As filed with the Securities and Exchange Commission on June 30, 2006



SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F/A (Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
Commission file number 1-12356

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DAIMLERCHRYSLERAG

(Exact name of Registrant as specified in its charter)

DAIMLERCHRYSLERAG

(Translation of Registrant's name into English)

FEDERAL REPUBLIC OF GERMANY

(Jurisdiction of incorporation or organization)

MERCEDESSTRASSE 137, 70327 STUTTGART, GERMANY

(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act.

|Title of each class                               |                                    | Name of each exchange
on which registered                                                                                 
|------------------------------------------------- | ---------------------------------- | --------------------------------------------------------------------------------------------------------------------------
|Ordinary Shares, no par value                     |                                    | Frankfurt Stock Exchange
New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Philadelphia Stock Exchange
|Guarantee of the following securities of:        
|DaimlerChrysler North America Holding Corporation |                                    |                                                                                                                           
|                                                  | 8.50% Notes Due January 18, 2031   |                                                                                                                           
|                                                  | 73/8% Notes Due September 15, 2006 |                                                                                                                           

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Securities registered or to be registered pursuant to Section 12(g) of the Act.
NONE
(Title of Class)

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Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)

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Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of
the period covered by the annual report:

Ordinary
Shares, no par value. . . . . . . . . 1,018,172,696

(as
of December 31, 2005)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.

Yes /X/

No / /


If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.

Yes / /

No /X/


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes /X/

No / /


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" in Rule 12b-2 of the Exchange Act.

|Large accelerated filer /X/ |  | Accelerated filer / / |  | Non-accelerated filer / /
|--------------------------- |  | --------------------- |  | -------------------------

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 / /

Item 18 /X/


If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes / /

No /X/




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The registrant hereby amends its Annual Report on Form 20-F filed March 6, 2006, to provide certain incremental and enhanced disclosures about the adjustments
made to the January 1, 2003 balance of stockholders' equity and to 2005 net income and operating profit and to provide the following condensed consolidated financial information of the European
Aeronautic Defence and Space Company EADS N.V. and subsidiaries ("EADS"):



DaimlerChrysler
is providing the aforementioned disclosures about the adjustments to its January 1, 2003 stockholders' equity balance and its 2005 net income and operating profit
in a revised Note 1 and Note 31 to the DaimlerChrysler 2005 consolidated financial statements. Additionally, DaimlerChrysler is providing the aforementioned condensed consolidated
financial information about EADS, prepared using generally accepted accounting principles in the United States of America, in a revised Note 3 to the DaimlerChrysler 2005 consolidated financial
statements.

DaimlerChrysler
is filing this amendment for the sole purpose of updating "Item 18. Financial Statements," updating Exhibits 12.1, 12.2, 13.1 and 14.1 and changing the page reference
under the heading "Consolidated Financial Statements" in "Item 8. Financial Information" from "F-1 through F-94" to "F-1 through F-98."

Item 18. Financial Statements.

You can find our Consolidated Financial Statements and schedule on pages F-i, F-1 through F-98.

2

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the
undersigned to sign this amendment to its 2005 Annual Report on its behalf.

Date:
June 30, 2006

| |  | DAIMLERCHRYSLER AG
| |  | ------------------
| |  | By:               
| |  | By:               

3

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DAIMLERCHRYSLER AG

Index to Consolidated Financial Statements

|                                                        |                                                                                                                 | Page
|------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firm |                                                                                                                 | F-1 
|Consolidated Financial Statements:                      |                                                                                                                 |     
|                                                        | Consolidated Statements of Income (Loss) for the years ended December 31, 2005, 2004 and 2003                   |     
|                                                        | Consolidated Balance Sheets at December 31, 2005 and 2004                                                       |     
|                                                        | Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2005, 2004 and 2003 |     
|                                                        | Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003                      |     
|                                                        | Consolidated Fixed Assets Schedule for the year ended December 31, 2005                                         |     
|                                                        | Notes to the Consolidated Financial Statements                                                                  |     

F-i

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Supervisory Board
DaimlerChrysler AG:

We
have audited the accompanying consolidated balance sheets of DaimlerChrysler AG and subsidiaries ("DaimlerChrysler") as of December 31, 2005 and 2004, and the related
consolidated statements of income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2005. These consolidated
financial statements are the responsibility of DaimlerChrysler's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DaimlerChrysler as of December 31, 2005
and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with generally accepted
accounting principles in the United States of America.

As
described in Note 11 to the consolidated financial statements, DaimlerChrysler adopted FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement
Obligations  an interpretation of FASB Statement No. 143" in 2005. As described in Note 1 to the consolidated financial statements, DaimlerChrysler
changed its method of accounting for stock-based compensation in 2003. As described in Notes 3 and 11 to the consolidated financial statements, DaimlerChrysler also adopted the required
portions of FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities  an interpretation of ARB No. 51", in 2003.

KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Stuttgart,
Germany
February 23, 2006 except for Note 3 which is as of June 2, 2006

F-1

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DAIMLERCHRYSLER AG AND SUBSIDIARIES
Consolidated Statements of Income (Loss)

|                                                                                                                                           |                                                                                                                                                                                           |                                                        |  | Consolidated |     
|------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  | ------------ | ----
|
|
|                                                                                                                                           |                                                                                                                                                                                          
|Revenues                                                                                                                                   |                                                                                                                                                                                           | 35.                                                    |  | 149,776      |     
|                                                                                                                                           |                                                                                                                                                                                          
|Cost of sales                                                                                                                              |                                                                                                                                                                                           | 5.                                                     |  | (122,894     | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Gross profit                                                                                                                               |                                                                                                                                                                                           |                                                        |  | 26,882       |     
|                                                                                                                                           |                                                                                                                                                                                          
|Selling, administrative and other expenses                                                                                                 |                                                                                                                                                                                           | 5.                                                     |  | (18,984      | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Research and development                                                                                                                   |                                                                                                                                                                                           |                                                        |  | (5,649       | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Other income                                                                                                                               |                                                                                                                                                                                           | 6.                                                     |  | 966          |     
|                                                                                                                                           |                                                                                                                                                                                          
|Goodwill impairment                                                                                                                        |                                                                                                                                                                                           | 12.                                                    |  | (30          | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Turnaround plan Chrysler Group                                                                                                             |                                                                                                                                                                                           | 7.                                                     |  | 36           |     
|                                                                                                                                           |                                                                                                                                                                                          
|Income before financial income                                                                                                             |                                                                                                                                                                                           |                                                        |  | 3,221        |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           | Impairment of investment in EADS                                                                                                                                                          |                                                        |  |              |    
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           | Other financial income (expense), net (therein loss on issuance of associated company stock of €135 million in 2004 and gain on issuance of related company stock of €24 million in 2003) |                                                        |  |              | 217 
|                                                                                                                                           |                                                                                                                                                                                          
|Financial income (expense), net                                                                                                            |                                                                                                                                                                                           | 8.                                                     |  | 217          |     
|                                                                                                                                           |                                                                                                                                                                                          
|Income (loss) before income taxes                                                                                                          |                                                                                                                                                                                           |                                                        |  | 3,438        |     
|                                                                                                                                           |                                                                                                                                                                                          
|Income tax (expense) benefit                                                                                                               |                                                                                                                                                                                           | 9.                                                     |  | (513         | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Minority interests                                                                                                                         |                                                                                                                                                                                           |                                                        |  | (74          | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Income (loss) from continuing operations                                                                                                   |                                                                                                                                                                                           |                                                        |  | 2,851        |     
|                                                                                                                                           |                                                                                                                                                                                          
|Income from discontinued operations, net of taxes                                                                                          |                                                                                                                                                                                           | 10.                                                    |  |             |     
|                                                                                                                                           |                                                                                                                                                                                          
|Income on disposal of discontinued operations, net of taxes                                                                                |                                                                                                                                                                                           | 10.                                                    |  |             |     
|                                                                                                                                           |                                                                                                                                                                                          
|Cumulative effects of changes in accounting principles: transition adjustments resulting from adoption of FIN 47 and FIN 46R, net of taxes |                                                                                                                                                                                           | 11.                                                    |  | (5           | )   
|                                                                                                                                           |                                                                                                                                                                                          
|Net income (loss)                                                                                                                          |                                                                                                                                                                                           |                                                        |  | 2,846        |     
|                                                                                                                                           |                                                                                                                                                                                          
|Earnings per share                                                                                                                         |                                                                                                                                                                                           | 36.                                                    |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|Basic earnings per share                                                                                                                   |                                                                                                                                                                                           |                                                        |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income (loss) from continuing operations               |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income from discontinued operations                    |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income on disposal of discontinued operations          |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Cumulative effects of changes in accounting principles |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           | Net income                                                                                                                                                                                |                                                        |  |              | 2.80
|                                                                                                                                           |                                                                                                                                                                                          
|Diluted earnings per share                                                                                                                 |                                                                                                                                                                                           |                                                        |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income (loss) from continuing operations               |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income from discontinued operations                    |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Income on disposal of discontinued operations          |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           |                                                                                                                                                                                           | Cumulative effects of changes in accounting principles |  |              |     
|                                                                                                                                           |                                                                                                                                                                                          
|                                                                                                                                           | Net income                                                                                                                                                                                |                                                        |  |              | 2.80
|                                                                                                                                           |                                                                                                                                                                                          

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-2

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DAIMLERCHRYSLER AG AND SUBSIDIARIES
Consolidated Statements of Income (Loss)

|Industrial Business1 |   | Financial Services1,2 |   |        
|-------------------- | - | --------------------- | - | -------
|
|
|                     |   |                       |   |        
|134,340              |   | 128,133               |   | 122,397
|                     |   |                       |   |        
|(110,326             | ) | (103,771              | ) | (98,937
|                     |   |                       |   |        
|24,014               |   | 24,362                |   | 23,460 
|                     |   |                       |   |        
|(17,725              | ) | (16,741               | ) | (16,374
|                     |   |                       |   |        
|(5,649               | ) | (5,658                | ) | (5,571 
|                     |   |                       |   |        
|921                  |   | 833                   |   | 637    
|                     |   |                       |   |        
|(30                  | ) |                      |   |       
|                     |   |                       |   |        
|36                   |   | (145                  | ) | (469   
|                     |   |                       |   |        
|1,567                |   | 2,651                 |   | 1,683  
|                     |   |                       |   |        
|                    |   |                      |   | (1,960 
|                     |   |                       |   |        
|192                  |   | (1,043                | ) | (775   
|                     |   |                       |   |        
|192                  |   | (1,043                | ) | (2,735 
|                     |   |                       |   |        
|1,759                |   | 1,608                 |   | (1,052 
|                     |   |                       |   |        
|133                  |   | (442                  | ) | (352   
|                     |   |                       |   |        
|(63                  | ) | 113                   |   | (30    
|                     |   |                       |   |        
|1,829                |   | 1,279                 |   | (1,434 
|                     |   |                       |   |        
|                    |   |                      |   | 14     
|                     |   |                       |   |        
|                    |   |                      |   | 882    
|                     |   |                       |   |        
|(5                   | ) |                      |   | (30    
|                     |   |                       |   |        
|1,824                |   | 1,279                 |   | (568   
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        
|                     |   |                       |   |        

F-3

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DAIMLERCHRYSLER AG AND SUBSIDIARIES
Consolidated Balance Sheets

|                                                                    |  |     |  | Consolidated |   | Industrial
Business1 |   | Financial
Services1,2
|------------------------------------------------------------------- |  | --- |  | ------------ | - | -------------------- | - | ---------------------
|
|
|                                                                    |  |     |  |             
|Assets                                                              |  |     |  |              |   |                      |   |                      
|                                                                    |  |     |  |             
|Goodwill                                                            |  | 12. |  | 1,881        |   | 2,003                |   | 1,822                
|                                                                    |  |     |  |             
|Other intangible assets                                             |  | 13. |  | 3,191        |   | 2,671                |   | 3,133                
|                                                                    |  |     |  |             
|Property, plant and equipment, net                                  |  | 14. |  | 36,739       |   | 34,017               |   | 36,565               
|                                                                    |  |     |  |             
|Investments and long-term financial assets                          |  | 20. |  | 6,356        |   | 7,039                |   | 6,084                
|                                                                    |  |     |  |             
|Equipment on operating leases, net                                  |  | 15. |  | 34,238       |   | 26,711               |   | 3,629                
|                                                                    |  |     |  |             
|Fixed assets                                                        |  |     |  | 82,405       |   | 72,441               |   | 51,233               
|                                                                    |  |     |  |             
|Inventories                                                         |  | 16. |  | 19,139       |   | 16,805               |   | 17,674               
|                                                                    |  |     |  |             
|Trade receivables                                                   |  | 17. |  | 7,595        |   | 7,001                |   | 7,348                
|                                                                    |  |     |  |             
|Receivables from financial services                                 |  | 18. |  | 61,101       |   | 56,785               |   |                     
|                                                                    |  |     |  |             
|Other assets                                                        |  | 19. |  | 8,731        |   | 12,931               |   | 4,654                
|                                                                    |  |     |  |             
|Securities                                                          |  | 20. |  | 4,936        |   | 3,884                |   | 4,502                
|                                                                    |  |     |  |             
|Cash and cash equivalents                                           |  | 21. |  | 7,711        |   | 7,782                |   | 6,894                
|                                                                    |  |     |  |             
|Non-fixed assets                                                    |  |     |  | 109,213      |   | 105,188              |   | 41,072               
|                                                                    |  |     |  |             
|Deferred taxes                                                      |  | 9.  |  | 7,249        |   | 4,213                |   | 7,060                
|                                                                    |  |     |  |             
|Prepaid expenses                                                    |  | 22. |  | 1,391        |   | 1,030                |   | 1,299                
|                                                                    |  |     |  |             
|Disposal group Off-Highway, assets held for sale                    |  | 10. |  | 1,374        |   |                     |   | 1,374                
|                                                                    |  |     |  |             
|Total assets (thereof short-term 2005: €74,909;
2004: €68,679)      |  |     |  | 201,632      |   | 182,872              |   | 102,038              
|                                                                    |  |     |  |             
|Liabilities and stockholders' equity                                |  |     |  |              |   |                      |   |                      
|                                                                    |  |     |  |             
|Capital stock                                                       |  |     |  | 2,647        |   | 2,633                |   |                      
|                                                                    |  |     |  |             
|Additional paid-in capital                                          |  |     |  | 8,221        |   | 8,042                |   |                      
|                                                                    |  |     |  |             
|Retained earnings                                                   |  |     |  | 31,688       |   | 30,361               |   |                      
|                                                                    |  |     |  |             
|Accumulated other comprehensive loss                                |  |     |  | (6,107       | ) | (7,514               | ) |                      
|                                                                    |  |     |  |             
|Treasury stock                                                      |  |     |  |             |   |                     |   |                      
|                                                                    |  |     |  |             
|Stockholders' equity                                                |  | 23. |  | 36,449       |   | 33,522               |   | 26,859               
|                                                                    |  |     |  |             
|Minority interests                                                  |  |     |  | 653          |   | 909                  |   | 614                  
|                                                                    |  |     |  |             
|Accrued liabilities                                                 |  | 25. |  | 46,682       |   | 41,938               |   | 45,389               
|                                                                    |  |     |  |             
|Financial liabilities                                               |  | 26. |  | 80,932       |   | 76,270               |   | 4,146                
|                                                                    |  |     |  |             
|Trade liabilities                                                   |  | 27. |  | 14,591       |   | 12,920               |   | 14,381               
|                                                                    |  |     |  |             
|Other liabilities                                                   |  | 28. |  | 9,053        |   | 8,745                |   | 6,561                
|                                                                    |  |     |  |             
|Liabilities                                                         |  |     |  | 104,576      |   | 97,935               |   | 25,088               
|                                                                    |  |     |  |             
|Deferred taxes                                                      |  | 9.  |  | 4,203        |   | 2,312                |   | (2,309               
|                                                                    |  |     |  |             
|Deferred income                                                     |  | 29. |  | 8,298        |   | 6,256                |   | 5,626                
|                                                                    |  |     |  |             
|Disposal group Off-Highway, liabilities held for sale               |  | 10. |  | 771          |   |                     |   | 771                  
|                                                                    |  |     |  |             
|Total liabilities (thereof short-term 2005:
€86,399; 2004: €77,158) |  |     |  | 165,183      |   | 149,350              |   | 75,179               
|                                                                    |  |     |  |             
|Total liabilities and stockholders' equity                          |  |     |  | 201,632      |   | 182,872              |   | 102,038              
|                                                                    |  |     |  |             

1      Additional information about the Industrial Business and Financial Services is not required under U.S. GAAP
and is unaudited.

2      Contains the financing and leasing business of the Financial Services segment without Mobility Management
and activities of
        DaimlerChrysler Financial Services AG.

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

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DAIMLERCHRYSLER AG AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity

|                                            |  |       |  |       |   |        |   | Accumulated other
comprehensive loss |   |      |   |        |  
|------------------------------------------- |  | ----- |  | ----- | - | ------ | - | ------------------------------------ | - | ---- | - | ------ | -
|
|                                            | 
|Balance at January 1,
2003                  |  | 2,633 |  | 7,819 |   | 30,485 |   | 465                                  |   | (74  | ) | 1,065  |  
|                                            | 
|Net income                                  |  |      |  |      |   | 448    |   |                                     |   |     |   |       |  
|Other comprehensive income (loss)           |  |      |  |      |   |       |   | (1,628                               | ) | 407  |   | 1,162  |  
|                                            | 
|Total comprehensive income                  |  |       |  |       |   |        |   |                                      |   |      |   |        |  
|                                            | 
|Stock based compensation                    |  |      |  | 95    |   |       |   |                                     |   |     |   |       |  
|Issuance of shares upon conversion of notes |  |      |  | 1     |   |       |   |                                     |   |     |   |       |  
|Purchase of capital stock                   |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Re-issuance of treasury stock               |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Dividends                                   |  |      |  |      |   | (1,519 | ) |                                     |   |     |   |       |  
|                                            | 
|Balance at December 31, 2003                |  | 2,633 |  | 7,915 |   | 29,414 |   | (1,163                               | ) | 333  |   | 2,227  |  
|                                            | 
|Net income                                  |  |      |  |      |   | 2,466  |   |                                     |   |     |   |       |  
|Other comprehensive loss                    |  |      |  |      |   |       |   | (715                                 | ) | (206 | ) | (369   | )
|                                            | 
|Total comprehensive income                  |  |       |  |       |   |        |   |                                      |   |      |   |        |  
|                                            | 
|Stock based compensation                    |  |      |  | 127   |   |       |   |                                     |   |     |   |       |  
|Purchase of capital stock                   |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Re-issuance of treasury stock               |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Dividends                                   |  |      |  |      |   | (1,519 | ) |                                     |   |     |   |       |  
|                                            | 
|Balance at December 31, 2004                |  | 2,633 |  | 8,042 |   | 30,361 |   | (1,878                               | ) | 127  |   | 1,858  |  
|                                            | 
|Net income                                  |  |      |  |      |   | 2,846  |   |                                     |   |     |   |       |  
|Other comprehensive income (loss)           |  |      |  |      |   |       |   | 2,727                                |   | (18  | ) | (1,223 | )
|                                            | 
|Total comprehensive income                  |  |       |  |       |   |        |   |                                      |   |      |   |        |  
|                                            | 
|Stock based compensation                    |  |      |  | 87    |   |       |   |                                     |   |     |   |       |  
|Issuance of new shares                      |  | 14    |  | 141   |   |       |   |                                     |   |     |   |       |  
|Purchase of capital stock                   |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Re-issuance of treasury stock               |  |      |  |      |   |       |   |                                     |   |     |   |       |  
|Dividends                                   |  |      |  |      |   | (1,519 | ) |                                     |   |     |   |       |  
|Other                                       |  |      |  | (49   | ) |       |   |                                     |   |     |   |       |  
|                                            | 
|Balance at December 31, 2005                |  | 2,647 |  | 8,221 |   | 31,688 |   | 849                                  |   | 109  |   | 635    |  
|                                            | 

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

---



DAIMLERCHRYSLER AG AND SUBSIDIARIES

Consolidated Statements of Cash Flows*

ConsolidatedYear ended December 31,(in millions of €)

2005

2004

2003Net income (loss)

2,846

2,466

448Income (loss) applicable to minority interests

74

(108
)
35Cumulative effects of changes in accounting principles

5



30Gains on disposals of shares in companies

(732
)
(281
)
(956
)Impairment of investment in EADS





1,960Depreciation and amortization of equipment on operating leases

6,341

5,445

5,579Depreciation and amortization of fixed assets

6,312

5,817

5,838Change in deferred taxes

(809
)
(593
)
644Equity (income) loss from equity method investments

(103
)
933

538Change in financial instruments

298

(275
)
160(Gains) losses on disposals of fixed assets/securities

(1,370
)
(520
)
(424
)Change in trading securities

(4
)
(26
)
71Change in accrued liabilities

170

1,344

1,015Turnaround plan expenses (gains)  Chrysler Group

(36
)
145

469Turnaround plan payments  Chrysler Group

(92
)
(219
)
(279
)Net changes in inventory-related receivables from financial services

(207
)
(2,455
)
(2,670
)Changes in other operating assets and liabilities: Inventories, net

(1,519
)
(1,393
)
(293
) Trade receivables

(443
)
242

(441
) Trade liabilities

802

1,186

1,081 Other assets and liabilities

820

(648
)
1,021Cash provided by operating activities

12,353

11,060

13,826Purchases of fixed assets: Increase in equipment on operating leases

(20,236
)
(17,678
)
(15,604
) Purchases of property, plant and equipment

(6,580
)
(6,386
)
(6,614
) Purchases of other fixed assets

(272
)
(514
)
(303
)Proceeds from disposals of equipment on operating leases

11,643

10,468

11,951Proceeds from disposals of fixed assets

1,098

741

643Payments for investments in businesses

(552
)
(264
)
(1,021
)Proceeds from disposals of businesses

516

1,218

1,209Investments in/collections from wholesale receivables

(5,195
)
(5,978
)
(10,432
)Proceeds from sale of wholesale receivables

5,288

6,331

10,260Investments in retail receivables

(27,073
)
(30,488
)
(28,946
)Collections on retail receivables

21,262

17,148

16,577Proceeds from sale of retail receivables

8,612

9,531

9,196Acquisitions of securities (other than trading)

(10,773
)
(4,211
)
(5,175
)Proceeds from sales of securities (other than trading)

11,025

3,481

4,785Change in other cash

15

(81
)
(134
)Cash used for investing activities

(11,222
)
(16,682
)
(13,608
)Change in commercial paper borrowings and short-term financial liabilities

1,407

2,453

129Additions to long-term financial liabilities

14,322

15,013

16,436Repayment of long-term financial liabilities

(15,867
)
(13,370
)
(12,518
)Dividends paid (including profit transferred from subsidiaries)

(1,575
)
(1,547
)
(1,537
)Proceeds from issuance of capital stock (including minority interests)

227

30

44Purchase of treasury stock

(27
)
(30
)
(36
)Cash provided by (used for) financing activities

(1,513
)
2,549

2,518Effect of foreign exchange rate changes on cash and cash equivalents (maturing within 3 months)

620

(313
)
(1,069
)Net increase (decrease) in cash and cash equivalents (maturing within 3 months)

238

(3,386
)
1,667Cash and cash equivalents (maturing within 3 months)At beginning of period

7,381

10,767

9,100At end of period

7,619

7,381

10,767


The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

---



Industrial Business1

Financial Services1,2Year ended December 31,

Year ended December 31,(in millions of €)2005

2004

2003

2005

2004

20031,824

1,279

(568
)
1,022

1,187

1,016

Net income (loss)63

(113
)
30

11

5

5

Income (loss) applicable to minority interests5



30







Cumulative effects of changes in accounting principles(732
)
(281
)
(956
)






Gains on disposals of shares in companies



1,960







Impairment of investment in EADS667

544

609

5,674

4,901

4,970

Depreciation and amortization of equipment on operating leases6,251

5,693

5,735

61

124

103

Depreciation and amortization of fixed assets(356
)
(1,211
)
194

(453
)
618

450

Change in deferred taxes(92
)
951

539

(11
)
(18
)
(1
)
Equity (income) loss from equity method investments297

(288
)
141

1

13

19

Change in financial instruments(1,320
)
(524
)
(424
)
(50
)
4



(Gains) losses on disposals of fixed assets/securities(3
)
(29
)
82

(1
)
3

(11
)
Change in trading securities93

1,198

1,098

77

146

(83
)
Change in accrued liabilities(36
)
145

469







Turnaround plan expenses (gains)  Chrysler Group(92
)
(219
)
(279
)






Turnaround plan payments  Chrysler Group(207
)
(2,455
)
(2,670
)






Net changes in inventory-related receivables from financial servicesChanges in other operating assets and liabilities:(1,518
)
(1,535
)
(502
)
(1
)
142

209

 Inventories, net(419
)
210

(500
)
(24
)
32

59

 Trade receivables806

1,193

1,082

(4
)
(7
)
(1
)
 Trade liabilities989

(805
)
715

(169
)
157

306

 Other assets and liabilities6,220

3,753

6,785

6,133

7,307

7,041

Cash provided by operating activitiesPurchases of fixed assets:(4,181
)
(3,828
)
(3,973
)
(16,055
)
(13,850
)
(11,631
)
 Increase in equipment on operating leases(6,537
)
(6,298
)
(6,539
)
(43
)
(88
)
(75
)
 Purchases of property, plant and equipment(253
)
(496
)
(250
)
(19
)
(18
)
(53
)
 Purchases of other fixed assets4,996

4,514

4,577

6,647

5,954

7,374

Proceeds from disposals of equipment on operating leases1,066

705

606

32

36

37

Proceeds from disposals of fixed assets(566
)
(244
)
(967
)
14

(20
)
(54
)
Payments for investments in businesses186

1,176

1,179

330

42

30

Proceeds from disposals of businesses26,963

29,911

37,346

(32,158
)
(35,889
)
(47,778
)
Investments in/collections from wholesale receivables(27,246
)
(27,849
)
(34,938
)
32,534

34,180

45,198

Proceeds from sale of wholesale receivables3,818

4,457

3,829

(30,891
)
(34,945
)
(32,775
)
Investments in retail receivables(2,824
)
(3,848
)
(3,206
)
24,086

20,996

19,783

Collections on retail receivables(504
)
(115
)
(361
)
9,116

9,646

9,557

Proceeds from sale of retail receivables(10,773
)
(4,210
)
(4,963
)


(1
)
(212
)
Acquisitions of securities (other than trading)11,017

3,445

4,687

8

36

98

Proceeds from sales of securities (other than trading)75

(189
)
(207
)
(60
)
108

73

Change in other cash(4,763
)
(2,869
)
(3,180
)
(6,459
)
(13,813
)
(10,428
)
Cash used for investing activities848

1,481

(1,392
)
559

972

1,521

Change in commercial paper borrowings and short-term financial liabilities2,297

2,661

5,469

12,025

12,352

10,967

Additions to long-term financial liabilities(4,609
)
(6,953
)
(4,229
)
(11,258
)
(6,417
)
(8,289
)
Repayment of long-term financial liabilities(287
)
(585
)
(908
)
(1,288
)
(962
)
(629
)
Dividends paid (including profit transferred from subsidiaries)195

(255
)
(220
)
32

285

264

Proceeds from issuance of capital stock (including minority interests)(27
)
(30
)
(36
)






Purchase of treasury stock(1,583
)
(3,681
)
(1,316
)
70

6,230

3,834

Cash provided by (used for) financing activities548

(291
)
(981
)
72

(22
)
(88
)
Effect of foreign exchange rate changes on cash and cash equivalents (maturing within 3 months)422

(3,088
)
1,308

(184
)
(298
)
359

Net increase (decrease) in cash and cash equivalents (maturing within 3 months)Cash and cash equivalents (maturing within 3 months)6,381

9,469

8,161

1,000

1,298

939

At beginning of period6,803

6,381

9,469

816

1,000

1,298

At end of period


F-7

---



DAIMLERCHRYSLER AG AND SUBSIDIARIES

Consolidated Fixed Assets Schedule

Acquisition or Manufacturing Costs(in millions of €)

Balance at
January 1,
2005

Currency
change

Change in
consolidated
companies

Additions

Reclassi-
fications

Disposals

Balance at
December 31,
2005Goodwill

3,049

361

16

176



520

3,082Other intangible assets

3,477

417



274

169

205

4,132Intangible assets

6,526

778

16

450

169

725

7,214Land, leasehold improvements and buildings including buildings on land owned by others

20,995

1,145

(15
)
270

377

393

22,379Technical equipment and machinery

32,536

2,766

4

847

1,976

1,854

36,275Other equipment, factory and office equipment

22,797

2,242

5

1,502

1,517

1.856

26,207Advance payments relating to plant and equipment and construction in progress

4,268

494

16

4,002

(4,053
)
47

4,680Property, plant and equipment

80,596

6,647

10

6,621

(183
)
4,150

89,541Investments in affiliated companies

1,026

17

(161
)
165

9

126

930Loans to affiliated companies

247



(108
)
47



48

138Investments in associated companies

4,334

15

21

140

(14
)
513

3,983Investments in related companies

1,033

8

(22
)
312

5

568

768Loans to associated and related companies

242

10



11



190

73Long-term securities

611

29



147



180

607Other loans

258



(4
)
15

201

244

226Investments and long-term financial assets

7,751

79

(274
)
837

201

1,869

6,725Equipment on operating leases

35,080

4,425

275

20,236

(187
)
14,933

44,896


1      Currency translation changes with period end rates.

The consolidated fixed assets schedule is part of the Notes to Consolidated Financial Statements.

F-8

---



Depreciation/Amortization

Book Value1Balance at
January
1, 2005

Currency
change

Change in
consoli-
dated
companies

Additions

Reclassi-
fications

Disposals

Balance at
December
31, 2005

Balance at
December
31, 2005

Balance
at December
31, 2004

(in millions of €)1,046

130



30



5

1,201

1,881

2,003

Goodwill806

57

(5
)
201

2

120

941

3,191

2,671

Other intangible assets1,852

187

(5
)
231

2

125

2,142

5,072

4,674

Intangible assets9,570

465

9

671

(7
)
207

10,501

11,878

11,425

Land, leasehold improvements and buildings including buildings on land owned by others21,436

1,596

(3
)
3,005

(9
)
1,697

24,328

11,947

11,100

Technical equipment and machinery15,497

1,448

3

2,351

57

1,484

17,872

8,335

7,300

Other equipment, factory and office equipment76

15



12

(2
)


101

4,579

4,192

Advance payments relating to plant and equipment and construction in progress46,579

3,524

9

6,039

39

3,388

52,802

36,739

34,017

Property, plant and equipment211

1

(8
)
32



72

164

766

815

Investments in affiliated companies10



(6
)
2





6

132

237

Loans to affiliated companies(2
)
5

7







10

3,973

4,336

Investments in associated companies253



(17
)
4



60

180

588

780

Investments in related companies164





1



164

1

72

78

Loans to associated and related companies12









11

1

606

599

Long-term securities64



(4
)
3



56

7

219

194

Other loans712

6

(28
)
42



363

369

6,356

7,039

Investments and long-term financial assets8,369

1,035

56

6,341

(41
)
5,102

10,658

34,238

26,711

Equipment on operating leases


F-9

---



DAIMLERCHRYSLER AG AND SUBSIDIARIES

Notes to Consolidated Financial Statements

BASIS OF PRESENTATION

1. Summary of Significant Accounting Policies

General.The consolidated financial statements of DaimlerChrysler AG and subsidiaries ("DaimlerChrysler" or the
"Group") have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All amounts are presented in millions of euros
("€").

Certain
amounts reported in previous years have been reclassified to conform to the 2005 presentation. In connection with an internal investigation of certain accounts, transactions and
payments, DaimlerChrysler made adjustments to its January 1, 2003 stockholders' equity balance to correct for misstatements in years prior to 2003 and recognized charges in its 2005
consolidated financial income statement to correct for misstatements in the years 2003 and 2004 (see Note 31). DaimlerChrysler also adjusted its January 1, 2003 stockholders' equity
balance and recognized charges in its 2005 income relating to the years 2003 and 2004 to correct the accounting for certain derivative instruments that did not qualify for hedge accounting treatment,
deferred income taxes of its U.S. subsidiaries, and other minor misstatements. The charges recognized for 2003 and 2004 had the effect of reducing operating profit by
€55 million, financial income by €58 million, tax expense by €7 million, and 2005 net income by
€106 million in the 2005 statement of income. The total adjustments relating to the years prior to 2003 had the effect of increasing stockholders' equity as of January 1,
2003 by €72 million. The 2003 and 2004 misstatements were not material to those years and the charges recognized in 2005 to correct the misstatements of those years were not
material to the consolidated statement of income for 2005. In addition, the adjustments to January 1, 2003 stockholders' equity to correct
the cumulative misstatements as of that date were not material to beginning stockholders' equity as of January 1, 2003.

