4.7
91
Notes to the Consolidated Financial
99
Statements
204
Daimler AG
(condensed version according to HGB)
102
Sustainability
105
F❘ Further Information
282
Overall Assessment of the Economic Situation
120
Events after the Reporting Period
121
Responsibility Statement
284
Remuneration Report
122
Independent Auditors' Report
285
Takeover-Relevant Information
Ten Year Summary
286
and Explanation
135
Glossary
288
202
Consolidated Statement of Changes in Equity
85
201
Corporate Governance Report
188
Highlights of 2015
56
Daimler and the Capital Market
62
Objectives and Strategy
66
E| Consolidated Financial
Statements
196
B| Combined Management Report
72
Consolidated Statement of Income
Risk and Opportunity Report
198
Corporate Profile
9,975
Income/Loss
199
Economic Conditions and Business
Consolidated Statement of Financial Position
200
Development
Profitability
Liquidity and Capital Resources
Financial Position
2008
79
Consolidated Statement of Cash Flows
Consolidated Statement of Comprehensive
54
138
289
"Our forward-looking answers for
a rapidly changing world"
Urban transformer: The Mercedes-Benz Vision Tokyo
Our autonomously driving Vision Tokyo also offers an
unprecedented spatial experience. With its futuristic
design language and spacious lounge atmosphere in the
interior, the vehicle is young, luxurious and progressive-
and in this manner expresses its reverence for the trendy
metropolis that is Tokyo.
This Mercedes-Benz show car is designed for Generation Z,
whose members were born after 1995 and therefore grew
up with the new digital media. Automobiles have a different
type of significance for this generation: Cars are viewed as
both a means of transportation and a digital companion.
Our Vision Tokyo goes even further than that, however, as
the vehicle is able to learn more about its occupants and
their preferences with every trip, and also uses innovative
algorithms to continue developing itself over time.
Intelligent partners in urban traffic situations
The autonomous driving features of the F 015 and the
Vision Tokyo not only offer drivers and passengers added
value, they also create entirely new possibilities for design-
ing urban infrastructures. Because they can communicate
with the world outside, they are perfectly aligned with the
shared spaces that will become more and more widespread
in the future. Here, people and machines share the road
and cooperatively manage their movements in a constant
flow of traffic.
Special zones for autonomous vehicles might be created in
urban centers, enabling inner-city spaces to be reclaimed
as vehicles park themselves on the outskirts of the cities.
The "car-friendly" city will thus become a "people-friendly"
city, without having to sacrifice personal mobility with
automobiles.
Daimler is conducting a dialogue
about autonomous driving
Extensive legal and ethical questions need to be
clarified as we move along the path to autonomous
driving. Daimler is promoting a broad-based dialogue
about this topic. The Daimler Sustainability Dialogue
and the symposium on the legal and ethical issues
associated with autonomous driving are just two
examples of the numerous measures that are already
under way. Daimler also supports interdisciplinary
research in order to provide a scientific framework
for this topic and promote further social discourse.
It's not just the autonomous driving features but also
a clear and sensuous design that make the Vision Tokyo
showcar a trendsetter for urban mobility.
88
+5
14,838
21,598
22,639
Employees (December 31) 2
+9
270,144
294,594
321,017
Unit sales
+125
139
68
153
thereof capitalized
+31
329
293
Vehicles will become quality-time machines for people
Whether driving away, merging into traffic, maintaining a
safe distance, steering, braking, overtaking, or parking -
the F 015 Luxury in Motion can do it all, and do it brilliantly.
Putting the luxury sedan in the autonomous mode frees
up space in many different ways. For example, drivers and
passengers are able to relax, talk, or work in comfort in
four rotatable lounge chairs arranged in pairs opposite one
another. With its lounge-like atmosphere and the possibil-
ities it provides for creating a digitally connected envi-
ronment, the vehicle's interior offers modern luxury and
enhances the quality of life of its occupants.
Our innovative technologies enable the establishment of a
completely new relationship between people and automo-
biles, whereby autonomous driving plays a major role. The
driver always decides how fast the F 015 should go, and on
which routes. However, drivers can also take their hands off
the wheel and let the vehicle's intelligent systems do the
work when traffic gets heavy, driving gets monotonous, or
something needs to be done that the driver can't do - for
example, a 360-degree check of the vehicle's surroundings.
The self-driving research vehicle from Mercedes-Benz
was designed with the future in mind and offers an optimal
automobile experience - including everything from an
expressive body design to outstanding interior features
and cutting-edge technology. The exterior displays a
monolithic character, but the intelligent F 015 Luxury in
Motion is anything but unapproachable. It uses LED light
modules to communicate with the outside world. It can
recognize pedestrians and is helpful and accommodating-
for example when it projects a virtual crosswalk onto the
street. It also sends other vehicles information on traffic
conditions ahead.
Please take a seat - we are about to
travel to the "City of the Future." In our
scenario, urban centers are becoming
increasingly dense and autonomous
driving has long since become the
norm. Cities are dynamic and con-
gested and people would like to have
more time, privacy and individuality.
The Mercedes-Benz F 015, with all
of its various facets, can meet these
demands.
Outlook
152
List of Charts and Tables
290
Daimler Worldwide
292
Information guidance system
Refers to an illustration or a table in the Annual Report
Refers to additional information on the Internet
Cross-reference within the Annual Report
Refers to a Daimler publication
Innovative
Digital
Leading
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Index
3
Daimler continues to move ahead with its transformation from an automotive
company into a networked mobility services provider. Our moovel mobility
concept, the Mercedes me service brand, the She's Mercedes inspiration plat-
form and car-to-x communication are helping us meet the changing demands
of our customers and enabling us to enter new markets. Digitization is also well
under way along the entire value chain. Our aim here is to make our processes
more efficient, to continue growing and to take the lead with regard to sales,
revenue and profitability.
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
5
Innovative
Our forerunners of the coming
mobility revolution
Autonomous driving is one of the biggest innovations since the
invention of the automobile. The Mercedes-Benz F 015 Luxury
in Motion demonstrates how vehicles will be transformed into a
personal refuge in the future. In the "City of the Future," the auton-
omously driving research vehicle becomes a luxurious lounge.
When switched to the self-driving mode, our Vision Tokyo becomes
a "chill-out zone" amidst the hectic city traffic. Our customers are
already using partially autonomous features today in Mercedes-Benz
S-Class, E-Class and C-Class models. We are systematically enhanc-
ing these technologies and thus moving closer to making autono-
mous driving a reality.
Baby, you can drive my car
The Mercedes-Benz campaign
offers a look at our vision of
autonomous driving.
Hyoutube.com/
watch?v=-PRiaUTal9M
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 7
Driving into the future - we put
visionary vehicles on the road
The dream of autonomous driving
can now be experienced
"The visionary F 015 Luxury in Motion is driving
technology developments, as well as the social
discourse on mobility and the design of urban
spaces. The needs of people are an important part
of Daimler's culture of innovation: People are at
the center of all our developments."
Daimler has been a pioneer and a driving force behind the devel-
opment of personal mobility for 130 years now. Our company's
founders, Carl Benz and Gottlieb Daimler, were strongly motivated
by a passion for invention - and also today, innovation remains
the most important factor behind our success. Our visionary ideas
and groundbreaking developments have put us on the path to
emission-free, accident-free and connected mobility - and are also
creating significant added value for our customers.
As the inventor of the automobile and one of the world's most innovative vehicle
manufacturers, Daimler is shaping the future of mobility. Our vehicles and services
make us a pioneer in the industry, and we are systematically increasing our lead.
For example, we are already making autonomous driving and pioneering drive sys-
tem technologies a reality today with world firsts such as the new Mercedes-Benz
E-Class, the Freightliner Inspiration Truck and the F 015 Luxury in Motion.
384
The Supervisory Board
Corporate Governance Code
28,081
+18
3
11
13
+1
187
182
184
-1
76
105
104
3.0
8,107
5.2
-2
4,105
4,218
4.113
+9
124
197
214
Employees (December 31)²
Unit sales
thereof capitalized
Research and development expenditure¹
Investment in property, plant and equipment
33,162
33,705
-15
18,147
Employees (December 31)
+30
19
23
30
Investment in property, plant and equipment
+18
83,539
98,967
116,727
Contract volume
+21
40,533
47,912
Return on sales (in %)
57,891
14,522
15,991
18,962
+17
1,268
1,387
1,619
New business
Revenue
EBIT
Daimler Financial Services
+4
16,603
17,473
+19
187
Revenue
Daimler Buses
160
Digital
14
Daimler Trucks
166
Leading
26
Mercedes-Benz Vans
171
Daimler Buses
174
Daimler Financial Services
177
Chairman's Letter
40
40
D | Corporate Governance
180
A | To Our Shareholders
45
Report of the Audit Committee
182
Integrity and Compliance
185
The Board of Management
46
Declaration of Compliance with the German
Report of the Supervisory Board
48
Mercedes-Benz Cars
4
Innovative
158
+12
1 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
2 As of 2014, including the numbers of employees previously counted under “Sales & Marketing Organization.”
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Ο
smar
M
WESTERN STAR
OUR BRANDS AND DIVISIONS
AMG
MAYBACH
Mercedes me
EBIT
FREIGHTLINER
FREIGHTLINER
SETRA
BHARATBENZ
Daimler Financial Services
Mere Bank
Mer Financial
Dim Truck Financial
moovel
CAR
260
mytaxi
Contents
Innovative. Digital. Leading.
1
C | The Divisions
FUSO
Research and development expenditure ¹
74
288
EBIT
7,926
5,853
4,006
+35
Revenue
83,809
73,584
64,307
% change
+14
9.5
8.0
6.2
Investment in property, plant and equipment
3,629
3,621
3,710
+0
Research and development expenditure1
Return on sales (in %)
4,711
15/14
2014
Employees (December 31)
3.25
284,015
2.45
2.25
+33
279,972
274,616
+1
1 Adjusted for the effects of currency translation, revenue increased by 9%.
2013
2 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
Apr 2015
Cover photo
Mercedes-Benz Concept IAA: Digital Transformer
Digital, innovative, leading - those properties are also
embodied by the Mercedes-Benz Concept IAA (Intelligent
Aerodynamic Automobile). The study combines world-
class aerodynamics with a drag coefficient of 0.19 and the
irresistible design of an expressive coupe. At the touch
of a button or automatically at speeds of 80 km/h and above,
the four-door coupe is transformed into an aerodynamic
world record holder: Eight segments emerge from the rear
of the car; front flaps in the front fender protrude outwards
and rearwards; the wheel rims change their concavity
and the louvre in the front fender moves back. The design
and aerodynamic shape of the Concept IAA would not
have been possible without systematic digital connectivity.
Daimler's Divisions >
Daimler at a Glance >
Divisions
€ amounts in millions
Mercedes-Benz Cars
2015
DAIMLER
4,025
3,808
+17
+16
Return on sales (in %)
6.9
5.8
5.2
Investment in property, plant and equipment
1,110
788
839
31,473
+41
1,293
thereof capitalized
26
1,188
34
1,171
+9
79
-24
Unit sales
Research and development expenditure 1
32,389
37,578
+37
thereof capitalized
1,612
1,035
1,063
+56
Unit sales
2,001,438
1,722,561
1,565,563
+16
Employees (December 31) 2
136,941
135,553
96,895
+1
Daimler Trucks
EBIT
Revenue
2,576
1,878
1,637
Dividend per share (in €)
502,478
+33
2,621
20,227
+8
NAFTA
47,653
38,025
32,925
+25
thereof United States
41,920
20,449
33,310
+26
Asia
33,744
29,446
24,481
+15
thereof China
14,684
13,294
28,597
10,705
22,001
+13
DAIMLER
Annual Report 2015
Key Figures
Daimler Group
€ amounts in millions
2015
2014
2013
15/14
thereof Germany
% change
149,467
129,872
117,982
+151
Western Europe
49,570
43,722
-34
41,123
Revenue
+10
Other markets
18,500
10,752
10,815
+23
Value added
5,675
4,416
5,921
+29
Net profit
13,186
8,711
8,720
+19
Earnings per share (in €)
7.87
6.51
6.40
+21
Total dividend
3,477
7,290
EBIT
-28
4,842
18,679
19,453
-1
Investment in property, plant and equipment
5,075
4,844
4,975
+5
Research and development expenditure²
6,564
5,680
5,489
+16
thereof capitalized
1,804
1,148
1,284
+57
Free cash flow of the industrial business
3,960
5,479
2,407
495,668
8,878
+1
484,211
-1
Mercedes-Benz Vans
EBIT
880
631
+29
Revenue
11,473
9,968
9,369
682
Return on sales (in %)
86,391
+15
Employees (December 31) 2
87,628
304
79,020
202
Investment in property, plant and equipment
6.7
6.8
7.7
4,655
3,635
Profit from ordinary activities
2,074
4,994
3,755
-900
-1,223
Net profit
3,771
Transfer to retained earnings
Financial income
Income tax expense
1,359
-91,733
Operating profit
1,122
1,441
Other operating income, net
-1,885
-1,969
General administrative expenses
-6,518
-6,695
-75,307
-278
Cost of sales (including R&D expenses)
Selling expenses
83,947
101,537
2,581
-1,150
The business development of Daimler AG is fundamentally
subject to the same risks and opportunities as that of the
Daimler Group. Daimler AG generally participates in the risks
of its subsidiaries and associated companies in line with
the percentage of each holding. The risks and opportunities
are described in the "Risk and Opportunity Report."
3,477
257
88,285
Prepaid expenses
3,399
41,230
48,769
Current assets
1,925
Cash and cash equivalents
43,772
7,846
29,985
38,341
Receivables, securities and other assets
39,259
8,503
Inventories
Non-current assets
Assets
Distributable profit
Dec. 31,
2014
In millions of euros
Balance sheet structure of Daimler AG
B.37
pages 138 ff For Daimler AG, we assess the probability of
occurrence of the risks and opportunities connected with
pension plans as high. These risks and opportunities increase
along with a change in the discount rate. Risks may addi-
tionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual
obligations (in particular with regard to financing).
Revenue
Risks and opportunities
Liabilities of €35.8 billion were at the prior-year level.
Provisions increased compared with December 31, 2014 by
€1.9 billion to €13.7 billion. This primarily reflects the sales-
related increase in provisions for warranty claims. The increase
also resulted from provisions for pensions and similar obliga-
tions, which were affected by the lower discount rate. There
was an opposing, reducing effect from the extraordinary
contribution of €0.9 billion to the German pension plan assets.
An additional factor is that there were higher personnel
and social-security obligations than in the previous year.
Equity increased compared with December 31, 2014 by €1.1
billion to €38.2 billion. This change primarily resulted from
the net profit for 2015, of which, in accordance with Section 58
Subsection 2 of the German Stock Corporation Act (AktG),
€0.3 billion was transferred to retained earnings. The equity
ratio at December 31, 2015 was 43.3% (December 31, 2014:
43.5%).
Cash flows from financing activities resulted in a net cash
outflow of €3.9 billion (2014: €3.2 billion). The increased
outflow is the result of the higher increase than in 2014 in
receivables due from subsidiaries from the Group's internal
transactions in connection with central finance and liquidity
management. There was an opposing effect from the
increase compared with the previous year in external financing
liabilities. Cash flows from financing activities include the
payment of the dividend for the year 2014 in an amount of
€2.6 billion.
Cash flows from investing activities resulted in a net cash
outflow of €4.2 billion in 2015 (2014: €1.3 billion). The increased
cash outflow was the result of higher net investment in
financial assets. An additional factor is that the sale of the
equity interest in Rolls-Royce Power Systems Holding GmbH
had a positive impact on cash flows from investing activities in
the previous year.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
104
2,621
Dec. 31,
2015
2014
Financial position, liquidity and capital
In millions of euros
page 200, the Consolidated Statement of Changes in
Equity page 202 and the related notes in the Notes to the
Consolidated Financial Statements.
Further information on the assets presented in the statement of
financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
Other liabilities of €12.3 billion (2014: €9.1 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase mainly results from the increase in deferred
income of €1.7 billion, which resulted from a higher volume of
service and maintenance contracts.
Other financial liabilities of €12.4 billion (2014: €10.7 billion)
mainly consist of liabilities from derivative financial instru-
ments, residual value guarantees, accrued interest on financing
liabilities, deposits received and liabilities from wages and
salaries. The increase of €1.2 billion after adjusting for exchange-
rate effects is due to derivative financial instruments, among
other things.
Trade payables increased to €10.5 billion due to the higher
volume of business (2014: €10.2 billion). The Mercedes-Benz
Cars division accounts for 61% of those payables and the Daimler
Trucks division accounts for 27%.
Financing liabilities of €101.1 billion were above the level of
December 31, 2014 (€86.7 billion). As well as currency effects
of €1.4 billion, the increase primarily reflects the refinancing of
the growing leasing and sales-financing business. 51% of the
financing liabilities are accounted for by bonds, 27% by liabilities
to financial institutions, 10% by deposits in the direct banking
business and 7% by liabilities from ABS transactions.
Provisions decreased to €26.1 billion (2014: €28.4 billion); as
a proportion of the balance sheet total, they amounted to 12%
(2014: 15%). They primarily comprise provisions for pensions and
similar obligations of €8.7 billion (2014: €12.8 billion), which
mainly consist of the difference between the present value of
defined benefit pension obligations of €27.6 billion (2014:
€30.1 billion) and the fair value of the pension plan assets applied
to finance those obligations of €20.2 billion (2014: €18.6 bil-
lion). The rise in discount rates, especially for German plans
from 1.9% at December 31, 2014 to 2.6% at December 31,
2015, led to a decrease in the present value of the defined ben-
efit pension obligations. This effect was strengthened by the
extraordinary contribution of €1.2 billion to German and US
pension plan assets. Provisions also relate to liabilities from
income taxes of €1.7 billion (2014: €1.6 billion), from product
warranties of €5.7 billion (2014: €5.0 billion) and from per-
sonnel and social costs of €4.4 billion (2014: €3.9 billion), as
well as other provisions of €5.8 billion (2014: €5.1 billion).
The Group's equity increased compared with December 31,
2014 from €44.6 billion to €54.6 billion. Equity attributable to
the shareholders of Daimler AG increased to €53.6 billion
(2014: €43.7 billion). The increase in equity was the result of
the net profit of €8.7 billion page 88, actuarial gains from
defined benefit pension plans recognized in retained earnings of
€2.7 billion, positive currency translation effects of €1.4 billion
and a gain of €0.7 billion on the measurement of financial assets
available for sale. There were negative effects on equity,
however, from the distribution of the dividend for financial year
2014 to the shareholders of Daimler AG (€2.6 billion) and the
remeasurement of derivative financial instruments (€0.6 billion).
Compared to the 15% increase in the balance sheet total, there
was a disproportionately high increase in equity of 23%. Due to
the effects described above, the Group's equity ratio of 23.6%
was above the level at the end of 2014 (22.1%); the equity ratio
for the industrial business was 44.2% (2014: 40.8%). It is nec-
essary to consider that the equity ratios at the end of 2014 and
2015 are adjusted for the paid and proposed dividend pay-
ments.
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 101
Other assets of €8.2 billion (2014: €8.3 billion) primarily com-
prise deferred tax assets and tax refund claims.
Other financial assets increased from €6.0 billion to €7.5 billion.
They primarily consist of the investments in Renault and Nissan
and derivative financial instruments, as well as loans and other
receivables due from third parties. Amongst other things, the
increase was caused by higher stock-market prices of Renault
and Nissan shares.
Cash and cash equivalents increased compared with the end
of 2014 by €0.3 billion to €9.9 billion.
Trade receivables increased by €0.4 billion to €9.1 billion. The
Mercedes-Benz Cars division accounts for 45% of these
receivables and the Daimler Trucks division accounts for 32%.
Inventories increased from €20.9 billion to €23.8 billion,
equivalent to 11% of total assets, as in the prior year. Adjusted
for currency effects, there was an increase of €2.6 billion, par-
tially due to the launch of new models and a larger number of
model versions, as well as the expected positive development
of unit sales. This resulted primarily at the Mercedes-Benz Cars
and Daimler Trucks divisions in increased stocks of finished
and unfinished goods in Germany and the United States.
102
Equity-method investments of €3.6 billion (2014: €2.3 billion)
primarily comprise the carrying amounts of our equity inter-
ests in Beijing Benz Automotive Co. Ltd. (BBAC), BAIC Motor
Corporation Ltd., Beijing Foton Daimler Automotive Co. Ltd.
and Kamaz PAO. In addition, the investment in the digital map-
ping provider HERE (There Holding B.V.) in December 2015 has
been recognized. The increase was also caused by the positive
proportionate share of the profit and the capital increase at
BBAC.
18 16
217 190
of which: Liquidity
Current liabilities
Current assets
67 77
92 77
Non-current liabilities
78 85
Equity and liabilities
Equity
45 55
125 113
2014
2015
Non-current assets
Assets
190 217
2015
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Condensed version according to the German Commercial Code (HGB)
Condensed statement of income of Daimler AG
B.36
Cash provided by operating activities amounted to €6.6
billion at the end of 2015 (2014: €3.2 billion). The increase
primarily reflects lower contributions to pension plan assets.
Additional factors behind the increase are lower inventory
growth than in the previous year and increased operating profit
in 2015.
Gross liquidity - defined as cash and cash equivalents and
other marketable securities of €7.8 billion was lower than a
year earlier (2014: €8.6 billion).
Receivables, securities and other assets increased compared
with December 31, 2014 by €8.4 billion to €38.3 billion. The
main reason for this development was growth in receivables
due from subsidiaries of €6.6 billion. Cash and cash equiva-
lents decreased by €1.5 billion to €1.9 billion, partially due to
the extraordinary contribution to German pension plan assets
of €0.9 billion.
Inventories increased by €0.7 billion to €8.5 billion at
December 31, 2015. The increase is mainly related to finished
and unfinished goods in connection with the higher pro-
duction volumes.
Non-current assets decreased by €4.5 billion to €39.3 billion
in 2015, primarily due to the lower amount of financial assets.
This mainly reflects the merger of Daimler Luft- und Raumfahrt
Holding AG into Daimler AG. Investments in property plant
and equipment (excluding leased assets, approximately €2.6
billion) mainly comprise investments for the production of
the C-, E- and S-Class, as well as investments in engine and
transmission projects.
The balance sheet total of €88.3 billion is €3.0 billion higher
than at year-end 2014.
resources
256
85,258
The economic situation of Daimler AG primarily results from
its business operations and those of its subsidiaries. Daimler AG
participates in the operating results of its subsidiaries through
profit distributions. The economic situation of Daimler AG is
therefore fundamentally the same as that of the Daimler Group,
which is described in the chapter "Overall Assessment of the
Economic Situation."
pages 120 f
Net profit of €3.8 billion was at the prior-year level. The higher
than forecast operating profit was partially offset by opposing
effects in financial income. Net profit is therefore significantly
higher than the amount originally expected.
The income tax expense amounts to €0.9 billion (2014: €1.2
billion). In 2015, the figure includes high tax benefits of €0.7
billion connected with the tax assessment of previous years.
Despite a higher tax expense for the year 2015 as a result
of the improved operating profit, these tax benefits led to a
reduction in the effective income tax expense compared
with 2014.
Financial income decreased by €1.5 billion to €2.1 billion,
primarily due to interest income/expense. The decrease mainly
reflects the higher interest expense relating to retirement
benefit obligations, which was caused by the lower discount
rate. Interest income/expense was also influenced by lower
income from pension plan assets.
Daimler AG
Other operating income amounted to €1.4 billion (2014: €1.1
billion). As part of the organizational focus on the divisions,
a restructuring program for the German sales organization was
started in 2014. In that context, individual selected locations
of the Group's own sales network in Germany were sold in 2015.
The income and expenses from the sale of the individual sales
locations, in particular the expenses for personnel actions, result
in a net expense of €0.2 billion. In the previous year, there
had been a negative impact of €0.6 billion from expenses in
connection with the antitrust investigations of European
manufacturers of commercial vehicles by the EU Commission.
71 B.36
Selling expenses increased by €0.2 billion to €6.7 billion. This
was primarily due to higher expenses for marketing and out-
bound shipping. As a proportion of revenue, selling expenses
decreased from 7.8% to 6.6%.
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 103
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
subsidiaries of Daimler AG are not counted in unit sales.
Revenue increased, as forecast in the previous year, due to
higher unit sales of vehicles and components by €17.6 billion to
€101.5 billion. In the car business, revenue thus rose by 24%
to €77.9 billion. Also with trucks and vans, higher unit sales of
vehicles and components led to an increase in revenue of
13% to €23.6 billion.
Profit from ordinary activities reported by Daimler AG for
2015 amounts to €4.7 billion (2014: €5.0 billion). The develop-
ment of earnings reflects the increase in operating profit of
€1.2 billion to €2.6 billion and the decrease in financial income
of €1.5 billion to €2.1 billion. 7 B.36
Profitability
Cost of sales increased by 22% to €91.7 billion. Increases in
unit sales and expenses for new products and technologies led
to higher cost of sales. Research and development expenses,
which are included in cost of sales, were higher than in the
previous year at €5.6 billion (2014: €4.9 billion); as a proportion
of revenue, they amounted to 5.5% (2014: 5.8%). Research
and development expenses were primarily related to the renewal
and expansion of the product portfolio, especially with regard
to the model series of the E-Class, the SUVs and the compact
class. In addition, we are continuously working on new genera-
tions of engines and alternative drive systems. At the end of the
year, approximately 18,000 people were employed in the
area of research and development.
Earnings from trucks and vans were significantly higher than in
2014. Sales of trucks increased by 11% to 102,000 units¹. Sales
of vans increased by 12% to 314,000 units¹.
The earnings achieved by the car business in 2015 were signi-
ficantly higher than in the previous year. The development
of earnings was influenced by ongoing growth in unit sales in
Europe, the United States and Asia. There were opposing,
negative effects from expenditure for new products and techno-
logies, amongst other factors. Unit sales in the car business
increased by 14% to 1,790,000 vehicles' in the year under review.
Of the various model series, the new C-Class was extremely
successful in 2015 with a 29% increase in unit sales to 375,000
vehicles'. SUVs (including the GLA) posted sales growth of
19% to 455,000 units¹.
The main performance indicators for Daimler AG are unit
sales, revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement,
primarily relating to intangible assets, provisions, financial
instruments, the leasing business and deferred taxes.
The vehicles are produced at the domestic plants of Daimler AG,
as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its
own sales-and-service network, which is organized in seven
regional centers for cars and seven for commercial vehicles,
through foreign sales subsidiaries and through third parties.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart. Its principal business activities
comprise the development, production and distribution of cars,
vans and trucks in Germany and the management of the
activities of the Daimler Group.
In addition to reporting on the Daimler Group, in this chapter,
we also describe the development of Daimler AG.
General administrative expenses of €2.0 billion were slightly
above the prior-year level (2014: €1.9 billion). In relation to
revenue, they amounted to 1.9% (2014: 2.2%).
Equity and liabilities
3,477
3,070
Daimler Group
In millions of euros
% change
15/14
2014
2015
Research and development expenditure by division
B.39
2015
2014
2013
2012
2011
0
6,564
LLLLL
total
1
3
2
4
5
6
7
In billions of euros
Research and development expenditure
B.38
as well as on the successor generations of existing products.
R&D expenditure at Mercedes-Benz Vans focused mainly on
ongoing product enhancement measures, the new Sprinter gener-
ation and the development of a new mid-size pickup. Daimler
Buses primarily focused its development activities on new prod-
ucts, the fulfillment of new emissions standards and the cre-
ation of alternative drive systems. 7 B.38 7 B.39
The most important development projects at Mercedes-Benz
Cars were the new models of the E-Class, the new SUVs and
the new generation of compact cars. In addition, we continually
invest in new low-emission engines, alternative drive systems
and innovative safety technologies. Mercedes-Benz Cars spent
a total of €4.7 billion on research and development in 2015,
which once again marked a significant increase from the prior
year's figure (€4.0 billion). Daimler Trucks invested €1.3 billion
in research and development projects (2014: €1.2 billion). The
focus there was on new medium-duty and heavy-duty engines
We want to continue shaping mobility through our pioneering
innovations in the coming years while moving ahead with digiti-
zation throughout the entire Group. We therefore increased
our very high level of investment in research and development
of €5.7 billion in 2014 to €6.6 billion in 2015. Of that amount,
€1.8 billion (2014: €1.1 billion) was capitalized as development
costs, which amounts to a capitalization rate of 27% (2014: 20%).
The amortization of capitalized research and development
expenditure totaled €1.2 billion during the year under review
(2014: €1.2 billion). With a rate of 4.4% (2014: 4.4%), research
and development expenditure also remained at a high level in
comparison with revenue. Research in the reporting year
focused on new vehicle models, extremely fuel-efficient and
environmentally friendly drive systems, new safety techno-
logies, autonomous driving systems and the digital networking
of our products.
€6.6 billion for research and development
thereof capitalized
5,680
+16
thereof capitalized
+18
11
13
+1
182
184
+125
68
153
+31
293
384
Mercedes-Benz Vans
thereof capitalized
Daimler Buses
thereof capitalized
-24
34
26
thereof capitalized
1,804
1,148
+57
Mercedes-Benz Cars
4,711
4,025
We invented the automobile: On January 29, 1886, Carl Benz
registered a patent for a "vehicle powered by a gas engine." In
the 130 years since then, we have refined automobiles with
more than 100,000 patents and set standards that point the
way toward emission-free, accident-free and autonomous
driving. We continued this tradition in 2015 by registering a
total of approximately 2,000 new ideas for patents as in the
previous year. These patents are important to the company for
two reasons. First of all, they enable exclusivity - i.e. the use
of such innovations solely in our products. Secondly, the patents
secure Daimler a certain amount of "freedom of action"
i.e. they prevent restrictive third-party patents from limiting
Daimler's scope of operations. In addition to industrial prop-
erty rights, which safeguard our innovations for future mobility
over the long term, the unique visual aspects of our products
are protected with over 9,000 designs registered in 2015 (2014:
6,400). The significant increase is primarily due to the expan-
sion of our product portfolio, but is also the result of a method
change in registration. Furthermore, with a portfolio of more
than 31,300 trademarks worldwide (2014: 32,900), we protect
the renowned and valuable Mercedes-Benz brand, the three-
pointed star and all of our other product brands in each rele-
vant market. The decrease is mainly due to portfolio
rationalization.
+17
1,612
1,035
+56
1,293
1,188
+9
thereof capitalized
Daimler Trucks
Share capital
Intellectual property rights secure our leadership
in technology and innovation
In order to achieve our ambitious goals, we also cooperate very
closely with research and development units from the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly bring
new technologies to market maturity. Such cooperation is all
the more important in light of the increasing digitization of pro-
cesses throughout all stages of the value chain. Strong part-
ners from the supplier industry are also indispensable for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we ensure
that the Group maintains the key technological expertise it
needs in order to keep our brands distinct and to safeguard the
future of the automobile in general.
Liabilities
30,379
30,654
Other liabilities
5,412
5,098
Trade payables
11,861
13,742
Provisions
10,470
11,811
Other provisions
1,391
35,752
1,931
37,062
38,196
Equity
2,621
In billions of euros
Distributable profit
19,891
20,169
Retained earnings
11,480
11,480
Capital reserve
(conditional capital €500 million)
3,070
Provisions for pensions and similar obligations
35,791
Deferred income
595
Targeted involvement of the supplier industry
Along with our internal activities, we also maintain close con-
tacts with external research institutions. For example, we
work together with various renowned research institutes around
the world and participate in international exchange programs
for up-and-coming scientists.
Our international research and development network
Our global research and development network comprises 23
locations in eleven countries. Our biggest facilities are in
Sindelfingen and Stuttgart-Untertürkheim in Germany. A new
facility for an ultramodern testing and technology center is
now under construction in Immendingen. We started test oper-
ations there in October 2015. We are investing approximately
€200 million in Immendingen, where 300 new jobs will be cre-
ated. Approximately 200 people are currently employed in
Sunnyvale, California, the headquarters of our research facili-
ties in North America. Other important research locations in
North America are Long Beach and Carlsbad, California;
Portland, Oregon; and Redford, Michigan. Our most important
locations in Asia are our facilities in Bangalore and Pune, India;
the Global Hybrid Center in Kawasaki, Japan; and our research
and development center in Beijing. With its nearly 2,900 employ-
ees, Mercedes-Benz Research and Development India (MBRDI,
with headquarters in Bangalore) is Daimler's largest research
and development center outside Germany. In November 2014,
Daimler Greater China Ltd. opened a new research and devel-
opment center in China, thereby expanding the existing R&D
network in Beijing. The Advanced Design Studio is the most
important component of the new center and also serves as
the Group's design hub in Asia. At the end of 2015, approximately
500 highly qualified engineers and designers were employed
at the Mercedes-Benz research and development center in
Beijing. Back in 2013, our van joint venture in China, Fujian
Benz Automotive Corporation, opened a new product develop-
ment center in Fuzhou. This facility, which is the first Mercedes-
Benz Vans product development center outside Germany, has
a design and calculation department, proving grounds, test
labs and component and complete-vehicle test rigs.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2015, Daimler employed 23,300 men
and women at its research and development units (2014:
21,700). A total of 15,500 of those employees (2014: 14,000)
worked at Group Research & Mercedes-Benz Cars Develop-
ment, 5,500 (2014: 5,500) at Daimler Trucks, 1,100 (2014:
1,000) at Mercedes-Benz Vans and 1,200 (2014: 1,100) at
Daimler Buses. Around 5,100 researchers and development
engineers (2014: 4,600) worked outside Germany.
Research and development as key success factors
Research and development have always played a key role
at Daimler. Our researchers anticipate trends, customer wishes
and the requirements of the mobility of the future, and our
development engineers systematically implement these ideas
in products that are ready for series production. Our goal is
to offer our customers fascinating products and customized
solutions for needs-oriented, safe and sustainable mobility.
Our technology portfolio and our key areas of expertise are
focused on this objective.
Research and development
The new sustainability report was drawn up in line with the
Global Reporting Initiative (GRI) guidelines “4.0 - Comprehensive."
In this context, Daimler specifically highlights all of the com-
pany's key sustainability-related issues. This applies in particular
to current focal topics such as further reductions in the emis-
sions of our vehicles, our position on the introduction of new
test cycles in Europe and our extensive activities to assist
refugees. We also focus on those issues that our periodic materi-
ality analyses have determined to be of great importance to
our stakeholders and ourselves. These include our activities to
protect human rights, measures to further reduce the CO2
emissions of our vehicles and the development of innovative
vehicle and drive-system technologies.
The new sustainability report on financial year 2015 will be
presented at Daimler's Annual Shareholders' Meeting in early
April 2016. The report will be published exclusively in digital
form for the first time, which means it will be available for
viewing at any time on the Daimler corporate website. The
report provides a detailed and comprehensive sustainability
balance sheet for the previous financial year. All of the key
facts and figures will also be published in a brochure.
daimler.com/sustainability
Comprehensive reporting on sustainability
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
106
At Daimler, sustainability is thematically and organizationally
embedded in our Group-wide corporate governance activities.
pages 180 ff The Corporate Sustainability Board (CSB) is
the central management body for all sustainability-related issues.
The operational work is conducted by the Corporate Sustain-
ability Office, which is staffed by representatives of the specialist
departments and divisions. Since 2011, we have been using
the Sustainability Scorecard as a tool for steering our efforts
to meet key sustainability targets. The scorecard uses a
color-coded system either to display the success of quantitative
indicators and qualitative objectives or to show that action
needs to be taken. This allows targeted measures to be taken
with the direct involvement of corporate management.
Group-wide sustainability management
As a corporate citizen, we seek to contribute to the common
good beyond the level of our business operations, and
we utilize our special expertise in order to achieve this goal.
As an employer, we have a responsibility to ensure fair and
attractive working conditions for our more than 284,000
employees worldwide.
Our operations impact the environment, and this is especially
the case in vehicle production. We therefore employ a
consistent system of environmental management in order
to minimize this impact.
We are committed to both legal and ethical standards and
must ensure that these standards are adhered to around
the world also by our business partners and suppliers.
Road traffic is one of the causes of CO2 and pollutant
emissions. As an automobile manufacturer, we work to pro-
mote sustainable mobility solutions and have demonstrated
our innovative capability with regard to environmental and
resource protection and safety.
544
88,285
85,258
Outlook
Due to the interrelations between Daimler AG and its subsi-
diaries and the relative size of Daimler AG within the Group,
we refer to the statements in the "Outlook” chapter, which
largely reflect our expectations also for the parent company.
This includes the statements on unit sales and revenue.
pages 152 ff For the year 2016, we plan for Daimler AG to
achieve a net profit significantly higher than in 2015. Due
to the expected legislation with regard to discount rates for
retirement benefit obligations, we anticipate a lower interest
expense. The related increase in financial income will be partially
offset by a decrease in income from investments in subsi-
diaries and associated companies.
Sustainability
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 107
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 105
Our view of sustainability
For us, sustainability means conducting business responsibly
to ensure long-term success in harmony with the environment
and society. We are moving toward our goals by making
sustainability a firmly integrated aspect of our operations and
by requiring and promoting a strong sense of responsibility
for sustainable operations among all of our managers and
employees throughout the Group. We include our business
partners in this process and conduct a dialogue on these issues
with our stakeholders. Our management structures, processes
and systems are designed in accordance with this concept
of sustainability. All of our behavior is based on legality and
integrity. As one of the world's foremost automakers, Daimler
has a clear claim to leadership in the field of sustainability.
Our sustainability strategy
We have developed a Group-wide sustainability strategy to
enable us to meet the requirements associated with sustain-
ability, and we systematically pursue the sustainability goals
we have set for ourselves. This strategy is embedded in our
corporate strategy, which is based on our four core values
of passion, respect, integrity and discipline. We can only ensure
sustained profitability and society's acceptance of our business
activities if we take into account the impact all of our business
processes have on the environment and society, and if we align
our business targets with environmental and social requirements.
Our sustainability strategy has six core aspects ("dimensions
of responsibility"), to which relevant areas have been assigned
where action needs to be taken. We have linked them with
targets and target indicators. Together, all of our goals and
targets serve as the basis for our medium- to long-term
Sustainability Program, which we use to measure our perfor-
mance, although we wish our performance to be judged
externally as well. Our "Sustainability Program" also defines
the areas in which we plan to take action in the coming
years. For example, we aim to further reduce pollutants and
emissions, further enhance the safety of our vehicles, and
further expand and more systematically structure our efforts
to protect human rights. We also seek to improve our
dialogue with our suppliers and dealers and to further strengthen
our social commitment.
Our business activities are also strongly guided by the ten
principles of the UN Global Compact, to which we are firmly
committed as a founding member. We are also a member
of the Global Compact LEAD Group. Our internal principles and
guidelines are based on this international reference frame-
work as well as on other international principles.
Sustainability at Daimler
Balance sheet structure Daimler Group
Marketable debt securities increased compared with December
31, 2014 from €6.6 billion to €8.3 billion. Those assets include
debt instruments that are allocated to liquidity, most of which
are traded in active markets. They generally have an external
rating of A or better.
Equipment on operating leases and receivables from financial
services increased to a total of €112.5 billion (2014: €94.7
billion). The increase was primarily caused by the higher level
of new business at Daimler Financial Services. In addition,
there was an increase due to the effects of currency translation
in an amount of €3.3 billion. The growth reflects the successful
course of business, especially in the United States. Above-aver-
age growth was achieved in the sales-financing business also
in China and other Asian countries, as well as in Turkey. The
leasing and sales-financing business as a proportion of total
assets of 52% is above the prior-year level (50%).
F2
R-1 (low)
R-1 (low)
On February 11, 2015, Moody's Investors Service (Moody's)
changed its outlook for Daimler's A3 long-term rating from
"stable" to "positive." Moody's justified this change with the
expectation of a positive sales development in the next 12 to
18 months, which will strengthen our company's credit profile
in combination with the ongoing efficiency measures. Moody's
pointed out that the financial profile of the Daimler Group has
improved in recent years on the basis of a successful business
development. The implementation of the positive outlook as an
upgrade of the rating depends on the extent to which Daimler
can sustain its strong operating performance in view of the
heterogeneous development of the world economy.
Standard & Poor's Ratings Services (S&P) published a report
on Daimler AG on November 27, 2015 in which it affirmed the
corporate long-term credit rating of A- and the stable outlook.
In the terminology of S&P, the rating reflects the satisfactory
business and minimal financial risk profiles. Amongst other
factors, the business risk reflects the cyclical development of
the automotive markets. The financial risk is an indicator of the
Group's financial strength. In the assessment of S&P, Daimler's
ongoing positive business development is subject to the risk of
weakening demand for motor vehicles in some markets.
Fitch Ratings (Fitch) also affirmed its long-term issuer default
rating of A- with a stable outlook for Daimler AG. Fitch referred
to the Group's solid business profile and the strengthening of
key financial metrics. In addition, Fitch praised Daimler's wide
geographical and product diversification as well as its leading
positions in the markets for premium cars, trucks, vans and
buses. Fitch stated that Daimler enjoys adequate headroom
with its present rating.
The Canadian agency DBRS most recently confirmed the
long-term credit rating of Daimler AG at A (low) with a stable
outlook in November 2015. DBRS pointed out that Daimler's
business performance had resulted in further improved
profitability. This reflects the product offensive at Mercedes-Benz
Cars as well as the ongoing cost-reduction activities. The
rather favorable market conditions (in aggregate) are regarded
as another driver of the positive sales development. DBRS
referred in particular to the sales successes of Mercedes-Benz
Cars in China and Daimler Trucks in North America.
The short-term credit ratings of all four rating agencies
remained unchanged in 2015.
Financial Position
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 99
The balance sheet total increased compared with December
31, 2014 from €189.6 billion to €217.2 billion; adjusted for
the effects of currency translation, the increase amounted to
€23.2 billion. Daimler Financial Services accounts for €123.9
billion of the balance sheet total (2014: €105.5 billion); this is
equivalent to 57% of the Daimler Group's total assets (2014:
56%).
The increase in total assets is primarily due to the growth of
the financial services business and higher inventories. On the
liabilities side of the balance sheet, there were increases in
particular in financing liabilities and shareholders' equity. Cur-
rent assets account for 42% of the balance sheet total, which
is above the prior-year level of 41%. Current liabilities account
for 35% of the balance sheet total, as at the end of previous
year.
Intangible assets of €10.1 billion include €7.8 billion of capitalized
development costs (2014: €7.2 billion) and, as in the previous
year, €0.7 billion of goodwill. Mercedes-Benz Cars accounts for
73% (2014: 69%) and Daimler Trucks for 18% (2014: 22%) of the
develoment costs. Capitalized development costs amounted to
€1.8 billion (2014: €1.1 billion), and account for 27% of the
Group's total research and development expenditure (2014: 20%)
page 107.
Property, plant and equipment
page 95 rose to €24.3
billion (2014: €23.2 billion). In 2015, €5.1 billion was invested
worldwide (2014: €4.8 billion), in particular at our production
and assembly sites for new products and technologies and for
the expansion and modernization of production facilities.
The sites in Germany accounted for €3.3 billion of the capital
expenditure (2014: €3.1 billion).
B.34
Consolidated statement of financial position
Dec. 31,
2015
2014
15/14
% change
In millions of euros
Assets
Intangible assets
Property, plant and equipment
Equipment on operating leases
and receivables from financial
services
Total assets
10,069
F2
P-2
A-2
A-2
B.35
98
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Credit ratings
In the year 2015, the outlook for the long-term credit rating of
Daimler AG as assessed by Moody's improved from "stable" to
"positive." Otherwise, our credit ratings remained unchanged.
Daimler AG therefore has comparable ratings at the level of A-
with all four of the credit-rating agencies it has engaged. The
outlook for the ratings is assessed as "stable" by S&P, Fitch
and DBRS. 71 B.33
B.33
Credit ratings
Long-term credit rating
Standard & Poor's
Moody's
Fitch
DBRS
Short-term credit rating
9,367
Standard & Poor's
Fitch
DBRS
End of 2015
End of 2014
A-
A-
A3
A3
A-
A (low)
A (low)
A-
P-2
Moody's
+7
Dec. 31,
23,182
+15
Equity and liabilities
Equity
54,624
44,584
+23
Provisions
26,145
28,393
-8
Financing liabilities
Trade payables
101,142
86,689
+17
189,635
10,548
+4
Other financial liabilities
Other liabilities
12,360
10,706
+15
12,347
9,085
+36
217,166
189,635
+15
24,322
100 B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
10,178
217,166
Total equity and liabilities
8,277
112,456
-1
+5
94,729
Equity-method investments
Inventories
3,633
2,294
+58
23,760
20,864
+14
Trade receivables
9,054
8,634
+19
Cash and cash equivalents
+5
+25
7,454
8,209
+25
5,987
8,273
9,936
6,634
9,667
+3
Marketable debt securities
Other financial assets
Other assets
Hybridization for further
increase in efficiency
We have also further reduced the fuel consumption of our
range of commercial vehicles, thanks to the most recent
additions and the use of new engines. Our Actros, Arocs, Antos
and Atego series, the heavy-duty Freightliner Cascadia
Evolution in the United States and the FUSO Super Great V
are amongst the cleanest and most economical trucks in
their respective classes - and our new buses also boast out-
standing fuel consumption figures.
pages 113 f
Much of our research and development work focuses on
making our cars and commercial vehicles with internal combus-
tion engines even more efficient. This is largely made possible
by engines with low displacement and turbochargers, as well
as by lightweight engineering, aerodynamic improvements,
tires with low rolling resistance, demand-appropriate energy
management and an automatic start-stop function. In parti-
cular, our new SUVs that were launched in 2015 displayed sig-
nificantly higher fuel efficiency. This was made possible by
modified or new drive systems, outstanding aerodynamics and
intelligent lightweight design. For example, the new GLC SUV
boasts up to 19% lower fuel consumption and CO2 emissions
compared with predecessor models with the same engine
output, despite its improved driving performance. The most
fuel-efficient Mercedes-Benz passenger car with a combustion
engine is currently the A 180 d BlueEFFICIENCY Edition', which
boasts average diesel consumption of only 3.5 liters per 100 km.
We are exploiting additional emission-reduction potential
through intelligent and customized hybridization.
Efficient cars and commercial vehicles with internal
combustion engines
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 109
Energy sources for locally emission-free driving
Clean fuels for internal combustion engines
Energy for the future
Locally emission-free
driving with electric
vehicles powered by
fuel cells or batteries
Additional plug-in hybrids with the star
3. Our electric vehicles, powered by batteries or fuel cells, are
making locally emission-free driving possible. 7 B.40
Optimizing our vehicles
Road to emission-free mobility
B.40
We are systematically pursuing our approach to emission-free
driving along the entire value chain. To this end, we are
addressing all relevant aspects and exploiting potential at
all development units for everything from lightweight
engineering to optimized aerodynamics, the use of clean and
efficient fuels, the creation of electric drive systems and
the implementation of sustainable mobility concepts. We also
view emissions as a holistic issue and are therefore examining
ways to reduce other types of emissions besides pollutants -
e.g. noise.
1. We continue to enhance our vehicles with state-of-the-art
internal combustion engines that we are optimizing to
achieve significantly lower fuel consumption and emissions.
2. We are achieving further significant increases in efficiency
through customized hybridization, i.e. the combination of
combustion engines and electric motors.
Our goal is to safeguard mobility for the generations to come.
We therefore strive to offer our customers vehicles and ser-
vices that are safe and efficient and produce low emissions
along the entire value chain. Our "Road to Emission-free
Driving" initiative defines the key development approaches for
creating new extremely fuel-efficient and environmentally
friendly drive-system technologies at all of our automotive
divisions:
Our "road to emission-free mobility"
MULTIBEAM headlights in the CLS and the overall concept of
the CLA Shooting Brake, which leads the way in its segment
by combining the beauty of a coupe with the practical benefits
of a station wagon. Daimler came out on top in the "Alternative
Drive Systems" category as a result of the S-Class and C-Class
plug-in hybrids and the all-electric B-Class.
Mercedes-Benz beat out the competition with its 578 individual
innovations and 183 world firsts. The outstanding innovations
cited include DISTRONIC PLUS with Stop&Go Pilot, the economi-
cal hybrid drive system in the S-Class and the MAGIC BODY
CONTROL suspension. Innovations highlighted in the "Most
Innovative Premium Brand” category included the curve
tilting technology in the S-Class Coupe, the 24-pixel LED
Following the launch in October 2014 of the S 500 e² - the
world's first certified "three-liter" luxury sedan - we continued
our hybrid offensive with the introduction of additional models
in 2015.
In April 2015, both Daimler and Mercedes-Benz received awards
for their innovative capability as a result of an extensive study
conducted by the Center of Automotive Management (CAM)
and the Pricewaterhouse Coopers (PwC) corporate consulting
firm. The study found that Mercedes-Benz is the most innovative
premium automobile brand with the greatest number of world
firsts. Mercedes-Benz also received a special award as the
"Most Innovative Brand in the Last Decade." Daimler was
named "Most Innovative Group" in the category "Alternative
Drive Systems."
with modern conventional
powertrains
The Mercedes-Benz C 350 e³ makes an excellent impression
both as a sedan and a wagon through its exceptionally dynamic
handling and efficiency. It can also be driven in the pure elec-
tric mode, and thus locally emission-free, for a distance of
31 kilometers. The model has a drive-system output of 205 kW
(279 hp) and system torque of 600 Nm. The C 350 e³ thus dis-
plays the driving performance of a sports car, even as it
boasts certified fuel consumption of between 2.4 and 2.1 liters
per 100 km as a sedan or station wagon (depending on the
equipment features installed). The fuel consumption figures
correspond to CO2 emissions of just 54-48 g/km. Indepen-
dent monitors from the TÜV Süd inspection agency have now
the Mercedes-Benz C 350 e³: The new plug-in-hybrid meets
all the requirements for environmentally sound product develop-
ment in accordance with the ISO TR 14062 standard. This
certification is based on a comprehensive life cycle assessment
of the model in which every environmentally relevant detail
is documented.
Clean, quiet and efficient:
In the spring of 2016, Mercedes-Benz will begin offering a plug-
in hybrid in the compact SUV segment: the GLC 350 e 4MATIC5
combines agile all-wheel driving pleasure with minimal con-
sumption and emission values. The mid-size SUV has a top
speed of 235 km/h and emits just 59 to 64 g CO2/km; these
are new top figures for its segment.
Daimler and Mercedes-Benz receive awards for their
innovative capability
The components used in our research and test vehicles are
gradually being put into series production, which means
partially autonomous driving is already a reality in our produc-
tion vehicles. For example, the basic elements of the auto-
nomous vehicle system in the Freightliner Inspiration Truck
have already been successfully implemented in the Freightliner
Cascadia Evolution model, thousands of which are shaping the
image of America's road freight transport. In the form of the
DISTRONIC proximity cruise control system installed in many
of our Mercedes-Benz vehicles, the DRIVE PILOT can not only
automatically maintain a proper distance to vehicles ahead but
can also safely follow them at speeds of up to 210 km/h. The
system supports drivers during steering and evasive maneuvers
as well.
During the year under review, we made tremendous progress
on the road to series production of autonomously driving
vehicles, thereby underscoring our technological lead in this
area. The milestones for passenger cars in this respect were
the F 015 Luxury in Motion and Vision Tokyo research vehicles.
With regard to trucks, we received permission to test the
Highway Pilot on public roads in both the United States and
Germany. We put the autonomously driving Freightliner
Inspiration Truck on the road in the United States last May, and
the first partially autonomous production truck had its pre-
miere on a Germany highway in October. The latter vehicle is
an Actros equipped with the intelligent Highway Pilot system.
Trailblazing advances on the road to autonomous
and accident-free driving pages 4ff
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY 111
Vehicle safety is one of our core areas of expertise and a key
component of our product strategy. An important chapter in
the history of vehicle safety actually began 75 years ago when
the engineer Béla Barényi joined the former Daimler-Benz AG.
Mercedes-Benz has been shaping the development of safety
systems ever since that time. Many of the company's inno-
vations, especially those for protecting vehicle occupants and
other road users, have saved countless lives. Our vision
of accident-free driving will continue to motivate us to make
mobility as safe as possible for everyone in the future.
Our "road to accident-free driving"
Under the motto "E-mobility thought to the end," the world's
largest second-use battery storage unit at the moment will
begin operating in early 2016 within the framework of a joint
venture in Lünen, Germany, in which we are participating.
The unit will be marketed in Germany's primary energy balanc-
ing sector. The joint venture partners Daimler, The Mobility
House, GETEC and REMONDIS cover the entire battery value
creation and recycling chain with their project - from the
manufacture and reprocessing of battery systems at the Daimler
subsidiary ACCUMOTIVE, the corresponding range of electric
and plug-in hybrid vehicles from Daimler AG, and the installation
and marketing of stationary battery storage units in the
energy markets by The Mobility House and GETEC, through to
the recycling of the battery systems at the end of their life-
cycle and the feeding of the valuable raw materials back into
the production cycle, which REMONDIS will be responsible for.
With their 2nd-use battery storage project, the four partners
are also demonstrating that the lifecycle of a plug-in or
electric vehicle battery does not end after its automotive appli-
cation. Instead, battery systems remain fully operational after
this point, as the low levels of power loss are only of minor
importance when used in stationary storage operations. It is
estimated that such a unit can operate efficiently in a station-
ary application for at least another ten years. This approach
demonstrably improves the environmental performance of
electric vehicles and also helps make electric mobility more
economically efficient.
In mid-2015, Daimler entered the sector for stationary energy
storage devices with its wholly owned ACCUMOTIVE subsidiary.
The underlying concept was developed by Daimler Business
Innovation and involves both private and commercial use of
such devices. For private applications, up to eight battery
modules can be combined into an energy storage device with a
capacity of 20 kWh. Households that have their own photo-
voltaic system can use the devices for interim storage of surplus
electricity with virtually no losses. The new stationary energy
storage devices will be launched on the market in early 2016.
The systems for commercial and industrial use can be scaled
as desired. Large stationary energy storage devices can be used
to stabilize grids or provide support during peak demand.
The first industrial-scale lithium-ion storage device is already
online and is operated by two Daimler partners: The Mobility
House AG and GETEC Energie AG.
Entry into the sector for stationary battery
storage devices
With the establishment of their H2 MOBILITY Deutschland
GmbH & Co. KG joint venture, the companies Air Liquide, Daimler,
Linde, OMV, Shell and Total have set the stage for the phased
expansion of a nationwide hydrogen filling station network in
Germany. Plans call for approximately 400 stations to be built
in Germany by 2023 with a total investment of approximately
€400 million. H2 MOBILITY, which has its headquarters in
Berlin, has already started operations and is preparing the first
phase of its plan of action, which will involve the rapid instal-
lation of an initial group of 100 filling stations over the next few
years. The success of fuel-cell drive systems powered by
hydrogen depends to a large extent on the establishment of
a filling station infrastructure, which H2 MOBILITY will now
create. Daimler is convinced that fuel-cell drive systems pow-
ered by hydrogen offer great potential. In particular, their
long range and short refilling times lead to extensive benefits
as an alternative to battery-electric drive for vehicles that
travel long distances. Our F 015 Luxury in Motion and Vision
Tokyo research vehicles offer a preview of the future of fuel-
cell technology. These vehicles are equipped with the innova-
tive F-CELL PLUG-IN HYBRID system - a combination of an
electric motor and a fuel cell that achieves an emission-free
range of up to 1,100 km.
The new GLE 500 e 4MATIC4 is the first Mercedes-Benz SUV
equipped with a plug-in hybrid drive. The model combines the
performance and comfort of a V8 engine with the fuel con-
sumption of a "three-liter vehicle" and the versatility of a premium
SUV. Its drive-system components include a direct-injection
BlueDIRECT V6 gasoline engine with an output of 245 kW (333 hp)
and a hybrid module with an electrical output of 85 kW (116 hp).
Along with the impressive acceleration enabled by a boost func-
tion, the innovative drive system allows for purely electric
driving at speeds of up to 130 km/h, optimized energy recov-
ery made possible by an intelligent operating strategy, and
comfort features such as pre-entry climate control in both sum-
mer and winter.
Fuel-cell infrastructure
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY
110
5 GLC 350 e 4MATIC: fuel consumption in 1/100 km: combined 2.7-2.5;
CO2 emissions in g/km: combined 64-59;
electricity consumption in kWh/100 km: 15.2-13.9
electricity consumption in kWh/100 km: 16.0
4 GLE 500 e 4MATIC: fuel consumption in I/100 km: combined 3.3;
CO2 emissions in g/km: combined 78;
electricity consumption in kWh/100 km: 11.3-11.0
3 C 350 e: fuel consumption in l/100 km: combined 2.4-2.1;
CO2 emissions in g/km: combined 54-48;
2 S 500 e: fuel consumption in l/100 km: combined 2.8;
CO2 emissions in g/km: combined 65;
electricity consumption in kWh/100 km: 13.5
CO2 emissions in g/km: combined 89;
electricity consumption in kWh/100 km: 13.5
1 A 180 d BlueEFFICIENCY Edition: fuel consumption in l/100 km:
urban 3.9 extra-urban 3.2 / combined 3.5;
In the period up until 2017, we will launch a total of ten plug-in
hybrid cars whose batteries can also be charged via the normal
power grid. This Mercedes-Benz plug-in hybrid offensive will
be accompanied over the next several years by the launch of
additional fully electric vehicles. For example, the new electric
smart will be introduced in 2016 - for the first time as a four-
seater as well. In addition, we are currently developing a con-
cept for an overarching vehicle architecture for electric cars with
a range of 400-500 km. And on the basis of the Mercedes-
Benz GLC, we will launch an innovative fuel-cell vehicle with a
long range and quick refueling as a series-produced model.
Daimler also continues to invest heavily in the expansion of its
battery expertise, which underscores the company's firm
commitment to electric mobility and its holistic approach to
sustainability.
New natural gas drive systems for urban buses
With its new Citaro NGT urban bus, Mercedes-Benz is now
offering an attractive alternative to the diesel-powered Citaro.
The Citaro NGT (Natural Gas Technology) stands out with
its low-noise operation and lower CO2 emissions, both of which
offer key benefits in congested inner cities. The Citaro NGT
also makes a convincing argument with its low weight and
associated high passenger capacity, as well as through its
engine's strong power delivery, low fuel consumption and long
maintenance intervals. The Citaro NGT's new high-tech
natural gas engine is extremely efficient. In combination with
the intelligent operation of its auxiliary systems, the vehicle
offers potential fuel savings of 15% to 20% compared to the pre-
decessor model. Even greater fuel savings can be achieved
through the use of an optional energy recovery module. Mercedes-
Benz offers the new drive-system variant as a Citaro NGT
solo bus and a Citaro G NGT articulated bus. The Citaro NGT
can be operated with either natural gas or renewable natural
gas, in which case the Citaro NGT becomes a virtually CO2-
neutral bus.
The greatest possible customer utility, the most stringent safety
standards, maximum environmental compatibility and effi-
ciency - we rely on innovative concepts and environmentally
sound product development to help us achieve all of those
goals simultaneously. Our innovations range from pioneering
vehicle and drive-system technologies to intelligent light-
weight engineering concepts, innovative comfort features and
sophisticated assistance systems that can prevent accidents.
Over recent years in particular, we have made tremendous pro-
gress on the road to accident-free and emission-free driving.
We have a greater range of electric vehicles on the road than
any other automaker and we also set standards for safety.
We have established a leading position in the area of autonomous
driving in particular, and we plan to further strengthen this
position.
Daimler Trucks
Innovation and safety
135,553
+1
279,972
284,015
136,941
Mercedes-Benz Cars
Daimler Group
% change
Employees (December 31)
15/14
2014
2015
Employees by division
B.43
Japan
Other
Brazil
10.0%
3.9%
4.1%
8.7%
USA
13.3%
Europe, excluding Germany
60.0%
+1
New standards for safety, comfort and stress reduction will
also be set once again when the new E-Class is launched in the
spring with new driver assistance systems, car-to-X communi-
cation technology and innovative safety systems. For example,
the new assistance systems package will enable partially
autonomous driving on highways and secondary roads and
make it possible to automatically move a vehicle in and out
of tight parking spaces using a smartphone app without any-
one inside the car. An autonomous braking feature will also
reduce the risk of an accident in a greater number of situations
than before. In addition, the Active Lane Change Assist system
will make autonomous lane changes possible for the first time
(e.g. for overtaking). Car to-X communication systems provide
timely warnings of dangers ahead and state-of-the-art radio
technology transforms the smartphone into a car key.
86,391
87,628
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
108
Number of years at Daimler
The Group's workforce also does not include the employees
of companies that we manage together with Chinese partners;
on December 31, 2015, they numbered approximately 19,000
people.
Around the world, we have combined in-house services such
as those for financial processes, HR, IT and development
tasks, sales functions and certain location-specific services
into shared service centers. Some of the shared service
centers are not consolidated because they do not affect our
profitability, cash flow or financial position; those companies
employed more than 6,800 men and women at the end of 2015.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
116
+12
8,842
9,922
Other
Innovations for the mobility of the future
+12
9,975
Daimler Financial Services
+4
17,473
18,147
Daimler Buses
+5
21,598
22,639
Mercedes-Benz Vans
-1
8,878
In addition, the new Mercedes-Benz E-Class is the first
series-produced car worldwide to receive a test license for
autonomous driving in the US federal state of Nevada. For
the first time and punctually for the main trade fair for consumer
electronics, the CES in Las Vegas, three series-produced
E-Class cars were approved in January 2016.
pages 30 ff
2015
-
Daimler believes it has a responsibility to help with efforts to
assist refugees. In order to support the professional integration
of refugees into the German labor market, Daimler is offering
14-week "bridge internships" for several hundred refugees in
the coming years. After a successful pilot phase with 40
"bridge interns," the project will be expanded to the number of
300 additional places within the first half of 2016. The 14-week
"bridge internships" are being carried out in close cooperation
with the Federal Employment Agency and local job centers in
Germany. The latter organizations are also responsible for
selecting those refugees who have the best chance of being
granted residency. The internships include alternating days of
German language instruction and production work. A total
of 50 additional trainee positions for refugees are also being
offered at various Group locations in Germany in the coming
years. For information on other assistance activities:
page 119.
Social responsibility
Responsible business activity
Our global presence offers us the opportunity to help shape the
social environment and promote an intercultural dialogue in
the places where we do business around the world. We and our
employees participate together in many charitable projects
that help address major challenges in society.
We concentrate here on areas where we can have an impact
through our role as a "good neighbor." We also participate in
projects to which we can contribute our specific knowledge
and core areas of expertise as an automobile manufacturer.
Our activities focus on the following areas: support for science,
education, traffic safety, the environment, the arts and culture,
community projects, charitable projects, projects for which our
employees volunteer, and projects for promoting dialogue
and understanding. 7 B.44
In 2015, we spent around €60 million on donations to nonprofit
institutions and on sponsorships of socially beneficial projects.
This does not include our foundations, corporate volunteering
activities or self-initiated projects.
B.42
Workforce numbers in nearly all divisions increased compared
with the previous year. Growth primarily took place at Daimler
Financial Services, Daimler Buses and Mercedes-Benz Vans.
7 B.43 Within the context of the Customer Dedication initiative,
the employees previously reported under "Sales & Marketing
Organization" were included in the employee numbers for the
respective divisions for the years 2014 and 2015. Since the
end of 2015, this has also applied to the Group's own sales and
service centers in Germany and the global logistics center in
Germersheim, whose employees are now grouped under Mercedes-
Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler
Buses. The figures for comparison from 2014 have been adjusted
to reflect these changes.
At December 31, 2015, the Daimler Group employed a total of
284,015 men and women. Due to the high demand for our
products, the workforce grew by 1% compared with the end of
2014. We had anticipated that the workforce would grow
slightly at the beginning of 2015. The number of employees in
Germany increased to 170,454 (2014: 168,909) and employee
numbers also rose in the United States, to 24,607 (2014: 22,833).
At the end of 2015, Daimler employed 11,669 men and
women in Brazil (2014: 12,313) and 11,002 (2014: 11,400) in Japan.
71 B.42 Our consolidated subsidiaries in China had a total
headcount of 3,155 at the end of the year (2014: 2,664). At the
end of the reporting year, the parent company Daimler AG
employed a total of 151,183 men and women (2014: 151,524).
Slight increase in number of employees
The workforce
and noise at our plants with the help of environmentally friendly
production processes. As a result, energy consumption during
the period 2011-2015 increased by only 4.5% to 10.9 million
megawatt-hours, which was well below the rate of production
growth. During the same period, CO 2 emissions decreased by
6.1% to a total of 3.2 million metric tons. Our ongoing energy-
saving projects enabled us to counteract the additional energy
consumption and CO2 emissions increase that resulted from
the rise in production in 2015. Energy consumption per manu-
factured vehicle (car) in the reporting year decreased by 5.5%
from the prior year, and CO2 emissions declined by 5.7%. With
resource-conserving technology such as circulation systems,
water consumption rose by slightly less than 1.1% between 2011
and 2015, which was well below the rate of production growth.
In relation to the number of vehicles we manufactured, we
were able to reduce water consumption by 2.2% compared
with the prior year.
In recent years, we have been able to limit the energy consump-
tion, CO2 emissions, production-related solvent emissions
Extensive measures for environmental protection
in production
As we systematically pursue our environmental protection
activities, we rely on comprehensive environmental manage-
ment systems. Today, more than 98% of our employees
worldwide work in plants whose environmental management
systems have been certified as conforming to the ISO 14001
or EMAS environmental standards.
In the area of waste management, Daimler believes that recy-
cling and the prevention of waste are better than disposal.
Accordingly, the reconditioning and reuse of raw, process and
operating materials has been standard practice at our plants
for many years. In order to avoid the creation of waste from the
outset, we use innovative technological processes and environ-
mentally focused production planning. Waste materials that are
unavoidable are generally recycled. As a result, the recycling
rate for waste at our plants is approximately 91% on average.
At some plants, almost 100% of the waste is now recycled,
meaning that waste destined for landfills has been almost com-
pletely eliminated.
Avoiding waste
Other proven elements of our recycling concept are the resale
of inspected and certified used parts, the remanufacturing
of parts and the MeRSy Recycling Management workshop dis-
posal system.
To make our vehicles more environmentally friendly, we are
reducing our automobiles' emissions and the resources they
consume over their entire lifecycle. We therefore pay close
attention to creating a recycling-friendly design already at the
development stage. Up to 85% of the materials in all Mercedes-
Benz models are recyclable and as much as 95% of the materials
are reusable. This means we were in compliance with the new
EU recycling directive before it even went into effect in 2015.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY 115
The safety requirements of customers and the high safety
standards at Mercedes-Benz will thus continue to be met in
the future. The system also enables the Group to make a
further contribution to climate protection.
Despite the extraordinarily short time available to develop CO₂
air conditioning systems for its top models, Mercedes-Benz
will be able to achieve the high level of quality it is striving to
attain. However, it will not be possible to equip the brand's
entire fleet with such systems by the cut-off date for the new
EU directive of January 1, 2017. So in order to ensure that all
other model series comply with the EU regulations on time, we
have developed safe solutions for using the R1234yf synthetic
refrigerant. As is generally well known, this refrigerant has a
different ignition potential than the R134a refrigerant previ-
ously used in the automotive industry. In order to continue to
offer our customers the same high degree of safety in the
future, we have developed a comprehensive package of vehi-
cle-specific measures that will ensure typical Mercedes-Benz
safety in those models in which R1234yf is used. These mea-
sures, which will be implemented as needed, include a
special protection component system for various vehicle con-
figurations. In the event of a frontal collision, this system,
which has since been patented, ensures that the refrigerant
and air mixture remains separate from the hot components
in the engine compartment and that the latter are also very
effectively cooled. This is made possible by the use of a gas
generator that sprays the protective gas argon onto the hot
surfaces, thus protecting against fire.
Assistance for refugees
The use of CO2 as a refrigerant requires the redevelopment of
key components. CO₂ air conditioners operate at a pressure
of over 100 bar, which is around ten times the operating pressure
of previously used systems. For this reason, all the compo-
nents, as well as hoses and seals and gaskets, will have to be
newly developed. To this end, Mercedes-Benz has worked
with all other German automakers and numerous supplier com-
panies on the creation of new standards in the automotive
standards committee of the German Association of the Auto-
motive Industry (VDA). These new DIN specifications, which
can be viewed by the public, will also offer other companies
the chance to launch short-term development activities in
this area. Mercedes-Benz has taken on a pioneering role here
and has become the first automaker to commission not
only development work on CO2 air conditioning systems and
their components but also production orders.
Measures for lifelong learning, such as the Daimler Academic
Programs for active employees, enable us to enhance the
qualifications of our employees and improve their performance
and innovative capability throughout their entire careers.
Employee qualification
The average number of years our employees have worked
for Daimler was close to the prior-year level at 16.0 years
(2014: 16.1 years). In Germany, employees had worked for
the Group for an average of 19.4 years at the end of 2015
(2014: 19.4 years). The comparative figure for Daimler AG was
19.9 years (2014: 19.8 years). Daimler employees outside
Germany had worked for the Group for an average of 10.9
years (2014: 11.0 years).
Attractive compensation
We continually strive to further enhance our appeal as an
employer - both within the company and externally on the job
market. Our employees receive market-rate wages and salaries
and additional benefits, such as company pension plans, which
also conform to market practices. We also let our employees
share in our success. For example, in April 2016 eligible employ-
ees of Daimler AG will receive a profit-sharing payout of up to
€5,650 for financial year 2015 - the highest such payout in the
company's history. In April 2015, we issued a profit-sharing
payout of €4,350 for financial year 2014.
High degree of employee commitment
We regularly conduct employee surveys to determine how sat-
isfied our employees are and the extent to which they identify
with the company. The feedback we receive helps us improve
our organization and further develop our management culture.
Our level of employee commitment is well above the global aver-
age as determined by benchmark studies. The results of the
2014 employee survey were carefully analyzed and used to iden-
tify areas where action was subsequently taken to achieve
sustained improvements for the benefit of the Group and its
employees. The next Group-wide employee survey will be
conducted in 2016.
Mobile working
Employees are increasingly demanding more flexible working
hours in line with the requirements of a modern lifestyle.
In response to this development, Daimler's executive manage-
ment launched an initiative in 2015 together with the Group's
General Works Council, the IG Metall trade union and the Fraun-
hofer Institute. This initiative featured surveys and brought
together managers and employees for a broad dialogue that
resulted in the creation of a framework of rules and limitations
for mobile work. The goal here is to incorporate the knowledge
thus gained into a new Group-wide agreement and thus make
Daimler an even more attractive employer.
Extension of Safeguarding the Future
at Daimler agreement
An agreement was reached in the summer of 2015 to extend
the Group-wide Safeguarding the Future at Daimler agreement.
The agreement includes measures designed to improve com-
petitiveness and flexibility, and it also excludes the possibility
of layoffs for employees at Daimler AG in Germany until
December 31, 2020. The basis for the extension was the local
transformation plans that were agreed upon beforehand at
Daimler AG plants. These plans also include investment com-
mitments. They will enable us to utilize market opportunities,
respond flexibly to demand fluctuations and quickly increase
the workforce as needed.
Diversity management
The statement "Daimler's success. Your benefit. Our responsi-
bility." underscores the importance of diversity management
as a strategic factor for success at Daimler. The various skills,
expertise and composition of our workforce enable us as a
global company to effectively reflect the diversity of our cus-
tomers, suppliers and shareholders around the world.
Increased proportion of women employees
Our instruments for supporting the targeted promotion of
women include special mentoring programs, special seminars
for women, and women's networks. We also support both
men and women who are managing a career and a family through
numerous company agreements, flexible working time
models, daycare services and sabbaticals.
In this context, we consider not only the new legislation for
equal participation of women and men in management
positions. Already in 2006, Daimler committed to raising the
proportion of women in senior executive positions at the
Group to 20% by the year 2020. The proportion of women in
such positions has continually risen over recent years to
reach 15.4% at the end of 2015 (2014: 14.1%). Because we are a
technologically oriented company, the targets take into
account sector-specific conditions and women's current share
of our workforce. At the Daimler Group, the proportion of
women in the total worldwide workforce increased to 17.3%
(2014: 16.8%). At Daimler AG, women accounted for 15.2% of all
employees at the end of the year under review (2014: 14.9%).
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
117
Slight increase in average age of our employees
The average age of our global workforce in 2015 was 42.5
years (2014: 42.4). Our employees in Germany were 44.0 years
old on average (2014: 43.8). Employees who are 50 years old
or older currently make up about 37% of our permanent work-
force at Daimler AG. On the basis of current assumptions,
this proportion will rise to about 50% over the next eight years.
Basic agreement on generation management
In the fall of 2015, executive management and the General Works
Council signed a basic agreement on generation management
at the Group. The components of the agreement form the frame-
work of Daimler's strategy for addressing the demographic
transformation. The main aspects here include health, work
arrangements, leadership, learning and human resources
development. The associated measures are designed to help
maintain the health and performance capabilities of both
young and old employees, while promoting cooperation across
all age groups. Examples include extensive health programs
and measures to ensure ergonomic workstations.
The Daimler Senior Experts program allows experienced retired
employees to return to the company for a temporary period.
Around 300 senior experts have participated in the program
since it was launched, with most of them helping out in pro-
duction, development and IT departments. More than 600
interested former Daimler employees have set up senior
expert profiles that list their areas of expertise and experience.
Securing young talent
Daimler takes a holistic approach to securing young talent. For
example, for five years now, our Genius initiative has been
enabling children and teenagers to gain valuable information
about technologies of the future and professions in the auto-
motive industry. page 118 School leavers can apply to par-
ticipate in a technical or commercial apprenticeship at one
of our locations or to study at the Cooperative State University
of Baden-Württemberg. After completing their college degrees,
they can directly join our company or launch their careers at
Daimler by taking part in our global CAReer training program.
We had 8,307 apprentices and trainees worldwide at the end
of 2015 (2014: 8,346). A total of 1,871 young people began
their vocational training at Daimler in Germany during the year
under review (2014: 1,990). The number of people we train
and subsequently hire is based solely on the Group's needs and
its future development. In 2015, 84% of Daimler trainees
were hired after completing their apprenticeships (2014: 89%).
We provide our staff with training and continuing education
opportunities throughout their entire careers. Our range
of qualification measures includes practical training courses,
seminars, workshops, specialist conferences and instruction
through digital media. In Germany alone, we spent €126 million
on the training and qualification of our employees in the year
under review (2014: €121 million). On average, every employee
spent four days on qualification courses in 2015 (2014: four
days).
In 2017, S-Class and E-Class models in Europe will become the
first production cars in the world to be equipped with CO2 air
conditioning systems. By making this move, Mercedes-Benz
will go beyond the climate protection requirements of the EU.
Because of their ability to produce a large amount of cold air
very quickly, CO2 air conditioners can create a comfortable
interior atmosphere in a short time, even when it is very hot
outside. The units are also very environmentally friendly,
which makes them the ideal sustainable premium solution
among climate control systems.
CO₂ air conditioners in production cars as of 2017
The fuel-consumption data provided by manufacturers is based
on the legally stipulated NEDC test cycle, which is conducted
in a laboratory. However, because conditions in real driving sit-
uations generally differ from those in such labs, actual fuel
consumption values can deviate from reported values. Daimler
strongly supports the introduction of the WLTP (Worldwide
Harmonized Light Vehicles Test Procedure) as a replacement
for the NEDC that would ensure only minor deviations between
actual and reported fuel consumption figures.
110
120
130
140
150
160
123
129
134
140
150
g/km
Average CO2 emissions of the new car fleet of Mercedes-Benz Cars
in the EU
B.41
In 2015, we continued to energetically pursue the goal of con-
serving resources and reducing all relevant emissions. We
kept a close eye on the impact of all our processes, ranging
from vehicle development and production to recycling and
environmentally friendly disposal. Our expenditure for environ-
mental protection remained nearly unchanged at €2.8 billion.
€2.8 billion for environmental protection
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective of
the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral com-
ponent of a corporate strategy aimed at long-term value
creation. Our measures for manufacturing environmentally
friendly products take the entire product lifecycle into
account - from design, production and product use all the way
to disposal and recycling. The environmental and energy-
related guidelines approved by the Board of Management define
the environmental and energy-related policy of the Daimler
Group. This expresses our commitment to integrated environ-
mental protection that begins with the underlying factors
that have an impact on the environment, assesses the environ-
mental effects of production processes and products in
advance, and takes these findings into account in corporate
decision-making.
Environmental protection
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112
The future E-Class opens up new dimensions in headlight tech-
nology. The model's MULTIBEAM LED headlights are now
equipped with 84 high-performance LEDS rather than the pre-
vious 24. This means the headlights in the new E-Class enable
the resolution of the light pattern to be increased by a factor of
3.5. Other road users can therefore now be protected more
precisely against blinding, and back-glare can be more effectively
avoided as well. This new dimension of precision in light
distribution makes it possible to use the partial high-beams
longer, thereby increasing safety even further. Drivers also
benefit from improved illumination of the road. The MULTIBEAM
LED headlights have partial high-beam light output up to 2.5
times greater than that of most systems on the market today.
The completely freely configurable high-resolution light
distribution has made it possible for the first time to implement
all high- and low-beam functions of the Intelligent Light System
in an entirely digital mode in the new E-Class. As a world first,
the dynamic cornering light function is now purely electronic.
In addition, a broad range of new, adaptive light functions is
possible, which will make driving at night and in inclement
weather even safer for both the driver and other road users.
High-resolution LED headlights
With this goal in mind, Daimler researchers achieved a break-
through within the framework of the UR:BAN research initiative.
Using "scene labeling," a camera-based system automatically
classifies completely unknown situations and thus detects all
objects that might be of importance to driver assistance
systems from cyclists to pedestrians and wheelchair users.
Daimler researchers showed their system thousands of photos
from various German cities. In these photos, they had manually
and precisely labeled 25 different object classes, such as
vehicles, cyclists, pedestrians, streets, sidewalks, buildings, poles
and trees. The system used these examples to teach itself
how to correctly classify completely unknown images automati-
cally, and thus detect all important objects for driver assis-
tance systems even if such objects are largely hidden or far away.
Such abilities are made possible by powerful computers that
are artificially networked in a manner similar to the neural
networks in the human brain. The result is known as a deep
neural network. Scene labeling transforms the camera from a
simple measuring system into an interpretive system as
versatile as the interaction between the human eye and brain.
The tremendous increase in computing power in recent
years is bringing us closer to the day when vehicles will be able
to see their surroundings in the same way humans do, and
are also able to correctly understand complex situations in city
traffic. In other words, the vision of autonomous and accident-
free driving is becoming more and more of a reality.
100
2011
2012
2013
In addition, we actively support the efforts being undertaken in
Germany and on the European level to introduce new testing
procedures that measure emissions during actual driving oper-
ations (Real Driving Emissions - RDE).
Compliance with legal emission-measurement stipulations
After reports surfaced or manipulation by a competitor in the
fulfillment of emission regulations, doubts began to arise
concerning the emission and fuel consumption figures reported
by other automakers. Daimler repudiates any allegations of
manipulation. In particular, Daimler does not use and has never
used any so-called “defeat device" that illegally restricts the
effectiveness of emission control systems. This applies to all
of our diesel and gasoline engines. Our engines comply with
all applicable laws and regulations. We also preclude any irreg-
ularities when measuring the CO2 emissions of our vehicles.
Furthermore, we draw attention to the fact, that several envi-
ronmental authorities in Europe and in the USA have made
requests for test results. Some requests were answered without
any findings whereas other discussions still continue.
We are continually working on further increasing efficiency in
road freight transport also in the United States. In March,
for example, Daimler Trucks North America presented its Super-
Truck concept vehicle at the Mid America Trucking Show 2015.
Thanks to its pioneering technology, the SuperTruck program
operated by Daimler Trucks North America (DTNA) has
achieved transport efficiency improvements of 115% (measured
in ton-miles per gallon). As a result, DTNA far exceeded the
efficiency improvement target of 50% set by the US Department
of Energy (DOE). Indeed, Daimler Trucks North America
exceeded all expectations in the DOE program and achieved
the best result of all four participating truck manufacturers.
In honor of its outstanding performance, Daimler was presented
with the Department of Energy's "Distinguished Achievement
Award." Some of the solutions developed within the framework
of the SuperTruck program are already being used as standard
components in Freightliner and Detroit products. The combina-
tion of proven and forward-looking technologies that DTNA
utilized in the DOE project allowed the truck manufacturer to
highlight solutions that are technically possible. One of the
most important initiatives was the optimal alignment of the
tractor and semitrailer, which DTNA developed as a unified
system for the first time in the project. Individual energy-efficient
tires with low rolling resistance, as well as sophisticated
aerodynamic features for the trailer, also made a major contri-
bution to the increase in efficiency achieved.
Innovative SuperTruck
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114
Daimler Trucks conducted the series of tests in cooperation with
leading German logistics companies. Typical payloads were
transported in typical ways along typical routes under realistic
conditions. The tests were supervised in detail by the inde-
pendent DEKRA testing organization, which defined the test
conditions, carried out the measurements and evaluated
the results. One of the key results was that the two Mercedes-
Benz Actros standard semitrailer combinations that were
optimized for the Efficiency Run each consumed around 12%
to 14% less fuel than the standard semitrailer combinations
from the participating logistics companies. The Efficiency Run
also examined the potential of long combination vehicles -
with a clear result here as well: In the test, a long combination
vehicle displayed fuel consumption that was around 17%
lower than that of the standard semitrailer combination used
in volume-based transport.
Double-digit reductions in the fuel consumption and thus the CO₂
emissions of modern truck combinations can be achieved by
using equipment and systems already available on the market.
This was demonstrated by a practical test whose results
Daimler Trucks presented in Berlin in October 2015. The field
test, which was known as the “Efficiency Run,” has major
implications in terms of achieving CO₂ targets for road freight
transport. That is because the Efficiency Run showed that
fuel consumption, and therefore also CO2 emissions, can be
significantly reduced - and at a lower cost as well - if opti-
mization efforts focus not just on the engine but also on the
vehicle as a whole. In other words, this integrated approach
addresses the trailer, tires and fuel in addition to the tractor,
although it focuses on actual driving operation, infrastructure
and fleet modernization as well. The Efficiency Run demonstrated
that the integrated approach does in fact work.
Integrated approach reduces CO2 emissions on
long-distance truck journeys
In Europe, we plan to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious target and
took a further step in that direction with the introduction of
the new generation of the OM 471 heavy-duty engine in 2015.
At the end of 2015, we completed a series of customer tests with
eight FUSO Canter E-Cell models in Portugal. Depending on
body type and payload, the Canter diesel truck can travel 100 km
on approximately 14 liters of diesel, while the FUSO Canter
E-Cell requires around 48 kWh of electricity for the same
distance. Based on the current cost of diesel fuel and elec-
tricity in Portugal, the Canter E-CELL offers operating cost
savings of more than 60% compared with a diesel truck.
UR:BAN: New assistance systems for city driving
Cross traffic, cyclists, crossing pedestrians (perhaps totally
engrossed in their smartphones), children playing - city
traffic places demands on drivers in many different situations,
while at the same time harboring many dangers as well. So
there is plenty of scope for assistance systems that support
drivers and also make driving in cities safer and less stressful.
The consumption of diesel fuel can also be greatly reduced by
hybrid technology - particularly in vans and trucks used for
distribution transportation. For example, the FUSO Canter Eco
Hybrid consumes up to 23% less fuel than a comparable diesel
truck, depending on use, and the Freightliner M2e Hybrid con-
sumes up to 30% less fuel than a conventional diesel-powered
M2 106. No other commercial vehicle manufacturer has more
experience in the areas of alternative drive systems and
electric mobility. We also have the most extensive lineup of
vehicles in this field, ranging from vans and trucks to buses.
Our trucks also set the standards for fuel efficiency in North
America, where production of the new Western Star 5700 XE
was launched in May 2015. The truck stands out through its
sophisticated aerodynamic features and is also equipped with
a new highly efficient powertrain from our Detroit brand.
The Western Star 5700 XE consumes nearly 15% less fuel
than a comparable truck.
Natural-gas engines also offer outstanding possibilities for
reducing fuel consumption and emissions. Daimler Trucks has
therefore supplemented its EURO VI engine family with the
new environmentally friendly M 936 G natural gas engine. The
new engine's CO2 emissions are up to 20% lower than those
of diesel engines and can be reduced even further with the use
of biogas.
Economical and low-emission commercial vehicles
In recent years, we have also continuously reduced the fuel
consumption of our commercial vehicles as well as their
emissions of CO2 and pollutants. Daimler was the first manu-
facturer to switch its entire European product range to Euro VI
before that new emissions standard went into effect in January
2014. Mercedes-Benz is achieving further efficiency gains with
the latest generation of the Mercedes-Benz OM 471 heavy-
duty engine, whose fuel consumption is up to 3% lower than
that of the predecessor unit, while the new engine also offers
higher torque and better driving performance. An Actros
semitrailer tractor equipped with this engine can save around
1,100 liters of fuel per year when driven over a distance of
130,000 km, which corresponds to a roughly three-ton reduc-
tion in annual CO2 emissions. The new engine is being used
in the heavy-duty Actros, Antos and Arocs trucks and puts all
of those models amongst the most efficient trucks in their
respective segments. Over the last four years, the fuel con-
sumption of our heavy-duty Actros truck has been reduced
by 13%, thanks in large part to the introduction of the new
model as a Euro VI truck, the use of the Predictive Powertrain
Control (PPC) cruise control system and the launch of the new
engine generation. Moreover, these savings were achieved
despite the fact that the truck is now more powerful than before
and produces lower levels of pollutant emissions. By com-
parison, long-term fuel-efficiency progress in the commercial
vehicle sector normally amounts to between 1.0% and 1.5%
per year.
113
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY
We plan to use innovative technologies for locally emission-free
mobility, and in particular new hybrid models, in order to
further reduce the fuel consumption and CO2 emissions of our
cars. We have also continuously reduced the pollutant emis-
sions of our cars in recent years and have been able to meet
new emission requirements in advance - and ahead of our
competitors. At Mercedes-Benz, we were one of the first manu-
facturers to begin in 2009 with the introduction of the EURO 6
technology, which was not obligatory until September 2015.
Our BLUETEC technology and sustainable SCR exhaust treat-
ment technology make us a world leader for reducing diesel-
vehicle emissions. The cars with this equipment already
comply with the strictest emission standards. In addition, we
are continually further developing our emission control
systems. The next generation of cutting-edge diesel engines
will soon be launched and will be pioneers by fulfilling new
legislative requirements in advance in Europe.
Daimler makes great efforts to reduce the fuel consumption of
its vehicles while enhancing their performance - and thus
increasing driving enjoyment and safety reserves. With a fleet
average of 123 g/km (2014: 129 g/km), we once again signifi-
cantly reduced the average CO2 emissions of the cars we sell
in the European Union in 2015. We were thus ahead of sched-
ule in achieving our goal of reducing the CO2 emissions of our
new-vehicle fleet in the European Union to 125 g/km by 2016.
Our achievements here were due to the further optimization of
our BlueEFFICIENCY measures and the success of our efficient
hybrid drive systems and extremely fuel-efficient new models.
We have reduced the CO2 emissions of our cars by 18% since
2011 and by 40% within just two vehicle generations. More
than 68 Mercedes-Benz models emit less than 120g CO2/km
and more than 108 models have received A+ or A energy effi-
ciency labels. 7 B.41
Further reductions in cars' CO2 emissions
A vehicle's environmental impact is largely predetermined in
the first stages of development. The earlier that environmen-
tally responsible product development (design for environment,
DfE) is integrated into the development process, the more
efficiently it can help minimize the impact on the environment.
The continual improvement of our products' environmental
compatibility is therefore a major requirement when setting
product specifications. Our DfE experts are involved in all
stages of the vehicle development process as a cross-functional
team. We also systematically integrate our product design
processes into our environmental and quality management
systems in accordance with ISO 14001 and ISO 9001.
Mercedes-Benz has been in full compliance with the relevant
standard ISO 14006 - since 2012. Mercedes-Benz has
also been certified according to ISO TR 14062, the standard
for environmentally oriented product development, since
2005. It was the first automaker in the world to achieve this
certification.
Environmentally responsible product development
2014
We are also leading the way with the introduction of the latest
exhaust technology in the bus sector. For example, all Mercedes-
Benz and Setra model series were made available with Euro VI
technology at a very early stage. A further reduction in the fuel
consumption of our already efficient buses will be achieved
through the use of the new generation of the OM 471 engine in
buses as well.
page 35
Extensive recyclability of old vehicles
Employees at 12/31/2015
By region
Germany
2015
Dr. Wolfgang Bernhard
8,364
2,902
43,424
1,727
1,727
2,008
2014
9,678
3,092
37,092
2,289
2,289
2,008
2015
Dr. Dieter Zetsche
Total
Long-term variable remuneration
(PPSP)
Value when granted
(2015: at share price €83.35)
(2014: at share price €66.83)
Number
2015
824
939
939
758
2014
Hohmann-Dennhardt
3,720
1,237
14,837
851
851
781
Short and medium-term variable
remuneration (annual bonus)
Short-term Medium-term
Dr. Christine
1,228
18,380
670
670
779
2014
4,083
1,381
16,564
3,347
Base salary
In thousands of euros
Board of Management remuneration in 2015
50% relates to "relative share performance," i.e. the develop-
ment of Daimler's share price in a three-year comparison
with the development of a share-price index for the defined
group of competitors. If the development of Daimler's share
price (in percent) is the same as of the index (in percent), target
achievement is deemed to be 100%. If the development
of Daimler's share price (in percent) is 50 percentage points
or more below (above) the development of the index, target
achievement is deemed to be 0% (200%). In the deviation range
of +/- 50 percentage points, target achievement varies in
proportion to the deviation.
Target achievement of 0% occurs if Daimler's return on sales
is 2 percentage points or more lower than 105% of the
calculated average of the competitors. In the deviation range
of +/- 2 percentage points, target achievement varies in
proportion to the deviation.
- 50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising all listed
vehicle manufacturers with an automotive proportion of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, Fuji Heavy, Honda, Hyundai, Isuzu,
Mazda, Nissan, Paccar, Suzuki, Toyota, Volvo and Volkswagen).
For the measurement of this success criterion, the com-
petitors' average return on sales is calculated over a period
of three years. Target achievement occurs to the extent to
which Daimler's return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average of
the competitors. Target achievement of 100% only occurs when
the average return on sales of the Daimler Group reaches
105% of the average return on sales of the group of competi-
tors. So target achievement of 200% occurs if Daimler's
return on sales exceeds 105% of the average of the competitors
by 2 percentage points or more. An additional limitation will
be implemented starting with PPSP 2015: If a target achieve-
ment of between 195% and 200% occurs in the third year
of the performance period, the maximum target achievement
calculated from the reference parameter of return on sales
compared to the reference group will only be deemed to be
200% if the actual return on sales for Daimler's automotive
business reaches at least the strategic target for return on
sales (currently 9%). Otherwise, target achievement will
be limited to 195%.
Reference parameters for Plan 2015:
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
126
range of 0% to 200%, after three years, the phantom shares
allocated at the beginning of the plan are converted into the final
number of phantom shares allocated. After another plan year
has elapsed, the amount to be paid out is calculated from this
final number of phantom shares and the applicable share
price at that time. The share price relevant to the payout under
this plan is also relevant to allocating the preliminary number
of phantom shares for the plan newly issued in the respective
year. 7 B.50 7 B.51
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects.
At the beginning of the plan, the Supervisory Board specifies
a grant value (absolute amount in euros) in the context of
setting the individual annual target remuneration. This amount
is divided by the relevant average price of Daimler shares
calculated over a predefined long period of time, which results
in the preliminary number of phantom shares allocated. Also
at the beginning of the plan, performance targets are set for a
period of three years (performance period). Depending on
the achievement of these performance targets with a possible
1 Maximum of 195% if, in the event of target achievement of 195% - 200%,
the strategic return target of 9% has not been reached.
Value upon allocation:
Share purchase obligation of up to 25% of the gross remuneration until the
defined number of shares (between 20,000 and 75,000) have been pur-
chased (shares to be held until the end of term of service)
(including dividend equivalent payments throughout the plan period)
2.5 times the amount granted
Maximum performance development (total cap):
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Price when issued and price at the end of
the plan period
- 50% relates to the "relative share perfor-
mance," i.e. the development of Daimler's
share price in a three-year comparison
with the development of a share-price in-
dex for the defined group of competitors.
Bandwidth of possible target achievement:
0% - 200%
Bandwidth of possible target achievement:
0% - 200%¹
achieved in a three-year comparison with
the defined group of competitors
O page 126
share price
Stock ownership guidelines
Determined annually by the Supervisory Board; for 2015,
approximately 1.3 to 1.5 times the base salary.
Bandwidth of possible target achievement:
0% to 200%, that is, the plan has an upper limit. It may also
be zero.
B.52
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits
for the members of the Board of Management in 2015 as
shown in table 7 B.53.
ation (2014: €8.2 million), €17.4 million (2014: €11.6 million)
was short- and medium-term variable performance-related
remuneration (annual bonus with deferral), and €12.3 million
was variable performance-related remuneration granted in 2015
with a long-term incentive effect (2014: €10.1 million). 7 B.52
The remuneration of the Board of Management for the year 2015
amounts to €38.8 million (2014: €29.9 million). Of that total,
€9.1 million was fixed, that is, non-performance-related remuner-
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation - the
amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
- the taxable non-cash benefits in 2015.
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2015, and
the half of the annual bonus for 2015 payable in 2016 and
measured as of the end of the reporting period,
the half of the medium-term share-based component
of the annual bonus for 2015 payable in 2017 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler's share price compared with
the Dow Jones STOXX Auto Index),
the base salary in 2015,
-
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the
Board of Management of Daimler AG is calculated as the total
of the amounts of
Board of Management remuneration in 2015 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
Board of Management remuneration in 2015
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Management
remuneration carried out by an external remuneration expert
in 2015. The result was that the remuneration system as
described above was confirmed as being in conformance with
the requirements of applicable law. The remuneration system
was approved as described by the Annual Shareholders' Meeting
in 2014 with an approval ratio of 96.8%.
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines” exist for the Board of
Management. These guidelines require the members of the
Board of Management to invest a portion of their private
assets in Daimler shares over several years and to hold those
shares until the end of their Board of Management member-
ship. The number of shares (between 20,000 and 75,000) to be
held was set in 2005 when the Performance Phantom Share
Plan was introduced in relation to double the then annual base
salary of each ordinary member of the Board of Management
and triple the then annual base salary of the Chairman of the
Board of Management. In fulfillment of the guidelines, up
to 25% of the gross remuneration out of each Performance
Phantom Share Plan is generally to be used to acquire
ordinary shares in the Company, but the required shares
can also be acquired in other ways.
Guidelines for share ownership
This share price is limited to 2.5 times the share price at the
beginning of the plan. In addition, the amount to be paid out
is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant to the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period. In the agreements on the inclusion of maximum
amounts of remuneration in their current contracts of service
effective as of January 1, 2014, the members of the Board of
Management also agreed to the application of this limit to the
dividend equivalents not yet due at that time from plans
issued before January 1, 2014 and still running.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant to the payout.
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Value of the phantom shares on payout:
633
633
17,370
1,161
1,313
15,754
890
890
781
2015
Prof. Dr. Thomas Weber
3,749
1,2983
3,874
20,765
775
901
2014
4,522
1,478
17,737
1,058
1,058
928
775
2014
758
652
2015
In thousands of euros
Taxable non-cash benefits and other fringe benefits
B.53
1 PPSP 2014 taking into account board remuneration of €62,707.
2 Board of Management remuneration paid until January 28, 2014.
3 PPSP 2014 taking into account board remuneration of €89,391.
28,532
10,134
37,327
12,268
147,170
153,912
8,697
5,808
5,808
6,782
8,697
7,665
2015
2014
Total
3,295
1,233
18,444
652
2015
Development of the Daimler
Bodo Uebber
1,161
758
2014
3,854
1,293
15,512
890
890
781
2015
652
Wilfried Porth
3,798
1,237
14,837
890
890
781
2015
Ola Källenius
3,185
2014
652
18,159
1,1511
17,370
652
652
758
2014
3,798
1,237
14,837
890
890
781
2015
Hubertus Troska
156
47
47
62
2014
2015
Andreas Renschler²
3,213
3,223
2014
Development of performance -50% relates to the "return on sales"
factors
PPSP 2015
Principles of Board of Management
remuneration
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Manage-
ment of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
Remuneration Report
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
122
Since the end of the 2015 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2016 confirms
the statements made in the "Outlook" section of this Annual
Report.
In February 2016, Daimler AG announced a recall of vehicles
for precautionary reasons due to defective airbags from the
manufacturer Takata. The resulting expense of €0.3 billion has
been recognized in the consolidated financial statements for
the year 2015.
Reporting Period
Events after the
Goals
We are extremely well positioned for the upcoming challenges
with our growth strategies, our digitization offensive and the high
levels of investment in the future of the Group. We are on a
stable growth path, which we will continue to follow system-
atically. We therefore look to the coming years with great
confidence and continue to aim for further profitable growth.
We once again demonstrated our technology leadership in 2015
in the fields of fuel efficiency, safety and vehicle connectivity.
With innovative powertrains and highly economical model
versions, we reduced the average CO2 emissions of the cars
we sell in the European Union to 123 grams per kilometer.
We thus achieved the goal we had set of 125 g/km by 2016
ahead of time. This was due in particular to our highly efficient
new models as well as our first four plug-in hybrids.
pages 12 f
The high levels of research and development expenditure
in recent years are already paying off. This is shown not only
by our current business development, but also by the fact
that we are playing a pioneering role in key technologies that
are crucial for the future of individual mobility. This applies
to powertrain technology, traffic safety and digital connectivity,
and in particular also to autonomous driving. Two milestones
were the research vehicles F 015 Luxury in Motion and Vision
Tokyo in the area of passenger cars. In the area of trucks,
we have official approval in both the United States and Germany
for road tests of our Highway Pilots. ①pages 10f The com-
ponents from our research and test vehicles are gradually being
applied in series production. Partially autonomous driving is
therefore already reality for our cars and our trucks. And we will
go one step further with the new E-Class, which will be
launched in the spring.
The generally very positive business development strengthens
our financial basis on a broad front and thus improves our
ability to invest substantial amounts to secure our successful
future and to finance those investments from our own resources.
In the year under review, we invested more than €13 billion in
property, plant and equipment, associated companies and joint
ventures, research and development for new products, new
technologies and digitization, and the expansion of our global
production network. And even higher amounts are planned
for the coming years.
We want our shareholders to participate appropriately in the
earnings achieved by Daimler in 2015. At the Annual Share-
holders' Meeting on April 6, 2016, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €3.25 per share (prior year: €2.45). With this
decision, we are also expressing our confidence about the
ongoing course of business. The dividend distribution will thus
rise to €3.5 billion (prior year €2.6 billion), which is by a large
margin the highest amount paid out in the Company's history.
B❘ COMBINED MANAGEMENT REPORT | EVENTS AFTER THE REPORTING PERIOD 121
In line with the ongoing high level of earnings, we continue to
have very sound key financial metrics. At year-end, the Group's
overall equity ratio rose to 23.6% (2014: 22.1%) and the equity
ratio of the industrial business was 44.2% (2014: 40.8%). The net
liquidity of the industrial business increased to €18.6 billion
(2014: €17.0 billion), although we made an extraordinary contri-
bution of €1.2 billion to the pension fund assets in Germany
and the United States and applied €0.7 billion for the acquisition
of the digital mapping business HERE. At €5.9 billion, the free
cash flow of the industrial business - the parameter we use to
measure financial strength - was once again higher than in the
previous year after adjusting for special items (2014: €5.2 billion),
and is thus significantly higher than the proposed dividend
distribution.
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 21.6%
(2014: 18.8%). We therefore once again earned substantially
more than our targeted minimum return on capital employed
(8%). This is reflected by our value added, which increased very
significantly to €5.7 billion (2014: €4.4 billion).
We made significant progress in 2015 also in terms of the
profitability of our business. Operating profit (EBIT) from the
ongoing business of €13.8 billion was 36% above the prior-
year level (€10.1 billion). This was primarily due to the Mercedes-
Benz Cars and Daimler Trucks divisions, but Mercedes Benz
Vans and Daimler Financial Services also significantly increased
their EBIT. At Mercedes-Benz Cars, the return on sales from
the ongoing business for the first time reached the division's
target of 10%, and Daimler Financial Services' return on equity
of 18.3% was once again above its target (17%). We laid a corner-
stone for this positive development with the efficiency pro-
grams that we implemented in all divisions in recent years. By
the end of 2014, we achieved a total contribution to earnings
of approximately €4 billion through sustained improvements
in cost structures as well as additional business activities.
The full impact of these programs was reflected for the first time
in the year 2015. In addition to these measures with short-
term effects, we are implementing fundamental initiatives for
the long-term and structural optimization of business systems
in all divisions.
We significantly increased our unit sales by 12% to 2.9 million
passenger cars and commercial vehicles despite difficult condi-
tions in some major markets. Thanks to numerous new and
successful products, Mercedes-Benz Cars and Mercedes-Benz
Vans set new records for unit sales and Daimler Trucks also
achieved a small increase, although the market situation in two
key markets (Brazil and Indonesia) was extraordinary difficult.
Only Daimler Buses did not quite match its unit sales of the pre-
vious year due to the market weakness in Latin America.
Driven by the positive development of the automotive business,
the Daimler Financial Services division also expanded signi-
ficantly in the reporting period. The Group's revenue therefore
also grew significantly - by 15% to €149.5 billion. Adjusted
for exchange-rate effects, there was an increase of 9%.
A key element of our growth strategy is the systematic digi-
tization of our products and processes - in all divisions,
along the entire value chain and with a focus on the customer.
The intelligent networking of the entire value chain enables
us to shorten the development processes and to make production
processes more flexible and marketing and sales processes
more direct. New patterns of thought and action are required
for the digital transformation at the Group. Our goal is to
combine the speed and risk culture of the digital industry with
Daimler's perfection and innovative strength.
Awards for our innovative strength, for our attractiveness as an
employer and for our new products and services are indicators
of the positive momentum we now have. The appeal of our core
brand Mercedes-Benz was significantly enhanced worldwide as
a result not only of new and especially attractive products
but also of outstanding quality. This allows us to address new
markets as well as new and younger customer groups. For
this purpose, we make use also of digital forms of customer
contact and new sales formats, for example with the new
Mercedes me sub-brand.
The remuneration system for the Board of Management aims
to remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related
and performance-related components of remuneration is
designed to create an incentive to secure the Group's long-term
success. The fixed component of remuneration is paid as a
base salary; the variable components are intended to reflect,
clearly and directly, the joint and individual performance of
the members of the Board of Management as well as the long-
term performance of the Group. The interests of all stake-
holders, in particular those of the shareholders as the owners
of the Company and those of the employees, are harmonized
through the focus on the Group's long-term success.
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appro-
priateness, based on a horizontal and a vertical comparison.
In the horizontal comparison, the following aspects are
given particular attention in relation to a group of comparable
companies in Germany:
(non-performance-related)
base salary
Target remuneration consists of non-performance-related
and performance-related components:
B.45
The maximum amounts of remuneration of the members
of the Board of Management were set as of financial year 2015
at 1.9 times the target remuneration for its members and
1.5 times the target remuneration for its Chairman. The target
remuneration consists of the base salary, the target annual
bonus and the grant value of the PPSP, excluding fringe benefits
and retirement benefit commitments. With the inclusion
of fringe benefits and retirement benefit commitments from
the respective financial year, the maximum limit of total
remuneration increases by these amounts. The possible cap
on the amount exceeding the maximum limit takes place
with the payment of the PPSP issued in the relevant financial
year, i.e. for the year 2015, with payment of the PPSP in 2019.
71 B.46
The maximum amounts of remuneration of the members
of the Board of Management are limited, both overall and with
regard to the variable components, in accordance with the
recommendation included in the German Corporate Governance
Code in 2013. Effective January 1, 2014, the members of the
Board of Management agreed to the inclusion of such limits in
their current contracts of service.
pages 63f, which Daimler AG uses as a benchmark for the
relative share-price development. Both the delayed payout
of the portion of the annual bonus (with the use of the bonus-
malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious comparative
parameters and to the share price reflect the recommenda-
tions of the German Corporate Governance Code and give due
consideration to both positive and negative developments.
As before, only 50% of the annual bonus is paid out in the
March of the following year. The other 50% is paid out a year
later (deferral) with the application of a bonus-malus rule,
depending on the development of the Daimler share price com-
pared with an automotive index (Dow Jones STOXX Auto Index)
With regard to the PPSP, an additional limitation of the target
achievement for the reference parameter return on sales
was decided upon for plans from 2015 onwards, if the strategic
target for return on sales (currently 9%) is not achieved.
Practical implementation
The system of Board of Management remuneration in 2015
The fixed base salary and the annual bonus each continue to
comprise approximately 29% of the target remuneration, while
the variable component of remuneration with a long-term
incentive effect (PPSP) makes up approximately 42% of the target
remuneration. The base salary was increased by an average
of 3% in the reporting year. 7 B.45
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
After the end of each year, target achievement is measured
and the actual remuneration is then calculated by the
Presidential Committee and submitted to the Supervisory
Board for its approval.
In this way, the individual base and target remuneration and
the relevant performance parameters are set by the beginning
of each
year.
For the long-term variable component of remuneration,
the so-called Performance Phantom Share Plan (PPSP), the
Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount
in euros and sets the related performance targets.
On the basis of the approved remuneration system, the
Supervisory Board decides at the beginning of the year on
the base and target remuneration for the individual members
of the Board of Management and decides on the success
parameters relevant to the annual bonus in the coming year.
Furthermore, individual goals are decided upon for each
member of the Board of Management for the respective areas
of personal responsibility; those goals are then taken into
consideration after the end of the financial year when the annual
bonus is decided upon by the Supervisory Board.
In carrying out this review, the Presidential Committee and the
Supervisory Board consult independent external advisors,
above all to facilitate a comparison with remuneration systems
common in the market. If the review results in a need for
changes to the remuneration system for the Board of Manage-
ment, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also with regard to development over time. The Supervisory
Board has defined the group of senior executives for this purpose.
- the relative weighting of the components, that is,
the relationship between the fixed base salary and the
short-term and long-term variable components; and
the target remuneration consisting of base salary, annual
bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
- the effects of the individual fixed and variable components,
that is, the methods behind them and their reference
parameters;
123
In the opinion of the Board of Management, the Daimler Group's
economic situation is thoroughly satisfactory at the time of
publication of this Annual Report. In recent years, we have imple-
mented our strategy effectively and with great determination.
This already led us onto a stable and profitable growth path in
the year 2014, along which we progressed further in 2015.
We significantly increased our revenue, unit sales and earnings
- although we were confronted by difficult conditions in some
markets. With new products and tailored services, we performed
better than our competitors in many areas, allowing us to
increase our market share. At the same time, we strengthened
our leading position in key technologies with pioneering inno-
vations, and systematically pushed forward with the digitization
of the Group at all levels and in all divisions.
Overall Assessment of the Economic Situation
B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
Traffic safety
"Genius - Daimler's young knowledge community" celebrated its
fifth anniversary in 2015. The goal of this education initiative
is to get children and teenagers interested in technology and
the natural sciences, thus counteracting the trend of waning
interest in these subjects on the part of young people. Efforts
here focus especially on girls, as women remain underrepre-
sented in technical professions. The initiative also includes an
expert team that develops technical and practical teaching
materials on the subject of automotive technologies.
genius-community.com
Providing more people with access to education is one of the
most lasting investments to the benefit of society and also
our company. The numerous education projects we fund around
the world promote interest in and passion for science and
technology, as well as the ability to look beyond the working
world and remain open to new ideas. The projects we support
also promote equal opportunities.
Education
e
Science/Technology/Environment 10%
14%
71%
5%
Education
As we move along the "road to accident-free driving," we are
utilizing assistance systems to ease the burden on drivers and
to protect and support them in dangerous situations. More
importantly, we also seek to ensure that everyone on streets
and roads remains safe. We pursue this goal with traffic-edu-
cation projects for schoolchildren and safety training programs
for adults, for example.
Arts & Culture
Donations and sponsoring in 2015
B.44
"Electrified commercial vehicle drive concepts" is the working
title of a professorship that is being established at the Depart-
ment of Automotive Engineering at Esslingen University of Applied
Sciences. The endowed professorship is being funded by the
Daimler Fund in the Donors' Association, with a view to the pro-
motion of forward-looking research into electric drive systems
for commercial vehicles in the future. H④ stifterverband.org
The Daimler and Benz Foundation, for example, is endowed
with €125 million. This foundation promotes the in-depth
scientific examination and study of research ideas in the areas
of environmental protection and technical safety. It also
supports a think tank that will address mobility issues and
examine the impact and socially relevant aspects of auto-
nomous driving. daimler-benz-stiftung.de
Sustainable development cannot be achieved without the tar-
geted funding of science, research and technology worldwide.
The international sharing of knowledge and the funding of inno-
vations are key drivers of developments here. We therefore
support universities, research institutes and interdisciplinary
scientific projects around the globe. We have consolidated
these activities in foundations.
Science funding
In 2015, we once again supported political parties in Germany,
donating a total of €320,000. As in the prior year, the CDU and
SPD parties each received €100,000 while the FDP, the CSU
and BÜNDNIS 90/DIE GRÜNEN each received €40,000.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
118
Charity/Community
Back in 2001, Daimler launched its Mobile Kids initiative. Since
then, a standardized concept that can be adjusted in line
with the situation in different countries has playfully taught more
than 1.2 million children worldwide how to recognize and
avoid danger in road traffic. The initiative also makes parents
and teachers aware of the importance of accident prevention
and supports them through the provision of information and
relevant materials. mobilekids.net
Nature conservation
We share responsibility for preserving the diversity of natural
habitats for future generations. That is why we have been
supporting the projects and initiatives of environmental organi-
zations around the world for many years now, as we help to
make sure the earth remains a place worth living in.
120
More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
The East Jerusalem Emergency Response Network, which is
being built by the Jerusalem Foundation with our assistance,
will provide effective assistance to the people of Jerusalem in
emergencies. The goals of the Jerusalem Foundation are to
improve the quality of life of residents of Jerusalem, break down
the barriers between the different religious and ethnic groups
and create a just society for everyone.
As a company that operates around the world, we support
projects and institutions that promote intercultural dialogue
in the interest of mutual understanding and the peaceful
coexistence of cultures. We also support initiatives for the
strengthening of democracy.
Dialogue and understanding
The largest single donation to date was €57,000 for a project
in South Africa known as "A fence for more freedom." With the
help of ProCent, an orphanage being built in Cape Town was
secured against attacks with a fence in order to protect children
and youths. The orphanage will offer around 120 children a
place to grow up in a family-like group atmosphere, and will
also provide them with medical care and education.
In the ProCent initiative, for example, Daimler employees vol-
untarily donate the cent amounts of their net salaries to
socially beneficial projects. The company matches every cent
donated. Approximately €1 million was collected in this
manner in 2015.
The efforts of our employees to help communities and promote
the common good around the globe manifest themselves
in countless initiatives that go beyond the refugee assistance
campaigns. These initiatives demonstrate just how seriously
our employees take their responsibility, and how willing they
are to offer opportunities to people at the very fringes of
society.
Employee commitment
In order to support the smooth integration of refugees into the
German labor market, Daimler also began offering "bridge
internships" for refugees in November 2015. For additional
information,
page 117.
We also assist efforts to integrate refugees and support the
individual campaigns of our employees. For example, our staff
members donated more than €300,000 to refugee assistance
projects and we doubled that amount to €601,332, which was
then given to the refugee aid section of the German Red Cross.
The fundraising campaign was initiated by the company manage-
ment and the General Works Council in Germany.
Daimler has actually been involved in refugee assistance pro-
grams for a long time now. For example, since 2013, Daimler
and the Wings of Help relief organization have sent three con-
voys with supplies for Syrian refugee camps in Turkey, and
the partners have also sent two aid shipments by plane to north-
ern Iraq. We have also contributed €100,000 annually for
three years to the city of Stuttgart's "Welcome Fund." We have
donated a further €100,000 to refugee assistance projects
sponsored by a community organization in Sindelfingen. In
addition, we donated €1 million to the "Bild hilft e. V. - Ein
Herz für Kinder" child refugee aid association. We finance German
courses for refugees, collect food donations from Daimler
cafeterias and provide aid organizations with an "assistance
fleet" of Mercedes-Benz vehicles.
Against the backdrop of the current refugee crisis in Germany,
Daimler has launched a variety of aid initiatives to provide
rapid assistance to refugees non-bureaucratically, thus send-
ing a message of respect and tolerance.
Communities and charitable projects
However, we do not focus solely on the visual arts, as Daimler
also supports the German Music Council, the largest cultural
association in Germany, through the Group's funding of Germa-
ny's Federal Youth Orchestra. We also support art and culture
outside Germany, such as the "Moscow meets Friends" music
festival in Russia and the "Emerging Artist Award," which is
jointly presented by Daimler Financial Services and the renowned
Cranbrook Academy in the United States.
As early as 1977, the company laid the cornerstone for its
Daimler Art Collection, which now includes some 2,600 works.
In 2015, the Daimler Art Collection presented newly acquired
Chinese works of art at two exhibitions in Berlin. The works of
the Chinese artists offer a unique insight into a fascinating
country with a culture that is thousands of years old.
A rich cultural life and a vibrant art scene foster creativity
and innovation. It is therefore very important to us to support
culture and the arts.
The arts and culture
119
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
For example, Daimler supports the wetland restoration project
of the NABU nature conservation organization in Baden-
Württemberg. The goal of the project is the renaturation of
damaged moors and bogs. Such wetlands currently occupy
only 3% of the earth's surface but store nearly one third of all
the carbon that remains trapped in the earth. Moors transform
CO2 from the atmosphere into long-lasting peat and are thus
the best natural carbon sinks.
short- and medium-term
performance-related
components
long-term performance-related
components
B.46
approx. 29%
For the other primary reference parameter, which also relates
to half of the annual bonus, "comparison of actual EBIT in
the financial year with actual EBIT in the prior year," the limits
of the unchanged possible range of 0% to 200% continue to
be defined by a deviation of +/- two percent of the prior-year
0% to 200%, that is, the annual bonus due to EBIT achievement
has an upper limit of double the base salary and may also be zero
(see below). Both primary reference parameters, each of which
relates to half of the annual bonus, can vary between 0% and
200%. For the primary reference parameter relating to half
of the annual bonus, "comparison of actual EBIT in the financial
year with EBIT targeted for the financial year," the limits of
the unchanged possible range of 0% to 200% are defined as
of 2014 by a deviation of +/- three percent of the prior-year
revenue (previously two percent).
Range of possible target achievement:
In 2015, this is equivalent to the respective base salary.
Amount with 100% target achievement
(target annual bonus):
-50% relates to a comparison of actual EBIT in 2015
with actual EBIT in 2014.
50% relates to a comparison of actual EBIT in 2015
with EBIT targeted for 2015.
Primary reference parameters:
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler Group
(EBIT). For the past financial year, the annual bonus was linked
to the target for the financial year determined by the Supervisory
Board (derived from the level of return targeted for the medium
term and the growth targets), the actual result compared with the
prior year, the individual performance of the Board of Man-
agement members and the achievement of compliance targets.
In addition, qualitative targets are defined and included. With
the actual-actual comparison, achievement of EBIT at the prior-
year level constitutes target achievement of 100%. With the
target-actual comparison, the particularly ambitious definition
of the targeted EBIT that is oriented towards the competition
constitutes target achievement of 150%. 7 B.48 7 B.49
revenue.
Maximum target achievement (total cap): 235% of the target bonus
Compliance
For 2015: Further develop-
ment and permanent estab-
lishment of the corporate
value of integrity, as well as
diversity and the maintenance
and enhancement of a high
level of employee satisfaction
and product quality.
Individual target agreements
in 2015
- 50% relates to a comparison
of actual EBIT in 2015 with
actual EBIT in 2014
of actual EBIT in 2015 with
EBIT targeted for 2015
- 50% relates to a comparison
Target achievement: "compliance targets"
Range of possible target achievement:
-25% -0%
Range of possible target achievement:
-10% +10%
Target achievement: "non-financial
targets"
agreements in 2015
The Supervisory Board may take account of the personal
performance of the individual Board of Management members
with an addition or deduction of up to 25% on the basis of the
agreed individual targets, with the degree of target achievement
calculated from the primary reference parameters. In addition,
an amount of up to 10 percent can be added or deducted,
depending on the key figures/assessment basis determined in
advance. Since 2012, non-financial targets have been used
as a basis for assessment of the latter component. For the past
financial year, those targets were the further development
and permanent establishment of the corporate value of integrity,
as well as diversity and the maintenance and enhancement
of a high level of employee satisfaction and product quality.
Also in 2015, further qualitative targets were agreed upon
with the individual members of the Board of Management with
regard to the development and sustained function of the
compliance management system. The complete or partial non-
achievement of these individual compliance targets can be
reflected by a deduction of up to 25% from the individual target
achievement. However, the compliance targets cannot result
any increase in individual target achievement, even in the case
of full accomplishment.
in
B.51
Time of payment of Performance Phantom Share Plan 2015 in February of the year 2019
final number of phantom shares x Daimler share price at end of plan
= amount paid out
after expiry of fourth plan year
= final number of phantom shares, dividend entitlement in fourth year
preliminary number of phantom shares x performance factor
three-year dividend entitlement
preliminary number of phantom shares
(virtual shares)
pages 125 f
after expiry of third plan year
price of Daimler shares when issued
amount when granted in euros page 125
approx. 42%
remuneration
long-term performance-related
- long-term performance-related remuneration
Performance Phantom Share Plan (PPSP)
B.50
125
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The total amount to be paid out from the annual bonus
is limited to 2.35 times the base salary of the respective
financial year.
Target achievement: "individual targets"
Range of possible target achievement:
-25% - +25%
dependent upon
Range of possible target achievement:
0% - 200%
dependent upon
page 123
Base salary-fixed
B.47
1 Excluding fringe benefits and retirement benefit commitments in all cases.
The possible cap on the amount exceeding the maximum limit takes
place with the payment of the PPSP for 2015 in 2019.
Total remuneration¹ in 2015
+ PPSP payment for 2015 (in 2019)
incl. dividend equivalent payments
(50% paid out in 2016 + 50% in 2017)
+ annual bonus for 2015
base salary - fixed - oriented towards the area of responsibility
Base salary in 2015
+ target bonus = 100% of the 2015 base salary
1.9 times the target
remuneration¹
1.5 times the target
remuneration¹
Base salary in 2015
Members of the Board of Management
Chairman of the Board of Management
Maximum limit of total remuneration¹ 2015
approx. 42%
approx. 29%
+ PPSP value when granted for 2015
Target remuneration' in 2015
The individual components of the remuneration system
are as follows:
The base salary is fixed remuneration relating to the entire
year, oriented towards the area of responsibility of each
Board of Management member and paid out in twelve monthly
installments. 7 B.47
base salary
Annual bonus in 2015
B.49
1 Depending on the development of the Daimler share price compared with the Dow Jones STOXX Auto Index.
50% of annual bonus (deferral) = in March of the second year after the reporting year (2017)
amount paid out = 50% of annual bonus x "relative share performance"
50% of annual bonus in March of the year after the reporting year (2016)
+/- target achievement "individual targets"
+/- target achievement "non-financial targets"
- target achievement "compliance targets"
overall target achievement
time of payment of annual bonus 2015
x overall target achievement
target achievement EBIT
= target bonus
target bonus
=100% of base
salary 2015
annual bonus 2015
approx. 29%
components
performance-related
short- and medium-term
performance-related remuneration page 124
Annual bonus - short- and medium-term
B.48
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
124
approx. 29%
(non-performance-related)
paid out in twelve monthly
installments
EBIT target achievement
Dr. Dieter Zetsche
Remuneration structure
163
148
of the German Commercial Code (HGB), this amount is reduced by €170,820
for the year 2015 (2014: €139,000). The corresponding fringe benefits
were granted and borne by a subsidiary and are thus not included in the
amounts to be disclosed in the annual financial statements of the parent
company, Daimler AG.
2 For the fulfillment of disclosure obligations pursuant to Section 285 No. 9a
1 Board of Management remuneration paid until January 28, 2014.
1,405
1,439
Total
127
Prof. Dr. Thomas Weber
332
188
Bodo Uebber
431
493
121
8
Dr. Wolfgang Bernhard
Hubertus Troska²
90
163
Dr. Christine Hohmann-Dennhardt
94
97
189
Wilfried Porth
107
93
Andreas Renschler¹
Ola Källenius
544
890
781
707
Deferral (50% of annual bonus, medium-term)
652
1,233
775
Annual variable remuneration (50% of annual bonus, short-term)
908
879
1,116
Total
664
1,058
Long-term variable remuneration
93
3,598
73
83
127
2,725
3,068
3,194
Payment of PPSP 2010
Retirement pension expense (service costs)
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2011
Payment of PPSP 2011
Total
121
Bodo Uebber
332
In thousands of euros
Total remuneration
342
314
2,757
2,063
5,533
642
30
220
Retirement pension expense (service costs)
4,367
4,462
Total
36
281
188
5,536
3,566
Taxable non-cash benefits and other fringe benefits
781
758
928
901
Base salary
742
2015
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Finance & Controlling,
Daimler Financial Services
146
4,373
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
65
670
0
Daimler AG has concluded various material agreements, as
listed below, that include clauses regulating the possible event
of a change of control, as can occur as a result of a takeover bid:
- A non-utilized syndicated credit line in a total amount of €9
billion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
- Credit agreements with lenders for a total amount of €2.8
billion, which the lenders are entitled to terminate if Daimler
AG becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €562 million, which
the lenders are entitled to terminate if Daimler AG becomes
a subsidiary of another company or comes under the control
of one person or several persons acting jointly.
- An agreement concerning the acquisition of a majority
(50.1%) of AFCC Automotive Fuel Cell Cooperation Corp.,
which has the purpose of further developing fuel cells for
automotive applications and making them marketable. In the
case of a change of control of Daimler AG, the agreement
provides for the right of termination by the other main share-
holder, Ford Motor Company. Control as defined by this
agreement is the beneficial ownership of the majority of the
voting rights and the resulting right to appoint the majority
of the members of the Board of Management.
- A cooperation agreement with Ford concerning the joint
predevelopment of a fuel-cell system. In the event of a
change of control of one of the parties to the agreement,
the agreement provides for the right of termination for the
other parties. A change of control is deemed to occur at a
threshold of 50% of the voting rights of the company in ques-
tion or upon authorization to appoint the majority of the
members of its managing board.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. in connection with cross-shareholdings. The
Renault-Nissan Alliance received an equity interest of 3.1% in
Daimler AG and Daimler AG received equity interests of 3.1%
in each of Renault S.A. and Nissan Motor Co., Ltd. In the case
of a change of control of one of the parties to the agreement,
each of the other parties has the right to terminate the
agreement. A change of control as defined by the master
cooperation agreement occurs if a third party or several third
parties acting jointly acquire, legally or economically,
directly or indirectly, at least 50% of the voting rights in the
company in question or are authorized to appoint a majority
of the members of its managing board. Under the master
cooperation agreement, several cooperation agreements
were concluded between Daimler AG on the one side and
Renault and/or Nissan on the other, which provide for the
right of termination for a party to the agreement in the case
of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the shared
use and development of fuel-efficient diesel and gasoline
engines and transmissions, the development and supply of a
small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for com-
pact cars, the joint development of components for a new
architecture for compact cars, and the joint production of
Infiniti and Mercedes-Benz compact vehicles in a 50-50 joint
venture in Mexico. A change of control is deemed to occur at
a threshold of 50% of the voting rights of the company in
question or upon authorization to appoint a majority of the
members of its managing board. In the case of termination of
cooperation in the area of the development of small cars due
to a change of control in the early phase of the cooperation,
the party affected by the change of control would be obliged
to bear its share of the costs of the development of shared
components even if the development were terminated for that
party.
An agreement with BAIC Motor Co., Ltd., relating to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate or exercise a put or call
option in the case that a third party acquires one third or
more of the voting rights in Daimler AG.
An agreement relating to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co.,
Ltd. the right of termination in the case that one of its
competitors acquires more than 25% of the equity or assets
of Daimler AG or becomes able to influence the decisions of
its Board of Management.
- An agreement between Daimler and Robert Bosch GmbH
relating to the joint establishment and joint operation of EM-
motive GmbH for the development and production of traction
and transmission-integrated electric motors as well as parts
and components for such motors for automotive applications
and for the sale of those articles to the Robert Bosch Group
and the Daimler Group. If Daimler should become controlled
by a competitor of Robert Bosch GmbH, Robert Bosch GmbH
has the right to terminate the consortium agreement without
prior notice and to acquire all the shares in the joint venture
held by Daimler at a fair market price.
Material agreements taking effect in the event of a change
of control
- An agreement between Daimler AG, BMW AG and Audi AG
relating to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V. In
the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question to
offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). If none of the other parties
acquire these shares, the agreement gives them the right to
dissolve There Holding B.V.
156
143
122
61
304
154
57
78
137
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015 also approved a
conditional increase in the share capital of up to €500 million
(Conditional Capital 2015). Conditional Capital 2010 was
rescinded.
In accordance with Section 5 of the Articles of Incorporation,
the Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation Act
(AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3
of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairman of the Board of Manage-
ment if there is an important reason to do so.
136
B | COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by a
resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corporation
Act (AktG) and Article 16 Subsection 1 of the Articles of Incorpo-
ration with a simple majority of the votes cast and if required
with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of
the Company requires a 75% majority of the share capital
represented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. Amendments to the Articles
of Incorporation that only affect the wording can be decided
upon by the Supervisory Board in accordance with Section 7
Subsection 2 of the Articles of Incorporation. Pursuant to
Section 181 Subsection 3 of the German Stock Corporation Act
(AktG), amendments to the Articles of Incorporation take effect
upon being entered in the Commercial Register.
Authorization of the Board of Management to issue
or buy back shares
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
By resolution of the Annual Shareholders' Meeting of April 14,
2010, the Board of Management was authorized during the period
until April 13, 2015 to acquire the Company's own shares, and
to apply derivative financial instruments for this purpose as
well. This authorization was rescinded by resolution of the
Annual Shareholders' Meeting of April 1, 2015 and replaced by
a new authorization that allows the Company to acquire its
own shares during the period until March 31, 2020 for all legal
purposes in a volume of up to 10% of the share capital at the
time of the resolution of the Annual Shareholders' Meeting.
The shares can be used, under the exclusion of shareholders'
subscription rights, for, among other things, corporate mergers
and acquisitions or else can be sold for cash to third parties
at a price that is not significantly below the market price at the
time of the sale. The shares can also be used to service debt
on convertible bonds and/or bonds with warrants, or else issued
to employees of the Company and employees and members of
executive bodies of affiliated companies pursuant to Section 15 ff.
of the German Stock Corporation Act (AktG). The Company's
own shares can also be canceled.
No use was made of this authorization to acquire the Company's
own shares during the reporting period.
By resolution of the Annual Shareholders' Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly or
in partial amounts, on one or several occasions, by up to
€1 billion by issuing new registered shares of no par value in
exchange for cash or non-cash contributions, and with the
consent of the Supervisory Board under certain conditions and
within defined limits to exclude shareholders' subscription
rights (Approved Capital 2014). No use has yet been made of
Approved Capital 2014.
The Company was authorized by resolution of the Annual
Shareholders' Meeting held on April 14, 2010, to issue convert-
ible bonds and/or bonds with warrants during the period until
April 13, 2015. The Company made no use of this authorization,
which was rescinded by resolution of the Annual Shareholders'
Meeting of April 1, 2015 and replaced by a new authorization.
It authorizes the Board of Management with the consent of the
Supervisory Board to issue during the period until March 31,
2020 convertible bonds and/or bonds with warrants or a com-
bination of those instruments (commercial papers) in a total
nominal amount of up to €10 billion with a maximum term of
ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no par
value in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms and
conditions of those convertible bonds or bonds with warrants.
The bonds may be issued in exchange for consideration in
cash, but also for consideration in kind, in particular for a partici-
pation in other companies. The respective terms and conditions
may also provide for mandatory conversion or an obligation to
exercise the option rights. The bonds can be issued once or
several times, wholly or in installments, or simultaneously in
various tranches. They can also be issued by companies affili-
ated with Daimler AG pursuant to Section 15 ff. of the German
Stock Corporation Act (AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the con-
sent of the Supervisory Board to exclude shareholders' sub-
scription rights to the bonds. No use has yet been made of this
new authorization to issue convertible bonds and/or bonds
with warrants.
In addition, the Board of Management is authorized under
other defined circumstances and with the consent of the Super-
visory Board to exclude shareholders' subscription rights. The
Company's own shares in a volume of up to 5% of the share
capital existing at the time of the resolution of the Annual
Shareholders' Meeting can also be acquired with the application
of derivative financial instruments (put or call options, forwards
or a combination of these financial instruments), whereby the
terms of the derivatives may not exceed 18 months and must
be terminated on March 31, 2020.
391
195
6,416
939
38
2,289
1,727
Annual variable remuneration (50% of annual bonus, short-term)
914
Deferral (50% of annual bonus, medium-term)
942
2,171
Total
90
163
148
163
2,156
2,566
1,583
564
2,770
7,524
Total remuneration
Retirement pension expense (service costs)
Total
Dividend equivalent PPSP 2015
1,809
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2011
Payment of PPSP 2011
Payment of PPSP 2010
Long-term variable remuneration
626
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2012
39
- the half of the annual bonus payable in 2016 for 2015
at the value as of the end of the reporting period,
the half of the share-based annual bonus paid in 2015
for 2013,
- the amount of the long-term share-based remuneration
(PPSP 2011) paid in 2015,
- the dividend equivalent of the current PPSP
(2012, 2013, 2014 and 2015) paid in 2015, and
the retirement pension expense in 2015
(service costs in 2015).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for the reporting year 2015 are
implemented with the payout of PPSP 2015, which constitutes
the last payment to be made of the components of remuneration
granted in 2015. For the year 2015, therefore, the possible
cap would take place in 2019, the year that PPSP 2015 is paid out.
Payments made
- the taxable non-cash benefits and other fringe benefits
in 2015,
In thousands of euros
Andreas Renschler¹
HR and Labor Relations Director,
IT & Mercedes-Benz Vans
Hubertus Troska
Greater China
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
2015
Jan. 1 Jan. 28, Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2014
Wilfried Porth
2015
- the base salary in 2015,
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 133
12
Dividend equivalent PPSP 2015
36
36
Total
1,442
The total of "payments made" for financial year 2015
is calculated from:
3,986
Retirement pension expense (service costs)
117
Total remuneration
2,294
4,864
2,316
1,229
Base salary
758
781
652
890
Deferral (50% of annual bonus, medium-term)
564
645
595
47
27
Dividend equivalent PPSP 2011
1,050
2,566
Payment of PPSP 2011
1,231
3,009
626
890
652
Annual variable remuneration (50% of annual bonus, short-term)
62
758
781
Taxable non-cash benefits and other fringe benefits
93
107
8
431
493
Total
851
888
70
1,189
1.274
43
43
39
8
41
45
91
41
11,424
827
11,171
1,044
106
4,241
380
14,422
14,371
5,563
5,763
In thousands of euros
Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs
4,401
448
Ola Källenius
Mercedes-Benz Cars Marketing & Sales
98
78
44
41
Dividend equivalent PPSP 2014
62
57
62
62
57
50
25
122
61
Pursuant to Section 31 Subsection 2 of the German Code-
termination Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Supervisory
Board has to make a suggestion for the appointment within
one month of the vote by the Supervisory Board. The Supervisory
Board then appoints the members of the Board of Manage-
ment with a majority of its members' votes. If no such majority
is obtained, voting is repeated and the Chairman of the Super-
visory Board then has two votes. The same procedure applies
for dismissals of members of the Board of Management.
32
Dividend equivalent PPSP 2013
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2015
Long-term variable remuneration
Payment of PPSP 2010
Payment of PPSP 2011
2,246
268
Dividend equivalent PPSP 2011
626
68
61
122
15
Dividend equivalent PPSP 2013
57
62
Dividend equivalent PPSP 2012
584
Deferral (50% of annual bonus, medium-term)
890
Base salary
758
781
781
Taxable non-cash benefits and other fringe benefits
94
97
189
Total
852
878
970
Annual variable remuneration (50% of annual bonus, short-term)
633
851
Dividend equivalent PPSP 2014
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section 84
of the German Stock Corporation Act (AktG), the members of
the Board of Management are appointed by the Supervisory
Board for a maximum period of office of five years. However,
the Supervisory Board of Daimler AG has decided generally to
limit the initial appointment of members of the Board of
Management to three years. Reappointment or the extension
of a period of office is permissible, in each case for a maximum
of five years.
127,700
Shares acquired by employees within the context of the employee
share program may not be disposed of until the end of the fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans are obliged by the Plans' terms and conditions
and by the Stock Ownership Guidelines to acquire Daimler
shares with a part of their Plan income up to a defined target
volume and to hold them for the duration of their employment
at the Daimler Group.
1,233 1,116 1,116
1,116
879
908
908
908
127
Annual variable remuneration
451
464
0
1,090
379
391
(50% of annual bonus, short-term)
0
127
121
928
928
928
758
781
781
127
781
and other fringe benefits
Total
332
188
188
188
Taxable non-cash benefits
901
919
451
1,991
2,095
Retirement pension expense (service costs)
676
834
834
5,468
834
419
0 2,920
0 4,758
419 419
Total remuneration
4,199
4,356 1,950 7,418
3,203 3,422 1,327 6,085
333
Deferral (50% of annual bonus, medium-term)
0
Total
464
0
1,090
379
391
0
2,290 2,406
919
(plan period of 4 years)
1,388 1,478
0
3,288
1,233
1,313
Long-term variable remuneration
Base salary
In thousands of euros
max.
0
2,750
Total
1,972 2,075
0
4,713
1,237
62
0
4,588
Retirement pension expense (service costs)
220
281
281
1,919 2,019
281
1,161
0
Deferral (50% of annual bonus, medium-term)
379
391
0
919
31
2,875
379
0
919
Long-term variable remuneration
(plan period of 4 years)
1,214
1,293
391
30
314
342
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Jan. 1 Dec. 31,
2014
- Retirement pension expense (service costs)
2015
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
max.
2014
2015
min.
Jan. 1 Dec. 31,
min.
- Taxable non-cash benefits and other fringe benefits
Excluding
5,058
342
342
Total remuneration
3,043
3,244 1,169
5,882
162
3,422
3,635
1,616 6,204
Total limit¹ for components of remuneration
granted in the reporting year
5,066
5,153
233
4,971
Total limit¹ for components of remuneration
granted in the reporting year
5,922
6,025
Dr. Clemens Börsig
Dr. Bernd Bohr
Dr. Jürgen Hambrecht
Petraea Heynike
Jörg Hofmann¹
Andrea Jung
Joe Kaeser
Dr. Paul Achleitner
Sari Baldauf
Michael Bettag¹
Ergun Lümali¹
Wolfgang Nieke¹
Dr. Bernd Pischetsrieder
Valter Sanches²
Jörg Spies¹
Elke Tönjes-Werner¹
Dr. Frank Weber
Dr. Sabine Maaßen¹
Roman Zitzelsberger¹
Member of the Supervisory Board
Member of the Supervisory Board
Name
In euros
Function(s) remunerated
Total in 2015
Dr. Manfred Bischoff
Michael Brecht¹
Chairman of the Supervisory Board, the Presidential Committee and the Nomination Committee
Member of the Supervisory Board and the Audit Committee, Deputy Chairman of the Supervisory
Board, the Presidential Committee and the Audit Committee
Member of the Supervisory Board
447,400
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
368,900
Member of the Supervisory Board (since November 4, 2015)
and of the Presidential Committee (since December 9, 2015)
1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation,
in accordance with the guidelines of the German Trade Union Federation.
194,300
127,700
127,700
127,700
127,700
127,700
Member of the Supervisory Board and the Audit Committee
20,168
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315 Subsection 4 and Section 289 Subsection 4 of the German Commercial Code (HGB))
135
Composition of share capital
The share capital of Daimler AG amounted to approximately
€3,070 million as of December 31, 2015. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section 67
Subsection 2 of the German Stock Corporation Act, only those
persons registered as shareholders in the share register are
considered to be shareholders of the Company. With the ex-
ception of treasury shares, from which the Company does not
have any rights, all shares confer equal rights to their holders.
Each share confers the right to one vote and, with the possible
exception of any new shares that are not yet entitled to a divi-
dend, to an equal share of the profits in accordance with the
dividend payout approved by the Annual Shareholders' Meeting.
The rights and obligations arising from the shares are derived
from the provisions of applicable law, in particular Sections 12,
53 aff, 118 ff and 186 of the German Stock Corporation Act.
There were no treasury shares as of December 31, 2015.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares
are nullified by law.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
127,700
192,100
919
2 Mr. Sanches has directed that he receive no remuneration and that his board remuneration is to be paid to the Hans-Böckler Foundation.
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board (since January 1, 2015)
152,800
152,800
127,700
Member of the Supervisory Board and the Audit Committee
(Chairman of the Audit Committee)
253,200
127,700
Member of the Supervisory Board and of the Presidential Committee
182,300
127,700
Member of the Supervisory Board and of the Presidential Committee (each until October 31, 2015)
Member of the Supervisory Board
149,823
127,700
Member of the Supervisory Board and the Audit Committee
Supervisory Board remuneration
Provisions of applicable law and of the Articles of Incorpo-
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
B.57
The remuneration of all the activities of the members
of the Supervisory Board of Daimler AG in the year 2015
was thus €3.5 million (2014: €3.6 million).
the dividend equivalent of the current PPSP
(2011, 2012, 2013 and 2014) paid in 2014, and
the retirement pension expense in 2014
(service costs in 2014).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in the year 2014 are implemented
with the payout of PPSP 2014, which constitutes the last pay-
ment to be made of the components of remuneration granted
in 2014. For the year 2014, therefore, the possible cap would
take place in 2018, the year that PPSP 2014 is paid out.
B.56
Payments made
In thousands of euros
- the value of the long-term share-based remuneration
(PPSP 2010) paid in 2014,
Dr. Dieter Zetsche
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Head of Mercedes-Benz Cars
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
2015
Base salary
Chairman of the Board of Management,
2,008
- the half of the annual bonus payable in 2015 for 2014 at the
value as of the end of the reporting period in financial year 2014,
the half of the share-based annual bonus paid in 2014
for 2012,
-
5,100
5,187
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
the taxable non-cash benefits and other fringe benefits
in 2014,
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
132
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The total of "payments made" for financial year 2014
is calculated from:
-
the base salary in 2014,
2 In 2014, Board of Managemenrt remuneration paid until January 28, 2014.
2,008
779
824
Total remuneration
7,270
7,172
5,852
5,885
1 In 2014, Board of Management remuneration paid until January 28, 2014.
419
134
Remuneration of the Supervisory Board
Supervisory Board remuneration in 2015
The remuneration of the Supervisory Board is determined by
the Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in April 2014 and effective for the
financial year beginning on January 1, 2014 specify that the
members of the Supervisory Board receive, in addition to
the refund of their expenses and the cost of any value-added tax
incurred by them in performance of their office, fixed remu-
neration of €120,000. The Chairman of the Supervisory Board
receives an additional €240,000 and the Deputy Chairman
of the Supervisory Board receives an additional €120,000. The
members of the Audit Committee are paid an additional
€60,000, the members of the Presidential Committee are paid
an additional €48,000 and the members of the other committees
of the Supervisory Board are paid an additional €24,000; an
exception is the Chairman of the Audit Committee, who is paid
an additional €120,000. Payments are made for activities in
a maximum of three committees; any persons who are members
of more than three such committees receive payments for
the three most highly paid functions. Members of a Supervisory
Board committee are only entitled to remuneration for such
membership if the committee has actually convened to fulfill
its duties in the respective year.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend.
The individual remuneration of the members of the
Supervisory Board is shown in table 7 B.57.
In financial year 2015, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency services,
except for the remuneration paid to the members of the
Supervisory Board representing the employees in accordance
with their contracts.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
333
834
676
129
68
75
61
66
47
51
41
45
43
39
5,361
5,222
4,640
4,558
Loans to members of the Supervisory Board
No advances or loans were made to members of the
Supervisory Board of Daimler AG in 2015.
Taxable non-cash benefits and other fringe benefits
Long-term variable remuneration
31
0
968
Long-term variable remuneration
(plan period of 4 years)
2,902
3,092
0
6,875
1,228
1,381
0
3,070
Total
4,910
5,100
0
11,595
2,008
2,205
412
0
390
0
2,156
2,156
942
914
914
914
Annual variable remuneration
(50% of annual bonus, short-term)
1,004
1,004
0
2,360
390
412
0
968
Deferral (50% of annual bonus, medium-term)
1,004
1,004
2,360
5,006
Retirement pension expense (service costs)
827
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
min.
max.
2014
2015
Jan. 1 Dec. 31,
min.
max.
In thousands of euros
Base salary
758
781
781
781
781
781
781
Taxable non-cash benefits
Payment of PPSP 2010
Ola Källenius
Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs
5,464
5,172
1,044
1,044
1,044
380
448
448
448
Total remuneration
Total limit¹ for components of remuneration
granted in the reporting year
2,156
Excluding
- Retirement pension expense (service costs)
7,908
8,300
3,200 14,795
3,330 3,567
1,362
6,368
10,149
10,149
- Taxable non-cash benefits and other fringe benefits
and other fringe benefits
Total
2,171
90
14,538
2014
275
676
14,148
Prof. Dr. Thomas Weber
2015
300
419
12,178
2014
300
333
12,454
Total
2015
2014
1,781
3,485
834
80,051
275
Bodo Uebber
156
281
8,070
2014
156
220
8,788
Andreas Renschler¹
2015
2014
225
30
Hubertus Troska
2015
342
3,159
2014
314
3,321
2015
2,006
2,780
80,514
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
Total
2,008
2,008
2,008
2,008
779
824
824
824
163
148
148
148
163
90
max.
Jan. 1 Dec. 31,
min.
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
min.
2014
1 Mr. Renschler proportionately until January 28, 2014.
2 The amounts of the present values are primarily due to the low level of the relevant discount rate.
Dr. Hohmann-Dennhardt has no entitlement to a company retirement benefit.
130
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Details of Board of Management remuneration in 2015
pursuant to the requirements of the German Corporate
Governance Code
The following tables show for each individual member of
the Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the reporting year and the retirement pension
expense in or for the reporting year in accordance with the
recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.
The total of "benefits granted" for financial year 2014
is calculated from
-
the base salary in 2014,
90
the taxable non-cash benefits and other fringe benefits
in 2014,
at the value for target achievement of 100%,
the half of the share-based annual bonus payable in 2016
for 2014 at the value for target achievement of 100%,
B.55
Benefits granted
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 Dec. 31,
2014
2015
max.
the half of the annual bonus payable in 2015 for 2014
94
379
2,750
0
919
Long-term variable remuneration
(plan period of 4 years)
1,161
1,237
0
2,750
1,237
0
1,274
Total
1,919
391
2,019
4,588
2,019
0
4,588
Retirement pension expense (service costs)
117
117
117
2,771
2,897
878
5,466
3,106
0
919
0
391
The pension agreements of some Board of Management members
include a commitment to an annual retirement pension, cal-
culated as a proportion of the former base salary and depending
on the number of years of service. Those pension rights were
granted until 2005 and remain valid; the same procedure was
applied for the relevant hierarchy level for Wilfried Porth for
the period before his membership of the Board of Management.
The pension rights have been frozen at that level, however.
Payments of these retirement pensions start upon request when
the term of service ends at or after the age of 60, or are paid
as disability pensions if the term of service ends before the age
of 60 due to disability. The respective agreements provide
for 3.5% annual increases starting when benefits are received
(with the exception that Wilfried Porth's benefits are adjusted
in accordance with applicable law). The agreements include
a provision by which a spouse of a deceased Board of Man-
agement member is entitled to 60% of that member's pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Retirement provision
Commitments upon termination of service
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
128
97
97
97
189
189
189
852
878
878
878
970
970
970
Annual variable remuneration
(50% of annual bonus, short-term)
379
391
0
919
391
0
919
Deferral (50% of annual bonus, medium-term)
379
1,087
5,675
Total remuneration
Total limit for components of remuneration
max.
2014
Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31,
min.
max.
758
781
781
781
62
758
781
781
781
93
107
107
107
8
431
493
493
493
851
888
888
888
70
Jan. 1 - Jan. 28,
Effective as of January 1, 2006, the pension agreements of the
Board of Management members were replaced by a new
arrangement, the “pension capital system". Under this system,
each Board of Management member is credited with a capital
component each year. This capital component comprises an
amount equal to 15% of the sum of the Board of Management
member's fixed base salary and the actual annual bonus, multi-
plied by an age factor equivalent to a rate of return of 6% until
2015 and 5% as of 2016 (Wolfgang Bernhard and Wilfried Porth:
5% for all years). These contributions to pension plans are
granted only until the age of 60. The benefit from the pension
plan is payable to surviving Board of Management members
at the earliest at the age of 60, even if retirement is before 60.
If a member of the Board of Management retires due to dis-
ability, the benefit is paid as a disability pension, even before
the age of 60.
Jan. 1 Dec. 31,
min.
2014
granted in the reporting year
4,971
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
5,058
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
5,058
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 131
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2014 (payable in 2018), and
the retirement pension expense in 2014 (service costs in
2014).
The total of "benefits granted” for financial year 2015
is calculated from:
-
the base salary in 2015,
- the taxable non-cash benefits and other fringe benefits
in 2015,
the half of the annual bonus payable in 2016 for 2015
at the value for target achievement of 100%,
the half of the share-based annual bonus payable in 2017
for 2015 at the value for target achievement of 100%,
the value when granted in 2015 (payable in 2019) of the
long-term share-based remuneration (PPSP), and
– the retirement pension expense in 2015 (service costs
in 2015).
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
Total
Wilfried Porth Andreas Renschler²
HR and Labor Relations Director,
Hubertus Troska
Greater China
IT & Mercedes-Benz Vans
Jan. 1 Dec. 31,
2015
1,189
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan." As before, the
new retirement benefit system features the payment of annual
contributions by Daimler, but is oriented toward the capital
market. Daimler makes a commitment to guarantee the total
of contributions paid, which are invested in the capital market
according to a precautionary investment concept. The Super-
visory Board of Daimler AG has approved the application of
this new system for all members of the Board of Management
newly appointed since 2012. The amount of the annual con-
tributions results from a fixed percentage of the base salary
and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is 15%.
This calculation takes into consideration the targeted level
of retirement provision for each Board of Management member
- also according to the period of membership - and the result-
ing annual and long-term expense for the Company. The contri-
butions to retirement provision are granted until the age of 62.
Payments under the pension capital system and the
Daimler Pensions Plan can be made in three ways:
- as a single amount;
Dr. Wolfgang Bernhard
2015
448
2,491
2014
380
2,565
Ola Källenius
2015
117
1,690
2014
Wilfried Porth
2015
Annual variable remuneration
(50% of annual bonus, short-term)
379
391
0
919
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 62,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, irrespective of his or her age
upon retirement.
39,238
827
1,274 1,274
1,044
- in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
- as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
37,925
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/
registered partner or dependent children is/are entitled to
the full committed amount in the case of the pension capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments, the heirs are entitled to the remaining
present value. In the case of a pension with benefits for surviving
dependents, the spouse/registered partner or dependent
children is/are entitled to 60% of the discounted terminal value
(pension capital), or the spouse/registered partner is entitled
to 60% of the actual pension (Daimler Pensions Plan).
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 129
Service costs for pension obligations according to IFRS amounted
to €3.5 million in 2015 (2014: €2.8 million). The present value
of the total defined benefit obligation according to IFRS amounted
to €80.0 million as of December 31, 2015 (December 31, 2014:
€80.5 million). Taking age and period of service into account, the
individual entitlements, service costs and present values are
shown in the table. 7 B.54
Commitments upon early termination of service
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus
pro rata for the period until the end of the contract of service
or of the Board of Management membership takes effect.
Entitlement to payment of the performance-related component
of remuneration with a long-term incentive effect that has
already been allocated is defined by the conditions of the respec-
tive plans. To the extent that the payments described above
are subject to the provisions of the so-called severance cap
of the German Corporate Governance Code, their total including
fringe benefits is limited to double the annual remuneration
and may not exceed the total remuneration for the remaining
period of the service contract.
Sideline activities of Board of Management members
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they are
disclosed in the notes to the annual company financial state-
ments of Daimler AG and on our website. In general, Board of
Management members have no right to separate remuneration
for board positions held at other companies of the Group.
Loans to members of the Board of Management
In 2015, no advances or loans were made to members
of the Board of Management of Daimler AG.
Payments made to former members of the Board
of Management of Daimler AG and their survivors
Payments made in 2015 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €15.5 million (2014: €16.8 million). Pension provisions
for former members of the Board of Management and their
survivors amounted to €235.2 million as of December 31, 2015
(2014: €263.0 million).
B.54
Departing Board of Management members with pension
agreements modified as of the beginning of 2006 receive, for
the period between the end of the last contract period and
reaching the age of 60, payments in the amounts of the pension
commitments granted as described in the previous section.
Departing Board of Management members are also provided with
a company car, in some cases for a defined period. These
payments are made until the age of 60, possibly reduced due
to other sources of income, and are subject to annual per-
centage increases described above in the explanation of these
pension agreements.
In thousands of euros
Individual entitlements, service costs and present values for members of the Board of Management
1,050
1,050
Dr. Dieter Zetsche
(for pension,
pension capital and
Daimler Pensions Plan)
2015
(for pension,
pension capital and
Daimler Pensions Plan)
Service cost
Annual pension
(as regulated until 2005)
as of age 60
Present value² of
obligations
2014
Risk category
Low
Production and technology risks
Impact
Opportunity category
Impact
Probability of occurrence
The following section deals with the company-specific risks
and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.60.
B.60
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group, and hence for the
achievement of corporate goals, are the brand image, design
and quality of the products - and thus their acceptance by
customers - as well as technical features based on innovative
research and development. Convincing solutions, which for
example promote accident-free driving or further improve our
vehicles' fuel consumption and emissions (e.g. diesel-hybrid
or electric vehicles), are of key importance for safe and sustain-
able mobility. Due to growing technical complexity, continually
rising requirements in terms of emissions, fuel consumption
and safety, and the Daimler Group's goal of meeting and
steadily raising its quality standards, product development
and manufacturing in the various automotive divisions are
subject to production and technology risks.
Company-specific risks and opportunities
In order to adapt to these requirements, Daimler has already
increased its local value added in major markets, and has thus
taken appropriate action in good time. On the basis of increasing
proximity to the markets of our production locations, however,
further opportunities also exist for the Daimler Group such as
logistical advantages or opportunities relating to the utilization
of market potentials.
Furthermore, the danger exists that individual countries will
attempt to defend and improve their competitiveness in the
world's markets by resorting to interventionist and protection-
ist actions. Particularly in China and the markets of develop-
ing countries and emerging economies, tendencies are increas-
ingly observed to limit growth in imports, for example by
making certification processes more difficult, and to attract
direct foreign investment by means of appropriate industrial
policies. Furthermore, a tendency towards stricter competition
law is also to be observed.
The position of the Daimler Group in key foreign markets could
also be affected by an increase in bilateral trade agreements.
If bilateral agreements are concluded without the involvement
of the European Union or without the conclusion of equivalent
agreements by the EU, the position of the Daimler Group could
be significantly impacted. At the same time, however, this could
also result in opportunities for the Daimler Group if the EU
concludes agreements with markets which have no similar agree-
ments with other important competitive markets.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development. The biggest challenge in the
coming years will be to offer an appropriate range of drive
systems and the right product portfolio in each market, while
fulfilling customers' wishes, internal financial targets and
statutory requirements. With an optimal product portfolio and
market-launch strategy, competitive advantages may also arise.
High
Company-specific risks and opportunities
Information technology risks
and joint ventures
Medium
Production and technology risks continue to have a low
probability of occurrence due to preventive measures. However,
because of the continually high number of new product
launches, the potential impact of such risks remains at the
same level.
Warranty and goodwill claims can arise when the quality
of the products of the automotive divisions does not meet
customers' expectations, when a regulation is not fully complied
with, or when support is not provided in the required form in
connection with product problems and product care. The Daimler
Group works continually and intensively to maintain product
quality at a very high level, even given the growing product com-
plexity, in order to avoid the danger of making corrections to
end products and in order to supply customers with the best pos-
sible products. Furthermore, processes are implemented at
the Daimler Group to regularly obtain customers' opinions on the
support provided so that our service and customer satisfaction
can be continuously improved.
Insufficient availability of vehicle components at the right
time and difficulties or interruptions in the supply chain, possibly
caused by regional restrictions, can lead to bottlenecks. In
order to avoid such bottleneck situations, priority is given to
foresighted capacity planning. In addition, supply chains and
the availability and quality of products are continuously monitored
within the context of managing the entire value chain. The
ongoing modernization of the production plants, supplier man-
agement and other monitoring activities help to prevent
risks in this area.
In principle, there is also a danger that due to infrastructure
problems, the failure of production equipment or a production
plant or in the external supply of energy, it might not be
possible to maintain the planned level of production, and that
would consequently generate costs. Such risks mainly exist
for the Mercedes-Benz Cars segment. The production equipment
is regularly maintained and as a precaution, spare parts are
held available for the production plants that might be at risk.
Innovation and technology opportunities for the progressive
and future-oriented design of the product range flow into the
strategic product planning of the automotive divisions.
In the context of a continuous process, checks are regularly
carried out as to whether the level of production can be
increased by means of shift work, the worldwide production
network, investment projects or more flexible production
facilities. In order to safeguard the long-term future orientation
of the Daimler Group's production facilities with regard to
the diversity of the product portfolio and in order to develop
additional production capacities to allow Daimler to grasp
the opportunities that are presented, continuous modernization,
expansion, construction and restructuring are carried out
at the locations of the Daimler Group and its joint ventures and
joint operations. The execution of modernization actions
and the launch of new products are generally connected with
high investments. Guidelines or delays in the ramp-up phase
of a new model or in connection with a product's lifecycle can
lead to a short-term reduction in production volumes. In order
to achieve a very high level of quality, which is one of the key
factors for a customer's decision to buy a product of the
Daimler Group, it is necessary to make investments in new prod-
ucts and technologies that sometimes exceed the originally
planned scope. This cost overrun would then reduce the antici-
pated earnings from the launch of a new model series or
product generation. Those automotive segments are affected
which are currently launching new products or planning to do
so, or carrying out related production expansions and modifi-
cations, in some cases in conformance with specific regional
conditions. In particular, the creation and expansion of production
capacities in the Chinese market is connected with risks due
to the uncertain market development. The establishment of effi-
cient production processes serves to manage quality risks
there. Furthermore, dependencies between contractual partners
and possible changes in the conditions in China must be
included in the local decision-making process.
147
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Low
Opportunities related to equity interests
and joint ventures
In addition to emission, fuel consumption and safety regulations,
traffic-policy restrictions for the reduction of traffic jams,
noise and pollution are becoming increasingly important in cities
and urban areas of the European Union and other regions of
the world. Drastic measures are increasingly being taken such
as general vehicle-registration restrictions like those in Beijing,
Guangzhou or Shanghai. This can have a dampening effect on
the development of unit sales, especially in growth markets.
Pressure to reduce personal transport is also being applied in
European cities through increasing measures such as restric-
tions or bans on vehicles in inner cities, as well as congestion
charges and other types of road-use fees. This stimulates
demand for mobility services, including car sharing services. In
order to utilize the resulting opportunities, Daimler is present
in the market with the provision of innovative mobility services
(e.g. car2go, moovel, RideScout and mytaxi).
Medium
Medium
Personnel opportunities
High
Medium
Personnel risks
Production and technology opportunities
Information technology opportunities
Low
Daimler currently does not anticipate any additional risks from
worldwide statutory safety regulations due to the Group's
longstanding strong focus on vehicle safety.
The Mercedes-Benz Cars segment faces risks in China in
particular, as the Chinese authorities have defined fleet fuel
consumption as of 2020 of 5.0 liters per 100 kilometers
(approximately 117 g CO2/km) as the industry's target for new
cars. For the year 2025, China has communicated in the
context of its "Made in China 2025" strategy an industry target
of 4.01/100 km (about 94 g CO2/km). If the manufacturer-
specific fleet targets are exceeded, there is the danger that
vehicles may not be granted type approval or may be barred
from the market. In addition, new emission legislation are
currently being discussed (China 6 and Beijing 6). A significant
tightening of the current legislation is expected.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
As the target achievement of the Daimler Financial Services
division is closely connected with the development of business
in the automotive divisions, the existing volume risks
and opportunities are also reflected in the Daimler Financial
Services segment. In this context, Daimler Financial Services
contributes towards marketing expenses, especially for adver-
tising campaigns.
Further risks and opportunities at Mercedes-Benz Cars and
Daimler Trucks relate to the development of the used vehicle
markets and thus to the residual values of the vehicles pro-
duced. As part of the established residual-value management
process, certain assumptions are made at the local and
corporate levels regarding the expected level of prices, on which
basis the cars returned in the leasing business are valued.
If general market developments lead to a negative or positive
deviation from the assumptions, there is a risk of lower residual
values or an opportunity of higher residual values of used cars.
Depending on the region and the current market situation, the
measures taken generally include continuous market monitoring
as well as, if required, price-setting strategies or sales pro-
motions designed to regulate vehicle inventories. The quality
of market forecasts is verified by periodic comparisons of
internal and external sources. If necessary, the set residual values
are adjusted and refined with regard to methods, processes
and systems for determining such values.
The Daimler Group's successful product portfolio is one
of the factors behind the advantageous positioning compared
to the competitors. A possible increase in competition and
price pressure is another area of risk that affects all the auto-
motive segments. Aggressive pricing policies, the introduction
of new products by competitors or price pressure related to the
aftersales business could make it impossible to achieve the
targeted prices. This might result in lower revenue or could mean
that the effect of cost-reduction programs is not fully reflected
in earnings. The extent of such risks is oriented towards a divi-
sion's sales volume. Depending on the volume of regional unit
sales, various measures are taken to support weaker markets.
They include the use of new sales channels, actions designed
to strengthen brand awareness and brand loyalty, and sales and
marketing campaigns. These measures can also be applied
to safeguard business in the area of aftersales. Daimler also
operates various programs to boost sales through the use
of financial incentives for customers. Corresponding measures
taken to support the segments' unit sales would adversely
affect the projected revenue. Continuous monitoring of competi-
tors is carried out in order to recognize such risks at an early
stage. Opportunities can arise in this context if sales-promotion
activities already planned do not have to be applied in full.
Some dealers and vehicle importers are in a difficult financial
situation. As a result, supporting actions may become neces-
sary to ensure the viability of such business partners. The sources
of the risks lay in the respective risk environments. Supporting
actions would negatively impact the profitability, cash flows and
financial position of the automotive segments. For this reason,
the financial situations of strategically relevant dealerships and
vehicle importers are continually monitored. Risks of this kind
exist for dealers and vehicle importers of the Mercedes-Benz
Cars, Daimler Trucks and Mercedes-Benz Vans divisions.
Existing uncertainties with regard to market developments
can also mean that the overall market or regional conditions for
the automotive industry might develop better than assumed
in the internal forecasts and the premises upon which the Group's
target planning is based. Due to strong demand, in particular
for vehicles of various series of the Mercedes-Benz Cars division,
market opportunities are conceivable that could be utilized
by creating additional production capacities or increasing the
divisions' production volumes. The possibility of higher unit
sales of vehicles exists in the Daimler Trucks segment as a result
of improved market developments or changed conditions in
the market. Further market opportunities have been identified
by the Mercedes-Benz Vans and Daimler Buses divisions.
However, the existing market opportunities of the divisions of
the Daimler Group can only be utilized if production and the
corresponding regional conditions can be focused accordingly
and gaps between demand and supply are recognized and
covered in good time. The measures that could be taken by the
Daimler Group to utilize potential opportunities include a
combination of local sales and marketing activities, central stra-
tegic product and capacity planning, and the adjustment
of production and cost structures to the changing conditions.
The assessment of market risks and opportunities is associ-
ated with assumptions and forecasts about the overall develop-
ment of markets in the various regions in which the Daimler
Group is active. The potential effects of the risks on the devel-
opment of the Daimler Group's unit sales are included in
risk scenarios. The danger of worsening market developments
or changed market conditions, especially due to the partially
unstable macroeconomic environment and political or business
uncertainties, generally exists for all divisions of the Daimler
Group and can cause changes relating to the planned unit sales
and inventories. Differences between the divisions exist due
to variations in their regional focus of activities. The development
of the markets is continuously analyzed and monitored by the
divisions; if necessary, specific marketing and sales programs
are implemented. Clear strategies have been formulated for
each division in order to ensure profitable growth and efficiency
progress.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
The risks and opportunities for the development of automotive
markets are strongly affected by the situation of the global
economy as described above.
General market risks and opportunities
On the global financial markets, a market environment with
relatively low liquidity could lead to significant market corrections
and phases of extreme volatility, for example when market
expectations with regard to central bank activities in the United
States or Europe are not fulfilled. Such developments could
impact the worldwide investment climate and have a negative
effect on the global economy. In addition, tensions resulting
from exchange-rate volatility and possible manipulations carried
out to preserve global competitiveness could lead to an
increase in protectionist measures and a type of "devaluation
race." This would put a substantial strain on world trade
and threaten future growth.
The conflict in Syria, which has heated up as a result of the
offensive of the "Islamic State" (IS), is threatening the stability
of the region, especially in neighboring Iraq. The severance of
diplomatic relations between Iran and Saudi Arabia is increasing
the tension in the region and reducing the chance of a settle-
ment of the current conflicts. Although most Iraqi oil production
facilities are located in regions not controlled by IS, concerns
still remain that Iraqi oil deliveries could be interrupted or that
the armed conflict in Syria could spill over into other areas.
An abrupt increase in oil prices brought about by an attack on
oil refineries could endanger the recovery in fragile European
economies or in the United States and could also negatively affect
emerging markets that depend on oil imports. However, if oil
prices remain at such a low level for a long time, this could
present a significant growth opportunity for the world economy
due to increased purchasing power. An additional factor is that
recent terror attacks by IS have shown that the conflict can no
longer be regarded as a regional risk. Should further attacks
or assassinations in Europe lead to a shock of uncertainty, invest-
ment and consumer confidence could be severely undermined
with a resulting impact on the real economy. In addition, state
spending for such purposes as coping with the refugee crisis
and for security actions could lead to rising fiscal deficits
in Europe. However, the suspension of the sanctions imposed
on Iran represents an opportunity. The resumption of eco-
nomic relations and an enormous need to catch up after the
end of the sanctions offer great growth potential in which
the divisions Mercedes-Benz Cars and above all Daimler Trucks
can participate.
The conflict between Russia and Ukraine has led to an addi-
tional risk for the development of the world economy since
2014. This risk has increased macroeconomic uncertainty and
has had a negative effect on the business climate and con-
sumer confidence. An escalation of the crisis and the resulting
tightening of sanctions and counter-sanctions would have a
massive negative impact on the economy, especially in Europe,
whereby the exact extent of this effect is very difficult to pre-
dict. It is conceivable that such an escalation would negatively
impact oil prices through a higher risk premium, and it would
also dampen sentiment and demand in markets that are highly
dependent on oil imports. Furthermore, the consequences of
a possible debt default by Russia or of its failure to service due
debts cannot be predicted.
Another risk is to be seen in a renewed weakening of growth
in the emerging markets. There have been disappointing
developments in recent years, especially in major economies
such as Russia and Brazil, although other countries such as
Indonesia and Turkey have also developed below their possibili-
ties. A combination of weak growth and high interest-rates
increases the risk of a rising number of defaults in those coun-
tries, especially in view of the substantial expansion of credit
in some cases over the past few years. A further drop in the price
of raw materials along with the interest-rate increase in the
United States could lead to renewed substantial capital outflows,
especially in raw-material exporting emerging countries. This
would worsen financing conditions above all in the emerging
markets, which are very dependent on foreign capital due to
their high current-account deficits and have high rates of foreign
debt. Financial-market turbulences going as far as currency
crises would be possible consequences and could have a massive
impact on the economies of the affected countries. As Daimler
is already very active in these countries or their markets play
a strategic role, this would have significantly negative effects
on the Group's prospective unit sales. An opportunity is to be
seen in the implementation of reforms occurring in important
emerging economies. If structural reforms are quickly and con-
sistently carried out in countries such as India or Indonesia,
flows of global capital into these countries would increase again,
resulting in new scope for growth. Furthermore, reduced
uncertainty in the international financial markets following the
first rise in interest rates in the United States could have
positive effects, especially on the economies of the emerging
markets.
demand for the automotive divisions in these regions. On the
other hand, a further opportunity is seen in an even stronger
development of the Chinese economy. This could be triggered
by the expansive monetary and fiscal policies taking rapid
effect, accompanied by a significant increase in consumption.
Strong growth in overall economic consumption would create
additional opportunities for the aforementioned divisions.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
142
Low
144 B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
ing on methods for measuring the CO2 emissions of heavy-
duty commercial vehicles that will probably have to be applied
as of 2018. We have to assume that the statutory limits will
be very difficult to meet in some countries. Very demanding
regulations for CO2 emissions are also planned or have been
approved for light commercial vehicles. This will present
a long-term challenge for Mercedes-Benz Vans in particular,
because the division primarily serves the heavy segment
of N1 vehicles. The European fleet of N1 vehicles may not emit
an average of more than 175 g CO2/km as of 2017 and not
more than 147 g CO2/km as of 2020; penalty payments may
otherwise be imposed. In the United States, Mercedes-Benz
Vans is affected to varying degrees by fuel-consumption and
greenhouse-gas regulations for both light-duty and heavy-
duty vehicles. The stricter limits planned for the years 2021
to 2027 will also affect Mercedes-Benz Vans.
Risks and opportunities relating to the leasing
and sales-financing business
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials.
There are also risks of capacity bottlenecks caused by supplier
delivery failures as well as risks of insufficient utilization of
production capacities at suppliers. In general, the possible impact
of risks related to the procurement market continues to be
assessed as "high". The risk situation relating to the probability
of occurrence decreased slightly compared with the previous
year and is now assessed as “low”. As in the previous year, only
minor opportunities are anticipated in the raw-material markets.
146
Strict regulations for the reduction of vehicles' emissions and fuel
consumption create potential risks also for the Daimler Trucks
division. For example, legislation was passed in Japan in 2006 and
in the United States in 2011 for the reduction of greenhouse-
gas emissions and fuel consumption by heavy-duty commercial
vehicles. In the United States, a draft was proposed in July
for fuel-consumption and greenhouse-gas legislation, which will
probably have to be complied with starting in the period of
2021 to 2027. As the legislation will not be passed until mid-2016,
the consequences for Daimler Trucks cannot yet be fully
assessed. In China, legislation has been drafted which is likely
to affect exports to that country and require additional expen-
diture as of 2017. The European Commission is currently work-
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive type approval if their air-conditioning
units are filled with a refrigerant that meets certain criteria with
regard to climate friendliness. For vehicles produced on the
basis of type approvals granted previously, the directive allows
a period of transition until December 31, 2016. Mercedes-Benz
vehicles will fully comply with these legal requirements as of
January 1, 2017 through the application of CO2 air-conditioning
and the refrigerant R1234yf in combination with a specially
developed safety device that will be used depending on each
vehicle's configuration. In December 2015, the EU Commission
decided to file a lawsuit with the European Court of Justice
(ECJ) against the Federal Republic of Germany. The Commission
sees a contravention of the type-approval directive by the
German authorities. At present, the Group does not assume
that this will result in material effects on profitability, cash
flows or financial position.
In 2015, the diesel technology that is important in particular
for the achievement of the challenging CO₂ targets in the EU
came under pressure due to air-quality problems in cities
(failure to meet NOx limits) and increasingly due to competitors'
irregularities in the fulfilment of emission tests. In this environ-
ment, large parts of the Real Driving Emission (RDE) legislation
has been or is being introduced. This has led to very ambitious
legislation, which will require very complex exhaust-gas aftertreat-
ment as of 2017. It remains to be seen to what extent the nega-
tive headlines and the threat of driving bans on diesel vehicles
have unsettled customers with resulting shifts in the drive-
system portfolio (fewer diesel and more gasoline engines).
If such a shift occurs over the long term, additional measures
will have to be taken to meet the CO2 fleet limits as of 2020.
We draw attention to the fact that several environmental autho-
rities in Europe and in the USA have made requests for test
results. Some requests were answered without any findings
whereas other discussions still continue.
Daimler gives these targets due consideration in its product plan-
ning. The increasingly ambitious targets require significant
proportions of plug-in hybrids or cars with other types of electric
drive. The market success of these drive systems is greatly
influenced by regional market conditions, for example the battery-
charging infrastructure and state support. But as market condi-
tions cannot be predicted with certainty, a residual risk exists.
Similar legislation exists or is being prepared in many other
countries, for example in Japan, South Korea, India, Canada,
Switzerland, Mexico, Saudi Arabia, Brazil and Australia.
Legislation in the United States on greenhouse gases and fuel
consumption stipulates that new car fleets in the United States
may only emit an average of 163 grams of CO2 per mile as of
2025 (approximately 100 grams CO2 per kilometer). These new
regulations will require an average annual reduction in CO2
emissions as of 2017 amounting to 5% for cars and 3.5% at first
for SUVs and pickups (this rather lower rate applies until 2022).
This will impact the German premium manufacturers and
thus also the Mercedes-Benz Cars division harder than the US
manufacturers, for example. As a result of strong demand for
large, powerful engines in the United States as well as Canada,
financial penalties cannot be ruled out.
In Germany, there have been considerations of stimulating
the hitherto sluggish sales of electric vehicles with a government
program. The concepts for incentives for car buyers include a
discussion of financing. This involves the risk that conventional
vehicles would suffer a higher burden in the form of a new
registration fee for the financing of incentives (also depending
on CO2 emissions). This also applies to the taxation of com-
pany cars, which could cause fleet customers to switch over
to smaller and more fuel-efficient cars.
Regulations concerning the CO2 emissions of new cars are
challenging also in the European Union. As of 2020, fleet-average
CO2 emissions of 95 g CO2/km are to be achieved across the
industry. The new regulation will apply to 100% of the fleet in 2021
following a one-year transition period. Daimler will suffer
penalties if it exceeds the limits resulting from the average fleet
vehicle weight (€95 per g CO2/km and vehicle). In addition,
the planned replacement of the NEDC (New European Driving
Cycle) with the WLTP (Worldwide Harmonized Light Vehicles
Test Procedure) is creating uncertainty, as neither the date
for the introduction of the WLTP nor the conditions for converting
from WLTP to NEDC figures to check the NEDC fleet target
(by foreseeably 2020) or the continuation of fleet targets in WLTP
figures (from foreseeably 2021) has been finally set. Based
on current information, the changeover to the WLTP will make
it more difficult to meet CO2 targets as of 2020.
Many countries have already implemented stricter regulations
to reduce vehicles' emissions and fuel consumption, or are
currently doing so.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 145
The risks and opportunities from the legal and political frame-
work also have a considerable impact on Daimler's future
business success. Regulations concerning vehicles' emissions,
fuel consumption and safety play a particularly important
role. Complying with these varied and often diverging regulations
all over the world requires strenuous efforts on the part of the
automotive industry. In the future, we expect to spend an even
larger proportion of the research and development budget to
ensure the fulfillment of these regulations. The probability of risks'
occurrence has not changed compared with the previous
year and is assessed as "medium"; the assessment of possible
impact remains unchanged at “high”.
and political framework
Risks and opportunities related to the legal
In connection with a further decrease in unit sales in major
emerging markets, the Daimler Trucks division in particular
is faced with the risk that Daimler will require a significantly
lower volume of components from suppliers than originally
planned. This would result in underutilization of production
capacities for the suppliers. If fixed costs were no longer
covered, there would be the risk of suppliers demanding com-
pensation payments.
Supplier risk management aims to identify potential financial
difficulties for suppliers at an early stage and to initiate suitable
countermeasures. Even though the crisis of recent years is
over, the situation of some of the suppliers remains difficult
due to tough competitive pressure. This has necessitated
individual or joint support actions by vehicle manufacturers
to safeguard their production and sales. In the context of
supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals
and made corresponding internal assessments. On these dates,
the suppliers report key performance indicators to Daimler
and decisions are made concerning any required support actions.
Raw-material prices primarily remained constant with some
falls during 2015 and featured moderate volatility. The weaker
euro against the dollar at the beginning of the year had a major
impact on all raw materials priced in US dollars. Due to almost
completely unchanged macroeconomic conditions, price fluc-
tuations are expected with uncertain and uneven trends in
the near future. On the one hand, raw-material markets can be
strongly impacted by political crises and uncertainties - combined
with possible supply bottlenecks - as well as by volatile
demand for specific raw materials; this increases the risk from
raw-material prices for the individual automotive segments.
On the other hand, the automotive segments' procurement oper-
ations profit from both the significantly lower dynamism of
Chinese industry and from the anticipated continuation of slightly
below-average growth of the world economy. Vehicle manu-
facturers are generally limited in their ability to pass on the higher
costs of commodities and other materials in the form of
higher prices for their products because of strong competitive
pressure in the international automotive markets. A drastic
increase in raw-material prices would at least temporarily result
in a considerable reduction in economic growth.
In connection with the sale of vehicles, Daimler also offers its
customers a wide range of financing possibilities - primarily
leasing and financing the Group's products. The resulting risks
for the Daimler Financial Services segment are mainly due
to borrowers' worsening creditworthiness, so that receivables
might not be recoverable in whole or in part due to customers'
insolvency (default risk or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods and the collateral-
ization of receivables, as well as state-of-the-art risk man-
agement with a firm focus on monitoring both internal and macro-
economic leading indicators. Other risks associated with the
leasing and sales-financing business involve the possibility of
increased refinancing costs due to changes in interest rates
(interest-rate risk). An adjustment of credit conditions for cus-
tomers in the leasing and sales-financing business due to
higher refinancing costs could reduce the new business and
contract volume of Daimler Financial Services, also reducing
the unit sales of the automotive divisions. Risks and opportunities
also arise from a lack of matching maturities with refinancing.
The risk of mismatching maturities is minimized by coordinat-
ing the refinancing with the periods of financing agreements,
from the perspective of interest rates as well as liquidity. Any
remaining risks from changes in interest rates are managed
by the use of derivative financial instruments. Further information
on credit risks and the Group's risk-minimizing actions is pro-
vided in Note 32 of the Notes to the Consolidated Financial
Statements. With regard to the leasing business, the auto-
motive divisions also have a residual-value risk resulting from
the risks associated with the development of used-vehicle
prices. The extent of the risks and opportunities and the proba-
bility of occurrence of the risks relating to the leasing and
sales-financing business continue to be assessed as low.
The impact of the risks continues to be assessed as "high".
Due to market volatility, the overall market risk increases to more
than €3 billion. The impact of opportunities has risen, due in
particular to market opportunities in the Mercedes-Benz Cars
segment.
Assessment of probability of occurrence and possible impact
138
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
The tasks of the employees responsible for risk and opportunity
management include, besides identification and assessment,
the development of measures and the initiation of such measures,
if necessary. The objective of such measures is to avoid, reduce
or transfer risks. The utilization or enhancement of an opportunity,
and its partial or full implementation, also require measures
to be taken. The cost-effectiveness of a measure is assessed
before its implementation. The development of all risks and
opportunities of the individual entities and of the related counter-
measures that have been initiated are continually monitored.
Risk and opportunity controlling at the Daimler Group takes place
at the level of the divisions based on individual risks and
opportunities.
The internal control and risk management system with
regard to the accounting process has the objective of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recognized
framework for internal control systems of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO
Internal Control - Integrated Framework), is continually devel-
oped further and is an integral part of the accounting and financial
reporting process in all relevant legal entities and corporate
functions. The system includes principles and procedures as well
as preventive and detective controls. Among other things,
it is regularly checked, if
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
- transactions within the Group are fully accounted
for and properly eliminated;
- issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
processes are established to guarantee the completeness
of financial reporting;
processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the
context of preparing financial statements and authorization
and access rules exist for relevant IT accounting systems.
The quantification of each risk and opportunity category in the
Management Report summarizes the individual risks and
opportunities for each category. If the impact of an individual
risk exceeds the amount of €2 billion, this risk is described
separately in the Management Report. If not otherwise presented,
even in the case of simultaneous occurrence of all individual
risks in a risk category, the Group does not expect any effect
in this category of more than €3 billion. In the context of
describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of a risk analysis and the definition of
control. Significant risks are identified relating to the process
of corporate accounting and financial reporting in the main legal
entities and corporate functions. The controls required are
then defined and documented in accordance with Group-wide
guidelines. Random samples are regularly tested to assess
the effectiveness of the controls. Those tests constitute the basis
for self-assessment of the appropriate magnitude and effec-
tiveness of the controls. The results of this self-assessment are
documented and reported in a global IT system. Identified
weaknesses are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal
entities and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to
the corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are
regularly informed about the main control weaknesses and the
effectiveness of the control mechanisms installed. However,
the internal control and risk management system for the account-
ing process cannot ensure with absolute certainty that material
false statements in accounting are avoided.
140
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In order to ensure the complete presentation and assessment
of material risks and risks threatening the existence of the Group,
as well as the control and risk processes with regard to the
corporate accounting process, Daimler has established the Group
Risk Management Committee. It is composed of represen-
tatives of Finance & Controlling, Accounting, Legal and Group
Compliance, and is chaired by the Board of Management
Member for Finance & Controlling and Daimler Financial Services.
The internal auditing department contributes material
findings on the internal control and risk management system.
In addition to dealing with fundamental issues, the committee
has the following tasks:
The GRMC defines and designs the framework conditions
with regard to the organization, methods, processes and
systems that are needed to ensure a functional, group-wide
and holistic control and risk management system.
The GRMC regularly reviews the effectiveness and functionality
of the installed control and risk management processes.
Minimum requirements can be laid down in terms of the design
of the control processes and of risk management and neces-
sary and appropriate measures can be initiated to eliminate any
system failings or weaknesses identified. The measures
taken by the GRMC ensure that relevant risks and process
weaknesses that might exist are identified and eliminated
as early as possible.
However, responsibility for operational risk management
and for the control and risk management processes with
regard to the corporate accounting process remains directly
with the divisions, corporate functions and legal entities.
Reports regarding the current risk situation and the effective-
ness, functionality and appropriateness of the internal
control and risk management system are regularly presented
to the Board of Management and to the Audit Committee
of the Supervisory Board of Daimler AG. Furthermore, the respon-
sible managers regularly discuss the risks of business opera-
tions with the Board of Management.
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The internal auditing department monitors whether
the statutory conditions and the Group's internal guidelines are
adhered to in the Group's monitoring and risk management
system. If required, measures are then initiated in cooperation
with the respective management. External auditors audit
the system for the early identification of risks that is integrated
in the risk management system for its general suitability to
identify risks threatening the existence of the Group; in addition,
they report to the Supervisory Board on any significant
weaknesses that have been recognized in the internal control
and risk management system.
The organizational embedding and monitoring of risk
and opportunity management takes place through the risk
management organization established at the Group. The
divisions, corporate functions and legal entities are asked
to report about concrete risks and opportunities at regular
intervals. This information is passed on to Corporate Risk
Management, which processes the information and provides
it to the Board of Management and the Supervisory Board
as well as to the Group Risk Management Committee (GRMC).
B.58 and is conducted before measures are imple-
At the Daimler Group, risks below €500 million are categorized
as low, between €500 million and €1 billion as medium and above
€1 billion as high. Risk management is based on the principle
of completeness. This means that at the level of the individual
entities, all concrete risks enter the risk management process.
General uncertainties without any clear indication of a possible
effect on earnings are monitored by the internal control system
(ICS). The assessment of the dimensions probability of occur-
rence and possible impact is based on the levels shown
in table
mented.
Risk assessment takes place on the basis of the probability
of occurrence and the possible impact of the risk according
to the levels low, medium and high. These levels also apply
to the potential impact of opportunities. An analysis of the
probability of occurrence is not conducted here. When assess-
ing the impact of a risk, the effect in relation to EBIT is
basically considered.
Level
Low
Medium
High
Probability of occurrence
0% < Probability of occurrence ≤ 33%
33% < Probability of occurrence ≤ 66%
66%< Probability of occurrence < 100%
< €500 million
< €1 billion
Level
Low
Possible impact
€0 <
Medium
€500 million ≤
High
Impact
Impact
Impact
≥ €1 billion
Risk and opportunity management system
The risk management system with regard to material and
existence-threatening risks is integrated into the value-based
management and planning system of the Daimler Group.
It is an integral part of the overall planning, management and
reporting process in the legal entities, divisions and corporate
functions. The risk management system is intended to system-
atically and continually identify, assess, control, monitor and
report material risks and risks threatening Daimler's existence,
in order to ensure the achievement of corporate targets and
to enhance risk awareness at the Group.
The opportunity management system at the Daimler Group
is derived from the risk management system. The objective
of opportunity management is to recognize the possible oppor-
tunities arising in business activities as a result of positive
developments at an early stage and to utilize them as optimally
as possible for the Group by taking appropriate measures.
Taking advantage of opportunities may lead to an overachieve-
ment of planned goals. Opportunity management considers
those opportunities that are relevant and implementable, but
which have not yet been included in any planning.
-
In the context of operational planning, risks and opportunities
with consideration of appropriate risk and opportunity
categories are identified and assessed generally for a two-year
planning period. Furthermore, the discussions for the deriva-
tion of mid-term and strategic targets in the context of strategic
planning include the identification and assessment of risks
and opportunities relating to a longer period. The reporting of
risks and opportunities in the Management Report generally
relates to a period of one year. Besides the reporting at specific
times and with reference to the described periods, risk and
opportunity management is established as a continuous task
within the Group. In addition to the regular reporting, there
is also an internal reporting obligation within the Group for risks
with reporting relevance arising unexpectedly. The Group's
central corporate risk management regularly reports the identi-
fied risks and opportunities to the Board of Management
and the Supervisory Board.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 139
Risks and opportunities
B.58
The following section describes the risks and opportunities that
can have a significant influence on the profitability, cash
flows and financial position of the Daimler Group. In general,
the reporting of risks and opportunities takes place for
the individual segments. If no segment is explicitly mentioned,
the risks and opportunities described relate to all the
automotive divisions.
Industry and business risks and opportunities
Low
High
General market opportunities
High
Opportunities relating to leasing
Low
and sales financing
Low
Low
High
Low
Opportunities relating to the legal
Medium
Information and technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer benefits
and enterprise value. However, it includes risks from the
increasing dependency of products and business processes
on IT. In addition, specific risks exist due to the use and avail-
ability of new technologies in connection with digitization, which
for example can affect the products, their use or the opera-
tional business. It is still essential for a global company like
Daimler that information is maintained and exchanged in
real time, comprehensively and correctly. Appropriately secure
IT systems and a reliable IT infrastructure must be used in
order to protect information. Risks that could result in the inter-
ruption of business processes due to the failure of IT systems
or which could cause the loss or corruption of data are therefore
identified and evaluated over the entire lifecycles of applica-
tions and IT systems. Daimler has defined suitable measures for
risk avoidance and limitation of damage. These measures are
continually adapted to changing circumstances. For example,
the Group minimizes potential interruptions of operating
routines in the data centers by means of mirrored data sets,
decentralized data storage, outsourced archiving, high-
availability computers and appropriate emergency plans. An IT-
security operations center coordinates potential danger from
cyber crime and hacker attacks. Daimler utilizes various preven-
tive and corrective measures in order to meet the growing
demands placed on the confidentiality, integrity and availability
of data. Necessary precautions are taken also for the protec-
tion of the products and services of the Daimler Group. Despite
all the precautionary measures taken, Daimler cannot com-
pletely rule out the possibility that IT disturbances will arise and
have a negative impact on the Group's business processes.
The impact and probability of occurrence of IT risks remain
unchanged compared to the prior year.
and political framework
The Daimler Group's divisions are exposed to a large number
of risks that are directly linked with business activities.
A risk is understood as the danger that events, developments
or actions will prevent the Group or one of its divisions from
achieving its targets. It is also important for the Daimler Group
to identify opportunities so that they can be utilized as part of
Daimler's business activities, thus safeguarding and enhancing
the Daimler Group's competitiveness. An opportunity is under-
stood as the possibility to surpass the planned targets as a result
of events, developments or actions. The divisions have direct
responsibility for recognizing and managing business risks and
opportunities at an early stage. As part of the strategy pro-
cess, risks related to the planned long-term development and
opportunities for further profitable growth are identified and
integrated into the decision-making process. In order to identify
risks and opportunities at an early stage and to assess and
manage them consistently, Daimler applies effective management
and control systems, which are integrated into a risk and
opportunity management system. Risks and opportunities are
not offset. The system is described below.
Risk and Opportunity Report
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Procurement market opportunities
Medium
Impact
Opportunity category
The following section describes the industry and business
risks and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.59.
Economic risks and opportunities
Economic risks and opportunities constitute the framework
for the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of
these risks and opportunities. Overall economic conditions have
a significant influence on automobile sales markets. Their
development is one of the Group's major risks and opportunities.
Like the majority of economic research institutes, Daimler
expects the world economy to remain within its rather below-
average growth corridor of 2.5 to 3.0% in 2016. Economic
developments in 2015 are described in detail in the "Economic
Conditions and Business Development" section of this
Management Report; growth assumptions for 2016 are explained
in the "Outlook" section pages 79 ff and 152 ff.
Economic risks and opportunities are linked with assumptions
and forecasts on the general development of the individual
subjects. Overall, economic risks for the business environment
have tended to increase compared with the previous year,
and the opportunities for an improvement of the world economy
have slightly decreased.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 141
The ongoing growth dynamism of the US economy will be
mainly determined by reactions to the first increases in interest
rates by the central bank after such a long phase of extremely
low rates. Excessively fast increases in interest rates by the
US Federal Reserve (Fed) would have a significantly negative
impact on the US economy. Rising interest on loans could reverse
the recovery of the real-estate market and dampen companies'
investments. If the weakening of industrial activity that was to
be observed as of mid-2015 exacerbates, there will be a
perceptible impact on the growth of the US economy in 2016.
If the recovery of the labor market falters or if wages rise
more slowly than currently assumed, there will be negative conse-
quences for private consumption, which is now the main
driver of US economic growth. Political uncertainty in advance
of the presidential election in 2016 could also impact con-
sumer and investor confidence. Although the Fed could coun-
teract significantly weakening growth through its monetary
policy, it would have little scope for action in this field, so the
effectiveness of the potential measures would be limited.
A possible renewed wave of expansive measures would also
further increase the danger of speculative bubbles. Such a
development would have significant consequences because
the Daimler Group (especially the Mercedes-Benz Cars and
Daimler Trucks divisions) generates a considerable volume of its
unit sales in the United States and diminished growth could
also spread to other regions. However, if investment activity
in the United States turns out to be significantly more dynamic
than previously assumed, this could result in substantially
stronger growth. The resulting increased employment and income
effects could boost demand for all the automotive divisions.
If there is no continuation of the required consolidation of state
budgets and of reform efforts in the countries of the European
Monetary Union (EWU), this could cause renewed turmoil in the
financial markets, leading to increasing refinancing costs
through rising capital-market interest rates and thus jeopardizing
the still only moderate economic recovery. The extremely low
rate of inflation harbors an additional risk in that a long-lasting
and broad-based fall in prices would constitute a considerable
threat to the economic recovery of the EMU and make it even
more difficult for the debt-ridden countries of the euro zone to
finance their debts. Furthermore, there is concern that the very
expansive monetary policy of the European Central Bank could
further increase the danger of speculative bubbles in the stock
and bond markets. Major turbulence in the financial markets
would directly impact the economic outlook. Although the agree-
ment reached between Greece and its creditors in the summer
of 2015 reduced the direct risk of Greece's exit from the euro
zone, that risk is by no means completely removed. A return
to that discussion could lead to renewed uncertainty and volatility
in the financial markets. A new factor is the risk of the United
Kingdom's exit from the European Union. This would have signifi-
cantly larger economic effects, whereby a major portion of
the risk would relate to the UK itself. The possible burden on the
British economy would be immense. The European market
continues to be very important for Daimler across all divisions;
for the Mercedes-Benz Cars and Mercedes-Benz Vans divi-
sions, it is in fact still the biggest sales market. An opportunity
that is difficult to assess can be seen in a significantly improved
economic development in the euro zone. If countries such as
Italy and France implement reform measures more quickly and
decisively than has so far been assumed, economic growth
could also accelerate. That would benefit the development of
investment and demand for motor vehicles in the important
European market.
In Japan, the failure of the country's expansive monetary and
fiscal policy and the lack of structural reforms could trigger a
significant growth slowdown or recession, although this should
be regarded as a regionally limited risk. A slowdown of eco-
nomic growth could lead to lower demand for cars and trucks,
which in turn could negatively affect the Mercedes-Benz Cars
and Daimler Trucks divisions, for which Japan is an important
sales market. A regionally limited opportunity exists in the
possibility of a distinct acceleration of economic growth in Japan.
This could be caused by a significant increase in investment
activity, resulting from the targeted structural reforms and the
expansive monetary and fiscal policies that have already
been initiated. The Mercedes-Benz Cars and Daimler Trucks
divisions could then benefit from this positive development.
Due to China's enormous importance as a growth driver for the
world economy in recent years, an economic downturn in
China would represent a considerable risk to the world economy.
The stock-market slumps in the summer of 2015 and at the
beginning of 2016, the volatile development of the real-estate
sector along with falling exports and increasing capital out-
flows are indicators of structural weaknesses. If these structural
problems become more severe than currently assumed and
the growth slowdown turns out to be more pronounced as
a consequence, the world economy would cool off significantly.
Another factor is the significant risk inherent in the enormous
growth in debt that has been observed since the global financial
crisis, especially in the corporate sector. If the growth slow-
down results in an excessive increase in credit defaults, this could
lead to turbulences in the banking sector and the financial
markets. China is now a key sales market for the Mercedes-Benz
Cars and Mercedes-Benz Vans divisions in particular, which
means that any disruptions caused by the aforementioned risks
could result in lower-than-planned growth in unit sales. In addi-
tion, a drop in demand in China would further exacerbate the fall
in the price of oil and other raw materials, with extremely
disadvantageous effects for raw-material exporting countries
worldwide. This would have a massive negative impact on
B.59
Industry and business risks and opportunities
Risk category
General market risks
Risks relating to leasing
and sales financing
Procurement market risks
Risks relating to the legal
and political framework
Probability of occurrence Impact
In addition, risks and opportunities that are not yet known
or classified as not material can influence profitability, cash
flows and financial position.
High
Risks related to equity interests
Low
Low
Commodity price risks
Interest rate opportunities
Low
Low
Interest rate risks
Exchange rate opportunities
High
We aim to achieve a sustainable dividend development also
in the coming years. In setting the dividend, our target is
to distribute approximately 40% of the net profit attributable
to Daimler shareholders.
Low
Forward-looking statements:
Against this backdrop, we look to the year 2016 with confidence.
Everything indicates that we will continue along our growth
path. We anticipate higher unit sales, revenue and earnings than
in the previous year.
- We have significantly increased our investment in the future
of the Company on the basis of sound finances.
We have continuously expanded our worldwide production
network in recent years, thus creating the right conditions
for further growth.
- With the efficiency programs that have been implemented in
all divisions in recent years, we have improved our cost
structures on a sustained basis. On that basis, we are taking
measures for the long-term and structural optimization
of the business system, which will facilitate further efficiency
gains in the coming years.
- We have assumed a leading role in the automotive industry
with the digitization of our products and processes.
Also in the field of drive systems, we meanwhile set the
standards with our cars and commercial vehicles. For example,
we reduced the average CO2 emissions of the cars we sell
in the European Union to 123 g/km in 2015, thus achieving the
target set for 2016 of 125 g/km ahead of time. With new
and highly efficient engines and the particularly economical
plug-in hybrids and new electric vehicles, we will significantly
reduce CO2 emissions in the coming years.
In the technologies that are decisive for the future of individual
mobility, we have achieved a competitive advantage with
pioneering innovations.
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe,"
"estimate," "expect," "intend," "may," "can," "could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a worsening of the sovereign-debt
crisis in the euro zone; an increase in political tension in Eastern Europe;
a deterioration of our refinancing possibilities on the credit and financial mar-
kets; events of force majeure including natural disasters, acts of terrorism,
political unrest, armed conflicts, industrial accidents and their effects on our
sales, purchasing, production or financial services activities; changes in
currency exchange rates; a shift in consumer preferences towards smaller,
lower-margin vehicles; a possible lack of acceptance of our products or
services which limits our ability to achieve prices and adequately utilize our
production capacities; price increases for fuel or raw materials; disruption
of production due to shortages of materials, labor strikes or supplier insol-
vencies; a decline in resale prices of used vehicles; the effective implemen-
tation of cost-reduction and efficiency-optimization measures; the business
outlook for companies in which we hold a significant equity interest; the
successful implementation of strategic cooperations and joint ventures;
changes in laws, regulations and government policies, particularly those
relating to vehicle emissions, fuel economy and safety; the resolution of
pending government investigations and the conclusion of pending or
threatened future legal proceedings; and other risks and uncertainties,
some of which we describe under the heading "Risk and Opportunity
Report" in this Annual Report. If any of these risks and uncertainties materi-
alizes or if the assumptions underlying any of our forward-looking state-
ments prove to be incorrect, the actual results may be materially different
from those we express or imply by such statements. We do not intend or
assume any obligation to update these forward-looking statements since
they are based solely on the circumstances at the date of publication.
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups and utilizing additional market
potential.
Dividend
In order to achieve our ambitious growth targets, we will expand
our product range in the coming years and develop additional
production and distribution capacities. We also want to make
sure that we can play a leading role in the far-reaching
technological transformation of the automotive industry. This
applies in particular to the digital connectivity of our products
and processes along the entire value chain. For this purpose,
we will once again significantly increase our already very high
investment in property, plant and equipment in the year 2016.
The Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz
Vans divisions will account for this increase. In addition to capital
expenditure, we are developing our position in the emerging
markets by means of targeted financial investments in our hold-
ings. That includes the expansion of our car production
capacities in China, together with our partner BAIC.
We assume that the Daimler Group's revenue will grow slightly
in 2016. Daimler will therefore continue along its growth path.
The most positive aspect is the ongoing growth in unit sales by
the automotive divisions.
Without exception, our divisions currently have a very attractive
and particularly competitive product range, which has been
expanded and consistently renewed in recent years. We there-
fore assume that Daimler will profit to an above-average
extent from the slight growth in global demand for automobiles
that we expect for 2016, and will be able to strengthen its posi-
tion in important markets. At Mercedes-Benz Cars, additional
growth this year will be driven above all by the new SUVs and
the new E-Class models. The other automotive divisions are
also extremely well positioned with their products, and
Daimler Financial Services' new business will profit from further
growth in unit sales. We anticipate significant revenue growth
at Mercedes-Benz Cars and Mercedes-Benz Vans and expect
Daimler Trucks and Daimler Buses to post revenue in the
magnitude of the previous year. We assume that the Daimler
Financial Services division will slightly increase its revenue.
In regional terms, we expect the highest growth rates in Asia
and Western Europe, but our business volumes should expand
also in the other regions. In particular in China, we have
created the right conditions for further growth with new sales
outlets and additional production capacities. But the continuing
growth in unit sales in China will have a disproportionately
low impact on revenue growth, as the share of local production
will increase. Our Chinese associated company Beijing Benz
Automotive China (BBAC) is included in our consolidated finan-
cial statements using the equity method of accounting.
The growth in unit sales and revenue that we anticipate will
have a positive impact on earnings in 2016.
We have laid the foundations for a lasting high level of earnings
with the programs "Fit for Leadership" at Mercedes-Benz Cars,
"Daimler Trucks #1" at Daimler Trucks, "Performance Vans" at
Mercedes-Benz Vans and "GLOBE 2013” at Daimler Buses.
With these programs, we achieved total profit contributions of
approximately €4 billion by the end of 2014, by taking mea-
sures for sustained improvements in cost structures as well as
through additional business activities. The full effect of these
programs was already reflected in 2015. In addition to these
measures for improved cost structures with short-term
effects, we are taking measures in all divisions for the long-term
structural optimization of our business system. In all divisions,
we are standardizing and modularizing our production processes,
for example with the intelligent use of vehicle platforms to
achieve further cost advantages. In parallel, we are pushing
forward with digital connectivity: in all divisions and along
the entire value chain - from development to production to sales
and service. This gives us additional scope to become faster,
more flexible and more efficient - for the benefit of our customers.
These long-term structural measures already had a positive
impact on earnings in 2015, and will facilitate further efficiency
gains in the coming years.
There will be opposing effects, however, from the ongoing high
expenditure for our model offensive, for innovative technologies
for the digitization of our products and processes, and for the
expansion and modernization of our worldwide production
facilities. As a result, our expenditure aimed at securing our
successful future will once again be higher in 2016 than in
the previous year.
page 71
After the development of currency exchange rates had an over-
all very positive impact on revenue and earnings in the year
2015, this effect is likely to be significantly less pronounced in
2016. Last year, the appreciation of the US dollar and some
other currencies such as the Chinese renminbi led to positive
exchange-rate effects. There were also some significant
negative effects, in particular from the depreciation of the
Russian ruble.
At the Mercedes-Benz Cars division, we will significantly
increase our capital expenditure in 2016. The most important
projects include the new E-Class family, the successor
models to the current compact class and new gasoline and
diesel engines. Substantial investment is planned also for
the expansion of our German production sites as competence
centers, as well as for the expansion of our international pro-
duction network. Daimler Trucks will mainly invest in successor
generations of existing products, the expansion and modern-
ization of the plants, and new global component projects in 2016.
At Mercedes-Benz Vans, the focus will be on further deve-
loping the existing model range, expanding the sales-and-service
organization and establishing production of the Sprinter in
the United States. Key projects at Daimler Buses are advance
expenditures for new models and product enhancements
and the new bus plant in India.
On the basis of the anticipated market development, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT from the ongoing business will
increase slightly in 2016.
-
Mercedes-Benz Vans: slightly above the prior-year level,
Daimler Buses: slightly above the prior-year level, and
Daimler Financial Services: slightly above the prior-year level.
156 B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Free cash flow and liquidity
The anticipated development of earnings in the automotive
divisions will have a positive impact on the free cash flow of
the industrial business also in 2016. With regard to the free
cash flow in the year 2015, it is necessary to consider that it
was affected by extraordinary contributions to the German
and American pension plan assets of €1.2 billion as well as by
the acquisition of stakes in the digital mapping business,
HERE, and in the US telematics provider, Zonar Systems, in a
total amount of €0.7 billion. As we will continue and intensify our
investment offensive in products and technologies, the free
cash flow of the industrial business adjusted for special items
should be significantly lower in 2016 than the comparable
amount of €5.9 billion in 2015. We assume, however, that it will
be significantly higher than the dividend distribution in the
year 2016.
For the year 2016, we aim to have liquidity available in a volume
appropriate to the general risk situation in the financial mar-
kets and to Daimler's risk profile. When measuring the level of
liquidity, we give due consideration to possible refinancing
risks caused for example by temporary distortions in the finan-
cial markets. We continue to assume, however, that we will
have very good access to the capital markets and bank markets
also in the year 2016. We want to cover our funding needs in
the planning period primarily by means of bonds, commercial
paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans
from globally and locally active banks. In view of the very good
liquidity situation of the international capital markets and
our strong creditworthiness, we expect a continuation of very
attractive refinancing conditions in 2016. An additional goal
is to continue securing a high degree of financial flexibility.
Investment
For the individual divisions, we have set ourselves the following
targets for EBIT from the ongoing business in the year 2016:
Mercedes-Benz Cars: slightly above the prior-year level,
Daimler Trucks: at the prior-year level,
-
We have implemented our strategy with great determination in
recent years, thus creating the basis for further growth:
Overall statement on future development
Interest rate risks and opportunities
Commodity price opportunities
The Daimler Group's global orientation implies that its business
operations and financial transactions are connected with risks
and opportunities of foreign exchange rates against the euro,
especially for the US dollar, the Chinese renminbi, the British
pound and other currencies such as currencies of growth markets.
An exchange rate risk or opportunity arises in business opera-
tions primarily when revenue is generated in a currency different
from that of the related costs (transaction risk). This applies in
particular to the Mercedes-Benz Cars division, as a major portion
of its revenue is generated in foreign currencies while most
of its production costs are denominated in euros. The Daimler
Trucks division is also exposed to such transaction risks, but
to a lesser degree because of its worldwide production network.
Currency risk exposures are successively hedged with suitable
financial instruments (predominantly currency-forwards and
options) in accordance with exchange rate expectations, which
are constantly reviewed, whereby both risks and opportunities
are limited. Exchange rate risks and opportunities also exist in
connection with the translation into euros of the net assets,
revenues and expenses of the companies of the Group outside
the euro zone (translation risk); these risks are not generally
hedged.
Exchange rate risks and opportunities
148
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Personnel risks and opportunities
Daimler's success is highly dependent on its employees and
their expertise. With their ideas and suggestions, they are
involved in their respective activities and working processes
and thus contribute considerably every day to improvements
and innovations.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Financial Services, whose policy is gener-
ally to perform term-congruent refinancing. However, to a limited
extent, the funding does not match in terms of maturities and
interest rates, which gives rise to the risk of changes in interest
rates. The funding activities of the industrial business and
the financial services business are coordinated at Group level.
Derivative interest rate instruments such as interest rate
swaps are used to achieve the desired interest rate maturities
and asset/liability structures (asset and liability management).
To support this process, the Daimler Group has established an
ideas management system through which employees can
submit ideas and suggestions for improvements. The processing
of the information received by this system and the integration
of ideas in an assessment process carried out by experts and
persons in charge of the respective processes is supported by
the established IT system "idee.com". This is intended to ensure
the systematic and sustained promotion of employees' ideas
and suggestions for improvement.
Competition for highly qualified staff and management is still very
intense in the industry and the regions in which we operate.
The future success of the Daimler Group also depends on the
magnitude to which we succeed over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise and ensuring
transparency with regard to the resources of the Daimler Group.
One focus of human resources management is the targeted
personnel development and further training of the workforce.
Employees benefit for example from the range of courses
offered by the Daimler Corporate Academy and from the trans-
parency created by a uniform worldwide performance and
potential management system. Due to demographic develop-
ments, the Group has to cope with changes relating to an aging
workforce and has to secure a sufficient number of qualified
young persons with the potential to become the next generation
of highly skilled specialists and executives. We address this
issue by taking appropriate measures in the area of generation
management. If this risk materializes, depending on the size
of the personnel shortage, an impact is to be expected on the
Group's activities and thus also on the earnings of the Daimler
Group. Further risks exist in the context of collective bargaining
negotiations concerning wages and general conditions. There
is no segment-specific assessment of the human resources risk
because the described risks are not related to any specific
business segment, but are valid for all segments. The category
of personnel risks is unchanged compared with the previous
year with regard to their impact and probability of occurrence.
Risks and opportunities related to associated companies,
joint ventures and joint operations
Cooperation with partners in associated companies, joint
ventures and joint operations and other types of partnerships
is of key importance for Daimler. Along with ensuring better
access to growth markets and new technologies, equity interests
and joint ventures help us exploit synergies and improve
cost structures and thus enable us to successfully respond
to competitive pressures in the automotive industry.
Daimler generally bears a proportionate share of the risks and
opportunities of its associated companies, joint ventures and
joint operations. The possible risks include negative financial
developments and delays in setting up development and pro-
duction structures in equity interests and joint ventures, which
can negatively impact the achievement of growth targets in
the affected segments. The related risks and opportunities are
allocated to the respective risk and opportunity category in
the Management Report. The remeasurement of an associated
company, joint venture or joint operation can result in risks
and opportunities relating to the corresponding carrying value
for the segment to which it is allocated. A disposal or the busi-
ness situation of an associated company, joint venture or joint
operation can also cause financial obligations or expected
revenue might not materialize. Risks from associated companies,
joint ventures and joint operations exist in the Mercedes-Benz
Cars, Daimler Trucks and Mercedes-Benz Vans segments, as well
as in the associated companies, joint ventures and joint opera-
tions directly allocated to the Group. All associated companies,
joint ventures and joint operations are subject to a continuous
monitoring process so that they can be promptly supported if
required and their profitability can be ensured. The recoverable
value of investments is also continually monitored. Due to cur-
rent developments in worldwide equity markets, the probability
of occurrence of these risks has increased compared to the
previous year from "low" to "medium".
Financial risks and opportunities
The following section deals with the financial risks and
opportunities of the Daimler Group. Risks and opportunities
can have a negative or positive effect, respectively, on the
profitability, cash flows and financial position of the Daimler
Group. The probability of occurrence and possible impact
of these risks and opportunities is presented in table 7 B.61.
In principle, the Group's operating and financial risk exposures
underlying the financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while with
the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 149
Furthermore, workgroups create processes and instruments to
produce new business ideas and to establish inter-departmental
cooperation. In this context, an online community exists in
the area of business innovation to which suggestions for dis-
cussions can be submitted, which all employees can assess
and develop further.
Equity price risks and opportunities
The Group is subject to equity price risks in connection
withits listed associated companies and joint ventures. As of
December 31, 2015, the only shares that Daimler holds are
shares that are classified as long-term investments (especially
Nissan and Renault) or that are included in the consolidated
financial statements using the equity method (primarily BAIC
Motor). The Group does not include these investments in a
market-price risk analysis. The section "Risks and opportunities
related to associated companies, joint ventures and joint
operations" provides more information on equity risks and
opportunities.
Commodity price risks and opportunities
Due to the growth in unit sales and revenue that we expect for
2016, production volumes will continue rising. At the same
time, the efficiency-enhancing measures we have implemented
at all divisions in recent years will now take full effect. The
medium- and long-term programs for structural improvements
of our business processes should facilitate further efficiency
progress. Against this backdrop, we assume that we will be able
to achieve our ambitious growth targets with only slight work-
force growth. Additional jobs are likely to be created at compa-
nies that we operate together with Chinese partners and
whose employees are not included in the figures for the Daimler
Group.
The workforce
157
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility - for example in
the fields of autonomous driving, hybrid drive, electric mobility
with batteries and fuel cells, and the connectivity of our
vehicles and services. In addition, we intend to utilize the growth
opportunities offered by worldwide automotive markets with
new and attractive products. In order to achieve these goals,
we will once again significantly increase our total expenditure
for research and development in 2016. At Mercedes-Benz Cars,
a large part of that expenditure will flow into the renewal
and expansion of our model range. In addition, we will invest
considerable amounts in new low-emission and fuel-efficient
engines, alternative drive systems, the connectivity of our vehi-
cles and innovative safety technologies. At Daimler Trucks,
the focus will be on activities in the areas of emmission standards
and fuel efficiency, as well as expenditure for tailored products
and technologies for the Brazilian market and for the FUSO
product portfolio. Also at Mercedes-Benz Vans and Daimler
Buses, an important area of research and development is to
meet future emission standards and to increase fuel efficiency.
One focus at Mercedes-Benz Vans will be on the connectivity
of products and processes, and alternative drive systems will
play an important role at Daimler Buses.
Research and development
ness.
At the Annual Shareholders' Meeting on April 6, 2016, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €3.25 per share (prior year:
€2.45). This represents a total distribution of €3.5 billion (prior
year: €2.6 billion) and is by far the highest dividend paid out
in the Company's history. With this proposal, we are letting our
shareholders participate in the Company's success while
expressing our confidence about the ongoing course of busi-
Exchange rate risks
Impact
Opportunity category
Impact
Probability of occurrence
Risk category
Financial risks and opportunities
B.61
The Group is exposed to credit risks which result primarily from
its financial services activities and from the operations of its
vehicle business. Credit risks also arise from the Group's liquid
assets. The following statements pertain to risks arising from
the Group's liquid assets; risks related to leasing and sales financ-
ing are addressed on page 144. Should defaults occur,
this would negatively affect the Group's financial position, cash
Credit risks
As already described in the section "Procurement market
risks and opportunities", the Group's business operations are
exposed to changes in the prices of consignments and raw
materials. The Group addresses these procurement risks by
means of concerted commodity and supplier risk management.
To a minor degree, derivative financial instruments are used
to reduce the Group's market-price risks related to the purchase
of certain metals.
Revenue and earnings
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to achieve further significant growth in
total unit sales in 2016. However, the rate of growth is likely
to be rather lower than in 2015, which featured exceptional
dynamism.
Daimler Financial Services aims to achieve further growth in
the coming years. For the year 2016, we anticipate slight
growth in new business and further growth in contract volume.
This will be driven by the growth offensives of the automotive
divisions. In addition, we are utilizing new market potential
especially in Asia, and applying new and digital possibilities
for customer contacts – in particular by systematically further
developing our online sales channels. We see good growth
opportunities also in the field of innovative mobility services,
where we are active with the brands car2go, moovel, Ridescout
and mytaxi, as well as with investments in the companies
Blacklane and Mein Fernbus FlixBus.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 155
flows and profitability. In recent years, the limit methodology
for exposures with financial institutions has been continually
further developed in order to counteract the diminished
creditworthiness of the banking sector since the financial crisis.
In connection with investment decisions, priority is placed
on the borrower's very high creditworthiness and on balanced
risk diversification. Most liquid assets are held in investments
with an external rating of A or better.
Country risks
Daimler is exposed to country risks that primarily result from
cross-border financing for Group companies or customers
as well as from investments in subsidiaries and joint ventures.
Country risks also arise from cross-border cash deposits at
financial institutions. The Group addresses these risks by setting
country limits (e.g. for cross-border financing of customers
and for hard-currency portfolios from financial services compa-
nies) and through investment-protection insurance against
political risks in high-risk countries. Daimler also has an internal
rating system that divides all countries in which it operates
into risk categories.
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group's financial instruments is provided
in Note 31 of the Notes to the Consolidated Financial
Statements.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations, and to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations less
plan assets constitutes the balance total or funded status
for these employee benefit plans. The valuation of the pension
obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in these
assumptions such as a change in the discount rate could
have a negative or positive effect on the funded status in the
current financial year or could lead to changes in the periodic
net pension expense in the following financial year. The market
value of plan assets is determined to a large degree by devel-
opments in the capital markets. Unfavorable or favorable devel-
opments, especially relating to equity prices and fixed-interest
securities, could reduce or increase the value of plan assets. The
recently increased volatility of financial markets raises the
risks and opportunities relating to the valuation of both pension
obligations and plan assets. The legal situation in connection
with pension plans can in some countries lead to payment obli-
gations if underfunding of the plans in those countries has
to be offset. Further information on the pension plans and their
risks is provided in Note 22 of the Notes to the Consoli-
dated Financial Statements.
Risks and opportunities from changes in credit ratings
Daimler's creditworthiness is assessed by the rating agencies
Standard & Poor's Rating Services, Moody's Investors Service,
Fitch Ratings and DBRS. There are risks and opportunities
in connection with potential downgrades or upgrades to credit
ratings by these rating agencies. Downgrades could have a
negative impact on the Group's financing if such a downgrade
leads to an increase in the costs for external financing or
otherwise restrict the Group's ability to obtain financing. A credit
rating downgrade could also damage the company's reputation
or discourage investment in Daimler AG. A risk to the credit rating
of the Daimler Group could also arise if the earnings and cash
flows anticipated from the Group's growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs
for the Group and also facilitate its access to financing sources
on the money and capital markets. If the positive development
of the Group should continue and its cash flow and profitability
should also develop positively, opportunities could arise for
an upgrade of the credit rating on the part of the rating agencies.
Risks from guarantees, legal and tax risks
The Group continues to be exposed to risks from guarantees
and legal risks. Provisions are recognized for those risks if and
insofar as that they are likely to be utilized and the amounts
of the obligations can be reasonably estimated. In 2015, the risk
and opportunity management system was expanded to include
tax risks. No quantitative assessment of tax risks is carried out.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risks from guarantees
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 151
Legal risks
Various legal proceedings, claims and government investigations
(legal proceedings) are pending against Daimler AG and its
subsidiaries on a wide range of topics, including vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
warranty claims, environmental matters, legal proceedings
relating to competition law and shareholder litigation. Product-
related litigation involves claims alleging faults in vehicles,
some of which have been made as class actions. If the outcome
of such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns
or other costly actions.
Some of these proceedings may have an impact on the Group's
reputation. As these proceedings are connected with a large
degree of uncertainty, it is possible that after the final resolution
of litigation, some of the provisions we have recognized for
legal proceedings could prove to be insufficient. As a result, sub-
stantial additional expenditures may arise. This also applies to
legal proceedings for which the Group has seen no requirement
to recognize a provision.
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely
to have a sustainable effect on the Group's cash flows, financial
position or profitability. Further information on legal proceed-
ings is provided in Note 29 of the Notes to the Consolidated
Financial Statements.
Tax risks
Daimler AG and its subsidiaries operate in many countries world-
wide and are therefore subject to numerous differing statutory
provisions and tax audits. Within the Group, the tax assessments
of several years are not yet final. Changes in local tax legisla-
tion and court verdicts, and differing interpretations by the fiscal
authorities in the various jurisdictions - especially in the field
of cross-border transactions - can lead to negative effects on
the Group's net profit and cash flows.
Any changes or interventions by the fiscal authorities are
continuously monitored by the Tax department and measures
are taken if required.
Issuing guarantees results in liability risks for the Group.
For example, Daimler holds an equity interest in the system
for recording and charging tolls for the use of highways in
Germany by commercial vehicles. The operation of the electronic
toll-collection system is the responsibility of the operator
company, Toll Collect GmbH, in which Daimler holds a 45% stake
and which is included in the consolidated financial statements
using the equity method of accounting. In addition to Daimler's
membership of the Toll Collect consortium and its equity
interest in Toll Collect GmbH, risks also arise from guarantees
that Daimler Financial Services AG has assumed with the
other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of Toll
Collect GmbH toward the Federal Republic of Germany in
connection with the toll system and a call option of the Federal
Republic of Germany. Claims could be made under those
guarantees if toll revenue is lost for technical reasons, if certain
contractually defined performance parameters are not ful-
filled, if additional claims are made by the Federal Republic of
Germany, if the final operating permit is not granted, if Toll
Collect GmbH fails to meet contractual obligations, if it fails
to have the required equipment available, or if the Federal
Republic of Germany takes over Toll Collect GmbH. The maximum
loss risk for the Group from these risks can be substantial.
Additional information is provided in Note 29 (Legal proceed-
ings) and Note 30 (Financial guarantees, contingent
liabilities and other financial commitments) of the Notes to
the Consolidated Financial Statements.
150
Low
Opportunities from changes in credit ratings
High
Low
Low
Credit risks
Low
Low
Credit opportunities
Country risks
Low
Low
Country opportunities
Risks relating to pension plans
Low
High
Opportunities relating to pension plans
High
Risks from changes in credit ratings
Low
Low
Overall assessment of the risk and
opportunity situation
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market-price
changes can have a negative or positive influence on the
Group's profitability, cash flows and financial position. Daimler
manages and monitors market-price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, whereby both market-price
risks and opportunities are limited.
The Group's overall risk situation is the sum of the individual
risks of all risk categories for the divisions, the corporate
functions and the legal entities. In addition to the risk categories
described above, unpredictable events that can disturb pro-
duction and business processes are possible, such as natural
disasters, political instability or terrorist attacks. Therefore,
emergency plans are prepared to allow the resumption of busi-
ness operations, precautionary measures are taken and insur-
ance policies are arranged, if possible. Risks relating to compli-
ance are addressed in the risk management process and are
continually monitored. Regular training courses are carried out
to prevent compliance violations.
In order to obtain an overall picture, Corporate Risk Manage-
ment collates the information described on risks from the
individual organizational units. The overall situation with regard
to the Group's risks and opportunities is the aggregate of the
individual risks and opportunities presented. The situation of the
Daimler Group has not changed significantly compared with
the previous year. No risks are currently recognizable that either
alone or in combination with other risks could endanger the
continued existence of the Group. But since considerable eco-
nomic and industry risks still exist, setbacks on the way to
regularly achieving growth and profitability targets cannot be
completely ruled out. The aforementioned opportunities
represent potential as well as challenges for the Daimler Group.
By effectively and flexibly focusing the production program
and sales activities on changing conditions, the divisions
of the Daimler Group strive to secure or surpass their respective
targets and plans. As far as it lays within the control of the
Daimler Group and if measures prove to be financially viable,
the Group takes appropriate action to realize the potential
of its opportunities. Most of the opportunities mentioned last
year were effectively realized. The associated measures
that have been implemented have a sustainable positive effect
on the Group's earnings.
In the North American truck market, the gradual weakening
of the industrial sector is likely to have an impact. From today's
perspective, demand for Classes 6-8 trucks is likely to decrease
by approximately 10%. But the European market so far seems
to be fairly unaffected by the uncertain development of the
world economy and should continue its recovery with slight
growth this year.
The Brazilian market shows no signs of improvement. Due to
the ongoing economic recession and the continuation of
relatively unfavorable financing conditions, we have to antici-
pate further market contraction in the magnitude of 10%. The
situation in the Russian market will remain difficult, so demand
there can only be expected at about the prior-year level.
Demand in China is likely to be impacted by the growth slow-
down in the manufacturing sector. From today's perspective,
only a moderate market recovery can be anticipated.
Demand in Japan for light-, medium- and heavy-duty trucks is
likely to be relatively solid. In a rather sluggish economic
environment, the market volume should be at about the prior-
year level. The Indonesian truck market is expected to
stabilize at the low level of 2015. In India, further significant
growth in the segment of medium- and heavy-duty trucks
is anticipated.
We expect a slight increase in demand for mid-size and large
vans in Western Europe in 2016 and stable demand for
small vans. For the United States, we also anticipate moderate
growth in the market for large vans. In Latin America,
however, we expect further substantial contraction in the
market for large vans, while in China, we expect more lively
demand in the market we address there.
We expect a slightly larger market volume for buses in West-
ern Europe in 2016 than in 2015. Following the significant drop
in demand for buses in Brazil, we anticipate further market
contraction in 2016.
154
B | COMBINED MANAGEMENT REPORT | OUTLOOK
Unit sales
Demand for medium- and heavy-duty trucks in the markets
relevant for Daimler should be slightly below the prior-year
volume in 2016.
Mercedes-Benz Cars will continue its "Mercedes-Benz 2020"
growth strategy in 2016. Overall, we intend to significantly
increase our unit sales and thus reach a new record level. This
is based on our very attractive and young model portfolio,
which we will expand with some additional new products. The
diversity of models is greater than ever before and the
attractiveness of the Mercedes-Benz brand has been signifi-
cantly enhanced. This allows us to continually establish new
concepts for individual customer communication, and thus to
address new markets and younger target groups. In line with
its "Best Customer Experience" sales and marketing strategy,
Mercedes-Benz is focusing even more on the wishes and
requirements of women. The new, holistic initiative is centered
on the "She's Mercedes" inspiration platform.
We expect significant growth in unit sales also from the smart
brand in 2016. This will be assisted by the new smart fortwo
convertible, which had its world premiere at last year's Frank-
furt Motor Show. Delivery of the first cars of this model will
start in March 2016. And in the summer, the new BRABUS
models of the fortwo and forfour with a sporty profile and
more powerful engines will be in the showrooms.
From a regional perspective, we expect the Asian markets to be
particularly strong growth drivers of our growth in unit sales
in 2016. In the year 2015, China was for the first time the biggest
sales market for Mercedes-Benz. Following strong growth of
41% in 2015, we intend to expand further in 2016, above all with
the models that we produce locally. But our growth rate in
China will be more moderate this year. Last year, we expanded
the dealer network to approximately 500 dealerships. Our
local production capacities were also expanded. In addition to
the C- and E-Class, production of two SUV models (the GLA
and the GLC) started in 2015. We will achieve further growth with
our new models also in North America, and we intend to profit
to an above-average degree from the ongoing revival of demand
expected for Western Europe.
Daimler Trucks anticipates unit sales in 2016 at the level of
the previous year. We expect to sell slightly more vehicles
in Western Europe than in 2015. In Turkey, however, a significant
decrease in unit sales is likely, mainly due to purchases
brought forward to 2015 because of the Euro VI emissions
standard that came into effect also in Turkey at the beginning
of 2016.
In Brazil, we anticipate a further drop in vehicle deliveries
following last year's market slump. The lack of economic growth
and unfavorable financing conditions are likely to impact
our business also in 2016. For the sustained strengthening
of Daimler Trucks' competitiveness in Brazil, we will invest
approximately €500 million by 2018 in tailored products, inno-
vative technologies and the optimization of our production
network.
In the NAFTA region, we expect unit sales below the high level
of the previous year in a contracting market. With our modern
product range in combination with the strong components
of our Detroit brand, we can ideally satisfy our customers'
requirements and safeguard our market leadership. We
assume, that we will increase the proportion of our own engines
and transmissions installed in the trucks sold.
In Japan and Indonesia, unit sales are likely to be of the same
magnitude as in 2015. In India, we should increase our unit
sales with our very well-positioned product portfolio. And we
will generate additional unit sales in Asia and Africa with
the expanded range of FUSO vehicles produced in India.
Mercedes-Benz Vans plans to achieve significant growth in
unit sales in 2016. We anticipate significant increases in
sales of vans in Europe, our core market. In the context of our
strategy for the division, "Mercedes-Benz Vans goes global,"
we launched the Vito also in North America and Latin America
in 2015. This will stimulate additional demand in those markets
also in 2016. And we aim to achieve additional growth with the
Sprinter, which we will produce also in North America in the
future. Furthermore, we will launch the V-Class multipurpose
vehicle and the Vito commercial van in China, thus expanding
our presence in the market segments we address there.
Daimler Buses assumes that it will be able to defend its
market leadership in its core markets for buses above 8 tons
with innovative and high-quality new products. For the year
2016, we anticipate total unit sales at the prior-year level. This
is based on the assumption of moderate growth in unit sales
in Europe. Following the significant decrease in Brazil in 2015,
we expect another fall in unit sales in 2016. An ongoing
positive development of unit sales is expected in Mexico.
Our new models will supply major growth impetus also in the
year 2016. In 2015, the "year of the SUVS," the Mercedes-Benz
brand renewed almost its full range of SUVs with four new or
upgraded models. In March 2016, the new generation of the
luxurious GLS SUV will be in the showrooms as the successor
to the GL. We anticipate additional growth impetus from the
new E-Class in 2016. Mercedes-Benz is taking a further step
along the way to accident-free and autonomous driving with
the world's most intelligent business sedan. And our new
dream cars such as the C-Class coupe and the S-Class con-
vertible, as well as the new SL and SLC generations, will also
contribute towards the ongoing success of the Mercedes-Benz
brand. Furthermore, we will launch some more plug-in hybrid
models in 2016, which combine outstanding driving performance
with the fuel consumption of a small car. Vehicles with plug-in
hybrid technology are an important component of our strategy
for emission-free driving. For this reason, we will successively
increase the number of models with plug-in hybrid drive systems
in the coming months. In 2017, a total of ten Mercedes-Benz
plug-in hybrid models will be on the market.
In Japan, a stabilization of demand is expected following the
significant market correction of the previous year. The outlook
for the large emerging markets remains mixed. Market growth
in India should accelerate again, whereas the ongoing recession
in Russia will most likely result in a further decrease in car
sales.
In the US market for cars and light trucks, only slight growth
is to be expected after the all-time high in the reporting year.
We anticipate slight market growth also for the market of
Western Europe. While little growth is likely in the core
markets of Germany and the United Kingdom, considerable
catch-up potential exists in other markets such as Italy.
However, much of the expected growth in China will be the
result of government stimulus. Against the backdrop of the
pronounced weak phase that the Chinese market went through
last summer, the government halved the sales tax on cars
with engines of up to 1.6 liters displacement in October. After
this measure already resulted in a visible improvement in
the later months of 2015, a positive effect is to be expected
also in 2016.
Daimler is confident that due to the risk and opportunity
management system established at the Group, risks and oppor-
tunities will continue to be recognized at an early stage in the
future, the current risk situation will be successfully managed,
and opportunities will be effectively utilized.
152
B | COMBINED MANAGEMENT REPORT | OUTLOOK
Outlook
The statements made in the Outlook chapter are generally
based on the operational planning of Daimler AG as approved
by the Board of Management and the Supervisory Board in
December 2015. This planning is based on the premises we set
regarding the economic situation and the development of the
automotive markets. It involves assessments made by Daimler,
which are based on relevant analyses by various renowned
economic research institutes, international organizations and
industry associations, as well as on the internal market
analyses of our sales companies. The prospects for our future
business development as presented here reflect the targets
of our divisions as well as the opportunities and risks presented
by the anticipated market conditions and the competitive
situation. We are constantly adjusting our expectations, however,
taking into account the latest forecasts on the development
of the world economy and automotive markets, as well as our
recent business development. The statements made below
are based on the information available to us in February 2016.
Our assessments for the year 2016 are based on the assumption
of generally stable economic conditions and the expectation
that the upward trend of the global economy and of worldwide
demand for motor vehicles will continue. The development
we have outlined is subject to various opportunities and risks,
which are explained in detail in the Risk and Opportunity
Report.
pages 138 ff
The world economy
At the beginning of 2016, the world economy is continuing
along a path of moderate growth. The solid growth of the
advanced economies continues to be one of the key drivers of
the global economy. But for the first time in five years, the
emerging markets might also be able to support the upward
trend with their aggregate growth rate.
Current leading indicators suggest that the US economy will
continue the upswing that has now lasted for six years. This
outlook is based on the continuation of solid domestic demand
and above all the robust growth of private consumption, and
should not be altered by the fact that the US Federal Reserve has
emerged from the phase of zero interest rates. The majority
of analysts therefore expect growth in gross domestic product
(GDP) of 2 to 2.5%.
The outlook for the Japanese economy is significantly less
positive. In order to achieve the projected GDP growth of just
over 1%, it is above all necessary for private consumption to
increase following its decrease in 2015.
The economy of the European Monetary Union (EMU) should
continue its recovery in 2016. The main drivers are likely to be
the latest once again more expansive - monetary policy
measures of the European Central Bank, the comparatively weak
euro, rising real incomes and ongoing support from low raw-
material prices. To what extent the dominant political events such
as the refugee crisis and the ongoing uncertainty surrounding
the Ukraine conflict will affect economic prospects in Europe
cannot yet be assessed at the beginning of 2016. It is currently
assumed that the EMU could achieve economic growth in the
magnitude of 1.5 to 2%. Growth expectations for the German
economy are within a similar corridor. With growth of more than
2%, the British economy should expand again significantly,
despite the debate about its continued membership of the
European Union.
B | COMBINED MANAGEMENT REPORT | OUTLOOK
153
The development of China continues to be of key importance
for the world economy. Despite current uncertainty with regard
to the Chinese stock market and the development of the
currency exchange rate, most analysts assume that a sudden
slump in growth dynamism (“hard landing") can be avoided.
However, the ongoing economic restructuring - away from high
investment and towards more consumption - will entail rather
lower growth rates of about 6.5%. Due to the renewed fall in raw-
material prices at the beginning of 2016, the economic
situation of all emerging markets that rely on exports of raw
materials remains critical. Recessive tendencies are still
very pronounced in those countries. This applies in particular
to Brazil, and to a lesser extent also to Russia. But as many
other emerging markets remain significantly below their long-
term expansion potential, the growth of these economies
will remain limited and will be only slightly stronger than in 2015.
In total, global economic output in 2016 is unlikely to exceed
the rather below-average growth corridor of 2.5 to 3%. With
regard to the currencies important for our business, we con-
tinue to anticipate significant exchange-rate fluctuations in
2016.
In order to counteract the risks arising for our business as a
result of still very volatile exchange rates, we conduct hedging
transactions as far as this makes sense for the various
currencies. For the year 2016, we have hedged approximately
80% of the exchange-rate risks as of mid-February.
Automotive markets
According to current estimates, global demand for cars in
the year 2016 is likely to increase again by between 3 and 4%
from its high level of 2015. Growth rates in the traditional
markets of the United States and Western Europe will probably
be significantly lower than the substantial growth of recent
years. But the Chinese market should expand significantly
once again, thus making the largest contribution to worldwide
growth.
In addition to the risks described above, there are risks that
affect the reputation of the Daimler Group as a whole. Public
interest is focused on Daimler's position with regard to issues
such as ethics and sustainability. Furthermore, customers
and capital markets are interested in how the Group reacts to the
technological challenges of the future and how it succeeds in
offering up-to-date and technologically leading products in the
markets. As one of the fundamental principles of business
activity, Daimler places particular priority on adherence to appli-
cable law and ethical standards. In addition, a secure approach
to sensitive data is a precondition for doing business with custom-
ers and suppliers in a trusting and cooperative environment.
In addition, the Group is exposed to credit and country-related
risks. As part of the risk management process, Daimler regularly
assesses these risks by considering changes in key economic
indicators and market information. Pension plan assets to cover
retirement and healthcare benefits (market sensitive invest-
ments including equities and interest-bearing securities) are not
included in the following analysis.
Total
Western Europe
Daimler Financial Services
3.7 million vehicles financed or leased for the
first time
Growth in all regions
177-179
Renewed increase in number of automotive insurance
policies brokered
Wide range of innovative mobility services
car2go expands further and has 1.2 million customers
EBIT significantly above prior-year level at €1.6 billion
(2014: €1.4 billion)
Mercedes-Benz Vans
-
Unit sales and revenue at record levels
- Sprinter successfull also in the year of its 20th
anniversary
Vito and Sprinter vans drive growth
Mid-size van Vito enters new markets
171-173
V-Class multipurpose vehicle continues on its path
of success
Marco Polo enjoys great popularity
EBIT
€ amounts in millions
2014
2015
Mercedes-Benz Cars
C.01
(2014: €1.9 billion)
Mercedes-Benz Cars continued to grow profitably in 2015 in a very dynamic manner. Unit sales,
revenue and earnings increased once again, and we also reached our target for return on sales
in the ongoing business. Numerous new models enabled us to significantly increase our market
share in nearly all regions. China is now our biggest market, and unit sales in China rose by 37% in
the year under review. The very good business year we enjoyed in 2015 was rounded out by numerous
awards for our vehicles and an extremely successful motorsport season. We further expanded
our global production network in the year under review, thereby creating the conditions necessary
for future growth.
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
160
EBIT significantly above prior-year level at €880 million
(2014: €682 million)
foundation for further long-term growth
"Mercedes-Benz Vans goes global" growth strategy lays
Portfolio expansion with a new pickup
Mercedes-Benz Cars
Revenue
– EBIT significantly above prior-year level at €2.6 billion
- Implementation of platform strategy with local
production of DT12 transmissions in Detroit
S.MA 2052
We inspire with new products and
pioneering technologies
Daimler's divisions developed very positively overall in the year under review and
further increased their profitability. We developed additional markets and market
segments with numerous new vehicle models and innovative service offerings.
At the same time, we pushed forward with the digitization of our business at all levels.
In order to create the right conditions for future growth, we modernized and
expanded our worldwide production network.
C | The Divisions
C | THE DIVISIONS | CONTENTS
159
Mercedes-Benz Cars
160-165
Daimler Buses
174-176
Unit sales and revenue at record levels
Acceleration of model offensive
Continuation of market leadership for buses with
gross vehicle weight over 8 tons
Renewal and expansion of SUV range
-
Numerous awards for Mercedes-Benz
Foundation laid for further growth in China
Global market presence expanded with new
regional centers
- Start of production of Western Star 5700 XE,
BharatBenz 3143 and new OM 471 engine generation
Two world premieres in the field of autonomously
driving trucks
Worldwide unit sales of more than 500,000 trucks
Record unit sales and extension of market leadership
in NAFTA region
166 - 170
Daimler Trucks
Roadmap presented for alternative drive systems
EBIT slightly above prior-year level at €214 million
(2014: €197 million)
Test of integrated approach to CO₂ reduction in
large-scale field test
Sales success and international awards at
Busworld Kortrijk 2015
situation in Latin America
Business development affected by difficult economic
- CO2 emissions reduced to an average of 123 g/km
EBIT significantly above prior-year level at €7.9 billion
(2014: €5.9 billion)
Most successful motorsport year in Daimler's history
Expansion of global production network
"Best Customer Experience" pushed forward with
new sales formats
Successful unit sales of complete buses
Return on sales (in %)
7,926
83,809
-49
32
16
thereof Brazil
-35
47
31
Latin America (excluding Mexico)
+18
142
167
thereof United States
+19
161
192
NAFTA
+26
57
+13
thereof Germany
32
29
+10
Asia
United Kingdom
8
+12
France
+0
7
6
9
148
167
-12
Freightliner Inspiration Truck: the first autonomously driving truck with US road approval.
C | THE DIVISIONS | DAIMLER TRUCKS 167
FREIGH
in Pretoria (South Africa) for Southern Africa. The regional cen-
ter for Southeast Asia will follow in Singapore in March. These
new regional centers will put us in even closer proximity to our
markets and customers, allowing us to respond more quickly
to their needs. We have also achieved another milestone in the
implementation of our platform strategy. In November, our
facility in Detroit began producing the automated Detroit Trans-
mission 12 (DT12) for the North American market.
In Western Europe, we increased our sales by 13% to 64,800
units. Unit sales became more dynamic as the year progressed.
Our Mercedes-Benz brand maintained its market lead in the
medium-duty and heavy-duty segments with a share of 22.5%
(2014: 24.4%). As a result of advance purchases before the
tougher EURO VI emissions standard comes into effect in 2016,
sales amounted to 24,900 units in Turkey, thus surpassing
the previous year's high level (2014: 22,200 units) despite the
country's weakening economic development and the uncertain
political situation in the region. The market nevertheless lost
significant momentum in the second half of the year. Demand
decreased substantially in Russia due to the country's ongoing
difficult economic situation.
Daimler Trucks saw sales drop sharply in Latin America, due
primarily to the severe market contraction in Brazil. The Brazilian
market was also weakened by the continued worsening of
the financing possibilities offered by the government's FINAME
program. The weakness of Brazil, our main market in the region,
caused sales to fall to 16,400 units (2014: 32,200). In this chal-
lenging environment, we were able to slightly increase our
market share of Brazil's medium-duty and heavy-duty segments
to 26.7% (2014: 25.8%). In order to permanently strengthen
Daimler Trucks' competitiveness in Brazil, between 2014 and
2018, we will invest approximately €500 million in products,
technology and services that are tailored to the needs of the
Brazilian market. To this end, we further optimized the comfort,
fuel economy and total cost of ownership of the locally produced
truck models Accelo, Atego, Axor and Actros.
10010
In the NAFTA region, Daimler Trucks saw sales rise by 19% to
the record level of 191,900 units. We further extended our
market leadership in the Classes 6-8 last year, increasing our
market share to 39.4% (2014: 37.2%). The sales growth was
due to our outstanding products as well as the good market
development last year. In May 2015, we started production
of the new Western Star 5700 XE in Cleveland, North Carolina.
This semitrailer tractor features sophisticated aerodynamics
and is equipped with the new, highly efficient Detroit powertrain.
It consumes nearly 15% less fuel than a comparable vehicle.
3,629
and equipment
Investment in property, plant
8.0
9.5
5,853
73,584
3,621
502
-4
572
thereof Japan
46
44
+4
Indonesia
32
595
58
For information purposes:
BFDA (Auman Trucks)
69
99
-30
Total (including BFDA)
-45
65
4,025
development expenditure
Open for luxury: The S-Class convertible from Mercedes-Benz is a superlative dream car that stands for individual and timelessly exclusive mobility.
Mercedes-AMG: the sports-car and performance brand
The AMG brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide
an unparalleled driving experience and the ability to serve as
a driving force in the high-performance segment. The AMG
sports-car brand enhances the fascination of Mercedes-Benz.
The brand's dynamic vehicles especially attract young and
sporty customers to the brand with the three-pointed star.
AMG models such as the new C 63 Coupe³ differ extensively
from their production-model cousins in terms of both engineering
and appearance, thus strengthening the authenticity of
the AMG brand. Mercedes-AMG is positioning itself even more
aggressively as a dynamic sports car and high-performance
brand with the GT, a sports car that was developed by
Mercedes-AMG completely on its own and clearly demonstrates
the innovation and development expertise in Affalterbach.
The numerous awards the AMG GT has received since its
premiere in 2014 underscore the success of this sports car,
which will be used as the basis for an entire model family.
True to its philosophy of performance with responsibility,
Mercedes-AMG is striving to become even more efficient
through new engine technologies and a comprehensive
lightweight design approach. AMG models already have some
of the lowest emissions in their respective segments.
thus meets the modern demand for the highest degree
of exclusivity and luxury. The four rear seats in the Mercedes-
Maybach Pullman² are arranged opposite one another.
These adjustable executive seats offer outstanding comfort.
Mercedes-Maybach expands its range of models
Following the successful launch of the Mercedes-Maybach S 600¹
in November 2014, the second model from the new Mercedes-
Maybach sub-brand celebrated its world premiere at the Geneva
Motor Show in March 2015. Mercedes-Maybach stands for
prestigious exclusivity and is aimed at particularly status-
conscious customers. With its combination of the very highest
exclusivity, unparalleled comfort and state-of-the-art tech-
nology, the new Mercedes-Maybach Pullman² now assumes
the role of a clear top-of-the-line model. With a length of
6.50 meters, the vehicle offers enough space for a large and
luxurious club lounge in the rear that features numerous
amenities as standard equipment. The chauffeured limousine
The new convertible is the sixth variant of the current S-Class
family and the first open-top luxury four-seater from Mercedes-
Benz since 1971. The elegant and sporty model celebrated its
world premiere at the Frankfurt Motor Show in September 2015.
With this vehicle, Mercedes-Benz can now boast of making the
world's most comfortable convertible. A unique level of climate
comfort is provided by the refined automatic draft shield system
AIRCAP, the AIRSCARF neck-level heating system, heated
armrests and a fully automatic intelligent climate control system.
The world's most comfortable convertible
Athletic and sporty: The clear and sensual design of the new
C-Class coupe makes a big impression on the road, while a
dynamically configured chassis forms the basis for agile handling
and driving pleasure. Among other things, this was made
possible by a weight-reducing lightweight design, excellent aero-
dynamics and high-performance yet efficient engines. New
assistance systems offer the highest degree of safety, and the
new C-Class coupe also sets new standards in its segment
with its high-end appeal and spacious interior. The model has
been delivered to customers since December 2015.
A new coupe for the C-Class family
C | THE DIVISIONS | MERCEDES-BENZ CARS
162
CLA Shooting Brake: Space for something new
The CLA Shooting Brake became the fifth member of our
successful family of compact models in March 2015. The CLA
Shooting Brake stands for a completely new vehicle concept
that combines a progressive, sporty design with versatile
spaciousness. The high quality of the interior is underscored
by the use of the same design idiom that makes the exterior
so special, as well as by carefully selected high-end materials.
During the year under review, we also upgraded the GL,
which is our most spacious SUV. The new GLS, which will arrive
in showrooms in March 2016, underscores our position as
the manufacturer of the "S-Class among SUVs." The fully fledged
seven-seater combines luxury with impressive comfort,
agile handling and best-in-class safety.
The GLC compact SUV, which had its world premiere in June 2015,
combines the utmost driving comfort with great sportiness.
Mercedes-Benz implemented an extensive package of measures
to significantly increase the GLC's energy efficiency and
performance. The fuel consumption of the GLC is as much as 19%
lower than of the GLK predecessor model, thanks in large
part to updated or completely new drive systems, outstanding
aerodynamics and intelligent lightweight engineering. In terms
of appearance, the vehicle body follows the clear design idiom
that was very successfully presented in the Concept GLC
Coupe show car in the spring of 2015. This design approach
will be used as a standard for future SUV families.
than the distinctive features of a robust SUV. The model stands
out both through its impressive handling and its attractive
exterior design. The GLE models were launched in the spring
of 2015 and have been very well received by our customers.
The new generation of the GLE is a completely reworked
version of the Mercedes-Benz bestseller in the SUV segment
(the former M-Class). The highlights of the new GLE include
a considerably more appealing front and rear as well as extensive
measures that enable new benchmarks for emissions and
drive systems. The all-new Mercedes-Benz GLE coupe com-
bines two very different vehicle segments in one model,
whereby its sporty coupe character is rather more dominant
The new SUVs: at home on any terrain
During the year under review, Mercedes-Benz Cars once again
expanded its range of models within the framework of its
"Mercedes-Benz 2020" growth strategy. The most wide-ranging
product portfolio in our history enabled us to attract new
customer groups and improve our market position vis-à-vis our
main competitors. The model offensive focused on SUVs in
2015. We renewed our range of vehicles in this growth segment
almost completely, and we also added the GLE coupe to
the portfolio. O pages 28f Other all-new additions are the
CLA Shooting Brake, the Mercedes-Benz AMG GT, another
exclusive Mercedes-Maybach model and the S-Class convertible,
which will be launched in the spring of 2016.
Model offensive accelerated
The main contributions to the growth in unit sales came
from the C-Class and our new SUVs. Our A-Class and B-Class
models also remained very popular, with sales of these cars
increasing by 10%. Including the CLA and CLA Shooting Brake,
a total of 425,000 units were delivered to customers. Our
C-Class models were particularly successful, with sales of these
vehicles increasing by 38% to 470,400 sedans, wagons and
coupes in the reporting year. The E-Class performed very well
in the last year before its model changeover, achieving unit
sales of 306,000 vehicles (-7%). The S-Class was once again
the best-selling luxury sedan in the world by far. In total we
sold 106,200 sedans and coupes of the S-Class (2014: 115,500).
Global sales in the SUV segment increased by 27% to 543,000
units. This positive development was mainly due to the new
GLC and GLE models and the success enjoyed by the GLA in the
Chinese market.
+38
The sum total of its innovations makes the new Mercedes-Benz E-Class the most intelligent business sedan.
C | THE DIVISIONS | MERCEDES-BENZ CARS
The new smart fortwo cabrio converts at the touch of a button from a closed two-seater into a cabriolet with a completely open roof.
163
The smart convertible - the most exclusive way
The Mercedes-Benz CLA Shooting Brake appeals with superb driving dynamics, a unique space concept and great everyday practicality.
C | THE DIVISIONS | MERCEDES-BENZ CARS 165
LAT
IS HA 4564
Second generation in great shape: The Mercedes-Benz GLC with sensuous clarity and modern SUV esthetics and a classic off-road stance.
S.UN 2530
The Mercedes-Benz brand once again made a big impression
on award juries and readers of various automotive magazines
in 2015. The outstanding design of Mercedes-Benz vehicles led
to many awards, including three first-place finishes for the
CLA Shooting Brake, the GLE coupe and the Mercedes-AMG GT
in the Auto Bild Design Award competition - and an impressive
sixth consecutive overall victory in this contest. The fact that
the most beautiful automobiles are built by Mercedes-Benz is
also underscored by awards for the GLE coupe and the
Mercedes-AMG GT, as well as the Autonis readers' design brand
of the year award from the magazine auto motor sport. The
SUV models from Mercedes-Benz also performed well in award
competitions in 2015. The brand's SUVs were nominated ten
times in six categories and came out on top six times. In addition,
more than 110,000 readers of auto motor sport chose the
Mercedes-Benz wins numerous awards
be able to address customer requirements in the country
in an even more targeted manner in the future. During the year
under review, we significantly improved our market position
in China, especially in comparison with our main competitors.
All in all, we were able to increase sales of Mercedes-Benz
brand vehicles by 41% to 387,400 units, although the overall
car market grew at a much slower pace. Additional sales
momentum was generated in China by our new SUVs, as well
as by the new C-Class, which along with a long-wheelbase
variant is now also available in a sporty version with the short
wheelbase. A total of 250,200 of the vehicles we sold in
China during the reporting year were manufactured locally at
facilities operated by our BBAC joint venture (2014: 145,500).
In 2015, we renewed and expanded our range of products for
customers in China by offering 15 new or updated model
series. Important new products here are the GLA and GLE SUVs,
the Mercedes-Maybach and the new smart models. We also
added more than 50 new sales outlets to our sales network in
China, which now comprises approximately 500 dealerships
nationwide. With the start of compact-vehicle production in the
form of the GLA, the plant in Beijing has become the only
Mercedes-Benz facility in the world to manufacture both front
and rear-drive car models, as well as engines, at one site.
In October 2015, we began producing an additional volume
series the GLC SUV - for the local market in China. Our
new research and development center in China ensures we will
C | THE DIVISIONS | MERCEDES-BENZ CARS 161
15 new models for the Chinese market
C | THE DIVISIONS | MERCEDES-BENZ CARS
164
3 Mercedes-AMG C 63 Coupe: fuel consumption in l/100 km urban 11.9-11.4/
extra-urban 7.1-6.9/combined 8.9-8.6; CO2 emissions in g/km combined
209-200.
2 Mercedes-Maybach Pullman: fuel consumption in l/100 km urban 18.0/
extra-urban 9.2/combined 2.9; CO2 emissions in g/km combined 299.
1 Mercedes-Maybach S 600: fuel consumption in l/100 km urban 16.9/
extra-urban 8.7/combined 11.7; CO2 emissions in g/km combined 274.
In order to meet the production targets of our 2020 growth
strategy, we are continually refining our flexible and highly
efficient production network. We have agreed with employee
representatives on transformation plans that are currently
being implemented at nearly all Mercedes-Benz manufacturing
plants in Germany. These plans will ensure the international
competitiveness of these facilities and also safeguard jobs at
the various locations. The billions of euros we are investing
here underscore the importance of our plants in Germany as
centers of expertise for global production. We are also expanding
our international production capacities. For example, we will
start building the C-Class and the GLA compact SUV at a new
car plant in Iracemápolis, Brazil, in 2016. In addition, Daimler
and the Renault-Nissan Alliance have laid the cornerstone
for a joint production facility in Aguascalientes, Mexico, where
Mercedes-Benz compact models will go into production in 2018.
Expansion of the global production network
A third model - the smart convertible - was then launched
at the end of 2015. The open-top two-seater celebrated its world
premiere in September 2015 at the Frankfurt Motor Show and
deliveries began in the first quarter of 2016. The only genuine
convertible in its segment, it can transform itself from a closed
two-seater into a car with a large foldable roof or a completely
open-top convertible with just the push of a button and when
traveling at any velocity - even at top speed. The flexibility offered
by this "tritop" roof is exceptional in this vehicle segment.
We also significantly improved safety features once again and
have made the convertible more robust than the coupe in
critical areas. Among other things, torsional stiffness has been
improved by around 15% compared with the previous model.
As is the case with the smart fortwo, advanced assistance sys-
tems previously reserved for more upper-range vehicles have
been installed to help prevent accidents. The new smart convert-
ible also makes a big impression with its compact dimensions
and unparalleled small turning circle.
The new smart fortwo and forfour models, deliveries of which
started in Europe in late 2014, were also launched in China,
the United States and Japan in the reporting year. Total sales of
smart-brand vehicles increased by 31% to 121,300 units in 2015.
to drive a smart
Mercedes-Benz aims for top quality at all production locations
and also seeks to ensure it can respond quickly to market
fluctuations and changed customer requirements. Within the
framework of Industry 4.0, we are working intensely on the
creation of "smart factories" that stand out through their resource
efficiency, as well as their ability to make rapid adjustments
and integrate customers and partners into value creation pro-
cesses. Connected production systems, a completely digital
process chain, the intelligent use of production data and new
models for human-machine cooperation will make manu-
facturing even more flexible and efficient in the future. At the
same time, we are optimizing our employees' workstations
on the basis of ergonomic criteria and creating the conditions
necessary for successful intergeneration cooperation in
our production organization.
SHV 2132
1 Including model variants.
+13
Mercedes-Benz Cars
+31
92
121
smart
-4
31
29
Sports cars
+27
2,001
426
SUVS (including GLA)
-8
115
106
S-Class
-7
329
306
E-Class
Research and
543
S-Class and the C-Class as the best cars of the year in their
respective categories. Mercedes-Benz was very successful
in the World Car Awards as well. The C-Class took home the
coveted title "2015 World Car of the Year" and the S-Class
coupe and Mercedes-AMG GT won in their respective categories.
Our vehicles also proved their worth once again when it comes
to value stability: The S-Class, C-Class, CLA, GLA and smart
fortwo cabrio electric drive¹ were named the best vehicles in
their respective classes in terms of value stability by Focus
Online and the Bähr & Fess Forecast market research institute.
1,723
thereof Western Europe
61
69
Japan
+37
293
400
China
+4
344
359
+16
thereof United States
391
412
NAFTA
+9
272
296
thereof Germany
+16
669
773
+5
Best Customer Experience
S.MB 1214
Most successful motorsport year in the Company's history
MERCEDES AMG PETRONAS captured both the Drivers' and
the Constructors' Championship in the Formula 1 racing series
for the second consecutive year. The key to the team's success
was once again the hybrid drive of the F1 W06 Hybrid champion-
ship car - the most efficient and successful drive system in
the competition. World champion Lewis Hamilton and second-
place finisher Nico Rosberg dominated nearly every Formula 1
race in 2015. Mercedes-Benz was also very successful in the
popular German DTM touring car series, in which our driver
Pascal Wehrlein became the youngest champion of all time at
the tender age of 20. Taking our victories in the Formula 3
European Championship and the ADAC GT Masters into account
as well, we succeeded in winning the drivers' championship
in every racing series we took part in last year, something that
has never been done before throughout the long history of
motorsports at Mercedes-Benz. Our efforts here paid off for
Daimler in the form of significant image enhancement and
the extensive publicity provided by the races. We can also gain
valuable experience with the hybrid technologies and light-
weight designs that we use in our motorsports activities, and
this experience flows into our series development and
production operations.
The Mercedes-Benz Cars division, comprising the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands as well as the smart brand, once
again accelerated its pace of profitable growth in the year under
review. We increased our unit sales for the sixth year in
succession and our sales of 2,001,400 vehicles (+16%) put us
above the two-million mark for the first time in our history.
7 C.01 We were able to gain market share in nearly all regions.
Revenue increased by 14% to €83.8 billion. We also signifi-
cantly improved our profitability compared with the previous
year, with EBIT rising by 35% to €7.9 billion. In addition, we
reached our target for return on sales in the ongoing business.
Our very positive overall business development throughout
the year was largely due to our new products, in particular the
new C-Class and our attractive SUVs.
Mercedes-Benz once again posts record unit sales
Unit sales of the Mercedes-Benz brand rose to the new record
level of 1,880,100 vehicles in 2015. 7 C.02 Despite difficult
conditions in several markets, the pace of growth increased
significantly once again compared with the previous year,
as sales grew by 15% (2014: 11%). We are the number one manu-
facturer in the premium segment in Germany as well as in
Canada and Japan. We also significantly improved our position
in China in the year under review.
Mercedes-Benz sold a total of 678,200 vehicles in Western
Europe in 2015, an increase of 11% from the previous year.
Growth was particularly strong in Spain (+24%), the United
Kingdom (+17%) and Italy (+16%). Sales in Germany increased by
4% to 259,200 units. Sales development was also positive
in the NAFTA region, where we set new records in the United
States (+5%), Canada (+23%) and Mexico (+10%). Despite difficult
market conditions, sales rose by 41% in China, where we
significantly outperformed the market as a whole. We recorded
substantial increases in unit sales also in Japan (+13%),
South Korea (+30%), India (+31%), Brazil (+67%) and Turkey (+35%).
Mercedes-Benz
1,880
1,630
+15
thereof: A-/B-Class
(excluding GLA)
425
Records for unit sales, revenue and earnings
387
C-Class
470
342
The number of 502,500 trucks sold in 2015 shows that our
strategy based on the three pillars of technology leadership,
global market presence and intelligent platforms is paying off.
We have assumed a leading role for autonomously driving
trucks. We continue to be well positioned as the market leaders
in the NAFTA region and Western Europe, and we have further
strengthened our position in the emerging markets. In October,
we opened our first regional center. Located in Dubai, it is the
first of six such centers that will be set up all over the world to
focus on sales and aftersales activities for Daimler Trucks.
The center in Dubai manages activities in 19 countries in the
Middle East and North Africa. In February 2016, two more
regional centers will be opened: in Kenya for Central Africa and
More than 500,000 trucks sold in 2015
In 2015, Daimler Trucks increased its unit sales by 1% to
502,500 vehicles, the highest number since 2006. Revenue
grew by 16% to €37.6 billion (2014: €32.4 billion). Daimler
Trucks faced a regionally very diverse market environment in
2015. Demand for trucks rose strongly once again in the
NAFTA region last year. Truck demand increased also in Europe,
thanks to a robust economic recovery and the purchase
of more replacement vehicles. In Japan, sales of commercial
vehicles were at the solid level of the previous year, whereas
the demand in India increased compared with the previous year.
The weak and uncertain economic situation in Brazil almost
halved the country's truck market. The Indonesian truck market
also contracted significantly. In this market environment,
Daimler Trucks increased its EBIT very significantly to the new
record of €2.6 billion (2014: €1.9 billion). The division's return
on sales rose to 6.9% (2014: 5.8%).
a heterogeneous market environment
Very successful business developments in
+1
15/14
Change in %
+10
+37
+16
15/14
% change
15/14
% change
4,711
496
thereof capitalized
1,612
1,035
+17
+56
Production
2,059,823
1,754,115
Unit sales
+35
+14
2,001,438
+17
+16
Employees (December 31)
136,941
135,553
+1
C.02
Unit sales Mercedes-Benz Cars
in thousands
2015
Within the framework of the "Best Customer Experience"
marketing and sales strategy, Mercedes-Benz is aligning its
sales and marketing organization with changing customer
requirements. The goal is to address new target groups while
maintaining the brand loyalty of established customers.
To this end, Mercedes-Benz is utilizing new sales channels
and digital portals as innovative interfaces with the brand.
The multichannel approach links different sales formats with
digital elements, thereby supplementing the services offered
at traditional Mercedes-Benz showrooms. The centerpiece
of Best Customer Experience is Mercedes me ④ mercedes.me.
This platform is also the name of a new chain of stores
Mercedes-Benz has opened in inner-city locations. A total of
five Mercedes me Stores have opened around the world
since 2014. New temporary formats such as special events
and pop-up stores have also been created, and more than
1,800 sales employees have received training in the new retail
formats. The year 2015 also marked the launch of the "She's
Mercedes" initiative, which is designed to help Mercedes-Benz
address women in a targeted manner and significantly increase
its proportion of female customers over the medium term. Along
with the provision of a new community and inspiration plat-
form, the initiative also includes networking dinners, training
programs for sales personnel and measures to increase
the proportion of women in the sales workforce. pages 18f
1,722,561
15/14
Change in %
2014
2015
Investment in property, plant,
5.8
6.9
Return on sales (in %)
1,878
32,389
37,578
Revenue
2,576
EBIT
€ amounts in millions
1,110
2014
C.03
Daimler Trucks is shaping the future of transportation. In 2015 Daimler Trucks once again impres-
sively demonstrated its leading role as a truck manufacturer with its strategy based on the three
pillars of technology leadership, global presence and intelligent platforms. In May 2015, the state of
Nevada approved our Freightliner Inspiration Truck for road use, making it the first autonomously
driving truck to receive this kind of certification anywhere in the world. Just five months later, we
tested the first autonomously driving series-production truck on public roads in Germany. With our
successful products and supported by positive market developments in the NAFTA region and Europe,
we further increased our unit sales to more than 500,000 vehicles, setting a major milestone in
our sales development.
Daimler Trucks
C | THE DIVISIONS | DAIMLER TRUCKS
166
page 112
1 smart fortwo cabrio electric drive: electricity consumption
in kWh/100 km 15.1; CO2 emissions in g/km 0.0.
Our new engines and extremely fuel-efficient model variants
enabled us to substantially reduce the average CO2 emissions
of the cars we sold in the European Union in 2015 - from 129
grams per kilometer to 123 g/km. This means we have achieved
our 2016 target of 125 g/km ahead of schedule. That achieve-
ment was made possible in large part by our new compact-class
models, the new and significantly more economical C-Class
models and our efficient hybrid drive systems.
2014
Further reduction of CO2 emissions
Daimler Trucks
788
2015
and equipment
In thousands
Unit sales of Daimler Trucks
+41
C.04
-1
87,628
86,391
+1
+2
497,710
495,668
502,478
Employees (December 31)
Unit sales
506,663
Production
+9
-24
34
1,188
1,293
26
thereof capitalized
development expenditure
Research and
€ amounts in millions
Mercedes-Benz Vans continued on its successful course of success from the previous year in 2015,
setting a new record for unit sales. Earnings also reached an all-time high at the division. Growth
was primarily driven by the Vito and Sprinter vans. Sales of the Sprinter were higher than ever before
in the model's 20-year production history. The market launch of the very successful mid-size
Vito van in North and South America marked yet another milestone in the implementation of our
"Mercedes-Benz Vans goes global" growth strategy. We consistently moved ahead with our
internationalization strategy also in the private customer segment, and were active in new sales
markets with our V-Class multipurpose vehicle and the camper van version of the Marco Polo.
This contributed to a significant increase in earnings at Mercedes-Benz Vans.
Mercedes-Benz Vans
C.05
Despite the difficult economic conditions in Latin America, we
were still able to sell 15,800 units in that region, which was
slightly lower than the number sold in the previous year (2014:
16,100). At 7,200 units, sales in China were significantly lower
than in the prior year (2014: 12,800), largely due to the upcom-
ing model changeover in the mid-size van segment. We sold
a total of 194,200 Sprinter vehicles worldwide during the year
under review (+4%), which marks a new record for sales of
large vans. Sales of mid-size vans were also significantly higher
than in the previous year, totaling 105,100 units (2014: 86,000).
Unit sales in Western Europe, our most important market, rose
by 10% to 208,500 vans in the year under review. Particularly
significant increases were recorded in Sweden (+27%), Belgium
(+25%) and Switzerland (+17%), and Mercedes-Benz Vans
also posted strong growth in the key volume markets of Western
Europe. For example, we set a new sales record in Germany
with 88,400 units (2014: 79,900). Despite a difficult market en-
vironment in Eastern Europe, Mercedes-Benz Vans was able
to increase its sales in the region to 32,200 units, an increase
of 5% over the prior year.
Mercedes-Benz Vans remained on course for growth also in the
NAFTA region, where sales rose sharply to 40,500 units.
The success story of our Sprinter continues in the United States,
where we launched the Metris in the fourth quarter of 2015
New records for unit sales, revenue and EBIT
Mercedes-Benz Vans set a new sales record in 2015, with an
increase of 9% to 321,000 units. At €11.5 billion, revenue was
also significantly higher than in the previous year (2014:
€10.0 billion). EBIT rose by 29% to the new record level of
€880 million. 7 C.05
Mercedes-Benz Vans' products remained successful also in
2015. Our Sprinter, Vito and Citan vans are targeted mainly at
commercial customers while the V-Class is designed primarily
for private use.
Continued growth
2015
page 173. Sales of 32,400 units in the United States (+25%)
marked a new record for the division. Sales in Canada increased
by 24% to 5,100 units.
2014
11,473
% change
EBIT
Revenue
Return on sales (in %)
880
682
+29
9,968
+15
7.7
Mercedes-Benz Vans
6.8
15/14
C | THE DIVISIONS | MERCEDES-BENZ VANS 171
The Asian sales markets developed in widely diverse ways last
year. In Japan, we increased our unit sales by 4% to 45,600
vehicles. We expanded our market share, which now amounts to
20.8% of Japan's overall truck market (2014: 20.1%). In India,
we increased deliveries by 36%, selling a total of 14,000 trucks.
Our new BharatBenz vehicles allowed us to increase our
market share of the upper medium- and heavy-duty segments
to 7.3% (2014: 6.2%). The BharatBenz product range was ex-
panded further last year by the launch of the all-new BharatBenz
3143 heavy-duty truck, which is designed for use in mining
and on construction sites and is by far the most powerful locally
built truck for the Indian market with 430 horsepower. With a
gross vehicle weight of 48 tons and four-axle configuration, the
truck is perfectly tailored to the requirements of customers
in India, with its plentiful reserves of raw materials. Thanks to
the intelligent platform strategy, Daimler Trucks' engineers
developed the model in less than three years. Our sales in the
strongly contracting Indonesian market fell to 32,100 units
(2014: 58,300). However, our share of the total Indonesian truck
market increased to 48.0% (2014: 47.4%). In 2015, we continued
to work on our strategy of increasing Daimler Trucks' global market
presence. The Asian subsidiaries Mitsubishi Fuso Truck and
Bus Corp. (MFTBC), which is based in Kawasaki, and Daimler
India Commercial Vehicles (DICV), which is headquartered in
Chennai, are making an important contribution to this strategy.
Eight preproduction-series FUSO Canter E-Cells were tested by
selected customers in a one-year field test in Portugal. A data
analysis of the customer test showed that the operating costs
were reduced by 64% compared to those of a conventional
diesel truck. With ranges of over 100 kilometers, the Canter
E-Cells surpassed the average distance that many trucks
cover in light-duty distribution transport each day. The electri-
cally powered light trucks are locally emission-free and nearly
silent, making them well-suited for short-distance distribution
transport in inner cities.
Investment in property, plant
168
C | THE DIVISIONS | DAIMLER TRUCKS
BHARATBENZ
BharatBenz 3143: by far the most powerful local truck for the Indian market with 430 horsepower.
000
Last year, Chennaiproduced FUSO trucks enabled us to enter
more than a dozen selected export markets, such as South Africa.
Further market entries are planned for 2016.
Presence in the world's largest truck market China
through our joint venture BFDA
Daimler AG owns 50% of Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA), a joint venture between Daimler and Beiqi Foton
Motor Co, Ltd. BFDA has been producing medium-duty and
heavy-duty Auman brand trucks since mid-2012. In 2015, sales
of medium- and heavy-duty trucks decreased by around 30%
in China, the world's biggest truck market by volume, due to the
country's weakening economy. BFDA with its Auman brand
was unable to avoid this development; its unit sales in 2015 thus
decreased for market-related reasons to 69,200 vehicles
(2014: 99,200). In order to profit from the Chinese volume market
in the medium term, we systematically pushed forward with
our cooperation with Foton/BFDA in 2015. Following the suc-
cessful establishment of the OM 457 engine factory in our
joint venture, production of the heavy-duty Euro IV/V engine
starts in 2016. More than 300,000 Auman vehicles have been
sold since the joint venture was launched.
C❘ THE DIVISIONS | DAIMLER TRUCKS 169
We continued to pursue our integrated powertrain strategy in
2015. We nearly doubled the rate of application of the DT12 au-
tomated transmission in the Freightliner Cascadia and Western
Star 5700 XE, so that approximately 40% of those models were
sold with the automated transmission in the United States and
Canada. In November, local production of the DT 12 transmission
for the North American market started in Detroit. As of 2018,
medium-duty engines for the NAFTA market will also be produced
in Detroit. We maintained the rate of application of our heavy-
duty engines in the United States and Canada at the high rate of
the previous year in a growing market. Just four years after
the launch of the Mercedes-Benz OM 471 heavy-duty engine,
Daimler Trucks presented the engine's next stage of develop-
ment in 2015 page 35. The latest generation of the EURO VI
engine is a part of the successful platform for heavy-duty
truck engines from Daimler Trucks. Compared to its predeces-
sor, the new engine reduces fuel consumption by up to 3%.
As a result, average fuel consumption has decreased by up
to 13% since 2011. The Euro VI engine family has also been
supplemented by the new, environmentally friendly M 936 G
natural-gas engine. This engine emits up to 20% less CO2
than a diesel engine and can reduce emissions even further if
biogas is used instead of natural gas.
Daimler Trucks is a pioneer for autonomous driving
As a globally positioned manufacturer, Daimler Trucks impres-
sively demonstrated in 2015 how intelligent technologies can
be rolled out for several brands and multiple markets in a very
short period of time. The autonomously driving vehicles from
Daimler Trucks are based on the series-production trucks used
in the respective markets. These trucks are equipped with the
Highway Pilot system, which is adapted to the specific market
conditions. The Highway Pilot encompasses a complex combi-
nation of cameras and radar systems along with lane-keeping
and collision-prevention functions that enable it to brake
and steer the vehicle and regulate its speed. We presented the
Highway Pilot to the public for the first time in 2014, when the
system enabled the Future Truck 2025 to complete a partially
autonomous drive on a cordoned-off section of an autobahn
near Magdeburg. Last year, Daimler Trucks then reached several
milestones on the road to achieving fully autonomous driving
page 10. In May 2015, the state of Nevada approved the
Freightliner Inspiration Truck for road use, making it the world's
first autonomously driving truck to receive this kind of certifica-
tion. The Inspiration Truck is based on the series-production
model Freightliner Cascadia. The vehicle is equipped with a
Highway Pilot that has been specially configured to operate in
American highway traffic. The first time we tested an autono-
mously driving series-production truck on public roads in
Germany was in October of last year. This premiere truck was
a series-production Mercedes-Benz Actros that was equipped
with the Highway Pilot in order to test autonomous driving on
public roads.
Daimler Trucks studies and series vehicles win awards
Daimler Trucks North America received the US Department of
Energy's renowned Distinguished Achievement Award for the
results of its SuperTruck concept vehicle. The award-winning
truck shows how freight transportation on roads can be made
as environmentally compatible and fuel-efficient as possible in
the future. Meanwhile, the Mercedes-Benz Future Truck 2025
won the internationally renowned iF Design Award 2015. Last
year, the Mercedes-Benz Actros won the Green Truck Award,
which is presented by the editors of the magazines Trucker and
VerkehrsRundschau. The winners of this award are primarily
chosen on the basis of their fuel consumption, and thus also of
their CO2 emissions.
HP
S.PN1009
Hpi
Mercedes-Benz Actros with Highway Pilot: premiere in 2015 for the first autonomously driving series-produced truck in Germany.
170
C❘ THE DIVISIONS | DAIMLER TRUCKS
Leading position in the field of safety
We are consolidating our leading position in the field of safety
by introducing new assistance systems and further developing
the emergency-braking and lane-keeping assistants. One
of the systems we will launch in the near future is the turning
assistant. By detecting pedestrians, cyclists and stationary
obstacles, this system can prevent accidents and save lives,
especially in city traffic.
Strategic focus on connectivity and digitization
In addition to safety and efficiency, truck connectivity plays a
crucial role as the third pillar of Daimler Trucks' technology
strategy. A truck generates a large amount of data, which can
be usefully applied in many ways. For example, modern
telematics systems can already record and analyze how efficiently
a vehicle is operated and can communicate that to the driver
or owner. Many more possibilities will exist in the future. With
the help of data transmitted by trucks in real time, trucking
companies will be able to organize their overall logistics more
efficiently. It will enable them to shorten trucks' standing times,
optimize maintenance intervals and reduce fuel consumption. In
order to strengthen its technological expertise in this area,
Daimler Trucks has purchased a stake in Zonar Systems Inc.,
a leading developer and supplier of logistics, telematics and
connectivity solutions. Daimler Trucks North America and Zonar
will jointly launch applications that are tailored to the needs
of North American customers. The two companies have already
been partners for the past five years, cooperating, among
other things, on the development of the telematics solution
Detroit Connect page 22. This solution includes an onboard
diagnostic and fleet monitoring system and can determine the
cause of a fault message while the vehicle is still in motion.
This can reduce servicing-related downtimes and thus cut main-
tenance costs. Repair costs can sink by as much as 20% while
operating time can increase by 6%.
Integrated approach for maximum efficiency
In the Efficiency Run practical test that was presented in October
2015, Daimler Trucks and three freight-forwarding companies
demonstrated that optimally coordinated truck combinations can
reduce fuel consumption and thus CO2 emissions by a double-
digit percentage, using systems that are already available on the
market. The vehicles were equipped with the Predictive Power-
train Control (PPC) cruise control system, which optimally coor-
dinates gear shifting with the route's topography. Weight-
optimized semitrailers and low-resistance tires were also used
in the field test. This integrated approach aims to optimize
not only the engine but also the entire truck transport system.
The two standard Mercedes-Benz Actros tractors that were
optimized for the Efficiency Run consumed about 12 to 14% less
fuel than a standard semitrailer tractor in the fleet of the freight-
forwarding company. The long truck that was also tested during
the Efficiency Run had an approximately 17% better fuel effi-
ciency in volume-based transportation than the test's standard
tractor and semitrailer. The test confirmed that two long
trucks can perform the transport tasks of three conventional
semitrailer trucks. DEKRA, a technical test organization,
accompanied the Efficiency Run and certified its results.
Customer tests of the FUSO Canter E-Cell successfully
completed
AUTRION
and equipment
Successful further development of our engine and
transmission strategy
304
thereof Germany
202
2,787
2,865
-3
Mexico
3,964
3,633
+9
Latin America (excluding Mexico)
11,909
17,614
-32
Asia
1,030
1,117
-8
Other markets
3,421
3,241
+6
Citaro NGT
Citaro NGT
7,557
7,757
Western Europe
33,162
31,485
-8
Unit sales
28,081
33,162
-15
Employees (December 31)
18,147
17,473
+4
C.08
MA MB 014
Unit sales by Daimler Buses
2014
15/14
% change
-2
15/14
% change
-15
+3
Earnings slightly above prior-year level
Daimler Buses sold 28,100 buses and bus chassis worldwide in
2015 (2014: 33,200). This significant decrease in unit sales
was largely due to the ongoing poor economic situation in Brazil.
Nevertheless, the division was able to maintain its clear lead-
ing position in its core markets for buses with a gross vehicle
weight of over 8 metric tons. 71 C.07 Business with complete
buses in Western Europe developed favorably during the year
under review, with sales increasing from the prior-year level. At
€4.1 billion, revenue was slightly lower than in 2014 (€4.2 billion).
Success with sales of complete buses and a favorable product
mix in Western Europe more than offset the lower unit sales in
Latin America, resulting in a slight increase in EBIT to €214 million
(2014: €197 million).
Varied business development in core regions
In Western Europe, the Daimler Buses brands Mercedes-Benz
and Setra offer not only a complete range of city buses,
intercity buses and coaches, but also bus chassis. Thanks to
an improvement in our complete bus business, sales in the
region increased by 3% to 7,800 units. As a result, Daimler Buses
maintained its leading position in Western Europe with a mar-
ket share of 30.9% (2014: 34.4%), although this share was lower
than the record figure achieved in 2014. Strong demand for
our Mercedes-Benz and Setra buses - particularly in the coach
segment had a positive effect on our sales in Germany,
where the coach segment also benefited from the continued
expansion of long-distance bus services. However, the de-
crease in demand for city buses compared with the extraordi-
narily high level of demand in the prior year led to a decrease
in bus sales in Germany to 2,800 units (2014: 2,900). Sales in
Turkey rose by 32% to 1,000 units; this positive development
Iwas mainly due to a substantial increase in coach sales in the
country.
Total
28,081
2015
C | THE DIVISIONS | DAIMLER BUSES
175
The Mercedes-Benz Citaro NGT (Natural Gas Technology) city bus convinces with its quiet operation and reduced CO2 emissions.
1,387
18,962
15,991
+17
+19
New business
57,891
47,912
+21
Contract volume
Investment in property, plant
and equipment
Employees (December 31)
116,727
98,967
1,619
+18
23
+30
9,975
8,878
+12
Nearly half of all delivered vehicles are financed
or leased by Daimler Financial Services
During the year under review, Daimler Financial Services
concluded 1.5 million new financing and leasing contracts worth
a total of €57.9 billion. The total value of all new contracts
rose by 21% compared with the prior year. As a result, the sales
and leasing activities at Daimler Financial Services supported
approximately half of all new-vehicle sales by our automotive
divisions in 2015. More than 3.7 million financed or leased
vehicles were on the books at the end of 2015; this corresponds
to an 18% increase in contract volume to €116.7 billion.
Adjusted for exchange-rate effects, the increase amounted
to 14%. EBIT rose to a new high of €1,619 million (2014:
€1,387 million). 7 C.09
New business in Europe increases
During the year under review, Daimler Financial Services
concluded 766,399 new financing and leasing contracts worth
€24.6 billion (+14%) in the Europe region. Particularly high
rates of growth were recorded in Spain (+43%) and Italy (+30%).
In Germany, Mercedes-Benz Bank's new business increased
by 8% to €10.7 billion; the volume of deposits in the direct bank-
ing business totaled €10.4 billion (-3%). In order to further
expand its market presence, Daimler Financial Services acquired
Welcome Bank GmbH in Austria, which was previously part
of Wiesenthal Autohandels AG. Welcome Bank GmbH has been
operating in Austria as Mercedes-Benz Bank GmbH since
the end of October 2015. During the year under review, Daimler
Financial Services' contract volume in Europe rose by 13%
to €45.6 billion.
EBIT
Revenue
30
29,092
% change
15/14
C
SETRA
LS3279
The TopClass 500 from the Setra brand offers a new travel feeling combining the highest levels of luxury and functionality.
176
C | THE DIVISIONS | DAIMLER BUSES
The ongoing economic difficulties in Latin America (excluding
Mexico) led to a significant further deterioration in the region,
with the Brazilian bus market reaching its lowest point for many
years in 2015. Sales of Mercedes-Benz bus chassis in Brazil fell
by 47% to 7,200 units. Nonetheless, we were able to signifi-
cantly expand our leading position in Brazil to a market share
of 52.5% (2014: 49.7%). At 4,000 units (2014: 3,600), sales
in Mexico were significantly higher than in the previous year.
Busworld Kortrijk 2015: New sales record and
international awards
-
For the second time in succession, Daimler Buses was extremely
successful at the oldest and most famous international bus
show, which takes place in Kortrijk, Belgium, every other year.
The number of buses sold increased once again following the
2013 event by approximately 70%, which made the total volume
significantly higher than the former record level. Sales actually
tripled compared with 2011. At Busworld, we presented the unique
complete range of products from Daimler Buses with its lead-
ing Mercedes-Benz and Setra brands. The presentation included
everything from minibuses to double-deckers, as well as a
wide range of services. Coaches from the Setra TopClass 500
series received several awards from European Coach & Bus
Week. The S 516 HDH high-decker bus was presented with the
"Grand Award Coach" and the judges also awarded the Setra
coach generation an "Ecology Label” and a “Styling & Design
Label" in recognition of the vehicles' high degree of environ-
mental compatibility and their appealing design. Both series also
received a "Special Mention 2015" prize from the "German
Design Award" organization at the beginning of the year. The
mid-decker coaches from the ComfortClass 500 series were
honored with the "Green Coach Award 2015” in Kortrijk. This
award has been presented by renowned trade journals to
coaches and city buses in alternating years since 2011. The
S 515 MD made a major impression here with its outstanding
economy and also by recording the lowest fuel consumption
on a test route.
New technologies set standards for efficiency and
environmental compatibility
Amounts in millions of euros
Daimler Buses is working to further improve the fuel efficiency
and environmental compatibility of its products through
the use of innovative technologies. The natural gas-powered
Mercedes-Benz Citaro NGT (Natural Gas Technology) city
bus presented in 2015 is equipped with the M 936 G Euro VI
natural gas engine, which makes it up to 20% more fuel-
efficient than the predecessor model. The natural gas engine
also boasts CO2 emissions that are as much as 10% lower
than the emissions of diesel engines. When powered by renew-
able natural gas, the Citaro NGT is also completely CO2-neutral.
In addition, the engine in the Citaro NGT makes less noise than
the quiet OM 936 diesel engine across the entire range of
engine speeds and the difference is noticeable. A new heavy-
duty engine is also now setting standards for coach operating
costs. Thanks to the new, highly efficient Mercedes-Benz OM 471
engine, which is used in three-axle premium buses from
Mercedes-Benz and Setra, fuel costs are down by as much
as 4%, even as handling has been made more dynamic.
Daimler Buses presented its roadmap for alternative drive
system technologies at the UITP (International Association of
Public Transport) World Congress and Exhibition. Along with
the further optimization of diesel powertrains, the division is
also focusing on developing the Citaro E-Cell and Citaro F-Cell
electric variants by 2020. Both models will be based on a mod-
ular electric vehicle platform. Additional measures here include
the development of a hybrid solution. With its Compact Hybrid,
Daimler Buses is pursuing a more simplified technical hybrid
approach. The result will not be a zero-emission vehicle but rather
one that achieves a substantial reduction in fuel consumption
compared with the already economical Euro VI diesel engines
with low additional costs for customers.
New bus plants facilitate entry into growth markets
In autumn 2015, series production operations were launched
at the Chennai bus plant in India, which opened in mid-2015.
The new facility gives Daimler Buses the opportunity to profit
from the tremendous growth potential offered by the Indian
market. The plant builds BharatBenz-brand front-engine buses
for the volume market in India, with bodies produced by the
British bus manufacturer Wrightbus. Mercedes-Benz rear-engine
buses are available for the premium segment. The new plant in
India has an initial production capacity of 1,500 units each year.
However, this annual capacity can be expanded to as many as
4,000 units. The first buses and bus chassis have already been
delivered to Indian customers as well as for export. A total of
€50 million has been invested in the facility in India to date. We
also opened a new bus chassis assembly plant in Funza,
near Bogotá, in Colombia. Daimler Buses is thus preparing for
the growing demand for buses and efficient mobility solutions
in that region.
Number 1 for safety technology in Europe
Daimler Buses is implementing a comprehensive integrated
safety concept for Mercedes-Benz and Setra buses. This con-
cept meets the highest possible demands in terms of safety
and also involves continual further developments in all areas.
The integrated safety concept comprises several components.
Its central component consists of a large number of innovative
safety features that are employed in line with the vehicle in
question and the way it is to be used, whereby the general ob-
jective is to continually improve active and passive safety.
Features range from driver assistance systems to fire alarm
devices in all buses as standard. Since November 2015, the
EU has required that all newly registered coaches be equipped
with emergency braking and lane-changing assistance systems.
Daimler Buses has been equipping coaches with its Lane Keep-
ing Assist system for nine years now, while Active Brake Assist
has been available for six years. The latest version of the latter
system - Active Break Assist 3 (ABA 3) - can initiate automatic
emergency braking and bring the coach to a standstill when it
encounters stationary obstacles ahead. Our vehicles also
already come with other assistance systems such as proximity
cruise control and Attention Assist. In addition, the Articulation
Turntable Controller (ATC) developed by Mercedes-Benz for the
Citaro G and CapaCity L articulated buses sets a new standard
for articulated bus handling and safety. Our safety technology
portfolio at Daimler Buses is rounded out by various safety
training courses and programs.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 177
Daimler Financial Services
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 3.7 million at the end of 2015. New business and
contract volume also rose sharply, and the combination of sales financing and brokered automotive
insurance policies gained in importance as well. During the year under review, we also further
expanded our range of innovative mobility solutions.
C.09
Daimler Financial Services
2015
2014
Roadmap for alternative drive systems
Production
+1
+18
13
+26
13,451
16,948
Other markets
-44
12,837
7,178
-2
16,063
15,750
(excluding Mexico)
China
Latin America
+29
31,466
40,519
172
C | THE DIVISIONS | MERCEDES-BENZ VANS
|
Sales of Vito models for the commercial segment rose by 23%
to 74,400 vehicles. Sales of the Mercedes-Benz Citan totaled
21,700 units (2014: 22,100). The V-Class multipurpose vehicle
remains very appealing to our customers; sales of the model
rose by 20% to 30,700 units.
Mercedes-Benz Vans is expanding its presence in the camper
van market as well. The Marco Polo and Marco Polo ACTIVITY
models have become quite successful just one year after their
market launch, as evidenced by the great demand for the two
Mercedes-Benz Vans on course for success in the
camper van market
11
A new chapter in the V-Class success story
The Vito is the second global van from Mercedes-Benz Vans,
following the Sprinter. After its market launch in Europe
in 2014, the mid-size van was introduced in North America in
October 2015 under the name Metris. With its attractive
design and wide range of variants, the model sets new stan-
dards in its segment. The Metris also stands out with its high
payload and efficient engines. The new van expands the Mercedes-
Benz Vans product program below the Sprinter and is thus able
to meet various customer requirements in the North American
market. An important area of application involves parcel deliv-
eries in connection with the growing online retail sector. Vito
models for the Latin American market are built at the Mercedes-
Benz Centro Industrial Juan Manuel Fangio plant near the capital
of Argentina, Buenos Aires. We also offer the Vito Tourer -
a Vito variant designed especially for passenger transport that
optimally meets the demand for shuttle buses and taxis, and
can also be used by limousine companies.
Mercedes-Benz Vans goes global: Vito successfully
launched in new markets
173
+5
The specialist for professional passenger transport: The compact Vito Tourer convinces with maximum versatility, comfort and quality.
C | THE DIVISIONS | MERCEDES-BENZ VANS
Mercedes-Benz Sprinter: In the year of its 20th anniversary, it set a new record for unit sales and is one of the most successful commercial vehicles of all time.
S.MB 2089
In order to improve our long-term cost position and meet the
demand for the Sprinter in North America, which has been rising
for several years now, we will build a new Mercedes-Benz Vans
production plant in Charleston, in the US federal state of South
Carolina. The facility will enable us to supply customers in
North America with the next-generation Sprinter more rapidly
and in a more individualized manner. Mercedes-Benz Vans will
invest roughly half a billion dollars in the new van plant in the next
several years. Construction is scheduled to begin in 2016. The
facility in Charleston will boast a completely new body shop, a
paint shop and a final assembly area. With this new plant, we
are continuing the development of our global production network
and achieving a new milestone for our "Mercedes-Benz Vans
goes global" growth strategy.
of gravity of the vehicle. Both generations of ESP led to a dra-
matic decline in accidents. The latest Sprinter also comes with
Crosswind Assist as a further innovation. Along with our efforts
to enhance safety, we are also committed to optimizing fuel con-
sumption and reducing emissions in the large van segment.
Thanks to our current efficiency package, the Sprinter boasts
official standard consumption of 6.1 liters per 100 km.
In September, we celebrated the Sprinter's 20th year of pro-
duction at the van plant in Düsseldorf. In 1995, the Mercedes-
Benz Sprinter established the large-van segment that still
bears its name - a segment it has continued to shape ever since.
The Sprinter is now on the road in more than 130 countries
and has been sold more than 2.9 million times. The model is thus
one of the most successful commercial vehicles of all time
and one of the bestsellers in the Daimler product portfolio. The
high level of versatility within the model series is very popular
with our customers around the world: The large premium van
comes in three different wheelbase lengths and cargo space
heights, and four different body lengths. The model is also
available as an all-wheel drive van as an option. Trailblazing
technical innovations have repeatedly made their debut in the
Sprinter throughout the model's history. For example, we were
the first van manufacturer to introduce the ABS anti-lock brak-
ing system in 1995, and we followed that up with the inclusion
of the Electronic Stability Program (ESP) in 2002. Mercedes-Benz
Vans achieved a further pioneering milestone in 2006 with the
introduction of Adaptive ESP as standard equipment. The inno-
vative system takes into account the current weight and center
An icon turns 20: the Sprinter remains a bestseller
and a guarantee of success
S&MB 3061
30,758
32,163
+11
Employees (December 31)
+9
294,594
321,017
+10
299,008
328,129
22.639
+125
153
+31
293
384
development expenditure
thereof capitalized
Production
Research and
-34
68
vehicles. The popularity of the Marco Polo has also led to awards
from two trade journals. Readers of promobil named the Marco
Polo "Compact Camper Van of the Year" for the second consec-
utive time in 2015, while readers of AUTO BILD REISEMOBIL
put the compact camper van in first place, leading to an award
as "Das Goldene AUTO BILD Reisemobil 2015" at the end
of August. The V-Class and the Vito are also conquering the
market for customized extensions and body types for compact
camper vans by serving as attractive base vehicles. More and
more camper van manufacturers are relying on the two premium
models, both of which feature an all-new pop-up roof.
21.598
Unit sales
79,898
88,380
thereof Germany
Eastern Europe
NAFTA
+10
190,019
208,459
Western Europe
+5
+9
321,017
15/14
% change
2014
2015
Total
Unit sales by Mercedes-Benz Vans
C.06
294,594
Portfolio expansion with a new pickup
The Mercedes-Benz V-Class was presented to the Japanese
public at the Tokyo Motor Show in 2015 and has been available
in Japan since January 2016. The multipurpose vehicle's launch
in Japan marks its entry into a second major right-hand drive
market after the UK. The MPV was also featured at the Dubai
International Motor Show in November 2015 and will be
launched in the United Arab Emirates and other markets in the
Middle East in the spring of 2016. The V-Class is now sold at
Mercedes-Benz passenger car and commercial vehicle dealer-
ships in more than 90 countries. Beginning in the spring of
2016, additional sales momentum should be generated by the
introduction of new equipment features such as the AMG Line
and the segment's largest panoramic roof.
5.2
thereof capitalized
182
184
development expenditure
Research and
-1
105
104
and equipment
Investment in property, plant
4.7
Return on sales (in %)
+9
197
4,218
We will expand our product range into a very promising segment
before the end of the decade by becoming the first premium
manufacturer to build a pickup truck. Within the framework of
our "Mercedes-Benz Vans goes global" strategy, a pickup is
the ideal vehicle for achieving a targeted expansion of our at-
tractive range of products on an international scale. In the
pickup segment as well, we will stand out through an unmistak-
able design and all of our typical brand attributes with regard
to safety, comfort, powertrain quality and high value. Versatile
pickups that boast a high degree of all-round quality and a
payload capacity of around one ton are very popular around the
world and thus offer solid sales potential. The initial target
markets for the new model will be Latin America, South Africa,
Australia and Europe.
4,113
214
Awards for the Mercedes-Benz Sprinter and Vito
Mercedes-Benz Vans gained a double victory in the competition
"CEP Van of the Year 2015." The vehicles were assessed by
a panel of experts from the courier, express and postal sectors
(CEP). The Vito 111 CDI and the Sprinter 316 CDI succeeded
against strong competition. The new Mercedes-Benz Vito took
first place in the category "Vans up to 3.0 tons" and the
Mercedes-Benz Sprinter defended its top position of recent
years in the category "Vans up to 3.5 tons."
174
C | THE DIVISIONS | DAIMLER BUSES
Daimler Buses
Revenue
C.07
As the leading bus manufacturer in its core markets of Western Europe and Latin America, Daimler
Buses focuses on supplying innovative and environmentally responsible products that meet its
customers' business requirements. During the year under review, we enhanced our wide-ranging
product portfolio. Business development in 2015 was once again negatively affected by the difficult
economic situation in Latin America, which led to a decrease in unit sales and revenue. Nevertheless,
we were able to increase our earnings slightly compared with the previous year.
2015
2014
€ amounts in millions
EBIT
Daimler Buses
Integrity Code
The Integrity Code is a result of our dialogue with employees.
The Code, which is based on a shared understanding of values
agreed upon with our employees, lays out the principles for
our everyday business conduct. Such principles include fairness,
responsibility, mutual respect, transparency, openness, legal
compliance and the honoring of rights. The Code is valid through-
out the Group and is available in 23 languages. A guide has
been prepared to support the application of the Code in every-
day situations, providing answers to the most frequently
asked questions.
Contact and advice center
In order to further develop a culture of integrity at the company,
we also began conducting a continual dialogue with our
employees in 2011. Integrity cannot be dictated from above;
this is why the regular sharing of opinions on questions of
integrity is an integral component of our everyday working life.
We regularly address integrity issues in our internal media
and make extensive integrity-related materials available on the
intranet for use by all our business units.
182
A culture of integrity
In March 2015, we launched the "Infopoint Integrity" for the
employees at our locations in Germany. The team offers advice
on integrity-related issues in the daily work environment
and puts employees in touch with the right contact partner if
necessary.
178
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Integrity is one of our four corporate values, which form the
foundation of our business activities. We are convinced that
doing business ethically brings us sustained success and is
also good for society as a whole. As a group of companies
with global operations, we accept responsibility and want to be
a pioneer in terms of ethical business conduct. The further
development and permanent establishment of such ethical
conduct is an important task and therefore a component of
the target agreements for Board of Management remuneration.
Our business activities are also strongly guided by the ten
principles of the UN Global Compact, of which Daimler is a
founding member. We are also a member of the Global
Compact LEAD Group.
Communicating with employees
By means of innovative dialog formats, our employees are
encouraged to discuss the issue of integrity. For example,
executives can use a toolbox to initiate discussions about
integrity in their departments. Furthermore, more than 55,000
employees worldwide have participated in our online game
"Monster Mission" since September 2014. The game increases
employee awareness of the principles contained in the
Integrity Code by simulating specific everyday work situations
in which ethical behavior is required.
We regard our business partners' integrity and behavior in con-
formity with regulations as an indispensable precondition
for trusting cooperation. In the selection of our direct business
partners, we make sure that they comply with the law and
observe ethical principles. Within the framework of our integrated
training program, we also offer our business partners special
training courses on integrity and compliance in line with the
specific risks they face. We reserve the right to terminate our
cooperation with business partners who fail to conform to our
standards. For the expectations we place on our business
partners, see also ④daimler.com/sus/obr.
Sharing experience of compliance in practice
We have designed the Daimler Compliance Academy as an
annual practical seminar that creates a platform for sharing
experience of compliance trends and challenges. The seminar,
which took place for the second time in 2015, is directed at
compliance professionals from all industries.
Antitrust law
Our Group-wide antitrust-compliance program, which is oriented
toward national and international standards, helps us to ensure
adherence to antitrust laws in our business operations. By assess-
ing qualitative and quantitative factors, we systematically
analyze the antitrust risks of all our business units. The results
of this analysis form the basis of our risk management and
of the definition of the measures to be taken to counteract any
risks related to antitrust law.