The
following table provides detailed information about the exact nature and related amount comprising each component of the adjustments made to correct for those misstatements:

|                                                                                                                                 |  | Effect of
accumulated
misstatements on
stockholders'
equity as of
January 1, 2003 |   | Effect of out of period
adjustments on
net income 2005 |   | Effect of out of period
adjustments on
operating profit 2005 |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- | - | ------------------------------------------------------ | - | ------------------------------------------------------------ | -
|
|Adjustments resulting from DaimlerChrysler's internal investigation of certain accounts, transactions and payments (see Note 31) |  | (306                                                                              | ) | (89                                                    | ) | (53                                                          | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Derivative instruments that did not qualify for hedge accounting                                                                 |  | 291                                                                               |   | (37                                                    | ) | 12                                                           |  
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Deferred income taxes of U.S. subsidiaries                                                                                       |  | 106                                                                               |   | 20                                                     |   | (9                                                           | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Correction of advertising accrual                                                                                                |  |                                                                                  |   | 10                                                     |   | (37                                                          | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Deferral of supplier payments received                                                                                           |  |                                                                                  |   | (28                                                    | ) | (17                                                          | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Recognition of earned supplier warrants                                                                                          |  |                                                                                  |   | 14                                                     |   | 14                                                           |  
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Capitalization of interest                                                                                                       |  |                                                                                  |   | 4                                                      |   | 4                                                            |  
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Correction of retirement accrual                                                                                                 |  | 6                                                                                 |   | 2                                                      |   | 1                                                            |  
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Canadian income taxes                                                                                                            |  | (25                                                                               | ) | (2                                                     | ) | (1                                                           | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  
|Total                                                                                                                            |  | 72                                                                                |   | (106                                                   | ) | (86                                                          | )
|                                                                                                                                 |  |                                                                                   |   |                                                        |   |                                                              |  

F-10

---



Commercial practices with respect to certain products manufactured by DaimlerChrysler necessitate that sales financing, including leasing
alternatives, be made available to the Group's customers. Accordingly, the Group's consolidated financial statements are also significantly influenced by activities of its financial services business.
To enhance the readers' understanding of the Group's consolidated financial statements, the
accompanying financial statements present, in addition to the audited consolidated financial statements, unaudited information with respect to the results of operations and financial position of the
Group's industrial and financial services business activities. Such information, however, is not required by U.S. GAAP and is not intended to, and does not represent the separate U.S. GAAP results of
operations and financial position of the Group's industrial or financial services business activities. Information concerning the financial services business activities of the Group contains the
financing and leasing business of the Financial Services segment without Mobility Management and the activities of DaimlerChrysler Financial Services AG. Transactions between the Group's industrial
and financial services business activities principally represent intercompany sales of products, intercompany borrowings and related interest, and other support under special vehicle financing
programs. The effects of transactions between the industrial and financial services businesses have been eliminated within the industrial business columns.

Use of Estimates.Preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions related to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses for the period. Significant items related to such estimates and assumptions include recoverability of investments in equipment on operating leases, collectibility of
sales financing and finance lease receivables, realizability of investments in associated companies, warranty obligations, sales incentive obligations, valuation of derivative instruments, and assets
and obligations related to employee benefits. Actual amounts could differ from those estimates.

F-11

---



Risks and uncertainties.DaimlerChrysler's financial position, results of operations, and cash flows are subject
to numerous risks and uncertainties. Factors that could affect DaimlerChrysler's future financial statements and cause actual results to vary materially from expectations include, but are not limited
to, adverse changes in global economic conditions; overcapacity and intense competition in the automotive industry; dependence on suppliers of parts and services, primarily single source suppliers;
the concentrations of DaimlerChrysler's revenues derived from the United States and Western Europe; the significant portion of DaimlerChrysler's workforce subject to collective bargaining agreements;
fluctuations in currency exchange rates, interest rates and commodity prices; significant legal proceedings and environmental and other government regulations.

Principles of Consolidation.The accompanying consolidated financial statements include the financial statements of DaimlerChrysler AG and
all of its material, majority-owned subsidiaries and certain variable interest entities for which DaimlerChrysler is determined to be the primary beneficiary (see Note 2).

All
significant intercompany accounts and transactions relating to consolidated subsidiaries and consolidated variable interest entities have been eliminated.

Investments in Associated Companies.Significant equity investments in which DaimlerChrysler does not have a controlling financial
interest, but has the ability to exercise significant influence over the operating and financial policies of the investee ("associated companies") are accounted for using the equity method.

The
excess of DaimlerChrysler's initial investment in equity method companies over the Group's ownership percentage in the underlying net assets of those companies is attributed to
certain fair value adjustments with the remaining portion recognized as goodwill ("investor level goodwill") which is not amortized.

A
decline in fair value of an investment in any associated company below its carrying amount that is deemed to be other than temporary results in a reduction in carrying amount of the
investment to fair value. The impairment is charged to earnings and a new cost basis for the investment is established.

The
European Aeronautic Defence and Space Company EADS N.V. ("EADS") represents a significant associated company. Because the financial statements of EADS are not made available timely
to DaimlerChrysler in order to apply the equity method of accounting, the Group's proportionate share of the results of operations of this associated company are included in DaimlerChrysler's
consolidated financial statements on a three month lag.

Foreign Currencies.The assets and liabilities of foreign operations where the functional currency is not the euro are generally
translated into euro using period-end exchange rates. The resulting translation adjustments are recorded as a component of accumulated other comprehensive loss. The statements of income
and the statements of cash flows are translated using average exchange rates during the respective periods.

The
exchange rates of the U.S. dollar, as the significant foreign currency, used in preparation of the consolidated financial statements were as follows:

|                              |  |                |  | 2005   |  | 2004   |  | 2003  
|----------------------------- |  | -------------- |  | ------ |  | ------ |  | ------
|
|Exchange rate at December 31, |  | 1.1797         |  | 1.3621 |  | 1.2630
|Average exchange rates        |  | First Quarter  |  | 1.3113 |  | 1.2497 |  | 1.0735
|                              |  | Second Quarter |  | 1.2594 |  | 1.2046 |  | 1.1355
|                              |  | Third Quarter  |  | 1.2199 |  | 1.2218 |  | 1.1248
|                              |  | Fourth Quarter |  | 1.1897 |  | 1.2977 |  | 1.1885

F-12

---



The
assets and liabilities of foreign operations in highly inflationary economies are translated into euro on the basis of period-end rates for monetary assets and
liabilities and at historical rates for non-monetary items, with resulting translation gains and losses recognized in earnings. Further, for foreign operations in such economies,
depreciation and gains and losses from the disposal of
non-monetary assets are determined using historical rates. In all periods presented the Group had foreign operations in one economy that was considered highly inflationary.

Revenue Recognition.Revenue for sales of vehicles, service parts and other related products is recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the price of the transaction is fixed and determinable, and collectibility is reasonably assured. Revenues are recognized net
of discounts, cash sales incentives, customer bonuses and rebates granted. Non-cash sales incentives that do not reduce the transaction price to the customer are classified within cost of
sales. Shipping and handling costs are recorded as cost of sales in the period incurred.

DaimlerChrysler
uses price discounts to adjust market pricing in response to a number of market and product factors, including: pricing actions and incentives offered by competitors,
economic conditions, the amount of excess industry production capacity, the intensity of market competition, and consumer demand for the product. The Group may offer a variety of sales incentive
programs at any point in time, including: cash offers to dealers and consumers, lease subsidies which reduce the consumer's monthly lease payment, or reduced financing rate programs offered to
consumers.

The
Group records as a reduction to revenue at the time of sale to the dealer the estimated impact of sales incentives programs offered to dealers and consumers. This estimated impact
represents the incentive programs offered to dealers and consumers as well as the expected modifications to these programs in order for the dealers to sell their inventory.

The
Group offers extended, separately priced warranty contracts for certain products. Revenues from these contracts are deferred and recognized into income over the contract period in
proportion to the costs expected to be incurred based on historical information. In circumstances in which there is insufficient historical information, income from extended warranty contracts is
recognized on a straight-line basis. A loss on these contracts is recognized in the current period if the sum of expected costs for services under the contract exceeds unearned revenue.

For
transactions with multiple deliverables, such as when vehicles are sold with free service programs, the Group allocates revenue to the various elements based on their relative fair
values when criteria for separation are met.

When
below market rate loans under special financing programs are used to promote sales of vehicles and the Financial Services segment finances the vehicle, the effect of the rate
differential at the contract origination date is deducted from revenues and recorded as unearned income in the consolidated balance sheet. The Financial Services segment amortizes the unearned income
balance into earnings using the interest method over the original (contractual) life of the receivables. Upon prepayment or sale of the receivable, the unamortized unearned income is recognized into
earnings.

Sales
under which the Group guarantees the minimum resale value of the product, such as in sales to certain rental car company customers, are accounted for similar to an operating lease
in accordance with Emerging Issues Task Force ("EITF") 95-1, "Revenue Recognition on Sales with a Guaranteed Minimum Resale Value." The guarantee of the resale value may take the form of
an obligation by DaimlerChrysler to pay any deficiency between the proceeds the customer receives upon resale in an auction and the guaranteed amount or an obligation to reacquire the vehicle after a
certain period of time at a set price. Gains or losses from resale of these vehicles are included in gross profit.

Revenue
from operating leases is recognized on a straight-line basis over the lease term.

F-13

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Revenue
from sales financing and finance lease receivables is recognized using the interest method. Recognition of revenue is generally suspended when a finance or lease receivable
becomes contractually delinquent for periods ranging from 60 to 120 days.

Sales of receivables.The Group transfers significant amounts of automotive finance receivables in the ordinary course of business to
trusts in "asset-backed securitizations" and "whole loan sales" and usually remains as servicer for a servicing fee. The accounting for securitized sold receivables is based upon the financial
component approach that focuses on control according to the provisions of Statement of Financial Accounting Standards ("SFAS") 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities."

Servicing
fees are recognized on a consistent yield basis over the remaining term of the related receivables sold.

Gains
and losses from the sale of finance receivables are recognized as revenues in the period in which the sale occurs. In determining the gain or loss for each qualifying sale of
finance receivables, the investment in the receivable pool sold is allocated between the portion sold and the portion retained based upon their relative fair values.

Further
information on the Group's securitized sold receivables is included in Note 34.

Estimated Credit Losses.DaimlerChrysler determines its allowance for credit losses based on an ongoing systematic review and evaluation
performed as part of the credit-risk evaluation process. The evaluation performed considers historical loss experience, the size and composition of the portfolios, current
economic events and conditions, the estimated fair value and adequacy of collateral and other pertinent factors. Certain homogeneous loan portfolios are evaluated collectively, taking into
consideration primarily historical loss experience adjusted for the estimated impact of current economic events and conditions, including fluctuations in the fair value and adequacy of collateral.
Other receivables, such as wholesale receivables and loans to large commercial borrowers, are evaluated for impairment individually based on the fair value of the underlying collateral. Credit
exposures deemed to be uncollectible are charged against the allowance for doubtful accounts. DaimlerChrysler generally does not originate or purchase receivables for resale. Loans that are classified
as held for sale are carried at the lower of cost or market when it is determined that market price for the loan represent the estimated future cash flows on the loan.

Research and Development and Advertising.Research and development and advertising costs are expensed as incurred.

Sales of Newly Issued Subsidiary Stock.Gains and losses resulting from the issuance of stock by a Group subsidiary to third parties that
reduce DaimlerChrysler's percentage ownership ("dilution gains and losses") and DaimlerChrysler's share of any dilution gains and losses reported by its investees accounted for under the equity method
are recognized in the Group's consolidated statement of income in the line item "Other financial income (expense), net."

Income taxes.Current income taxes are determined based on respective local taxable income and tax rules. In addition, current income
taxes include adjustments for uncertain tax payments or tax refunds for periods not yet assessed. Deferred tax reflects the changes in deferred tax assets and liabilities except for changes recognized
in other comprehensive loss. Deferred tax assets or liabilities are determined based on temporary differences between financial reporting and the tax basis of assets and liabilities including
differences from consolidation, loss carry forwards and tax credits. Amortization of these differences or realization of loss carry forwards and tax credits are based on enacted local tax rules and
tax rates. DaimlerChrysler recognizes a valuation allowance on deferred tax assets if it is more likely than not that the benefit from the deferred tax asset will not be realized.

F-14

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Discontinued Operations.The results of operations of discontinued Group components and gains or losses from their disposal are each
presented separately net of tax in the Group's statement of income for all periods presented. A Group component is considered a discontinued operation if its operations and cash flows have been or
will be eliminated from the ongoing activities of the Group as a result of the disposal transaction, the Group will not have any significant subsequent continuing involvement with the component, and
the component can be clearly distinguished operationally and for financial reporting purposes. If not disposed of by the balance sheet date, to qualify as discontinued operations, a component must
also meet the conditions to be classified as held for sale. Net assets of a discontinued Group component classified as held for sale are measured at the lower of its carrying amount or fair value less
cost to sell. Gains from the sale of a discontinued Group component are recognized in the period realized and reported separately.

Pension and Other Postretirement Plans.The measurement of pension and postretirement benefit liabilities is based upon the projected unit
credit method in accordance with SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," respectively. As permitted
under SFAS 87 and SFAS 106, changes in the amount of either the projected benefit obligation (for pension plans), the accumulated benefit obligation (for other postretirement plans) or
differences between actual and expected return on plan assets and from changes in assumptions can result in gains and losses not yet recognized in the Group's consolidated financial statements. The
expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the fair value or market-related value of plan assets. Amortization of an
unrecognized net gain or loss is included as a component of the Group's net periodic benefit plan cost for a year if, as of the beginning of the year, that unrecognized net gain or loss exceeds
10 percent of the greater of (1) the projected benefit obligation (for pension plans) or the accumulated postretirement benefit obligation (for other postretirement plans) or
(2) the fair value or market-related value of that plan's assets. In such case, the amount of amortization recognized by the Group is the resulting excess divided by the average remaining
service period of active employees expected to receive benefits under the plan (see Note 25a).

DaimlerChrysler
elected retroactive application as of January 1, 2004, to account for subsidies provided under the Medicare Prescription Drug, Improvement and Modernization Act of
2003 ("Medicare Act"). Under certain conditions, the Medicare Act provides for subsidies related to postretirement healthcare benefits that reduce the accumulated postretirement benefit obligation
("APBO") of companies in the United States. See Note 25a for further information about the impact of the Medicare Act on the Group's consolidated financial statements.

Earnings Per Share.Basic earnings per share are calculated by dividing income from continuing operations and net income, respectively, by
the weighted average number of shares outstanding. Diluted earnings per share reflect the potential dilution that would occur if all securities and other contracts to issue ordinary shares were
exercised or converted (see Note 36).

F-15

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Goodwill and Other Intangible Assets.The Group accounts for all business combinations initiated after
June 30, 2001, using the purchase method of accounting. Goodwill represents the excess of the cost of an acquired entity over the fair values assigned to the assets acquired and the liabilities
assumed after taking into consideration the types of acquired intangible assets that are required to be recognized and reported separately from goodwill.

Goodwill
acquired and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment. DaimlerChrysler evaluates the
recoverability of its goodwill at least annually or when significant events occur or there are changes in circumstances that indicate the fair value of a reporting unit of the Group is less than its
carrying value. The Group determines the fair value of each of its reporting units by estimating the present value of their future cash flows. In addition, any recognized intangible asset determined
to have an indefinite useful life is tested at least annually for impairment until its life is determined to no longer be indefinite. Intangible assets with estimable useful lives are valued at
acquisition cost, are amortized on a straight-line basis over their respective estimated useful lives (2 to 10 years) to their estimated residual values, and are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable.

Property, Plant and Equipment.Property, plant and equipment is valued at acquisition or manufacturing costs plus the fair value of
related asset retirement costs, if any and if reasonably estimable, less accumulated depreciation. Plant and equipment under capital leases are stated at the lower of present value of minimum lease
payments or fair value less accumulated amortization. Depreciation expense is recognized using the straight-line method. The costs of internally produced equipment and facilities include
all direct costs and allocable manufacturing overhead including depreciation charges as well as the fair value of related asset retirement cost, if any. Costs of the construction of certain
long-term assets include capitalized interest, which is amortized over the estimated useful life of the related asset. Property, plant and equipment are depreciated over the following
useful lives:

Buildings

10 to 50 yearsSite improvements

5 to 40 yearsTechnical equipment and machinery

3 to 30 yearsOther equipment, factory and office equipment

2 to 33 years


Leasing.Leasing includes all arrangements that transfer the right to use specified property, plant or equipment for a stated period of
time, even if the right to use such property, plant or equipment is not explicitly described in an arrangement. The Group is a lessee of property, plant and equipment and lessor of equipment,
principally passenger cars and commercial vehicles. All leases that meet certain specified criteria intended to represent situations where the substantive risks and rewards of ownership have been
transferred to the lessee are accounted for as capital leases. All other leases are accounted for as operating leases. Rent expense on operating lease where the Group is lessee is recognized over the
respective lease terms using the straight-line method. Equipment on operating leases where the Group is lessor is carried initially at its acquisition or production cost and is depreciated
over the contractual term of the lease, using the straight-line method, to its estimated residual value. The estimated residual value is initially determined using published third party
information as well as projections based on historical experience about expected resale values for the types of equipment leased.

Impairment of Long-Lived Assets.Long-lived assets held and used, such as property, plant and equipment and
purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be
recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to the estimated future undiscounted cash flows expected to be
generated by the asset or group of assets. If

F-16

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the
carrying amount of an asset or group of assets exceeds its estimated future undiscounted cash flows, an impairment charge is recognized in the Group's financial statements by the amount by which
the carrying amount of the asset or group of assets exceeds fair value of the asset or group of assets.

Assets and liabilities held for sale.Long-lived assets and disposal groups classified as held for sale (including
discontinued operations) are disclosed separately. Long-lived assets held for sale are reported at the lower of the carrying amount or fair value less costs to sell, and are no longer
depreciated. See Notes 4 and 10 for further information.

Non-fixed Assets.Non-fixed assets represent the Group's inventories, receivables, securities and cash, including
amounts to be realized in excess of one year. In the accompanying notes, the portion of assets to be realized in excess of one year has been disclosed.

Inventories.Inventories are valued at the lower of acquisition or manufacturing cost or market, cost being generally determined on the
basis of an average or first-in, first-out method ("FIFO"). Certain of the Group's U.S. inventories are valued using the last-in, first-out method
("LIFO"). Manufacturing costs comprise direct material and labor and applicable manufacturing overheads, including depreciation charges.

Marketable Securities and Investments.Securities and certain investments are accounted for at fair value, if fair value is readily
determinable. Unrealized gains and losses on trading securities, representing securities bought and held principally for the purpose of near term sales, are included in earnings. Unrealized gains and
losses on available-for-sale securities are included as a component of accumulated other comprehensive loss, net of applicable taxes, until realized. All other securities and
investments are recorded at cost. A decline in value of any available-for-sale security or cost method investment below cost that is deemed to be other than temporary results
in an impairment charge to earnings that reduces the carrying amount of the security or the cost method investment to fair value establishing a new cost basis.

Valuation of Retained Interests in Securitized Sold Receivables.DaimlerChrysler retains residual beneficial interests in certain pools of
sold and securitized retail and wholesale finance receivables. The retained interest balance represents DaimlerChrysler's right to receive collections on the transferred receivables in excess of
amounts required by the securitization trust to pay the interest and principal to investors, servicing fees, and other required payments. The Group determines the value of its retained interests using
discounted cash flow modeling upon the sale of receivables and at the end of each quarter. The valuation methodology considers historical and projected principal and interest collections on the
securitized sold receivables, expected future credit losses arising from the collection of the securitized sold receivables, and estimated repayment of principal and interest on notes issued to third
parties and secured by the sold receivables.

The
Group recognizes unrealized gains or losses attributable to the change in the fair value of the retained interests, which are recorded in a manner similar to
available-for-sale securities, net of related income taxes as a component of accumulated other comprehensive loss until realized. The Group is not aware of an active market for
the purchase or sale of retained interests, and accordingly, determines the estimated fair value of the retained interests by discounting the estimated cash flow releases (the cash-out
method) using a discount rate that is commensurate with the risks involved. In determining the fair value of the retained interests, the Group estimates the future rates of prepayments, net credit
losses and forward yield curves. These estimates are developed by evaluating the historical experience of comparable receivables and the specific characteristics of the receivables sold, and forward
yield curves based on trends in the economy.

An
impairment adjustment to the carrying value of the retained interests is recognized in the period a decline in the estimated cash flows below the cash flows inherent in the cost basis
of an individual retained interest (the pool-by-pool method) is considered to be other than temporary. Other than temporary impairment adjustments are generally recorded as a
reduction of revenue.

F-17

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Cash Equivalents.The Group's liquid assets are recorded under various balance sheet captions as more fully described in Note 21.
For purposes of the consolidated statements of cash flows, the Group considers those highly liquid instruments with original maturities of three months or less to be cash equivalents.

Derivative Instruments and Hedging Activities.DaimlerChrysler uses derivative financial instruments such as forward contracts, swaps,
options, futures, swaptions, forward rate agreements, caps and floors for hedging purposes. The accounting of derivative instruments is based upon the provisions of SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. On the date a derivative contract is entered into, DaimlerChrysler designates the derivative as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a
recognized asset or liability (cash flow hedge), or a hedge of a net investment in a foreign operation. DaimlerChrysler recognizes all derivative instruments as assets or accrued liabilities on the
balance sheet and measures them at fair value, regardless of the purpose or intent for holding them. Changes in the fair value of derivative instruments are recognized periodically either in earnings
or stockholders' equity, as a component of accumulated other comprehensive loss, depending on whether the derivative is designated as a hedge of changes in fair value or cash flows. For derivatives
designated as fair value hedges, changes in fair value of the hedged item and the derivative are recognized currently in earnings. For derivatives designated as cash flow hedges, fair value changes of
the effective portion of the hedging instrument are recognized in accumulated other comprehensive loss on the balance sheet, net of applicable taxes, until the hedged item is recognized in earnings.
The ineffective portions of the fair value changes are recognized in earnings immediately. Derivatives not meeting the criteria for hedge accounting are marked to market and impact earnings.
SFAS 133 also requires that certain derivative instruments embedded in host contracts be accounted for separately as derivatives.

Further
information on the Group's financial instruments is included in Note 33.

Commitments and Contingencies.Liabilities for loss contingencies are recorded when it is probable that a liability to third parties has
been incurred and the amount can be reasonably estimated. Liabilities for loss contingencies are regularly adjusted as further information develops or circumstances change.

The
accrued liability for expected warranty-related costs is established when the product is sold, upon lease inception, or when a new warranty program is initiated. Estimates for
accrued warranty costs are primarily based on historical experience. Because portions of the products sold and warranted by the Group contain
parts manufactured (and warranted) by suppliers, the amount of warranty costs accrued also contains an estimate of recoveries from suppliers.

The
accrued liability for sales incentives is based on the estimated cost of the sales incentive programs and the number of vehicles held in dealers' inventory. The majority of vehicles
held in dealers' inventory are sold to consumers within the next quarter and the sales incentives accrued liability is adjusted to reflect recent actual experience.

In
accordance with Financial Accounting Standards Board ("FASB") Interpretation ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Othersan interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34" DaimlerChrysler recognizes, at
inception of a guarantee, a liability for the fair value of the non-contingent portion of the obligation due to the issuance of the guarantee. DaimlerChrysler applies these provisions for
guarantees issued or modified after December 31, 2002. If performance under the guarantee is probable and the amount can be reasonably estimated, a liability for the contingent obligation is
recognized for any guarantee regardless of its date of issuance. Further information on the Group's obligations under guarantees is included in Note 25b and 32.

F-18

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DaimlerChrysler
records the fair value of an asset retirement obligation in the period in which it incurs a legal obligation associated with the retirement of tangible
long-lived assets and subsequently adjusts the carrying amount for changes in expected cash flows and the passage of time.

Deposits from Direct Banking Business.Demand deposit accounts are classified as financial liabilities. Interest paid on demand deposit
accounts is recognized in cost of sales as incurred.

Stock-Based Compensation.DaimlerChrysler adopted the fair value recognition provisions of SFAS 123, "Accounting for Stock-Based
Compensation," prospectively to all employee awards granted, modified, or settled after January 1, 2003. Compensation expense for all stock-options granted after December 31, 2002, has
been measured principally at the grant date based on the fair value of the equity award using a modified Black-Scholes option-pricing model. Compensation expense is recognized over the employee
service period with an offsetting credit to equity (paid-in capital). DaimlerChrysler options granted prior to January 1, 2003, continue to be accounted for using the intrinsic
value based approach under Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. Compensation expense under APB 25 was
measured at the grant date based on the difference between the strike price of the equity award and the fair value of the underlying stock as of the date of grant. The following table illustrates the
effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

|                                                                                                                                            |  | Year ended December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|Net income                                                                                                                                  |  | 2,846                   |  
|Add: Stock-based employee compensation expense included in reported net income, net of related tax effects                                  |  | 57                      |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |  | (59                     | )
|                                                                                                                                            |  |                         |  
|Pro forma net income                                                                                                                        |  | 2,844                   |  
|                                                                                                                                            |  |                         |  
|Earnings per share (in €):                                                                                                                  |  |                         |  
|Basic                                                                                                                                       |  | 2.80                    |  
|Basic  pro forma                                                                                                                           |  | 2.80                    |  
|Diluted                                                                                                                                     |  | 2.80                    |  
|Diluted  pro forma                                                                                                                         |  | 2.79                    |  

Further
information on stock-based compensation is included in Note 24.

New Accounting Standards Not Yet Adopted.In December 2004 the FASB issued SFAS 123 (revised 2004), "Share-Based Payment"
("SFAS 123R"). SFAS 123R establishes the accounting for transactions in which an entity exchanges its equity instruments for goods or services. SFAS 123R also addresses
transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those
equity instruments. Equity-classified awards are measured at grant date fair value and are not subsequently remeasured. Liability-classified awards are remeasured to fair value at each balance sheet
date until the award is settled. SFAS 123R originally applied to all awards granted after July 1, 2005, and to awards modified, repurchased or cancelled after that date. The effective
date of SFAS 123R was deferred by an SEC Rule until the beginning of the first annual period beginning after June 15, 2005. DaimlerChrysler will adopt SFAS 123R as of
January 1, 2006, using a modified version of

F-19

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prospective
application. DaimlerChrysler expects the cumulative effect from the adoption of SFAS 123R to increase expense by €9 million in the first quarter of 2006.

In
June 2005 the FASB ratified EITF 05-5, "Accounting for Early Retirement or Postemployment Programs with Specific Features (Such As Terms Specified in Altersteilzeit
Early Retirement Arrangements)." EITF 05-5 provides guidance on the accounting for the German Altersteilzeit ("ATZ") early retirement program and other types of benefit arrangements with
the same or similar terms. The ATZ program is an early retirement program in Germany designed to create an incentive for employees within a certain age group, to transition from full or
part-time employment into retirement before their legal retirement age. The ATZ program provides the employee with a bonus which is reimbursed by subsidies from the German government if
certain conditions are met. According to EITF 05-5, the bonuses provided by the employer should be accounted for as postemployment benefits under SFAS 112, "Employer's Accounting
for Postretirement Benefits," with compensation cost recognized over the remaining service period beginning when the individual agreement is signed by the employee and ending when the active service
period ends. The government subsidy should be recognized when the employer meets the necessary criteria and is entitled to the subsidy. The effect of applying EITF 05-5 should be
recognized prospectively as a change in accounting estimate in fiscal years beginning after December 15, 2005. DaimlerChrysler expects the adoption of EITF 05-5 to result in income
after taxes of approximately €0.1 billion from the reduction of the related provision that will be recognized in the income of the first quarter 2006 in the Group's consolidated
financial statements.

2. Scope of Consolidation and Certain Variable Interest Entities

Scope of Consolidation.DaimlerChrysler comprises, besides DaimlerChrysler AG, 494 (2004: 485) German and
non-German subsidiaries as well as 4 (2004: 4) companies (variable interest entities) that have been consolidated in accordance with the requirements of FASB Interpretation
No. 46 (revised December 2003) "Consolidation of Variable Interest Entities ("FIN 46R")". A total of 96 (2004: 105) companies are
accounted for in the consolidated financial statements using the equity method of accounting. During 2005, 18 subsidiaries were included in the consolidated financial statements for the first time. A
total of 9 subsidiaries were no longer included in the consolidated group. The effects of changes in the Group's consolidated balance sheets and the consolidated statements of income, if material, are
explained further in the notes to the consolidated financial statements. In addition, 3 (2004: 3) companies administering pension funds whose assets are subject to restrictions have not been
included in the consolidated financial statements. The impact of non-consolidated subsidiaries (affiliated companies) and investments that were not accounted for using the equity method of
accounting (associated companies) on the consolidated financial position, results of operations or cash flows of the Group was neither material for individual companies nor in the aggregate.

Variable Interest Entities.DaimlerChrysler applied the provisions FIN 46R to special purpose entities as of December 31, 2003, and
to all other entities as of March 31, 2004. The implementation of FIN 46R resulted in the consolidation of several leasing arrangements that were off-balance in the past and qualify
as special purpose entities as defined in FIN 46R. DaimlerChrysler is the primary beneficiary of those structures and, accordingly, consolidated them effective December 31, 2003. Under the
leasing arrangements, variable interest entities were established which raised funds by issuing either debt or equity securities to third party investors. The variable interest entities used the debt
and equity proceeds to purchase property and equipment, which is leased by the Group and used in the normal course of business. At the end of the lease term, DaimlerChrysler generally has the option
to purchase the property and equipment or re-lease the property and equipment under new terms. Total assets of those consolidated entities amount to €0.5 billion and
€0.7 billion and total liabilities amount to €0.7 billion and €0.8 billion as of December 31, 2005 and 2004, respectively.
The cumulative effect of consolidating these special purpose entities on the Group's consolidated statement of income in 2003 was €(30) million, net of taxes of
€35 million (€(0.03) per share). The assets consist primarily of property, plant and

F-20

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equipment
that generally serves as collateral for the entities' long-term borrowings. The creditors of these entities do not have recourse to the general credit of the Group, except to the
extent of guarantees provided.

In
addition, DaimlerChrysler has equity or other variable interests in a number of other variable interest entities where it is not the primary beneficiary. Among these entities are Toll
Collect, multi-seller bank conduits, and other variable interest entities. Note 3 provides disclosure about the Group's involvement in Toll Collect, while multi-seller bank conduits are
discussed in Note 34. DaimlerChrysler's aggregate maximum exposure to loss arising from its investments in the other variable interest entities was €0.4 billion as of
December 31, 2005.

3. Significant Equity Method Investments

EADS.At December 31, 2005, the European Aeronautic Defence and Space Company EADS N.V. ("EADS") was the
most significant investment accounted for under the equity method. The Group's legal ownership percentage in EADS as of December 31, 2005, was 30%.

On
July 7, 2004, DaimlerChrysler entered into a securities lending agreement with Deutsche Bank AG concerning 22,227,478 EADS shares (3% of the voting stock). The securities
lending has several tranches with terms ranging between three and four years. As collateral, DaimlerChrysler received a lien on a securities account of equivalent value as the shares loaned by
DaimlerChrysler. Because this transaction does not meet the criteria of a sale, the loaned shares continue to be carried as investments on the balance sheet and, accordingly, our proportionate share
of EADS' income is still accounted at a percentage of 33%.

As
of September 30, 2003, DaimlerChrysler determined that the decline in fair value below the carrying value of its investment in EADS was other than temporary. To evaluate the
fair value of the investment the Group used the market price of a share of EADS common stock, multiplied by the number of shares owned. In making that determination, DaimlerChrysler considered the
duration and severity of the decline and the reasons for the decline. Although EADS is involved in a variety of businesses, it is primarily an aircraft manufacturer because of its Airbus division,
which manufactures commercial aircraft and represents more than 60% of EADS' revenues. As a consequence, EADS' share price declined as a result of the negative outlook for the airline industry in the
aftermath of the terrorist attacks at September 11, 2001, the outbreak of the SARS disease, the war in Iraq and the decline of the U.S. dollar compared to the euro which further depressed
market participants' expectations for the commercial airline industry. Consequently, DaimlerChrysler reduced the carrying value of its investment in EADS by €1.96 billion to its
market value, based on the quoted market price, which approximated €3.5 billion at that time. As a result of the impairment a new cost basis was established.

DaimlerChrysler's
equity in the earnings or losses of EADS was €324 million, €249 million and €(1,845) million in 2005, 2004
and 2003, respectively, including investor-level adjustments. DaimlerChrysler's equity in the earnings or losses of EADS is shown in the Group's statements of income within "Financial income
(expense), net," except for the other than temporary impairment of €1,960 million in 2003, which is included in a separate caption within "financial income (expense), net."

The
carrying amount of DaimlerChrysler's investment in EADS at December 31, 2005 and 2004 was €3,564 million and €3,854 million,
respectively. DaimlerChrysler's share of the underlying reported net assets of EADS exceeded the carrying value of DaimlerChrysler's investment at December 31, 2005 and 2004, by
€1,899 million, primarily as a result of the impairment recognized in the third quarter of 2003. The market value at December 31, 2005, of DaimlerChrysler's investment in
EADS based on quoted market prices was €8,507 million.

F-21

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The
following table presents summarized U.S. GAAP financial information for EADS, which was the basis for applying the equity method in the Group's consolidated financial statements:

EADS



2005

2004

2003Revenues

32,542

30,977

27,650Net income

980

753

348


Balance sheet information2

Fixed assets

32,462

29,331Non-fixed assets

36,935

34,525Total assets

69,397

63,856Stockholders' equity

16,557

17,434Minority interests

1,811

1,971Accrued liabilities

10,825

9,299Other liabilities

40,204

35,152Total liabilities and stockholders' equity

69,397

63,856


---

DaimlerChrysler is providing the following condensed consolidated financial information about EADS as of December 31, 2005 and 2004 and for
the years ended December 31, 2005, 2004 and 2003 (in millions of €):

Condensed
consolidated income statement information:

Year ended
December 31, 2005

Year ended
December 31, 2004

Year ended
December 31, 2003Revenues

32,172

29,512

28,641Cost of sales

(26,014
)
(23,929
)
(23,001
)Gross margin

6,158

5,583

5,640Selling, administrative and other expenses

(2,217
)
(2,181
)
(2,444
)Research and development

(2,349
)
(2,273
)
(2,168
)Other income

243

355

217Income before financial income

1,835

1,484

1,245Financial result

83

(132
)
(4
)Income before income taxes

1,918

1,352

1,241Income taxes

(706
)
(587
)
(494
)Minority interests

(199
)
(73
)
(54
)Cumultative effects of changes in accounting principles

0

0

10Net income

1,013

692

703


F-22

---



Condensed
consolidated balance sheet information:

At December 31, 2005

At December 31, 2004Goodwill

10,902

10,851Other intangible assets

404

368Property, plant and equipment, net

11,662

10,134Investments and long-term financial assets

6,508

6,360Equipment on operating leases, net

2,080

2,458Fixed assets

31,556

30,171Inventories

13,964

10,728Trade receivables

3,866

3,564Other receivables

6,025

10,998Securities

1,040

466Cash, and cash equivalents

8,951

8,073Non-fixed assets

33,846

33,829Deferred taxes

2,729

2,667Prepaid expenses

846

941Assets classified as held for sale

881

0Total assets

69,858

67,608Stockholders' equity

15,932

18,397Minority interests

1,663

2,243Accrued liabilities

11,282

9,609Financial liabilities

6,299

6,205Trade and other liabilities

30,725

25,275Liabilities

37,024

31,480Deferred taxes

2,167

4,058Deferred income

1,728

1,821Liabilities directly associated with assets held for sale

62

0Total liabilities

52,263

46,968Total liabilities and stockholders' equity

69,858

67,608


F-23

---



Condensed consolidated cash flow information:

Year ended
December 31, 2005

Year ended
December 31, 2004

Year ended
December 31, 2003Net cash provided by operating activities

4,829

4,959

3,905Purchases of non-current assets

(2,990
)
(3,724
)
(3,166
)Proceeds from disposal of non-current assets

489

152

301Other

(546
)
19

(373
)Net cash used for investing activities

(3,047
)
(3,553
)
(3,238
)Change in financial liabilities

(330
)
337

1,199Cash distribution to shareholders

(396
)
(320
)
(240
)Other

(193
)
(102
)
(40
)Net cash provided by (used for) financing activities

(919
)
(85
)
919Effect of foreign exchange rate changes and other valuation adjustments on cash and cash equivalents

15

(2
)
(79
)Net increase in cash and cash equivalents

878

1,319

1,507Cash and cash equivalents:At beginning of year

8,073

6,754

5,247At end of year

8,951

8,073

6,754


MMC.On April 22, 2004, the Board of Management and the Supervisory Board of DaimlerChrysler AG decided to withdraw from providing
any financial support to Mitsubishi Motors Corporation ("MMC") and not to participate in a recapitalization of MMC anticipated to occur in July 2004. At the time of this decision,
DaimlerChrysler held 37% of MMC's voting stock and was represented by 3 of the 8 (37.5%) of the members of MMC's board of directors.