We help our employees to recognize situations that might
be critical from an antitrust perspective and to act in compliance
with regulations in their daily work by means of training
courses, as well as with written advice and practical examples.
Our employees also have access to an advisory hotline estab-
lished by the Legal department for questions on antitrust and
cartel matters. Our antitrust-compliance program defines a
binding Daimler standard on how matters of competition law
are to be assessed internally. In this context, we focus in par-
ticular on the strict standards of the European antitrust author-
ities and courts. Our standard is the basis for effective imple-
mentation of the program and allows us, guided and supported
by our Legal department, to ensure a uniform level of compli-
ance and advice throughout the Group. We regularly review our
antitrust-compliance program in order to continually adapt it
to worldwide developments, new legal requirements and changing
risks, and to constantly improve its effectiveness.
D❘ CORPORATE GOVERNANCE | DECLARATION OF COMPLIANCE 187
Declaration by the Board of Management and
Supervisory Board of Daimler AG pursuant
to Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section
of the German Federal Gazette on June 12, 2015 in the Code
version dated May 5, 2015, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board) and one deviation from Clause 5.4.1 Paragraph 2 (Spe-
cific objectives for the composition of the Supervisory Board),
which was declared as a precautionary measure, and will con-
tinue to observe the recommendations with the aforesaid
deviations. Since the issuance of the last compliance declara-
tion in December 2014, Daimler AG has observed the recom-
mendations of the German Corporate Governance Code in the
version dated June 24, 2014, published on September 30,
2014, with the aforementioned exceptions.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible
for the members of the Supervisory Board, which is appropriate
in the view of Daimler AG. However, this deductible does not
correspond to the legally required deductible for members of
the Board of Management in the amount of at least 10% of
the damage up to at least one and a half of the fixed annual
remuneration. Since the remuneration structure of the
Supervisory Board is limited to fixed remuneration without
performance bonus components, setting a deductible for
Supervisory Board members in the amount of 1.5 times the
fixed annual remuneration would have a disproportionate
economic impact when compared with the members of the
Board of Management, whose compensation consists of
fixed and performance bonus components.
Specific objectives for the composition of the Supervisory
Board (Clause 5.4.1 Paragraph 2)
The Supervisory Board has limited its target objective for its
composition regarding the number of independent members of
the Supervisory Board and in consideration of potential con-
flicts of interest to the appointments for the shareholders' side
in the light of the German Co-Determination Act and due to
the lack of influence on the appointments for the employee side.
Daimler AG is in conformity with the new recommendation for
a limit on the duration of membership in the Supervisory Board
contained in Clause 5.4.1 Paragraph 2 of the new version of
the German Corporate Governance Code, dated May 5, 2015,
since the determination of such a limit with a Supervisory
Board resolution dated December 9, 2015.
Stuttgart, December 2015
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
For the Board of Management
Dr. Dieter Zetsche
Chairman
Compliance at our business partners
Whistleblower system BPO (Business Practices Office)
The BPO is the organization where Daimler employees and
external whistleblowers can report misconduct anywhere in
the world. The office is available to receive information around
the clock and if allowed by local law - also anonymously.
This system enables us to learn about potential risks and specific
violations at an early stage and thus prevent damage to the
company and its reputation. Our globally valid corporate policy
in this area ensures a fair and sensitive approach that takes
into consideration the principle of proportionality and also gives
protection to both whistleblowers and affected parties. In
Germany, reports to the BPO can also be submitted via a “neutral
intermediary" - an independent attorney who, due to her oath
of professional secrecy, is obliged to maintain confidentiality.
We offer target group-specific training courses within our inte-
grated training program in order to ensure compliance staff
members remain up to date on the continual changes made to
laws and regulations.
Our Compliance Organization is structured along the lines of
our divisions. This structure enables us to offer effective
support and advice to the individual divisions. For this purpose,
the organization consists of divisional and regional compliance
officers. In addition, local compliance managers throughout
the world make sure that our standards are observed. The
divisional and regional compliance officers report directly to
the Chief Compliance Officer. This ensures the divisional and
regional compliance officers' independence from the divisions.
The Chief Compliance Officer reports directly to the Member
of the Board of Management for Integrity and Legal Affairs and
to the Chairman of the Supervisory Board.
Extensive training program
The Integrity Code also forms the foundation of the range of
training courses we offer. Our integrated training program is
defined on the basis of an annual planning cycle that starts with
a needs analysis, extends through the implementation of the
program and ends with a feedback and monitoring process.
Among other things, the program addresses the topics of integ-
rity, compliance, data protection and antitrust law. Depending
on the risk and the target group, we use classroom training or
web-based training sessions. Our training measures help ensure
that ethical and compliant behavior remain firmly and sustain-
ably anchored within the Group. They also help employees deal
with specific questions in their day-to-day business. Basic web-
based training in integrity, compliance and legal issues is offered
to our employees via the intranet. Every newly hired Daimler
employee must complete this training session as part of a
"Welcome Package” when they join the company. About
50,000 employees from various levels of the hierarchy partici-
pated in this training program in 2015.
Requirements for managers
Our Integrity Code also defines requirements for managers, who
serve as role models and have a special responsibility for
the culture of integrity. All training seminars for new managers
therefore also include modules that address the topic of
integrity. In addition, integrity and compliance are important
criteria in the annual target agreements and in assessing
the target achievement of our managers.
Advisory Board for Integrity and Corporate Responsibility
The Advisory Board consists of independent external experts
from the fields of science, business, politics and journalism,
and from non-governmental organizations. The Advisory Board
regularly collects information on the company's activities,
conducts discussions with company representatives and monitors
the integrity process at Daimler in a constructively critical banner.
We also promote discussions of issues of current importance
to the company through our meetings with stakeholders.
To this end, we organized a conference in 2015 under the head-
ing of "Autonomous Driving, Law and Ethics."
186
D | CORPORATE GOVERNANCE | INTEGRITY AND COMPLIANCE
Daimler Financial Services satisfies its customers' requirements with excellent service and tailored financing, leasing and insurance offers.
Compliance
Compliance management system (CMS)
Our CMS is based on national and international standards and
supports us in ensuring compliant behavior in our daily busi-
ness. We continually review the effectiveness of the system,
and we adjust it to worldwide developments, changed risks
and new legal requirements. In this way, we improve its efficiency
and effectiveness.
"Anti-Money Laundering Policy"
This policy is designed to prevent money laundering and the
financing of terrorism in the trade with goods. It forms the
basis for ensuring that legislation in various countries is com-
plied with throughout the Group. The Chief Compliance
Officer serves as the anti-money laundering officer of Daimler AG.
A center of competence supports the Chief Compliance Officer
with the management and coordination of money-laundering
prevention measures in the goods trade.
Consistent compliance with sanction lists
Daimler takes appropriate measures to ensure that the legal
sanctions specified by legislation are observed. Effective
and efficient implementation has been ensured here by the
introduction of a global system-based standard process.
Systematic minimization of compliance risks
We systematically analyze and assess the compliance risks of
all our business units every year. The results of this analysis
form the basis of our risk management. One focus of our risk
minimization activities is on sales companies in high-risk
countries. The responsibility for implementing and monitoring
the associated measures lies with the management of each
company, which cooperates closely with the Group Compliance
department.
Effective compliance structures
Daimler acts in conformance with ethical principles and adheres
to all relevant legislation, internal rules and voluntary commit-
ments. We place the utmost priority on complying with all appli-
cable anti-corruption regulations and on maintaining and
promoting fair competition, as is set out in our Integrity Code.
Continued expansion in North America
Daimler Financial Services was able to record an increase
over the high level of new business of the previous year also in
the Americas region, where the company brokered 456,365
new financing and leasing contracts worth €22.0 billion in 2015
(+21%). The decrease in new business in Brazil that resulted
from the difficult economic situation in the country was offset
by significant gains in the United States (+28%) and Mexico
(+31%), leading to an overall increase in contract volume in the
Americas of 18% to €50.8 billion.
Increase in new business in Africa & Asia-Pacific region
New business in the Africa & Asia-Pacific region increased over
the previous year by 39% to €11.3 billion. Business develop-
ment was especially strong in India (+91%), China (+66%) and
South Korea (+53%). With a contract volume of €6.9 billion,
China became the fourth-largest market for Daimler Financial
Services in the year under review. At the end of 2015, contract
volume in the Africa & Asia-Pacific region totaled €20.2 billion,
which corresponds to a 32% increase over the previous year.
184
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Also in the meeting on June 18, 2015, the Audit Committee dealt
with new developments in accounting and financial reporting
and other audit-relevant areas. Furthermore, the Committee
was informed in detail about the Group Legal System and Group
Legal Risk Reporting. Finally, the Committee was informed
in detail about the leasing business model and also discussed
with the Board of Management and the representatives
of the specialist departments issues related to residual-value
management and associated accounting processes.
In the meeting held on July 22, 2015, the Audit Committee
received the annual report from the Group's Data Protection
Officer and was informed about the main topics and current
developments in the field of data protection. Here, the members
of the Committee addressed, for example, the data protection
principles for connected vehicles and data protection at the
Mercedes me online platform, which is designed to reconcile
the needs of data security and customer-friendly operation.
In the meeting held on October 21, 2015, the Committee dealt
with, among other things, current activities in the Compliance
department and was informed in particular about measures
designed to ensure the permanent establishment of the elements
of the Compliance Management System and the improvement
of specific processes.
Topics in 2016
In a meeting held on February 3, 2016, the Audit Committee
dealt with the preliminary figures of the annual company
financial statements and the annual consolidated financial
statements for the year 2015, as well as with the proposal
on the appropriation of profits made by the Board of Manage-
ment. Following an in-depth review, the Audit Committee
took positive note of the presented figures and determined that
no objections could be made to their proposed publication.
The Committee further recommended that the Supervisory Board
adopt the same view. The preliminary key figures and the
proposal on the appropriation of profits were published at the
Annual Press Conference on February 4, 2016.
In another meeting on February 16, 2016, the Audit Committee
reviewed and discussed in detail the annual company financial
statements, the annual consolidated financial statements and
the combined management report for Daimler AG and the
Daimler Group for the year 2015, each of which had been issued
with an unqualified auditor's opinion by the external auditors,
as well as the proposal on the appropriation of profits. At the
meeting, the external auditors reported on the results of their
audit and were available to answer supplementary questions
and to provide additional information. The audit reports on
the company and consolidated financial statements and on the
internal control system (ICS), the report on the risk manage-
ment system for the year 2015, the Annual Report 2015 and
important issues related to financial reporting were discussed
with the external auditors. Following an intensive review
and discussion, the Audit Committee recommended that the
Supervisory Board approve the annual financial statements
and the combined management report, and on this basis adopt
the recommendation of the Board of Management to pay a
dividend of €3.25 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit
Committee for the year 2015.
Also in this meeting, the Audit Committee discussed the report
on the total fees paid to the external auditors in the year 2015.
The Audit Committee also decided to recommend to the Super-
visory Board, and subsequently to the Annual Shareholders'
Meeting, that KPMG be engaged to conduct the annual exter-
nal audit and the external auditors' review of interim financial
reports for financial year 2016; the results of the independence
review and the discussion of the quality of the external audit
were taken into consideration. Subject to the outcome of voting
by the Annual Shareholders' Meeting, the Committee also
discussed the proposal for the fees to be agreed upon with
the external auditors for financial year 2016. Finally, within
the framework of its responsibility, the Audit Committee dealt
with the draft agenda for the 2016 Annual Shareholders'
Meeting and the annual audit plan for 2016 of the Internal
Auditing department.
Efficiency review
As in previous years, the Audit Committee once again con-
ducted a self-evaluation of its own activities in 2015. The very
positive results of this efficiency review were presented and
discussed in the meeting in mid-February 2016. This did not
result in any need for action with regard to the Committee's
tasks, or with regard to the content, frequency or procedure
of its meetings.
Stuttgart, February 2016
The Audit Committee
ming.
Dr. Clemens Börsig
Chairman
Integrity and Compliance
D | CORPORATE GOVERNANCE | INTEGRITY AND COMPLIANCE
In its meeting on June 18, 2015, the Audit Committee discussed
the Group's risk management system, and dealt in particular
with its changes and further development. It also discussed the
methods and processes of, and possible changes to, the
internal control system, which along with accounting also encom-
passes the internal auditing and compliance management
functions. Furthermore, the Committee received a report
on the non-auditing services provided by the external auditors.
In this meeting, the important audit issues for the external
audit of the reporting period and the framework of approval for
engaging the external auditors to provide non-audit services
were also determined. In addition, this meeting was used to dis-
cuss the results of the internal quality analysis of the external
audit for the year 2014.
185
In the meetings during 2015 relating to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditors'
review of interim financial statements. In addition, the Commit-
tee received reports from the Compliance, Legal and Corpo-
rate Audit departments. In this connection, the Audit Commit-
tee dealt, for example, with the current status of pending
legal proceedings and with measures taken by the Company to
prevent money laundering and to ensure a review of sanction
lists. In addition, the Audit Committee dealt with notifications
concerning possible violations of rules submitted by employees
and third parties to the Company's own whistleblower system,
the BPO (Business Practices Office).
issues related to financial reporting were discussed with the
external auditors. Following an intensive review and discussion,
the Audit Committee recommended that the Supervisory
Board approve the annual financial statements and the com-
bined management report, and on this basis adopt the
recommendation of the Board of Management to pay a dividend
of €2.45 per share entitled to a dividend. Furthermore, the
Audit Committee approved the Report of the Audit Committee
for the year 2014.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Report of the Audit Committee
Dear Shareholders,
As Chairman of the Audit Committee, I am pleased to report
to you on the tasks and activities performed by that body in
financial year 2015.
Responsibility
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting and financial reporting. In addi-
tion, it deals with the annual audit and reviews the qualifications
and independence of the external auditors. Furthermore, it
discusses the effectiveness and functional capabilities of the
risk management system, the internal control system, the
internal auditing system and compliance management. After
the external auditors are elected by the Annual Shareholders'
Meeting, the Audit Committee engages the external auditors
to conduct the annual audit and the auditors' review of interim
financial statements, determines the important audit issues
and negotiates the audit fees with the external auditors.
Equal representation
Following several personnel changes that occurred in the
prior year, the makeup of the four-member Audit Committee
remained unchanged in 2015. Audit Committee Chairman
Dr. Clemens Börsig and Joe Kaeser served as the shareholder
representatives. Both are independent and have expertise
in the field of financial reporting, as well as special knowledge
and experience in the application of methods of internal
control. During financial year 2015, the employees were repre-
sented on the Audit Committee by Michael Brecht as the
Deputy Chairman of the Committee and by Dr. Sabine Maaßen.
Meetings and participants
The Audit Committee met six times in financial year 2015.
All of those meetings were also attended by the Chairman
of the Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The meetings were also attended by the Chairman
of the Board of Management, the members of the Board
of Management responsible for Finance and Controlling and
for Integrity and Legal Affairs, and the external auditors.
The heads of specialist departments such as those for account-
ing, auditing, compliance and law, as well as other experts,
were also present for the appropriate items of the agenda.
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the external auditors,
the members of the Board of Management responsible for
Finance and Controlling and for Integrity and Legal Affairs, and,
if required, the heads of the specialist departments. Such
individual discussions were mainly held to prepare for the next
committee meetings.
Reporting to the Supervisory Board
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following Super-
visory Board meetings.
Topics in 2015
In a meeting on February 4, 2015, the Audit Committee dealt
with the preliminary figures of the annual company financial
statements and the annual consolidated financial statements
for the year 2014, as well as with the proposal on the appro-
priation of profits made by the Board of Management. Follow-
ing an in-depth review, the Audit Committee took positive
note of the presented figures and determined that no objections
could be made to their proposed publication. The Committee
further recommended that the Supervisory Board adopt the same
view. The preliminary key figures for financial year 2014 and
the proposal on the appropriation of profits were published at
the Annual Press Conference on the next day (February 5,
2015).
In another meeting held on February 13, 2015, the Audit Com-
mittee dealt with the annual company financial statements,
the annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group
for the year 2014, which had been issued with an unqualified
auditor's opinion by the external auditors, as well as with the
proposal on the appropriation of profits. At the meeting, the
external auditors reported on the results of their audit and
were available to answer supplementary questions and to pro-
vide additional information. The audit reports on the com-
pany and consolidated financial statements and on the internal
control system (ICS), the report on the risk management sys-
tem for the year 2014, the Annual Report 2014 and important
Dr. Clemens Börsig, Chairman of the Audit Committee
Also in this meeting, the Audit Committee discussed the report
on the fees paid to the external auditors in the year 2014 for
auditing and non-auditing services. Taking into consideration
the results of the independence review, the Audit Committee
decided to recommend to the Supervisory Board, and subse-
quently to the Annual Shareholders' Meeting, that KPMG be
engaged to conduct the annual external audit and the external
auditors' review of interim financial reports for financial year
2015. Among other things, the Audit Committee based this rec-
ommendation on the very good results of the analysis of the
quality of the external audit of financial year 2013 carried out
by the Audit Committee in May 2014. Subject to the election
of the proposed external auditors by the Annual Shareholders'
Meeting, the Committee discussed the proposal for the fees
to be agreed upon with the external auditors for financial year
2015. Finally, within the framework of its responsibility, the
Audit Committee dealt with the draft agenda for the 2015 Annual
Shareholders' Meeting and the annual audit plan for 2015 of
the Corporate Auditing department.
187
D&O insurance deductible for the Supervisory Board
- Targets for the composition of the Supervisory Board
Shares and Share Transactions by Board of
Management and Supervisory Board members
Risk management and financial reporting
Corporate governance statement
We act responsibly and sustainably
S.MB 2540
A new approach to mobility: With car2go, moovel and mytaxi, we are making personal transport more connected, flexible and intelligent.
P
PER NOMES
1254
The automatic system for truck-toll collection on German
autobahns and selected federal highways continued to operate
smoothly and reliably in 2015. The system recorded a total
of 29.7 billion kilometers driven. Daimler Financial Services
holds a 45% equity interest in the Toll Collect consortium.
On July 1, 2015, the Toll Collect system was expanded to cover
additional federal highways in Germany, and on October 1
it was extended to include trucks with a gross vehicle weight
of 7.5 metric tons and above. The Federal Republic of Germany
has collected a total of €44 billion in tolls since Toll Collect
went into operation at the beginning of 2005.
Toll Collect system successfully expanded
The foundation of these and other successes is formed by
our highly motivated employees, nine out of ten of whom
stated in the independent Great Place to Work Institute global
survey that Daimler Financial Services is a great employer.
Focus on customer and employee satisfaction
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2015, independent surveys once again
showed that we are a leader in numerous countries with regard
to customers' and dealers' assessments of our service quality.
In the United States, for example, Mercedes-Benz Financial
Services finished top in three categories of a J. D. Power study
of dealer satisfaction, whereby more than two thirds of the
dealers surveyed reported that they planned to further increase
the share of business they conduct with Mercedes-Benz
Financial Services USA due to the exceptional customer focus
of the company's sales staff. During the year under review,
Mercedes-Benz Financial Services was once again named the
most popular partner for auto dealerships also in the UK.
In 2015, Daimler Financial Services once again supported
its fleet customers with the financing and management of their
vehicles and fleets. Daimler Fleet Management concluded a
total of 152,000 new contracts with commercial clients in 2015,
representing an increase of 9% over the previous year. A total
of 310,000 contracts were on the books in Europe at the end
of December 2015 - an increase of 1.5% over the previous
year. The demand for comprehensive mobility concepts for
use with company fleets increased during the year under
review, and fleet services for smaller companies with less than
50 vehicles were also expanded.
Fleet business expanded
179
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Daimler Financial Services offers a broad range of innovative
mobility solutions. During the year under review, the division
also further expanded its services in this area. The number
of customers using the car2go car-sharing system increased
to 1.2 million in 2015, thereby enabling car2go to maintain
its position as the world's leading car-sharing company. car2go
was also launched in Turin and Madrid in 2015; at the end
of the year, the Group-owned company was operating at 31
locations. We also further developed our moovel app in 2015,
which allows customers in Germany to compare various mobility
and transport-mode options and then choose the best way
to get from point A to point B. The app can also be used to book
and directly pay for services provided by companies such
as car2go, Flinkster, mytaxi and the Deutsche Bahn railway
company. In the fourth quarter of 2015, moovel in Stuttgart
became the first provider to allow users to book and pay for
online tickets for journeys by a public transport operator.
RideScout in North America, which is also a Daimler company,
acquired the US startup GlobeSherpa at the end of the
second quarter of 2015. GlobeSherpa is an upcoming US
provider in the field of mobile ticketing and is currently present
in San Francisco, Portland, Chicago and several other cities.
The mytaxi app allows customers to locate, book and pay for
a taxi using their smartphones. The app's great popularity
led to its launch in Milan, Seville, Valencia, Krakow and Lisbon
during the year under review. mytaxi was thus in use in 40
cities at the end of 2015. Daimler also has an equity interest
in Mein Fernbus FlixBus GmbH and in the Blacklane profes-
sional driver service.
Mobility services expanded further
During the year under review, Daimler Financial Services
brokered 1.8 million insurance policies - an increase of 25%
compared with the prior year. Our insurance business
continued to be particularly successful in China, where an
average of 75% of Daimler vehicles were delivered with
an insurance policy brokered by us.
Growth in the insurance business
The Board of Management and the Supervisory Board of Daimler
are committed to the principles of good corporate governance.
All of our actions take place within the framework of responsible,
transparent and sustainable corporate governance.
Declaration by the Board of Management
and the Supervisory Board of Daimler AG
of Compliance with the German Corporate
Governance Code
D | Corporate Governance
Responsibilities and composition
Shareholders and the Annual Shareholders' Meeting
Germany's law on the equal participation of women
and men in executive positions
committees of the Supervisory Board
Composition and mode of operation of the
Management and the Supervisory Board
The main principles applied in our corporate governance
Composition and mode of operation of the Board of
185 - 186
Corporate Governance Report
182-184
D❘ CORPORATE GOVERNANCE | CONTENTS 181
Antitrust law
-
Compliance
Culture of integrity
Integrity and Compliance
- Topics dealt with
Meetings and participants
Report of the Audit Committee
188 - 195
Corporate governance statement
223
pages 138 ff
Risk management and financial reporting
As of December 31, 2015, the members of the Board of
Management held a total of 0.25 million shares or options on
shares of Daimler AG (0.024% of the shares issued). On
the same date, the members of the Supervisory Board held a
total of 0.02 million shares or options on shares of Daimler AG
(0.002% of the shares issued).
Shares and share transactions by Board of
Management and Supervisory Board members
195
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
In addition to other methods of communication, we also make
extensive use of the Company's website. All of the important
information disclosed in 2015, including annual and interim
reports, press releases, voting rights notifications from major
shareholders, presentations, and audio recordings of analyst
and investor events and conference calls, as well as the
financial calendar, can be found at H daimler.com/investors.
All the dates of important disclosures such as annual reports
and interim reports and the dates of the Annual Shareholders'
Meeting, the annual press conference and the analyst confer-
ences are announced in advance in the financial calendar. The
financial calendar is also included in this Annual Report as a
bookmark. Disclosures are made in English as well as in German.
We maintain close contacts with our shareholders in the con-
text of our comprehensive investor relations and public rela-
tions activities. We regularly and comprehensively inform our
shareholders, financial analysts, shareholder associations,
the media and the interested public about the situation of the
Group, and inform them without delay about any significant
changes in its business.
The influence of the Annual Shareholders' Meeting on the
management of the Company is limited by law, however. The
Annual Shareholders' Meeting can only make management
decisions if it is requested to do so by the Board of Management.
Among other matters, the Annual Shareholders' Meeting
decides on the appropriation of distributable profits, the ratifi-
cation of the actions of the members of the Board of Manage-
ment and of the Supervisory Board, the election of the external
auditors, the election of the members of the Supervisory
Board representing the shareholders and the remuneration of
the Supervisory Board. The Annual Shareholders' Meeting
also makes other decisions, especially on amendments to the
Articles of Incorporation, capital measures and the approval
of certain intercompany agreements. Shareholders can submit
countermotions on resolutions proposed by the Board of
Management and the Supervisory Board and, within the provi-
sions of applicable law, can challenge resolutions passed by
the Annual Shareholders' Meeting in a court of law.
The shareholders exercise their membership rights, in parti-
cular their information and voting rights, at the Annual
Shareholders' Meeting. Each share in Daimler AG entitles
its owner to one vote. There are no multiple voting rights,
preferred stock or maximum voting rights at Daimler AG. Docu-
ments and information relating to the Annual Shareholders'
Meeting can be found on our website at daimler.com/ir/am.
The Annual Shareholders' Meeting is generally held within
four months of the end of a financial year. The Company facili-
tates the personal exercise of the shareholders' rights and
proxy voting in a variety of ways, such as by appointing proxies
who are strictly bound by the shareholders' voting instructions
and who can be contacted also during the Annual Sharehold-
ers' Meeting. Absentee voting is also possible. It is possible
to authorize the Daimler-appointed proxies and give them voting
instructions or to cast absentee votes by using the so-called
e-service for shareholders.
Shareholders and the Annual Shareholders'
Meeting
On December 31, 2015, 30% of the shareholder representatives
in the Supervisory Board of Daimler AG were women (Sari
Baldauf, Andrea Jung and Petraea Heynike). On that date, 20%
of the employee representatives on the Supervisory Board
were women (Dr. Sabine Maaßen and Elke Tönjes-Werner). In
its meeting on October 1, 2015, the Supervisory Board con-
sidered its nominations for the election at the Annual Share-
holders' Meeting 2016 and came to the conclusion that the
shareholders and employees should achieve the legally required
share of women board members separately. This step became
necessary because the shareholder representatives declared
that they object to the Supervisory Board's combined com-
pliance with the legally required gender ratio. Thereafter, the
Supervisory Board decided to nominate Dr. Manfred Bischoff
and Petraea Heynike for reelection to the Supervisory Board
during the Annual Shareholders' Meeting 2016. If they are
reelected, the shareholder side will continue to fulfill the legally
required gender ratio. The next election of employee represen-
tatives to the Supervisory Board will take place in 2018.
For companies such as Daimler AG that have supervisory
boards in which shareholders and employees are equally repre-
sented, the new law on the equal participation of women and
men in executive positions stipulates a proportion of women
of at least 30% when vacant supervisory board positions are
filled, beginning in 2016. This requirement has to be fulfilled
by the Supervisory Board as a whole. If the side of the Super-
visory Board representing the shareholders or the side repre-
senting the employees objects to the Chairman of the Super-
visory Board about the application of the ratio to the entire
Supervisory Board, the minimum ratio is to apply separately
to the shareholders' side and to the employees' side for that
election.
On June 23, 2015, the Board of Management passed a resolu-
tion stipulating a target of 6.5% women for the first manage-
ment level below the Board of Management of Daimler AG (the
actual proportion was 5.3% at the time of the resolution) and
of 10.0% for the second management level below the Board of
Management (the actual proportion was 9.9% at the time of
the resolution). The Board of Management also set December 31,
2016 as the deadline for both of these targets.
To meet these legal requirements, the Supervisory Board
of Daimler AG passed a resolution on April 28, 2015 that the
target figure for the proportion of women in the Board of
Management of Daimler AG would be 12.5% (the same as the
status quo at the time when the resolution was passed),
while the deadline would be December 31, 2016. Dr. Christine
Hohmann-Dennhardt stepped down from the Board of
Management at the end of December 31, 2015. She was suc-
ceeded on January 1, 2016, by Renata Jungo Brüngger. As
a result, women continue to account for 12.5% of the Board
of Management members.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
Risk management at the Group
Daimler has a risk management system
commensurate with its size and position as a company with
global operations. The risk management system is one
component of the overall planning, controlling and reporting
process. Its goal is to enable the company's management
to recognize significant risks at an early stage and to initiate
appropriate countermeasures in a timely manner. The Super-
visory Board deals with the risk management system in partic-
ular with regard to the approval of the operational planning.
The Audit Committee discusses at least once a year the
effectiveness and functionality of the risk management system
with the Board of Management and the external auditors.
In addition, the Audit Committee regularly deals with the risk
report. The Chairman of the Supervisory Board has regular
contacts with the Board of Management to discuss not only
the Group's strategy and business development, but also
the issue of risk management. The Internal Auditing depart-
ment monitors adherence to the legal framework and
Group standards by means of targeted audits and initiates
appropriate actions as required.
Accounting policies
The consolidated financial statements of the Daimler Group
are prepared in accordance with the International Financial
Reporting Standards (IFRS), as adopted by the European
Union, and with the supplementary standards to be applied
according to Section 315a Subsection 1 of the German
Commercial Code (HGB). Details of the IFRS are provided
in this Annual Report in the Notes to the Consolidated
Financial Statements.
Note 1 of the Notes to the Consolidated Financial State-
ments. The annual financial statements of Daimler AG, which is
the parent company, are prepared in accordance with the
accounting standards of the German Commercial Code (HGB).
Both sets of financial statements are audited by a firm of
accountants elected by the Annual Shareholders' Meeting to
conduct the external audit.
200
of Financial Position
Consolidated Statement
199
of Comprehensive Income/Loss
Consolidated Statement
198
Consolidated Statement of Income
194
E| Consolidated Financial Statements
E | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
The Consolidated Financial Statements presented as follows have been prepared
in accordance with the International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). They also comply with additional requirements
set forth in Section 315a (1) of the German Commercial Code (HGB).
We have a sound
financial basis
SMB 2038
S.MB 2091
S.MB 2098
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB) is
published simultaneously with the Annual Report including
the Corporate Governance Report at ④ daimler.com/dai/dsr
and can be accessed there.
Interim reports for the Daimler Group are prepared in accor-
dance with IFRS for interim reporting, as adopted by the Euro-
pean Union, as well as with regard to the interim management
reports prepared in accordance with the applicable provisions
of the German Securities Trading Act (WpHG). Interim finan-
cial reports are reviewed by the external auditors elected by
the Annual Shareholders' Meeting.
197
Consolidated Statement of Cash Flows
to set a target for the proportion of women at the two manage-
ment levels below that of the board of management. If the
proportions of women at the time when these targets are set
by the board of management and the supervisory board are
below 30%, the targets may not be lower than the proportions
already reached. At the same time that the targets are set,
the boards have to set periods for their achievement, which may
not be longer than five years. In the first step, targets had to
be set by no later than September 30, 2015, and deadlines fixed
for no later than June 30, 2017.
Germany's law on the equal participation of
women and men in executive positions
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
daimler.com/dai/rop.
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distri-
butable profits. Following discussions with the external
auditors and taking into consideration the audit reports of the
external auditors and the results of the review by the Audit
Committee, the Supervisory Board states whether, after the
final results of its own review, any objections are to be raised.
If that is not the case, the Supervisory Board approves the
financial statements and the combined management report.
Upon being approved, the annual company financial statements
are adopted. The Supervisory Board reports to the Annual
Shareholders' Meeting on the results of its own review and on
the manner and scope of its supervision of the Board of
Management during the previous financial year. The Report
of the Supervisory Board for the year 2015 is available on
pages 48 ff of this Annual Report and on the Internet at
daimler.com/dai/supervisoryboard.
The Supervisory Board also decides on the system of remuner-
ation for the Board of Management, reviews it regularly and
determines the individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the senior
executives and the workforce as a whole, also with regard to
development over time. For this comparison, the Supervisory
Board has defined the senior executives by applying Daimler's
internal terminology for the hierarchical levels and has defined
the workforce of Daimler AG in Germany as the relevant work-
force. For the individual Board of Management remuneration in
total and with regard to its variable components, the Super-
visory Board has set upper limits taking effect as of January 1,
2014. Further information on Board of Management remunera-
tion can be found in the Remuneration Report of this Annual
Report pages 122 ff
In accordance with German law requiring women and men to
be equally represented in executive positions, the Supervisory
Board has defined a target for the proportion of women in
the Board of Management as well as a deadline when this target
must be met. The details are described in a separate section.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
192
The Supervisory Board's duties include appointing and recalling
the members of the Board of Management. Initial appoint-
ments are usually made for a period of three years. In connec-
tion with the composition of the Board of Management, the
Supervisory Board pays attention not only to the members'
appropriate specialist qualifications, with due consideration
of the Group's international operations, but also to diversity.
This applies in particular to age, nationality and other per-
sonal characteristics.
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Company.
At regular intervals, the Board of Management reports to the
Supervisory Board on corporate strategy, corporate planning,
profitability, business development and the situation of the
Group, as well as on the internal control system, the risk man-
agement system and compliance. The Supervisory Board has
retained the right of approval for transactions of fundamental
importance. Furthermore, the Supervisory Board has specified
the information and reporting duties of the Board of Manage-
ment to the Supervisory Board, to the Audit Committee and
- between the meetings of the Supervisory Board - to the Chair-
man of the Supervisory Board.
The Chairman of the Supervisory Board, Dr. Manfred Bischoff,
is a former member of the Board of Management. After
stepping down from the Board of Management in December
2003, he was first elected to the Supervisory Board after
a cooling-off period of more than two years in April 2006, and
was first elected as the Chairman of the Supervisory Board
after a cooling-off period of more than three years in April 2007.
One member of the Supervisory Board is a member of the
board of management of a listed company. Excluding his mem-
bership of that company's board of management, he is a
member of no more than three supervisory boards of listed
companies or similar company boards or committees with
comparable requirements, including his membership of the
Supervisory Board of Daimler AG. No member of the Super-
visory Board is a member of a board of, or advises, a significant
competitor. The members of the Supervisory Board attend
on their own responsibility such courses of training and further
training as might be necessary for the performance of their
tasks and are supported by the Company in doing so. Daimler AG
offers courses of further training to the members of its
Supervisory Board as required. Possible contents of such courses
include the subjects technological and economic develop-
ments, accounting and financial reporting, internal control and
risk management systems, compliance, corporate governance,
new legislation and board of management remuneration.
In accordance with another new recommendation of the Code
as revised on May 5, 2015, the Supervisory Board made sure
when it nominated Dr. Manfred Bischoff and Petraea Heynike
for reelection that they will be able to continue to devote the
time required as known to them from their previous mandate
in the Supervisory Board.
The rules of procedure of the Supervisory Board stipulate
that candidates for election as members of the Supervisory
Board who are to hold the position for a full period of office
should generally not be over the age of 72 at the time of their
election. In specifying this age limit, the Supervisory Board
has intentionally refrained from stipulating a strict upper age
limit and instead decided in favor of a flexible general limit
that ensures each individual case is appropriately assessed,
the
range of potential Supervisory Board candidates is
sufficiently broad and members can be reelected. After care-
ful consideration, the Supervisory Board took advantage
of its decision-making freedom to nominate Dr. Manfred
Bischoff to be elected for another full term to the Super-
visory Board at the Annual Shareholders' Meeting in 2016.
This decision was based on a number of factors, including
the very positive assessment of Dr. Bischoff's dedicated ser-
vice by the other members of the Supervisory Board as
well as his successful and constructively critical cooperation
with the Board of Management and the fact that his nomi-
nation would signalize stability and continuity at Daimler. In
addition, the nomination aims to maintain the different
areas of expertise of the Supervisory Board's members and
ensure that the body has a balanced age structure. None
of the other members of the Supervisory Board exceeded
the applicable general age limit at the time of his or her
election. This applies to Petraea Heynike as well, who is
also nominated for reelection to the Supervisory Board for
a full term at the Annual Shareholders' Meeting in 2016.
In accordance with the new recommendation of the German
Corporate Governance Code as revised on May 5, 2015,
the Supervisory Board decided on December 9, 2015, to
impose a general limit on the length of time a person
can be a member of the Board. As a result, only candidates
who have not yet been members of the Supervisory Board
for three full terms of office at the time of their election should
generally be nominated for membership of the Supervisory
Board for a full term of office. This general length of service
on the Supervisory Board has not been exceeded by
Dr. Manfred Bischoff and Petraea Heynike, are nominated for
reelection at the Annual Shareholders' Meeting in 2016.
In order to ensure the independent advice and supervision
of the Board of Management by the Supervisory Board, the
rules of procedure of the Supervisory Board already stipu-
late that more than half of the members of the Supervisory
Board representing the shareholders are to be independent
as defined by the German Corporate Governance Code and
that no person may be a member of the Supervisory Board
who is a member of a board of, or advises, a significant com-
petitor of the Daimler Group. At present, there are no
indications for any of the members of the Supervisory Board
representing the shareholders that relevant relationships
or circumstances exist that would compromise their inde-
pendence. In particular, this is not the case with their rela-
tionships or circumstances vis-a-vis the Company, the Board
of Management or other Supervisory Board members. No
member of the Supervisory Board is a member of a board of,
or advises, a significant competitor.
191
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
whose specific details could cause a conflict of interests.
During the reporting period, there were no instances of an
actual or a potential conflict of interest that might have affected
a shareholder representative on the Supervisory Board.
or its boards
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party nor
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employ-
ees and of the members representing the shareholders with
the members of the Board of Management. Each Supervisory
Board meeting includes an executive session for discussions
of the Supervisory Board in the absence of the members of the
Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls or
video conferences. However, this is generally not the case.
Composition and mode of operation of
the committees of the Supervisory Board
The Supervisory Board has formed four committees, which
perform to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board: the Presidential Committee, the Nomination Committee,
the Audit Committee and the Mediation Committee. The
committee chairpersons report to the entire Supervisory Board
on the committees' work at the latest in the meeting of the
Supervisory Board following each committee meeting. The Super-
visory Board has issued rules of procedure for each of its
committees. These rules of procedure can be viewed on our
website at daimler.com/dai/rop. Information on the
current composition of these committees can be viewed at
daimler.com/dai/sbc and is also available on
of this Annual Report.
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member
of the Supervisory Board representing the employees and one
member of the Supervisory Board representing the share-
holders, each elected with a majority of the votes cast. It is
formed solely to perform the functions laid down in Section 31
Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved.
As in previous years, the Mediation Committee did not have
to take any action in financial year 2015.
Mediation Committee
Finally, the Audit Committee approves services that are not
directly related to the annual audit and which are provided
by the firm of external auditors or its affiliates to Daimler AG
or to companies of the Daimler Group.
The Committee also makes recommendations for the proposal
on the election of external auditors, assesses those auditors'
suitability and independence, and, after the external auditors
are elected by the Annual Shareholders' Meeting, it engages
them to conduct the annual audit of the company and consoli-
dated financial statements and to review the interim reports,
negotiates an audit fee and determines the focus of the annual
audit. The external auditors report to the Audit Committee
on all accounting matters that might be regarded as critical and
on any material weaknesses of the internal control and risk
management system with regard to accounting that might be
discovered during the audit.
The Audit Committee discusses with the Board of Management
the interim reports on the first quarter, first half and first
nine months of the year before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the annual
consolidated financial statements, as well as the combined
management report of the Company and the Group, and dis-
cusses them with the external auditors. Since 2014, the
responsible auditor at KPMG AG Wirtschaftsprüfungsgesell-
schaft, the company of auditors commissioned to carry
out the external audit 2015, has been Dr. Axel Thümler. The
Audit Committee makes a proposal to the Supervisory
Board on the adoption of the annual company financial state-
ments of Daimler AG, on the approval of the annual consoli-
dated financial statements and on the appropriation of profits.
The Audit Committee deals with the supervision of the account-
ing process and the annual external audit. At least once a year,
it discusses with the Board of Management the effectiveness
and functionality of the risk management system, the internal
control and auditing system and the compliance management
system. It regularly receives reports on the work of the
Internal Auditing department and the Compliance Organization.
At least four times a year, the Audit Committee receives a
report from the Business Practices Office on complaints and
information about any breaches of regulations or guidelines
by high-level executives. It regularly receives information about
the handling of these complaints and notifications.
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence
and have expertise in the field of financial reporting, as
well as special knowledge and experience in the application
of accounting principles and methods of internal control.
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast on the relevant resolu-
tion of the Supervisory Board. The Chairman of the Supervi-
sory Board is not simultaneously the Chairman of the Audit
Committee.
Germany's law on the equal participation of women and men in
executive positions went into effect on May 1, 2015. According
to this law, the supervisory boards of listed companies or com-
panies subject to Germany's system of codetermination have
to set a target for the proportion of women in the board of man-
agement. The board of management of such a company has
Audit Committee
Nomination Committee
193
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
In addition, the Presidential Committee decides on questions
of corporate governance, on which it also makes recommenda-
tions to the Supervisory Board. It supports and advises the
Chairman of the Supervisory Board and his Deputy, and pre-
pares the meetings of the Supervisory Board within the
limits of its responsibilities.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of
the Board of Management, whereby it especially takes into
account the requirements of the position to be filled as
well as the Supervisory Board's target for the proportion of
women in the Board of Management. It submits proposals
to the Supervisory Board on the design of the remuneration
system for the Board of Management and on the appropriate
total individual remuneration of its members. In this context,
it follows the relevant recommendations of the German
Corporate Governance Code. The Presidential Committee is
also responsible for the Board of Management members'
contractual affairs. In addition, it decides on the granting of
approval for sideline activities of the members of the Board
of Management, reports to the Supervisory Board regularly
and without delay on consents it has issued and once a
year submits to the Supervisory Board for its approval a com-
plete list of the sideline activities of each member of the
Board of Management.
The Presidential Committee is composed of the Chairman of
the Supervisory Board, his Deputy and two other members,
who are elected by a majority of the votes cast on the relevant
resolution of the Supervisory Board.
page 55
Presidential Committee
The Nomination Committee is composed of at least three
members, who are elected by a majority of the votes cast by
the members of the Supervisory Board representing the
shareholders. It is the only Supervisory Board Committee that
consists solely of members representing the shareholders,
and makes recommendations to the Supervisory Board concern-
ing persons to be proposed for election as members of the
Supervisory Board representing the shareholders at the Annual
Shareholders' Meeting. In doing so, the Nomination Committee
takes into consideration the requirements of the new German
law regulating equal participation of women and men in exe-
cutive positions, the German Corporate Governance Code and
the rules of procedure of the Supervisory Board, as well as
the specific goals that the Supervisory Board has set for its own
composition. Furthermore, it defines the requirements for
each specific position to be occupied.
201
Consolidated Statement
of Changes in Equity
269
35. Earnings per share
230
15. Marketable debt securities
269
34. Capital management
229
14. Receivables from financial services
265
33. Segment reporting
225
13. Equity-method investments
258
32. Management of financial risks
224
12. Equipment on operating leases
250
16. Other financial assets
230
36. Related party relationships
270
272
39. Additional information
234
21. Share-based payment
272
38. Principal accountant fees
232
20. Equity
31. Financial instruments
271
232
19. Trade receivables
of the Board of Management and
231
18. Inventories
37. Remuneration of the members
230
17. Other assets
the Supervisory Board
11. Property, plant and equipment
248
and other financial obligations
216
4. Revenue
244
24. Financing liabilities
215
3. Consolidated Group
243
23. Provisions for other risks
25. Other financial liabilities
214
236
22. Pensions and similar obligations
204
1. Significant accounting policies
204
Statements
Notes to the Consolidated Financial
202
2. Accounting estimates and assessments
representing the shareholders should have
245
217
222
10. Intangible assets
30. Financial guarantees, contingent liabilities
219
247
29. Legal proceedings
219
8. Interest income and interest expense
9. Income Taxes
5. Functional costs
246
219
7. Other financial income/expense, net
245
27. Other liabilities
218
6. Other operating income and expense
245
26. Deferred income
28. Consolidated statement of cash flows
At least half of the members of the Supervisory Board
⚫ a business or personal relationship to the Company
In addition to Germany's new legal requirements for equal par-
ticipation by women and men in executive positions, the
Supervisory Board has also taken the recommendations of
the German Corporate Governance Code into account
with regard to the Board's composition and has therefore
set itself the following goals:
The Board of Management prepares the Group's interim reports,
the annual company financial statements of Daimler AG, the
annual consolidated financial statements, and the combined
management report of the Company and the Group. It
ensures that the provisions of applicable law, official regula-
tions and the Group's internal guidelines are adhered to,
and works to make sure that the companies of the Group com-
ply with those rules and regulations. The tasks of the Board
of Management also include establishing and monitoring an
appropriate and efficient risk management system.
The members of the Board of Management must represent
the interests of the Company and share responsibility for manag-
ing the Group's entire business. Irrespective of this overall
responsibility, the individual members of the Board of Manage-
ment manage their allocated areas on their own responsibility
and within the framework of the instructions approved by the
entire Board of Management. Affairs of fundamental or great
importance that affect the areas of responsibility of several Board
of Management members are dealt with by the Board as a
whole, which must approve all related decisions. The Chairman
of the Board of Management coordinates the work of the
Board of Management.
of Management and their areas of responsibility are also listed
on page 46 of this Annual Report. No member of the Board
of Management is a member of more than three supervisory
boards of listed companies outside the Daimler Group or of
similar boards or committees with comparable requirements of
companies outside the Daimler Group. The Board of Manage-
ment manages Daimler AG and the Daimler Group. With the
consent of the Supervisory Board, the Board of Management
determines the Group's strategic focus, defines the corporate
goals and makes decisions concerning operational planning
issues.
Information on the areas of responsibility and curricula vitae
of the Board of Management members are posted on our web-
site at daimler.com/dai/bom. The members of the Board
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The
precise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had
eight members on December 31, 2015. In accordance with the
German law requiring women and men to be equally repre-
sented in executive positions, the Supervisory Board has defined
a target for the proportion of women on the Board of Manage-
ment as well as a deadline when this target must be met. The
details are described in a separate section:
pages 193 f
Board of Management
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict
personal and functional separation between the Board of
Management and the Supervisory Board (two-tier board).
Accordingly, the Board of Management manages the company
while the Supervisory Board monitors and advises the Board
of Management. No person may be a member of the two boards
at the same time.
Composition and mode of operation of the
Board of Management and the Supervisory
Board 7 D.01
For Daimler, acting with integrity is a basic prerequisite for
trusting cooperation. When selecting our direct business part-
ners, we ensure that they comply with the law and follow
ethical principles. For the expectations we place on our busi-
ness partners, see also daimler.com/sus/obr.
Expectations on our business partners
The "Principles of Social Responsibility" also form part of the
Integrity Code. They are binding for the entire Group. In the
Principles of Social Responsibility, Daimler commits itself to
the principles of the UN Global Compact and thus to inter-
nationally recognized human and workers' rights, such as the
prohibition of child labor and forced labor, as well as freedom
of association and sustainable protection of the environment.
Daimler also commits itself to guaranteeing equal oppor-
tunities and adhering to the principle of “equal pay for equal
work." The Integrity Code is available on the Internet at
daimler.com/dai/caag.
For certain types of transaction of fundamental importance as
defined by the Supervisory Board, the Board of Management
requires the consent of the Supervisory Board. At regular inter-
vals, the Board of Management reports to the Supervisory
Board on corporate strategy, corporate planning, profitability,
business development and the situation of the Group, as well
as on the internal control system, the risk management system
and compliance. The Supervisory Board has specified the
information and reporting duties of the Board of Management.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT 189
The principles guiding our conduct
Additional relevant principles of corporate governance that go
beyond the legal requirements but are applied throughout the
Group are our Standards of Business Conduct. They are com-
posed of several documents and policies and are based on the
company values of passion, respect, integrity and discipline.
These standards serve as a frame of reference at Daimler that
helps ensure behavior in conformity with applicable regula-
tions and the principles of integrity.
Daimler AG has followed and continues to follow the suggestions
of the Code with just one exception: Deviating from the sug-
gestion in Clause 2.3.3, which stipulates that companies should
enable shareholders to view the Annual Shareholders' Meeting
with modern communications media such as the Internet, the
Annual Shareholders' Meeting is not transmitted in its entirety
on the Internet, but only until the end of the report by the Board
of Management, in order to protect the character of the
Annual Shareholders' Meeting as a meeting attended by our
shareholders in person. An additional factor is that continuing
the broadcast after that point, in particular broadcasting com-
ments made by individual shareholders, could impair the dis-
cussion between shareholders and management, and might
also be construed as an unjustified infringement of share-
holders' privacy rights. When considering this matter, the inter-
ests of transmission do not automatically take precedence
over shareholders' privacy rights. This is reflected by the statu-
tory requirement for the entire transmission to have a legal
basis in the Company's Articles of Incorporation or in the rules
of procedure for the Annual Shareholders' Meeting.
daimler.com/dai/gcgc. Previous, no longer applicable dec-
larations of compliance from the past five years, and the
current German Corporate Governance Code are also available
there.
There is no statutory duty to follow the standards contained in
the recommendations and suggestions of the Code. However,
according to the principle of comply or explain, the Board of
Management and the Supervisory Board of Daimler AG are
obliged by Section 161 of the German Stock Corporation Act
(AktG) to make a declaration of compliance with regard to
the recommendations of the German Corporate Governance
Code and to disclose and justify any deviations from the
Code's recommendations. With the exceptions disclosed and
justified in the declaration of compliance of December 2015,
Daimler AG has followed and continues to follow the recom-
mendations of the German Corporate Governance Code.
The declaration of compliance is printed on page 187 of this
Annual Report and can also be accessed on our website at
The legal framework for the corporate governance of Daimler AG
is provided by German law, in particular the Stock Corporation
Act (AktG), the Codetermination Act (MitbestG) and legislation
concerning capital markets, as well as by the Company's
Articles of Incorporation. The German Corporate Governance
Code gives recommendations and makes suggestions for
the details of this framework. These recommendations and
suggestions are regularly reviewed by the Government
Commission for the German Corporate Governance Code. In
the reporting year, this review caused the Code to be revised
as of May 5, 2015. This revised description of the Code was
published in the German Federal Gazette on June 12, 2015.
German Corporate Governance Code
The main principles applied in our corporate
governance
Good corporate governance is a precondition for and a reflection of the responsible management
of a company. The Board of Management and the Supervisory Board aim to align the Group's
management and supervision with nationally and internationally recognized standards in order
to secure sustainable value creation and success at the Daimler Group with its strong traditions.
Corporate Governance Report
188 D❘ CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
In order to ensure sufficient internationality, for example
through many years of international experience, the Supervi-
sory Board has set a target of a proportion of at least 30%
of international members representing the shareholders, and
the resulting proportion of the entire Supervisory Board of
at least 15%. Irrespective of the many years of international
experience of a great majority of the members representing
the shareholders, this target is currently significantly over-
achieved due to the international origins of Dr. Paul Achleitner,
Sari Baldauf, Petraea Heynike and Andrea Jung on the share-
holders' side (40%) and Valter Sanches on the employees'
entire Supervisory Board.
Integrity Code
D.01
The Integrity Code defines the principles of behavior and guide-
lines for everyday conduct at Daimler. This applies to inter-
personal conduct within the company as well as conduct toward
customers and business partners. Fairness, responsibility
and compliance with legislation are key principles in this context.
The Integrity Code is based on a shared understanding of
values, which was developed together with the Daimler employ-
ees. In addition to general principles of behavior, it includes
requirements and regulations concerning the protection of human
rights, dealing with conflicts of interest and preventing all
forms of corruption.
Annual Shareholders' Meeting
The Supervisory Board is to be composed so that its members
together dispose of the knowledge, skills and specialist
experience that are required for the proper execution of their
tasks. Proposals by the Supervisory Board of candidates
for election by the Annual Shareholders' Meeting as members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, take into
consideration not only the requirements of applicable law,
the Articles of Incorporation and the German Corporate Gover-
nance Code, but also a list of criteria of qualifications and
experience. They include, for example, market knowledge in
the regions particularly important to Daimler, expertise in
the management of technologies and experience in certain
management functions. Other important conditions for pro-
ductive work in the Supervisory Board and for being able to
properly supervise and advise the Board of Management
are the members' personality and integrity, as well as individual
diversity with regard to age, internationality, gender and
other personal characteristics.
Governance structure
Information on the individual members of the Supervisory
Board is available on the Internet at ④ daimler.com/dai/
supervisoryboard and on pages 54 f of this Annual Report.
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Annual
Shareholders' Meeting. The other half comprises members
who are elected by the Company's employees who work in
Germany. The members representing the shareholders and
the members representing the employees are equally obliged
by law to act in the Company's best interests.
Supervisory Board
When making appointments to executive positions at the
Group, the Board of Management also gives due consideration
to age and internationality. The management of teams with a
varied makeup requires a conscious approach to the teams'
inherent diversity. A key element of our approach here is there-
fore to make executives more aware of the importance of
diversity. For this purpose, we also use mentoring programs,
communication activities, conferences, workshops and
e-learning tools. By continually addressing diversity manage-
ment issues, we help to further develop our corporate culture.
The targeted advancement of women had been a key area of
action of Daimler's diversity management even before Ger-
many's law on the equal participation of women and men in
executive positions came into force. Among other things,
the Company promotes this goal with flexible working-time
arrangements, company-owned daycare centers and special
mentoring programs. To meet the new legal requirements, the
Board of Management has defined targets and deadlines for
the proportion of women at the two management levels below
the Board of Management. The details are described in a sepa-
rate section. Independently of the legal requirements, Daimler
continues to affirm the goal it already set itself in 2006 of
increasing the proportion of women in executive positions at
the Group to 20% by 2020. At the end of 2015, this proportion
amounted to about 15% (2014: 14.1%).
The Board of Management has not formed any committees.
The Board of Management has also given itself a set of rules
of procedure, which can be viewed on our website at
④daimler.com/dai/rop. Those rules describe, for example,
the procedure to be observed when passing resolutions
and ways to avoid conflicts of interest.
D❘ CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
190
The Board of Management has committed to diversity manage-
ment as a strategic factor of success that safeguards the
future of the company, with the signed statement: "Promote
diversity. Create links. Shape the future."
reports
Board of Management
the actions of
ratifies
appoints,
advises and
monitors
20 members
reports
reports
Supervisory Board
elects members
representing the
shareholders,
ratifies the
actions of
8 members
She's Mercedes connects and inspires
women.
Up close and personal
with customers
She's Mercedes & lifestyle configurator
Daimler is charting new territory in addressing custom-
ers with its exclusive She's Mercedes platform and the
innovative Mercedes-Benz vehicle configurator, which
reflects each customer's individual lifestyle.
Daimler is addressing the wishes and requirements of women more extensively
by offering women customized products and services in both the digital and
real worlds. There's good reason for this, as women are playing a key role in the
expanding global automotive market.
Information & emotion
Quick and easy configuration of Mercedes-Benz models
Mercedes-Benz is also integrating an all-new vehicle configurator into the online
world. The goal here is to make the process of choosing a vehicle as simple
as possible, even for those who aren't enthusiastic about technology. To this end,
customers create a profile of their preferences regarding architecture, music,
travel, sports and home life. They then receive five model and equipment variant
recommendations that correspond to these preferences and can be used to
further customize the suggested vehicles.
The lifestyle configurator has been available in Germany since the end of 2015
and will be successively introduced at country-specific Mercedes-Benz websites
worldwide as an alternative to the traditional vehicle configurator.
The networking and inspiration
platform for strong and confident
"Tell me about your lifestyle and
I'll show you the perfect vehicle."
She's Mercedes is the title of an initiative that specifically addresses women
and combines an Internet platform with exclusive event formats at various loca-
tions. All activities focus on dialog. For example, the She's Mercedes network
enables women to communicate, develop new ideas and establish new contacts.
Mercedes-Benz also uses She's Mercedes to make women more familiar with the
brand and to learn more about women's mobility needs.
necessary.
of Mercedes-Benz
The Mercedes me app can be used
to send vehicle information to
Apple Watches, iPhones and Android
smartphones.
Doors locked/unlocked?
Everything's okay!
Fuel tank status? Heat on/off?
Mercedes me app: real-time access to vehicles
The free Mercedes me app offers even greater utility, as it
allows customers to call up a whole range of vehicle status
data, or remotely turn on the heat and lock or unlock car
doors when on the road. The app also enables convenient
door-to-door navigation, which along with the driving route
also includes the distance that has to be walked to the
parked vehicle.
Naturally, Mercedes me can also help customers find the
right insurance policy for their dream car. We have coop-
erated with partners in the insurance business to develop
automotive insurance solutions that offer full protection and
guarantee that damaged vehicles are always repaired by
specialists in accordance with the manufacturer's instruc-
tions. Mobility services from Daimler, such as car2go
and moovel, can also be accessed quickly and easily via
Mercedes me.
pages 20f
Mercedes me is also the perfect gateway to the world
of Daimler Financial Services. Our product finder and
payments calculator point the way to customized financing
solutions and allow customers to obtain their vehicle in the
manner that best fits their financial situation. For example,
we give customers the freedom to choose the size of their
down payment and the duration of their contract. This,
in turn, gives them a say in determining their monthly
payments. Those who are interested in driving the latest
models can take advantage of our flexible leasing offers.
Discovering the world of financial services
from Daimler
Mercedes me is all about connecting with customers
digitally. The focus is on the personal lifestyle and mobility
needs of each and every user - regardless of whether
they drive a Mercedes-Benz, use car2go, Mercedes-Benz
Rent, or moovel, or own a vehicle from a non-Group
brand. Daimler has been setting the standard for person-
alized customer service with Mercedes me since 2014.
Mercedes me allows Daimler to address people on the
Internet and in the real world. Users can decide for them-
selves which Mercedes me services they want to take
advantage of, and when and where. This could be at home
on the couch via tablet computer, on vacation using a
smartphone, at Mercedes me stores, or at a "Discover me"
lifestyle event.
Mercedes me allows completely personalized access to the
exclusive Mercedes-Benz brand world. This digital platform
offers mobility, connectivity and financial services, but also
inspiration for travel, lifestyle and entertainment.
Fascinating products, services and events: Customers can take
Mercedes-Benz with them wherever they go by simply logging on.
Daimler is a pioneer in new service concepts for offering exciting
experiences that go far beyond the automobile.
Rediscovering the world
Mercedes me
18 DAIMLER | INNOVATIVE. DIGITAL. LEADING.
H mercedes-benz.com/en/
mercedes-me/inspiration/she/
connect.mercedes.me
Zaki Ibrahim: Kreativer Flow mit
Baby im Arm
CA
Ober den Balenekt zwischen musschen
As early as 2013, the near-production Mercedes-Benz
S 500 INTELLIGENT DRIVE already impressively demon-
strated that autonomous driving is possible in normal
traffic by driving an approximately 100-kilometer route
from Mannheim to Pforzheim completely autonomously.
Partially autonomous driving on highways and secondary
roads and in cities, autonomous braking in critical situations
and active support during evasive maneuvers - all of this is
now an everyday occurrence, thanks to the expanded Intel-
ligent Drive assistance package from Mercedes-Benz. The
benefits provided by innovations that will pave the way for
autonomous driving in the future can already be experienced
in the S-Class and the brand-new C-Class Coupe.
Partially autonomous driving with greater comfort,
less stress and more safety for everyone on the road
With its athletic and clear sensuous design, the
Mercedes-Benz C-Class Coupe offers exciting new
features that make it stand out in road traffic. The model
also comes with numerous safety and assistance systems
based on the Intelligent Drive concept. Standard equip-
ment includes, for example, ATTENTION ASSIST, which
issues a warning when the driver becomes inattentive
or fatigued, and COLLISION PREVENTION ASSIST PLUS,
which can help prevent accidents.
Assistants that think and steer
Many other "co-pilot" features are available as options.
for example, DISTRONIC PLUS with Steering Assist, as well
as the Stop & Go Pilot. Thanks to its intelligent technology,
the C-Class Coupe can not only automatically maintain a
proper distance to vehicles ahead but also follow them at
such a distance at a speed of up to 200 km/h. The "dis-
tance pilot" makes things easier for drivers by accelerating
and braking as needed in normal operations. The BAS
PLUS Active Brake Assist system warns drivers of impend-
ing collisions and other dangers, helps with emergency
braking maneuvers and automatically brakes the vehicle if
Because the car of the future will increasingly
become a digital companion, it will have to be safe
and secure not only on the road. Data will have to be
processed securely as well. After all, data protection
is also customer protection. Daimler therefore has
clear principles and targeted measures to ensure
data is protected. We protect our customers, their
vehicles and their data by taking our principles of
transparency, personal autonomy and data security
into account as early as the vehicle development
stage.
5200
The city is full of
exciting places.
DAIMLER INNOVATIVE. DIGITAL. LEADING. 21
moovel.com/en/DE
moovel allows you to find the
available mobility services and to
get to your destination easily.
moovel - the mobility app
for your city
Startups aren't the only companies that can adapt
dynamically to market requirements. With moovel,
Daimler has shown how a company's core business
can be expanded to include innovative digital busi-
ness operations. This success was honored at the
2015 DLD digital conference in Munich with a Focus
Digital Star Award. In addition, moovel partner mytaxi
was named "Digital Company of the Year" at the
German Digital Award 2015 event in Berlin.
Digital awards for moovel
and mytaxi
car2go has made Daimler the market leader for free-
floating car-sharing systems that operate without rental
stations. With its fleet of around 14,500 smart fortwo vehi-
cles (including 1,600 battery-electric cars) at 31 locations
in Europe and North America, car2go is now the world's
biggest car-sharing company. A car2go vehicle is now
rented once every 1.4 seconds by one of the company's
more than 1.2 million customers. Following a successful
test phase, car2go will also be rolled out in a Chinese city
for the first time in the spring of 2016.
Simple. Always. Everywhere - car2go
Dashing around the city and getting where you need to
go flexibly: With car2go, that's as simple as using a cell
phone, as the system is not only online, but also utilizes
smartphones as the central interface for finding and
booking a vehicle, unlocking and locking it, and paying for
it - all with just one device. More than two thirds of all
car2go rentals are already transacted in this manner. This
shows just how much acceptance the app enjoys among
our customers as a "car key," and it also demonstrates
that we're on the right track.
moovel's partners are car2go, Flinkster, mytaxi, Taxi-Ruf,
Mietfahrräder, public transport operators and Deutsche
Bahn (German Railways).
moovel has made Daimler a pioneer for innovative urban
mobility services. The free moovel app allows users to
compare the travel times and costs for various modes
of transport and then to select an optimal route for their
trip and in many cases also to pay for it using their
smartphones.
Search, book, go - moovel
Wireless technologies and GPS ensure that vehicles and
services can be flexibly linked with one another and used
in those locations where the customer happens to need
them. Welcome to the sharing society! Our moovel mobility
platform and the car2go free-floating car-sharing system
are pointing the way to the future.
People are increasingly using multiple
modes of transport to get around and
they also want to be able to organize
their trips while on the go. moovel and
car2go offer successful solutions for
this new mobility culture.
Individual mobility concepts.
for people on the move
moovel & car2go
STANIS
Die nachsten Events
Unterwegs im neuen GLC
Ana Kras-Sty Gestares
017
Schandrang und engagierter Muttermole
B
Daimler is moving ahead
with vehicle connectivity and
data protection
DIFFUSE A/C
Digitization of the value chain - the key to meeting
customer requirements efficiently and individually
Customer requirements around the globe are becoming
more varied and complex, and this is affecting the entire
product lifecycle - from vehicle design, development
and production all the way to delivery and the provision
of associated services. The thorough networking of our
processes helps ensure that our products can be designed
in a more individual manner and that their production is
more flexible and efficient. Opages 23f
road to locally emission-free vehicles. They combine the
advantages of two technologies in a manner that allows
our customers to drive in the all-electric mode in the city
and benefit from the range of the combustion engine on
long trips.
We are already using high-tech hybrid systems in all pro-
duction models from the Mercedes-Benz C-Class upwards.
Plug-in hybrid systems represent a key technology on the
An extra boost for the new era of mobility
The Mercedes-Benz F 015 Luxury in Motion research
vehicle and the Mercedes-Benz Vision Tokyo show car are
not only sensations in terms of their autonomous driving
technology; they also display superior performance with
regard to their drive systems. Both vehicles are equipped
with the innovative F-CELL PLUG-IN HYBRID system, which
combines an electric motor with an extremely powerful
high-voltage battery and fuel cells to achieve an emission-
free range of approximately 1,100 kilometers, thus pointing
the way far into the future.
Group" in the "Alternative Drive Systems" category of the
Automotive INNOVATIONS Award 2015 competition.
Daimler's environmental roadmap focuses consistently on
further efficiency enhancements to combustion engines,
needs-based hybridization and locally emission-free electric
vehicles with batteries and fuel cells. We take the entire
environmental performance of our vehicles into account -
from production to operation to recycling. The effectiveness
of our sustainable development work is impressively under-
scored by the award we received as the "Most Innovative
traffic smoother and vehicles more an-
ticipatory and thus safer as well. As
we work on such systems, we continue
to focus on clean drive-system tech-
nologies. Our environmental roadmap
and hybrid offensive have put Daimler
on the path to emission-free mobility.
-
Autonomous driving systems make
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 13
The best of both worlds
Plug-in hybrids
The new E-Class takes safety, comfort
and driver stress reduction to a new level
With Intelligent Drive next level, we are raising the bar once
again in the new Mercedes-Benz E-Class. Daimler has
taken the next step on the road to autonomous driving with
innovations such as remote-controlled automated parking,
emergency steering assistance and an emergency braking
system for sudden traffic jams. O pages 30 ff
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 11
Ten new plug-in hybrid models by 2017
The successful plug-in hybrid models from Mercedes-Benz
combine the highest degree of dynamic performance
and comfort with the economy of a compact car. In 2015,
we presented additional models as pioneers of the Daimler
hybrid offensive. Their fuel consumption ranges from
Narrow headlights with blue LED bands on the front sides and
the radiator grille. Within the spectacular body of the Inspiration
Truck lies innovative Highway Pilot technology.
Drivers can relax when the Inspiration Truck drives
autonomously - and this is very helpful on long trips
along routes that are monotonous, which is generally
what drivers have to deal with today. With regard to
the benefits of autonomous driving, optimal gear shifting
and braking reduce both fuel consumption and CO₂
emissions, and also increase safety.
Autonomous trucks offer added value in terms
of efficiency, safety and economy
The Inspiration Truck is based on the Freightliner Cascadia
Evolution production model in the United States; the only
difference is the inclusion of the Highway Pilot, which
operates with radar sensors, a stereo camera and assis-
tance systems such as Adaptive Cruise Control, Active
Brake Assist and Active Lane Keeping Assist. The Highway
Pilot can thus take over operation of the 505 horsepower
truck and control its speed, braking and steering.
manufacturer to receive such permission. The licenses
were issued for two Freightliner Inspiration Trucks, which
are now demonstrating in normal operations how their
Highway Pilot technology benefits society, the environ-
ment and the economy.
204010
Daimler took the first step toward a self-driving truck
in 2014, when Mercedes-Benz presented the Future
Truck 2025 on a closed-off highway section near the city
of Magdeburg. The vehicle then successfully and easily
completed the world's first autonomous truck journey.
in long-distance transport are econ-
omy, safety and efficiency. With the
Freightliner Inspiration Truck and the
Actros with Highway Pilot, we have
demonstrated that autonomously
driving trucks can take us a major step
forward in all these areas. The innova-
tive vehicles from Daimler Trucks will
revolutionize road freight transport
in the years ahead.
source of inspiration. The top priorities highways, making Daimler Trucks the world's first vehicle
Revolutionary technology on public highways
We achieved the next milestone in May 2015, when
the US state of Nevada granted Daimler Trucks a license
to operate self-driving heavy-duty trucks on public
This vision could soon become a
reality - one also made possible by
our customers, who serve as our
Autonomous driving —
safe and efficient
Highway Pilot activated!
from the C-Class to the
are capable of partially
autonomous driving today.
The dawn of a new age of mobility: Solutions from
today for the transportation needs of tomorrow
The intelligent Highway Pilot system is now being
tested on German roads as well. Daimler sent a clear
signal in October 2015 with the maiden journey of the
company's first autonomous series-production truck -
a Mercedes-Benz Actros - on the A8 autobahn in
Germany. This type of testing in real traffic conditions
marks another important step on the path to a market-
ready product and to safe and sustainable road freight
transport in the future.
3.3 liters per 100 kilometers for the GLE 500 e 4MATIC¹ to
an outstanding 2.1 l/100 km in the most efficient model,
the C 350 e². A total of ten forward-looking plug-in hybrid
models with the three-pointed star will be launched by 2017.
1 GLE 500 e 4MATIC: fuel consumption in liters/100 km
combined: 3.3; CO2 emissions in g/km combined: 78;
electricity consumption in kWh/100 km: 16.0
2 C 350 e: fuel consumption in liters/100 km combined: 2.4-2.1;
CO₂ emissions in g/km combined: 54-48; electricity
consumption in kWh/100 km: 11.3-11.0
Automobile production is our core area of expertise, which
we are now expanding with the help of digital technologies
such as those for autonomous driving or accident-free driv-
ing, as well as systems that continue to merge navigation,
entertainment and vehicle operation functions. Connected
services such as our moovel mobility platform and car2go
car-sharing system are also key business areas. And these
achievements are only the beginning! pages 20f
Digital business models - fascination through
innovation and state-of-the-art products
Digitization of customer relationships -
we're always where our customers are
Virtual communication channels, social media formats
and online communities are ideal platforms for a lively
exchange between Daimler and its customers - anytime,
anywhere. The Mercedes me portal and the Mercedes me
app allow anyone to become part of the fascinating world
of Mercedes-Benz. This benefits everyone. Interested
parties can contact us at any time, from anywhere, and
customers always have online access to their vehicle data.
We always have our finger on the pulse of the market and
can therefore ideally align our premium products with the
dynamic requirements of our customers. Opages 18f
DAIMLER INNOVATIVE. DIGITAL. LEADING. 17
were created, of which the most aerodynamic version
was implemented. Opage 23
Digital data model of the Concept IAA:
Through state-of-the-art CAD, 300 digital prototypes
"The Internet and connectivity
will result in major changes to our
products and processes - and in
the way we work together."
The digitization process is being supported by the
DigitalLife@Daimler initiative, which we're using to develop
strategies and implement projects that will lead to the
digital transformation of all our business units. We are
focusing on two questions here: What do our customers
perceive directly, and what do they perceive indirectly?
We are answering the first question by examining how
customers experience our products and how we establish
and maintain relationships with them. With regard to the
second question, we are digitizing our processes in order
to create the basis for meeting customer requirements
more flexibly and economically with innovative products.
The digital transformation has been firmly established
throughout the company and is now a part of our core
business. This transformation has been given the same
strategic importance as green technologies and our
measures for growing in new markets.
As a premium automobile manufacturer, we also seek to be
a leader in digitization and to actively exploit the tremen-
dous opportunities offered by the Internet and connectivity
in general. Daimler has already transformed itself from a
leading automotive company into a mobility services pro-
vider and we continue to pick up the pace on the road to
the mobility of the future.
What will the world in which Daimler
does business be like in the near
future? One thing is certain, namely
that digitization has long since become
a part of normal daily life - and the
options available for data networking
are already enabling us to transform
each and every part of our company.
Much more than just the complete
networking of the automobile.
Intelligent data networking is creating completely new possibilities for
the automotive industry. With a digital process chain extending from
research and development to production and sales, the digital era is
already well under way at Daimler. We are a pioneer in this transforma-
tion process, in which we are using digitization to develop innovative
vehicles and services and improve the work environment. In doing so,
we are speeding up profitable processes and the creation of new auto-
motive concepts that will enrich the future of mobility.
Completely connected - we are
designing the digital future
connectivity/
daimler.com/innovation/
Discover new forms of connectivity.
Fully networked
Digital
000.0
The automobile has always been a symbol of personal freedom -
and people today are "always on" and want to remain online in their
vehicles as well. Our visionary F 015 research vehicle offers just
one example of how a continual dialogue can be maintained between
vehicles, passengers and the surrounding environment. We are
already integrating our product portfolio into the digital world of our
customers and linking navigation, infotainment and vehicle operation
systems. Mercedes me connects people, experiences and services,
and intelligent "co-drivers” in Mercedes-Benz models ensure out-
standing safety and comfort. In line with its pioneering role, Daimler
is achieving new milestones and inspiring its customers with Intelli-
gent Drive next Level, car-to-x technologies and many other digital
services and systems. pages 30 ff
22°C
Connected to the digital driving
culture of the future
21°0
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
14
and ergonomic production.
by robots and people working together. This ensures more flexible
Fit for the future. Batteries are installed in our hybrid vehicles
Preparing employees for the digital world and giving
them the freedom to develop innovative ideas!
Shorter lines of communication and an ongoing creative
dialogue across business units and hierarchies: Digital
networking is also improving the work environment at our
company. Daimler employees around the world can now
exchange information and generate ideas for future mobil-
ity in internal social networks, through projects, by means
of open-space technologies and at events. In this manner,
we are strengthening the independent entrepreneurial
spirit at our company, as well as its culture of innovation.
→ page 25
models
S-Class
Linked to the world of existing and
potential customers
Relax as you are safely driven
to your destination
Intelligent Drive next level
The C-Class Coupe stands out with a sporty profile
and assistance systems that enable partially
autonomous driving. The new E-Class takes a step
into the future as well. pages 30 ff
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 9
S.MB 1052
When will we see the first self-driving
series-production cars on the road?
It's not possible to answer this question
today because the development of
autonomous driving also depends on
decisions made by politicians. As a
pioneer in automotive engineering,
Daimler has already created the tech-
nological basis for autonomous driving,
as many current Mercedes-Benz
850
6,590
1
1
126
122
59,831
24
5,994
50,399
18,805
10,325
Financing liabilities
6,712
Provisions for other risks
23
41,026
874
851
875
Provisions for income taxes
176
7,617
9,872
117
36,967
12,630
8,546
12,806
8,663
6,120
40,074
2,876
25
Total non-current liabilities
14
30
14
30
27
Other liabilities
480
707
3,101
4,144
3,581
4,851
Other financial liabilities
26
413
2,688
3,578
-1,618
-1,363
1,070
2,215
9
Deferred tax liabilities
575
2,231
2,301
2,644
22
Deferred income
Provisions for pensions and similar obligations
44,584
Trade payables
39,937
77,145
91,847
2,826
3,319
772
952
3,598
4,271
17
9,452
9,981
-7,099
Total assets
-7,435
2,546
16
Total current assets
Other assets
Other financial assets
110
127
5,150
6,998
5,260
7,125
15
Marketable debt securities
2,353
44,752
217,166
93,303
54,624
20
Total equity
43,665
919
1,063
Non-controlling interests
53,561
of Daimler AG
Equity attributable to shareholders
Treasury shares
Other reserves
202
1,583
189,635
28,487
11,906
11,917
3,070
3,070
Retained earnings
Capital reserve
Share capital
Equity and liabilities
105,454
123,863
42,178
51,910
34,967
84,181
36,991
85,461
10,548
78,077
10,178
757
777
26
2,888
2,413
1,886
1,674
1,002
739
27
2,363
2,007
1,523
1,376
840
631
Total current liabilities
77,081
66,974
9,220
13,091
Total equity and liabilities
217,166
189,635
93,303
84,181
67,861
123,863
53,883
105,454
1,864
2,351
6,198
7,133
Financing liabilities
1,326
Other financial liabilities
Deferred income
Other liabilities
22222
23
9,710
7,267
24
41,311
36,290
39,331
10,182
709
9,204
-21,417
The accompanying notes are an integral part of these consolidated financial statements.
34,123
9,852
43,954
366
326
679
6,830
-13,518
68
78
506
437
62,728
49,808
25
9,484
8,062
46,130
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS 201
Consolidated Statement of Cash Flows¹
E.04
48
Gains (-)/losses (+) on disposals of assets
-229
-1,053
-228
-1,053
-1
Change in operating assets and liabilities
Inventories
-2,613
-2,768
-2,597
-2,734
72
-16
Trade receivables
-205
-606
-193
-430
-12
-176
Trade payables
142
853
111
845
31
-34
Provisions for income taxes
-898
-850
In millions of euros
Consolidated
Industrial Business
(unaudited additional
information)
Daimler Financial Services
(unaudited additional
information)
2015
2014
2015
2014
2015
Provisions for other risks
2014
Profit before income taxes
-522
12,744
11,131
8,794
1,613
1,379
Depreciation and amortization/impairments
5,384
4,999
5,316
4,964
68
35
Other non-cash expense and income
-450
10,173
1,567
138
8,369
55
69
124
72
1,381
1,453
Items that may be reclassified to profit/loss
11
11
-3
-3
investments (after tax)
Unrealized gains/losses from equity-method
11
11
-3
-3
Unrealized gains/losses (pre-tax)
investments
Unrealized gains/losses from equity-method
-1,885
-1,886
4
-647
-643
financial instruments (after tax)
Unrealized gains/losses from derivative
Actuarial gains/losses from pensions and similar
obligations (pre-tax)
3,280
3,280
Total comprehensive income
8
55
-3,627
-3,572
72
4,082
4,154
Other comprehensive income/loss, net of taxes
-3,696
-3,696
2,701
2,701
800
Items that will not be reclassified to profit/loss
-3,696
2,701
2,701
obligations (after tax)
Actuarial gains/losses from pensions and similar
1,682
1,682
-579
-579
and similar obligations
Taxes on actuarial gains/losses from pensions
-5,378
-5,378
-3,696
800
-1
279
Unrealized gains/losses (pre-tax)
available-for-sale
Unrealized gains/losses from financial assets
56
1,744
1,800
67
1,370
1,437
currency translation adjustments
Unrealized gains/losses from
328
6,962
670
7,290
8,424
8,711
Net profit
2014
2014
2014
2015
2015
2015
interests
of Daimler AG
Group
Non-
controlling
287
12,865
669
205
278
and on reclassifications
Taxes on unrealized gains/losses
-2,432
-253
-2,433
-253
2,849
2,849
Reclassifications to profit and loss (pre-tax)
5
-3,775
-3,770
Unrealized gains/losses (pre-tax)
financial instruments
1
Unrealized gains/losses from derivative
199
1
661
662
available-for-sale (after tax)
Unrealized gains/losses from financial assets
-6
-6
-8
-8
and on reclassifications
Taxes on unrealized gains/losses
205
199
8,341
12,506
3,718
125,319
Total non-current assets
2,733
3,025
-2,178
-2,371
555
654
17
Other assets
514
537
3,610
2,747
4,124
3,284
9
Deferred tax assets
4,774
5,444
-1,140
-536
3,634
4,908
16
Other financial assets
1,368
112,490
53,366
49,214
71,953
9,667
9,936
Cash and cash equivalents
26,794
35,179
-25
-24
26,769
35,155
14
Receivables from financial services
810
839
1,147
7,824
8,634
9,054
19
Trade receivables
860
898
20,004
22,862
20,864
23,760
18
Inventories
63,276
8,215
6
1,374
1,148
Property, plant and equipment
165
222
9,202
9,847
9,367
10,069
10
Intangible assets
Assets
2014
2015
At December 31,
11
At December 31,
2014
At December 31,
2015
2014
Note
Industrial Business Daimler Financial Services
(unaudited additional
(unaudited additional
information)
information)
Consolidated
In millions of euros
E.03
Consolidated Statement of Financial Position
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
200
The accompanying notes are an integral part of these consolidated financial statements.
1 See Note 20 for other information on comprehensive income/loss.
383
3,335
2015
359
24,322
24,262
15
Marketable debt securities
34,959
38,417
-49
-58
34,910
38,359
14
Receivables from financial services
30
23
2,264
23,182
3,610
3,633
13
Equity-method investments
57
18,676
23,078
14,374
15,864
33,050
38,942
12
Equipment on operating leases
60
23,125
2,294
Receivables from financial services
8.1734 48.0583
-8,065
23
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
-26
-26
-26
Acquisition of treasury shares
26
26
26
Issue and disposal of treasury shares
54
-9
45
Other
-1,032
-1
43,665
919
44,584
Balance at December 31, 2014
-1,032
-1
43,665
919
44,584
20
3
-2,565
-158
Total
equity
In millions of euros
853
-12
42,680
683
43,363
Balance at January 1, 2014
6,962
328
7,290
Net profit
-2,685
Balance at January 1, 2015
11
55
-6,048
Other comprehensive income/loss before taxes
800
2,476
2,476
Deferred taxes on other comprehensive income
-1,885
11
3,335
383
3,718
-2,407
-6,103
-
8,424
287
Other
-1,679
-4
53,561
1,063
54,624
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Balance at December 31, 2015
204
2
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Significant accounting policies
General information
The consolidated financial statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315a of the German Commercial
Code (HGB) and comply with the International Financial Report-
ing Standards (IFRS) as adopted by the European Union (EU).
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The Company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 137, 70327 Stuttgart, Germany.
The consolidated financial statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
The Board of Management authorized the consolidated
financial statements for publication on February 16, 2016.
Basis of preparation
Applied IFRSS
The accounting policies applied in the consolidated financial
statements comply with the IFRSS required to be applied in the
EU as of December 31, 2015.
IFRSS issued, EU endorsed and initially adopted
in the reporting period
IFRSS with mandatory initial application in the EU as of
January 1, 2015 had no significant impact on the consolidated
financial statements.
IFRSS issued but neither EU endorsed nor yet adopted
In July 2014, the IASB published IFRS 9 Financial Instruments,
which shall supersede IAS 39. IFRS 9 deals with the classi-
fication, recognition and measurement (including impairment)
of financial instruments as well as with regulations for
general hedge accounting. With IFRS 9, additional notes will
be required, as specified by the revised IFRS 7 Financial
Instruments - Disclosures. Subject to being endorsed by the
EU, application of IFRS 9 is mandatory for reporting periods
beginning on or after January 1, 2018. Early adoption is permitted.
Investigation of the effects on the consolidated financial
statements of adopting IFRS 9 has not yet been completed.
Notes to the Consolidated Financial Statements
Non-
controlling
interests
-9
27
8,711
Net profit
-647
-926
-3
279
-3
4,390
73
4,463
-308
-1
-309
11
-
359
12,865
-2,621
-274
-2,895
68
68
-27
-27
-27
27
27
-
12,506
In May 2014, the IASB published IFRS 15 Revenue from Contracts
with Customers. It replaces existing guidance for revenue
recognition, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
The new standard defines a comprehensive framework for
determining whether, in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. Subject to being
endorsed by the EU, application of IFRS 15 is mandatory
for reporting periods beginning on or after January 1, 2018.
Early adoption is permitted. Investigation of the effects on
the consolidated financial statements of adopting IFRS 15 has
not yet been completed. Effects on Daimler may occur, in
particular with regard to the date of revenue recognition for
multiple-element arrangements. Disclosure requirements
are also extended. From today's perspective, the application
of IFRS 15 is not expected to have any major impact on the
Group's profitability, liquidity and capital resources or financial
position.
Equity
attributable to
shareholders
of Daimler AG
method
In millions of euros
Share
Capital
capital
reserves
Retained
earnings²
Currency
translation
Financial
assets
available
for sale
Balance at January 1, 2014
3,069
11,850
27,628
-969
261
Net profit
6,962
Other comprehensive income/loss before taxes
-5,378
1,744
205
Deferred taxes on other comprehensive income
1,682
-6
Total comprehensive income/loss
3,266
1,744
E.05
Consolidated Statement of Changes in Equity¹
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
202
323
151
330
-13
-7
Net increase/decrease in cash and cash equivalents
269
-1,386
28
-1,504
241
118
Cash and cash equivalents at beginning of period
199
9,667
8,341
9,845
1,326
1,208
Cash and cash equivalents at end of period
9,936
9,667
8,369
8,341
1,567
1,326
1 See Note 28 for other information on consolidated statements of cash flows.
The accompanying notes are an integral part of these consolidated financial statements.
11,053
Dividends
-2,407
Capital increase/Issue of new shares
-2,621
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Other
Balance at December 31, 2015
3,070
11
11,917
36,991
2,145
1,121
1 See Note 20 Equity for other information on changes in equity.
2 Retained earnings also include items that will not be reclassified to the consolidated income statement. Actuarial losses from pensions and similar
obligations amount to €6,191 million net of tax in 2015 (2014: €8,892 million net of tax).
661
The accompanying notes are an integral part of these consolidated financial statements.
items that
may be reclassified
in profit/loss
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
203
Share of
investments
Derivative
accounted for
Shareholders
financial using the equity
Treasury
instruments
Other reserves
share
1,370
-8
1
2
Acquisition of treasury shares
Issue and disposal of treasury shares
Other
Balance at December 31, 2014
54
3,070
11,906
28,487
775
460
Balance at January 1, 2015
11,125
Net profit
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
3,070
11,906
28,487
775
460
8,424
3,280
1,370
669
-579
Other comprehensive income/loss before taxes
-10,251
The final standard IFRS 16 Leases was published by the IASB
on January 13, 2016. The changes resulting from this new
standard mainly affect lessee accounting and generally require
lessees to recognize assets and liabilities for all leases.
The exact effects still have to be analyzed.
205
-9,936
-2,709
-9,722
Cash provided by/used for investing activities
-11
-19
-19
-20
-30
-39
358
250
3,476
2,193
3,834
2,443
Proceeds from sales of marketable debt securities
Other
-60
-11
-3,281
-4,090
-3,341
-4,101
Acquisition of marketable debt securities
128
3,098
-89
-2,887
214
178
Change in short-term financing liabilities
Additions to long-term financing liabilities
-264
-158
-274
Dividends paid to non-controlling interests
-2,407
-2,621
-2,407
-2,621
Dividend paid to shareholders of Daimler AG
-22,792
-28,529
-11,858
-13,375
3,098
-34,650
Repayment of long-term financing liabilities
23,643
32,685
13,711
21,647
37,354
54,332
1,407
193
722
-157
2,129
36
-41,904
39
Proceeds from disposals of shareholdings
-81
-1,274
222
Cash provided by/used for operating activities
-340
142
-1,830
-2,715
-2,170
-2,573
Income taxes paid/refunded
213
663
819
11,735
1,534
2,197
Other operating assets and liabilities
-2,795
-3,789
-24
-135
-2,819
-3,924
Vehicles on operating leases
-7,151
-10,284
-914
33
1,032
-156
7,539
-8,813
-44
-91
-1,179
-172
-1,223
Investments in shareholdings
15
15
194
480
209
495
equipment and intangible assets
-11,513
Proceeds from disposals of property, plant and
-75
-1,443
-2,186
-1,463
-2,261
Additions to intangible assets
-23
-30
-4,821
-5,045
-4,844
-5,075
Additions to property, plant and equipment
-20
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
-10
Proceeds from the issue of share capital
Exchange rates
USD
1€ =
GBP
1€ =
JPY
1€ =
CNY
1€ =
2015
RUB
2014
USD
GBP
1€ =
1€ =
1€ =
JPY
1€ =
CNY
1€ =
RUB
1€ =
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In addition,
current income taxes presented for the period include adjust-
ments for uncertain tax payments or tax refunds for periods
not yet finally assessed including interest expense and penalties
on the underpayment of taxes. For the case that amounts
included in the tax return might not be realized (uncertain tax
positions), a provision for income taxes is recognized. The
amount is based on the best possible assessment of the expected
tax payment. Tax refund claims from uncertain tax positions
are recognized when it is predominantly likely and thus reason-
ably expected that they can be realized. Only in the case
of tax loss carryforwards or unused tax credits, no provision
for taxes or tax claim is recognized for these uncertain tax
positions. Instead, the deferred tax assets for the unused tax
loss carryforwards or tax credits are to be adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Income taxes
An exception to the aforementioned principles is made
for Daimler Financial Services. In this case, interest income
and expense and gains or losses from derivative financial
instruments are disclosed under revenue and cost of sales
respectively.
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents as
well as interest expense from liabilities. Furthermore, interest
and changes in fair values related to interest rate hedging
activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The interest
components of defined benefit pension obligations and
other similar obligations as well as of the plan assets available
to cover these obligations are also presented in this line item.
Interest income and interest expense
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of interest
on provisions for other risks is recorded in this line item.
Other financial income/expense, net
Profit/loss from equity-method investments
This item includes all income and expenses in connection
with investments accounted for using the equity method.
In addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting
from the sale of equity interests or the remeasurement of
equity interests following a loss of significant influence.
Daimler's share of dilution gains and losses occurring if the
Group or other owners do not participate in capital increases
of companies in which shares are held and accounted for
using the equity method are also included in profit/loss from
equity-method investments. This item also includes losses
on the impairment of an investment's carrying amounts and/or
gains on the reversal of such impairments.
E.06
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services
business at Daimler Financial Services. The revenue from the
rental and leasing business results from operating leases
and is recognized on a straight-line basis over the periods
of the contracts. In addition, sales revenue is generated
at the end of lease contracts from the subsequent sale of the
vehicles. Revenue from receivables from financial services
is recognized using the effective interest method. When loans
are issued below market rates, related receivables are recog-
nized at present value and revenue is reduced for the interest
incentive granted. If subsidized leasing fees are agreed upon
in connection with finance leases, revenue from the sale of
a vehicle is reduced by the amount of the interest incentive
granted.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.
Revenue from sales of vehicles, service parts and other related
products is recognized when the risks and rewards of owner-
ship of the goods are transferred to the customer, the amount
of revenue can be estimated reliably and collectability is rea-
sonably assured. Revenue is recognized net of sales reductions
such as cash discounts and sales incentives granted.
Subject to EU endorsement of these standards, which are then
to be adopted in future periods, Daimler does not currently
plan to apply these standards earlier. Other IFRSS issued but
not EU endorsed are not expected to have a significant impact
on the Group's profitability, liquidity and capital resources
or financial position.
Presentation
Presentation in the consolidated statement of financial position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or within
a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The consolidated statement of income is presented using
the cost-of-sales method.
The Group's consolidated financial statements are significantly
influenced by the activities of its financial services business.
To enhance readers' understanding of the Group's profitability,
liquidity and capital resources and financial position, unaudited
information with respect to the Group's industrial and financial
services business activities (Daimler Financial Services) is
provided in addition to the audited consolidated financial state-
ments. Such information is not required by IFRS and is not
intended to, and does not represent the separate IFRS profit-
ability, liquidity and capital resources and financial position
of the Group's industrial or financial services business activities.
Eliminations of the effects of transactions between the
industrial and financial services businesses have generally
been allocated to the industrial business columns.
Measurement
The consolidated financial statements have been prepared
on the historical cost basis with the exception of certain items
such as available-for-sale financial assets, derivative financial
instruments, hedged items, and pensions and similar obligations.
The measurement models applied to those exceptions are
described below.
Principles of consolidation
The consolidated financial statements include the financial
statements of Daimler AG and the financial statements of
all subsidiaries, including structured entities which are directly
or indirectly controlled by Daimler AG. Control exists if the
parent company has the power of decision over a subsidiary
based on voting rights or other rights, if it participates in
positive and negative variable returns from a subsidiary, and
if it can affect these returns by its power of decision.
Structured entities which are controlled also have to be
consolidated. Accordingly, the assets and liabilities remain in
the consolidated statement of financial position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls
the entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
The financial statements of consolidated subsidiaries which
are included in the consolidated financial statements are
generally prepared as of the reporting date of the consolidated
financial statements. The financial statements of Daimler AG
and its subsidiaries included in the consolidated financial
statements are prepared using uniform recognition and mea-
surement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from trans-
actions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Business combinations are accounted for using the purchase
method.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without loss
of control are accounted for as an equity transaction between
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in
earnings over the life of a depreciable asset as a reduced
depreciation expense. Government grants which compensate
the Group for expenses are recognized as other operating
income in the same period as the expenses themselves.
owners.
An associated company is an entity over which the Group
has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions
of the investee. Associated companies are generally accounted
for using the equity method.
For entities over which Daimler has joint control together
with a partner (joint arrangements), it has to be decided
if a joint operation or a joint venture exists. In a joint venture,
the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. For joint ventures,
the equity method has to be applied. A joint operation exists
when the jointly controlling parties have direct rights to the
assets and obligations for the liabilities. In this case, the prorated
assets and liabilities and the prorated income and expenses
are generally to be recognized. As the joint operations recognized
at the end of the reporting period have no significant impact
on the consolidated financial statements, they are accounted
for using the equity method.
206
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of
the results of operations is included in Daimler's consolidated
financial statements with a one to three-month time lag.
Adjustments are made for all significant events or transactions
that occur during the time lag (see also Note 13).
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume
and that are not material for the Group and the fair presentation
of financial position, liquidity and capital resources, and
profitability are generally measured at amortized cost in the
consolidated financial statements.
Foreign currency translation
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated into euros using period-end
exchange rates; gains and losses from this measurement
are recognized in profit and loss (except for gains and losses
resulting from the translation of available-for-sale equity
instruments, which are recognized in other comprehensive
income/loss).
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into euros
using period-end exchange rates. The translation adjustments
are presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.
The exchange rates of the US dollar, the British pound, the
Japanese yen, the Chinese renminbi and the Russian ruble
- the most significant foreign currencies for Daimler - were
as shown in table 7 E.06.
Accounting policies
Revenue recognition
Investments in associated companies,
joint ventures or joint operations
Government grants
Borrowing costs are expensed as incurred unless they
are directly attributable to the acquisition, construction or
production of a qualifying asset and are therefore part
of the cost of that asset. Depreciation of the capitalized
borrowing costs is presented within cost of sales.
Borrowing costs
0.7340 131.0700
1.0887
Effect of foreign exchange rate changes
6,491
8,760
11,553
-6,486
-1,922
2,274
9,631
Cash provided by/used for financing activities
7,152
-6,491
-7,152
7.0608
Internal equity and financing transactions
-10
Acquisition of non-controlling interests in subsidiaries
-26
-27
-26
-27
Acquisition of treasury shares
13
62
29
27
42
89
-10
-2
80.6736
0.7789 145.2300
Research and non-capitalized development costs
Expenditure for research and development that does not
meet the conditions for capitalization according to IAS 38
Intangible Assets is expensed as incurred.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group allocates revenue
to the various elements based on their estimated fair values.
for certain products. Revenue from these contracts is deferred
and recognized 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 infor-
mation, income from extended warranty contracts is recognized
on a straight-line basis. A loss on these contracts is recog-
nized in the current period if the sum of the expected costs
for services under the contract exceeds unearned revenue.
The Group offers extended, separately priced warranties
207
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.6824 59.7160
on cash and cash equivalents
0.7938 137.7500
0.7891 142.7500
8.5438 47.9415
8.3576 48.0425
0.8279 140.8000
0.8147 140.0000
1.2141
1.3696
1.3711
1.3256
1.2498
0.7434 134.1200
0.7211 134.2900
0.7173 135.8600
0.7220 132.9500
1.0953
Fourth quarter
1.1116
Third quarter
1.1053
Second quarter
1.1261
First quarter
during the respective period
Average exchange rates
72.3370
7.5358
7.0231 70.9608
6.8572 58.2187
7.0083 70.3033
7.0003 72.4051
Daimler
Average exchange
Group of Daimler AG
15,991
-13,597
Gross profit
31,797
28,184
25,790
2,814
2,394
Selling expenses
5
-12,147
-11,534
-11,577
-16,148
-11,103
-431
General administrative expenses
5
-3,710
-3,329
-2,993
-2,693
-717
-636
Research and non-capitalized
development costs
5
-570
-88,091
18,962
113,881
Consolidated Statement of Income
E.01
Consolidated
Industrial Business Daimler Financial Services
(unaudited additional
information)
(unaudited additional
information)
2014
2015
2014
Note
-545
-2,387
-3,488
-2,883
-4,033
2015
2014
2015
In millions of euros
Revenue
Cost of sales
4
149,467
129,872
5
-117,670
-101,688
130,505
-101,522
-4,760
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
-4,532
-4,532
13
Interest income
8
170
145
169
145
1
Interest expense
8
-602
-715
-5
-595
-7
-8
Profit before income taxes¹
Income taxes
Net profit
thereof profit attributable to
non-controlling interests
thereof profit attributable to
shareholders of Daimler AG
12,744
10,173
11,131
8,794
1,613
-707
445
-22
458
Other operating income
6
2,114
1,759
1,982
1,676
132
83
Other operating expense
6
-555
-1,160
-530
-1,139
-25
-21
Profit/loss on equity method investments, net
13
464
897
474
912
-10
-15
Other financial income/expense, net
7
-27
-4,760
198
28,983
883
Daimler
In millions of euros
E.02
Income/Loss¹
Consolidated Statement of Comprehensive
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS 199
The accompanying notes are an integral part of these consolidated financial statements.
1 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.
6.51
6.51
7.87
7.87
Diluted
1,379
rate on December 31
Non-
controlling
interests
9
-496
8,711
7,290
7,643
6,407
1,068
Basic
287
328
8,424
6,962
Earnings per share (in euros)
for profit attributable
Shareholders
to shareholders of Daimler AG
35
International
15
Germany
30
29
Joint operations, joint ventures and associated
companies accounted for at (amortized) cost
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold or when new warranty programs are
initiated. Based on historical warranty claim experience,
assumptions have to be made on the type and extent of future
warranty claims and customer goodwill, as well as on possible
recall or buyback campaigns for each model series. In addition,
the estimates also include assumptions on the amounts
of potential repair costs per vehicle and the effects of possible
time or mileage limits. The provisions are regularly adjusted
to reflect new information.
Further information on provisions for other risks is provided
in Note 23.
Legal proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries
on a wide range of topics. If the outcome of such legal proceed-
ings is detrimental to Daimler, the Group may be required
to pay substantial compensatory and punitive damages or to
undertake service actions, recall campaigns or other costly
actions. Litigation and governmental investigations often involve
complex legal issues and are connected with a high degree
of uncertainty. Accordingly, the assessment of whether an obli-
gation exists on the balance sheet date as a result of an event
in the past, and whether a future cash outflow is likely and the
obligation can be reliably estimated, largely depends on
estimations by the management. Daimler regularly evaluates
the current stage of legal proceedings, also with the involve-
ment of external legal counsel. It is therefore possible that the
amounts of provisions for pending or potential litigation
will have to be adjusted due to future developments. Changes
in estimates and premises can have a material effect on the
Group's future profitability. It is also possible that provisions
accrued for some legal proceedings may turn out to be
insufficient once such proceedings have ended. Daimler may
also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on
Daimler's operating results and cash flows for a particular
reporting period, Daimler believes that it should not materially
affect the Group's financial position.
15
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
215
Pensions and similar obligations
The calculation of provisions for pensions and similar
obligations and the related pension cost are based on various
actuarial valuations. The calculations are subject to various
assumptions on matters such as current actuarially developed
probabilities (e.g. discount factors and cost-of-living increases),
future fluctuations with regard to age and period of service, and
experience with the probability of occurrence of pension
payments, annuities or lump sums. As a result of changed
market or economic conditions, the probabilities on which
the influencing factors are based, may differ from current devel-
opments. The financial effects of deviations of the main
factors are calculated with the use of sensitivity analyses.
See Note 22 for further information.
Income taxes
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable
in the various countries. Due to their complexity, the tax items
presented in the financial statements are possibly subject
to different interpretation by taxpayers on the one hand and
local tax authorities on the other hand. For the calculation
of deferred tax assets, assumptions have to be made regarding
future taxable income and the time of realization of the
deferred tax assets. In this context, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal
of taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are
sometimes beyond Daimler's control, the assumptions to be
made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the probability
of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired. Further
information is provided in Note 9.
3. Consolidated Group
Composition of the Group
Table 71 E.08 shows the composition of the Group.
The aggregate balance sheet totals of the subsidiaries, associ-
ated companies, joint ventures and joint operations accounted
for at amortized cost whose business is non-active or of low
volume and which are not material for the Group and the fair
presentation of its profitability, liquidity and capital resources
and financial position would amount to approximately 1% of the
Group's balance sheet total; the aggregate revenues and
the aggregate net profit would amount to approximately 1%
of the Group's revenue and net profit.
|
International
14
15
3,180
3,853
447
business at Daimler Financial Services
Interest from the financial services
114,013
12,245
14,462
Revenue from the rental and leasing business
130,705
Revenue from sales of goods
2014
2015
In millions of euros
Revenue
E.09
At the reporting date, the Group has business relationships
with 11 (2014: 18) controlled structured entities, of which
9 (2014: 16) are fully consolidated. In addition, the Group
has relationships with 5 (2014: 5) non-controlled structured
entities. The unconsolidated structured entities are not
material for the Group's profitability, liquidity and capital
resources and financial position.
The structured entities of the Group are rental companies
and asset-backed-securities (ABS) companies. The purpose
of the rental companies primarily is the acquisition, renting
and management of assets. The ABS companies are primarily
used for the Group's refinancing. The assets transferred
to structured entities usually result from the Group's leasing
and sales financing business. Those entities refinance the
purchase price by issuing securities.
Structured entities
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
216
470
470
A detailed list of the companies included in the consolidated
financial statements and of the equity investments of
Daimler AG pursuant to Sections 285 und 313 of the German
Commercial Code (HGB) is provided in the statement
of investments. Further information is provided in Note 39.
E.08
Composition of the Group
2015
Germany
1
1
International
2
2
Joint ventures accounted for using
the equity method
13
13
Germany
4
3
International
9
10
Associated companies accounted for using
the equity method
14
12
Germany
3
3
11
3
5
At December 31,
2014
Consolidated subsidiaries
Germany
329
327
59
60
International
270
267
82
80
29
33
53
23a
Subsidiaries accounted for using
the equity method
Unconsolidated subsidiaries
Germany
International
Germany
International
5
Joint operations accounted for
using the equity method
47
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for
hedge accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
208
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. These are mainly interest
rate risks, currency risks and commodity price risks.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives, (including embedded
derivatives separated from the host contract) which are
not used as hedging instruments in hedge accounting, are
classified as held for trading. Gains or losses on liabilities
held for trading are recognized in profit or loss.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest method.
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities and
other liabilities.
Financial liabilities
Financial assets and financial liabilities are offset and the net
amount is presented in the consolidated statement of financial
position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Offsetting financial instruments
Available-for-sale financial assets. If an available-for-sale
financial asset is impaired, the difference between its cost
(net of any principal payment and amortization) and its current
fair value (less any impairment loss previously recognized
in the statement of income) is reclassified from other compre-
hensive income/loss to the statement of income. Reversals
with respect to equity instruments classified as available for
sale are recognized in other comprehensive income/loss.
Reversals of impairment losses on debt instruments are recog-
nized through the statement of income if the increase in fair
value of the instrument can be objectively attributed to an event
occurring after the impairment losses were recognized in
the consolidated statement of income.
In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance
lease receivables and trade receivables) is recorded using
allowance accounts. The decision to account for credit
risks using an allowance account or by directly reducing the
receivable depends on the estimated probability of the
loss of receivables.
If, in a subsequent reporting period, the amount of the
impairment loss decreases and the decrease can be attributed
objectively to an event occurring after the impairment was
recognized, the impairment loss recorded in prior periods is
reversed and recognized in profit or loss.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Embedded derivatives are separated from the host contract,
which is not measured at fair value through profit or loss,
if an analysis shows that the economic characteristics and
risks of embedded derivatives are not closely related to
those of the host contract.
212
At each reporting date, the carrying amounts of financial
assets other than those to be measured at fair value through
profit or loss are assessed to determine whether there is
objective evidence of impairment. Objective evidence may exist
for example if a debtor is facing serious financial difficulties
or there is a substantial change in the debtor's technological,
economic, legal or market environment. For quoted equity
instruments, a significant or prolonged decline in fair value
is additional objective evidence of possible impairment.
Daimler has defined criteria for the significance and duration
of a decline in fair value. A decline in fair value is deemed
significant if it exceeds 20% of the carrying amount of the invest-
ment; a decline is deemed prolonged if the carrying amount
exceeds the fair value for a period longer than nine months.
Impairment of financial assets
Cash and cash equivalents. Cash and cash equivalents consist
primarily of cash on hand, checks and demand deposits at
banks, as well as debt instruments and certificates of deposits
with a remaining term when acquired of up to three months,
which are not subject to any material value fluctuations.
Cash and cash equivalents correspond with the classification
in the consolidated statement of cash flows.
After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income
using the effective interest method. Dividends are recognized
in profit or loss when the right of payment has been established.
Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial papers.
Loans and receivables. Loans and receivables are non-
derivative financial assets with fixed or determinable payments
that are not quoted in an active market, such as receivables
from financial services or trade receivables. After initial recog-
nition, loans and receivables are subsequently carried at
amortized cost using the effective interest method less any
impairment losses. Gains and losses are recognized in the
statement of income when the loans and receivables are impaired
or derecognized. Interest effects on the application of the
effective interest method are also recognized in profit or loss.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instruments
in hedge accounting, as well as shares and marketable debt
securities acquired for the purpose of selling in the near term
are classified as held for trading. Gains or losses on these
financial assets are recognized in profit or loss.
Financial assets at fair value through profit or loss.
Financial assets at fair value through profit or loss include
those financial assets designated as held for trading.
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets and marketable securities
and financial investments.
Financial assets
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable
to acquisition or issuance are considered by determining
the carrying amount if the financial instruments are not mea-
sured at fair value through profit or loss.
Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted
at the original effective interest rate of the financial asset. The
amount of the impairment loss is recognized in profit or loss.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive and
as liabilities if the fair value is negative.
If the requirements for hedge accounting set out in IAS 39 are
met, Daimler designates and documents the hedge relation-
ship from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair value
of a recognized asset or liability or an unrecognized firm com-
mitment is hedged. In a cash flow hedge, the variability of cash
flows to be received or paid from expected transactions related
to a recognized asset or liability or a highly probable forecast
transaction are hedged. The documentation of the hedging
relationship includes the objectives and strategy of risk manage-
ment, the type of hedging relationship, the nature of the risk
being hedged, the identification of the hedging instrument and
the hedged item, as well as a description of the method used
to assess hedge effectiveness. Hedging transactions are
expected to be highly effective in achieving offsetting risks from
changes in fair value or cash flows and are regularly assessed
to determine that they have actually been highly effective
throughout the financial reporting periods for which they are
designated.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pensions and similar obligations
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valua-
tion of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the consolidated statement
of financial position or on the consolidated statement of com-
prehensive income/loss.
The balance of defined benefit plans for pensions and other
post-employment benefits obligations and plan assets
(net pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest expense
or income is recognized in profit and loss under interest
expense or interest income in the consolidated statement of
income. The other expenses resulting from pension obligations
and other post-employment benefit obligations (medical care),
which mainly result from entitlements acquired during the year
under review, are taken into consideration in the functional
costs in the consolidated statement of income.
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
by reference to market yields at the end of the reporting
period on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount
factors are estimated by extrapolating current market rates
along the yield curve.
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when
the curtailment or settlement occurs.
Provisions for other risks
A provision is recognized when a liability to third parties
has been incurred, an outflow of resources is probable and
the amount of the obligation can be reasonably estimated.
The amount recognized as a provision represents the best esti-
mate of the obligation at the balance sheet date. Provisions
with an original maturity of more than one year are discounted
to the present value of the expenditures expected to settle
the obligation at the end of the reporting period. Provisions
are regularly reviewed and adjusted as further information
becomes available or circumstances change.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based
on historical experience.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business
is conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the ter-
mination of agreements with suppliers and dealers. Restruc-
turing provisions are recognized when the Group has a detailed
formal plan that has either commenced implementation or
been announced.
Share-based payment
Share-based payment comprises cash-settled liability awards.
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions.
The profit or loss of the period equals the addition to and/or
the reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
Presentation in the consolidated statement of cash flow
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash used for investing activities.
214 E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Accounting estimates and assessments
In the consolidated financial statements, to a certain degree,
estimates, assessments and assumptions have to be made
which can affect the amounts and reporting of assets and liabili-
ties, the reporting of contingent assets and liabilities on the
balance sheet date and the amounts of income and expense
reported for the period. The major items affected by such
estimates, assessments and assumptions are described as
follows. Actual amounts may differ from the estimates.
Changes in the estimates, assessments and assumptions
can have a material impact on the consolidated financial
statements.
Recoverable amounts of cash-generating units
and equity-method investments
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be made
in particular with regard to future cash inflows and outflows
for the planning period and the following periods. The estimates
include assumptions regarding future market share and the
growth of the respective markets as well as regarding the prod-
ucts' profitability. On the basis of the impairment tests
carried out in 2015, the recoverable amounts are substantially
larger than the net assets of the Group's cash-generating units.
When objective evidence of impairment is present, estimates
and assessments also have to be made to determine the
recoverable amount of an equity method financial investment.
The determination of the recoverable amount is based on
assumptions regarding future business developments for
the determination of the expected future cash flows of that
financial investment. See Note 13 for the presentation
of carrying amounts and fair values of equity-method financial
investments in listed companies.
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values
of its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash flows
from leased assets. In this context, assumptions have to be
made regarding the future supply of and demand for vehicles,
as well as the development of vehicle prices. Those assump-
tions are determined either by qualified estimates or by publi-
cations provided by expert third parties; qualified estimates
are based, as far as they are publicly available, on external data
with consideration of internally available additional information
such as historical experience of price developments and
recent sale prices. The residual values thus determined serve
as a basis for depreciation; changes in residual values lead
either to prospective adjustments of the depreciation or, in the
case of a significant decline in expected residual values, to
impairment. If depreciation is prospectively adjusted, changes
in estimates of residual values do not have a direct effect
but are equally distributed over the remaining periods of the
lease contracts.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consider-
ation in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and adequacy
of collaterals. Changes in economic conditions can lead to
changes in our customers' creditworthiness and to changes
in used vehicle prices, which would have a direct effect
on the market values of the vehicles assigned as collateral.
Changes to the estimation and assessment of these factors
influence the allowance for credit losses with a resulting
impact on the Group's net profit. See also Notes 14 and 32
for further information.
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
213
|
211
Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other com-
prehensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For
cash flow hedges, fair value changes in the effective portion
of the hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the statement
of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Financial instruments
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Property, plant and equipment are measured at acquisition
or manufacturing costs less accumulated depreciation.
If necessary, accumulated impairment losses are recognized.
Property, plant and equipment
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
For acquisitions, goodwill represents the excess of the consid-
eration transferred over the fair values assigned to the
identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries
in the functional currency of those subsidiaries.
Goodwill
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried
at cost less accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include all direct
costs and allocable overheads and are amortized on a straight-
line basis over the expected product life cycle (a maximum
of ten years). Amortization of capitalized development costs is
an element of manufacturing costs and is allocated to those
vehicles and components by which they were generated and is
included in cost of sales when the inventory (vehicles) is sold.
Intangible assets other than development costs with finite
useful lives are generally amortized on a straight-line basis
over their useful lives (three to ten years) and are tested for
impairment whenever there is an indication that the intangible
asset may be impaired. The amortization period for intangible
assets with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
3 to 30 years
Other equipment, factory and office equipment
6 to 25 years
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 E.07.
10 to 50 years
Buildings and site improvements
Useful lives of property, plant and equipment
E.07
Intangible assets with indefinite lives are reviewed annually
to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
If necessary, accumulated impairment losses are recognized.
Intangible assets acquired are measured at acquisition
or manufacturing cost less accumulated amortization.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years 2015 and 2014 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a corre-
sponding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and interests
in joint arrangements are not recognized if the Group is able
to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Technical equipment and machinery
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
209
Inventories are measured at the lower of acquisition or
manufacturing cost and net realizable value. The net realizable
value is the estimated selling price less any remaining costs
to sell. The acquisition or manufacturing costs of inventories
are generally based on the specific identification method and
include costs incurred in acquiring the inventories and bringing
them to their existing location and condition. Costs for large
numbers of inventories that are interchangeable are allocated
under the average cost formula. In the case of manufactured
inventories and work in progress, acquisition or manufacturing
cost also includes production overheads based
on normal capacity.
Inventories
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups
as held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is
reversed, this reversal is restricted to the impairment loss
previously recognized for the assets or disposal group
concerned. The Group generally discloses these assets or
disposal groups separately in the consolidated statement
of financial position.
149,467
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may have decreased. If this is the case, Daimler records
a partial or entire reversal of the impairment; the carrying amount
is thereby increased to its recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, which
at Daimler correspond to the reportable segments, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). Value in use is measured by discount-
ing expected future cash flows from the continuing use of
the cash-generating units using a risk-adjusted interest rate.
Future cash flows are determined on the basis of the long-term
planning, which is approved by the Board of Management
and which is valid at the date when the impairment test is con-
ducted. This planning is based on expectations regarding
future market share, the growth of the respective markets as
well as the products' profitability. The multi-year planning
comprises a planning horizon until 2022 and therefore mainly
covers the product life cycles of our automotive business.
The rounded risk-adjusted interest rates used to discount cash
flows, which are calculated for each segment, are currently
unchanged from the previous year at 8% after taxes for the cash-
generating units of the industrial business and 9% after taxes
for Daimler Financial Services. Whereas the discount rate for
Daimler Financial Services represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the industrial business is based on the weighted average
cost of capital (WACC). These are calculated based on the capital
asset pricing model (CAPM) taking into account current
market expectations. In calculating the risk-adjusted interest
rate for impairment test purposes, specific peer group infor-
mation for beta factors, capital structure data and cost of debt
are used. Periods not covered by the forecast are taken into
account by recognizing a residual value (terminal value), which
generally does not consider any growth rates. In addition,
several sensitivity analyses are conducted. These show that
even in case of more unfavorable premises for main influenc-
ing factors with respect to the original planning, no need
for impairment exists. If value in use is lower than the carrying
amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired. If such indication
exists, Daimler estimates the recoverable amount of the asset.
The recoverable amount is determined for each individual
asset unless the asset generates cash inflows that are not
largely independent of those from other assets or groups
of assets (cash-generating units). In addition, goodwill and
other intangible assets with indefinite useful lives are tested
annually for impairment; this takes place at the level of the
cash-generating units. If the carrying amount of an asset
or of a cash-generating unit exceeds the recoverable amount,
an impairment loss is recognized for the difference.
Impairment of non-current non-financial assets
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
210
Interim gains or losses (to be eliminated) from transactions
with companies accounted for at-equity are recognized
through profit and loss with corresponding adjustments
of the investments' carrying amounts.
Daimler reviews on each balance-sheet date whether there
is any objective indication of impairments of equity-method
investments. If such indications exist, the Group determines
the impairment loss to be recognized. If the carrying amount
exceeds the recoverable amount of an investment, the carrying
amount is written down to the recoverable amount. The recov-
erable amount is the greater of fair value less costs to sell and
value in use. An impairment or impairment reversal is recog-
nized in the consolidated statement of income under income/
loss on equity-method investments; this also includes any
gains and/or losses on the sale of equity-method investments.
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company
or joint venture are determined and recognized as investor
level goodwill. The goodwill is included in the carrying amount
of the equity-method investment. With step acquisition of
an equity interest by which significant influence or joint control
is achieved for the first time, the investment is generally
accounted for on the basis of IFRS 3 Business Combinations.
This means that the previously held equity interest is remeasured
on the date of acquisition; any resulting gain or loss is recog-
nized through profit and loss. If an equity interest in an existing
associated company is increased without any resulting change
in significant influence, goodwill is determined only for the
additionally acquired interest; the previous investment is not
remeasured at fair value.
Equity-method investments
In the case of finance leases, the Group presents the receiv-
ables in amount of the net investment of the lease agreements
under receivables from financial services. The net investment
of a lease agreement is the gross investment (future minimum
lease payments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.
Operating leases also relate to Group products that Daimler
Financial Services acquires from non-Group dealers or other
third parties and leases to end customers. These vehicles
are presented at (depreciated) cost of acquisition under leased
equipment in the Daimler Financial Services segment. If these
vehicles are subsidized, the subsidies are deducted from the cost
of acquisition. After revenue is received from the sale to inde-
pendent dealers, these vehicles generate revenue from lease
payments and subsequent resale on the basis of the separate
leasing contracts. The revenue received from the sale of these
vehicles to the dealers is estimated by the Group as being of
the magnitude of the addition to leased equipment at Daimler
Financial Services. In 2015, additions to leased equipment
at Daimler Financial Services amounted to approximately
€12 billion (2014: approximately €9 billion).
Operating leases relate to vehicles that the Group produces
itself and leases to third parties or vehicles that the Group
sells and guarantees to buy back or guarantees a residual value.
These vehicles are capitalized at (depreciated) cost of pro-
duction under leased equipment in the industrial business and
are depreciated over the contract term on a straight-line basis
with consideration of the expected residual values. Changes in
the expected residual values lead either to prospective adjust-
ments of the scheduled depreciation or to an impairment loss
if necessary.
Daimler as lessor
The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
Sale and lease back
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated depre-
ciation and other accumulated impairment losses. Depreciation
is on a straight-line basis; residual values of the assets are
given due consideration. Payment obligations resulting from
future lease payments are discounted and disclosed under
financing liabilities.
In the case of an operating lease, the lease payments
or rental payments are immediately expensed.
Daimler as lessee
Leasing includes all arrangements that transfer the right
to use a specified asset for a stated period of time in return
for a payment, even if the right to use such asset is not
explicitly described in an arrangement. The Group is a lessee
of property, plant and equipment and a lessor of its products.
It is evaluated on the basis of the risks and rewards of a leased
asset whether the ownership of the leased asset is attributed
to the lessee (finance lease) or to the lessor (operating lease).
Leasing
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial instruments in the
form of financial assets and financial liabilities are generally
presented separately. Financial instruments are recognized
as soon as Daimler becomes a party to the contractual provi-
sions of the financial instrument. In the case of purchases
or sales of financial assets through the regular market, Daimler
uses the transaction date as the date of initial recognition
or derecognition.
129,872
Revenue frome sales of other services
Cost of sales
-165
-105
EBIT
Daimler Trucks
82
Provisions for optimization programs¹
-5
180
Cash flow
-81
Cash flow
-64
Mercedes-Benz Cars
In millions of euros
2014
2015
Optimization programs
E.11
Table E.11 shows the effects of the optimization programs
on the key figures of the segments.
In addition, in non-productive areas of Daimler Trucks in
Germany, a program based on socially acceptable voluntary
measures that ran between May 2013 and December 2014
was continued in the third quarter of 2015 and led in total to a
reduction of approximately 700 jobs as of December 31, 2015.
In January 2013, Daimler Trucks announced workforce
adjustments as part of its goal of increasing its profitability
by stronger utilization of efficiencies. In Brazil, a redundancy
program was launched in the first quarter of 2013. This program
has led to a reduction of approximately 3,200 jobs in the
administrative and productive areas as of December 31, 2015,
mostly through voluntary severance agreements. These work-
force adjustments also affected Daimler Buses to a small extent.
At December 31, 2015, the disposal group's assets for the
German locations amounted to €248 million (December 31,
2014: €300 million) and its liabilities amounted to €12 million
(December 31, 2014: €27 million). Due to their minor impact
on the Group's profitability, liquidity and capital resources, and
financial position, the assets and liabilities held for sale are
not presented separately in the consolidated statement of finan-
cial position. Measurement at fair value less cost to sell
led to an impairment of property, plant and equipment in 2014
in an amount of €93 million. Daimler already sold parts
of the disposal group in 2015. In 2016, the Group anticipates
further negative effects on earnings of up to €0.1 billion
in Germany.
EBIT
the Mercedes-Benz Cars segment. In the reporting period 2015,
these measures had resulted in a net expense of €144 million.
-64
Provisions for optimization programs¹
E.10
1 Amounts of provisions for optimization programs as of December 31.
13
2
-25
-1
-14
-4
Provisions for optimization programs¹
Cash flow
-170
EBIT
19
Provisions for optimization programs¹
-1
5
Cash flow
-17
EBIT
Mercedes-Benz Vans
6
21
Daimler Buses
In the course of the organizational focus on the divisions,
Daimler started a restructuring program for its sales organiza-
tion in Germany in 2014. Selected sales-and-service centers
and outlets are being combined into car and commercial-vehicle
outlets in order to steadily increase the profitability of
Daimler's own dealer activities in the highly competitive German
market. In addition, in 2015, the Group initiated programs
to restructure its sales organization abroad. These restructuring
programs also include the sale of selected operations of
the Group's current sales network in Germany and abroad.
The programs affect all automotive segments, but mainly
-29
Optimization programs
Disposals in 2015
Disposals of consolidated subsidiaries
-433
-3,189
-101,688
-117,670
-502
-3,913
Other cost of sales
financial services
Impairment losses on receivables from
Daimler Financial Services
Refinancing costs at
-1,443
-1,666
-5,946
-105,643
2014
434
2015
Depreciation of equipment on operating leases
Expense of goods sold
Measures and programs with implementation costs that
materially impacted EBIT of the segments are briefly described
below.
In millions of euros
In 2015, Daimler decided to sell its equity interest in Atlantis
Foundries (Pty.) Ltd., which had been allocated to the
Daimler Trucks segment, to Neue Halberg-Guss GmbH.
The disposal led to an expense of €61 million.
Acquisitions and disposals of equity-method investments
-91,574
-5,049
There Holding B. V. (THBV) was founded in 2015;
Daimler, Audi and BMW each hold 33.3% of the shares
Research and non-capitalized development costs
Research and non-capitalized development costs were
€4,760 million in 2015 (2014: €4,532 million) and primarily
comprise personnel expenses and material costs.
General administrative expenses amounted to €3,710 million
in 2015 (2014: €3,329 million) and comprise expenses
which were not attributable to production, sales or research
and development functions, including personnel expenses,
depreciation and amortization on fixed and intangible assets,
and other administrative costs.
Acquisitions in 2015
General administrative expenses
In 2015, selling expenses amounted to €12,147 million
(2014: €11,534 million). Selling expenses include direct selling
costs as well as selling overhead expenses and consist of
personnel expenses, material costs and other selling costs.
Selling expenses
Amortization expense of capitalized development costs in
the amount of €1,245 million (2014: €1,212 million) is presented
in expense of goods sold.
Cost of sales
5. Functional costs
217
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Items included in cost of sales are shown in table 7 E.10.
Table 71 E.09 shows the composition of revenue at Group level.
4. Revenue
of the company. Each of the shareholders provided
See Note 13 for further information on the companies
accounted for using the equity method
In 2014, the Group sold its 4% equity interest in Tesla
Motors, Inc. (Tesla) and prematurely terminated the related
hedging instrument. The remeasurement of the Tesla
shares after the end of Daimler's significant influence on
Tesla led to a non-cash gain of €718 million. An expense
of approximately €124 million and a cash inflow of €625 million
resulted from the hedging instrument and the sale of
the equity interest. A gain of €594 million resulted in total.
In March 2014, the Board of Management and the Supervisory
Board of Daimler AG decided to sell the 50% equity interest
in Rolls-Royce Power Systems Holding GmbH (RRPSH) to
the partner Rolls-Royce Holdings plc (Rolls-Royce). For that
purpose, Daimler exercised a put option on its stake in RRPSH.
The measurement of the put option resulted in an expense
of €118 million. The agreed purchase price of €2,433 million
was received in August 2014. The gain on the sale amounted
to €1,006 million.
a capital contribution of €668 million.
Disposals in 2014
THBV is accounted for in the consolidated financial statements
of Daimler AG as an associated company using the equity
method, and is allocated to the Mercedes-Benz Cars segment.
Revenue by segment 7 E.84 and region 7 E.86 is presented
in Note 33.
Effective as of December 4, 2015, There Acquisition B. V.,
a 100% subsidiary of THBV, acquired the mapping provider HERE
from Nokia Corporation for a purchase price of €2,602 million
subject to any further purchase price adjustments. The acqui-
sition was financed by capital contributions of €2,000 million
and by bank loans taken out by There Acquisition B.V. of €602
million. As of January 29, 2016, There Acquisition B.V. was
renamed into HERE International B.V.
4,232
2,648
7,028
4,314
365
Non-current liabilities
685
445
584
1,784
Current assets
2,434
747
595
-5
3,115
Total comprehensive income
1,093
862
310
1,005
384
443
-30
Information on the statement of financial position and
reconciliation to equity-method carrying amounts
Non-current assets
4,139
3,314
12,072
10,127
4
322
668
Current liabilities
Other comprehensive income/loss
Other
86
77
Goodwill
-76
-63
Unrealized profit (-)/loss (+) on sales to/
purchases from
89
55
594
691
928
1,481
interests) attributable to the Group
Equity (excluding non-controlling
594
4,903
3,484
8,095
6,586
384
503
210
476
3,023
1,894
8,571
6,071
2,003
365
Equity (including non-controlling interest)
Profit/loss from discontinued operations
after taxes
3 The proportionate share of unaudited earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's consolidated financial statements
with a three-month time lag. As the investment was acquired in November 2013, Daimler's proportionate share of earnings for 2014 relates to the months
of December 2013 through September 2014. For 2015, earnings relate to the months of October 2014 through September 2015.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
There Holding B. V. is accounted for in the consolidated financial
statements of Daimler AG as an associated company using
the equity method, and is allocated to the Mercedes-Benz Cars
segment. Daimler's proportionate share of its profits and
losses is included with a one-month delay. No proportionate
share of profit or loss was included in Daimler's consolidated
financial statements for 2015 as the amount was not material.
Due to closeness in time to the balance sheet date, not
all hidden reserves and obligations could be finally identified.
Purchase price allocation is expected to be finalized in the
first quarter 2016.
218
Effective December 4, 2015, There Acquisition B. V., based in
Rijswijk, Netherlands, a 100% subsidiary of There Holding B. V.,
acquired the roadmap service HERE from Nokia Corporation
for a purchase price of €2,602 million, subject to possible further
price adjustments. HERE is one of the biggest manufacturers
of digital roadmaps for navigation systems worldwide. Future
expected high resolution maps will be one of the fundamentals
for future autonomous driving. The acquisition price was
funded by using cash contributions of €2,000 million and by
bank loans to There Acquisition B. V. of €602 million.
There Holding B.V. (THBV), based in Rijswijk, Netherlands,
was founded in 2015. Daimler, Audi and BMW each hold an
interest in the company of 33.3%. Each of the shareholders
has made a cash contribution to the company of €668 million.
THBV (HERE)
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger
car division of BAIC Group, one of the leading automotive
companies in China. Directly or via subsidiaries, BAIC Motor
is engaged in the business of researching, developing, manu-
facturing, selling, marketing and servicing of automotive vehicles
and related parts and components and all related services.
Due to Daimler's representation on the board of directors
of BAIC Motor and other contractual arrangements, the Group
classifies this investment as an investment in an associate,
to be accounted for using the equity-method; in the segment
reporting, the investment's carrying amount and its propor-
tionate share of profit or loss are presented in the reconciliation
of total segment's assets to Group assets and total segments'
EBIT to Group EBIT, respectively. On December 19, 2014,
BAIC Motor successfully placed its equity securities for trading
on the Hong Kong Stock Exchange, also with the issue of
new shares. As a result, Daimler's interest in BAIC Motor was
diluted from 12.0% to 10.1%. Daimler continues to classify
this investment as an investment in an associate, to be accounted
for using the equity-method. The effect of dilution was not
material. In the second quarter of 2015, the shareholders
of BAIC Motor decided to pay a dividend. The amount of
€34 million attributable to Daimler decreased the investment's
carrying amount accordingly.
BAIC Motor
In 2015, capital increases of €287 million took place at BBAC.
Daimler plans to contribute additional equity of €0.2 billion,
in accordance with its shareholding ratio, to BBAC in the next
years. In December 2015, the shareholders of BBAC declared a
dividend. The amount of €208 million attributable to Daimler
has decreased the investment's carrying amount accordingly.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz passenger cars and spare parts
in China. The investment and the proportionate share
in the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
BBAC
226 E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 The proportionate share of earnings of There Holding B.V. (THBV) is included in Daimler's consolidated financial statements with a one-month time lag.
5 The dividend from BBAC (€208 million) was not paid out in the year 2015.
4
92
1
1,795
864
716
49.0
10.1
730
852
686
133
Kamaz
34
15.0
38
71
186
-32
13
10
9
Daimler and the Russian truck manufacturer Kamaz PAO (Kamaz)
have signed a license agreement to produce and use Axor,
Atego and Actros driver's cabs as well as delivery contracts for
cabs, engines and axles for trucks and buses of the Russian
company within the framework of their strategic partnership.
Resulting from its agreed representation on the board of
directors of Kamaz and its significant contractual rights as a
minority shareholder, the Group can exercise significant
influence on Kamaz. Therefore, the Group accounts for its
equity interest in Kamaz using the equity method; the
investment and the proportionate share in the profit and loss
of Kamaz are allocated to the Daimler Trucks segment.
In 2014, the Group recognized an impairment loss of €30 million
with respect to its investment in Kamaz. The loss was included
in the line item profit/loss on equity-method investments, net.
384
1,005
310
862
Profit/loss from continuing operations
after taxes
2,124
1,435
5,211
11,336
5,767
9,575
Revenue
Information on the statement of income
Kamaz4
2014
2015
THBV³ (HERE)
2014
2015
RRPSH
In March 2014, Daimler decided to sell its 50% equity interest
in the joint venture Rolls-Royce Power Systems Holding GmbH
(RRPSH) to its partner Rolls-Royce. To do so, Daimler exercised
a put option on its stake in RRPSH that was agreed upon with
Rolls-Royce in 2011; measurement using the equity method was
ended. Until then, the proportionate share of earnings had
been allocated to the Daimler Trucks segment. In mid-April 2014,
a sale price of €2,433 million was agreed upon. The trans-
action was consummated on August 26, 2014, when antitrust-
law and foreign-trade-law approvals had been obtained;
the board members and management representatives from
Daimler in RRPSH-companies stepped down from their
positions. The proceeds of the sale of €1,006 million were
classified as "Other financial result" and, in the segment
reporting, were presented in the reconciliation of total segments'
EBIT to Group EBIT.
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 7 E.33 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group's consolidated financial statements.
E.33
In 2010, the Group and the European Bank for Reconstruction
and Development (EBRD) agreed to increase their strategic
investment in Kamaz. Daimler increased its equity interest
in Kamaz to 15%. Of that interest, 4% was legally held by EBRD,
but Daimler was deemed to be the economic owner of those
shares due to the equity-method measurement. In October
2014, Daimler agreed with EBRD to take over the remaining 4%
interest. With this step, Daimler has raised its investment
in Kamaz to 15% also in legal terms.
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
227
BBAC¹
2015
2014
2015
BAIC Motor²
2014
In millions of euros
6
2015
4
-1,160
-555
-947
-291
Other miscellaneous expenses
-93
-137
Expenses associated with optimization programs
-120
-127
Losses on sales of property, plant and equipment
2014
2015
In millions of euros
Other operating expense
E.15
1,759
1,131
1,039
Government grants and subsidies
107
92
Gains on sales of property, plant and equipment
Beside gains and/or losses from the sale of selected opera-
tions of the Group's current sales network, the EBIT effects
listed in table E.11 primarily relate to personnel measures
and are included in the line items within the consolidated
statement of income as shown in table 7 E.12.
242
Rental income not relating to sales financing
Other miscellaneous income
81
59
553
506
2,114
63
Income from costs recharged to third parties
Cash effects resulting from the optimization programs are
mainly expected until the end of 2017.
Due to the organizational focus of the divisions on their
customers and markets, the numbers of employees previously
reported under sales and marketing are included in the
respective divisions since 2014. Since the end of 2015, this
also applies to the Group's own sales and service centers in
Germany and the global logistics center in Germersheim,
whose employees are now grouped under Mercedes-Benz
Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
The figures for comparison for 2014 have been adjusted to
reflect these changes.
2 Including investor-level adjustments.
Table 71 E.17 shows the components of interest income
and interest expense.
8. Interest income and interest expense
1 Excluding the expense from compounding provisions for pensions and
similar obligations.
458
-27
811
-7
-353
-20
Income and expense from compounding of provisions
and effects of changes in discount rates¹
Miscellaneous other financial income/expense, net
2014
2015
In millions of euros
Other financial income/expense, net
E.16
In 2014, miscellaneous other financial income/expense, net
included income from the disposal of the 50% equity interest
in RRPSH of €1,006 million as well as income from the disposal
of the Tesla shares of €88 million. It also included in 2014
expenses of €118 million from the measurement of the RRPSH
put option and expenses of €212 million from hedging the
Tesla share price.
Information on the total remuneration of the current and for-
mer members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.
6. Other operating income and expense
The composition of other operating income is shown
in table 7 E.14.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.
Gains on sales of property, plant and equipment include
gains of €87 million from the sale of real-estate properties
in the United States.
Personnel expenses and average number of employees
Personnel expenses included in the consolidated statement
of income amounted to €20,949 million in 2015 (2014: €19,607
million). The average numbers of people employed are shown
in table E.13.
The composition of other operating expense is shown
in table
Further information on expenses associated with optimization
programs is provided in Note 5.
Other miscellaneous expense includes losses from disposals
of current assets, changes in other provisions (partially in
connection with legal proceedings) and additional miscellaneous
items. In the previous year, the line item included an addition
of €600 million to the provision for EU Commission antitrust
proceedings concerning European commercial vehicle
manufacturers.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
219
7. Other financial income/expense, net
Table 7 E.16 shows the components of other financial
income/expense, net.
E.15.
3
2014
In millions of euros
Selling expenses
-95
-46
Cost of sales
2014
2015
In millions of euros
Income and expenses associated with optimization programs
E.12
In order to consolidate the company without a time lag, adjustments are made as of December 31, which are included in line item Other.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date September 30.
Figures for the statement of income relate to the period from October 1 to September 30.
4 Kamaz:
Daimler recognizes its proportionate share of the profits or losses of There Holding B.V. (THBV) with a one-month time lag. Figures for the statement
of financial position relate to the date of acquisition of HERE of December 4, 2015.
3 THBV:
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
Figures for BAIC Motor are based on local GAAP.
For 2014 figures for the statement of income relate to the period of January 1 to September 30.
-22
Carrying amount of equity-method
investment
1,418
852
772
-119
686
58
71
1 BBAC:
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
Daimler recognizes its proportionate share of the unaudited profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
As the equity interest in BAIC Motor was acquired in November 2013, the proportionate share of the profit/loss of BAIC Motor for the year 2014 relates
to the months of December 2013 and January through September 2014.
Figures for the statement of income for the year 2015 relate to the period of October 1, 2014 to September 30, 2015.
668
2015
-33
-7
Other operating income
E.14
8,437
279,857
284,562
9,574
Other
8,594
9,665
Daimler Financial Services
17,257
17,755
Daimler Buses
137,431 135,345
87,707 88,228
21,996
22,430
Mercedes-Benz Vans
Daimler Trucks
Mercedes-Benz Cars
-43
Research and non-capitalized development costs
-3
-13
Other operating expenses
-137
General administrative expenses
-93
110
-202
-277
E.13
Average number of employees
2014
Other operating income
1 Proportionate stock market prices.
-30
Stock market price¹
Equity investment²
Equity result²
278
-6
-8
Income tax expense in the consolidated
financial statement of income
Income tax expense/benefit
recorded in other reserves
In millions of euros
Tax expense in equity
E.25
Deferred tax assets, net as of December 31
1 Primarily effects from currency translation.
800
Other changes¹
-363
-1,557
937
3,054
Deferred tax assets, net as of January 1
Deferred tax expense in the
financial statement of income
2014
2015
In millions of euros
Change in deferred tax expense/benefit
on financial assets available-for-sale included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on actuarial gains/losses from defined benefit
pension plans
Change of deferred tax assets, net
-579
-119
Table 7 E.27 shows the line items of the consolidated
statement of income in which total amortization expense
for intangible assets is included.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet
been completed (carrying amount at December 31, 2015:
€2,137 million; 2014: €1,935 million). In addition, other
intangible assets with a carrying amount at December 31, 2015
of €258 million (2014: €264 million) are not amortizable.
Other non-amortizable intangible assets are trademarks with
indefinite useful lives, which relate to the Daimler Trucks
segment, as well as distribution rights of Mercedes-Benz Cars
with indefinite useful lives. The Group plans to continue
to use these assets unchanged.
At December 31, 2015, goodwill of €425 million
(2014: €421 million) relates to the Daimler Trucks segment
and of €194 million (2014: €192 million) relates to the
Mercedes-Benz Cars segment.
Intangible assets developed as shown in table 71 E.26.
10. Intangible assets
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
222
-407
1,682
-4,342
-309
-2,883
-4,033
2014
2015
3,054
1,069
4
2,476
E.24
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed
for all open tax years. As a result of future adjudications
or changes in the opinions of the fiscal authorities, it cannot
be ruled out that Daimler might receive tax refunds for
previous years.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group did not
recognize deferred tax liabilities on retained earnings of non-
German subsidiaries of €27,005 million (2014: €21,242 million).
If earnings are paid out as dividends, an amount of 5% would
be taxed under German taxation rules and, if applicable, with
non-German withholding tax. Additionally, income tax conse-
quences may arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding company.
Normally, the distribution would lead to an additional income
tax expense. It is not practicable to estimate the amount of tax-
able temporary differences for these undistributed foreign
earnings.
-183
Other provisions
-872
-2,390
Provisions for pensions and similar obligations
-189
-169
Other assets
-177
-352
Other financial assets
-736
-575
Receivables from financial services
-50
-63
Inventories
-6,053
-363
Other
-199
-232
At December 31, 2015, the valuation allowance on deferred
tax assets relates, among other things, to corporate income tax
loss carryforwards (€590 million), tax loss carryforwards
in connection with capital losses (€19 million) and tax credits
(€27 million). €21 million of the deferred tax assets for cor-
porate income tax loss carryforwards adjusted by a valuation
allowance relates to tax loss carryforwards which expire
at various dates from 2018 through 2020, €189 million relates
to tax loss carryforwards which expire at various dates from
2021 through 2025, €4 million relates to tax loss carryforwards
which expire at various dates from 2031 through 2035 and
€376 million relates to tax loss carryforwards which can be
carried forward indefinitely. The deferred tax assets on loss
carryforwards connected with capital losses were reduced by
valuation allowances because the carryforward periods of
those losses are partly limited and can only be utilized with
future capital gains. Of the total amount of deferred tax assets
adjusted by valuation allowances, deferred tax assets in
connection with capital losses amounting to €4 million expire
in 2016; €15 million can be carried forward indefinitely.
Of the tax credit carryforwards adjusted by a valuation allow-
ance, €4 million expire at various dates from 2016 through
2020 and €21 million expire at various dates from 2021 through
2025; €2 million relates to tax credits which can be carried
forward indefinitely. Furthermore, the valuation allowance primar-
ily relates to temporary differences as well as net operating
losses for state and local taxes at the US companies. Daimler
believes that it is more likely than not that those deferred
tax assets cannot be utilized. In 2015 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €191 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
221
|
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the consolidated statement of financial position, the valua-
tion allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €70 million
compared to December 31, 2014. On the one hand, this is
a result of the additional valuation allowances of €147 million
recorded in net profit. On the other hand, a decrease
of the valuation allowance was recognized in equity, mainly
due to currency translation.
Including the items recognized in other comprehensive
income/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown
in table 7 E.25.
The development of deferred tax assets, net, is shown
in table E.24.
In respect of each type of temporary difference and in
respect of each type of unutilized tax loss carryforwards and
unutilized tax credits, the deferred tax assets and liabilities
before offset are summarized in table 7 E.23.
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets
and liabilities are presented as shown in table 7 E.22.
Deferred tax assets and deferred tax liabilities are offset
if the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities.
In the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
Furthermore, in 2015, the line item also includes tax benefits
relating to tax assessments of prior years. The tax benefits
relating to tax assessments of prior years consist of the current
tax benefits recognized for prior periods as well as partly
offsetting deferred tax expenses recognized for prior periods.
Moreover, in 2014, the line item includes tax-free gains real-
ized on the sale of RRPSH as well as non-deductible expenses
in connection with the EU commission's ongoing antitrust
proceedings concerning European commercial vehicle manu-
facturers.
In 2015, the Group impaired deferred tax assets of foreign
subsidiaries while in 2014, the Group released valuation
allowances on deferred tax assets of foreign subsidiaries.
The resulting tax expenses and benefits are included in the
line item change of valuation allowance on deferred tax assets.
Table 7 E.21 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
3,054
1,069
-12,535
-15,314
Deferred tax assets, net
Deferred tax liabilities, gross
At December 31, 2015, intangible assets include capitalized
borrowing costs on qualified assets according to IAS 23 in
the amount of €59 million (2014: €58 million) which related only
to capitalized development costs. In 2015, borrowing costs
in the amount of €11 million (2014: €7 million) were capitalized;
amortization amounted to €10 million (2014: €9 million).
The basis for the calculation of borrowing costs was an aver-
age cost of debt of 0.7% (2014: 0.7%).
-7,188
E.26
In millions of euros
Additions
6,482
1,632
4,590
260
Balance at January 1, 2014
17,559
3,582
1,221
12,962
160
146
12
2
-1,320
-298
-1,018
-4
1,015
2,273
286
Reclassifications
331
1,255
4
Additions
7,054
1,869
4,908
277
1,507
Balance at December 31, 2014
90
8
17
Other changes¹
-1,050
-139
-911
Disposals
115
458
1,815
25
(internally
generated)²
Goodwill
(acquired)
Development
Amortization/impairment
Balance at December 31, 2015
Other changes¹
Disposals
Reclassifications
costs Other intangible
Other additions
Balance at December 31, 2014
Other changes¹
Disposals
Reclassifications
Other additions
Additions due to business combinations
Dividend payment to Daimler
Acquisition or manufacturing costs
Additions due to business combinations
assets
(acquired)
Total
941
21
25
16,421
3,251
12,153
1,017
-1,143
158
93
10
55
-231
-912
1,470
315
1,155
66
45
15,870
3,029
11,900
Intangible assets
1,590
Equipment on operating leases
-1,742
-2,883
E.20
Components of deferred tax expense
In millions of euros
2015
2014
Deferred taxes
-1,557
-4,033
-363
-595
-44
due to tax loss carryforwards and tax credits
-962
-319
220
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E.21
due to temporary differences
Reconciliation of expected income tax expense
-605
Non-German companies
12,744
10,173
E.19
Components of income taxes
2015
2014
In millions of euros
Current taxes
-1,113
German companies
-1,125
Non-German companies
-1,558
-1,395
Deferred taxes
German companies
-444
242
-918
to actual income tax expense
In millions of euros
2015
E.22
Deferred tax assets and liabilities
In millions of euros
10
-2,883
At December 31,
2015
2014
Deferred tax assets
3,284
4,124
-4,033
Deferred tax liabilities
-1,070
Deferred tax assets, net
1,069
3,054
E.23
Split of tax assets and liabilities before offset
In millions of euros
At December 31,
2015
-2,215
Actual income tax expense
5
Other
2014
Expected income tax expense
Foreign tax rate differential
-3,801
-126
-3,034
-91
Trade tax rate differential
44
21
Tax law changes
-49
-21
Change of valuation allowance
on deferred tax assets
-147
276
Tax-free income and non-deductible expenses
41
-44
7,213
-1,639
7,764
2,960
Other provisions
958
869
Provisions for pensions and similar obligations
3,323
2,693
Tax loss carryforwards and unused tax credits
4,349
2,304
4,984
275
303
Receivables from financial services
752
992
Inventories
1,273
1,178
Other financial assets
Equipment on operating leases
2,313
1,645
Property, plant and equipment
-918
15,589
-2,162
-73
-2,317
-125
Other intangible assets
Development costs
16,383
Deferred tax assets, gross
-988
Liabilities
Valuation allowances
17,371
315
331
Other
1,186
1,611
Deferred income
1,384
16,507
327
52
52
409
170
145
Interest expense
Net interest expense on the net obligation
from defined benefit pension plans
-293
-350
Interest and similar expense
-309
142
-365
-715
E.18
Profit before income taxes
2015
2014
In millions of euros
German companies
4,980
-602
167
Interest and similar income
3
Property, plant and equipment
Intangible assets
2014
E.17
Interest income and interest expense
2015
2014
In millions of euros
9. Income Taxes
Profit before income taxes is comprised as shown
in table
E.18.
Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in those
companies are held by German companies.
Table 7 E.19 shows the components of income taxes.
The current tax expense includes tax benefits at German
and foreign companies of €731 million (2014: €53 million)
recognized for prior periods.
The deferred tax expense is comprised of the components
shown in table 7 E.20.
For German companies, in 2015 and 2014, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%. For non-German compa-
nies, the deferred taxes at period-end were calculated using the
tax rates of the respective countries.
Interest income
Net interest income on the net assets of defined
benefit pension plans
3
Non-German companies
Reclassifications
Balance at January 1, 2014
-4
Additions
Balance at January 1, 2014
Depreciation/impairment
48,091
Balance at December 31, 2015
2,163
Other changes¹
-16,637
6,718
Disposals
Reclassifications
21,636
Other additions
Additions due to business acquisitions
40,928
Balance at December 31, 2014
2,486
Other changes¹
1
-14,479
5,049
Disposals
-5,073
Disposals
Maturity of minimum lease payments
for equipment on operating leases
E.30
1 Primarily changes from currency translation.
Carrying amount at December 31, 2015
Carrying amount at December 31, 2014
Balance at December 31, 2015
Reclassifications
Other changes¹
Reclassifications
5,946
Additions
7,878
Balance at December 31, 2014
452
Other changes¹
-4,341
Disposals
Disposals
Reclassifications
E.30.