Between
DaimlerChrysler's Board vote on April 22, 2004, and the MMC shareholder meeting on June 29, 2004, MMC worked with its other significant shareholders, lenders and
potential investors on a restructuring plan that included a recapitalization of MMC which was presented for vote at the June 29 shareholder meeting. DaimlerChrysler was not party to those
discussions nor did DaimlerChrysler participate in any of the measures set forth in the restructuring plan; however, DaimlerChrysler's concurrence to the measures was required as its ownership level
at such time provided it with veto powers.

On
June 29, 2004, the shareholders of MMC approved the restructuring plan which resulted in a new investor obtaining a 33.3% interest in MMC's voting stock, thereby becoming MMC's
largest shareholder, and in the issuance of three classes of convertible preferred instruments to other investors and some existing MMC shareholders (not including DaimlerChrysler).

The
new investor that acquired a 33.3% voting interest entered into a contractual agreement with MMC that awarded it the unilateral right to make significant operating decisions. In
addition, the new shareholder acted in concert with other large institutional shareholders who together with the new shareholder own a majority of the voting stock. Accordingly, such Japanese
shareholder groups who acted in concert in the recapitalization were in a position to control MMC.

F-24

---



The
MMC board of directors was comprised of 12 board members in total, with DaimlerChrysler's board representation reduced to 2 board members (16.7%) which did no longer enable
DaimlerChrysler to block or veto any matters coming to a vote at board level.

DaimlerChrysler's
ownership interest in voting stock was diluted from 37.0% to 24.7% in the second quarter of 2004. The dilution below one-third was significant because
Japanese laws require a one-third minimum quorum to afford shareholder protective rights, e.g. in cases of the dissolution of the company, the sale of all or substantial part of the
business of the company, or agreements to merge with other companies. As a result, DaimlerChrysler no longer had the blocking and veto rights that DaimlerChrysler believes are essential to exercise
significant influence by ownership interest. DaimlerChrysler surrendered significant rights by agreeing not to oppose the restructuring plan. Upon conversion of the mandatory convertible preferred
instruments issued to other MMC investors, DaimlerChrysler's interest in MMC's voting stock would have been further diluted to below 11%.

Furthermore,
all executive officers appointed by DaimlerChrysler resigned and all other DaimlerChrysler expatriates, in total more than 50 managers that were assigned to this investee,
left MMC prior to June 30, 2004, and returned to DaimlerChrysler. Even prior to the June 29, 2004 shareholder meeting, an announcement was made on May 24, 2004 informing MMC
employees that DaimlerChrysler's assignees had been released from their managerial responsibilities and had delegated their responsibilities to other managers, none of whom were related to
DaimlerChrysler.

Based
on the factors outlined above, DaimlerChrysler lost its ability to significantly influence MMC's operating and financial policies. Consequently, as of the annual shareholders'
meeting of MMC on June 29, 2004, DaimlerChrysler ceased to account for its investment in MMC using the equity method and has accounted for MMC shares as a marketable security at fair value
until the disposition of such shares (see Note 20).

Through
June 29, 2004, the results from MMC were included in the Group's consolidated statements of income using the equity method of accounting. The Group's proportionate share
in the negative results of MMC through June 29, 2004 and 2003, was €(655) million and €(281) million, respectively. The amount for 2004 includes
the effects from the dilution of the Group's interest in MMC of €(135) million and related realized gains from currency hedging of the net investment of
€195 million (after tax €120 million). These effects from the dilution as well as these realized gains from currency hedging are reflected in
DaimlerChrysler's consolidated statement of income in the line item "financial income (expense), net".

In
November 2005, DaimlerChrysler sold all of its MMC shares for €970 million in cash. Due to the gain on that sale DaimlerChrysler's financial income and
net income for 2005 increased by €681 million and €502 million, respectively.

The
following table presents summarized U.S. GAAP financial information for MMC, which was the basis for applying the equity method in the Group's consolidated financial statements:

MMC



2004

2003Revenues

9,858

27,129Net loss

(1,730
)
(759
)


---

F-25

---



Toll Collect.In 2002, our subsidiary DaimlerChrysler Financial Services AG (formerly
DaimlerChrysler Services AG), Deutsche Telekom AG and Compagnie Financiere et Industrielle des Autoroutes S.A. (Cofiroute) contracted with the Federal Republic of Germany to develop and, within a
joint venture company, install and operate a system for electronic collection of tolls from all commercial vehicles over 12t GVW using German highways. DaimlerChrysler Financial Services AG and
Deutsche Telekom AG each hold a 45% equity interest and Cofiroute holds the remaining 10% equity interest in both the consortium (Toll Collect GbR) and the joint venture company (Toll Collect GmbH)
(together "Toll Collect"). DaimlerChrysler accounts for its 45% ownership interest in Toll Collect using the equity method of accounting. The Group has a significant variable interest in Toll Collect,
a variable interest entity, but determined that it is not the primary beneficiary and therefore not required to consolidate Toll Collect. In the operating agreement, each of the consortium members
(including DaimlerChrysler Financial Services AG) has provided guarantees supporting the obligations of Toll Collect GmbH towards the Federal Republic of Germany. These guarantees are described in
more detail below. Cofiroute's risks and obligations are limited to €70 million. DaimlerChrysler Financial Services AG and Deutsche Telekom AG are jointly obliged to indemnify
Cofiroute for amounts exceeding this limitation.

The
following table presents summarized U.S. GAAP financial information for Toll Collect, which was the basis for applying the equity method in the Group's consolidated financial
statements:

Toll Collect



2005

2004

2003Revenues

522



Net loss

(143
)
(1,071
)
(206
)


Balance sheet information as of December 31

Noncurrent assets

457

458Current assets

467

77Total assets

924

535Equity

(789
)
(934
)Noncurrent liabilities

38

1,173Current liabilities

1,675

296Total liabilities and equity

924

535


During the construction period of the toll collection system, the most significant assumptions used in accounting for the investment in Toll
Collect related to the launch date of the toll collection system, the estimated cost to design and construct the system, and the operation of the system.

According
to the Operating Agreement, the toll collection system was to be operational no later than August 31, 2003. After a delay in the launch date of the toll collection
system, which resulted in a loss of revenue for Toll Collect and in payments of contractual penalties for delays, the toll collection system was introduced on January 1, 2005, with
on-board units that allowed for slightly less than full technical performance in accordance with the technical specification (phase 1). On January 1, 2006, the toll collection
system was installed and started to operate with full effectiveness as specified in the Operating Agreement (phase 2). On December 20, 2005 Toll

F-26

---



Collect
GmbH received a preliminary operating permit as specified in the Operating Agreement. Toll Collect GmbH expects to receive a final operating permit in April 2006. Failure to obtain the
final operating permit by January 1, 2007, at the latest, may lead to termination of the operating agreement by the Federal Republic of Germany.

With
the successful start of phase 1, for the period beginning January 1, 2005, Toll Collect GmbH received remuneration for the infrastructure and the operation of the toll
collection system from the Federal Republic of Germany. Certain immaterial penalties have been set off from the remuneration by the Federal Republic of Germany. According to the implementation
agreement of April 23, 2004, the Federal Republic of Germany paid Toll Collect GmbH only 95% of the fees which would otherwise had been payable under the Operating Agreement due to the slightly
reduced technical functionality during phase 1.

Failure
to perform various obligations under the Operating Agreement may result in penalties, additional revenue reductions and damage claims that could become significant over time.
However, penalties and revenue reductions are capped at €75 million per year until September 30, 2006, at €150 million per year thereafter until
the final operating permit has been issued, and at €100 million per year following issuance of the final operating permit. These cap amounts are subject to a 3% increase for
every year of operation.

During
phase 1 any offsetting with claims of the Federal Republic of Germany stemming from the period before January 1, 2005, including contractual penalties and damages, was
excluded. The exclusion of offsetting according to the implementation agreement does not cover damages and contractual penalties arising with the beginning of phase 1. In phase 2 there are no
limitations to offsetting by the Federal Republic of Germany. In case of any offsetting Toll Collect GmbH insofar may not receive remuneration. In case of offsetting, the consortium members may be
required to provide Toll Collect GmbH with sufficient liquidity.

The
Operating Agreement calls for submission of all disputes related to the toll collection system to arbitration. The Federal Republic of Germany has initiated arbitration proceedings
against DaimlerChrysler Financial Services AG, Deutsche Telekom AG and the consortium. According to the statement of claims received in August 2005, the Federal Republic of Germany is seeking
damages, including contractual penalties and reimbursement of lost revenues that allegedly arose from delays in the operability of the toll collection system. See Note 31 for additional
information.

Each
of the consortium members (including DaimlerChrysler Financial Services AG) have provided guarantees supporting the obligations of Toll Collect GmbH towards the Federal Republic of
Germany relating to the completion and operation of the toll collection system, which are subject to specific triggering events. In addition, DaimlerChrysler AG has guaranteed bank loans obtained by
the consortium. The guarantees are described in detail below:



F-27

---





Collect
GmbH is subject to revenue reductions caused by underperformance, if the Federal Republic of Germany is successful in claiming lost revenues against Toll Collect GmbH for any period the system
was not fully operational or if Toll Collect GmbH incurs penalties that may become payable under the above mentioned agreements. If such penalties, revenue reductions and other events reduce Toll
Collect GmbH's equity to a level that is below the minimum equity percentage agreed upon, the consortium members are obligated to fund Toll Collect GmbH's operations to the extent necessary to reach
the required minimum equity.

While
DaimlerChrysler's maximum future obligation resulting from the guarantee of the bank loan can be determined (€600 million), the Group is unable to accurately
estimate its maximum exposure to loss resulting from the guarantee of obligations and the guarantee in form of the equity maintenance undertaking due to the various uncertainties described above.
Therefore, in addition to the maximum exposure from the guarantee of the bank loan and the risks already provided for under the established accruals, the Group's exceeding maximum exposure to loss
could be material.

debis AirFinance.In November 1995, DaimlerChrysler assumed a 45% equity ownership interest in debis AirFinance B.V. ("dAF"), an
Amsterdam registered Private Limited Liability Company that was established for purposes of leasing aircraft and related technical equipment to airlines and financial intermediaries. Several banks
held the remaining ownership interests in dAF. DaimlerChrysler held significant variable interests in dAF, a variable interest entity, but determined that it was not the primary beneficiary and
therefore not required to consolidate dAF. DaimlerChrysler's involvement with dAF consisted primarily of its equity interest and also subordinated loans receivable and unsecured loans provided to dAF.
In the fourth quarter of 2004, DaimlerChrysler recorded impairment charges of €222 million relating to its investment which were based on estimates of the fair value of
DaimlerChrysler's proportionate share of dAF's underlying equity and of the loans provided to dAF.

In
June 2005, as part of the Group's ongoing strategy to focus on its core automotive business, DaimlerChrysler sold its 45% equity interest in dAF and its outstanding
subordinated loans receivable and unsecured loans to dAF for €325 million in cash to Cerberus Capital Management, L.P., subject to indemnification for exposures incurred prior
to the sale up to a maximum of $30 million. The sale did not have a material impact on the Group's net income.

Prior
to the sale, DaimlerChrysler accounted for its investment in dAF using the equity method of accounting.

4. Acquisitions and Dispositions

Acquisitions

MFTBC.On March 14, 2003, as part of the Group's global commercial vehicle strategy, DaimlerChrysler
acquired from MMC a 43% non-controlling interest in Mitsubishi Fuso Truck and Bus Corporation ("MFTBC") for €764 million in cash plus certain direct acquisition
costs. MFTBC is involved in the development, design, manufacture, assembly and sale of small, mid-size and heavy-duty trucks and buses, primarily in Japan and other Asian
countries. Also, on March 14, 2003, ten Mitsubishi Group companies entered into a separate share sale and purchase agreement with MMC pursuant to which they purchased from MMC 15% of MFTBC's
shares for approximately €266 million in cash. On March 18, 2004, DaimlerChrysler acquired from MMC an additional 22% interest in MFTBC for
€394 million in cash, thereby reducing MMC's interest in MFTBC to a non-controlling 20%. The aggregate amount paid by DaimlerChrysler for its 65% controlling
interest in MFTBC was €1,251 million, consisting of consideration paid plus direct acquisition costs in 2003 and 2004 (€770 million and
€394 million, respectively), plus a re-allocation of €87 million of the initial purchase price of MMC pertaining to MFTBC and previously
included in the Group's investment in MMC, which was an equity method investee of DaimlerChrysler

F-28

---



when
the business combination with MFTBC was consummated. DaimlerChrysler has included the consolidated results of MFTBC beginning at the consummation date in the Group's Commercial Vehicles segment.
Prior to then, the Group's proportionate share of MFTBC's results was included in the Commercial Vehicles segment using the equity method of accounting (see also Note 35).

Subsequent
to DaimlerChrysler's acquisition of a controlling interest in MFTBC, a number of quality problems concerning MFTBC vehicles spanning production years since July 1974
were identified. During the second and third quarters of 2004, DaimlerChrysler was able to comprehensively assess those quality issues and define necessary technical solutions and a course of action
to implement them. The estimates of cost in the interim periods of 2004 were based on the status of the investigation and DaimlerChrysler's best estimate of the probable costs to be incurred to
address and remedy the identified quality issues.

Of
the €1.1 billion quality costs recorded in 2004 by MFTBC, (i) €0.1 billion was recognized in "Financial income (expense), net" in
the statement of income representing DaimlerChrysler's proportionate share of the results of MFTBC, which was included on a one month lag relating to amounts attributed to refinements to estimates
that were made before MFTBC was fully consolidated, (ii) €0.7 billion to cost of sales representing the sum of the 43% attributed to the March 2003 investment (for
which the purchase price allocation period was closed) and the 35% of the costs attributed to minority shareholders of MFTBC; (iii) €0.2 billion to goodwill attributed to
the 22% interest acquired in 2004; and (iv) €0.1 billion to deferred tax assets.

DaimlerChrysler
assigned €95 million of the aggregate preliminary purchase price to registered trademarks that are not subject to amortization,
€81 million to technology with a useful life of 10 years, €49 million to other identifiable intangible assets and
€14 million to acquired in-process R&D that was expensed in the periods the investments were made. In addition, DaimlerChrysler assigned
€6,206 million to tangible assets acquired and €5,469 million to liabilities assumed. The remaining €275 million was allocated to
goodwill of the Commercial Vehicles segment and is not expected to be deductible for tax purposes.

During
the first quarter of 2005, MFTBC finished investigating the product quality reports and finalized its conclusions about the issues that required action. The level of information
reached during this process enabled DaimlerChrysler to refine its estimate of the probable cost and an additional amount of €5 million was recorded in the first quarter of 2005.
MFTBC expects to be able to complete the majority of the field campaigns by the end of the first quarter of 2006.

Under
the two share purchase agreements under which DaimlerChrysler acquired 43% and 22%, respectively, of MFTBC shares, DaimlerChrysler had the right to a price adjustment if the
warranty reserve recorded on the books of MFTBC proved to be inadequate. Negotiations with MMC resulted in a settlement agreement on March 4, 2005, in which the parties agreed on such a price
adjustment. Under the terms of the settlement agreement, DaimlerChrysler received (i) MMC's remaining 20% stake in MFTBC, (ii) a cash payment of €72 million,
(iii) promissory notes having an aggregate face value of €143 million, payable in four equal installments over the next four years and (iv) certain other assets
and rights pertaining to the distribution of MFTBC products in one Asian market. The parties also clarified the terms of their cooperation under other, ongoing agreements. The fair value assigned to
the consideration received from MMC was €0.5 billion and has been allocated to income and goodwill consistent with DaimlerChrysler's accounting for the quality issues subsequent
to the business combination. Accordingly, €0.3 billion was recognized as a reduction of cost of sales in the first quarter of 2005 based on DaimlerChrysler's proportionate
after-tax loss recorded in the
second and third quarter of 2004 relating to quality measures and €0.2 billion was recognized as reduction of goodwill.

As
a result of the settlement with MMC, DaimlerChrysler's controlling interest in MFTBC increased from 65% to 85% and the aggregate purchase price after giving effect to the price
reduction was €1,014 million. As of

F-29

---



June 30,
2005, goodwill of €53 million related to final purchase price allocation of MFTBC was allocated to the Commercial Vehicles segment. The goodwill is not expected
to be deductible for tax purposes.

Dispositions

Off-Highway business.In September 2005, DaimlerChrysler acquired the 11.65% interest in MTU
Friedrichshafen GmbH ("MTU-F") held by minority shareholders for €171 million in cash, including direct transaction costs. DaimlerChrysler has subsequently owned
100% of the MTU-F shares. As a result of this transaction, DaimlerChrysler recorded a preliminary goodwill of €134 million that was allocated to goodwill of the
Other Activities segment.

On
December 27, 2005, as part of the Group's ongoing strategy to focus on its core automotive business, DaimlerChrysler entered into a share sale and purchase agreement with the
Swedish investor group EQT regarding the sale of a major portion of its Off-Highway Business Unit, including the MTU-F Group and the Off-Highway activities of
Detroit Diesel Corporation. The sale price, which still has to be determined finally, is based on an enterprise value of €1,600 million which is subject to adjustments for cash,
debts, pensions and a standardized net working capital.

The
closing of the transaction, which is expected to occur in the first quarter of 2006, is subject to certain closing conditions, e.g. approval of the relevant anti-trust
authorities. Furthermore, the transaction has to be submitted for review by the Federal Ministry of Economics and Technology under the German Foreign Trade and Payments Act (see Note 10 for
presentation).

ALF.In the third quarter of 2005, as part of the Group's ongoing strategy to focus on its core automotive business, Freightliner, a
wholly-owned U.S. subsidiary of DaimlerChrysler, entered into an agreement to sell major parts of its subsidiary American LaFrance ("ALF"), a fire-truck manufacturer, to an U.S. investment
company. The sale was closed in the fourth quarter of 2005. Prior to the sale and based upon the agreed purchase price, Freightliner recorded asset impairment charges in 2005 of
€87 million, related to the write-down of inventories and certain long-lived assets, which are reflected in cost of sales and other operating expenses of
the Commercial Vehicles segment.

Hyundai.In May 2004, as part of the realignment of its strategic alliance with Hyundai Motor Company ("HMC"), DaimlerChrysler
terminated discussions with HMC regarding the formation of a commercial vehicles joint venture. Also in May 2004, DaimlerChrysler sold its non-controlling 50% interest in
DaimlerHyundai Truck Corporation ("DHTC") to HMC for a total pretax gain of €60 million (€27 million was recognized in other income and
€33 million is recognized in financial income (expense), net), which is attributed to the Commercial Vehicles segment. In August 2004, as part of the realignment of its
strategic alliance with HMC, DaimlerChrysler sold its 10.5% stake in HMC for €737 million in cash, resulting in a pretax gain of €252 million that is
included in financial income (expense), net.

MTU Aero Engines.On December 31, 2003, as part of the Group's ongoing strategy to focus on its core automotive business,
DaimlerChrysler sold its 100% equity interest in MTU Aero Engines GmbH ("MTU Aero Engines") to Kohlberg, Kravis Roberts & Co. Ltd. ("KKR"), an investment company. The sales price for the
operative business of MTU Aero Engines amounted to €1,450 million. Excluding cash, cash equivalents and debts, which remain at MTU Aero Engines, the net sales price amounted to
€1,052 million. Consideration received by DaimlerChrysler included a note receivable from KKR and cash of €877 million. As a result of this transaction,
DaimlerChrysler paid a compensation of $250 million to United Technologies Corporation, the parent company of Pratt & Whitney, in January 2004. In 2003, DaimlerChrysler realized a
gain of €882 million from this sale, net of taxes of €149 million. The operating results and cash flows from MTU Aero Engines' business are included
in

F-30

---



DaimlerChrysler's
consolidated financial statements through December 31, 2003. However the operating results and gain are presented as discontinued operations in accordance with SFAS 144
(see Note 10).

Other dispositions.In November 2003, as part of the Group's ongoing strategy to focus on its core automotive business,
DaimlerChrysler sold a 60% interest in Mercedes-Benz Lenkungen GmbH, its 100% interest in Mercedes-Benz Lenkungen U.S. LLC and its 100% interest in the steering activities of
DaimlerChrysler do Brasil Ltda. to ThyssenKrupp Automotive AG ("ThyssenKrupp") for €42 million in cash. DaimlerChrysler's remaining 40% interest in
Mercedes-Benz Lenkungen GmbH was subject to put and call options held by DaimlerChrysler and ThyssenKrupp, respectively, of approximately €28 million. The sales
resulted in an aggregate pretax gain of
€11 million in 2003, which is included in other income of the Commercial Vehicles segment. DaimlerChrysler's remaining 40% interest in Mercedes-Benz Lenkungen GmbH
was accounted for using the equity method. In November 2005, the Group exercised its Put Option to sell its remaining 40%-stake in ThyssenKrupp Presta SteerTec (formerly:
Mercedes-Benz Lenkungen GmbH) to ThyssenKrupp for a purchase price of €28 million.

In
September 2003, as part of the Group's ongoing strategy to focus on its core automotive business, DaimlerChrysler sold its 50% interest in CTS Fahrzeug-Dachsysteme GmbH to
Porsche AG for €55 million in cash, resulting in a pretax gain of €50 million which is included in financial income (expense), net, of the Mercedes Car
Group segment. Prior to the sale, DaimlerChrysler accounted for CTS Fahrzeug-Dachsysteme GmbH using the cost method.

Notes to Consolidated Statments of Income

5. Functional Costs and Other Expenses

Selling, administrative and other expenses are comprised of the following:

Year ended December 31,(in millions of €)

2005

2004

2003Selling expenses

11,960

11,403

11,763Administration expenses

6,092

6,008

5,351Other expenses

932

561

65818,984

17,972

17,772


In
2005, selling expenses include advertising costs of €2,512 million (2004: €2,748 million, 2003: €2,965 million).

Headcount reduction initiative at Mercedes Car Group.In September 2005, DaimlerChrysler
initiated a program to enhance the competitiveness of the Mercedes Car Group. The program is expected to reduce headcount by 8,500 employees in Germany, primarily through voluntary termination
contracts. The initiative is expected to be finalized during the second half of 2006. The individual benefits are based on age, salary levels and past service.

As
of December 31, 2005, approximately 5,000 employees have signed severance contracts. For the contracts signed prior to December 31, 2005, expenditures of
€670 million will be incurred; €570 million were recorded in income for 2005, primarily within cost of sales. An amount of
€100 million is available under the terms of a deferred compensation fund set up under the Compensation Framework Agreement (ERA), a collective bargaining agreement in Germany.
Under this agreement, DaimlerChrysler had to recognize a liability in prior years for ERA as a portion of the compensation increase in these years was to be unconditionally paid to employees at a
later date. In an agreement with the worker's council of DaimlerChrysler, it was determined that the fund should be used for purposes such as termination and early retirement benefits with any unused
balance distributed to employees otherwise. In 2005, €70 million were paid and €600 million remain within other liabilities at December 31, 2005.

F-31

---





smart realignment.Based on the unit sales development of the smart roadster and the smart forfour
and the downward revisions to forecasted sales targets, DaimlerChrysler reduced its production and notified suppliers about declining production at the beginning of 2005. These developments resulted
in increased operating and cash flow losses and an expectation that losses would continue in future periods. Therefore, DaimlerChrysler evaluated the recoverability of the carrying amount of the
long-lived assets that generate cash flows largely independent of other assets and liabilities of the Group. The smart roadster had been assembled in a plant in France until the decision
to cease production, whereas the asset group related to the smart forfour consists of owned real estate and equipment of a Dutch plant as well as leased equipment located with suppliers, but carried
on DaimlerChrysler's balance sheet. As a result of the impairment tests, DaimlerChrysler recognized charges of €444 million in 2005 in "cost of sales" representing the excess of
the carrying amount of these long-lived assets over their fair value. After the impairment charge, the remaining carrying amount of the assets represented the estimated fair value of land
and buildings and other assets.

As
a result of the deterioration of operations in the first quarter of 2005, DaimlerChrysler decided to cease production of the smart roadster by the end of 2005 and provide incentives
to dealers related to those vehicles. Thus, also included as a reduction of revenue or in "cost of sales" during 2005 were €140 million, to recognize the effects of inventory
write-downs, higher incentives and lower residual values of vehicles.

Further
costs related to the realignment of smart during 2005, amounting to €301 million, arose primarily from supplier claims which resulted from the
discontinuation of the smart roadster and the reduction of the production volume for the smart forfour. Estimated payments to the dealer network are also included. These charges were recognized in
"cost of sales" and in "selling expenses".

In
connection with the activities related to the smart business unit, DaimlerChrysler also decided in 2005 not to proceed with the development of the smart SUV that was scheduled to be
introduced in 2006. As a result of the decision to abandon the smart SUV, tooling and equipment located in the designated assembly plant in Brazil and equipment still under construction with suppliers
for which firm purchase orders were in place, €61 million were written off in 2005 by a charge to "other expenses" to the extent those assets could not be redeployed for other
purposes. Charges of €104 million were recognized during 2005 related to the liabilities arising from the cancellation of supply contracts and were recognized as "other
expenses".

In
addition, plans to reduce workforce at the locations in Böblingen (Germany) and Hambach (France) were approved in 2005. According to those plans, by December 31,
2005, 185 employees have been transferred to other Group operations and continue to provide services there while 236 German employees had accepted termination benefits in accordance with the terms of
a collective bargaining agreement consisting of cash severance, continued pay for a period after the end of service and job placement assistance; the employee services ended with the acceptance of the
termination benefits. Therefore, charges for employee termination benefits of €24 million are included in 2005. In addition, charges for consulting services have been recorded
totaling to €7 million in 2005.

A
goodwill impairment charge of €30 million was recognized in 2005 (see Note 12).

F-32

---



All
charges related to the realignment of smart, amounting to €1,111 million, relate to the Mercedes Car Group segment. The development of balances accrued in
2005, which lead to payments in subsequent periods, is summarized as follows:

(in millions of €)

Workforce
reduction

Other costs

TotalBalance at January 1, 2005





Net charges

24

552

576Payments

(16
)
(443
)
(459
)Balance at December 31, 2005

8

109

117


The
Mercedes Car Group expects the remaining balance of €117 million to be paid in 2006.

Others.In 2003, DaimlerChrysler recognized an impairment charge amounting to
€77 million related to certain long-lived assets (primarily property, plant and equipment) at a production facility in Brazil. The charge is included in cost of
sales of the Mercedes Car Group segment.

As
discussed in Note 7, the DaimlerChrysler Supervisory Board approved a multi-year turnaround plan for the Chrysler Group in February 2001. The related charges
are presented as a separate line item on the accompanying consolidated statements of income (loss) and are not reflected in cost of sales or selling, administrative and other expenses.

Personnel expenses and number of employees.Personnel expenses included in the statement of income
are comprised of:

Year ended December 31,(in millions of €)

2005

2004

2003Wages and salaries

19,750

18,750

18,897Social security and payroll costs

3,371

3,294

3,178Net pension cost (see Note 25a)

1,131

948

837Net postretirement benefit cost (see Note 25a)

1,331

1,173

1,290Other expenses for pensions and retirements

148

51

8525,731

24,216

24,287


Number
of employees (annual average):

2005

2004

2003Hourly employees

232,836

229,763

226,989Salaried employees

139,220

134,949

129,656Trainees/apprentices

14,409

14,307

14,039386,465

379,019

370,684


Information
on the remuneration to the current and former members of the Board of Management and to the current members of the Supervisory Board is included in Note 38.

F-33

---



6. Other Income

Other income consists of the following:

Year ended December 31,(in millions of €)

2005

2004

2003Gains on sales of property, plant and equipment

351

94

58Rental income, other than relating to financial services

101

100

110Gains on sales of companies

64

128

11Reimbursement of contract costs





17Government subsidies

33

30

63Other miscellaneous items

417

543

430966

895

689


Other
miscellaneous items consist of reimbursements under insurance policies, income from licenses, reimbursements of certain non-income related taxes and customs duties,
income from various employee canteens and other miscellaneous items.

Gains
on sales of property, plant and equipment for the year ended December 31, 2005, include a €240 million gain on the sale of the Chrysler Group's
Arizona Proving Grounds vehicle testing facility.

Due
to the repurchase of a note by its issuer, a gain of €53 million was realized in 2005 and is included in gains of sales on property, plant and equipment. The
note was issued by MTU Aero Engines Holding AG to DaimlerChrysler in the context of the sale of MTU Aero Engines GmbH in 2003.

As
result of the settlement agreement in connection with the sale of DaimlerChrysler Rail Systems GmbH (Adtranz) in 2004, a gain of €120 million which had been
deferred since 2001 was realized as other income.

7. Turnaround Plan for the Chrysler Group

In 2001, the Supervisory Board of DaimlerChrysler AG approved a multi-year turnaround plan for the Chrysler Group. Key initiatives for the
multi-year turnaround plan included a workforce reduction and an elimination of excess capacity.

The
net gains recorded for the plan in 2005 were €36 million (€23 million net of taxes) and are presented as a separate line item on the
accompanying consolidated statements of income (€34 million and €2 million would have otherwise been reflected in cost of sales and selling,
administrative and other expenses, respectively). These adjustments were due to modifications of estimates related to workforce reductions and facility closures in 2005 and prior years.

The
net charges recorded for the plan in 2004 were €145 million (€89 million net of taxes) and are presented as a separate line item on the
accompanying consolidated statements of income (€139 million and €6 million would have otherwise been reflected in cost of sales and selling,
administrative and other expenses, respectively). These adjustments were due to modifications of estimates related to workforce reductions and facility closures in 2004 and prior years.

The
net charges recorded for the plan in 2003 were €469 million (€288 million net of taxes) and are presented as a separate line item on the
accompanying consolidated statements of income (loss) (€462 million and €7 million would have otherwise been reflected in cost of sales and selling,
administrative and other expenses, respectively). These adjustments were associated with the planned closing, significant downsizing and sale of

F-34

---



certain
manufacturing facilities between 2003 and 2005. The adjustments were also the result of modifications to previous estimates due to actual settlements or additional available information.

Workforce
reduction charges in 2005, 2004 and 2003 were €(15) million, €154 million and €209 million respectively. The
charges for the voluntary early retirement programs, accepted by 223, 503 and 1,827 employees in 2005, 2004 and 2003, respectively, were formula driven based on salary levels, age and past service.
Additionally, 618, 5,417 and 1,355 employees were involuntarily affected by the plan in 2005, 2004 and 2003, respectively. The amount of involuntary severance benefits paid and charged against the
liability were €30 million, €51 million and €20 million in 2005, 2004 and 2003, respectively.

The
Chrysler Group recorded impairment charges of €(3) million, €43 million and €249 million in 2005, 2004 and 2003,
respectively. The 2005 impairment charges represent an adjustment to prior estimates related to facility closures. The 2004 and 2003 impairment charges represent the amount by which the carrying
values of the property, plant, equipment and tooling exceeded their respective fair market values.

In
addition, accruals for other costs related to divestiture and closure actions included net charges and adjustments of €(18) million, €(52) million and
€11 million during the years ended December 31, 2005, 2004 and 2003, respectively.

During
the years ended December 31, 2005, 2004 and 2003, the Chrysler Group made cash payments of €92 million, €219 million and
€279 million, respectively, for charges previously recorded.

The
Chrysler Group expects to make additional cash payments of approximately $58 million in 2006 for the previously recorded charges. The Chrysler Group may recognize additional
adjustments to the turnaround plan charges in 2006 primarily relating to the closure or sale of selected operations.

As
of December 31, 2005, 2004 and 2003, the Chrysler Group had workforce reduction reserves of €102 million, €160 million and
€198 million, respectively. In addition, reserves for other costs were €18 million, €60 million and
€148 million as of December 31, 2005, 2004 and 2003, respectively.

F-35

---



8. Financial Income (Expense), net

Year ended December 31,(in millions of €)

2005

2004

2003Income from investments of which from affiliated companies €28 (2004: €36; 2003: €37)

55

86

37Gains, net from disposals of investments and shares in affiliated and associated companies

732

291

44Gain (loss) from the dilution of shares in affiliated companies and investments accounted for under the equity method



(135
)
24Impairment of investment in EADS (Note 3)





(1,960
)Write-down of investments and shares in affiliated companies

(31
)
(50
)
(44
)Gain (loss) from companies included at equity

103

(798
)
(538
)Income (loss) from investments, net

859

(606
)
(2,437
)Other interest and similar income of which from affiliated companies €33 (2004: €5; 2003: €20)

539

490

521Interest and similar expenses of which from affiliated companies €26 (2004: €32; 2003: €16)

(1,112
)
(790
)
(911
)Interest expense, net

(573
)
(300
)
(390
)Income (loss) from securities and long-term receivables of which from affiliated companies €2 (2004: €2; 2003: €1)

200

18

(15
)Write-down of securities and long-term receivables

(5
)
(122
)
(19
)Other, net

(264
)
(67
)
69Other financial income (loss), net

(69
)
(171
)
35217

(1,077
)
(2,792
)


In
2005, DaimlerChrysler sold all of its MMC shares. The gain on that sale amounted to €681 million and is included in "Gains, net from disposals of investments
and shares in affiliated and associated companies".

In
2004, the dilution of DaimlerChrysler's interest in MMC resulted in a loss of €135 million which is reflected in "Gain (loss) from the dilution of shares in
affiliated companies and investments accounted for under the equity method". Realized gains from DaimlerChrysler's currency hedging of the net investment in MMC of €195 million
are included in "Loss from companies included at equity".

In
2003, MTU-F created a new company, MTU CFC Solutions GmbH ("MTU CFC"), and contributed all of its fuel cell activities into a new company for 100% ownership interest. Also
in 2003, MTU CFC issued new shares to RWE Fuel Cells GmbH for a capital contribution. MTU-F did not participate in this increase in share capital causing the ownership interest of
MTU-F in MTU CFC to dilute to 74.9%. As a result of this transaction, DaimlerChrysler realized a gain of €24 million, which is included in "gain (loss) from the
dilution of shares in affiliated companies and investments accounted for under the equity method".

The
Group capitalized interest expenses related to qualifying construction projects of €73 million (2004: €70 million; 2003:
€100 million).

F-36

---



9. Income Taxes

Income before income taxes consists of the following:

Year ended December 31,(in millions of €)

2005

2004

2003Germany

(103
)
448

(736
)Non-German countries

3,541

3,087

1,3323,438

3,535

596


The
income (loss) in Germany includes the income (loss) from companies included at equity if the shares of those companies are held by German companies. In 2003, the
write-down of the investment in EADS of €1,960 million is also included.

Income
tax expense is comprised of the following components:

Year ended December 31,(in millions of €)

2005

2004

2003Current taxesGermany

3

847

766Non-German countries

1,319

923

(432
)Deferred taxesGermany

(309
)
(502
)
172Non-German countries

(500
)
(91
)
473513

1,177

979


For
German companies, the deferred taxes at December 31, 2005 were calculated using a federal corporate tax rate of 25% (2004 and 2003: 25%). Deferred taxes were also calculated
with a solidarity surcharge of 5.5% for each year on federal corporate taxes plus the after federal tax benefit rate for trade tax of 12.125% for each year. Therefore, the tax rate applied to German
deferred taxes amounted to 38.5% (2004 and 2003: 38.5%). For non-German companies, the deferred taxes at period-end were calculated using the enacted tax rates.

In
2004, the U.S. government enacted the American Jobs Creation Act of 2004 ("Act"), that provides for a special one-time tax deduction of 85% of certain earnings of
non-U.S. subsidiaries that are repatriated to the U.S., provided certain criteria are met. DaimlerChrysler North America Holding Corporation, a wholly-owned U.S. subsidiary of
DaimlerChrysler, completed in 2005 its evaluation of the Act. In 2005, DaimlerChrysler repatriated $2.7 billion of dividends to the U.S., leading to an income tax expense of
€66 million. In the reconciliation of expected income tax expense to actual income tax expense the expense is included in the line "foreign tax rate differential".

In
2003, the German government enacted new tax legislation which, among other changes, provides that, beginning January 1, 2004, 5% of dividends received from German companies and
5% from certain gains from the sale of shares in affiliated and unaffiliated companies are no longer tax-free while losses from the sale of shares in affiliated and unaffiliated companies
continue to be non-deductible. The change in tax legislation resulted in a deferred tax expense due to the deferred tax liabilities on the unrealized gains. The effect of the increase in
the deferred tax liabilities of the Group's German companies was recognized in the year of enactment and as a result, a deferred tax expense of €64 million was included in the
consolidated statement of income (loss) in 2003.

F-37

---



A
reconciliation of expected income tax expense to actual income tax expense determined using the applicable German corporate tax rate for the calendar year of 25% (2004: 25%; 2003:
26.5%) plus a solidarity surcharge of 5.5% on federal corporate taxes payable plus the after federal tax benefit rate for trade taxes of 12.125% (2004: 12.125%; 2003: 11.842%) for a combined statutory
rate of 38.5% in 2005 (2004: 38.5%; 2003: 39.8%) is included in the following table. In 2003, for the purpose of financing the flood disaster in Germany and effective only for the calendar year 2003,
the increased federal corporate tax rate of 26.5% instead of 25% was used for calculating the current taxes in Germany.

Year ended December 31,(in millions of €)

2005

2004

2003Expected expense for income taxes

1,324

1,361

237Foreign tax rate differential

(544
)
(357
)
(489
)Trade tax rate differential

(50
)
(43
)
(37
)Non-deductible impairment of investment in EADS





780Tax effect of equity method investments

(15
)
291

159Tax-free income and non-deductible expenses

(194
)
(88
)
269Effect of changes in German tax laws





64Other

(8
)
13

(4
)Actual expense for income taxes

513

1,177

979


In
2005, tax free income at foreign companies arose relating to the compensation for MFTBC, the sale of other securities and in connection with the net periodic postretirement benefit
costs. The reduction of the calculated expected tax expenses on those issues is included in the line "foreign tax rate differential". Moreover, the line "foreign tax rate differential" includes all
other reconciling items between expected and actual expense for income taxes at foreign companies.

In
2005, DaimlerChrysler sold all of its MMC shares. The realized gain  with the exception of the net gains from hedging the Group's net investment in MMC  was
tax-free. The expected tax expense on the tax free gain was reversed in the line "tax free income and non-deductible expenses" with an amount of
€82 million. In 2004, the non tax-deductible loss of MMC resulting from accounting under the equity method and from the dilution of DaimlerChrysler's interest in MMC
affected the line "tax effect of equity method investments" negatively by €298 million due to the missing tax benefit.

In
2004, Daimler Chrysler sold its investment in HMC and realized a tax free gain of €252 million. This led to a positive reconciling item of
€97 million in the line "tax free income and non-deductible expenses".

Tax
free gains included in net periodic pension costs at the German companies also reduced the expected tax expense. Moreover, the line "tax-free income and non-deductible
expenses" includes all other effects at German companies due to tax free income and non-deductible expenses.

The
Group has various open income tax years unresolved with the taxing authorities in various jurisdictions. The open years are either currently under review by certain taxing
authorities or not yet under examination. In 2003, the line "foreign tax rate differential" above included a tax benefit and related interest of €571 million which resulted in
connection with agreements reached with the U.S. tax authorities on a claim pertaining to additional research and development credits for tax years 1986 through 1998. In 2003, the line "tax free
income and non-deductible expenses" included a tax expense
and related interest of €318 million pertaining primarily to tax costs associated with developments resulting from the examination by the German tax authorities of the Group's
German tax returns for the years 1994 to 1998.

F-38

---



Deferred
income tax assets and liabilities are summarized as follows:

At December 31,(in millions of €)

2005

2004Intangible assets

401

55Property, plant and equipment

520

699Investments and long-term financial assets

3,135

2,678Equipment on operating leases

727

651Inventories

752

675Receivables

749

834Net operating loss and tax credit carryforwards

1,854

2,814Pension plans and similar obligations

5,125

4,315Other accrued liabilities

6,477

5,515Liabilities

2,516

3,000Deferred income

1,670

1,371Other

111

9524,037

22,702Valuation allowances

(640
)
(573
)Deferred tax assets

23,397

22,129Intangible assets

(932
)
(852
)Property, plant and equipment

(3,987
)
(3,798
)Equipment on operating leases

(7,125
)
(6,699
)Receivables

(3,482
)
(4,540
)Prepaid expenses

(360
)
(370
)Pension plans and similar obligations

(2,479
)
(2,096
)Other accrued liabilities

(311
)
(148
)Taxes on undistributed earnings of non-German subsidiaries

(261
)
(307
)Liabilities

(1,010
)
(1,012
)Other

(404
)
(406
)Deferred tax liabilities

(20,351
)
(20,228
)Deferred tax assets (liabilities), net

3,046

1,901


At
December 31, 2005, the Group had corporate tax net operating losses ("NOLs") amounting to €1,528 million (2004: €1,705 million),
trade tax NOLs amounting to €129 million (2004: €81 million) and tax credit carryforwards amounting to €868 million (2004:
€1,640 million). The corporate tax NOLs mainly relate to losses of foreign companies and are partly limited in their use to the Group. Of the total amount of corporate tax NOLs
at December 31, 2005, €25 million expire at various dates from 2006 through 2009, €704 million in 2010, €275 million expire
at various dates from 2018 through 2025 and €524 million can be carried forward indefinitely. The tax credit carryforwards mainly relate to U.S. companies and are partly limited
in their use to the Group. Of the total amount of credit carryforwards at December 31, 2005, €107 million expire from 2010 through 2015,
€181 million expire from 2023 through 2025 and €580 million can be carried forward indefinitely. The trade tax NOLs are not limited in their use. The
companies of the Off-Highway Business unit, which are shown as held for sale, are included at December 31, 2005 in the corporate and trade tax NOLs with
€21 million each.

The
valuation allowances, which relate to deferred tax assets of foreign companies that DaimlerChrysler believes will more likely than not expire without benefit increased by
€67 million from December 31, 2004 to

F-39

---



December 31,
2005. In future periods DaimlerChrysler's estimate of the amount of the deferred tax assets considered realizable may change, and hence the valuation allowances may increase or
decrease.

Net
deferred income tax assets and liabilities in the consolidated balance sheets are as follows:

At December 31,
2005

At December 31,
2004(in millions of €)

Total

thereof non-current

Total

thereof non-currentDeferred tax assets

7,249

2,880

4,213

1,944Deferred tax liabilities

(4,203
)
(4,099
)
(2,312
)
(2,222
)Deferred tax assets (liabilities), net

3,046

(1,219
)
1,901

(278
)


DaimlerChrysler
recorded deferred tax liabilities for non-German withholding taxes of €188 million (2004: €222 million) on
€3,764 million (2004: €4,434 million) in cumulative undistributed earnings of non-German subsidiaries and additional German tax of
€73 million (2004: €85 million) on the future payout of these foreign dividends to Germany because as of today, the earnings are not intended to be
permanently reinvested in those operations.

The
Group did not provide income taxes or non-German withholding taxes on €13,831 million (2004: €9,626 million) in cumulative
earnings of non-German subsidiaries because the earnings are intended to be indefinitely reinvested in those operations. It is not practicable to estimate the amount of unrecognized
deferred tax liabilities for these undistributed foreign earnings.

Including
the items charged or credited directly to related components of stockholders' equity and the expense (benefit) of discontinued operations and from changes in accounting
principles, the expense (benefit) for income taxes consists of the following:

Year ended December 31,(in millions of €)

2005

2004

2003Expense for income taxes of continuing operations

513

1,177

979Expense for income taxes of discontinued operations





202Income tax benefit from changes in accounting principles

(3
)


(35
)Stockholders' equity for items in accumulated other comprehensive loss

(1,065
)
(754
)
1,055Stockholders' equity for U.S. employee stock option expense in excess of amounts recognized for financial purposes



(9
)
(555
)
414

2,201


In
2004 and 2003, tax benefits of €2 million and €105 million from the reversal of deferred tax asset valuation allowances at subsidiaries
of MMC were recorded as a reduction of the investor level goodwill relating to the Group's investment in MMC.

10. Disposal Group Off-Highway, Assets and Liabilities Held for Sale and Discontinued Operations

Disposal Group Off-Highway, Assets and Liabilities Held for Sale.On December 27,
2005, DaimlerChrysler entered into a share sale and purchase agreement regarding the sale of a major portion of its Off-Highway Business Unit. The closing is expected to occur in the first
quarter of 2006 (see Note 4). As a result of

F-40

---



DaimlerChrysler's
significant anticipated continuing sales of products to the Off-Highway business which are expected to continue beyond one year after disposal, the operations of the
Off-Highway business have not been presented as discontinued operations in DaimlerChrysler's consolidated income statements.

However,
the assets and the liabilities of the Off-Highway business that are part of the transaction have each been aggregated and presented in separate lines on the
consolidated balance sheet.

The
assets held for sale and liabilities held for sale are shown on a consolidated basis and are comprised of the following:

(in millions of €)

At December 31, 2005Assets held for saleIntangible assets

20Goodwill

309Property, plant and equipment

212Investments and long-term financial assets

80Inventories

395Receivables and other assets

316Other

421,374Liabilities held for saleMinority interests

4Accrued liabilities

603Liabilities

157Other

7771


Discontinued Operations.The results of MTU Aero Engines and the gain on sale are reported as
discontinued operations. However, for segment reporting purposes, the revenues and operating profit of MTU Aero Engines are included in the Other Activities segment revenues and operating profit in
2003 (see Notes 4 and 35).

The
operating results of the discontinued operations were as follows in 2003:

(in millions of €)

Year ended December 31, 2003Revenues

1,933Income before income taxes

67Income taxes

(53
)Earnings from discontinued operations

14


11. Cumulative Effects of Changes in Accounting Principles

Conditional Asset Retirement Obligation.As of December 31, 2005, DaimlerChrysler adopted the
provisions of FIN 47, "Accounting for Conditional Asset Retirement Obligations  an interpretation of FASB Statement No. 143" pertaining to the accounting for legal asset retirement
obligations whose timing or method of

F-41

---



settlement
is conditional on a future event. For existing conditional asset retirement obligations whose fair value could be reasonably determined, DaimlerChrysler recognized the liability and related
additional long-lived asset and adjusted the liability and the asset, respectively, for cumulative accretion and accumulated depreciation to the date of adoption. The cumulative effect of
adopting FIN 47 was a reduction of net income of €5 million, net of taxes of €3 million (€0.00 per share), recognized separately in the
consolidated statement of income in 2005.

Variable Interest Entities.DaimlerChrysler adopted the provisions of FIN 46R pertaining to the
consolidation of variable interest entities that are special purpose entities as of December 31, 2003, and to all other entities as of March 31, 2004 (see Note 2). The cumulative
effect of adopting FIN 46R was a reduction of net income of €30 million, net of taxes of €35 million (€0.03 per share), recognized in the
consolidated statement of income in 2003.

Notes to Consolidated Balance Sheets

12. Goodwill

Information with respect to changes in the Group's goodwill is presented in the Consolidated Fixed Asset Schedule included herein.

The
carrying amount of goodwill as of December 31, 2005, compared to the previous year, decreased by €122 million. This decrease relates to goodwill of
€309 million attributable to the business unit Off-Highway and is included in the separate line item "assets held for sale" as of December 31, 2005 (see
Note 10). Additions to goodwill of €134 million from the acquisition of the minority interests in MTU-F in 2005 form part of that goodwill (see
Note 4). Furthermore, the goodwill of MFTBC was reduced by €200 million (see Note 4). Currency translation effects of €232 million led to an
increase of goodwill.

At
December 31, 2005 and 2004, the carrying value of goodwill allocated to the Group's reporting segments are (excluding investor level goodwill of
€55 million and €51 million, respectively):

(in millions of €)

Mercedes
Car Group

Chrysler Group

Commercial
Vehicles

Financial Services

Other Activities

total2005

199

1,035

547

63

37

1,8812004

177

898

670

62

196

2,003


The
company conducts a goodwill impairment test at least annually to identify potential goodwill impairment. In this regard, the company compares the fair value of a reporting unit with
its carrying amount, including goodwill allocated to the respective reporting unit. The fair values of the reporting units are calculated using discounted future cash flows. If the carrying amount of
a reporting unit exceeds its fair value, a second step of the goodwill impairment test is performed to measure the amount of goodwill impairment loss. As a result of the 2005 goodwill impairment test,
a goodwill impairment charge at smart of €30 million was recognized.

13. Other Intangible Assets

Information with respect to changes in the Group's other intangible assets is presented in the Consolidated Fixed Asset Schedule included herein.

F-42

---



Other
intangible assets comprise:

At December 31,(in millions of €)

2005

2004Other intangible assets subject to amortizationGross carrying amount

1,628

1,309Accumulated amortization

(941
)
(806
)Net carrying amount

687

503Other intangible assets not subject to amortization

2,504

2,1683,191

2,671


DaimlerChrysler's
other intangible assets subject to amortization represent concessions, industrial property rights and similar rights (€298 million) as well as
software developed or obtained for internal use (€342 million). The additions in 2005 of €244 million (2004: €215 million) with a
weighted average useful life of 6 years primarily include software developed or obtained for internal use. The aggregate amortization expense for the years ended December 2005, 2004 and
2003, was €201 million, €169 million and €178 million, respectively.

Estimated
aggregate amortization expense for other intangible assets for the next five years is:

(in millions of €)

2006

2007

2008

2009

2010Amortization expense

213

136

109

54

40


Other
intangible assets not subject to amortization represent primarily intangible pension assets.

14. Property, Plant and Equipment, net

Information with respect to changes in the Group's property, plant and equipment is presented in the Consolidated Fixed Assets Schedule included herein.

Property,
plant and equipment includes buildings, technical equipment and other equipment capitalized under capital lease agreements of €262 million (2004:
€245 million). Depreciation expense and impairment charges on assets under capital lease arrangements were €47 million (2004:
€34 million; 2003: €19 million).

Future
minimum lease payments due for property, plant and equipment under capital leases at December 31, 2005 amounted to €472 million and are due as
follows:

(in millions of €)

2006

2007

2008

2009

2010

there-
afterFuture minimum lease payments

75

72

53

33

30

209


The
reconciliation of future minimum lease payments from capital lease agreements to the corresponding liabilities is as follows:

(in millions of €)

December 31, 2005Amount of future minimum lease payments

472Less interests included

133Liabilities from capital lease agreements

339


F-43

---



15. Equipment on Operating Leases, net

Information with respect to changes in the Group's equipment on operating leases is presented in the Consolidated Fixed Assets Schedule included herein. Of the
total equipment on operating leases, €33,644 million represent automobiles and commercial vehicles (2004: €26,017 million).

Noncancellable
future lease payments due from customers for equipment on operating leases at December 31, 2005 amounted to €15,500 million and are due as
follows:

(in millions of €)

2006

2007

2008

2009

2010

there-
afterFuture lease payments

7,918

4,350

2,225

738

149

120


16. Inventories

At December 31,(in millions of €)

2005

2004Raw materials and manufacturing supplies

1,906

1,746Work-in-process

2,924

2,545Finished goods, parts and products held for resale

14,414

12,805Advance payments to suppliers

47

7519,291

17,171Less: Advance payments received

(152
)
(366
)19,139

16,805


Certain
of the Group's U.S. inventories are valued using the LIFO method. If the FIFO method had been used instead of the LIFO method, inventories would have been higher by
€753 million (2004: €601 million).

At
December 31, 2005, inventories include €322 million of company cars of DaimlerChrysler pledged as collateral to the DaimlerChrysler Pension Trust e.V.
The pledge was made in 2004 due to the requirement to provide collateral for certain vested employee benefits in Germany.

17. Trade Receivables

At December 31,(in millions of €)

2005

2004Receivables from sales of goods and services

8,135

7,592Allowance for doubtful accounts

(540
)
(591
)7,595

7,001


As
of December 31, 2005, €115 million of the trade receivables mature after more than one year (2004: €283 million).

F-44

---



Changes
in the allowance for doubtful accounts for trade receivables were as follows:

Year ended December 31,(in millions of €)

2005

2004

2003Balance at beginning of year

591

587

629Charged to costs and expenses

41

49

23Amounts written off

(75
)
(160
)
(48
)Currency translation and other changes

(17
)
115

(17
)Balance at end of year

540

591

587


18. Receivables from Financial Services

Types of receivables.Retail receivables include loans and finance leases to end users of the Group's
products who purchased their vehicle either from a dealer or directly from DaimlerChrysler.

Wholesale
receivables represent loans for floor financing programs for vehicles sold by the Group's automotive businesses to the dealer or loans for assets purchased by the dealer from
third parties, primarily used vehicles traded in by the dealer's customer or real estate such as dealer showrooms.

Other
receivables mainly represent investments in leases involving the purchase of non-automotive assets by parties other than retail customers or the Group's dealers.

Receivables
from financial services are comprised of the following:

At December 31,(in millions of €)

2005

2004Receivables from:Retail

46,947

44,202Wholesale

11,961

10,670Other

3,367

3,02062,275

57,892Allowance for doubtful accounts

(1,174
)
(1,107
)61,101

56,785


As
of December 31, 2005, receivables from financial services with a carrying amount of €37,896 million mature after more than one year (2004:
€35,598 million). Receivables from financial services are generally secured by vehicles or other assets.

Maturities.Contractual payments from the receivables from financial services at December 31,
2005 amounted to €66,235 million and are as follows:

(in millions of €)

2006

2007

2008

2009

2010

there-
afterMaturities

25,600

13,338

11,014

6,701

3,533

6,049


Actual
cash flows will vary from contractual maturities due to future sales of finance receivables, prepayments and write-offs.

F-45

---



Allowances.Changes in the allowance for doubtful accounts for receivables from financial services
were as follows:

Year ended December 31,(in millions of €)

2005

2004

2003Balance at beginning of year

1,107

1,265

1,559Charged to costs and expenses

559

467

553Amounts written off

(420
)
(413
)
(492
)Reversals

(137
)
(84
)
(63
)Currency translation and other changes

65

(128
)
(292
)Balance at end of year

1,174

1,107

1,265


Sales type and direct financing contracts.Finance leases consist of sales-type leases of
vehicles to the Group's direct retail customers and direct-financing leases of vehicles to customers of the Group's independent dealers. Included in retail and other receivables are investments in
finance leases involving minimum lease payments of €15,309 million and €14,072 million, unearned income of €2,496 million and
€2,602 million, initial direct costs of €43 million and €47 million and estimated unguaranteed residual values of
€623 million and €660 million at December 31, 2005 and 2004, respectively.

Leveraged lease contracts.Investments in leveraged leases are included in the line "other".
Leveraged leases are comprised of the following:

At December 31,(in millions of €)

2005

2004Rentals receivable (net of principal and interest on nonrecourse debt)

4,586

4,039Deferred investment tax credits

(41
)
(40
)4,545

3,999Unguaranteed residual values

588

617Unearned income

(1,780
)
(1,638
)3,353

2,978


As
of December 31, 2005, an amount of €2,775 million (2004: €2,421 million) of deferred income tax liabilities was related to
leveraged leases.

Presentation in Consolidated Statements of Cash Flows.Wholesale receivables from the sale of
vehicles from the Group's inventory to independent dealers as well as retail receivables from the sale of DaimlerChrysler's vehicles directly to retail customers relate to the sale of the Group's
inventory. The cash flow effects of such receivables are presented as "net changes in inventory-related receivables from financial services" within the consolidated cash flows from operating
activities. All cash flow effects attributable to receivables from financial services that are not related to the sale of inventory to DaimlerChrysler's independent dealers or direct customers are
classified as investing activities within the consolidated statements of cash flows.

Sale of receivables.Based on market conditions and liquidity needs, DaimlerChrysler may sell
portfolios of retail and wholesale receivables to third parties, which typically results in the de-recognition of the transferred receivables from the balance sheet. Retained interests in
securitized sold receivables are
classified as other assets in the Group's consolidated balance sheets (see Note 19). For additional information on retained interests in sold receivables and the sale of finance receivables,
see Note 34.

F-46

---



19. Other Assets

At December 31,(in millions of €)

2005

2004Receivables from affiliated companies

696

1,174Receivables from related companies1

324

588Retained interests in sold receivables

2,215

2,202Other receivables and other assets

5,664

9,2288,899

13,192Allowance for doubtful accounts

(168
)
(261
)8,731

12,931


---

As
of December 31, 2005, €2,618 million of the other assets mature after more than one year (2004: €3,494 million).

Changes
in the allowance for doubtful accounts related to receivables included in other assets were as follows:

Year ended December 31,(in millions of €)

2005

2004

2003Balance at beginning of year

261

888

723Charges (releases) to costs and expenses

(18
)
61

134Amounts written off

(90
)
(702
)
(2
)Currency translation and other changes

15

14

33Balance at end of year

168

261

888


20. Securities, Investments and Long-Term Financial Assets

Information with respect to the Group's total investments and long-term financial assets is presented in the Consolidated Fixed Assets Schedule
included herein. The carrying amounts of participations (investments that are not accounted for under the equity method) and long-term (marketable) securities which are shown among
"Investments and long-term financial assets" in the Consolidated Balance Sheets are comprised of the following:

At December 31,(in millions of €)

2005

2004Participations with a quoted market price

332

503Participations without a quoted market price

256

277Total participations

588

780Long-term securities

606

599


The
main changes in investments in participations were caused by the sale of the stake in MMC (see Note 3).

F-47

---





Investments without a quoted market price were tested for impairment when an impairment indicator occurred. In 2005 and 2004, investments without a quoted market
price with carrying amounts of €20 million were tested for impairment. In 2005 and 2004, no impairments were recognized.

The
disclosure of short-term securities is made in the Consolidated Balance Sheets among "Securities" and is recorded separately in available-for-sale
and trading:

At December 31,(in millions of €)

2005

2004Available-for-sale

4,773

3,725Trading

163

159Short-term securities

4,936

3,884


As
of December 31, 2005, the table below shows the (amortized) costs, fair values, gross unrealized holding gains and losses per security class of investments with a quoted market
price, long-term and short-term available-for-sale securities. The aggregate amounts of
unrealized losses on investments which are in a continuous unrealized loss position for less than 12 months and the aggregate amounts of unrealized losses on investments which are in a
continuous unrealized loss position for 12 months or longer are shown separately together with their appropriate fair values.

|                                                                                 |  |       |  |       |  |     |  | Unrealized Loss
less 1 year |  | Unrealized Loss
1 year or more |  | Unrealized Loss total
|-------------------------------------------------------------------------------- |  | ----- |  | ----- |  | --- |  | --------------------------- |  | ------------------------------ |  | ---------------------
|
|Equity securities                                                                |  | 279   |  | 664   |  | 388 |  | 12                          |  | 3                              |  |                     
|Equity-based funds                                                               |  | 272   |  | 273   |  | 1   |  |                            |  |                               |  |                     
|Debt securities issued by the German government and other political subdivisions |  | 205   |  | 205   |  |    |  |                            |  |                               |  |                     
|Debt securities issued by non-German governments                                 |  | 778   |  | 777   |  |    |  | 34                          |  | 1                              |  |                     
|Corporate debt securities                                                        |  | 2,796 |  | 2,796 |  | 9   |  | 547                         |  | 6                              |  | 26                   
|Mortgage-backed securities                                                       |  | 318   |  | 317   |  | 1   |  | 68                          |  | 1                              |  | 35                   
|Securities backed by other assets                                                |  | 190   |  | 190   |  |    |  |                            |  |                               |  |                     
|Other debt securities                                                            |  | 260   |  | 260   |  |    |  |                            |  |                               |  |                     
|Debt-based funds                                                                 |  | 228   |  | 229   |  | 1   |  |                            |  |                               |  |                     
|                                                                                 |  |       |  |       |  |     |  |                             |  |                                |  |                      
|                                                                                 |  | 5,326 |  | 5,711 |  | 400 |  | 661                         |  | 11                             |  | 61                   
|                                                                                 |  |       |  |       |  |     |  |                             |  |                                |  |                      

F-48

---



As of December 31, 2004, these values were as follows:

|                                                                                 |  |       |  |       |  |     |  | Unrealized Loss
less 1 year |  | Unrealized Loss
1 year or more |  | Unrealized Loss total
|-------------------------------------------------------------------------------- |  | ----- |  | ----- |  | --- |  | --------------------------- |  | ------------------------------ |  | ---------------------
|
|Equity securities                                                                |  | 560   |  | 948   |  | 394 |  |                            |  |                               |  | 134                  
|Equity-based funds                                                               |  | 175   |  | 175   |  |    |  |                            |  |                               |  |                     
|Debt securities issued by the German government and other political subdivisions |  | 360   |  | 360   |  | 1   |  |                            |  |                               |  | 1                    
|Debt securities issued by non-German governments                                 |  | 128   |  | 132   |  | 4   |  |                            |  |                               |  |                     
|Corporate debt securities                                                        |  | 1,718 |  | 1,726 |  | 12  |  | 96                          |  | 4                              |  |                     
|Mortgage-backed securities                                                       |  | 361   |  | 361   |  | 1   |  | 41                          |  | 1                              |  |                     
|Securities backed by other assets                                                |  | 170   |  | 170   |  |    |  |                            |  |                               |  |                     
|Other debt securities                                                            |  | 819   |  | 820   |  | 1   |  |                            |  |                               |  |                     
|Debt-based funds                                                                 |  | 135   |  | 135   |  |    |  |                            |  |                               |  |                     
|                                                                                 |  |       |  |       |  |     |  |                             |  |                                |  |                      
|                                                                                 |  | 4,426 |  | 4,827 |  | 413 |  | 137                         |  | 5                              |  | 135                  
|                                                                                 |  |       |  |       |  |     |  |                             |  |                                |  |                      

The estimated fair values of investments in debt securities (excluding debt-based funds), by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.

At December 31,(in millions of €)

2005

2004Due within one year

1,164

1,157Due after one year through five years

1,703

1,624Due after five years through ten years

508

330Due after more than ten years

1,170

4584,545

3,569


Proceeds
from disposals of long-term and short-term available-for-sale securities were €10,336 million (2004:
€3,702 million; 2003: €2,743 million). Gross realized gains from sales of these securities were €847 million (2004:
€254 million; 2003: €8 million), while gross realized losses were €8 million (2004: €3 million; 2003:
€15 million). The proceeds and realized gains from the sale of the stake in MMC in 2005 (see Note 3) and HMC in 2004 (see Note 4) are included in these figures.
The proceeds from the sale of the stake in HMC are shown in the Consolidated Statements of Cash Flows among the line item "Proceeds from disposals of businesses", the remaining proceeds are disclosed
in the line item "Proceeds from sales of securities (other than trading)".

The
unrealized losses included in the 2005 statement of income related to trading securities were €6 million (2004 and 2003: -). There are no unrealized gains in
these securities (2004: €2 million; 2003: €10 million).

DaimlerChrysler
uses the weighted average cost method as a basis for determining cost and calculating realized gains and losses.

F-49

---



21. Liquid Assets

Liquid assets recorded under various balance sheet captions are as follows:

At December 31,2005

2004Cash and cash equivalents1originally maturing within 3 months

7,619

7,381originally maturing after 3 months

92

401Total cash and cash equivalents

7,711

7,782Securities

4,936

3,88412,647

11,666


---

22. Prepaid Expenses

Prepaid expenses are comprised of the following:

At December 31,(in millions of €)

2005

2004Prepaid pension cost

595

246Other prepaid expenses

796

7841,391

1,030


As
of December 31, 2005, €809 million of the total prepaid expenses mature after more than one year (2004: €435 million).

As
a result of the overfunded status of the accumulated pension benefit obligations of one pension plan, the prepaid pension cost increased in 2005 by
€0.3 billion.

23. Stockholders' Equity

Number of Shares Issued and Outstanding as well as Treasury Stock.DaimlerChrysler had issued and
outstanding 1,018,172,696 registered Ordinary Shares of no par value at December 31, 2005 (2004: 1,012,824,191). This increase relates to the issuance of new Ordinary Shares upon exercises in
connection with the Stock Option Plan 2000 (tranche 2003). Each share represents a nominal value of €2.60 of capital stock.

In
2005, DaimlerChrysler purchased approximately 0.7 million (2004: 0.8 million; 2003: 1.3 million) Ordinary Shares in connection with an employee share purchase
plan, of which 0.7 million (2004: 0.8 million; 2003: 1.3 million) were re-issued to employees.

Authorized and Conditional Capital.On April 6, 2005, the annual meeting authorized
DaimlerChrysler through October 6, 2006, to acquire treasury stocks for certain defined purposes up to a maximum nominal amount of €263 million of capital stock,
representing nearly 10% of the issued and outstanding capital stock.

On
April 9, 2003, the annual meeting authorized the Board of Management through April 8, 2008, upon approval of the Supervisory Board, to increase capital stock by issuing
new, no par value registered shares in

F-50

---



exchange
for cash contributions totaling €500 million as well as by issuing new, no par value registered shares in exchange for non-cash contributions totaling
€500 million and to increase capital stock by issuing Ordinary Shares to employees totaling €26 million.

Furthermore,
the Board of Management, with the consent of the Supervisory Board, was authorized to issue convertible bonds and / or notes with warrants with a total face value up
to €15 billion and with a maturity of no more than twenty years prior to April 5, 2010, and to grant conversion or option rights for new shares in DaimlerChrysler with an
allocable portion of the capital stock of up to €300 million as more closely defined in the fixed terms and conditions.

From
the Stock Option Plan 1996 on December 31, 2005, outstanding rights in a nominal volume of €0.1 million could result in 22,110 new shares of
DaimlerChrysler AG. In 2005, 2004 and 2003, no options were exercised from this Plan.

Comprehensive Income/(Loss).The changes in the components of accumulated other comprehensive loss
are as follows:

|                                                                            |  | Year ended
December 31, 2005 |   | Year ended
December 31, 2004 |   | Year ended
December 31, 2003 |  
|--------------------------------------------------------------------------- |  | ---------------------------- | - | ---------------------------- | - | ---------------------------- | -
|
|Unrealized gains (losses) on securities (incl. retained interests):         |  |                              |   |                              |   |                              |  
|Unrealized holding gains (losses)                                           |  | 511                          |   | (136                         | ) | 375                          |  
|Reclassification adjustments for (gains) losses included in net income      |  | (512                         | ) | 119                          |   | (393                         | )
|                                                                            |  |                              |   |                              |   |                              |  
|Unrealized gains (losses) on securities                                     |  | (1                           | ) | (17                          | ) | (18                          | )
|Unrealized gains (losses) on derivatives hedging variability of cash flows: |  |                              |   |                              |   |                              |  
|Unrealized derivative gains (losses)                                        |  | (3,552                       | ) | 1,270                        |   | (2,282                       | )
|Reclassification adjustments for (gains) losses included in net income      |  | 1,517                        |   | (458                         | ) | 1,059                        |  
|                                                                            |  |                              |   |                              |   |                              |  
|Unrealized derivative gains (losses)                                        |  | (2,035                       | ) | 812                          |   | (1,223                       | )
|Minimum pension liability adjustments                                       |  | (170                         | ) | 91                           |   | (79                          | )
|Foreign currency translation adjustments                                    |  | 2,548                        |   | 179                          |   | 2,727                        |  
|                                                                            |  |                              |   |                              |   |                              |  
|Changes in other comprehensive income/(loss)                                |  | 342                          |   | 1,065                        |   | 1,407                        |  
|                                                                            |  |                              |   |                              |   |                              |  

Exchange
rate effects on the components of other comprehensive loss principally are shown within changes of the cumulative translation adjustment.