23,182
2,511
5,609
8,120
8,430
6,942
7,257
Carrying amount at December 31, 2015
Carrying amount at December 31, 2014
43,038
5,790
1
15,548
8,506
170
1
216
-38
-9
Balance at December 31, 2015
18,983
2,845
24,322
1 Primarily changes from currency translation.
for equipment on operating leases are due as presented
in table
Non-cancelable future lease payments to Daimler
Minimum lease payments
At December 31, 2015, equipment on operating leases with
a carrying amount of €5,404 million is pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on operating leases
and related vehicles (2014: €4,392 million) (see also Note 24).
The development of equipment on operating leases
is shown in table 7 E.29.
12. Equipment on operating leases
-9
18,052
Other additions
Additions due to business acquisitions
34,878
Balance at January 1, 2014
Acquisition or manufacturing costs
In millions of euros
Equipment on operating leases
E.29
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
224
2 Includes impairments of €93 million in connection with the disposal of selected sites of the Group's own sales network.
398
Other changes¹
9,149
38,942
10.1
49.0
Equity interest (in %)
At December 31, 2015
Total
Others
RRPSH
Kamaz
33.3
BAIC Motor³
In millions of euros
Key figures on interests in associated companies accounted for using the equity method
E.32
1 Including investor-level adjustments.
2,294
897
7
2
5
26
BBAC
864
15.0
705
Equity interest (in %)
At December 31, 2014
34
208
Dividend payment to Daimler5
3,124
490
-19
-6
Stock market price¹
74
Equity result²
208
58
668
772
1,418
Equity investment²
47
441
Equity result¹
44
448
Table 71 E.31 shows the carrying amounts and profits/losses
from equity-method investments.
13. Equity-method investments
225
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11,780
14,306
48
64
Table 7 E.32 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's consolidated financial statements.
later than 5 years
7,437
between one and five years
5,742
6,805
within one year
Maturity
2014
At December 31,
2015
5,990
E.31
Summarized carrying amounts and profits/losses from equity-method investments
In millions of euros
1,795
Equity investment¹
At December 31, 2014
3,633
464
8
-34
490
47
462
3,124
Total
Subsidiaries
Joint
operations
ventures
Joint
Associated
companies
Equity result¹
Equity investment¹
At December 31, 2015
33,050
-1,636
In millions of euros
-612
equipment
office and construction
and equipment
relating to plant
Advance
payments
Other
equipment,
factory and
Additions due to business acquisitions
Balance at January 1, 2014
in progress
Acquisition or manufacturing costs
Technical
equipment
and machinery
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Property, plant and equipment
E.28
1,507
1,590
4
30
In millions of euros
35
Total
21,575
-930
-158
9
-2,036
568
1,239
238
4,743
14,835
2,267
833
228
Disposals
Reclassifications
Other additions
60,191
2,273
21,508
1,415
Research and non-capitalized development costs
Other operating expense
41
44
7,245
740
2 Including capitalized borrowing costs on development costs.
1 Primarily changes from currency translation.
Carrying amount at December 31, 2015
Carrying amount at December 31, 2014
7,490
2,029
1,382
5,173
-1,264
110
90
9
11
Balance at December 31, 2015
Other changes¹
-19
-999
288
9,367
727
7,789
92
73
1,344
1,434
2014
2015
General administrative expenses
Cost of sales
Selling expenses
In millions of euros
in the consolidated statement of income
Amortization expense for intangible assets
E.27
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a carrying
amount of €221 million (2014: €238 million). In 2015, additions
to and depreciation expense on assets under finance lease
arrangements amounted to €16 million (2014: €19 million) and
€39 million (2014: €40 million), respectively.
In 2015, government grants of €192 million (2014: €47 million)
were deducted from property, plant and equipment.
Property, plant and equipment developed as shown
in table E.28.
11. Property, plant and equipment
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 223
10,069
1,553
-1,066
-32
-261
Other changes¹
241
108
Other changes¹
-1,913
-970
-825
-118
Disposals
352
-108
Reclassifications
3,501
10
1,861
1,210
420
Additions²
38,412
108
-1
700
Balance at December 31, 2014
-2,186
-730
-275
Disposals
-
-1
1
Reclassifications
3,804
9
2,102
1,358
335
Additions
40,700
10
17,277
14,959
8,454
1
16,142
THBV4 (HERE)
8,044
Reclassifications
4,909
2,279
1,521
854
255
Other additions
Additions due to business acquisitions
302
63,882
22,886
23,079
15,396
Balance at December 31, 2014
1,125
49
461
14,225
2,521
817
362
-1,913
Balance at January 1, 2014
793
Depreciation/impairment
384
67,360
2,846
15
259
24,773
23,978
15,763
Balance at December 31, 2015
253
144
Other changes¹
-1,814
-56
-686
-738
-334
-1
Disposals
-34
-2.3
Medium-term component of the annual bonus
-0.7
-1.8
-0.9
-2.3
-2.4
-6.1
-2.4
-0.9
-6.0
PPSP
2014
2015
2014
2015
2014
-2.5
-0.7
Andreas Renschler³
Ola Källenius²
2015
-0.2
-0.7
-0.9
-2.5
-2.4
In millions of euros
-0.9
Medium-term component of the annual bonus
-0.6
PPSP
2015
2014
2015
2014
2015
Wilfried Porth
In millions of euros
2014
members of the Board of
Management
Dr. Wolfgang Bernhard
409
-173
-177
PPSP
The details shown in table 7 E.46 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2015 can be found in the
Remuneration Report. Management Report from page 122
Table 7 E.46 shows expenses in the consolidated
statement of income resulting from the rights of current
members of the Board of Management.
The pre-tax effects of share-based payment arrangements
for the executive managers of the Group and the members
of the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table 7 E.45.
In 2014, rights from Stock Option Plan (SOP) 2004 also
existed. The exercisable stock options granted in 2004 were
equity-settled share-based payment instruments and were
measured at fair value at the date of grant. The unexercised
rights from Stock Option Plan 2004 expired on March 31, 2014.
Options granted to the Board of Management in 2004 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 a limit in the event of excep-
tional and unpredictable developments were measured at
their intrinsic values as of balance sheet date. The options
were exercised completely in 2013.
363
Moreover, 50% of the annual bonus of the members of
the Board of Management is paid out after a waiting period
of one year. The actual payout is determined by the devel-
opment of Daimler shares compared to an automobile related
index (Auto-STOXX). The fair value of this medium-term
annual bonus, which depends on this development, is mea-
sured by using the intrinsic value at the reporting date.
21. Share-based payment
In millions of euros
At December 31,
2015
2014
Expense
2014
2015
Provision
Effects of share-based payment
E.45
As of December 31, 2015, the Group has the 2012-2015
Performance Phantom Share Plans (PPSP) outstanding.
The PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined conditions
are met. PPSP 2011 was paid out as planned in the first
quarter of 2015.
Dr. Christine Hohmann-Dennhardt¹
Medium-term component
-0.1
Dr. Dieter Zetsche
In millions of euros
Expenses in the consolidated statement of income resulting from
share-based payments of current members of the Board of Management
E.46
The Group recognizes a provision for awarding the PPSP in
the consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the individ-
ual years are determined on the price of Daimler ordinary
shares and the estimated target achievement.
The number of phantom shares that vest of the PPSPs granted
in 2014 and 2015 will be based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
return on sales (ROS) compared with benchmarks oriented
towards competitors. Special rules apply for the members of
the Board of Management: Daimler's RoS must be not equal
to but higher than that of the competitors in order to achieve
the same target achievement as the other plan participants.
For the PPSP granted in 2015, an additional limit on target
achievement was agreed upon for the reference parameter RoS
for the members of the Board of Management. In the case
of target achievement between 195% and 200%, an additional
comparison is made on the basis of the RoS achieved in
absolute terms. If the actual RoS for the automotive business
is below the strategic target (currently 9%) in the third year
of the performance period, target achievement is limited to 195%.
Determination of the number of phantom shares that vest
of the existing PPSP 2012 to 2013 is based on return on
net assets derived from internal targets and return on sales
compared with benchmarks oriented towards competitors.
In 2015, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used from 2005 to 2014, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During the
four-year period between the allocation of the preliminary phan-
tom shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares. The
amount of cash paid to eligible employees at the end of the
holding period is based on the number of vested phantom
shares (determined over a three-year performance period)
multiplied by the quoted price of Daimler's ordinary shares
(calculated as an average price over a specified period at the
end of the four-year plan period). The vesting period is therefore
four years. For the plans granted as of 2009, the quoted price
of Daimler's ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. For
the plans granted as of the beginning of 2012, the payout for
the members of the Board of Management is also limited to
2.5 times the allotment value used to determine the preliminary
number of phantom shares. The limitation of the payout for
the members of the Board of Management also includes the
dividend equivalents paid out after January 1, 2014.
of annual bonus of the
Performance Phantom Share Plans
375
424
-179
-186
12
15
-6
-9
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
Hubertus Troska
1 Appointment to the Board of Management ends on December 31, 2015.
2015
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-term
outsourced funds. Contractual trust arrangements (CTA) exist
between Daimler AG as well as some subsidiaries in Germany and
the Daimler Pension Trust e.V. The Daimler Pension Trust e. V.
acts as a collateral trust fund.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee
a life annuity.
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year, and for executives it depends on their respective
income. For the commitments to retirement benefits made until
2011, the contributions continue to be converted into capital
components and credited to the individual pension account with
the application of fixed factors related to each employee's
age. The conversion factors include a fixed value increase.
The pension plans were newly structured for new entrants
in 2011 to reduce the risks associated with defined benefit plans.
New entrants now benefit from value increases of the con-
tributions through an investment fund with a special lifecycle
model. The Company guarantees at a minimum the value of
the contributions paid in. Pension payments are made either as
a life annuity, twelve annual installments, or a single lump sum.
German plans
237
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
43.57
-0.1
43.57
-0.1
43.57
0.2
euros per share
in millions
exercise price in
Average
In Germany, there are no statutory or regulatory minimum
funding requirements.
Non-German plans
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets outplaced into long-term investment funds.
Risks from defined benefit pension plans
12,806
8,663
1,187
1,129
Provision for other post-employment benefits
11,619
7,534
Provision for pension benefits
2014
2014
December 31,
In millions of euros
Composition of provisions for pensions
and similar obligations
E.48
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
The fair value of plan assets is predominantly determined by the
situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and qualitative
analyses, and the continual monitoring of performance and
risk help to reduce associated investment risk. The Group regu-
larly makes additional contributions to the plan assets in
order to cover future obligations from defined benefit pension
plans. In addition, the Group made extraordinary contributions
of €1.0 billion in 2015 and €2.5 billion in 2014 to sustainably
strengthen the German plan assets. In 2015, an extraordinary
contribution of €0.2 billion was paid into the US pension
plan assets.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes
in financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
The general requirements with regard to retirement benefit
models are laid down in the Pension Policy, which has Group-wide
validity. Accordingly, the committed benefits are intended
to contribute to additional financial security during retirement,
and in the case of death or invalidity to be capable of being
planned and fulfilled by the respective company of the Group
and to have a low-risk structure. In addition, a committee
exists that approves new pension plans and amendments
to existing pension plans as well as guidelines relating
to company retirement benefits.
2015
Number of
stock options
stock options exercise price in
in millions euros per share
Number of
-0.9
-0.8
-1.1
-0.7
-0.9
Medium-term component of the annual bonus
-2.6
-2.5
-0.7
-2.9
-1.6
-1.9
PPSP
2014
Prof. Dr. Thomas Weber
2015
2014
2015
2014
-2.9
Bodo Uebber
2 Appointed to the Board of Management as of January 1, 2015.
236
Exercisable at end of year
Outstanding at end of year
Disposals/Forfeited
Exercised
Balance at beginning of year
Development of the stock options issued
E.47
The Group's main German and non-German pension plans
are described below.
3 Stepped down from the Board of Management as of January 28, 2014. Amounts are included pro rata for 2014.
Provisions for pension obligations are made for defined commit-
ments to active and former employees of the Daimler Group
and their survivors. The defined benefit pension plans provided
by Daimler generally vary according to the economic, tax and
legal circumstances of the country concerned. Most of the
defined benefit pension plans also provide benefits in the case
of invalidity and death.
At the Daimler Group, defined benefit pension obligations exist
as well as, to a smaller extent, defined contribution pension
obligations, specific to the various countries. In addition, health-
care benefit obligations are recognized outside Germany.
Table 7 E.48 shows the composition of provisions for pension
benefit plans and similar obligations.
22. Pensions and similar obligations
In 2014, the weighted average share price of Daimler
ordinary shares during the exercise period was €66.40.
Table 71 E.47 shows the development of the stock options
issued.
In April 2000, the Annual Shareholders' Meeting approved
the Daimler Stock Option Plans (SOP), which granted stock
options for the purchase of Daimler ordinary shares to eligible
employees. Options granted under the SOP were exercisable
at a reference price per Daimler ordinary share, which was deter-
mined in advance, plus a 20% premium. The options became
exercisable in equal installments at the earliest on the second
and third anniversaries of the date of grant. All unexercised
options expired ten years after the date of grant. If the market
price per Daimler ordinary share on the date of exercise
was at least 20% higher than the reference price, the holder
was entitled to receive a cash payment equal to the original
exercise premium of 20%. No new stock options were granted
after 2004. The last SOP plan 2004 forfeited on March 31, 2014.
All unexercised rights expired.
Stock option plans
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Defined benefit pension plans
2015
Average
Table 71 E.02 shows the details of changes in other reserves
in other comprehensive income/loss.
2,936
81
68
68
2,212
22
2,190
2,473
52
2,421
557
40
517
696
26
670
2014
At December 31,
2015
Total
At December 31, 2014
Non-current
Current
Total
At December 31, 2015
Non-current
Current
Inventories
E.41
Others
Prepaid expenses
81
Reimbursements due to the Medicare Act (USA)
Other expected reimbursements
192
349
3,371
Work in progress
2,409
2,643
Raw materials and manufacturing supplies
In millions of euros
4,153
555
3,598
4,925
654
4,271
558
136
422
810
264
546
424
130
294
529
87
442
321
146
175
157
Reimbursements due to other tax refunds
Reimbursements due to income tax refunds
In millions of euros
1,647
2,303
2,303
thereof equity instruments recognized at fair value through profit or loss
thereof equity instruments carried at cost
2,269
2,269
3,049
3,049
Available-for-sale financial assets
At December 31, 2014
Total
Current Non-current
Total
Current Non-current
At December 31, 2015
In millions of euros
Other financial assets
E.39
The carrying amount of inventories recognized during
the period by taking possession of collateral held as security
amounted to €103 million at December 31, 2015 (2014:
€91 million). Those assets are utilized in the context of the
normal business cycle.
In addition, inventories with a carrying amount of
€235 million at December 31, 2015 (2014: €262 million)
were pledged as collateral for liabilities from ABS
transactions (see also Note 24).
Based on the requirement to provide collateral for certain
vested employee benefits in Germany, the value of company
cars included in inventories at Daimler AG in an amount
of €718 million at December 31, 2015 (2014: €609 million)
was pledged as collateral to the Daimler Pension Trust e.V.
The amount of write-down of inventories to net realizable
value recognized as expense in cost of sales was €501 million
in 2015 (2014: €391 million). Inventories that are expected
to be recovered or settled after more than twelve months
amounted to €930 million at December 31, 2015 (2014: €977
million) and are primarily spare parts.
Inventories are comprised as shown in table > E.41.
18. Inventories
231
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Other expected reimbursements predominantly relate
to recovery claims from our suppliers in connection with
issued product warranties.
in table E.40.
1,647
746
746
622
E.40
5,987
3,634
2,353
7,454
4,908
2,546
2,325
588
1,737
2,839
854
1,985
Finished goods, parts and products held for resale
97
42
203
39
164
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
1,296
722
574
1,363
966
397
Derivative financial instruments used in hedge accounting
622
55
Non-financial other assets are comprised as shown
17,609
Advance payments to suppliers
in the number of shares outstanding/issued. The number
Since January 1, 2014, there was no material change
The share capital (authorized capital) is divided into
no-par-value shares. All shares are fully paid up. Each share
confers the right to one vote at the Annual Shareholders'
Meeting of Daimler AG and, if applicable, with the exception
of any new shares potentially not entitled to dividends,
to an equal portion of the profits as defined by the dividend
distribution decided upon at the Annual Shareholders'
Meeting. Each share represents a proportionate amount
of approximately €2.87 of the share capital.
Share capital
See also the consolidated statement of changes in equity
71 E.05.
20. Equity
Further information on financial risk and types of risk
is provided in Note 32.
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Receivables not subject to an individual impairment
Table 7 E.44 provides an overview of credit risks included
in trade receivables.
Credit risks
8,634
9,054
Net carrying amount
2,106
2,133
Receivables impaired individually
1,258
1,367
Total
78
80
120 days or more
18
25
90 to 119 days
42
at December 31, 2015 is 1,070 million, unchanged from
December 31, 2014.
53
Approved capital
Approved Capital 2009, which was limited until April 7, 2014
and had not been utilized is replaced by Approved Capital
2014, which has also not yet been utilized.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on the measurement of financial assets available-
for-sale, derivative financial instruments and equity-method
investments.
In the line item unrealized gains/losses from equity-method
investments, the amounts for 2015 include unrealized losses
from currency translation of €3 million before taxes and after
taxes (amounts attributable to shareholders of Daimler AG
only). In 2014, the line item includes unrealized gains from
currency translation of €11 million before taxes and after taxes
(amounts attributable to shareholders of Daimler AG only).
Other reserves
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only)
in accordance with the German Commercial Code (HGB).
For the year ended December 31, 2015, the Daimler manage-
ment will propose to the shareholders at the Annual Share-
holders' Meeting to pay out €3,477 million of the distribut-
able profit of Daimler AG as a dividend to the shareholders,
equivalent to €3.25 per no-par-value share entitled to a dividend
(2014: €2,621 million and €2.45 per no-par-value share
entitled to a dividend respectively).
Dividend
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's consolidated
financial statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earnings.
Retained earnings
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
234
Capital reserves primarily comprise premiums arising on
the issue of shares as well as expenses relating to the exercise
of stock option plans and the issue of employee shares,
effects from changes in ownership interests in consolidated
entities and directly attributable related transaction costs.
Capital reserves
In 2015, 0.3 million Daimler shares representing €0.9 million
or 0.03% of the share capital were purchased for a price
of €27 million and reissued to employees (2014: 0.4 million
Daimler shares representing €1.1 million or 0.04% of
the share capital were purchased for a price of €26 million).
Employee share purchase plan
As was the case at December 31, 2014, no treasury shares
are held by Daimler AG at December 31, 2015.
The authorization to acquire treasury shares was not exercised
in the reporting period.
The Board of Management is further authorized, with the
consent of the Supervisory Board, to exclude shareholders'
subscription rights in other defined cases. In a volume up
to 5% of the share capital issued as of the day of the resolution,
the Company was authorized to acquire treasury shares
also by using derivatives (put options, call options, forward
purchases or a combination of these instruments), whereas the
term of a derivative must not exceed 18 months and must not
end later than March 31, 2020.
The authorization resolved by the Annual Meeting on April 14,
2010 to acquire treasury shares including the authorization
to use derivative financial instruments in this context until
April 13, 2015 has been canceled by resolution of the Annual
Shareholders' Meeting held on April 1, 2015 and has been
replaced by a new authorization. This authorizes the Company
until March 31, 2020 to acquire treasury shares in a volume
up to 10% of the share capital issued as of the day of the reso-
lution to be used for all legal purposes. The shares can be
used, amongst other things excluding shareholders' subscription
rights, for business combinations or to acquire companies
or to be sold to third parties for cash at a price that is not signifi-
cantly lower than the stock-exchange price of the Company's
shares. The acquired shares can also be used to fulfill obligations
from issued convertible bonds and/or bonds with warrants
and to be issued to employees of the Company and employees
and board members of the Company's affiliates pursuant
to Sections 15 et seq. of the German Stock Corporation Act
(AktG). The treasury shares can also be canceled.
Treasury shares
The stock option plan initiated in 2004 expired on March 31, 2014.
Of the 0.2 million options granting subscription rights to new
shares representing €0.6 million of the share capital remaining
from this plan on January 1, 2014, 0.1 million options granting
subscription rights to new shares representing €0.2 million of
the share capital were exercised in 2014. The remaining options
that had not been exercised by March 31, 2014 expired on
that date.
Stock option plan
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally
by an amount of up to €500 million (Conditional Capital 2015).
Conditional Capital 2010 has been canceled.
This new authorization to issue convertible and/or warrant
bonds has not yet been utilized.
The resolution of the Annual Shareholders' Meeting on April 14,
2010 authorizing the Company until April 13, 2015 to issue
convertible and/or warrant bonds, which had not been utilized,
was replaced by a new authorization of the Annual Shareholders'
Meeting on April 1, 2015. From this the Board of Management
is authorized, with the consent of the Supervisory Board, until
March 31, 2020 to issue convertible and/or warrant bonds
or a combination of these instruments ("bonds") with a total
face value of up to €10.0 billion and a maturity of no more than
ten years. The Board of Management is allowed to grant the
holders of these bonds conversion or warrant rights for new
registered no-par-value shares in Daimler AG with an allocable
portion of the share capital of up to €500 million in accordance
with the details defined in the terms and conditions of the
bonds. The bonds can be offered in exchange for cash and/or
non-cash contributions, in particular for shares in other
companies. The terms and conditions of the bonds can include
warranty obligations or conversion obligations. The bonds
can be issued once or several times, wholly or in installments,
or simultaneously in various tranches as well by affiliates
of the Company within the meaning of Sections 15 et seq.
of the German Stock Corporation Act (AktG). Among other
things, the Board of Management was authorized to exclude
shareholders' subscription rights for the bonds under certain
conditions and within defined constraints with the consent
of the Supervisory Board.
Conditional capital
233
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Annual Shareholders' Meeting held on April 9, 2014,
authorized the Board of Management, with the consent
of the Supervisory Board, to increase the share capital of
Daimler AG in the period until April 8, 2019 by a total
of €1.0 billion in one lump sum or by separate partial amounts
at different times by issuing new, registered no-par-value
shares in exchange for cash and/or non-cash contributions
(Approved Capital 2014). The new shares are generally to
be offered to the shareholders for subscription (also by way
of indirect subscription pursuant to Section 186 Subsection 5
Sentence 1 of the German Stock Corporation Act (AktG)).
Among other things, the Board of Management was authorized
with the consent of the Supervisory Board to exclude
shareholders' subscription rights under certain conditions
and within defined limits.
60 to 89 days
151
113
Changes in the allowance account for trade receivables
E.43
8,634
9,054
Net carrying amount
-412
-392
Allowances for doubtful accounts
9,046
9,446
Gross carrying amount
At December 31,
2015
2014
In millions of euros
Trade receivables
E.42
The total expense from the impairment of trade receivables
amounted to €109 million in 2015 (2014: €130 million).
Table 71 E.43 shows changes in the allowance account
for trade receivables.
Allowances
At December 31, 2015, €67 million of the trade receivables
mature after more than one year (2014: €78 million).
Trade receivables are comprised as shown in table > E.42.
19. Trade receivables
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
232
20,864
23,760
107
137
2015
2014
In millions of euros
Balance at January 1
30 to 59 days
969
1,096
less than 30 days
Receivables past due, not impaired individually
5,270
5,554
individually
Receivables, neither past due nor impaired
2014
At December 31,
2015
In millions of euros
Credit risks included in trade receivables
15,412
E.44
392
Balance at December 31
8
-6
Currency translation and other changes
-66
-80
Amounts written off
73
66
Charged to costs and expenses
397
412
412
17. Other assets
Other assets
At December 31, 2015, receivables with a carrying amount
of €633 million (2014: €302 million) were pledged as collateral
for liabilities (see also Note 24).
35,155
Net carrying amount
-921
-513
-408
-1,016
-500
-516
Allowances for doubtful accounts
62,600
35,423
27,177
74,530
38,859
35,671
Gross carrying amount
15,452
10,368
5,084
18,537
12,371
6,166
Finance-lease contracts
13,989
2,203
11,786
Further information on other financial assets is provided
in Note 31.
38,359
73,514
26,769
34,910
14,820
571
9,104
5,145
18,030
407
11,308
1,954
501
6,816
-650
Unearned finance income
Gross investment
Unguaranteed residual values
6,315
Contractual future lease payments
2,588
Total
to 5 years
<1 year
Total
1 year up
At December 31, 2014
> 5 years
1 year up
to 5 years
<1 year
At December 31, 2015
In millions of euros
Maturities of the finance lease contracts
E.36
61,679
> 5 years
12
15,944
33,159
-84
6
2014
2015
2014
2015
Joint ventures
Associated companies
Total comprehensive income/loss
Other comprehensive income/loss
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
Summarized aggregated financial information (pro rata)
In millions of euros
Summarized aggregated financial information on minor
equity-method investments
E.34
Further information on equity-method investments is provided
in Notes 3 and 36.
Table 71 E.34 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.
In 2015, Daimler disregarded losses in connection with equity-
method investments of €47 million (2014: €60 million) as
Daimler is not obliged to compensate these losses. The total of
disregarded losses adds up to €107 million (2014: €60 million).
In March 2014, Daimler acquired 50.1% of the shares in
Li-Tec Battery GmbH (Li-Tec), which had previously been held
by Evonik Degussa GmbH (Evonik), and therefore became
the sole owner of the company. The effects on the consolidated
financial statements were not material.
In April 2014, Daimler provided a joint and separate liability
guarantee to external banks which provided a syndicate loan
to the joint venture Shenzen BYD Daimler New Technology Co.
Ltd. (SBDNT). The agreement was signed in April 2014. The
guarantee provided by Daimler amounts to RMB 750 million
(approximately €106 million as of December 31, 2015) and
equates to the Group's share in the loan granted to SBDNT based
on its 50% equity interest in SBDNT. €94 million of this loan
had been utilized as of December 31, 2015. In December 2015,
Daimler decided to provide a shareholder loan to the joint
venture SBDNT of RMB 250 million (approximately €35 million).
€24 million of this loan had been utilized as of December 31,
2015. The carrying amount of the investment in SBDNT is
allocated to the Mercedes-Benz Cars segment.
Furthermore, the Group's equity-method investments include
its interest in the joint venture Fujian Benz Automotive Co.,
Ltd. (FBAC), which is allocated to the Mercedes-Benz Vans
segment. In 2012, an impairment loss was recognized
on the investment in FBAC; in the second quarter of 2014, the
impairment was reversed based on improved profit expecta-
tions, leading to a gain of €61 million. FBAC received a capital
increase of €18 million in the second quarter of 2015.
In addition, the equity-method results of the other minor
companies in 2014 included startup losses in the area of alter-
native drive systems of €34 million, which were allocated to
the Mercedes-Benz Cars segment. Impairments of investments
of €30 million were included in this amount.
In 2015, an impairment of €17 million was recognized on an
investment allocated to the Mercedes-Benz Cars segment.
The Group's investment in Tesla Motors, Inc. (Tesla) was included
in other minor equity-method investments in associated
companies. Since the Annual Shareholders' Meeting of Tesla
on June 3, 2014, no representative of Daimler has been a
member of Tesla's board of directors. Therefore, Daimler's signi-
ficant influence on Tesla ended on the day of the Annual
Shareholders' Meeting and until the date of sale, the equity
interest was recognized as a "financial asset available for sale"
at fair value based on the stock-market price. The difference
between the first-time fair value measurement on June 3, 2014
using the stock-market price and the carrying amount
measured by applying the equity method resulted in a non-cash
gain of €718 million affecting Group EBIT in 2014. The carrying
amount, which was previously assigned to the Mercedes-Benz
Cars segment, and the remeasurement gain have been
reallocated as corporate items in the reconciliation of total
segments' figures to Group figures in the segment reporting.
Other minor equity-method investments
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
228
-85
-7
7
1
22,852
10,307
37,461
23,900
13,561
Sales financing with customers
In millions of euros
At December 31, 2014
Non-current
Total
Current
At December 31, 2015
Non-current
Total
Current
Receivables from financial services
E.35
Sales financing with dealers
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for
operating activities in the consolidated statement of cash flows.
At December 31, 2015, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €238 million (December 31, 2014: €365 million).
Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded in
by dealers' customer or real estate such as dealers' showrooms.
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Types of receivables
Table 7 E.35 shows the components of receivables
from financial services.
14. Receivables from financial services
229
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-84
-84
7
-1
Maturities of the finance lease contracts are shown
in table 7 E.36.
2,467
18,532
Financial assets recognized at fair value through profit
69,746
Receivables, neither past due
At December 31,
2015
2014
In millions of euros
from financial services
Credit risks included in receivables
E.38
921
1,016
Balance at December 31
3
-41
Currency translation and other changes
-166
-152
Reversals
-208
-212
Amounts written off
421
500
Charged to costs and expenses
871
921
Balance at January 1
2014
2015
58,142
In millions of euros
Receivables past due, not impaired individually
1,534
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
483
In 2015, equity instruments measured at cost with a carrying
amount of €3 million were sold (2014: €1 million). The gains
realized on the sales were €17 million in 2015 (2014: €5 million).
As of December 31, 2015, the Group did not generally intend
to dispose of any of the reported equity instruments.
The line item other financial assets presented in the
consolidated statement of financial position is comprised
as shown in table 7 E.39.
16. Other financial assets
61,679
73,514
Net carrying amount
1,457
1,740
Receivables impaired individually
2,080
2,028
Total
116
95
120 days or more
42
41
90 to 119 days
75
71
60 to 89 days
330
287
30 to 59 days
1,517
less than 30 days
for receivables from financial services
nor impaired individually
E.37
-176
Allowances for doubtful accounts
15,452
515
9,853
5,084
18,537
325
12,046
6,166
Gross carrying amount
-1,641
-102
-201
-995
-1,960
-94
-1,216
17,093
617
10,848
5,628
20,497
419
13,262
Changes in the allowance account
46
1,744
-544
-2
2,273
-159
-379
Further information on marketable debt securities
is provided in Note 31.
The marketable debt securities with a carrying amount
of €8,273 million (2014: €6,634 million) are part of the
Group's liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those securities
are presented as current assets.
15. Marketable debt securities
Within the context of the ongoing concentration on the
automotive business, Daimler Financial Services sold
non-automotive assets that were subject to finance lease
contracts in 2015. This resulted in a cash inflow of
€73 million (2014: €69 million). In 2015, the sale of these
assets had no significant impact on the consolidated
statement of income and the EBIT of the Daimler Financial
Services segment (2014: €45 million).
At December 31, 2015, receivables from financial services with
a carrying amount of €4,048 million (2014: €3,068 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).
Further information on financial risks and nature of risks
is provided in Note 32.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Table 71 E.38 provides an overview of credit risks included
in receivables from financial services.
Credit risks
The total expense from the impairment of receivables
from financial services amounted to €502 million in 2015
(2014: €433 million).
Changes in the allowance account for receivables from
financial services are shown in table 7 E.37.
Allowances
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2015, a pool of marketable debt securities
with a carrying amount of €4 million (2014: €204 million)
was pledged as collateral, exclusively for liabilities to financial
institutions.
15,080
230
-208
-5
-372
5,990
Net carrying amount
323
18,158
4,925
9,645
510
11,845
27
28
999
885
912
800
Total
795
795
value through profit or loss
800
Accrued interest expenses
971
960
1,912
1,024
888
2,104
1,144
Liabilities from residual value guarantees
359
131
228
263
113
Deposits received
150
Liabilities from wages and salaries
422
1,846
977
Financial liabilities recognized at fair
At December 31, 2015
Non-current
Current
In millions of euros
Deferred income and prepaid expenses
E.61
10,706
2,644
8,062
12,360
2,876
9,484
8,030
555
1,605
8,977
7,131
Miscellaneous other financial liabilities
3,614
162
3,452
4,102
119
3,983
Other
792
392
400
6,425
2,317
2015
1,409
135
79
65
231
200
later than five years
93
85
56
70
149
155
between one and five years
40
43
16
13
56
56
within one year
Maturity
2014
2015
2014
2015
2014
Current
152
411
436
148
3,120
917
2,203
Total
At December 31, 2014
Non-current
Current
Total
At December 31, 2015
Non-current
Current
in hedge accounting
Derivative financial instruments used
In millions of euros
Other financial liabilities
908
E.60
27. Other liabilities
The composition of deferred income is shown in table 7 E.61.
26. Deferred income
Further information on other financial liabilities is provided
in Note 31.
Financial liabilities recognized at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
The composition of other financial liabilities is shown
in table E.60.
25. Other financial liabilities
245
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
285
263
151
Table 7 E.62 shows the composition of other liabilities.
At December 31, 2014
Non-current
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferral of revenue from multi-year service
and maintenance agreements
In millions of euros
Cash flows included in cash provided by/used
for operating activities
E.64
289
1,581
1,032
2,197
Miscellaneous other assets and liabilities
-82
Financial instruments
-838
564
Provisions
2014
2015
In millions of euros
Changes in other operating assets and liabilities
E.63
Cash provided by/used for operating activities
Changes in other operating assets and liabilities are shown
in table 7 E.63.
At December 31, 2015, cash and cash equivalents included
restricted funds of €183 million (2014: €112 million).
The restricted funds primarily relate to subsidiaries where
exchange controls apply so that the Group has restricted
access to the funds.
Calculation of funds
28. Consolidated statement of cash flows
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
246
2,021
14
2,007
306
2
2015
2014
Interest paid
-311
at December 31,
238
a sustained influence on the Group's financial position.
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are reflected
in the Group's consolidated financial statements and are based
on estimates. Risks resulting from legal proceedings, however,
sometimes cannot be assessed reliably or only to a limited extent.
Consequently, provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could materially
affect Daimler's operating results and cash flows for a particular
reporting period, Daimler believes that it should not exert
Since, among other things, some of the contractual penalties
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.
The defendants submitted their response to the statement of
claims on June 30, 2006. The Federal Republic of Germany
delivered its reply to the arbitrators on February 15, 2007, and
the defendants delivered their rebuttal on October 1, 2007
(see also Note 30). The arbitrators held the first hearing
on June 16 and 17, 2008. Additional briefs from the claimant
and the defendants have been filed since then. A hearing
of witnesses and experts took place between December 6
and 14, 2010. The parties submitted further written statements
on July 15 and November 15, 2011. After the Tribunal's President
resigned for personal reasons as of March 30, 2012, the new
President was determined by the Administrative Court in Berlin
as of October 29, 2012. The arbitrators held further hearings
in May and October 2014 as well as in June 2015. In accordance
with IAS 37.92, no further information is disclosed regarding
the arbitration proceedings and the related risks to the Company,
in particular regarding the measures taken by the Company,
in order to prevent negative effects on the proceedings.
Daimler believes the claims of the Federal Republic of Germany
are without merit and will continue to defend itself vigorously.
lost revenue of €3.33 billion for the period September 1, 2003
through December 31, 2004 plus interest at 5% per annum
above the respective base rate since submission of claims
(an amount of €2 billion as at the date of September 29, 2014),
and contractual penalties of approximately €1.65 billion
through July 31, 2005 plus interest at 5% per annum above
the respective base rate since submission of claims (an amount
of €225 million as at the date of September 29, 2014),
-plus refinancing costs of €196 million.
-
is claiming
The Federal Republic of Germany initiated arbitration proceed-
ings against Daimler Financial Services AG, Deutsche Telekom
AG and Toll Collect GbR and submitted its statement of claims
in August 2005. It seeks damages, contractual penalties
and the transfer of intellectual property rights to Toll Collect
GmbH. In particular, the Federal Republic of Germany
In mid-January 2011, the European Commission carried out
anti-trust investigations of European commercial vehicle
manufacturers, including Daimler AG. If antitrust infringements
are discovered, the European Commission can impose con-
siderable fines depending on the gravity of the infringement.
In November 2014, the European Commission served Daimler
with its statement of objections which, from the European
Commission's perspective, further explains and legally evaluates
the relevant facts. Resulting from knowledge gained from
access to essential documents of the European Commission's
file, Daimler AG, in December 2014, decided to increase
provisions by €600 million. Daimler is taking the Commission's
investigation very seriously. The Company is cooperating
with the authorities but will at the same time - while stating the
Company's legal view - safeguard its rights in the further
proceedings and is also reviewing all of its procedural options.
In accordance with IAS 37.92, the Group does not provide
further information on this antitrust investigation and the asso-
ciated risk for the Group, especially with regard to the
measures taken in this context, in order not to impair the
outcome of the proceedings.
Various legal proceedings, claims and governmental investiga-
tions (legal proceedings) are pending against Daimler AG
and its subsidiaries on a wide range of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters and shareholder matters. Legal proceedings relating
to products deal with claims on account of alleged vehicle
defects. Some of these claims are asserted by way of class
action suits. If the outcome of such legal proceedings is
detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages or to undertake
service actions, recall campaigns or other costly actions.
29. Legal proceedings
247
304
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash provided by financing activities includes cash flows
from hedging the currency risks of financial liabilities. In 2015,
Cash provided by financing activities
The line item other non-cash expense and income within
the reconciliation of profit before income taxes to cash
provided by/used for operating activities in the reporting year
primarily comprises the Group's share in the profit/loss of
companies accounted for using the equity method. In the prior
year, the reconciling item mainly comprised the effect
from the remeasurement of the Tesla shares (see Note 13).
Table 71 E.64 shows cash flows included in cash provided
by/used for operating activities.
The change in financial instruments in comparison to the
prior year was mainly caused by measurement effects in fiscal
year 2014. The effects were primarily related to the hedging
instrument in connection with the disposal of the equity interest
in Tesla Motors, Inc. and the put option in connection with
the disposal of Rolls-Royce Power Systems Holding GmbH.
The increase in provisions in the reporting period resulted
from the provisions for warranties which were especially
affected by the recall in connection with Takata airbags. Fur-
thermore, there was a rise of the provisions for dealer incentives
and for personnel costs. Opposing effects resulted from the
decrease in the provisions for pensions and similar obligations
caused by extraordinary contributions to the German pension
assets in particular. The decrease in provisions in the prior
year was primarily influenced by an extraordinary contribution
to the German pension fund assets and was related to the pro-
visions for pensions and similar obligations. Furthermore, there
were opposing effects from the addition to the provision for the
EU Commission's antitrust proceedings concerning European
commercial vehicle manufacturers and the increase in the
provision for personnel costs.
171
135
Dividends received
136
152
Interest received
-445
cash provided by financing activities included payments
for the reduction of the outstanding finance lease liabilities
of €48 million (2014: €46 million).
362
2,393
30
2,363
314
246
585
278
307
Other deferred income
1,047
466
581
1,461
662
799
from operating lease arrangements
560
Deferral of advance rental payments received
866
370
1,374
928
446
with residual-value guarantees
Deferral of sales revenue received from sales
3,151
1,935
1,216
4,319
2,983
1,336
1,236
Total
2,888
7,739
1
361
Miscellaneous other liabilities
1,553
1
162
11
151
1,552
1,821
21
1,800
Other tax liabilities
210
4,851
8
Income tax liabilities
At December 31, 2015
Non-current
Total
At December 31, 2014
Non-current
Current
Total
Current
In millions of euros
Other liabilities
E.62
5,994
3,581
2,413
202
at December 31,
1,715
Future minimum
lease payments
650
128
Others
50
50
64
64
Equities
6,380
5,481
899
4,690
3,864
826
Government bonds in EUR
2,353
2,340
13
3,854
778
3,853
158
1,229
97
461
367
94
Industrials
658
578
80
503
416
87
Consumer goods
1,440
1,220
220
955
788
167
Information technology and telecommunication services
1,071
1
Government bonds in USD
1,951
Corporate bonds in USD
3,161
2,637
524
1,925
1,521
404
Corporate bonds in other currencies
205
21
184
200
44
156
Corporate bonds
5,969
5,252
717
4,372
6
2,241
2,247
9
1,479
472
969
555
414
Government bonds in other currencies
458
458
443
544
443
4,762
3,819
943
5,266
4,408
858
Corporate bonds in EUR
2,603
2,594
Government bonds
641
Healthcare
172
Pension benefits paid
-829
-688
-141
-773
-650
-123
Currency exchange-rate changes and other changes
198
8
190
Fair value of plan assets at December 31
20,226
17,306
2,920
224
18,581
7
217
15,973
-12
Settlements
4
53
571
190
318
308
10
1,294
1,000
294
Contributions by the employer
2,608
1,900
260
3,111
2,975
136
Contributions by plan participants
70
65
5
57
1,640
3,806
-7,414
Funded status
Plans
Plans
Total
At December 31, 2014
German Non-German
Plans
Plans
In millions of euros
Energy, commodities and utilities
Financials
896
799
97
832
718
114
1,466
1,269
197
1,097
925
Total
At December 31, 2015
German Non-German
Composition of plan assets
E.50
thereof recognized in other assets
thereof recognized in provisions for pensions
and similar obligations
-7,534
-6,497
-1,037
-11,619
-10,523
-1,096
120
-6,497
-11,546
-10,523
-1,023
73
73
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 239
Market prices are available for equities and bonds due to their
listing in active markets. Most of the bonds have investment
grade ratings. They include government bonds of very good
creditworthiness.
The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. Several pension plans use dedicated liability driven
investment approaches to take the structure of pension obliga-
tions into account in the investment process.
-917
120
566
Securitized bonds
64
3
-21
24
-22
-19
-3
Net interest expense
-245
-201
-44
-292
-250
-42
Net interest income
3
3
Interest included in future
minimum lease payments
3
3
Past service cost, curtailments and settlements
-90
-437
-527
Effect on future cash flows
Daimler currently plans to make contributions of €0.6 billion
to its pension plans for the year 2016; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€0.9 billion in 2016.
The weighted average duration of the defined benefit obliga-
tions is shown in table 7 E.55.
E.51
Pension cost
In millions of euros
2015
2014
Total
-955
German
Plans
Plans
Total
German
Plans
Non-German
Plans
Current service cost
-716
-602
-114
Non-German
by means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
was achieved.
-824
-838
Interest income
3
3
Interest expense
-245
-292
-955
-838
E.53
Significant factors for the calculation of pension benefit obligations
In percent
German Plans
Non-German Plans
At December 31,
At December 31,
2015
2014
2015
2014
-21
Other operating expense
-74
-101
-706
-132
E.52
Net periodic pension cost within
the consolidated statement of income
In millions of euros
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
241
2015
-131
2014
-402
-318
Selling expenses
-121
-106
General administrative expenses
-68
-51
Research and non-capitalized development costs
Cost of sales
761
For the calculation of the sensitivity of life expectancy,
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 7 E.54.
12,078
2,300
Alternative investments²
616
507
109
675
567
108
Real estate
493
395
98
514
410
104
Other non-exchange-traded instruments¹
255
219
14,378
2,620
14,557
17,177
4
60
54
5
49
Bonds
10,795
9,075
1,720
36
9,692
1,473
Other exchange-traded instruments¹
2
1
1
-4
-5
1
Total exchange-traded instruments
8,219
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed due to
correlation effects. With a change in the parameters, the
sensitivities shown cannot be used to derive a linear develop-
ment of the defined benefit obligation.
-124
30
73
73
7
7
88
88
1 Includes derivative financial instruments which could have a negative fair value at the balance sheet date.
2 Alternative investments mainly comprise private equity.
240
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pension cost
The components of pension cost included in the consolidated
statement of income are shown in table 7 E.51.
Table 7 E.52 shows the line items within the consolidated
statement of income in which the net periodic pension cost
is included.
Measurement assumptions
The measurement date for the Group's defined benefit
pension obligations and plan assets is generally December 31.
The measurement date for the Group's net periodic pension
cost is generally January 1. The assumptions used to calculate
the defined benefit obligations vary according to the economic
conditions of the countries in which the pension plans
are situated.
Calculation of the defined benefit obligation uses life expectancy
for the German plans based on the 2005 G mortality tables
of K. Heubeck. For Non-German plans, comparable country-
specific calculation methods are used.
Table 7 E.53 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Discount rates for German and non-German pension plans
are determined annually as of December 31 on the basis
of high-quality corporate bonds with maturities and currencies
matching those of the pension payments.
Sensitivity analysis
thereof fair value of self-used plan assets
financial instruments
thereof fair value of own transferable
2,608
Cash and cash equivalents
1,685
1,628
57
3,138
3,072
66
Total non-exchange-traded instruments
3,049
-154
2,749
4,203
3,895
308
Fair value of plan assets
20,226
17,306
2,920
18,581
15,973
300
-101
-12
Actual return on plan assets
thereof current
Balance at December 31, 2015
Currency translation and other changes
Addition of accrued interest and effects of changes in discount rates
Reversals
Utilizations
Additions
thereof non-current
thereof current
Balance at December 31, 2014
In millions of euros
Provisions for other risks
E.57
Further information on other provisions for other risks
is provided in Notes 5 and 29.
Provisions for other risks include obligations for expected reduc-
tions in revenue already recognized such as bonuses, discounts
and other price reduction commitments. They also include
expected costs in connection with liability and litigation risks,
provisions for optimization programs, provisions for environ-
mental protection risks, as well as provisions for other taxes and
various other risks which cannot be allocated to other categories.
Other
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans.
The additions recorded to the provisions for profit sharing
and management bonuses in the reporting year usually result
in cash outflows in the following year. The cash outflow
for non-current provisions for personnel and social costs is
primarily expected within a period until 2026.
Personnel and social costs
Daimler issues various types of product warranties, under which
it generally guarantees the performance of products delivered
and services rendered for a certain period. The provision for
these product warranties covers expected costs for legal
and contractual warranty claims as well as expected costs for
policy coverage, recall campaigns and buyback commitments.
The provision for buyback commitments represents the expected
costs related to the Group's obligation under certain condi-
tions to repurchase vehicles from customers. Buybacks may
occur for a number of reasons including litigation, compliance
with laws and regulations in a particular region and customer
satisfaction issues. The utilization date of product warranties
depends on the incidence of the warranty claims and can
span the entire term of the product warranties. The cash out-
flow for non-current product warranties is principally
expected within a period until 2018.
thereof non-current
Product Personnel and
warranties
social costs
Other
-1,975
-1,769
-2,448
8,794
3,193
2,334
3,267
6,712
2,012
Product warranties
2,135
7,267
3,038
1,806
2,423
13,979
5,050
3,941
4,988
Total
2,565
-6,192
The development of provisions for other risks is summarized
in table 7 E.57.
243
Key data for other post-employment benefits
E.56
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2015, the total cost from defined contri-
bution plans amounted to €1.5 billion (2014: €1.4 billion).
Of those payments €1.4 billion (2014: €1.3 billion) was related
to governmental pension plans.
Defined contribution pension plans
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
242
16
16
Non-German Plans
17
16
German Plans
2014
2015
In years
benefit obligations
Weighted average duration of the defined
E.55
-40
In millions of euros
Present value of defined benefit obligations
Fair value of plan assets and
-101
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In May 2014, Daimler Trucks North America LLC and the
United Auto Workers union (UAW) entered into an agreement
to settle a healthcare plan as part of a collective bargaining
agreement. As a result of this agreement, the obligation to the
active eligible employees was settled in the fourth quarter
of 2014. The resulting cash outflow from this transaction was
approximately €0.3 billion. The transfer of the obligation to
the retirees was subject to US court approval. The approval was
received in December 2014 and became legally binding with
expiration of the deadline for notices of appeal at the end of
January 2015. The cash outflow from this transaction (approxi-
mately €0.1 billion) occurred in the first quarter of 2015. The
settlement has no material impact on the Group's consolidated
statement of income or on the EBIT of Daimler Trucks.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to be
accounted for as defined benefit plans. These obligations are
funded to a small extent through reimbursement rights
and plan assets. Table 71 E.56 shows key data for other post-
employment benefits.
Other post-employment benefits
Daimler participates in some collectively bargained defined
benefit pension plans maintained by more than one employer.
The Group presents several of these plans in its consolidated
financial statements as defined contribution plans because the
information required to use defined benefit accounting is not
available in a timely manner or in sufficient detail. The Group
cannot exercise direct control over such plans and the plan
trustees have no legal obligation to share information directly
with participating employers. Higher contributions by the
Group to such a pension plan could be required in particular
when an underfunded status exceeds a specific level. Exit
from such a plan can lead to the companies involved having
to offset the potential future shortfall relating to their share
of the plan. Furthermore, the possibility exists that Daimler can
be liable for other participants' obligations. Compared with
the prior-year assessment, the extent of the risk has increased,
but at December 31, 2015, the risk to the Group continues
to be classified as very low. No exit from any of these plans
is intended.
Multi-employer plans
-51
-21
23. Provisions for other risks
-1,106
68
87
1,193
1,129
2014
2015
post-employment benefits
Net periodic cost for other
Funded status
-1,061
-500
-261
-518
4,114
7,378
3,388
3,990
Liabilities from ABS transactions
10,853
2,503
8,350
10,532
2,520
8,012
Deposits in the direct banking business
22,893
11,792
11,101
27,311
12,085
15,226
Liabilities to financial institutions
1,875
5,989
Liabilities from finance leases
43
Liabilities from finance
lease arrangements
at December 31,
In millions of euros
from finance lease arrangements
Reconciliation of minimum lease payments to liabilities
E.59
1,216
86,689
50,399
36,290
714
2,277
502
445
59,831
41,311
841
Loans, other financing liabilities
285
245
40
263
220
1,286
101,142
-71
8
2,961
2,175
3,072
9,710
4,932
2,189
2,589
15,830
5,805
4,364
5,661
79
36
-49
92
20
19
-22
23
-850
873
6,120
244
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2,961
Commercial paper
43,176
33,262
9,914
51,411
41,173
10,238
Notes/bonds
2,269
At December 31, 2014
Non-current
Total
At December 31, 2015
Non-current
Total
Current
In millions of euros
Financing liabilities
E.58
Liabilities from finance leases relate primarily to leases
of property, plant and equipment which transfer substantially
all risks and rewards to the Group as lessee. Future minimum
lease payments under finance leases amounted to €411 million
at December 31, 2015 (2014: €436 million). The reconciliation
of future minimum lease payments from finance lease arrange-
ments to the corresponding liabilities is shown in table 7 E.59.
in table 7 E.58.
The composition of financing liabilities is shown
24. Financing liabilities
Current
-540
reimbursement rights
-359
in financial assumptions
-2,762
-2,614
-148
5,867
5,629
238
Actuarial gains (-)/losses from experience adjustments
-94
-99
5
-32
-41
9
Actuarial gains (-)/losses
-3,320
Discount rates
-3,148
-172
-53
69
99
168
90
Interest cost
661
509
152
822
679
143
Contributions by plan participants
6,003
69
4
57
55
2
Actuarial gains (-)/losses from changes
in demographic assumptions
-464
-435
-29
65
437
5,687
Past service cost, curtailments and settlements
3,837
30,127
26,496
3,631
Fair value of plan assets
at January 1
Interest income from plan assets
18,581
419
15,973
2,608
14,668
12,588
2,080
308
111
533
429
104
Actuarial gains/losses (-)
23,803
27,640
at December 31
Present value of the defined benefit obligation
-15
21
-36
22
19
3
Pension benefits paid
-894
-733
316
-161
-697
-144
Currency exchange-rate changes and other changes
296
-9
305
307
6
301
-841
527
Actuarial gains (-)/losses from changes
2,920
65
77
+ 0.10%
in cost of living
Sensitivity for expected increase
130
1,140
1,270
122
903
1,025
- 0.25%
Sensitivity for discount rates
-130
-1,080
-1,210
-143
-889
-1,032
12
120
110
114
-412
- 1 year
Sensitivity for life expectancy
40
480
520
21
354
375
+ 0.25%
+ 1 year
-10
-120
-130
-11
-104
-115
- 0.10%
in cost of living
Sensitivity for expected increase
Sensitivity for life expectancy
Sensitivity for discount rates
10
Plans
In millions of euros
2015
2014
German
Non-German
Total
Plans
Plans
Total
Present value of defined benefit pension obligations and fair value of plan assets
Non-German
Present value of the defined benefit obligation
at January 1
30,127
Current service cost
716
26,496
602
3,631
23,230
20,310
In millions of euros
Plans
E.49
German
Plans
Composition of plan assets
December 31, 2014
Non-German
Plan assets and income from plan assets are used solely to pay
pension benefits and to administer the plans. The composition
of the Group's pension plan assets is shown in table 7 E.50.
German
Plans
Total
Plans
December 31, 2015
Non-German
German
Plans
Sensitivity analysis for the present value of defined benefit pension obligation
E.54
1 For German Plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation
to the Group's active employees as well as retirees and their survivors. For most non-German Plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
Total
4.1
1.9
1.8
2.6
1.7
Expected increase in cost of living¹
Reconciliation of the net obligation from
defined benefit pension plans
The development of the relevant factors is shown
3.9
in table E.49.
2,305
26,281
31,884
thereof cash flow hedges
3,104
799
3,490
1,647
29,771
34,004
thereof fair value hedges
5,318
41,621
Interest rate swaps
Hedging of interest rate risks from receivables/liabilities
thereof hedging of net investments in foreign operations
545
545
39,873
23,381
26,533
23,412
27,384
28,078
39,322
Hedging of commodity price risks from forecasted transactions
30,276
1,388
51,490
49,914
30,310
26,409
3,867
thereof fair value hedges
44,962
28,143
28,666
56,809
thereof cash flow hedges
86,826
62,425
43,039
105,464
Total nominal values of derivative financial instruments
1,305
747
484
1,231
thereof cash flow hedges
1,460
783
605
Forward commodity contracts
2,926
In millions of euros
377
359
359
Derivative financial instruments used in hedge accounting
3,120
3,120
2,317
2,317
Miscellaneous other financial liabilities
8,977
8,977
8,030
8,030
124,050
124,667
263
107,573
252
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instruments
as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt
securities and other financial assets.
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Offsetting of financial instruments
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement)
of the International Swaps and Derivatives Association (ISDA)
and other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in
the consolidated statement of financial position, as they allow
netting only in the case of future events such as default
or insolvency on the part of the Group or the counterparty.
Table 71 E.69 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
Table 71 E.70 provides an overview of the classification
into measurement hierarchies of financial assets and liabilities
measured at fair value (according to IFRS 13).
At the end of each reporting period, Daimler reviews
the necessity of reclassification between the measurement
hierarchies.
E.69
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
108,927
263
Financial liabilities recognized at fair value through profit or loss
Other financial liabilities
622
Financial assets recognized at fair value through profit or loss
203
203
97
97
Derivative financial instruments used in hedge accounting
1,363
1,363
1,296
1,296
Other receivables and financial assets
2,839
2,839
2,325
2,325
108,231
10,178
10,178
10,548
10,548
Trade payables
88,043
In millions of euros
86,689
101,142
Financing liabilities
Financial liabilities
92,979
92,601
108,554
101,759
622
Other financial assets¹
At December 31, 2015
At December 31, 2014
Level 22
Level 33
Financial assets measured at fair value
Financial assets available for sale
10,576
6,976
3,600
8,281
6,158
2,123
thereof equity instruments
measured at fair value
2,303
2,297
Level 11
6
1,642
5
thereof marketable debt securities
8,273
4,679
3,594
6,634
4,516
2,118
Financial assets measured
128
at fair value through profit or loss
203
203
1,647
Total
At December 31, 2015
Level 22
Level 33
Level 11
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
1,566
3,383
-1,045
-1,045
Net amounts
521
2,338
At December 31, 2014
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
Net amounts
1,393
2,676
-670
723
-670
Total
In millions of euros
Measurement hierarchy of financial assets and liabilities measured at fair value
E.70
As of January 1, 2014, the financial assets shown as classified
as Level 3 and presented in table 7 E.71 consisted solely of
Daimler's option to sell the shares it held in RRPSH to Rolls-
Royce (see also Note 13). Daimler sold its shares in RRPSH to
Rolls-Royce in 2014. The option was exercised and derecognized
through profit or loss.
E.71.
Other financial liabilities²
value through profit or loss and classified as Level 3 is shown
in table
financial instruments which are allocated to the Level 2
measurement hierarchy, portfolios managed on basis of net
exposure are applied.
For the determination of the credit risk from derivative
253
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
2,006
The development of financial assets recognized at fair
97
746
thereof equity instruments measured at cost
The composition of other financial obligations is shown
in table 7 E.66.
In connection with its production programs and the ongoing
expansion of its business activities, Daimler has signed addi-
tional agreements with suppliers in 2015 to purchase various
volumes of parts and components over extended periods.
The Group also has entered into further arrangements for the
provision of future services. In addition, the Group has committed
to purchase or invest in the construction and maintenance
of production facilities. At December 31, 2015, contractual com-
mitments for the acquisition of property, plant and equipment
amount to €2.2 billion.
E.66
Composition of other financial obligations
(nominal amounts)
In millions of euros
Commitments from purchasing contracts
Long-term rental and leasing agreements
Irrevocable credit commitments
Other miscellaneous financial commitments
At December 31,
2015
2014
13,371
9,769
2,156
2,157
1,931
Other financial obligations
1,320
2,318
18,976
15,564
250
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group has additional other financial obligations resulting
from non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts
partially include renewal or repurchase options and escalation
clauses. In 2015, Daimler recognized as expense rental
payments of €491 million (2014: €517 million). Table 7 E.67
provides an overview of when future minimum lease payments
under non-cancelable long-term rental and lease agreements
fall due (nominal amounts).
In addition, the Group had issued irrevocable loan commitments
as of December 31, 2015. These loan commitments had
not been utilized as of that date. An overview of the maturities
of irrevocable credit commitments is shown in Table 7 E.82
in Note 32.
Miscellaneous other financial commitments primarily comprise
financial obligations to make payments in connection with
capital contributions to be made into the share capital of uncon-
solidated subsidiaries or associated companies as well as
obligations in connection with cooperation agreements. In prior
year, commitments from purchasing contracts of €1.2 billion
were disclosed under other miscellaneous financial commitments.
E.67
Future minimum lease payments under long-term rental
and lease agreements (nominal amounts)
In millions of euros
At December 31,
2015
Maturity
within one year
1,518
Obligations from product warranties and extended
product warranties are not included in the above disclosures.
See Note 23 for provisions relating to such obligations.
While Daimler's maximum future obligation resulting from
the guarantee of the bank loan can be determined (2015:
€100 million), the Group is unable to reasonably estimate the
amount or range of amounts of possible loss resulting from
the financial guarantee in form of the equity maintenance
undertaking due to the various uncertainties described above,
although it could be material. Only the guarantee for the
bank loan is included in the above disclosures for financial
guarantees.
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG
are jointly obliged to indemnify Cofiroute for amounts exceed-
ing this limitation.
248
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. Financial guarantees, contingent liabilities
and other financial obligations
Financial guarantees
Financial guarantees principally represent contractual
arrangements. These guarantees generally provide that in
the event of default or non-payment by the primary debtor,
the Group will be required to settle such financial obligations.
The maximum potential obligation resulting from these
guarantees amounted to €1,033 million at December 31, 2015
(2014: €786 million) and includes liabilities recognized in
the amount of €117 million (2014: €84 million). These amounts
include financial guarantees which the Group issued for the
benefit of Chrysler in connection with the Chrysler transactions
entered into in 2007 and 2009. At December 31, 2015, these
guarantees amounted to €0.3 billion. For a portion of these
financial guarantees, Chrysler provided collateral of €0.2 billion
to an escrow account.
Contingent liabilities
Table 7 E.65 shows estimates of the financial effects
of contingent liabilities at December 31.
Guarantees under buyback commitments represent arrange-
ments whereby the Group guarantees specified trade-in or
resale values for sold vehicles. Such guarantees provide the
holder with the right to return purchased vehicles to the Group,
the right being primarily contingent on the future purchase
of vehicles or services. The provisions recognized in connection
with these buyback commitments, amounted to €85 million
at December 31, 2015 (2014: €58 million). On the other hand,
residual value guarantees related to arrangements for which
revenue recognition is precluded due to the Group's obligation
to repurchase assets are included in other financial liabilities.
E.65
Composition of contingent liabilities
In millions of euros
At December 31,
2015
2014
Guarantees under buyback commitments
1,560
1,208
Other contingent liabilities
360
Guarantee of bank loans. Daimler AG issued a guarantee
to third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group's 50% share of Toll Collect
GmbH's external financing guaranteed by its shareholders.
- Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several basis,
additional funds to Toll Collect GmbH as may be necessary
for Toll Collect GmbH to maintain a minimum equity (based
on German Commercial Code accounting principles) of 15%
of total assets (a so-called “equity maintenance undertaking").
This obligation will terminate on August 31, 2018, when
the extended operating agreement expires, or earlier if the
agreement is terminated. Such obligation may arise if
Toll Collect GmbH is subject to revenue reductions caused
by underperformance, if the Federal Republic of Germany
is successful in claiming lost revenue 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 or other events reduce Toll Collect GmbH's
equity to a level 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.
Each of the consortium members (including Daimler Financial
Services AG) has 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, Daimler AG has guaranteed bank loans
obtained by Toll Collect GmbH. The guarantees are described
in detail below:
The operating agreement calls for the submission of all
disputes related to the toll collection system to arbitration.
The Federal Republic of Germany has initiated arbitration
proceedings against Daimler 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 revenue that allegedly arose
from delays in the operability of the toll collection system.
See Note 29 for additional information.
Beginning in June 2006, the Federal Republic of Germany
began reducing monthly payments to Toll Collect GmbH
by €8 million in partial set-off against amounts claimed in the
arbitration proceedings referred to below. This offsetting
may require the consortium members to provide additional
operating funds to Toll Collect GmbH.
249
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
505
However, penalties and revenue reductions are capped at
€150 million per year until the final operating permit has been
issued and at €100 million per year following the issuance
of the final operating permit. These cap amounts are subject
to a 3% increase for every year of operation.
According to the operating agreement, the toll collection
system had to be operational no later than August 31, 2003.
After a delay of 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 Collect GmbH received a preliminary operating permit
as specified in the operating agreement. Toll Collect GmbH
expects to receive the final operating permit, and continues
to operate the toll collection system under the preliminary
operating permit in the interim.
In 2002, our subsidiary Daimler Financial Services AG,
Deutsche Telekom AG and Compagnie Financière et Industrielle
des Autoroutes S.A. (Cofiroute) entered into a consortium
agreement in order to jointly develop, install and operate under
a contract with the Federal Republic of Germany (operating
agreement) a system for the electronic collection of tolls for all
commercial vehicles over 12 tons gross vehicle weight using
German highways. Daimler 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).
Other contingent liabilities comprise contingent liabilities
which constitute other guarantees as well as potential
obligations from other tax and customs duty risks. At Decem-
ber 31, 2015, the best estimate for potential obligations
from other contingent liabilities for which no provisions had
yet been recognized was €360 million (2014: €383 million).
1,591
1,920
383
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.
746
between one and five years
later than five years
Fair value
At December 31, 2014
Carrying
amount
Fair value
73,514
73,837
61,679
62,057
9,054
9,054
8,634
8,634
9,936
9,936
9,667
amount
9,667
8,273
6,634
6,634
Other financial assets
Available-for-sale financial assets
3,049
3,049
2,269
2,269
thereof equity instruments measured at fair value
2,303
2,303
1,647
1,647
8,273
At December 31, 2015
Carrying
Available-for-sale financial assets
Marketable debt securities
540
2,156
2014
416
629
2,157
31. Financial instruments
Carrying amounts and fair values of financial instruments
Table 7 E.68 shows the carrying amounts and fair values
of the respective classes of the Group's financial instruments.
The fair value of a financial instrument is the price at which
a party would accept the rights and/or obligations of that finan-
cial instrument from another independent party. Given the
varying influencing factors, the reported fair values can only
be viewed as indicators of the prices that may actually
be achieved on the market.
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
Receivables from financial services
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respective
carrying amounts because the interest rates agreed and those
available in the market do not significantly differ. The fair values
of receivables from financial services with fixed interest
rates are determined on the basis of discounted expected
future cash flows.
The discounting is based on the current interest rates at
which similar loans with identical terms could have been
obtained as of December 31, 2015 and December 31, 2014.
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments
and the fundamentally lower credit risk, it is assumed that
their fair values are equal to the carrying amounts.
Marketable debt securities and other financial assets
Financial assets available-for-sale include:
debt and equity instruments measured at fair value; these
instruments were measured using quoted market prices
at December 31. Otherwise, the fair value measurement of
these debt and equity instruments is based on inputs that
are either directly or indirectly observable on active markets.
Equity instruments measured at fair value predominantly
comprise the investments in Nissan Motor Co., Ltd. (Nissan)
and Renault SA (Renault).
- equity interests measured at cost; fair values could not be
determined for these financial instruments because no
stock exchange or market prices are available. These equity
interests comprise investments in non-listed companies
for which no objective evidence existed at the balance sheet
date that these assets were impaired and whose fair values
cannot be determined with sufficient reliability. It is assumed
that the fair values approximate the carrying amounts.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
251
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
In millions of euros
Carrying amounts and fair values of financial instruments
1,111
E.68
Trade payables
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows. Market interest rates for the appropriate terms are
used for discounting.
Financing liabilities
Other receivables and assets are carried at amortized
cost. Because of the predominantly short maturities
of these financial instruments, it is assumed that the fair
values approximate the carrying amounts.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values
of commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices
with consideration of forward premiums and discounts.
Financial assets recognized at fair value through profit or loss
include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
- derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms of
the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using price quotations or option
pricing models using market data.
Due to the short maturities of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
97
1,112
1,363
12,142
At December 31,
2015
2014
-1,666
3,089
3,791
-1,799
2014
2015
Fair values of hedging instruments
535
E.76
Total interest income
In millions of euros
Total interest income and total interest expense
Total interest income and total interest expense
E.75
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
256
Total interest expense
to financial instruments that are not used in hedge accounting.
Fair value hedges
Cash flow hedges
Unrealized gains/losses from cash flow hedges
E.78
-552
65
553
-69
Net gains/losses from hedging instruments
Net gains/losses from underlying transactions
498
In millions of euros
2015
-29
Net gains/losses from fair value hedges
E.77
Hedges of net investments in foreign operations
-1,527
-2,255
2014
2015
1 Financial instruments classified as held for trading; these amounts relate
103
1 This does not include lease receivables of €18,158 million as of
December 31, 2015 (2014: €15,080 million) as these are not assigned
to an IAS 39 measurement category.
as these financial instruments are not assigned to an IAS 39 measurement
category.
The table above does not include cash and cash equivalents or the carrying
amounts of derivative financial instruments used in hedge accounting
359
263
104,528
120,287
2 Financial instruments classified as held for trading purposes.
Financial liabilities measured at (amortized) cost
Financial liabilities measured at fair value
through profit or loss
8,860
86,404
100,879
10,178
10,548
Other financial liabilities4
Financing liabilities³
7,946
124
These figures comprise financial instruments that are not used
in hedge accounting.
as of December 31, 2015 (2014: €285 million) as these are not assigned
to an IAS 39 measurement category.
Financial liabilities measured at (amortized) cost
-210
-313
Loans and receivables
235
130
Available-for-sale financial assets
3 This does not include liabilities from finance leases of €263 million
-578
Financial assets and liabilities recognized
at fair value through profit or loss¹
2014
2015
In millions of euros
Net gains/losses
E.74
4 This does not include liabilities from financial guarantees of €117 million
as of December 31, 2015 (2014: €84 million) as these are not assigned
to an IAS 39 measurement category.
197
2014
In millions of euros
Unrealized gains/losses
Hedging of currency risks of net investments in foreign operations
Currency swaps
thereof cash flow hedges
Forward exchange contracts and currency options
Hedging of currency risks from forecasted transactions
thereof fair value hedges
thereof cash flow hedges
Cross currency interest rate swaps
At December 31, 2015
Forward exchange contracts
In millions of euros
Nominal values of derivative financial instruments
E.80
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in Note 32
in the sub-item finance market risk.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Hedging transactions for which the effects from the measurement
of the hedging instrument and the underlying transaction to
a large extent offset each other in the consolidated statement
of income mostly not classify for hedge accounting.
Table 7 E.80 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that
arise from the Group's operating and/or financing activities.
Hedging of currency risks from receivables/liabilities
Nominal values of derivative financial instruments
At December 31, 2014
Nominal values
505
2,137
1,710
850
2,560
5,803
4,226
Maturity
1,965
5,513
7,073
7,073
Nominal values
> 1 year
Maturity
≤1 year
6,191
of selected investments with the application of derivative
financial instruments.
Daimler also partially hedges the foreign currency risk
Hedges of net investments in foreign operations
-2
-3
Interest expense
Interest income
Cost of sales
-90
340
-2,857
-2,755
-99
2015
-2,433
-3,770
Revenue
In millions of euros
Reclassifications of pre-tax gains/losses from equity
to the statement of income
E.79
2014
248
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair value
through profit or loss are shown in table > E.75.
See Note 1 for qualitative descriptions of accounting for financial
instruments (including derivative financial instruments).
257
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges corre-
spond with those of the underlying transactions. The realization
of the underlying transactions of the cash flow hedges is
expected to correspond with the maturities of the hedging trans-
actions shown in table 7 E.80. As of December 31, 2015,
Daimler utilized derivative instruments with a maximum maturity
of 51 months (2014: 36 months) as hedges for currency
risks arising from future transactions.
In 2015, the discontinuation of cash flow hedges as a result
of non-realizable hedged items resulted in losses of €21 million
(2014: €6 million).
Net profit for 2015 includes net losses (before income taxes)
of €9 million (2014: €17 million) attributable to the ineffective-
ness of derivative financial instruments entered into for
hedging purposes (hedge-ineffectiveness).
Table 71 E.79 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized in other comprehensive
income, are shown in table 7 E.78.
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Cash flow hedges
Net gains and losses from these hedging instruments
and the changes in the value of the underlying transactions
are shown in table 7 E.77.
The Group uses fair value hedges primarily for hedging
interest rate risks.
Fair value hedges
Table 71 E.76 shows the fair values of hedging instruments
at the end of the reporting period.
Fair values of hedging instruments
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks. For these hedging
purposes, the Group mainly uses currency forward transac-
tions, cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
Trade payables
Derivative financial instruments
used in hedge accounting
Liabilities
203
Balance at December 31
2015
2014
97
P-118
254
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 71 E.72 shows into which measurement hierarchy
(according to IFRS 13) the fair values of the financial assets
and liabilities are classified which are not measured at
fair value in the consolidated statement of financial position.
The carrying amounts of financial instruments presented
according to IAS 39 measurement categories are shown in
table 7 E.73.
E.72
Measurement hierarchy of financial assets and liabilities not measured at fair value
income/expense, net
Total
At December 31, 2015
Level 22 Level 33
Total
Level 11
At December 31, 2014
Level 22
Level 33
In millions of euros
Fair values of financial assets measured at cost
Receivables from financial services
73,837
73,837
62,057
Fair values of financial liabilities measured at cost
Financing liabilities
Level 11
Losses recognized in other financial
Balance at January 1
In millions of euros
1,363
1,296
1,296
6,976
5,166
9,674
6,158
3,516
Liabilities measured at fair value
Financial liabilities measured
at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
263
263
359
3,120
3,383
2,317
2,676
3,120
3,383
359
2,317
2,676
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
E.71
Development of financial assets recognized at fair value
through profit or loss classified as Level 3
101,759
45,535
118
thereof bonds
In millions of euros
Assets
At December 31,
2015
2014
Receivables from financial services¹
Trade receivables
55,356
46,599
8,634
Other receivables and financial assets
2,839
2,325
Loans and receivables
67,249
57,558
Marketable debt securities
8,273
6,634
Other financial assets
3,049
2,269
56,224
Financial assets measured at fair value
through profit or loss²
8,903
11,322
Available-for-sale financial assets
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
E.73
9,054
Net losses on loans and receivables mainly include impairment
losses that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign currency
gains and losses are also included.
52,031
45,535
6,496
Net gains on financial liabilities measured at (amortized) cost
mainly include gains and losses from currency translation.
thereof other financing liabilities
7,390
42,338
7,390
42,338
62,057
88,043
39,525
48,518
44,367
39,525
thereof liabilities from ABS transactions
5,996
4,842
Net gains and in the prior year net losses of financial assets
and liabilities recognized at fair value through profit or loss
primarily include gains and losses attributable to changes in
fair values.
Net gains or losses
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
Table 71 E.74 shows the net gains or losses of financial
instruments included in the consolidated statement of income
(excluding derivative financial instruments used in hedge
accounting).
Net gains on available-for-sale financial assets mainly include
income from the measurement of equity interests as well as
gains realized on their disposal.
37,680
37,680
5,996
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
304
Depreciation and amortization
4,844
3
4,841
23
105
788
20
plant and equipment
thereof investments in property,
1,463
1,463
13
115
77
1,238
4,562
3,621
1,435
1 Includes impairments of property, plant and equipment of €93 million from the sale of selected sites of the Group's sales network, of which
€64 million relates to Mercedes-Benz Cars, €13 million to Daimler Trucks, €14 million to Mercedes-Benz Vans and €2 million to Daimler Buses.
225
3,501
3
3,498
14
75
197
766
2,446
plant and equipment¹
thereof depreciation of property,
1,498
1,498
20
15
93
284
1,086
of intangible assets
thereof amortization
10,057
15
10,042
3,368
452
of non-current assets¹
intangible assets
thereof investments in
174,688
113,991
2,833
5,038
13,653
39,173
Segment liabilities
3,633
772
2,861
23
9
109
578
-12,146
2,142
thereof carrying amounts of
217,166
3,175
123,863 213,991
3,562
6,311
21,290
58,965
Segment assets
-20
-4
-16
-4
-3
equity method investments
-7
162,542
12,556
481
1,559
4,850
of non-current assets
Depreciation and amortization
5,075
5,075
30
104
202
1,110
3,629
plant and equipment
thereof investments in property,
Additions to non-current assets
2,261
75
16
288
67
1,815
intangible assets
thereof investments in
28,818
5
28,813
12,312
509
1,194
2,242
2,261
251
-15
changes in discount rates
2,853
Intersegment revenue
11,129
35,613
80,956
External revenue
2015
In millions of euros
Daimler
Group
Recon-
ciliation
Services Segments
Buses
Benz Vans
Total
1,965
Financial
Mercedes-
Daimler
Trucks
Benz Cars
Mercedes-
Daimler
Segment information
E.84
Table 7 E.84 presents segment information as of and
for the years ended December 31, 2015 and 2014.
With respect to information about geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented according
to the physical location of these assets.
Information related to geographic areas
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
If the Group hedges investments in associated companies
for strategic reasons, the related financial assets and earnings
effects are generally not allocated to the segments.
The effects of certain legal proceedings are excluded from
the operative results and liabilities of the segments if such items
are not indicative of the segments' performance, since their
related results of operations may be distorted by the amount
and the irregular nature of such events. This may also be the
case for items that refer to more than one reportable segment.
Reconciliation includes corporate items for which headquarters
are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
Reconciliation
Daimler
13
344
83,809
compounding of provisions and
thereof expenses from
464
74
390
-10
2
-14
-16
428
equity-method investments
thereof profit/loss from
13,186
-29
Total revenue
13,215
214
880
2,576
7,926
Segment profit (EBIT)
149,467
-6,468
-6,468
6,468
155,935
149,467
149,467
17,723
1,239
18,962
4,046
67
4,113
11,473
37,578
1,619
4,182
11,323
17
20,181
51,950
Segment assets
-353
-1
-352
-4
-11
-20
-70
-247
changes in discount rates
compounding of provisions and
thereof expenses from
5,895
897
151
-15
1
63
-1
103
10,752
755
9,997
1,387
197
682
1,878
5,853
746
equity-method investments
3,562
187,042
24,265
10
24,255
9,899
507
1,004
1,896
10,949
Additions to non-current assets
145,051
-6,699
151,750
97,837
2,622
105,454
4,349
34,811
Segment liabilities
2,294
678
1,616
30
8
97
545
936
equity method investments
thereof carrying amounts of
189,635
2,593
12,131
thereof profit/loss from
Segment profit (EBIT)
129,872
In 2015, expenses from the restructuring of the Group's dealer
network impacted Daimler Buses in 2015 with an amount of
€4 million (see also Note 5). The prior-year amount of €14
million additionally included expenses for the measures
described under Daimler Trucks. Furthermore, income of €16
million resulted from the sale of the investment in New MCI
Holdings Inc.
Daimler Buses
In 2015, expenses of €40 million from a recall in connection
with Takata airbags had a negative effect on earnings.
Furthermore, expenses from the restructuring of the own
dealer network affected Mercedes-Benz Vans by an amount
of €29 million (2014: €17 million).
Mercedes-Benz Vans
In January 2013, Daimler Trucks decided on workforce adjust-
ments in Germany and Brazil, which were continued in 2015.
Expenses recorded in this regard and for the restructuring of
the own dealer network amounted to €105 million in 2015
(2014: €165 million). In 2015, the optimization programs led to
a cash outflow of €64 million (2014: €170 million) (see also
Note 5). Further expenses of €61 million resulted from the sale
of the investment in Atlantis Foundries (Pty) Ltd.
Daimler Trucks
In 2015, in Mercedes-Benz Cars segment, the restructuring
of the own dealer network had an effect of €-64 million
(2014: €-81 million). In 2015, the optimization programs
led to a cash inflow of €180 million (2014: €-5 million)
(see also Note 5). The division's earnings also include expenses
of €300 million from a recall in connection with Takata airbags
as well as expenses of €121 million for public-sector levies of
prior periods. Furthermore, Mercedes-Benz Cars segment
had an effect of €87 million from the sale of property in USA.
Mercedes-Benz Cars
267
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3,804
3,803
16
Daimler Financial Services
79
847
2,677
plant and equipment
thereof depreciation of property,
1,580
1,580
53
14
106
285
1,122
of intangible assets
thereof amortization
11,340
184
The interest income and interest expenses of Daimler Financial
Services are included in revenue and cost of sales, and are
presented in Notes 4 and 5.
Mercedes-
Benz Cars
Daimler
-6,278
-6,278
6,278
136,150
129,872
129,872
14,915
1,076
15,991
63
4,218
9,968
32,389
73,584
Total revenue
367
2,087
2,685
Intersegment revenue
4,155
9,601
30,302
Mercedes-
Daimler
Daimler
Financial
Total
Trucks
Benz Vans
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Buses
Recon-
ciliation
Daimler
Group
In millions of euros
2014
External revenue
70,899
Services Segments
266
1
Depreciation and amortization may also include impairments
as far as they do not relate to goodwill impairment as per
IAS 36.
Country risk
Information on the Group's financing liabilities is also
provided in Note 24.
Table 71 E.82 provides an overview of how the future liquidity
situation of the Group is affected by the cash flows from
liabilities and financial guarantees as of December 31, 2015.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling pro-
cess. This process enables Daimler to manage its liquidity surplus
and liquidity requirements according to the actual needs
of the Group and each subsidiary. The Group's short-term and
mid-term liquidity management takes into account the matur-
ities of financial assets and financial liabilities and estimates
of cash flows from the operating business.
At December 31, 2015, liquidity amounted to €18.2 billion
(2014: €16.3 billion). In 2015, significant cash inflows resulted
from the positive contributions to earnings by the automotive
segments. Cash outflows mainly resulted from the portfolio
growth of the leasing and sales financing activities of Daimler
Financial Services, as well as from the increased investment
offensive. Furthermore, cash outflows resulted from the unsched-
uled contributions to the German and US pension plan assets
(see Note 22), as well as from the purchase of the digital map
business HERE, which took place in December 2015.
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from
financial services.
261
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. In 2015, Daimler had very
good access to the money and capital markets. Bank credit
lines are also used to cover financing requirements. These credit
lines include a syndicated €9.0 billion credit facility of Daimler AG
with five year tenor and two extension options of one year
each which was signed with a syndicate of international banks
in September 2013. In 2014, Daimler had exercised the option
to extend the credit line by a further year until 2019. In 2015,
Daimler exercised the second extension option to extend the
credit line by a further year until 2020. This syndicated facility can
be used to finance general corporate purposes and serves as
a back-up for commercial paper drawings. At December 31, 2015,
this facility had not been utilized. Potential downgrades of
Daimler's credit ratings could have a negative impact on the
Group's financing.
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents as well as debt instruments classified as held
for sale. The Group can dispose of these liquid assets at
short notice.
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
Liquidity risk
With respect to other receivables and financial assets
in 2015 and 2014, Daimler is exposed to credit risk only
to a small extent.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respective
country, e.g. resulting from sovereign measures such as
expropriation or interdiction of foreign currency transfers.
Other receivables and financial assets
Derivative financial instruments
Further information on trade receivables and the status
of impairments recognized is provided in Note 19.
Appropriate provisions are recognized for the risks inherent in
trade receivables. For this purpose, all receivables are regularly
reviewed and impairments are recognized if there is any
objective indication of non-performance or other contractual
violations. In general, substantial individual receivables and
receivables whose realizability is jeopardized are assessed indi-
vidually. In addition, taking country-specific risks and any
collateral into consideration, the other receivables are grouped
by similarity of contract and tested for impairment collectively.
One important factor for the definition of the impairment to be
recognized is the respective country risk.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
- letters of credit.
first-class bank guarantees and
credit insurances,
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
For trade receivables from export business, Daimler also
evaluates each general distribution company's creditworthiness
by means of an internal rating process and its country risk.
In this context, the year-end financial statements and other
relevant information on the general distribution companies
such as payment history are used and assessed.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and cash
deposits. In order to prevent the credit risk Daimler assesses
the creditworthiness of the counterparties.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well
as other corporate and private customers. Daimler manages
its credit risk from trade receivables using appropriate IT
applications and databases on the basis of internal guidelines
which have to be followed globally.
Trade receivables
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
260
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. Daimler manages its credit
risk exposure in connection with derivative financial instru-
ments through a limit system, which is based on the review
of each counterparty's financial strength. This system limits
and diversifies the credit risk. As a result, Daimler is exposed
to credit risk only to a small extent with respect to its deriv-
ative financial instruments. In accordance with the Group's risk
policy, most derivatives are contracted with counterparties
which have an external rating of "A" or better.
Further details on receivables from financial services and the
balance of the recorded impairments are provided in Note 14.
Daimler is exposed to country risk mainly resulting from cross-
border funding of Group companies and customers as well as
cross-border capital investments at Group companies and joint
ventures. Additionally, country risk also arises from cross-
border investments of liquid assets with financial institutions.
E.82
29
2
10,517
10,548
Trade payables4
30
119
233
329
1,099
2,742
4,552
Derivative financial instruments³
10,336
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management;
it assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
8,176
15,551
24,067
43,638
107,527
Financing liabilities²
≥ 2021
2020
2019
2018
2017
2016
Total
In millions of euros
Liquidity runoff for liabilities and financial guarantees¹
5,759
Miscellaneous other financial liabilities excluding
The allowance ratio remained at the low level of the previous
year.
Within the framework of testing for impairment, existing
collateral is generally given due consideration. In that context,
any excess collateral of individual customers is not netted
off with insufficient collateral of other customers. The maxi-
mum credit risk is limited by the fair value of collateral
(e.g. financed vehicles).
(assets only)
used in hedge accounting
Derivative financial instruments
Credit risk
61,679
8,634
9,054
19
Trade receivables
73,514
14
services
Receivables from financial
16,301
18,209
16
Liquid assets
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its commercial business or refinancing
activities. Without these derivative financial instruments,
the Group would be exposed to higher financial risks (additional
information on financial instruments and especially on the
nominal values of the derivative financial instruments used
is included in Note 31). Daimler regularly evaluates its financial
risks with due consideration of changes in key economic
indicators and up-to-date market information.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
Maximum
risk position
2014
Maximum
risk position
2015
see also
Note
In millions of euros
Maximum risk positions of financial assets and loan commitments
E.81
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An equity
price risk results from investments in listed companies (including
Nissan, Renault, BAIC Motor and Kamaz). In addition, the
Group is exposed to credit risks from its leasing and financing
activities and from its operating business (trade receivables).
With regard to the leasing and financing activities, credit risks
arise from operating lease contracts, finance lease contracts
and financing contracts. Furthermore, the Group is exposed to
liquidity and country risks relating to its credit and market
risks or a deterioration of its operating business or financial
market disturbances. If these financial risks materialize,
they could adversely affect Daimler's profitability, liquidity
and capital resources and financial position.
General information on financial risks
32. Management of financial risks
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
258
Amortization of capitalized borrowing costs is not included
in the amortization of intangible assets or depreciation
of property, plant and equipment since it is not considered
as part of EBIT.
Any market sensitive instruments including equity and
debt securities that the plan assets hold to finance pension
and other post-employment healthcare benefits are not
included in the following quantitative and qualitative analysis.
See Note 22 for additional information on Daimler's pension
and other post-employment benefits.
If, in connection with contracts, a worsening of payment
behavior or other causes of a need for impairment are recognized,
collection procedures are initiated by claims management to
obtain the overdue payments of the customer, to take possession
of the asset financed or leased or, alternatively, to renegotiate
the impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment
of local management, indicate that repayment will probably
continue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected proceeds
to be derived from repossession and remarketing.
1,363
Derivative financial instruments
Loans and finance lease receivables related to retail or small
business customers are grouped into homogeneous pools and
collectively assessed for impairment. Impairments are required
for example if there are adverse changes in the payment status
of the borrowers included in the pool, adverse changes in
expected loss frequency and severity, and adverse changes
in economic conditions.
Significant loans and leases to corporate customers are tested
individually for impairment. An individual loan or lease is
considered impaired when there is objective evidence that the
Group will be unable to collect all amounts due as specified
by the contractual terms. Examples of objective evidence that
loans or lease receivables may be impaired include the following
factors: significant financial difficulty of the borrower, a rising
probability that the borrower will become bankrupt, delinquency
in his installment payments, and restructured or renegotiated
contracts to avoid immediate default.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate customers
are evaluated using internal rating instruments. Both evalua-
tion processes use external credit bureau data if available.
The scoring and rating results as well as the availability of secu-
rity and other risk mitigation instruments, such as advance
payments, guarantees and, to a lower extent, residual debt
insurances, are essential elements for credit decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of collat-
eral generally depends on the amount of the financed assets.
The financed vehicles usually serve as collateral. Furthermore,
Daimler Financial Services mitigates the credit risk from
financing and lease activities, for example through advance
payments from customers.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global
as well as at a local level. In particular, these rules deal with
minimum requirements for all risk-relevant credit processes,
the definition of financing products offered, the evaluation of
customer quality, requests for collateral as well as the treat-
ment of unsecured loans and non-performing claims. The limita-
tion of concentration risks is implemented primarily by means
of global limits, which refer to single customer exposures.
As of December 31, 2015, exposure to the biggest 15 customers
did not exceed 4.8% (2014: 4.0%) of the total portfolio.
In addition, the Daimler Financial Services segment is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2015, irrevocable loan
commitments of Daimler Financial Services amounted to
€1,913 million (2014: €1,306 million), of which €1,186 million
had a maturity of less than one year (2014: €772 million),
€378 million had maturities between one and three years
(2014: €249 million), €228 million had maturities between
three and four years (2014: €172 million), €92 million had matur-
ities between four and five years (2014: €113 million) and €29
million had maturities later than five years (2014: €0 million).
Daimler's financing and leasing activities are primarily
focused on supporting the sales of the Group's automotive
products. As a consequence of these activities, the Group
is exposed to credit risk, which is monitored and managed based
on defined standards, guidelines and procedures. Daimler
Financial Services manages its credit risk irrespective of whether
it is related to a financing contract or to an operating lease or
a finance lease contract. For this reason, statements concerning
the credit risk of Daimler Financial Services refer to the entire
financing and leasing business, unless specified otherwise.
Receivables from financial services
on the borrower's very high creditworthiness and on balanced
risk diversification. The limits and their utilizations are
reassessed continuously. In this assessment, Daimler also
considers the credit risk assessment of its counterparties
by the capital markets. In line with the Group's risk policy, most
liquid assets are held in investments with an external rating
of "A" or better.
259
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Liquid assets consist of cash and cash equivalents and market-
able debt securities classified as available-for-sale. With the
investment of liquid assets, banks and issuers of securities
are selected very carefully and diversified in accordance with
a limit system. In the past years, the limit methodology was
continuously enhanced to counteract the decline of the credit-
worthiness of the banking sector in the course of the financial
crisis. Additionally, liquid assets are increasingly also held at
financial institutions outside Europe with high creditworthiness
and as bonds issued by German federal states. Furthermore
and due to the current business development, the Group also
temporarily holds high levels of liquidity in emerging markets.
At the same time, the Group has increased the number
of financial institutions with which investments are made.
In connection with investment decisions, priority is placed
Liquid assets
are generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available).
Table 71 E.81 shows the maximum risk positions.
1,296
The maximum risk positions of financial assets which
2,325
2,839
16
financial assets
Other receivables and
1,320
1,931
30
Loan commitments
97
203
16
(assets only)
not used in hedge accounting
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with
the contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
accrued interest
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk.
The portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and repay-
ment claims from financing loans. The operating lease port-
folio is reported under equipment on operating leases in the
Group's consolidated financial statements. Overdue lease
payments from operating lease contracts are recognized in
trade receivables.
6,336
69
54
Interest rate risk
494
370
731
731
1,543
1,209
1,680
1,209
(from derivative financial instruments)
Exchange rate risk
2014
Average
46
Low
Period-end
2015
Average
Low
High
Period-end
In millions of euros
Value at risk for exchange rate risk, interest rate risk and commodity price risk
E.83
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, such as
Nissan or Renault, or which are accounted for using the equity
method, such as BAIC Motor or Kamaz. Therefore, the Group
does not include these investments in a market risk assessment.
Equity price risk
Compared to the previous year, the value at risk of commodity
derivatives has increased. The main reasons for this develop-
ment were rising volatilities for platinum and an increase in the
nominal hedge volume for palladium and aluminum.
Table 7 E.83 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2015
and 2014 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 E.80
for the nominal values of derivative commodity price hedges
at the balance sheet date.
For precious metals, central commodity management shows
an unhedged position of 23% of the forecasted commodity
purchases at year-end 2015 for calendar year 2016. The corre-
sponding figure at year-end 2014 was 32% for calendar
year 2015.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw material
price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
High
56
36
39
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash effective additions to these
property, plant and equipment and intangible assets as far as
they do not relate to capitalized borrowing costs, goodwill and
finance leases.
8,182
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms vary
by vehicle segment and geographic region.
on the basis of return on equity, which is the usual procedure
in the banking business.
Daimler Financial Services' performance is measured
Segment liabilities principally comprise all liabilities. The indus-
trial business segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other
post-employment benefit plans, and certain financial liabilities
(including financing liabilities).
Segment assets principally comprise all assets. The industrial
business segments' assets exclude income tax assets, assets
from defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
from equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized bor-
rowing costs is included in cost of sales, it is not included in EBIT.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred
to as "EBIT" in our management and reporting system.
The Group's management reporting and controlling systems
principally use accounting policies that are the same
as those described in Note 1 in the summary of significant
accounting policies according to IFRS.
Management and reporting system
The Daimler Financial Services segment supports the sales
of the Group's vehicle segments worldwide. Its product portfolio
mainly comprises tailored financing and leasing packages
for customers and dealers. The segment also provides services
such as fleet management, the brokering of automotive insur-
ance, banking services and various innovative mobility services
(under the brands moovel and car2go).
The vehicle segments develop and manufacture passenger
cars, trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand and
small cars under the smart brand, as well as the service brand
Mercedes me. Daimler Trucks distributes its trucks under the
brand names Mercedes-Benz, Freightliner, FUSO, Western Star,
Thomas Built Buses and BharatBenz. The vans of the
Mercedes-Benz Vans segment are primarily sold under the
brand name Mercedes-Benz and also under the Freightliner
brand. Daimler Buses sells completely built-up buses under the
brand names Mercedes-Benz and Setra. In addition, Daimler
Buses produces and sells bus chassis. The vehicle segments
also sell related spare parts and accessories.
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately according to nature of products
and services provided, brands, distribution channels and profile
of customers.
Reportable segments
36
Commodity price risk
(from derivative financial instruments)
54
63
37
Commodity price risk
49
38
25
32
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
265
33. Segment reporting
38
In the course of 2015, changes of the value at risk for interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
30
Derivative financial instruments are also used in conjunction
with the refinancing related to the industrial business.
Daimler coordinates the funding activities of the industrial
and financial services businesses at the Group level.
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual peri-
ods, this may also include negative cash flows from derivatives with an overall positive fair value.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can
be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
1 The amounts were calculated as follows:
10,697
8,489
6,534
16,812
29
92
379
262
25,772
1,033
1,033
133,773
1,203
1,931
Financial guarantees
and of Daimler AG5
of the Daimler Financial Services segment
Irrevocable loan commitments
302
102
314
Table 71 E.83 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2015 and 2014
portfolio of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
In this respect, the table shows the interest rate risk regarding
the unhedged position of interest rate sensitive financial
instruments. The average values have been computed on an
end-of-quarter basis.
524
604
65,469
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
228
The global nature of its businesses exposes Daimler to significant
market risks resulting from fluctuations in foreign currency
exchange rates and interest rates. In addition, the Group is
exposed to market risks in terms of commodity price risk
associated with its business operations, which the Group hedges
partially through derivative financial instruments. The Group
is also exposed to equity price risk in connection with its invest-
ments in listed companies (including Nissan, Renault, BAIC
Motor and Kamaz). If these market risks materialize, they will
adversely affect the Group's profitability, liquidity and capital
resources and financial position.
263
In order to mitigate the impact of currency exchange rate
fluctuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign cur-
rency exposures from Daimler's subsidiaries and operative units
and carries out the FXCo's decisions concerning foreign cur-
rency hedging through transactions with international financial
institutions. Risk Controlling regularly informs the Board of
Management of the actions taken by Corporate Treasury based
on the FXCo's decisions.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to protect the Group from unfavorable movements
in exchange rates while preserving some flexibility to partici-
pate in favorable developments. Based on this reference model
and depending on the market outlook, the FXCo determines
the hedging horizon, which usually varies from one to five years,
as well as the average hedge ratios. Reflecting the character
of the underlying risks, the hedge ratios decrease with increasing
maturities. At year-end 2015, foreign exchange management
showed an unhedged position in the automotive business for the
underlying forecasted cash flows in US dollars in calendar
year 2016 of 20%, for the underlying forecasted cash flows
in Chinese renminbi in calendar year 2016 of 22%, as well
as for the underlying forecasted cash flows in British pounds
in calendar year 2016 of 29%.
The hedged position of the operating vehicle businesses
is influenced by the amount of derivative currency contracts
held. The derivative financial instruments used to cover
foreign currency exposure are primarily forward foreign exchange
contracts and currency options. Daimler's guidelines call for
a mixture of these instruments depending on the assessment
of market conditions. Value at risk is used to measure
the exchange rate risk inherent in these derivative financial
instruments.
In 2015, the development of the value at risk from foreign
currency hedging was mainly driven by changes in the nominal
volume and by the increased foreign currency volatilities.
The Group's investments in liquid assets or refinancing activities
generally are not allowed to result in currency risk. Transaction
risks arising from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing on
money and capital markets are generally hedged against currency
risks at the time of investing or refinancing in accordance
with Daimler's internal guidelines. The Group uses appropriate
derivative financial instruments (e.g. cross currency interest
rate swaps) to hedge against currency risk.
|
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
264
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Finance market risks
Interest rate risk
Daimler uses a variety of interest rate sensitive financial
instruments to manage the liquidity needs of its day-to-day
operations. A substantial volume of interest rate sensitive
assets and liabilities results from the leasing and sales financing
business operated by the Daimler Financial Services segment.
The Daimler Financial Services companies enter into transactions
with customers that primarily result in fixed-rate receivables.
Daimler's general policy is to match funding in terms of maturities
and interest rates wherever economically feasible. However,
for a limited portion of the receivables portfolio in selected and
developed markets, the Group does not match funding in
terms of maturities in order to take advantage of market oppor-
tunities. As a result, Daimler is exposed to risks due to
changes in interest rates. In this regard, the Group is not
exposed to any liquidity risks.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate
Treasury department manages the interest rate risk relating
to Daimler's leasing and financing activities by setting
targets for the interest rate risk position. The Treasury Risk
Management department and the local Daimler Financial
Services companies are jointly responsible for achieving these
targets. As separate functions, the Daimler Financial Services
Risk Management and the Daimler Financial Services Controlling
& Reporting department monitors target achievement on a
monthly basis. In order to achieve the targeted interest rate
risk positions in terms of maturities and interest rate fixing
periods, Daimler also uses derivative financial instruments such
as interest rate swaps. Daimler assesses its interest rate risk
position by comparing assets and liabilities for corresponding
maturities, including the impact of the relevant derivative
financial instruments.
Effects of currency translation. For purposes of Daimler's
consolidated financial statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities
of the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book values
caused by exchange rates. In general, Daimler does not hedge
against exchange rate translation risk.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 7 E.83 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2015 and
2014 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included
in the following value at risk presentation. See also table 71 E.80
for the nominal volumes on the balance sheet date of deriv-
ative currency instruments entered into to hedge the currency
risk from forecasted transactions.
Cash inflows and outflows of the business segments are offset
if they are denominated in the same currency. This means
that the exchange rate risk resulting from revenue generated
in a particular currency can be offset by costs in the same
currency, even if the revenue arises from a transaction indepen-
dent of that in which the costs are incurred. As a result,
only the net exposure is subject to transaction risk. In addition,
natural hedging opportunities exist to the extent that currency
exposures of the operating businesses of individual segments
offset each other partially at Group level, thereby reducing
overall currency exposure. These natural hedges eliminate the
need for hedging to the extent of the matched exposures.
To provide an additional natural hedge against any remaining
transaction risk exposure, Daimler generally strives to
increase cash outflows in the same currencies in which the
Group has a net excess inflow.
The value at risk calculations employed:
-
express potential losses in fair values,
and
assume a 99% confidence level and a holding period
of five days.
As part of its risk management system, Daimler employs value
at risk. In performing these analyses, Daimler quantifies its
market risk exposure to changes in foreign currency exchange
rates and interest rates on a regular basis by predicting the
potential loss over a target time horizon (holding period) and
confidence level.
Daimler manages market risks to minimize the impact of
fluctuations in foreign exchange rates, interest rates and com-
modity prices on the results of the Group and its segments.
The Group calculates its overall exposure to these market risks
to provide the basis for hedging decisions, which include
the selection of hedging instruments and the determination of
hedging volumes and the corresponding periods. Decisions
regarding the management of market risks resulting from fluctu-
ations in foreign exchange rates, interest rates (asset-/liability
management) and commodity prices are regularly made by the
relevant Daimler risk management committees.
When calculating the value at risk by using the variance-
covariance approach, Daimler first computes the current market
value of the Group's financial instruments portfolio. Then
the sensitivity of the portfolio value to changes in the relevant
market risk factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on expected volatilities and correlations of these market
risk factors, which are obtained from the RiskMetricsTM data-
set, a statistical distribution of potential changes in the portfolio
value at the end of the holding period is computed. The loss
which is reached or exceeded with a probability of only 1% can
be derived from this calculation and represents the value at risk.
Daimler calculates the value at risk for exchange rate and
interest rate risk according to the variance-covariance
approach. The value at risk calculation method for commodity
hedging instruments is based on a Monte Carlo simulation.
Oriented towards the risk management standards of the
international banking industry, Daimler maintains its financial
controlling unit independent of operating Corporate Treasury
and with a separate reporting line.
Exchange rate risk
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows and earnings
to risks arising from fluctuations in exchange rates. These
risks primarily relate to fluctuations between the euro and the
US dollar, the Chinese renminbi, and the British pound.
In the operating vehicle business, the Group's exchange rate risk
primarily arises when revenue is generated in a currency that
is different from the currency in which the costs of generating
the revenue are incurred (transaction risk). When the revenue
is converted into the currency in which the costs are incurred,
it may be inadequate to cover the costs if the value of the
currency in which the revenue is generated declined in the interim
relative to the value of the currency in which the costs were
incurred. This risk exposure primarily affects the Mercedes-Benz
Cars segment, which generates a major portion of its revenue
in foreign currencies and incurs manufacturing costs primarily
in euros. The Daimler Trucks segment is also subject to
transaction risk, but to a lesser extent because of its global
production network. The Mercedes-Benz Vans and Daimler
Buses segments are also directly exposed to transaction risk,
but only to a minor degree compared to the Mercedes-Benz
Cars and Daimler Trucks segments. In addition, the Group
is indirectly exposed to transaction risk from its equity-method
investments.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow
the calculation of a possible change in the portfolio value over
the holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
risk can be determined based on this distribution as the portfolio
value loss which is reached or exceeded with a probability of 1%.
100.00
Budapest, Hungary
Mercedes-Benz Danmark A/S
Copenhagen, Denmark
100.00
Horsholm, Denmark
100.00
100.00
99.98
São Paulo, Brazil
Mercedes-Benz Desarrollo de Mercados, S. de R.L. de C.V.
Buenos Aires, Argentina
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
100.00
Mercedes-Benz Dealer Bedrijven B.V.
Villeneuve-Loubet, France
174
-279
15
Mercedes-Benz Espana, S.A.U.
100.00
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Alcobendas, Spain
Drogenbos, Belgium
Mercedes-Benz Drogenbos N.V.
1,081
23
100.00
Mercedes-Benz do Brasil Ltda.
100.00
São Paulo, Brazil
100.00
Mexico City, Mexico
100.00
The Hague, Netherlands
São Bernardo do Campo, Brazil
Mercedes-Benz CPH A/S
Mercedes-Benz Capital Rus 000
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz Corretora de Seguros Ltda
Berlin, Germany
Alcobendas, Spain
Prague, Czech Republic
Moscow, Russian Federation
Gesellschaft mit beschränkter Haftung
Mercedes-Benz CharterWay
Mercedes-Benz CharterWay España, S.A.
100.00
Mercedes-Benz Ceská republika s.r.o.
of €
in %1
Footnote
(loss) in
share
100.00
in millions
millions of €
Mercedes-Benz Côte d'Azur SAS
100.00
12
100.00
Bogota D.C., Colombia
Mercedes-Benz Compania de Financiamiento Colombia S.A.
100.00
Mem Martins, Portugal
Mercedes-Benz Comercial, Unipessoal Lda.
100.00
48
Trent, Italy
100.00
Le Chesnay, France
Mercedes-Benz CharterWay S.A.S.
5,6
13
100.00
100.00
Mercedes-Benz CharterWay S.r.l.
460
Mercedes-Benz Financial Services Singapore Ltd.
15
23
95
100.00
Utrecht, Netherlands
28
227
80.00
Seoul, South Korea
12
212
100.00
Rome, Italy
15
80.00
Hong Kong, China
15
Auckland, New Zealand
100.00
Mem Martins, Portugal
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Net income
Mercedes-Benz Financial Services Slovakia s.r.o.
15
85.00
Singapore, Singapore
15
100.00
94
Schlieren, Switzerland
100.00
Moscow, Russian Federation
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Rus O00
15
100.00
100.00
Kifissia, Greece
20
358
100.00
Melbourne, Australia
25
198
90.00
Tokyo, Japan
100.00
159
Hong Kong, China
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Hellas Vehicle
Sales and Rental SA
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz Finance China Ltd.
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
66
26
Salzburg, Austria
100.00
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
10
103
100.00
15
Prague, Czech Republic
66
233
100.00
Mississauga, Canada
100.00
Brussels, Belgium
100.00
15
Equity
100.00
Domicile, Country
2,048
75.00
Beijing, China
100.00
Mem Martins, Portugal
Mercedes-Benz Accessories GmbH
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
Mercedes-Benz (Thailand) Limited
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
Mercedes-Benz (China) Ltd.
5,6
459
100.00
Affalterbach, Germany
13
108
627
15
Bangkok, Thailand
100.00
100.00
Antwerp, Belgium
Mercedes-Benz Antwerpen N.V.
3
5,6
100.00
Düsseldorf, Germany
100.00
Mercedes-Benz AG & Co. Grundstücksvermietung Objekte
Leipzig und Magdeburg KG
100.00
Stuttgart, Germany
100.00
Yangzhou, China
15
107
294
6
Brixworth, United Kingdom
Mercedes AMG High Performance Powertrains Ltd
Mercedes-AMG GmbH
5,6
Hamburg, Germany
5,6
100.00
Kirchheim-Heimstetten, Germany
MBarc Credit Canada Inc.
Li-Tec Battery GmbH
Koppieview Property (Pty) Ltd
100.00
Invema Assessoria Empresarial Ltda
Intelligent Apps GmbH
Henne-Unimog GmbH
GmbH & Co. OHG
5
100.00
Schönefeld, Germany
Bratislava, Slovakia
Intrepid Insurance Company
Mercedes-Benz Argentina S.A.
31
Farmington Hills, USA
100.00
Arnstadt, Germany
MDC Technology GmbH
5,6
100.00
Kölleda, Germany
MDC Power GmbH
5,6
100.00
5,6
100.00
Kamenz, Germany
100.00
Zwartkop, South Africa
São Paulo, Brazil
100.00
Mississauga, Canada
Capital
Buenos Aires, Argentina
Mercedes-Benz Asia GmbH
100.00
Saarbrücken, Germany
100.00
Berlin, Germany
100.00
Moscow, Russian Federation
100.00
Warsaw, Poland
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Polska S.A.
100.00
Vienna, Austria
Mercedes-Benz Bank GmbH
Brussels, Belgium
100.00
5,6
15
Mercedes-Benz Bordeaux S.A.S.
Name of the Company
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
276
89
114
100.00
Toronto, Canada
6
100.00
Mercedes-Benz Canada Inc.
Mercedes-Benz Brooklands Limited
100.00
Budapest, Hungary
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
100.00
Begles, France
Milton Keynes, United Kingdom
1,732
100.00
Stuttgart, Germany
Wilmington, USA
83
1,190
100.00
Beijing, China
147
538
0.00
100.00
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2014-A
Mercedes-Benz Auto Lease Trust 2015-A
Mercedes-Benz Auto Lease Trust 2015-B
Mercedes-Benz Auto Receivables Trust 2013-1
100.00
Utrecht, Netherlands
5,6
100.00
Stuttgart, Germany
Mercedes-Benz Assuradeuren B.V.
Melbourne, Australia
100.00
3
0.00
3
0.00
Wilmington, USA
Mercedes-Benz Bank AG
Mercedes-Benz Auto Receivables Trust 2015-1
3
0.00
Wilmington, USA
Wilmington, USA
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
3
Mercedes-Benz Auto Receivables Trust 2014-1
75.00
15
100.00
Alcobendas, Spain
Mercedes-Benz Renting, S.A.
15
11
93
100.00
Mem Martins, Portugal
Mercedes-Benz Portugal, S.A.
15
28
73
100.00
Warsaw, Poland
Mercedes-Benz Polska Sp. z o.O.
100.00
100.00
Mercedes-Benz Research & Development North America, Inc.
Wilmington, USA
100.00
Mercedes-Benz Russia AO
100.00
Bucharest, Romania
100.00
Rome, Italy
100.00
Centurion, South Africa
Port-Marly, France
100.00
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail Group UK Limited
Madrid, Spain
100.00
Salzburg, Austria
100.00
Stuttgart, Germany
-
100.00
Dortmund, Germany
Mercedes-Benz Molsheim S.A.S.
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Mercedes-Benz Minibus GmbH
100.00
100.00
Mercedes-Benz Milano S.p.A.
11
16
100.00
Mexico City, Mexico
3
-
Milan, Italy
Moscow, Russian Federation
4
Molsheim, France
Ninove, Belgium
10
43
100.00
Auckland, New Zealand
15
31
5,6
5,6
207
Utrecht, Netherlands
Mercedes-Benz Paris SAS
Mercedes-Benz Österreich GmbH
Mercedes-Benz Ninove N.V.
Mercedes-Benz New Zealand Ltd
Mercedes-Benz Nederland B.V.
100.00
100.00
0.00
100.00
Mercedes-Benz Schweiz AG
Mercedes-Benz UK Limited
100.00
Warsaw, Poland
Mercedes-Benz Ubezpieczenia Sp. z o.o.
89
223
100.00
Vance, USA
155
933
66.91
100.00
Istanbul, Turkey
Nijkerk, Netherlands
45
Milton Keynes, United Kingdom
100.00
236
61
100.00
100.00
Herblay, France
Genas, France
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz V.I. Lyon SAS
100.00
116
Vendeville, France
15
136
230
100.00
Wilmington, USA
Mercedes-Benz USA, LLC
15
Mercedes-Benz V.I. Lille SAS
51.00
Taipei, Taiwan
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
100.00
Rome, Italy
100.00
Petaling Jaya, Malaysia
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Servizi Assicurativi Italia S.p.A.
100.00
Istanbul, Turkey
Alcobendas, Spain
Bucharest, Romania
130
47
156
100.00
Schlieren, Switzerland
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
100.00
120
100.00
Sosnowiec, Poland
Mercedes-Benz Türk A.S.
Mercedes-Benz Technical Center Nederland B.V.
Mercedes-Benz Taiwan Ltd.
Grundstücksverwaltungsgesellschaft Henne-Unimog
27
62
100.00
Mercedes-Benz Sosnowiec Sp. z o.o.
Malmö, Sweden
15
109
540
100.00
Pretoria, South Africa
Mercedes-Benz South Africa Ltd
100.00
Mercedes-Benz Sverige AB
Centurion, South Africa
Wilmington, USA
231
100.00
Kifissia, Greece
-44
-151
60.00
Brackley, United Kingdom
100.00
Gent, Belgium
15
54
321
100.00
Montigny-le-Bretonneux, France
Mercedes-Benz India Private Limited
Mercedes-Benz Hong Kong Limited
Hong Kong, China
100.00
77
10
277
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
100.00
Taipei, Taiwan
100.00
Utrecht, Netherlands
Mercedes-Benz Hellas S.A.
100.00
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Broker S.R.L.
47
212
100.00
Pune, India
Voluntari, Romania
Mercedes-Benz Grand Prix Ltd.
Mercedes-Benz Gent N.V.
Mercedes-Benz France S.A.S.
100.00
Farmington Hills, USA
15
146
692
100.00
Milton Keynes, United Kingdom
2,413
15
Taipei, Taiwan
Mercedes-Benz Financial Services USA LLC
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services Taiwan Ltd.
15
35
115
100.00
Domicile, Country
419
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
100.00
Malmö, Sweden
Mercedes-Benz Försäljnings AB
15
37
182
100.00
15
Istanbul, Turkey
100.00
Istanbul, Turkey
100.00
Malmö, Sweden
100.00
Copenhagen, Denmark
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
65
Capital
share
in %1
100.00
Ludwigsfelde, Germany
5,6
100.00
Stuttgart, Germany
100.00
Taipei, Taiwan
15
15
15
100.00
Warsaw, Poland
100.00
Budapest, Hungary
100.00
41
5,6
Luxembourg, Luxembourg
90.00
100.00
Kecskemét, Hungary
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mercedes-Benz Master Owner Trust
Mercedes-Benz Manufacturing Hungary Kft.
100.00
Bangkok, Thailand
Bucharest, Romania
Mercedes-Benz Manufacturing (Thailand) Limited
Wilmington, USA
130
150
51.00
Kuala Lumpur, Malaysia
100.00
Lyon, France
100.00
100.00
Zagreb, Croatia
5,6
Seoul, South Korea
123
528
100.00
Tokyo, Japan
15
28
51.00
350
Rome, Italy
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Mercedes-Benz Leasing Co., Ltd.
Mercedes-Benz Korea Limited
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Japan Co., Ltd.
Footnote
Net income
(loss) in
millions of €
of €
100.00
Equity
in millions
182
Bangkok, Thailand
511
100.00
Stuttgart, Germany
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Luxembourg S.A.
Mercedes-Benz Ludwigsfelde GmbH
72
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Lyon S.A.S.
100.00
Barueri, Brazil
Mercedes-Benz Leasing do Brasil Arrendamento
Mercantil S.A.
65.00
Beijing, China
100.00
Mercedes-Benz Leasing GmbH
OHG
DAIMLER SERVICIOS CORPORATIVOS MEXICO
14
Audit of financial statements
2014
2015
In millions of euros
Accountant fees
E.90
Fees for other attestation services include in particular the
review of the interim IFRS financial statements (2015:
€5 million; 2014: €5 million), the audit of the internal control
system (2015: €3 million; 2014: €3 million), as well as project-
related reviews connected with the annual financial statements
and performed in the context of the introduction and further
development of IT systems (2015: €6 million; 2014: €5 million).
The annual audit fees are for the audit of the consolidated
financial statements and the company financial statements
of Daimler AG and the subsidiaries included in the Group's
consolidated financial statements.
The shareholders of Daimler AG elected KPMG AG Wirt-
schaftsprüfungsgesellschaft as the external auditor
at the Annual Shareholders' Meeting held on April 1, 2015.
Table 7 E.90 shows the fees paid for services provided by
KPMG AG Wirtschaftsprüfungsgesellschaft and the companies
of the worldwide KPMG group.
38. Principal accountant fees
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25
272
54.7
3.6
3.5
Remuneration of the Supervisory Board
43.7
51.2
2.8
3.5
Post-employment benefits (service cost)
Termination benefits
20.7
21.1
47.3
a long-term incentive effect
24
Wirtschaftsprüfungsgesellschaft
daimler-declaration-en-12-2015.pdf.
The Board of Management and the Supervisory Board
of Daimler AG have issued a declaration pursuant to
Section 161 of the German Stock Corporation Act (AktG)
and have made it permanent available to their shareholders
on Daimler's website at : http://www.daimler.com/
documents/company/corporate-governance/declarations/
German Corporate Governance Code
39. Additional information
2
2
10
12
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
4
thereof KPMG AG
11
1
1
thereof KPMG AG
Tax consulting
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
14
16
Other attestation services
10
10
Other services
Third-party companies
Variable remuneration with
Short-term variable remuneration
47
221
281
25
31
Joint operations
6
8
195
158
134
44
91
497
Joint ventures
16
51
726
884
28
69
2,093
2,922
thereof BBAC
646
Mid-term variable remuneration
35
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 271
6.2
8.8
5.8
8.7
8.2
9.1
Remuneration of the Board of Management
2014
2015
Fixed remuneration
In millions of euros
22
Remuneration of the members of the Board of Management
and the Supervisory Board
Expenses for variable remuneration with long-term incentive
effect, as shown in table 7 E.89, result from the ongoing
measurement at fair value at each balance sheet date of all rights
granted and not yet due under the Performance Phantom
Share Plans (PPSP). In 2015, the active members of the Board
of Management were granted 147,170 (2014: 153,912) phantom
shares in connection with the PPSP; the fair value of these
phantom shares at the grant date was €12.3 million (2014:
€10.1 million). According to Section 314 Subsection 1 Number 6a
of the German Commercial Code (HGB) the overall remu-
neration granted to the members of the Board of Management,
excluding service cost resulting from entitlements to post-
employment benefits, amounted to €38.8 million (2014: €29.9
million). See Note 21 for additional information on share-
based payment of the members of the Board of Management.
of Management and the Supervisory Board who were active
as of December 31, 2015, affected net profit for the year
ended December 31 as shown in table 71 E.89.
37. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board
E.89
Information regarding the remuneration of the members
of the Board of Management and of the Supervisory
Board is disclosed on an individual basis in the Remuneration
Report, which is part of the Management Report.
Management Report from page 122
The payments made in 2015 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €15.5 million (2014: €16.8 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €235.2 million as of December 31, 2015
(2014: €263.0 million).
No advance payments or loans were made to members
of the Board of Management or to the members of the
Supervisory Board of Daimler AG.
See Note 37 for information on the remuneration of board
members.
Board of Management and Supervisory Board members and
close family members of these board members may also
purchase goods and services from Daimler AG or its subsidiaries
as customers. When such business relationships exist,
transactions are concluded on the basis of customary market
conditions.
Throughout the world, the Group has business relationships with
numerous entities that are customers and/or suppliers of
the Group. Those customers and/or suppliers include companies
that have a connection with some of the members of the
Board of Management or of the Supervisory Board and close
family members of these board members of Daimler AG
or its subsidiaries.
Board members
The members of the Supervisory Board are solely granted
short-term benefits for their board and committee activities,
except for remuneration and other benefits paid to those
members representing the employees in accordance with their
contracts of employment. No remuneration was paid for services
provided personally beyond board and committee activities,
in particular for advisory or agency services, in 2015 or 2014.
At December 31, 2015, the Group was a shareholder of the
companies included in table 7 E.91 that meet the criteria
of a significant third-party company as defined by the German
Corporate Governance Code
Information on investments
The statement of investments of Daimler AG pursuant to
Sections 285 and 313 of the German Commercial Code (HGB)
is presented in table 7 E.92. In prior years, for information
regarding equity and earnings, values from local financial state-
ments were generally used. As of the financial statements for
the year under review, IFRS values are used for fully consolidated
companies. The change to IFRS values allows a better com-
parison of the values. Information on equity and earnings and
information on investments pursuant to Section 285 No. 11
fourth part of the Sentence and/or Section 313 Subsection 2
No. 4 Sentence 2 of the HGB is omitted pursuant to Section
286 Subsection 3 Sentence No. 1 and/or Section 313
Subsection 2 No. 4 Sentence 3 of the HGB to the extent that
such information is of minor relevance for a fair presentation
of the profitability, liquidity and capital resources, and financial
position of Daimler AG. In addition, the statement of invest-
ments indicates which consolidated companies make use of
the exemption pursuant to Section 264 Subsection 3 of the
HGB and/or Section 264b of the HGB (footnote 5). The consoli-
dated financial statements of Daimler AG release those
subsidiaries from the requirements that would otherwise apply.
Vancouver, Canada
DA Investments Co. LLC
Coventry Lane Holdings, L.L.C.
Conemaugh Hydroelectric Projects, Inc.
CLIDET NO 1048 (Proprietary) Limited
CARS Technik & Logistik GmbH
car2go UK Ltd.
car2go Sverige AB
car2go Österreich GmbH
car2go Nederland B.V.
car2go N.A. LLC
100.00
car2go Italia S.R.L.
car2go Group GmbH
car2go Europe GmbH
car2go Deutschland GmbH
car2go Danmark A/S
car2go China Co., Ltd.
car2go Canada Ltd.
100.00
São Bernardo do Campo, Brazil
Campo Largo Comercio de Veículos e Peças Ltda.
100.00
Milton Keynes, United Kingdom
car2go Iberia S.L.
100.00
4
Beijing, China
100.00
Utrecht, Netherlands
-24
12
100.00
Wilmington, USA
-10
2
100.00
Milan, Italy
100.00
-13
Madrid, Spain
100.00
Leinfelden-Echterdingen, Germany
75.00
Leinfelden-Echterdingen, Germany
-17
6
100.00
Leinfelden-Echterdingen, Germany
100.00
Copenhagen, Denmark
100.00
5,6
São Paulo, Brazil
15
22
1 As of December 31, 2015.
3,300
1,890
37,491
24,476
3.1
Japan
France
3.1
Tokyo,
Boulogne-Billancourt,
Renault SA2 Company Ltd.³
2 Based on IFRS consolidated financial statements
Nissan Motor
54
4
10
Net profit (in millions of euros)4
Total equity (in millions of euros) 4
Equity interest (in %)¹
Headquarters of the company
Name of the company
Third-party companies
E.91
Wirtschaftsprüfungsgesellschaft
44
for the year ended December 31, 2014.
3 Based on national consolidated financial statements
for the year ended March 31, 2015.
337
100.00
São Paulo, Brazil
100.00
100.00
Wilmington, USA
Wilmington, USA
Brooklands Estates Management Limited
Belerofonte Empreendimentos Imobiliários Ltda.
Banco Mercedes-Benz do Brasil S.A.
AutoGravity Corporation
Auto Testing Company, Inc.
I. Consolidated subsidiaries
Footnote
(loss) in
millions of €
of €
Net income
Equity
in millions
Capital
share
in %1
Domicile, Country
Name of the Company
Statement of investments of Daimler AG
E.92
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
4 Excluding non-controlling interests.
65
Vienna, Austria
96
936
similar obligations4
and liabilities from pensions and
Unallocated financial liabilities
47
283
151,750
174,688
Income tax liabilities4
Total of segments' liabilities
189,635
217,166
Other corporate items and eliminations
Group assets
-17,045
Other corporate items and eliminations
13,886
16,110
similar obligations4
assets from pensions and
(including liquidity) and
Unallocated financial assets
4,028
3,338
Income tax assets4
-15,999
678
Group liabilities
9,661
20,449
22,001
thereof Germany
40,519
44,025
43,722
49,570
Western Europe
2014
2015
2014
5,672
2015
Revenue
In millions of euros
Revenue and non-current assets by region
E.86
3 Mainly comprises the carrying amount of the investment in BAIC Motor.
4 Industrial business.
2 Amortization of capitalized borrowing costs is not considered in the
internal performance measure "EBIT” but is included in cost of sales.
1 Mainly comprises the Group's proportionate share of profits and losses
of BAIC Motor.
145,051
162,542
-16,407
-18,101
Non-current assets
34,981
772
Carrying amount of
Remeasurement of the
Equity-method investments
investment in RRPSH
Revenue from external customers and non-current assets
by region are shown in table 7 E.86.
Revenue and non-current assets by region
In 2014, the line item other corporate items comprises
expenses of €600 million in connection with the ongoing EU
Commission antitrust proceedings concerning European
commercial vehicle manufacturers as well as further expenses
in connection with legal proceedings. This line item also
includes expenses of €212 million from the hedging of the Tesla
share price and income of €88 million from the sale of the
Tesla shares, as well as expenses of €118 million from the
measurement of the RRPSH put option.
Reconciliations of the total segment amounts to the respective
items included in the consolidated financial statements are
shown in table 7 E.85.
Reconciliations
10,752
28
718
investment in Tesla
1,006
13,215
2014
2015
Result from the disposal of the
Total of segments' profit (EBIT)
In millions of euros
Reconciliation to Group figures
E.85
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
268
5,7
9,997
equity-method investments³
Other income from
74
187,042
213,991
Total of segments' assets
10,173
12,744
Profit before income taxes
-715
-602
Interest expense
145
170
equity-method investments'
Interest income
-10
borrowing costs²
Amortization of capitalized
13,186
Group EBIT
42
50
Eliminations
-1,039
-153
Other corporate items
-9
32,882
NAFTA
47,653
In 2015, the associated company BAIC Motor acquired a 35%
interest in the fully consolidated Mercedes-Benz Leasing Co.,
Ltd. (MBLC) in the context of a capital increase. Daimler
continues to be the main shareholder with an interest of 65%.
The purchases of goods and services shown in table 7 E.88
were primarily from MBtech Group GmbH & Co. KGaA
(MBtech Group). MBtech Group develops, integrates and tests
components, systems, modules and vehicles worldwide.
Until the sale of the company in 2014, significant transactions
of goods and services also took place with Rolls-Royce
Power Systems AG (RRPS), which is a subsidiary of RRPSH.
Further information on RRPSH is also provided in Note 13.
A large proportion of the Group's sales of goods and services
with associated companies as well as receivables results
from business relations with Beijing Benz Automotive Co., Ltd.
(BBAC). See Note 13 for further information on BBAC.
Associated companies
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies, joint ventures
and joint operations, and are shown in table 7 E.88.
Related parties are deemed to be associated companies,
joint ventures, joint operations and unconsolidated subsidiaries,
as well as persons who exercise a significant influence
on the financial and business policy of the Daimler Group.
The latter category includes all persons in key positions
and their close family members. At the Daimler Group, those
persons are the members of the Board of Management
and of the Supervisory Board.
36. Related party relationships
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
270
2 Unless allocated to the segments
3 Industrial business
Joint ventures
1 Equity
40,779
41,644
1,156
839
2,700
3,772
618
770
Equity method investments²
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
36,305
36,263
Net assets of the segments
7,154
Significant sales of goods and services took place with Fujian
Benz Automotive Co., Ltd. (FBAC), as well as with Mercedes-
Benz Trucks Vostok 000, a joint venture established with
Kamaz PAO, another of the Group's associated companies.
The Mercedes-Benz Trucks Vostok (MBTV) and Fuso Kamaz
Trucks Rus (FKTR) joint ventures, which had previously operated
separately, were merged in 2015 as Mercedes-Benz Trucks
Vostok (MBTV). MBTV was renamed into DAIMLER KAMAZ
RUS OOO (DK RUS) on January 21, 2016.
Joint operations
316
367
2,433
3,192
Associated companies
Payables
At December 31,
2015
2014
At December 31,
2015
2014
2014
Receivables
2015
2014
In connection with its 45% equity interest in Toll Collect GmbH,
Daimler has issued guarantees which are not shown in
table 7 E.88 (€100 million at December 31, 2015 and at
December 31, 2014).
In millions of euros
and other expense
and other income
and services
Purchases of goods
Sales of goods
Transactions with related parties
E.88
In 2015 and 2014, the Group made contributions of
€1,902 million and €3,121 million to its external funds
to cover pension and other post-employment benefits.
See also Note 22 for further information.
Contributions to plan assets
Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as
well as significant transactions in the years 2015 and 2014.
Joint operations primarily relate to significant business trans-
actions with Beijing Mercedes-Benz Sales Service Co., Ltd.
(BMBS), which provides advisory and other services relating
to marketing, sales and distribution in the Chinese market.
2015
8,859
982
906
149,467
2,983
3,042
18,679
18,500
Other markets
79
100
13,294
14,684
thereof China
129,872
1,859
29,446
33,744
Asia
18,161
21,878
33,310
41,920
thereof United States
20,238
24,105
38,025
2,161
73,333
65,599
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,742
1,479
9,313
7,974
17,114
17,045
Mercedes-Benz Cars
Daimler Financial Services¹
Daimler Buses
Mercedes-Benz Vans
Daimler Trucks
In millions of euros
2014
2015
Average net assets
E.87
The calculation of basic and diluted earnings per share is
based on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014,
dilutive effects no longer exist. The profit attributable to share-
holders of Daimler AG (basic and diluted) amounts to
€8,424 million (2014: €6,962 million). The weighted average
number of shares outstanding (basic and diluted) amounts
to 1,069.8 million (2014: 1,069.8 million).
35. Earnings per share
The objective of capital management is to increase value
added among other things by optimizing the cost of capital.
This is achieved on the one hand by the management of
the net assets, for instance by optimizing working capital, which
is within the operational responsibility of the segments.
In addition, taking into account legal regulations, Daimler strives
to optimize the costs and risks of its capital structure and,
consequently, the cost of capital, with due consideration
of applicable law. Examples of this include a balanced relation-
ship between equity and financial liabilities as well as an
appropriate level of liquidity, oriented towards the operational
requirements.
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's cost
of capital comprises the cost of equity as well as the costs
of debt and pension obligations of the industrial business; in
addition, the expected returns on liquidity and on the plan
assets of the pension funds of the industrial business are consid-
ered with the opposite sign. In the reporting period, the cost
of capital used for our internal capital management amounted
to 8% after taxes.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning
and the end of the quarter and are shown in table 7 E.87.
"Net assets" and "value added” represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The industrial
segments are accountable for the operational net assets; all
assets, liabilities and provisions which they are responsible
for in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Financial Services is
on an equity basis, in line with the usual practice in the banking
business. Net assets at Group level additionally include
assets and liabilities from income taxes as well as other
corporate items and eliminations.
34. Capital management
269
|
764
100.00
and services
100.00
100.00
Stuttgart, Germany
5
-17
64
100.00
Kirchheim unter Teck, Germany
100.00
San Juan Ixtacala, Mexico
100.00
Toluca, Mexico
1,115
22
100.00
Detroit, USA
15
259
193
100.00
Detroit, USA
100.00
Farmington Hills, USA
100.00
Mexico City, Mexico
64
48
5,6
100.00
EvoBus Portugal, S.A.
EvoBus Polska Sp. z o.o.
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
Sámano, Spain
5,6
251
100.00
Kloten, Switzerland
Kirchheim unter Teck, Germany
Sarcelles, France
100.00
Koege, Denmark
100.00
Prague, Czech Republic
100.00
Kobbegem-Asse, Belgium
100.00
Wiener Neudorf, Austria
100.00
Coventry, United Kingdom
100.00
EvoBus Sverige AB
2,308
Madrid, Spain
100.00
Farmington Hills, USA
1,543
-10
100
100.00
Portland, USA
2,337
100.00
Portland, USA
100.00
Seoul, South Korea
Farmington Hills, USA
15
30
100.00
Mississauga, Canada
100.00
Beijing, China
91
214
100.00
Singapore, Singapore
100.00
Mexico City, Mexico
65
100.00
100.00
100.00
5,6
100.00
Berlin, Germany
5,6
3,866
100.00
Schönefeld, Germany
5, 6, 15
4,125
100.00
Stuttgart, Germany
Farmington Hills, USA
15
Mexico City, Mexico
100.00
Wilmington, USA
100.00
Ladson, USA
67.55
Hong Kong, China
48
561
100.00
Milton Keynes, United Kingdom
100.00
Wolica, Poland
100.00
Mem Martins, Portugal
170
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Delta OHG
5
23
23
187
100.00
Schönefeld, Germany
15
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5
35
151
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 7 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Beta OHG
Alpha 6 OHG
5
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
166
Stockholm, Sweden
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co.
Gamma 3 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 2 OHG
Epsilon OHG
5
144
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 1 OHG
5
60
69
279
100.00
Schönefeld, Germany
14
5
13
215
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 2 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5
334
2,097
5
100.00
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
100.00
Portland, USA
84
24
100.00
Alpha 1 OHG
Freightliner Custom Chassis Corporation
GlobeSherpa Inc.
100.00
Vetlanda, Sweden
100.00
Schönefeld, Germany
Alpha 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
5
34
592
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Net income Footnote
(loss) in
millions of €
of €
in %1
Equity
in millions
Capital
share
275
Domicile, Country
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Alpha 4 OHG
55
48
48
403
100.00
100.00
Farmington Hills, USA
Gaffney, USA
100.00
5,6
20
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Daimler Fleet Management GmbH
15
30
116
100.00
Daimler Fleet Management Singapore Pte. Ltd.
Mexico City, Mexico
15
14
86
100.00
Kawasaki, Japan
100.00
Chennai, India
5,6
1,894
100.00
Stuttgart, Germany
Daimler Financial Services México, S. de R.L. de C.V.
100.00
Singapore, Singapore
Daimler Fleet Management South Africa (Pty.) Ltd.
Daimler Fleet Management UK Limited
100.00
Schönefeld, Germany
361
1,373
100.00
Beijing, China
Daimler Insurance Services UK Limited
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services GmbH
Daimler Insurance Agency LLC
Daimler India Commercial Vehicles Private Limited
100.00
Daimler Grund Services GmbH
5,6
100.00
Stuttgart, Germany
100.00
Istanbul, Turkey
Daimler FleetBoard GmbH
Daimler Fleet Services A.S.
100.00
Milton Keynes, United Kingdom
65.00
Centurion, South Africa
Daimler Greater China Ltd.
Wilmington, USA
5,6
Berlin, Germany
Valencia, Venezuela
Oriskany, USA
Toronto, Canada
Montreal, Canada
Daimler Canada Finance Inc.
Daimler Buses North America Ltd.
Daimler Buses North America Inc.
Daimler Automotive de Venezuela C.A.
Daimler Australia/Pacific Pty. Ltd.
Daimler AC Leasing, d.o.o.
100.00
Farmington Hills, USA
DAF Investments, Ltd.
100.00
Ljubljana, Slovenia
Wilmington, USA
Farmington Hills, USA
100.00
Farmington Hills, USA
100.00
Centurion, South Africa
5,6
100.00
Wiedemar, Germany
5,6
100.00
Milton Keynes, United Kingdom
100.00
52.00
Melbourne, Australia
100.00
-10
13
100.00
Bogota D.C., Colombia
100.00
Farmington Hills, USA
Daimler Financial Services Japan Co., Ltd.
Daimler Financial Services India Private Limited
Daimler Financial Services AG
Daimler Finance North America LLC
Daimler Export and Trade Finance GmbH
Daimler Colombia S. A.
Daimler Capital Services LLC
100.00
Halifax, Canada
Daimler Canada Investments Company
7
239
100.00
100.00
15
16
34
100.00
100.00
5,6
Chennai, India
100.00
-120
EvoBus Ibérica, S.A. (Sociedad Unipersonal)
EvoBus GmbH
EvoBus France S.A.S.
EvoBus Danmark A/S
EvoBus Ceská republika s.r.o.
EvoBus Belgium N.V.
EvoBus Austria GmbH
EvoBus (U.K.) Ltd.
EvoBus (Schweiz) AG
EHG Elektroholding GmbH
Deutsche Accumotive GmbH & Co. KG
EvoBus Nederland B.V.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Detroit Diesel Remanufacturing LLC
Detroit Diesel Corporation
DCS UTI LLC, Mercedes Series
Daiprodco Mexico S. de R.L. de C.V.
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daimspain S.L.
Daimler Vans USA, LLC
Daimler Vans Manufacturing, LLC
Daimler Vans Hong Kong Limited
Daimler Trust Leasing LLC
Daimler UK Limited
Daimler Trust Leasing Conduit LLC
Daimler Trust Holdings LLC
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Daimler Trucks Remarketing Corporation
Utrecht, Netherlands
836
Berlin, Germany
10
46
100.00
100.00
Luxembourg, Luxembourg
5,6
74.90
Bremen, Germany
5,6
100.00
100.00
Stuttgart, Germany
93
100.00
Beijing, China
100.00
Newark, USA
15
1,993
10,963
100.00
Wilmington, USA
2
26
Daimler Trucks North America LLC
EvoBus Italia S.p.A.
Daimler Trucks Canada Ltd.
Farmington Hills, USA
12
100.00
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
Wilmington, USA
Daimler Mexico, S.A. de C.V.
Daimler Motors Investments LLC
Daimler Manufactura, S. de R.L. de C.V.
Daimler Investments US Corporation
100.00
100.00
Daimler International Finance B.V.
100.00
Milton Keynes, United Kingdom
100.00
Tokyo, Japan
5,6
100.00
Farmington Hills, USA
Daimler Trucks Korea Ltd.
Stuttgart, Germany
100.00
Utrecht, Netherlands
274
377
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler Trucks and Buses (China) Ltd.
Daimler South East Asia Pte. Ltd.
S. DE R.L. DE C.V.
Daimler Retail Receivables LLC
Daimler Real Estate GmbH
Daimler Re Insurance S.A. Luxembourg
Daimler Re Brokers GmbH
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler North America Finance Corporation
Daimler North America Corporation
Daimler Nederland B.V.
Footnote
Daimler Parts Brand GmbH
millions of €
Name of the Company
Domicile, Country
Capital
share
Equity
Net income
-188
(loss) in
in %1
of €
in millions
100.00
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Research and
39
Bangalore, India
100.00
Stuttgart, Germany
Mercedes-Benz Project Consult GmbH
100.00
Shanghai, China
15
6
6
100.00
Stuttgart, Germany
Mercedes-Benz Museum GmbH
100.00
Budapest, Hungary
Mercedes-Benz Hungária Kft.
99.99
Cebu City, Philippines
Mercedes-Benz Group Services Philippines, Inc.
12
100.00
Gaggenau, Germany
100.00
6
Development India Private Limited
Vienna, Austria
Bratislava, Slovakia
Berlin, Germany
100.00
Raaba, Austria
Zurich, Switzerland
Kleinostheim, Germany
Warsaw, Poland
Milan, Italy
myTaxi Swiss GmbH
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
MYTAXI ITALIA S.R.L.
mytaxi Austria GmbH
mytapp Portugal Unipessoal LDA
Montajes y Estampaciones Metálicas, S.L.
Monarch Cars (Tamworth) Ltd.
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
MercedesService Card Beteiligungsgesellschaft mbH
Mercedes-Benz Vertriebsgesellschaft mbH
100.00
Valencia, Venezuela
100.00
Novi Beograd, Serbia
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Venezuela S.A.
Mercedes-Benz Srbija i Crna Gora d.o.o.
Mercedes-Benz Solihull Ltd.
51.00
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz GastroService GmbH
6
100.00
Le Port, France
6
100.00
Stuttgart, Germany
100.00
Kirchheim unter Teck, Germany
100.00
São Paulo, Brazil
11, 13
30
1,211
100.00
96.00
Stuttgart, Germany
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Ulm, Germany
100.00
Horsholm, Denmark
100.00
100.00
51.00
6
Wilmington, USA
100.00
Moscow, Russian Federation
100.00
Stuttgart, Germany
Cairo, Egypt
Mercedes-Benz Egypt S.A.E.
100.00
Maastricht, Netherlands
6
100.00
Stuttgart, Germany
100.00
São Bernardo do Campo, Brazil
3,7
100.00
Düsseldorf, Germany
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Consulting GmbH
Mercedes-Benz Adm. Consorcios Ltda.
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Baden-Baden und Dresden OHG
6
100.00
Neuhausen auf den Fildern, Germany
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
100.00
Milton Keynes, United Kingdom
100.00
Arvidsjaur, Sweden
100.00
São Paulo, Brazil
100.00
Mercedes-Benz G GmbH
Toyama, Japan
14
Milton Keynes, United Kingdom
IV. Joint ventures accounted for using the equity method
North America Fuel Systems Remanufacturing LLC
EM-motive GmbH
AFCC Automotive Fuel Cell Cooperation Corp.
III. Joint operations accounted for using the equity method
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
6
Footnote
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
Beijing Foton Daimler Automotive Co., Ltd
100.00
Vermögensverwaltungsgesellschaft Daimler Atlanta mbH
Woking Motors Limited
51.00
Schlieren, Switzerland
T.O.C. (Schweiz) AG
100.00
100.00
Maribor, Slovenia
Cugir, Romania
STARKOM d.o.o.
STAR TRANSMISSION SRL
99.50
Cairo, Egypt
Stuttgart, Germany
Daimler Kamaz Trucks Holding GmbH
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
9
Garcia, Mexico
6
-28
218
50.00
Fuzhou, China
25.10
Munich, Germany
50.00
Vienna, Austria
8
745
50.00
Beijing, China
9
13
39
50.00
Kentwood, USA
50.00
Hildesheim, Germany
50.10
Burnaby, Canada
6
SelecTrucks of Atlanta LLC
Polomex, S.A. de C.V.
100.00
100.00
Sebes, Romania
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Washington D.C., USA
100.00
London, United Kingdom
100.00
Hamburg, Germany
100.00
Ring Garage AG Chur
R.T.C. Management Company Limited
PT Fuso Trucks Indonesia
Ebina, Japan
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
myTaxi USA Inc.
myTaxi UK Ltd.
myTaxi UG
100.00
100.00
100.00
100.00
Lisbon, Portugal
51.00
Esparraguera, Spain
100.00
PABCO Co., Ltd.
100.00
Schönefeld, Germany
100.00
100.00
Mauá, Brazil
100.00
Stuttgart, Germany
Star Egypt For Import LLC
Star Assembly SRL
Siebte Vermögensverwaltungsgesellschaft DVB mbH
SelecTrucks Comércio de Veículos Ltda
Ruth Verwaltungsgesellschaft mbH
millions of €
of €
in %1
(loss) in
in millions
Net income
Equity
Capital
share
Domicile, Country
Name of the Company
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
280
100.00
Chur, Switzerland
88.89
Bicester, United Kingdom
100.00
Jakarta, Indonesia
100.00
100.00
P.T. Star Engines Indonesia
100.00
Leinfelden-Echterdingen, Germany
15
100.00
Logan Township, USA
100.00
Tramagal, Portugal
267
1,869
89.29
Kawasaki, Japan
100.00
Toronto, Canada
100.00
100.00
100.00
Wemmel, Belgium
100.00
Wavre, Belgium
100.00
Braine-l'Alleud, Belgium
100.00
Warsaw, Poland
21
86
70.00
Ho Chi Minh City, Vietnam
Farmington Hills, USA
52
Stuttgart, Germany
100.00
-14
21
100.00
Austin, USA
100.00
Lima, Peru
100.00
Bogor, Indonesia
100.00
Bogor, Indonesia
100.00
Jakarta, Indonesia
100.00
Paris, France
100.00
Kirchheim unter Teck, Germany
100.00
Mechelen, Belgium
100.00
Erembodegem, Belgium
100.00
Barcelona, Spain
100.00
Jacksonville, USA
100.00
Farmington Hills, USA
5,6
5,6
5,6
Bryanston, South Africa
100.00
5,6
SelecTrucks of Toronto, Inc.
SelecTrucks of America LLC
Sandown Motor Holdings (Pty) Ltd
RideScout LLC
Renting del Pacífico S.A.C.
P.T. Mercedes-Benz Indonesia
P.T. Mercedes-Benz Distribution Indonesia
ogotrac S.A.S.
NuCellSys GmbH
N.V. Mercedes-Benz Mechelen
N.V. Mercedes-Benz Aalst
myTaxi Iberia SL
Setra of North America, Inc.
MVSA COMPANY, INC.
moovel Group GmbH
Mitsubishi Fuso Truck of America, Inc.
moovel GmbH
Mitsubishi Fuso Truck and Bus Corporation
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
MFTA Canada, Inc.
Mercedes-Benz Wholesale Receivables LLC
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz V.I. Toulouse SAS
Mercedes-Benz Versicherung AG
Mercedes-Benz Vertrieb NFZ GmbH
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
26.00
Name of the Company
Multistate LIHTC Holdings III Limited Partnership
Silver Arrow S.A.
smart France S.A.S.
smart Vertriebs gmbh
100.00
Stuttgart, Germany
6
100.00
Stuttgart, Germany
100.00
Fenouillet, France
Footnote
millions of €
of €
in %1
(loss) in
in millions
Net income
Equity
Capital
share
Domicile, Country
6353 Sunset Boulevard, Inc.
3218095 Nova Scotia Company
Western Star Trucks Sales, Inc
Trona Cogeneration Corporation
Tróia Empreendimentos Imobiliários Ltda
Thomas Built Buses, Inc.
Thomas Built Buses of Canada Limited
Sumperská správa majetku k.s.
Sterling Truck Corporation
Starexport Trading S.A.
Stuttgart, Germany
62.62
Portland, USA
100.00
Capital
share
Domicile, Country
279
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
6
100.00
Berlin, Germany
100.00
Milton Keynes, United Kingdom
3
50.00
Equity
in millions
Beijing, China
100.00
Mexico City, Mexico
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
100.00
Dubai, United Arab Emirates
Daimler Commercial Vehicles MENA FZE
100.00
Nairobi, Kenya
Daimler Commercial Vehicles Africa Ltd.
7
100.00
Ludwigsfelde, Germany
Daimler Culture Development Co., Ltd.
Daimler Financial Services UK Trustees Ltd.
Daimler Group Services Berlin GmbH
in %1
of €
Net income
(loss) in
millions of €
Dubai, United Arab Emirates.
Stuttgart, Germany
Legend Investments Ltd.
Lapland Car Test Aktiebolag
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
Gemini-Tur Excursoes Passagens e Turismo Ltda.
EvoBus Russland 000
Elfte Vermögensverwaltungsgesellschaft DVB mbH
EvoBus Reunion S. A.
Deméter Empreendimentos Imobiliários Ltda.
Deutsche Accumotive Verwaltungs-GmbH
Daimler Unterstützungskasse GmbH
Daimler UK Trustees Limited
Daimler UK Share Trustee Ltd.
Daimler TSS GmbH
Daimler Starmark A/S
Daimler Purchasing Coordination Corp.
Daimler Protics GmbH
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Middle East & Levant FZE
6
100.00
Böblingen, Germany
100.00
Wilmington, USA
Daimler International Assignment Services USA, LLC
Daimler IT Retail GmbH
100.00
San Sebastián de los Reyes, Spain
Daimler Group Services Madrid, S.A.U.
Footnote
Daimler AG & Co. Anlagenverwaltung OHG
100.00
Stuttgart, Germany
71.30
100.00
Calgary, Canada
100.00
Prague, Czech Republic
-2
-602
100.00
Portland, USA
4
222
100.00
São Bernardo do Campo, Brazil
5,6
-
100.00
Berlin, Germany
18
71
100.00
Hambach, France
3
0.00
Luxembourg, Luxembourg
100.00
Oriskany, USA
100.00
Mississauga, Canada
High Point, USA
Stuttgart, Germany
100.00
19
Buenos Aires, Argentina
4
100.00
Niederzier, Germany
6
100.00
Berlin, Germany
6
100.00
Stuttgart, Germany
100.00
São Paulo, Brazil
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Brefa Bremsen- und Fahrzeugdienst AG (in Liquidation)
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
AEG do Brasil Produtos Eletricos e Eletronicos Ltda.