Effective
October 1, 2004, the Chrysler Group prospectively changed the functional currency of DaimlerChrysler Canada Inc. ("DCCI"), its Canadian subsidiary, from the U.S.
dollar to the Canadian dollar. This change resulted from several significant economic and operational changes within DCCI, including a reduction of U.S. sourced components. The initial implementation
of this change in functional currency had the effect of increasing the value of the net assets of the Group and the accumulated other comprehensive loss by €179 million in 2004.

Miscellaneous.Under the German corporation law (Aktiengesetz), the amount of dividends available for
distribution to shareholders is based upon the unappropriated accumulated earnings of DaimlerChrysler AG (parent company only) as reported in its statutory financial statements determined in
accordance with the German commercial code (Handelsgesetzbuch). For the year ended December 31, 2005, DaimlerChrysler management has

F-51

---



proposed
a distribution of €1,527 million (€1.50 per share) of the 2005 earnings of DaimlerChrysler AG as a dividend to the stockholders.

24. Stock-Based Compensation

As of December 31, 2005, the Group has awards outstanding that were issued under a variety of plans including (1) the 2005 Performance Phantom Share
Plan, (2) the 2000 and 1996 stock option plans, (3) various stock appreciation rights ("SARs") plans and (4) the medium term incentive awards.

As
discussed in Note 1, DaimlerChrysler adopted the provisions of SFAS 123 prospectively for all awards granted after December 31, 2002. Awards granted in previous
periods will continue to be accounted for using the provisions of APB 25 and related interpretations.

Performance Phantom Share Plan.In 2005 the Group adopted the "Performance Phantom Share Plan" under
which virtual shares (phantom shares) are granted to eligible employees entitling them to receive cash paid out after four years. The amount of cash paid to eligible employees is based on the number
of phantom shares that vest (determined over a three year performance period) times the quoted price of DaimlerChrysler's
Ordinary Shares (determined as an average price over a specified period at the end of the four-year service). The number of phantom shares that vest will depend on the achievement of Group
performance goals as compared with competitive and internal benchmarks (return on net assets and return on sales). The Group will not issue any common shares in connection with the Performance Phantom
Share Plan.

Analysis
of the phantom shares issued is as follows:

Number of
phantom shares
(in millions)Outstanding at the beginning of the year

Granted phantom shares

3.6Forfeitures/Disposals

Outstanding at year end

3.6


In
2005 the group recognized €30 million of compensation expenses related to the Performance Phantom Share Plan. The Group considers the Performance Phantom Share
Plan in the accrued liabilities. Because the payment per vested phantom share depends on the quoted price of one DaimlerChrysler Ordinary Share, the quoted price represents the fair value of each
phantom share. The proportionate compensation expense for 2005 is determined based on the year-end quoted price of DaimlerChrysler Ordinary Shares as well as the estimated target
achievement grades as of December 31, 2005.

Stock Option Plans.In April 2000, the Group's shareholders approved the DaimlerChrysler Stock
Option Plan 2000 which provides for the granting of stock options for the purchase of DaimlerChrysler Ordinary Shares to eligible employees. Options granted under the Stock Option Plan 2000 are
exercisable at a reference price per DaimlerChrysler Ordinary Share determined in advance plus a 20% premium. The options become exercisable in equal installments on the second and third anniversaries
from the date of grant. All unexercised options expire ten years from the date of grant. If the market price per DaimlerChrysler Ordinary Share on the date of exercise is at least 20% higher than the
reference price, the holder is entitled to receive a cash payment equal to the original exercise premium of 20%.

F-52

---



The
table below shows the basic terms of options issued (in millions):

At December 31, 2005Year of grant

Reference
price

Exercise
price

Options
granted

Options
outstanding

Options
exercisable2000

€62.30

€74.76

15.2

13.3

13.32001

€55.80

€66.96

18.7

16.7

16.72002

€42.93

€51.52

20.0

18.5

18.52003

€28.67

€34.40

20.5

13.8

4.32004

€36.31

€43.57

18.0

17.3




In
2005, no options were granted under the Stock Option Plan 2000.

DaimlerChrysler
established, based on shareholder approvals, the 1998, 1997 and 1996 Stock Option Plans (former Daimler-Benz plans), which provided for the granting of
options for the purchase of DaimlerChrysler Ordinary Shares to certain members of management. The options granted under the plans 1997 and 1998 were evidenced by non-transferable
convertible bonds with a principal amount of €511 per bond due ten years after issuance. During certain specified periods each year, each convertible bond could have been converted
into 201 DaimlerChrysler Ordinary Shares, if the market price per share on the day of conversion was at least 15% higher than the predetermined conversion price and the options had been held for a
24 month waiting period.

In
the second quarter of 1999, DaimlerChrysler converted all options granted under the 1998 and 1997 Stock Option Plans into SARs. All terms and conditions of the new SARs are identical
to the stock options which were replaced, except that the holder of a SAR has the right to receive cash equal to the difference between the exercise price of the original option and the fair value of
the Group's stock at the exercise date rather than receiving DaimlerChrysler Ordinary Shares.

All
terms and conditions of the options granted under the plan 1996 are identical to the stock options which were granted under the plans 1997 and 1998, except that the plan 1996
includes no waiting period. The options granted under the plan 1996 were not converted into SARs.

The
basic terms of the bonds and the related stock options/SARs issued (in millions) under these plans are as follows:

Stock options/SARs
At December 31, 2005Related
stock
options
grantedStated
interest rate

Conversion
priceBonds granted in

outstanding

exercisable1996

5.9
%
€42.62

0.9



1997

5.3
%
€65.90

7.4

4.6

4.61998

4.4
%
€92.30

8.2

5.3

5.3


The
Group will not issue any common shares in connection with the plans 1997 and 1998.

F-53

---



Analysis
of the stock options issued is as follows (options in millions; per share amounts in €):

2005

2004

2003Number of
stock options

Average
exercise
price
per share

Number of
stock options

Average
exercise
price
per share

Number of
stock options

Average
exercise
price
per shareBalance at beginning of year

86.5

52.78

71.6

55.18

53.1

63.40Options granted





18.0

43.57

20.5

34.40Exercised

(5.3
)
34.40







Forfeited

(0.3
)
41.42

(1.4
)
40.79

(1.2
)
51.83Expired

(1.3
)
60.13

(1.7
)
65.92

(0.8
)
74.76Outstanding at year-end

79.6

53.92

86.5

52.78

71.6

55.18Exercisable at year-end

52.8

60.82

40.2

65.92

23.1

71.71


For
the year ended December 31, 2005, the Group recognized compensation expense on stock options (before taxes) of €87 million (2004:
€119 million; 2003: €95 million).

The
fair values of the DaimlerChrysler stock options issued in 2004 and 2003 were measured at the grant date (beginning of April) based on a modified Black-Scholes option-pricing model,
which considers the specific terms of issuance. For options granted to the Board of Management in 2004 and for which  according to the recommendations of the German
Corporate Governance Code  the Presidential Committee can impose a limit or reserve the right to impose such a limit in the case of exceptional and unpredictable
developments, are calculated with the intrinsic value at December 31. The table below presents the underlying assumptions as well as the resulting fair values and total values (in millions of
€):

2004

2003Expected dividend yield

4.4
%
5.6
%Expected volatility

33
%
35
%Risk-free interest rate

2.6
%
2.9
%Expected lives (in years)

3

3Fair value per option

€7.85

€6.00Total value by award

131.9

123.0


Unearned
compensation expense (before taxes) of all outstanding and unvested stock options as of December 31, 2005, that are not subject to a possible limitation according the
recommendation of the German Corporate Governance Code, totals €35 million (2004: €125 million; 2003: €122 million).

Stock Appreciation Rights Plans.In 1999, DaimlerChrysler established a stock appreciation rights
plan (the "SAR Plan 1999") which provides eligible employees of the Group with the right to receive cash equal to the appreciation of DaimlerChrysler Ordinary Shares subsequent to the date of grant.
The stock appreciation rights granted under the SAR Plan 1999 vest in equal installments on the second and third anniversaries from the date of grant. All unexercised SARs expire ten years from the
grant date. The exercise price of a SAR is equal to the fair market value of DaimlerChrysler's Ordinary Shares on the date of grant. On February 24, 1999, the Group issued 11.4 million
SARs at an exercise price of €89.70 each ($98.76 for Chrysler employees), of which 8.2 million SARs are outstanding and exercisable at December 31, 2005.

As
discussed above (see "Stock Option Plans"), in the second quarter of 1999 DaimlerChrysler converted all options granted under its existing stock option plans from 1997 and 1998 into
SARs.

F-54

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In
conjunction with the consummation of the merger between Daimler-Benz and Chrysler in 1998, the Group implemented a SAR plan through which 22.3 million SARs were
issued at an exercise price of $75.56 each, of which 10.0 million SARs are outstanding and exercisable at December 31, 2005. The initial grant of SARs replaced Chrysler fixed stock
options that were converted to DaimlerChrysler Ordinary Shares as of the consummation of the merger. SARs which replaced stock options that were exercisable at the time of the consummation of the
merger were immediately exercisable at the date of grant. SARs related to stock options that were not exercisable at the date of consummation of the merger became exercisable in two installments; 50%
on the six-month and one-year anniversaries of the consummation date.

A
summary of the activity related to the Group's SAR plans as of and for the years ended December 31, 2005, 2004 and 2003 is presented below (SARs in millions; per share amounts
in €):

2005

2004

2003Number
of SARs

Weighted-
average
exercise
price

Number
of SARs

Weighted-
average
exercise
price

Number
of SARs

Weighted-
average
exercise
priceOutstanding at beginning of year

32.5

71.37

36.3

74.24

40.3

79.13Granted











Exercised











Forfeited

(4.5
)
67.16

(3.8
)
72.54

(4.0
)
75.00Outstanding at year-end

28.0

76.65

32.5

71.37

36.3

74.24SARs exercisable at year-end

28.0

76.65

32.5

71.37

36.3

74.24


Compensation
expense or benefit (representing the reversal of previously recognized expense) on SARs is recorded based on changes in the market price of DaimlerChrysler Ordinary Shares.
For the years ended December 31, 2005, 2004 and 2003, the Group recognized no compensation expense in connection with SARs, because the options underlying exercise prices were greater than the
market price for DaimlerChrysler Ordinary Shares at December 31, 2005.

Medium Term Incentive Awards.The Group granted medium term incentives to certain eligible employees
with three year performance periods. The amount ultimately earned in cash at the end of a performance period is primarily based on the degree of achievement of corporate goals derived from competitive
and internal planning benchmarks and the value of DaimlerChrysler Ordinary Shares at the end of three year performance periods. The benchmarks are return on net assets and return on sales. In 2005 no
medium term incentive awards (2004: 0.7 million awards; 2003: 1.3 million awards) were issued.

The
Group considers the medium term incentive awards with their fair value in the accrued liabilities and recognized €25 million gains (2004:
€12 million expenses; 2003: €35 million expenses) from the valuation of this accrued liability.

F-55

---



25. Accrued Liabilities

Accrued liabilities are comprised of the following:

At December 31,

At December 31,2005

2004(in millions of €)

Total

Due after
one year

Total

Due after
one yearPension plans and similar obligations (see Note 25a)

15,482

12,845

13,923

12,634Income and other taxes

3,396

1,166

3,344

1,884Other accrued liabilities (see Note 25b)

27,804

11,839

24,671

8,77146,682

25,850

41,938

23,289


a)     Pension Plans and Similar Obligations

Pension plans and similar obligations are comprised of the following components:

At December 31,(in millions of €)

2005

2004Pension liabilities (pension plans)

5,275

5,606Other postretirement benefits

9,825

8,021Other benefit liabilities

382

29615,482

13,923


The
decrease of the pension liabilities of €0.3 billion resulted primarily from the transfer of the Group's Off-Highway pension liabilities to
"Disposal Group Off-Highway, Liabilities Held for Sale" (see Note 10).

The
increase in accrued other postretirement benefits of €1.8 billion resulted mainly from currency exchange rate effects and from the annual increase of the
accruals less payments to beneficiaries.

Pension Plans

The Group provides pension benefits to substantially all of its hourly and salaried employees. Plan benefits are principally based upon years of service. Certain
pension plans are based on salary earned in the last year or last five years of employment while others are fixed plans depending on ranking (both wage level and position).

Funded Status.The following information with respect to the Group's pension plans is presented by
German Plans and non-German Plans (principally comprised of plans in the U.S.). The funded status of the projected benefit obligations is as follows:

At December 31, 2005

At December 31, 2004(in millions of €)

Total

German
Plans

Non-German
Plans

Total

German
Plans

Non-German
PlansProjected benefit obligations

41,514

15,163

26,351

34,448

12,628

21,820Less fair value of plan assets

(34,348
)
(10,590
)
(23,758
)
(27,804
)
(9,019
)
(18,785
)Funded status

7,166

4,573

2,593

6,644

3,609

3,035


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---



A
reconciliation of the funded status to the amounts recognized in the consolidated balance sheets is as follows:

At December 31, 2005

At December 31, 2004(in millions of €)

Total

German
Plans

Non-German
Plans

Total

German
Plans

Non-German
PlansFunded status

7,166

4,573

2,593

6,644

3,609

3,035Amounts not recognized:Unrecognized actuarial net losses

(13,270
)
(5,299
)
(7,971
)
(11,356
)
(4,166
)
(7,190
)Unrecognized prior service cost

(2,470
)
(2
)
(2,468
)
(2,143
)
(2
)
(2,141
)Net assets recognized

(8,574
)
(728
)
(7,846
)
(6,855
)
(559
)
(6,296
)Amounts recognized in the consolidated balance sheets consist of:Prepaid pension cost

(595
)


(595
)
(246
)


(246
)Accrued pension liability

5,275

3,141

2,134

5,606

2,927

2,679Disposal group off-highway, liabilities held for sale

321

321







Intangible assets

(2,375
)


(2,375
)
(2,074
)


(2,074
)Accumulated other comprehensive loss

(11,200
)
(4,190
)
(7,010
)
(10,141
)
(3,486
)
(6,655
)Net assets recognized

(8,574
)
(728
)
(7,846
)
(6,855
)
(559
)
(6,296
)


In
2005 DaimlerChrysler used the rates from the 2005 Heubeck mortality tables G for the valuation of the German pension obligations. Previously, DaimlerChrysler used the rates from 1998
Heubeck mortalitiy tables. The new mortality tables reflect longer living expectation for current employees and lower living expectation for retirees, which resulted in a minor increase of projected
benefit obligations for 2005.

F-57

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The
development of the projected benefit obligation and the plan assets in 2005 and 2004 is as follows:

At December 31, 2005

At December 31, 2004(in millions of €)

Total

German
Plans

Non-German
Plans

Total

German
Plans

Non-German
PlansChange in projected benefit obligations:Projected benefit obligations at beginning of year

34,448

12,628

21,820

32,132

11,165

20,967Foreign currency exchange rate changes

3,391



3,391

(1,351
)


(1,351
)Service cost

739

296

443

681

256

425Interest cost

1,874

588

1,286

1,878

586

1,292Plan amendments

233



233

67



67Actuarial losses

2,923

2,163

760

2,146

1,110

1,036Acquisitions and other

53

53



852

58

794Settlement / curtailment loss

49



49

134

3

131Benefits paid

(2,196
)
(565
)
(1,631
)
(2,091
)
(550
)
(1,541
)Projected benefit obligations at end of year

41,514

15,163

26,351

34,448

12,628

21,820Change in plan assets:Fair value of plan assets at beginning of year

27,804

9,019

18,785

26,328

8,183

18,145Foreign currency exchange rate changes

3,038



3,038

(1,252
)


(1,252
)Actual return on plan assets

3,951

1,518

2,433

2,854

664

2,190Employer contributions

1,661

534

1,127

1,649

638

1,011Plan participant contributions

18



18

19



19Acquisitions and other







188



188Benefits paid

(2,124
)
(481
)
(1,643
)
(1,982
)
(466
)
(1,516
)Fair value of plan assets at end of year

34,348

10,590

23,758

27,804

9,019

18,785


Plan Assets.At December 31, 2005, plan assets were invested in diversified
portfolios that consisted primarily of debt and equity securities. Assets and income accruing on all pension trust and relief funds are used solely to pay pension benefits and administer the plans.
The Group's pension asset allocation at December 31, 2005 and 2004, and target allocation for the year 2006, are presented in the following table:

Plan Assets German Plans

Plan Assets Non-German Plans(in % of plan assets)

2006
planned

2005

2004

2006
planned

2005

2004Equity securities

56

56

56

61

61

61Debt securities

35

36

36

24

25

28Alternative investments

4

2

1

9

7

5Real estate

3

2

2

5

5

4Other

2

4

5

1

2

2


Alternative
investments consist of private equity and debt investments and, beginning in 2005 investments in commodities and hedge funds.

F-58

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Every
3-5 years, or more frequently if appropriate, DaimlerChrysler conducts asset-liability studies for its major pension funds. DaimlerChrysler uses the expertise of
external investment and actuarial advisors. These studies are intended to determine the optimal long-term asset allocation with regard to the liability structure. The resulting Model
Portfolio allocation is intended to minimize the economic cost of defined benefit schemes and to limit the risks to an appropriate level.

The
Model Portfolio is then expanded to a medium term Benchmark Portfolio. The Benchmark Portfolio matches the asset class weights in the Model portfolio, but expands the asset classes
by adding of sub-asset-classes with corresponding weights and assigning specific capital market indices to each sub-asset class.

Modern
Portfolio Theory is then applied to determine an optimal one-year target allocation, the performance of which is tracked against the Benchmark Portfolio.

The
entire process is overseen by investment committees which consist of senior financial management from treasury and certain appropriate executives. The investment committees meet
regularly to approve the asset allocations, review the risks and results of the major pension funds and approve the selection and retention of external managers of specific portfolios.

The
majority of investments are in international blue chip equities and high quality government and corporate bonds. To maintain a wide range of diversification and to improve return
opportunities, up to approximately 20% of assets are allocated to private equity, high yield debt, convertible instruments, emerging markets, commodities and hedge funds. Internal controlling units
monitor all investments regularly. External depositary banks provide safekeeping of securities and reporting of transactions and assets.

Assumptions.The measurement date for the Group's pension obligations and plan assets is generally
December 31. The measurement date for the Group's net periodic pension cost is principally January 1. Assumed discount rates and rates of increase in remuneration used in calculating the
projected benefit obligations together with long-term rates of return on plan assets vary according to the economic conditions of the country in which the pension plans are situated.

The
following weighted average assumptions were used to determine benefit obligations:

German Plans

Non-German Plans2005

2004

2003

2005

2004

2003(in %)Average assumptions:Discount rate

4.0

4.8

5.3

5.4

5.8

6.2Rate of long-term compensation increase

3.0

3.0

3.0

4.4

4.5

4.5


The
following weighted average assumptions were used to determine net periodic pension cost:

German Plans

Non-German Plans2005

2004

2003

2005

2004

2003(in %)Average assumptions:Discount rate

4.8

5.3

5.8

5.8

6.2

6.7Expected return on plan assets (at the beginning of the year)

7.5

7.5

7.5

8.5

8.5

8.5Rate of long-term compensation increase

3.0

3.0

3.0

4.5

4.5

5.4


Expected Return on Plan Assets.The expected rate of return for German and non-German
plan assets is primarily derived from asset allocation of pension funds and expected future returns for the various asset classes

F-59

---



in
portfolios. The investment committees survey banks and large asset portfolio managers about their expectations of future returns of the relevant market indices. The allocation weighted average
return expectations serves an initial indicator for the expected rate of return on plan assets for each pension fund.

In
addition, we consider long-term actual portfolios results and historical market returns in evaluation in order to reflect the long-term character of the
expected rate.

From
January 1, 2003 to December 31, 2005, the expected rate of return was 7.5% and 8.5% for German and non-German plans, respectively. For 2006, the expected
rates of return on plan assets for German and non-German plans are the same as the respective rates used in 2005.

Net Pension Cost.The components of net pension cost were for the years ended December 31,
2005, 2004 and 2003 as follows:

|                               |                                           | 2005   |     | 2004 |     | 2003   |    
|------------------------------ | ----------------------------------------- | ------ | --- | ---- | --- | ------ | ---
|
|(in millions of €)             |                                           |        |     |      |     |        |    
|Service cost                   |                                           | 739    |     | 296  |     | 443    |    
|Interest cost                  |                                           | 1,874  |     | 588  |     | 1,286  |    
|Expected return on plan assets |                                           | (2,377 | )   | (673 | )   | (1,704 | )  
|Amortization of:               |                                           |        |     |      |     |        |    
|                               | Unrecognized net actuarial (gains) losses |        | 600 |      | 183 |        | 417
|                               | Unrecognized prior service cost           |        | 279 |      |    |        | 279
|                               |                                           |        |     |      |     |        |    
|Net periodic pension cost      |                                           | 1,115  |     | 394  |     | 721    |    
|Settlement / curtailment loss  |                                           | 16     |     |     |     | 16     |    
|                               |                                           |        |     |      |     |        |    
|Net pension cost               |                                           | 1,131  |     | 394  |     | 737    |    
|                               |                                           |        |     |      |     |        |    

Contributions.Employer contributions to the Group's defined benefit pension plans
were €1,661 million and €1,649 million for the years ended December 31, 2005 and 2004, respectively. Employer cash contributions to the Group's
defined benefit pension plans are expected to approximate €1.9 billion in 2006, of which €0.5 billion is estimated to be needed to satisfy minimum funding
and contractual requirements and an additional €1.4 billion is expected to be contributed at the Group's discretion.

Estimated Future Pension Benefit Payments.Pension benefits pertaining to the Group's German and
non-German plans were €565 million and €1,631 million, respectively during 2005, and €550 million and
€1,541 million, respectively during 2004. The total estimated future pension benefits to be paid by the Group's pension plans for the next 10 years approximates
€25.4 billion and are expected to be paid as follows:

2006

2007

2008

2009

2010

2011-
2015(in billions of €)German Plans

0.6

0.6

0.6

0.7

0.7

3.9Non-German Plans

1.7

1.8

1.8

1.8

1.9

9.3Total

2.3

2.4

2.4

2.5

2.6

13.2


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Accumulated Benefit Obligation.For all pension plans that have an accumulated benefit obligation in
excess of plan assets, information pertaining to the accumulated benefit obligation and plan assets are presented as follows:

At December 31,

At December 31,

At December 31,2005

2004

2003(in millions of €)Projected benefit obligation

41,099

33,749

31,487Accumulated benefit obligation

39,379

32,627

30,547Plan Assets

33,953

27,141

25,660


The
pretax increase of the minimum pension liability in 2005 resulted in a reduction of stockholder's equity by €170 million (2004:
€1,224 million) and is included in other comprehensive loss.

Other Postretirement Benefits

Certain DaimlerChrysler operations in the U.S. and Canada provide postretirement health and life insurance benefits to their employees. Upon retirement from
DaimlerChrysler, the employees may become eligible for continuation of these benefits. The benefits and eligibility rules may be modified.

Funded Status.The funded status of the accumulated postretirement benefit obligations is as follows:

At December 31,2005

2004(in millions of €)Accumulated postretirement benefit obligations

17,711

14,355Less fair value of plan assets

(1,912
)
(1,547
)Funded status

15,799

12,808


A
reconciliation of the funded status to the liability recognized for accrued postretirement health and life insurance benefits in pension plans and similar obligations is as follows:

At December 31,2005

2004(in millions of €)Funded status

15,799

12,808Amounts not recognized:Unrecognized actuarial net losses

(6,189
)
(4,721
)Unrecognized prior service cost

215

(66
)Net liability recognized

9,825

8,021


F-61

---



The
development of the accumulated postretirement benefit obligations and the plan assets in 2005 and 2004 is as follows:

At December 31,2005

2004(in millions of €)Change in accumulated postretirement benefit obligations:Accumulated postretirement benefit obligations at beginning of year

14,355

14,910Foreign currency exchange rate changes

2,280

(1,053
)Service cost

273

255Interest cost

917

863Plan amendments

(289
)
4Actuarial losses

1,004

127Settlement/curtailment loss

15

46Benefits paid

(844
)
(797
)Accumulated postretirement benefit obligations at end of year

17,711

14,355Change in plan assets:Fair value of plan assets at beginning of year

1,547

1,531Foreign currency exchange rate changes

241

(132
)Actual gains (losses) on plan assets

134

160Plan participant contributions

1

Benefits paid

(11
)
(12
)Fair value of plan assets at end of year

1,912

1,547


Plan Assets.At December 31, 2005, plan assets were invested in diversified portfolios that
consisted primarily of debt and equity securities. Assets and income accruing on all pension trust and relief funds are used solely to pay benefits and administer the plans. The Group's other benefit
plan asset allocation at December 31, 2005 and 2004, and target allocations for 2006 are as follows:

2006
planned

2005

2004(in % of plan assets)Equity securities

65

67

68Debt securities

35

33

32Real estate








Asset
allocation is based on a Benchmark Portfolio designed to diversify investments among the following primary asset classes: U.S. Equity, International Equity and U.S. Fixed Income.
The objective of the Benchmark Portfolio is to achieve a reasonable balance between risk and return.

The
investment process is overseen by Investment Committees which consist of senior financial management and other appropriate executives. The Investment Committees meet regularly to
approve the asset allocations and review the risks and results of the funds and approve the selection and retention of external managers of specific portfolios.

The
majority of investments reflect the asset classes designated by the Benchmark Portfolio. To maintain a wide range of diversification and improve return possibilities, a small
percentage of assets (approximately 5%) is allocated to highly promising markets such as High Yield Debt and Emerging Markets. Internal controlling units

F-62

---



monitor
all investments regularly. External depositary banks provide safekeeping of securities as well as reporting of transactions and assets.

Estimated Future Subsidies due to Medicare Act.The total estimated future subsidies due to Medicare
Act for the next 10 years approximate €717 million and are expected to be received as follows:

2006

2007

2008

2009

2010

2011-
2015(in millions of €)Medicare Act

53

57

61

65

69

412


Contributions.DaimlerChrysler did not make any contributions to its other postretirement plans in
2005 or 2004 and does not expect to make any contributions in 2006.

Assumptions.The measurement date for the Group's accumulated other postretirement benefit
obligations and plan assets is generally December 31. The measurement date for the Group's net periodic postretirement benefit cost is principally January 1. Assumed discount rates and
rates of increase in remuneration used in calculating the accumulated postretirement benefit obligations together with long-term rates of return on plan assets vary according to the
economic conditions of the country in which the plans are situated.

The
weighted average assumptions used to determine the benefit obligations of the Group's postretirement benefit plans at December 31 were as follows (in %):

2005

2004

2003Average assumptions:Discount rate

5.7

6.0

6.3Health care inflation rate in following (or "base") year

7.4

8.0

8.0Ultimate health care inflation rate (2011/2011/2008)

5.0

5.0

5.0


The
weighted average assumptions used to determine the net periodic postretirement benefit cost of the Group's postretirement benefit plans were as follows (in %):

2005

2004

2003Average assumptions:Discount rate

6.0

6.3

6.8Expected return on plan assets (at the beginning of the year)

8.5

8.5

8.5Health care inflation rate in following (or "base") year

8.0

8.0

10.0Ultimate health care inflation rate (2011)

5.0

5.0

5.0


U.S.
postretirement benefit plan assets utilize an asset allocation substantially similar to that of the pension assets so the expected rate of return is the same for both pension and
postretirement benefit plan asset portfolios. Accordingly, the information about the expected rate of return on pension plan assets described above also applies to postretirement plan assets. For 2006
the expected rate of return on plan assets is the same as the rate applied in 2005.

F-63

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The
assumptions have a significant effect on the amounts reported for the Group's health care plans. The following schedule presents the effects of a one-percentage-point
change in assumed ultimate health care cost inflation rates as from 2011:

1-Percentage-
Point
Increase

1-Percentage-
Point
Decrease(in millions of €)Effect on total of service and interest cost components

191

(129
)Effect on accumulated postretirement benefit obligations

2,223

(1,805
)


Net Postretirement Benefit Cost.The components of net periodic postretirement benefit cost for the
years ended December 31, 2005, 2004 and 2003 were as follows:

2005

2004

2003(in millions of €)Service cost

273

255

278Interest cost

917

863

983Expected return on plan assets

(155
)
(159
)
(217
)Amortization of:Unrecognized net actuarial (gains) losses

301

208

220Unrecognized prior service cost

(8
)
3

24Net periodic postretirement benefit cost

1,328

1,170

1,288Settlement/curtailment loss

3

3

2Net postretirement benefit cost

1,331

1,173

1,290


Estimated Future Postretirement Benefit Payments.Postretirement benefits paid pertaining to the
Group's plans were €844 million and €797 million during 2005 and 2004, respectively. The total estimated future postretirement benefits to be paid by the
Group's plans for the next 10 years approximate €11.6 billion and are expected to be paid as follows:

2006

2007

2008

2009

2010

2011-
2015(in billions of €)Expected payments

1.0

1.0

1.1

1.1

1.2

6.2


Prepaid Employee Benefits.In 1996 DaimlerChrysler established a Voluntary Employees' Beneficiary
Association ("VEBA") trust for payment of non-pension employee benefits. At December 31, 2005 and 2004, the VEBA trust had a balance of €2,392 million and
€2,023 million, respectively, of which the long-term assets in the VEBA trust of €1,835 million and €1,474 million,
respectively, are reported as plan assets for the accumulated postretirement benefit obligations and not reported in DaimlerChrysler's Consolidated Balance Sheets. The short-term assets in
the VEBA trust are classified as cash and marketable securities in DaimlerChrysler's Consolidated Balance Sheets. No contributions to the VEBA trust were made in 2005, 2004 and 2003. DaimlerChrysler
does not expect to make any contributions to the VEBA trust in 2006.

F-64

---



b) Other Accrued Liabilities

Other accrued liabilities consisted of the following:

At December 31,2005

2004(in millions of €)Product guarantees

11,632

10,877Accrued sales incentives

5,381

4,680Accrued personnel and social costs

3,219

2,938Derivative financial instruments

1,706

326Other

5,866

5,85027,804

24,671


The
Group issues various types of product guarantees under which it generally guarantees the performance of products delivered and services rendered for a certain period or term (see
Note 32). The accrued liability for these product guarantees covers expected costs for legally and contractually obligated warranties as well as expected costs for policy coverage, recall
campaigns and buyback commitments. The liability for buyback commitments represents the expected costs related to the Group's obligation, under certain conditions, to repurchase a vehicle from a
customer. Buybacks may occur for a number of reasons including litigation, compliance with laws and regulations in a particular region and customer satisfaction issues.

The
changes in provisions for those product guarantees are summarized as follows:

2005

2004(in millions of €)Balance at January 1

10,877

9,230Currency change and change in consolidated companies

767

334Utilizations and transfers

(5,587
)
(4,712
)Product guarantees issued in respective year

5,012

4,807Changes from prior period product guarantees issued

563

1,218Balance at December 31

11,632

10,877


The
amount included in the line item "Product guarantees issued in respective year" represents the additions to the accruals for product guarantees recognized in the corresponding year
for products sold in this year.

In
2005, "Changes from prior period product guarantees issued" are partly offset by payments received from suppliers in settlement of claims for recovery of the costs for recall
campaigns.

The
Group also offers customers the opportunity to purchase separately priced extended warranty and maintenance contracts. The revenue from these contracts is deferred at the inception
of the contract and recognized into income over the contract period in proportion to the costs expected to be incurred based on

F-65

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historical
information. Included in "Deferred income" on the Consolidated Balance Sheets, the deferred revenue from these contracts is summarized as follows:

2005

2004(in millions of €)Balance at January 1

1,115

1,129Currency change and transfers

226

(147
)Deferred revenue current period

694

611Earned revenue current period

(487
)
(478
)Balance at December 31

1,548

1,115


The
provisions for derivative financial instruments are mainly due to exchange rate risks from financial liabilities and future sales revenues. The deviation from previous year is
especially attributable to the changed currency relation of the Euro in relation to the U.S. dollar.

F-66

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26. Financial Liabilities

|                                                                                                                    |                                      |            |      | At December 31,
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------- | ---- | ---------------
|
|(in millions of €)                                                                                                  |                                      |            |      |                
|Short-term:                                                                                                         |                                      |            |      |                
|Notes/Bonds                                                                                                         |                                      |            |      | 12,530         
|Commercial paper                                                                                                    |                                      |            |      | 9,104          
|Liabilities to financial institutions                                                                               |                                      |            |      | 9,860          
|Liabilities to affiliated companies                                                                                 |                                      |            |      | 417            
|Deposits from direct banking business                                                                               |                                      |            |      | 3,045          
|Loans, other financial liabilities                                                                                  |                                      |            |      | 27             
|Liabilities from capital lease and residual value guarantees                                                        |                                      |            |      | 1,500          
|                                                                                                                    |                                      |            |      |                
|Short-term financial liabilities (due within one year)                                                              |                                      |            |      | 36,483         
|                                                                                                                    |                                      |            |      |                
|Long-term:                                                                                                          |                                      | Maturities |      |                
|Notes/Bonds                                                                                                         |                                      | 2007-      |      |                
|                                                                                                                    | of which due in more than five years |            | 2097 |                
|                                                                                                                    | €10,939 (2004: €10,492)              |            |      |                
|Liabilities to financial institutions                                                                               |                                      | 2007-      |      |                
|                                                                                                                    | of which due in more than five years |            | 2019 |                
|                                                                                                                    | €1,469 (2004: €1,265)                |            |      |                
|Liabilities to affiliated companies
of which due in more than five years
€ (2004: €)                              |                                      |            |      | 76             
|Deposits from direct banking business
of which due in more than five years
€9 (2004: €9)                            |                                      |            |      | 160            
|Loans, other financial liabilities
of which due in more than five years
€ (2004: €)                               |                                      |            |      |               
|Liabilities from capital lease and residual value guarantees
of which due in more than five years
€210 (2004: €210) |                                      |            |      | 1,699          
|                                                                                                                    |                                      |            |      |                
|Long-term financial liabilities                                                                                     |                                      |            |      | 44,449         
|                                                                                                                    |                                      |            |      |                
|                                                                                                                    |                                      |            |      | 80,932         
|                                                                                                                    |                                      |            |      |                

Weighted
average interest rates for notes/bonds, commercial paper, liabilities to financial institutions and deposits from direct banking business are 5.70%, 4.08%, 4.54% and 2.24%,
respectively, at December 31, 2005.