AEG Olympia Office GmbH
II. Unconsolidated subsidiaries²
100.00
Wilmington, USA
100.00
Halifax, Canada
14
-1
100.00
Portland, USA
100.00
Farmington Hills, USA
100.00
São Paulo, Brazil
58
McDonough, USA
BBB+
SelecTrucks of Houston LLC
1,542
Total dividend
7.87
6.51
6.40
6.02
5.31
4.28
-2.63
1.40
3.80
3.64
1,928
Diluted net profit (loss) per share (€) 2
6.51
6.40
6.02
5.32
4.28
-2.63
3.83
8,711
7,290
6,830 8,720
6,029
4,674
7.87
556
Dividend per share (€)
1.50
27.1
16.5
32,747 14,650 16,087 15,965 17,593 19,180 20,599 21,779 23,182 24,322
36,949 19,638 18,672 18,532 19,925 22,811 26,058 28,160 33,050 38,942
67,507 39,686 42,077 40,044 41,309 45,023 48,947 48,138 56,258 62,055
18,396 14,086 16,805 12,845 14,544 17,081 17,720 17,349 20,864 23,760
8,409 15,631 6,912 9,800 10,903 9,576 10,996 11,053 9,667 9,936
53,626 31,403 31,672 31,635 31,556 34,461 38,742 42,039 46,614 58,151
217,634 135,094 132,225 128,821 135,830 148,132 163,062 168,518 189,635 217,166
37,346 38,230 32,730 31,827 37,953 41,337 39,330 43,363 44,584 54,624
2,673 2,766 2,768 3,045 3,058 3,060 3,063 3,069 3,070 3,070
Net assets (average) 2
Net liquidity industrial business
Current liabilities²
Non-current liabilities²
Equity ratio industrial business (%) 2
Equity ratio Group (%) 2
thereof share capital
Shareholders' equity2
Total assets 2
Other current assets
Liquid assets
Inventories
Other non-current assets²
Leased equipment
Property, plant and equipment
From the statements of financial position
3.25
3,477
2,621
2.45
2,346 2,349 2,407
2.20
2.20 2.25
1,971
1.85
0
0.00
0.60
2.00
21.6
26.9
43.7
18.8
12,744
1,2
Personnel expenses
Revenue
2015
2014
2013
2012
2011
2010
2009
2008
2007
Research and development expenditure ³
2006
€ amounts in millions
F.01
Ten Year Summary
F❘ FURTHER INFORMATION | TEN YEAR SUMMARY
286
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfer
Becker
KPMG AG Wirtschaftsprüfungsgesellschaft
Stuttgart, February 16, 2016
In our opinion, based on the findings of our audit of the
consolidated financial statements and the combined management
report, the combined management report is consistent with
the consolidated financial statements, and as a whole provides
a suitable view of the Group's position and suitably presents
the opportunities and risks of future development.
Pursuant to Section 322 (3) sentence 1 HGB, we state
that our audit of the combined management report has not
led to any reservations.
From the statements of income
3,733
thereof capitalized
715
10,173
7,678
10,139
9,173
22.6
8,116
7,302
19.6
19.9
-2,298
6,628 8,449
-2,102 5,120 6,240
-6.6
17.5
-2,644
3,985
4,902 9,181 2,795
4,032 4,123 1,370
8.3
10.5
4.4
1,414
1.41
3.66
Net profit (loss) per share (€) 2
3,783
Net profit (loss) 2
as % of net assets (RONA) 2
Net operating profit (loss) 2
and extraordinary items²
Profit (loss) before income taxes
8.8
13,186
10,752
8.3
10,815
9.2
8,820
7.7
1,804
1,148
99,222 101,569 98,469 78,924 97,761 106,540 114,297 117,982 129,872 149,467
23,574 20,256 15,066 13,928 16,454 17,424 18,002 18,753 19,607 20,949
4,148 4,442 4,181 4,849 5,634 5,644 5,489 5,680 6,564
990 1,387 1,285
1,373 1,460
1,465 1,284
8,710 2,730 -1,513 7,274 8,755
8.6
2.8
-1.9
7.4
8.2
5.0
Operating margin (%) 2
4,992
EBIT2
9,007
Report on the Combined Management Report
We have audited the accompanying group management
report of Daimler AG, which is combined with the management
report of the company for the financial year from January 1
to December 31, 2015. The Board of Management of Daimler AG
is responsible for the preparation of this combined manage-
ment report in compliance with the applicable requirements
of German commercial law pursuant to Section 315a (1) HGB.
We are required to conduct our audit in accordance with
Section 317 (2) HGB and the German generally accepted stan-
dards for the audit of financial statements promulgated by
the German Institute of Public Auditors (IDW). Accordingly, we
are required to plan and perform the audit of the combined
management report to obtain reasonable assurance about
whether the combined management report is consistent
with the consolidated financial statements and the audit find-
ings, and as a whole provides a suitable view of the Group's
position and suitably presents the opportunities and risks
of future development.
24.3
26.5
A3
A3
A3
Baa1
Moody's
A-
A-
A-
A-
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BBB+
BBB+
A3
A-
BBB
Standard & Poor's
Credit rating, long-term
Ratings
1,067.1 1,069.1 1,069.8 1,069.8
1,051.5 1,067.1
1,003.8
1,027.3 1,047.3 959.9
1,022.1 1,037.8 957.7 1,003.8 1,050.8 1,066.0 1,066.8 1,068.8 1,069.8 1,069.8
77.58
68.97
62.90
BBB+
A3
A3
A3
2 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
3 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
277,771 271,704 274,330 258,628 258,120 267,274 274,605 275,384 279,857 284,562
1 Until August 3, 2007, including Chrysler.
Average annual number of employees
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low) A (low)
DBRS
A-
A-
A-
A-
A-
BBB+
BBB+
A-
A-
BBB+
Fitch
A3
A3
41.32
24.7
33.92
37.23
2011
2010
2009
2008
2007
2006
287
F | FURTHER INFORMATION | TEN YEAR SUMMARY
€ amounts in millions
9,861 12,912 3,106 7,285 11,938 11,981
48,584 39,187 31,466 31,778 29,338 31,426
89,836 48,866 52,182 47,538 53,139 54,855 58,716 59,108 66,974 77,081
11,508 13,834 16,953 18,580
37,521 40,648 40,779 41,644
49,456 44,738 51,940 65,016 66,047 78,077 85,461
2012
90,452 47,998 47,313
40.8
43.4
39.8
46.4
45.8
42.6
42.7
23.6
22.1
24.3
22.7
26.3
44.2
2013
2014
2015
26.70
66.50
46.80
Average shares outstanding (in millions)
Average diluted shares outstanding
(in millions)
Share price at year-end (€)
From the stock exchanges
3,960
5,479
9,631
-9,722
222
-696 -1,100 3,285 -1,274
-6,537 -8,864 -6,829 -2,709
5,842 11,506 3,855 2,274
989 1,452 4,842
8,544
-313
-7,551
5,432
14,337 7,146 -786 10,961
-15,857 26,479 -4,812 -8,950
2,396 -25,204 -2,915 1,057
2,679 7,637 -3,915 2,706
Free cash flow of the industrial business
financing activities
investing activities
operating activities
Cash provided by (used for)
5,075
5,384
3,653 4,158 4,827 4,975 4,844
3,364 3,575 4,067 4,368 4,999
4,247 3,559 2,423
4,146 3,023 3,264
5,874
7,169
Depreciation and amortization
plant and equipment
Investments in property,
From the statements of cash flows 1
50.73
In our opinion, based on the findings of our audit, the con-
solidated financial statements comply in all material respects
with IFRSS as adopted by the EU and the additional require-
ments of German commercial law pursuant to Section 315a (1)
HGB and give a true and fair view of the net assets and finan-
cial position of the Group as at December 31, 2015 as well
as the results of operations for the financial year then ended,
in accordance with these requirements.
Pursuant to Section 322 (3) sentence 1 HGB, we state that
our audit of the consolidated financial statements has not led
to any reservations.
Audit Opinion
Wiesbaden, Germany
Burnaby, Canada
Beijing, China
Weissach, Germany
Communication Technologies - EICT GmbH
EvoBus Hungária Kereskedelmi Kft.
Gottapark, Inc.
European Center for Information and
Esslinger Wohnungsbau GmbH
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
COBUS Industries GmbH
Beijing Mercedes-Benz Sales Service Co., Ltd.
BDF IP Holdings Ltd.
VI. Joint operations, joint ventures and associated companies accounted for at (amortized) cost²
Abgaszentrum der Automobilindustrie GbR
Rijswijk, Netherlands
Seattle, USA
Mexico City, Mexico
Jakarta, Indonesia
There Holding B.V.
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
20.94
9, 16
2,003
33.33
32.28
18.00
Jakarta, Indonesia
50.00
Okayamashi, Japan
8
Zonar Systems, Inc.
25.00
33.00
51.00
Mercedes-Benz Starmark I/S
Mercedes-Benz Lackzentrum Dresden GmbH
Mercedes-Benz Buses Central Asia GmbH
MBtech Verwaltungs-GmbH
INPRO Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
Institut für angewandte Systemtechnik Bremen GmbH
Juffali Industrial Products Company
Laureus World Sports Awards Limited
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
H2 Mobility Deutschland GmbH & Co. KG
Footnote
Net income
(loss) in
millions of €
of €
in %1
Equity
in millions
Capital
share
Domicile, Country
281
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
7
San Francisco, USA
18.09
33.33
Budapest, Hungary
20.00
Berlin, Germany
26.57
Esslingen am Neckar, Germany
50.00
40.82
-23
MercedesService Card GmbH & Co. KG
67
Varese, Italy
10
72
562
45.00
Berlin, Germany
Toll Collect GmbH
45.00
Berlin, Germany
Toll Collect GbR
60.00
Stuttgart, Germany
TASIAP GmbH
V. Associated companies accounted for using the equity method
8
253
50.00
Shenzhen, China
Shenzhen BYD Daimler New Technology Co., Ltd.
50.00
Council Bluffs, USA
SelecTrucks of Omaha LLC
50.00
Houston, USA
SelecTrucks of Houston Wholesale LLC
50.00
Houston, USA
-26
BAIC Motor Corporation Ltd.
Beijing Benz Automotive Co., Ltd.
Blacklane GmbH
35.00
Sindelfingen, Germany
43.83
Yokohama, Japan
Russian Federation
15.00
Naberezhnye Chelny,
21.67
Kawasaki, Japan
5.52
Munich, Germany
17.13
Berlin, Germany
9
3,023
49.00
Beijing, China
10.08
Beijing, China
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
MV Agusta Motor S.P.A.
MBtech Group GmbH & Co. KGaA
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
KAMAZ PAO
FUSO LAND TRANSPORT & Co. Ltd.
Flixbus GmbH
25.00
MFTB Taiwan Co., Ltd.
National Automobile Industry Company Ltd.
Omuta Unso Co., Ltd.
F❘ FURTHER INFORMATION | RESPONSIBILITY STATEMENT
284
F❘ FURTHER INFORMATION | CONTENTS 283
292
Daimler Worldwide
290
List of Charts and Tables
289
Index
288
Glossary
286
Responsibility Statement
Ten Year Summary
Independent Auditors' Report
284
Responsibility Statement
F❘ Further Information
to €3.25 per share (prior year: €2.45). With the highest dividend payout in Daimler's
history we expressing our confidence about the ongoing course of business.
At the Annual Shareholders' Meeting on April 6, 2016, the Board of Management
and the Supervisory Board will therefore propose an increase in the dividend
sound dividend policy
We pursue a sustainable and
S.W1765
Daimler recognizes its proportionate share of the profits or losses of There Holding B.V. (THBV) with a one-month time lag.
16 The equity figure relates to the date of acquisition of HERE of December 4, 2015.
15 Preconsolidating company
285
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group, and the
Group management report, which has been combined with
the management report for DAG, includes a fair review
of the development and performance of the business and
the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, February 16, 2016
Die
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor's professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error.
In assessing those risks, the auditor considers the internal
control system relevant to the entity's preparation of the con-
solidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that
are appropriate in the given circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Group's internal control system. An audit also includes eval-
uating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board
of Management, as well as evaluating the overall presentation
of the consolidated financial statements.
Our responsibility is to express an opinion on these conso-
lidated financial statements based on our audit. We conducted
our audit in accordance with Section 317 HGB and the German
generally accepted standards for the audit of financial state-
ments promulgated by the German Institute of Public Auditors
(IDW) as well as in supplementary compliance with International
Standards on Auditing (ISA). Accordingly, we are required to
comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the consoli-
dated financial statements are free from material misstatement.
Auditor's Responsibility
The Board of Management of Daimler AG is responsible
for the preparation of these consolidated financial statements.
This responsibility includes preparing these consolidated
financial statements in accordance with International Financial
Reporting Standards (IFRSS) as adopted by the EU, and the
supplementary requirements of German commercial law pursuant
to Section 315a (1) of the German Commercial Code (HGB),
to give a true and fair view of the net assets, financial position
and results of operations of the group in accordance with
these requirements. The Board of Management is also respon-
sible for the internal controls that the Board of Management
determines are necessary to enable the preparation of con-
solidated financial statements that are free from material
misstatement, whether due to fraud or error.
Board of Management's Responsibility for the
Consolidated Financial Statements
We have audited the accompanying consolidated financial state-
ments of Daimler AG, Stuttgart, and its subsidiaries, which
comprise the consolidated statement of income, the consolidated
statement of comprehensive income/loss, the consolidated
statement of financial position, the consolidated statement
of cash flows, the consolidated statement of changes in equity
and notes to the consolidated financial statements for
the financial year from January 1 to December 31, 2015.
Report on the Consolidated Financial Statements
285
Independent Auditor's Report
F❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Thomas Weber
T W
Bodo Uebber
Bodo сессо
Hubertus Troska
Huberten DZ
Wilfried Porth
Wilfried Past
Ola Källenius
Au Paro
Wolfgang Bernhard
Golfgang Bernhard
воданд
Renata Jungo Brüngger
крафовитур
A
Dieter Zetsche
14 Joint control due to economic circumstances
13 Control of the investment of the assets. No consolidation of the assets due to the contractual situation.
12 Financial statements according to local GAAP 2015
11 Financial statements according to local GAAP November 1, 2013 October 31, 2014
51.00
Kleinostheim, Germany
50.00
Vejle, Denmark
36.00
Dresden, Germany
50.00
Stuttgart, Germany
35.00
Sindelfingen, Germany
50.00
London, United Kingdom
14
0.00
Jeddah, Saudi Arabia
26.25
Bremen, Germany
Berlin, Germany
20.00
2.90
Berlin, Germany
18.37
Berlin, Germany
smart-BRABUS GmbH
Reva SAS
Biomechanics GbR
PDB Partnership for Dummy Technology and
Taipei, Taiwan
50.00
33.40
26.00
10 Financial statements according to local GAAP September 1, 2014 - August 31, 2015
9 Financial statements according to IFRS
8 Financial statements according to local GAAP 2014
7 Daimler AG is unlimited partner
6 Profit and loss transfer agreement with Daimler AG (direct or indirect)
5 Qualification for Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB)
4 In liquidation
3 Control due to economic circumstances
they are not consolidated and not accounted for using the equity method.
2 As the impact of these companies is not material for the consolidated financial statements,
1 Share pursuant to Section 16 of the German Stock Corporation Act (AktG)
Munich, Germany
Sannoseki, Japan
Most, Czech Republic
Toyo Kotsu Co., Ltd.
tiramizoo GmbH
STARCAM s.r.o.
28.20
18.46
51.00
50.00
Bottrop, Germany
34.00
Cunac, France
20.00
Ingolstadt, Germany
33.51
Ohmuta, Japan
Jeddah, Saudi Arabia
278
862
308
Mercedes-Benz
F.02
Daimler Worldwide
F | FURTHER INFORMATION | DAIMLER WORLDWIDE
292
134
B.57 Supervisory Board remuneration
292
286
Daimler Worldwide
F.02
132
B.56 Payments made
Cars
Ten Year Summary
130
B.55 Benefits granted
129
Board of Management
Further Information
and present values for members of the
B.54 Individual entitlements, service costs
127
and other fringe benefits
page 197
Tables E.06 to E.92 in the Notes to the Consolidated
Financial Statements
127
B.52 Board of Management remuneration in 2015
B.53 Taxable non-cash benefits
F.01
125
Sales
Daimler
Buses
Revenue (in millions of euros)
Sales outlets
Production locations
NAFTA
16,027
2,824
5,879
29
7,326
4,022
7
3
7
11
Vans
20,136
121,321
Employees
8,852
10,815
34,214
Revenue (in millions of euros)
Sales outlets
Production locations
Europe
Trucks
Daimler Mercedes-Benz
Daimler
Financial
Services
Organization
Automotive
Businesses
38,164
B.51 PPSP 2015
202
E.05 Consolidated Statement of Changes in Equity
This abbreviation stands for the four countries of Brazil,
Russia, India and China.
Compliance
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as the
related internal guidelines and policies in connection with all
activities of the Daimler Group.
Consolidated Group
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate
of return.
page 78
Remuneration Report
189
D.01 Governance structure
BRIC
Corporate Governance
B.44 Donations and sponsoring in 2015
115
B.43 Employees by division
115
B.42 Employees at 12/31/2015 by region
177
Daimler Financial Services
C.09
112
of Mercedes-Benz Cars in the EU
174
Unit sales by Daimler Buses
C.08
118
A combination of inner-engine measures to reduce emissions
and treat exhaust gases. It improves diesel engines' efficiency
for cars and commercial vehicles by optimizing their combustion,
and reduces their emissions with SCR catalysts.
BLUETEC
Efficiency packages for saving fuel. They include measures
taken inside engines, bodywork weight reductions, tires with
low roll resistance, aerodynamic improvements, the ECO
start-stop function etc. As a result, fuel consumption can be
reduced by more than 20%.
125
long-term performance-related remuneration
201
200
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
E.04
B.50 Performance Phantom Share Plan (PPSP) -
E.03
124
B.49 Annual bonus in 2015
199
Income/Loss
124
performance-related remuneration
198
E.01 Consolidated Statement of Income
E.02 Consolidated Statement of Comprehensive
B.48 Annual bonus - short- and medium-term
123
B.47 Base salary - fixed
123
Maximum limit of total remuneration 2015
B.46
Consolidated Financial Statements
123
B.45 Remuneration structure
288
F | FURTHER INFORMATION | GLOSSARY
Glossary
BlueEFFICIENCY
Employees
1
14
1
Internet, Information, Addresses
Notes: Unconsolidated revenue of each division (segment revenue).
196
34
91
237
494
Employees
234
37
208
570
1,723
Information on the Internet
Revenue (in millions of euros)
250
Sales outlets
Production locations
Australia/Oceania
1,455
1,147
9
2,248
-
2
168
38
14,012
2
Special information on our shares and earnings development
can be found in the "Investor Relations" section of our website.
daimler.com It includes the Group's annual and interim
reports and the company financial statements of Daimler AG.
You can also find topical reports, presentations, an overview
of various key figures, information on our share price and other
services.
Publications for our shareholders:
Annual Report
Mercedesstraße 137
Daimler AG
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
Fax +49 711 17 94075
ir.dai@daimler.com
+49 711 17 92261
+49 711 17 95256
Investor Relations
Phone +49 711 17 95277
Phone +49 711 17 0
Fax +49 711 17 22244
www.daimler.com
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Daimler AG
FSC® C016368
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tungsvollen Quellen
www.fsc.org
FSC
Fax +49 711 17 92287
order.print@daimler.com
Phone +49 711 17 92262
70546 Stuttgart, Germany
Daimler AG, Investor Relations, HPC 0324
The aforementioned publications can be requested from:
daimler.com/ir/reports
daimler.com/downloads/en
Daimler Corporate Brochure - Ready to start up
(German, English)
Responsibility - Focus Sustainability 2015
German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
Focus Sustainability 2015
Responsibility
DAIMLER
Ready to start up
DAIMLER
daimler.com/investors
(German, English)
3,216
B.41 Average CO2 emissions of the new car fleet
Employees
298
538
1,702
867
Employees
Revenue (in millions of euros)
634
-
-
Sales outlets
3
1
2
1
728
Production locations
1,825
472
398
22,893
7,347
9,637
293
1,377
17,066
19,646
4
1,525
1
Latin America (excluding Mexico)
361
10,482
1,816
6,227
25,956
Revenue (in millions of euros)
Sales outlets
3
2
Production locations
Asia
195
84
160
603
4,202
Employees
92
201
1,181
1,424
Revenue (in millions of euros)
1
388
Sales outlets
1
1
Production locations
Africa
425
308
1,362
135
70327 Stuttgart
174
Unit sales by Mercedes-Benz Vans
Daimler Buses
84, 160, 166, 171, 174, 177, 216
98
122ff
85ff, 198f
91 f, 101, 236 ff
76 f
85ff, 102 f
89 f
91ff, 244f
65
185 f, 188 f
185 f
285
87, 103, 219 ff
108 ff
110
204 ff, 208
88, 103, 219
87
78, 86 f, 160, 166, 171, 174, 177
77
85ff
63,89
51, 180ff
215ff
185 f
108 ff
137
92ff, 103 f, 201
95 f, 156
65, 96 f
64, 194
6ff, 111
Value added
Unit sales
85 ff
Sustainability
265ff
62 ff, 135 f
84
B.10 Consolidated revenue by region
83
Market share
B.09
Daimler and the Capital Market
82
B.08 Unit sales structure of Daimler Trucks
82
B.07 Unit sales structure of Mercedes-Benz Cars
80
B.06 Global automotive markets
Front cover
99 ff, 104, 232 ff
Facts and Figures 2015 (enclosed brochure)
B.05 Economic growth
Front cover
Divisions
Front cover
Key Figures
Economic Conditions and
Business Development
Cover
List of Charts and Tables
F❘ FURTHER INFORMATION | LIST OF CHARTS AND TABLES
290
89 f
81ff, 160, 166, 171, 174
66ff
105 ff
79
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
Strategy
Remuneration system
Revenue
Ratings
Net operating profit
Net assets represent the capital employed by the Group
and the industrial divisions. The relevant capital basis
for Daimler Financial Services is equity capital.
Net assets
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption.
NEDC - New European Driving Cycle
They are at the heart of future electric drive systems.
Compared with conventional batteries, lithium-ion batteries
are considerably smaller and feature significantly higher
power density, short charging times and long lives.
Lithium-ion batteries
289
F | FURTHER INFORMATION | GLOSSARY | INDEX
Index
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
INTELLIGENT DRIVE
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for everyday
conduct that are applicable at Daimler. Fairness, responsibility
and compliance with legislation are key principles in this context.
page 90
Integrity Code
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately
or together depending on the type of vehicle and driving
situation.
Hybrid drive
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Goodwill
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable and
willing parties who are independent of each other.
Fair value
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
pages 85 ff
Equity method
Earnings before interest and taxes are the measure
of operating profit before taxes.
EBIT
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
CSR - corporate social responsibility
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Net operating profit is the relevant parameter for measuring
the Group's operating performance after taxes.
Rating
An assessment of a company's creditworthiness issued
by a rating agency.
Profitability
Portfolio changes
Pension obligations
Net profit
Net assets
Liabilities
Investor Relations
Integrity Code
Integrity
Independent auditors' report
Income taxes
Fuel cells
Goodwill
Hybrid drive
Financial income
Efficiency programs
Earnings per share (EPS)
EBIT
Consolidated Group
Corporate governance
Dividend
CO₂ reductions
Compliance
Capital expenditure
Cash flows
Change of control
Bonds
Autonomous driving
Annual Shareholders' Meeting
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Value at risk
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 88 f
Value added
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT
and revenue.
ROS - return on sales
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT
and shareholders' equity.
ROE - return on equity
B.11 Revenue by division
84
A.01 Development of Daimler's share price and
of major indices
99
8g
Risk and Opportunity Report
B.34 Consolidated statement of financial position
B.35 Balance sheet structure Daimler Group
Financial Position
291
F❘ FURTHER INFORMATION | LIST OF CHARTS AND TABLES
98
97
B.33 Credit ratings
Benchmark issuances
B.32
97
100
B.31 Refinancing instruments
95
94
B.28 Other financial obligations (nominal amounts)
B.29 Investment in property, plant and equipment
B.30 Investment in property, plant and equipment
by division
94
94
93
B.25 Free cash flow of the industrial business
B.26 Net liquidity of the industrial business
B.27 Net debt of the Daimler Group
74 75 77 78
Calculation of value added
B.04 Cost of capital
B.03
B.01 Consolidated revenue by division
B.02 Daimler Group structure 2015
Corporate Profile
92
95
B.58 Assessment of probability of occurrence
and possible impact
138
Daimler AG
C.07
108
B.40 Road to emission-free mobility
C.06
107
by division
171
C.05 Mercedes-Benz Vans
166
C.04 Unit sales by Daimler Trucks
107
B.38 Research and development expenditure
B.39 Research and development expenditure
166
160
Unit sales by Mercedes-Benz Cars
Daimler Trucks
C.03
C.02
Sustainability
160
Mercedes-Benz Cars
C.01
The Divisions
104
Condensed statement of income of Daimler AG 103
B.37 Balance sheet structure of Daimler AG
B.36
149
146
141
B.59 Industry and business risks and opportunities
B.60 Company-specific risks and opportunities
B.61 Financial risks and opportunities
of cash flows
171
B.24 Condensed consolidated statement
A.13 Research and development expenditure
86
86
85
88 80 80 89
B.17 Reconciliation of Group EBIT to profit before
B.16 Return on Equity
B.15 Return on Sales
पु
64
A.08 Shareholder structure as of December 31, 2015
By region
B.14 Special items affecting EBIT
पु
64
87
B.13 Development of earnings
64
A.06 Stock-exchange data for Daimler shares
B.12 EBIT by segment
64
A.05 Key figures for Daimler shares
63
A.04 Share price index
Profitability
63
A.03 Daimler share price (high/low), 2015
62
A.02 Key figures per share
62
A.07 Shareholder structure as of December 31, 2015
By type of shareholder
87
income taxes
87
Liquidity and Capital Resources
71
2016-2017
90
90
89
89
0 % % % 80%
B.23 Net assets of the Daimler Group at year-end
FR
71
Investment in property, plant and equipment
A.12 Research and development expenditure
A.11
71
B.22 Net assets (average)
A.10 Investment in property, plant and equipment
2016 - 2017
Value Added
B.21
67
A.09 Strategic focus areas
Reconciliation to net operating profit
B.20
89
88
Dividend per share
B.19
Objectives and Strategy
Consolidated statement of income
B.18
71
Germany
3
www.daimler.com
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Freedom for developing new ideas
A global company with
an entrepreneurial spirit
25
25
Daimler is taking the lead in the
digital age as well, and is creating
the conditions required for an agile
and connected organization. This
enables our employees to make full
use of their creativity.
Step by step, we are developing a new digital work culture.
The formats we utilize here include the Daimler Connect
internal social network, discussion forums, idea competi-
tions, workshops and other events.
DigitalLife Day: freedom for creativity and networking
The DigitalLife Day series of events enables us to conduct
a continual dialogue about the digital transformation and
prepare our employees for the future. In an effort to further
promote the spirit of innovation at the company, we are
combining our strengths as a global corporation even more
extensively with the qualities typical of a startup. Whether
it's a smartphone app for managing one's personal work-
life balance or the use of interactive data goggles at vehicle
repair centers - the concepts produced at the employee
idea competition during DigitalLife Day 2015 show just how
important inspiration from our workforce is for the success
of the company.
HR innovation - Peninsula project: Mercedes-Benz
Vans benefits from the ideas of entrepreneurs
Since the fall of 2015, entrepreneurial experts have been
working with Daimler employees in a co-working office
in Berlin on the development of future-oriented solutions
for passenger and goods transport by van. At a location
known as the "Peninsula," far away from corporate struc-
tures, people from different professional backgrounds and
with different ways of thinking are cooperating to develop
valuable ideas for Mercedes-Benz Vans.
Hackathons without borders: across regions,
divisions and disciplines
Hackathons in India and Germany were supplemented
in the summer of 2015 by a hackathon staged by
Mercedes-Benz Research & Development North America
(MBRDNA) in one of the world's most creative regions -
Silicon Valley. More than 100 programmers and creative
individuals attended the three-day event for developing
apps that can be used in Mercedes-Benz vehicles.
MBRDNA headquarters is part of the global R&D network
and has been benefiting since 1995 from the inventive
spirit and unique culture of cooperation in Silicon Valley.
04137
udio
"We use innovative formats
to promote a networked
job culture and a startup
mentality at the company."
26
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Leading
Premium in all sizes
The brand-new Mercedes-Benz GLS SUV is one of the highlights
of our model offensive - and it demonstrates once again that
Daimler is pursuing the right strategy. Indeed, we are attracting
more customers than ever before with the youngest and broadest
product range in our history. We have completely renewed our
model lineup in the growing SUV market, and we are also setting
the standard for modern luxury, connectivity and autonomous
driving with our new Mercedes-Benz E-Class. In addition, we occupy
an outstanding position with our trucks, vans and buses, not least
due to their outstanding safety and efficiency. With the help of
exemplary products and technologies, we plan to stay ahead of the
competition also in the future.
Best performance in
every segment
Experience the world of
Daimler products.
daimler.com/products/
Mercedes-Benz SUV offensive
A perfect ride on any terrain
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
29
"There's good reason for us to focus strongly on SUVs,
as these are fascinating automobiles in a market that
continues to expand around the world."
Ter Fabry
reduces the amount of strenuous overhead
work the employees have to do.
The "InCarRob" sits in the vehicle and
"With our vision of Industry 4.0, we are digitizing
the entire value creation process - from design
and development to production, sales and service."
Digital services make for
optimal transport logistics
In addition to normal cargo, connected
trucks also deliver – “on the side”.
valuable data on the vehicle, its load,
the traffic and the weather. If this data
is sent to the cloud, it opens up com-
pletely new possibilities – for everyone
involved in logistics.
-
The telematics systems Detroit Connect and FleetBoard
are milestones on the way into the future, and for many
long-distance drivers are already part of their regular
working lives.
Telematics services offer truck fleet operators many ben-
efits, such as reduced fuel consumption, greater vehicle
availability and lower maintenance costs. Daimler Trucks
offers the right solution for each market with FleetBoard
in Europe, South Africa and Brazil, and Detroit Connect in
the United States and Canada. Both systems have already
gained the trust of customers and serve as an ideal foun-
dation for developments in the future.
FleetBoard: efficient truck fleet management
Daimler FleetBoard is Europe's leading telematics service
provider for trucks, vans and buses. The system delivers
data about drivers, fleets and transport jobs. It also con-
nects logistics systems and creates transparency at all
levels. FleetBoard can determine the location of a vehicle
at any time, for example, and can also send and receive
data to and from vehicles. It also supports drivers on the
road with easily operated technical systems. The result is
optimized truck capacity utilization, lower fuel consump-
tion, greater vehicle availability and better economy than
ever before. FleetBoard is installed in nearly half of all new
trucks in Europe today.
Detroit Connect: remote diagnosis
and fleet monitoring
Detroit Connect enables trucks, drivers, fleet operators
and repair centers to share data. Detroit Connect is the
first telematics solution in the United States and Canada
that uses an onboard diagnosis and fleet monitoring
system to identify the causes of fault messages while the
vehicle is in motion. This telematics system from Daimler
Trucks has already been installed in over 150,000 vehicles.
Virtual Technician supports truckers
A minor fault - or something more serious?
A flashing Check Engine light can mean
different things. Truckers in the United
States and Canada can rely on the
Virtual Technician from Detroit Connect
to determine the cause of the warning,
as a real-time recording of the engine's
technical data is sent to the Detroit Cus-
tomer Service Center for analysis whenever the
Check Engine light flashes. A recommendation
for action is sent to the driver, who can then
take the necessary steps. This remote diagno-
sis system reduces service-related downtime
and maintenance costs. Fleet operators thus
benefit from as much as 20 percent lower
repair costs and six percent higher vehicle
operation times.
Daimler Trucks promotes truck
connectivity with its investment
in Zonar Systems
Daimler Trucks is systematically continuing its activities
in the field of networked vehicle services through its
investment in Zonar Systems, a leading developer and
supplier of logistics, telematics and connectivity solutions.
In the future, Daimler Trucks North America and Zonar
will jointly launch applications for the US market. The two
companies have already been cooperating for five years
through the Virtual Technician and Detroit Connect. They
also share the same vision of providing optimal transport
logistics through intelligent networking.
"By linking our trucks with the cloud, we are enabling them
to become part of a complete logistics network."
Superior on any terrain:
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 23
Intelligent networking of humans
and machines
The visionary Mercedes-Benz Concept IAA combines previously unattained
aerodynamic properties with a thrilling design - and the "Digital Transformer"
also shows just how far Daimler has progressed in terms of digitized vehicle
development and production.
The Concept IAA (Intelligent Aerodynamic Automobile)
lets drivers experience the future at the push of a button.
Sophisticated improvements to the vehicle body have
transformed the four-door coupe into an aerodynamic
world champion with a drag coefficient (Cd value) of
only 0.19. This innovative concept from Daimler would
never have been possible without the digital networking
of various levels of the value chain.
Digital prototypes: greater precision,
shorter innovation cycles, faster development
The outstanding characteristics of the Concept IAA are the
result of an almost completely digital development pro-
cess. State-of-the-art CAD techniques were used to create
300 digital prototypes; after that, the most aerodynamic
version was implemented in the record time of ten months.
The opportunities offered by digital prototyping for series
development are clear, as digital simulations and the use of
big data will, in the future, bring individual vehicles and the
newest technologies to life more quickly and economically
than ever before.
Digital production: greater variety
and improved ergonomics
The more dynamic the market, the greater the amount
of flexibility we need in production in order to respond
to changed customer requirements at short notice, for
example. The key to success here can be found in the link
between the physical and the digital world, in line with the
vision of Industry 4.0. The new Mercedes-Benz E-Class
impressively shows how the networking of the value chain
has become a reality at Daimler. The vehicle was shaped
by digital technology for everything from development to
production to sales.
The smart factory is a core component of the process
of digitization at our company. In the digital factory
of the future, production equipment, components and
the surrounding environment will all be linked with one
another and with the Internet. Even more importantly,
people and robots will work together, making production
more flexible and resource-efficient and ensuring even
more ergonomic conditions for employees.
10
This concept will be gradually implemented throughout
the Mercedes-Benz global production network. Numerous
smart-factory elements have also been incorporated into
manufacturing processes since the E-Class production
launch.
TecFactory: new technologies for series production
Daimler is also setting the pace for innovative manufactur-
ing concepts. Such new processes are extensively tested
in the TecFactory before they make their way into series
production operations. For example, we were the first
automaker to recognize the potential offered by sensitive
robots and we are now testing such machines in the
Mercedes-Benz TecFactory.
Robots as colleagues: people and machines
working hand in hand
State-of-the-art lightweight robots are enabling cooper-
ation between workers and machines - without any
protective barriers between them. The robots use
sensors to scan the immediate area, and they stop their
work whenever a person enters their radius of action.
Sometimes, direct contact between people and robots
is actually part of the system. For example, some robots
need to be tapped or have their arms moved in order to get
them to start working. Staff at the Mercedes-Benz plant
in Untertürkheim are already being assisted by the latest
generation of robots in the series production of dual-clutch
transmissions.
Concept IAA
Detroit Connect & FleetBoard
The E-Class interior equipped with the COMAND Online
system features two brilliant next-generation high-
resolution displays, each with a 12.3-inch screen diago-
nal. The displays seem to merge to form a widescreen
dashboard a central element that emphasizes the hori-
zontal alignment of the interior, consisting of a display
with virtual instruments in the driver's field of vision and
a display above the center console. The system also offers
a choice of three screen design styles: "Classic," "Sport"
and "Progressive."
Are you ready for countless
adventures? The new generation
of SUVs from Mercedes-Benz
makes a thrilling impression with
a broad range of off-road features,
a new design and extraordinary
handling, comfort and safety.
If the driver deliberately or instinctively initiates an evasive
maneuver in a dangerous situation, this new feature sup-
ports the required steering movements and then helps the
driver straighten the vehicle's course again.
PRE-SAFE® Impulse Side and PRE-SAFE® Sound
The PRE-SAFE® Impulse Side function is part of the PLUS
driver assistance package. If an imminent side collision is
detected, the function moves the driver or front passenger
as far away from the danger zone as possible.
PRE-SAFE® Sound emits a brief noise via the vehicle's
sound system when the risk of a collision is identified.
This signal can trigger a protective reflex in the inner ear
and thus prepare the occupants' ears for the noise from
the anticipated collision.
Car-to-x communication expands horizons
Back in 2013, Mercedes-Benz became the first manufac-
turer to introduce car-to-car connectivity in series-produc-
tion models through a retrofit solution. This has now been
followed by the launch of the world's first fully integrated
car-to-x solution as standard equipment in the new E-Class.
The cell-phone-supported exchange of information with
other vehicles enables the driver to "see around corners"
or "through obstacles," so to speak.
The benefits are clear, as drivers are warned more quickly
of potential dangers, such as a sudden traffic jam around
a bend, a broken-down vehicle at the side of the road, a
construction site ahead, or heavy rain and icy roads. The
new E-Class acts as a both a receiver and a transmitter
here, as warnings are conveyed either automatically or by
the driver to the back-end system.
Smartphone integration links the customer's lifestyle
with the features of a modern business sedan
The workplace and private sphere have now been joined
by the new E-Class as a third realm in which smartphones
play a special role. New technologies are enabling wireless
antenna connections and smartphone recharging. Drivers
or passengers can place their phone onto an inductive port,
which then connects the phone to the multimedia system
via the near field communication (NFC) protocol. Another
advantage is that NFC transforms smartphones into digital
car keys.
In and out of parking spaces by remote control
with the Remote Parking Pilot
The new E-Class also makes another dream come true,
as it can be moved into and out of garages and parking
spaces via a smartphone, thereby making it easier for
occupants to enter and exit the vehicle.
Masterpiece of Intelligence
Special on the new E-Class.
daimler.com/products/
specials/new-e-class/
Ahead of the competition with
a test license for autonomously
driving vehicles
The built-in intelligence of the new E-Class also
marks a milestone on the road to the self-driving
automobile - for Mercedes-Benz and for the
automotive industry as a whole. Current proof:
As the first series-production vehicle worldwide,
the new E-Class received a permit for autonomous
test drives in everyday traffic in advance of the
CES in Las Vegas. Since January 2016, three pro-
duction sedans (not prototypes) have been operating
on interstate and state highways in Nevada in the
United States.
DAIMLER INNOVATIVE. DIGITAL. LEADING. 33
S&W 2132
"Taken together, the pioneering assistance systems
reduce driver stress immensely and offer unprecedented
levels of safety and comfort. In addition, the intelligent
E-Class heralds a new era of vehicle digitization and
connectivity."
Further cost reductions of up to 4% for fuel and AdBlue
in Mercedes-Benz and Setra coaches.
$3905
9
StreamSpain
eating in Fficiency
Dining Experience Slovena 2015
With the latest generation of the OM 471 engine, the Mercedes-Benz Actros
is once again significantly extending its lead in terms of efficiency.
MEER PR 5259
Pedestrian protection: Evasive Steering Assist
In the fast lane with Active Lane Change Assist
This new radar and camera-based subsystem of DRIVE
PILOT provides support during lane changes on multi-lane
roads. The driver simply engages the turn-indicator light for
at least two seconds, after which the new E-Class checks
the lane selected by the driver and then switches to it after
determining that it's safe to do so.
Another new development for reducing stress is the Speed
Limit Pilot, which can independently adjust the vehicle's
speed in line with speed limit signs detected by its camera
or speed limit information stored in the navigation system.
DRIVE PILOT automatically keeps the car at a proper
distance behind other vehicles on highways and secondary
roads, and for the first time - it can also follow vehicles
at a speed of up to 210 km/h. The driver thus no longer
needs to operate the brake or gas pedal and also receives
steering support from Steering Pilot - even in slight curves.
Another unique feature is that the system can continue
to intervene actively at speeds up to 130 km/h by taking
account of surrounding vehicles and parallel structures,
even if there are no visible lane markings. DRIVE PILOT
therefore makes driving easier, especially in traffic jams
or on congested roads.
"G" for Geländewagen (German for off-road vehicle) is
our designation for off-road expertise, and this has been
the case ever since we developed the G-Class - the first
off-road model with the three-pointed star. The DNA of the
original G-Class can still be found in all Mercedes-Benz
SUVs, which also bear the "G" designation in their names.
Following the compact GLA, the new GLC, the GLE (for-
merly the M-Class) and the new G-Class have been taking
the world by storm on and off the road since 2015.
The innovative GLE coupe expands our range of SUVs to
include a particularly sporty version that combines the
dynamics of a coupe with the bold appearance of an SUV.
The GLE will be followed in the spring of 2016 by our
flagship SUV - the GLS (formerly GL). With a total of six
models in all segments, Mercedes-Benz has a wider range
of SUVS in its portfolio than any other premium brand.
Perfectly shaped: The aesthetic new SUV look
Sensual purity and modern aesthetic appeal paired with a
classic off-road look - that's the best way to describe the
design philosophy of the new generation of Mercedes-Benz
SUVs. The models' dynamic design elicits emotion, while
also making use of purist shapes. Our design concept also
employs precise lines and surfaces that convey a positive
sense of tension. This concept has also been applied to the
vehicle's sporty interior, which features high-quality mate-
rials and pioneering infotainment systems in the luxurious
atmosphere typical of the Mercedes-Benz brand.
Even safer and more comfortable and efficient
The new Mercedes-Benz SUVs set standards in terms of
technology as well. For example, an extensive package of
measures has significantly increased the energy efficien-
cy and performance of the SUV models. Depending on
a driver's personal preferences, the DYNAMIC SELECT
driving program provides individualized agility while AIR
BODY Control ensures enhanced comfort on any terrain.
The models also feature state-of-the-art assistance
systems that underscore the high safety standards at
Mercedes-Benz.
Off the beaten track
The SUV campaign uses imposing
images and famous people to present
the SUV family from Mercedes-Benz.
youtube.com/
watch?v=5Ax45-TDVbM
"The E-Class is the core of the Mercedes-Benz
brand; it has always set the standard for business-
class vehicles. Now it's continuing this tradition
with numerous top-class innovations."
S.MB 1286
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Daimler stands for successful brands, outstanding passenger cars
and commercial vehicles and customized mobility and financial
services. Our product offensive has put us on course for profitable
growth, and we are already the leader in many vehicle segments.
We are also accelerating the pace with new fascinating models and
trailblazing technologies, which ensure that we continue to delight
our loyal customers while inspiring new customers to purchase
our products.
31
The most intelligent business sedan
With the brand-new E-Class, the
inventor of the automobile is present-
ing the most advanced production
vehicle in the world. The business
sedan is the leader in terms of safety,
efficiency and vehicle intelligence.
The exterior of the new E-Class makes a stylish and power-
ful impression right from the start. The vehicle's doors.
can be opened using a smartphone as a key. The interior of
the new E-Class impressively combines the elegance of the
luxury class with cultivated sportiness. Its spacious interior
architecture and the finest materials and technologies
send a message of next-level design and set a benchmark
for today's business sedans.
Trendsetter in its segment: the digital
widescreen dashboard
World premiere: infotainment control with swiping
The new E-Class also marks the premiere of touch-sensitive
controls on a steering wheel. These controls respond to
horizontal and vertical swiping movements - just like on
a smartphone. As a result, the entire infotainment system
can be operated intuitively and ergonomically, without the
driver having to take his or her hands off the steering wheel.
The new E-Class also features familiar control formats such
as a touchpad with controller, the LINGUATRONIC voice
command system and, for the first time, on/off switches
for certain driver assistance systems. An intelligent graphic
design with brilliant visual features underscores the fasci-
nating operation concept. Among other things, animations
make it easier for users to understand and thus directly
experience the assistance systems.
Trailblazing engines open up new dimensions
of efficiency and dynamic performance
The engine variants for the business sedan are also ex-
tremely innovative. The new E-Class will be available with
either a four-cylinder gasoline engine or a new four-cylinder
diesel engine at market launch. Despite their smaller dis-
placement, the new diesel engines put more power on
the road, with fuel consumption that only a few and much
smaller cars have previously offered.
As part of the Daimler hybrid offensive, we will also offer
a third-generation plug-in hybrid E-Class version that will
enable a 30-kilometer all-electric range for locally emission-
free driving. The combination of the four-cylinder gasoline
engine and the electric motor boasts the performance of a
sports car but consumes less fuel than a compact vehicle.
Lightweight engineering and record-setting aerodynamics
also do their part to ensure that the E-Class sets new stan-
dards for efficiency. pages 12f
Less stress and greater safety and driving pleasure:
next-generation driver-assistance package
The new Mercedes-Benz E-Class comes with Active Brake
Assist as standard equipment. This system is able to warn
the driver of an impending crash situation, provide support
during emergency braking and, if necessary, automatically
brake the vehicle itself. It can detect other vehicles as well
as pedestrians crossing in front of the car. Also included as
standard are ATTENTION ASSIST with adjustable sensitivity
and Crosswind Assist.
Highlights of the optional driver assistance package
include proven and extensively refined systems such as
Active Lane Keeping Assist, Active Blind Spot Assist
and PRE-SAFE® PLUS - as well as numerous groundbreak-
ing innovations that are bringing autonomous driving
within reach.
DRIVE PILOT: a further technological step toward
autonomous driving
The new Mercedes-Benz E-Class
products for all lifestyles
In addition, more than 5,000 FleetBoard customers are
now able to utilize the system's comprehensive app portfo-
lio for Android and iOS smartphones and tablet computers.
As a result, logistics company clients, fleet dispatchers,
drivers and subcontractors are all able to call up the data
they need quickly and flexibly, and from any location.
CHAIRMAN'S LETTER 43
The Board of Management
A | To Our Shareholders
We have set ourselves the goals of being the leaders in the area of technology
and innovation, of inspiring our customers and of continuing our profitable growth.
We intend to shape the safe and sustainable individual mobility of the future with
outstanding products and services and with pioneering innovations. In this way, we will
create value - for our shareholders, our customers, our employees and society in
general. To achieve that, we are pursuing a globally oriented technology and growth
strategy. We reached some major milestones in the year under review - financial
year 2015 was an overall success. That will be to the benefit also of our shareholders:
through a significantly higher dividend and an attractive share price.
We are steadily implementing
our strategy
A | TO OUR SHAREHOLDERS | CONTENTS 45
Dieter Zetsche
Die t
Sincerely yours,
As you can see, Daimler is moving at high speed in the right direction.
We look forward to continuing this journey with you, our shareholders.
Our course for the years ahead is clear: We will further strengthen our core
business, grow worldwide, lead in terms of technology, and push forward
with the digitization of our products and services and along our entire value chain.
For this purpose, we will significantly increase our budget for research and
development and our capital expenditure in the next two years. We will do that
on the basis of sound finances and with the goal of sustainably strengthening
our future competitiveness. We need to safeguard the level of profitability we
have achieved over the long term and generally make the Group more robust.
CHAIRMAN'S LETTER
44
For our commercial vehicles, a special focus in 2016 is the IAA Commercial
Vehicles Show in Hanover, where we will once again demonstrate our
technology leadership in the areas of connectivity, safety and efficiency.
We will also expand our global presence. Last October, the first of six
international regional centers was opened in Dubai. These centers will enhance
our proximity to customers and allow us to fully utilize the potential of
new growth markets in the future. We will also expand our platform strategy.
For example, we will launch our medium-duty engine family also in the
NAFTA region in 2016.
46
Against this backdrop, the product offensive at Mercedes-Benz enters the next
phase. With the new E-Class, we have already had the year's most important
premiere. The most intelligent business sedan sets new standards for interior
design and autonomous driving. Another major feature of the year 2016
will be our "Dream Cars." Spread over the year, we will present a whole range
of highly emotive automobiles. In addition, the products that we launched
in 2015 will have their full market impact this year.
All of this success was made possible by our 284,000 employees and their
untiring efforts. On behalf of the entire Board of Management, I would like to
thank them for their excellent work.
Daimler Financial Services posted record levels of new business and contract
volume. Meanwhile, we finance or lease nearly half of all the vehicles we sell.
Daimler Buses performed well in a difficult market environment, although
we did not quite match the unit sales of the previous year. In the future,
we intend to profit from the growth potential of the Indian market, and we have
already charted the course: After a construction period of just two years,
series production started in fall last year at our new bus plant in Chennai.
At Mercedes-Benz Vans, the Sprinter in particular gave us reason to celebrate.
The bestseller not only had its twentieth anniversary in 2015, it also set a
new sales record. Another highlight was the market launch of the Vito in North
and South America. In total, we increased our unit sales of all van models
by nine percent last year.
Daimler Trucks reached a major milestone in 2015 with sales of more than
500,000 vehicles. In regional terms, the development of the truck business
was very varied. The decrease in unit sales in the weak Latin American market
was offset by an exceptionally strong performance in North America.
We underscored our role as the leading truck manufacturer with milestones
in the field of autonomous driving. In Nevada, we received the very first
road approval for a truck driving autonomously. We also tested the first
autonomous series-production truck on a German autobahn.
Mercedes-Benz Cars played a large part. With sales of more than two million
vehicles, we set our fifth consecutive record for unit sales. This means that
we were once again the world's strongest-growing premium brand. For the first
time, China was the most important market for Mercedes-Benz. Our multitude
of models is the key to this success. The main drivers of the sales growth were
the C-Class, our SUVs and the compact cars. In addition, we achieved our
profitability target of a ten-percent return on sales in 2015.
CHAIRMAN'S LETTER
42
How did the individual divisions contribute to these outstanding results?
Our numbers show that we have the potential to do that: 2.9 million customers
decided in favor of a vehicle from the Daimler Group last year – an absolute
record. And at 149.5 billion euros, our revenue was higher than ever before
as well. EBIT from the ongoing business increased by 36 percent to
13.8 billion euros. The bottom line is a net profit of 8.7 billion euros. At the
Annual Shareholders' Meeting, the Board of Management and the
Supervisory Board will therefore propose the distribution of the highest
dividend in our company's history.
-
to the top is hard - staying at the top is even harder. But that is our ambition -
in motorsport and in our core business: We want to be in the lead on a
sustained basis.
2015 was an extremely successful year for your company. We achieved a lot.
In Formula 1, for example, we won both the drivers' championship and the
constructors' title. Some people might think, “Great, but you already did that
the year before." That's right. And that's exactly what it's about. Getting
There is every indication that 2016 will also be a good year. Although the
world economy is growing only moderately and there are many challenges
ahead of us, the year is an opportunity for further improvement.
CHAIRMAN'S LETTER 41
Report of the Supervisory Board
The Supervisory Board
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 37
"Safety is one of the fundamental
brand values at Daimler."
On the road with a safety pioneer
Mercedes-Benz Marco Polo
of the OM 471 engine is designed for efficiency like
no other long-distance truck before it."
"The Mercedes-Benz Actros with the latest generation
fuelduel.com/
Further information:
Fuel Duels: second round
The Mercedes-Benz Actros proved to be the most efficient
truck in its class in Fuel Duels held with leading European
competitors. A total of 90 semitrailer trucks were driven
for nearly 9 million kilometers in 1,901 Fuel Duels in 22
countries in Europe. The Actros performed outstandingly,
coming out on top in more than 90 percent of the compar-
ative tests, with an average fuel consumption advantage
of 10.3%. At the end of 2015, the Actros began another
round of Fuel Duels with the new-generation OM 471 engine.
Significantly more efficient – also in the highly
competitive Fuel Duels
The outstanding fuel consumption offered by the Actros
long-distance truck not only pays off for our customers in
hard cash; it also once again underscores Daimler's tech-
nological expertise and innovative capability.
Maximum economy in the tough transport business
The progress that's been made is impressive. For example,
fuel consumption in the new-generation OM 471 has again
been considerably reduced – this time by up to 3%. The
average fuel consumption of the Mercedes-Benz Actros is
now as much as 13% lower than in 2011. By comparison,
fuel-saving progress normally amounts to 1.5% per year in
the commercial vehicle industry.
48
measures have led to further optimization of the outstand-
ing attributes of the OM 471 heavy-duty engine in its latest
development stage, and operating costs are therefore
lower as well.
tion system and an
second generation of the
X-Pulse fuel injection
system, a patented
exhaust gas recircula-
Five output classes with fur-
ther optimized torque, the
Second innovation stage is
even more efficient
Squaring the circle: even lower fuel consumption
and emissions despite improved performance
A revolution took place in 2011 in the form of the all-new
OM 471 engine from Mercedes-Benz. With 250,000 units
worldwide, it is the top-selling engine for our heavy-duty
commercial vehicles. Daimler has boosted efficiency even
further in the latest generation of the OM 471 engine,
which now ensures that the Mercedes-Benz Actros and the
premium coaches from Mercedes-Benz and Setra are even
cleaner and more economical, even as their engine output
has increased.
Whether it's vans, trucks or buses - economy is the top
priority for freight and passenger transport. Lower fuel
consumption and CO2 emissions are the key factors that
offer economic benefits for our customers - and added
value for society. That's why Daimler has significantly
reduced fuel consumption once again by systematically
optimizing its OM 471 engine.
66
Objectives and Strategy
62
Daimler and the Capital Market
56
54
Highlights of 2015
even more robust, low-
maintenance design -
numerous individual
Daimler's vision of accident-free
Thane holders,
Stuttgart, February 2016
Mercedes-Benz Marco Polo
on track for success
The PRE-SAFE® system familiar from passenger car models
is also available in the Marco Polo. This is the first time
such a system has been offered in the compact camper-van
segment. In the event of an impending collision, the system
ensures that the seat belts and airbags offer the best pos-
sible protection.
Other ultramodern assistance systems are available in the
Marco Polo as options. These include Active Parking Assist,
a 360-degree camera, DISTRONIC PLUS proximity cruise
control, the COLLISION PREVENTION ASSIST distance warn-
ing system, Traffic Sign Assist with a wrong-way warning
function, Lane Keeping Assist, Blind Spot Assist, the LED
Intelligent Light System and Adaptive Highbeam Assist.
Additional optional assistance systems
The range of standard equipment in the Marco Polo is
exemplary and includes ATTENTION ASSIST, which detects
signs of driver fatigue, and Crosswind Assist, which can
reduce the negative impact of dangerous wind gusts by
supporting the driver by means of targeted braking - a
unique feature in the compact camper-van segment.
The Marco Polo, which is based on the Mercedes-Benz
V-Class multipurpose vehicle, perfectly combines leisure
and daily use. In addition, a total of 11 assistance systems
ensure a high level of safety with the help of state-of-the-
art radar, cameras and ultrasound sensors based on the
Mercedes-Benz Intelligent Drive concept.
Safe feeling as standard: Marco Polo with unique
driver assistance systems
The Marco Polo is also the first camper van to demonstrate
exceptional occupant protection and installation stability
through participation in a crash test in addition to legally
required safety tests. During a collision at 56 km/h, the
vehicle structure was able to absorb all impact forces with-
out any deformations in the interior. All of the installations
also remained undamaged and the doors of the furniture in
the interior stayed closed.
The Marco Polo is extremely successful. Demand
for the camper van continues to rise and the model
has received awards from two trade journals. The
camper van took first place in the readers' choice
competition of AUTO BILD REISEMOBIL magazine
for the "Goldene AUTO BILD Reisemobil 2015"
award, while readers of promobil named it "Compact
Camper Van of the Year" in 2016, as they had in the
previous year.
Dea
Close cooperation between our automotive divisions and
between those divisions and Daimler Group Research have
given us a considerable edge over our competitors. This in
turn offers a major advantage, especially in terms of vans,
Safety first: setting the pace and the standards
Our development work on safety systems takes into
account not only future legal requirements but also the
actual situation on roads and highways. This approach has
proven to be very successful, as our assistance systems
in vehicles with the star and those built by other Daimler
brands are virtually synonymous with top-class safety.
Daimler already builds the world's safest vehicles - and
we still have plenty of ideas about how to make passenger
and road freight transport even safer in the future.
driving promotes the development of
outstanding safety technologies, and
the Marco Polo from Mercedes-Benz
Vans is no exception.
Whoever said ecology and economy
don't mix? Daimler is demonstrating
that they do with the latest generation
of the OM 471 engine. Thanks to its
second stage of innovation, the engine
is more efficient than ever before.
Setting the pace for the most
efficient trucks and buses
Latest generation of the OM 471 engine
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 35
whose technological similarity to Mercedes-Benz pas-
senger cars allows innovative technologies in cars
to be quickly transferred. This is also the case with the
Marco Polo and Marco Polo ACTIVITY models from
Mercedes-Benz Vans.
S.MP 4475
The Marco Polo: exemplary safety confirmed by TÜV
The compact camper van combines maximum functionality
with style and aesthetic appeal. It also offers a level of
safety above and beyond the legal requirements - a fact
that was confirmed in August 2015, when Mercedes-Benz
Vans was presented with a seal of quality for Occupant
Protection in the Marco Polo by the TÜV Rheinland tech-
nical inspection agency. It is the first and, to date, only
camper van manufacturer to ever receive such an award.
The future is already taking shape
S.MP 4470
E
of cars in EU down by 6 g/km
average CO2 emissions
123 g/km
proposed dividend
€3.25
to €13.8 billion
from ongoing business
80 cents higher than in the prior year
+36%
revenue growth
to €149.5 billion
+15%
A lot achieved -
more to come
39
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
increase in EBIT
Daimler already brings to life today many of the aspects of the mobility of
tomorrow. Our fascinating vehicles, technologies and mobility concepts
perfectly combine the wishes of our customers with the options offered by
the digital world. We at Daimler have already achieved a great deal as we
move into the new era of intelligent mobility - and we still have a lot planned
as well. As a pioneer, we will continue to exploit our innovative capabilities
and the potential offered by further digitization in order to help shape the
future of the automobile at the cutting edge of our industry.
Wolfgang Bernhard | 55
Daimler Trucks and Buses,
During a two-day strategy workshop at the Mercedes-Benz
plant in Sindelfingen in the fall of 2015, the Supervisory Board
was first informed, in connection with recent events, about
the impact of the emissions issue on a competitor in the German
automotive industry. In that context, the Supervisory Board
received a detailed presentation of the current situation in all
of the Group's automotive divisions, and ascertained that
no so-called defeat devices, which non-permissibly restrict
the effectiveness of exhaust-gas aftertreatment, are used
or have been used at Daimler.
Furthermore, in a joint meeting with the advisory board for
integrity and corporate responsibility, the Supervisory Board
dealt with, amongst other things, the Group's role in the field
of sustainability. The participants in the meeting discussed the
Group's international standards relating to working conditions,
the promotion of human rights and possibilities of making
a positive contribution to the development of society in certain
regions, as well as the Group's sustainability communication.
Following discussion of the course of business and the results
of the first half of 2015, in its meeting in July, the Supervisory
Board received detailed information on the business development
of Daimler Financial Services worldwide and in particular
in China, and subsequently approved a capital increase at
Mercedes-Benz Bank AG. The Supervisory Board also dealt
with the planned "Mercedes-Benz Stadium" sponsoring project
as an advertising and communication platform at the new
location of Mercedes-Benz USA in Atlanta, and approved the
project. Subsequently, the Supervisory Board received detailed
information on the planned joint acquisition of the HERE
digital mapping business from Nokia Corporation by Daimler,
Audi and BMW. Through the joint acquisition of HERE, it is
intended to create an open, independent and value-adding
platform for cloud-based maps and mobility services. The
Supervisory Board approved the project in written circulated
form in late July 2015.
Subsequently, the Supervisory Board dealt with questions of
corporate governance and the subject of Board of Management
remuneration. In addition, approval was granted for the other
board memberships and sideline activities of the members of the
Board of Management that were presented in the meeting.
One of the items on the agenda of the Annual Shareholders' Meet-
ing held on April 1, 2015 was the reelection of Dr. Paul Achleitner
as a member of the Supervisory Board representing the
shareholders. After he was elected by the Annual Shareholders'
Meeting, the Supervisory Board reelected Dr. Paul Achleitner
as a member of the Nomination Committee.
Daimler Financial Services,
Appointed until December 2019
Also in the meeting on February 13, 2015, the Supervisory Board
received detailed information on the strategy for information
security at Daimler. This included the question of how the Group's
different IT systems identify and repel attacks by hackers.
The Supervisory Board also discussed the current status of the
most important legal proceedings such as the arbitration
proceedings with regard to Toll Collect or the EU antitrust pro-
ceedings against truck manufacturers. After that, the
Supervisory Board discussed the results of the efficiency audit
carried out in 2014, which once again confirmed the very
good and constructive cooperation within the Supervisory Board
and with the Board of Management. Suggestions for the
further optimization of the cooperation were effectively acted
upon and implemented during the year.
In another meeting at the end of April 2015, the Supervisory
Board dealt with the various aspects of the subject of sustain-
ability and its importance for the Group. The detailed discussion
covered the development of resource consumption and
improved energy efficiency in production, the sustainable further
development of the product portfolio and the implementation
of integrity at the Group, as well as the legal and ethical questions
arising in the context of autonomous driving. Subsequently,
the Supervisory Board received information on the status of the
strategic cooperation with Renault-Nissan with regard to
the expansion of the Mercedes-Benz product portfolio. Specific
details were discussed of the project to offer in the future a
Mercedes-Benz pickup with the brand's typical vehicle attributes
of safety, comfort and high quality. In addition, the Supervisory
Board discussed the strategy of the worldwide service and
spare-parts organization. Furthermore, the Supervisory Board
was occupied with the contents and possible legal conse-
quences for the Company of antitrust proceedings, as well as
the proportion of women in the Supervisory Board and the
Board of Management in the context of corporate governance
topics. The background was legislation for equal participation
of women and men in management positions, which came into
force in May 2015. For the composition of the Board of
Management, the Supervisory Board decided on a target for
the proportion of women of 12.5%, in line with the status
quo, which is to apply until December 31, 2016.
Finance & Controlling,
Wilfried Porth | 57
Head of Mercedes-Benz Cars,
Appointed until December 2019
Dieter Zetsche | 62
Chairman of the Board of Management,
Appointed until December 2017
Ola Källenius | 46
Mercedes-Benz Cars
Marketing & Sales,
Renata Jungo Brüngger | 54
Integrity and Legal Affairs,
Appointed until December 2018
IT & Mercedes-Benz Vans,
Appointed until April 2017
of Labor Relations,
Human Resources and Director
Appointed until December 2016
Cars Development,
Bodo Uebber | 56
Group Research & Mercedes-Benz
elected until 2018
(IG Metall)
Therefore, in connection with its decision to propose the
reelection to the Supervisory Board of Dr. Manfred Bischoff
as a member representing the shareholders at the Annual
Shareholders' Meeting in 2016, the Supervisory Board also
dealt with the age limit for members, which is anchored in the
rules of procedure of the Supervisory Board in fulfilment of
the corresponding recommendation of the German Corporate
Governance Code. Accordingly, candidates are generally to
be proposed for election to the Supervisory Board for a full period
of office only if they are not older than 72 years at the time
of the election.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
52
The Supervisory Board also recognizes the importance
for the composition of the Supervisory Board of an age limit
and a rule limiting the period of membership.
In the Supervisory Board of Daimler AG, the proportion of 30%
women is fulfilled on the shareholder side as of December 31,
2015 by the members Sari Baldauf, Andrea Jung and Petraea
Heynike. On the employee side, the proportion of women as of
that date is 20% with Dr. Sabine Maaßen and Elke Tönjes-
Werner. In its meeting on October 1, 2015, the Supervisory Board
dealt with the specific proposals for candidates for election
to be made at the Annual Shareholders' Meeting in 2016, and,
against this backdrop, stated that the shareholder side and
employee side should separately achieve the legally prescribed
proportion of women. The members representing the share-
holders stated that they object to the overall fulfilment of the
statutory gender quota. Subsequently, the Supervisory Board
decided to propose the reelection to the Supervisory Board of
Dr. Manfred Bischoff and Petraea Heynike at the Annual
Shareholders' Meeting in 2016. In the case that they are elected,
the statutory gender ratio will continue to be fulfilled on the
shareholder side. The next election to the Supervisory Board of
members representing the employees will take place in 2018.
For supervisory boards subject to parity codetermination, like
that of Daimler AG, legislation for equal participation by women
and men in executive positions prescribes a binding gender
ratio of at least 30% women to be implemented in the context
of new appointments as of 2016. The ratio is to apply to the
entire supervisory board. If the side of the supervisory board
representing the shareholders or the side representing the
employees objects to the chairman of the supervisory board
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
The Supervisory Board is convinced that effective work in
the Supervisory Board in terms of good corporate governance
requires two things: On the one hand, its members must
have high levels of specialist expertise. On the other hand,
diversity amongst the members in terms of internationality,
gender, experience and cultural background must reflect the
Group's size and internationality. Both of these requirements
are fulfilled at Daimler.
The members of the Supervisory Board of Daimler AG are
obliged to disclose conflicts of interest - especially those that
might arise due to an advisory or board function for a customer,
supplier or creditor of Daimler or for other third parties - to the
entire Supervisory Board. In fulfilment of the relevant recom-
mendations of the German Corporate Governance Code, the
Supervisory Board provides information on any conflicts of
interest that occur and on how they have been dealt with in its
report to the Annual Shareholders' Meeting. There were no
indications of any actual or potential conflicts of interest in 2015.
During the year 2015, the Supervisory Board was continually
occupied with standards of good corporate governance.
Corporate governance
Other topics dealt with in the December meeting were corporate
governance and Board of Management remuneration in light
of the recommendations of the German Corporate Governance
Code. Finally, the Supervisory Board dealt with the probable
main topics of the year 2016. Following the meeting of the
Supervisory Board in December, the members of the Supervisory
Board received information on the current stage of legislative
developments in this field in the context of an optional corporate
governance session.
At the beginning of the meeting held in December 2015, the
members of the Supervisory Board were occupied in the context
of a vehicle presentation with new vehicle models, design
studies and future-oriented technologies. Subsequently, the
Supervisory Board dealt with the departure of Dr. Christine
Hohmann-Dennhardt and the appointment of Renata Jungo
Brüngger to the Board of Management. In the further course
of the meeting, the Supervisory Board dealt in detail on the
basis of comprehensive documentation with the operational
planning for the years 2016 and 2017. This included discussion
of existing opportunities and risks as well as the Group's risk
management. In addition, the Supervisory Board approved
the capital increase for a company of the Group in Brazil
as well as a contribution to the German pension fund assets.
The Supervisory Board was also informed about the planned
expansion of transmission production at an existing Daimler
facility in Romania, and approved that project.
Furthermore, the members of the Supervisory Board representing
the shareholders decided on October 1, 2015, on the basis
of recommendations by the members of the Nomination
Committee, to propose to the Annual Shareholders' Meeting
that Dr. Manfred Bischoff and Petraea Heynike be reelected
to the Supervisory Board with effect as of the end of the Annual
Shareholders' Meeting held on April 6, 2016 and until the
end of the Annual Shareholders' Meeting that decides on ratifi-
cation of their actions in the year 2020.
The Supervisory Board was also informed about the preventive
measures taken by the Group in connection with antitrust-law
compliance and about the most important initiatives for the
creation of a future-oriented sales and marketing organization
for Mercedes-Benz Cars. Other items on the agenda were
the development of legislative conditions for the continuous
reduction of CO2 emissions and the ongoing development
of alternative drive systems at Daimler.
After that, the Supervisory Board experienced numerous
of the Group's topics for the future first hand under the heading
of "Objectives and digital transformation." The heads of
specialist departments used market stalls and exhibits to give
the members of the Supervisory Board and the Board of
Management direct insights into new products and technologies,
such as "Industry 4.0," "Transport systems of the future from
Mercedes-Benz Vans" and "Communication in the digital world."
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 51
Subsequently, the Supervisory Board received information
on the strategic goals of Daimler AG and the divisions, as well
as on the stage of their implementation so far. The starting
point was an assessment of the markets and the automotive
environment in the year 2025. The Supervisory Board dealt
in detail with the expected changes in structural conditions and
risks. Important points for discussion included the subjects
of the mobility of the future, connectivity and the digitization
of processes and systems along the entire value chain. After
that, the Supervisory Board discussed the key financial figures
and goals for the Group and the divisions. Other focuses of
the annual strategy meeting were the development of the Chinese
and Brazilian economies and the prospects for Daimler in
those two markets.
A | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 47
Hubertus Troska |55
Greater China,
Appointed until December 2020
Thomas Weber | 61
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Stuttgart
In the Supervisory Board meeting held on February 13, 2015,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on page 52.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the year 2014, each of which had been issued with
an unqualified audit opinion by the external auditors, as well as
with the reports of the Audit Committee and the Supervisory
Board, the corporate governance report, the remuneration report
and the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with com-
prehensive documentation. The Audit Committee and the
Supervisory Board dealt with those documents in detail and
discussed them intensively in the presence of the external
auditors, who reported on the results of their audit and were
available to answer supplementary questions and to provide
further information. Following the final results of the review by
the Audit Committee and its own review, the Supervisory
Board declared its agreement with the results of the audit carried
out by the external auditors. It determined that no objections
were to be raised and approved the financial statements and the
combined management report as presented by the Board of
Management. The company financial statements of Daimler AG
for the year 2014 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the Board
of Management on the appropriation of distributable profit.
In addition, the Supervisory Board approved the report of the
Supervisory Board, the corporate governance report and the
remuneration report, as well as its proposed decisions on the
items of the agenda for the 2015 Annual Shareholders' Meeting.
Dr. Paul Achleitner
Sari Baldauf
* Representative of the employees
We have set the course for further
profitable growth
Daimler continued to implement its strategy of profitable growth at an accelerated
pace in 2015. The most important factor in the Group's success is our extremely
attractive and innovative range of products and services, which we expanded system-
atically during the year under review. We have further consolidated our leading
position in the areas of autonomous driving and mobility systems of the future, and
we have consistently moved ahead with digitization at all levels. Our success
in 2015 is also reflected by the numerous awards we received for our products,
as well as by our outstanding achievements in motor sports.
WORLD PREMIERE
FREIGHTLINER INSPIRATION TRUCK
HOOVER DAM, MAY 5TH, 2015
INFINITE INSPIRATION
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
57
World premiere of the Freightliner Inspiration Truck
at Hoover Dam in May 2015
The Freightliner Inspiration Truck is the first autonomously
driven truck licensed to operate on a public highway.
German Metalworkers' Union (IG Metall),
Dr. Manfred Bischoff - Chairman
When it set this age limit, the Supervisory Board deliberately
decided against a strict age limit and in favor of a flexible rule
allowing the required scope for the appropriate assessment
of the circumstances of each individual case. The decision of
the Supervisory Board to propose to the Annual Shareholders'
Meeting the reelection to the Supervisory Board of Dr. Manfred
Bischoff for another full period of office was based, amongst
other things, on the very positive assessment of his service by
the other members, on the successful and constructive-critical
cooperation with the Board of Management, and on giving
a signal of stability and continuity. Furthermore, the election
proposal is intended to maintain the composition of the
Supervisory Board with regard to the various areas of expertise
of its members and to ensure a balanced age structure. All
other members of the Supervisory Board had not yet reached
the age limit at the time of their election. This applies also
to Ms. Heynike, who will also be proposed for reelection at the
Annual Shareholders' Meeting in 2016.
Nomination Committee
Joe Kaeser
appointed until 2018
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG
Retired from the Supervisory Board:
Jörg Hofmann*
Frankfurt am Main
First Chairman of the German Metalworkers' Union (IG Metall)
(retired on October 31, 2015))
Committees of the Supervisory Board:
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Presidential Committee
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Audit Committee
Dr. Clemens Börsig - Chairman
Michael Brecht*
Dr. Sabine Maaßen*
50
Roman Zitzelsberger*
Stuttgart
The Board of Management
48
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Report of the Supervisory Board
Dear Shareholders, the Supervisory Board dealt intensively and extensively with the strategic and
operational development of the Daimler Group in seven meetings during the 2015 financial year.
In the year 2015, the Supervisory Board performed its tasks
as defined by the law, the Articles of Incorporation and the rules
of procedure. It continually advised and supervised the Board
of Management on the management of the company. It examined
whether the annual company and consolidated financial
statements, the combined management report for the Company
and the Group, and the other financial reporting were in
conformance with the applicable requirements. In addition, it
approved numerous business matters for which its consent
was required following careful reviews and consultations. Those
matters included finance and investment planning, major
capital changes at companies of the Group, key individual invest-
ments and the conclusion of contracts with particular impor-
tance for the Group. The Board of Management informed the
Supervisory Board about a large number of other actions
and transactions and the two boards discussed those matters
together, for example the further development of strategic
programs in the various divisions and the status of various coop-
eration projects. Together with the Board of Management,
the Supervisory Board held intensive and detailed discussions
on the information and assessments that were material for
its decisions and recommendations.
During the reporting period, the Board of Management
regularly informed the Supervisory Board about all significant
key financials of the Group and the divisions. In addition, it
continually provided information to it on all fundamental questions
of corporate planning including finance, investment, sales
and personnel planning, current developments at the companies
of the Group, the development of revenue and the situation
of the Company and the divisions. In addition, the Board
of Management reported to the Supervisory Board continually
on the return on equity and the Group's liquidity situation,
the development of sales and procurement markets, the overall
economic situation and developments in the capital markets
and in the area of financial services. Additional topics included
the further development of the product portfolio, securing
the Group's long-term competitiveness and the ongoing imple-
mentation of the measures for safeguarding future-oriented
and sustainable mobility. The Supervisory Board also dealt in
detail with the development of the share price and the
related background as well as the expected impact of strategic
projects on the share price.
Daimler continued its profitable growth also in the year under
review. The strategy is expressly supported by the Supervisory
Board and is being implemented in a disciplined and successful
manner. New records were set in 2015 for unit sales, revenue
and earnings. Challenges resulting from partially very unfavorable
conditions in some markets were more than offset by successes
in other regions. The Group's financial strength and sound
balance sheet allow this growth strategy to be continued while
paying out an attractive dividend to our shareholders. The
model range was further expanded once again last year with
competitive products and innovative technologies. Structural
adjustments and ongoing efficiency improvements make the
business model more robust with regard to short- and long-
term changes in the business environment. As a result, we intend
to play a role in shaping the significant changes that our
industry is expected to go through in the coming years from
a position of strength. For this purpose, large volumes of advance
expenditure for the future will be made also in the coming
years. That includes investment in the core business and the
utilization of additional market potential, as well as the
development of new technologies, increasing digitization
and the development of innovative mobility services.
Cooperation between the Supervisory Board
and the Board of Management
The meetings of the Supervisory Board featured open and inten-
sive exchanges of information and opinions. The Supervisory
Board arranged an executive session in each of its meetings
to be able to discuss topics in the absence of the Board of
Management. Participation in the meetings by the members
of the Supervisory Board was at a high level in the year 2015,
as in the previous years. All members of the Supervisory Board
participated in significantly more than half of the meetings
of the Supervisory Board and the committees of which they
are members in the year under review.
Dr. Manfred Bischoff, Chairman of the Supervisory Board
The members of the Supervisory Board regularly prepared
for upcoming resolutions on the basis of documentation that
had been provided in advance by the Board of Management.
They were supported by the relevant committees and intensively
discussed the actions and transactions upon which decisions
were to be taken with the Board of Management. The members
of the Supervisory Board independently attended such courses
of training and further training regarded as necessary for the
performance of their tasks. In this context, in the meetings
of the Supervisory Board and in special training courses, they
dealt with issues of fundamental importance for the Group
such as the macroeconomic situation of key sales markets,
questions of corporate governance and changes in the legal
framework, and new products and forward-looking technologies.
In addition, the members representing the employees and
the members representing the shareholders regularly prepared
the Supervisory Board meetings in separate discussions, which
were attended by the members of the Board of Management.
The Board of Management informed the Supervisory Board with
the use of monthly reports and risk reports about the most
important indicators of business development and existing risks,
and submitted the interim financial reports to the Supervisory
Board. The Supervisory Board was kept fully informed of specific
matters also between its meetings. In addition, the Chairman
of the Board of Management informed the Chairman of the
Supervisory Board in regular discussions about important devel-
opments and about those matters that were to be submitted
to the Supervisory Board to pass resolutions on or to take note of.
As required in individual cases, for example in cases of special
urgency, the members were requested to pass resolutions
in writing, following consultation with the Chairman. For the
preparation of such proposed resolutions, comprehensive
and conclusive documentation was distributed to the members
of the Supervisory Board. Furthermore, the members of the
Board of Management were available for a bilateral exchange
of opinions and to answer any questions.
Topics dealt with by the Supervisory Board in the year 2015
In a meeting attended by the external auditors in early February
2015, the preliminary key figures of the annual company and
consolidated financial statements for 2014 and the dividend pro-
posal to be made at the 2015 Annual Shareholders' Meeting
were discussed. The preliminary key figures for the year 2014
and the proposal on the appropriation of profit were announced
at the Annual Press Conference on February 5, 2015.
Appointed until February 2018
Chairman of the Works Council, Headquarters, Daimler AG
elected until 2018
The vehicle boasts the highest levels of efficiency, safety and
connectivity. The basic elements of the autonomous vehicle
system in the Inspiration Truck are already being successfully
implemented in the Freightliner Cascadia Evolution.
Wolfgang Nieke*
Jörg Spies*
elected until 2018
International Secretary of the National Confederation of the
Metalworkers of CUT - CNM/CUT
Director of Communications of the Metalworkers' Union ABC;
President of the Fundação Sociedade Comunicação,
Cultura e Trabalho (Foundation Society of Communications,
Culture and Work);
São Paulo
Valter Sanches*
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München - Chairman
Tetra-Laval International S.A. Group
elected until 2019
in München
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft, Aktiengesellschaft
Munich
Dr. Bernd Pischetsrieder
elected until 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
Stuttgart
Other supervisory board memberships/directorships:
ThyssenKrupp AG
In its meeting in December, the Supervisory Board updated
the rules of procedure of the Supervisory Board and its commit-
tees and decided on a limitation on the period of office in
the Supervisory Board in line with the new recommendation
of the German Corporate Governance Code of May 5, 2015.
This means that only such candidates are now generally to be
elected to the Supervisory Board for a full period of office that
have not already been members of the Supervisory Board for
three full statutory periods of office at the time of the election.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 53
Corporate governance at Daimler is described in detail in the
corporate governance report on
remuneration report on
Climate and Land Use Alliance
Aiglon College
Schulich School of Business
Other supervisory board memberships/directorships:
elected until 2016
of Nestlé S.A.
Former Executive Vice President of the Executive Board
Vevey
Petraea Heynike
Trumpf GmbH + Co. KG - Chairman
Fuchs Petrolub SE - Chairman
Chairman
Other supervisory board memberships/directorships:
BASF SE
elected until 2018
Chairman of the Supervisory Board of BASF SE
Ludwigshafen
Dr. Jürgen Hambrecht
IOR Istituto per le Opere di Religione (Vatican Bank)
Emerson Electric Co.
Bayer AG
Other supervisory board memberships/directorships:
Linde AG
elected until 2017
of Deutsche Bank Foundation
Chairman of the Board of Directors
Also in December, the Supervisory Board approved the 2015
declaration of compliance with the German Corporate
Governance Code pursuant to Section 161 of the German Stock
Corporation Act (AktG). With the exceptions explained in the
declaration, all the recommendations of the Code have been
complied with and continue to be complied with.
Frankfurt am Main
Dr. Clemens Börsig
Michael Bettag*
Nuremberg
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
General Counsel of the German Metalworkers' Union
Frankfurt am Main
Dr. Sabine Maaßen*
elected until 2018
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Sindelfingen
Dr. Frank Weber*
Deputy Chairman of the General Works Council of Daimler AG
elected until 2018
Chairman of the Works Council at the Sindelfingen Plant;
Sindelfingen
Ergun Lümali*
elected until 2018
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
AkzoNobel N.V.
Bremen
NXP Semiconductors N.V.
Other supervisory board memberships/directorships:
Allianz Deutschland AG
Chairman of the Board of Management of Siemens AG
elected until 2019
Munich
Joe Kaeser
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 55
General Electric Company
Other supervisory board memberships/directorships:
Apple Inc.
President and Chief Executive Officer of Grameen America, Inc.
elected until 2018
New York
Andrea Jung
appointed until 2018
(since January 1, 2015)
Elke Tönjes-Werner*
Deutsche Telekom AG
District Manager Baden-Württemberg
Other supervisory board memberships/directorships:
The Supervisory Board warmly thanks all of the employees and
the management of the Daimler Group for their committed
contributions to the successful year 2015. Special thanks are
due to Jörg Hofmann, who closely accompanied the Group
since 2008 with strong commitment and stepped down from
the Supervisory Board as of October 31, 2015. The Supervisory
Board also thanks Dr. Christine Hohmann-Dennhardt for the
very good work she did for Daimler AG.
Stuttgart, February 2016
The Supervisory Board
Seafred Riefe
Dr. Manfred Bischoff
Chairman
54
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
The Supervisory Board
Dr. Manfred Bischoff
Munich
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Chairman of the Supervisory Board of Daimler AG
elected until 2016
Other supervisory board memberships/directorships:
Airbus Group N.V.
SMS Holding GmbH
UniCredit S.p.A.
Dr. Bernd Bohr
Stuttgart
Former Member of the Management Board
of Robert Bosch GmbH
elected until 2019
Other supervisory board memberships/directorships:
Formel D GmbH
Michael Brecht*
Gaggenau
Chairman of the General Works Council, Daimler Group
and Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG;
Deputy Chairman of the Supervisory Board of Daimler AG
elected until 2018
Dr. Paul Achleitner
Munich
Chairman of the Supervisory Board of Deutsche Bank AG
elected until 2020
Fortum OYjChairwoman
Sari Baldauf
Appreciation.
Helsinki
of KPMG on the annual company financial statements of
Daimler AG and the consolidated financial statements, each
including the combined management report, as well as
drafts of the reports of the Supervisory Board and of the
Audit Committee.
of the Networks Business Group of Nokia Corporation
elected until 2018
Former Executive Vice President and General Manager
pages 188 ff and in the
pages 122 ff of this Annual Report.
Report on the work of the committees
Presidential Committee
The Presidential Committee convened six times last year. It dealt
primarily with corporate governance topics and questions of
remuneration, as well as with personnel matters of the Board
of Management. As in previous years, compliance targets
constituted part of the individual target agreements of the
members of the Board of Management. Once again, additional
non-financial targets were also included as criteria in the
target agreements. For the past financial year, they were the
further development and permanent establishment of integ-
rity, diversity, the maintenance and enhancement of a high level
of employee satisfaction, and high product quality.
Audit Committee
The Audit Committee met six times in 2015. Details of those
meetings are provided in a separate report of that committee.
pages 182 ff
Nomination Committee
The members of the Nomination Committee prepared a recom-
mendation for the Supervisory Board's proposal to the Annual
Shareholders' Meeting in 2016 on the candidates for election
to the Supervisory Board. The proposal on the reelection of
Dr. Manfred Bischoff and Petraea Heynike take into consideration,
apart from the qualifications defined for each position, the
recommendations of the German Corporate Governance Code.
The Nomination Committee had already announced in 2014
that it would recommend the reelection of Dr. Paul Achleitner
to the Supervisory Board at the Annual Shareholders' Meeting
in 2015.
Mediation Committee
As in previous years, the Mediation Committee, a body
required by the provisions of the German Codetermination Act
(MitbestG), had no occasion to take any action in 2015.
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the responsible external auditors, who reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
Following the final results of the review by the Audit Committee
and its own review, the Supervisory Board declared its agreement
with the results of the audit by the external auditors; it deter-
mined that no objections were to be raised and approved the
financial statements and the combined management report
as presented by the Board of Management. The company financial
statements of Daimler AG for the year 2015 were thereby
adopted. On this basis, the Supervisory Board consented to
the proposal made by the Board of Management on the appro-
priation of distributable profit. Furthermore, it approved the
report of the Supervisory Board, the corporate governance
report and the remuneration report, as well as its own proposed
decisions on the items of the agenda for the 2016 Annual
Shareholders' Meeting.
Personnel changes in the Supervisory Board
The chairmen of the committees informed the members of the
Supervisory Board about the activities of the committees and
their decisions, in each case in the Supervisory Board meeting
following those decisions.
On April 1, 2015, the Annual Shareholders' Meeting elected
Dr. Paul Achleitner as a member of the Supervisory Board
representing the shareholders until the end of the Annual Share-
holders' Meeting that decides on ratification of the actions
for the year 2019. The election proposal made by the Supervisory
Board to the Annual Shareholders' Meeting was based
on a recommendation made by the Nomination Committee.
In the meeting on February 16, 2016, the Supervisory Board dealt
with the annual company financial statements, the annual
consolidated financial statements and the combined management
report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the exter-
nal auditors, as well as with the reports of the Audit Committee
and the Supervisory Board, the corporate governance report,
the remuneration report and the proposal on the appropriation
of profit. In preparation, the members of the Supervisory
Board had been provided with comprehensive documentation
including the Annual Report with the consolidated financial
statements according to IFRS, the combined management report
for Daimler AG and the Daimler Group, the corporate gover-
nance report and the remuneration report, the annual company
financial statements of Daimler AG, the proposal of the Board
of Management on the appropriation of profit, the audit reports
In a meeting in early February 2016 attended by the external
auditors, the Supervisory Board discussed the preliminary
key figures of the annual company and consolidated financial
statements for 2015 and the dividend proposal to be made
at the 2016 Annual Shareholders' Meeting. The preliminary key
figures for the year 2015 were announced at the Annual
Press Conference on February 4, 2016.
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2015
were duly audited by KPMG AG, Wirtschaftsprüfungsgesellschaft,
Berlin, and were given an unqualified audit opinion. The same
applies to the consolidated financial statements for 2015 prepared
according to IFRS.
With effect as of January 1, 2015, Michael Bettag was appointed
by the court to the Supervisory Board as a member representing
the employees, after Jürgen Langer had stepped down from
the Supervisory Board as of December 31, 2014.
In the Supervisory Board meeting on February 16, 2016,
Dr. Dieter Zetsche was reappointed as the Chairman of the
Board of Management and Head of Mercedes-Benz Cars
for a further three years as of January 1, 2017. In addition, the
Supervisory Board decided in this meeting to assign Board of
Management responsibility for Group Research & Mercedes-Benz
Cars Development to Ola Källenius as of January 1, 2017.
He will thus succeed to Professor Dr. Thomas Weber, who will
step down from his position as a member of the Board of
Management of Daimler AG after 14 years when his contract
expires on December 31, 2016.
In its meeting on December 9, 2015, the Supervisory Board
appointed Renata Jungo Brüngger as a member of the Board
of Management of Daimler AG with responsibility for Integrity
and Legal Affairs for a period of three years as of January 1, 2016.
Audit of the 2015 company and consolidated financial
statements
In the Supervisory Board meeting on February 13, 2015,
the appointment of Hubertus Troska as a member of the
Board of Management of Daimler AG with responsibility
for Greater China was extended for another five years as
of January 1, 2016.
Personnel changes in the Board of Management
(since November 4, 2015)
by the court to the Supervisory Board as a member representing
the employees, after Jörg Hofmann had stepped down from
the Supervisory Board as of October 31, 2015.
On November 4, 2015, Roman Zitzelsberger was appointed
The appointment of Dr. Christine Hohmann-Dennhardt as a
member of the Board of Management ended on December 31,
2015. Dr. Hohmann-Dennhardt became a member of the
board of management of Volkswagen AG as of January 1, 2016.
A3
A3
A-
A (low)
A-
A (low)
German Securities Identification Number
ISIN
Institutional investors hold a total of 74% of our equity capital
while private investors own 16%. Approximately 65% of our
capital is in the hands of European investors and around 24%
is held by US investors. 7 A.08 Daimler shares' weighting
in major indices rose further during the reporting year as a result
of the overall share-price rise. With a weighting of 8.67%
(2014: 8.51%), Daimler was ranked second in the German DAX
30 index at the end of 2015. 7 A.05 In the Dow Jones Euro
STOXX 50 index, our shares had a weighting of 3.63% (2014:
3.46%), which put them in fifth place. Daimler shares are listed
on the stock exchanges in Frankfurt and Stuttgart. A total
volume of 1,188 million shares were traded in Germany in 2015
(2014: 957 million). Daimler shares are also increasingly
being traded on multilateral trading platforms and in the
over-the-counter market.
Employee share purchase plan implemented once again
Staff members entitled to purchase employee shares were
able to do so once again in March 2015. As was the case
in the prior year, the employees received a discount as well
as bonus shares. At 11.7%, the participation rate was lower
than in 2014 (15.4%). A total of 20,400 employees took part
in the program (2014: 26,600), purchasing just under
300,000 shares (2014: 390,000).
Annual Shareholders' Meeting in a new venue with
an all-new Daimler corporate design
Our Annual Shareholders' Meeting took place for the first
time in the new CityCube in Berlin on April 1, 2015. The modern
building offered the perfect atmosphere for an elegant presen-
tation of the Group's new corporate design. Some 5,000 share-
holders (2014: 5,500) attended the meeting, despite very
stormy weather in Berlin. A total of 36.15% of the equity capital
was represented at the meeting (actual attendees and share-
holders who voted by absentee ballot). A large majority of the
shareholders approved each of the agenda points proposed
by the company's management. For example, the Annual
Shareholders' Meeting approved the highest dividend in the
company's history (€2.45 per share; 2014: €2.25) and reelected
Dr. Paul Achleitner, Chairman of the Supervisory Board of
Deutsche Bank AG, as a shareholder representative on the
Daimler AG Supervisory Board. All of the documents and
information regarding the Annual Shareholders' Meeting can be
found at daimler.com/investors/events/annual-meetings.
In the exhibition areas of the CityCube, Daimler presented its
technological expertise and broad range of products and
services. The presentation highlights included the F 015 research
vehicle, which points the way to the future of autonomous
driving with passenger cars and also attracted a lot of admiring
looks during the Annual Shareholders' Meeting. Our trainees
provided an insight into their work, and with "Mercedes me"
the Mercedes-Benz brand presented services in addition
to its products.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 65
Continuation of comprehensive investor relations
activities
In 2015, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development.
We organized road shows for institutional investors and analysts
in the finance capitals of Europe, North America, Asia and
Australia. We also held many one-on-one meetings at investor
conferences. This was especially the case at the international
motor shows in Geneva and Frankfurt. Sustainability-focused
investors were also able to meet and talk with company repre-
sentatives at events held at the IAA and at a conference in Paris
in November. We reported on our quarterly results in confer-
ence calls and webcasts. The presentations can be viewed on
our website at daimler.com/investors/events.
The talks with analysts and investors focused on the latest
earnings expectations for 2015, as well as on the business
development and profitability of the individual divisions and
regions. In addition, top-level managers from Mercedes-Benz
Cars discussed the strategies and goals of their division
during a capital market event held in June at our Mercedes-
AMG motor sports subsidiary in Affalterbach, Germany.
The audio recording and charts and illustrations from that event
are also available at daimler.com/investors/events.
Awards once again for the print and online versions
of the Annual Report
Annual Report 2014 was created in a pilot project that already
included elements of the new Corporate Design. The print
version in the new brushed silver look and the online version
with numerous additional features led to several prestigious
national and international awards for Annual Report 2014.
Daimler was also named the best listed company in Germany
in the "Investor's Darling" rankings of Manager Magazin,
which took into account reporting, investor relations activities
and capital market presence.
Corporate website with new software platform and layout
The broad range of information offered on our website at the
existing address ④ daimler.com was transferred to an entirely
new and more powerful software platform in November and
aligned with Daimler's new corporate design as well. In addition
to its many helpful features, the website has a responsive
layout that allows it to be displayed easily on any device in an
optimal size and format.
Number of online shareholders remains at a high level
Our shareholders continue to make good use of our range
of personalized electronic information and communication.
Approximately 84,000 shareholders once again received
the invitation and agenda for the Annual Shareholders' Meeting
by e-mail rather than by post in 2015. We would like to thank
those shareholders for helping to protect the environment and
cut costs. As was the case in the past, those shareholders
once again had the opportunity to win attractive prizes in a
lottery. Access to the e-service for shareholders and additional
information can be found at https://register.daimler.com.
Refinancing benefits from a high level of capital-market
liquidity and good ratings
The ongoing expansionary monetary policies at central banks
also impacted bond markets during the year under review.
As a result of the high level of liquidity, companies with
investment-grade ratings saw their risk premiums remain
at an attractive level despite volatile markets.
In 2015, Daimler primarily covered its refinancing needs by
issuing bonds. A large proportion of those bonds were sold
as benchmark bond issuances (bonds with high nominal volumes)
in euro and US-dollar markets. In the US capital market,
for example, Daimler Finance North America LLC issued bonds
worth a total of $9.5 billion in March, May and August 2015.
The bonds had terms of 18 months and two, three, five or ten
years. In addition, Daimler AG issued euro bonds in benchmark
format with a total volume of €1.5 billion and terms of two
and approximately four years. In 2015, Daimler AG also issued
bonds in the Chinese capital market (so-called Panda bonds)
worth a total of CNY 5.0 billion. Furthermore, many smaller bonds
were issued by the Daimler Group in a variety of currencies in
the euro market as well as in Mexico, Brazil, Argentina, Canada,
South Africa, Thailand and South Korea.
At the end of 2015, companies of the Daimler Group had
issued bonds that were still outstanding in a volume of
€51.4 billion (2014: €43.2 billion). Besides raising funds through
the issuance of bonds, Daimler also issued a small volume
of commercial paper in 2015.
Daimler also conducted several asset-backed security (ABS)
transactions in the United States, Canada and Germany during
the reporting year. In the United States, for example, the
company generated a refinancing volume of US$5.8 billion
through four issuances. A further C$0.4 billion was placed
in Canada. In addition, Mercedes-Benz Bank used the Silver
Arrow Platform to sell €1.0 billion in ABS bonds to European
investors once again.
66
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Objectives and Strategy
As the inventor of the automobile, we believe it is our mission and our duty to shape future mobility
in a safe and sustainable manner, with outstanding products and services and trend-setting
technologies. We strive to attain the leading position in all of our business activities. Our goals are
to be the leader in technology and innovation, to inspire our customers and to continue to grow
profitably. In this way, we intend to continually increase our enterprise value. We plan to achieve
our goals by focusing our activities on four strategic areas in the coming years.
Four objectives
Technology leadership and innovation
We set standards for technology and innovation. We want our
products from all the divisions to be industry leaders in terms
of safety, autonomous driving with cars and commercial vehicles,
and green technologies. We also seek to be the leader in the
use of digital technologies, both in our products and services
and as channels for maintaining contact with our customers.
We utilize the potential generated by Group-wide research
activities and predevelopment and, where possible, we make
use of standardized systems and solutions.
Delighted customers
Our leading brands in all the divisions create added value for our
customers. We aim to finish at the top of all relevant customer-
satisfaction rankings and convince customers with our outstand-
ing quality. For that purpose, we create interfaces for sales
and aftersales processes that ensure we can maintain contact
with customers at all times. We also offer our customers
tailored transport and mobility services.
0
710000
DAIGN.DE
DAI:GR
Rest of the world
DE0007100000
Stock-exchange symbol
Reuters ticker symbol
Bloomberg ticker symbol
A.07
Shareholder structure as of December 31, 2015
By type of shareholder
Kuwait Investment Authority
6.8%
Renault-Nissan
3.1%
Institutional investors
73.7%
Retail investors
16.4%
A.08
Shareholder structure as of December 31, 2015
By region
Germany
32.5%
Europe, excluding Germany
32.4%
USA
23.9%
Kuwait
6.8%
Asia
4.1%
0.3%
DAI
A.04
new products and the expansion of existing model series.
Our "Best Customer Experience" initiative is designed to offer
our customers the best experience among all automakers.
All sales, service and financial services activities are aligned
with each other throughout the entire duration of the customer
relationship - right from the first contact. New sales formats
such as mobile sales pavilions and Mercedes me stores create
meeting points that enable us to establish contact with new
customers as well. With our state-of-the-art digital product
presentations, we are creating product experiences without
having to maintain a stock of all product variants in our show-
rooms. We are also developing Mercedes me into a central
platform and service brand.
page 18
Daimler presents its new corporate design
The new corporate design is intended to underscore Daimler's
premium claim worldwide even more effectively than before.
The shiny chrome Daimler corporate logo and the use of silver
as the new main design color convey a message of modernity,
elegance and cutting-edge technology, and also highlight the
Group's relationship with Mercedes-Benz, which is Daimler's
most valuable vehicle brand.
Audi, BMW and Daimler successfully conclude HERE
acquisition
The three partners acquire the digital mapping business operated
by HERE from Nokia Corporations, with equal shareholdings.
The move will ensure the availability of HERE products and
services as a permanently open, independent and value-added
platform for cloud-based map and mobility services.
62
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Daimler and the Capital Market
Global stock markets remained volatile in 2015 and markets in some regions finished the year
with substantial gains. European share prices benefited overall from the ongoing expansionary
monetary policy of the European Central Bank (ECB), as well as from low interest rates.
The Daimler share price increased by 12% over the course of the year and thus once again
outperformed the DAX. The Board of Management and the Supervisory Board propose
an increased dividend of €3.25 per share (prior year: €2.45).
A.01
Development of Daimler's share price and of major indices
End of 2015 End of 2014
Daimler share price (in euros)
77.58
With the establishment of their joint venture, H2 MOBILITY
Deutschland GmbH & Co. KG, the companies Air Liquide,
Daimler, Linde, OMV, Shell and Total have set the stage for
a phased expansion of the hydrogen filling station network
in Germany. Plans call for approximately 400 new stations
to be built in Germany by 2023.
68.97
10,743
9,806
+10
Dow Jones Euro STOXX 50
Dow Jones Industrial Average
Nikkei
3,268
3,146
17,425
17,823
+4
-2
19,034
17,451
+9
Dow Jones STOXX Auto Index
DAX 30
566
Filling stations for fuel-cell vehicles
The milestone truck is a series-production Actros equipped
with the intelligent Highway Pilot system for testing autonomous
driving on public roads. The testing of a self-driving truck on
public roads in Germany is another milestone on the path to this
technology's market maturity - and to safe and sustainable
road freight transport in the future.
Production of BharatBenz buses in India
The first bus built by the BharatBenz brand rolls off the produc-
tion line in Oragadam. The facility there is the only Daimler
manufacturing site that builds trucks, buses and engines from
Mercedes-Benz, BharatBenz and FUSO at one location.
Cornerstone laid in Mexico
Daimler and the Renault-Nissan Alliance lay the cornerstone
for a new joint venture production plant in Aguascalientes.
The facility will manufacture premium compact models from the
Mercedes-Benz and Infiniti brands. The first Mercedes-Benz
vehicles will roll off the assembly line in 2018.
"She's Mercedes" launched
Mercedes-Benz plans to address women in a more targeted
manner in the future, as they are the fastest-growing and most
influential group of customers. To this end, the brand with
the star launches the "She's Mercedes" inspiration platform.
Further reductions in heavy-duty truck fuel consumption
Daimler takes things to the next level four years after the intro-
duction of the OM 471 heavy-duty engine: The Mercedes-Benz
Actros further improves its efficiency with up to three percent
lower fuel consumption.
Strong signal sent to the workforce
The "Safeguarding the Future" agreement at Daimler will be
extended until the end of 2020. The agreement is one of
the most extensive and important Group-wide agreements
for the workforce and has proved to be effective in difficult
times as well. It includes specific firm investment plans on the
part of Daimler and a commitment by employees to improve
efficiency and flexibility.
IAA 2015: The Mercedes Dream Car Collection
The "Mercedes Dream Car Collection" at the IAA International
Motor Show in Frankfurt features three world premieres:
the Concept IAA (Intelligent Aerodynamic Automobile), the
Mercedes-Benz S-Class convertible and the Mercedes-Benz
C-Class coupe. We also presented the new smart convertible
in Frankfurt.
Legal and ethical aspects of autonomous driving
Data protection experts, engineers, lawyers, politicians,
journalists, IT specialists and representatives of business and
industry gather in Frankfurt at Daimler's invitation during IAA
2015 to discuss open questions related to autonomous driving.
The focus is on legal, ethical and social aspects.
1,000,000th Actros delivered from the Wörth plant
The Actros stands for maximum economy, safety and comfort.
The Actros demonstrates its efficiency advantages allover Europe
in the so-called Fuel Duel. The results of over 1,900 compar-
ative tests speak for themselves: more than 90% of all duels
won, and average fuel-consumption advantage of 10%.
SV15079
Most successful motorsport year in Daimler's history
MERCEDES AMG PETRONAS clinches both the Drivers' and the
Constructors' Championship in the Formula 1 series by a wide
margin before the season ends. World Champion Lewis Hamilton
and second-place finisher Nico Rosberg dominate nearly
every race in 2015. Mercedes-Benz also captures the Drivers'
Championship in the German DTM touring car series, with
Pascal Wehrlein becoming the youngest champion of all time
at the tender age of 20.
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N
more time
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015 61
Q4
Mercedes-Benz & smart at IAA 2015
The New
smart fortwo cabrio
The New
C-Class Coupe
The New
S-Class Cabriolet
Concept IAA
Daimler begins to offer internships to refugees
Some 40 refugees begin internships at the Stuttgart-
Untertürkheim site in a project being carried out in cooperation
with the Federal Employment Agency in Germany. Daimler
plans to train several hundred refugees in professions that will
enable them to work in various industrial sectors in Germany.
First autonomous series-production truck
on a German autobahn
W
501
+13
A.02
+13
1 Closing prices
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 63
Daimler share price up by 12% over the year
Financial markets responded very favorably to the publication of
the Daimler Group's results for 2014, the positive outlook for
2015, and the recommendation that the dividend be increased
from €2.25 to €2.45 per share. This helped the share price
to rise considerably (by 30%) in the first quarter of 2015 alone.
On March 16, 2015, the Daimler share price reached €95.79.
This was the highest price for the year and also the highest value
for Daimler shares in several years. However, the Daimler share
price was also not immune to growing concerns regarding the
escalation of the Greek debt crisis, as well as the market
turbulence in China. Many investors pulled out of the market
for a short period in August, and automotive stocks were
significantly impacted by this development in light of the
importance of the Chinese market for vehicle manufacturers.
A short period of recovery followed in the run-up to the IAA
International Motor Show in Frankfurt, due in part to our solid
sales development throughout the summer months. Starting
in mid-September, reports regarding irregularities with diesel
emissions of a competitor's vehicles led to significant declines
in share prices also for other automakers and automotive
suppliers. In this situation, our share price reached its low
point of the year (€63.26) on September 29, 2015.
International stock markets then made substantial gains once
again in the fourth quarter, and our share price increased
at an above-average rate. Daimler shares closed at €77.58
on December 30. At the end of the year, the company had
a market capitalization of €83.0 billion (2014: €73.8 billion).
Daimler's share price thus increased by 12% over the course
of the year, outperforming the DAX (+10%) and in line with the
Dow Jones STOXX Auto Index (+13%). When the dividend
payout of €2.45 per share is included, our shareholders saw
the value of their investment rise by 16%.
Stock exchanges started the year 2016 with falling prices
worldwide. The main unsettling factors were concerns about
China, tension in the Middle East and the sharp fall in
commodity prices. At 9,798 at the end of January, the DAX
was 9% lower than at the end of 2015.
Dividend of €3.25 7 A.02
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €3.25 per share at the
Annual Shareholders' Meeting on April 6, 2016. We are thus
raising the dividend substantially once again (+33%), and letting
our shareholders participate in the company's financial
success. The total dividend will amount to €3,477 million
(2014: €2,621 million), which is by far the highest dividend
payout in Daimler's history.
A broad shareholder structure 7 A.07
Daimler continues to have a broad shareholder base of approxi-
mately 900,000 shareholders. The Kuwait Investment
Authority (KIA) currently owns 6.8% of the company's stock,
making it Daimler AG's largest single shareholder. The Renault-
Nissan Alliance continues to hold 3.1% of Daimler's shares.
BlackRock Inc., New York, still holds a stake above the 5%
reporting limit as defined by Germany's Securities Trading Act
(WPHG). In December 2015, BlackRock notified us that its
proportion of the voting rights was 6.12% on November 26.
The Norwegian Finance Ministry informed us that on October 26,
2015, the shares held by Norges Bank, Oslo, dropped below
the reporting limit of 3%. As of that date, the bank held 2.99%
of the voting rights in Daimler.
The aforementioned and all other voting-rights notifications
as well as notifications of shareholdings pursuant to Germany's
Transparency Directive Implementation Act are published on
the Internet at daimler.com/investors/share/voting-rights.
A.03
56.01
Daimler share price (high/low), 2015
In euros
105
100
95
90
85
80
75
70
65
60
55
50
1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15 10/1511/15 12/15
110
63.26
Lowest¹
+35
Key figures per share
2015
2014
Amounts in euros
15/14
% change
+12
15/14
% change
+21
Volatile year on global stock markets
European stock markets began the year 2015 with substantial
gains. The stock markets were boosted in particular by the
expansionary monetary policy of the ECB, which supplemented
its existing measures by initiating a government-bond pur-
chasing program (quantitative easing, QE) with a total volume
of €1.1 trillion. The DAX had risen by more than 25% by the
beginning of April, reaching record highs during that period.
Subsequently, however, the further escalation of the Greek
debt crisis had a negative impact on the development of the
index, as concerns surrounding the possible consequences
of a potential Greek exit from the euro zone led to increased
volatility. The share-price losses of companies with high export
volumes were slightly higher than those of the market as a
whole, as the euro was able to recover somewhat from its weak
position against the dollar. After share prices rose slightly
in July, developments on international markets were negatively
affected by reports of slower growth for China's economy,
turbulence on Chinese stock markets and uncertainties regarding
the interest-rate policy of the Federal Reserve in the United
States. As a result, share prices fell significantly in Europe and
the United States in August. Given the importance of the
Chinese market for vehicle manufacturers, automotive stocks
were significantly impacted by the aforementioned devel-
opments. There were also further concerns at the time that
economic growth in the United States might have already
peaked. But it did not take long for the markets to recover,
and many sectors were able to recoup at least some of their
previous share-price losses. The ongoing decline in oil prices
and disappointment related to the ECB's decision not to
expand its bond purchasing program led to very volatile share-
price movements in December.
The index of the most important shares in the euro zone, the
Dow Jones Euro STOXX 50, rose by 4% in 2015. The leading
German index, the DAX, performed significantly better, rising
by 10%. The DAX also broke through the 12,000 mark for the
first time ever in April 2015 and reached a new all-time high of
12,375 on April 10. In Japan, the Nikkei-Index climbed by
9% over the year, and in the United States, the Dow Jones
fell by 2% over the year. 7 A.01
Net profit
7.87
6.51
Dividend
3.25
2.45
+33
Equity (December 31)
50.06
40.81
+23
Xetra price at year end¹
77.58
68.97
+12
Highest¹
95.79
71.14
Local production of the new Vito in Argentina and the model's
launch in that country's market is part of the "Mercedes-Benz
Vans goes global" growth strategy, whose goals are to further
increase the division's technology leadership, expand existing
activities and utilize new growth potential.
Vito now built in Argentina as well
Q3
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
World premiere in Las Vegas
With its presentation of the autonomous F 015 Luxury in
Motion high-end sedan at the Consumer Electronics Show in
Las Vegas, Mercedes-Benz demonstrates how vehicles will
be transformed into personal retreats in the future. The extreme
interior spaciousness and lounge-like atmosphere of the F 015
take comfort and luxury to a new level.
car2go launched in China
The world's biggest car-sharing company announces that it
will begin operating in the major city of Chongqing with a fleet
of several hundred smart fortwo models. This marks the entry
of car2go into the Asian market, whereby operations in Chongqing
will serve as a pilot project for expansion into other major
cities in Asia.
World premiere for moovel in Stuttgart
With the full integration of online tickets for buses, trams and
trains, moovel in Stuttgart is the first provider to offer a
genuine one-stop shop for urban mobility. Directly in the moovel
app, moovel users can book and pay for journeys with car2go,
Flinkster or mytaxi, as well as by German Railways or Stuttgart
public transport.
GLE coupe stars in Jurassic World
The two main characters in Jurassic World rely on the off-road
capabilities of various Mercedes-Benz vehicles for their adven-
tures in the jungle - and especially on the new GLE Coupe, whose
production version is presented for the first time in the film.
Cornerstone laid for a new passenger car plant in Brazil
Mercedes-Benz expands its global production network:
A new passenger car manufacturing facility in Iracemápolis
(near São Paulo) will begin building C-Class models in the
first quarter of 2016; production of the compact GLA SUV will
start in the middle of the year.
New Metris van for the United States unveiled
Share price index
People who shape the future
Q1
This is the motto for the celebration marking the 100th
anniversary of the Mercedes-Benz facility in Sindelfingen.
The official ceremony takes place in the new future-oriented
Technology Factory. This is where tools and machinery
will soon be developed for the Mercedes-Benz plants around
the world.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015 59
Annual Shareholders' Meeting approves highest dividend
in the company's history
The Daimler Annual Shareholders' Meeting takes place for
the first time in the new CityCube in Berlin, and is also the first
such meeting to be held with the Group's new Corporate
Design. During the meeting, some 5,000 shareholders approve
a dividend of €2.45 per share - the highest in the history
of the company.
GLA production launch in Beijing
The opening ceremony for the new Mercedes-Benz production
plant for compact cars at Beijing Benz Automotive Corporation
is a major milestone in the Mercedes-Benz strategy for China.
With the launch of GLA production in Beijing, Mercedes-Benz
now builds its successful compact vehicles at four locations.
Mercedes-Benz is the most innovative premium brand
Mercedes-Benz is the most innovative premium automobile
brand (greatest number of world firsts) according to an in-depth
study conducted by the Center of Automotive Management
(CAM) and the Pricewaterhouse Coopers (PwC) corporate
consulting firm. Mercedes-Benz also receives a special award
as the "Most Innovative Brand in the Last Decade."
Top marks in employer ranking
Daimler receives top marks in the current "trendence Graduate
Barometer." The company is named as one of the best employers
in Germany and finishes first in the categories "Innovation
of the Year" and "Best Career Website" (among automakers).
Battery technology for stationary applications
Daimler's wholly owned ACCUMOTIVE subsidiary offers stationary
energy storage devices for private and commercial use.
Daimler plans to expand cooperation in this field with other
sales partners in Germany and around the world.
A-
A-
Stock-exchange data for Daimler shares
A.06
Q2
Luxury in Motion
F015
World Premiere
We continue to forge ahead with our vehicle architecture and
module strategy. It allows us to successfully manage the increas-
ing complexity resulting from additional model variants, as
well as ever-shorter innovation cycles and the expansion of our
international production network. By increasing the level of
standardization and modularization at our manufacturing plants,
we are reducing our investment requirements and fixed costs.
The classification of lead and partner plants is safeguarding both
the transfer of knowledge and the high quality standards
associated with "Made by Mercedes" worldwide. Comprehensive
restructuring measures are helping to safeguard the future of
our German plants. To this end, we have also reached far-reaching
agreements with employee representatives in the areas
of products, expertise, vertical integration and employment.
In addition, plans call for the investment of €4.75 billion in our
facilities in Germany over the next few years. We will also
invest $1.3 billion in the expansion of our production operations
in the United States. We will open a new plant in Mexico with
our strategic partner Renault-Nissan and will begin producing
Mercedes-Benz compact vehicles there in 2018. We continue
to systematically enhance our brands through the creation of
We are strengthening our core business with innovative first-class
products, competitive structures, flexible processes and a
customer-oriented organization. We are continuing the model
offensive launched at Mercedes-Benz Cars in 2012 by devel-
oping additional models and attractive successor models in all
segments. We will launch more than 30 new car models between
2012 and 2020. Almost half of those new products have no
predecessor model in the current product portfolio. In 2015,
we expanded our product range with a Mercedes-Maybach
model, the Mercedes-AMG GT, the CLA Shooting Brake, and the
GLE coupe. The major highlight of 2016 will be the new E-Class,
whose innovative assistance and safety systems will take the
model a step further in the direction of autonomous driving.
In the S-Class segment, the S-Class convertible presented
at the Frankfurt Motor Show will be launched without a direct
predecessor, and additional attractive models will then follow.
Strengthening our core business
67
The four focus areas of the Daimler strategy
Pushing
digitization
Leading
in technology
Growing
globally
core business
Strengthening
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Strategic focus areas
A.09
- pushing digitization.
- leading in technology
- growing globally,
- strengthening our core business,
We will focus on
We plan to achieve our goals through four strategic focus
areas. A.09
Four strategic focus areas
to ensure long-term success in harmony with the environment
and society. pages 105 ff
Sustainability is a fixed element of our philosophy. For us,
sustainability means conducting business responsibly
In order to safeguard our profitability also under difficult market
conditions, we are adapting our business system in a way
that enables us to react quickly and flexibly to market fluctua-
tions and create value as near to our markets as possible.
The "Mercedes-Benz 2020" growth strategy is designed to
ensure that our Mercedes-Benz Cars division will play the leading
role in the premium segment worldwide by the end of the
decade. We also plan to further enhance the smart brand's
pioneering role in urban mobility. In addition, we want to
further strengthen Daimler Trucks' position as the leading truck
manufacturer in the global truck business. Mercedes-Benz
Vans aims to achieve further profitable growth with the help of
its "Mercedes-Benz Vans goes global" strategy. Daimler Buses
will further strengthen its leading position in the segment
for buses above eight metric tons gross vehicle weight. Daimler
Financial Services plans to maintain its position as the best
captive financial services provider; it will continue to grow in line
with our automotive business and also in the area of mobility
services.
We intend to achieve an average return on sales (EBIT in relation
to revenue) for the automotive business of 9% on a sustained
basis. This overall figure is based on the return targets for the
individual divisions. These targets are 10% for Mercedes-Benz
Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6%
for Daimler Buses. For Daimler Financial Services, we have
set a target for return on equity of 17%.
Profitable growth
58
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
Highlights of 2015
DBRS
The smart brand - with the smart fortwo, forfour and new
smart convertible models that will be launched in 2016 -
stands for outstanding urban mobility. The electric smart,
whose new version will be launched in 2016, will help
us enhance our position in the field of electric mobility.
Daimler Trucks relies on its technology leadership, global
presence and the intelligent use of platforms. Our platform
strategy enables us to deliver tailor-made systems and technol-
ogies to our customers worldwide, even as we exploit our
economies of scale to the greatest extent possible. For example,
we can offer innovative cutting-edge technologies to our core
markets of Western Europe, North America and Japan, as well
as traditional and proven technologies in markets such as
Brazil, China and Russia. We are also in a position to supply
markets in India, Africa and certain Asian countries with simpler
and locally produced technologies. Thanks to this strategy
and a broad range of products, Daimler Trucks occupies a very
good position in the competitive field. On this basis, we continue
to target sales of 700,000 units in the year 2020. In addition
to growth, Daimler Trucks also prioritizes further increases in
efficiency and the focus on its core business.
Fitch
Standard & Poor's
12/31/14 2/27/15 4/30/15 6/30/15 8/31/15 10/30/15 12/31/15
80
85
90
95
100
105
110
115
120
125
130
135
Daimler AG
140
150
Truck connectivity in the United States
Daimler Trucks continues to expand its activities in the field
of connected services and to this end acquires an interest
in Zonar Systems Inc. in North America. The company is one
of the leading developers and suppliers of logistics, telematics
and connectivity solutions. The investment is a key milestone
on the path to completely networked vehicles and value-added
services for fleet operators and drivers.
New bus plant in Colombia
Daimler's wholly owned subsidiary in Colombia, Daimler
Colombia S.A., opens a new bus plant in the city of Funza
(near Bogotá) with a production capacity of 4,000 units per year.
Daimler Buses has built the plant in response to growing
demand for regular-service buses and efficient mobility solutions,
such as Bus Rapid Transit, in various cities in the region.
Daimler progresses as planned
Daimler sets new records for revenue, unit sales and earnings
in the second quarter of 2015. EBIT from ongoing business
operations increases by 54% to €3.8 billion. The Group continues
to expect that it will achieve a significant increase in earnings
for full-year 2015 as well.
HELLO
CHINA
李治
DAIMLER
O
smart
60
60
145
Dow Jones STOXX Auto Index
DAX
64
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Long-term credit ratings
3.46%
3.63%
Dow Jones Euro STOXX 50
8.51%
8.67%
DAX 30
Weighting in share indices
0
0.9
0.9
Number of shareholders (in millions)
(in billions of euros)
+12
73.8
83.0
Market capitalization
0
1,069.8
1,069.8
Number of shares (in millions)
0
3,070
3,070
Share capital (in millions of euros)
15/14
% change
End of 2015 End of 2014
Key figures for Daimler shares
A.05
Moody's
The Metris - the US version of the new Vito - celebrates its
premiere at The Work Truck Show in Indianapolis. The Metris
went on sale at more than 200 US dealerships in October,
and is available in different versions as a panel van (for cargo)
and as a tourer (for passengers). The Metris joins the Sprinter
as the second van with the three-pointed star in the US market.
We work in teams whose diversity in terms of gender, nationality
and age is of great importance. Our employees are proud to
work at Daimler, and we are one of the employers most sought
after by job applicants. Our core corporate values - passion,
respect, integrity and discipline - form the basis of our actions.
Integrity is particularly important to our company. It is one
of the key principles that stand behind our actions, and it guides
our dealings with respect to the company and its employees,
business partners and customers. We are firmly convinced that
conducting business with integrity makes us more successful
over the long term and is also good for society as a whole.
pages 185f
Best teams
68
108
Innovation and safety
77
106
105
Sustainability at Daimler
Research and development
76
74
ZO
Corporate governance statement
Performance measurement system
Efficiency programs take full effect
Portfolio changes and strategic partnerships
Business model
105
Sustainability
74
Corporate Profile
B | Combined Management Report
77
B❘ COMBINED MANAGEMENT REPORT | CONTENTS 73
Environmental protection
78
Profitability
121
Events after the Reporting Period
1805
81
Business development
80
Automotive markets
79
112
The world economy
of the Economic Situation
Overall Assessment
79
Development
Economic Conditions and Business
117
Social responsibility
115
The workforce
120
Daimler accelerated along its profitable growth path in the year 2015. Unit sales,
revenue and earnings were significantly higher than in the previous year. We inspired
our customers with numerous new products and improved Daimler's market position.
At the same time, we succeeded in putting pioneering innovations on the road, such
as autonomous driving and the new plug-in hybrids. We pressed forward with the
digitization of our products and processes throughout the Group. On the basis of sound
finances, we were once again able to invest very substantial amounts in our future,
thus creating the right conditions for further profitable growth.
We are growing profitably
and sustainably
STUN 2921
The Daimler Buses division with its brands Mercedes-Benz
and Setra is the undisputed industry leader in the segment
for buses above 8 metric tons in its core markets. The division's
product range comprises city and intercity buses, coaches
and bus chassis. The largest of the division's 14 production sites
are located in Germany, France, Spain, Turkey, Argentina,
Brazil and Mexico. In the year under review, a new bus plant
was opened at the production location in Chennai, India.
Front-engine buses are produced there to meet the requirements
of the Indian volume market with bodies from the British bus
manufacturer Wrightbus. Rear-engine buses for the premium
segment are built and sold under the Mercedes-Benz brand
name in India. Another new bus plant started production last year
in Funza near Bogotá, Colombia. In 2015, Daimler Buses
generated 58% of its revenue in Western Europe and 18%
in Latin America (excluding Mexico). While we mainly sell fully
equipped buses in Europe, our business in Latin America,
Mexico, Africa and Asia is focused on the production and
distribution of bus chassis.
The Daimler Financial Services division supports the sales
of the Daimler Group's automotive brands in more than
40 countries. Its product portfolio primarily consists of tailored
financing and leasing packages for customers and dealers,
but also insurance brokering, fleet management services, invest-
ment products and credit cards, as well as various mobility
services such as the "moovel" mobility platform, the "mytaxi"
app and the flexible car2go mobility concept. The main areas
of the division's activities are Western Europe and North America,
and increasingly Asia as well. During the year under review,
Daimler Financial Services financed or leased nearly 50% of the
vehicles sold by the Daimler Group. The division's contract
volume of €116.7 billion covers more than 3.7 million vehicles.
Daimler Financial Services also holds a 45% interest in the
Toll Collect consortium, which operates an electronic toll-
charging system for trucks on highways in Germany.
B.02
Daimler Group structure 2015
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler
The product range of the Mercedes-Benz Vans division in
the segment for mid-size and large vans comprises the Sprinter
and Vito series. Our portfolio is rounded out at the lower
end by the Mercedes-Benz Citan city van, the addition of which
makes us a full-range supplier in the van market. In 2014,
we also launched the V-Class, which is a multi-purpose vehicle
(MPV). Mercedes-Benz Vans has manufacturing facilities at
a total of nine locations in Germany, Spain, the United States
and Argentina, as well as in China within the framework of
the Fujian Benz Automotive Co., Ltd. joint venture, and in France
in the context of the strategic alliance with Renault-Nissan.
The Mercedes-Benz Sprinter Classic is produced under license
by our partner GAZ in Russia. The most important markets
for vans at the moment are in Western Europe, which accounts
for 65% of unit sales. As part of the "Mercedes-Benz Vans goes
global" business strategy, we are also increasingly developing
the growth markets of South America and Asia, as well as
the Russian van market. In addition, we plan to more effectively
exploit the potential of the expanding North American van
market in the future, and to this end we expanded our range
of products in that market in 2015 by launching the Vito
under the name Metris. With our new production location for
the next-generation Sprinter in South Carolina in the United
States (construction to begin in 2016), we will also improve
our cost position in this major sales market.
Cars
Financial Services
Revenue
€83.8 billion
€37.6 billion
€11.5 billion
€4.1 billion
€19.0 billion
Employees
136,941
Vans
85
Ltd., has been producing trucks under the Auman brand name
since 2012. Daimler Trucks' product range includes light-,
medium- and heavy-duty trucks for local and long-distance
deliveries and construction sites, as well as special vehicles
used mainly in municipal applications. Due to close links in terms
of production technology, the division's product range also
includes the buses of the Thomas Built Buses and FUSO brands.
Daimler Trucks' most important sales markets in 2015 were
the NAFTA region with 38% of unit sales, Asia (29%), Western
Europe (13%) and Latin America excluding Mexico (6%).
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
0.4
0.2
0.2
Daimler Buses
0.8
0.4
0.3
Mercedes-Benz Cars
54%
75
Daimler Trucks
Mercedes-Benz Vans
7%
Daimler Buses
3%
Daimler Financial Services
12%
In 2015, Daimler increased its revenue by 15% to €149.5 billion.
The individual divisions contributed to this total as follows:
Mercedes-Benz Cars 54%, Daimler Trucks 24%, Mercedes-Benz
Vans 7%, Daimler Buses 3% and Daimler Financial Services 12%.
At the end of 2015, Daimler employed a total workforce of more
than 284,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand and its Mercedes-AMG and Mercedes-
Maybach sub-brands. These vehicles range from the compact
models of the A-Class and B-Class to a highly varied program
of sport utility vehicles, roadsters, coupes and convertibles,
and S-Class luxury sedans. The portfolio is rounded out by the
new Mercedes me sub-brand and the high-quality small cars
of the smart brand. The main country of manufacture is Germany,
but the division also has production facilities in the United
States, China, France, Hungary, Romania, South Africa, India,
Vietnam and Indonesia, and at Valmet Automotive in Finland.
In the medium term, we anticipate significant growth in world-
wide demand for automobiles and above-average growth in
the premium car segment. In order to ensure that we can exploit
this potential, we are creating additional production capacities,
especially at Beijing Benz Automotive Co. (BBAC) in China and
at our plants in the United States and India. We will also
expand our global production network with a new plant in Brazil,
where we will produce the next generation of the C-Class
as well as the GLA compact SUV for the local market starting
in 2016. Together with our partner Renault-Nissan, we are
now establishing an assembly plant in Aguascalientes, Mexico,
which will also begin manufacturing compact vehicles of the
Mercedes-Benz brand in 2018. The most important markets for
Mercedes-Benz Cars in 2015 were China with 20% of unit
sales, the United States (18%), Germany (15%) and the other
markets of Western Europe (24%).
As the biggest globally active manufacturer of trucks above
6 metric tons gross vehicle weight, Daimler Trucks develops
and produces vehicles in a global network under the brands
Mercedes-Benz, Freightliner, Western Star, FUSO and BharatBenz.
The division's 26 production facilities are located in the
NAFTA region (14), Europe (7), Asia (3) and South America (2).
In China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Beiqi Foton Motor Co.,
24%
Remuneration Report
122
EBIT
Unit sales
104
Risks and opportunities
153
Automotive markets
103
Financial position, liquidity and capital resources
152
The world economy
154
102
152
Outlook
102
according to HGB)
Daimler AG (condensed version
151
and opportunity situation
Overall assessment of the risk
99
Profitability
150
Outlook
Revenue and earnings
With its strong brands, Daimler is active in nearly all the countries
of the world. The Group has production facilities in a total
of 19 countries and more than 8,500 sales centers worldwide.
The global networking of research and development activities
and of production and sales locations gives Daimler considerable
advantages in the international competitive field and also
offers additional growth opportunities. In addition, we can apply
our innovative drive and safety technologies in a broad port-
folio of vehicles while utilizing experience and expertise from
all parts of the Group. This also helps us with the further
development of autonomous driving technology, an area in which
we play a pioneering role for both passenger cars and
commercial vehicles.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart (Mercedesstraße 137, 70327 Stuttgart,
Germany). The main business of Daimler AG is the develop-
ment, production and distribution of cars, trucks and vans in
Germany and the management of the Daimler Group. The
management reports for Daimler AG and for the Daimler Group
are combined in this management report.
Daimler can look back on a tradition covering 130 years - a tradi-
tion that extends back to Gottlieb Daimler and Carl Benz, the
inventors of the automobile, and features pioneering achieve-
ments in automotive engineering. Today, the Daimler Group
is a globally leading vehicle manufacturer with an unparalleled
range of premium automobiles, trucks, vans and buses. The
product portfolio is rounded out by a range of tailored financial
services and mobility services. Daimler seeks to play a leading
role in the digitization of products, services and processes in the
automotive industry.
Business model
Corporate Profile
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
74
157
Overall statement on future development
104
157
156
Research and development
156
Investment
156
Dividend
156
Free cash flow and liquidity
155
The workforce
Risks from guarantees, legal and tax risks
148
Financial risks and opportunities
Other financial obligations, financial
Principles and objectives of financial management
Cash flows
Liquidity and Capital Resources
89
Value added
134
Remuneration of the Supervisory Board
89
Net operating profit
guarantees and contingent liabilities
128
89
Dividend
126
Board of Management remuneration in 2015
88
Consolidated statement of income
122
Principles of Board of Management remuneration
85
Commitments upon termination of service
Investment
Refinancing
Credit ratings
146
Company-specific risks and opportunities
98
140
Industry and business risks and opportunities
140
138
Risk and opportunity management system
Risks and opportunities
96
95
95
10 10000
138
Risk and Opportunity Report
92
91
ངས
135
Takeover-Relevant Information
and Explanation
91
Financial Position
86,391
22,639
18,147
9,975
3.6
3.6
Mercedes-Benz Cars
14.0
5.1
4.8
Daimler Group
Amounts in billions of euros
2015 actual 2016-2017
9.9
2014 actual
A.11
0.4%
Daimler Financial Services
1%
Daimler Buses
8%
Mercedes-Benz Vans
20%
Daimler Trucks
Investment in property, plant and equipment
71%
Daimler Trucks
1.1
74%
Mercedes-Benz Cars
Research and development expenditure 2016 - 2017
In %
A.12
The investment in property, plant and equipment will mainly
be used to prepare for the production of our new models,
to modernize and realign our manufacturing facilities in Germany,
to expand local production in growth markets and to enhance
and restructure our sales organization. page 95
In the coming years, we will continue to move ahead system-
atically with our investment offensive in order to implement
our growth strategy through the introduction of new products,
innovative technologies and state-of-the-art manufacturing
capacities. A large amount of our investment will be used for the
digitization of processes and products throughout the entire
company. We will therefore invest approximately €14 billion in
property, plant and equipment in 2016 and 2017, as well as
€14.5 billion in research and development projects. With
this plan, we are once again substantially increasing our
investment in order to safeguard the future of our company.
7 A.10 to A.13
Extensive investment in the future
of the company
0.05
0.03
0.8
0.02
0.2
0.1
0.1
Daimler Buses
1.1
0.2
0.3
Mercedes-Benz Vans
2.7
Daimler Financial Services
Daimler Trucks
Mercedes-Benz Cars
A.10
In order to improve the fuel efficiency of commercial vehicles
as well, we are optimizing vehicles and powertrains at our
Daimler Trucks division. The Predictive Powertrain Control cruise
control system makes it possible for example to reduce diesel
fuel consumption by as much as 5%. The new generation of the
OM471 heavy-duty engine consumes up to 3% less fuel than
its predecessor. We conducted a field test with a comprehensively
optimized truck that was not only equipped with the new
engine but also featured an enhanced trailer as well as modified
tires and other key components. The CO2 emissions produced
by this vehicle were 12 to 14% lower than those generated by
its non-optimized counterpart.
handling and comfort with the fuel consumption of a small car,
and can drive up to 33 kilometers in purely electric mode - and
thus locally emission free. Fuel consumption here ranges from
3.3 liters per 100 kilometers for the GLE 500 e 4MATIC¹ to an
outstanding 2.1 l/100 km in the most efficient model, the
C 350 e². Our activities in the area of alternative drive systems
will focus on plug-in hybrids in the years ahead. However,
we are also a leader for purely electric mobility. For example,
we expanded our range of series-produced electric vehicles
in 2014 to include the new electric B-Class for the United States
and Europe. The DENZA brand gives us an electric vehicle
exclusively for the Chinese market. And we will launch the new
smart electric drive in 2016. In the medium term, another
battery-electric vehicle with a range of up to 500 kilometers
will be available. We are also pushing forward with fuel-cell
technology. In 2017, we will present the next vehicle generation
on the basis of our GLC.
As a pioneer of automotive engineering, we continue to expand
our leadership in the areas of drive system technology, safety,
autonomous driving and the connectivity of our vehicles. Regard-
less of whether our customers travel long distances, along
country roads, or mainly in cities - we offer the right drive system
solution for every user profile. Our portfolio ranges from opti-
mized internal combustion engines to hybrid drive and locally
emission-free solutions. In 2015, we were able to reduce
the average CO2 emissions of newly registered vehicles from
Mercedes-Benz Cars in the European Union from 129 grams
per kilometer to 123 g/km. This means we have achieved our
2016 target of 125 g/km ahead of schedule. Beginning in 2016,
our new E-Class will also help us achieve a further significant
reduction in fuel consumption and thus CO2 emissions, thanks
to its lightweight design, improved aerodynamics and highly
efficient combustion engines. Consistent hybridization is an
important component of the drive-system strategy at
Mercedes-Benz Cars. We plan to launch a total of ten plug-in
hybrid models in the period of 2014 through 2017. Our new
plug-in hybrid vehicles combine the highest levels of dynamic
Maintaining our technology leadership
The Daimler Financial Services division continues to expand
its business activities in line with the growth strategies of the
automotive divisions. The division offers leasing and financing
models tailored to specific regions. China especially offers
good opportunities for further substantial growth in the future.
Daimler Financial Services supports the worldwide sales of
Daimler vehicles in more than 40 countries, and will profit from
the growing unit sales in those markets.
Daimler Buses plans to grow in the emerging markets in the
coming years. Extensive potential for growth exists in Latin
America especially, and this potential can be utilized once the
markets in the region begin to recover. In India, Daimler Buses
has integrated its local business activities into the Daimler
India Commercial Vehicles (DICV) organization and also started
operations at a new plant in the country. Among other things,
Daimler Buses has set itself the goal of moving into the premium
bus segment in India.
Within the framework of its "Mercedes-Benz Vans goes global"
strategy, Mercedes-Benz Vans also plans to grow in new
markets. In order to meet the rising demand for our Sprinter in
North America and to improve our cost position over the long
term, a new production plant is being established in Charleston
in the US state of South Carolina. We also produce vans in
Argentina as well as in Russia with our partner GAZ. Alongside
the Sprinter, the Vito is meanwhile the second world van from
Mercedes-Benz Vans. Following the market launch in Europe
in 2014, the mid-size van was launched in October 2015 in Latin
America and under the name Metris also in North America.
For the Latin American market, the vehicle is also produced in
Argentina. The joint venture Fujian Benz Automotive Corporation
produces the models Vito, Viano and Sprinter for the Chinese
market. In 2016, the Viano will be there replaced with the new
V-Class, which should stimulate further growth. The entry
into the worldwide volume segment of mid-size pickups before
the end of the decade in cooperation with our strategic partner
Renault-Nissan is to be seen as a further step in the global
growth strategy.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 69
In order to fully utilize growth opportunities in the markets
of the future in Africa, Asia and Latin America, we are position-
ing ourselves even closer to the pulse of the market in these
regions with our new regional centers. They will concentrate
on sales and aftersales for commercial vehicles of the Daimler
brands. Following the opening of the first of six worldwide
regional centers in Dubai in October last year, more regional
centers will follow in the first quarter of 2016.
In Europe, we want to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious goal and
took a further step in that direction with the introduction of the
new generation of the OM471 heavy-duty truck engine in 2015.
Our activities in the field of medium-duty and heavy-duty
trucks in China focus on cooperation with our partner Foton,
with which we produce Auman-brand trucks in our joint
venture Beijing Foton Daimler Automotive Co. Ltd. (BFDA).
We will begin producing the C-Class and the GLA for the local
market in Brazil in 2016. In Mexico, Daimler and the Renault-
Nissan alliance have laid the foundation stone for a shared
production plant in Aguascalientes. The first Mercedes-Benz
vehicles should drive off the production lines there in 2018.
We have further expanded assembly capacity in India to include
the compact CLA-Class, which means that seven of the
nine volume models available in India are now assembled
locally in Pune.
In order to achieve Mercedes-Benz Cars' sales targets, we
are intensifying our local activities, particularly in China but
also in Brazil and India. We manufacture the GLK SUV in China,
and in late 2015 we began building its successor, the GLC,
there as well. We also produce the long-wheelbase version of
the E-Class, long and short versions of the C-Class and, since
mid-2015, the GLA compact SUV in China. Beginning in mid-2016,
the previous long-wheelbase version of the E-Class will be
replaced with a successor model. We opened a new production
plant for four-cylinder engines in China in late 2013, and this
facility has been gradually expanded since then. As of year-end
2015, we and our partner BAIC had invested a total of €4 billion
in the expansion of local car and engine production in China.
In the electric-vehicle segment, we joined forces with the Chinese
battery and vehicle manufacturer BYD to develop a battery-
electric automobile. This electric vehicle was launched in China
in 2014 under the DENZA brand name. We are continuing our
internationalization strategy for the research and development
unit with the expansion of the R&D center in Beijing. Our dealer-
ship network in China is now just as extensive as the networks
of our main competitors.
Growth in global demand for automobiles will take place mainly
in Asia in the coming years. Although growth rates in China
will be more moderate in the next few years, we expect China
to permanently become the world's largest automobile
market over the next ten years. For Daimler, growing further
on a global scale means improving our strong position in
passenger car and commercial vehicle markets in Europe,
North America and Japan, while also fully exploiting growth
potential in Asia and various emerging markets.
Growing on a global scale
Daimler Financial Services remains on course for growth.
Approximately half of all newly delivered passenger cars from
the Daimler Group worldwide are already financed or leased
by Daimler Financial Services. The division currently finances
3.7 million cars and commercial vehicles worldwide, and
plans to increase this figure in the future. At the same time, the
division will expand its product range in the areas of financing,
leasing, insurance and mobility services. The company is also
focusing on the expanded use of digital sales channels and
more extensive networking with the vehicle divisions. Daimler
Financial Services currently enjoys an excellent reputation
as an attractive employer, which serves as further motivation
for the company to maintain its employees' high level of
satisfaction and remain very appealing to external job appli-
cants in the future.
Daimler Buses will focus over the next few years on achieving
further growth and continual efficiency gains. Additional business
volume will be generated through increased sales of highly
attractive buses and bus chassis, as well as by a larger number
of more extensive services for buses. Our new Mercedes-Benz
Citaro NGT model is an urban regular-service bus powered by a
highly efficient natural-gas engine.
Mercedes-Benz Vans intends to strengthen its good market
position in Western Europe with tailored and technologically
leading products. For this purpose, the division is systematically
further developing its proven models Sprinter, Vito and Citan,
with which it primarily addresses commercial customers. The
focus is on the product features that are especially important
to customers: economy and safety. With the very successful
V-Class multipurpose vehicle, the Marco Polo models and the
Vito Tourer, Mercedes-Benz Vans is addressing additional
target groups. New markets are to be developed with these
models also in regional terms.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Our goal for Daimler Trucks is to safeguard the division's strong
position in Europe and North and South America, and to
achieve significant growth in particular in the Asian markets
with Daimler Trucks Asia. Daimler Trucks Asia consists of
the two regional companies Mitsubishi Fuso Truck and Bus
Corporation (MFTBC) and Daimler India Commercial Vehicles
(DICV), which has been operating in India for several years.
The consolidation of these two companies under a joint manage-
ment system enables us to more effectively exploit market
potential in the region and also generate synergies. At DICV
in India, we build trucks of the BharatBenz brand as well
as FUSO trucks for export to external markets. The FUSO trucks
built in India are mainly aimed at price-sensitive markets
in Asia and Africa.
Investment in property, plant and equipment 2016 - 2017
In %
The Freightliner Cascadia Evolution is currently the most
fuel-efficient heavy-duty truck on the North American market.
We are the world leader for hybrid technologies in commercial
vehicles. The Canter Eco Hybrid for example boasts fuel savings
of as much as 23%, and owners are able to recoup the addi-
tional cost for the hybrid model in just a few years. A series of
customer tests with the emission-free FUSO Canter E-CELL
resulted in operating costs that were 64% lower than those for
a conventional diesel truck. We thus already have an effective
and reliable concept in place today that will enable us to meet
the requirements for urban delivery vehicles and address
the challenges that will be brought by more restrictive emission
standards in metropolitan areas in the future.
electricity consumption in kWh/100 km: 16.0
Most of our outlay for research and development is used for new
products, innovative drive and safety technologies, vehicle
connectivity systems and the further development of autonomous
driving technologies. Between 2012 and 2020, we will launch
more than 30 new car models and will also systematically further
develop our range of commercial vehicles. In addition, we
intend to continue significantly reducing our vehicles' fuel
consumption, and thus CO2 emissions, for example with the
use of innovative hybrid drive systems. We will also continue
to set standards in the areas of safety and autonomous driving
for cars and commercial vehicles. pages 6 ff and 107 ff
New ways of thinking and acting are required if the digital
transformation at our company is to be successful. We want
to get our employees enthusiastic about digital technologies
and strengthen our culture of innovation. We are addressing
digitization issues with the help of new innovation formats.
We are changing our structures and processes in order to ensure
we can optimally exploit the opportunities offered by digitiza-
tion. Our goal is to successfully combine the speed and
risk-taking culture of the digital sector with our company's
perfection and innovative capability. For us, digitization
is just as important as a strong core business and leadership
in technology.
The further digitization of core processes and the compre-
hensive expansion of digital services are also important goals
for the next few years at Daimler Financial Services.
Digitization along the entire value chain allows us to shorten
development times, design production processes more flexibly
and utilize marketing and sales channels in a more direct
manner. For example, the development time for the Concept
IAA (Intelligent Aerodynamic Automobile) presented at the
Frankfurt Motor Show in 2015 was shortened from one and
a half years to less than ten months. Industry 4.0 will digitize
factories through the use of systems for augmented reality,
virtual assembly or human-robot cooperation. The amount
of monotonous and strenuous work will be reduced as a result.
The intelligent use of continually increasing volumes of data,
along with the networking of all points in the value chain, will
enhance efficiency, improve quality, increase speed and make
the entire production process even more flexible. It is also no
longer possible to imagine marketing and customer-oriented
communication without digitization. Our social media channels
are already widespread and successful, for example. Concepts
such as the lifestyle configurator, temporary pop-up stores
and extra online sales channels help us directly address our
customers in an innovative manner - and gain new customers
as well.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 71
Digital technologies also offer us the opportunity to develop
new and innovative mobility concepts for private, business and
public transport applications. Examples here include car2go,
CharterWay, Bus Rapid Transit (BRT) and the “moovel" mobility
platform. car2go, which is our biggest business for private
mobility services and is managed by Daimler Financial Services,
is being further expanded around the world and linked with
the moovel range of services. By the end of 2015, car2go was
established at 31 locations in Europe and North America
and had well over a million customers. car2go is also one of the
biggest car-sharing companies for electric vehicles, with
all-electric fleets at four locations. moovel offers our customers
the opportunity to optimally combine various private and public
mobility services and book them through a payment system.
so that our products become part of an overall logistics system.
We are further expanding our Detroit Connect telematics
services in North America in cooperation with our strategic
partner Zonar Systems. We are further developing FleetBoard
in Europe, South Africa and Brazil, where the system is
now included in half of all our new trucks. The Mercedes-Benz
Vans and Daimler Buses divisions are also developing
integrated transport solutions and improving their fleet
management systems.
We are extending our range of digital services also at Daimler
Trucks. Connectivity will be a crucial factor for success in
the logistics sector in the future. Our goal is to be the leading
commercial vehicle manufacturer in terms of connectivity
page 18
1 GLE 500 e 4MATIC: fuel consumption in l/100 km (combined): 3.3;
CO2 emissions in g/km (combined): 78;
We continue to roll out connected vehicles at Mercedes-Benz
Cars. Mercedes me connect is now available in nearly all
model series and customers can access their vehicle online
at any time and from any location. Mercedes me is our digital
platform that brings together mobility, financing and other
services (connect, assist, move and finance), and also provides
information and news about the Mercedes-Benz brand
(inspire).
Moving ahead with digitization
We are underscoring our leading position in the field of safety
also with new assistance systems and with the further devel-
opment of the emergency-braking and lane-keeping assistants.
And in the near future, we will launch the turning assistant on
the market. It can recognize pedestrians, cyclists and stationary
obstacles, thus preventing accidents in urban traffic and
saving lives.
In May 2015, Daimler Trucks received the world's first permit
for an autonomously driving truck on public roads for the
Freightliner Inspiration Truck in the US state of Nevada. And
since October 2015, the first autonomously driving series-
produced truck, a Mercedes-Benz Actros with Highway Pilot,
has been undergoing road tests in Germany. Autonomous
driving offers many advantages in particular for transporting
goods by road. It increases safety, as well as efficiency
as a result of optimal gear shifting, braking and accelerating.
We will also further strengthen our position as a pioneer in
the development of active and passive safety systems for cars
and commercial vehicles. Our goal here is to offer the highest
degree of safety in all our model series. The E-Class, which will
become available in the spring of 2016, marks a major step
forward on the path to autonomous and connected driving. The
new Intelligent Drive next Level system enables the vehicle
to follow traffic ahead in its lane at speeds of up to 210 km/h.
At speeds up to 130 km/h, the system can intervene even
without clearly visible lane markings and thus ease the burden
on drivers, especially in congested and slow-moving traffic.
Active Brake Assist can detect traffic approaching from the side
at an intersection, as well as traffic jams and pedestrians in
danger zones in front of the car. The system can warn drivers
of an impending collision and automatically initiate an emer-
gency braking maneuver if necessary. The S 500 INTELLIGENT
DRIVE research car and the Future Truck 2025 are both mile-
stones on the road to fully autonomous driving, which we want
to make a reality in a series-production car by the end of this
decade. In September 2015, we became the first automaker
to receive official permission to test autonomously driving
vehicles on public roads in California in the United States.
We continue to safeguard our leading position with regard
to safety and assistance systems in all our automotive divisions.
In parallel, we are developing autonomous driving to series
maturity for cars and commercial vehicles.
pages 6ff
We have also achieved fuel savings of as much as 8% with our
new Euro VI bus models. Use of the second-generation OM471
heavy-duty engine in the new Mercedes-Benz Travego has
led to a further reduction in fuel consumption and CO2 emissions
of approximately 4%. Daimler Buses is also focusing more
on alternative drive systems. The Mercedes-Benz Citaro NGT is
a new urban regular-service bus equipped with a natural-gas
engine. The model stands out through its low-noise operation
and lower CO2 emissions, both of which are very important
considerations in congested cities. The CO2/km emissions of
the Citaro NGT are between 15% and 20% lower than those
of the predecessor model. Daimler Buses also plans to launch
the Citaro E-CELL with a battery-electric drive and a new
model with fuel cells in the segment for locally emission-free
vehicles before the end of the decade.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
70
2 C 350 e: fuel consumption in l/100 km (combined): 2.4-2.1;
CO2 emissions in g/km (combined): 54-48;
electricity consumption in kWh/100 km: 11.3-11.0
Digitization is changing the way we do things in a major way.
It is altering our products and services, our communication with
customers and the manner in which we create value at
Daimler. Digitization is also paving the way for new mobility
concepts. In order to remain on top as this transformation
proceeds, we are moving ahead with digitization at all levels and
along the entire value chain, while continuing to focus on
our customers. Our activities involve enhancing the connectivity
of our products, developing customer-focused digital services
and increasing digital communication with customers - starting
with the initial contact and extending through the entire
relationship. This approach offers our customers many benefits.
For example, connecting sales and production processes
enables us to respond to customer preferences more quickly,
individually and flexibly. We are also using digitization to
make our internal processes more efficient and to improve
their quality, while eliminating the need for our employees
to perform certain types of heavy physical labor.
Consolidated revenue by division
18%
5%
76
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Daimler is also active in the global automotive industry
and related sectors through a broad network of subsidiaries,
associated companies, joint ventures and cooperations.
The statement of investments of Daimler AG in accordance with
Section 313 of the German Commercial Code (HGB) can
be found in O Note 39 of the Notes to the Consolidated
Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and utilized addi-
tional growth potential in 2015. At the same time, we focused
on the continuous further development of our existing busi-
ness portfolio, as well as on improving our competitiveness in
our core business areas.
Entry into the digital map business
In August 2015, Audi, BMW and Daimler reached an agreement
with the Nokia Corporation on the acquisition of its HERE
subsidiary, which provides digital mapping and location-based
services. This move will ensure the availability of HERE products
and services as a permanently open, independent and value-
added platform for cloud-based map and mobility services.
Digital maps from HERE will serve as the foundation for the next
generation of mobility and location-based services, which in
turn will form the basis for new assistance systems and even-
tually fully automated vehicles. Such systems link highly
precise digital map data with real-time vehicle data in a manner
that enhances road safety and enables the introduction
of innovative products and services. The three partners have
acquired equal numbers of shares in HERE. The purchase
price of €2.6 billion was financed by capital contributions from
Audi, BMW and Daimler and partially by borrowing. Daimler's
capital contribution amounted to €0.7 billion. After receiving the
approval of the antitrust authorities, the transaction was
completed in December 2015.
Audi, BMW and Daimler plan for other investors to acquire
shares in HERE and to reduce their own stakes in HERE from
the current level of 33.3%.
Expansion of the partnership with BAIC
mytaxi
Daimler and the Chinese automobile manufacturer BAIC Motor
Corporation plan to intensify their cooperation in the area
of financial services. To this end, Daimler AG and BAIC Motor
Corporation signed an agreement in March 2015. In line with
that agreement, BAIC Motor, which is the passenger car
division of the BAIC Group, has acquired 35% of Mercedes-Benz
Leasing Co., Ltd (MBLC) within the framework of a capital
increase. Daimler will retain its majority interest with 65% of
MBLC's shares. The transaction was completed at the beginning
of September 2015 after being approved by the relevant
authorities. The expansion of financial services is an important
factor for achieving growth in China in the future.
Production joint venture with Nissan launched in Mexico
Daimler and the Renault-Nissan Alliance have intensified
their cooperation five years after the launch of their strategic
partnership. In September, the two companies laid the corner-
stone for a new joint-venture production plant in Aguascalientes,
Mexico, known as COMPAS (Cooperation Manufacturing Plant
Aguascalientes), whose establishment had been agreed upon
back in June 2014. The new plant is being constructed at a site
in the direct vicinity of an existing Nissan facility. After the start
of production, the new plant will be ramped up to an annual
capacity of 300,000 units, which is expected to be achieved
by 2021. Production is scheduled to begin with Infiniti models
in 2017. The plant will start producing Mercedes-Benz brand
vehicles in 2018. The partners will invest a total of $1 billion
in the joint venture. Daimler and Renault-Nissan will also coop-
erate on the development of the next generation of premium
compact cars for the Mercedes-Benz and Infiniti brands.
Daimler acquires an interest in Zonar Systems
In June 2015, Daimler Trucks North America (DTNA) acquired
a minority interest in Zonar Systems Inc., which is one of
the leading developers and suppliers of logistics, telematics and
connectivity solutions. The investment is a key milestone
along the way to completely connected vehicles and value-added
services for truck fleet operators and drivers. DTNA and
Zonar will work together to launch tailored applications for
North American customers.
Reorganization of the sales system
Mercedes-Benz is restructuring its own sales organization
in Germany for the requirements of the future. The objective
is to ensure optimal customer care, to operate profitably
on a sustainable basis, and thus to protect jobs. In this context,
63 of the total 158 Daimler-owned sales locations were sold
in 2015. For 26 of the operations sold, the transfer of ownership
took place on January 1, 2016. The other transactions will
be concluded in 2016.
In addition, Daimler's own sales-and-service centers, which had
been organized in early 2015 as regional sales centers, eleven
for cars and eleven for trucks, have now been transitioned into
the planned target structure of seven regional sales centers
for cars and seven for trucks as of January 1, 2016. We are thus
consistently pursuing our strategy of a divisional orientation;
by focusing on the respective business we are ensuring optimal
customer care, the basis for secure jobs and adequate
profitability.
We are continually optimizing our sales structures also
in other markets.
Sale of Atlantis Foundries (Pty.) Ltd.
Daimler Trucks also continually works to improve its competi-
tiveness. Within the framework of this strategy, a decision was
made at the end of February to sell the division's Atlantis
Foundries business in South Africa. The new owner is an estab-
lished supplier company that will continue to deliver cylinder
crankcases to Daimler. The transaction was completed at the
end of June 2015 after approval by the relevant authorities.
We once again expanded production capacities at Beijing
Benz Automotive Co., Ltd. (BBAC) in 2015. Another SUV
model for the Chinese market went into production there
in October the GLC - about six months after the start
of production of the compact GLA. In 2015, we produced
more than 200,000 vehicles locally at BBAC for the first
time in one year.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 77
CAR
2GO
Daimler Truck Financial
Brands
Mercedes-Benz
Mercedes-Benz
AMG
FREIGHTLINER
MAYBACH
smart
FUSO
M
moovel
WESTERN STAR
BUILT BUSES
Mercedes me
BHARATBENZ
Mercedes-Benz
FREIGHTLINER
Mercedes-Benz
Mercedes-Benz Bank
SETRA
Mercedes-Benz Financial
mas
Mercedes-Benz Vans
Daimler Buses
Efficiency programs take full effect
Performance measurement system
Cost of
capital (%)
× Net assets
Mercedes-Benz Vans
2.6
1.3
1.2
Daimler Trucks
10.7
4.7
Net assets
productivity
4.0
14.5
6.6
5.7
Daimler Group
Amounts in billions of euros
2014 actual 2015 actual 2016-2017
Research and development expenditure
A.13
3%
Mercedes-Benz Cars
With the programs "Fit for Leadership" at Mercedes-Benz Cars,
"Daimler Trucks #1" at Daimler Trucks, "Performance Vans"
at Mercedes-Benz Vans and "GLOBE 2013" at Daimler Buses,
we were able to achieve earnings contributions totaling
approximately €4 billion by the end of 2014 as a result of mea-
sures taken for the sustained improvement of cost structures,
as well as through additional business activities. As planned,
those programs had their full effect in 2015. Further efficiency
enhancements are currently being implemented in all divisions.
In addition, we are taking fundamental measures for the
long-term and structural optimization of the business system.
For example, the "Fit for Leadership Next Stage" follow-up
program was launched at Mercedes-Benz Cars in 2015. We are
also continuing the standardization and modularization of
production processes throughout the Group, making intelligent
use of vehicle platforms in order to generate additional cost
benefits, for example. In parallel, we are systematically moving
ahead with digital connectivity at all divisions and along the
entire value chain - from development and production to sales
and service. Among other things, this approach gives us addi-
tional scope to become faster and more flexible and efficient,
to the benefit of our customers. These long-term structural
measures already had a positive impact on earnings in 2015 and
will facilitate further efficiency gains in the coming years.
sales
Return on
Financial performance measures
The financial performance measures used at Daimler are
oriented toward our investors' interests and expectations and
provide the foundation of our value-based management.
Value added
Value added is a key element of our performance measurement
system, which is applied at both the Group and the divisional
levels. It is calculated as the difference between operating profit
and the cost of capital of average net assets. Alternatively,
the value added of the industrial divisions can be determined
using the main value drivers of return on sales (quotient
of EBIT and revenue) and net assets' productivity (quotient
of revenue and net assets). 7 B.03
The use of a combination of return on sales and net assets'
productivity within the context of a strategy of profitable
revenue growth provides the basis for the positive development
of value added. Value added shows the extent to which the
Group and its divisions achieve or exceed the minimum return
requirements of shareholders and creditors, thus creating
additional value.
The quantitative development of value added and the
other financial performance measures is explained in the
"Profitability" chapter.
Profit measure
pages 85 ff
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit used at the Group level is net operating profit.
It comprises the EBIT of the divisions as well as profit and
loss effects for which the divisions are not held responsible.
The latter include income taxes and other reconciliation items.
7 B.12 on page 85
X
Net assets
B.03
Calculation of value added
Net assets
X
Value added
Profit measure
Cost of
capital (%)
Cost of capital
Value
added
Net assets are the basis for the investors' required return.
The industrial divisions are accountable for the net operating
assets; all assets, liabilities and provisions which they are
responsible for in day-to-day operations are therefore allocated
to them. Performance measurement at Daimler Financial
Services is on an equity basis. Net assets at the Group level
include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation
items that cannot be allocated to the divisions. Average annual
net assets are calculated from average quarterly net assets.
page 90
B.01
2015
10,173
15/14
Change in
% points
Mercedes-Benz Cars
Western Europe
6.0
5.5
+0.5
thereof Germany
10.1
9.7
1 Amortization of capitalized borrowing costs is not included in the internal
performance measure EBIT, but is a component of cost of sales.
2.0
2.1
-0.1
1.9
1.5
+0.4
1.6
1.3
+0.3
United States
China
Japan
Daimler Trucks
Medium-duty and heavy-duty
trucks Western Europe
22.5
24.4
-1.9
thereof Germany
36.9
2014
39.8
2015
In %
Other markets
10%
B.08
Unit sales structure of Daimler Trucks
Western Europe
13%
Latin America
6%
NAFTA
38%
Asia
29%
Other markets
14%
0
Daimler Trucks increased its unit sales by 1% in 2015 in a
regionally very disparate market environment. We sold a total
of 502,500 heavy-, medium- and light-duty trucks as well
as buses of the Thomas Built Buses and FUSO brands in the year
under review (2014: 495,700), so we continue to be the biggest
global manufacturer of trucks above 6 metric tons gross vehicle
weight. 7 B.08 Our strategy based on the three pillars of
technology leadership, global market presence and intelligent
platforms proved its worth once again in 2015. We have
taken a leading role for autonomously driving trucks. In the
new markets, we are increasing our customer focus and
thus further strengthening our position.
In Western Europe, we increased our unit sales by 13% to 64,800
vehicles and defended our market leadership in the medium-
and heavy-duty segment with a market share of 22.5% (2014:
24.4%). As a result of purchases being brought forward before
the stricter Euro VI standard came into effect in 2016, the high
level of unit sales achieved in Turkey in 2014 was surpassed
with sales of 24,900 trucks in 2015 (2014: 22,200). Nonetheless,
sales became significantly less dynamic in the second half
of the year. In Russia, the continuation of the difficult economic
situation led to a significant drop in demand. 7 B.09
In Latin America, Daimler Trucks' unit sales decreased by 35%
to 30,500 vehicles, primarily due to the economic crisis
in our main market there, Brazil. Nonetheless, we succeeded
in increasing our market share in the medium- and heavy-duty
segment in Brazil to 26.7% (2014: 25.8%).
In the NAFTA region, we were once again the market leader
for Class 6-8 medium- and heavy-duty trucks by a clear margin,
and actually extended our lead to gain a share of 39.4% (2014:
37.2%). Unit sales rose by 19% to the record number of 191,900
vehicles. This performance was facilitated by our outstanding
product portfolio and the favorable market development.
The Asian sales markets developed disparately in 2015. We
increased our unit sales and gained market share in both Japan
and India. The product portfolio of BharatBenz was expanded
once again last year with the BharatBenz 3143, which is designed
for use in mining and on construction sites. Our unit sales in
Indonesia decreased significantly, but we increased our market
share to 48.0% (2014: 47.4%). In total, we sold 147,700 trucks
in Asia (2014: 167,200).
Through Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a
joint venture with our Chinese partner Foton, we are represented
in the Chinese truck market with locally produced vehicles of
the Auman brand. Unit sales of Auman trucks decreased by 30%
to 69,200 vehicles in the reporting period for market-related
reasons. These vehicles are not included in the Daimler Group's
unit sales. pages 166 ff
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 83
Mercedes-Benz Vans once again achieved record unit sales
in the year 2015, surpassing the prior-year figure by 9% with
sales of 321,000 vehicles. Our Sprinter, Vito and Citan vans are
targeted mainly at commercial customers, while the V-Class
is designed primarily for private use. Unit sales in Western Europe,
our most important market, rose by 10% to 208,500 vans;
market leadership for mid-size and large vans was clearly
defended with a share of 18.4% (2014: 18.2%). Nearly all volume
markets contributed to this success, and in Germany we
achieved a new record of 88,400 vehicles (2014: 79,900). Despite
a difficult market environment due to the economic situation,
unit sales in Eastern Europe increased by 5% to 32,200 vehicles.
Our vans continued their success in the United States, where
we set a new record with sales of 32,400 units (2014: 25,800).
Our share of the market for large vans was 8.7% (2014: 8.9%).
In Latin America, we sold 15,800 vans, almost equaling the
number sold in the previous year despite the difficult economic
situation there. In China, sales decreased significantly to
7,200 units (2014: 12,800), mainly because of the upcoming
model change for the mid-size vans. Overall, we sold the
record number of 194,200 Sprinter vans worldwide in 2015
(+4%). The Vito achieved growth of 23% to 74,400 vehicles
and the V-Class multipurpose vehicle was also very successful
with sales of 30,700 vehicles (+20%). Sales of the Mercedes-
Benz Citan totaled 21,700 units (2014: 22,100). O pages 171ff
Daimler Buses sold 28,100 buses and bus chassis worldwide in
2015. Compared with the previous year, this was a significant
decrease of 15%, but the division maintained its absolute market
leadership in our core markets in the segment for buses with a
gross vehicle weight above 8 tons. One positive aspect was the
ongoing strong demand for our complete buses in Western
Europe, where unit sales increased by 3% to 7,800 vehicles and
market share once again reached a very high level of 30.9%,
following the record level of 34.4% in 2014. In Germany, sales
of 2,800 units were 3% lower than in the previous year, which
was positively affected by unusually high demand for city buses
in the first half of 2014. In Latin America, we posted a significant
decrease in sales to 11,900 units (2014: 17,600). This devel-
opment was mainly due to the significant market slump caused
by the ongoing difficult economic situation, which particularly
affected Brazil, our most important market. Nonetheless, we
were able to strengthen significantly our leading market
position in Brazil with a market share of 52.5% (2014: 49.7%).
In Mexico, the number of 4,000 units sold was 9% higher
than in 2014.
pages 174ff
Business at Daimler Financial Services developed very
positively in the year under review. As we had forecast in Annual
Report 2014, worldwide contract volume grew substantially,
reaching the new record level of €116.7 billion (+18%). Adjusted
for exchange rate effects, the increase amounted to 14%.
As expected, new business also increased significantly, by 21%
to €57.9 billion. Significant growth was achieved in Europe (+14%)
as well as in the Americas region (+21%) and in the Africa &
Asia-Pacific region (+39%). We achieved significant growth also
in the insurance business in 2015, brokering a total of 1.8 million
insurance policies, which is 25% more than in 2014. Daimler
Financial Services supported numerous companies with the
financing and management of their vehicles and fleets last year.
At the end of 2015, the division had a total of 310,000 contracts
with fleet customers in Europe (+1.5%). We further developed our
business with innovative mobility services in the year under
review. Our car-sharing service, car2go, had more than 1.2 million
users at 31 locations in Europe and North America by the end
of the year. This makes car2go the market leader in the area of
flexible short-term car rentals. We also further developed the
moovel app, with which customers in Germany can find the best
way of traveling from A to B using all modes of transport, and
can directly book and pay providers such as car2go, Flinkster,
mytaxi and Deutsche Bahn (German Railways). At the beginning
of the third quarter, RideScout, another Daimler-owned
mobility platform in North America, acquired the US startup
GlobeSherpa, an upcoming US provider in the field of
mobile ticketing.
B.09
Market share¹
pages 177ff
31%
-2.9
region (Class 8)
3.1
3.2
-0.1
8.7
8.9
-0.2
Daimler Buses
Buses over 8 metric tons
Western Europe
thereof Germany
Buses over 8 metric tons Brazil
30.9
34.4
-3.5
49.3
57.1
-7.8
52.5
49.7
+2.8
1 Based on estimates in certain markets.
84
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Order situation
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Buses divisions produce vehicles predominantly
to order in accordance with customers' specifications. In doing
so, we flexibly adjust production numbers to changing levels
of demand. Overall, the order situation of the Daimler Group
continued to develop very positively in 2015. Due to strong
demand in the United States and China in particular, the number
of orders placed with Mercedes-Benz Cars was once again
above the high level of orders recorded in the previous year.
This was driven on the product side primarily by the models
of the C-Class and the very successful new SUVs. Due to the
positive development of demand, we significantly increased
our production volumes. Nonetheless, the order backlog at the
end of 2015 was higher than a year before. At Daimler Trucks,
both orders received and order backlog at year-end were lower
than the high levels of the prior-year, which was positively
affected above all by the exceptionally high volume of orders
received in the NAFTA region in the fourth quarter. Another
factor is that orders in 2015 were negatively impacted by falling
demand in Indonesia and Latin America.
Revenue
The Daimler Group increased its total revenue in the year
2015 by 15% to €149.5 billion; adjusted for exchange rate effects,
the increase amounted to 9%. This means that, as we had
expected at the beginning of 2015, our dynamic growth accel-
erated further thanks to the success of our new vehicle
models. The divisions Mercedes-Benz Cars (+14%), Daimler
Trucks (+16%) Mercedes-Benz Vans (+15%) and Daimler
Financial Services (+19%) all increased their business volumes
significantly. The factors behind this strong growth were the
market success of our products, as well as exchange-rate effects
especially at Daimler Trucks and Daimler Financial Services.
At Daimler Buses, revenue was 2% lower than in the previous year.
This was due to the negative impact of the market situation in
Latin America, which was even more unfavorable than expected
at the beginning of the year.
In regional terms, Daimler achieved revenue growth in
Western Europe (+13% to €49.6 billion), the NAFTA region
(+25% to €47.7 billion) and Asia (+15% to €33.7 billion).
B.10
Consolidated revenue by region
Small vans Western Europe
Large vans USA
Heavy-duty trucks NAFTA
+0.6
27.1
39.3
35.9
+3.4
Medium-duty trucks NAFTA
region (Classes 6 and 7)
39.7
40.3
-0.6
Medium-duty and heavy-duty
trucks Brazil
26.7
25.8
+0.9
Trucks Japan
20.8
20.1
+0.7
Trucks Indonesia
48.0
47.4
+0.6
Medium-duty and heavy-duty
trucks India
7.3
6.2
+1.1
Mercedes-Benz Vans
Mid-size and large vans
Western Europe
18.4
18.2
+0.2
thereof Germany
26.5
In billions of euros
Asia
NAFTA
In a generally sluggish global economic environment, the
economies of the industrialized countries were rather more
dynamic than in the previous year. Overall, these countries'
real gross domestic product (GDP) grew by approximately 1.9%
(2014: 1.7%). The US economy once again proved to be a stable
cornerstone of the global economy. Supported by lively private
consumption and solid investment by companies, the United
States achieved overall economic growth of 2.4%. In Japan, the
economy revived slightly at the beginning of the year, but
then reverted to a rather weaker phase. Due only to the positive
start of the year, 2015 as a whole resulted in slight growth
of approximately 0.5%.
Although the Greece crisis resulted in considerable uncertainty,
especially in the first half of the year, the economy of the Euro-
pean Monetary Union (EMU) was one of the positive surprises
in 2015. Overall, the EMU seems to have achieved a growth
rate of about 1.5%. Low inflation, rising real incomes, low energy
prices, a weaker euro and the very expansive monetary policy
of the European Central Bank (ECB) were responsible for this
positive development. It was particularly pleasing that former
crisis countries such as Spain and Ireland posted some of the
highest growth rates. But the German economy was also
very robust with growth of 1.7%. The British economy delivered
a convincing performance, as in the previous years, with
expansion of 2.2%.
Unlike the industrialized countries, the overall economic
growth of the emerging markets slowed down in the year under
review. It amounted to only about 3.3% (2014: 4.3%), and was
thus almost as low as most recently during the financial crisis
in the year 2009. The main reason was the repeated drop in
raw-material prices, which had a major impact above all on the
economic development of the raw-material exporting coun-
tries. Some economies such as Russia and Brazil were actually
in distinct recession. Another factor was substantial currency
depreciation in some major emerging economies. The slowdown
of growth in China to a rate of 6.9% was roughly as expected
so the country's economic restructuring fortunately continued
without a hard landing. However, the significant correction
of the Chinese stock market in the middle of the year triggered
considerable uncertainty in the global financial markets.
B.05
Economic growth
Gross domestic product, growth rates in %
6
5
4
3
2
1
0
-1
-2
Total
Western
Europe
NAFTA
Asia
South
America
2014
2015
Eastern
Europe
Source: IHS Global Insight, S/DM
80
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
In this partially very tense global economic environment,
currency exchange rates were very volatile. Against the US dollar,
the euro fluctuated between $1.05 and $1.21. At the end
of the year, the euro was about 10% weaker than a year earlier
at $1.09. Once again, the range of fluctuation of the euro to
the Japanese yen was quite substantial, with a corridor of 126
to 146 yen to the euro. By the end of the year, the euro had
fallen by 10% also against the yen. Against the British pound,
the euro ended the year with depreciation of approximately 6%.
The euro gained against some currencies such as the Turkish lira
and the Canadian dollar, in some cases by double-digit per-
centages, with the highest gain of over 30% against the Brazilian
real. Compared with the ruble, the euro had gained nearly
12% by the end of the year, with substantial volatility during
the year of between 53 and 82 rubles to the euro.
B.06
Global automotive markets
In the year under review, the world economy expanded at
a slightly lower rate than in the two previous years, once again
remaining below the long-term trend with real growth of about
2.5%. 71 B.05 This was primarily the result of the ongoing slow-
down and highly dissatisfactory economic developments in the
emerging markets. Global financial markets continued to feature
considerable interest-rate fluctuations during 2015. Prices
of industrial raw materials decreased significantly compared
with the previous year and were approximately 20% lower
than in 2014; the price of crude oil actually fell by nearly 50%.
Unit sales growth rates 2015 in %
The world economy
Economic Conditions
78
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Cost of capital
The required rate of return on net assets, and hence the cost
of capital, is derived from the minimum rates of return that
investors expect on their invested capital. The calculation of the
cost of capital for the Group and the industrial divisions takes
into consideration the cost of equity as well as the costs of debt
and the net pension obligations of the industrial business.
The expected returns on liquidity of the industrial business are
considered with the opposite sign. The cost of equity is calcu-
lated according to the capital asset pricing model (CAPM), using
the interest rate for long-term risk-free securities (such as
German government bonds) plus a risk premium reflecting the
specific risks of an investment in Daimler shares. While the cost
of debt is derived from the required rate of return for obliga-
tions entered into by the Group with external lenders, the cost
of capital for net pension obligations is calculated on the basis
of discount rates used in accordance with IFRS. The expected
return on liquidity is based on money market interest rates.
The Group's cost of capital is the weighted average of the indi-
vidually required or expected rates of return. During the reporting
period, the cost of capital amounted to 8% after taxes. For the
industrial divisions, the cost of capital amounted to 12% before
taxes; for Daimler Financial Services, a cost of equity of 13%
before taxes was applied. 7 B.04
B.04
Cost of capital
2015
2014
8
In percent
Group, after taxes
8
Industrial business, before taxes
12
Daimler Financial Services, before taxes
13
23
12
13
Return on sales
As one of the main factors influencing value added, return
on sales is of particular importance for assessing the industrial
divisions' profitability. The combination of return on sales and
net assets' productivity results in return on net assets (RONA).
If RONA exceeds the cost of capital, value is created for our
shareholders. The measure of profitability for Daimler Financial
Services is not return on sales, but return on equity.
Key performance indicators
The important financial indicators for measuring our operating
financial performance, in addition to EBIT and revenue, are the
free cash flow of the industrial business, investment, and research
and development expenditure. Along with the indicators of
financial performance, we also use various non-financial indica-
tors to help us manage the Group. Of particular importance
in this respect are the unit sales of our automotive divisions,
which we use as the basis for our capacity and human
resources planning, and workforce numbers.
Furthermore, within the context of our sustainability manage-
ment, we use other non-financial indicators such as the
CO2 emissions of our vehicle fleet and the energy and water
consumption of our production sites. Non-financial indicators
are also used to determine the remuneration of our Board
of Management members. In addition, integrity and compliance
are important criteria used in annual goal agreements for
our managers, as well as in target-achievement assessments.
Details of the development of non-financial performance indi-
cators can be found in the chapters "Economic Conditions
and Business Development" and "Sustainability." pages 79 ff
and pages 105 ff. For "Integrity and Compliance," see pages
185 ff.
Corporate governance statement
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB)
can be seen on the Internet at ④daimler.com/corpgov/en.
Pursuant to Section 317 Subsection 2 Sentence 3 of the
German Commercial Code (HGB), the contents of the statement
pursuant to Section 289a of the HGB are not included in
the audit carried out by the external auditors.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 79
and Business Development
20%
20
10
The bus market of Western Europe significantly surpassed
its weak prior-year level. There was positive impetus in particular
from the coach segment, which profited from expansion
of the business of long-distance buses in Germany. Demand in
Eastern Europe was at the prior-year level, with support from
the growing coach segment in Turkey. As a result of the difficult
economic and political situation in Latin America, market
conditions there deteriorated significantly. In Brazil alone, market
volume decreased by 40% compared with 2014.
Business development
Unit sales
Daimler significantly increased its total unit sales in the year 2015,
as had been forecast in Annual Report 2014. Sales of approx-
imately 2.9 million vehicles surpassed the prior-year figure by 12%.
This growth was mainly driven by the Mercedes-Benz Cars
division (+16%) and to a lesser extent by the Mercedes-Benz
Vans division (+9%). The forecasts made at the beginning of
the year were therefore confirmed. At Daimler Trucks, growth
of just over 1% was lower than we had originally anticipated,
primarily due to the weak condition of markets in Latin America
and Indonesia. Unit sales of buses, which we had expected
to increase slightly at the beginning of the year, were significantly
below the prior-year level. This was mainly the result of the
very weak markets for bus chassis in Latin America.
The Mercedes-Benz Cars division once again accelerated along
its growth path in 2015, with 16% growth in unit sales to the
new record of 2,001,400 vehicles. The Mercedes-Benz brand
increased its unit sales by 15% to a record of 1,880,100 vehicles.
We are the number one in the premium segment in Germany as
well as in Canada and Japan. We also significantly improved
our position in China.
In Western Europe, Mercedes-Benz sold a total of 678,200
vehicles, surpassing the prior-year number by 11%. Growth was
particularly strong in Spain (+24%), the United Kingdom (+17%)
and Italy (+16%). But also in Germany, we increased our unit sales
by 4% to 259,200 vehicles. Unit sales in NAFTA continued to
develop positively, with new records set in the United States (+5%)
as well as in Canada (+23%) and Mexico (+10%). In China, we
achieved growth of 41% - considerably stronger than the overall
market and our main competitors. We posted significant
growth also in Japan (+13%), South Korea (+30%), India (+31%),
Brazil (+67%) and Turkey (+35%).
82
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
The increase in unit sales was primarily driven by the C-Class
and the new SUVs. But with growth of 10%, there was a contin-
uation of strong demand also for our A- and B-Class models:
Including the CLA and the CLA Shooting Brake, a total of 425,000
of those models were delivered. Our C-Class models were
especially successful, with 38% growth to sales of 470,400
sedans, wagons and coupes. The E-Class performed very well
in its last year before the model change with sales of 306,000
units (-7%). The S-Class was once again the best-selling luxury
sedan in the world by far. In total we sold 106,200 sedans
and coupes of the S-Class (2014: 115,500). In the SUV segment,
worldwide unit sales increased by 27% to 543,000 vehicles,
primarily driven by the new GLC and GLE models and the success
of the GLA in China. 7 B.07
With the new and very successful fortwo and forfour
models, the smart brand increased its unit sales by 31%
to 121,300 vehicles.
pages 160 ff
B.07
Unit sales structure of Mercedes-Benz Cars
A-/B-Class
21%
C-Class
24%
E-Class
15%
S-Class
5%
SUVS*
27%
Sports Cars
2%
smart
6%
* including GLA
Western Europe
39%
Demand for vans in Western Europe continued to grow in 2015.
The market volume increased by 11% for mid-size and large
vans and by 8% for small vans. In particular, the markets of the
countries of southern Europe recovered significantly, and
distinct growth was apparent also in Germany. In the United
States, the market for large vans continued to develop very
positively with growth of 14%. In China, however, there was
significant contraction of the market segment we address
there. Due to the unfavorable economic situation, the market
for large vans in Latin America also contracted sharply.
15
With a drop of more than 40%, demand for trucks in Russia
decreased substantially due to the country's economic recession.
And China, the world's biggest truck market, contracted by
almost 30%.
The European market developed significantly better than
at the beginning of 2015. In a comparatively favorable economic
environment, it grew by approximately 17%. The Turkish market
weakened significantly following a positive start to the year, but
grew in the full year by approximately 9% due to purchases
brought forward because of the upcoming introduction of the
Euro VI emissions standard. On the other hand, demand for
trucks in Brazil slumped drastically because of the severe eco-
nomic recession, falling to about half the volume of 2014;
the market was additionally weakened towards the end of the
year by the continued worsening of financing possibilities
in the context of the government's FINAME program.
5
0
-5
-10
-15
-20
-25
-30
-35
-40
Total
Western
NAFTA
|
Asia
Europe
region¹
1 Cars segment includes light trucks
Passenger cars
Commercial vehicles
South
America¹
Eastern
Europe
Source: German Association of the
Automotive Industry (VDA),
various institutions, S/DM
Automotive markets
The continuation of below-average global economic dynamism
in the year 2015 was also reflected by the development of
global demand for cars. The increase of about 3% in demand
worldwide is to be regarded as quite solid with currently strong
markets, whereby regional differences were very substantial.
While China and the traditional markets of the United States and
Western Europe followed a relatively positive development,
demand was very weak in some major emerging markets. 71 B.06
From a very strong starting point, the US market grew again
by nearly 6%, surpassing its previous record from the year 2000
with sales of approximately 17.5 million cars and light trucks.
Demand in Western Europe also developed very positively.
The market recovery that had started in 2014 became more
dynamic and led to significant growth of about 9%. It must
be emphasized that this market growth took place on a broad
basis: double-digit growth was recorded in Spain and Italy while
the three major markets of Germany, the United Kingdom
and France each posted significant growth of between 6 and 7%.
The initial impression of the Chinese car market is still positive,
with growth of approximately 9% and the biggest contribution
in absolute terms to the increased worldwide volume. But these
figures conceal the significant period of weakness that the
market went through during the summer months. The Chinese
government finally initiated countermeasures, granting tax
reductions on the purchase of small cars with engine displace-
ment of up to 1.6 liters, which were subsequently responsible
for the aforementioned market growth.
The Japanese car market contracted by approximately 10%,
after demand had been kept artificially high for several years
as a result of measures taken by the government. With the
exception of China, the major emerging markets displayed very
differing tendencies. The Indian market grew significantly
while demand for cars slumped in Brazil and Russia. Deep eco-
nomic recessions in both countries resulted in market slumps
of about 25% in Brazil and even 35% in Russia, thus dampening
the worldwide volume growth.
Worldwide demand for medium-duty and heavy-duty trucks
came under considerable pressure last year and fell by approx-
imately 11%. This decrease was also primarily due to the drastic
contraction of some major emerging markets, which was
not offset by the positive development of the North American
and European markets.
The North American market proved once again to be robust
in Classes 6-8 with overall growth of approximately 11%.
But a weakening of the market's dynamism was to be observed
as the year progressed, at first in industrial orders received
and towards the end of the year also in sales figures.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 81
From Daimler's perspective, the main Asian markets were rather
mixed. The Japanese market for light-, medium- and heavy-
duty trucks remained close to its solid prior-year level despite
weak economic dynamism. Indonesia, however, was affected
by the growth slowdown in China and by falling raw-material
prices, which resulted in a contraction of 32% in the overall
truck market. Demand in India developed positively, with growth
of about 10% in the market for medium- and heavy-duty trucks.
2011
2012
+0.4
2015
-29
-17
Relocation of MBUSA Headquarters
-3
Reversal of impairment of
investment in FBAC
+61
Daimler Buses
Sale of investment in New MCI Holdings Inc.
+16
Restructuring of own dealer network
-4
Business repositioning
-2
-12
Reconciliation
Sale of shares in RRPSH
Measurement of put option for RRPSH
+1,006
-118
+718
Remeasurement of Tesla shares
Sale of Tesla shares and hedge
of Tesla share price
Expenses related to EU antitrust proceedings
-600
-124
The Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz
Vans divisions significantly increased their EBIT from the
ongoing business in 2015 and thus met the forecasts made
in Annual Report 2014. Daimler Buses also fulfilled our expec-
tations with EBIT just under the prior-year level. The earnings
of Daimler Financial Services developed better than we had
forecasted at the beginning of the year. We had anticipated
a slight improvement at Daimler Financial Services compared
with the previous year. We adjusted those assessments upwards
as the year progressed in the context of our quarterly reporting,
as the division's contract volume increased faster than expected.
Mercedes-Benz Cars posted EBIT of €7,926 million, which is
significantly higher than the prior-year figure of €5,853 million.
The division's return on sales increased to 9.5% (2014: 8.0%).
7 B.15
This very positive development primarily reflects the in-creased
unit sales of new vehicles. The main drivers were the new
C-Class, the compact cars and increased unit sales in the SUV
segment. Other positive effects on EBIT resulted from the
better pricing, efficiency measures and currency translation.
Negative effects resulted from expenses for the expansion of
production capacities and advance expenditure for new techno-
logies and vehicles. EBIT also includes expenses of €300 mil-
lion from a recall in connection with Takata airbags as well as
expenses for public-sector levies from prior periods of €121
million and expenses for the relocation of the Mercedes-Benz
USA, LLC headquarters caused expenses of €19 million. On
the other hand, EBIT includes a gain of €87 million on the sale
of real estate in the United States. EBIT in the previous year
included impairments of investments in the field of alternative
drive systems of €30 million.
The automotive divisions were also affected by a total expense
of €144 million from the restructuring of Daimler's own dealer-
ship network (2014: €116 million). In this context, we refer to
the information provided in Note 5 of the Notes to the Con-
solidated Financial Statements.
Daimler Trucks achieved EBIT of €2,576 million (2014: €1,878
million), which is significantly higher than the prior-year figure.
The division's return on sales increased to 6.9% (2014: 5.8%).
71 B.15
Restructuring of own dealer network
The positive development of earnings was primarily the result
of increased unit sales in the NAFTA region and Europe, the
realization of further efficiency improvements and positive
exchange-rate effects. There were negative impacts on earn-
ings from lower unit sales in Latin America and Indonesia, as
well as from higher expenses for warranties and customer
goodwill, the expansion of production capacities and advance
expenditure for new technologies and vehicles. EBIT also
includes expenses of €58 million for workforce actions in the
context of the ongoing optimization programs in Brazil and
Germany. Furthermore, the sale of Atlantis Foundries (Pty.) Ltd.
resulted in expenses of €61 million. The prior-year earnings
were reduced by expenses from the impairment of the equity-
method carrying value of the investment in Kamaz PAO.
-40
Mercedes-Benz Vans
Mercedes-Benz Cars
Recall in connection with Takata airbags
Sale of real estate in the United States
2015
EBIT
Net profit (loss)
2015
2014
-300
+87
Public-sector levies related to prior periods
-121
Restructuring of own dealer network
-64
-81
Relocation of MBUSA Headquarters
-19
Impairment of investments in the area
of alternative drive systems
-30
Daimler Trucks
Sale of investment in Atlantis Foundries
-61
Workforce adjustments
-58
-149
Restructuring of own dealer network
-47
-16
Impairment of investment in Kamaz
-30
Recall in connection with Takata airbags
In millions of euros
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 87
a significant improvement on its prior-year earnings of €682
million. The division's return on sales increased to 7.7% from
6.8% in 2014. 7 B.15
30
25
20
15
10
5
0
2011
2012
2013
2014
2015
B.17
Reconciliation of Group EBIT to profit before income taxes
2015
2014
In millions of euros
Group EBIT
13,186
10,752
Amortization of capitalized borrowing costs'
Interest income
-10
-9
170
145
Interest expense
-602
-715
Profit before income taxes
12,744
In %
Mercedes-Benz Vans posted EBIT of €880 million in 2015,
Daimler Financial Services
Mercedes-Benz Daimler
Buses
EBIT reflects the very positive development of unit sales, espe-
cially in Europe and in the NAFTA region. This was mainly due
to the very strong growth rates for the V-Class and the new Vito.
Improved material efficiency also had positive impact on earn-
ings, while expenses for warranties and customer goodwill affected
EBIT negatively. Additionally, expenses of €40 million from a
recall in connection with Takata airbags had a negative effect
on earnings. In the previous year, a gain on the reversal of an
impairment of the investment in the Chinese joint venture Fujian
Benz Automotive Corporation boosted EBIT by €61 million.
Daimler Buses increased its EBIT to €214 million in 2015
(2014: €197 million) and achieved a return on sales of 5.2%
(2014: 4.7%). 7 B.15
Positive effects resulted in particular from the good business
with complete buses with a positive product mix in Western
Europe as well as further efficiency improvements. The develop-
ment of earnings also benefited from positive exchange-rate
effects. On the other hand, the continuation of the difficult
economic situation in Latin America had a negative impact on
earnings. The division's EBIT includes a gain of €16 million on
the sale of the shares in MCI Holdings Inc.
In 2015, Daimler Financial Services posted EBIT of €1,619
million, significantly surpassing its prior-year earnings (2014:
€1,387 million). The division's return on equity was 18.3%
(2014: 19.4%). 7 B.16
The main reasons for this development were the increased
contract volume and positive exchange-rate effects, which
more than offset additional expenses in connection with the
expansion of business operations.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-group transactions
between the divisions.
Items at the corporate level resulted in an expense of €79 million
(2014: income of €713 million). The income in the previous
year primarily resulted from our investments in RRPSH and Tesla.
In 2014, Daimler had a gain of €1,006 million from the sale of
the shares in RRPSH and an expense of €118 million from the
remeasurement of the put option on those shares. In connec-
tion with our investment in Tesla, the loss of significant influence
on that company meant that the Tesla shares had to be remea-
sured, resulting in a gain of €718 million. The hedge of Tesla's
share price and the sale of those shares resulted in total
expenses of €124 million in 2014. Items at the corporate level
also included expenses of €600 million related to the ongoing
antitrust investigations of European manufacturers of commercial
vehicles by the EU Commission.
The elimination of intra-group transactions resulted in income
of €50 million in 2015 (2014: €42 million).
The reconciliation of Group EBIT to profit before income taxes
is shown in table 7 B.17.
B.15
Return on Sales
In %
2011
2012
2013
2015
2014
12
9
6
2013
0
-3
-6
-9
B.16
Mercedes-Benz
Cars
Daimler
Trucks
Vans
Return on Equity
Special items affecting EBIT
3
2014
32,389
+16
Mercedes-Benz Vans
11,473
9,968
+15
Daimler Buses
4,113
4,218
-2
Daimler Financial Services
18,962
15,991
+19
Profitability
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 85
EBIT
The Daimler Group achieved an EBIT of €13.2 billion in 2015
(2014: €10.8 billion). 7 B.12 71 B.13
The Mercedes-Benz Cars division in particular significantly sur-
passed its prior-year earnings as a result of further growth in
unit sales. This was primarily due to the new C-Class in its first
full year, as well as the expanded product range in the SUV
segment (including the GLA). Daimler Trucks and Mercedes-Benz
Vans significantly surpassed their prior-year earnings. Both
divisions achieved growth in unit sales mainly in the NAFTA
region and Europe. Daimler Buses achieved higher earnings
than in 2014. Daimler Financial Services once again significantly
surpassed its prior-year earnings, mainly as a result of its
increased contract volume.
The development of currency exchange rates and lower expenses
due to increased discount rates had a positive impact on oper-
ating profit. Also, the increasing effect of the implemented
efficiency measures contributed to higher EBIT.
Special items resulted in expenses for the Group in 2015. In
particular, expenses of €340 million from a recall in connec-
tion with Takata airbags at the Mercedes-Benz Cars and the
Mercedes-Benz Vans division, expenses connected with the
restructuring of the Group's own dealer network in a net amount
of €144 million across all automotive divisions and public-
sector levies related to prior periods of €121 million at the
Mercedes-Benz Cars division led to negative effects on
earnings.
The reconciliation of segment earnings to Group EBIT resulted
in significantly lower income than in the previous year. The
previous year was affected in particular by the income from the
disposal of the shares in Rolls-Royce Power Systems Holding
GmbH (RRPSH) and the remeasurement and sale of the shares
in Tesla Motors Inc. (Tesla) as well as the expenses from the
related hedging instruments totaling €1,482 million. Expenses
connected with the ongoing antitrust investigations of Euro-
pean truck manufacturers by the EU Commission reduced
earnings by €600 million in the previous year.
The special items affecting earnings in the years 2014 and 2015
are shown in table 7 B.14.
Due to the favorable business development in all divisions,
Daimler was able to significantly exceed its prior-year EBIT from
ongoing business of €10.1 billion, achieving €13.8 billion
in 2015, which is in line with our expectations as stated in the
Outlook section of Annual Report 2014. 7 B.12
B.12
EBIT by segment
In millions of euros
2014
EBIT
15/14
37,578
2015
Daimler Trucks
73,584
B.14
2014
50
45
40
35
30
25
20
15
10
5
0
Germany
Western Europe NAFTA region
(excl. Germany)
Asia
Other markets
B.11
Revenue by division
2015
2014
15/14
% change
Daimler Group
149,467
129,872
+15
Mercedes-Benz Cars
83,809
+14
% change
In millions of euros
15/14
% change
1,387
+17
Reconciliation
-29
755
-29
-127
-77
Daimler Group
13,186
10,752
+23
13,829
10,146
+36
86
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Development of earnings
In billions of euros
14
12
10
8
6 420
ונה
2011
2012
EBIT from ongoing business
2014
2013
1,619
+17
B.13
1,619
Mercedes-Benz Cars
7,926
1,387
5,853
+35
8,343
5,964
Daimler Trucks
2,576
1,878
+37
2,742
2,073
+32
Mercedes-Benz Vans
+40
682
211
-4
880
202
+9
214
197
Daimler Financial Services
+49
638
952
+29
Daimler Buses
Net operating profit
2014
Table 7B.20 shows the reconciliation of the EBIT of the divisions
to net operating profit. In addition to the EBIT of the divisions,
net operating profit also includes earnings effects for which
the divisions are not accountable such as income taxes and
other reconciliation items.
In millions of euros
Daimler Buses
At the Annual Shareholders' Meeting on April 6, 2016, the
Board of Management and the Supervisory Board will recommend
the payment of a dividend of €3.25 per share (2014: €2.45).
With this proposal, we are once again raising the dividend (by
33%) and letting our shareholders participate in the Company's
success. The total dividend will thus amount to €3,477 million
(prior year: €2,621 million) and the distribution ratio will be
41.3% of the net profit attributable to the Daimler shareholders
(prior year: 37.6%). 7 B.19
2015
15/14
+35
Mercedes-Benz Cars
7,926
5,853
Daimler Trucks
2,576
1,878
Dividend
Mercedes-Benz Vans
+37
% change
Reconciliation to net operating profit
3.50
2015
In euros
880
Dividend per share
2.20
2.20
2.25
2.45
3.25
3.00
2.50
2.00
1.50
1.00
0.50
0
2011
2012
2013
2014
B.20
682
5,675
214
2015
2014
In millions of euros
15/14
% change
Daimler Group
4,416
+29
Mercedes-Benz Cars
Value Added
5,881
+55
Daimler Trucks
1,619
761
+113
Mercedes-Benz Vans
B.19
703
3,799
B.21
1 Adjusted for tax effects on interest income/expense and amortization
of capitalized borrowing costs.
Net operating profit
197
+9
Daimler Financial Services
EBIT of the divisions
1,619
1,387
+17
13,215
9,997
+32
-4,179
-3,074
+36
-29
755
9,007
7,678
+17
Income taxes¹
Other reconciliation
+29
As described in the "Performance measurement system" sec-
tion of the "Corporate Profile" chapter in table 7 B.03, the
cost of capital is the result of net assets and cost of capital
expressed as a percentage, which is subtracted from earnings
in order to calculate value added. The tables 7 B.21 and
7 B.22 show value added and net assets for the Group and for
the individual divisions. Table 1 B.23 shows how net assets
are derived from the consolidated statement of financial position.
-3,329
The calculation of earnings per share (basic) is based on an
unchanged average number of outstanding shares of 1,069.8
million.
-3,710
+15
+16
+13
+5
+11
Research and non-capitalized
development costs
-4,760
-4,532
Other operating income
2,114
General administrative expenses
1,759
Other operating expense
-555
-1,160
-52
Share of profit from equity-method
investments, net
464
897
+5
+20
28,184
-11,534
-12,147
Selling expenses
473
138
88
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
Consolidated statement of income
The Group's total revenue increased by 15.1% to €149.5 billion
in 2015; adjusted for exchange-rate effects, it increased by
9.0%. The revenue growth primarily reflects the strong demand
for our products in nearly all divisions. Further information on
the development of revenue is provided in the "Business
development" section of this Management Report. 7 B.18
Cost of sales amounted to €117.7 billion in 2015, increasing by
15.7% compared with the previous year. The rise in cost of
sales was caused by higher business volumes and consequentially
higher material expenses. Personnel expenses and deprecia-
tion of equipment on operating leases and of property, plant
and equipment also increased. Further information on cost
of sales is provided in Note 5 of the Notes to the Consoli-
dated Financial Statements. 7 B.18
Gross profit therefore increased by 12.8% overall.
B.18
Consolidated statement of income
In millions of euros
2015
2014
149,467 129,872
-117,670 -101,688
15/14
% change
Revenue
Cost of sales
Gross profit
31,797
-48
Value added
Other financial expense, net
458
328
-13
thereof
attributable to shareholders
of Daimler AG
8,424
6,962
+21
287
Due to the growth in unit sales, selling expenses increased by
€0.6 billion to €12.1 billion. The main factors here were higher
expenses for marketing and personnel. As a percentage of rev-
enue, selling expenses decreased from 8.9% to 8.1%. 7 B.18
Research and non-capitalized development costs increased
by €0.2 billion to €4.8 billion in 2015. They were mainly related
to the development of new models, advance expenditure for the
renewal of existing models and the further development of
fuel-efficient and environmentally friendly drive systems as well
as safety technologies and autonomous driving. As a propor-
tion of revenue, research and non-capitalized development costs
decreased from 3.5% to 3.2%. Further information on the
Group's research and development costs is provided in the
"Research and development" section of the ①"Sustain-
ability" chapter of this Management Report. 7 B.18
Other operating income increased to €2.1 billion (2014: €1.8
billion). Other operating expense decreased significantly to
€0.6 billion (2014: €1.2 billion), due in particular to expenses of
€0.6 billion in the previous year related to the ongoing antitrust
investigations of European manufacturers of commercial vehicles
by the EU Commission. Further information on the composition
of other operating income and expense is provided in > Note 6
of the Notes to the Consolidated Financial Statements. 7 B.18
In 2015, our share of profit from equity-method investments
decreased to €0.5 billion (2014: €0.9 billion). In 2014, Daimler
lost its significant influence on Tesla, which was previously
accounted for using the equity method; the subsequent remea-
surement of our Tesla shares resulted in a gain of €0.7 billion
in 2014. B.18
Other financial expense/income decreased from an income
of €458 million to an expense of €27 million. This was primar-
ily due to the disposal of the RRPSH shares, which resulted in
a gain of €1.0 billion in 2014. 7 B.18
Net interest expense improved to €0.4 billion (2014: €0.6
billion). Expenses in connection with pension and healthcare
benefit obligations decreased, primarily due to lower applicable
interest rates. Other interest expense improved, mainly because
of the successive expiry of refinancing at high interest rates.
7 B.18
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 89
The tax expense of €4.0 billion stated under income tax expense
is €1.1 billion higher than in 2014, mainly due to the improved
pretax income. The effective tax rate for 2015 was 31.6% (2014:
28.3%). In 2014, a gain was recognized on the sale of the
RRPSH shares that was largely tax free. But also expenses arose
that were not tax deductible in connection with the ongoing
antitrust investigations of European manufacturers of commer-
cial vehicles by the EU Commission. Therefore, the increase
in pretax income is mainly an increase in normally taxed earn-
ings, which led to a correspondingly higher tax expense. In
both years, the income tax expense was affected by additional
tax benefits and expenses. The year 2015 includes tax benefits
in connection with the tax assessment of previous years as well
as tax expenses due to valuation allowances on deferred tax
assets, while in the year 2014, gains were recognized on the
reversal of valuation allowances on deferred tax assets.
7 B.18
Net profit for the year amounts to €8.7 billion (2014: €7.3
billion). Net profit of €0.3 billion is attributable to non-controlling
interests (2014: €0.3 billion). Net profit attributable to the
shareholders of Daimler AG amounts to €8.4 billion (2014:
€7.0 billion), representing earnings per share of €7.87 (2014:
€6.51). 7 B.18
General administrative expenses of €3.7 billion were above
the level of the previous year (2014: €3.3 billion), mainly driven
by higher IT and personnel expenses. As a percentage of reve-
nue, general administrative expenses decreased slightly to 2.5%
(2014: 2.6%). 71 B.18
attributable to non-controlling
interests
thereof
+19
Interest income
170
145
+17
Interest expense
-602
-715
-16
Profit before income taxes
12,744
10,173
+25
Income taxes
-4,033
-2,883
+40
Net profit
8,711
7,290
-27
+49
323
105
23
30
Daimler Financial Services
2.5
2.5
in % of revenue
+30
-1
104
Daimler Buses
3.0
1.8
in % of revenue
-34
105
in % of revenue
0.2
0.1
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 97
Furthermore, several asset-backed securities (ABS) transac-
tions were carried out in the United States, Canada and
Germany. In the United States for example, five emissions gen-
erated a refinancing volume totaling US$5.8 billion. Bonds in
a volume of CAN$0.4 billion were issued in Canada. In addition,
Mercedes-Benz Bank once again sold ABS bonds in a volume
of €1.0 billion to European investors through its Silver Arrow
Platform.
In addition, Daimler issued small volumes of commercial papers
in 2015.
In April and November, Daimler AG placed bonds in the domestic
capital market of the People's Republic of China, so-called
panda bonds, with a volume of CNY3.0 billion and CNY2.0 billion.
In addition, a large number of smaller bonds were issued in
various currencies in the euro market, as well as in Mexico,
Brazil, Argentina, Canada, South Africa, Thailand and South
Korea.
In 2015, the Group covered its refinancing requirements mainly
through the issuance of bonds. A large proportion of those
bonds were placed in the form of so-called benchmark emissions
(bonds with high nominal volumes) in the US dollar and euro
markets. B.32
The continued expansive monetary policy of the central banks
also affected the situation in the bond markets in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit ratings
remained moderate despite increasingly volatile markets.
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €35 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The funds raised by Daimler in the year 2015 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank credits, commercial papers in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank and the securitization of receivables
from customers in the financial services business (asset backed
securities, ABS).
Refinancing
Furthermore, we capitalized development costs of €1.8 billion
in 2015 (2014: €1.1 billion); this is presented under intangible
assets. S. 107
Together with Audi and BMW, we acquired the digital mapping
business HERE in 2015. The digital maps from HERE are the
basis for new assistance systems going as far as fully automated
driving. Daimler's share of the purchase price is approximately
€0.7 billion.
In addition to capital expenditure on property, plant and equip-
ment, we also invested in associated companies and joint ven-
tures in 2015.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €3.6 billion in 2015 was on prior year level. The
most important projects included the GLC and GLE SUVS and
the new E-Class family. We also made substantial investments
in the reorganization of our German production facilities as
competence centers and in the expansion of our international
production network. Following the completion of the Euro VI
product offensive, the main areas of investment at Daimler Trucks
in 2015 were to extend technological leadership and to adapt
production capacities to the high demand. Total investment in
property, plant and equipment at Daimler Trucks increased to
€1.1 billion. At the Mercedes-Benz Vans division, the focus of
investment was on the next-generation Sprinter, the new mid-
size pickup and production preparations for the new Vito in Latin
America. The main investments at Daimler Buses were in new
products and the modernization and expansion of the production
facilities.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
96
304
Bank credit was another important source of refinancing in
2015. Funds were provided not only by large, globally active
banks, but increasingly also by a number of local banks. The
lenders included supranational banks such as the European
Investment Bank and the Brazilian Development Bank (BNDES).
In this way, we continued our diversification in refinancing
through banks.
202
2.4
Daimler Group
In millions of euros
15/14
% change
2014
2015
Investment in property, plant and equipment by division
in % of revenue
B.30
2014
2013
2012
2011
0
1
2015
in % of revenue
Daimler Trucks
in % of revenue
3.0
+41
788
1,110
4.9
4.3
+0
3,621
3,629
Mercedes-Benz Cars
3.7
3.4
+5
4,844
5,075
Mercedes-Benz Vans
3
2
In order to secure sufficient financial flexibility, in September
2013, Daimler concluded a €9 billion syndicated credit facility
with a consortium of international banks with a maturity of five
years and two extension options of two years in total. This
provides the Group with financial flexibility until the year 2020.
More than 40 European, American and Asian banks partici-
pated in the consortium. Daimler does not intend to utilize the
credit line. In 2015, Daimler exercised the option to extend the
facility by another year until 2020. All the banks in the consortium
participated in the extension.
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.31.
At December 31, 2015, they are mainly denominated in the fol-
lowing currencies: 40% in euros, 30% in US dollars, 6% in Chinese
renminbi, 5% in British pounds and 3% in Japanese yen.
US$650 million
May 2020
May 2015
US$1,300 million
May 2018
May 2015
May 2015
US$1,050 million
Mar. 2015
US$1,250 million
Mar. 2018
Mar. 2015
US$1,500 million
Mar. 2017
Mar. 2020
May 2025
US$150 million
Aug. 2015
Sep. 2015
Nov. 2015
€1,000 million
Aug. 2025
Aug. 2015
US$500 million
€500 million
Aug. 2020
Aug. 2015
US$850 million
Aug. 2018
Aug. 2015
US$1,000 million
Aug. 2017
Aug. 2015
US$1,000 million
Feb. 2017
Mar. 2015
At the end of 2015, Daimler had not utilized short- and long-term
credit lines totaling €18.5 billion (2014: €17.2 billion). They
include a syndicated credit facility arranged in September 2013
with a consortium of international banks with a volume of €9
billion.
US$250 million
Issuer
58,789
1.68
1.69
Notes/bonds and
liabilities from
ABS transactions
In millions of euros
Carrying values
Dec. 31,
2014
49,165
in %
Dec. 31,
2014
Average interest rates
Dec. 31,
2015
Refinancing instruments
B.31
Detailed information on the amounts and terms of financing
liabilities is provided in Notes 24 and 32 of the Notes to
the Consolidated Financial Statements. Note 32 also provides
information on the maturities of the other financial liabilities.
At December 31, 2015, the total of financial liabilities shown
in the consolidated statement of financial position amounted
to €101,142 million (2014: €86,689 million).
Dec. 31,
2015
Commercial paper
Liabilities to financial
institutions
Deposits in the direct
banking business
1.35
1.11
Maturity
Month of
emission
Volume
Benchmark issuances
B.32
10,853
10,532
1.06
0.71
22,893
27,311
3.08
2.58
2,277
2,961
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Daimler AG
4
5
6
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
94
1 The effects from the financing of the Group's own dealerships, which
are reflected in cash provided by operating activities, are eliminated
under other adjustments.
-1,519
5,479
3,960
B.26
industrial business
-758
1,022
264
Other adjustments¹
+2,092
-195
Free cash flow of the
Net liquidity of the industrial business
In millions of euros
Dec. 31,
2015
2,612
Financing liabilities
+1,871
13,497
15,368
Liquidity
+28
+1,843
5,156
6,999
Marketable debt securities
8,341
8,369
Cash and cash equivalents
15/14
Change
Dec. 31,
2014
1,897
3,193
debt securities
-7,049
Cash and cash equivalents increased by €0.3 billion compared
with December 31, 2014, after taking currency translation
effects into account. Total liquidity, which also includes market-
able debt securities, increased by €1.9 billion to €18.2 billion.
Cash provided by financing activities 7 B.24 amounted
to €9.6 billion (2014: €2.3 billion). The change resulted almost
solely from the renewed increase in financing liabilities.
There were opposing effects from increased dividend payments
to the shareholders of Daimler AG and to minority share-
holders of subsidiaries.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93
Cash used for investing activities 7 B.24 amounted to
€9.7 billion (2014: €2.7 billion). The change compared with the
prior-year period resulted primarily from acquisitions and
disposals of shares in companies. The prior-year period included
proceeds of €2.4 billion from the sale of RRPSH shares. Fur-
thermore, the sale of shares in Tesla and the termination of the
related share-price hedge led to a cash inflow of €0.6 billion.
On the other hand, the reporting period was affected in particular
by the capital increases carried out at our financial invest-
ments and the acquisition of shares in the digital mapping busi-
ness HERE in December 2015. Cash used for investing activi-
ties also reflects the increased investments in intangible assets
and property, plant and equipment. Furthermore, negative
effects resulted from acquisitions and disposals of securities
in the context of liquidity management. Those transactions
led to a net cash outflow in 2015, whereas disposals of securities
were higher than acquisitions in the previous year.
Cash used for/provided by operating activities 7 B.24
amounted to €0.2 billion in 2015 (2014: cash outflow of
€1.3 billion) and was affected in particular by the implementation
of our growth strategy. New business in leasing and sales
financing was €3.3 billion above the high level of the prior-year
period. Positive effects resulted from profit before income
taxes, which improved by €2.5 billion to €12.7 billion (2014:
€10.2 billion). Furthermore, there were impacts from the
higher tax refunds in 2015 from the final tax assessment of the
previous years. In addition, contributions to pension funds
were lower than in 2014. The prior-year period was affected by
cash outflows of €2.5 billion for the extraordinary contribution
to the German pension fund assets, whereas in the reporting
period, the extraordinary contributions in Germany and the
United States amounted to €1.2 billion.
Cash flows
The parameter used by Daimler to measure the financial
capability of the Group's industrial business is the free cash
flow of the industrial business 7 B.25, which is derived
from the reported cash flows from operating and investing activ-
ities. The cash flows from the acquisition and sale of market-
able debt securities included in cash flows from investing activi-
ties are deducted, as those securities are allocated to liquidity
and changes in them are thus not a part of the free cash flow.
Further information on the management of market-price
risk, credit-default and liquidity risk is provided in Note 32
of the Notes to the Consolidated Financial Statements.
+269
9,667
9,936
at end of period
Cash and cash equivalents
-185
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies
in risk countries and the risk from direct sales to customers
in those countries. Daimler has an internal rating system that
divides all countries in which it operates into risk categories.
Equity capital transactions in risk countries are hedged against
political risks with the use of investment protection insurance
such as the German government's investment guarantees. Some
cross-border receivables due from customers are protected
with the use of export credit insurance, first-class bank guaran-
tees and letters of credit. In addition, a committee sets and
restricts the level of hard-currency credits granted to financial
services companies in risk countries.
Other adjustments relate to additions to property, plant and
equipment that are allocated to the Group as their beneficial
owner due to the form of their underlying lease contracts.
Furthermore, adjustments are made for the effects of financing
dealerships within the Group. In addition, the calculation of
the free cash flow includes those cash flows to be shown under
cash from financing activities in connection with the acquisi-
tion or sale of interests in subsidiaries without loss of control.
The free cash flow of the industrial business amounted to
€4.0 billion in 2015. The cash outflow of €1.2 billion for the
extraordinary payments in the context of pension and health
care benefits in Germany and the United States reduced
the free cash flow of the industrial business. Furthermore, the
acquisition of shares in the digital mapping business HERE
had an influence of €0.7 billion. Adjusted for these special effects,
the free cash flow of the industrial business amounted to
€5.9 billion (2014: €5.2 billion).
At the beginning of 2015, we expected a free cash flow in
a significantly higher amount than the dividend payment
of €2.6 billion, but significantly lower than in the previous year
as a result of the intensified level of investments. Due to the
positive business development in the course of the year 2015,
we successively increased our free cash flow forecast during
the reporting period. With consideration of the acquisition of
HERE and the extraordinary contribution to pension plan
assets in the fourth quarter, the free cash flow in the reporting
period was lower than in the previous year. Adjusted for
these material special items, the free cash flow of the industrial
business amounted to €5.9 billion and significantly exceeded
the amount of €5.2 billion in the previous year.
-2,887
-9,936
investing activities
Cash used for
+4,196
7,539
11,735
Cash provided by
operating activities
15/14
Change
2014
2015
In millions of euros
Free cash flow of the industrial business
B.25
The increase of €0.7 billion to €5.9 billion in the free cash
flow adjusted for special effects reflects the positive business
development, and was primarily the result of higher profit
contributions from the automotive divisions. Opposing effects
resulted from the higher increase in working capital, defined
as the net change in inventories, trade receivables and trade pay-
ables. In addition to the higher capital increases carried out
at our financial investments, the free cash flow of the industrial
business was especially reduced by higher investments in
intangible assets and property, plant and equipment. Higher
tax payments were another factor.
Change in marketable
Market valuation and currency
hedges for financing liabilities
600
Irrevocable loan obligations
2,157
2,156
Non-terminable rental and leasing agreements
9,769
13,371
1,931
Obligations from purchasing agreements
Dec. 31,
2015
In millions of euros
Other financial obligations (nominal amounts)
B.28
+313
-14,140
-12,232
-70,118
Dec. 31,
2014
1,320
Miscellaneous other financial obligations
1,518
Investment in property, plant and equipment
In billions of euros
B.29
Daimler Buses
In the context of our growth strategy, we aim to make good
use of the opportunities presented by the global automotive
markets. At the same time, we intend to play a major role in
the fundamental technological change in the automotive industry,
and to assume a leading role with digitization. This requires
substantial investment in innovative products and new technolo-
gies as well as in the expansion of our worldwide production
network. In 2015, we therefore once again increased our invest-
ment in property, plant and equipment - as already announced
in Annual Report 2014 - from an already high level to €5.1 billion
(2014: €4.8 billion).
Investment
The contingent liabilities principally constitute buyback obliga-
tions. At December 31, 2015, the best possible estimate for
the loss risk from these guarantees amounted to €1.6 billion
(2014: €1.2 billion). Warranty and goodwill commitments
(product guarantees) provided by the Group in connection with
its vehicle sales are not included in the contingent liabilities.
Contingent liabilities also include other contingent liabilities.
The best possible estimate for potential expenses from the
other contingent liabilities is €0.4 billion (December 31, 2014:
€0.4 billion).
Within the context of financial guarantees, Daimler generally
guarantees the settlement of the payment obligations of the
main debtor vis-à-vis the holder of the guarantee. The maximum
potential obligation resulting from these guarantees amounts
to €1.0 billion at December 31, 2015 (end of 2014: €0.8 billion);
liabilities recognized in this context amount to €0.1 billion
at the end of the year (end of 2014: €0.1 billion). In connection
with the Chrysler transactions entered into 2007 and 2009,
Daimler provides guarantees for Chrysler obligations; at
December 31, 2015, those guarantees amount to €0.3 billion,
whereby Chrysler provided €0.2 billion on an escrow account
as collateral for the guaranteed obligations. Another financial
guarantee of €0.1 billion relates to bank loans of Toll Collect
GmbH, the operator company of the toll-collection system
for trucks in Germany. Other risks arise from an additional
guarantee that Daimler Financial Services AG provided for
obligations of Toll Collect GmbH to the Federal Republic of
Germany. This guarantee is related to the completion and oper-
ation of the toll-collection system. A claim on this guarantee
could primarily arise if for technical reasons toll revenue is lost
or if certain contractually defined parameters are not fulfilled,
if the Federal Republic of Germany makes additional claims or
if the final operating permit is not granted. Furthermore,
arbitration proceedings have been initiated against Daimler
Financial Services AG. The maximum obligation that could
result from this guarantee for the Group is substantial, but
cannot be reliably estimated.
Note 32 (Management of financial risks) of the Notes to
the Consolidated Financial Statements.
In the context of its ordinary business operations, the
Group has entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2015. Table B.28 provides an overview of the
nominal amounts of other financial obligations. With regard
to their maturities, we refer to Note 30 (Financial guarantees,
contingent liabilities and other financial commitments) and
Other financial obligations, financial guarantees
and contingent liabilities
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 95
15,564
18,976
Other financial obligations
2,318
-82,350
-86,419
-100,559
Financing liabilities (nominal)
Net debt
To the extent that the Group's internal refinancing of the
financial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business. At December 31, 2015,
the Group's internal refinancing was of a higher volume than
the financing liabilities originally taken on in the industrial busi-
ness due to the application of the industrial business's own
financial resources. This resulted in a positive value for the financ-
ing liabilities of the industrial business, thus increasing net
liquidity, so the net liquidity of the industrial business exceeds
the gross liquidity presented here.
The net liquidity of the industrial business 7 B.26 is
calculated as the total amount as shown in the statement
of financial position of cash, cash equivalents and marketable
debt securities included in liquidity management, less the
currency-hedged nominal amounts of financing liabilities.
15/14
Change
-581
Dec. 31,
2014
Dec. 31,
2015
In millions of euros
Net debt of the Daimler Group
B.27
+337
-244
+1,627
16,953
18,580
263
3,456
3,212
Financing liabilities (nominal)
Net liquidity
Compared with December 31, 2014, the net liquidity of the
industrial business increased from €17.0 billion to €18.6 billion.
The increase mainly reflects the positive free cash flow of
€4.0 billion. Opposing effects resulted from the dividend pay-
ments to the shareholders of Daimler AG (€2.6 billion) and to
minority interests of subsidiaries (€0.3 billion). Positive exchange-
rate effects were partially compensated by capital increases
in financial services companies and led in total to an increase
in net liquidity of €0.5 billion.
Sep. 2017
Net debt at Group level, which primarily results from the
refinancing of the leasing and sales-financing business,
increased compared with December 31, 2014 from €70.1 billion
to €82.4 billion. 7 B.27
9,936
270
583
hedges for financing liabilities
Market valuation and currency
+269
+1,639
+1,908
-14,453
-86,689
-101,142
Financing liabilities
16,301
18,209
Liquidity
6,634
8,273
Marketable debt securities
9,667
Cash and cash equivalents
Mar. 2020
At December 31, 2015, financial obligations of €2.2 billion
exist in connection with future investments in property, plant
and equipment.
40,359
3,772
Other reconciliation³
839
2,700
1,156
+40
-27
Daimler Group
1 Total equity
41,644
40,779
+2
2 To the extent not allocated to the segments
3 Industrial business
B.23
Net assets of the Daimler Group at year-end
In millions of euros
2015
2014
15/14
% change
Net assets of the industrial business
income taxes³
Assets and liabilities from
+25
618
7,974
9,313
-14
Mercedes-Benz Vans
1,479
1,742
-15
Daimler Buses
906
Intangible assets
982
Daimler Financial Services¹
8,859
7,154
+24
Net assets of the divisions
36,263
36,305
Equity method investments²
770
-8
9,789
9,144
Property, plant and equipment
-22,438
-24,353
Less other assets and liabilities
-9,852
-10,182
Less trade payables
+5
+13
-13,420
-15,198
+3
+9
Less provisions for other risks
8,215
Trade receivables
+14
20,004
22,862
Inventories
+7
+5
+10
14,374
15,864
7,824
Daimler Trucks
Assets and liabilities
3,055
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements con-
sistently for all Group entities by Treasury. Financial management
operates within a framework of guidelines, limits and bench-
marks, and on the operational level is organizationally separate
from other financial functions such as settlement, financial
controlling, reporting and accounting.
Principles and objectives of financial
management
Liquidity and Capital Resources
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 91
+9
24,262
44,186
Net Assets
Daimler Financial Services' value added of €0.5 billion was
close to the level of 2014. The division's return on equity
amounted to 18.3% (2014: 19.4%). The development of value
added primarily reflects the increase in EBIT due to growth in
contract volume and positive exchange-rate effects, which more
than offset additional expenses in connection with the expan-
sion of business operations. Average equity rose by €1.7 billion
to €8.9 billion.
from income taxes
The value added of the Daimler Buses division was €26 million
higher than in previous year and amounted to €105 million in
2015. This increase was primarily due to the development of
EBIT. Positive effects primarily resulted from the good business
with complete buses with a favorable product mix in Western
Europe, further efficiency improvements and positive exchange-
rate effects. Offsetting, negative effects came from the ongoing
difficult economic situation in Latin America. Compared to the
previous year, average net assets decreased by €76 million.
Value added at Daimler Trucks was significantly higher than
in the previous year and reached €1.6 billion (2014: €0.8 billion).
This was due to higher earnings resulting from increased unit
sales in the NAFTA region and Europe, the realization of further
efficiency improvements and positive exchange-rate effects.
There were negative impacts on earnings from lower unit sales
in Latin America and Indonesia, as well as from higher expenses
for warranties and customer goodwill and for the expansion of
production capacities, and from advance expenditure for new
technologies and vehicles. In addition, the reduction in average
net assets resulting among other things from the sale of the
50% equity interest in the associated company RRPSH in 2014
also led to the increase in value added.
The value added of Mercedes-Benz Cars increased by €2.1
billion to €5.9 billion. This was mainly the result of the very
positive development of earnings reflected by the growth in
unit sales of new vehicles, better pricing, efficiency measures
and exchange-rate effects. There were offsetting effects on
value added from expenses from the expansion of production
capacities as well as from advance expenditure for new tech-
nologies and vehicles. The division's average net assets were
nearly unchanged.
+30
7,617
9,872
Daimler Financial Services
Total equity of
-23
3,981
Mercedes-Benz Vans' value added increased by €0.2 billion
to €0.7 billion as a result of the significant improvement in
EBIT reflecting the very positive development of unit sales,
especially in Europe and in the NAFTA region. This was mainly
due to the very strong growth rates for the V-Class and the new
Vito. On the other hand, expenses for warranties and customer
goodwill affected EBIT negatively. Average net assets decreased
by €0.3 billion and also made a minor contribution to the
increase in value added.
Leased assets
-0
17,045
at beginning of period
Cash and cash equivalents
In millions of euros
15/14
Change
2014
2015
Condensed consolidated statement of cash flows
B.24
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with finan-
cial institutions, issuers of securities and customers in the
financial services business and the automotive business. Credit
risks with financial institutions and issuers of securities arise
primarily from investments executed as part of our liquidity man-
agement and from trading in derivative financial instruments.
The management of these credit risks is mainly based on an
internal limit system that reflects the creditworthiness of
the respective financial institution or issuer. The credit risk with
customers of our automotive business relates to contracted
dealerships and general agencies, other corporate customers
and retail customers. In connection with the export business,
general agencies that according to our creditworthiness analysis
are not sufficiently creditworthy are generally required to
provide collateral such as first-class bank guarantees. The credit
risk with end customers in the financial services business is
managed by Daimler Financial Services on the basis of a stan-
dardized risk management process. In this process, minimum
requirements are defined for the sales-financing and leasing
business and standards are set for credit processes as well
as for the identification, measurement and management of risks.
Key elements for the management of credit risks are appro-
priate creditworthiness assessments, supported by statistical
analyses and evaluation methods, as well as structured
portfolio analysis and portfolio monitoring.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
92
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are held in separate pension funds and are
thus not available for general business purposes. The funds are
allocated to different asset classes such as equities, fixed-
interest securities, alternative investments and real estate,
depending on the expected development of pension obliga-
tions and with the help of a process for risk-return optimization.
The performance of asset management is measured by com-
paring with defined reference indices. Local custodians of the
pension funds are responsible for the risk management of
the individual pension funds. The Global Pension Committee
limits these risks by means of group-wide binding guidelines
whereby applicable laws are given due consideration. Additional
information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated
Financial Statements.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the results of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Decisions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices,
as well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Cash management determines the Group's cash requirements
and surpluses. The number of external bank transactions is
minimized by the Group's internal netting of cash requirements
and surpluses. Netting is done by means of cash-concentration
or cash-pooling procedures. Daimler has established standard-
ized processes and systems to manage its bank accounts,
internal cash-clearing accounts and the execution of automated
payment transactions.
Liquidity management ensures the Group's ability to meet
its payment obligations at any time. For this purpose, liquidity
planning provides information about all cash flows from
operating and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appropriate
instruments for liquidity management (e.g. bank credits, commer-
cial papers, notes); liquidity surpluses are invested in the
money market or the capital market to optimize risk and return.
Our goal is to ensure the level of liquidity regarded as neces-
sary at optimal costs. Besides operational liquidity, Daimler keeps
additional liquidity reserves which are available in the short
term. Those additional financial resources include a pool
of receivables from the financial services business which are
available for securitization in the capital market, as well
as a contractually confirmed syndicated credit facility with
a volume of €9 billion.
9,667
11,053
-1,386
Cash provided by/used
on cash and cash equivalents
Effect of exchange-rate changes
+7,357
2,274
9,631
financing activities
Cash provided by
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as
production, sales and financing companies - are based on
the principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply
with restrictions on capital transactions and on the transfer
of capital and currencies.
-7,013
-9,722
investing activities
Cash used for
+1,496
-1,274
222
for operating activities
-2,709
17,114
23,125
457
79
+33
Daimler Financial Services
467
+2
90
The Group's value added amounted to €5.7 billion in 2015 (2014:
€4.4 billion), representing a return on net assets of 21.6%
(2014: 18.8%). This was once again substantially higher than
the minimum required rate of return of 8%. The increase in
value added was primarily due to the rise in the divisions oper-
ating profits, partially offset by higher income taxes and to a
smaller extent offset by an increase in average net assets. Further-
more, value added in the previous year included the gains on
the sale of the 50% equity interest in RRPSH and the remea-
surement and sale of the Tesla shares.
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
Net assets (average)
2015
2014
In millions of euros
15/14
% change
-0
Mercedes-Benz Cars
B.22
2,576
6.7
+8
+22
37,578
79,483
2,380
33,187
5.9
1,948
470,705
6.9
1,243
415,108
78,642
502,478
+13
86,391
+1
Revenue
-21
12,835
11,473
+3
EBIT
1,028
1,181
880
+1
Return on sales (in %)
26
+5
1,293
1,265
57
45
1,322
-17
1,110
1,170
13,164
118
35,707
14,682
12,902
+14
Net profit
10,864
8,784
+24
Earnings per share (in €)
9.84
7.97
+23
Dividend per share (in €)
3.65
3.25
+12
Employees (December 31)
289,321
282,488
+2
1 Adjusted for the effects of currency translation, revenue increased by 8%.
Cover photo
The Concept EQA is the first fully electric
EQ concept car from Mercedes-Benz in the
compact segment. Excellent driving dynamics
are ensured by permanent all-wheel drive and
two electric motors, whose system output can
be increased to over 200 kW thanks to scalable
battery components. In combination with the
intelligent Mercedes-Benz operating strategy, the
Concept EQA offers a range of up to 400 kilometers,
depending on the battery capacity installed. The
highly efficient lithium-ion battery with pouch cells
is supplied by the Daimler subsidiary Deutsche
ACCUMOTIVE. The Concept EQA can be charged
via induction or wallbox and is also prepared for
rapid charging.
Daimler's Divisions >
EBIT
The Divisions and Brands
-48
2,005
DAIMLER
Annual Report 2017
D
Key Figures
Daimler Group
€ amounts in millions
2017
2016
17/16
% change
Revenue
164,330
153,261
+71
Investment in property, plant and equipment
6,744
5,889
+15
Research and development expenditure
8,711
7,572
+15
Free cash flow of the industrial business
3,874
€ amounts in millions
Mercedes-Benz Cars
Revenue
2,388
2,008
1,612
+19
2,373,527
2,197,956
2,001,438
+8
Employees (December 31)
142,666
139,947
136,941
+2
Daimler Trucks
Revenue
EBIT
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
thereof capitalized
Unit sales
Employees (December 31)
Mercedes-Benz Vans
thereof capitalized
+17
4,711
5,671
2017
2016
2015
17/16
% change
EBIT
94,695
9,207
89,284
83,809
+6
8,112
9.0
7,926
Return on sales (in %)
9.7
9.1
9.5
Investment in property, plant and equipment
4,843
4,147
3,629
+17
Research and development expenditure
6,642
+13
9.1
Unit sales
Investment in property, plant and equipment
9,975
12,062
13,012
+16
30
37
43
Investment in property, plant and equipment
Employees (December 31)
+8
+6
+14
57,891
+13
1,619
+15
18,962
20,660
1,739
61,810
132,565
139,907
116,727
Contract volume
Daimler AG is one of the world's most successful automobile companies. With its
divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses
and Daimler Financial Services, the vehicle manufacturer is one of the biggest
suppliers of premium cars and is the largest producer of commercial vehicles with a
global reach. Daimler Financial Services provides financing, leasing, fleet management,
insurance, investment products and brokerage of credit cards, as well as innovative
mobility services. For more information: ④ daimler.com
MAYBACH
mytaxi
CAR
2GO
→moovel
Daimler Truck Financial
Mercedes-Benz
Financial Services
Mercedes-Benz Bank
BHARATBENZ
SETRA
AMG
FREIGHTLINER
WESTERN STAR
BUILT BUSES.
FUSO
Thamaa
FREIGHTLINER
smart
EQ
Mercedes me
BHARATBENZ
(condensed version according to HGB)
70,721
1,970
194
Research and development expenditure
-3
104
97
94
Investment in property, plant and equipment
5.2
202
6.0
Return on sales (in %)
-2
214
249
243
66
ALL OUR DIVISIONS.
AND SERVICE OFFENSIVE AT
5.6
New business
184
thereof capitalized
23,775
EBIT
Revenue
Daimler Financial Services
+2
18,147
17,899
18,292
-4
Employees (December 31)
28,081
26,226
28,676
Unit sales
+173
13
11
30
+9
99...THROUGH OUR PRODUCT
Contents
1
234
Non-Financial Report
Statement on the review of the
229
Compliance
227
Social issues
222
B| Combined Management Report 88
Employee issues
218
Environmental issues
216
Sustainability at Daimler
62
NONON
82
Objectives and Strategy
72
78
Corporate Profile
Economic Conditions and Business
7.7
Consolidated Statement of Financial Position
Daimler AG
239
Income/Loss
115
Financial Position
Consolidated Statement of Comprehensive
90
107
238
Consolidated Statement of Income
101
Profitability
95
Development
236
F| Consolidated Financial
Statements
Liquidity and Capital Resources
#1
Daimler and the Capital Market
70
192
Daimler Buses
50
COMPANY
189
Mercedes-Benz Vans
44
CULTURE
Daimler Financial Services
184
24
CASE
178
Mercedes-Benz Cars
4
CORE
176
C| The Divisions
Daimler Trucks
Highlights of 2017
195
54
The Supervisory Board
64
Report of the Supervisory Board
214
E| Non-Financial Report
61
The Board of Management
A | To Our Shareholders
SHAPING THE FUTURE
203
Declaration on Corporate Governance,
56
56
Chairman's Letter
200
Report of the Audit Committee
198
D Corporate Governance
Corporate Governance Report
CORE
240
99 SYSTEMATIC
+4
EBIT
373
GROWTH IN OUR
CORE BUSINESS... 66
Consolidated Statement of Cash Flows
241
Sustainability and Integrity
121
Consolidated Statement of Changes in Equity
242
Overall Assessment of the Economic Situation 134
Notes to the Consolidated Financial
Events after the Reporting Period
135
Statements
244
Remuneration Report
136
Takeover-Relevant Information
and Explanation
152
G| Further Information
324
4,113
Risk and Opportunity Report
4,176
Revenue
202
+90
Research and development expenditure
565
442
384
+28
thereof capitalized
310
238
153
+30
Unit sales
401,025
359,096
321,017
+12
Employees (December 31)
25,255
24,029
22,639
+5
Daimler Buses
4,351
155
710
Outlook
"
#1
-
Daimler is writing the next chapter of its success story. As a leading automo-
bile manufacturer, we continue to set the pace and shape the future. That's
because the mobility of tomorrow will be fundamentally different – because
our customers' expectations are becoming more diverse and more challeng-
ing in increasingly dynamic markets. To make sure Daimler stays in the lead,
we are focusing our activities in four strategic areas. That's how we aim to
strengthen our economic base through profitable growth in our global core
business: CORE. We are using our earning power to shape the radical trans-
formation of the automobile industry. To this end, we're investing in the
future-oriented CASE fields - Connected, Autonomous, Shared & Services
and Electric in order to strengthen our core business over the long term. To
support this transformation effectively, we are renewing our corporate culture
in cooperation with our employees: CULTURE. Through the new structure
that we envisage, we aim to make even better use of our opportunities in the
market: COMPANY. As a result of our activities in these four strategic areas,
we are becoming more effective, faster and more successful - on course for
a leading role at the next level of mobility.
MANUFACTURER ... 66
#10
VEHICLE
99 AS A LEADING
ACTROS
DAIMLER ANNUAL REPORT 2017 | #1 | CORE CASE CULTURE COMPANY
... WE WANT TO
2
Future-oriented
corporate culture
transformation
Innovative, flexible
CULTURE
EQA
Driving
CASE
Strengthening
the base
CORE
structure
SHAPE THE FUTURE
COMPANY
66
OF MOBILITY.
170
Responsibility Statement
326
Independent Auditor's Report
327
334
Glossary
336
Index
337
Ten Year Summary
338
4
Daimler Worldwide
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
The updated Mercedes-Benz S-Class defines milestones
on the road to autonomous driving thanks to its innovative
assistance systems, and thrills customers with its luxurious
driving comfort.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 5
Cross-reference within the Annual Report
Refers to a Daimler publication
Refers to additional information on the Internet
Refers to an illustration or a table in the Annual Report
O
Information guidance system
Details of the development of non-financial performance
indicators can be found in the chapters "Economic Conditions
and Business Development" and "Non-Financial Report".
pages 95 ff and pages 214ff
The important financial indicators for measuring our operating
financial performance, in addition to EBIT and revenue, are
the free cash flow of the industrial business, investments, and
expenditure for research and development. Along with the
indicators of financial performance, we also use various non-
financial indicators to help us manage the Group. Of particular
importance in this respect are the unit sales of our automotive
divisions, which we also use as the basis for our capacity and
human resources planning and workforce numbers.
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the industrial
divisions' profitability. The combination of net profitability and
net assets' productivity results in the return on net assets
(RONA). If RONA exceeds the cost of capital, value is created
for our shareholders. The measure of profitability for Daimler
Financial Services is not return on sales, but return on equity.
Non-financial performance indicators are also used to deter-
mine the remuneration of our Board of Management members.
Important criteria for annual target achievement also include
integrity and compliance, employee satisfaction and the high
quality of our products.
Key performance indicators
Corporate governance statement
In percent
Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
B.04
Cost of capital
2017
Return on sales
2016
The corporate governance statement pursuant to Section 289f
and Section 315d of the German Commercial Code (HGB)
can be found in this Annual Report on pages 203 ff and can
also be viewed on the Internet at ④daimler.com/corpgov/en.
The required rate of return on net assets, and hence the cost of
capital, is derived from the minimum rates of return that inves-
tors expect on their invested capital. The cost of capital of the
Group and of the industrial divisions comprises the cost of
equity as well as the costs of debt and net pension obligations
of the industrial business. The expected returns on liquidity
of the industrial business are considered with the opposite sign.
The cost of equity is calculated according to the capital asset
pricing model (CAPM), using the interest rate for long-term risk-
free securities (such as German government bonds) plus a
risk premium reflecting the specific risks of an investment in
Daimler shares. Whereas the cost of debt is derived from the
required rate of return for obligations the Group enters into with
external lenders, the cost of capital for net pension obligations
is calculated on the basis of discount rates used in accordance
with IFRS. The expected return on liquidity is based on money-
market interest rates. The Group's cost of capital is the weighted
average of the individually required or expected rates of return.
During the year under review, the cost of capital amounted to
8% after taxes. For the industrial divisions, the cost of capital
amounted to 12% before taxes; for Daimler Financial Services,
a cost of equity of 13% before taxes was applied. 7 B.04
Cost of capital
Net assets are the basis for the investors' required return. The
industrial divisions are accountable for the net operating assets;
all assets, liabilities and provisions for which they are respon-
sible in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Financial Services is
implemented on an equity basis. Net assets at the Group level
include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual net
assets are calculated on the basis of average quarterly net
assets.
page 106
Group, after taxes
Net assets
×
Cost of
capital (%)
Value
added
Return
on sales
Cost of capital
Net assets
productivity
Net
assets
94
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Profit measure
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit that is used at the Group level is the net oper-
ating profit. It comprises the EBIT of the divisions as well as
profit and loss effects for which the divisions are not held respon-
sible. The latter include income taxes and other reconciliation
items. B.19 on page 105
Net assets
Cost of
capital (%)
8
and Business Development
Industrial business, before taxes
172
Unit sales
120
171
Automotive markets
119
Financial position, liquidity and capital resources
170
The world economy
118
Profitability
170
Outlook
Outlook
118
Daimler AG (condensed version
169
and opportunity situation
Overall assessment of the risk
115
Financial Position
168
167
Risks from guarantees, legal and tax risks
Non-financial risks
164
163
Company-specific risks and opportunities
Financial risks and opportunities
114
according to HGB)
8
120
173
12
Daimler Financial Services, before taxes
13
23
12
13
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 95
Economic Conditions
Credit ratings
The world economy
With real growth of more than 3% in the year under review, the
world economy had its strongest growth performance since
2011. B.05 Both the industrialized countries and the emerging
markets contributed to this positive development, as the
economic upturn was once again relatively broad-based and
synchronized for the first time in several years. During the year
under review, the economic situation of the emerging markets,
which accounted for nearly two thirds of global growth,
improved significantly. A key driver of this development was the
increase in prices for industrial raw materials, which were
approximately 20% higher on average compared with the pre-
vious year. The acceleration of global growth was even more
remarkable in view of the fact that the risks associated with
geopolitical developments remained relatively high.
Daimler AG is the parent company of the Daimler Group, and
has its headquarters in Stuttgart (Mercedesstraße 137, 70327
Stuttgart, Germany). The main business of Daimler AG is the
development, production and distribution of cars, trucks and
vans in Germany and the management of the Daimler Group.
The management reports for Daimler AG and for the Daimler
Group are combined in this management report.
Daimler can look back on a tradition covering more than 130
years a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an unpar-
alleled range of premium automobiles, trucks, vans and buses.
Its product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler's goal is to
continue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we intend
to play a major role in promoting and shaping that change. With
our strong core business, we are creating the financial foundation
for our investments in the future-oriented fields of Connected,
Autonomous, Shared & Services (flexible use) and Electric -
"CASE" for short. Innovations from the future-oriented CASE
fields enable us to safeguard the attractiveness and profitability
of our core business.
Revenue and earnings
Business model
90 B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
175
Overall statement on future development
175
The workforce
174
Research and development
174
Investment
174
Dividend
174
Free cash flow and liquidity
Corporate Profile
Risks and opportunities
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 93
Value
added
Daimler
Financial Services
Revenue
€94.7 billion
€35.7 billion
€13.2 billion
€4.4 billion
€23.8 billion
B.01
Employees 142,666
79,483
25,255
18,292
13,012
Brands
AMG
FREIGHTLINER
FREIGHTLINER
SETRA
MAYBACH
FUSO
smart
Vans
W
Cars
Mercedes-Benz
55.4%
Daimler Trucks
20.8%
Mercedes-Benz Vans
7.7%
Daimler Buses
2.6%
Daimler Financial Services
13.5%
Thanks to its strong brands, Daimler is active in nearly all the
countries of the world. The Group has production facilities in a
total of 19 countries and more than 8,500 sales centers all
over the world. The global networking of its research and devel-
opment activities as well as its production facilities and sales
organizations gives Daimler considerable competitive advantages
internationally, and also offers additional growth opportunities.
In 2017, Daimler increased its revenue by 7% to €164.3 billion.
The Group's five divisions contributed to this total as follows:
Mercedes-Benz Cars 55%, Daimler Trucks 21%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Financial Services 13%.
At the end of 2017, Daimler employed a total workforce of more
than 289,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium automobiles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These auto-
mobiles range from compact models to a highly varied program
of off-road vehicles, roadsters, coupes and convertibles, as
well as S-Class luxury sedans. The portfolio is rounded out by
the Mercedes me brand and the high-quality small cars of
the smart brand. In 2016, we introduced the new EQ brand, which
consolidates all of our activities related to electric mobility.
The most important markets for Mercedes-Benz Cars in 2017
were China with 26% of unit sales, the United States (14%),
Germany (13%) and the other European markets (29%). Within the
framework of its growth strategy, the division continuously
refines its flexible and efficient production network consisting
of more than 30 plants on four continents. At the same time,
we are preparing our worldwide production network to meet the
requirements of electric mobility. We will manufacture our
future electric vehicles of the EQ product and technology brand
within the framework of normal series production, on the
same assembly lines that are used to produce vehicles with com-
bustion engines. In the future, our sites for the production of
electric vehicles will be our plants in Bremen, Sindelfingen and
Rastatt, Germany; Tuscaloosa, Alabama; and Hambach, France.
We will also manufacture electric vehicles for the Chinese mar-
ket at Beijing Benz Automotive Co., Ltd. (BBAC) in China. In the
future, Mercedes-Benz Cars will thus build electric vehicles at
six different locations. In parallel, we will expand our global
battery network to five sites on three continents.
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 91
As the world's largest manufacturer of trucks above 6 metric tons
gross vehicle weight, Daimler Trucks develops and produces
vehicles in a global network under the brands Mercedes-Benz,
Freightliner, Western Star, FUSO and BharatBenz. The division's
26 production facilities are located in the NAFTA region (14),
Europe (7), Asia (3) and South America (2). In China, Beijing Foton
Daimler Automotive Co., Ltd. (BFDA), a joint venture with our
Chinese partner Beiqi Foton Motor Co., Ltd., has been producing
trucks under the Auman brand name since 2012. Daimler
Trucks' product range includes light-, medium- and heavy-duty
trucks for long-distance, distribution and construction-site haul-
age, as well as special vehicles that are used mainly in municipal
applications. Due to close links in terms of production tech-
nology, the division's product range also includes buses of the
Thomas Built Buses and FUSO brands. In the future, Daimler
Trucks intends to offer vehicles with locally emission-free elec-
tric drive across the entire product portfolio: The product
portfolio will be supplemented with the FUSO eCanter for light-
duty distribution, fully electric trucks from the Mercedes-Benz
brand for heavy-duty distribution, the new product brand E-FUSO
and the fully electric school bus from Thomas Built Buses.
Daimler Trucks' most important sales markets in 2017 were the
NAFTA region with 35% of unit sales, Asia with 32% and the
EU30 region (European Union, Switzerland and Norway) with 17%.
Mercedes-Benz Vans is a global supplier of a complete range
of vans and associated services. The division's product range
in the commercial vans segment comprises the Sprinter large
van, the Vito mid-size van (marketed as the “Metris" in the
United States) and the Mercedes-Benz Citan urban delivery van.
The range of Mercedes-Benz vans in the private-customer
segment consists of the V-Class full-size MPV and the Marco
Polo camper vans and recreational vehicles. With the launch of
the Mercedes-Benz X-Class in November 2017, we became the
first premium manufacturer to introduce a model series in the
very promising segment of mid-size pickups. The Mercedes-Benz
Vans division has manufacturing facilities on four continents: in
Germany, Spain, the United States, Argentina, China and Russia.
The division is active in the Chinese market through a joint
venture, Fujian Benz Automotive Co., Ltd. The production of the
Citan and the Mercedes-Benz X-Class is part of the strategic
alliance with Renault-Nissan. In Russia, the Sprinter Classic is
built for Mercedes-Benz Vans by the GAZ and YaMZ companies.
The most important markets for vans at present are in the EU30
region, which accounts for 68% of unit sales, and the NAFTA
region (11% of unit sales in the year under review).
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the undisputed industry leader for buses above 8
metric tons in its most important traditional core markets: the
EU30 region, Brazil, Argentina and Mexico. The division's prod-
uct range comprises city and inter-city buses, touring coaches
and bus chassis. The largest of the division's 14 production
plants are located in Germany, France, Spain, Turkey, Argentina,
Brazil, Mexico and, since 2015, in India as well. In 2017,
Daimler Buses generated 67% of its revenue in the EU30 region
and 17% in Latin America (excluding Mexico). Whereas we
mainly sell complete buses in Europe, our business in Latin
America, Mexico, Africa and Asia focuses on the production
and distribution of bus chassis.
B.02
Daimler Group structure 2017
Mercedes-Benz
Daimler Trucks
Daimler Buses
Profit
measure
WESTERN STAR
Lomas
Daimler launches e-payment business
In January 2017, Daimler Financial Services acquired the elec-
tronic payment services provider PayCash Europe SA. With its
entry into the e-payment sector, Daimler is launching its own
electronic payment services provider under the brand name
"Mercedes pay". The "Mercedes pay" brand is a key component
of Daimler's mobility and digitization strategy. The new pay-
ment system underscores Daimler's goal, as a leading provider
of digital mobility services, of making its products and services
even more attractive.
112
mytaxi invests in international expansion
Daimler's mytaxi subsidiary - Europe's leading taxi app -
acquired 100% of the Greek taxi app operator Taxibeat LTD in
February 2017. Through this acquisition, Daimler is investing
in the further development and expansion of urban mobility sys-
tems in Europe. Daimler will initially continue to use the Taxi-
beat brand name. In June 2017, Daimler also acquired a 100%
interest in Clever Taxi, the taxi app market leader in Romania.
As a result, mytaxi now operates in 11 European countries. In
the third quarter of 2017, we introduced a pooling service
known as mytaxi match, which allows several customers to share
a taxi. The pilot project for the service was launched in Warsaw.
Targeted investments in mobility services
During the year under review, we expanded our range of inno-
vative mobility services in a targeted manner. In August, the
moovel Group acquired the Hamburg startup Familonet, which
offers a locator app. Private car-sharing services have also
been expanded through the acquisition of a minority interest
in Turo, which is the leading peer-to-peer (P2P) marketplace
for vehicle rentals in the United States. Turo plans to enter the
German market in 2018. At the same time, Daimler integrated
its Croove private car-sharing platform into the Turo organization.
With the acquisition of flinc, the leading provider of door-to-
door ride-sharing services, Daimler added yet another compo-
nent to its portfolio of forward-looking mobility solutions.
ViaVan joint venture with the US startup company Via
Mercedes-Benz Vans entered the ride-sharing sector in October
2017 through the establishment of the ViaVan joint venture
with the US startup company Via, which has its headquarters in
New York. Via's intelligent algorithm enables the creation of a
dynamic mass transportation system that supplements public
transport systems and reduces traffic volumes in cities. Tech-
nology from Via and engineering from Mercedes-Benz Vans thus
form a perfect combination for efficient, affordable and sus-
tainable ride-sharing services. Furthermore, Daimler acquired
an equity interest in Via Transportation Inc. in 2017.
Important events
Initial steps taken to strengthen the divisional structure
Daimler AG seeks to further focus and strengthen the business
structure of the Group by establishing legally independent enti-
ties. The plan calls for Mercedes-Benz Cars & Vans and Daimler
Trucks & Buses to become legally independent entities with
greater business responsibility alongside the legally independent
Daimler Financial Services division. This project is designed
to strengthen the divisions as they prepare for the future, so that
they can more effectively utilize the growth and earnings poten-
tial of their respective markets. Daimler's plan for safeguarding
the future of the company is based on three components:
maintaining and increasing business success, continuing to pre-
pare employees for the future, and keeping investors committed
to the company over the long term.
Daimler plans to invest a three-digit million euro amount in
the initial measures of this plan. None of the aspects of this
project involve cost-cutting or efficiency programs, and the
Group has no plans to reduce workforce numbers. Daimler AG
is also not planning to divest itself of individual business units.
The company will consult closely with employee representatives
throughout the project. It has already reached an agreement
in a position paper that addresses ways to balance the interests
of the employees and those of the company. The key points
include the extension of the employment guarantee to the end
of 2029 ("Safeguarding the Future 2030") and measures that
will ensure nearly full funding of the company's pension obliga-
tions. With regard to balancing the interests of the employees
and those of the company, Daimler contributed €3 billion in liquid
funds to the pension plan assets of Daimler AG in the fourth
quarter of the year under review.
This project will be continued in close consultation with the
employee representatives. Following the preparation of an
implementation plan and a final assessment, the actual imple-
mentation will have to be decided on by the Board of Manage-
ment and the Supervisory Board and approved by the Annual
Shareholders' Meeting. The goal is for the draft proposal on
the separation to be presented to the Annual Shareholders'
Meeting for its approval in 2019.
Performance measurement system
Financial performance measures
The financial performance measures used at Daimler are
oriented toward our investors' interests and expectations. They
provide the foundation for value-based management.
Value added
Value added is a key element of our performance measurement
system, which is applied at both the Group and the divisional
levels. It is calculated as the difference between operating profit
and the cost of capital of the average net assets. Alternatively,
the value added of the industrial divisions can be determined
using the main value drivers of return on sales (quotient of EBIT
and revenue) and net assets' productivity (quotient of revenue
and net assets). 7 B.03
Using a combination of return on sales and net assets' produc-
tivity within the context of a strategy of profitable revenue
growth provides a basis for the positive development of value
added. Value added shows the extent to which the Group
and its divisions achieve or exceed investors' minimum return
requirements, thus creating additional value. The quantitative
development of value added and the other financial performance
measures is explained in the "Profitability" chapter.
pages 105f
B.03
Calculation of value added
In July 2017, the two partners also signed an agreement that
will further strengthen their cooperation within the framework
of the production joint venture Beijing Benz Automotive Co.,
Ltd. (BBAC). The companies plan to jointly invest around RMB
5 billion (approximately €655 million) in the production of
battery-electric Mercedes-Benz brand vehicles at the BBAC
manufacturing facility in Beijing. As part of this strategic
framework agreement, Daimler and BAIC Motor are to prepare
for the local production of battery-electric vehicles at BBAC
between now and 2020. The partners also intend to provide the
infrastructure needed for the local production of battery
cells in China, as well as the required research and development
capacities.
Mercedes me
In June 2017, Daimler AG and its Chinese partner BAIC Group
signed a framework agreement that will strengthen their stra-
tegic cooperation through investments in the production of
vehicles with alternative drive systems in China. As part of the
investment agreement, Daimler intends to acquire a minority
share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of
the BAIC Group. The goal is to strengthen the strategic col-
laboration with BAIC on vehicles with alternative drive systems.
China is already the world's biggest market for electric vehicles.
With the establishment of the IONITY joint venture in November
2017, the BMW Group, Daimler, Ford Motor Company and
Volkswagen with Audi and Porsche laid the foundation for the
creation of the most powerful charging network for electric
vehicles in Europe. The establishment and operation of approx-
imately 400 high-power charging (HPC) stations by 2020 will
be a major step toward enabling long-distance journeys with
electric vehicles, thus helping to establish these vehicles in
the market.
BUILT BUSES
EQ
BHARATBENZ
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
Daimler Truck Financial
moovel
2GO
mytaxi
92
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
The Daimler Financial Services division supports the sales of
the Daimler Group's automotive brands in approximately 40
countries. Its product portfolio primarily consists of customized
financing and leasing packages for end customers and dealers.
It also includes insurance brokering, fleet management services,
investment products and credit cards, as well as various mobil-
ity services such as the moovel mobility platform, the mytaxi
app and car2go, the world's leading company for flexible car-
sharing services. The total number of users of our mobility ser-
vices increased to 17.8 million in 2017. During the year under
review, Daimler Financial Services financed or leased around
50% of the vehicles sold by Daimler. The division's contract
volume of €139.9 billion covers more than 4.8 million vehicles.
Daimler Financial Services also holds a 45% interest in the
Toll Collect consortium, which operates an electronic road-
charging system for trucks on highways in Germany.
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries, asso-
ciated companies and joint operations. The statement of
investments of Daimler AG in accordance with Section 313 of the
German Commercial Code (HGB) can be found in Note 40
of the Notes to the Consolidated Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2017. We also focused on contin-
uously developing our business portfolio and improving our
competitiveness in our core business areas. Our activities revolve
around the future-oriented strategic fields of Connected,
Autonomous, Shared & Services and Electric (CASE), all of which
will play a major role in shaping the future of mobility. In order
to strengthen our position in these areas, we forged ahead with
our partnerships and made a large number of investments
during the year under review. The most important projects are
briefly described below.
Cooperation with Bosch on the development of highly
automated and driverless driving
In March 2017, the two companies entered into a development
agreement that will bring highly automated and driverless
driving to city streets by the beginning of the next decade. The
objective is to jointly develop software and algorithms for a
highly automated driving system. By introducing highly automated
and driverless driving in the urban environment, Bosch and
Daimler aim to improve the flow of traffic in cities, enhance
safety on the road and provide an important building block
for the traffic systems of the future.
Intelligent charging solutions for electric mobility
Daimler AG became an investor in the American charging solu-
tions provider ChargePoint Inc. in March 2017. ChargePoint's
core areas of expertise include both the development and pro-
duction of innovative infrastructure solutions for electric
vehicles ranging from conventional AC (alternating current)
systems to ultra-fast DC (direct current) charging systems
with up to 400 kilowatts. All of the products from ChargePoint
are networked via software and can be expanded as needed.
Along with hardware, the US market leader also provides its
customers with customized cloud-based solutions, ranging
from user-specific energy management systems to well-proven
payment services, and a mobile app for private customers
that provides innovative features previously unavailable in the
European market. Daimler and ChargePoint are systematically
pursuing the same goal: to promote the breakthrough of electric
mobility through the targeted expansion of infrastructure and
services. The strategic partnership of the two companies sup-
plements existing Daimler AG alliances and joint ventures
that are designed to build and expand an ecosystem for electric
mobility.
Expansion of strategic partnership with BAIC
Refinancing
107
Industry and business risks and opportunities
Strengthening our divisional structure
(COMPANY)
0.4
Daimler Group
Amounts in billions of euros
2017 2018 - 2019
2016
Investments in property, plant and equipment
The industrialized countries also benefited from the favorable
global economic environment, as these nations increased their
growth rates to just over 2%. The US economy played a major
role here, posting growth in output of 2.5%, which was
significantly higher than the growth recorded in 2016. Increased
investment by companies following the decrease in 2016 served
as a key driver of growth, while private consumption remained
stable. Developments were very positive also in Japan, where
gross domestic product (GDP) rose by about 1.8%.
The economy of the European Monetary Union was particularly
strong in the year under review: Growth of around 2.5%
represents a significant improvement on the figure for 2016.
This was largely due to a higher contribution from exports. The
European Central Bank (ECB) also supported this development
with its ongoing expansionary monetary policy in response to
low inflation rates. The German economy recorded above-average
growth (2.2%) in a long-term comparison for the fourth
consecutive year. Despite a significant decrease in private
consumption, the economy of the United Kingdom posted
GDP growth of 1.8%, so the economic impact of the Brexit
negotiations continued to be limited.
With a real growth rate of just over 4.5%, the emerging markets
finally succeeded in overcoming the economic difficulties they
had experienced over the previous two years. The turnaround was
particularly pronounced in South America, which recorded slight
growth of just over 1% in 2017 after undergoing a substantial
downturn in the prior year. The economies of Eastern Europe
also bounced back noticeably during the year under review.
The growth rate for the region more or less doubled, largely due
to the recovery of the Russian economy. Despite receiving less
support from fiscal and monetary policy, the Chinese economy
continued to benefit from previous measures in this regard,
and with a growth rate of 6.9%, China actually posted a slight
increase in growth compared with the prior year. The economic
situation in the Middle East remained problematic, with growth
clearly below the long-term trend.
Currency exchange rates remained volatile despite the favorable
global economic environment. Against the US dollar, the euro
moved during the year between $1.03 and $1.21. At the end of
the year, the euro stood at $1.20, making it around 14% stronger
than at the end of 2016. The range of fluctuation of the Japanese
yen against the euro was 116 to 135. By the end of the year,
the euro had appreciated against the yen by about 9%. The British
pound once again fell against the euro (by approximately 3.5%),
but this decrease was not nearly as pronounced as the decrease
recorded in 2016. The euro also appreciated against other key
currencies such as the Russian ruble, the Brazilian real and the
Turkish lira, in some cases recording double-digit increases.
B.05
Economic growth
In order to respond appropriately to the highly dynamic devel-
opment of our industry, its markets, new competitors and new
technologies, we need to have an organization that enables
rapid and agile action. In our fourth strategic column, “Project
Future", we are working on how to transform our divisions
into legally independent entities to further focus and strengthen
the Group's divisional structure. It is intended to form three
legally independent three legally independent business units with
greater business responsibility under the shared roof and
overall management of Daimler AG. These new units would be
Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and
Daimler Financial Services AG, which is already a successful
legally independent company. “Project Future” pursues the
goal of strengthening the divisions as they prepare for the future
so that they can more effectively exploit the growth and earn-
ings potential of their respective markets. The project will be
continued in close consultation with the employee representa-
tives. In this context, the main focus of a balance of interests
is on the extension of the employment guarantee until the
end of 2029. Following the preparation and final assessment of
an implementation plan, the Board of Management and the
Supervisory Board must make a decision to implement it and
the plan must be approved by the Shareholders' Meeting.
The goal is to present a draft proposal for the separations to the
Annual Shareholders' Meeting of Daimler AG in 2019.
Gross domestic product, growth rates in %
2017
6
5
4
3
2
1
0
-1
-2
-3
-4
Total
Europe
2016
By focusing on these goals and on our strategic focus areas
of CORE, CASE, CULTURE and COMPANY, we will successfully
transform our company from a leading automaker into a
leading provider of mobility services.
Extensive investments in our company's future
In the coming years, we will continue to forge ahead with our
innovation offensive in order to implement our growth strategy
through the introduction of new products, innovative technolo-
gies and modern manufacturing capacities. The future-oriented
CASE fields (Connected, Autonomous, Shared & Services and
Electric) will play a key role here. We will invest almost €15 billion
in property, plant and equipment in 2018 and 2019, as well as
nearly €18 billion in research and development projects. With
this plan, we are once again increasing our investment in order
to safeguard the future of our company. 7 A.10 and A.11
128
The workforce
93
Performance measurement system
122
Innovation, safety and environmental protection
93
Important events
121
Research and development
92
Portfolio changes and strategic partnerships
121
Sustainability at Daimler
90
Business model
121
The investments in property, plant and equipment will mainly be
used to prepare for the production launches of our new models.
We will also use our investment to realign our manufacturing
facilities in Germany, increase local production in the growth
markets and expand our global production network for electric
vehicles and batteries.
Most of our expenditure for research and development flows
into new products. Important individual projects include the
successor models of the current compact-class cars, as well as
the GLS and GLE off-road vehicles and the new Sprinter. Other
focus areas at all of our automotive divisions include innovative
drive-system and safety technologies, vehicle connectivity and
the further development of autonomous driving. The plans also
call for substantial funds to be invested in our comprehensive
electric mobility offensive.
99 WE ARE CONTINUING
ALONG OUR PATH OF
PROFITABLE GROWTH!
66
NAFTA
S.PU485
B❘ COMBINED MANAGEMENT REPORT | CONTENTS 89
B | Combined Management Report
Corporate Profile
90
90
Sustainability and Integrity
Daimler achieved record levels of unit sales and revenue in the year 2017, and Group
EBIT also increased significantly. On the basis of solid finances and a strong core
business, we are focusing our businesses on the future: with outstanding vehicles
and services, with pioneering technologies and business models, with an innovative
and flexible corporate culture, and with an organization that meets the needs of the
markets' growing dynamism. In 2017, we invested more than €15 billion in the future
of the company, thus creating the right conditions for further profitable growth.
Asia
South
America
Source: IHS Global Insight, own calculations
2017 2018 - 2019
Amounts in billions of euros
Daimler Group
7.6
8.7
17.8
Mercedes-Benz Cars
5.7
6.6
14.0
Daimler Trucks
1.3
1.3
2.5
Mercedes-Benz Vans
0.4
0.6
Mercedes-Benz Cars
86
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
With its Mercedes-Benz Future Bus with CityPilot, Daimler
Buses has demonstrated the highly advanced stage its
research has reached in the area of partially automated driving
on a BRT route (bus rapid transit) near Amsterdam. BRT sys-
tems are an important element of future urban mobility, and
already facilitate efficient, fast and cost-effective public trans-
port in many cities of the world.
Shared & Services
Daimler Financial Services offers mobility services that make
the division a pioneer in the area of Shared & Services. We are
enlarging our customer base by expanding existing services
and creating additional services for new mobility segments. At
the same time, we are working both independently and with
partners to develop the core expertise we need to establish
new business with fleets of automated and autonomous vehi-
cle vehicles. With car2go, we are currently the world's leading
company for flexible car-sharing services. The Daimler subsid-
iary mytaxi is the leader in the taxi-ordering app market in
Europe, while moovel offers our customers a platform that
enables them to optimally compare, combine, book and pay for
various mobility services. With our strategic partner Via, we
are now testing flexible shuttle services and pooling concepts
that can complement local public transport systems. We plan
to continue growing in the business customer segment as well.
Mercedes-Benz Van Rental offers customers flexible rental
services for vans and commercial vehicles.
2016
Electric
Daimler Trucks is also focusing more strongly on vehicle elec-
trification. Worsening traffic congestion in urban distribution
transportation and more restrictions for vehicles with combus-
tion engines are making the development of alternative drive
systems also for commercial vehicles increasingly important.
As early as 2006, we started series production of the FUSO
Canter Eco Hybrid for the Japanese market. The FUSO eCanter
is our first light-duty series-produced truck with fully electric
drive; we delivered the first units to customers in 2017 and large-
scale production is to begin in 2019. With its Mercedes-Benz
Electric Truck concept vehicle, Daimler Trucks is demonstrating
the viability of all-electric transport. The E-FUSO Vision One
shows how electric mobility can be successfully launched also in
the heavy-duty truck segment. Daimler Trucks North America
is also working on an electric Freightliner eCascadia for long-
distance haulage. And Daimler Trucks' North American sub-
sidiary Thomas Built Buses has presented an all-electric school
bus that is to be launched in 2019.
Mercedes-Benz Vans believes the future of delivery transport
will be increasingly electric, and it is making use of the modular
system employed by Mercedes-Benz Cars for electric vehicles.
Mercedes-Benz Vans plans the electrification of all its com-
mercial model series. The eVito will be available in the second
half of 2018 and the eSprinter is to follow in 2019.
0.2
0.2
Daimler Buses
0.9
At Mercedes-Benz Cars, we have significantly expanded
our activities in the area of electric mobility. We believe that
by 2025, between 15% and 25% of our new vehicles will be
all-electric models. All of the electric vehicles and electric
mobility services offered to Mercedes-Benz Cars customers
have been consolidated under our new EQ brand, which stands
for "Electric Intelligence". We aim to offer more than ten
battery-electric models by 2022, and to this end we will invest
approximately €10 billion. Our modular and scalable electric-
vehicle platform will enable us to offer impressive designs and
a high degree of flexibility in terms of variants and models.
The EQC, a sporty SUV model, is to be launched in 2019. After
that, we aim to launch a new model every six to eight months.
In 2017, we presented a pre-series model of the new Mercedes-
Benz GLC F-CELL at the IAA, a fuel-cell vehicle with plug-in
hybrid technology. In addition to hydrogen, the purely electric
version of the popular SUV was also able to "fill up" with elec-
tricity. The smart brand plans to offer cars solely with electric
drive systems in Europe and North America by 2020; the
other regions are to follow a short time later. We are establish-
ing a production network to permit the flexible manufacture
of electric vehicles at all of our key production locations world-
wide. This is the only way to ensure that we can react fast
enough to fluctuations in demand.
Corporate governance statement
Research and development expenditure
A.10
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 87
Daimler Financial Services has been operating a system for
flexible car sharing with electric vehicles for about six years with
car2go, and we are the largest provider in the field of flexible,
electric car sharing. Of a total of 14,000 vehicles at 26 locations
worldwide, we have 1,400 electric vehicles and three all-electric
fleets in Stuttgart, Amsterdam and Madrid. car2go thus offers
millions of city dwellers an easy way to experience electric
cars for the first time. Furthermore, Daimler Financial Services
supports risk-free access to electric mobility through leasing
plans and overall packages for electric vehicles and accessories.
Daimler Buses is increasingly focusing on the development of
electric drive systems. In late 2018, the division plans to start
series production of a city bus with a fully electric drive system
on the basis of the Mercedes-Benz Citaro. The modular design
of the lithium-ion battery pack will allow individualized solutions
for various applications and requirements in urban transport.
The Mannheim plant shall be developed as the center for electric
mobility at Daimler Buses. In addition, Daimler Buses provides
comprehensive advice to its customers on the subject of electric
mobility with its "eMobility Consulting" initiative.
5.9
6.7
14.8
Mercedes-Benz Cars
4.1
4.8
11.0
Daimler Trucks
1.2
1.0
2.4
Mercedes-Benz Vans
0.4
0.7
We are also addressing the cultural challenge associated with
the transformation of the automotive industry by adapting our
corporate culture accordingly. Together with our employees, we
have developed a new management culture within the frame-
work of the Leadership 2020 program. We support interdisciplin-
ary work that is pursued outside of hierarchical structures.
To this end, we enable new teams to be put together for limited
periods of time in order to work on specific projects (swarm-
ing). We also promote the development of innovations through
the use of modern techniques such as scrum and design think-
ing. With our Incubator, which is an internal startup concept for
employee ideas, as well as our STARTUP AUTOBAHN initiative,
we are supporting the development and implementation of new
business ideas and innovations from employees and external
partners. We develop digital solutions for our customers at our
divisions' digital units and at our digital hubs. In order to pro-
mote our employees' enthusiasm for digital technologies and
to enable them to use such technologies effectively, we create
learning programs that teach digital skills. We also promote
knowledge sharing through new event formats and platforms
such as our Social Intranet, blogs and communities. And we
offer hands-on experience with digital technologies during our
DigitalLife Days and road shows at our sites. This is how we
are cooperating with our employees to lay the foundations for
our company's cultural transformation.
Adapting our corporate culture (CULTURE)
0.3
0.0
0.0
0.1
A.11
0.04
Daimler Financial Services
Corporate
0.3
0.1
0.1
Daimler Buses
0.7
0.04
157
94
129
105
Value added
Net operating profit
Dividend
140
financial year 2017
103
Board of Management remuneration in
Commitments upon termination of service
101
Principles of Board of Management remuneration
101
136
Remuneration Report
Statement of income
EBIT
Profitability
97
136
142
105
Remuneration of the Supervisory Board
111
Investment
157
155
Risk and opportunity management system
Risks and opportunities
110
other financial obligations
Financial guarantees, contingent liabilities and
109
155
Risk and Opportunity Report
Principles and objectives of financial management
Cash flows
152
and Explanation
107
Liquidity and Capital Resources
Takeover-Relevant Information
105
150
Business development
Social responsibility
Consolidated revenue by division
Events after the Reporting Period
135
96
95
10
The world economy
134
Automotive markets
95
Development
Overall Assessment
Economic Conditions and Business
132
Integrity, compliance and legal responsibility
of the Economic Situation
0
Unit sales structure of Daimler Trucks
B.08
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
98
4%
34%
36%
Asia
43%
17%
Europe
NAFTA
96
EU30
Other markets
Latin America
10%
17%
6%
35%
Asia
32%
Other markets
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
B.09
Market share¹
in %
2017
0
2016
17/16
Change in % points
NAFTA
1%
Automotive markets
Once again, the Chinese market made the biggest contribution
to the growth of the world market, although growth was
significantly lower than in previous years due to the very high
market volume in 2016. A substantial number of advance
purchases were made towards the end of the year because state
tax incentives for purchasers of cars with small engines ended
in January 2018, as had been previously announced, but market
growth for the full year was just over 3%.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 97
Demand for vans continued to develop positively in the EU30
region in 2017. Market volume for mid-size and large vans
increased by 9%, while demand for small vans rose by 3%. In
Germany as well, sales in the combined segment for mid-size
and large vans increased by 8%. Demand for large vans in the US
was slightly below the prior year's level. Demand in the segment
of the van market that we serve in China also decreased slightly.
The market for large vans in Latin America recovered strongly
from the low level of the previous year.
Market volume for buses in the EU30 region was at the high
level of the previous year. The market recovery in Latin America
(excluding Mexico) led to a significant improvement in the bus
segment, especially in Brazil, where market volume increased by
10% after bottoming out in 2016. As a result of the ongoing
difficult situation in Turkey, domestic demand in that country
once again decreased significantly compared with the prior
year.
Business development
Unit sales
Daimler increased its total unit sales in the year 2017 by 9%
to 3.3 million vehicles, thus surpassing its growth target. The
Mercedes-Benz Cars and Mercedes-Benz Vans divisions
exceeded the forecasts made at the beginning of the year by
recording significant growth (8% and 12% respectively).
Daimler Trucks also posted a significant increase of 13% in unit
sales. At the beginning of the year, the division had anticipated
unit sales similar to those of the previous year. Our sales forecast
was successively adjusted as a result of more favorable
market developments in some markets important for us. As we
expected at the beginning of the year, unit sales at Daimler
Buses were also significantly higher than in the prior year (+9%).
The Mercedes-Benz Cars division continued along its growth
path in the year under review. Unit sales rose by 8% to the new
record of 2,373,500 vehicles. The Mercedes-Benz brand
increased its unit sales by 9% to 2,238,000 vehicles and was once
again the strongest-selling premium brand in the automobile
industry. Mercedes-Benz is the number one brand in the premium
segment in Germany and numerous other key European
markets, as well as in the United States, Canada, South Korea
and Japan. In addition, we once again significantly improved
our position in China.
Unit sales in Europe increased by 5% to 911,700 vehicles.
Significant growth was achieved in the volume markets of
France (+9%), Italy (+9%), Spain (+8%) and the United Kingdom
(+4%), and we also increased our unit sales in Germany by 2%
to 282,600 vehicles. Mercedes-Benz continued its success in
China during the year under review. Unit sales in the country
rose by 28% to 595,200 vehicles – much faster growth than the
overall market and our most important competitors. We set
new records for unit sales also in other Asian markets - for
example in Thailand (+31%) India (+14%), South Korea (+9%)
and Taiwan (+7%). Total unit sales in the NAFTA region were at the
prior-year level. Here, sales increased significantly in Canada
and Mexico but decreased slightly in the United States as in
the market overall.
The growth was primarily driven by our new E-Class. After all
model variants became available, sales reached the new record
level of 398,200 units (+31%). Our off-road vehicles were also
very successful once again. Total unit sales in the SUV segment
increased by 16% to 823,000 vehicles. Demand for our C-Class
models also remained very strong, with sales of these vehicles
increasing slightly to 492,700 sedans, wagons, coupes and
convertibles in 2017. Unit sales of A- and B-Class models did not
quite reach the previous year's high level. Including the CLA
and CLA Shooting Brake, a total of 420,200 units were delivered.
Sales of the S-Class reached a total of 79,400 sedans, coupes
and convertibles. The upgraded S-Class generated additional
sales momentum in the second half of the year. 7 B.07
B.07
Unit sales structure of Mercedes-Benz Cars
A-/B-Class
C-Class
E-Class
S-Class
SUVS*
Sports Cars
smart
* including GLA
18%
21%
17%
3%
various institutions
Source: German Association of the
Automotive Industry (VDA),
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
6%
Car demand in Europe was slightly higher than in the previous
year. Following the recovery of recent years, the Western
European car market has now reached a solid level and was able
to record slight growth in 2017. Most of the Western European
core markets grew once again; only the UK car market suffered
a decrease (of approximately 6%) after reaching a record volume
in 2016. Sales in Germany were up by nearly 3% from the prior
year. The overall market situation in Eastern Europe improved
considerably. This was largely due to developments in the Russian
market, which posted a significant increase of approximately
12% after recording substantial contraction over the previous
four years.
The US market volume for cars and light trucks decreased by
almost 2% and thus did not quite reach the record volume
of the prior year. Nevertheless, at just over 17 million units,
B.06
Global automotive markets
Unit sales growth rates 2017 in %
15
10
Passenger cars
Commercial vehicles
market demand remains at an unusually high level. Whereas
sales of SUVs and pickups increased once again, demand for
traditional sedans was relatively weak by comparison. The Japa-
nese market displayed a solid performance, with market volume
increasing by about 6%. Sales in India were significantly higher
than in the prior year. A recovery trend was observed in Brazil,
where the market expanded by just over 9%.
Global demand for cars continued to develop favorably in 2017,
with the worldwide market volume increasing for the eighth
consecutive year. While the previous high market volume led to
slower growth compared with the previous year, the increase of
more than 2% was nevertheless impressive. Once again, the
growth of the world market was primarily due to contributions
from the Chinese and Western European markets, while sales in
the United States decreased slightly. Key emerging markets
were able to overcome their weaknesses and developed in a
much more positive manner during the year under review.
71 B.06
During the year under review, worldwide demand for medium-
and heavy-duty trucks gradually recovered from its previous
weak phase, and experienced an upswing as 2017 progressed.
It should be pointed out, however, that overall demand in the
full year in markets relevant to our operations was only slightly
above the prior-year level.
Demand in the EU30 region (European Union, Switzerland and
Norway) approximately maintained the solid market volume
of the previous year. Sales in Western Europe rose somewhat,
while markets in the EU states of Central and Eastern Europe
contracted slightly overall. Demand for trucks in Brazil stabilized
following the slight improvement of overall economic conditions
in the country. No significant recovery occurred in Brazil, how-
ever, so the market volume therefore only slightly surpassed
the very low level of the prior year. Following the severe mar-
ket slump in Turkey in 2016, demand improved during 2017, but
also here, the market was only slightly larger than the weak
volume of the previous year. The Russian market underwent
a strong recovery and expanded at a significantly double-digit
rate.
Developments in Daimler's most important Asian markets were
varied. The Japanese market for light-, medium- and heavy-
duty trucks was slightly larger than the solid volume of the prior
year (+1%). In India, on the other hand, demand for medium-
and heavy-duty trucks fell by about 10%. Here, the introduction
of new regulatory and tax measures during the year led to
uncertainty and weak demand that could not be offset in the
final months of 2017. Truck sales in China once again rose
sharply, largely due to the favorable economic situation and
regulatory measures that led many truck operators to
replace many older vehicles.
5
0
-5
Total
Europe
NAFTA 1,2
Asia
The pace of recovery on the North American market picked up
in the second half of the year. However, as demand in the first
half of the year was significantly lower than in the same period
of 2016, the full-year market volume in weight classes 6-8 was
only slightly higher (+1%) than in the previous year. Sales in the
heavy-duty Class 8 segment were at about the same level
as in 2016.
South
America 1,2
2015
2016
European Union
Other operating income
-5,257
-5,257 -5,938
-5,938
Research and non-capitalized development costs
-717
-993
-2,702
-3,419 -2,816
-3,809
General administrative expenses
-649
-741
2,962
3,543
- 17,698
20,660
23,775
-20,232
164,330 153,261 140,555 132,601
-129,999 -121,298 109,767 -103,600
34,331 31,963 30,788 29,001
-12,965 -12,226 -12,224 -11,577
Selling expenses
Gross profit
Cost of sales
Revenue
2016
2017
2016
2017
2016
2017
2,824
Daimler Financial
Services
2,350
2,200
1
229
214
230
214
Interest income
25
0
250
-230
275
-230
Other financial expense, net
-1
1
503
1,497
502
1,498
Share of profit from equity-method investments, net
-31
-43
-1,267
-999
- 1,298
-1,042
Other operating expense
150
203
2,621
Consolidated Industrial Business²
In millions of euros
Statement of income¹
14,301
Profit before income taxes
-546
-582
Interest expense
- 12
230
214
Interest income
-13
capitalized borrowing costs¹
Amortization of
12,902
14,682
Group EBIT
2016
2017
In millions of euros
Reconciliation of Group EBIT to profit before income taxes
B.16
2017
2016
2015
2014
2013
0
5
Mercedes-Benz Cars
5250
20
12,574
1 Amortization of capitalized borrowing costs is not included in
the internal performance measure EBIT, but is a component of
cost of sales.
The Mercedes-Benz Cars division posted EBIT of €9,207 million
in 2017, which is significantly above the prior-year figure of
€8,112 million. The division's return on sales was 9.7% (2016:
9.1%) 7 B.14
B.17
The calculation of earnings per share (basic) is based
on an unchanged average number of outstanding shares
of 1,069.8 million.
Net profit for the year improved to €10.9 billion
(2016: €8.8 billion). Net profit of €0.3 billion is attributable to
non-controlling interests (2016: €0.3 billion). Net profit
attributable to the shareholders of Daimler AG amounts to
€10.5 billion (2016: €8.5 billion), representing an increase in
earnings per share to €9.84 (2016: €7.97). 71 B.17
The tax expense of €3.4 billion (2016: €3.8 billion) stated under
income tax expense decreased despite the increase in profit
before income taxes. The effective tax rate for 2017 was 24.0%
(2016: 30.1%). This was mainly a result of the law signed in
2017 for a comprehensive tax reform in the United States. Due
to the reduction in the nationwide federal corporate income
tax rate for US companies, the future net tax liabilities of the
US-subsidiaries of Daimler had to be remeasured with the new
tax rate. The remeasurement resulted in an income tax benefit
of €1.7 billion. Opposing the positive impact from the US tax
reform, tax expenses were recognized in 2017 in connection with
the interpretation of tax laws. 7 B.17
Net interest expense amounted to €0.4 billion
(2016: €0.3 billion). 71 B.17
Other financial expense/income worsened from income of
€0.3 billion to an expense of €0.2 billion. This significant change
is primarily the result of the gain of €0.6 billion recognized in
the previous year from the contribution of the equity interests
in Renault and Nissan at fair value into the German pension-
plan assets. Those gains were previously presented within other
comprehensive income/loss. 7 B.17
In 2017, our share of profit from equity-method investments
was significantly higher than the prior-year level at €1.5 billion
(2016: €0.5 billion). The increase was primarily due to improved
earnings at Beijing Benz Automotive Co. Ltd.(BBAC) and the
reversal of the impairment of €0.2 billion of the shares in BAIC
Motor (2016: negative impact from the impairment of €0.2 billion
of the investment in BAIC Motor). 7 B.17
Other operating income increased to €2.8 billion
(2016: €2.4 billion). This is primarily attributable to income of
€0.4 billion from the sale of property, plant and equipment.
Other operating expense decreased in the year 2017 to €1.0
billion (2016: €1.3 billion), due in particular to expenses con-
nected with a legal proceeding of €0.4 billion in 2016. Further
information on the composition of other operating income and
expense is provided in Note 6 of the Notes to the Consolidated
Financial Statements. 7 B.17
104 B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Research and non-capitalized development costs increased
by €0.7 billion to €5.9 billion in 2017. They were mainly related
to the development of new models, advance expenditure for
the renewal of existing models, and the further development of
fuel-efficient and environmentally friendly drive systems, as
well as safety technologies, autonomous driving and the digital
connectivity of our products. As a proportion of revenue,
research and non-capitalized development costs increased from
3.4% to 3.6%. Further information on the Group's research
and development costs is provided in the "Research and devel-
opment" section of the "Sustainability” chapter of this
Combined Management Report. 7 B.17
General administrative expenses of €3.8 billion were above
the level of the previous year (2016: €3.4 billion). The increase
was mainly due to higher expenses for personnel and consulting.
As a percentage of revenue, general administrative expenses
increased slightly to 2.3% (2016: 2.2%). 71 B.17
Due to the growth in unit sales, selling expenses increased
by €0.7 billion to €13.0 billion and includes higher expenses for
marketing. As a percentage of revenue, selling expenses
decreased slightly from 8.0% to 7.9%. 71 B.17
Overall, gross profit of 20.9% was at the same level as in the
previous year.
Cost of sales amounted to €130.0 billion in 2017, increasing
by 7.2% compared with the previous year. The rise in cost
of sales was caused by higher business volumes and conse-
quentially higher material expenses. The higher material
expenses also reflect increased prices of raw materials. Per-
sonnel expenses and depreciation of equipment on operating
leases also increased. At Daimler Financial Services, the higher
interest-rate level led to higher refinancing costs. Cost of
sales also includes expenses for voluntary service activities
and expenses for a specific vehicle recall of €0.4 billion.
Further information on cost of sales is provided in Note 5 of
the Notes to the Consolidated Financial Statements. 7 B.17
Interest expense
The Group's total revenue increased by 7.2% to €164.3 billion
in 2017; adjusted for exchange rate effects, it increased by
7.8%. The revenue growth primarily reflects the strong demand
for our products at Mercedes-Benz Cars and Daimler Trucks,
as well as the increased contract volume at Daimler Financial
Services. Further information on the development of revenue
is provided in the "Business development" section of this Com-
bined Management Report. B.17
The reconciliation of Group EBIT to profit before income taxes
is shown in table. 7 B.16
The elimination of intra-group transactions resulted in
expenses of €45 million in 2017 (2016: income of €17 million).
Items at the corporate level resulted in expenses of €254 million
(2016: €333 million). In 2017, this primarily comprises expenses
related to legal proceedings. On the other hand, the reversal of
an impairment of €240 million of Daimler's equity investment
in BAIC Motor had a positive effect on earnings. In the previous
year, there were expenses of €400 million in connection with
a legal proceeding, the impairment of €244 million of Daimler's
equity investment in BAIC Motor, and losses of €241 million
from currency transactions not allocated to business operations.
The gain of €605 million recognized on the contribution of the
Renault S.A.(Renault) and Nissan Motor Company Ltd.(Nissan)
shares into the German pension-plan assets did not offset
those expenses.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the effects
on earnings of eliminating intra-group transactions between
the divisions.
This positive development was the result of increased contract
volume and a further improvement in the cost-of-risk situation.
On the other hand, there were negative effects from a higher
interest-rate level, increased expenses for the expansion of
mobility services and the digitization of the business system.
Daimler Financial Services posted EBIT of €1,970 million
in 2017, thus significantly surpassing its prior-year earnings of
€1,739 million. The division's return on equity was 17.6%
(2016: 17.4%). 7 B.15
Further efficiency enhancements and higher unit sales in
Latin America almost offset the inflation-related cost increase
in Latin America and the negative exchange-rate effects.
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 103
The Daimler Buses division's EBIT of €243 million in 2017
(2016: €249 million) was at the high prior-year level. The return
on sales decreased slightly to 5.6% (2016: 6.0%). 7 B.14
EBIT was affected by higher expenses for product ramp-ups
and new technologies. Furthermore, earnings were reduced by
the termination of a contract-manufacturing arrangement.
These effects were offset by the positive development of unit
sales, especially in Europe, China and Latin America, and by
exchange-rate effects. Prior-year EBIT included expenses in
connection with Takata airbags (€83 million) and expenses
from a voluntary severance program at the Düsseldorf plant
(€38 million).
Mercedes-Benz Vans achieved EBIT in 2017 of €1,181 million,
similar to the prior-year level (2016: €1,170 million).
The division's return on sales was 9.0% (2016: 9.1%). 7 B.14
The positive development of earnings was primarily the result
of increased unit sales in the NAFTA region. EBIT was also
boosted by income from the sale of real estate at the Kawasaki
site in Japan (€267 million) and by efficiency improvements.
Higher expenses for raw materials and expenses of €172 million
for the fixed-cost optimization had a negative impact on EBIT.
Daimler Trucks' EBIT in the year 2017 of €2,380 million was
significantly above the prior-year figure of €1,948 million.
The division's return on sales was 6.7% (2016: 5.9%). 7 B.14
The positive earnings development primarily reflects the
increased unit sales of new vehicles. The main drivers were
the SUV segment and the new E-Class. Additional positive
effects on EBIT resulted from exchange-rate effects and income
of €183 million in connection with the remeasurement of the
investment in THERE Holding B.V. now using the equity method.
Negative effects resulted from advance expenditure for new
technologies and future vehicles and from expenses for the
expansion of production capacities. Higher expenses for raw
materials also had a negative impact on EBIT. Furthermore,
expenses for voluntary service activities and expenses for a
specific vehicle recall (€425 million) had a significant impact
on earnings. In the year 2016, EBIT included expenses in
connection with Takata airbags (€480 million) and expenses in
connection with remeasurement of inventories (€238 million).
Statement of income
-582
-546
-577
-5
-316
-299
-9
-3,895
-3,555
Income taxes¹
Other reconciliation
Net operating profit
+13
13,218
14,981
+13
1,739
1,970
Daimler Financial Services
EBIT of the divisions
-2
249
243
Daimler Buses
+1
1,170
1,181
Mercedes-Benz Vans
+22
1,948
2,380
Daimler Trucks
+13
8,112
9,207
11,127
9,007
+24
1 Adjusted for tax effects on interest income/expense and
amortization of capi-talized borrowing costs.
+18
439
518
Daimler Financial Services
-12
143
126
Daimler Buses
-7
962
895
Mercedes-Benz Vans
+46
935
Mercedes-Benz Cars
1,369
+17
5,431
6,330
Mercedes-Benz Cars
+38
5,243
7,246
Daimler Group
17/16
% change
In millions of euros
2016
2017
Value added
B.20
Daimler Trucks
25
Value added at Mercedes-Benz Cars increased by €0.9 billion
to €6.3 billion, primarily reflecting the positive earnings
development due to the increased sales of new vehicles, positive
exchange-rate effects and income in connection with the
remeasurement in the equity investment in THERE Holding B.V.
Opposing effects resulted from advance expenditure for new
technologies and future vehicles, expenses for the expansion of
production capacities and a disadvantageous development
of raw-material prices. Furthermore, expenses for voluntary ser-
vice activities and for a specific vehicle recall had a negative
impact on earnings. In the year 2016, EBIT included expenses in
connection with Takata airbags and expenses in connection
with the remeasurement of inventories. There was a slight neg-
ative impact on value added from the increase in average net
assets to €24.0 billion primarily caused by higher investments
in fixed assets.
The Group's value added increased by €2.0 billion
2.25
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 105
1 The columns „,,Industrial business" and „Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
8,526
10,525
258
339
of Daimler AG
attributable to shareholders
thereof
non-controlling interests
attributable to
thereof
1,179
2,679
-555
714
1,734
1,965
10,840
-3,235
7,605
12,574 12,336
-3,790 -4,151
8,784 8,185
-3,437
10,864
Net profit
Income taxes
14,301
Profit before income taxes
-6
-5
-540
2.45
3.25
3.25
3.65
As described in the "Performance measurement system" section
of the "Corporate Profile" chapter in chart 7 B.03, the cost of
capital is the result of net assets and cost of capital expressed
as a percentage, which is subtracted from earnings in order
to calculate value added. The tables 7 B.20 and 7 B.21 show
value added and net assets for the Group and for the individual
divisions. Table 7 B.22 shows how net assets are derived from
the consolidated statement of financial position.
Value added
% change
In millions of euros
17/16
2016
2017
Reconciliation to net operating profit
B.19
2017
2016
2015
2014
2013
to €7.2 billion in 2017, representing a return on net assets of
22.9% (2016: 19.1%). This was once again substantially higher
than the minimum required rate of return of 8%. The significant
increase in value added was mainly due to the growth in the
divisions' EBIT. In addition, a positive effect came from the
decrease in income-tax expenses caused by the reduction in
the nationwide federal corporate income tax rate for US com-
panies as a result of the law signed in 2017 for a comprehensive
tax reform in the United States. The increase in average net
assets was mainly attributable to higher investment in fixed
assets and had only a slight negative impact on value added.
0
1.00
1.50
2.00
2.50
3.00
Table B.19 shows the reconciliation of the EBIT of the divisions
to net operating profit. In addition to the EBIT of the divisions,
net operating profit also includes earnings effects for which the
divisions are not accountable, such as income taxes and other
reconciliation items.
Net operating profit
3.50
4.00
In euros
Dividend per share
B.18
In the light of the positive business development in 2017, the
Board of Management and the Supervisory Board will propose
to the Annual Shareholders' Meeting to be held on April 5,
2018 that the dividend per share for the 2017 financial year be
increased to €3.65 (prior year €3.25). This corresponds to a
total dividend distribution of €3.9 billion to our shareholders,
which is significantly above the high level of €3.5 billion dis-
tributed in the previous year. We aim to achieve a sustainable
dividend development also in the coming years. 7 B.18
Dividend
0.50
15
10
In %
100 B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Business at Daimler Financial Services continued to develop
very positively in the year under review. As we had forecast in
the 2016 Annual Report, worldwide contract volume continued
to grow, reaching the new record level of 139.9 billion (+6%) in
2017. Adjusted for currency-translation effects, contract volume
increased by 12%. New business increased by 14% to €70.7
billion, growing at a much faster rate than we had anticipated at
the beginning of the year. Significant growth was recorded in
Europe (+15%), while new business in the Americas region was of
the prior-year magnitude (+1%). The growth of new business in
the Africa and Asia-Pacific region (excluding China) was once
again very dynamic at a rate of 16%. In China, new business
actually increased by 56%. In the insurance business, we bro-
kered approximately 2.1 million policies, representing an
increase of 20% compared with the prior year. In financial year
2017, Daimler Financial Services was active in fleet management
with the two brands Daimler Fleet Management and Athlon. In
Europe, Daimler Financial Services had a total of 383,300
contracts with fleet customers on its books at the end of 2017,
representing an increase of 6% compared with a year earlier.
Contract volume amounted to €6.4 billion. The total number of
registered users of our mobility services rose to 17.8 million
in the year under review. car2go increased its number of regis-
tered users to 3.0 million at the end of the year and thus
strengthened its position as the world's leader for flexible car
sharing. The app-based taxi-ordering service mytaxi is Europe's
biggest taxi network and also continued its growth in 2017; the
number of registered users rose by 85% to 11.1 million at the
end of the year. We further developed the moovel app, with which
customers in Germany can find the best way of traveling from
A to B using various modes of transport and can also directly
book and pay for services from providers such as car2go,
mytaxi and Deutsche Bahn (German Railways). With moovel
transit, moovel North America is the leading provider of mobile
ticket solutions for the apps of public transport companies in
the United States. The number of registered moovel users in
Germany and the United States had risen to 3.7 million by the
end of 2017 (2016: 2.2 million).
pages 195 ff
volume in Brazil grew by 10% after having bottomed out in 2016.
Sales of Mercedes-Benz bus chassis in Brazil rose by a double-
digit rate (+46%) to 7,200 units. We were also able to maintain
our leading market position in Brazil with a market share of
52.5% (2016: 58.4%). In Mexico, sales of 3,400 units (2016:
3,800) were significantly lower than in the previous year.
pages 192ff
Daimler Buses sold 28,700 buses and bus chassis worldwide in
2017 (2016: 26,200). The significant increase is due in particular
to the gradual recovery of the economy in Brazil. The division
maintained its clear market leadership in its most important
traditional markets (EU30, Brazil, Argentina and Mexico).
Continued high demand for complete buses meant that the
division achieved sales in the EU30 region of 8,700 units sold
in the year under review (2016: 8,800). At 28.4% (2016: 29.6%),
market share was once again at a very high level. Sales of
3,100 Mercedes-Benz and Setra buses in Germany were at
the prior year level (2016: 3,100), while the ongoing difficult
situation in Turkey resulted in a significant decrease in unit sales,
to 400 vehicles (2016: 600). The market situation in Latin
America (excluding Mexico) improved considerably; bus market
Mercedes-Benz Vans achieved record sales once again in
2017. Unit sales of 401,000 vehicles surpassed the prior-year
figure by 12%. Whereas we mainly focus on commercial
customers with the Sprinter, Vito and Citan models, the V-Class
is primarily designed for private use. With the X-Class, our
new mid-size pickup, we are addressing various customers for
both private and commercial applications. In the EU30 region,
which is our core region, we increased our unit sales by 9% to
273,300 vehicles, and we continue to be the market leader
for mid-size and large vans with a share of 16.7% (2016: 16.8%).
Double-digit growth was achieved in several European markets,
and the division also set a new record in Germany with sales
of 105,800 units (2016: 96,100). Sales in the NAFTA region
increased to 44,800 units (2016: 43,400) and the division's mar-
ket share for large vans in the United States reached 7.5% (2016:
7.6%). Business development was very favorable in Latin America,
where sales rose by 31% to 16,400 units. Unit sales in China
also increased significantly, by 75% to 23,800 vans. This devel-
opment was largely due to the success of the Vito and the
V-Class, both of which were launched in China in 2016. In total,
we sold 200,500 Sprinter vans worldwide (2016: 193,400) in the
reporting period, which was the last full year of the current model's
lifecycle. Vito sales rose significantly, by 21% to 111,800 units,
while sales of the Mercedes-Benz Citan reached 26,100 units
(2016: 24,900). The V-Class full-size MPV was very successful;
sales of 59,300 units surpassed the previous year's figure by 22%.
The X-Class also got off to a good start at the end of the year
with sales of 3,300 units.pages 189ff
In China, the world's biggest truck market, Daimler AG holds a
50% interest in Beijing Foton Daimler Automotive Co. Ltd. (BFDA),
a joint venture with Beiqi Foton Motor Co. Ltd. Medium- and
heavy-duty trucks of the Auman brand have been produced
there since 2012. In line with the significant recovery of the
Chinese truck market, Auman posted a substantial sales increase
to 112,400 units (2016: 77,800).
pages 184ff
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 99
We increased our sales in Asia by 18% to 148,600 trucks. At
44,800 units, sales in Japan were slightly lower than in the
previous year (46,400). Our FUSO brand achieved an overall
market share of 19.6% (2016: 20.4%) in Japan. The new Super
Great heavy-duty truck underscores our determination to further
strengthen our position in the Japanese truck market. Our
sales of 42,700 units in Indonesia were substantially higher than
in the prior year (28,000). Although the volume of the truck
market in India was below the prior-year level, we were able to
increase our sales in the fifth year since the establishment of
the BharatBenz brand to 16,700 trucks (2016: 13,100) and our
market share increased to 9.1% (2016: 6.8%). At 23,600 units
(2016: 17,600), our sales in the Middle East were also substan-
tially higher than the low prior-year level.
In the NAFTA region, we were able to record a significant
increase in sales to 165,000 units in the year under review
(2016: 145,700). We further increased our market share in
Classes 6-8 with a market share of 39.8% (2016: 39.3%). In
Class 8 for heavy-duty trucks, we once again achieved a
market share of 40.0% (2016: 40.0%). We also remained the
undisputed market leader in Classes 6-8. At the beginning
of 2017, we started production of the new Freightliner Cascadia,
which offers a number of new features for fuel efficiency,
connectivity and safety.
Our unit sales in Latin America increased to 30,500 from the
low level of 27,500 vehicles sold in 2016. With sales of 5,600
units (2016: 3,900), the market in Argentina made a major
contribution to this positive development. Sales in our main Latin
American market, Brazil, rose significantly to 13,400 units
(2016: 12,100). With our Mercedes-Benz trucks, we achieved a
market share of 27.6% in the medium- and heavy-duty
segments (2016: 29.8%).
In the EU30 region (European Union, Switzerland and Norway),
we sold 82,300 vehicles in the year under review, slightly
higher than the 79,800 sold in 2016. Our Mercedes-Benz brand
remained the market leader in the medium-duty and heavy-
duty segments, with a share of 21.0% (2016: 20.7%). Following
the slump in Turkey in 2016, we were able to significantly
increase our sales in the country to 11,800 units in the year under
review (2016: 9,300). Developments were also very positive
in Russia, where unit sales more than tripled to 8,000 trucks
(2016: 2,300). 7 B.09
Built Buses and FUSO brands in the year under review (2016:
415,100). Daimler Trucks continues to be the world's biggest
manufacturer of trucks above 6 tons. 71 B.08
Unit sales by Daimler Trucks in 2017 were significantly higher
than in the previous year. In total, we delivered 470,700 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
The smart brand sold a total of 135,500 vehicles in 46 markets
worldwide in 2017. The smart was particularly popular in China,
which is now the smart brand's third-biggest sales market after
Germany and Italy. pages 178ff
1 Based on estimates in certain markets.
+1.5
-5.9
58.4
52.5
Buses over 8 tons Brazil
50.1
51.6
thereof Germany
-1.2
29.6
28.4
Buses over 8 tons EU30
Daimler Buses
-0.1
7.6
Order situation
7.5
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Buses divisions produce vehicles predominantly
to order in accordance with customers' specifications. While
doing so, we flexibly adjust the production capacities for the
individual models to changing levels of demand. Due in particular
to strong demand in China and the European markets, the
number of orders placed with Mercedes-Benz Cars during the
year under review was once again above the high level of
orders recorded in the previous year. This was driven on the
product side primarily by the new E-Class, all variants of which
are now available, as well as by the continued strong success
of our off-road vehicles. Due to the positive development
of demand, we once again increased our production volumes.