Commercial
papers are primarily denominated in euros and U.S. dollars and include accrued interest. Liabilities to financial institutions are partly secured by mortgage conveyance, liens
and assignment of receivables of approximately €2,219 million (2004: €2,232 million).

F-67

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Aggregate
nominal amounts of financial liabilities maturing during the next five years and thereafter are as follows:

2006

2007

2008

2009

2010

thereafter(in millions of €)Financial liabilities

36,601

13,474

11,760

4,169

2,370

12,482


At
December 31, 2005, the Group had unused short-term credit lines of €7,099 million (2004: €9,278 million) and unused
long-term credit lines of €10,806 million (2004: €8,981 million). The credit lines include an $18 billion revolving credit facility
with a syndicate of international banks. The credit agreement is comprised of a multi-currency revolving credit facility which allows DaimlerChrysler AG to borrow up to $5 billion until
December 2009 and $4.8 billion until December 2010, respectively, an U.S. dollar revolving credit facility which allows DaimlerChrysler North America Holding Corporation, a
wholly-owned subsidiary of DaimlerChrysler AG, to borrow up to $6 billion available until May 2006, and a multi-currency revolving credit facility for working capital purposes which
allows DaimlerChrysler AG and several subsidiaries to borrow up to $7 billion until May 2008. A part of the $18 billion facility serves as back-up for commercial paper
drawings.

27. Trade Liabilities

At December 31, 2005

At December 31, 2004Total

Due after one
and before
five years

Due after
five years

Total

Due after one
and before
five years

Due after
five years(in millions of €)Trade liabilities

14,591

1



12,920

2




28. Other Liabilities

At December 31, 2005

At December 31, 2004Total

Due after one
and before
five years

Due after
five years

Total

Due after one
and before
five years

Due after
five years(in millions of €)Liabilities to affiliated companies

334



224

354

10

Liabilities to related companies

96

5



77



Other liabilities

8,623

260

139

8,314

542

1669,053

265

363

8,745

552

166


As
of December 31, 2005, other liabilities include tax liabilities of €1,147 million (2004: €803 million) and social benefits due of
€808 million (2004: €774 million).

29. Deferred Income

As of December 31, 2005, €3,105 million of the total deferred income is to be recognized after more than one year (2004:
€2,088 million).

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Notes to Consolidated Statements of Cash Flows

30. Consolidated Statements of Cash Flows

The following cash flows represent supplemental information with respect to net cash provided by operating activities:

Year ended December 31,2005

2004

2003(in millions of €)Interest paid

3,652

3,092

3,207Income taxes paid

700

1,373

937


For
the year ended December 31, 2005, net cash provided by financing activities included payments / (proceeds) of early terminated cross currency hedges, related to financial
liabilities, of €72 million (2004: €(1,304) million; 2003: €(556) million).

Other Notes

31. Legal Proceedings

Various legal proceedings are pending against the Group. We believe that such proceedings in the main constitute ordinary routine litigation incidental to its
business.

The
official receiver of Garage Bernard Tutrice S.A., France, a former customer of DaimlerChrysler France S.A.S., filed a lawsuit against DaimlerChrysler France in the commercial court
of Versailles in November 2003. The complaint seeks damages of €455 million alleged to have resulted from tax fraud committed by the former Chairman of Tutrice S.A. who
was convicted of tax fraud in April, 2001. In January 2006, the court ordered DaimlerChrysler France to pay €30 million in compensatory damages, and rejected the rest of
the claim.

In
October 2005, DaimlerChrysler Australia/Pacific Pty. Ltd. ("DCAuP") settled the previously reported actions filed in the Supreme Court of New South Wales by National
Australia Bank Limited and the liquidator in connection with the financial failure of a customer. The settlement agreement provides for payment by DCAuP of AUD55 million and a release from all
further claims.

DaimlerChrysler
AG in its capacity as successor of Daimler-Benz AG is a party to a valuation proceeding (Spruchstellenverfahren) relating to a subordination and profit
transfer agreement that existed
between Daimler-Benz AG and the former AEG AG ("AEG"). In 1988, former AEG shareholders filed a petition to the regional court in Frankfurt claiming that the consideration and compensation
stipulated in the agreement was inadequate. In 1994, a court-appointed valuation expert concluded that the consideration provided for in the agreement was adequate. Following a Federal Constitutional
Court decision in an unrelated case, the Frankfurt court in 1999 instructed the expert to employ a market value approach in its valuation analysis rather than the capitalized earnings value approach
previously used. The court also instructed the expert in 2004 to take into account additional findings of the Federal Supreme Court elaborating further on the valuation issue addressed by the Federal
Constitutional Court. In September 2004, the expert delivered the requested valuation opinion. If the new opinion were to be followed by the Frankfurt court, the valuation ratio would increase
significantly in favour of the AEG shareholders. DaimlerChrysler believes the original consideration and compensation to be adequate and the second valuation opinion to be unwarranted. DaimlerChrysler
intends to defend itself vigorously against the claims in this proceeding.

In
1999, former shareholders of Daimler-Benz AG instituted a valuation proceeding (Spruchstellenverfahren) against DaimlerChrysler AG at Stuttgart district court. These
proceedings relate to the merger of Daimler-Benz AG

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and
DaimlerChrysler AG in connection with the business combination of Daimler-Benz and Chrysler Corporation in 1998. In the course of the merger, 1.8% of all shares in
Daimler-Benz AG were involuntarily exchanged for DaimlerChrysler shares. Some shareholders claim that the ratio used in the course of the merger did not correspond to the actual value of
the Daimler-Benz shares. An expert commissioned by the court presented his report in December 2005. In it, he has calculated various alternative values for payments to be made.
These alternatives range from confirming the appropriateness of the ratio used to considerable payments to be made to the former Daimler-Benz shareholders with respect to the involuntarily
exchanged shares. DaimlerChrysler continues to view the exchange ratio set by the company at the time as appropriate, and the alternative values calculated by the court expert as unfounded. We intend
to continue defending ourselves vigorously against these claims.

Various
legal proceedings are pending against DaimlerChrysler AG or its subsidiaries alleging defects in various components (including occupant restraint systems, seats, brake systems,
tires, ball joints, engines and fuel systems) in several different vehicle models or allege design defects relating to vehicle stability (rollover propensity), pedal misapplication (sudden
acceleration), brakes (vibration and brake transmission shift interlock), or crashworthiness. Some of these proceedings are filed as class action lawsuits that seek repair or replacement of the
vehicles or compensation for their alleged reduction in value, while others seek recovery for damage to property, personal injuries or wrongful death. Adverse decisions in one or more proceedings
could require DaimlerChrysler or its subsidiaries to pay partially substantial compensatory and punitive damages, or undertake service actions, recall campaigns or other costly actions.

Seven
purported class action lawsuits are pending in various U.S. courts regarding alleged front disc brake judder in 1999-2004 model year Jeep® Grand Cherokee
vehicles and the treatment
of related warranty claims. Plaintiffs seek compensatory and punitive damages, costs of repair or replacement, attorneys' fees and costs.

Three
purported class action lawsuits are pending in various U.S. courts that allege that the paint applied to 1982-1997 model year Chrysler, Plymouth, Jeep® and
Dodge vehicles delaminates, peels or chips as the result of defective paint, paint primer, or application processes. Plaintiffs seek compensatory and punitive damages, costs of repair or replacement,
attorneys' fees and costs. Seven other previously reported class action lawsuits regarding paint delamination have been dismissed.

In
November 2004, a jury awarded $3.75 million in compensatory damages and $98 million in punitive damages against DaimlerChrysler Corporation in Flax v.
DaimlerChrysler Corporation, a case filed in Davidson County Circuit Court in the state of Tennessee. The complaint alleged that the seat back in a 1998 Dodge Grand Caravan was defective and collapsed
when the Caravan was struck by another vehicle resulting in the death of an occupant. In June 2005 the trial court reduced the punitive damage award to $20 million in response to motions
filed by DaimlerChrysler Corporation challenging the verdict and the damage awards. DaimlerChrysler Corporation is appealing the verdict and the damage awards.

In
October 2005, the Arizona Court of Appeals reversed the $50 million punitive damages award and affirmed the $3.75 million compensatory damages award in Douglas v.
DaimlerChrysler Corporation, a case involving the front seat back strength of a 1996 Dodge Ram club cab pickup. DaimlerChrysler Corporation is defending approximately 25 other complaints involving
vehicle seat back strength.

The
U.S. Environmental Protection Agency filed a complaint in the U.S. District Court for the District of Columbia against DaimlerChrysler Corporation in December 2005 alleging
defects in catalytic converters and on-board diagnostic systems in certain Chrysler Group vehicles, and failure to properly disclose defects in such converters. The parties have agreed to
the terms of a consent decree in settlement of the complaint. The settlement requires DaimlerChrysler Corporation to, among other things, extend the warranties on catalytic converters in certain
1996 - 2000 vehicles, and reprogram the powertrain control modules in certain 1996 - 1998 vehicles with updated on-board diagnostic systems
calibrations. DaimlerChrysler Corporation also settled a related parallel

F-70

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administrative
proceeding with the California Air Resources Board. The estimated cost of such remedial actions and related settlement payments is approximately $95 million.

Like
other companies in the automotive industry, DaimlerChrysler (primarily DaimlerChrysler Corporation) have experienced a growing number of lawsuits which seek compensatory and
punitive damages for illnesses
alleged to have resulted from direct and indirect exposure to asbestos used in some vehicle components (principally brake pads). Typically, these suits name many other corporate defendants and may
also include claims of exposure to a variety of non-automotive asbestos products. A single lawsuit may include claims by multiple plaintiffs alleging illness in the form of asbestosis,
mesothelioma or other cancer or illness. The number of claims in these lawsuits increased from approximately 14,000 at the end of 2001 to approximately 28,000 at the end of 2005. In the majority of
these cases, plaintiffs do not specify their alleged illness and provide little detail about their alleged exposure to components in DaimlerChrysler's vehicles. Some plaintiffs do not exhibit current
illness, but seek recovery based on potential future illness. DaimlerChrysler believes that many of these lawsuits involve unsubstantiated illnesses or assert only tenuous connections with components
in its vehicles, and that there is credible scientific evidence to support the dismissal of many of these claims. Although DaimlerChrysler's expenditures to date in connection with such claims have
not been material to its financial condition, it is possible that the number of these lawsuits will continue to grow, especially those alleging life-threatening illness, and that the
company could incur significant costs in the future in resolving these lawsuits.

A
class action lawsuit was filed in 2002 against Mercedes-Benz USA, LLC ("MBUSA"), and its wholly-owned subsidiary Mercedes-Benz Manhattan, Inc., and is
pending in the United States District Court for the District of New Jersey. The lawsuit alleges that those companies participated in a price fixing conspiracy among Mercedes-Benz dealers.
MBUSA and Mercedes-Benz Manhattan continue to defend themselves vigorously.

DaimlerChrysler
received a "statement of objections" from the European Commission on April 1,1999, which alleged that the Group violated EU competition rules by impeding
cross-border sales of Mercedes-Benz passenger cars to final customers in the European Economic Area. In October 2001, the European Commission found that DaimlerChrysler infringed EU
competition rules and imposed a fine of approximately €72 million. On September 15, 2005, the Court of First Instance of the European Court of Justice annulled the
decision in part and reduced the fine to an amount of €9.8 million. Neither party appealed the judgment, which is now final.

More
than 80 purported class action lawsuits alleging violations of antitrust law are pending against DaimlerChrysler and several of its U.S. subsidiaries, six other motor vehicle
manufacturers, operating subsidiaries of those companies in both the United States and Canada, the National Automobile Dealers Association and the Canadian Automobile Dealers Association. Some
complaints were filed in federal courts in various states and others were filed in state courts. The complaints allege that the defendants conspired to prevent the sale to U.S. consumers of vehicles
sold by dealers in Canada in order to maintain new car prices at artificially high levels in the U.S. They seek treble damages on behalf of everyone who bought or leased a new vehicle in the U.S.
since January 1, 2001. DaimlerChrysler believes the complaints against it are without merit and plans to defend itself against them vigorously.

DaimlerChrysler
Services North America LLC ("DCSNA") settled the two previously reported class action lawsuits alleging racially discriminatory credit practices. The court approved
settlements require, among other things, training programs for employees, consumer financial literacy programs, and community outreach for African-Americans and Hispanics.

The
Federal Republic of Germany has initiated arbitration proceedings against DaimlerChrysler Financial Services AG, Deutsche Telekom AG and Toll Collect GbR. The statement of claims of
the Federal Republic of Germany was received in August 2005. The Federal Republic of Germany is mainly seeking damages, contractual penalties and the transfer of intellectual property rights to
Toll Collect GmbH. In particular, the Federal Republic

F-71

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of
Germany is claiming lost revenues of €3.51 billion plus interest (€236 million through July 31, 2005) for the period September 1, 2003,
through December 31, 2004, and contractual penalties of approximately €1.65 billion through July 31, 2005 plus interest (€107 million
through July 31, 2005). Since some of the contractual penalties, among other things, are dependent on time and further claims for contractual penalties have been asserted by the Federal
Republic of Germany, the amount claimed as contractual penalties may increase. DaimlerChrysler believes the claims of the Federal Republic of Germany are without merit and intends to defend itself
vigorously against these claims.

Freightliner
LLC acquired in September 2000 Western Star Trucks Holdings Ltd. Prior to its acquisition by Freightliner, Western Star had completed the sale of a truck
manufacturer, ERF (Holdings) plc, to MAN AG for CAD195 million. In September 2002, MAN filed a claim against Freightliner Ltd. (formerly Western Star) with the London Commercial
Court for fraud and breach of representations and warranties in the share purchase agreement, alleging that ERF's accounts and financial statements were misstated and seeking damages in excess of
GBP300 million. Freightliner Ltd. subsequently filed a contribution claim with that court against Ernst & Young, ERF's and Western Star's auditors. In October 2005, the
court ruled that Freightliner Ltd. was vicariously liable for fraud by an employee of ERF in connection with the preparation of ERF's financial accounts, and also found in favor of
Ernst & Young on the contribution claim. Freightliner Ltd. has appealed both decisions on liability. In December 2005, the court awarded MAN an interim payment of
GBP250 million, based on a minimum estimate of the parties, which amount significantly exceeds Freightliner Ltd.'s net assets. A hearing to determine final damages may be deferred until
resolution of the appeals. In a related matter, MAN sued Freightliner LLC in February 2005 alleging that assets were fraudulently transferred from Freightliner Ltd. while the above
described proceeding was pending, and seeking payment from Freightliner LLC of the damages awarded against Freightliner Ltd. in that proceeding. The complaint, which was amended in
December 2005, is pending in Multnomah County Circuit Court in the state of Oregon. Freightliner LLC intends to defend itself vigorously in this matter.

Tracinda
Corporation filed a lawsuit in 2000 against DaimlerChrysler AG and some of the members of its Supervisory Board and Board of Management alleging that the defendants violated
U.S. securities law and committed fraud in obtaining approval from Chrysler stockholders of the business combination between Chrysler and Daimler-Benz in 1998. On April 7, 2005, the
United States District Court for the District of Delaware rendered a judgment in favor of the defendants and against Tracinda Corporation on all claims finding that there had been no fraud and no
violation of U.S. securities laws. Tracinda is appealing the decision and filed its opening brief with the United States Court of Appeals for the Third Circuit in January 2006.

A
purported class action was filed against DaimlerChrysler AG and some members of its Board of Management in 2004 in the United States District Court for the District of Delaware on
behalf of current or former DaimlerChrysler shareholders who are neither citizens nor residents of the United States and who acquired their DaimlerChrysler shares on or through a foreign stock
exchange. On January 24, 2006, the Court granted DaimlerChrysler's motion to dismiss the complaint, declining to exercise jurisdiction over the case. The complaint, which had not yet been
served on any member of DaimlerChrysler's Board of Management, contained allegations similar to those in the Tracinda complaint and the prior class action complaint. On February 17, 2006, the
plaintiffs filed a notice of appeal of this decision to the United States Court of Appeals for the Third Circuit.

Several
lawsuits, including putative class action lawsuits, were filed in 2002 against a large number of companies from a wide variety of industries and nationalities asserting claims
relating to the practice of apartheid in South Africa. One of the lawsuits names DaimlerChrysler AG as a defendant and another one names a U.S. subsidiary of DaimlerChrysler AG as a defendant. The
lawsuits were consolidated in the United States District Court for the Southern District of New York for pretrial purposes. On November 29, 2004, the Court granted a motion to dismiss filed by
a group of defendants, including DaimlerChrysler. Plaintiffs filed notices of appeal of the Court's decision. The appeal has now been fully briefed. Oral argument was held in January 2006.

F-72

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In August 2004, the U.S. Securities and Exchange Commission ("SEC") opened a formal investigation into possible violations by DaimlerChrysler of the
anti-bribery, record-keeping and internal control provisions of the U.S. Foreign Corrupt Practices Act ("FCPA"). The U.S. Department of Justice ("DOJ") has also requested information in
this regard. DaimlerChrysler is voluntarily sharing with the DOJ and the SEC information from its own internal investigation of certain accounts, transactions and payments, primarily relating to
transactions involving government entities, and is providing the agencies with information pursuant to outstanding subpoenas and other requests. Following is a summary of information DaimlerChrysler
uncovered to date in connection with its internal investigation. Further issues may arise as the company completes its investigation.

DaimlerChrysler
determined that improper payments were made in a number of jurisdictions, primarily in Africa, Asia and Eastern Europe. These payments raise concerns under
the U.S. FCPA, German law, and the laws of other jurisdictions.

In
connection with its internal investigation, DaimlerChrysler has identified and self-reported potential tax liabilities to tax authorities in several
jurisdictions. These tax liabilities of DaimlerChrysler AG and certain foreign affiliates result from misclassifications of, or the failure to record, commissions and other payments and expenses.

DaimlerChrysler
determined that certain payable accounts related to consolidated subsidiaries were not eliminated during consolidation.

DaimlerChrysler
is taking action to address and resolve the issues identified in the course of our investigation to safeguard against the recurrence of improper conduct.
This includes evaluating and revising its governance policies and internal control procedures.

In
connection with these issues, DaimlerChrysler recognized charges in its 2005 consolidated statement of income to correct misstatements relating to the years 2003 and 2004 which had
the effect of reducing 2005 operating profit by €16 million and reducing 2005 net income by €64 million.
In addition, DaimlerChrysler adjusted stockholders' equity as at January 1, 2003 to correct accumulated misstatements in the periods 1994 through 2002 which had the effect of reducing the
January 1, 2003 balance of stockholders' equity by €222 million. DaimlerChrysler recognized a charge of €125 million in the third quarter of 2005
with respect to tax liabilities that had been identified in the course of the internal investigation by the date the unaudited interim financial statements for the third quarter 2005 were issued.
Following its continued investigation of the misstatements discussed above, DaimlerChrysler subsequently determined that any adjustments for pre-2003 periods should be reflected in the
January 1, 2003 balance of stockholders' equity. Accordingly, DaimlerChrysler reversed €100 million of the €125 million charge originally
recognized in the third quarter 2005. This amount is reflected in the €222 million reduction of the January 1, 2003 balance of stockholders' equity.

DaimlerChrysler's
internal investigation into possible violations of law is ongoing. If the DOJ or the SEC determines that violations of U.S. law have occurred, it could seek criminal or
civil sanctions, including monetary penalties, against DaimlerChrysler and certain of its employees, as well as additional changes to its business practices and compliance programs.

DaimlerChrysler
also determined that for a number of years a portion of the taxes related to compensation paid to expatriate employees was not properly reported. In connection with this
underpayment of taxes, DaimlerChrysler recognized charges in its 2005 consolidated statement of income to correct corresponding overstatements relating to the years 2003 and 2004 which had the effect
of reducing 2005 operating profit by €34 million and reducing 2005 net income by €25 million. In addition, DaimlerChrysler adjusted stockholders' equity
as at January 1, 2003 to correct accumulated overstatements of net income in the periods 1994 through 2002 which had the effect of reducing the January 1, 2003 balance of stockholders'
equity by €84 million. DaimlerChrysler voluntarily reported potential tax liabilities resulting from these issues to the tax authorities in several jurisdictions.

F-73

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The
following table provides detailed information about the exact nature and related amount comprising each component of the adjustments made to correct for the misstatements related to
the internal investigation and the expatriate employee compensation:

|                                                                                        |  | Effect of
accumulated
misstatements on
stockholders'
equity as of
January 1, 2003 |   | Effect of out of period
adjustments on
net income 2005 |   | Effect of out of period
adjustments on
operating profit 2005 |  
|--------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- | - | ------------------------------------------------------ | - | ------------------------------------------------------------ | -
|
|Self-reported potential tax liabilities                                                 |  | (265                                                                              | ) | (65                                                    | ) | (34                                                          | )
|                                                                                        |  |                                                                                   |   |                                                        |   |                                                              |  
|Intercompany accounts not properly eliminated in consolidation                          |  | 37                                                                                |   | (15                                                    | ) | (18                                                          | )
|                                                                                        |  |                                                                                   |   |                                                        |   |                                                              |  
|Consolidation of controlled entities previously not consolidated                        |  | 6                                                                                 |   | 16                                                     |   | 10                                                           |  
|                                                                                        |  |                                                                                   |   |                                                        |   |                                                              |  
|SubtotalInternal investigation into possible violations of law                         |  | (222                                                                              | ) | (64                                                    | ) | (42                                                          | )
|                                                                                        |  |                                                                                   |   |                                                        |   |                                                              |  
|Unreported taxes related to compensation of expatriate employees                        |  | (84                                                                               | ) | (25                                                    | ) | (11                                                          | )
|                                                                                        |  |                                                                                   |   |                                                        |   |                                                              |  
|DaimlerChrysler's internal investigation of certain accounts, transactions and payments |  | (306                                                                              | ) | (89                                                    | ) | (53                                                          | )

In
November 2004, the SEC issued a formal order of investigation concerning 13 named participants in the United Nations Oil-for-Food Program seeking to
determine whether there had been acts in violation of the provisions of the Securities Exchange Act of 1934 requiring the maintenance of books, records and accounts, the maintenance of internal
accounting controls and prohibiting specified payments to foreign officials for improper purposes. In July 2005, the SEC supplemented the formal order of investigation to add DaimlerChrysler to
the list of named companies. In that regard, DaimlerChrysler received an order from the SEC to provide a written statement and to produce certain documents regarding transactions in that Program.
DaimlerChrysler is responding to the SEC's request. The DOJ has also requested information in this regard. In addition, the United Nations Independent Inquiry Committee ("IIC") that investigated the
administration and management of the United Nations Oil-for-Food Program asked DaimlerChrysler to provide assistance in the IIC's evaluation of certain transactions under that
Program. On October 27, 2005, the IIC issued its final report on the United Nations Oil-for-Food Program, which includes a narrative describing DaimlerChrysler's alleged
conduct during the Program. In its report, the IIC concludes that DaimlerChrysler knowingly made or caused to be made a kickback payment of approximately €6,950 to the former
Government of Iraq, that a DaimlerChrysler employee signed two side agreements to make additional payments, and that this conduct was in contravention of Program rules and the United Nations sanctions
against Iraq. It is possible that additional payments may be identified as a result of the ongoing SEC and DOJ investigations. If the DOJ or the SEC determines that violations of U.S. law have
occurred, it could seek criminal or civil sanctions, including monetary penalties, against DaimlerChrysler and certain of its employees.

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The
BaFin (German Federal Financial Supervisory Authority) is investigating whether DaimlerChrysler AG's public ad hoc disclosure on July 28, 2005 that Professor Schrempp will
leave the company at the end of 2005 was timely. If the BaFin determines that the company improperly filed such disclosure, it could fine DaimlerChrysler up to €1 million. In a
related matter, the District Attorney's Office in Stuttgart closed the previously reported investigation of alleged insider trading in DaimlerChrysler shares by two DaimlerChrysler senior executives
prior to the ad hoc disclosure. In January 2006 the District Attorney's Office
also opened an investigation of alleged insider tipping by the Chairman of our Supervisory Board in advance of such disclosure. In February 2006, shareholders of DaimlerChrysler who claim
damages based on the alleged unduly delayed ad hoc disclosure filed an application for a model case pursuant to German law (KapMuG).

Litigation
is subject to many uncertainties and DaimlerChrysler cannot predict the outcome of individual matters with assurance. It is reasonably possible that the final resolution of
some of these matters could require the Group to make expenditures, in excess of established reserves, over an extended period of time and in a range of amounts that DaimlerChrysler cannot reasonably
estimate. Although the final resolution of any such matters could have a material effect on the Group's consolidated operating results for a particular reporting period, DaimlerChrysler believes that
it should not materially affect its consolidated financial position.

32. Contingent Obligations and Commercial Commitments

Contingent Obligations.Obligations from issuing guarantees as a guarantor (excluding product warranties) are as
follows:

At December 31,
Maximum potential future obligations

At December 31,
Amount recognized
as a liability(in millions of €)

2005

2004

2005

2004Guarantees for third party liabilities

1,819

2,653

412

486Guarantees under buy-back commitments

1,499

1,646

406

536Other contingent obligations

249

273

125

1783,567

4,572

943

1,200


Guarantees
for third party liabilities principally represent guarantees of indebtedness of non-consolidated affiliated companies and third parties and commitments by Group
companies as to contractual performance by joint venture companies and certain non-incorporated companies, partnerships, and project groups. The terms under these arrangements generally
cover the range of the related indebtedness of the non-consolidated affiliated companies and third parties or the contractual performance period of joint venture companies,
non-incorporated companies, partnerships, and project groups. The parent company of the Group (DaimlerChrysler AG) provides guarantees for certain obligations of its consolidated
subsidiaries towards third parties. At December 31, 2005, these guarantees amounted to €54.0 billion. To a lesser extent, consolidated subsidiaries provide guarantees to
third parties of obligations of other consolidated subsidiaries. All intercompany guarantees are eliminated in consolidation and therefore are not reflected in the above table.

DaimlerChrysler
AG provides a guarantee to Deutsche Bank AG to cover the obligations of employees that are participating in its corporate credit card program for corporate travel
expenses which is operated by Deutsche Bank AG. To date, DaimlerChrysler has not incurred any significant payments from that guarantee which amounted to €651 million as of
December 31, 2004. In March 2005, DaimlerChrysler AG and Deutsche Bank AG concluded an additional agreement that supplements the existing framework agreement, limiting the guarantee for
current and future credit card obligations arising from that program to €20 million.

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Guarantees
under buy-back commitments principally represent arrangements whereby the Group guarantees specified trade-in or resale values for assets or products
sold to non-consolidated affiliated companies and third parties. Such guarantees provide the holder with the right to return purchased assets or products back to the Group, partially also
in connection with a future purchase of products or services. The table above excludes residual value guarantees related to arrangements for which revenue recognition is precluded due to the Group's
obligation to repurchase assets sold to unrelated guaranteed parties.

Other
contingent obligations principally include pledges or indemnifications related to the quality or timing of performance by third parties or participations in performance guarantees
of consortiums. Performance
guarantees typically provide the purchaser of goods or services with the right to be reimbursed for losses incurred or other penalties if the third party or the consortium fails to perform. Amounts
accrued under performance guarantees reflect estimates of probable losses resulting from a third party's failure to perform under obligating agreements.

DaimlerChrysler
AG and its wholly owned subsidiary DaimlerChrysler Financial Services AG have provided various guarantees towards third parties with respect to the investment in Toll
Collect. See Note 3 for detailed information regarding Toll Collect including the guarantees issued. Of the guarantees mentioned in Note 3, only the €600 million
guarantee for the bank loan is reflected in the above table in the line "Guarantees for third party liabilities". The other guarantees are not reflected in the above table since the maximum potential
future obligation resulting from the remaining guarantees cannot be accurately estimated. Accruals established in this regard are also not included in the above table.

When
circumstances indicate that payment is probable and the amount is reasonably estimable, guarantees made by the Group are recognized as a liability in the consolidated balance sheet
in accordance with SFAS 5 "Accounting for Contingencies", with an offsetting amount recorded as an expense (contingent obligation). For guarantees issued or modified after December 31, 2002,
the Group records guarantees at fair value, unless a higher amount must be accrued for in accordance with SFAS 5 (non-contingent obligations). Both contingent obligations and
non-contingent obligations are included in the column "Amount recognized as a liability" in the table above.

In
accordance with FIN 45, the obligations associated with product warranties are not reflected in the above table. See Note 25b for accruals relating to such obligations.

Commercial Commitments.In addition to the above guarantees and warranties, in connection with certain production programs, the Group has
committed to purchase various levels of outsourced manufactured parts and components over extended periods at market prices. The Group has also committed to purchase or invest in the construction and
maintenance of various production facilities. Amounts under these guarantees represent commitments to purchase plant or equipment at market prices in the future. As of December 31, 2005,
commitments to purchase outsourced manufactured parts and components or to invest in plant and equipment are approximately €10.1 billion. These amounts are not reflected in the
above table.

Collins &
Aikman Corporation ("C&A"), a major tier one supplier to the automotive industry, initiated bankruptcy reorganization proceedings in the U.S. and similar proceedings in
England. During 2005, DaimlerChrysler Corporation, along with other major customers of C&A, agreed to provide price increases and financing to C&A. DaimlerChrysler's portion of the 2005 price
increases and funding commitment was $120 million and is included in cost of sales on the accompanying consolidated statements of income (loss). DaimlerChrysler agreed to provide an additional
$70 million of price increases for calendar year 2006. DaimlerChrysler also agreed to accelerate payments for tooling and to fund other DaimlerChrysler program specific capital expenditures in
2005 and 2006, as well as to fund launch costs as needed throughout 2005. In addition, DaimlerChrysler also provided financial support of €13 million in Europe in 2005 to
support the continuation of component deliveries, to finance specific investments and to secure launch costs.

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DaimlerChrysler
would be significantly adversely affected in the near term by a sudden and prolonged interruption in the supply of components from C&A. Such an interruption would affect
production of nearly all Chrysler Group vehicles as well as the Mercedes Car Group's M-Class and R-Class vehicles in Alabama, and all Commercial Vehicle Division vans in
Europe. It would also delay the launch of future vehicle projects in our Vans business unit.

The
Group also enters into noncancellable operating leases for facilities, plant and equipment. Total rentals under operating leases charged to expense in 2005 in the statement of income
amounted to €946 million (2004: €902 million; 2003: €747 million). Future minimum lease payments under noncancellable lease
agreements as of December 31, 2005 are as follows:

(in millions of €)

2006

2007

2008

2009

2010

thereafterOperating leases

805

588

401

344

304

1,134


Future
payments to be received from the subleasing of these facilities, plant and equipment to third parties total €297 million.

In
2003, DaimlerChrysler signed an agreement with the City of Hamburg, Germany, a holder of approximately 6% of the common shares of DaimlerChrysler Luft- und Raumfahrt
Holding Aktiengesellschaft ("DCLRH"), a majority-owned subsidiary of the Group. Pursuant to the terms of the agreement and upon execution of the agreement, DaimlerChrysler holds a call option for the
City's interest in DCLRH, exercisable on or after January 1, 2005, and the City of Hamburg holds a put option exercisable at the earlier of October 1, 2007, or upon the occurrence of
certain events which are solely within the control of DaimlerChrysler. DaimlerChrysler believes the likelihood that these certain events will occur is remote. Upon exercise of either option, the City
of Hamburg would have received a minimum consideration of its interest in DCLRH of €450 million in cash or shares of EADS or a combination of both. The agreement was amended in
July 2004 with respect to the exercise price of the put option, so that the City of Hamburg may only put its interest in DCLRH to the Group for €450 million in cash. As a
consideration for the amendment, the City of Hamburg is entitled to receive an additional payment upon execution of the option equal to 10% of the appreciation of EADS shares in excess of a share
price of €21 up to a share price of €26.

33. Information about Financial Instruments and Derivatives

The
Group conducts business on a global basis in numerous international currencies and is therefore exposed to fluctuations in foreign currency exchange rates. The Group uses, among
others, bonds, medium-term-notes, commercial paper and bank loans in various currencies. As a consequence of using these types of financial instruments, the Group is exposed to
risks from changes in interest and foreign currency exchange rates. DaimlerChrysler holds financial instruments, such as money market investments, variable-and fixed-interest bearing securities, and
to a lesser extent, equity securities for managing excess liquidity that subject the Group to risks from changes in interest rates and market prices. DaimlerChrysler manages the various types of
market risks by using, among others, derivative financial instruments. In addition, equity investments in publicly traded companies also expose the Group to equity price risk, which, if deemed
appropriate, DaimlerChrysler hedges through the use of derivative financial instruments. Without these derivative financial instruments the Group's exposure to these market risks would be higher.
DaimlerChrysler does not use derivative financial instruments for purposes other than risk management.

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Based
on regulations issued by regulatory authorities for financial institutions, the Group has established guidelines for risk controlling procedures and for the use of financial
instruments, including a clear segregation of duties with regard to operating financial activities, settlement, accounting and controlling of financial instruments.

Market
risks are quantified according to the "value-at-risk" method which is commonly used among banks. Using historical variability of market data, potential
changes in value resulting from changes of market prices are calculated on the basis of statistical methods.

DaimlerChrysler
is also exposed to market price risks associated with the purchase of commodities. To a minor degree, DaimlerChrysler uses derivative instruments to reduce market price
risks, primarily with respect to precious metals. The risk resulting from derivative commodity instruments is not significant to the Group and thus not included in the following discussion.