Nonetheless, the order backlog at the end of 2017 was higher
than a year before. At Daimler Trucks, both orders received and
the order backlog at year-end were significantly higher than a
year earlier. This was primarily due to the revival of demand in
North America and Asia. We increased production volumes
mainly in the second half of the year in response to the higher
demand.
In the year 2017, Daimler increased its total revenue by 7% to
€164.3 billion; adjusted for currency-translation effects,
revenue grew by 8%. This means we surpassed our expectations
from the beginning of the year. The divisions Mercedes-Benz
Cars (+6%) and Daimler Financial Services (+15%) increased their
business volumes by significant margins. The Daimler Trucks
division also recorded a significant increase in revenue of 8%,
primarily due to positive sales development in North America.
Exchange-rate effects had a negative impact on revenue. We had
originally expected a business volume similar to that of the
previous year. Revenue at Mercedes-Benz Vans (+3%) and Daimler
Buses (+4%) rose slightly. At Mercedes-Benz Vans, we had
only expected revenue to stabilize and unit sales to increase
slightly at the beginning of the year, because contract
manufacturing of vans for Volkswagen had been discontinued
at the end of 2016.
94,695
Mercedes-Benz Cars
Mercedes-Benz Daimler
Buses
10
15-
20
25
30
35
40
+7
153,261
164,330
Daimler Group
45
50
17/16
% change
2016
2017
In millions of euros
2017
2014
2013
Revenue by division and region
B.11
In billions of euros
Consolidated revenue by region
B.10
In regional terms, Daimler achieved revenue growth in Europe
(+8% to €68.4 billion), in the NAFTA region (+4% to €46.9 billion)
and in Asia (+9% to €38.8 billion).
Revenue
Large vans United States
0.0
3.1
-0.8
37.2
36.4
thereof Germany
+0.3
20.7
21.0
trucks EU30
Medium- and heavy-duty
Daimler Trucks
0.0
1.7
1.7
Japan
+0.5
2.1
2.6
China
0.0
2.0
2.0
United States
+0.1
10.4
10.5
thereof Germany
+0.1
6.2
6.3
Heavy-duty trucks NAFTA
region (Class 8)
40.0
40.0
3.1
Small vans EU30
0.0
27.3
27.3
thereof Germany
-0.1
16.8
16.7
Mid-size and large vans EU30
Mercedes-Benz Vans
+2.3
6.8
9.1
89,284
trucks India
-2.2
-0.8
20.4
19.6
Trucks Japan
29.8
27.6
trucks Brazil
Medium- and heavy-duty
+1.4
37.9
39.3
region (Classes 6 and 7)
Medium-duty trucks NAFTA
0.0
Medium- and heavy-duty
+6
Divisions
35,707
14
16
In billions of euros
Development of earnings
B.13
1 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes.
The reconciliation of the Daimler Group's EBIT to earnings before
income taxes is included in Note 33 of the Notes to the Consolidated
Financial Statements.
+14
12,902
14,682
Daimler Group¹
+5
-316
-299
Reconciliation
+13
1,739
1,970
Daimler Financial Services
-2
249
243
+1
1,170
1,181
Mercedes-Benz Vans
+22
Daimler Trucks
2,380
+13
12
10
8
6
Daimler Financial Services
Return on Equity
B.15
Vans
Trucks
Cars
Mercedes-Benz Daimler
0
3
6
9
12
2017
2015
2016
8,112
2013
2014
Return on Sales
B.14
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
102
101
2015 2016 2017
2014
2013
0
Net profit (loss)
EBIT
m
2
4
In %
9,207
1,948
Daimler Buses
+2
23,509
Mercedes-Benz Cars
thereof Germany
+8
63,417
68,437
Europe
(without
Germany)
NAFTA region Asia
Europe
'Germany
Regions
0
5
+15
20,660
23,775
Daimler Financial Services
+4
4,176
4,351
Daimler Buses
+3
12,835
13,164
Mercedes-Benz Vans
+8
33,187
NAFTA region
46,916
23,939
+4
Daimler Trucks
% change
In millions of euros
2016
2017
17/16
B.12
EBIT by segment
The Mercedes-Benz Cars division significantly increased its
EBIT in 2017 and thus met the forecasts made in Annual Report
2016. For the Daimler Trucks division, the EBIT forecast in
Annual Report 2016 was slightly below the prior-year figure. We
adjusted those assessments gradually upwards as the year
progressed in the context of our quarterly reporting, as the divi-
sion's unit sales increased faster than expected in some key
markets and as expenses for the fixed-cost optimization were
below our expectations. The earnings of Mercedes-Benz Vans
also developed better than we had forecast at the beginning of
the year. We had anticipated a significant decrease compared
with the previous year. As the year 2017 progressed, we adjusted
that assessment upwards in the context of our quarterly report-
ing to EBIT in the magnitude of the previous year, as the division's
unit sales increased faster than expected. Daimler Buses also
achieved EBIT at the prior-year level. It thus did not meet the
forecast made in Annual Report 2016 of EBIT slightly above the
prior-year level. Daimler Financial Services significantly increased
its EBIT and thus surpassed the forecast made in Annual
Report 2016.
The reconciliation of segment earnings to Group EBIT resulted
in income slightly above the prior-year level.
The development of earnings reflects primarily the very good
situation of unit sales in the automotive segments. Accordingly,
the Mercedes-Benz Cars division increased its earnings due in
particular to further growth in unit sales, especially of the SUV
models and the new E-Class. Daimler Trucks also significantly
improved its earnings compared with the previous year, mainly
due to increased unit sales in the NAFTA region and the sale
of real estate in Japan. Mercedes-Benz Vans and Daimler Buses
achieved EBIT at the prior-year level. EBIT at Daimler Financial
Services increased significantly. Exchange-rate effects had a net
positive impact on operating profit.
44,960
EBIT
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Profitability
+10
The Daimler Group achieved EBIT of €14.7 billion in 2017
(2016: €12.9 billion), which surpassed the prior-year figure
significantly. 7 B.12 71 B.13
10,211
thereof United States
40,459
9,322
+3
Asia
38,766
35,562
39,169
thereof China
18,280
15,984
+14
Other markets
+9
The increase in total assets was primarily due to the growth
of the financial services business and higher trade receivables.
In addition, the higher volume of capital expenditure led to an
increase in intangible assets and property, plant and equipment.
On the liabilities side, the increased refinancing requirement
resulting from the portfolio growth led to increased financing
liabilities. Furthermore, there was an increase in shareholders'
equity. Current assets accounted for 42% of the balance sheet
total, which was at the prior-year level. Current liabilities
amounted to 34% of total equity and liabilities, which was slightly
below the prior-year level (2016: 35%).
Intangible assets of €13.7 billion (2016: €12.1 billion)
included €10.3 billion of capitalized development costs (2016:
€8.8 billion), €2.0 billion (2016: €1.4 billion) of franchises,
industrial property and similar rights, as well as €1.1 billion of
goodwill (2016: €1.2 billion). The Mercedes-Benz Car division
accounted for 79% (2016: 76%) and Daimler Trucks for 10%
(2016: 14%) of development costs. Capitalized development
costs amounted to €2.8 billion in 2017 (2016: €2.3 billion), and
accounted for 32% of the Group's total research and develop-
ment expenditure (2016: 31%) see page 264.
Property, plant and equipment see page 265 increased
to €28.0 billion (2016: €26.4 billion). In 2017, €6.7 billion
was invested worldwide (2016: €5.9 billion), in particular at our
production and assembly sites for new products and tech-
nologies and for the expansion and modernization of production
facilities. The sites in Germany accounted for €4.0 billion of
the capital expenditure (2016: €3.6 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €133.5 billion
(2016: €127.4 billion). The increase adjusted for exchange-rate
effects of €14.5 billion was primarily caused by the higher
level of new business at Daimler Financial Services. The growth
in business operations reflected the successful course of
business, especially in Asia and Europe. The growth in the sales-
financing business was especially significant in China and
other Asian countries. The leasing and sales-financing business as
a proportion of total assets was at the prior-year level of 52%.
Equity-method investments of €4.8 billion (2016: €4.1 billion)
mainly comprised the carrying amounts of our equity interests
in Beijing Benz Automotive Co., Ltd., BAIC Motor Corporation Ltd.,
There Holding B.V. and LSH Auto International Limited. See
Note 13 of the Notes to the Consolidated Financial Statements
for further information.
Cash and cash equivalents increased compared with the end
of 2016 by €1.1 billion to €12.1 billion.
Trade receivables amounted to €12.0 billion, which is above
the prior-year level of €10.6 billion. The Mercedes-Benz Cars
division accounted for 43% of these receivables and the Daimler
Trucks division accounted for 24%.
Marketable debt securities decreased compared with
December 31, 2016 from €10.7 billion to €10.1 billion. Those
assets included the debt instruments that are allocated
to liquidity, most of which are traded in active markets. They
generally had an external rating of A or better.
Inventories increased from €25.4 billion to €25.7 billion,
equivalent to 10% of total assets, and were thus at the prior-year
level. The increase adjusted for exchange-rate effects of
€1.4 billion applied to all automotive divisions.
The balance sheet total increased compared with December
31, 2016 from €243.0 billion to €255.6 billion; adjusted for
the effects of currency translation, the increase amounted to
€25.3 billion. Daimler Financial Services accounted for
€150.0 billion of the balance sheet total (2016: €141.8 billion),
equivalent to 59% of the Daimler Group's total assets
(2016: 58%).
-5
Financial Position
-687
-3,905
-626
-216
-61
-3,689
Acquisitions and sales of marketable debt securities
537
-2,330
435
-2,311
102
-19
Other
790
402
791
344
-1
58
Cash used for investing activities
Change in financing liabilities
Dividends paid
Other transactions with shareholders
Internal equity and financing transactions
Cash used for/provided by financing activities
-9,518
-14,666
-9,425
Investments in and disposals of shareholdings
- 10,903
- 113
-8,720
- 132
-48
2,150
-644
1,650
-4,323
596
-4,077
500
843
103
842
103
1
-3,879
-2,950
-3,715
-2,797
-164
Cash used for/provided by operating activities
-1,652
3,711
11,967
12,643
-13,619
-153
-8,932
Additions to property, plant and equipment and intangible assets
- 10,158
-8,833
- 10,025
-133
642
-93
16,794
+15
5,889
3.8
6,744
4.1
in % of revenue
Mercedes-Benz Cars
Daimler Group
In millions of euros
in % of revenue
At December 31, 2017, financial obligations of €4.0 billion
exist in connection with future investments in property, plant
and equipment.
In the context of our strategy of strengthening our core business,
we aim to make good use of the opportunities presented by
the global automotive markets. At the same time, we intend to
play a major role in shaping the fundamental technological
change occurring in the automotive industry, and to assume a
leading role with the development of the future areas of CASE
(Connected, Autonomous, Shared & Services and Electric). This
requires substantial investment in innovative products and
new technologies, as well as in the expansion of our worldwide
production network. In 2017, we therefore once again signi-
ficantly increased our investment in property, plant and equip-
ment - as already announced in Annual Report 2016 - from
an already high level to €6.7 billion (2016: €5.9 billion).
Investment
% change
16/15
2016
2017
Investment in property, plant and equipment by division
B.28
2017
2016
2015
2014
2013
0
1
2
3
4
5
6
7
4,843
-3,763
4,147
5.1
15,763
8,976
9,876
7,818
5,887
-3,727
-3,678
-3,723
-3,674
-4
-4
62
-76
13,129
12,009
-20
-6,233
-1,000
-111
-7,444
- 1,353
82
35
6,233
14,129
7,444
13,362
Effect of foreign exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at end of period
-868
12,072
-9
1,028
Daimler Trucks
4.6
+17
-4,209
-3,681
-7,042
Detailed information on the amounts and terms of financing
liabilities is provided in Note 24 and 32 of the Notes to the
Consolidated Financial Statements. Note 32 also provides
information on the maturities of the other financial liabilities.
At December 31, 2017, the total of financial liabilities shown
in the consolidated statement of financial position amounted to
€127,124 million (2016: €117,686 million).
The carrying values of the main refinancing instruments and the
weighted average interest rates are shown in table 7 B.29.
At December 31, 2017, they are mainly denominated in the fol-
lowing currencies: 43% in euros, 25% in US dollars, 8% in
Chinese renminbi, 4% in Canadian dollars, 4% in British pounds
and 3% in Japanese yen.
At the end of 2017, Daimler had not utilized short- and long-term
credit lines totaling €21.0 billion (2016: €18.1 billion). They
include the syndicated credit facility arranged in September
2013 with a consortium of international banks with a volume
of €9 billion.
In order to secure sufficient financial flexibility, Daimler
concluded a €9 billion syndicated credit facility with a consor-
tium of international banks in September 2013. This provides
the Group with financial flexibility until the year 2020. More
than 40 European, American and Asian banks participated in
the consortium. Currently, Daimler does not intend to utilize the
credit line.
Bank credit was another important source of refinancing in
2017. Loans were provided by globally active banks as well as
by nationally operating banks. The lenders also included
supranational banks such as the European Investment Bank
and the Brazilian Development Bank (BNDES).
113
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
In the United Kingdom, ABS of GBP 0.4 billion were successfully
placed with investors, while the volume of the first transaction
in Australia was AUD 0.75 billion. In the United States, a total
refinancing volume of $4.7 billion was generated in 2017 in
three transactions, and CAD 0.4 billion was generated in a trans-
action in Canada. In addition, Mercedes-Benz Bank sold
€1.1 billion worth of ABS bonds to European investors through
the Silver Arrow platform. In China, two ABS transactions
with a total volume of CNY 10.2 billion were successfully placed.
In 2017, asset-backed securities (ABS) were issued in two new
countries in addition to the already established ABS platforms in
the United States, Canada, China and Germany.
Daimler also issued small volumes of commercial paper in 2017.
In the Chinese market, Daimler placed four so-called panda
bonds with a total volume of CNY 16.0 billion. In addition, a
large number of smaller bonds were issued in various currencies
and markets.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark emissions (bonds with high nominal volumes) in
the US dollar and euro markets. 7 B.30
The continued expansive monetary policy of the central banks
also affected the situation in the bond markets in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit ratings
remained moderate.
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €50 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The funds raised by Daimler in the year 2017 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank, and the securitization of receivables
from customers in the financial services business (asset backed
securities).
Refinancing
Furthermore, we capitalized development costs of €2.8 billion
in 2017 (2016: €2.3 billion); this is presented under intangible
assets. page 264.
In addition to property, plant and equipment, we also invested
in associated companies and joint ventures in the reporting
period. Through targeted investments, we strengthened our
position especially in the area of mobility services and in the
development of a charging infrastructure for electric mobility.
Also in 2017, Daimler acquired an equity interest of 15% in LSH
Auto International Limited (LSHAI) for €0.3 billion. LSHAI is a
subsidiary of Lei Shing Hong Group and is one of the biggest
Mercedes-Benz dealers worldwide. With this transaction, the
two partners are strengthening their longstanding cooperation.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
112
At Mercedes-Benz Cars, investment in property, plant and
equipment of €4.8 billion in 2017 was significantly above the
prior-year level (2016: €4.1 billion). The most important
projects included the model upgrade of the S-Class and the
successor models in the compact class, as well as new
combustion engines and transmissions. We also made sub-
stantial investments in the reorganization of our German
production facilities as competence centers and in the expan-
sion of our international production network. At the same
time, we are preparing our worldwide production network for
electric mobility. The main areas of investment at Daimler
Trucks in 2017 were successor generations for existing prod-
ucts, new products, global component projects and the
optimization of the worldwide production network. Total invest-
ment in property, plant and equipment at Daimler Trucks
decreased to €1.0 billion (2016: €1.2 billion). At the Mercedes-
Benz Vans division, the focus of investment was on the next-
generation Sprinter in Germany and the United States. The main
investments at Daimler Buses in the reporting period were in
alternative drive systems, new products and the modernization
of the production network.
0.2
0.2
in % of revenue
+16
37
43
Daimler Financial Services
B.29
2.3
Refinancing instruments
Dec. 31,
2016
0.65
0.42
29,674
34,555
2.96
3.09
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Issuer
Benchmark issuances
B.30
Deposits in the
direct banking
business
institutions
Commercial
paper
Liabilities
to financial
1,701
1,045
2.71
2.64
73,648
78,110
1.64
1.88
ABS transactions
liabilities from
Notes/bonds and
In millions of euros
Carrying values
Dec. 31,
2016
in %
2017
Dec. 31,
Average interest rates
Dec. 31,
2017
2.2
in % of revenue
-3
2,230
8,369
8,751
12,574 12,336 10,840
5,478 5,521 5,398
14,301
5,676
Depreciation and amortization/impairments
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
- 1,455
- 1,272
-1,264 -1,356
-191
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 115
-1,592
-962
- 1,082
-697
-510
-265
1,288
757
1,159
581
129
176
-11,145 -6,848
200
194
-11,345
1,567
1,965
1,734
155
97
94
Daimler Buses
2.9
5.4
in % of revenue
+90
373
710
-778
3.7
2.9
in % of revenue
- 17
In billions of euros
1,243
Receivables from financial services
Trade payables
Trade receivables
Inventories
Change in operating assets and liabilities
31
68
-1,141
-2,028
-1,110
-1,960
gains/losses on disposals of assets
Other non-cash expense and income and
80
Vehicles on operating leases
11,460
Investment in property, plant and equipment
in Note 30 of the Notes to the Consolidated Financial
Statements.
2 To the extent not allocated to the segments.
3 To the extent not allocated to Daimler Financial Services.
B.22
Net assets of the Daimler Group at year-end
In millions of euros
2017
2016
17/16
% change
Net assets¹
Intangible assets
12,742
11,145
+14
Property, plant
and equipment
27,914
26,314
+6
Leased assets
18,711
17,433
+7
Inventories
24,492
24,426
+0
Trade receivables
9,737
+3
8,977
47,054
1 Total equity.
-0
Mercedes-Benz Vans
2,385
1,739
+37
Daimler Buses
978
887
+10
Daimler Financial Services¹
11,165
10,000
+12
Net assets of the divisions
46,924
43,419
+8
Equity method investments²
941
555
+70
Assets and liabilities from
income taxes³
2,141
Other reconciliation³
-1,492
3,372
-292
-37
+411
Daimler Group
48,514
8,448
+8
for other risks
Principles and objectives of financial
management
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements con-
sistently for all Group entities by Treasury. Financial management
operates within a framework of guidelines, limits and bench-
marks, and on the operational level is organizationally separate
from other financial functions such as settlement, financial
controlling, reporting and accounting.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as pro-
duction, sales and financing companies - are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply with
restrictions on capital transactions and on the transfer of capital
and currencies.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this pur-
pose, the Group records the cash flows from operating and
financial activities in a rolling plan. The resulting financial
requirements are covered by the use of appropriate instruments
for liquidity management (e.g. bank credits, commercial paper
and notes); liquidity surpluses are invested in the money market
or the capital market taking into account risk and return
expectations. The goal is to ensure the level of liquidity regarded
as necessary at optimal costs. Besides operational liquidity,
Daimler maintains additional liquidity reserves, which are avail-
able in the short term. Those additional financial resources
include a pool of receivables from the financial services business
which are available for securitization in the capital market, as
well as a contractually confirmed syndicated credit facility with
a volume of €9 billion.
Cash management determines the Group's cash requirements
and surpluses. Via cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of Daimler in various
currencies. Most of the payments between Group companies
are made via internal clearing accounts, so that the number of
external cash flows is reduced to a minimum. Daimler has
established standardized processes and systems to manage
its bank accounts and internal cash-clearing accounts, and to
execute automated payment transactions.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the results of the divisions and the
Group. The Group's overall exposure to these market-price risks
is determined to provide a basis for hedging decisions, which
include the definition of hedging volumes and corresponding
periods, as well as the selection of hedging instruments.
Decisions regarding the management of risks resulting from fluc-
tuations in foreign exchange rates and commodity prices, as
well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are legally separated from the Group's assets
and are invested primarily in funds; pension assets are not
available for general business purposes. The funds are allocated
to different asset classes such as equities, fixed-interest
securities, alternative investments and real estate, depending
on the expected development of pension obligations and with
the help of a risk-return optimization. The performance of
asset management is measured by comparing with defined ref-
erence indices. Local custodians of the pension assets are
responsible for the risk management of the individual pension
assets. The Global Pension and Healthcare Committee limits
these risks by means of Group-wide binding guidelines. Addi-
tional information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated Finan-
cial Statements.
108
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.23
Condensed statement of cash flows'
In millions of euros
Consolidated Industrial Business² Daimler Financial
Services
2017
2016
2017
2016
2017
2016
Cash and cash equivalents at beginning of period
10,981
9,936
Profit before income taxes
8,751
9,515
10,981
-4
-90
Liquidity and Capital Resources
Less provisions
107
1 To the extent not allocated to Daimler Financial Services.
-16,512
-15,325
+8
Less trade payables
-11,655
- 10,853
+7
Less other assets
and liabilities
-27,789 -26,727
+4
Assets and liabilities
from income taxes¹
1,719
2,935
-41
Total equity of
Daimler Financial Services
12,378
10,448
+18
Daimler Trucks' value added was significantly higher than
in the previous year at €1.4 billion (2016: €0.9 billion). This
development was primarily the result of the positive development
of earnings due to increased unit sales in the NAFTA region,
the sale of real estate in Japan and efficiency improvements.
Higher expenses for raw materials and expenses for the fixed-
cost optimization had a negative impact on EBIT. Average net
assets were close to the prior-year level.
At Mercedes-Benz Vans, value added decreased by €0.1 billion
to €0.9 billion. This development was the result of the increase
in average net assets caused by higher investments in fixed
assets and higher inventories. Despite increasing expenses for
product ramp-ups and production material, as well as the
negative impact of the termination of a contract-manufacturing
arrangement, EBIT remained at the prior-year level due to the
positive development of unit sales.
The value added of the Daimler Buses division was slightly lower
than in the previous year at €126 million (2016: €143 million).
This primarily reflects the increase in average net assets due to
higher inventories. EBIT was at the high prior-year level, due
to further efficiency enhancements and increasing unit sales in
Latin America.
Daimler Financial Services' value added of €0.5 billion was
above the prior-year level at €0.4 billion. The division's return on
equity amounted to 17.6% (2016: 17.4%). The development of
value added primarily reflects the higher earnings resulting from
increased contract volume and a better cost-of-risk situation.
On the other hand, a higher interest-rate level, the expansion
of businesses activities and exchange-rate effects impacted
earnings negatively. In addition, average equity increased by
€0.1 billion.
Daimler Group
51,737
48,773
+6
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
8,421
Daimler Trucks
+7
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2016 from €95.9 billion to €105.2 billion.
7 B.26
Compared with December 31, 2016, the net liquidity of the
industrial business decreased from €19.7 billion to €16.6 billion.
The dividend payment to the shareholders of Daimler AG and
negative exchange-rate effects led to a decrease in net liquidity
that was only partially offset by the positive free cash flow.
To the extent that the Group's internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
The net liquidity of the industrial business 7 B.25 is
calculated as the total amount as shown in the statement of
financial position of cash, cash equivalents and the market-
able debt securities included in liquidity management, less the
currency-hedged nominal amounts of financing liabilities.
In 2017, the free cash flow of the Daimler Group led to a cash
outflow of €11.9 billion (2016: €9.3 billion). Besides the effects
of the free cash flow of the industrial business, the free cash flow
of the Daimler Group is mainly affected by the leasing and
sales-financing business of Daimler Financial Services. In the
prior-year period, there was an additional effect due to the
acquisition of 100% of the shares of Athlon, including the settle-
ment and assumption of Athlon's financing liabilities.
17/16
Change
Dec. 31,
2016
Dec. 31,
2017
Net debt of the Daimler Group
B.26
-3,300
-3,140
19,737
1,488
-1,812
16,597
Net liquidity
(nominal)
Financing liabilities
-249
37
-212
for financing liabilities
currency hedges
Market valuation and
+764
-604
+160
-3,051
1,451
- 1,600
Financing liabilities
18,249
18,409
In millions of euros
Liquidity
Cash and cash equivalents
10,981
Detailed information on financial guarantees, contingent
liabilities and other financial obligations are provided
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2017.
The contingent liabilities principally constitute buyback obli-
gations. At December 31, 2017, the best possible estimate for
the loss risk from these guarantees amounted to €1.6 billion
(2016: €1.7 billion). The amounts of the buyback commitments
are close to the fair values of the vehicles to be taken back.
Warranty and goodwill commitments (product guarantees) pro-
vided by the Group in connection with its vehicle sales are
not included in the contingent liabilities. Other contingent liabil-
ities are also included. The best possible estimate for an
obligation from the other contingent liabilities is €0.6 billion
(2016: €0.3 billion).
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 111
Within the context of financial guarantees, Daimler generally
guarantees the settlement of the payment obligations of the
main debtor vis-à-vis the holder of the guarantee. The maximum
potential obligation resulting from these guarantees amounts
to €0.7 billion at December 31, 2017 (2016: €0.8 billion); the
liabilities recognized in this context amount to €0.1 billion at
the end of the year (2016: €0.2 billion). The financial guarantees
that the Group has issued relating to bank loans of Toll Collect
GmbH, the operator company for the electronic toll-collection
system in Germany, remain unchanged at €0.1 billion. For
information on risks arising from guarantees, we refer to our
Risk and Opportunity Report in the section "Risks from guaran-
tees, legal and tax risks".
Financial guarantees, contingent liabilities and
other financial obligations
The €1.9 billion decrease in the free cash flow to €2.0 billion
resulted primarily from the cash outflow for the extraordinary
contribution to the pension plan assets and the higher income
taxes paid. In addition, the free cash flow of the industrial busi-
ness was affected by increased investments in property, plant
and equipment and intangible assets and the acquisition of an
interest in LSHAI. Opposing effects were due to the positive
business performance and the development of operating leases
in the industrial business. A cash inflow of €0.8 billion resulted
from the dividend distributed by Beijing Benz Automotive Co.,
Ltd. and the sale of real estate in Japan led to a cash inflow of
€0.3 billion. The payment of the fine of €1.0 billion imposed on
Daimler by the European Commission in the context of the
settlement in the truck antitrust proceedings led to a cash out-
flow in the prior-year period.
-9,728
-9,322
- 117,625
-95,896
-127,353
-105,218
Net debt
(nominal)
Financing liabilities
-290
61
-229
for financing liabilities
currency hedges
Market valuation and
+1,091
-685
+406
-9,438
- 117,686
-127,124
Financing liabilities
21,729
22,135
Liquidity
10,748
10,063
Marketable debt securities
12,072
9,498
8,894
Marketable debt securities
17/16
2016
2017
In millions of euros
Free cash flow of the industrial business
B.24
Cash used for investing activities 7 B.23 amounted to
€9.5 billion (2016: €14.7 billion). The change compared with
the prior-year period resulted primarily from lower cash out-
flowsfor investments in shareholdings. The reporting period
was affected by the acquisition of an interest in LSH Auto
International Limited (LSHAI). In the prior-year period, the
acquisition of 100% of the shares of Athlon Car Lease Inter-
national B.V. (Athlon) and the settlement of financing liabilities
of Athlon led to cash outflows. Positive effects resulted from
acquisitions and disposals of securities in the context of liquid-
ity management. Those transactions led to a net cash inflow
in 2017, whereas acquisitions exceeded disposals in the previ-
ous year. The sale of real estate in Japan led to a cash inflow
of €0.3 billion. Cash used for investing activities also reflects
increased investments in property, plant and equipment and
intangible assets.
Cash used for/provided by operating activities 7 B.23
resulted in a cash outflow of €1.7 billion in 2017 (2016: cash
inflow of €3.7 billion). The decrease was primarily due to
effects from the leasing and sales-financing business. In addi-
tion, a cash outflow of €3.0 billion resulted from the extra-
ordinary contribution to the German pension plan assets. Cash
used for operating activities also reflects higher income taxes
paid. Opposing effects were due to the positive business per-
formance. A cash inflow of €0.8 billion resulted from the
dividend distributed by Beijing Benz Automotive Co., Ltd. The
payment of the fine of €1.0 billion imposed on Daimler by
the European Commission in the context of the settlement in
the truck antitrust proceedings led to a cash outflow in the
prior-year period.
Cash flows
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 109
Further information on the management of market-price
risk, credit-default and liquidity risk is provided in ①Note 32
of the Notes to the Consolidated Financial Statements.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies in
risk countries, and the risk from direct sales to customers in
those countries. Daimler has an internal rating system that divides
all countries in which it operates into risk categories. With
equity capital transactions in risk countries, the Group hedges
against political risks with the use of investment protection
insurance such as the German government's investment guar-
antees. Risks from cross-border receivables are partially pro-
tected with the use of export credit insurance, letters of credit
and bank guarantees in favor of Daimler AG. In addition, a
committee sets and restricts the level of hard-currency credits
granted to financial services companies in risk countries.
appropriate creditworthiness assessments, supported by
statistical risk-classification methods, as well as structured
portfolio analysis and portfolio monitoring.
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with
financial institutions, issuers of securities, and customers in
the financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our liquid-
ity management and from trading in derivative financial instru-
ments. The management of these credit risks is mainly based
on an internal limit system that reflects the creditworthiness of
the respective financial institution or issuer. The credit risk
with customers of our automotive business relates to contracted
dealerships and general agencies, other corporate customers
and retail customers. In connection with the export business,
general agencies that according to our creditworthiness
analyses are not sufficiently creditworthy are generally required
to provide collateral such as first-class bank guarantees. The
credit risk with end-customers in the financial services business
is managed by Daimler Financial Services on the basis of a
standardized risk management process. In this process, mini-
mum requirements are defined for the sales-financing and
leasing business and standards are set for credit processes as
well as for the identification, measurement and management
of risks. Key elements for the management of credit risks are
1 The columns "Industrial business«< and >>Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
2,230
2,557
106
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
B.21
Net assets (average)
2017
2016
17/16
In millions of euros
% change
Mercedes-Benz Cars
23,975
22,345
Change
Cash provided by
operating activities
Cash used for
investing activities
Change in marketable
debt securities
Other adjustments
Free cash flow of the
industrial business
11,967
12,643
8,751
9,515
Cash and cash equivalents
17/16
Change
In millions of euros
Dec. 31,
2016
2017
Dec. 31,
Net liquidity of the industrial business
B.25
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
110
The free cash flow of the industrial business amounted to
€2.0 billion in 2017 and was lower than the prior-year level
of €3.9 billion. The free cash flow of the industrial business
was thus in line with the adjusted forecast made in the Outlook
section of the Interim Report on the third quarter of 2017,
and was primarily influenced by the cash outflow of €3.0 billion
for the extraordinary contribution to the German pension
plan assets. Excluding this payment, which was announced in
the Outlook section of the Interim Report on the third quarter
of 2017, the free cash flow of the industrial business was signifi-
cantly higher than in the previous year and thus significantly
surpassed our forecast as adjusted during the year.
Other adjustments relate to non-cash additions to property,
plant and equipment that are allocated to the Group as their
beneficial owner due to the form of their underlying lease
contracts. Furthermore, adjustments are made for the effects
of financing dealerships within the Group. In addition, the
calculation of the free cash flow includes those cash flows to
be shown under cash from financing activities in connection
with the acquisition or sale of interests in subsidiaries without
loss of control.
B.27
The parameter used by Daimler to measure the financial capabil-
ity of the Group's industrial business is the free cash flow
of the industrial business 7 B.24, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable debt
securities included in cash flows from investing activities
are deducted, as those securities are allocated to liquidity and
changes in them are thus not a part of the free cash flow.
Cash provided by financing activities 7 B.23 amounted to
€13.1 billion (2016: €12.0 billion). The increase was primarily
caused by higher net cash inflows from financing liabilities in the
context of refinancing the leasing and sales-financing business.
-1,869
3,874
2,005
+75
-177
-102
-2,746
2,311
-435
+1,478
- 10,903
-9,425
-676
Cash and cash equivalents increased by €1.1 billion compared
with December 31, 2016, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities, increased by €0.4 billion to €22.1 billion.
11,642
84
Month of
emission
Standard & Poor's
Short-term credit rating
A (low)
A
A
A-
A-
A3
A2
A
A
End of 2016
End of 2017
DBRS
Scope
A-1
A-1
Moody's
P-1
The short-term ratings issued by S&P, Fitch and DBRS
remained unchanged in 2017.
On November 29, 2017, the Canadian agency DBRS upgraded its
long-term rating for Daimler AG from A (low) to A, with a stable
outlook. DBRS stated that this change reflects the continually
improving earnings over the past number of years, which has
caused Daimler's financial risk assessment to strengthen to a
higher level.
On September 15, 2017, S&P Global Ratings (S&P) also
confirmed its long-term corporate rating of A for Daimler AG
with reference to the leading position that the Group has
achieved in the automotive business. The rating agency referred
in particular to the strength of the Mercedes-Benz Cars
division. S&P assumes that Daimler will maintain its competitive
position in the coming years. Furthermore, S&P expects a
continuation of very good financial metrics. The business risk
of Daimler AG is assessed as "satisfactory" and the financial
risk as "minimal".
On May 26, 2017, Fitch Ratings (Fitch) affirmed its long-term
issuer default rating of A- with a stable outlook for Daimler AG.
Fitch referred to Daimler's strong business profile and robust
credit metrics. In addition, Fitch mentioned the Group's wide geo-
graphic and business diversification as well as the strength-
ened profitability of the automotive divisions in recent years.
Fitch expects that increased technological convergence in
the fields of autonomous driving and electric mobility will provide
more synergies between the divisions in the medium term.
Daimler AG for the first time engaged the European rating agency
Scope Ratings (Scope) to issue a corporate rating. On April 27,
2017, Scope assigned an A rating for the creditworthiness of
Daimler AG and its financing companies. The short-term
rating was assessed as S-1 and the outlook as "stable". Scope
stated that its corporate rating reflects the company's track
record in recent years and Scope's expectation for a continua-
tion of the strong market positions held by the Daimler Group's
leading divisions, Mercedes-Benz Cars and Daimler Trucks.
Scope stated that its positive risk assessment was supported
by the Group's geographic diversification and the added
benefit from the captive finance business at Daimler Financial
Services. Furthermore, it assessed Daimler's financial risk
profile as very strong.
On February 3, 2017, Moody's Investors Service (Moody's)
upgraded its long-term rating for Daimler AG and its rated
subsidiaries from A3 to A2. It also upgraded its short-term rat-
ing from P-2 to P-1. The outlook was changed from "positive"
to "stable". The upgrade was explained with the robust opera-
tional performance in recent years as well as the successful
and ongoing product renewal program. As assessed by Moody's,
Daimler is well prepared to weather the future challenges
facing the automotive industry such as autonomous driving,
alternative drive systems, fuel consumption and emissions.
DBRS
Fitch
R-1 (low)
S-1
Volume
Scope
F2
F2
Fitch
P-2
R-1 (low)
Moody's
Mercedes-Benz Vans
Long-term credit rating
May 2017
US$1,250 million
Nov. 2018
May 2017
US$500 million
Maturity
US$1,400 million
May 2020
Jan. 2017
US$850 million
Jan. 2022
US$750 million
€1,250 million
Jan. 2017
Feb. 2017
Jan. 2027
Feb. 2025
Standard & Poor's
Jan. 2020
Daimler AG
Jan. 2017
Daimler AG
In financial year 2017, the long-term credit ratings of Daimler AG
were upgraded by the two rating agencies Moody's Investors
Service and DBRS from A3 to A2 and from A (low) to A respec-
tively. Concurrently, Moody's also upgraded the short-term
rating from P-2 to P-1. For the first time, Daimler received a
credit rating from the European rating agency Scope Ratings
AG. Scope assigned a corporate issuer rating of A and a stable
outlook to Daimler AG and its financing subsidiaries, with a
short-term rating of S-1. The other agencies did not change our
credit ratings compared with the previous year. At the end of
2017, the outlook for Daimler AG was assessed as "stable" by
all five of the agencies it has engaged. 7 B.31
Daimler AG
Credit ratings
114
Feb. 2021
Nov. 2017
US$1,500 million
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Nov. 2027
US$250 million
€1,250 million
€1,500 million
€1,300 million
€1,000 million
May 2017
Jun. 2017
Jun. 2017
Jun. 2017
Nov. 2017
Daimler Finance
North America LLC
Jan. 2022
B.31
Rating
Jul. 2024
Jul. 2029
Jul. 2037
By 2022, Daimler intends to offer more than ten all-electric
models in the passenger-car segment alone: from the smart to
a large SUV. The first series-produced battery-electric model
under the EQ brand will be launched in the SUV segment before
the end of this decade. will be followed by a model initiative
that will gradually expand the product range of Mercedes-Benz
Cars with all-electric models. The new generation of electric
vehicles will be based on an architecture developed especially
for battery-electric models. This architecture is scalable in
every respect and can be used in all model series: Wheelbase
and track width as well as all other system components,
especially the battery, are variable thanks to the modular system.
Broad range of plug-in hybrid cars
The use of 48-volt on-board electrical systems enables hybrid
functions ranging from energy recovery and boost effect to
initial acceleration and maneuvering in the all-electric mode.
This means that such functions can be used for the first time
without high-voltage components, which eliminates the need for
the additional safety equipment that normally has to be used
in high-voltage networks. This enables us to noticeably reduce
the fuel consumption of our high-volume models and to offer
customers greater agility and comfort.
E-Class plug-in hybrid impressive in environmental audit
In February 2017, the Mercedes-Benz E 350 e plug-in hybrid
model (fuel consumption in 1/100 km, combined: 2.1; CO2
emissions in g/km: 49; electricity consumption in kWh/100 km:
11.5) successfully completed the TÜV validation audit for the
German Environmental Certificate. This certificate is awarded
on the basis of a lifecycle assessment in which independent
experts at the TÜV Süd technical inspection authority assess the
integration of environmental aspects into the product design
and development process, as well as the environmental impact
of a car throughout its entire life cycle.
on-board fast charger, it should be possible in the future to
charge an electric car in about ten minutes so that it can
drive another 100 kilometers.
The E 350 e also makes a big impression in other areas besides
driving. For example, during its lifecycle (material manufacture,
production, driving for 250,000 kilometers calculated with
certified consumption figures and recycling) and when the hybrid
model is charged externally with the European electricity mix,
the vehicle emits around 44% less CO2 than the predecessor
model, the E 350 CGI, which has comparable performance
data and a conventional engine. If the calculation is based on the
use of renewable energy for external charging, CO2 emissions
can be reduced by 63%. The picture is much the same in terms
of energy consumption, as the E 350 e consumes 31%/48%
less primary energy over all of its lifecycle phases.
Preproduction phase begins for the GLC F-CELL
With the unveiling of the two GLC F-CELL preproduction cars
at the Frankfurt Motor Show in 2017, Daimler presented yet
another milestone on the road to emission-free driving. The GLC
F-Cell is a fuel-cell electric car using a lithium-ion battery as an
additional energy source that can be externally charged by means
of plug-in technology. Intelligent interplay between the battery
and the fuel cells, as well as a short refueling time, will make the
GLC F-CELL a practical vehicle for long-distance travel in the
future. The preproduction model carries 4.4 kilograms of hydrogen
on board and produces enough energy to achieve a range of
more than 400 kilometers in the New European Driving Cycle
(NEDC). Daimler has developed a completely new fuel-cell
system for this world first. Compared to the B-Class F-CELL,
which has been on the market since 2010 (fuel consumption:
0.97 kg H₂/100 km; CO2 emissions, combined: 0 g/km), the
overall drive system offers around 40 percent more output.
The fuel-cell system is around 30 percent more compact than
before; it can be housed entirely in the engine compartment
for the first time, and is installed on the usual mounting points
like a conventional engine. In addition, the use of platinum in
the fuel cells has been reduced by 90 percent, which conserves
resources and also lowers system costs - without any com-
promises in terms of performance.
To date, fuel-cell vehicles from Mercedes-Benz, which include
the B-Class F-CELL and the Mercedes-Benz Citaro FuelCELL
Hybrid city bus, have driven more than 18 million kilometers
and have thus demonstrated the market maturity of this drive
configuration. The pre-series version of the GLC F-CELL repre-
sents a further milestone on the road to series-produced
fuel-cell vehicles. Market-specific sales concepts, including the
option of a rental model, are currently being evaluated.
smart vision EQ fortwo: car sharing for the city of tomorrow
At the Frankfurt Motor Show in September 2017, the smart
brand presented the smart vision EQ fortwo, offering a preview
of car sharing in the future. The concept car is our vision of
the form future urban mobility might take. As a fully autonomous
vehicle connected in swarms with other cars in the fleet, the
smart vision EQ fortwo could move on its own through a city and
drive to locations where it is needed at a given time. The
electric car could be equipped with a 30kWh lithium-ion battery
that is recharged autonomously and inductively. It would do
this by driving to one of many hub stations located around a city.
22,560
Plug-in hybrid vehicles combine the best aspects of combustion
engines and electric drive systems. This helps to reduce overall
consumption and increase performance, as the electric motor is
used to take over from or support the combustion engine in
situations where the latter is less efficient. With eight plug-in
hybrid models, we already offer a broad range of plug-in hybrid
vehicles in the premium segment. Our powerful battery already
enables all-electric driving. The battery can be recharged
externally. The new S-Class with hybrid drive, which we plan to
launch in 2018, already has an all-electric range of up to 50
kilometers. We aim to achieve significantly longer ranges for
plug-in hybrids as technological advances are made. This will
enable our customers to drive locally emission-free to a very
large extent in everyday situations. In such a setup, the combus-
tion engine is used for longer distances, which means our plug-in
hybrids are perfect for any driving requirement. We believe that
plug-in hybrid technology will be extremely successful as we
move into the next decade, and that is why hybrid systems are
a key component of our drive-system strategy.
3,070
Retained earnings
11,480
Capital reserve
(Conditional capital €500 million)
3,070
Share capital
Equity and liabilities
40,107
9,071
46,120
1,660
56,851
339
891
98,188
107,310
3,462
125
23,637
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
40,587
Mercedes-Benz has consolidated all of its activities in the
area of electric mobility into the new EQ product brand. EQ
stands for Electric Intelligence, which in turn is derived from
the Mercedes-Benz brand values of emotion and intelligence.
EQ offers a comprehensive electric mobility ecosystem of
products, services, technologies and innovations. The new brand
was heralded by the near-production Concept EQ from 2016
and the compact Concept EQA, which was presented at the
Frankfurt Motor Show (IAA) in September 2017.
Other liabilities
6,077
6,499
Trade payables
11,847
13,981
Provisions
11,847
13,981
Other provisions
Net defined-benefit plan asset
42,092
With the Concept EQA study, Mercedes-Benz has shown
what an EQ model in the compact-car segment could look like.
In combination with the intelligent operating strategy from
Mercedes-Benz, the concept car achieves a range of approxi-
mately 400 kilometers. The Concept EQA provides a glimpse
of the technological future. It can be charged using a wall box and
is also prepared for rapid charging. Thanks to an integrated
Equity
3,905
Distributable profit
Our trucks also set the standards for fuel efficiency in North
America, where we presented the Freightliner New Cascadia,
our flagship in North America, in the fall of 2016. The truck's
aerodynamic shape and state-of-the-art drivetrain components
have helped to reduce fuel consumption by up to 8% compared
to the predecessor model, the Cascadia Evolution, which was
already an extremely economical vehicle.
In Europe, we plan to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious target, and
we took a clear step in that direction with the introduction of
the new generation of the OM 471 heavy-duty truck engine in
2015 and the slightly smaller OM 470 in 2016.
New FUSO Super Great truck sets efficiency standards
With the latest generation of the FUSO flagship, the world's
largest manufacturer of commercial vehicles is setting new
standards for efficiency, safety and connectivity in Japan. A
range of new technologies has reduced the truck's fuel consump-
tion by up to 15%. The powertrain components in the new FUSO
Super Great were taken from the current product platforms and
were only slightly adjusted to meet the specific requirements
of the Japanese market. Daimler Trucks' global platform strategy
enables consistent quality standards, cost benefits through
economies of scale, and flexibility in the utilization of production
capacity. The 10.7-liter OM470 engine used in the new FUSO
Super Great complies with the JP17 emission standard in Japan.
It also comes with the HDEP (Heavy Duty Engine Platform)
Fuel Efficiency Package and has been further optimized in terms
of fuel consumption, emission efficiency and payload compared
with the previous drivetrain. Deliveries to customers of the new
truck started in May 2017.
Clean and efficient drive technology for buses
Daimler is also very advanced in terms of exhaust aftertreatment
technology for the bus sector. For example, all Mercedes-Benz
and Setra model series were made available with Euro VI tech-
nology at a very early stage. Despite the use of this complex
exhaust treatment technology, we were able to achieve a further
reduction in the fuel consumption of our already economical
buses with the application of the new Mercedes-Benz engines.
For example, various vehicle optimization measures have led
to further significant reductions in the fuel consumption of our
touring coaches equipped with the new OM 471 diesel engine,
despite higher performance.
The new Mercedes-Benz Tourismo coach is also much more
efficient than the predecessor model. Its fuel consumption was
reduced primarily through optimized aerodynamics and an
all-new and lighter body. New optional extras such as Predictive
Powertrain Control (PPC) and Eco Driver Feedback (EDF)
enable fuel consumption and thus emissions to be reduced even
further.
The Mercedes-Benz Citaro NGT with natural-gas drive is even
cleaner and quieter than the already efficient Citaro equipped
with the ultra-modern Euro VI diesel engine. Moreover, the Citaro
NGT's all-new M 936 natural-gas engine makes the bus the
benchmark in its segment. The Citaro NGT is also even more
efficient than its predecessor model - and when organic
natural gas is used, the vehicle is virtually CO2-neutral. In
parallel with the further optimization of the combustion
engine, the next step along the path into the future is the battery-
electric Mercedes-Benz Citaro - an all-electric city bus which
Daimler Buses plans to have ready for series production and on
the road by the end of 2018.
Comprehensive electric mobility offensive
Daimler launched a broad-based electric mobility offensive at all
of its divisions back in 2016. The models include new plug-in
hybrids from Mercedes-Benz Cars, new electric smart models,
the DENZA 400, which we developed with our partner BYD for
the Chinese market, the new FUSO eCanter and the new GLC
pre-series model with fuel cells, which we presented at the
Frankfurt Motor Show (IAA) in September 2017. The electric
mobility offensive also includes new concept vehicles that offer
a clear preview of the future of electric mobility: the Concept EQ,
the Concept EQA and the smart vision EQ fortwo, as well as
the Mercedes-Benz electric truck and the E-FUSO Vision One
truck - both for heavy-duty distribution transport.
EQ - our electric mobility brand
3,477
384
Dec. 31,
2017
60,764
5,868
4,982
Net profit
-1,422
-2,018
Income taxes
5,430
5,866
Financial income
1,860
1,134
Operating profit
-749
-355
Other operating expense, net
-1,844
-2,010
General administrative expenses
-6,454
-7,312
-96,271
-101,874
Cost of sales (including R&D expenses)
Selling expenses
107,178
112,685
Transfer to retained earnings
-1,077
-2,391
Distributable profit
Current assets
1,782
Cash and cash equivalents
49,516
Receivables, securities and other assets
42,700
9,466
Inventories
Non-current assets
Assets
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as that of the Daimler
Group. Daimler AG generally participates in the risks of its sub-
sidiaries and associated companies in line with the percentage
of each holding. Risks and opportunities are described in the
"Risk and Opportunity Report”. O pages 155 ff Risks may
additionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual obli-
gations (in particular with regard to financing), as well as from
the impairment of investments in subsidiaries and associated
companies.
Risks and opportunities
Liabilities increased by €5.3 billion to €50.3 billion, primarily
due to increased financing liabilities, as well as trade payables.
Prepaid expenses
Provisions increased compared with December 31, 2016 by
€2.1 billion to €14.0 billion. This was primarily due to increased
obligations from sales transactions, provisions for warranty
obligations, and provisions relating to legal proceedings.
Dec. 31,
2016
43,838
In millions of euros
Balance sheet structure of Daimler AG
B.35
Cash flows from financing activities resulted in a net cash
outflow of €0.6 billion (2016: €2.7 billion). This is explained by
the reduction compared with the previous year in the cash out-
flow from the Group's internal transactions in connection with
central finance and liquidity management. There were oppos-
ing effects of reduced cash inflows from the lower assumption
of external financing liabilities than in the previous year. Cash
flows from financing activities include the payment of the divi-
dend for the year 2016 in an amount of €3.5 billion.
Cash flows from investing activities resulted in a net cash
outflow of €6.5 billion in 2017 (2016: €6.1 billion). The increase
is primarily a reflection of capital measures within financial
assets as well as increased investment in property, plant and
equipment. Positive effects resulted from acquisitions and
sales of securities within the framework of liquidity management.
Cash provided by operating activities amounted to
€7.2 billion in 2017 (2016: €8.5 billion). The decrease primarily
reflects higher cash-effective contributions to pension plan
assets, increased working capital and higher income tax pay-
ments. On the other hand, utilization of provisions was lower
than in the previous year.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
120
3,477
3,905
Equity increased in 2017 by €1.5 billion to €42.1 billion. This
change primarily resulted from the net profit for 2017, of which,
in accordance with Section 58 Subsection 2 of the German
Stock Corporation Act (AktG), €1.1 billion was transferred to
retained earnings. The equity ratio at December 31, 2017
was 39.2% (December 31, 2016: 41.3%). As stated in the notes to
the annual financial statements according to the German
Commercial Code (HGB), Daimler AG holds no treasury shares
at December 31, 2017.
38,935
The expertise, creativity and motivation of our employees in
research and development are key factors behind our vehicles'
market success. At the end of 2017, Daimler employed 24,600
men and women at its research and development units around
the world (2016: 24,200). A total of 16,800 of those employees
(2016: 16,300) worked at Group Research & Mercedes-Benz Cars
Development, 5,300 (2016: 5,600) at Daimler Trucks, 1,300
(2016: 1,200) at Mercedes-Benz Vans and 1,200 (2016: 1,200) at
Daimler Buses. Around 5,200 researchers and development
engineers (2016: 5,400) worked outside Germany.
50,337
We want to continue shaping mobility through our pioneering
innovations in the years ahead, while moving ahead with
digitization throughout the Group. As announced in our Annual
Report 2016, we therefore increased our very high level of
investment in research and development by 15% to €8.7 billion
in 2017. Of that amount, €2.8 billion (2016: €2.3 billion) was
capitalized as development costs, which amounts to a capitali-
zation rate of 32% (2016: 31%). The amortization of capitalized
research and development expenditure totaled €1.3 billion during
the year under review (2016: €1.3 billion). With a rate of
5.3% (2016: 4.9%), research and development expenditure also
remained at a high level in comparison with revenue. Research in
the year under review focused on new vehicle models, extremely
fuel-efficient and environmentally friendly drive systems, new
safety technologies, autonomous driving systems and the digital
connectivity of our products.
€8.7 billion for research and development
On January 29, 1886, Carl Benz registered a patent for a "vehicle
powered by a gas engine". Since then, we have refined auto-
mobiles with more than 114,000 patents and have launched
pioneering innovations. We continued this tradition in 2017 by
registering nearly 1,900 new ideas for patents, with an increasing
focus on the CASE technologies. These patents are important
to the company primarily for two reasons: Firstly, the patents
secure Daimler a certain amount of "freedom of action" that
enables us to manufacture and sell our products around the world
and avoid legal conflicts with third parties. Secondly, they
enable "exclusivity", the goal of which is to establish exclusive
positioning of selected Daimler features on the market and
thus differentiate ourselves from the competition. In addition
to industrial property rights, which safeguard our innovations
for future mobility over the long term, the unique visual aspects
of our products are protected with more than 7,800 designs
registered in 2017 (2016: 9,100). The decrease primarily reflects
a review of our intellectual-property strategy. Our portfolio of
more than 35,800 trademarks worldwide (2016: 32,800), serves
to protect the Mercedes-Benz brand, our new EQ brand for
electric mobility and all our other product brands in each relevant
market.
Patents ensure freedom of action and safeguard
our brands
-4
+173
11
30
thereof capitalized
202
194
Daimler Buses
+30
238
310
thereof capitalized
+28
442
565
Mercedes-Benz Vans
-21
57
45
thereof capitalized
+5
1,265
The most important development projects at Mercedes-Benz
Cars focused on the successor models of the GLS and GLE
off-road vehicles, the new compact class, the EQ electric brand
and the new generation of diesel and gasoline engines. We also
invested in vehicle connectivity and autonomous driving systems
and in the development of additional innovative safety tech-
nologies. Mercedes-Benz Cars spent a total of €6.6 billion on
research and development in 2017, which once again marked
a significant increase from the prior-year figure (€5.7 billion).
Daimler Trucks invested €1.3 billion in research and develop-
ment projects. The division's most important projects were in the
areas of emission standards and fuel efficiency, customized
products and technologies for important growth markets, and the
successor generations for existing products. R&D expenditure
at Mercedes-Benz Vans focused mainly on the new Sprinter
generation, the expansion of the portfolio in the form of the
new X-Class pickup, and the further development of the Vito and
the V-Class. Daimler Buses primarily focused its development
activities on new products, the fulfillment of future emissions
standards and measures to further reduce fuel consumption.
Alternative drive systems, in particular electrification technology,
also played a key role in our development activities during the
year under review.
7 B.36 7 B.37
Innovation, safety and environmental protection
Innovations for the future of mobility
The fact that Mercedes-Benz provides its customers with
particularly fuel-efficient vehicles has been demonstrated by
the more than 4,000 comparison drives that had been carried
out throughout Europe by the end of 2017. In these comparison
drives, customers tested Mercedes-Benz trucks in their fleet
against vehicles manufactured by the main competitors. The
results speak for themselves: The Mercedes-Benz trucks came
out on top more than 90% of the time, with 11% lower fuel con-
sumption on average.
anticipatory cruise control system, our latest generation of
engines and the Actros with a second-generation drivetrain,
which we presented at the IAA Commercial Vehicles Show in
2016. The new drivetrain technologies will also be used in the
Antos and Arocs truck models.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
124
Energy sources for locally emission-free driving
Clean fuels for internal combustion engines
Energy for the future
Locally emission-free
driving with electric
vehicles powered by
batteries or fuel cells
Hybridization for further
increase in efficiency
with modern conventional
powertrains
Optimizing our vehicles
Road to emission-free mobility
1,322
B.38
Fuel-efficient trucks
Four more members of the all-new engine family made their
debut in 2017: an inline six-cylinder engine (diesel and gasoline
variants), a new four-cylinder gasoline engine and a new
biturbo V8. Forward-looking new technologies such as the
integrated starter-generator (ISG), the 48-volt electrical
system and the electric auxiliary compressor also had their
world premieres. The ISG is responsible for hybrid functions,
such as boost effect and energy recovery, and thus enables fuel
savings that were previously typical of high-voltage hybrid tech-
nology. Our new S-Class models, which have been delivered to
customers since mid-2017, are a particularly good example of
how we have been able to increase fuel efficiency even further.
For example, the Mercedes-Benz S 350 d 4MATIC (fuel con-
sumption in 1/100 km urban: 6.9-6.7/extra-urban: 5.0-4.8/
combined: 5.7-5.5; CO2 emissions, combined: 150-145 g/km)
with its new six-cylinder diesel engine consumes significantly
less fuel than its predecessor, despite higher output, while the
Mercedes-Benz S 450 4MATIC (fuel consumption in l/100 km
urban: 9.6-9.3/extra-urban: 6.0-5.6/combined: 7.3-7.0; CO₂
emissions, combined: 167–159 g/km) achieves outstanding fuel
efficiency with the newly developed M 256 six-cylinder
gasoline engine.
Biggest engine offensive in the history of Mercedes-Benz
The new OM 654 four-cylinder diesel engine, which was
launched in the new E-Class in 2016, is the first member of the
modular engine family that will be utilized across the product
range of Mercedes-Benz Cars and also at Mercedes-Benz Vans.
Several different output ratings are planned for the engine,
which will be installed either longitudinally or transversely in
vehicles with front, rear or all-wheel drive. In this way,
Mercedes-Benz intends to equip its range of diesel cars in
Europe with this engine generation by 2019.
Innovative vehicle and drive-system technologies from Daimler
demonstrate what we have already achieved in this regard.
The following examples illustrate our approach to the mobility
of the future.
We believe that combustion engines will continue to form
the backbone of personal mobility until electric vehicles can
achieve a breakthrough in the market. This is one of the main
reasons why we continue to invest in the improvement of com-
bustion engine technology, thus making a contribution to
reducing the fuel consumption and emissions of each and every
vehicle. At the same time, we have launched a broad-based
electric-mobility offensive at all of our divisions. We are pursuing
a holistic approach here. For example, along with partial and
fully electric drive systems, we are also investing in fast-charging
networks, hydrogen infrastructure and software solutions.
Our drive system strategy for reducing emissions has three
components. First, highly efficient combustion engines remain
part of the solution for us, and this applies to both gasoline
and diesel engines. We are also focusing on additional plug-in-
hybrid and electric vehicle models.
Our "Road to Emission-free Driving" initiative defines the primary
focal points for developing new, extremely fuel-efficient and
environmentally friendly drive-system technologies at all of our
automotive divisions. We are pursuing this approach along the
entire value chain. To this end, we are addressing all relevant
aspects and exploiting potential in all areas of development
for everything from lightweight engineering to optimized aero-
dynamics, the use of clean and efficient fuels, the creation of
electric drive systems, and the implementation of sustainable
mobility concepts.
Our "road to emission-free driving"
123
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
In this context, we are focusing on CASE - these four letters
stand for the four future-oriented strategic fields of connectivity
(Connected), autonomous driving (Autonomous), flexible use
and services (Shared & Services) and electric drive systems
(Electric). We are moving ahead consistently in all of these
areas at all of our divisions, and we are also linking them in an
intelligent way to create a comprehensive target concept for
our vehicles, services and business models. In this manner, we
are underlining our claim to play a dominant role in the
mobility of the future.
We aim for the best possible customer utility, high standards of
safety, environmental compatibility and efficiency. In order to
work on achieving these goals in parallel, we rely on innovative
concepts and environmentally sound product development.
In recent years, we have also continuously reduced the fuel
consumption of our commercial vehicles as well as their CO2
emissions. For example, since 2011, we have been able to
reduce the average fuel consumption of the Mercedes-Benz
Actros heavy-duty truck by a total of about 15% compared to
the proven Actros predecessor model through the introduction of
the new Euro VI model, the Predictive Powertrain Control (PPC)
Liabilities
Daimler Trucks
2,008
9
In billions of euros
Research and development expenditure
B.36
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
122
In order to achieve our ambitious goals, we also cooperate
very closely with research and development units in the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly
bring new technologies to market maturity. Such cooperation is
all the more important in light of the increasing digitization of
processes throughout all stages of the value chain. Strong part-
ners from the supplier industry are also essential for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we aim to
ensure that the Group retains the key technological expertise it
needs to maintain the uniqueness of our brands and safeguard
the future of the automobile in general.
Targeted involvement of the supplier industry
Our international research and development network
Our global research and development network comprises
35 locations in 15 countries. Our biggest facilities are in
Sindelfingen and Stuttgart-Untertürkheim in Germany. Our most
important research facilities in North America are the US R&D
headquarters in Sunnyvale, California; in Long Beach, California;
in Portland, Oregon; and in Redford, Michigan. Our most
important facilities in Asia are in Bangalore, India; the Global
Hybrid Center in Kawasaki, Japan; and our research and
development center in Beijing. Mercedes-Benz Research &
Development India (MBRDI), with headquarters in Bangalore)
is Daimler's largest R&D center outside Germany. Activities at
MBRDI focus on digitization, simulations and data science.
Mercedes-Benz Research & Development China is also an
integral part of the Daimler Group's research network.
Among other things, it plays an important role in understanding
Chinese customers' expectations and local requirements.
Along with our internal activities, we also maintain close contacts
with external research institutions. For example, we work
together with various renowned research institutes around the
world and participate in international exchange programs for
next-generation scientists. In November 2017, we opened new
digital hubs in Tel Aviv and Seattle.
Revenue
Research and development as key success factors
Research and development have always played a key role at
Daimler. Gottlieb Daimler and Carl Benz invented the automobile
more than 130 years ago. Today, we are shaping the future of
mobility. Our goal is to offer our customers fascinating products
and customized solutions for needs-oriented, safe and sus-
tainable mobility. Our technology portfolio and our key areas of
expertise are focused on this objective.
Research and development
The new Daimler Sustainability Report for financial year 2017
will available on the Group's website in late March 2018.
daimler.com/sustainability
Sustainability is one of the basic principles of our corporate
strategy as well as a benchmark for our success as a company.
As a vehicle manufacturer with global operations, we face
industry-specific challenges. To ensure that our business success
is sustainable, we need to exploit the associated opportunities
and minimize the risks. To this end, we have drawn up a Group-
wide sustainability strategy, which is part of our corporate
strategy and makes sustainability a fundamental corporate
principle. Additional information on sustainability at Daimler
can be found in the "Non-Financial Report" section of this Annual
Report pages 214ff. The "Non-Financial Report" is also
available on the Internet at daimler.com/nonfinancial-report.
Sustainability at Daimler
Sustainability and Integrity
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 121
Due to the interrelations between Daimler AG and its sub-
sidiaries and the relative size of Daimler AG within the Group,
we refer to the statements in the "Outlook" chapter, which
largely reflect our expectations also for the parent company.
pages 170 ff For financial year 2018, we expect Daimler
AG to achieve net profit at the level of 2017. This will result from
a higher planned operating profit and a lower income tax
expense, which will be offset by the anticipated decrease in
financial income. We expect Daimler AG to achieve unit sales
and revenue in 2018 at the prior-year level.
Outlook
98,188
107,310
742
900
Deferred income
45,012
∞ 4654321
total
thereof capitalized
8
7
2,388
thereof capitalized
+17
5,671
6,642
Mercedes-Benz Cars
+15
+20
2,315
2,773
thereof capitalized
7,572
8,711
+19
Daimler Group
17/16
% change
2016
2017
Research and development expenditure by division
B.37
2017
2016
2015
2014
2013
0
LLLLL
In millions of euros
2016
11,480
In millions of euros
8,894
9,498
1,169
1,250
thereof current
9,073
9,648
8,893
9,497
180
151
thereof non-current
10,748
990
1
1
989
1,099
Other financial assets
6,801
5,736
-10,933
- 11,045
17,734
16,781
Other assets
1,100
10,063
Marketable debt securities
2,230
80,594
Equity-method investments
4,818
4,098
4,670
4,043
55
Inventories
25,686
25,384
24,492
24,426
1,194
958
Trade receivables
11,990
10,614
9,737
8,977
2,253
1,637
Cash and cash equivalents
12,072
10,981
9,515
8,751
2,557
8,958
Total assets
255,605
9,499
242,988
47,288
-19,435
-20,480
68,181
67,768
thereof non-current
78,378
2017
70,398
21,035
19,029
57,343
51,369
Trade payables
12,474
11,567
11,655
10,853
819
714
Other financial liabilities
11,522
12,869
7,622
9,645
3,900
3,224
48,746
85,896
thereof current
125,524
-61
105,619
1,637
Other liabilities
101,146
9,019
149,986
7,862
141,842
Equity and liabilities
Equity
65,314
59,133
52,936
48,685
12,378
10,448
Provisions
24,617
26,810
23,591
25,768
1,026
1,042
Financing liabilities
127,124
117,686
1,600
-1,451
119,137
-87
148
80,507
Daimler AG
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
118
243 256
22 22
256 243
thereof liquidity
Current liabilities
Current assets
85 88
107 102
- Non-current liabilities
99 103
Equity and liabilities
Equity
59 65
149 141
2016
2017
Non-current assets
Assets
Balance sheet structure Daimler Group
In billions of euros
B.33
- 109
Other liabilities of €14.6 billion (2016: €14.9 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The tax reform in the United States affected the deferred tax
liability. This was offset in particular by an increase in
deferred income due to the expansion of business activity.
Other financial liabilities of €11.5 billion (2016: €12.9 billion)
mainly consisted of liabilities from residual-value guarantees,
liabilities from wages and salaries, deposits received and accrued
interest on financing liabilities. The decrease was primarily
caused by lower negative fair values of currency derivatives.
Trade payables increased to €12.5 billion due to the higher
volume of business (2016: €11.6 billion). The Mercedes-Benz Cars
division accounted for 63% of those payables and the Daimler
Trucks division accounted for 20%.
Financing liabilities of €127.1 billion were above the prior-year
level (€117.7 billion). The increase of €16.2 billion adjusted for
exchange-rate effects was primarily due to the refinancing of the
growing leasing and sales-financing business. 53% of the
financing liabilities were accounted for by bonds, 27% by liabili-
ties to financial institutions, 9% by deposits in the direct
banking business and 9% by liabilities from ABS transactions.
117
B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Condensed version according to the German Commercial Code (HGB)
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
The vehicles are produced at the domestic plants of Daimler
AG, as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its own
sales-and-service network, which is organized in seven regional
centers for cars and seven for commercial vehicles, through
foreign sales subsidiaries and through third parties.
Condensed income statement of Daimler AG
B.34
The net defined-benefit plan asset results from the fair value of
the special-purpose assets in excess of the settlement amount
of the pension obligations. The increase in financial year 2017
to €3.5 billon (2016: €0.9 billion) is primarily due to the extraor-
dinary contribution of €3.0 billion to the German pension plan
assets.
Gross liquidity - defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits
presented under other assets - of €9.6 billion was higher than
a year earlier (2016: €8.5 billion).
Receivables, securities and other assets increased compared
with December 31, 2016 by €3.4 billion to €49.5 billion. The
main reason for this development was growth of €2.3 billion in
receivables due from subsidiaries and associated companies,
as well as the increase in securities of €0.8 billion. Cash and
cash equivalents increased by €0.1 billion to €1.8 billion.
Inventories increased compared with December 31, 2016
by €0.4 billion to €9.5 billion. The increase is mainly related to
finished products and goods.
Non-current assets increased by €2.6 billion to €42.7 billion,
mainly due to the higher amounts of financial assets and fixed
assets. Investment in property, plant and equipment (excluding
leased assets, approximately €3.1 billion) mainly comprises
investments for the production of the new A-Class models and
the new Sprinter, as well as investments in engine and trans-
mission projects.
The balance sheet total of €107.3 billion is €9.1 billion higher
than at year-end 2016. 7 B.35
capital resources
Financial position, liquidity and
The economic situation of Daimler AG is primarily deter-
mined by its business operations and those of its subsidiaries.
Daimler AG participates in the operating results of its sub-
sidiaries through profit distributions. The economic situation of
Daimler AG is therefore fundamentally the same as that of
the Daimler Group, which is described in the chapter "Overall
Assessment of the Economic Situation".
page 134
Net profit decreased from €5.9 billion to €5.0 billion, and was
thus in line with the expectations stated in the "Outlook"
section of last year's Annual Report. The development primarily
reflects the lower operating profit as well as a higher income
tax expense. There was an opposing effect from the improved
financial income.
The income tax expense amounts to €2.0 billion (2016:
€1.4 billion). The increase primarily reflects tax expenses for
prior periods relating to tax assessments of previous years.
The figure for 2016 includes tax benefits recognized for prior
periods.
Financial income increased by €0.4 billion to €5.9 billion, pri-
marily due to improved income from investments in subsidi-
aries and associated companies. This mainly reflects increased
dividend distributions as well as lower impairments of invest-
ments in subsidiaries. On the other hand, financial income was
affected by increased interest expense relating to pensions.
This primarily resulted from a decrease in the discount rate. In
the previous year, there was a positive effect from a change
in the law on the calculation of the discount rate.
Other operating expense, net amounted to €0.4 billion
(2016: €0.7 billion). The prior-year figure mainly comprised
expenses in connection with a legal proceeding. 7 B.34
General administrative expenses of €2.0 billion were
slightly above the prior-year level (2016: €1.8 billion). In relation
to revenue, they amounted to 1.8% (2016: 1.7%).
Selling expenses increased by €0.9 billion to €7.3 billion. This
was primarily due to higher expenses for marketing, commis-
sions and outgoing freight. As a proportion of revenue, selling
expenses increased from 6.0% to 6.5%.
119
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Daimler AG slightly increased its unit sales in 2017, as had been
forecast in the previous year. Unit sales in the car business
increased by 3% to 1,870,000 vehicles¹. The SUV segment was
particularly successful in 2017, with a 16% increase in sales
to 639,000 units¹. The E-Class segment recorded growth of 11%
to 274,000 units¹. Due to the lifecycle of the C-Class, sales of
336,000 units in this segment were lower than in the previous
year (2016: 375,000). Sales of trucks amounted to 106,000
(2016: 101,000) units¹ and sales of vans increased by 5% to
357,000 units¹.
The development of profitability was affected in financial year
2017 by the decrease in operating profit by €0.7 billion to
€1.1 billion, as well as by the increase in financial income by
€0.4 billion to €5.9 billion. 7 B.34
Profitability
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
to subsidiaries of Daimler AG, as well as contract manufacturing by
Daimler AG are not counted in unit sales.
Cost of sales increased by 6% to €101.9 billion. Increases in
unit sales and expenses for new products and technologies led
to higher cost of sales. Research and development expenses,
which are included in cost of sales, were significantly higher than
in the previous year at €7.6 billion (2016: €6.6 billion); as a pro-
portion of revenue, they amounted to 6.8% (2016: 6.1%). Research
and development expenses were primarily related to the
renewal and expansion of the product portfolio, especially with
regard to the model series of the SUVs, the compact class
and the S-Class, as well as the successor model of the Sprinter.
In addition, work is continuing on new generations of engines,
alternative drive systems and the intensification of the module
strategy. At the end of the year, approximately 20,000 people
were employed in the area of research and development.
Revenue increased by €5.5 billion to €112.7 billion and was
thus higher than our expectations as stated in the "Outlook"
section of last year's Annual Report. Revenue in the car
business increased by 6% to €87.0 billion due to higher unit
sales of vehicles and components. Despite the termination
of a contract-manufacturing agreement, revenue in the com-
mercial-vehicle business increased by 1% to €25.7 billion.
The main performance indicators for Daimler AG are unit sales,
revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). This results in some differ-
ences with regard to recognition and measurement, primarily
relating to intangible assets, provisions, financial instruments,
the leasing business and deferred taxes.
Daimler AG is the parent company of the Daimler Group and is
domiciled in Stuttgart. Its principal business activities comprise
the development, production and distribution of cars, vans and
trucks in Germany and the management of the activities of the
Daimler Group.
1 The columns,,Industrial business" and „Daimler Financial Services" represent a business point of view.
Further information on the assets presented in the statement of
financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
see page 240, the Consolidated Statement of Changes in
Equity see page 242 and the related notes in the Notes to the
Consolidated Financial Statements.
149,986
2016
2017
2016
Intangible assets
13,735
12,098
141,842
11,199
946
899
Property, plant and equipment
27,981
2017
26,381
26,314
67
67
Equipment on operating leases
47,714
46,942
18,711
17,433
29,003
29,509
Receivables from financial services
85,787
27,914
2016
12,789
At December 31,
101,146
105,619
242,988
255,605
Total equity and liabilities
2017
6,339
7,646
8,215
14,923
116
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Other financial assets increased by €1.1 billion to €6.8 billion.
They primarily consisted of derivative financial instruments,
equity instruments in non-consolidated subsidiaries and other
investments, as well as loans and other receivables due from
third parties. The increase was primarily attributable to higher
positive fair values of currency derivatives.
7,277
The Group's equity increased compared with December 31,
2016 from €59.1 billion to €65.3 billion; adjusted for the effects
of currency translation, the increase amounted to €8.8 billion.
The increase in equity was mainly due to net profit of €10.9 billion
see page 104 and the remeasurement of derivative financial
instruments not recognized in profit and loss of €1.7 billion. The
increase was partially offset by the dividend of €3.5 billion paid
out to Daimler's shareholders and effects from currency trans-
lation of €2.7 billion. Equity attributable to the shareholders
of Daimler AG increased to €64.0 billion (2016: €58.0 billion).
Other assets of €9.0 billion (2016: €9.5 billion) primarily com-
prised deferred tax assets and tax refund claims. The decrease
in deferred tax assets primarily related to effects from the
measurement of derivatives not recognized in profit and loss.
14,554
At December 31,
At December 31,
Industrial Business²
Consolidated
Daimler Financial
Services
Assets
in millions of euros
Statement of financial position'
B.32
Provisions decreased from €26.8 billion to €24.6 billion; as
a proportion of the balance sheet total, they were slightly
below the prior-year level at 10% (2016: 11%). They primarily
comprised provisions for pensions and similar obligations
of €5.8 billion (2016: €9.0 billion), which mainly consists of the
difference between the present value of defined benefit
pension obligations of €31.7 billion (2016: €31.2 billion) and the
fair value of the pension-plan assets applied to finance those
obligations of €27.2 billion (2016: €23.4 billion). The decrease
in provisions for pensions and similar obligations is primarily
due to the extraordinary contribution of €3.0 billion into the
German pension plan assets. Provisions also related to liabili-
ties from income taxes of €1.6 billion (2016: €1.7 billion), from
product warranties of €6.7 billion (2016: €6.1 billion) and for
personnel and social costs of €4.4 billion (2016: €4.3 billion),
as well as other provisions of €6.2 billion (2016: €5.7 billion).
In relation to the 5% increase in the balance sheet total, equity
increased by the disproportionally high rate of 10%. Due to the
effects described above, the Group's equity ratio of 24.0% was
above the level at the end of 2016 (22.9%); the equity ratio for
the industrial business was 46.4% (2016: 44.7%). It is necessary
to consider that the equity ratios at the end of 2016 and 2017
are adjusted for the paid and proposed dividend payments.
Electric vehicles from Mercedes-Benz Vans
Mercedes-Benz Vans plans to offer all of its commercial van
models with electric drive systems. This has already started
with the mid-size eVito, which has been available for ordering
since the end of November 2017; deliveries are scheduled to
start in the second half of 2018. The eVito is the second all-
electric production model from Mercedes-Benz Vans; the first
was the Vito E-Cell from 2010. With an installed battery capacity
of 41.4 kWh, the new eVito will have a range of up to 150 kilo-
meters. Even under unfavorable conditions, such as low outside
temperatures and with a full payload, the van will have a range
of up to 100 km. The mid-size van is thus perfect for inner-city
deliveries and other commercial operations, as well as for
passenger transport. The battery can be fully charged in around
six hours, and dynamic performance is ensured by an output
of 84 kW and torque of up to 300 Nm. In terms of top speed,
customers can choose between two options: The first is a
maximum speed of 80 km/h, which meets all requirements in
city traffic and metropolitan areas, while also conserving
energy and increasing the vehicle's range. If things need to move
faster, the customer can choose a top speed of up to 120 km/h.
The electric Vito is to be followed by the eSprinter in 2019; the
electric van product range will then be rounded out by the Citan.
With the establishment of the IONITY joint venture, the BMW
Group, Daimler, Ford Motor Company and the Volkswagen
Group with Audi and Porsche have laid the foundation for the
creation of the most effective rapid-charging network for
electric vehicles in Europe. The goal is to install about 400
rapid-charging stations along major routes in Europe by 2020.
In March 2017, Daimler acquired an equity interest in the
American charging solutions provider, ChargePoint Inc. This
investment ensures the Group's access to other customer-
focused electric mobility services. ChargePoint offers solutions
for every segment of the electric mobility charging ecosystem,
which includes companies, the retail sector, public institutions,
fleet customers and private households. In terms of technology,
ChargePoint makes use of the standardized Combined Charging
System (CCS) in Europe, which will enable it to offer maximum
compatibility for future electric vehicle models of all brands.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 127
Intelligent charging solutions for electric mobility
For the electrification of the drivetrain, we are employing a holis-
tic approach that includes both electric vehicles and a broad
range of services needed for electric mobility. Our approach
ranges from the provision of green electricity to intelligent
charging solutions for the home that include customized services
and home energy storage units operating in tandem with
photovoltaic units on roofs, for example.
The holistic electric drive strategy at Mercedes-Benz Vans
focuses not only on the electric van itself, but also on a tech-
nological ecosystem that is optimally aligned with customers'
business needs. This holistic strategy provides for an innovative
complete system solution that covers the entire value chain
for commercial applications. For this reason, strategic partners
and their sector expertise are being incorporated into the
development process at an early stage. One example of this is
our partnership with the Hermes logistics services company.
This partnership was launched with pilot programs in Hamburg
and Stuttgart at the beginning of 2018. After those programs
are completed, we want to spread the application of the electric
fleet, which is to be used for parcel deliveries and encompass
a total of 1,500 electric Vito and Sprinter vans by 2020, to other
urban areas. The strategic partnership also involves the joint
development of a concept for an efficient charging infrastructure
at Hermes logistics centers, as well as IT services to ensure
optimum management of the electric fleet.
Our vision of accident-free driving
In the future, Daimler plans to offer its commercial vehicle
customers a comprehensive lineup of battery-electric vehicles
ranging from vans and light trucks to heavy-duty distribution
trucks and electric city buses.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
We plan to deliver more than 500 of these trucks to customers
over the coming years. All the experience we gain with the small
production series will flow into the further development of the
battery-electric Canter, with plans for volume production to
begin in 2019. The eCanter can make a contribution to reducing
noise in large cities.
All-electric trucks are a component of Daimler Trucks' com-
prehensive electric offensive, which includes the light-duty FUSO
eCanter, which we launched in a small production series on a
global scale in July 2017. The first 150 vehicles are destined for
selected customers in Europe, Japan and the United States.
Our electric truck concept met with a very positive response,
as evidenced by the many inquiries we received from our
customers after we presented the truck at the IAA Commercial
Vehicles Show in October 2016. We forged ahead with the
development, establishment and testing of our Customer Inno-
vation Fleet in 2017. In 2018, we intend to begin practical tests
of our Mercedes-Benz Electric Truck Innovation Fleet for heavy-
duty distribution transportation with customers under real-life
conditions. These tests will allow us to gain further knowledge
about logistics processes and operating costs with electric
trucks. The results will be incorporated into new business models
for all-electric trucks for heavy-duty distribution transportation
within cities.
Electric trucks for heavy-duty distribution transportation
In July 2016, we became one of the first commercial vehicle
manufacturer to present an all-electric truck for heavy-duty
distribution transportation. The planned key specifications of
this Mercedes-Benz vehicle are as follows: a battery output
of 212 kWh, a range of up to 200 kilometers and a payload of
12.8 metric tons with a gross vehicle weight of 26 metric tons.
Vehicles not in use could store energy, and a bidirectional
charging system would allow cars with surplus energy to return
it to the power grid. In this manner, smart is assuming
responsibility for an important function for the energy transition.
126
Vehicle safety is one of our core areas of expertise and a key
component of our product strategy. The Mercedes-Benz brand
has been shaping the development of safety systems for
decades. The company's innovations, especially those for pro-
tecting vehicle occupants and other road users, have saved
countless lives. Today, Daimler continues to set standards with
regard to safety. Our vision of accident-free driving will
continue to motivate us to make mobility as safe as possible
for everyone in the future.
During the Tokyo Motor Show in October 2017, Daimler
announced that it will completely electrify its full range of FUSO
trucks and buses in the years ahead. With E-FUSO, we are
now the first truck manufacturer to launch a product brand for
electric mobility with trucks and buses. The E-FUSO Vision One,
which was presented for the first time in Tokyo, is a concept for
an all-electric heavy-duty truck with a GVW of approximately
23 metric tons and a payload of around 11 metric tons - which
is only two tons less than the payload of the diesel version.
With a battery capacity of 300 kWh, the E-FUSO Vision One has
a range of up to 350 kilometers. One potential application for
the electric heavy-duty truck is regional inner-city and intra-city
distribution. Growing customer interest, the development of
the necessary infrastructure, and new regulatory measures are
promoting the electrification of road transport. In this situation,
it may be possible to launch the series-produced version of the
E-FUSO Vision One within the next four years in highly developed
markets such as Japan or Europe.
Partially automated driving in the upgraded S-Class
B.39
Cooperation with Bosch
10%
14%
Science & Technology &
Environment
Political dialog
6%
1%
Funding through foundations
Our activities in areas such as sports, science and research are
carried out under the auspices of foundations. For example,
we use the Daimler and Benz Foundation to fund interdisciplinary
research that addresses issues related to the interaction
between humans, the environment and technology. We also
support interdisciplinary research projects with the Daimler
Fund in the Donors' Association. This fund has helped create
several endowed professorships, such as the one for "Elec-
trified Commercial Vehicle Drive Systems" at Esslingen Univer-
sity of Applied Sciences, the junior endowed professorship for
"Sensor Merging and Tracking Driver Assistance Systems" at
Ulm University of Applied Sciences, and the junior endowed
professorship for “Digital Transformation" at Freie Universität
Berlin.
The Laureus Sport for Good Foundation uses sports to help
achieve sustained improvement of the lives of socially disad-
vantaged or sick children and teenagers. A large number of
children and teenagers around the world have participated in
Laureus sports projects and in this manner have been able to
discover their own strengths and potential for the first time.
For example, donations from the Laureus Sport for Good Foun-
dation were used to fund the Indigo Youth Movement project in
South Africa. Here, a camp was set up near Durban in which
young villagers were taught how to skateboard. The camp
community offers them a protected environment in which they
can develop greater self-confidence and learn how to improve
their lives.
More information on the projects promoted by the Group and
the activities related to our social commitment can be found in
the Daimler Sustainability Report and on our website under
"Sustainability". ④daimler.com/sustainability
Further information on social matters can be found in the
Non-Financial Report of this Annual Report.
pages 227 ff
132
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Integrity, compliance and legal responsibility
For Daimler, integrity, compliance and legal responsibility are
not merely abstract concepts - they are inseparable from our
daily business activities. That is because only those who act
responsibly can achieve sustained success over the long term.
For us, this involves more than just obeying laws, as we also
seek to align our activities with shared principles and values.
Organizationally established at the highest level
Because of their strategic significance, we have combined the
responsibilities for integrity, compliance and legal affairs within
a single area headed by a member of the Board of Management.
This division supports the business divisions and units in their
efforts to ensure that these issues remain an integral com-
ponent of their organizations. We view integrity and compliance
as firm elements of our corporate culture that contribute to
our company's lasting success and are already a natural part of
our daily business. The basis for this is our Integrity Code,
which defines guidelines for our everyday business conduct,
offers our employees orientation, and helps them make the
right decisions even in difficult business situations. The Integrity
Code is supplemented by other in-house principles and
guidelines.
A culture of integrity
Integrity is one of the four corporate values that form the
foundation of our business activities. For us, integrity means
acting in accordance with ethical principles. This also includes
our determination to ensure compliance with all applicable laws,
internal regulations and voluntary commitments. We expect all
of our employees and business partners to adhere to the princi-
ples of our culture of integrity out of a sense of conviction. Our
goal is to make integrity a permanent part of our corporate
culture.
Organization of integrity management
69%
Charity & Community
Arts & Culture
Education
Donations and sponsoring in 2017
B.41
Employee qualification
We support our staff with training and continuing education
opportunities throughout their entire careers in order to
safeguard the long-term innovative capability and outstanding
performance of our workforce. Our range of qualification
measures includes practical training courses, e-learning, semi-
nars, workshops, specialist conferences and financial support
for employees who conduct a course of study while continuing
to work.
Health management and occupational safety
Healthy and motivated employees are important for our
competitiveness. We therefore promote the health and safety
of our employees through numerous programs that focus on
adequate protective measures, ergonomics, the provision of
medical care, nutritional advice, individual exercise courses
and much more. Daimler has a separate function - the Health
& Safety department - that is dedicated to promoting and
ensuring occupational health and safety. This department
defines, coordinates and monitors all measures associated
with occupational safety, occupational healthcare and the
promotion of good health and a healthy lifestyle.
Further information on employee matters can be found in the
Non-Financial Report of this Annual Report.
pages 222 ff
Social responsibility
The goals associated with our social commitment
As a group of companies with global operations, we regard it
as both our responsibility and our obligation to support social
progress around the world. That is because for us, business
success and social responsibility go hand in hand. As a company,
we strive to contribute to the advancement of society and to
effectively shape, help and promote its development in order to
create recognizable benefits.
In 2017, we spent more than €60 million on donations to non-
profit institutions and on sponsorships of socially beneficial
projects. This does not include our foundations and corporate
volunteering activities or self-initiated projects.
DaimlerWeCare
It is very important to us that our various locations and the
people who work there identify with our activities. We therefore
support the efforts of our employees to promote the common
good, and we also work to improve the social environment in the
communities where we operate. In this context, we focus on
the one hand on fields of action that arise from our role as a
"good neighbor". On the other hand, we are involved in projects
in which we can contribute specific expertise and our core
competencies as an automaker.
The Integrity Management unit is responsible for the long-term
promotion of the culture of integrity at our company. The unit's
experts for change management, corporate-responsibility
management, training, consulting and communication develop
innovative and employee-focused approaches that promote a
culture of integrity at the company. These experts also support
disseminators throughout the Daimler organization in their
integrity-related activities. The unit's goal is to further establish
and maintain a common understanding of integrity in order to
reduce risks and help ensure the sustained success of the com-
pany. The Head of Integrity Management reports directly to
the member of the Board of Management responsible for Integ-
rity and Legal Affairs.
We also initiate a variety of aid and assistance projects around
the globe. For example, we implement measures to strengthen
communities and promote education, science, the arts and
culture, and nature conservation, and we also support initiatives
that improve road safety. 7 B.41 All of these issues are
addressed in various projects organized and managed under
the DaimlerWeCare brand. Our approach here is based
on three pillars: "For our employees", "For our locations" and
"Worldwide".
For our employees
Since 2006, Daimler Financial Services has been staging a
Day of Caring that focuses on non-profit projects that help local
communities. Under the motto "Offering help where help is
needed", thousands of employees around the world once again
rolled up their sleeves and lent a hand in 2017 by leaving their
offices and picking up a paintbrush, hammer or garden rake.
A wide variety of social institutions and initiatives were
supported - from hospitals and kindergartens to the SOS
Children's Villages organization.
The ProCent initiative is another example of our employees'
commitment to society. In this initiative, Daimler employees
voluntarily donate the cent amounts of their net salaries to
socially beneficial projects. The company matches every cent
that is donated. More than €800,000 was collected in this
manner in 2017. One of the recipients of donations from the
ProCent initiative in 2017 was the Spitalverein Offenburg
voluntary hospital aid association, which used a donation of
around €10,000 to help build a new 250-square-meter play-
ground for young patients at Ortenau Hospital in Offenburg-
Gengenbach.
For our locations
We support a wide variety of initiatives that strengthen the
communities at our locations. The integration of refugees is a
very important issue in Germany, for example. Here, we support
not only labor market integration with our “bridge internships",
but also the social integration of people who have been forced
to flee their homes. A key aspect here involves improving
access to education with programs such as our Genius knowledge
community and the Daimler Children's University in Sindelfingen.
We want to help preserve the diversity of natural habitats for
future generations. For many years now, we have therefore been
supporting projects and initiatives carried out by environmental
organizations near our locations around the world. One such
project, which is being conducted in cooperation with the
Global Nature Fund, is helping to restore severely damaged
mangrove forests in Asia. Environmental protection measures
and specific funding programs – near our production location
in Chennai in southern India, for example - are being
implemented to get the local population extensively involved
in the project. The goal here is to work with local partner
organizations to restore the mangrove forests to their original
state and then ensure that they remain protected.
Worldwide
Another environmental project that Daimler is supporting in
cooperation with the Global Nature Fund is EcoKarst. The
objective of this project is to contribute to the protection and
sustainable economic development of seven protected karst
areas in the Danube region. The idea is to achieve a balance
between the maintenance and strengthening of ecosystems
and their sustainable use.
In India, Brazil and Mozambique, we are carrying out projects
with Caritas International that promote the sustainable use of
water resources. Climate change is threatening to make entire
tracts of land uninhabitable in those three countries. Project
workers are creating reliable water supply systems and providing
training and useful knowledge to local farmers. As a result,
the farmers can now cultivate plants that do not require addi-
tional irrigation, such as tamarind and passion fruit.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 131
We had 8,097 apprentices and trainees throughout the Group
at the end of 2017 (2016: 7,960). Of that number, 4,409 were in
a training program at Daimler AG (2016: 4,824). A total of 1,278
young people began their vocational training at Daimler during
the year under review (2016: 1,662), and 1,197 of them were
hired after completing their apprenticeships (2016: 1,448).
Our Integrity Code forms the basis of our business conduct.
The Integrity Code is one of the most important results of the
employee dialogues we have been conducting since 2011. It is
based on a shared understanding of values agreed upon with our
employees, and it lays out the principles for our everyday
business conduct. These principles are based on compliance
with laws. They include fairness, responsibility, mutual respect,
transparency and openness. The Code applies for all employees
of Daimler AG and the Group and is available in 23 langua-
ges. A guide is available on the Group's intranet to support
the employees in their application of the Code in everyday
situations, providing answers to frequently asked questions.
daimler.com/sustainability/integrity/at-a-glance.html
Our Integrity Code also defines requirements for executives and
managers, who are expected to serve as role models in terms
of ethical behavior and to provide employees with orientation.
To help them optimally fulfill their responsibilities, the new
web-based Integrity@Work training program includes a manage-
ment module that is compulsory for all management staff and
which communicates a shared understanding of the role of our
executives and managers with regard to integrity, compliance
and the law. Furthermore, selected seminars during the training
of new managers and the further training of senior executives
include modules on the subject of integrity.
We continue to expand our core business as a basis for us to
take a leading role in the new CASE areas. CORE and CASE are
inseparably connected and mutually dependent. In this context,
we need a corporate culture that strengthens and supports both
areas. In order to enhance our focus on markets and custom-
ers and to facilitate cooperation with other companies, we are
reviewing whether we should make our divisions even more
independent.
We succeeded in strengthening our core business also in the
year 2017, with significant increases in the Daimler Group's rev-
enue, unit sales and EBIT. The growth targets we announced at
the beginning of the year were in some cases actually surpassed.
In the year under review, we increased our unit sales to a total
of 3.3 million cars and commercial vehicles (2016: 3.0 million),
enabling us to further strengthen our market positon in the core
business. Thanks to numerous new and successful products,
Mercedes-Benz Cars and Mercedes-Benz Vans sold more vehicles
than ever before. The consistency of our growth path is dem-
onstrated by the fact that December 2017 was the 58th consec-
utive record month for sales to end-customers at Mercedes-
Benz Cars. The Daimler Trucks and Daimler Buses divisions also
significantly increased their unit sales. And driven above all
by the positive development of the automotive business and a
further increase in the proportion of those vehicles leased
The Daimler Group's operating profit (EBIT) of €14.7 billion
was significantly higher than in the previous year (€12.9 billion).
The divisions Mercedes-Benz Cars, Daimler Trucks and Daimler
Financial Services all achieved significant EBIT growth, while
Mercedes Benz Vans and Daimler Buses maintained their high
level of prior-year earnings. In the overall vehicle business, return
on sales we achieved our target value of 9%. Daimler Financial
Services' return on equity of 17.6% surpassed its target of 17%.
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 22.9%
(2016: 19.1%). We therefore once again earned substantially more
than our targeted minimum return on capital employed (8%).
This is reflected by our value added of €7.2 billion, which was
significantly higher than the prior-year figure (2016: €5.2 billion).
In line with the ongoing high level of earnings, we continue
to have very sound key financial metrics. This was confirmed
by the rating agencies in their publications during the year. In
early February 2017, Moody's raised Daimler's long-term credit
rating from A3 to A2 and the short-term rating from P-2 to P-1.
And in November 2017, the Canadian rating agency DBRS also
raised the long-term rating from A (low) to A.
The Group's overall equity ratio and the equity ratio of the indus-
trial business increased in the year under review to 24.0% and
46.4% respectively (2016: 22.9% and 44.7%). The net liquidity of
the industrial business decreased to €16.6 billion at the end
of 2017 (2016: €19.7 billion). This decrease is almost entirely
explained by an extraordinary contribution of €3 billion to the
German pension plan assets of Daimler AG. Mainly for the same
reason, the free cash flow of the industrial business - the
parameter we use to measure financial strength - decreased
to €2.0 billion (2016: €3.9 billion). Without this effect, at
€5.0 billion the free cash flow of the industrial business would
have been higher than in the previous year and higher than
the dividend distribution in the year 2017, despite a significant
increase to in advance expenditure for new products and tech-
nologies.
B | COMBINED MANAGEMENT REPORT | EVENTS AFTER THE REPORTING PERIOD
135
We want our shareholders to participate appropriately in the
very good level of earnings achieved by Daimler once again
in 2017. At the Annual Shareholders' Meeting on April 5, 2018,
the Board of Management and the Supervisory Board will
therefore propose a dividend of €3.65 per share (prior year:
€3.25). The dividend distribution will thus increase to the
record level of €3.9 billion (prior year: €3.5 billion).
On the basis of our profitable core business, we increased the
expenditure for securing our future in 2017 from an already very
high level by a total of €2.0 billion to €15.5 billion: €8.7 billion for
research and development (2016: €7.6 billion) and €6.7 billion for
investment in property, plant and equipment (2016: €5.9 billion).
This substantial expenditure is necessary because we, as the
inventor of the automobile, intend to play a major role in shaping
the mobility of the future. To achieve this goal, we are increas-
ingly focusing on CASE - the four strategic areas for the future:
connected, autonomous, shared and services, and electric.
We intend to be leaders in each of these areas and to utilize
additional potential by linking up the four areas.
We see great growth opportunities in the area of electric
mobility in particular. By the year 2022, we aim to electrify each
segment across the entire Mercedes-Benz portfolio. Our goal
is to offer our customers at least one electrified alternative in
each segment - from the compact car to the large SUV. In total,
we plan to launch more than 50 electrified versions, including
more than ten fully electric vehicles, the plug-in hybrid versions
and the models with 48-volt technology. Under the new brand
EQ, which stands for electric intelligence, we offer Mercedes-
Benz Cars' customers both vehicles and services in connection
with electric mobility. We are progressing with electrification
also with our commercial vehicles. With the FUSO eCanter, our
first fully electric light-duty truck from a limited production
series, we started deliveries to customers in 2017; unlimited
large-series production is to start in 2019. The Mercedes-Benz
electric truck concept vehicle shows how fully electric transport
is possible with a gross vehicle weight of up to 26 tons. Electric
drive will soon be available also for vans from Mercedes-Benz:
The eVito will be available as of the second half of 2018 and
the eSprinter is to follow in 2019. And Daimler Buses plans to
put a fully electric bus on the road in 2018.
With the upgraded S-Class, Mercedes-Benz has taken another
step towards automated driving. For example, Active Distance
Assist DISTRONIC and Active Steering Assist have been further
developed with new and modified functions. Daimler Trucks
also has a leading position in the field of autonomous driving.
Platooning concepts, electronically linking up several trucks
driving in a convoy, are gaining importance as an intermediate
stage. We successfully tested the system under real-life condi-
tions in Europe on several occasions in 2016, and we plan to test
platooning in real operation with fleet customers in the United
States as of 2018.
Daimler Financial Services is a pioneer in the field of shared
and services with its mobility services. We invested in the
expansion of these businesses in 2017 and we aim to achieve
further growth with them. The total number of registered
users of our mobility services increased to 17.8 million at the
end of 2017. With car2go, Daimler is the world's leading
company for flexible car sharing. The Daimler subsidiary mytaxi
is the market leader for taxi-ordering apps in Europe, and
with moovel, we offer our customers a platform with which they
can optimally compare, combine, book and pay for various
mobility services.
In order to successfully make the transition from vehicle pro-
ducer to full-range supplier of innovative mobility solutions,
we must adapt our company to face the new challenges. In doing
so, we aim to combine the flexibility and risk culture of the
digital industry with the perfection and innovativeness of our
company's strong traditions. Together with our workforce,
we are therefore developing a new and flexible corporate culture
under the roof of "Leadership 2020". In addition, we are work-
ing in "Project Future" on how we can change our divisions into
legally independent entities, in order to further focus and
strengthening the divisional structure of the Daimler Group.
With the four strategic areas for action - CORE, CASE, CULTURE
and COMPANY - we have set the course for a successful
future. Against this backdrop, we look to the coming years with
great confidence, and aim to continue our profitable growth.
Events after the
Reporting Period
Since the end of the 2017 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2018 confirms the
statements made in the “Outlook" section of this Annual Report.
4. COMPANY (strengthening the divisional structure)
3. CULTURE (adapting the corporate culture)
2. CASE (leading in new future fields)
1. CORE (strengthening the global core business)
In addition, integrity and compliance requirements are impor-
tant criteria for the target achievement of our executives.
They are also part of the agreed objectives for the remuneration
of the Board of Management.
Contact and advice center
page 138
Our "Infopoint Integrity" is available to our employees around
the world as a central contact and advice center. The Infopoint
team offers advice on integrity-related issues in the daily working
environment and puts employees in touch with the right contact
partner if necessary. A worldwide network of local compliance
and legal contact persons is also available to our employees.
Communication measures
We conduct an ongoing open dialogue with our employees in
order to ensure that ethical behavior continues to be established
in the company's daily business. We regularly address integrity
issues in our internal media and make a wide range of materials
available to our business units. During the year under review,
we introduced an app that provides information on integrity,
compliance and legal affairs. We also place great value on
face-to-face discussions. For this reason, we regularly conduct
individually designed dialogue events with employees at all
levels of the hierarchy, as well as with external stakeholders.
These events are held both in Germany and at our locations
abroad.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
133
We use various event formats to get employees to think about
integrity by approaching the issue from different perspectives.
At these events, we also increase the participants' awareness
of the importance of making ethical decisions. For example,
we conduct business simulations that enable employees to
experience and discuss the relevance of integrity to daily
business operations from a new viewpoint. The things we
focused on in 2017 included events that addressed the topic of
integrity in technical fields. We also have a network of integrity
contact persons who help the business units address specific
issues in a targeted manner. In addition, we produce target-
group-specific materials for managers who wish to raise aware-
ness of integrity and potential ethical dilemma situations in
their departments.
Requirements for management staff
Compliance and legal responsibility
Our Compliance Management System (CMS) serves
as the foundation
Our Compliance Management System (CMS) is designed to
prevent inappropriate or illegal behavior by Daimler and its
employees. The measures needed for this are defined by Group
Compliance and the Legal department in a process that also
takes the company's business requirements into account. Our
CMS consists of basic principles and measures that aim to
ensure compliant behavior throughout the company. The CMS
is based on national and international standards and is
applied on a global scale at all Daimler AG units and majority
holdings. The systematic minimization of compliance risks is
also extremely important, and for this reason we analyze and
assess the compliance risks of all our business units every year.
These analyses are based on centrally compiled information on
all business units; specific additional details are taken into
account in line with the given risk assessment. The results of the
analyses form the basis of our risk management.
More detailed information on the Daimler Compliance Manage-
ment System can be found in the "Non-Financial Report"
section of this Annual Report.
pages 229 ff
In order to ensure an independent external assessment of
our Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with the 980 standards
of the Institute of Public Auditors in Germany. This audit,
which was based on the principles of appropriateness and
effective implementation, was successfully completed at
the end of 2016.
134 B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
Overall Assessment of the Economic Situation
In the opinion of the Board of Management, the Daimler Group's
economic situation continues to be very satisfactory at the
time of publication of this Annual Report. In recent years, we
have implemented our strategy effectively and with great
determination. This has led us onto a stable and profitable growth
path, along which we have made great progress, also in the
past year. We will continue along that path in order to remain
sustainably competitive and profitable. Against this backdrop,
we intend to take the lead in shaping the fundamental transfor-
mation process of the automotive industry.
For that purpose, we have prioritized four strategic areas for
action, which are closely interrelated:
Compliance is an indispensable part of the culture of integrity
at Daimler. For us, compliance means acting in accordance
with laws and regulations. Our objective here is to ensure that
all Daimler employees worldwide are always able to carry out
their work in a manner that is in compliance with applicable laws,
regulations, voluntary commitments and our basic values, as
is set out in binding form in our Integrity Code. Our compliance
activities focus on adhering to all applicable anti-corruption
regulations, the maintenance and promotion of fair competition,
adherence to legal and regulatory stipulations related to product
development, the observance of and respect for human rights,
compliance with data protection laws and our own data pro-
tection policy, adherence to sanctions and the prevention of
money laundering. Our Legal and Compliance department
advises and supports all of our corporate units worldwide with
regard to their business operations, processes and services,
in order to minimize legal and business risks.
With the upgraded S-Class, Mercedes-Benz has taken a further
step toward autonomous driving. For example, new and modified
features have been added to the DISTRONIC active proximity
control and the Active Steering Assist systems. Another highlight
in the new S-Class is the route-based speed adaptation system,
which uses map and navigation data to control handling. With
these and other intelligent equipment features, the new luxury
sedan marks another major step toward autonomous driving.
Improved systems with a range of up to 250 meters enable
even more comfortable automated driving on all types of roads.
In addition, Mercedes-Benz uses Active Body Control with
ROAD SURFACE SCAN system and the CURVE curve-tilting func-
tion to improve ride comfort even further with the help of
intelligent sensors.
Daimler takes a holistic approach to securing young talent.
Our "Genius" initiative gives children and teenagers valuable
insights into future technologies and information about jobs in
the automotive industry. Along with technical and commercial
apprenticeships and dual courses of study, we also conduct
various activities that address young talent. In addition, we offer
extensive possibilities to personally interact with the company
via social media, hackathons, competitions and internships.
After university students graduate, we offer them attractive
opportunities to join our company directly or launch their careers
at Daimler by taking part in our global CAReer training program.
Further details are provided in the Corporate Governance
Report on pages 203 ff of this Annual Report.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 129
The workforce
Slight increase in the number of employees
On December 31, 2017, the Daimler Group employed a total
of 289,321 men and women (2016: 282,488). As was forecast
in Annual Report 2016, the number of employees increased
slightly (+2%). This increase was primarily a result of the positive
business situation throughout the Group. Workforce numbers
increased at all divisions in 2017. 71 B.40
The number of employees in Germany increased from
170,034 in 2016 to 172,089 in the year under review. Whereas
employee numbers rose in the United States to 23,513
(2016: 21,857), workforce numbers remained constant in Brazil
at 9,800 (2016: 9,782) and in Japan at 10,016 (2016: 10,535).
7 B.39 Our consolidated subsidiaries in China had a total of
4,099 employees at the end of the year (2016: 3,696). At the
end of the year under review, Daimler AG employed a total of
148,953 men and women (2016: 148,704).
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT and
development tasks, sales functions and certain location-specific
services, into shared service centers. Some of the shared service
centers are not consolidated because they do not affect our
financial position, cash flow or profitability; those companies
employed around 10,000 men and women at the end of 2017.
The Group's total workforce also does not include the
employees of companies that we manage together with Chinese
partners; on December 31, 2017, they numbered approxi-
mately 19,900 people (2016: 19,500).
Human resources strategy
The key aims of our human resources strategy are to further
increase our attractiveness as an employer and to safeguard the
competitiveness of our workforce. Because our executives
should motivate their employees to achieve top performance,
it is crucial that we further develop our management culture and
establish outstanding leadership capabilities in our manage-
ment. In addition, we want to take on social responsibility and
let diversity flourish in our global company.
High attractiveness as an employer
Our activities and measures for enhancing our attractiveness
as an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified
managers in the global competition for talented staff. Our
primary objectives here are to ensure attractive and fair
compensation and to establish and maintain a work culture that
enables outstanding performance and a high level of motivation
and satisfaction among our employees and management staff.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve
top performance and support their efforts to do so, rather than
focusing on their mere presence at work. For this reason,
we also seek to improve performance by helping employees
reconcile their professional and personal responsibilities.
Employees at 12/31/2017
By region
Germany
59.5%
Europe, excluding Germany
USA
14.3%
8.1%
Brazil
3.4%
Our commitment to the environment is an integral component
of our corporate strategy, which focuses on increasing the
value of the company over the long term. For this reason, we
have established environmental management systems at our
manufacturing facilities with the goal of ensuring that we can
produce our vehicles safely, efficiently, at a high level of quality
and in an environmentally friendly manner that complies with all
legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group has a
majority interest in the ownership structure. We have achieved
a high level of air quality control, climate protection and resource
conservation (in terms of water consumption, waste manage-
ment and soil conservation), and we maintain this high level with
the help of Daimler Group standards. The environmental and
energy-related guidelines approved by the Board of Management
define the environmental and energy-related policy of the
Daimler Group. The guidelines also express our commitment to
integrated environmental protection that begins with the
assessment of the causes of environment problems and takes
into account the environmental effects of production pro-
cesses and products as early as the planning and development
phases. Additional information on this topic can be found in
the "Non-Financial Report" section of this Annual Report.
pages 214ff
Environmental protection in production
the resale of tested and certified used parts through
the Mercedes-Benz Used Parts Center,
the remanufacturing of used parts, and
the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System).
The key aspects of our activities in this area are:
During the year under review, we entered into a partnership with
Bosch that focuses on the joint development of software and
algorithms for a highly automated driving system. The objective
here is to bring highly automated and driverless driving to city
streets by the beginning of the next decade. The project com-
bines the comprehensive vehicle expertise of Daimler with the
system and hardware expertise of the world's biggest automotive
supplier. The resulting synergies are expected to lead to the
early series production of a safe and secure technology.
By introducing highly automated and driverless driving to the
urban environment, Bosch and Daimler aim to improve the flow
of traffic in cities, enhance safety on the road and provide an
important building block for the traffic system of the future.
Among other things, the technology will enhance the appeal
of car sharing. It will also allow people to make the best possible
use of their time in cars and will open up new mobility
opportunities for people without a driver's license, for example.
The main objective is to develop a production-ready system
that will enable cars to drive in highly automated mode in cities.
The idea here is that the vehicle should come to the driver,
rather than the other way round. Within a predefined area of a
city, customers will be able to order a car-sharing vehicle or
a robot taxi with their smartphones; the vehicle will then drive
driverless to the user's location.
X-ray vision for crash tests
The Mercedes-Benz Vehicle Safety unit is cooperating with
various partners from the fields of research and industry on the
use of ultra-fast X-ray technology to examine specific areas of
the vehicle body and the interior during a crash test. The X-ray
images can be combined with computer-aided simulation
models to improve the forecasting reliability of crash simulations.
In addition to analyzing the deformation of vehicle bodies and
components, the goal here is to develop alternative passenger
restraint concepts. Interdisciplinary teams in the project are
addressing the challenges of new mobility systems - for example,
the issue of passive safety in-conditionally automated driving
systems.
Active Brake Assist 4
An active emergency braking system with pedestrian recognition
that can prevent many accidents and protect more vulnerable
road users is being used for the first time in Mercedes-Benz
trucks. It will also be introduced in Mercedes-Benz and Setra
touring coaches in 2018. The new Active Brake Assist 4 (ABA 4)
system with pedestrian recognition uses acoustic and visual
signals to warn the driver of a potential collision with pedestrians,
in which case it also automatically triggers partial braking.
Active Brake Assist 4 with pedestrian recognition is based on
a new generation of radar technology that is also used in current
Mercedes-Benz car models. This electronically scanning multi-
mode system uses both long and short-range radar. The long-
range radar detects vehicles in multiple lanes and stationary
obstacles at a distance of up to 250 meters in a direct line in
front of the coach. It also registers single-track vehicles, such as
bicycles, at a distance of up to 160 meters, and pedestrians
at up to 80 meters. The short-range radar has a maximum range
of 70 meters and can even recognize pedestrians and vehicles
in front of the coach but at each side of it.
128
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Japan
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective
of the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral
component of a corporate strategy aimed at long-term value
creation. The environmental and energy-related guidelines
approved by the Board of Management define the environmental
and energy-related policy of the Daimler Group. This expresses
our commitment to integrated environmental protection that
begins with the underlying factors with an impact on the
environment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision-making.
Car CO2 emissions: 125 g/km
=
Daimler makes great efforts to reduce the fuel consumption
of its vehicles while enhancing their performance — thus
increasing driving pleasure and safety reserves. As early as 2015,
we were able to reduce the CO2 emissions of newly registered
vehicles from Mercedes-Benz Cars in the EU to an average of
123 grams per kilometer. This means we achieved our 2016
target of 125 g/km ahead of schedule. We were able to maintain
123 g/km in 2016 as well, despite a shift in our sales structure
toward medium-sized and large automobiles. Emissions rose to
125 g/km in 2017, primarily due to a further increase in the
proportion of sales in the EU accounted for by vehicles with high
levels of optional equipment. More detailed information can
be found in the "Non-Financial Report" section of this Annual
Report.
pages 218ff
Plan for the future of diesel vehicles
We are convinced that diesel engines will continue to be a firm
element of the drive-system mix, not least due to their low CO₂
emissions. The public debate surrounding diesel engines is
leading to increasing uncertainty among customers, however.
For this reason, the Daimler Board of Management approved a
comprehensive plan for diesel engines in July 2017.
The plan calls for an expansion of the current voluntary service
measures for vehicles in customers' hands, as well as the rapid
market launch of a completely new diesel engine family. As early
as March 2017, Mercedes-Benz began offering its compact-
class customers an improvement in NOx emissions for one
engine variant. In order to effectively reduce the emissions
of other model series, the Daimler Board of Management decided
in July to extend the service measures to include more than
three million Mercedes-Benz vehicles. The measures are being
carried out for most Euro 5 and Euro 6 vehicles in Europe
and other markets in close cooperation with vehicle registration
authorities. Daimler is investing around €285 million in these
measures. The service measures are being implemented at no
charge to customers. The company is also carrying out
voluntary service measures for V-Class customers. Additional
measures were added to the package following a summit
meeting between the government and the automotive industry
in August 2017. Additional information on this topic can be
found in the "Non-Financial Report" section of this Annual
Report.
pages 218ff
Conservation of resources: Consistently high recyclability
To make our vehicles more environmentally friendly, we are
working to continuously reduce the resources our automobiles
consume over their entire lifecycles.
During vehicle development, we also prepare a recycling concept
in which all components and materials are examined with a
view to their suitability for the various stages of the recycling
process. As a result, all Mercedes-Benz car models are
85 percent recyclable and 95 percent recoverable.
A vehicle's environmental impact is largely decided in the first
stages of development. The earlier we integrate environmentally
responsible product development (design for environment or DfE)
into the development process, the more efficiently we can
minimize the impact on the environment.
pages 218 ff
Securing young talent
3.5%
1.4%
+5
Daimler Buses
18,292
17,899
+2
Daimler Financial Services
13,012
12,062
+8
Group Functions & Services
10,613
9,909
+7
130
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Diversity management
The statement "diversity shapes our future" underscores the
importance of diversity management as a strategic factor for
success at Daimler. The various skills and talents of our work-
force enable us as a global company to effectively reflect the
diversity of our customers, suppliers and investors around the
world.
Daimler's more than 289,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways
of life. We have committed ourselves to raising the proportion
of women in senior management positions at the Group to 20%
by the year 2020. The proportion of women in such positions has
continually risen in recent years to reach 17.6% at the end of
2017 (2016: 16.7%). Our instruments for supporting the targeted
promotion of women include mentorships, special events and
training measures, as well as employee networks.
In order to fulfill the requirements of new legislation on the equal
participation of women and men in management positions,
the Board of Management has set targets for the proportion of
women at the two executive levels below the Board of Manage-
ment and a deadline for achieving those targets. In setting all
targets, we have taken industry-specific circumstances into
consideration.
24,029
25,255
Mercedes-Benz Vans
+1
9.8%
Other
* excluding non-consolidated associated companies and joint ventures
B.40
Employees by division
Daimler Group
2017
2016
Employees (December 31)
China*
17/16
% change
282,488
+2
Mercedes-Benz Cars
142,666
139,947
+2
Daimler Trucks
79,483
78,642
289,321
or financed by Daimler, the Daimler Financial Services division
also continued to grow in 2017. The Daimler Group's revenue
therefore also increased significantly: by 7% to €164.3 billion.
Adjusted for exchange-rate effects, revenue actually grew by 8%.
Long-term variable remuneration
= 100% of
base salary
2017
795
391
406
0
954
Deferral (50% of annual bonus,
medium-term)
338
0
B.48
0
Time of payment of Performance Phantom Share Plan 2017
in February of the year 2021
after expiry of fourth plan year
= final number of phantom shares, dividend entitlement in fourth year
preliminary number of phantom shares × performance factor
three-year dividend entitlement
of phantom shares
(virtual shares)
= preliminary number
page 139
after expiry of third plan year
price of Daimler shares when issued
amount when granted in euros page 139
final number of phantom shares × Daimler share price at end of plan
= amount paid out
338
(50% of annual bonus, short-term)
Annual variable remuneration
677
677
781
812
812
812
Taxable non-cash benefits and
other fringe benefits
Total
235
235
235
107
108
108
108
912
912
912
888
920
920
920
approx. 40%
677
remuneration
- long-term performance-related remuneration
dependent upon
Annual bonus' in 2017
B.46
amount paid out = 50% of annual bonus × "relative share performance"¹
1 Depending on the development of the Daimler share price compared with the
Dow Jones STOXX Auto Index.
50% of annual bonus in March of the year after the reporting year (2018)
50% of annual bonus (deferral) = in March of the second year after the
reporting year (2019)
overall target achievement
- non-achievement of individual
compliance targets
Board of Management as a whole:
non-financial targets
Board of Management as a whole
(derived from individual targets)
+/- target achievement for the
+/- target achievement for the
EBIT target achievement
Range of possible target achievement:
0% - 200%
target achievement EBIT
target bonus
annual bonus 2017 = target bonus × overall target achievement
approx. 30%
components
performance-related
short- and medium-term
performance-related remuneration page 138
Annual bonus - short- and medium-term
B.45
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
time of payment of annual bonus 2017
Target achievement for the
Board of Management as a whole
(derived from individual targets)
Range of possible target achievement:
-25% - +25%
Target achievement for the
Board of Management as a whole:
non-financial targets
-50% relates to a compari-
Performance Phantom Share Plan (PPSP)
B.47
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 139
As was the case in previous years, further qualitative targets
were agreed upon with the individual members of the Board
of Management with regard to the sustained implementation
and embedment of the compliance management system. The
complete or partial non-achievement of individual compliance
targets can be reflected by a deduction of up to 25% from the
individual target achievement. However, the compliance targets
cannot result in any increase in individual target achievement,
even in the case of full accomplishment.
In addition, the Supervisory Board uses individual target
agreements as a basis for measuring the target achievement
for individual Board of Management members and then uses
this target achievement value to measure the overall target
achievement of the Board of Management as a whole. This
overall target achievement result can lead to an addition or
reduction of up to 25% from the degree of target achievement
as measured on the basis of the primary performance parame-
ters. Only in exceptional cases may the Supervisory Board
deviate from this overall performance assessment and make
individual additions or deductions within the range described
above. In addition, on the basis of the sustainability-related non-
financial targets for the Board of Management as a whole, an
amount of up to 10% can be added or deducted, depending on
the predefined key figures/assessment basis. The non-finan-
cial targets defined for 2017 were the further development and
permanent establishment of the corporate value of integrity,
the promotion of diversity in the sense of increasing the share
of women in management positions and the maintenance
and enhancement of a high level of employee satisfaction and
product quality.
For the other primary performance parameter, which also relates
to half of the annual bonus, "comparison of actual EBIT in
the financial year with actual EBIT in the prior year", the limits
of the unchanged possible range of 0 to 200% are defined
as a deviation of +/- 2% of the prior-year revenue.
0 to 200%, that is, the annual bonus due to EBIT achievement
has an upper limit of double the base salary and may also
be zero. Both primary performance parameters, each of which
relates to half of the bonus, can vary between 0% and 200%.
For the primary performance parameter defining 50% of the
annual bonus, "comparison of actual EBIT in the financial
year with the EBIT targeted for the financial year", the limits of
the unchanged possible range of 0 to 200% are defined as a
deviation of +/- 3% from prior-year revenue.
Range of possible target achievement:
In 2017, this is equivalent to the respective base salary.
Amount with 100% target achievement
(target annual bonus):
- 50% relates to a comparison of actual EBIT in 2017 with
actual EBIT in 2016.
50% relates to a comparison of actual EBIT in 2017 with
EBIT targeted for 2017.
Primary reference parameters:
The annual bonus is variable remuneration, the level of
which is primarily linked to the operating profit of the Daimler
Group (EBIT). For the past financial year, the annual bonus
was also linked to the target for the financial year determined
by the Supervisory Board (derived from the level of return
targeted for the medium term and the growth targets), the actual
result compared with the prior year, the combined performance
of the Board of Management members, additional non-financial
sustainability-related targets for the Board of Management
as a whole and, as a possible individual reduction component,
the non-achievement of compliance targets. With the actual-
actual comparison, achievement of EBIT at the prior year level
constitutes target achievement of 100%. With the target-actual
comparison, the particularly ambitious definition of the targeted
EBIT that is oriented towards the competition constitutes
target achievement of 150%. 71 B.45 71 B.46
1 May be subject to retention or repayment claims
235% of the target bonus
nance and enhancement of a
high level of employee satis-
faction and product quality.
Compliance agreements in
2017
Maximum target achievement
(total cap):
Range of possible target achievement:
-25% -0%
Non-achievement of individual
compliance targets
Range of possible target achievement: rity; diversity and the mainte-
-10% - +10%
For 2017: Further development
and permanent establishment
of the corporate value of integ-
son of actual EBIT in 2017
with EBIT targeted for 2017
-50% relates to a compari-
son of actual EBIT in 2017
with actual EBIT in 2016
Individual target agreements
in 2017
long-term performance-related
max.
Jan. 1 Dec. 31
min.
2017
Jan. 1 Dec. 31
2016
2017
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2016
2017
Jan. 1 - Feb. 10
min.
max.
2,008
2,008
Head of Mercedes-Benz Cars
2,008 2,008
92
92
92
167
131
9
9
9
955
101
824
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Chairman of the Board of Management,
Dr. Dieter Zetsche
The total of "benefits granted" for financial year 2016
is calculated from
the base salary in 2016,
the taxable non-cash benefits and other fringe benefits in 2016,
the half of the annual bonus payable in 2017 for 2016 at the
value for target achievement of 100%,
the half of the share-based annual bonus payable in 2018 for
2016 at the value for target achievement of 100%,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2016 (payable in 2020), and
- the retirement pension expense in 2016 (service costs in 2016).
B.54
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and
other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral
(50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit¹ for components of remuneration
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
101
101
618
167
167
2,626 2,175 2,175 2,175
1,004 1,004
147 363
10,149
10,224
5,464
348
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
Base salary
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
145
Martin Daum
Daimler Trucks & Buses
Renata Jungo Brüngger
Integrity & Legal Affairs
Jan. 1 Dec. 31
March 1 Dec. 31
2016
2017
min.
max.
Jan. 1 Dec. 31
2016
239
138
3,294
7,912 6,836
0 2,360
412
1,004 1,004
0
2,360
412
446
46
0 108
46
0
108
2,570 2,653
4,578 4,661
708
0 7,000
0 11,720
1,148
1,972
92
0
216
367
46
46
46
2,175 13,895
137
approx. 30%
paid out in twelve monthly
installments
146
146
146
171
95
95
95
393
other fringe benefits
Taxable non-cash benefits and
Total
812
812
781
812
812
812
781
Base salary
max.
Jan. 1 Dec. 31
min.
2017
812
1,174
907
907
406
391
954
0
406
391
(50% of annual bonus, medium-term)
Deferral
954
0
406
391
954
0
406
391
(50% of annual bonus, short-term)
Annual variable remuneration
958
958
958
952
907
2016
max.
Jan. 1 Dec. 31
Jan. 1 Dec. 31
min.
245
245
245
117
102
102
102
Retirement pension expense (service costs)
4,658
0
1,810 1,855
4,340
0
1,719
Total
2,750
0
1,043
1,028
2,750
0
1,043
(plan period of 4 years)
Total remuneration
0
2,733
5,354
2017
2016
Jan. 1 Dec. 31
Vans
Group Research & Mercedes-Benz Cars HR and Labor Relations Director & Mercedes-Benz
Development
Wilfried Porth
Ola Källenius
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
5,176
5,058
4,662
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
5,823
1,165
3,020
2,815
1,014
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the reporting year and the retirement pension
expense in or for the year under review in accordance with
the recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.
954
1,028
Target remuneration consists of non-performance-related
and performance-related components:
Remuneration structure
B.42
The base salary is fixed remuneration relating to the entire
year, oriented towards the area of responsibility of each Board
of Management member and paid out in twelve monthly
installments. 7 B.44
The individual components of the remuneration system are
as follows:
As in the prior year, the maximum amounts of remuneration
of the members of the Board of Management were set for
financial year 2017 at 1.9 times the target remuneration for its
members and 1.5 times the target remuneration for its Chair-
man. The target remuneration consists of the base salary, the
target annual bonus and the grant value of the PPSP, excluding
fringe benefits and retirement benefit commitments. With
the inclusion of fringe benefits and retirement benefit commit-
ments from the respective financial year, the maximum limit
of total remuneration increases by these amounts. The possible
cap on the amount exceeding the maximum limit takes place
with the payment of the PPSP issued in the relevant financial
year, i.e. for the year 2017, with payment of the PPSP in 2021.
7 B.43
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
As before, only 50% of the annual bonus is paid out in the
March of the following financial year. The other 50% is paid out
a year later (deferral) with the application of a bonus-malus
rule, depending on the development of the Daimler share price
compared with an automotive index (Dow Jones STOXX Auto
Index) pages 78f, which Daimler AG uses as a benchmark
for the relative share-price development. Both the delayed
payout of the portion of the annual bonus (with the use of the
bonus-malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious comparative
parameters and to the share price reflect the recommendations
of the German Corporate Governance Code and give due con-
sideration to both positive and negative business developments.
The system of Board of Management remuneration in 2017
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the variable
component of remuneration with a long-term incentive effect
(PPSP) makes up approximately 40% of the target remuneration.
7 B.42
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
base salary
After the end of each year, the achievement of both financial and
non-financial targets by the Board of Management as a whole is
measured in order to determine the amount of the annual bonus.
The degree of achievement of individual targets by members
of the Board of Management is used as the basis for measuring
target achievement for the Board of Management as a whole.
The Presidential Committee then calculates the annual bonus and
submits its proposal to the Supervisory Board for its approval.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the
Board of Management as well as on total remuneration limits.
It also decides on the relevant performance parameters and
the respective targets that are to be used in the bonus calcula-
tions for the upcoming financial year. Furthermore, individual
targets and compliance goals are decided upon for each member
of the Board of Management and additional non-financial goals
related to sustainability are drawn up for the Board of Manage-
ment as a whole. Both the individual goals, including the com-
pliance goals, and the non-financial goals for the Board of
Management as a whole are taken into consideration along with
the financial performance parameters after the end of the
financial year when the annual bonus is decided upon by the
Supervisory Board.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also in terms of development over time. The Supervisory Board
has defined the group of senior executives for this purpose.
and the target remuneration consisting of base salary, annual
bonus and long-term variable remuneration, also with con-
sideration of entitlement to a retirement pension and fringe
benefits.
the relative weighting of the components, that is, the relation-
ship between the fixed base salary and the short-term and
long-term variable components;
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
-
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appropri-
ateness, based on a horizontal and vertical comparison. In the
horizontal comparison, the following aspects are given particular
attention in relation to a group of comparable companies in
Germany:
Practical implementation
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets.
(non-performance-related) approx. 30%
short- and medium-term
performance-related
components
long-term performance-related
components
(non-performance-related)
base salary
base salary - fixed - oriented towards the area of responsibility
Base salary - fixed page 137
B.44
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2017 in 2021.
1 Excluding fringe benefits and retirement benefit
commitments in all cases.
Total remuneration¹ in 2017
+ PPSP payment for 2017 (in 2021)
incl. dividend equivalent payments
(50% paid out in 2018 + 50% in 2019)
+ annual bonus for 2017
Base salary in 2017
Target remuneration¹ in 2017
+ PPSP value when granted for 2017
+ target bonus = 100% of the 2017 base salary
1.9 times the target
remuneration¹
1.5 times the target
remuneration¹
Base salary in 2017
Members of the Board of Management
Chairman of the Board of Management
Maximum limit of total remuneration¹ 2017
approx. 40%
approx. 30%
B.43
The remuneration system for the Board of Management aims to
remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related and
performance-related components of remuneration is designed to
create an incentive to secure the Group's long-term success.
The fixed component of remuneration is paid as a base salary;
the variable components are intended to reflect, clearly and
directly, the joint performance of the members of the Board of
Management as a whole, as well as the long-term performance
of the Group. The interests of all stakeholders, in particular those
of the shareholders as the owners of the Company and those of
the employees, are harmonized through the focus on the Group's
long-term success.
Goals
Principles of Board of Management
remuneration
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Manage-
ment of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
282
282
247
248
248
248
235
Retirement pension expense (service costs)
4,783
0
1,902
1,857
0 4,658
1,855
1,810
Total
2,875
0
1,090
1,075
2,750
0
1,043
282
(plan period of 4 years)
3,219
5,813
Remuneration Report
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
136
795
391
406
0
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
5,058
granted in the reporting year
Total limit¹ for components of remuneration
Total remuneration
5,271
5,153
5,176
6,023
1,240
3,142
3,056
3,010 1,155
Long-term variable remuneration
Details of Board of Management remuneration in 2017
pursuant to the requirements of the German Corporate
Governance Code
In 2017, no advances or loans were made to members of the
Board of Management of Daimler AG.
1,978
39,315
2,653
8,617
2016
2,008
1,516
1,516
40,838
2,570
1,978
7,610
2017
92
90
90
272
2016
824
622
622
18,236
Dr. Wolfgang Bernhard¹
2,008
2017
Dr. Dieter Zetsche
Non-achievement of compliance
targets -25% - 0% (not applied in 2017)
Non-financial success parameters
+/- 10%
Joint performance
+/- 25%
Financial success
parameters 0% - 200%
1 Positive target achievement of the defined performance criteria "unit-sales
development, revenue development, transformation in future technologies,
change in the corporate culture (Leadership 2020)"
B.51
Board of Management remuneration in 2017
In thousands of euros
Base salary
Short-term
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan)
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
1 Amount paid out including dividend-equivalent
payments of PPSP 2013
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
Overall target
achievement
final number of
phantom shares
times share price
at end of plan
(amount paid out
in €)
Variable remuneration
Remuneration (PPSP)
Total
(annual bonus)
Number Value when granted
Medium-term
(2017: at share price €67.49)
(2016: at share price €62.94)
1,148
3,216
Martin Daum²
2017
15,446
1,043
3,455
2016
781
590
590
16,336
1,028
2,989
Wilfried Porth
2017
812
800
800
16,148
1,090
3,502
2016
781
590
590
17,078
800
0
800
2017
677
667
667
15,446
1,043
3,054
2016
Renata Jungo Brüngger
2017
812
800
800
15,446
1,043
3,455
2016
781
590
590
16,336
1,028
2,989
Ola Källenius
812
1,075
50
50% short-term
0 to 200%, that is, the plan has an upper limit. It may also
be zero.
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria described
above and on the share price relevant for the payout. This
share price is limited to 2.5 times the share price at the beginning
of the plan. In addition, the amount to be paid out is limited to
2.5 times the absolute euro amount specified at the beginning
of the plan, which is relevant for the preliminary number of
phantom shares allocated. This maximum amount includes the
dividend equivalent paid out during the four-year plan period.
The terms governing the PPSP include a provision that allows for
the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who clearly
violates the Integrity Code that applies to all employees and
Board of Management members, or any other professional obli-
gations, prior to the payout of the plan proceeds. The Super-
visory Board has the final decision on all such bonus reductions.
Guidelines for share ownership
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines" exist for the Board of Manage-
ment. These guidelines require the members of the Board
of Management to invest a portion of their private assets in
Daimler shares over several years and to hold those shares
until the end of their Board of Management membership.
The number of shares to be held is set between 20,000 and
75,000. In fulfillment of the guidelines, up to 25% of the
gross remuneration out of each Performance Phantom Share
Plan is generally to be used to acquire ordinary shares in
the Company, but the required shares can also be acquired in
other ways.
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corporation
Act (AktG), the Supervisory Board of Daimler AG once again
had an assessment of the system of Board of Management
remuneration carried out by an external remuneration
expert in 2017. The result was that the remuneration system
as described above was confirmed as being in conformance
with the requirements of applicable law. The remuneration sys-
tem was approved by the Annual Shareholders' Meeting in
2014 with an approval ratio of 96.8%.
Board of Management remuneration
in financial year 2017
Range of possible target achievement:
Board of Management remuneration in 2017 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
-
the base salary in 2017,
the half of the annual bonus for 2017 payable in 2018 and
measured as of the end of the reporting period,
the half of the medium-term share-based component of
the annual bonus for 2017 payable in 2019 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler's share price compared
with the Dow Jones STOXX Auto Index),
- the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017, and
- the taxable non-cash benefits in 2017.
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and on the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 141
The possible limits with regard to the annual bonus and the
PPSP are shown in tables 7 B.49 and 7 B.50.
The total remuneration of the Board of Management for the finan-
cial year 2017 amounts to €35.0 million (2016: €31.8 million).
Of that total, €9.5 million was fixed, that is, non-performance-
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the
Board of Management of Daimler AG is calculated as the total of
the amounts of
Determined annually by the Supervisory Board; for 2017,
approximately 1.4 times the base salary.
Value upon allocation:
- Target achievement of 0% occurs if Daimler's return
on sales is 2 percentage points or more lower. In
the deviation range of +/- 2 percentage points, target
achievement varies in proportion to the deviation.
50% relates to "relative share performance", i.e. the develop-
ment of Daimler's share price in a three-year comparison
with the development of a share-price index for the defined
group of competitors. If the development of Daimler's share
price (in percent) is the same as that of the index (in percent),
target achievement is deemed to be 100%. If the develop-
ment of Daimler's share price (in percent) is 50 percentage
points or more below (above) the development of the index,
target achievement is deemed to be 0% (200%). In the deviation
range of +/- 50 percentage points, target achievement varies
in proportion to the deviation.
PPSP 2017
dependent upon
Development of
performance factors
Development of the
Daimler share price
50% relates to the "return on sales"
achieved in a three-year comparison with
the defined group of competitors
> page 140
Bandwidth of possible target achievement:
0% - 200%¹
50% relates to the "relative share perfor-
mance", i.e. the development of Daimler's
share price in a three-year comparison
with the development of a share-price
index for the defined group of competitors.
Bandwidth of possible target achievement:
0% - 200%
Price when issued and price at the end of the
plan period
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Maximum performance development (total cap):
2.5 times the amount granted
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000) have
been purchased (shares to be held until the end of the term of service)
1 Maximum of 195% if, in the event of target achievement of 195% -
200%, the strategic return target of 9% has not been reached.
In this context, agreements were reached with the members of
the Board of Management allowing for the partial reduction or
complete elimination of the annual bonus for any member who
clearly violates our Integrity Code. If it is not possible to reduce
a future bonus payment, or a payment that has yet to be made,
the Board of Management member in question will be required
to pay back the amount of the bonus reduction. The Supervisory
Board has the final decision on all such bonus reductions.
The total amount to be paid out from the annual bonus is limited
to 2.35 times the base salary of the respective financial year.
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects. At the
beginning of the plan, the Supervisory Board specifies a grant
value (absolute amount in euros) in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated over
a predefined long period of time, which results in the prelimi-
nary number of phantom shares allocated. Also at the beginning
of the plan, performance targets are set for a period of three
years (performance period). Depending on the achievement of
these performance targets with a possible range of 0% to 200%,
after three years the phantom shares allocated at the beginning
of the plan are converted into the final number of phantom
shares allocated.
After another plan year has elapsed (retention period), the
amount to be paid out is calculated from this final number of
phantom shares and the applicable share price at that time.
The share price relevant for the payout under this plan is
also relevant for allocating the preliminary number of phantom
shares for the plan newly issued in the respective year.
7 B.47 7 B.48
140
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Performance parameters for Plan 2017:
- 50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising all listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, Fuji Heavy, Honda, Hyundai, Isuzu,
Kia, Mazda, Nissan, Paccar, Suzuki, Toyota, Volvo and Volks-
wagen). For the measurement of success, the competitors'
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler's return on sales deviates by a maximum of +/-2 per-
centage points from 105% of the calculated average of
the competitors.
- Target achievement of 100% only occurs when the aver-
age return on sales of the Daimler Group reaches 105% of
the average return on sales of the group of competitors.
Target achievement of 200% occurs if Daimler's return on
sales exceeds 105% of the average of the competitors
by 2 percentage points or more. An additional limitation
was implemented starting with PPSP 2015: If a target
achievement of between 195% and 200% occurs in the
third year of the performance period, the maximum
target achievement calculated from the performance
parameter of return on sales compared to the group of
competitors will only be deemed to be 200% if the actual
return on sales for Daimler's automotive business
reaches at least the strategic target for return on sales
(currently 9%). Otherwise, target achievement will be
limited to 195%.
related remuneration (2016: €10.0 million), €15.3 million
(2016: €11.6 million) was short-term and medium-term variable
performance-related remuneration (annual bonus with defer-
ral), and €10.2 million was variable performance-related remu-
neration granted in the financial year 2017 with a long-term
incentive effect (2016: €10.2 million). 7 B.51
B.49
Annual bonus
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
100
base salary
75
50%
50
short-term
25
0
50% medium-term
250%
(deferral)
250
200% of the
200
172% of the
Maximum
200%
191% ACTUAL
ACTUAL
165 %
base salary
150
ACTUAL
100%
125
100
150
300
B.50
PPSP 2013 (paid in 2017)
(long-term variable remuneration 7 B.55)
Maximum
theoretically 500%
of the grant value
500
235
200
+ 10% of the base salary
+25% of the base salary
Maximum 235% of the base salary
ACTUAL
450
197% of the base salary
400
With more than 250% target
50%
+5% of the base salary
achievement, the total cap¹ applies.
ACTUAL
175 medium-term
+20% of the base salary
350
315%
(deferral)
Maximum
3,036
Britta Seeger
2017
Martin Daum³
2017
1,050
1,050
708
42,738
43,533
46
367
3,230
102
2,860
2016
2016
2017
245
938
2016
117
654
Ola Källenius
2017
248
2,651
Renata Jungo Brüngger
2017
Dr. Wolfgang Bernhard²
2016
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
- as a single amount;
- in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
- as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/
registered partner or dependent children is/are entitled to the
full committed amount in the case of the Pension Capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments, the heirs are entitled to the remaining
present value. In the case of a pension with benefits for surviving
dependents, the spouse/registered partner or dependent
children is/are entitled to 60% of the discounted terminal value
(Pension Capital), or the spouse/registered partner is
entitled to 60% of the actual pension (Daimler Pensions Plan).
Until the end of 2005, the pension agreements of Board
of Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the
corresponding hierarchical level applied to Wilfried Porth for
the period prior to his serving as a member of the Board of
Management. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
Payments of these retirement pensions start upon request
when the term of service ends at or after the age of 60, or are
paid as disability pensions if the term of service ends before
the age of 60 due to disability. The respective agreements pro-
vide for 3.5% annual increases starting when benefits are
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 143
received (with the exception that Wilfried Porth's benefits are
adjusted in accordance with applicable law). The agreements
include a provision by which a spouse of a deceased Board of
Management member is entitled to 60% of that member's
pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Departing Board of Management members with pension agree-
ments (pension commitments) modified as of the beginning of
2006 receive, for the period between the end of the last contract
period and reaching the age of 60, payments in the amounts
of the pension commitments granted as described in the pre-
vious section. Departing Board of Management members are
also provided with a company car, in some cases for a defined
period. These payments are made until the age of 60, possibly
reduced due to other sources of income, and are subject to
annual percentage increases described above in the explanation
of these pension agreements.
Service costs for pension obligations according to IFRS amounted
to €2.0 million in financial year 2017 (2016: €2.8 million). The
present value of the total defined benefit obligation according
to IFRS amounted to €82.7 million as of December 31, 2017
(December 31, 2016: €95.7 million). Taking age and period of
service into account, the individual entitlements, service
costs and present values are shown in the table.
71 B.53
Commitments upon early termination of service
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus pro
rata for the period until the end of the contract of service or of
the Board of Management membership takes effect. Entitle-
ment to payment of the performance-related component of
remuneration with a long-term incentive effect (PPSP) that
has already been allocated is defined by the conditions of the
respective plans. To the extent that the payments described
above are subject to the provisions of the so-called severance
cap of the German Corporate Governance Code, their total
including fringe benefits is limited to double the annual remu-
neration and may not exceed the total remuneration for the
remaining period of the service contract.
In the event of an early termination of the service contract, both
the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the long-
term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan.
In connection with the early termination of the Board of
Management membership of Dr. Wolfgang Bernhard by mutual
agreement, effective midnight on February 10, 2017, it was
agreed that the payments to be made by the Company pursuant
B.53
Individual entitlements, service costs and present values for members of the Board of Management
In thousands of euros
Annual pension
(as regulated until 2005)
as of age 60
Service cost
(for pension, pension
capital and Daimler
Pensions Plan)
Present value of obliga-
tions (for pension,
pension capital and
Daimler Pensions Plan)
Dr. Dieter Zetsche
2017
2016
235
2,345
Wilfried Porth
649
17,007
Prof. Dr. Thomas Weber
2017
2016
300
264
14,716
Total
2017
2016
1,481
1,781
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 Dr. Bernhard pro rata until Feb. 10, 2017
3 Mr. Daum pro rata from March 1, 2017
1,973
82,711
2,826
95,693
144
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
to the contract of service would continue to be granted until
the end of the original contract of service on February 28, 2018.
Accordingly, Dr. Bernhard receives a base salary of €869,744,
short-term variable remuneration of €721,430 (value at the con-
tract date to be paid in 2018), medium-term variable remuner-
ation of €721,430 (value at the contract date to be paid in 2019
with application of the bonus/malus rule), and fringe benefits
of €11,570. Service cost amounts to €365,244 (in accordance
with Section 285 No. 9a of the German Commercial Code (HGB)
€306,077). Entitlement relating to long-term variable remuner-
ation (PPSP) and the company pension are paid out pursuant
to the contractual provisions.
Sideline activities of Board of Management members
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they are
disclosed in the notes to the annual financial statements of
Daimler AG, which is published on our website. In general, Board
of Management members have no right to separate remuner-
ation for board positions held at other companies of the Group.
Loans to members of the Board of Management
275
Under this system, each Board of Management member is
credited with a capital component each year. This capital com-
ponent comprises an amount equal to 15% of the sum of
the Board of Management member's fixed base salary and the
total annual bonus for the respective financial year on the
balance sheet date, multiplied by an age factor equivalent to
a rate of return of 6% until 2015 and 5% as of 2016 (Wolfgang
Bernhard and Wilfried Porth: 5% for all years). These contribu-
tions to pension plans are granted only until the age of 60.
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 60,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, even before the age of 60.
2016
690
2017
156
282
10,280
2016
156
247
9,597
Britta Seeger
Hubertus Troska
2017
122
1,072
2016
2017
238
4,909
2016
239
4,611
Bodo Uebber
2017
275
17,263
The Pension Capital system was used from the beginning of 2006
until the end of 2011. The pension agreements of active Board
of Management members that were valid until that time were
modified accordingly. All Board of Management members
newly appointed during that period were subject exclusively to
the Pension Capital system.
The Supervisory Board of Daimler AG has approved the appli-
cation of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base
salary and the total annual bonus for the respective financial
year calculated as of the balance sheet date. This percentage
is 15%. This calculation takes into consideration the targeted
level of retirement provision for each Board of Management
member - also according to the period of membership - and
the resulting annual and long-term expense for the Company.
The contributions to the retirement provision are granted until
the age of 62. The benefit from the pension plan is payable
to surviving Board of Management members at the earliest
at the age of 62, irrespective of their age upon retirement. If
a member of the Board of Management retires due to dis-
ability, the benefit is paid as a disability pension, even before
the age of 62.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan". This retirement
benefit system features the payment of annual contributions
by Daimler, but is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to a
precautionary investment concept.
18,464
1,246
4,057
2016
928
701
701
19,528
1,229
3,559
932
Dr. Thomas Weber
2016
781
590
590
17,345
1,092
3,053
Total
2017
2016
2017
932
947
2017
812
800
800
15,446
1,043
3,455
2016
Hubertus Troska
2017
812
800
800
15,446
1,043
3,455
2016
781
590
590
16,336
1,028
2,989
Bodo Uebber
7,784
Payments made to former members of the Board of
Management of Daimler AG and their survivors
Payments made in 2017 to former members of the Board of
Management of Daimler AG and their survivors (including
payments made to Dr. Bernhard after termination of his Board
of Management membership) amounted to €19.0 million
(2016: €15.6 million). Pension provisions according to IFRS for
former members of the Board of Management and their
survivors amounted to €270.5 million as of December 31, 2017
(2016: €252.9 million).
7,667
151,157
Ola Källenius
95
393
Wilfried Porth
146
171
Britta Seeger
366
Hubertus Troska4
470
635
Bodo Uebber
107
163
Prof. Dr. Thomas Weber
129
Total
1,703
2,347
1 (2016: including an anniversary bonus of €418,464)
2 Board of Management remuneration paid until Feb. 10, 2017
3 Board of Management remuneration paid from March 1, 2017
4 For the fulfillment of disclosure obligations pursuant to Section 285
No. 9a of the German Commercial Code (HGB), this amount is
reduced by €197,508 for the year 2017 (2016: €208,136). The cor-
responding fringe benefits were granted and borne by a subsidiary
and are thus not included in the remuneration to be disclosed in
the annual financial statements of the parent company, Daimler AG.
The granting of non-cash benefits in kind, primarily the reim-
bursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2017 as
shown in table 7 B.52.
Commitments upon termination of service
Retirement provision
107
7,667
108
235
10,204
33,322
7,665
5,789
5,789
162,033
10,198
29,441
1 Board of Management remuneration paid until Feb. 10, 2017
2 Board of Management remuneration paid from March 1, 2017
142
Renata Jungo Brüngger
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Taxable non-cash benefits and other fringe benefits
2017
2016
In thousands of euros
Dr. Dieter Zetsche¹
167
618
Dr. Wolfgang Bernhard²
9
131
Martin Daum³
B.52
954
In the context of operative planning, risks and opportunities -
with consideration of appropriate risk and opportunity catego-
ries are identified and assessed for a two-year planning
period. Furthermore, the discussions for the derivation of mid-
term and strategic targets in the context of strategic planning
include the identification and assessment of risks and opportu-
nities relating to a longer period. The reporting of risks and
opportunities in the Management Report generally relates to
a period of one year. Besides the reporting at specific times,
risk and opportunity management is established as a continuous
task within the Group. In addition to the regular reporting,
there is also an internal reporting obligation within the Group for
material risks arising unexpectedly. The central Group Risk
Management regularly reports the identified risks and opportu-
nities to the Board of Management and the Supervisory Board.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportuni-
ties arising in business activities as a result of positive devel-
opments at an early stage, and to use them in the best possible
way for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be secured
or overachieved. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
Benefits granted
812
781
812
366
635
470
1,178
1,416
1,282
800
590
800
652
846
1,369
123
2,472
146 B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
158
2017
2
2016
2016
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
Payment of PPSP 2013
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Total
Retirement pension expense (service costs)
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Britta Seeger¹
Mercedes-Benz Cars Marketing & Sales
Hubertus Troska
Greater China
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
2017
Taxable non-cash benefits and other fringe benefits
56
2
Daimler Financial Services
Development
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
2016
2017
2016
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
928
947
781
163
107
Group Research &
Mercedes-Benz Cars
61
Finance & Controlling,
Prof. Dr. Thomas Weber
48
48
5
53
53
50
50
982
2,926
122
239
4,330
238
4,581
5,850
Total remuneration
2,282
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Bodo Uebber
129
Base salary
Payments made
Dividend equivalent PPSP 2017
Total
Retirement pension expense (service costs)
Ola Källenius¹
Wilfried Porth
Mercedes-Benz Cars Development
Group Research & HR and Labor Relations Director
& Mercedes-Benz Vans
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
2016
2017
2016
2017
781
812
781
812
393
95
171
Dividend equivalent PPSP 2016
146
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2013
1,000
102
117
1,407
245
2,005
2,572
Total remuneration
1,789
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
Payment of PPSP 2013
Dividend equivalent PPSP 2014
In thousands of euros
1,174
952
50
53
53
56
56
50
52
1,138
2,272
235
248
4,132
247
4,340
282
Total remuneration
2,547
3,427
5,331
5,580
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
50
907
48
64
958
590
800
590
800
846
652
846
411
2,567
-
457
2,472
21
-
158
15
18
59
48
1,091
1,054
910
153,900
Dr. Frank Weber
Member of the Supervisory Board
153,900
Member of the Supervisory Board and the Presidential Committee
217,000
Roman Zitzelsberger¹
1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-
Böckler Foundation, in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Sanches has directed that he receive no remuneration and that his board remuneration is to be paid to
the Hans-Böckler Foundation.