The
contract volumes at December 31 of derivative financial instruments used for hedging currency- and interest rate risks are shown in the table below. The contract or notional
amounts shown do not always represent amounts exchanged by the parties and are not necessarily a measure for the exposure of DaimlerChrysler through its use of derivatives.

At December 31,2005

2004(in millions of €)Currency contracts

25,082

20,226Interest rate contracts

42,407

38,313


The
fair value of a financial instrument is the price at which one party would assume the rights and/or duties of another party pertaining to such instrument. The fair values of
financial instruments have been determined with reference to market information available at the balance sheet date and the valuation methodologies discussed below. Considering the variability of
their value-determining factors, the fair values presented herein are only an indication of the amounts that the Group could realize under current market conditions.

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The
carrying amounts and fair values of the Group's financial instruments are as follows:

At December 31, 2005

At December 31, 2004Carrying amount

Fair value

Carrying amount

Fair value(in millions of €)Financial instruments (other than derivative instruments):Assets:Financial assets

1,361

1,361

1,610

1,610Receivables from financial services

61,101

61,246

56,785

57,558Securities

4,936

4,936

3,884

3,884Cash and cash equivalents

7,711

7,711

7,782

7,782Liabilities:Financial liabilities

80,932

82,129

76,270

78,244Derivative instruments:Assets:Currency contracts

181

181

1,287

1,287Interest rate contracts

546

546

2,667

2,667Equity contracts

73

73

90

90Liabilities:Currency contracts

646

646

152

152Interest rate contracts

867

867

196

196Equity contracts

209

209

65

65


Derivative
instruments representing assets are included in other assets (see Note 19) at fair value, while derivative instruments representing liabilities are included in other
accrued liabilities (see Note 25b) at fair value.

The
methods and assumptions used to determine the fair values of financial instruments are summarized below:

Financial Assets and Securities.The fair values of securities are determined using quoted market prices. The Group has certain equity
investments in related and affiliated companies which are not presented in the table since they are not publicly traded and determination of fair values is impracticable. In addition, equity
investments in associated companies are also not considered in this presentation. For a presentation of the carrying amount and fair value of EADS, the most significant investment of DaimlerChrysler
in associated companies, please refer to Note 3.

Receivables from Financial Services.The carrying amounts of variable rate finance receivables approximate their fair values since the
contract rates of those receivables approximate current market rates. The fair values of fixed rate finance receivables were determined by discounting expected cash flows, using the current interest
rates at which comparable loans with identical maturity could be borrowed as of December 31, 2005 and 2004.

Cash and Other assets.The carrying amounts of Cash and Other assets approximate fair values due to the short-term maturities
of these instruments.

Financial Liabilities.The fair value of publicly traded debt was determined using quoted market prices. The fair values of other
long-term bonds were determined by discounting future cash flows, using market interest rates over the remaining term. The carrying amounts of commercial paper and borrowings under
revolving credit facilities were assumed to approximate fair value due to their short maturities.

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Currency Contracts.The fair values of forward foreign exchange contracts were based on European Central Bank reference exchange rates
adjusted for the respective interest rate differentials (premiums or discounts). Currency options were valued based on quoted market prices or option pricing models.

Interest Rate Contracts.The fair values of instruments to hedge interest rate risks (e. g. interest rate swap agreements, cross currency
interest rate swap agreements) were determined by discounting expected cash flows, using market interest rates over the remaining term of the instrument. Interest rate options are valued based on
quoted market prices or option pricing models.

Equity Contracts.The fair values of instruments to hedge equity price risk were determined on the basis of quoted market prices or option
pricing models.

The
Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. DaimlerChrysler manages the credit risk exposure to
financial institutions through diversification of counterparties and review of each counterparty's financial strength. Based on the rating of the counterparties performed by established rating
agencies, DaimlerChrysler does not have a significant exposure to any individual counterparty. DaimlerChrysler Financial Services has established detailed guidelines for the risk management process
related to the exposure to financial services customers. Additional information with respect to receivables from financial services and allowance for doubtful accounts is included in Note 18.

The
income or expense arising from the Group's financial instruments (other than derivative instruments), is recognized in financial income, net, with the exception of receivables from
financial services and financial liabilities related to leasing and sales financing activities. Interest income on receivables from financial services and gains and losses from sales of receivables
are recognized as revenues. Interest expense on financial liabilities related to leasing and sales financing activities are recognized as cost of sales. The carrying amounts of the financial
instruments (other than derivative instruments) are included in the consolidated balance sheets under their corresponding captions.

Foreign Currency Risk Management.As a consequence of the global nature of DaimlerChrysler's businesses, its operations and its reported
financial results and cash flows are exposed to the risks associated with fluctuations in the exchange rates of the U.S. dollar and other world currencies against the euro. The Group's businesses are
exposed to transaction risk whenever revenues of a business are denominated in a currency other than the currency in which the business incurs the costs relating to those revenues. The Mercedes Car
Group segment is primarily exposed to such risk. The Mercedes Car Group generates its revenues mainly in the currencies of the countries in which cars are sold, but it incurs manufacturing costs
primarily in euros. The Commercial Vehicles segment is subject to transaction risk to a lesser extent because of its global production network. At Chrysler Group, revenues and costs are principally
generated in U.S. dollars, resulting in a relatively low transaction risk for this segment. The Other Activities segment is indirectly exposed to transaction risk through its equity investment in
EADS, which is accounted for using the equity method.

To
mitigate the impact of currency exchange rate fluctuations, DaimlerChrysler continually assesses its exposure to currency risks and hedges a portion of those risks through the use of
derivative financial instruments. Responsibility for managing DaimlerChrysler's currency exposures and use of currency derivatives is centralized within the Group's Currency Committee. The Currency
Committee consists of members of senior management from Corporate Treasury, each of the operating businesses as well as from Risk Controlling. Corporate Treasury implements the decisions concerning
foreign currency hedging taken by the Currency Committee. Risk

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Controlling
regularly informs the Board of Management of the actions of Corporate Treasury based on the decisions of the Currency Committee.

Interest Rate and Equity Price Risk Management.DaimlerChrysler holds a variety of interest rate sensitive assets and liabilities to
manage the liquidity and cash needs of its day-to-day operations. In addition a substantial volume of interest rate sensitive assets and liabilities is related to the leasing
and sales financing business which is operated by DaimlerChrysler Financial Services. In particular, the Group's leasing and sales financing business enters into transactions with customers, primarily
resulting in fixed rate receivables. DaimlerChrysler's general policy is to match funding in terms of maturities and
interest rates. However, for a limited portion of the receivables portfolio, funding does not match in terms of maturities and interest rates. As a result, DaimlerChrysler is exposed to risks due to
changes in interest rates. DaimlerChrysler coordinates funding activities of the industrial business and financial services on the Group level. The Group uses interest rate derivative instruments such
as interest rate swaps, forward rate agreements, swaptions, caps and floors to achieve the desired interest rate maturities and asset/liability structures.

The
Group assesses interest rate risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating
hedging opportunities. The Group maintains risk management control systems independent of Corporate Treasury to monitor interest rate risk attributable to DaimlerChrysler's outstanding interest rate
exposures as well as its offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including value-at-risk analyses, to estimate
the expected impact of changes in interest rates on the Group's future cash flows.

Excess
liquidity invested in equity securities and the corresponding risks of derivative financial hedging instruments for equities were not material to the Group in the reporting
periods presented. To a certain extent, the equity price risk from investments in publicly traded companies is hedged through derivative financial instruments.

Fair Value Hedges.Gains and losses from fluctuations in the fair value of recognized assets and liabilities and firm commitments of
operating transactions as well as gains and losses arising from derivative financial instruments designated as fair value hedges of these recognized assets and liabilities and firm commitments are
recognized currently in revenues or cost of sales, if the transactions being hedged involve sales (including the leasing and sales financing business) or production of the Group's products. When the
hedged items are recognized in financial income, net, net gains and losses from fluctuations in the fair value of both recognized financial assets and liabilities and derivative financial instruments
designated as fair value hedges of these financial assets and liabilities are also recognized in financial income, net.

For
the year ended December 31, 2005, net losses of €58 million (2004: net losses of €49 million) were recognized in operating and
financial income, net, representing principally the component of the derivative instruments' gain or loss excluded from the assessment of hedge effectiveness and the amount of hedging ineffectiveness.

Cash Flow Hedges.Changes in the value of forward foreign currency exchange contracts and currency options designated and qualifying as
cash flow hedges are reported in accumulated other comprehensive loss. These amounts are subsequently reclassified into operating income in the same period the underlying transactions affect operating
income. Changes in the fair value of derivative hedging instruments designated as hedges of variability of cash flows associated with variable-rate long-term debt are also
reported in accumulated other comprehensive loss. These amounts are subsequently reclassified into the income statement as a yield adjustment in the same period in which the related interest on the
floating-rate debt obligations affect earnings. If the interest sensitive hedged items affect operating income (including the leasing and sales financing business), the effects from the
hedging instruments are also recognized in operating income. If the interest sensitive hedged

F-81

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items
affect financial income, net, the corresponding effects from the hedging instruments are likewise classified in financial income, net.

For
the year ended December 31, 2005, €41 million losses (2004: losses of €6 million), representing principally the component of the
derivative instruments' gain/loss excluded from the assessment of the hedge effectiveness and the amount of hedge ineffectiveness, were recognized in operating and financial income, net.

During
2005, DaimlerChrysler recorded expenses of €1 million as a result of the discontinuance of cash flow hedges (2004: no gains and losses were recorded).

It
is anticipated that €90 million of net gains included in accumulated other comprehensive loss at December 31, 2005, will be reclassified into earnings
during the next year.

As
of December 31, 2005, DaimlerChrysler held derivative financial instruments with a maximum maturity of 27 months to hedge its exposure to the variability in future cash
flows from foreign currency forecasted transactions.

Hedges of the Net Investment in a Foreign Operation.In specific circumstances, DaimlerChrysler hedges the currency risk inherent in
certain of its long-term investments where the functional currency is other than the euro, through the use of derivative and non-derivative financial instruments. For the year
ended December 31, 2005, net gains of €213 million (2004: €120 million) from hedging the Group's net investment in MMC were reclassified into the
income statement. For further information, also see the discussion in Note 3. In addition, net losses of €8 million from hedging the Group's net investments in foreign
operations were included in the cumulative translation adjustment without affecting DaimlerChrysler's net income in 2004.

34. Retained Interests in Securitized Sold Receivables and Sale of Finance Receivables

DaimlerChrysler uses securitization transactions to improve shareholder returns and diversify its funding sources. In the ordinary course of the business the
Group sells significant portions of its automotive finance receivables to trusts and third-parties entities in "asset-backed securitizations" and "whole loan sales". The information given below
relates only to transfers of finance receivables which qualified for de-recognition according to the criteria in SFAS 140.

Description of Securitization Transactions.Asset-backed securitizations ("ABS") involve the sale of financial assets by DaimlerChrysler
to trusts that are Special Purpose Entities ("SPEs"). The SPEs purchase the assets with cash raised through the issuance of beneficial interests (usually debt instruments) to third-party investors.
The sold financial assets consist of retail receivables with an expected average lifetime of several months at the time of the securitization and short-term wholesale receivables which are
securitized using a revolving-period structure. The investors in the beneficial interests have recourse to the assets in the trusts and benefit from credit enhancements, such as overcollateralization.
In a subordinated capacity, the Group retains residual beneficial interests in the sold receivables designed to absorb substantially all credit, prepayment, and interest-rate risk of the
receivables transferred to the trusts. The retained interest balance represents DaimlerChrysler's right to receive collections on the transferred receivables in excess of amounts required by the trust
to pay interest and principal to investors, servicing fees, and other required payments. To support the European ABS-program DaimlerChrysler also provided a subordinated loan to one trust.
The Group's maximum exposure to loss as a result of its involvement with these entities is limited to the amount of the carrying value of retained interests and the provided subordinated loan.

The
Group also transfers automotive finance receivables to third-party trusts in transactions wherein it does not retain a beneficial interest in the transferred receivables (whole loan
sales). In whole loan sales, all risk of loss related to the sold receivables is transferred from DaimlerChrysler to the purchaser.

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The
Group generally remains as servicer for the sold receivables.

Trusts and Third-Party Entities.Trusts sponsored by DaimlerChrysler are considered Qualifying Special Purpose Entities ("QSPEs") under
SFAS 140 and are not consolidated by the Group. The third-party entities are multi-seller and multi-collateralized bank conduits. These trusts are considered to be variable interest entities
("VIEs") under FIN 46R. A bank conduit generally receives substantially all of its funding from issuing asset-backed securities that are cross-collateralized by the assets held by the entity. Although
its interest in these VIEs is significant, DaimlerChrysler has concluded that it is not the primary beneficiary of these bank conduits and therefore is not required to consolidate them under FIN 46R.

Assumptions in Measuring the Retained Interests and Sensitivity Analysis.At December 31, 2005 and 2004, significant assumptions
used in measuring the residual interest resulting from the sale of retail and wholesale receivables were as follows (weighted average rates for securitizations completed during the respective year):

Retail

Wholesale2005

2004

2005

2004Prepayment speed assumption (monthly rate)

1.25%-1.5%

1.5
%
1

1Lifetime (in months)

18

18

3

3Estimated lifetime net credit losses (an average percentage of sold receivables)

1.9%

2.3
%
0.0
%
0.0
%Residual cash flows discount rate (annual rate)

12.0%

12.0
%
12.0
%
12.0
%


---

Actual and projected net lifetime credit losses for retail receivables securitized were as follows:

Receivables securitized inActual and projected credit losses
Percentages as of2002

2003

2004

2005December 31, 2005

1.8
%
1.6
%
1.8
%
1.9
%December 31, 2004

1.9
%
2.0
%
2.3
%December 31, 2003

2.4
%
2.5
%December 31, 2002

2.6
%


Static
pool losses are calculated by summing the actual and projected future credit losses and dividing them by the original balance of each pool of assets. The amount shown above for
each year is a weighted average for all securitizations during that year and outstanding at December 31, 2005.

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At
December 31, 2005, the significant assumptions used in estimating the residual cash flows from sold receivables and the sensitivity of the current fair value to immediate 10%
and 20% adverse changes are as follows:

Impact on fair value
based on adverseAssumption
percentage

10%
change

20%
change(in millions of €)Prepayment speed, monthly

1.5
%
(8
)
(14
)Expected remaining net credit losses as a percentage of receivables sold

0.9
%
(23
)
(45
)Residual cash flow discount rate, annualized

12.0
%
(16
)
(32
)


The
effect of a 10% and 20% adverse change in the discount rate used to compute the fair value of the retained subordinated securities would be a decrease of
€2 million and €3 million, respectively. Similar changes to the monthly prepayment speed and the expected remaining net credit losses as a percentage of
receivables sold for the retained subordinated securities would have no adverse effect on the fair value of the retained subordinated securities.

These
sensitivities are hypothetical and should be used with caution. The effect of a variation in a particular assumption on the fair value of the retained interests is calculated
without changing any other assumption; in reality, changes in one assumption may result in changes in another, which might magnify or counteract the sensitivities.

Retained Beneficial Interests in Securitized Sold Receivables.As there is no active market for retained interests, the Group determines
the value of its retained interests using discounted cash flow modeling upon the sale of receivables. The valuation methodology considers historical and projected principal and interest
collections on the sold receivables, expected future credit losses arising from the collection of the sold receivables, and estimated repayment of principal and interest.

For
more details on the valuation of retained interests in securitized sold receivables please see Note 1.

The
fair value of retained interests in securitized sold receivables was as follows:

At December 31,2005

2004(in millions of €)Fair value of estimated residual cash flows, net of prepayments, from sold receivables, before expected future net credit losses

2,266

2,190Expected future net credit losses on sold receivables

(286
)
(369
)Fair value of net residual cash flows from sold receivables

1,980

1,821Retained subordinated securities

233

379Other retained interests

2

2Retained interests in sold receivables

2,215

2,202


At
December 31, 2005, the Group also recognized a subordinated loan with a carrying value of €25 million to a trust related to the European
ABS-platform.

The
fair value of Retained Interests in sold receivables and the subordinated loan are included in other assets (see Note 19).

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Sale of Finance Receivables.During the year ended December 31, 2005, DaimlerChrysler sold in asset-backed securitization
transactions €10,059 million (2004: €9,329 million) and €33,922 million (2004: €35,414 million) of retail
and wholesale receivables, respectively. From these transactions, the Group recognized gains of €11 million (2004: €79 million) and
€169 million (2004: €157 million). During the year ended December 31, 2005, the Group sold €1,516 million (2004:
€965 million) of retail receivables in whole loan sales and recognized gains of €2 million (2004: €14 million). As of
December 31, 2005, the outstanding balance of receivables serviced in connection with whole loan sales was €1,931 million (2004: €1,361 million).

The
cash flows in connection with the mentioned transactions between DaimlerChrysler and the securitization trusts were as follows:

2005

2004(in millions of €)Proceeds from new securitizations

15,093

11,360Proceeds from collections reinvested in previous wholesale securitizations

33,892

35,393Amounts reinvested in previous wholesale securitizations

(33,922
)
(35,414
)Servicing fees received

214

183Receipt of cash flows on retained interests in sold receivables

998

686


F-85

---





The outstanding balance, delinquencies and net credit losses of sold receivables and other receivables, of those companies that sell receivables, as of and for
the years ended December 31, 2005 and 2004, respectively, were as follows:

Outstanding
balance at

Delinquencies
> 60 days at

Net credit losses
for the year ended2005

2004

2005

2004

2005

2004(in millions of €)Managed retail receivables

48,216

38,963

111

116

428

390Managed wholesale receivables

18,979

15,142

8

6

6

3Total receivables managed

67,195

54,105

119

122

434

393Less: Retail receivables sold

(14,677
)
(14,287
)
(32
)
(24
)
(155
)
(144
)Less: Wholesale receivables sold

(8,703
)
(5,880
)




(3
)
Total receivables sold

(23,380
)
(20,167
)
(32
)
(24
)
(158
)
(144
)Retail receivables recognized in balance sheets

33,539

24,676

79

92

273

246Wholesale receivables recognized in balance sheets

10,276

9,262

8

6

3

3Receivables recognized in balance sheets

43,815

33,938

87

98

276

249


The
following summarizes the outstanding balance of the receivables sold to the QSPEs and VIEs and the corresponding retained interest balances as of December 31, 2005:

(in millions of €)

Receivables
sold

Retained
interest in sold
receivablesVariable interest entities

3,815

367Qualifying special purpose entities

19,565

1,84823,380

2,215


Servicing Assets and Servicing Liabilities.Servicing assets (Servicing liabilities) represent the
present value derived from retaining the right (obligation) to service securitized receivables compared to adequate servicer compensation. During the year ended December 31, 2005, the Group
recognized servicing assets of €7 million (2004: €1 million) and related amortization of €2 million (2004:
€2 million). The Group also recognized servicing liabilities of €10 million (2004: €8 million) and related amortization of
€13 million (2004: €11 million). At December 31, 2005, the fair value of servicing assets on sold receivables was
€6 million (2004: €1 million), and the fair value of servicing liabilities was €15 million (2004:
€15 million). These values were determined by discounting expected cash flows at current market rates.

Liquidity Facilities of Special Purpose Entities.To support the Group's asset-backed commercial
paper program in North America, a group of financial institutions has provided contractually committed liquidity facilities aggregating $6.2 billion which expire in September 2006, and
are subject to annual renewal. These liquidity facilities can only be drawn upon by the special purpose entity to which the Group's North American financial services companies will sell receivables
under this program. As of December 31, 2005, none of the liquidity facilities have been utilized.

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35. Segment Reporting

Information with respect to the Group's reportable segments follows:

Mercedes Car Group.This segment includes activities related mainly to the development, design,
manufacture, assembly and sale of passenger cars and off-road vehicles under the brand names Mercedes-Benz, smart and Maybach as well as related parts and accessories.

Chrysler Group.This segment includes the development, design, manufacture, assembly and sale of cars
and trucks under the brand names Chrysler, Jeep® and Dodge and related automotive parts and accessories.

Commercial Vehicles.This segment is involved in the development, design, manufacture, assembly and
sale of vans, trucks, buses and Unimogs as well as related parts and accessories. The products are sold mainly under the brand names Mercedes-Benz, Setra, Freightliner, and Mitsubishi and
Fuso.

Financial Services.The activities in this segment primarily extend to the marketing of services
related to financial services (principally retail and lease financing for vehicles and dealer financing) and insurance brokerage. This Segment is also engaged in toll collection. In 2005,
DaimlerChrysler renamed its Services segment to Financial Services, to emphasize its focus on the financial services business.

Other Activities.This segment comprises businesses, operations and investments not allocated to one
of DaimlerChrysler's other business segments. It includes the Group's equity method investment EADS, the business unit DC Off-Highway which is primarily comprised of the MTU-F
Group and the Off-Highway activities of Detroit Diesel Corporation, the real estate and corporate research activities, the holding companies and financing subsidiaries through which the
Group refinances the capital needs of the operating businesses in the capital markets. The Group's equity investment in MMC is included in this segment using the equity method of accounting through
June 29, 2004, and thereafter as an investment in related companies, accounted for at fair value. In November 2005, DaimlerChrysler sold all of its MMC shares (see also Note 3).
Through December 31, 2003, this segment includes the MTU Aero Engines business unit. On December 27, 2005, DaimlerChrysler entered into a share sale and purchase agreement with the
Swedish investor group EQT regarding the sale of a major portion of its Off-Highway Business Unit. The closing is expected to occur in the first quarter of 2006 (see also Note 4).
On January 24, 2006, DaimlerChrysler presented a new management model. As part of the new management model,
DaimlerChrysler intends to change the composition of its business segments by reporting the van and bus business units with its Other Activities. As a result of these changes, the Commercial Vehicles
segment will be renamed the Truck Group.

Management Reporting and Controlling Systems.The Group's management reporting and controlling
systems use accounting policies that are substantially the same as those described in Note 1 in the summary of significant accounting policies (U.S. GAAP), except for revenue recognition
between the automotive business segments and the Services segment in certain markets.

The
Group measures the performance of its operating segments through "operating profit". DaimlerChrysler's consolidated operating profit (loss) is the sum of the operating profits and
losses of its reportable segments adjusted for consolidation and elimination entries. Segment operating profit (loss) is computed starting with income (loss) before income taxes, minority interests,
discontinued operations, and the cumulative effect of changes in accounting principles, and then adjusting that amount to 1) exclude pension and postretirement benefit income or expenses, other
than current and prior year service costs and settlement/curtailment losses, 2) exclude gains from the sale of the 12.4% stake in MMC in 2005 and the 10.5% stake in HMC in 2004, impairment of
investment in EADS in 2003, 3) exclude interest and

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similar
income and interest and similar expenses, 4) exclude other financial income (loss), net and 5) include or exclude certain miscellaneous items. In addition, this result is further
adjusted to a) include pre-tax income (loss) from discontinued operations, adjusted to exclude or include the reconciling items 1 to 5 described above, b) include
pre-tax gain (loss) on the disposal of discontinued operations, and c) include the Group's share of all of the above reconciling items included in the net earnings (losses) of
investments accounted for at equity.

Intersegment
sales and revenues are generally recorded at values that approximate third-party selling prices.

Revenues
are allocated to countries based on the location of the customer. Long-lived assets are disclosed according to the physical location of these assets.

Capital
expenditures represent the purchase of property, plant and equipment.

Segment
information as of and for the years ended December 31, 2005, 2004 and 2003 follows:

(in millions of €)

Mercedes
Car Group

Chrysler
Group

Commercial
Vehicles

Financial
Services

Other
Activities

Total
Segments

Discontinued
Operations/
Eliminations

Consolidated2005Revenues

46,429

50,086

38,356

12,798

2,107

149,776



149,776Intersegment sales

3,586

32

2,278

2,641

289

8,826

(8,826
)
Total revenues

50,015

50,118

40,634

15,439

2,396

158,602

(8,826
)
149,776Operating Profit (Loss)

(505
)
1,534

2,093

1,468

591

5,181

4

5,185Identifiable segment assets

27,081

55,372

21,712

99,635

29,251

233,051

(31,419
)
201,632Capital expenditures

1,629

3,083

1,743

45

109

6,609

(29
)
6,580Depreciation and amortization

2,418

3,336

1,313

5,757

168

12,992

(381
)
12,6112004Revenues

46,082

49,485

32,940

11,646

1,906

142,059



142,059Intersegment sales

3,548

13

1,824

2,293

294

7,972

(7,972
)
Total revenues

49,630

49,498

34,764

13,939

2,200

150,031

(7,972
)
142,059Operating Profit (Loss)

1,666

1,427

1,332

1,250

456

6,131

(377
)
5,754Identifiable segment assets

26,945

45,869

20,156

88,036

26,526

207,532

(24,660
)
182,872Capital expenditures

2,343

2,647

1,184

91

134

6,399

(13
)
6,386Depreciation and amortization

1,854

3,368

1,058

4,976

164

11,420

(308
)
11,1122003Revenues

48,025

49,321

25,304

11,997

3,723

138,370

(1,933
)
136,437Intersegment sales

3,421



1,502

2,040

361

7,324

(7,324
)
Total revenues

51,446

49,321

26,806

14,037

4,084

145,694

(9,257
)
136,437Operating Profit (Loss)

3,126

(506
)
811

1,240

1,329

6,000

(314
)
5,686Identifiable segment assets

24,199

47,147

14,713

83,239

31,227

200,525

(22,075
)
178,450Capital expenditures

2,939

2,487

958

76

169

6,629

(15
)
6,614Depreciation and amortization

1,789

3,927

890

5,087

196

11,889

(290
)
11,599


Mercedes Car Group.In 2005, the operating profit (loss) of the Mercedes Car Group
segment includes charges of €570 million for the headcount reduction initiative at Mercedes Car Group. Of this amount, €70 million were already cash
effective in 2005 (see Note 5).

An
accrual established in connection with a case alleging infringement of EU competition law was reduced by €60 million as a result of a favorable decision by the
Court of First Instance of the European Court of Justice. This

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amount
is included in selling expenses in the consolidated statement of income and in the operating results of the Mercedes Car Group segment in 2005.

The
operating profit (loss) of the Mercedes Car Group segment for 2005 includes charges of €1,111 million associated with the realignment of the business model for
smart. Thereof €535 million are attributable to impairment charges and write-downs and €576 million are attributable to expected payments in the current
or future periods (see Note 5).

In
2003, operating profit of the Mercedes Car Group includes a non-cash impairment charge amounting to €77 million related to certain
long-lived assets (primarily property, plant and equipment) at a production facility in Brazil.

Chrysler Group.In 2005, the Chrysler Group recorded a €240 million gain on
the sale of its Arizona Proving Grounds vehicle testing facility and a €36 million benefit as a result of adjustments to prior estimates associated with the Chrysler Group
turnaround plan (see also Note 7), which were partially offset by charges of €99 million related to the financial support provided to supplier Collins & Aikman
(see Note 32).

In
2004, the Chrysler Group's operating results were negatively impacted by a €145 million charge related to the turnaround plan, a
€138 million charge for early retirement incentives and other workforce reductions, partially offset by an adjustment of €95 million to correct the
calculation of an advertising accrual to more accurately reflect expected payments.

In
2003, the Chrysler Group's operating results were negatively impacted by a €469 million charge related to the turnaround plan. Also during 2003, the Chrysler
Group and Financial Services segments agreed to an arrangement regarding the sharing of risks associated with the residual values of certain leased vehicles. In addition, the Chrysler Group and
Financial Services segments negotiated reduced pricing on certain retail financing programs offered by the Chrysler Group as sales incentives in 2003. The adjusted pricing reflected the then current
favorable funding environment as well as Financial Services becoming the exclusive provider of selected discount consumer financing for the Chrysler Group. Both arrangements resulted in a favorable
impact of €244 million on the 2003 operating profit of the Chrysler Group, and a corresponding decrease of €244 million on the 2003 operating profit of
Financial Services. Neither arrangement had any effect on the Group's consolidated operating results.

Commercial Vehicles.As discussed in Note 4, on March 18, 2004, DaimlerChrysler
acquired an additional 22% interest in MFTBC from MMC for €394 million in cash, thereby increasing the Group's ownership interest in MFTBC to a controlling 65%. As a result of
the acquisition and first time consolidation of MFTBC in March 2004, the identifiable segment assets of the Commercial Vehicles segment increased by €4.3 billion.

Subsequent
to the acquisition of the controlling interest in MFTBC, a number of quality problems of MFTBC vehicles that were produced before DaimlerChrysler first acquired a stake in
MFTBC were identified (see Note 4 for additional information). As of December 31, 2004, DaimlerChrysler made a true-up based on the preliminary evaluation of the probable
costs associated with the quality measures and recall campaigns at
MFTBC which substantially confirmed the estimates made in the third quarter 2004. Total expenses arising from the recall issues reduced 2004 operating profit of the Commercial Vehicle segment by
€475 million. The reduction in operating profit consisted of €70 million classified as financial income (expense), net, in the Group's 2004 statement of
operations and €735 million classified as cost of sales, net of €330 million attributed to the minority interests' share in those costs. As expenses
attributed to minority interests are not allocated to operating profit, they are included in the line "Miscellaneous items, net" in the reconciliation of total segment operating profit to consolidated
income before income taxes, minority interests, and discontinued operations. The following

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settlement
with MMC associated with the quality issues and recall campaigns at MFTBC resulted in a favorable impact of €276 million, which is included in the operating profit of
the Commercial Vehicles segment in 2005.

Financial Services.In 2005, 2004 and 2003, the Financial Services segment recorded charges of
€54 million, €472 million and €241 million related to the participation in Toll Collect. The charges in 2004 were mainly the result
of revaluing the system's total costs and extra operating expenses required to guarantee the start of the system on January 1, 2005.

In
2004, the operating profit of the Financial Services segment includes non-cash impairment charges of €102 million associated with the investment
made in dAF.

Capital
expenditures for equipment on operating leases for 2005, 2004 and 2003 for the Financial Services segment amounted to €16,055 million,
€13,850 million and €11,631 million, respectively.

With
respect to two agreements entered into in 2003 with the Chrysler Group segment, the 2003 operating profit of Financial Services were unfavorably impacted by
€244 million. See discussion at Chrysler Group above.

Other Activities.In 2005, operating profit of the Other Activities segment includes primarily the
Group's share in the gains of EADS of €757 million (see Note 3). In 2004 and 2003, the proportionate results of the investments in EADS and MMC together amounted to
€548 million and €278 million, respectively. The 2004 amount also included the results from the dilution of the Group's interest in MMC (loss of
€135 million) and related currency hedging effects (gain of €195 million). Due to the loss of significant influence on MMC at June 29, 2004, the
Group's
share in the losses of MMC is only included for the corresponding period (see Note 3 for additional information).

As
a result of the repurchase of a note by MTU Aero Engines Holding AG, a gain of €53 million is included in the operating profit of the Other Activities segment
for 2005 (see Note 6).

At
December 31, 2005, the identifiable assets of the Other Activities segment include €3,564 million related to the carrying values of the investment in
EADS. In 2004 and 2003, the carrying values of the investments in EADS and MMC together amounted to €4,313 million and €4,542 million, respectively.

In
connection with the sale of Adtranz in 2001, a settlement agreement with Bombardier was reached in 2004 with respect to all claims asserted. This settlement resulted in a favorable
impact of €120 million on the 2004 operating profit of the Other Activities segment.

In
addition, the operating profit of 2004 of the Other Activities segment includes non-cash impairment charges of €70 million associated with the
investment made in dAF.

The
2003 operating profit of Other Activities includes a gain of €1,031 million from the sale of MTU Aero Engines. Following the sale transaction, effective
December 31, 2003, MTU Aero Engines' assets and liabilities were deconsolidated. Revenues, operating profit, capital expenditures, and depreciation and amortization of the Other Activities
segment include MTU Aero Engines through December 31, 2003 (see also Notes 4 and 10).

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The
reconciliation of total segment operating profit to consolidated income before income taxes, minority interests, discontinued operations and cumulative effects of changes in
accounting principles is as follows:

(in millions of €)

2005

2004

2003Total segment operating profit

5,181

6,131

6,000Elimination and consolidation amounts

4

(377
)
(314
)Total Group operating profit

5,185

5,754

5,686Pension and postretirement benefit expenses, other than current and prior service costs and settlement/curtailment losses

(1,175
)
(845
)
(870
)Gain from the sale of the 12.4% stake in MMC

681



Gain from the sale of the 10.5% stake in HMC



252

Impairment of investment in EADS





(1,960
)Interest and similar income

539

490

521Interest and similar expenses

(1,112
)
(790
)
(911
)Other financial income (loss), net

(69
)
(171
)
35Miscellaneous items, net

(149
)
(384
)
(308
)Pre-tax income from discontinued operations, adjusted to exclude or include the above reconciling items





(84
)Pre-tax income on disposal of discontinued operations





(1,031
)The Group's share of the above reconciling items included in the net losses of investments accounted for at equity

(462
)
(771
)
(482
)Consolidated income before income taxes, minority interests, cumulative effects of changes in accounting principles and discontinued operations

3,438

3,535

596


Revenues
from external customers presented by geographic region are as follows:

(in millions of €)

Germany

Western
Europe1

United States

Other
American
countries

Asia

Other
countries

Discontinued
operations

Consolidated2005

20,948

26,389

67,015

13,919

12,525

8,980



149,7762004

22,315

26,530

64,232

11,295

10,093

7,594



142,0592003

24,182

26,975

64,757

10,399

6,786

5,271

(1,933
)
136,437


---

Germany accounts for €20,682 million of long-lived assets (2004: €21,209 million; 2003:
€21,164 million), the United States for €44,007 million (2004: €35,250 million; 2003: €36,430 million) and
other countries for €17,716 million (2004: €15,982 million; 2003: €13,102 million).

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36. Earnings (Loss) per Share

The computation of basic and diluted earnings (loss) per share for "Income (loss) from continuing operations" is as follows:

Year ended December 31,2005

2004

2003(in millions of € or millions of shares, except earnings (loss) per share)Income (loss) from continuing operations  basic

2,851

2,466

(418
)Interest expense on convertible bonds and notes (net of tax)





Income (loss) from continuing operations  diluted

2,851

2,466

(418
)Weighted average number of shares outstanding  basic

1,014.7

1,012.8

1,012.7Dilutive effect of stock options in 2005 and 2004

3.0

1.7

Weighted average number of shares outstanding  diluted

1,017.7

1,014.5

1,012.7Earnings (loss) per share from continuing operationsBasic

2.80

2.43

(0.41
)Diluted

2.80

2.43

(0.41
)


Because
the Group reported a loss from continuing operations for the year ended December 31, 2003 the diluted loss per share does not include the antidilutive effects of
convertible bonds and notes. Had the Group reported income from continuing operations for the year ended December 31, 2003 the weighted average number of shares outstanding would have
potentially been diluted by 0.5 million shares resulting from the conversion of bonds and notes.

Stock
options to acquire 65.7 million, 67.1 million and 71.6 million DaimlerChrysler Ordinary Shares that were issued in connection with the 2000 Stock Option Plan
were not included in the computation of diluted earnings (loss) per share for 2005, 2004 and 2003, respectively, because the options' underlying exercise prices were higher than the average market
prices of DaimlerChrysler Ordinary Shares in these periods.

37. Related Party Transactions

The Group purchases materials, supplies and services from numerous suppliers throughout the world in the ordinary course of its business. These suppliers include
companies in which the Group holds an ownership interest and companies that are affiliated with some members of DaimlerChrysler AG's Supervisory Board or Board of Management.

In
recent years, DaimlerChrysler initiated several cooperation projects with MMC. In November 2005, DaimlerChrysler sold its remaining 12.4% interest in MMC. Current cooperation
projects will not be affected by the sale, and will continue as previously agreed. Examples of such projects are the joint development and production of engines, the shared use of vehicle architecture
and the joint production of passenger cars, sports utility vehicles and pickup trucks in Europe, North America, China and South Africa.

DaimlerChrysler
has an agreement with McLaren Cars Ltd., a wholly owned subsidiary of McLaren Group Ltd., for the production of the Mercedes McLaren super sports car, which
DaimlerChrysler launched into the markets in 2004. The Group owns a 40% equity interest in McLaren Group Ltd.

As
described in more detail in Note 3, DaimlerChrysler provides a number of guarantees with respect to Toll Collect, a joint venture in which DaimlerChrysler holds an equity
interest of 45%. Mr. Bernhard Walter, a member

F-92

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of
the Supervisory Board of DaimlerChrysler AG, is also a member of the Supervisory Board of Deutsche Telekom AG, one of the other investors in Toll Collect.

In
2003, DaimlerChrysler sold 60% of its equity interest in Mercedes-Benz Lenkungen GmbH to ThyssenKrupp Automotive AG. Since then, DaimlerChrysler accounted for its
remaining 40% equity interest in
the company using the equity method of accounting. Mr. Bernhard Walter, a member of DaimlerChrysler's Supervisory Board, abstained from the voting for the approval of the sale since he is also
a member of the Supervisory Board of ThyssenKrupp AG, the parent company of ThyssenKrupp Automotive AG. As described in Note 4, DaimlerChrysler sold its remaining 40% equity interest in the
company to ThyssenKrupp Automotive AG. The Group continues to purchase products from this company.

In
May 2002, our wholly owned subsidiary DaimlerChrysler Corporation ("DCC") sold its Dayton Thermal Products Plant to Behr Dayton, a joint venture company with Behr
America Inc. As of May 1, 2004, DCC sold its remaining minority interest in the joint venture to Behr America Inc. DCC is required to purchase products from the former joint
venture at competitively-based prices under a supply agreement entered into in connection with the sale. The supply agreement is valid from April 2002 through April 2008. Product pricing
was based on the existing cost structure of the Dayton Thermal Products Plant and was comparable to pricing in effect prior to the transaction.

In
2004, Dr. Mark Wössner, a member of DaimlerChrysler's Supervisory Board, received payments for the rental of premises to Westfalia Van Conversion GmbH, a wholly
owned subsidiary of DaimlerChrysler AG, in the amount of €1 million.

DaimlerChrysler
engages in commercial transactions negotiated at arms length with its equity investee EADS. DaimlerChrysler does not consider these transactions to be material to us
either individually or in the aggregate. Mr. Lagardère, a member of the Supervisory Board of DaimlerChrysler AG, is also one of two chairmen of the board of directors of EADS.

From
time to time, DaimlerChrysler Group companies may purchase goods and services (primarily advertising) from, and sell or lease vehicles or provide financial services to,
Lagardère Group companies in the ordinary course. Mr. Lagardère is the general partner and chief executive officer of their ultimate parent company,
Lagardère SCA, a publicly traded company.

The following represent transactions with shareholders.DaimlerChrysler incurred expenses of approximately
$800,000 in 2005 for advertising and related marketing activities with a U.S. magazine. Earl G. Graves, member of DaimlerChrysler's Supervisory Board and shareholder of DaimlerChrysler AG, is the
Chairman, Chief Executive Officer and sole stockholder of the magazine's ultimate parent company.

In
July 2005, DCC and Haden Prism LLC ("Haden") entered into an agreement under which Haden will construct and operate a vehicle paint facility within the Chrysler Group's
manufacturing complex in Toledo, Ohio, as part of a supplier co-location project scheduled to begin operation in 2006. Haden is an indirect subsidiary of Haden International
Group, Inc., which is 75% owned by Palladium Equity Partners ("Palladium"), a private investment firm with investments in several other companies. Robert J. Lanigan, a member of the Supervisory
Board of DaimlerChrysler AG, is a partner and an investor in Palladium.

DaimlerChrysler
Canada Inc. paid CAD1.2 million to a subsidiary of Mosaic Sales Solutions Holding Company for field marketing services pursuant to a competitively bid
contract awarded in April 2005. The chief executive officer of the subsidiary, Tony LaSorda, is the brother of Thomas LaSorda, a member of the Board of Management of DaimlerChrysler AG who
assumed responsibility for the Chrysler Group in September 2005.

F-93

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During
2005, Deutsche Bank AG reduced its 11.8% share ownership as of December 31, 2004, and now holds less than 5% of our outstanding shares. Deutsche Bank AG and its
subsidiaries provided the Group with various financial and other services for which they were paid reasonable and customary fees. DaimlerChrysler also guarantees the obligations of its employees under
the company's corporate credit card program for corporate travel expenses with Deutsche Bank AG in the event the employees default on their obligations to Deutsche Bank AG. This guarantee, which
amounted to €651 million as of December 31, 2004, was reduced to €20 million during 2005. DaimlerChrysler so far has not incurred any major
payments to Deutsche Bank AG from that guarantee.

On
July 7, 2004, DaimlerChrysler entered into a securities lending agreement with Deutsche Bank AG concerning 22,227,478 of its shares in EADS (approximately 3% of the voting
stock). As collateral, DaimlerChrysler received a lien on a securities account of equivalent value as the shares loaned by DaimlerChrysler.

38. Compensation of the Members of the Board of Management and the Supervisory Board and
       Further Additional Information Concerning German Corporate Governance Code

Compensation.The total compensation paid by Group related companies to the members of the Board of Management of
DaimlerChrysler AG is calculated from the amount of compensation paid in cash and from benefits in kind.

Thereof
€9.3 million account for fixed, €24.6 million for short-term and mid-term and
€1.0 million for long-term incentive compensation components. This is correspondent to a sum of €34.9 million in 2005.

In
2005, 454,914 phantom shares were granted to the members of the Board of Management from the long-term share-based compensation component. The cash pay-out for
these shares will be effective in 2009 in the event of continuous service on the Board of Management and dependent on the achievement of internal and external goals. The information on the
pay-out will be part of the performance-oriented compensation disclosure for the business year 2009. For detailed information on stock-based compensation programs, see Note 24.

In
2005, stock options granted in 2003 were exercisable. In this context, Members of the Board of Management exercised 167,500 stock options.

Board
of Management Members, whose term of office expired in 2005, were entitled to receive compensation earned before the respective retirement date from current mid-term
and the new 2005 long-term share-based remuneration components calculated on a pro-rata basis. We also had expenditures in connection with certain previously accrued retirement
benefit obligations of other Board of Management Members. The aggregate amount of both items is €23.8 million.

The
aggregate amount of expenditures paid by DaimlerChrysler for the year ended December 31, 2005, to provide pension, retirement and similar benefits for former members of the
board of management and their survivors was €16.9 million. An amount of €292.9 million has been accrued for pension obligations to former members of the
Board of Management and their survivors.

The
compensation paid in 2005 to the members of the Supervisory Board of DaimlerChrysler AG for services in all capacities to the Group amounted to €2.0 million.
The individual compensation paid to the members of the Supervisory Board is disclosed as part of the compensation report in accordance with a recommendation of the German corporate governance code.
Except for the compensation paid to employee representatives within the Supervisory Board in accordance with their contracts of employment, no compensation was paid for services provided personally
beyond the aforementioned Board activities, in particular for advisory or agency services.

As
of December 31, 2005, no advances or loans existed to members of the Board of Management or Supervisory Board of DaimlerChrysler AG.

F-94

---



Transactions with Related Parties.For transactions with related parties, which are shareholders of
DaimlerChrysler AG, see the last section of Note 37.

Third Party Companies.At December 31, 2005, DaimlerChrysler was shareholder of a significant
company, that meet the criteria of a third party company according German Corporate Governance Codex:

Name of the company

Tata Motors LimitedHeadquarters

Mumbai, IndiaStake in %1

6.8Equity in millions of €2

828Net income in millions of €2

253


---

39. Principal Accountant Fees and Services

The fees, billed by the independent auditors KPMG for professional services in 2005, 2004 and 2003 are comprised of:

Year ended December 31,(in millions of €)

2005

2004

2003Audit fees

42

39

34Audit-related fees

11

14

7Tax fees

5

6

6All other fees

4

5

362

64

50


40. Condensed Consolidating Financial Information

DaimlerChrysler AG, the parent company of the Group, fully and unconditionally guarantees certain publicly issued debt of its 100% owned subsidiary
DaimlerChrysler North America Holding Corporation. The condensed consolidating financial information for DaimlerChrysler AG, DaimlerChrysler North America Holding Corporation and all other
subsidiaries on a combined basis set forth below is intended to provide investors with meaningful and comparable financial information about DaimlerChrysler AG and its subsidiary issuer. Investments
and long-term financial assets include the investments in consolidated subsidiaries recorded under the equity method for purposes of the condensed consolidating financial information.
Financial income, net includes the income or loss related to such investments.

F-95

---





|2005
(in millions of €)                              |                                                                    | DaimlerChrysler AG (parent company)        |         | DaimlerChrysler North America Holding |        | Other subsidiaries (combined) |          | Consolidating adjustments |          | DaimlerChrysler AG (consolidated) |         
|---------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------ | ------- | ------------------------------------- | ------ | ----------------------------- | -------- | ------------------------- | -------- | --------------------------------- | --------
|Assets                                               |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     |                                                                    | Goodwill and other intangible assets       |         | 83                                    |        |                              |          | 4,989                     |          |                                  |         
|                                                     |                                                                    | Property, plant and equipment, net         |         | 7,500                                 |        |                              |          | 29,244                    |          | (5                                | )       
|                                                     |                                                                    | Investments and long-term financial assets |         | 33,424                                |        | 51,346                        |          | 11,968                    |          | (90,382                           | )       
|                                                     |                                                                    | Equipment on operating leases, net         |         | 5,279                                 |        |                              |          | 29,264                    |          | (305                              | )       
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Fixed assets                                                       |                                            | 46,286  |                                       | 51,346 |                               | 75,465   |                           | (90,692  | )                                 | 82,405  
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     |                                                                    | Inventories                                |         | 6,065                                 |        |                              |          | 14,203                    |          | (1,129                            | )       
|                                                     |                                                                    | Trade, finance and other receivables       |         | 14,446                                |        | 1,271                         |          | 78,559                    |          | (16,849                           | )       
|                                                     |                                                                    | Securities                                 |         | 1,853                                 |        | 1,656                         |          | 1,427                     |          |                                  |         
|                                                     |                                                                    | Cash and cash equivalents                  |         | 297                                   |        | 4,955                         |          | 2,459                     |          |                                  |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Non-fixed assets                                                   |                                            | 22,661  |                                       | 7,882  |                               | 96,648   |                           | (17,978  | )                                 | 109,213 
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Deferred taxes and prepaid expenses                                |                                            | 3,525   |                                       |       |                               | 9,280    |                           | (4,165   | )                                 | 8,640   
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Disposal group Off-Highway, assets held for sale                   |                                            |        |                                       |       |                               | 1,478    |                           | (104     | )                                 | 1,374   
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Total assets                                                       |                                            | 72,472  |                                       | 59,228 |                               | 182,871  |                           | (112,939 | )                                 | 201,632 
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Liabilities and stockholders' equity                 |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Stockholders' equity                                               |                                            | 36,449  |                                       | 14,718 |                               | 69,913   |                           | (84,631  | )                                 | 36,449  
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Minority interests                                                 |                                            |        |                                       |       |                               | 653      |                           |         |                                   | 653     
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Accrued liabilities                                                |                                            | 12,501  |                                       | 627    |                               | 33,702   |                           | (148     | )                                 | 46,682  
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     |                                                                    | Financial liabilities                      |         | 14,401                                |        | 42,486                        |          | 43,148                    |          | (19,103                           | )       
|                                                     |                                                                    | Trade liabilities                          |         | 3,943                                 |        |                              |          | 10,648                    |          |                                  |         
|                                                     |                                                                    | Other liabilities                          |         | 2,432                                 |        | 1,316                         |          | 9,195                     |          | (3,890                            | )       
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Liabilities                                                        |                                            | 20,776  |                                       | 43,802 |                               | 62,991   |                           | (22,993  | )                                 | 104,576 
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Deferred taxes and deferred income                                 |                                            | 2,746   |                                       | 81     |                               | 14,792   |                           | (5,118   | )                                 | 12,501  
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Disposal group Off-Highway, liabilities held for sale              |                                            |        |                                       |       |                               | 820      |                           | (49      | )                                 | 771     
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Total liabilities                                                  |                                            | 36,023  |                                       | 44,510 |                               | 112,958  |                           | (28,308  | )                                 | 165,183 
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Total liabilities and stockholders' equity                         |                                            | 72,472  |                                       | 59,228 |                               | 182,871  |                           | (112,939 | )                                 | 201,632 
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Revenues                                                           |                                            | 59,188  |                                       |       |                               | 134,315  |                           | (43,727  | )                                 | 149,776 
|                                                     | Cost of sales                                                      |                                            | (49,810 | )                                     |       |                               | (114,263 | )                         | 41,179   |                                   | (122,894
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Gross margin                                         |                                                                    | 9,378                                      |         |                                      |        | 20,052                        |          | (2,548                    | )        | 26,882                            |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Selling, administrative and other expenses                         |                                            | (7,424  | )                                     | (12    | )                             | (13,077  | )                         | 1,529    |                                   | (18,984 
|                                                     | Research and development                                           |                                            | (2,960  | )                                     |       |                               | (2,799   | )                         | 110      |                                   | (5,649  
|                                                     | Other income                                                       |                                            | 761     |                                       |       |                               | 1,165    |                           | (960     | )                                 | 966     
|                                                     | Goodwill impairment                                                |                                            |        |                                       |       |                               | (30      | )                         |         |                                   | (30     
|                                                     | Turnaround plan  Chrysler Group                                   |                                            |        |                                       |       |                               | 36       |                           |         |                                   | 36      
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Income (loss) before financial income                |                                                                    | (245                                       | )       | (12                                   | )      | 5,347                         |          | (1,869                    | )        | 3,221                             |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Financial income (expense), net                                    |                                            | 3,021   |                                       | 895    |                               | 8        |                           | (3,707   | )                                 | 217     
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Income (loss) before income taxes                    |                                                                    | 2,776                                      |         | 883                                   |        | 5,355                         |          | (5,576                    | )        | 3,438                             |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Income taxes                                                       |                                            | 71      |                                       | 736    |                               | (1,363   | )                         | 43       |                                   | (513    
|                                                     | Minority interests                                                 |                                            |        |                                       |       |                               | (74      | )                         |         |                                   | (74     
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Income (loss) from continuing operations             |                                                                    | 2,847                                      |         | 1,619                                 |        | 3,918                         |          | (5,533                    | )        | 2,851                             |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Income from discontinued operations                                |                                            |        |                                       |       |                               |         |                           |         |                                   |        
|                                                     | Cumulative effects of changes in accounting principle              |                                            | (1      | )                                     |       |                               | (4       | )                         |         |                                   | (5      
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Net income (loss)                                    |                                                                    | 2,846                                      |         | 1,619                                 |        | 3,914                         |          | (5,533                    | )        | 2,846                             |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Cash provided by (used for) operating activities     |                                                                    | 1,360                                      |         | (530                                  | )      | 9,407                         |          | 2,116                     |          | 12,353                            |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Increase in equipment on operating leases            |                                                                    | (3,225                                     | )       |                                      |        | (17,305                       | )        | 294                       |          | (20,236                           | )       
|                                                     | Purchases of property, plant, equipment and other fixed assets     |                                            | (2,083  | )                                     |       |                               | (4,769   | )                         |         |                                   | (6,852  
|                                                     | Proceeds from disposals of equipment on operating leases leases    |                                            | 2,729   |                                       |       |                               | 8,914    |                           |         |                                   | 11,643  
|                                                     | Proceeds from disposals of fixed assets                            |                                            | 141     |                                       |       |                               | 957      |                           |         |                                   | 1,098   
|                                                     | Payments for investments in businesses                             |                                            | (811    | )                                     |       |                               | (774     | )                         | 1,033    |                                   | (552    
|                                                     | Proceeds from disposals of businesses                              |                                            | 422     |                                       |       |                               | 1,127    |                           | (1,033   | )                                 | 516     
|                                                     | (Increase) decrease in receivables from financial services, net    |                                            | (165    | )                                     |       |                               | 3,057    |                           | 2        |                                   | 2,894   
|                                                     | Disposition (acquisitions) of securities (other than trading), net |                                            | 1,063   |                                       | (1,121 | )                             | 310      |                           |         |                                   | 252     
|                                                     | Other                                                              |                                            | (205    | )                                     | 4,742  |                               | (1,043   | )                         | (3,479   | )                                 | 15      
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Cash used for investing activities                   |                                                                    | (2,134                                     | )       | 3,621                                 |        | (9,526                        | )        | (3,183                    | )        | (11,222                           | )       
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | Change in financial liabilities                                    |                                            | 346     |                                       | (1,101 | )                             | 2,078    |                           | (1,461   | )                                 | (138    
|                                                     | Dividends paid                                                     |                                            | (1,519  | )                                     | (884   | )                             | (3,309   | )                         | 4,137    |                                   | (1,575  
|                                                     | Other                                                              |                                            | 200     |                                       |       |                               | 1,609    |                           | (1,609   | )                                 | 200     
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Cash provided by (used for) financing activities     |                                                                    | (973                                       | )       | (1,985                                | )      | 378                           |          | 1,067                     |          | (1,513                            | )       
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Effect of foreign exchange rate changes on cash      |                                                                    |                                           |         | 568                                   |        | 52                            |          |                          |          | 620                               |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Net increase (decrease) in cash and cash equivalents |                                                                    | (1,747                                     | )       | 1,674                                 |        | 311                           |          |                          |          | 238                               |         
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|Cash and cash equivalents                            |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | At beginning of period                                             |                                            | 2,044   |                                       | 3,281  |                               | 2,056    |                           |         |                                   | 7,381   
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         
|                                                     | At end of period                                                   |                                            | 297     |                                       | 4,955  |                               | 2,367    |                           |         |                                   | 7,619   
|                                                     |                                                                    |                                            |         |                                       |        |                               |          |                           |          |                                   |         

F-96

---





|2004
(in millions of €)                              |                                                                    | DaimlerChrysler AG (parent company)        |        | DaimlerChrysler North America Holding |        | Other subsidiaries (combined) |         | Consolidating adjustments |          | DaimlerChrysler AG (consolidated) |        
|---------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------ | ------ | ------------------------------------- | ------ | ----------------------------- | ------- | ------------------------- | -------- | --------------------------------- | -------
|Assets                                               |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Goodwill and other intangible assets       |        | 97                                    |        |                              |         | 4,577                     |          |                                  |        
|                                                     |                                                                    | Property, plant and equipment, net         |        | 7,130                                 |        |                              |         | 26,897                    |          | (10                               | )      
|                                                     |                                                                    | Investments and long-term financial assets |        | 30,170                                |        | 45,891                        |         | 10,464                    |          | (79,486                           | )      
|                                                     |                                                                    | Equipment on operating leases, net         |        | 4,955                                 |        |                              |         | 22,013                    |          | (257                              | )      
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Fixed assets                                                       |                                            | 42,352 |                                       | 45,891 |                               | 63,951  |                           | (79,753  | )                                 | 72,441 
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Inventories                                |        | 6,395                                 |        |                              |         | 11,236                    |          | (826                              | )      
|                                                     |                                                                    | Trade, finance and other receivables       |        | 11,166                                |        | 3,968                         |         | 75,829                    |          | (14,246                           | )      
|                                                     |                                                                    | Securities                                 |        | 1,951                                 |        | 410                           |         | 1,523                     |          |                                  |        
|                                                     |                                                                    | Cash and cash equivalents                  |        | 2,409                                 |        | 3,281                         |         | 2,092                     |          |                                  |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Non-fixed assets                                                   |                                            | 21,921 |                                       | 7,659  |                               | 90,680  |                           | (15,072  | )                                 | 105,188
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Deferred taxes and prepaid expenses                                |                                            | 2,076  |                                       | 8      |                               | 9,312   |                           | (6,153   | )                                 | 5,243  
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Total assets                                                       |                                            | 66,349 |                                       | 53,558 |                               | 163,943 |                           | (100,978 | )                                 | 182,872
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Liabilities and stockholders' equity                 |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Stockholders' equity                                               |                                            | 33,338 |                                       | 11,961 |                               | 63,435  |                           | (75,212  | )                                 | 33,522 
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Minority interests                                                 |                                            |       |                                       |       |                               | 909     |                           |         |                                   | 909    
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Accrued liabilities                                                |                                            | 10,824 |                                       | 135    |                               | 31,118  |                           | (139     | )                                 | 41,938 
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Financial liabilities                      |        | 14,054                                |        | 41,066                        |         | 37,255                    |          | (16,105                           | )      
|                                                     |                                                                    | Trade liabilities                          |        | 4,206                                 |        |                              |         | 8,714                     |          |                                  |        
|                                                     |                                                                    | Other liabilities                          |        | 1,680                                 |        | 149                           |         | 9,571                     |          | (2,655                            | )      
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Liabilities                                                        |                                            | 19,940 |                                       | 41,215 |                               | 55,540  |                           | (18,760  | )                                 | 97,935 
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Deferred taxes and deferred income                                 |                                            | 2,247  |                                       | 247    |                               | 12,941  |                           | (6,867   | )                                 | 8,568  
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Total liabilities                                                  |                                            | 33,011 |                                       | 41,597 |                               | 100,508 |                           | (25,766  | )                                 | 149,350
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Total liabilities and stockholders' equity                         |                                            | 66,349 |                                       | 53,558 |                               | 163,943 |                           | (100,978 | )                                 | 182,872
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Revenues                                   |        | 56,553                                |        |                              |         | 125,089                   |          | (39,583                           | )      
|                                                     |                                                                    | Cost of sales                              |        | (46,000                               | )      |                              |         | (105,691                  | )        | 37,124                            |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Gross margin                                         |                                                                    | 10,553                                     |        |                                      |        | 19,398                        |         | (2,459                    | )        | 27,492                            |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Selling, administrative and other expenses |        | (6,995                                | )      | (12                           | )       | (12,458                   | )        | 1,493                             |        
|                                                     |                                                                    | Research and development                   |        | (3,179                                | )      |                              |         | (2,581                    | )        | 102                               |        
|                                                     |                                                                    | Other income                               |        | 748                                   |        |                              |         | 824                       |          | (677                              | )      
|                                                     |                                                                    | Turnaround plan expenses  Chrysler Group  |        |                                      |        |                              |         | (145                      | )        |                                  |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Income (loss) before financial income                |                                                                    | 1,127                                      |        | (12                                   | )      | 5,038                         |         | (1,541                    | )        | 4,612                             |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Financial income (expense), net                                    |                                            | 2,005  |                                       | 1,348  |                               | (416    | )                         | (4,014   | )                                 | (1,077 
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Income (loss) before income taxes                    |                                                                    | 3,132                                      |        | 1,336                                 |        | 4,622                         |         | (5,555                    | )        | 3,535                             |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | Income taxes                               |        | (666                                  | )      | 492                           |         | (1,065                    | )        | 62                                |        
|                                                     |                                                                    | Minority interests                         |        |                                      |        |                              |         | 108                       |          |                                  |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Income (loss) from continuing operations             |                                                                    | 2,466                                      |        | 1,828                                 |        | 3,665                         |         | (5,493                    | )        | 2,466                             |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Income from discontinued operations                                |                                            |       |                                       |       |                               |        |                           |         |                                   |       
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Net income (loss)                                    |                                                                    | 2,466                                      |        | 1,828                                 |        | 3,665                         |         | (5,493                    | )        | 2,466                             |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Cash provided by (used for) operating activities     |                                                                    | 3,124                                      |        | (932                                  | )      | 12,034                        |         | (3,166                    | )        | 11,060                            |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Increase in equipment on operating leases                          |                                            | (3,278 | )                                     |       |                               | (14,623 | )                         | 223      |                                   | (17,678
|                                                     | Purchases of property, plant, equipment and other fixed assets     |                                            | (2,244 | )                                     |       |                               | (4,658  | )                         | 2        |                                   | (6,900 
|                                                     | Proceeds from disposals of equipment on operating leases leases    |                                            | 2,492  |                                       |       |                               | 7,976   |                           |         |                                   | 10,468 
|                                                     | Proceeds from disposals of fixed assets                            |                                            | 203    |                                       |       |                               | 538     |                           |         |                                   | 741    
|                                                     | Payments for investments in businesses                             |                                            | (465   | )                                     |       |                               | 162     |                           | 39       |                                   | (264   
|                                                     | Proceeds from disposals of businesses                              |                                            | 875    |                                       |       |                               | 382     |                           | (39      | )                                 | 1,218  
|                                                     | (Increase) decrease in receivables from financial services, net    |                                            | 3      |                                       |       |                               | (4,058  | )                         | 599      |                                   | (3,456 
|                                                     | Disposition (acquisitions) of securities (other than trading), net |                                            | (454   | )                                     | (103   | )                             | (173    | )                         |         |                                   | (730   
|                                                     | Other                                                              |                                            | (2,344 | )                                     | (1,691 | )                             | (505    | )                         | 4,459    |                                   | (81    
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Cash used for investing activities                   |                                                                    | (5,212                                     | )      | (1,794                                | )      | (14,959                       | )       | 5,283                     |          | (16,682                           | )      
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     | Change in financial liabilities                                    |                                            | 2,927  |                                       | 1,325  |                               | 188     |                           | (344     | )                                 | 4,096  
|                                                     | Dividends paid                                                     |                                            | (1,519 | )                                     |       |                               | (1,952  | )                         | 1,924    |                                   | (1,547 
|                                                     | Other                                                              |                                            |       |                                       |       |                               | 3,697   |                           | (3,697   | )                                 |       
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Cash provided by (used for) financing activities     |                                                                    | 1,408                                      |        | 1,325                                 |        | 1,933                         |         | (2,117                    | )        | 2,549                             |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Effect of foreign exchange rate changes on cash      |                                                                    |                                           |        | (236                                  | )      | (77                           | )       |                          |          | (313                              | )      
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Net increase (decrease) in cash and cash equivalents |                                                                    | (680                                       | )      | (1,637                                | )      | (1,069                        | )       |                          |          | (3,386                            | )      
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|Cash and cash equivalents                            |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | At beginning of period                     |        | 2,724                                 |        | 4,918                         |         | 3,125                     |          |                                  |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        
|                                                     |                                                                    | At end of period                           |        | 2,044                                 |        | 3,281                         |         | 2,056                     |          |                                  |        
|                                                     |                                                                    |                                            |        |                                       |        |                               |         |                           |          |                                   |        

F-97

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|2003
(in millions of €)                              |                                                                    | DaimlerChrysler AG (parent company)   |         | DaimlerChrysler North America Holding |        | Other subsidiaries (combined) |          | Consolidating adjustments |         | DaimlerChrysler AG (consolidated) |         
|---------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------- | ------- | ------------------------------------- | ------ | ----------------------------- | -------- | ------------------------- | ------- | --------------------------------- | --------
|                                                     | Revenues                                                           |                                       | 56,248  |                                       |       |                               | 117,777  |                           | (37,588 | )                                 | 136,437 
|                                                     | Cost of sales                                                      |                                       | (44,808 | )                                     |       |                               | (100,369 | )                         | 35,251  |                                   | (109,926
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Gross margin                                         |                                                                    | 11,440                                |         |                                      |        | 17,408                        |          | (2,337                    | )       | 26,511                            |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Selling, administrative and other expenses                         |                                       | (7,327  | )                                     | (17    | )                             | (11,645  | )                         | 1,217   |                                   | (17,772 
|                                                     | Research and development                                           |                                       | (3,382  | )                                     |       |                               | (2,295   | )                         | 106     |                                   | (5,571  
|                                                     | Other income                                                       |                                       | 532     |                                       |       |                               | 785      |                           | (604    | )                                 | 713     
|                                                     | Turnaround plan expenses  Chrysler Group                          |                                       |        |                                       |       |                               | (469     | )                         |        |                                   | (469    
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Income (loss) before financial income                |                                                                    | 1,263                                 |         | (17                                   | )      | 3,784                         |          | (1,618                    | )       | 3,412                             |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     |                                                                    | Impairment of investment in EADS      |         | (1,960                                | )      |                              |          | (1,960                    | )       | 1,960                             |         
|                                                     |                                                                    | Other financial income (expense), net |         | 1,225                                 |        | 425                           |          | (211                      | )       | (2,295                            | )       
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Financial income (expense), net                                    |                                       | (735    | )                                     | 425    |                               | (2,171   | )                         | (335    | )                                 | (2,816  
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Income (loss) before income taxes                                  |                                       | 528     |                                       | 408    |                               | 1,613    |                           | (1,953  | )                                 | 596     
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Income taxes                                                       |                                       | (946    | )                                     | 544    |                               | (627     | )                         | 50      |                                   | (979    
|                                                     | Minority interests                                                 |                                       |        |                                       |       |                               | (35      | )                         |        |                                   | (35     
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Income (loss) from continuing operations             |                                                                    | (418                                  | )       | 952                                   |        | 951                           |          | (1,903                    | )       | (418                              | )       
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Income from discontinued operations                                |                                       | 14      |                                       |       |                               | 14       |                           | (14     | )                                 | 14      
|                                                     | Income on disposal of discontinued operations                      |                                       | 882     |                                       |       |                               | 888      |                           | (888    | )                                 | 882     
|                                                     | Cumulative effects of changes in accounting principle              |                                       | (30     | )                                     |       |                               | (30      | )                         | 30      |                                   | (30     
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Net income (loss)                                    |                                                                    | 448                                   |         | 952                                   |        | 1,823                         |          | (2,775                    | )       | 448                               |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Cash provided by (used for) operating activities     |                                                                    | 6,217                                 |         | 891                                   |        | 9,508                         |          | (2,790                    | )       | 13,826                            |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Increase in equipment on operating leases                          |                                       | (2,934  | )                                     |       |                               | (12,813  | )                         | 143     |                                   | (15,604 
|                                                     | Purchases of property, plant, equipment and other fixed assets     |                                       | (2,507  | )                                     |       |                               | (4,422   | )                         | 12      |                                   | (6,917  
|                                                     | Proceeds from disposals of equipment on operating leases leases    |                                       | 2,277   |                                       |       |                               | 9,674    |                           |        |                                   | 11,951  
|                                                     | Proceeds from disposals of fixed assets                            |                                       | 297     |                                       |       |                               | 346      |                           |        |                                   | 643     
|                                                     | Payments for investments in businesses                             |                                       | (912    | )                                     |       |                               | (414     | )                         | 305     |                                   | (1,021  
|                                                     | Proceeds from disposals of businesses                              |                                       | 298     |                                       |       |                               | 1,216    |                           | (305    | )                                 | 1,209   
|                                                     | (Increase) decrease in receivables from financial services, net    |                                       |        |                                       |       |                               | (3,580   | )                         | 235     |                                   | (3,345  
|                                                     | Disposition (acquisitions) of securities (other than trading), net |                                       | 179     |                                       | (88    | )                             | (481     | )                         |        |                                   | (390    
|                                                     | Other                                                              |                                       | (1,077  | )                                     | (1,207 | )                             | 3,453    |                           | (1,303  | )                                 | (134    
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Cash used for investing activities                   |                                                                    | (4,379                                | )       | (1,295                                | )      | (7,021                        | )        | (913                      | )       | (13,608                           | )       
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     | Change in financial liabilities                                    |                                       | (696    | )                                     | 2,647  |                               | (1,725   | )                         | 3,821   |                                   | 4,047   
|                                                     | Dividends paid                                                     |                                       | (1,519  | )                                     | (442   | )                             | (1,601   | )                         | 2,025   |                                   | (1,537  
|                                                     | Other                                                              |                                       | 1       |                                       |       |                               | 2,150    |                           | (2,143  | )                                 | 8       
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Cash provided by (used for) financing activities     |                                                                    | (2,214                                | )       | 2,205                                 |        | (1,176                        | )        | 3,703                     |         | 2,518                             |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Effect of foreign exchange rate changes on cash      |                                                                    |                                      |         | (865                                  | )      | (204                          | )        |                          |         | (1,069                            | )       
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Net increase (decrease) in cash and cash equivalents |                                                                    | (376                                  | )       | 936                                   |        | 1,107                         |          |                          |         | 1,667                             |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|Cash and cash equivalents                            |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     |                                                                    | At beginning of period                |         | 3,100                                 |        | 3,982                         |          | 2,018                     |         |                                  |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         
|                                                     |                                                                    | At end of period                      |         | 2,724                                 |        | 4,918                         |          | 3,125                     |         |                                  |         
|                                                     |                                                                    |                                       |         |                                       |        |                               |          |                           |         |                                   |         

F-98

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