152
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Composition of share capital
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2017. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section 67
Subsection 2 of the German Stock Corporation Act (AktG), only
those persons registered as shareholders in the register of
shareholders are considered to be shareholders of the Company.
With the exception of treasury shares, from which the Com-
pany does not have any rights, all shares confer equal rights to
their holders. Each share confers the right to one vote and,
with the possible exception of any new shares that are not yet
entitled to a dividend, to an equal share of the profits in accor-
dance with the dividend payout approved by the Annual Share-
holders' Meeting. The rights and obligations arising from the
shares are derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff, 118 ff and 186 of the German Stock
Corporation Act. There were no treasury shares at December 31,
2017.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock Cor-
poration Act (AktG), the voting rights of treasury shares are
nullified by law.
Shares acquired by employees within the context of the
employee share program may not be disposed of until the end
of the following year. Eligible participants in the Performance
Phantom Share Plans (PPSP) of Executive Level 1 and eligible
members of the Board of Management are obliged by the
Plans' terms and conditions and by the Stock Ownership Guide-
lines to acquire Daimler shares with a part of their Plan income
up to a defined target volume and to hold them for the duration
of their employment at the Daimler Group. For the other per-
sons eligible for PPSP, this obligation no longer applies since
payment of PPSP 2013 in February/March 2017.
Provisions of applicable law and of the Articles of
Incorporation concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German Stock
Corporation Act (AktG) and Section 31 of the German Code-
termination Act (MitbestG). In accordance with Section 84 of
the German Stock Corporation Act, the members of the Board
of Management are appointed by the Supervisory Board for a
maximum period of office of five years. However, the Super-
visory Board of Daimler AG has decided generally to limit the
initial appointment of members of the Board of Management
to three years. Reappointment or the extension of a period of
office is permissible, in each case for a maximum of five years.
Member of the Supervisory Board
Pursuant to Section 31 Subsection 2 of the German Code-
termination Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Super-
visory Board has to make a suggestion for the appointment
within one month of the vote by the Supervisory Board in
which the required majority was not reached. The Supervisory
Board then appoints the members of the Board of Management
with a majority of its members' votes. If no such majority is
obtained, voting is repeated and the Chairperson of the Super-
visory Board then has two votes. The same procedure applies
for dismissals of members of the Board of Management.
Sibylle Wankel'
Member of the Supervisory Board
Joe Kaeser
Member of the Supervisory Board and the Audit Committee
230,300
Ergun Lümali¹
Member of the Supervisory Board and the Audit Committee
230,300
Wolfgang Nieke¹
Member of the Supervisory Board
153,900
Dr. Bernd Pischetsrieder
Member of the Supervisory Board
152,800
Valter Sanches²
Member of the Supervisory Board
150,600
Jörg Spies¹
Member of the Supervisory Board
153,900
Elke Tönjes-Werner¹
153,900
152,800
In accordance with Article 5 of the Articles of Incorporation,
the Board of Management has at least two members. The num-
ber of members is decided by the Supervisory Board. Pursuant
to Section 84 Subsection 2 of the German Stock Corporation Act
(AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3 of
the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board of
Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so.
153
- An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competitors
acquires more than 25% of the equity or assets of Daimler AG
or becomes able to influence the decisions of its Board of
Management.
- An agreement between Daimler and Robert Bosch GmbH
related to the joint establishment and joint operation of
EM-motive GmbH for the development and production of
traction and transmission-integrated electric motors as
well as parts and components for such motors for automotive
applications and for the sale of those articles to the Robert
Bosch Group and the Daimler Group. If Daimler should become
controlled by a competitor of Robert Bosch GmbH, Robert
Bosch GmbH has the right to terminate the consortium agree-
ment without prior notice and to acquire all the shares in
the joint venture held by Daimler at a fair market price.
- An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V. In
the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question
to offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). A change of control of Daimler
AG occurs if a person gains control over Daimler AG, whereby
control is defined as (i) having control of more than 50% of
the voting rights, (ii) being able to control more than 50% of the
voting rights eligible to vote at the shareholders' meetings
on all or nearly all matters, or (iii) the right to determine the
majority of the members of the Board of Management or of
the Supervisory Board. A change of control also occurs if com-
petitors of the HERE Group or certain possible competitors
of the HERE Group in the technology industry acquire a share-
holding of at least 25% of Daimler AG. If none of the other
parties acquire these shares, the agreement gives them the
right to dissolve There Holding B.V.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
155
Risk and Opportunity Report
The Daimler Group is exposed to a large number of risks that
are directly linked with the business activities of its divisions or
which result from external influences. A risk is understood as
the danger that events, developments or actions will prevent the
Group or one of its divisions from achieving its targets. At the
same time, it is important for the Daimler Group to identify oppor-
tunities so that they can be utilized in the course of its busi-
ness activities, thus safeguarding and enhancing the Group's
competitiveness. An opportunity is understood as the possibil-
ity to safeguard or to surpass the planned targets of the Group or
a division as a result of events, developments or actions. The
divisions have direct responsibility for recognizing and manag-
ing business risks and opportunities at an early stage. As part
of the strategy process, risks related to the planned long-term
development and opportunities for further profitable growth
are identified and integrated into the decision-making process.
In order to identify business risks and opportunities at an early
stage and to assess and manage them consequently, effective
management and control systems, which are clustered into a
risk and opportunity management system, are applied. Risks and
opportunities are not offset. The system is described below.
B.57
Assessment of probability of occurrence/possible impact
Level
Low
Medium
High
Probability of occurrence
0% Probability of occurrence ≤ 33%
33% Probability of occurrence ≤ 66%
66% Probability of occurrence < 100%
Level
Low
Medium
High
Possible impact
€0 <
€500 million <
Impact
Impact
< €500 million
< €1 billion
Impact
> €1 billion
Risk and opportunity management system
The risk management system with regard to existence-
threatening and other material risks is integrated into the
value-based management and planning system of the Daimler
Group. It is an integral part of the overall planning, manage-
ment and reporting process in the legal entities, divisions and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control, moni-
tor and report risks threatening Daimler's existence and other
material risks, in order to support the achievement of corporate
targets and to enhance risk awareness at the Group.
- An agreement with BAIC Motor Co., Ltd. related to a jointly
held company for the production and distribution of cars of the
Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate the agreement or exercise
a put or call option in the case that a third party acquires
one third or more of the voting rights in Daimler AG.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
supply of pickups, the use of an existing architecture for com-
pact cars, and the joint production of Infiniti/Nissan and
Mercedes-Benz compact vehicles in a 50-50 joint venture in
Mexico. A change of control is deemed to occur at a thresh-
old of 50% of the voting rights of the company in question or
upon authorization to appoint a majority of the members of
its managing board. In the case of termination of cooperation
in the area of the development of small cars due to a change of
control in the early phase of the cooperation, the party affected
by the change of control would be obliged to bear its share
of the costs of the development of shared components even
if the development were terminated for that party.
- A cooperation agreement with Ford concerning the joint
predevelopment of a fuel-cell system. In the event of a change
of control of one of the parties to the agreement, the agree-
ment provides for the right of termination for the other party. A
change of control is deemed to occur at a threshold of 50%
of the voting rights of the company in question or upon authori-
zation to appoint a majority of the members of its managing
board.
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by
a resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corpo-
ration Act (AktG) and Article 16 Subsection 1 of the Articles of
Incorporation with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. Amendments to the Articles of
Incorporation that only affect the wording can be decided
upon by the Supervisory Board in accordance with Article 7
Subsection 2 of the Articles of Incorporation. Pursuant to
Section 181 Subsection 3 of the German Stock Corporation
Act (AktG), amendments to the Articles of Incorporation
take effect upon being entered in the Commercial Register.
Authorization of the Board of Management to issue or
buy back shares
By resolution of the Annual Shareholders' Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes
in a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders' Meeting. The shares
can be used, under the exclusion of shareholders' subscription
rights, for, among other things, corporate mergers and acquisi-
tions or else can be sold for cash to third parties at a price that
is not significantly below the market price at the time of the
sale. The shares can also be used to service debt on convertible
bonds and/or bonds with warrants, or can be issued to employ-
ees of the Company and employees and members of executive
bodies of affiliated companies pursuant to Section 15 ff of
the German Stock Corporation Act (AktG). The Company's own
shares can also be canceled.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Super-
visory Board to exclude shareholders' subscription rights for
shares they acquire. The Company's own shares in a volume
of up to 5% of the share capital existing at the time of the reso-
lution of the Annual Shareholders' Meeting can also be
acquired with the application of derivative financial instruments
(put or call options, forwards or a combination of these finan-
cial instruments), whereby the terms of the derivatives may not
exceed 18 months and must be terminated on March 31, 2020,
at the latest.
No use was made of this authorization to acquire the
Company's own shares during the reporting period.
By resolution of the Annual Shareholders' Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly
or in partial amounts, on one or several occasions, by up to
€1 billion by issuing new registered shares of no par value in
exchange for cash or non-cash contributions, and with the
consent of the Supervisory Board under certain conditions and
within defined limits to exclude shareholders' subscription
rights (Approved Capital 2014). Subscription rights can, under
these defined conditions, be excluded in the event of a capital
increase through non-cash contributions for the purposes of
an acquisition, and in the case of a capital increase through
cash contributions, if the issue price of new shares is not sig-
nificantly below the market price at the time of the issue.
No use has yet been made of Approved Capital 2014.
By resolution of the Annual Shareholders' Meeting held on
April 1, 2015, the Board of Management, with the consent of the
Supervisory Board, is authorized to issue during the period
until March 31, 2020 convertible bonds and/or bonds with war-
rants or a combination of those instruments (commercial
papers) in a total nominal amount of up to €10 billion with a
maximum term of ten years, and to grant the owners/lenders
ofthose bonds conversion or option rights to new, registered
shares of no par value in Daimler AG with a corresponding
amount of the share capital of up to €500 million, in accordance
with the terms and conditions of those convertible bonds or
bonds with warrants. The bonds may be issued in exchange for
consideration in cash, but also for consideration in kind, in
particular for a participation in other companies. The respective
terms and conditions may also provide for mandatory con-
version or an obligation to exercise the option rights. The bonds
can be issued once or several times, wholly or in installments,
or simultaneously in various tranches. They can also be issued
by companies affiliated with Daimler AG pursuant to Section
15 ff of the German Stock Corporation Act (AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board to exclude shareholders' sub-
scription rights to the bonds. Subscription rights can, under
these defined conditions, be excluded when bonds are issued
in exchange for non-cash contributions, particularly within
the framework of a merger or acquisition, and when bonds are
issued in exchange for cash contributions, if the issue price
is not significantly below the theoretical market price of the
bonds at the time of the issue. No use has yet been made of
this new authorization to issue convertible bonds and/or bonds
with warrants.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015, also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
154 B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Material agreements taking effect in the event of a
change of control
Daimler AG has concluded various material agreements, as listed
below, that include clauses regulating the possible event of
a change of control, as can occur as a result of a takeover bid:
- A non-utilized syndicated credit line for a total amount
of €9 billion, which the lenders are entitled to terminate if
Daimler AG becomes a subsidiary of another company or
comes under the control of one person or several persons
acting jointly.
- Credit agreements with lenders for a total amount of
-
€2.0 billion, which the lenders are entitled to terminate if
Daimler AG becomes a subsidiary of another company or
comes under the control of one person or several persons
acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €131 million, which
the lenders are entitled to terminate if Daimler AG becomes
a subsidiary of another company or comes under the control
of one person or several persons acting jointly.
- An agreement concerning the acquisition of a majority (50.1%)
of AFCC Automotive Fuel Cell Cooperation Corp., which has
the purpose of further developing fuel cells for automotive
applications and making them marketable. In the case of a
change of control of Daimler AG, the agreement provides for
the right of termination by the other main shareholder, Ford
Motor Company. Control as defined by this agreement is the
beneficial ownership of the majority of the voting rights and
the resulting right to appoint the majority of the members of
the Board of Management.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. In the case of a change of control of one of
the parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a third
party or several third parties acting jointly acquire, legally
or economically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to appoint
a majority of the members of its managing board. Under the
master cooperation agreement, several cooperation agree-
ments were concluded between Daimler AG on the one side
and Renault and/or Nissan on the other, which provide for
the right of termination for a party to the agreement in the case
of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the shared
use and development of fuel-efficient diesel and gasoline
engines and transmissions, the development and supply of a
small urban delivery van, the development, production and
Member of the Supervisory Board
153,900
215,900
63
56
Dividend equivalent PPSP 2017
60
Total
4,921
5,147
4,302
Retirement pension expense (service costs)
649
690
264
Total remuneration
6,661
6,891
5,476
2017
149
150
63
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Dividend equivalent PPSP 2016
58
701
932
590
775
1,005
652
3,068
2,725
Payment of PPSP 2013
2,956
Dividend equivalent PPSP 2013
189
168
Dividend equivalent PPSP 2014
67
73
60
Dividend equivalent PPSP 2015
58
51
Remuneration of the Supervisory Board
Supervisory Board remuneration in 2017
The remuneration of the Supervisory Board is determined by the
Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in March 2017 and effective for the finan-
cial year beginning on January 1, 2017 specify that the mem-
bers of the Supervisory Board receive, in addition to the refund
of their expenses and the cost of any value-added tax incurred
by them in performance of their office, fixed remuneration of
€144,000 after the conclusion of the financial year. The Chair-
man of the Supervisory Board receives an additional €288,000
and the Deputy Chairman of the Supervisory Board receives
an additional €144,000. The members of the Audit Committee are
paid an additional €72,000, the members of the Presidential
Committee are paid an additional €57,600 and the members of
the other committees of the Supervisory Board are paid an
additional €28,800; an exception is the Chairman of the Audit
Committee, who is paid an additional €144,000. Additional
payments are made for activities in a maximum of three com-
mittees; any persons who are members of more than three
such committees receive additional payments for the three most
highly paid functions. Members of a Supervisory Board com-
mittee are only entitled to remuneration for such membership
if the committee has actually convened to fulfill its duties in
the respective year.
Petraea Heynike
Andrea Jung
Chairman of the Supervisory Board, the Presidential Committee and the
Nomination Committee
Deputy Chairman of the Supervisory Board, the Presidential Committee
and the Audit Committee
Member of the Supervisory Board and the
Presidential Committee
Member of the Supervisory Board
536,000
436,300
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board (since March 29, 2017)
183,800
115,177
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
184,900
153,900
Member of the Supervisory Board and Chairman of the Audit Committee
302,300
Member of the Supervisory Board (until March 29, 2017)
38,018
Dr. Jürgen Hambrecht
Dr. Bernd Bohr
Dr. Clemens Börsig
Bettag, Michael¹
In connection with the remuneration adjustment, all members
of the Supervisory Board have made a self-commitment to
purchase Company shares in the amount of 20% of their gross
annual salary (excluding committee remuneration and the
meeting fee) every year and to hold these shares until the end
of one year after they have left the Company's Supervisory
Board (voluntary obligation in accordance with the "comply or
explain" principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory
or voluntary manner to the guidelines of the German Trade
Union Confederation on the transfer of supervisory board
remuneration to the Hans Böckler Foundation, or to the same
extent is subject to a transfer to the employer or claim to
payment due to a service or employment contract. In the event
that a lower amount of the Supervisory Board remuneration
is transferred or credited, the voluntary commitment applies
to 20% of the amount not transferred or credited. With this
voluntary commitment, the members of the Supervisory Board
are expressing their focus on and commitment to the long-
term, sustainable success of the Company.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
The individual remuneration of the members of the
Supervisory Board is shown in table. 7 B.56
In financial year 2017, no remuneration was paid for services
provided personally beyond the aforementioned board and com-
mittee activities, in particular for advisory or agency services,
except for the remuneration paid to the members of the Super-
visory Board representing the employees in accordance with
their contracts of employment.
The remuneration of all the activities of the members of the
Supervisory Board of Daimler AG in the year 2017 was thus
€4.2 million (2016: €3.5 million).
Loans to members of the Supervisory Board
No advances or loans were made to members of the Super-
visory Board of Daimler AG in 2017.
B.56
775
Supervisory Board remuneration
Function(s) remunerated
In euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 151
Total in 2017
Dr. Manfred Bischoff
Michael Brecht'
Dr. Paul Achleitner
Bader M. Al Saad
Sari Baldauf
Name
50
-
53
464
473
0
1,112
391
Long-term variable remuneration
(plan period of 4 years)
(50% of annual bonus, medium-term)
1,229
0
3,288
1,092
Total
2,157
2,192
0
1,246
Deferral
391
1,112
1,416
1,178
1,178
107
107
107
129
Total
1,091
1,054
1,054 1,054
910
Annual variable remuneration
(50% of annual bonus, short-term)
464
473
0
5,512
1,874
Retirement pension expense (service costs)
649
is calculated from
-
the base salary in 2017,
- the taxable non-cash benefits and other fringe benefits in 2017,
- the half of the annual bonus payable in 2018 for 2017 at
the value for target achievement of 100%,
the half of the share-based annual bonus payable in 2019 for
2017 at the value for target achievement of 100%,
- the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017 (payable in 2021), and
- the retirement pension expense in 2017 (service costs in 2017).
The total of "payments made" for financial year 2016
is calculated from
- the base salary in 2016,
-
the taxable non-cash benefits and other fringe benefits in 2016,
the half of the annual bonus payable in 2017 for 2016 at
the value as of the end of the reporting period in financial
year 2016,
the half of the share-based annual bonus paid in 2016 for
2014 (deferral),
- the value of the long-term share-based remuneration
(PPSP 2012) paid in 2016,
the dividend equivalent of the current PPSP (2013, 2014,
2015 and 2016) paid in 2016, and
- the retirement pension expense in 2016 (service costs in 2016).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in financial year 2016 are
implemented with the payout of PPSP 2016, which constitutes the
last payment to be made of the components of remuneration
granted in financial year 2016. For financial year 2016, therefore,
the possible cap would take place in 2020, the year that PPSP
2016 is paid out.
The total of "benefits granted" for financial year 2017
1,282
147
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
690
690
690
264
Total remuneration
3,897
7,256
3,048
Total limit¹ for components of remuneration
granted in the reporting year
6,025
6,095
5,187
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
1,282
1,282
Annual variable remuneration
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
5,176
5,058
5,176
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
6,178
1,520
3,375
3,465
1,300 5,958
3,155
In thousands of euros
Total remuneration
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Jan. 1 Dec. 31
163
other fringe benefits
Taxable non-cash benefits and
781
947
947
947
928
Base salary
Jan. 1 Dec. 31
min.
max.
2017
Jan. 1 Dec. 31
2016
max.
Jan. 1 - Dec. 31
min.
50
2017
2016
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
The total of "payments made" for financial year 2017
is calculated from
238
238
954
0
406
391
954
0
406
(50% of annual bonus, medium-term)
Deferral
954
0
406
391
954
0
406
(50% of annual bonus, short-term)
Long-term variable remuneration
238
(plan period of 4 years)
0
239
122
122
122
Retirement pension expense (service costs)
4,658
0
1,855
1,810
0 4,658
1,855
Total
2,750
0
1,043
1,028
2,750
1,043
-
3,936 1,744
the taxable non-cash benefits and other fringe benefits in 2017,
the half of the annual bonus payable in 2018 for 2017 at
the value as of the end of the reporting period,
2016
2017
677
781
812
235
107
108
912
888
the base salary in 2017,
1,178
Total
470
470
470
635
2017
366
2016
Jan. 1 Dec. 31
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
Payment of PPSP 2013
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Total
Retirement pension expense (service costs)
Martin Daum¹
Daimler Trucks & Buses
Renata Jungo Brüngger¹
Integrity & Legal Affairs
March 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
Taxable non-cash benefits and other fringe benefits
366
other fringe benefits
Base salary
In thousands of euros
667
590
800
320
-
488
22
22
8
9
17
7
7
19
53
Britta Seeger
366
Jan. 1 Dec. 31
2017
Taxable non-cash benefits and
812
812
812
781
812
812
812
max.
min.
2017
Jan. 1 Dec. 31
Jan. 1 Dec. 31
2016
max.
Greater China
Hubertus Troska
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31
min.
2016
Base salary
920
Payments made
2017
2016
2017
2,008
2,008
824
92
618
167
131
9
2,626
2,175
955
101
1,516
1,978
2016
622
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Feb. 10
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
the half of the share-based annual bonus paid in 2017 for
2015 (deferral),
the value of the long-term share-based remuneration
(PPSP 2013) paid in 2017,
the dividend equivalent of the current PPSP (2014, 2015,
2016 and 2017) paid in 2017, and
- the retirement pension expense in 2017 (service costs in 2017).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in financial year 2017 are
implemented with the payout of PPSP 2017, which constitutes the
last payment to be made of the components of remuneration
granted in financial year 2017. For financial year 2017, therefore,
the possible cap would take place in 2021, the year that PPSP
2017 is paid out.
B.55
In thousands of euros
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
90
Payments made
2,175
59
Dividend equivalent PPSP 2017
128
Total
10,450
10,868
Retirement pension expense (service costs)
708
4,190
367
3,454
46
Total remuneration
13,784
13,043
3,601
148
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
1,727
133
133
5,512
54
Dividend equivalent PPSP 2016
892
670
2,567
Payment of PPSP 2013
6,181
2,472
Dividend equivalent PPSP 2013
6,417
158
Dividend equivalent PPSP 2014
141
152
60
Dividend equivalent PPSP 2015
121
395
121
Commodity price risks and opportunities
As already described in the section "Procurement market risks
and opportunities", the Group's business operations are
exposed to changes in the market prices of purchased parts,
components and raw materials. The Group addresses these
procurement risks by means of concerted commodity and sup-
plier risk management. To a minor degree, derivative financial
instruments are used to reduce the Group's market price risks
related to the purchase of certain metals.
B.60
Financial risks and opportunities
Probability
Risk category
Impact
Impact
Opportunity category
Exchange rate risks
Low
High
Exchange rate opportunities
Interest rate risks
of occurrence
The Group is subject to equity price risks in connection with
its listed associated companies and joint ventures. As of
December 31, 2017, the only shares that Daimler holds are
shares that are included in the consolidated financial state-
ments using the equity method (primarily BAIC Motor). The
Group does not include these investments in a market price
risk analysis. The section "Risks and opportunities related to
associated companies, joint ventures and joint operations"
provides more information on equity risks and opportunities.
165
Changes in interest rates can create risks and opportunities
for business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial instru-
ments are held in connection with the financial services busi-
ness of Daimler Financial Services, whose policy is generally
to perform term-congruent refinancing. However, to a limited
extent, the funding does not match in terms of maturities and
interest rates, which gives rise to the risk of changes in inter-
est rates. The funding activities of the industrial business and
the financial services business are coordinated at Group
level. Derivative interest rate instruments such as interest rate
swaps are used to achieve the desired interest rate maturities
and asset/liability structures (asset and liability management).
Risks and opportunities can arise from the remeasurement of an
associated company, joint venture or joint operation relating
to the corresponding carrying value for the segment to which it
is allocated. Furthermore, the business activities of an associ-
ated company, joint venture or joint operation, or a disposal or
acquisition of a stake in such an entity, could cause financial
obligations or an additional financing requirement, but could
also cause higher income or cash inflows in excess of the tar-
gets set. Such risks are also generally connected with startups
whose further development is not yet foreseeable. Risks exist
in the Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Financial Services segments, as well as in
the associated companies, joint ventures and joint operations
directly allocated to the Group.
Low
All associated companies, joint ventures and joint operations
are subject to a continuous monitoring process so that they
can be promptly supported if required and their profitability
can be ensured. The recoverable value of investments is also
continually monitored.
Due to the development of the quoted portfolio and the increas-
ing, risky investments in startups, the possible impact of risks
in this category has increased compared with the previous year
from "low" to "medium." The probability of occurrence remains
unchanged.
Financial risks and opportunities
The following section deals with the financial risks and oppor-
tunities of the Daimler Group. Risks and opportunities can have
a negative or positive effect on the profitability, cash flows
and financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportuni-
ties is presented in table 7 B.60.
Equity price risks and opportunities
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Group's profitability, cash flows and financial position. Daimler
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
In addition, the Group is exposed to credit and country-related
risks, risks of restricted access to capital markets and risks
of early credit repayment requirements. As part of the risk
management process, Daimler regularly assesses these risks
by considering changes in key economic indicators and market
information. Pension plan assets to cover retirement and
healthcare benefits (market-sensitive investments including
equities and interest-bearing securities) are not included in
the following analysis.
Exchange rate risks and opportunities
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations against the euro
of the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange rate
risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that of
the related costs (transaction risk). This applies in particular
to the Mercedes-Benz Cars division, as a major portion of its
revenue is generated in foreign currencies while most of its
production costs are denominated in euros. The Daimler Trucks
division is also exposed to such transaction risks, but to a
lesser degree because of its worldwide production network.
Regularly updated currency risk exposures are successively
hedged with suitable financial instruments (predominantly cur-
rency forwards and options) in accordance with exchange
rate expectations, which are continually reviewed, whereby both
risks and opportunities are limited. Any overcollateralization
caused by changes in exposure is generally reversed by suitable
measures without delay. Exchange rate risks and opportunities
also exist in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the
Group outside the euro zone (translation risk); these risks are
not generally hedged.
Interest rate risks and opportunities
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market price
changes can have a negative or positive influence on the
Low
Opportunities of restricted capital-market access
Commodity price risks
Low
Low
Opportunities of credit repayment requirements
Risks relating to pension plans
Low
High
Risks of credit repayment requirements
Opportunities relating to pension plans
Risks from changes in credit ratings
Low
Low
Opportunities from changes in credit ratings
Low
The Daimler Group generally participates in the risks and
opportunities of associated companies, joint ventures and joint
operations in line with its ownership interest.
High
Interest rate opportunities
Medium
Risks of restricted capital-market access
Low
Low
Commodity price opportunities
High
Low
Low
Low
Credit risks
Low
Credit opportunities
Country risks
Low
Low
Country opportunities
Low
Cooperation with partners in associated companies, joint ven-
tures and joint operations and other types of partnership is of
key importance for Daimler. Along with ensuring better access
to growth markets and new technologies, these shareholdings
and partnerships help to utilize synergies and improve cost
structures in order to successfully respond to the competitive
situation in the automotive industry. Through investments in
startups, Daimler promotes innovative approaches in many areas
of the Group.
159
There is no segment-specific assessment of the human resources
risk because the described risks are not related to any specific
business segment, but are valid for all segments in the respective
regions. Overall, personnel risks are reduced compared to
the previous year in terms of impact from "medium" to "low". The
probability of occurrence remains unchanged.
Low
Procurement market opportunities
High
Low
Procurement market risks
Low
Opportunities relating to leasing
and sales financing
Low
Low
and sales financing
Risks relating to leasing
High
General market opportunities
High
Low
Risks relating to the legal
and political framework
Low
High
As the target achievement of the Daimler Financial Services
division is closely connected with the business development in
the automotive divisions, the existing volume risks and
opportunities are reflected in the Daimler Financial Services
segment.
Volatilities with regard to market developments can also mean
that the overall market or regional conditions for the automo-
tive industry might develop better than assumed in the internal
forecasts and premises upon which the Group's target plan-
ning is based. This can lead to market opportunities. Opportu-
nities can also arise from an improvement in the competitive
situation or a positive development of demand for the divisions.
However, the existing market opportunities of the divisions
of the Daimler Group can only be utilized if production can be
aligned accordingly, and if this is enabled by regional condi-
tions. In addition, any gaps between demand and supply have
to be recognized and covered in good time. The measures
that could be initiated by the Daimler Group to utilize potential
opportunities include a combination of local sales and mar-
keting activities, as well as central strategic product and capacity
planning.
Potential effects of the risks on the development of unit sales
are included in risk scenarios. The risks can cause changes in
the planned business activities and the related vehicle sales and
inventories. In particular, the partially unstable macroeco-
nomic environment as well as political or economic uncertainty
could be causes in this context. Differences between the
divisions exist due to the partly varying regional focus of their
activities. Discussions about the future of diesel technology and
the related legal uncertainties are also responsible for changes
in customer demand, which can have a negative impact on
the sale of diesel vehicles and possibly also on earnings. The
development of markets, unit sales and inventories is conti-
nually analyzed and monitored by the divisions; if necessary,
specific marketing and sales programs are implemented. Clear
strategies have been formulated for each division for profitable
growth and efficient progress.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The risks and opportunities for the economic development
of automotive markets are strongly affected by the cyclical
situation of the global economy as described above. The
assessment of market risks and opportunities is linked to
assumptions and forecasts about the overall development
of markets in the regions in which the Daimler Group is active.
The possibility of markets developing better or worse than
assumed in the planning, or of changing market conditions,
generally exists for all divisions of the Daimler Group.
General market risks and opportunities
Further risks exist from geopolitical tension, such as between
Saudi Arabia and Iran or in North Korea, but countries like
Russia and Turkey also continue to represent considerable con-
flict potential. Should further terrorist attacks or assassina-
tions in Europe or other major economies lead to an additional
high degree of uncertainty, investment and consumer confi-
dence could be severely undermined with a resulting impact on
the real economy. In addition, an increase in terrorist attacks
would accelerate the already growing influx into populist parties,
thereby promoting isolationism and adversely affecting world
trade, with enormous costs to the world economy.
Risks and opportunities related to associated companies,
joint ventures and joint operations
In view of the positive economic situation in many parts of the
world, including Europe and some major emerging markets,
the opportunity exists that the world economy will grow in 2018
at a higher rate than hitherto assumed. A stronger increase in
worldwide demand would support raw-material prices and would
have positive effects on raw-material exporters in South
America, the Middle East and Africa.
Due to China's enormous importance as a growth driver for the
world economy in recent years, a downturn in China's economy
would represent a considerable risk to the world economy.
The enormous growth in debt that has been observed since the
global financial crisis, especially in the corporate sector, repre-
sents a significant risk. If the government's efforts to restrict
credit growth lead to a more significant growth slowdown than
currently expected, this would result in a perceptible cooling-off
for the world economy. Within China, a slowdown could result
in an excessive increase in credit defaults, which would then
lead to turbulence in the banking sector and the financial
markets. In particular for the Mercedes-Benz Cars division, for
which China is now the biggest individual sales market by a
large margin, the aforementioned risks could result in significant
negative effects on its unit sales. In addition, a drop in demand
in China would trigger another fall in the price of oil and other
(industrial) raw materials, with extremely disadvantageous
effects for raw-material exporting countries worldwide, especially
in Latin America, the Middle East and Sub-Saharan Africa.
This would have a negative impact on demand for the automotive
divisions in those regions. On the other hand, growth in 2018
could also turn out to be stronger than expected if the Chinese
government pursues less tight monetary and fiscal policies
than currently anticipated. The resulting stronger growth in over-
all economic consumption would create additional opportuni-
ties, especially for the Mercedes-Benz Cars division.
In Europe, political risks regarding the stability of the EU and the
monetary union have decreased somewhat since the results of
the elections in 2017. Nonetheless, separatist tendencies such
as in Catalonia or upcoming parliamentary elections in Italy
mean that a resurgence of the euro crisis cannot be ruled out.
In addition, there are still significant risks in the banking
sector of some member states and the volume of defaulting
loans is very high in some countries. Another crucial factor
for economic development in Europe is the ongoing progress of
the Brexit negotiations. Failure to reach an agreement could
have a negative impact on the business climate and thus on the
development of the British economy and to a lower extent the
euro zone, which would potentially make trading conditions more
difficult. The European market continues to be very important
for Daimler across all divisions; in fact, it is the biggest sales
market for the Mercedes-Benz Cars and Mercedes-Benz Vans
division. These risks exist along with opportunities for stronger
growth due to even stronger dynamism from consumption and
investment in the euro zone, which would also boost demand
for motor vehicles in the important European market.
market adjustments and phases of exceptional volatility in
the global financial markets. Such developments could have a
negative impact on the investment climate worldwide, with
negative effects on the world economy.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
158
Low
Opportunities relating to the legal
and political framework
The prospects of the emerging markets remain stable compared
with the previous year, but continue to be connected with some
risks, primarily of an external nature. For example, a significant
increase in interest rates in the United States could cause
difficulties in particular for those emerging markets with high
current account deficits and high levels of foreign debt,
resulting in significant currency depreciation (e.g. Turkey, South
Africa and Brazil). Financial-market turbulences going as far as
currency crises would be possible consequences and could have
a massive impact on the economies of the affected countries.
Lower growth in world trade and lower raw-material prices (e.g.
a drop in the oil price) than currently forecast would have a
negative impact on growth for exporters of raw materials. As
Daimler is already very active in those countries, or their mar-
kets play a strategic role, this would have significantly negative
effects on the Group's prospective unit sales. However,
import-dependent economies such as India would benefit from
lower price levels. Furthermore, stronger growth in world
trade and higher raw-material prices would create positive impe-
tus in emerging markets that export raw materials, leading
to stronger economic growth and thus increased demand for
motor vehicles.
Impact
Opportunity category
Impact
In order to ensure the complete presentation and assessment
of existence-threatening and other material risks of the Group,
as well as the control and risk processes with regard to the
corporate accounting process, Daimler has established the
GRMC. It is composed of representatives of Accounting &
Financial Reporting, the Legal Department, Group Compliance
and Technical Compliance, and is chaired by the Board of
Management Member for Finance & Controlling/Daimler Finan-
cial Services. The internal auditing department contributes
material findings on the internal control and risk management
system.
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk manage-
ment organization established at the Group. In this context,
the divisions, corporate functions and legal entities are requested
to report on concrete risks and opportunities at regular inter-
vals. This information is passed on to Group Risk Management,
which processes the information and provides it to the Board
of Management and the Supervisory Board as well as to the
Group Risk Management Committee (GRMC).
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and the definition of con-
trol. Significant risks are identified relating to the processes
of corporate accounting and financial reporting in the main legal
entities and corporate functions. The controls required are
then defined and documented in accordance with Group-wide
guidelines. Random samples are regularly tested to assess the
effectiveness of the controls. Those tests constitute the basis
for self-assessment of the appropriate magnitude and effec-
tiveness of the controls. The results of this self-assessment are
documented and reported in a Group-wide IT system. Identified
weaknesses are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal enti-
ties and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to
the corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are regu-
larly informed about the main control weaknesses and the effec-
tiveness of the control mechanisms installed. However, the
internal control and risk management system for the accounting
process cannot ensure with absolute certainty that material
false statements in accounting are avoided.
- processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the
context of preparing financial statements, and authorization
and access rules exist for relevant IT accounting systems.
- processes are established to guarantee the completeness
of financial reporting;
- issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
- transactions within the Group are accounted
for and properly eliminated;
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
The internal control and risk management system with
regard to the accounting process has the objective of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recognized
framework for internal control systems of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO
Internal Control - Integrated Framework), is continually devel-
oped further, and is an integral part of the accounting and
financial reporting processes in all relevant legal entities and
corporate functions.
The tasks of the employees responsible for risk and opportunity
management include, besides the identification and assess-
ment of risks and opportunities, the development of measures
and the initiation of such measures, if necessary. The objective
of such measures is to avoid, reduce or transfer risks. The utili-
zation or enhancement of an opportunity, and its partial or full
implementation, also require measures to be taken. The cost-
effectiveness of a measure is assessed before its implemen-
tation. The development of all risks and opportunities of the indi-
vidual entities and of the related measures that have been
initiated are continually monitored. The management activities
take place at the level of the divisions based on individual risks
and opportunities.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all concrete
risks enter the risk management process. General uncertain-
ties without any clear indication of a possible effect on earnings
are monitored within the internal control system (ICS).
Group level, risks and opportunities below €500 million are
classified as low, between €500 million and €1 billion as medium,
and above €1 billion as high. For the quantification of each
risk and opportunity category in the Management Report, the
individual risks and opportunities are summarized for each cat-
egory. The assessment of the dimensions probability of occur-
rence and possible impact is based on the levels shown in table
7 B.57 and is conducted before measures are implemented. In
addition to the quantifiable risks and opportunities, risk man-
agement also considers qualitative risks and opportunities, which
primarily comprise those risks connected with aspects pre-
sented in the non-financial report. In the context of describing
the risk and opportunity categories, significant changes in
comparison to the prior year are explained.
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels low,
medium and high. These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of
a risk or opportunity, its effect on EBIT is generally considered.
156 B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The system includes principles and procedures as well as
preventive and detective controls. Among other things, it is
regularly checked, if
Due to the partly difficult financial situation of some dealerships
and vehicle importers, support actions might become neces-
sary to ensure the performance of the business partners. The
sources of these risks lie in the respective risk environment.
Supporting actions would adversely affect the profitability, cash
flows and financial position of the automotive divisions. Further
risks may result from the dependency on certain dealerships. In
certain circumstances, relationships with new business partners
may have to be developed. The financial situation of strategi-
cally relevant dealerships and vehicle importers is continually
monitored. If required, payment conditions are adjusted and
additional guarantees are obtained. Risks of this kind exist for
dealerships and vehicle importers of the divisions Mercedes-
Benz Cars, Daimler Trucks and Mercedes-Benz Vans.
157
Reports regarding the current risk situation and the effective-
ness, functionality and appropriateness of the internal control
and risk management system are regularly presented to the
Board of Management and to the Audit Committee of the Super-
visory Board of Daimler AG. Furthermore, the responsible
managers regularly discuss risks and opportunities out of busi-
ness operations with the Board of Management.
Probability
of occurrence
Risk category
Industry and business risks and opportunities
B.58
In the United States, the tax reform recently passed and a
generally more expansive fiscal policy could result in additional
impetus that has not previously been considered. If a signifi-
cantly more dynamic investment activity ensues there, leading
to stronger growth in combination with positive employment
and income effects, this could boost demand in all automotive
divisions. As the Daimler Group generates a substantial pro-
portion of its revenue in the United States, especially in the
Mercedes-Benz Cars, Daimler Trucks and Daimler Financial
Services divisions, these developments would have consider-
able consequences for the Group's success. Furthermore,
stronger growth in the United States would also have spillover
effects on the rest of the world. However, the disadvantages
of such an expansionary fiscal policy are a worsening of the debt
situation in the United States and the risk that the central
bank ("Fed") might feel forced to raise interest rates more sig-
nificantly than previously assumed in order to counteract
strong inflationary pressure. This would increase the existing
risks arising from the Fed's exit from its expansive monetary
policy and from the increase in the federal funds rates. As a
result, increasing lending rates could dampen the recovery
of the real-estate market and companies' propensity to invest.
There is also the risk of sharp falls in share prices triggering
a chain reaction on global stock markets, resulting in major
Economic risks and opportunities are linked with assumptions
and forecasts concerning general developments. The relation-
ship between risks and opportunities at the beginning of the
year 2018 is more balanced than in the previous year; however,
numerous risks continue to exist for the world economy.
pages 95 ff
Responsibility for operational risk management and for the
risk management processes lies directly with the divisions,
corporate functions and legal entities.
Like the majority of economic research institutes, Daimler
expects the world economy to grow by more than 3% once again
in 2018, following the perceptible acceleration of growth in
2017. Economic developments in 2017 are described in detail
in the "Economic Conditions and Business Development"
section of this Management Report; growth assumptions for
2018 are explained in the “Outlook" section
and 170 ff.
Economic risks and opportunities
The following section describes the industry and business
risks and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.58.
Industry and business risks and opportunities
In addition, risks and opportunities that are not yet known
or classified as not material can influence profitability, cash
flows and financial position.
The following section describes the risks and opportunities
that can have a significant influence on the profitability, cash
flows and financial position of the Daimler Group. In general,
the reporting of risks and opportunities takes place in relation
to the individual segments. If no segment is explicitly men-
tioned, the risks and opportunities described relate to all the
automotive divisions.
Risks and opportunities
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The internal auditing department monitors whether
the statutory conditions and the Group's internal guidelines con-
cerning the internal control and risk management system of
the Group are adhered to. If required, measures are then initi-
ated in cooperation with the respective management. External
auditors audit the system for the early identification of risks
which is integrated in the risk management system for its
general suitability to identify risks threatening the existence of
the Group; in addition, they report to the Supervisory Board
on any significant weaknesses that have been recognized in the
internal control and risk management system.
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
The successful product portfolio of the Daimler Group con-
tributes to its advantageous positioning compared with the
competitors. Possibly rising competitive and price pressure
above all affect the segments Mercedes-Benz Cars and Daimler
Trucks. Aggressive pricing policies, the introduction of new
products by competitors, or pricing pressure in the aftersales
business can make it more difficult to achieve expected prices.
This might result in lower revenue, the failure to achieve the
products' planned profitability, or lower market share. The
extent of such risks is related to the magnitude of a division's
sales volume. Continuous monitoring of competitors is carried
out in order to recognize these risks at an early stage. Depending
on the situation, product-specific and possibly regionally differ-
ent measures are taken to support weaker markets. They include
the use of new sales channels, actions designed to strengthen
brand awareness and brand loyalty as well as sales and mar-
keting campaigns. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
General market risks
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Financial Services companies that operate
commercial fleet management and leasing management,
because most of those vehicles are not covered by manufactur-
ers' residual-value guarantees. Residual-value risk is taken
into account through a high level of diversification with regard to
brands, regions, customers and lease periods. Used-vehicle
prices are continually monitored both locally and centrally, so
that the residual-value risk from a drop in market prices can
be forecast in good time and suitable countermeasures may be
initiated.
163
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Low
Opportunities related to equity interests
and joint ventures
Medium
Low
and joint ventures
Company-specific risks and opportunities
Risks related to equity interests
Low
Low
Personnel risks
Medium
Low
Information technology risks
High
Production and technology opportunities
Information technology opportunities
Personnel opportunities
Low
The following section describes the company-specific risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 71 B.59.
In the context of product launches, the required parts and
equipment components have to be available. To avoid restrictions
in this context, the related processes are continually evaluated
and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expan-
sion, construction and restructuring measures are carried out
as required. The execution of modernization activities and
the launch of new products are generally connected with high
investments. For example, stipulations, plant reconstruction
or delays in the ramp-up phase of an innovation or during a prod-
uct's lifecycle can lead to a short-term reduction in production
volumes. Those automotive segments are affected which are
currently launching a new product or have planned a related
production ramp up. In this context, it is also necessary to con-
sider dependencies between contractual and cooperation part-
ners, as well as possible changes in regional conditions, which
have to be included in the local decision-making process.
Further risks at Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Financial Services relate to the development of used
vehicle markets and thus to the residual values of the vehicles
produced. In particular, the uncertainty existing in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evaluated.
If changing market developments lead to a negative deviation
from assumptions, there is a risk of lower residual values of used
cars. Depending on the region and the current market situa-
tion, the measures taken generally include continuous market
monitoring as well as, if required, price-setting strategies or
sales promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by periodic
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems.
On the other hand, opportunities can arise from a positive
development of residual values caused by a favorable market
environment for used vehicles as well as reductions in price
reductions granted on new vehicles.
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. Future success also depends on the extent to which
the Daimler Group succeed over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise and ensur-
ing transparency with regard to the resources of the Daimler
Group. One focus of human resources management is the
targeted personnel development and further training of the
workforce. Employees benefit for example from the range of
courses offered by the Daimler Corporate Academy and from
transparency in the context of performance management.
Management culture and principles are currently being further
developed in a Group-wide project.
The success of the Daimler Group is highly dependent on its
employees and their expertise. They are involved in their
respective activities and working processes with their ideas
and suggestions, and thus make significant contributions to
improvements and innovations every day.
Personnel risks and opportunities
The impact and probability of occurrence of IT risks remain
unchanged compared with the previous year.
out.
Despite all precautionary measures, disturbances in information
processing and therefore negative impacts on the business
processes and on IT-based services cannot be completely ruled
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group - and hence for the
achievement of corporate targets - are brand image, design
and quality, and thus the acceptance of products by custom-
ers, as well as technical features based on innovative research
and development. Convincing solutions, which for example
support accident-free driving or further improve the products'
fuel consumption and emissions, such as hybrid or electric
vehicles, are of key importance for safe and sustainable mobil-
ity. Innovations and technology opportunities for the progres-
sive and future-oriented design of the product range flow into
the strategic product planning of the automotive divisions.
However, due to increasing technical complexity, the continu-
ally rising extent of requirements in terms of emissions, fuel
consumption and safety, as well as meeting and steadily raising
the Daimler Group's quality standards, product launches and
manufacturing in the automotive divisions are also subject to
production and technology risks.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has defined various
preventive and corrective measures so that the related risks
are minimized and possible damage is limited. These measures
are continually adapted to changing circumstances. For exam-
ple, the Group minimizes potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and IT
systems designed for high availability. Emergency plans are
developed, employees are trained sensitized, and further tech-
nical and organizational precautions are taken in order to
maintain operating capability. Specific threats are analyzed and
countermeasures are coordinated at a central cyber security
center. The protection of products and services from danger
caused by hacking and cybercrime is continually developed.
164
It is essential for a global company like Daimler AG that
information is available and can be exchanged in an up-to-date,
complete and correct form. Appropriately secure IT systems
and a reliable IT infrastructure must be used to protect informa-
tion. The Daimler Group intends to identify and evaluate risks
that could result in the interruption of business processes due
to the failure of IT systems or which could cause the loss or
corruption of data, over the entire lifecycle of applications and
IT systems.
Information technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer bene-
fits and enterprise value. However, it also includes risks from
the increasing IT dependency of products and business and pro-
duction processes. In addition, specific risks exist due to the
use and availability of new technologies in connection with digiti-
zation, which amongst others can affect the products, their
use, or business operations. In addition, risks from cybercrime
and hacker attacks cannot be ruled out.
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared with the
previous year across all segments.
Warranty and goodwill cases could arise in the Daimler Group
if the quality of the products does not meet the requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product prob-
lems and product care. Quality problems with components in
vehicles from external suppliers - as for example in connection
with the industry-wide problems with Takata airbags - can
require technical adjustments that can lead to considerable
expenses. Possible claims in connection with such risks are
examined and, if necessary, the appropriate measures are initi-
ated for the affected products. This can reduce the products'
profitability and generate follow-up costs. The Daimler Group
works continually and intensively to maintain product quality
at a very high level, along with growing product complexity, in
order to avoid the need for correction measures on end products
and thus to supply customers with the best possible products.
Insufficient availability of vehicle components at the right time,
interruptions in the supply chain and possible interruptions in
supply by energy providers can lead to bottlenecks, especially
at the Mercedes-Benz Cars division. In order to avoid such
bottleneck situations, importance is placed upon being able
to compensate for capacity constraints through forward
planning. In addition, supply chains and the availability and qual-
ity of products are continuously monitored within the context
of managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of increas-
ing inventories in good time and building up alternative supply
lines, as required.
In principle, there is a danger that infrastructure problems or the
failure of production equipment or production plants may
cause internal bottlenecks that would consequently generate
costs. With the parallel failure of several production plants, the
resulting effects could accumulate. These risks mainly exist for
the Mercedes-Benz Cars segment. The production equipment
is continually maintained and modernized. As a precaution, spare
parts are held available or, if required, redundant machines
are purchased for the production plants that might be at risk.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Production and technology risks
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This issue is addressed by taking appropriate
measures in the area of generation management. If this risk
occurs, depending on the extent of the personnel shortage, an
impact is to be expected on the business activities and thus
also on the earnings of the Daimler Group.
Opportunity category
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. They relate for
example to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by the production facilities. Non-
compliance with regulations applicable in the various regions
might result in significant penalties and reputational harm
and in the case of violations of regulations concerning vehicles'
environmental compatibility, might even mean that vehicles
could not be or could no longer be registered in the relevant
markets. The cost of compliance with these regulations is
significant, especially for conventional engines, and Daimler
expects a significant increase in costs in this context.
The automotive industry is subject to extensive governmental
regulation worldwide. Risks and opportunities from the legal
and political framework have a considerable impact on Daimler's
future business success. Regulations concerning vehicles'
emissions, fuel consumption and certification play a partic-
ularly important role. Complying with these varied and often
diverging regulations all over the world requires strenuous efforts
on the part of the automotive industry. In the future, Daimler
expects to spend an even larger portion of its research and devel-
opment budget to ensure compliance with these regulations.
Nonetheless, it has been possible to reduce the assessment of
risks and opportunities related to the legal and political frame-
work to "low" for the probability of occurrence. This is mainly
because issues for the year 2018 have been taken into consid-
eration in the planning. The potential impact of the risks and
opportunities remains unchanged at "high."
Risks and opportunities related to the legal and
political framework
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 161
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines, the
Mercedes-Benz Cars segment in particular is faced with the
risk that Daimler will require changed volumes of components
from suppliers. This could result in over- or under-utilization
of production capacities for certain suppliers. If supplier can-
not cover their fixed costs, there is the risk that suppliers
could demand compensation payments. Necessary capacity
expansion at suppliers' plants could also require cost-effective
participation.
Supplier risk management aims to identify potential financial
bottlenecks for suppliers at an early stage and to initiate
suitable countermeasures. Although the crisis of recent years is
over, the situation of some of suppliers remains difficult due
to a high degree of competitive pressure. This has necessitated
individual or joint support actions by vehicle manufacturers to
safeguard their production and sales. In the context of supplier
risk management, regular reporting dates are set for suppliers
for which we have received early warning signals and made cor-
responding internal assessments. On those dates, the suppliers
report their key performance indicators to Daimler and decisions
are made concerning any required support actions.
Impact
The Mercedes-Benz Cars segment faces risks with respect to
regulations on average fleet fuel consumption in the Chinese
market. In the European Union, the EU Commission made an
ambitious proposal in November 2017 on future regulations
concerning the CO2 emissions of new vehicles (period of 2021
to 2030). Legislation in the United States on greenhouse gases
and fuel consumption impacts German premium manufacturers
and thus also the Mercedes-Benz Cars division harder than
US manufacturers, for example. Similar legislation exists or is
being prepared in many other countries, as in Japan, South
Korea, India, Canada, Switzerland, Mexico, Saudi Arabia, Brazil
and Australia. Daimler gives these targets due consideration in
its product planning. The increasingly ambitious targets require
significant proportions of plug-in hybrids or cars with other
types of electric drive. The market success of these drive sys-
tems is greatly influenced by regional market conditions, for
example the battery-charging infrastructure and state support.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions in
particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppliers
and of capacity bottlenecks caused by supplier delivery failures
or by insufficient utilization of production capacities at suppliers.
The risk situation relating to probability of occurrence and
impact has not changed compared with the previous year. Oppor-
tunities in the raw-material markets continue to exist due to
positive price developments for relevant raw materials. Com-
pared with the previous year, however, the extent of those
opportunities has decreased from “medium” to “low” as a result
of more pessimistic assumptions concerning the future develop-
ment of raw-material prices.
Possible regard residual-value risks for the automotive
divisions and the companies in the Daimler Financial Services
division that operate commercial fleet management and leas-
ing management are described in the section "General Market
Risks and Opportunities."
An adjustment of credit conditions for customers in the leas-
ing and sales-financing business caused by higher refinancing
costs could reduce the new business and contract volume of
Daimler Financial Services, also reducing the unit sales of the
automotive divisions. Risks and opportunities also arise from
a lack of matching maturities with refinancing. The risk of mis-
matching maturities is minimized by coordinating refinancing
with the periods of financing agreements, from the perspective
of interest rates as well as liquidity. Any remaining risks from
changes in interest rates are managed by the use of derivative
financial instruments. Further information on credit risks and
the Group's risk-minimizing actions is provided in Note 32
of the Notes to the Consolidated Financial Statements.
In connection with the sale of vehicles, Daimler offers its
customers a wide range of financing possibilities - primarily
of leasing and financing the Group's products. The resulting
risks for the Daimler Financial Services segment are mainly due
to borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because of cus-
tomers' insolvency (default risk or credit risk). Daimler
counteracts credit risks by means of creditworthiness checks
on the basis of standardized scoring and rating methods and
the collateralization of receivables, as well as an effective risk
management with a firm focus on monitoring both internal
and macroeconomic leading indicators. Other risks associated
with the leasing and sales-financing business involve the
possibility of increased refinancing costs due to changes in
interest rates (interest rate risk).
Risks and opportunities relating to the leasing and
sales-financing business
Despite increasing residual-value risks, the probability of
occurrence of general market risks across all segments has
decreased compared with the previous year from “medium”
to "low" as a result of the improved market positioning of the
automotive divisions compared with their competitors.
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160
The extent of the risks and opportunities and the probability
of occurrence of the risks relating to the leasing and sales-
financing business continue to be assessed as low.
If the negative headlines on diesel engines and the threat of
driving bans on diesel vehicles were to unsettle customers,
resulting in lasting shifts in the drive-system portfolio (fewer
diesel and more gasoline engines), additional development and
production measures would have to be taken to meet the CO2
fleet limits applicable as of 2020. On the other hand, differenti-
ating bans in cities that privilege diesel vehicles with good
emission levels could result in competitive advantages for our
new 4 and 6-cylinder engines (OM 654 and OM 656) with their
very good exhaust emissions.
Raw-material prices continued to feature significant volatility
in 2017. Due to almost completely unchanged macroeconomic
conditions, price fluctuations are expected with uncertain and
uneven trends in the near future. On the one hand, raw-material
markets can be impacted by political crises and uncertainties -
combined with possible supply bottlenecks - as well as by
volatile demand for specific raw materials; this increases the
risk from raw-material prices for the individual automotive
segments. Generally, the ability to pass on the higher costs of
commodities and other materials in the form of higher prices
for the manufactured vehicles is limited because of strong com-
petitive pressure in the international automotive markets.
Strict regulations for the reduction of vehicles' emissions and
fuel consumption create potential risks also for the Daimler
Trucks and Daimler Buses divisions, because it will be hard
to fulfill the statutory requirements in some countries. For
example, legislation has been in effect in Japan since 2006 and
in the United States since 2011 on the reduction of greenhouse-
gas emissions and fuel consumption by heavy-duty commercial
vehicles. In China, fuel-consumption legislation was drafted
in 2017 which affects our exports of heavy-duty trucks to that
country with strict requirements as of 2019/2020. The Euro-
pean Commission is currently working on methods for measur-
ing the CO2 emissions of heavy-duty commercial vehicles that
will have to be applied as of 2019. It has also decided to present
a standard for limiting heavy-duty commercial vehicles' CO₂
emissions in the first half of 2018. We expect that the limits to
be confirmed by the EU Parliament and Council will have to be
met as of approximately 2025. Other countries such as India,
South Korea and Brazil are also working on draft proposals
for reducing the fuel consumption of heavy-duty commercial
vehicles.
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive type approval if their air-conditioning units
are filled with a refrigerant that meets certain criteria with
regard to climate friendliness. For vehicles produced on the basis
of type approvals granted previously, the directive allowed a
period of transition until December 31, 2016. Mercedes-Benz
vehicles fully comply with these legal requirements as of
January 1, 2017 through the application of CO2 air-conditioning
and the refrigerant R1234yf in combination with a specially
developed safety device that will be used depending on each
vehicle's configuration. In December 2016, the EU Commission
initiated infringement proceedings against the Federal Republic
of Germany in the European Court of Justice (ECJ). The Com-
mission sees a contravention of the European type-approval
directive and of the Directive on emissions from air-condi-
tioning systems in motor vehicles by the German authorities.
In March 2017, Germany's Federal Motor Vehicle Transport
Authority issued Daimler AG with an injunction requiring the
changeover of those vehicles from the first half of 2013 in
which the previously used refrigerant R134a was used for reasons
of safety. Daimler considers the claim to be unfounded and
has filed an objection to the order. At present, the Group does
not assume that these issues will result in material effects on
its profitability, cash flows or financial position.
Impact
of occurrence
Risk category
Probability
B.59
In order to adapt to these requirements, Daimler has already
increased its local value added in major markets, and has thus
taken appropriate action in good time. However, on the basis
of our production locations' increasing proximity to the various
markets, further opportunities also exist for the Daimler Group,
relating for example to the utilization of market potential or
logistical advantages.
Furthermore, the danger exists that individual countries will
attempt to defend and improve their competitiveness in the
world's markets by resorting to interventionist and protec-
tionist actions. This applies to the markets of developing
countries and emerging economies, but also to Europe, the
United States and China, and is manifested above all in the
form of local-content rules affecting the entire value chain. In
addition, attempts are being made to limit growth in imports
through barriers to market access such as by making certifi-
cation processes more difficult, delaying certification and
imposing other complicated customers procedures, while attract-
ing direct foreign investment by means of appropriate industrial
policies. Changes in tax subsidies or the like have the potential
to significantly influence the overall market development and
increase uncertainty in the planning process.
Company-specific risks and opportunities
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development. The biggest challenge in the
coming years will be to offer an appropriate range of drive
systems and the right product portfolio in each market, while
fulfilling customers' wishes, internal financial targets and
statutory requirements. With an optimal product portfolio and
market-launch strategy, competitive advantages may also arise.
These discussions or bans on vehicles with conventional drive
systems can increase demand for vehicles with alternative drive
systems, especially for electric vehicles, as well as for mobility
services including car-sharing services. In order to utilize the
resulting opportunities, Daimler is present in the market with
the provision of innovative mobility services (including car2go,
moovel, mytaxi and Via).
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction of traffic
jams, noise and emissions are becoming increasingly impor-
tant in cities and urban areas worldwide. In China for example,
limited access to vehicle registration is continuing, and now
also imported plug-in hybrid vehicles are being specifically
excluded from access to registration (e. g. in Beijing, Guang-
zhou and Shenzhen). This development can have a dampening
effect on the development of unit sales, especially in growth
markets. Pressure to reduce personal transport is increasingly
being applied in European cities through discussions of bans
on vehicles entering or driving in inner cities, especially those
with diesel engines.
Very demanding regulations for CO2 emissions are also planned
or have been approved for light commercial vehicles. This will
present a challenge for Mercedes-Benz Vans, especially in the
long term. In the United States, Mercedes-Benz Vans is affected
to varying degrees by fuel-consumption and greenhouse-gas
regulations for both light-duty and heavy-duty vehicles. The
stricter limits planned for the years 2021 to 2027 will also affect
Mercedes-Benz Vans. The proposals presented by the EU
Commission in November 2017 for limiting the CO2 emissions of
light commercial vehicles, if confirmed by the EU Parliament
and Council, are very ambitious.
Furthermore, many countries such as China, India and Brazil are
working on the regulation of emissions, which will raise their
standards at least to the level of Euro VI limits. Daimler Trucks
and Daimler Buses will therefore have to apply the latest tech-
nologies in order to fulfill these requirements.
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162
The position of the Daimler Group in key foreign markets could
also be affected by an increase in bilateral free-trade
agreements. If bilateral agreements are concluded without the
involvement of the European Union or without the conclusion
of equivalent agreements by the EU, the position of the Daimler
Group could be significantly impacted. At the same time, EU
free-trade agreements could also result in opportunities for the
Daimler Group vis-à-vis competitors in countries which are
not parties to such agreements.
The emerging economies should achieve aggregate growth in
output of just over 4.5% in 2018, as in the previous year and
thus in line with their long-term trend. The prospects of the Chi-
nese economy, based on its very robust development in the
year 2017, are favorable for this year as well. However, due to
reduced state economic stimulus and rather more restrictive
lending, most analysts anticipate a slight decrease in growth
to about 6.5%. While the economies of Central and Eastern
Europe will probably not quite match their strong growth of the
previous year, an acceleration of growth is expected for the
In 2018, worldwide demand for cars is likely to increase again
from an already high level. According to current forecasts, slight
growth of approximately 2% is to be expected. Slight market
growth is expected once again in Europe and China. The US
market will be similar to its prior-year volume and the recovery
of demand in the emerging markets should continue.
Automotive markets
Overall, the world economy should grow in 2018 by significantly
more than 3%, a similarly favorable rate of expansion as in the
previous year.
South American economies. But with anticipated GDP growth
of 2 to 2.5%, South America remains below its potential. The
further stabilization of raw-material prices should help the
countries of the Middle East, but their expected growth rates
of just under 3% remain below average for that region.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK 171
The growth prospects of the Japanese economy also remain
relatively stable. Although growth in private consumption and
investment should weaken slightly, an increase in gross domes-
tic product (GDP) of between 1 and 1.5% is expected.
170
Most economic indicators suggest that the economy of the
European Monetary Union (EMU) will grow at an above-average
rate also in 2018. On the basis of robust domestic demand and
a solid contribution from foreign trade, economic growth of close
to 2.5% should be possible. The European Central Bank will
make use of the favorable economic outlook to gradually cut
back its very expansive monetary policy of recent years. This
applies in particular to the probable phasing out of the exten-
sive bond-buying program. From today's perspective, however,
increases in key interest rates are not yet on the agenda. Growth
prospects for the German economy are also positive and it
could expand by 2.5% this year. As the year 2018 will probably
continue to be impacted by uncertainty relating to the EU exit
conditions for the United Kingdom, the British economy is
likely to continue its rather moderate development, an economic
slump in the UK is unlikely.
At the beginning of 2018, the world economy continues to
develop with solid growth. We assume that this dynamism will
also continue as the year progresses. Growth prospects for
both the advanced economies and the emerging markets are
similarly positive as they were last year.
The world economy
Our assessments for the year 2018 are based on the assumption
of generally stable economic conditions and the expectation
that the positive trend of the global economy and of worldwide
demand for motor vehicles will continue. The development
we have outlined is subject to various opportunities and risks,
which are explained in detail in the Risk and Opportunity
Report.
pages 155 ff
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board in December 2017.
That planning is based on the premises we set regarding the
economic situation and the development of automotive markets.
It involves assessments made by Daimler, which are based on
relevant analyses by various renowned economic research insti-
tutes, international organizations and industry associations, as
well as on the internal market analyses of our sales companies.
The prospects for our future business development as presented
here reflect the targets of our divisions as well as the opportunities
and risks presented by the anticipated market conditions and
the competitive situation during the planning period. Against this
backdrop, we adjust our expectations for business development
to reflect updated forecasts for the development of the various
automotive markets. The statements made below are based on
the facts known to us at the beginning of 2018.
Outlook
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
In the United States, the available leading indicators point
towards a continuation of the economy's solid upswing. In
view of stable domestic demand, moderate inflation and low
unemployment, the US Federal Reserve is likely to maintain
its slightly restrictive monetary policy with only small inter-
est-rate rises. In connection with stimulus from the tax
reform passed in late 2017, this could result in overall growth of
just above 2.5%, and thus slight acceleration compared with 2017.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 169
Daimler Buses assumes that it will be able to defend its mar-
ket leadership in its most important traditional core markets for
buses above 8 tons with innovative, future-oriented and high-
quality products. We expect total unit sales in 2018 to be signif-
icantly above the prior-year level. We assume that unit sales in
the EU30 region will increase perceptibly. After the significant
increase in unit sales in Latin America last year, we anticipate
a further significant recovery in 2018. A positive development of
unit sales is expected also in India.
Thanks to the continuation of a positive investment climate
worldwide, overall demand for medium- and heavy-duty
trucks should increase significantly in most of the regions
relevant to us.
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continually monitored and further developed.
Mercedes-Benz Vans plans to significantly increase its unit
sales in the year 2018. Growth is expected to be particularly
strong in China and the United States. We anticipate signifi-
cant growth also in the EU30 region, due not least to the new
X-Class. In the context of our "Mercedes-Benz Vans goes global"
strategy for the division, we have expanded our portfolio with
the Mercedes-Benz X-Class, a premium pickup for markets in
Europe, South Africa, Australia and New Zealand. In Latin
America, market launch is planned for the year 2019. We expect
additional growth in 2018 from the new Sprinter, which we will
produce also in North America in the future.
Daimler Trucks assumes that its total unit sales in 2018 will be
significantly higher than in the previous year, primarily due to
the perceptible recovery of major markets. In the NAFTA region,
we anticipate unit sales significantly higher than the prior-year
level as a result of the ongoing market recovery apparent since
the second quarter of 2017. In the EU30 region, we expect unit
sales to be in the magnitude of the previous year. In Brazil, we
assume that unit sales in 2018 will significantly surpass the
low level of 2017. With our attractive product portfolio in the
Indian market, we expect to significantly increase our unit sales
and to further strengthen our market position. Furthermore,
with the expanded range of FUSO vehicles from Indian produc-
tion, we have the opportunity to generate additional sales in
Asia, Africa and Latin America. Our unit sales in Indonesia
should grow significantly once again, and we expect to sell a
similar number of trucks in Japan as we did in 2017.
As of the year 2020, the smart brand intends to sell solely cars
with electric drive in Europe and North America, and the other
regions will follow. The new electric-drive models of the smart
fortwo, smart fortwo Cabrio and smart forfour (electricity con-
sumption combined: 13.1-12.9 kWh/100 km; CO2 emissions
combined: 0 g/km) combine the agility of a smart with locally
emission-free driving at an affordable price - the ideal combina-
tion for urban mobility.
We are systematically expanding our worldwide production net-
work for electric mobility. Under the new brand EQ, which
stands for "Electric Intelligence," we will offer not only vehicles
but also services in connection with electric mobility. By the
year 2022, we want to electrify each segment across the entire
Mercedes portfolio. Our goal is to offer our customers at least
one electrified alternative in each segment - from the compact
car to the large SUV. We plan to have a total of more than 50
electrified models by the year 2022. This will include more than
ten fully electric vehicles, the plug-in hybrids and the models
with 48-volt technology.
We are well positioned also with our SUVs, including the
upgraded GLA, which we launched in 2017. The new G-Class
will make its mark in this segment as of this spring, and the
GLC models should continue along their growth path. In addi-
tion, our sports-car and high-performance brand Mercedes-
AMG continues to be an important sales driver. More and more
customers are fascinated by the broad and appealing range
of automobiles offered by Mercedes-AMG, which we are con-
tinually expanding.
Mercedes-Benz will launch more than a dozen new and
upgraded automobiles in 2018. Sales should be boosted in par-
ticular by our E-Class and C-Class model families. And our new
generation of the compact cars, which will be launched with
the A-Class this spring, should have a positive impact on unit
sales. Our product range will become even more attractive as
a result of several model upgrades. Above all, the new S-Class
sedan, which has been delivered to customers also as a coupe
and convertible since the beginning of 2018, should stimulate
demand in the luxury segment. With the new CLS coupe, which
had its premiere at the Los Angeles Auto Show in 2017, we
intend to continue this model series' success story.
The Chinese car market continues to be significantly affected
by regulatory conditions. At the beginning of the year, the tax
rate on purchases of cars with small engines (up to 1.6 liters)
was raised back to its normal level of 10%. As this led to pur-
chases being brought forward to late 2017, more moderate
demand is to be expected in the first months of this year. In
full-year 2018, the Chinese market should expand slightly
nonetheless. In Japan, we assume that the car market will
undergo a slight downward correction, but demand in India
should continue to grow significantly.
Mercedes-Benz Cars will continue along its growth path in
2018. We intend to slightly increase our total unit sales, thus
reaching a new record level. Growth is anticipated above all in
China. This expectation is based on our attractive and innova-
tive model portfolio, which is more diverse than ever before.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
172
We expect a market volume for buses in the magnitude of the
previous year in the EU30 region. The market situation in Latin
America will be influenced by the economic upturn in Argen-
tina and Brazil. Following the significant decline until 2016 and the
turnaround in 2017, we assume that the significant market
recovery will continue in 2018.
In the EU30 region in 2018, we expect slight market growth
for small vans, for the combined segment of mid-size and
large vans, and for the segment of mid-size pickups. In the
United States, demand for large vans should be slightly
stronger than in the previous year. The market for large vans
in Latin America should continue its recovery in 2018. In
China, we also expect a significant recovery of demand in
the market we address there.
The most important Asian markets from Daimler's perspective
are likely to present a varied picture in 2018. In the Japanese
market for light-, medium- and heavy-duty trucks, we anticipate
a slight market correction at an ongoing solid level. We expect
a positive development of the Indonesian truck market. In India,
demand for medium- and heavy-duty trucks should recover
significantly from the market contraction of 2017. In the Chi-
nese market, a significant correction is to be expected following
the extremely high volume of the previous year.
In an ongoing favorable economic environment, we assume
that demand in the EU30 region (European Union, Switzerland
and Norway) will maintain the robust market volume of the previ-
ous year. After the long weakness of demand of recent years in
Brazil, it is to be expected that a somewhat livelier economic
recovery will also bring about significant growth of the truck
market, although from a very low level. The Turkish market
should also grow significantly from its present low level. In Rus-
sia, we expect further significant growth in demand for trucks.
In the NAFTA region, a cyclical recovery of the truck market is
to be expected and we anticipate a significant increase in overall
sales in weight classes 6-8.
Unit sales
be influenced by the Daimler Group and provided that the
required measures are financially viable, the Group takes appro-
priate action to realize those opportunities.
The automotive industry is subject to extensive governmental
regulations worldwide. Laws in various jurisdictions regulate
occupant safety and the environmental impact of vehicles,
including emission levels, fuel economy and noise, as well as
the pollutants generated by the plants where vehicles are
produced. Noncompliance with regulations applicable in the
different regions could result in significant penalties and
reputational harm or the inability to sell vehicles in the rele-
vant markets. The cost of compliance with these regulations
is significant, and in this context, Daimler expects a significant
increase in such costs.
-
The Group continues to be exposed to risks from guarantees
as well as legal risks and tax risks. Provisions are recognized
for those risks if and insofar as they are likely to be utilized
and the amounts of the obligations can be reasonably estimated.
No quantitative assessment of these risks is carried out.
Risks from guarantees, legal and tax risks
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 167
Risks and opportunities from changes in credit ratings
Daimler's creditworthiness is assessed by the rating agencies
S&P Global Ratings, Moody's Investors Service, Fitch Ratings,
Scope Ratings and DBRS. Risks and opportunities exist in con-
nection with potential downgrades or upgrades to credit ratings
by these rating agencies. Downgrades could have a negative
impact on the Group's financing if such a downgrade leads to
an increase in the costs for external financing or restricts the
Group's ability to obtain financing. A credit rating downgrade
could also damage the company's reputation or discourage inves-
tors from investing in Daimler AG. A risk to the credit rating of
the Daimler Group could also arise if the earnings and cash flows
anticipated from the Group's growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs for
the Group and also facilitate its access to financing sources
in the money and capital markets. If the positive development
of the Group continues and its cash flow and profitability also
develop positively, opportunities could arise for an upgrade of
the credit rating on the part of the rating agencies.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations less
plan assets constitutes the carrying amount or funded status
of those employee benefit plans. The measurement of pension
obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in those
assumptions such as a change in the discount rate could
have a negative or positive effect on the funded status and
Group equity in the current financial year, or could lead to
changes in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined to
a large degree by developments in the capital markets. Unfa-
vorable or favorable developments, especially relating to
equity prices and fixed-interest securities, can reduce or increase
the carrying value of plan assets. The currently increased volatil-
ity of financial markets raises the risks and opportunities relating
to the measurement of both pension obligations and plan
assets. The structure of pension obligations is taken into con-
sideration with the determination of the investment strategy
for the plan assets in order to reduce fluctuations of the funded
status. A change in the composition of pension assets can
have an additional positive or negative impact on the fair value
of the plan assets. Further information on the pension plans
and their risks is provided in O Note 22 of the Notes to the
Consolidated Financial Statements.
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group's financial instruments is provided
in Note 31 of the Notes to the Consolidated Financial
Statements.
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongoing
legal proceedings. It is to be expected that the resulting refi-
nancing requirement will have to be concluded at a higher cost.
Risks of credit repayment requirements
Risks of restricted access to capital markets
Daimler covers its refinancing needs, among other things, by
means of borrowing in the capital markets. Access to capital
markets in individual countries may be limited by government
regulations or by a temporary lack of absorption capacity. In
addition, pending legal proceedings as well as Daimler's own
business policy considerations may temporarily prevent the
company from covering any liquidity requirements by means of
borrowing in the capital markets.
Daimler is exposed to country risks that primarily result from
cross-border financing or collateralization for Group companies
or customers (e. g. Turkey), from investments in subsidiaries
and joint ventures, and from cross-border trade receivables (e.g.
China). Country risks also arise from cross-border cash depos-
its with financial institutions. The Group addresses these risks
by setting country limits (e.g. for cross-border financing of
customers and for hard-currency portfolios from financial ser-
vices companies) and through investment-protection insurance
against political risks in high-risk countries. Daimler also has
an internal rating system that divides all countries in which it
operates into risk categories.
Country risks
The Group is exposed to credit risks which result primarily
from its financial services activities and from the operations of
its vehicle business. Credit risks also arise from the Group's
liquid assets. The following statements pertain to risks arising
from the Group's liquid assets; risks related to leasing and
sales financing are addressed on page 160. Should defaults
occur, this would adversely affect the Group's financial position,
cash flows and profitability. In recent years, the limit method-
ology for exposures with financial institutions has been contin-
ually further developed in order to counteract the diminished
creditworthiness of the banking sector since the financial crisis.
In connection with investment decisions, priority is placed on
the borrowers' very high creditworthiness and on balanced risk
diversification. Most liquid assets are held in investments with
an external rating of "A" or better.
Credit risks
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
166
Risks from guarantees
Issuing guarantees results in liability risks for the Group. For
example, Daimler holds an equity interest in the road-charging
system in Germany, which records the use of autobahns and
selected federal highways by commercial vehicles and charges
tolls accordingly. The operation of the electronic toll-collection
system is the responsibility of the operator company, Toll Collect
GmbH, in which Daimler holds a 45% stake through Daimler
Financial Services AG and which is included in the consolidated
financial statements using the equity method of accounting. In
addition to Daimler's membership of the Toll Collect consortium
and its equity interest in Toll Collect GmbH, risks also arise
from guarantees that Daimler Financial Services AG has assumed
with the other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of Toll
Collect GmbH toward the Federal Republic of Germany. These
guarantees are connected with the toll system and a call option
of the Federal Republic of Germany, i.e. the possibility of the
Federal Republic of Germany to take over the shares in Toll
Collect GmbH. Claims could be made under those guarantees if
toll revenue is lost for technical reasons, if certain contractually
defined performance parameters are not fulfilled, if additional
claims are made by the Federal Republic of Germany, if the
final operating permit is not granted, if Toll Collect GmbH fails to
meet contractual obligations, if it fails to have the required equip-
ment available, or if the Federal Republic of Germany takes over
Toll Collect GmbH. The maximum loss risk for the Group from
these risks can be substantial. Additional information is provided
in Note 29 (Legal proceedings) and Note 30 (Financial
guarantees, contingent liabilities and other financial obligations)
of the Notes to the Consolidated Financial Statements.
Legal risks
Various legal proceedings, claims and government investigations
(legal proceedings) are pending against Daimler AG and its
subsidiaries on a large number of topics, including vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
warranty claims, environmental matters, antitrust matters
(including actions for damages) and shareholder litigation. Prod-
uct-related litigation involves claims alleging faults in vehicles,
some of which have been made as class actions. If the outcome
of such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns,
monetary penalties or other costly actions. Some of these legal
proceedings may have an impact on the Group's reputation.
As well as the risk categories described above, unpredictable
events such as natural disasters, political instability or terrorist
attacks can disturb production and business processes. Emer-
gency plans are therefore prepared to allow the resumption of
business operations as soon as possible. As far as possible,
precautionary measures are taken and insurance policies are
arranged. Risks relating to compliance are also included in the
risk management process and are continually monitored. Regular
training courses are carried out to prevent compliance viola-
tions. In addition to the described risks, other risks can occur
that adversely affect the public perception and therefore the
reputation of the Daimler Group. Public interest is focused on
Daimler's position with regard to individual issues in the fields
of sustainability, integrity and social responsibility. Furthermore,
customers, business partners and capital markets are inter-
ested in how the Group reacts to the technological challenges
of the future, how it succeeds in offering up-to-date and tech-
nologically leading products in the markets, and how business
operations take place under the given conditions. As one of
the fundamental principles of business activity, Daimler places
particular priority - also in the selection of suppliers - on
adherence to applicable laws and ethical standards. Furthermore,
the secure handling of sensitive data is a precondition for
business relationships with customers and suppliers in a trusting
and cooperative environment.
The overall view of the Group's risk and opportunity situation is
the sum of the described individual risks and opportunities of all
risk and opportunity categories for the divisions, the corporate
functions and the legal entities.
Overall assessment of the risk and
opportunity situation
Any changes or interventions by the fiscal authorities are
continuously monitored by the tax department and measures
are taken if required.
Daimler Financial Services aims to achieve ongoing growth in
the coming years. In 2018, we expect further growth in contract
volume. This will be primarily driven by the strong develop-
ment of new business in 2017, which should continue at the
same high level this year. We are utilizing new market poten-
tial above all in China, and by means of new and digital pos-
sibilities for customer contacts – in particular through the
systematic further development of our online sales channels.
We continue to see good growth opportunities in the field of
innovative mobility services, where we are active with the brands
car2go, moovel and mytaxi, as well as with equity interests in
Blacklane and FlixBus and various startup companies.
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities - especially in the field of cross-border
transactions, may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
Tax risks
Compared with the previous year, risks from associated com-
panies, joint ventures and joint operations have increased as a
result of increasing in risky investments in startups. However,
the overall view of the Daimler Group's risk and opportunity
situation remains essentially unchanged. No risks are recogniz-
able neither on the balance sheet date nor at the time of
preparing the consolidated financial statements – that either
alone or in combination with other risks could endanger the
continued existence of the Group. But since considerable eco-
nomic and industry risks still exist, setbacks on the way to sus-
tainably achieving growth and profitability targets cannot be
completely ruled out. New competitors in the IT sector for exam-
ple and the Group's current strategy, among other things in
connection with electric mobility, pose further challenges for
the Daimler Group and are connected with risks and opportuni-
ties. By effectively and flexibly focusing production and sales
activities on changing conditions, the divisions of the Daimler
Group strive to utilize the opportunities offered so that they can
fulfill or surpass their respective targets and plans. As far as can
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement of
the NEDC (New European Driving Cycle) with the new measur-
ing method WLTP (Worldwide Harmonized Light Vehicles Test
Procedure), the fleet CO2 average has worsened. In light of
today's knowledge, this would make it more difficult to achieve
the CO2 targets as of 2020. Furthermore, there has been some
pressure in the past two years on diesel technology, which is
important for compliance with the challenging CO₂ targets in
the EU, because of air-quality problems in cities (exceeding the
NOx limits). For this reason, the Real Driving Emissions (RDE)
legislation entered into force in the EU in July 2017. Complying
with emission limits under real driving conditions (on the road
and not, as previously, only on the test bench) is very ambitious
legislation that since September 2017 has required very
complex technology for exhaust-gas aftertreatment, as well as
detailed documentation. The current public focus on vehicle
emissions as well as their measurement and impact on people
and the environment jeopardizes the reputation of the automo-
tive industry and in particular of the diesel engine, and could
result in damage to Daimler's reputation. With the develop-
ment of a new generation of diesel engines, Daimler has found
a convincing technical solution with regard to reducing emis-
sions and will successively introduce this innovation throughout
the product range.
Non-financial risks
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's cash flows, financial
position or profitability. Further information on legal proceed-
ings is provided in Note 29 of the Notes to the Consoli-
dated Financial Statements.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
investigation, it cannot be ruled out that the various authorities
might reach the conclusion that Mercedes-Benz diesel vehicles
have similar functionalities. The inquiries and investigations as
well as the replies to the governmental information requests
and our internal investigation are still ongoing and open; hence,
Daimler cannot predict the outcome at this time. If these or
other inquiries, investigations, legal actions and/or proceedings
result in unfavorable findings, an unfavorable outcome or
otherwise develop unfavorably, Daimler could be subject to
significant monetary penalties, remediation requirements,
vehicle recalls, process improvements, mitigation measures and
the early termination of promotional loans, and/or other sanc-
tions, measures and actions, including further investigations by
these or other authorities and additional litigations. The occur-
rence of the aforementioned events in whole or in part could
cause significant collateral damage including reputational
harm. In addition, Daimler's ability to defend itself in litigations
could be impaired by unfavorable findings, results or develop-
ments in any of the governmental information requests, inquiries,
investigations, legal actions and proceedings discussed above.
Therefore, it cannot be ruled out that the risks discussed above
may materially adversely impact our profitability, cash flows
and financial situation.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
168
Currently, Daimler is subject to governmental information
requests, inquiries and investigations as well as litigation relat-
ing to environmental, securities, criminal, antitrust and other
laws and regulations in connection with diesel exhaust emissions.
Several federal and state authorities and institutions worldwide
have inquired about and/or are investigating test results, the
emission control systems used in Mercedes-Benz diesel vehi-
cles and/or Daimler's interaction with the relevant federal and
state authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities, criminal and antitrust laws. These authorities include,
amongst others, the U.S. Department of Justice ("DOJ"), which
has requested that Daimler conduct an internal investigation, the
U.S. Environmental Protection Agency ("EPA"), the California
Air Resources Board ("CARB") and other US state authorities,
the U.S. Securities and Exchange Commission ("SEC"), the
European Commission, with which Daimler has filed a leniency
application, as well as national cartel authorities and other
authorities of various foreign states as well as the German Fed-
eral Financial Supervisory Authority ("BaFin") and the German
Federal Motor Transport Authority ("KBA”). The Stuttgart district
attorney's office is conducting criminal investigation proceed-
ings against Daimler employees on the suspicion of fraud and
criminal advertising, and searched the premises of Daimler at
several locations in Germany. Further, Daimler comprehensively
responded to the diesel emissions committee of inquiry of the
German Parliament. Daimler continues to fully cooperate with
the authorities and institutions. Irrespective of such coopera-
tion by Daimler, it is possible that further civil and criminal inves-
tigative and enforcement actions and measures relating to
Daimler and/or its employees will be taken, such as subpoenas,
i.e. legal instructions issued under penalty of law in the pro-
cess of taking evidence, or other requests for documentation,
testimony or other information, further search warrants, a
notice of violation or an increased formalization of the govern-
mental proceedings. Additionally, delays in obtaining regulatory
approvals necessary to introduce new or recertify existing diesel
models could occur. In light of the notices of violation that were
issued by US environmental authorities to another vehicle manu-
facturer in January of 2017 and the related complaint filed by the
United States against such manufacturer in May 2017, identifying
functionalities, apparently including functionalities that are com-
mon in diesel vehicles, as undisclosed Auxiliary Emission Control
Devices (AECDs) and, in some unspecified cases, as imper-
missible, and in light of the ongoing governmental information
requests, inquiries and investigations, and our own internal
As a company with worldwide activities, Daimler AG is at the
focus of public interest. In this context, the relevant stake-
holders' perception is of crucial importance and can affect the
reputation of the entire Daimler Group page 214 "Non-
Financial Report." A key role in the public's current perception
is played by the company's approach to environmental,
employee and social matters, fighting corruption and bribery,
and respecting human rights.
-
In Europe, we expect a slight increase in overall car sales. As
the market volume in Western Europe is now above average
again, we expect demand to remain fairly stable. In Eastern
Europe, however, a significant increase in sales volumes is
anticipated primarily due to the ongoing recovery of the Rus-
sian market. The US market for cars and light trucks should
maintain its high level of approximately 17 million units sold.
Despite the favorable economic outlook, we believe a further
increase is unlikely because the market can be regarded as
being fairly saturated at this level.
B | COMBINED MANAGEMENT REPORT | OUTLOOK
In order to achieve our ambitious growth targets, we will sys-
tematically expand our product range in the coming years.
At the same time, we want to be able to play a leading role in
the far-reaching technological transformation of the automo-
tive industry. This applies in particular to the increasing elec-
trification of our product portfolio and to the digital connec-
tivity of our products and processes along the entire value chain.
By intelligently connecting the constantly growing volumes
of data, we will create efficiency advantages, improve our
product quality and facilitate the ongoing flexibilization of the
production process. Against this backdrop, we will once
again significantly increase our investment in property, plant
and equipment in the year 2018.
Following the significant increase in the year 2017, capital
expenditure at Mercedes-Benz Cars will increase again in
2018. This is primarily due to the product offensive and the
expansion of production capacities. The most important proj-
ects include the successor models of the current compact
class, the C-Class, the product ramp-up of the new GLE and
GLS, and the new gasoline and diesel engines of the new
engine series. Substantial investment is planned also for the
realignment of our German production sites, for the expan-
sion of our international production network, and for the
worldwide production network for electric mobility. Daimler
Trucks will mainly invest in successor generations of existing
products, in new products, in global component projects, in
the optimization of its worldwide production network and in
the new Daimler Trucks Campus. At Mercedes-Benz Vans, the
focus of capital expenditure will be on production of the next
generation of the Sprinter in Germany and the United States.
Key projects at Daimler Buses are improvements in the pro-
duction network and advance expenditure for new models, in
particular for the development of an electrically powered city
bus.
Research and development
With our research and development activities, our goal is to fur-
ther strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility. In addition, we
intend to utilize the growth opportunities offered by worldwide
automotive markets with new and attractive products. We are
increasingly focusing on the strategic areas for the future of
connectivity, autonomous driving, flexible use and services, and
electric drive. We aim to occupy a leading position in these
areas, both individually and by linking them up intelligently. In
order to achieve our goals, we will once again slightly increase
our total expenditure for research and development in 2018. At
Mercedes-Benz Cars, a large part of that expenditure will flow
into the renewal and expansion of our model range. The divi-
sion's most important projects are the successor models of the
compact cars, the GLE and GLS SUVs, and the new C-Class.
We are also working hard on new, low-emission combustion
engines, electric mobility, the connectivity of our vehicles, and
innovative safety technologies for autonomous driving. At Daim-
ler Trucks, the focus will be on activities in the areas of fuel effi-
ciency and emission reductions, as well as expenditure for tai-
lored products and technologies for important growth markets.
The topics of electric mobility, connectivity and automated
driving also play an increasingly important role. Key projects
at Mercedes-Benz Vans are the successor generation of the
Sprinter and the further development of the Vito and V-Class.
Furthermore, Mercedes-Benz Vans is pushing forward with the
electrification of its commercial model series. Another impor-
tant topic is the connectivity of products and processes, espe-
cially the innovative connectivity solution, Mercedes PRO. An
important area of research and development at Daimler Buses
is to meet future emission standards and to increase fuel effi-
ciency. Also at Daimler Buses, other focus areas are alternative
drive systems, electrification and connectivity.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
175
The workforce
Due to the growth in unit sales and revenue we anticipate,
production volumes will continue rising in 2018. At the same
time, the efficiency-enhancing measures we have implemented
at all divisions in recent years are now taking effect. The
medium- and long-term measures we have taken for structural
improvements in our business processes should facilitate
further efficiency progress. Against this backdrop, we assume
that we will be able to achieve our growth targets with only
slight workforce growth. Additional jobs will be created in par-
ticular through the expansion of our international production
network, as well as in the area of research and development
for projects in the future areas of electric mobility and digiti-
zation. Companies that we operate together with Chinese
partners and whose employees are not included in the figures
for the Daimler Group are also likely to recruit additional
employees.
Overall statement on future development
At the end of the 2017 financial year, we continue to be on a
path of stable and profitable growth. We will consistently imple-
ment our strategy also in the coming years, thus creating the
basis for further growth.
-
-
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups, utilizing additional market
potential and strengthening our market position worldwide.
With the efficiency programs that have been implemented
in all divisions in recent years, we have improved our cost
structures on a sustained basis and thus laid the founda-
tions for a high level of profitability. We are currently taking
further measures in all divisions for the long-term and
structural optimization of the business system. In this way, we
are strengthening our core business (CORE) and creating the
financial basis to invest in the future of the company.
We will therefore significantly increase our advance expendi-
ture for new products and technologies once again in 2018.
Especially in the strategic, future-oriented areas of connectiv-
ity, autonomous driving, flexible use and services, and electric
drive, as well as by intelligently linking up those areas (CASE),
we will therefore play a leading role also in the future.
Together with the workforce, we are developing a new leader-
ship culture under the heading of "Leadership 2020" that will
allow us to successfully shape our future. In this way, we are
meeting the challenges of the digital world and creating the
basis for cultural changes at the Group (CULTURE).
To enable us to react flexibly to the high dynamism of the
environment, markets, new competitors and technologies,
we need an organization that facilitates rapid and agile
action. In the context of "Project Future," we aim to further
focus Daimler's divisional structure, thus strengthening the
future viability of the various businesses (COMPANY).
With the four strategic areas for action - CORE, CASE, CUL-
TURE and COMPANY - we are setting the course for a successful
future, and we reached some important milestones in 2017.
Against this backdrop, we look to the year 2018 with confidence.
We expect both unit sales and revenue to be higher than in the
previous year, and should continue to achieve a high level of
earnings despite the high volume of expenditure to safeguard
our future.
Forward-looking statements
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume,” “believe,” “esti-
mate," "expect," "intend," "may," "can," "could," "plan," "project," "should"
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, acts of terrorism, political unrest, armed con-
flicts, industrial accidents and their effects on our sales, purchasing, produc-
tion or financial services activities; changes in currency exchange rates; a
shift in consumer preferences towards smaller, lower-margin vehicles; a pos-
sible lack of acceptance of our products or services which limits our ability to
achieve prices and adequately utilize our production capacities; price
increases for fuel or raw materials; disruption of production due to shortages
of materials, labor strikes or supplier insolvencies; a decline in resale prices
of used vehicles; the effective implementation of cost-reduction and effi-
ciency-optimization measures; the business outlook for companies in which
we hold a significant equity interest; the successful implementation of strate-
gic cooperations and joint ventures; changes in laws, regulations and govern-
ment policies, particularly those relating to vehicle emissions, fuel economy
and safety; the resolution of pending government investigations or of investi-
gations requested by governments and the conclusion of pending or threat-
ened future legal proceedings; and other risks and uncertainties, some of
which we describe under the heading "Risk and Opportunity Report" in this
Annual Report. If any of these risks and uncertainties materializes or if the
assumptions underlying any of our forward-looking statements prove to be
incorrect, the actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obliga-
tion to update these forward-looking statements since they are based solely
on the circumstances at the date of publication.
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to slightly increase its total unit sales in
2018.
Investment
We aim to maintain a sustainable dividend development also
in the coming years. In setting the dividend, our target is
generally to distribute approximately 40% of the net profit
attributable to Daimler shareholders.
-
Dividend
At the Annual Shareholders' Meeting on April 5, 2018, the Board
of Management and the Supervisory Board will propose an
increased dividend of €3.65 per share for the year 2017 (prior
year: €3.25). This represents a total distribution of €3.9 billion
(prior year: €3.5 billion). With this proposal, our shareholders
are participating in the Company's success.
173
Revenue and earnings
We assume that the revenue of the Daimler Group will also
increase slightly in 2018, as a result of the overall positive
development of unit sales in the automotive divisions.
Exchange-rate effects are likely to have a rather negative
impact on the development of revenue in the year 2018.
This applies above all to our business in the NAFTA region.
Our divisions currently have very attractive product ranges,
which have been expanded and systematically renewed in
recent years. We therefore assume that Daimler will profit to
an above-average extent from the slight growth in global
demand for motor vehicles that we expect in the year 2018,
and will be able to strengthen or defend its position in major
markets. At Mercedes-Benz Cars, additional growth this year
will be primarily driven by the E-Class models, the GLC SUV,
the new convertible models and the new A-Class. On the other
hand, revenue growth will be dampened by the anticipated
development of exchange rates and lifecycle effects from some
car models, as well as by a changing sales structure. Mercedes-
Benz Cars therefore anticipates revenue in 2018 only at the
high prior-year level despite a slight increase in unit sales. Due
to generally positive expectations for markets and unit sales,
the Daimler Trucks division plans for slight revenue growth, while
the Mercedes-Benz Vans, Daimler Buses and Daimler Financial
Services divisions anticipate significant increases in revenue.
The growth in unit sales and revenue that we anticipate will
have a generally positive impact on earnings in 2018. We have
laid the foundations for a lasting high level of earnings with
various programs for improved profitability, which we already
implemented in the years 2013 to 2015. Since then, we have
continuously been taking further measures in all divisions for
the long-term and structural optimization of our business sys-
tem. At Mercedes-Benz Cars for example, we aim to achieve
further efficiency improvements in the context of the F4L (Fit
for Leadership) program. Daimler Trucks is also working contin-
uously on efficiency improvements with its optimization pro-
gram. In combination with the cost optimizations we have so far
planned and partially already implemented, we aim to achieve
profit-effective improvements for Daimler Trucks in an amount
of €1.4 billion by the end of 2018. These programs are expected
to become fully effective in the year 2019.
We are standardizing and modularizing our production processes
throughout the Group. In this context, we are making intelli-
gent use of vehicle platforms, allowing us to achieve further
cost advantages. In parallel, we are pushing forward with digi-
tal connectivity: in all divisions and at all stages of the value
chain - from development to production to sales and service.
In this way, we are opening up additional scope to become
even faster, more flexible and more efficient - to the benefit of
our customers.
However, earnings will be reduced by the continuation of very
high expenditure: for our model offensive, for innovative tech-
nologies (especially for reducing fuel consumption and for elec-
trification), for the digitization of our products and processes,
and for the expansion and modernization of the worldwide pro-
duction capacities. As a result, our advance expenditure aimed
at securing a successful future will once again be substantially
higher in 2018 than in the previous year.
page 174
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT in 2018 will be of the magnitude of the
previous year.
The individual divisions have the following expectations for
EBIT in the year 2018:
In regional terms, we expect further slight growth in revenue
in Asia and Europe. In China, we have created the right con-
ditions for further growth with new sales outlets, additional
production capacities and a broad product range. However,
growth in unit sales in China will have a disproportionately low
impact on revenue growth, as the share of local production will
continue to increase. Our Chinese associated company, Beijing
Benz Automotive China (BBAC), is included in our consolidated
financial statements using the equity method of accounting.
At Mercedes-Benz Cars, positive effects will result from the
anticipated growth in unit sales. They will be offset, however,
by the significant increase in advance expenditure for new
products and technologies, a less favorable sales structure
and negative exchange-rate effects.
Both Daimler Trucks and Daimler Buses should profit from
rising unit sales and the efficiency-enhancing measures.
Daimler Financial Services assumes that its earnings will
develop positively as a result of further growth in contract vol-
ume and the optimization of business processes. Increased
investment in new businesses and the advance of digitization,
as well as higher interest rates and exchange-rate effects, will
probably have a negative impact on earnings.
Against the backdrop of high advance expenditure for the
Sprinter model change, higher costs from the production
ramp-up of the new models and negative exchange-rate effects,
Mercedes-Benz Vans anticipates a slight decrease in earn-
ings. The expected growth in unit sales is unlikely to fully offset
these negative effects.
174
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Free cash flow and liquidity
Mercedes-Benz Cars: at the prior-year level,
Daimler Trucks: significantly above the prior-year level,
Mercedes-Benz Vans: slightly below the prior-year level,
Daimler Buses: significantly above the prior-year level, and
Daimler Financial Services: at the prior-year level.
The anticipated development of earnings in the automotive
divisions will have a positive impact on the free cash flow of
the industrial business. There will be a negative effect, how-
ever, from the further increase in advance expenditure for
new products and technologies. Under these conditions, we
assume that the free cash flow of the industrial business
should be significantly higher than in the previous year and
also higher than the dividend distribution planned in 2018. It
must be taken into consideration, however, that the free
cash flow of the industrial business in 2017 was reduced by an
extraordinary contribution of €3 billion to the German pen-
sion fund assets.
For the year 2018, we aim to have liquidity available in a vol-
ume appropriate to the general risk situation in the financial
markets and to Daimler's risk profile. When measuring the
level of liquidity, we give due consideration to possible refi-
nancing risks caused for example by temporary distortions in
the financial markets. We continue to assume, however, that
we will have very good access to the capital markets and the
bank market also in the year 2018. We aim to cover our fund-
ing needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the
direct banking business and the securitization of receivables
in the financial services business; the focus will be on bonds
and loans from globally and locally active banks. In view of
the very good liquidity situation of the international capital
markets and our strong creditworthiness, we expect a contin-
uation of very attractive refinancing conditions in 2018. An
additional goal is to continue securing a high degree of finan-
cial flexibility.
+8
Unit sales
2,373,527 2,197,956
+8
Employees (December 31)
142,666 139,947
Unit sales Mercedes-Benz Cars
C.02
2017
2016
2,235,352
in thousands
+2
2,411,378
+17
+19
2,008
2,388
thereof capitalized
+17
5,671
6,642
development expenditure
Research and
4,147
4,843
plant and equipment
Investment in property,
17/16
% change
Production
Mercedes-Benz
+16
2,054
Mercedes-Benz Cars
-6
144
136
smart
-10
27
25
Sports cars
9.1
712
823
SUVs¹
-6
2,238
84
S-Class
+31
304
398
E-Class
+1
490
493
C-Class
-3
435
420
thereof A-/B-Class
+9
79
9.7
Market launch of Mercedes-Benz X-Class
+6
+13
FUSO eCanter is the first fully electric light-duty truck in
series production from Daimler Trucks
Presentation in Japan of E-FUSO, the Group's own product
brand for electric trucks and buses
Daimler Financial Services
184-188
Significant increase in unit sales
Daimler Trucks
EBIT of €243 million at prior-year level (2016: €249 million)
First customer for Mercedes-Benz Citaro fully electric city
bus
Strategic cooperation for on-demand mobility
Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
Positive development of business with bus chassis in Brazil
Presentation of new Mercedes-Benz Tourismo and
Setra S 531 DT double-decker
192-194
Significant growth in unit sales
Daimler Buses
EBIT significantly above prior-year level at €9.2 billion
(2016: €8.1 billion)
Comprehensive future plan for diesel engines
Mercedes wins drivers' and constructors' world
championships in Formula 1
Presentation of the fully electric school bus from Thomas
Built Buses
Deepened partnership in China
Mercedes-AMG achieves six-digit unit sales for the first time
World premiere of upgraded Mercedes-Benz S-Class
Continuation of dream-car offensive
Mercedes-Benz Cars achieves record unit sales once again
178-183
-
-
Mercedes-Benz Cars
177
C | THE DIVISIONS | CONTENTS
C | The Divisions
The divisions of the Daimler Group developed extremely successfully in the year 2017,
and in some cases significantly surpassed their growth targets. The Mercedes-Benz
Cars and Mercedes-Benz Vans divisions set new records for unit sales, thanks to
numerous new and successful products. The Daimler Trucks and Daimler Buses divi-
sions also significantly increased their unit sales. Due to the positive development of
the automotive business, the Daimler Financial Services division also continued its
steady growth. And we further improved the Group's market position with innovative
products and services.
66
AND SERVICES!
WE CONVINCE WITH
INNOVATIVE VEHICLES
smart focuses on electric mobility
Truck platooning on public highways in the United States
Connected Mercedes-Benz Arocs in driverless test
operation
New connectivity solutions for the logistics industry
EBIT significantly above prior-year level at €2.4 billion (2016:
€1.9 billion)
89,284
8,112
94,695
9,207
EBIT
Revenue
17/16
% change
€ amounts in millions
2016
2017
Mercedes-Benz Cars
C.01
Mercedes-Benz Cars continued to grow profitably in 2017. Unit sales and revenue increased signi-
ficantly once again and earnings before interest and taxes reached a record level, despite the con-
siderable advance investment we made in our product offensive and new technologies. Our most
important new model in the year under review was the upgraded S-Class. We also continued our
dream car initiative with new attractive coupes and convertibles. In addition, we offered a preview
of our upcoming electric-mobility offensive and the future of mobility by presenting the EQA and
smart vision EQ fortwo concept vehicles at the Frankfurt Motor Show.
Mercedes-Benz Cars
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
178
EBIT of €1.2 billion at prior-year level (2016: €1.2 billion)
- First results from adVANce future initiative
eVito in the ecosystem for electrification
195-197
New records for new business and contract volume
Further increase in number of automotive insurance policies
brokered
Europe-wide growth of fleet business
Successful progress with digitization of financial services
Expanded range of innovative mobility services
car2go upgrades its fleet and expands its range of services
moovel offers mobile-ticketing app for transportation
companies
mytaxi continues its expansion and now has 120,000 regis-
tered taxi drivers in 70 cities
- Toll4Europe operates Europe-wide road-charging system for
trucks
Return on sales (in %)
EBIT significantly above prior-year level at €2.0 billion (2016:
€1.7 billion)
Unit sales at record level
Growth driven by V-Class and Vito
First details of new Sprinter
2,374
189-191
- Expansion of Marco Polo family with new HORIZON
Mercedes-Benz Vans
2,198
+20
thereof Europe
Strengthened partnership in China
Sustainable development with local partners is crucial for con-
tinuing our business success in China. The signing of two
framework agreements has further strengthened cooperation
between Daimler and BAIC Motor in their production joint
venture, Beijing Benz Automotive Co., Ltd. (BBAC). Daimler and
BAIC Motor are jointly investing in the production of battery-
electric vehicles in Beijing and in the construction of a new
battery factory that will further pave the way for the launch
of vehicles equipped with alternative drive systems. In this way,
we are creating the foundation for further sustainable growth
and continued success in the future for Daimler in China, which
is now by far the world's biggest automotive market.
With the upgraded Mercedes-Benz S-Class presented at Auto
Shanghai in April 2017, we have opened up a new dimension of
driving also in China.
All in all, we were able to increase sales of Mercedes-Benz
brand vehicles in China to the new record level of 595,200 units,
an increase of 28% from the prior year. More than two thirds
of the vehicles we sold in China during the reporting year were
manufactured locally at facilities operated by our BBAC joint
venture.
182 C | THE DIVISIONS | MERCEDES-BENZ CARS
Global production network for electric mobility
In the year under review, our manufacturing facilities continued
to build vehicles without interruption throughout the summer
months in order to meet the ongoing high demand for our models
on global markets. Within the framework of its growth strategy,
the Mercedes-Benz Cars division is continually further develop-
ing its flexible and efficient production network with more than
30 locations on four continents. In 2017, for example, we laid
the foundation stone for a new engine plant in Jawor, Poland,
and began building a new vehicle manufacturing facility near
Moscow in Russia.
At the same time, we are preparing our worldwide production
network for the requirements associated with electric mobility.
We will manufacture our future electric vehicles from the EQ
product and technology brand within the framework of normal
series production on the same lines used to produce vehicles
with combustion engines. In the future, our production locations
for electric vehicles will be our plants in Bremen, Sindelfingen
and Rastatt, as well as in Tuscaloosa, Alabama, and Hambach.
We will also manufacture electric vehicles for the Chinese
market at Beijing Benz Automotive Co., Ltd. (BBAC). Mercedes-
Benz Cars will thus build electric vehicles at six locations in
the future. At the same time, we will expand our global battery
network to five sites on three continents. In the spring of 2017,
the foundation stone was laid for a second battery production
facility in Kamenz. BBAC will supply the Chinese market with
appropriate batteries, and battery production plants will be
added to our manufacturing facilities in Untertürkheim (Stuttgart)
and Tuscaloosa. With these and other measures, Mercedes-
Benz Cars is using new technologies to strengthen its strategic
approach to shape the future of mobility.
Comprehensive plan for the future of diesel engines
We are convinced that diesel engines will continue to be an
integral part of the drive-system mix, not least due to their low
CO2 emissions. The debate surrounding diesel engines is
leading to increasing uncertainty among customers, however.
For this reason, the Daimler AG Board of Management approved
a comprehensive plan for the future of diesel engines in July
2017. The plan calls for a massive expansion of the current vol-
untary service measures for vehicles in customers' hands, as
well as the rapid market launch of a completely new family of
diesel engines.
As early as 2016, Mercedes-Benz began offering diesel vehicles
that were able to meet the Real Driving Emissions (RDE) limits
that went into effect in the EU in 2017. This achievement was
made possible by an all-new modular family of efficient and
clean diesel engines. In the future, this modular engine family
will be utilized across the entire product range of Mercedes-
Benz Cars and also at Mercedes-Benz Vans. The new engines'
exemplary emissions have also been confirmed by measure-
ments conducted at independent institutes.
Best Customer Experience
"Best Customer Experience" (BCE) is a global sales and market-
ing program at the Mercedes-Benz Cars division. The key
drivers of our growth strategy are innovative products and entry
into new markets and market segments. The program seeks
to more strongly align the division's sales and marketing organi-
zation with changing customer wishes and requirements and
in this manner to generate additional growth. Our goal here is to
make the Mercedes-Benz brand more attractive to new and
also younger target groups while also strengthening the brand
SG 1008
An icon is reinvented: The new Mercedes-Benz G-Class is better than ever for either on- or off-road driving.
The smart brand sold a total of 135,500 vehicles in 46 markets
worldwide in 2017. The smart was particularly popular in
China, which is now its third-biggest sales market after Germany
and Italy.
C | THE DIVISIONS | MERCEDES-BENZ CARS 183
Lewis Hamilton celebrates the fourth consecutive win for Mercedes-AMG Petronas Motorsport in Kuala Lumpur.
FOUR WINS.
FOR 
YOU.
loyalty of established customers. Our BCE program thus sys-
tematically focuses on customers and their need for personal
assistance at every point of contact with the brand, its prod-
ucts and its services. To this end, Mercedes-Benz is using new
sales channels and digital portals as innovative interfaces with
the brand. Various sales formats, such as those using new digi-
tal channels, supplement the services offered at traditional
Mercedes-Benz dealerships and showrooms.
An important component of Best Customer Experience is
the "Mercedes me" digital ecosystem, which enables personal-
ized interaction with the Mercedes-Benz brand. This makes
customer contact with Mercedes-Benz more individualized,
convenient and transparent. For example, customers can
use Mercedes me to obtain information on and utilize services
for mobility, connectivity, customer support, financing and
lifestyle. Mercedes me is now used by more than one million
satisfied customers in 36 markets.
page 32
The Mercedes-Benz brand's "She's Mercedes" initiative spe-
cifically addresses women with the aim of making the brand
more appealing to women and increasing the proportion of
female customers. Along with community and inspiration plat-
forms, the initiative also offers training for sales staff and
seeks to increase the number of women in sales positions.
O page 32
#4TheTeam: success in motorsports
Mercedes-AMG Petronas Motorsport captured both the
Drivers' and the Constructors' World Championship in the For-
mula 1 racing series for the fourth consecutive year in 2017.
A special aspect of this achievement is that the team was able
to defend its titles despite the extensive changes made to
Formula 1 regulations. Last year marked the fourth time that
Lewis Hamilton has won the Drivers' Championship. And
with the Mercedes-AMG Project ONE show car at the Frankfurt
Motor Show, we presented for the first time a car that could
bring Formula 1 hybrid technology from the racetrack to the
road. Mercedes-AMG Motorsport also recorded six victories
and 14 podium finishes in 18 races in the German DTM touring
car series. As part of the strategic repositioning of our motor-
sports activities, we have decided to end our participation in
the DTM series after the 2018 season and to participate in
Formula E in the future. This will enable us to demonstrate the
performance capability of our intelligent battery-electric
drive systems in a motorsports setting as well, and it will add
an emotional component to the EQ brand. Participation in
motorsports is an important factor of success for Daimler - not
just in terms of the significant image enhancement and exten-
sive publicity provided by the races, but also with regard to
the valuable experience we gain through the use of hybrid tech-
nologies and lightweight designs in our motorsports activities.
184
C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Trucks
Our Daimler Trucks division achieved significant growth in both unit sales and earnings in 2017.
In all that we do, our focus is on our customers. In order to offer them our best products and solu-
tions, we work continuously on innovations. Our focus is on trucks that are efficient and electric,
safe, automated and connected. In order to best meet the needs of our customers in the various
regions, we are further expanding our presence in our core markets and in new markets. Using
global platforms, our engineers worldwide develop outstanding technologies and utilize economies
of scale and the advantage of speed. Our corporate culture is the foundation for the implemen-
tation of our strategy: Across national borders and departmental boundaries, we at Daimler Trucks
collaborate entrepreneurially, internationally and openly.
C.03
Daimler Trucks
2017
Winners of both the Drivers' and the Constructors' World Championship in Formula 1 racing:
2016
The range of services offered for the smart brand is being
continuously expanded. One example is “smart ready to drop."
This service, which is offered in cooperation with various
logistics companies, enables parcels to be delivered to the trunk
of a customer's car and also allows for the pick-up of returns
using the same system."smart ready to share" enables car shar-
ing in closed groups - e.g. within a family, between friends
or at small companies - in an extremely user-friendly manner
with the help of an app that eliminates the need to hand over
keys to the next user.
bined: 0 g/km) combine the agility of a smart with locally
emission-free driving at an affordable price - the ideal combi-
nation for urban mobility.
S&A 233
179
The growth was primarily driven by our new E-Class. After all
model variants became available, sales reached the new record
level of 398,200 units (+31%). Our off-road vehicles were also
very successful once again. All in all, sales in the SUV segment
increased by 16% to 823,000 units. Demand for our C-Class
models also remained very strong, with sales of these vehicles
increasing slightly to 492,700 sedans, wagons, coupes and
convertibles in 2017. Unit sales of A-Class and B-Class models
did not quite reach the previous year's high level. Including
the CLA and CLA Shooting Brake, a total of 420,200 units were
delivered to customers. Unit sales of the S-Class totaled
79,400 sedans, coupes and convertibles. The upgraded S-Class
generated additional sales momentum in the second half of
the year.
Fit for Leadership 4.0
Since 2012, "Fit for Leadership" has served as the central
component of our strategy for shaping the future of Mercedes-
Benz Cars. Fit for Leadership utilizes a holistic approach that
aims to achieve continuous growth, to establish competitive
structures and to improve efficiency on an ongoing basis.
The program is being systematically pursued. With the further
development of program activities in the context of Fit for
Leadership 4.0, we aim to achieve an additional efficiency
improvement of €4 billion by the year 2025. This should
also help to offset the high advance expenditure in the future
for the impending technological transformation and to
safeguard the division's return on sales in the corridor of
8-10% over the long term.
World premiere of the upgraded S-Class
In April 2017, the upgraded S-Class with numerous innovations
had its world premiere at Auto Shanghai. One of the highlights
was an all-new and highly efficient engine program featuring a
range of new technologies for electrification of the powertrain.
In addition, the Intelligent Drive system has taken another step
along the road to driverless driving. For example, new and
modified features have been added to the DISTRONIC active
proximity control system and Active Steering Assist. Forward-
looking new technologies such as the integrated starter
generator (ISG) with a 48-volt onboard power system and the
electric additional compressor also had their world premieres
in the new S-Class. The ISG is responsible for hybrid functions
such as power boost and energy recovery, and thus enables
fuel savings that were previously achieved only by high-voltage
hybrid technology. The improved third-generation plug-in-
hybrid system is now available in the S-Class for the first time.
With a significant increase in battery capacity to 13.3 kWh,
the use of state-of-the-art lithium-ion technology and an opti-
mized operating strategy, ranges for all-electric driving of
over 50 kilometers (NEDC) can be achieved.
Dream car initiative continues
The E-Class family was renewed entirely within one year and
fully rounded out in 2017 with the addition of a coupe and a
convertible model. The new E-Class coupe combines expres-
sive coupe proportions, a clear and sensuous design, and long-
distance comfort for four occupants with the beauty and clas-
sic virtues of a gran turismo. The new E-Class convertible has
been thrilling customers in Europe and the United States since
September 2017. At once both hot and cool, the vehicle's
design idiom represents beauty and intelligence. We also
unveiled the coupe and convertible models of the updated
S-Class in both their series-production and AMG versions at
the Frankfurt Motor Show in September 2017. These models
benefit from extensive new features that were introduced in
the sedan - for example extensively enhanced driver assis-
tance systems, the state-of-the-art widescreen dashboard, a
new-generation steering wheel and the holistic ENERGIZING
comfort control system.
pages 10f
EQ - the brand for electric mobility
In 2016, Mercedes-Benz consolidated all of its activities in the
area of electric mobility into a new product and technology
brand known as EQ. The new brand was heralded by the near-
production Concept EQ in 2016 and the compact Concept
EQA presented at the Frankfurt Motor Show in September 2017.
The Concept EQA is equipped with an electric motor on both
the front and rear axles. It has a total output of more than 200 kW
and maximum torque of over 500 Nm. It takes only around
five seconds for the electric vehicle to accelerate from 0 to
100 km/h. The basis of the vehicle's outstanding handling
180
With its "smart vision EQ fortwo" concept car, the brand pre-
sented its vision of the future of urban mobility at the 2017
Frankfurt Motor Show. This car-sharing concept vehicle, which
is of course both electric and fully automated, illustrates the
future possibilities for personalized and highly flexible public
transport with maximum efficiency. page 33
C | THE DIVISIONS | MERCEDES-BENZ CARS
Daimler plans to offer more than ten all-electric models in the
passenger-car segment alone by 2022 - from the smart to the
large SUV. The first battery-electric series-produced model
from the EQ brand will be launched in the SUV segment before
the end of this decade. It will be followed by a model offensive
that will gradually supplement the product range of Mercedes-
Benz Cars with purely electric models. The new generation
of electric vehicles will be based on an architecture developed
especially for battery-electric models, which in every respect
shall be scalable and suitable for use in all model series: Wheel-
base and track width as well as all other system components,
especially the batteries, will be variable thanks to the modular
system.
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-Benz
S-Class with the exclusivity of a Maybach. The Mercedes-
Maybach S 600 Pullman launched in early 2016 (fuel consump-
tion in l/100 km urban: 19.6 / extra-urban: 10.3 / combined:
13.6; CO2 emissions in g/km combined: 314) has a face-to-face
seating configuration and is a clear top-of-the-line model.
The brand's first convertible was launched in the spring of 2017
as a limited edition of 300 units. A preview of the form the
luxury brand might take in the future is offered by the concept
cars Vision Mercedes-Maybach 6 and Vision Mercedes-
Maybach 6 Cabriolet - a sensational coupe and a luxurious
convertible.
Mercedes-AMG: the sports-car and performance brand
The brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. The Mercedes-
AMG sports-car brand enhances the fascination of Mercedes-
Benz with nearly 60 models. The brand's dynamic vehicles espe-
cially attract young and sporty customers to the brand with
the three-pointed star. Mercedes-AMG models differ greatly from
their series-produced cousins in terms of both engineering
and appearance, thus strengthening the authenticity and distinc-
tive identity of the Mercedes-AMG brand. The Mercedes-AMG
Project ONE concept vehicle marks yet another milestone in the
strategic further development of Mercedes AMG as a sports-
car and high-performance brand. The two-seat hypercar brings
state-of-the-art and efficient Formula 1 hybrid technology
from the racetrack to the road in virtually identical form for the
first time ever. Together with the four-door AMG GT Concept,
the Mercedes-AMG Project ONE offers yet another preview of
how AMG will use its high-performance hybrid-drive strategy
to define driving performance in the future.
The sports-car and high-performance brand from Mercedes-
Benz finished the year of its 50th anniversary with a new
record: For the first time, the brand sold significantly more
than 100,000 units.
smart: focus on electric mobility
At the Frankfurt Motor Show in September 2017, Daimler
announced that the smart brand plans to sell solely smart models
with electric drive systems in Europe and North America
starting in 2020. The other regions will then follow soon after-
wards. The new electric drive models - the smart fortwo,
smart fortwo convertible and smart forfour (electricity consump-
tion combined: 13.1-12.9 kWh/100 km; CO2 emissions com-
AMG provides a preview of alternative drive concepts with the four-door hybrid show car Mercedes-AMG GT Concept.
DO
plende hollywood cal
MATILACLE MELE 
SHOPS
smart
Las Vegas Blvd
C | THE DIVISIONS | MERCEDES-BENZ CARS
|
181
Concept for future mobility: The smart vision EQ fortwo is the first fully automated sharing concept car for the city of the future.
and safety is an electric all-wheel drive system with axle-vari-
able torque distribution and a battery installed deep inside
the vehicle floor between the axles. In combination with the
intelligent operating strategy from Mercedes-Benz, the Con-
cept EQA is able to achieve a range of up to 400 km, depending
on the installed battery capacity.
+8
€ amounts in millions
EBIT
2017
2016
Mercedes-Benz increased its unit sales in Europe by 5% to
911,700 vehicles in 2017. Substantial growth was achieved in
the volume markets of France (+9%), Italy (+9%), Spain (+8%)
and the United Kingdom (+4%), and we also increased our unit
sales in Germany by 2% to 282,600 vehicles. Mercedes-Benz
continued its success in China during the year under review.
Unit sales in the country rose by 28% to 595,200 vehicles,
which means we significantly outperformed both the market as
a whole and our most important competitors. We also set new
records for unit sales in other Asian markets - for example in
Thailand (+31%), India (+14%), South Korea (+9%) and Taiwan
(+7%). Total unit sales in the NAFTA region were at the prior-year
level: Sales increased significantly in Canada and Mexico but
decreased slightly in the United States and the NAFTA market
overall.
Mercedes-Benz once again posts record unit sales
The Mercedes-Benz brand set a new record once again in
2017, with unit sales increasing by 9% to 2,238,000 vehicles.
7 C.02 The Mercedes-Benz brand therefore not only grew
significantly faster than the global car markets, it was once
again the premium brand with the highest unit sales in the
automotive industry. The Mercedes-Benz brand is the number
one manufacturer in the premium segment in Germany,
numerous other core European markets, the United States,
Canada, South Korea and Japan. We also significantly
improved our position in China once again in the year under
review.
The Mercedes-Benz Cars division consists of the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands, as well as the smart brand and
the new EQ brand for electric mobility. The division continued
along its path of profitable growth in the year under review,
with unit sales increasing by 8% to the new record level of
2,373,500 vehicles and revenue rising by 6% to €94.7 billion.
7 C.01 Mercedes-Benz Cars was able to improve its market
position in nearly all regions. And despite considerable advance
investment in our product offensive and new technologies,
we were able to increase EBIT by 13% to €9.2 billion.
Ongoing growth
1 Including the GLA
+27
488
619
thereof China
S&C 257
715
859
In thousands
Asia
347
338
thereof United States
-1
406
403
NAFTA region
+2
314
320
Thereof Germany
+3
980
1,014
-3
Revenue
Unit sales of Daimler Trucks
+1
35,707
2,380
33,187
1,948
+8
+22
Return on sales (in %)
6.7
5.9
Investment in property,
plant, and equipment
1,028
1,243
-17
Research and
development expenditure
1,322
C.04
1,265
45
57
-21
Production
476,325
411,265
+16
Unit sales
470,705
415,108
+13
Employees (December 31)
79,483
78,642
thereof capitalized
A perfect combination of performance and design: the AMG version of the E-Class convertible.
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
17/16
Change in %
+13
thereof United States
140
122
+15
Latin America (excluding Mexico)
31
27
+11
thereof Brazil
146
13
+11
Asia
149
125
+18
thereof Japan
45
46
-3
Indonesia
12
165
NAFTA region
+2
17/16
Change in %
+5
Positive business development with only moderate market
dynamism
Daimler Trucks significantly increased its unit sales to the number
of 470,700 vehicles in 2017 (2016: 415,100). Revenue of €35.7
billion was also significantly higher than in the previous year
(2016: €33.2 billion). Overall, Daimler Trucks had little tailwind
from its relevant markets last year, but nonetheless significantly
increased its EBIT to €2.4 billion (2016: €1.9 billion). We have
taken an important step with the ongoing optimization of fixed
costs, especially at the Mercedes-Benz brand, in order to
bring Daimler Trucks up to the targeted level of profitability in the
coming years. Together with the cost optimizations previously
planned, some of which have already been implemented, we
aim to achieve improvements for Daimler Trucks with a direct
impact on earnings in an amount of €1.4 billion by the end of
2018. Our goal is for these measures to become fully effective
in the year 2019.
Unit sales significantly higher than in the previous year
Our total unit sales of 470,700 vehicles were 13% higher than
the prior-year number of trucks sold. In the EU30 region
(European Union, Switzerland and Norway), we sold 82,300
vehicles in 2017, which is slightly above the prior-year level
(2016: 79,800). Our Mercedes-Benz brand maintained its market
leadership in the medium- and heavy-duty segment with a
share of 21.0% (2016: 20.7%). Sales of 31,700 units in Germany
were in the magnitude of the prior-year level (2016: 31,500).
In Turkey, we achieved significant sales growth after the weak
development of the previous year and sold 11,800 units (2016:
9,300). The local Daimler company had its 50th anniversary in
the summer of 2017. The sales organization for Turkey, the
local product development department for trucks and buses,
and the plants in Aksaray (trucks) and Hoşdere (buses) are
organized under the roof of Mercedes-Benz Türk. The sales
development was positive also in Russia, where we more
than tripled our sales to 8,000 units (2016: 2,300).
Total
471
415
+13
EU30
82
80
+3
thereof Germany
32
31
+1
United Kingdom
9
8
+12
8
8
43
28
France
For information purposes:
+53
We increased our truck sales in Asia by 18% to 148,600 units.
In Japan, our sales of 44,800 trucks were slightly below
the prior-year level (2016: 46,400). Our FUSO brand achieved
a 19.6% share of the overall Japanese truck market (2016:
20.4%). The new heavy-duty Super Great truck underscores
our ambition to further expand our position in the Japanese
market and sets new standards for efficiency, safety and con-
nectivity. The new FUSO flagship, like the latest heavy-duty
trucks from Freightliner and Mercedes-Benz, utilizes compo-
nents from our global platform strategy such as the common
powertrain and standardized electric/electronics architecture. In
Indonesia, our sales of 42,700 units were significantly higher
than in the previous year (2016: 28,000). The first Mercedes-
Benz truck drove off the assembly line at our Indonesian
assembly plant in Wanaherang. Daimler Trucks will produce
heavy-duty Mercedes-Benz trucks for the Indonesian market
there, so we will be present in Indonesia with the two brands
FUSO and Mercedes-Benz in the future. In the Middle East,
our sales of 23,600 trucks last year were significantly higher
than the low prior-year volume (2016: 17,600).
The positive development of unit sales in the NAFTA region made
a major contribution to our growth, especially in the second
half of the year. We were able to significantly increase our sales
to 165,000 units (2016: 145,700). We further increased our
market share in weight classes 6-8 to 39.8% (2016: 39.3%) and
in heavy-duty class 8 we once again achieved a market share
of 40.0% (2016: 40.0%). In classes 6-8, we continued to be the
undisputed market leader. The new Freightliner Cascadia has
been in production since the beginning of 2017 and is equipped
with our integrated powertrain. Approximately 95% of our
heavy-duty engines in our trucks in the United States and Canada
meanwhile stem from our own engine platform. We were able
to increase the proportion of Freightliner Cascadia and Western
Star 5700 XE trucks with the DT12 automated transmission to
approximately 75% in the United States and Canada. Local pro-
duction of the medium-duty DD8 engine started in Detroit in
late 2017, marking a further milestone of our platform strategy.
Production of the DD5 engine will follow in 2018.
Road efficiency: The Mercedes-Benz Actros provided evidence of its fuel efficiency at the event Driving Experience Portugal 2017.
004
Driving Experterna Pronage
Leading in Road F
185
Our sales of 30,500 trucks in Latin America were above the
low level of the previous year (2016: 27,500). There was a
significant contribution from the positive sales development in
Argentina, where 5,600 units were sold (2016: 3,900). In
Brazil, the region's main market, we increased our sales signifi-
cantly to 13,400 vehicles (2016: 12,100). With our trucks of
the Mercedes-Benz brand, we achieved a share of 27.6% in the
medium- and heavy-duty segment (2016: 29.8%). In the next
five years, we will invest approximately €600 million in Brazil in
the modernization of the product lineup, in digital services and
in the two plants in São Bernardo do Campo and Juiz de Fora.
Both those plants are to meet the highest production stan-
dards by 2022, making them even more competitive.
+18
493
583
Total (including BFDA)
+44
78
112
C | THE DIVISIONS | DAIMLER TRUCKS
BFDA (Auman Trucks)
WORLD DRIVE
INTELLIGENTI
sales of Mercedes-Benz cars in China more
than doubled.
Strong demand: Between 2013 and 2017,
6
HIGH SPEED
IN CHINA'S
12 DAIMLER ANNUAL REPORT 2017 | #1 | CORE
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
CORE
More and more satisfied customers:
GROWTH MARKET
Half of all the new vehicles we sell today
are either financed or leased through
With the new generation of the FUSO flagship
truck, the Super Great, Daimler Trucks aims to
further expand its market position in Japan.
WORLD-
CLASS
FINANCIAL
SERVICES
Customized financing and leasing products accelerate
our automotive business. One of the most important factors
behind our success is our attractive and innovative range
of services around vehicle financing and insurance. Daimler
Financial Services has posted record figures for many years.
We aim to systematically pursue our strategy of profitable
growth at high speed in the future. Daimler Financial Services
finances or leases half of all the new vehicles sold worldwide
by the Daimler Group - and our international portfolio contin-
ues to grow. In 2017 DFS increased the number of its new
leasing and financing contracts by 14 percent, once again
setting a new record. It's clear that in the future, Daimler's
automotive core business will stay in the fast lane.
④daimler-financialservices.com/en
DAIMLER TRUCKS:
GLOBAL LEADERS
Ever since the truck was invented 120 years ago,
Daimler Trucks has been the pioneer in the sector -
and it continues to gain ground. As the world's
number one company in the truck business, we focus
our strengths for our customers' benefit - with the
optimal experience, know-how and positioning for
providing attractive products and services. Our success
is based on six strong vehicle brands under the roof of
Daimler Trucks. We aim to continue shaping the logistics
business with these brands in the future. We offer
customized applications and pioneering truck technolo-
gies all over the world. For example, since early 2017,
we have been offering the new Freightliner Cascadia in
the North American market and the new FUSO Super
Great to customers in Japan. At the beginning of 2017, we
launched production of the new Freightliner Cascadia,
which is equipped with our integrated powertrain.
Components of the global Daimler Trucks platform
strategy are installed in all of our new heavy-duty
trucks from Mercedes-Benz, Freightliner and FUSO.
Our standardized architecture for electric and electronic
systems is yet another success factor that makes us
the leader in the global truck market.
④ daimler.com/products/trucks
Strengthening the base
The 75th anniversary of Freightliner and the 50th
of Western Star: Two significant birthdays that
underline Daimler Trucks' strong market position
in North America.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 15
Leading in Road Fficiency
Low total Cost Greater Sex Maine
Driving Experience Portugal 27
Thanks to the ongoing optimization of its
powertrain and aerodynamics, the Actros is
posting ever better fuel economy.
Daimler Financial Services.
Sustainable earning power in our automotive
core business is our economic foundation —
and the basis for the investments we need to
make in the future. That's why Daimler plans
to systematically expand its global strategy for
success in all of its divisions. Our fascinating
premium cars and our successful trucks, vans
and buses are all shaping our course of prof-
itable growth. The customized financing and
leasing products of Daimler Financial Services
support our successful core business all over
the world. In addition to our traditional markets,
the Asia region and China in particular will
continue to play a key role. Thanks to our glob-
ally organized, flexible production network and
our optimal customer orientation, we continue
along our successful path.
Mercedes-Benz is breaking sales records in the booming markets of Asia. The brand
with the star is the most frequently registered premium brand in many countries all over
the globe. Especially in the Asia-Pacific region, Mercedes-Benz vehicles are bestsellers. The
Group delivered more cars in this region last year than ever before. As the world's biggest
market and a source of considerable growth, China has played a key role in this outstanding
result. Our coveted premium vehicles are also very popular in South Korea and India and
are setting new sales records there. We are already producing many vehicles locally in this
region. For example, we've produced more than one million vehicles to date at our plant in
Beijing. We've more than tripled our sales in China in just four years. Many new models are
now celebrating their premieres in Asia. That's yet another way Daimler recognizes the major
role played by its successful markets in Asia, where it remains on course in the passing lane.
MERCEDES-BENZ:
NO.1 AMONG
PREMIUM VEHICLES
www
convertible defines the luxury of the future.
Through its sensual and emotional design and
technical innovations, the Vision Mercedes-Maybach 6
in the hand-finishing section of the Mercedes-Benz
plant in Sindelfingen.
The breathtaking coupes and roadsters from the
Mercedes-AMG GT model series are manufactured
S.GT 558
Roadsters, convertibles and coupes from Mercedes-Benz make customers' hearts
beat faster. Dream cars such as the legendary gullwing model are part of the myth of the
Mercedes-Benz brand. Today, we offer dream cars that meet a wide range of expectations
and are available in all classes. Now more than ever before, the Mercedes-Benz star stands
for state-of-the-art luxury and outstanding diversity. It symbolizes success: Mercedes-Benz
roadsters, convertibles and coupes are coveted all over the world. The dream car family
includes the SL, the SLC and the C-Class convertible as an entry-level model from the world
of Mercedes-Benz convertibles, as well as the luxurious S-Class four-seat open convertible.
The special highlights of our portfolio also include the Mercedes-Maybach convertible and
the E-Class coupe.
The minimalistic styling of the sporty
and elegant E-Class coupe typifies the
DREAM CAR
WITH A STAR
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
10
The GLA became an overnight success
in the compact SUV segment, which it
shaped and redefined.
The dynamic GLC Coupe, which delights
buyers all over the world, is an especially
popular product.
sophistication of Mercedes-Benz design.
S.X1563
SEL
SUV2500
Premium vehicles from Mercedes-Benz thrill our customers worldwide - unstoppably. Premium
automobiles form the basis of our core business. That's why Mercedes-Benz now has a larger and more
diverse model portfolio than ever before. With their pioneering design and innovative technologies,
Mercedes-Benz vehicles fascinate customers all over the world. The cars with the star are setting sales
records and leading the worldwide premium segment. The new E-Class and the upgraded S-Class from
Mercedes-Benz are playing a key role in this success. Daimler is operating from a position of strength
and is stepping up its pace. Until the end of this decade, it will launch numerous new car models on the
market. Many of them have no predecessor in the Group's current product range. We are expanding our
international production network and our flexible modular strategy in order to achieve our long-term goal
of efficient manufacturing for sustainable growth.
daimler.com/products
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
The new edition of the Mercedes-Benz G-Class
represents the biggest transformation in the
success story of this off-road legend - and yet
it remains true to itself.
8
S.61050
CONFIDENT
ON EVERY
TERRAIN
The special qualities of Mercedes-Benz SUVs impress
customers, both on and off the road. With seven models
in all classes, Mercedes-Benz is extremely well positioned
all over the world in the growing market for off-road vehicles.
Our model offensive is paying off: Customers are thrilled
by these vehicles' superb SUV aesthetics and outstanding
technology. We're delivering more GLA, GLC, GLC Coupe,
GLE, GLE Coupe, GLS and G-Class vehicles than ever before.
The SUVs with the star are posting double-digit sales
growth that puts them in a top spot in this global growth
segment. These are good reasons to continue closely
watching our off-road vehicles – because they're setting
the pace for Daimler.
H
44,815
34,158
thereof United States
+3
+1
43,354
33,749
NAFTA
Total
401,025 359,096
273,297 249,860
105,781 96,130
thereof Germany
EU30
17/16
% change
2017
Latin America
(excluding Mexico)
2016
+12
+9
+10
16,378
C❘ THE DIVISIONS | MERCEDES-BENZ VANS
+31
Preview of the new Sprinter: The transformation of a
vehicle into an integrated system solution
Mercedes-Benz Vans will launch the new Sprinter in Europe in
the second quarter of 2018, with other markets to follow
successively. The division already announced specific details
of the new full-size van in 2017. The new Sprinter will be
fully connected in order to be a part of the Internet of things.
In addition, the vehicle's unique scalability, electric drive
system and customized hardware solutions for the cargo space,
as well as a combination of van-sharing and rental services,
will make it the first integrated system solution from Mercedes-
Benz Vans. These innovations are integrated solely on the
basis of each customer's sector-specific needs, and they sig-
nificantly ease the daily work of drivers and fleet managers.
Unit sales by Mercedes-Benz Vans
Market launch of the Mercedes-Benz X-Class
Mercedes-Benz Vans has been delivering the new X-Class, the
first pickup from a premium automaker, to customers in Europe
since late 2017. South Africa and Australia will follow in early
2018 and we plan to launch the model in Argentina and Brazil
in 2019. The mid-size pickup segment is global in scope, is a
volume market and is set to grow further. The X-Class has room
for
up to five people. It augments the strengths of a mid-size
pickup with the typical properties of the Mercedes-Benz brand:
dynamic handling, comfort, great design, high safety, good
connectivity and a comprehensive range of customization options.
Customers can choose between three variants, rear-wheel
drive, engageable all-wheel drive or permanent all-wheel drive
(permanent all-wheel drive as of mid-2018), a six-speed
manual or seven-speed automatic transmission, and a diverse
range of accessories developed by Mercedes-Benz.
Mercedes-Benz Vans is continuing the successful implementa-
tion of its "Mercedes-Benz Vans goes global" growth strategy.
At the same time, we have laid the foundation for further growth
in the future. Building on its strong position, Mercedes-Benz
Vans announced in February 2017 that it would invest a total of
over €2.0 billion in 2017 and 2018 alone. This money is being
used to expand and update the division's product range and to
establish new services. The investments particularly focus on
the new Mercedes-Benz X-Class and the new Sprinter, as well as
on innovative holistic solutions for the vehicles from Mercedes-
Benz Vans.
Mercedes-Benz Vans invests in its future
190
thereof China
Other markets
12,497
+7
+75
13,636
23,801
+49
22,526
33,641
Asia
32,894 30,859
C.06
17/16
% change
24,029
373
710
plant and equipment
Investment in property,
9.1
9.0
Return on sales (in %)
+90
+1
+3
12,835
13,164
1,181
Revenue
EBIT
17/16
% change
€ amounts in millions
Mercedes-Benz Vans is the only manufacturer of full-size vans
that continues to produce in Germany. In this context,
Mercedes-Benz Vans is investing a total of €450 million in the
lead plant of the global Sprinter production network in
Düsseldorf, and in the Sprinter plant in Ludwigsfelde. The bat-
tery-electric Sprinter will be produced in Düsseldorf, and
this location will serve as the global competence center for the
electric-drive Sprinter. In 2017, the plant in González Catán
near Buenos Aires, Argentina, also began making preparations
for production of the new Sprinter. The division will invest
US$150 million in this facility and will create more than 500
additional jobs there. At the same time, construction of the
new Sprinter plant in North Charleston, South Carolina, con-
tinues to progress. Mercedes-Benz Vans is investing roughly
half a billion dollars in the new plant and will create up to 1,300
jobs there.
1,170
+5
Research and development
565
25,255
Employees (December 31)
+12
359,096
401,025
Unit sales
+10
expenditure
368,574
Production
+30
238
310
thereof capitalized
+28
442
405,129
S.MB 4702
The new Mercedes-Benz X-Class is the first pickup from a premium manufacturer.
SPU 1253E
2016
2017
Daimler Financial Services
C.09
Further growth in the insurance business
Daimler Financial Services brokered approximately 2.1 million
insurance policies in 2017 - an increase of 20% compared
with the prior year. A new telematics-based insurance rate was
developed in 2017 and successfully launched in France,
Belgium and Germany. Since it started operations in 2016, the
warranty insurer Mercedes-Benz Versicherung AG, has
established itself in the German market very successfully
and continued to grow in financial year 2017.
Strong growth in Africa & Asia-Pacific region and China
New business in the Africa & Asia-Pacific region (excluding China)
increased sharply once again compared with the prior year,
by 16% to €8.4 billion. Business growth was especially strong in
South Korea (+30%) and Japan (+19%). At the end of 2017,
contract volume in the Africa & Asia-Pacific region (excluding
China) totaled €17.2 billion, representing a 7% increase over
the previous year. New business also increased significantly in
China: 300,300 new leasing and financing contracts worth
€9.5 billion were concluded in 2017 (+56%). At the end of 2017,
contract volume in China amounted to €12.2 billion - an
increase of 39% compared with the end of 2016.
The Americas: new business at prior-year level
Daimler Financial Services brokered 444,600 new financing
and leasing contracts worth €21.8 billion in the Americas
region in 2017 (+1%). The volume of new business developed
very well in Brazil (+28%) and Canada (+8%). Contract volume
in the Americas region of €50.7 billion at December 31, 2017
was lower than at the end of 2016 (-6%). Adjusted for exchange-
rate effects, contract volume increased by 6%.
Significant increase in new business in Europe
During the year under review, Daimler Financial Services
concluded 967,600 new financing and leasing contracts worth
€31.1 billion in the Europe region (+15%). Especially high
rates of growth were recorded in Russia (+51%), Italy (+29%)
and Spain (+28%). In Germany, Mercedes-Benz Bank's new
business increased by 9% to €12.9 billion. Daimler Financial
Services' total contract volume in Europe rose by 12% to
€59.7 billion.
Daimler Financial Services concluded 1.9 million new financing
and leasing contracts worth a total of €70.7 billion in 2017.
The total value of all new contracts rose by 14% compared with
the prior year. About half of all new-vehicle sales by our auto-
motive divisions in 2017 were supported by sales financing from
Daimler Financial Services. A total of more than 4.8 million
financed or leased vehicles were on the books at the end of
2017 with a total contract volume of €139.9 billion; this repre-
sents a 6% increase compared with the end of 2016. Adjusted
for exchange-rate effects, contract volume increased by 12%.
EBIT rose to a new high of €1,970 million (2016: €1,739 million).
71 C.09
Half of all Daimler vehicles delivered to customers are
financed or leased
17/16
% change
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 4.8 million at the end of financial year 2017. Record figures
were also posted for new business and contract volume, and EBIT set a new benchmark as well.
The combination of sales financing with brokered automotive insurance policies continued to gain
importance. The division's range of innovative mobility services was further expanded. Today,
services such as car2go, moovel and mytaxi are used by 17.8 million customers all over the world.
In 2017, the digitization of financial services was also successfully expanded with the Mercedes Pay
electronic payment system and the AutoGravity financing app.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Daimler Financial Services
Award-winning products from Daimler Buses
At the Busworld international buses trade fair in Kortrijk,
Belgium, Daimler Buses was honored with five awards. The
panel of experts granting the Busworld Awards honored the
Mercedes-Benz Tourismo M and Citaro hybrid bus models with
two awards each. And the Setra S 516 HD touring coach in
the ComfortClass received the Sustainable Bus Award for 2018
from the international panel of judges.
Daimler Buses has become a strategic investor in the Berlin-
based mobility service CleverShuttle. Through a minority hold-
ing, the division is entering into a strategic cooperation for
mobility on demand - in other words, mobility services that are
designed to flexibly meet customer demand.
Strategic cooperation with CleverShuttle for mobility on
demand
As part of a new target vision, Daimler Buses is making its
production network in Europe fit for the future. Within this con-
text, in the years ahead, we aim to invest approximately €340
million in optimized structures and more efficient processes in
the manufacturing network, as well as in the implementation
of the CASE strategy at Daimler Buses.
A future package to enhance efficiency in production and
the implementation of CASE
In the year under review, Daimler Buses received a large number
of major orders. The local transportation authority in Riyadh,
Saudi Arabia, ordered more than 600 Mercedes-Benz Citaro
buses the biggest single order for Mercedes-Benz Citaro
city buses in the history of Daimler Buses. Two major orders
were concluded in Poland: 80 Mercedes-Benz Conecto buses
for Warsaw and 60 Mercedes-Benz Citaro buses for the local
transport operator in Wrocław. In addition, EMT Madrid
ordered an additional 300 vehicles. A framework agreement
was signed with the Italian transport operator AGI for 300
buses, and another contract with BusItalia covered a total of
950 vehicles.
Daimler Buses receives many major orders
Starting in 2018, we plan to consolidate our digital services for
buses under the umbrella brand Omniplus On in a single portal.
For example, the Uptime feature continuously monitors and
analyzes the vehicle systems and indicates when maintenance
or repair is needed. The Driver's App supports the communi-
cation of drivers and companies and helps them carry out the
required pre-departure checks. The Remote Bus feature pro-
vides essential data. Thanks to these features, our customers
have a wide variety of information available to them for sup-
porting the efficient deployment of their fleets.
195
The new umbrella brand Omniplus On for all digital
services
€ amounts in millions
EBIT
We sold a total of 200,500 units of the Sprinter worldwide in
2017 (2016: 193,400), which was the last full year of the current
model's life cycle. The successor generation of the Sprinter
is already set for market launch in the first half of 2018. Sales
of vehicles in the mid-size segment were significantly higher
than in the previous year, totaling 171,100 units in 2017 (2016:
140,800). Sales also rose in the commercial segment, with
Vito sales increasing significantly by 21% to 111,800 vehicles.
Meanwhile, sales of the Mercedes-Benz Citan reached 26,100
units (2016: 24,900). Sales of the V-Class full size MPV rose by
22% to 59,300 units in the year under review. The X-Class also
got off to a good start at the end of the year, with sales totaling
3,300 units.
C.05
Mercedes-Benz Vans
Employees (December 31)
+8
+16
37
12,062
13,012
43
Revenue
Investment in property,
plant and equipment
132,565
+14
61,810
+13
1,739
+15
20,660
23,775
1,970
70,721
139,907
Contract volume
New business
+6
Sales developed very favorably in Latin America, increasing sig-
nificantly by 31% to 16,400 units. Sales in China once again
rose sharply (+75%) compared with the prior year, driven by
the new models launched in the mid-size segment in 2016.
New bus models for the African market
Daimler Buses is launching two new bus models on the market
in Kenya. Both bus models will be manufactured for the local
market in cooperation with the division's local sales partner
DT Dobie Kenya in Nairobi. The Mercedes-Benz 917 city bus
was designed for city, school and shuttle operation, and the
Mercedes-Benz 1730 is ideal for long-distance routes.
2016
3,440
Mexico
+46
4,937
7,201
thereof Brazil
+30
9,837
12,740
(excluding Mexico)
3,780
Latin America
3,063
3,057
thereof Germany
-2
+9
26,226
8,838
8,687
EU30
28,676
Total
-0
Furthermore, Daimler Buses is conducting the "eMobility
Consulting" initiative to advise its customers on issues related
to electric mobility. In this context, we work together with our
customers to analyze each specific starting situation and use it
as a basis for developing a holistic system with the highest
possible proportion of electric mobility. In the process, we con-
sider not only the vehicles themselves but also the charging
infrastructure, the operating plan and the service concepts.
-9
2,348
The new Setra S 531 DT double-decker bus continues our
coach offensive. Thanks to improved aerodynamics, it consumes
significantly less fuel than its predecessor. In addition, it is
equipped as standard with an emergency braking system with
obstacle and pedestrian recognition, and Sideguard Assist
for taking the blind spot into account is offered as an optional
extra.
Outstanding new touring coaches: the Mercedes-Benz
Tourismo and the Setra double-decker S 531 DT
Another focus area of the product offensive was the new
version of the successful Mercedes-Benz Tourismo touring
coach. New assistance and safety systems such as Active
Brake Assist 4 (ABA4) with pedestrian detection make the new
Tourismo even safer. Fuel consumption continues to fall,
thanks to its optimized aerodynamics and the further improve-
ment of its chassis compared with the predecessor model.
With four model variants, the new Mercedes-Benz Tourismo
addresses the wide range of customer needs in the coach
segment. The product offensive is also paying off in the grow-
ing intercity-bus business.
The benchmark: the new Mercedes-Benz Citaro hybrid
In the year under review, Daimler Buses continued its model
offensive with the Mercedes-Benz Citaro hybrid and other
models. Hybrid drive is available for many model variants of
the best-selling Citaro city bus, including the natural-gas-
powered Citaro NGT. Hybrid drive, together with the new elec-
tro-hydraulic steering system, further reduces the fuel
consumption of the conventional Citaro, which is already highly
efficient, depending on the vehicle's application and speci-
fications. The further reduced fuel consumption quickly pays
off for transport companies, and society and the environment
benefit from the decrease in emissions.
C | THE DIVISIONS | DAIMLER BUSES
194
NU-5324
ETRA
193
C | THE DIVISIONS | DAIMLER BUSES
The Setra S 531 DT double-decker is the biggest and most comfortable coach from Daimler Buses.
Asia
Economic, safe, comfortable and functional: the new Mercedes-Benz Tourismo RHD high-decker coach.
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a full range of city buses, intercity buses and
touring coaches, as well as bus chassis. Due to the continued
high demand for our complete buses, unit sales in this region
amounted to 8,700, remaining roughly at the high level of the
prior year (2016: 8,800 units). Daimler Buses maintained its
leading market position in the EU30 region with a market share
of 28.4% (2016: 29.6%). At 3,100 units, sales in Germany were
at the same level as in the previous year. Sales of 400 units in
Turkey were significantly lower than in the prior year (2016:
600) due to the country's economic situation, which remains
difficult. The market situation in Latin America (excluding
Mexico) improved considerably on account of the gradually
recovering market in Brazil. The bus market volume in Brazil
grew by 10% in the year under review after having bottomed
out in 2016. Sales of Mercedes-Benz bus chassis in Brazil
rose by 46% to 7,200 units. We were able to maintain our lead-
ing market position in Brazil with a market share of 52.5%
(2016: 58.4%). In India, we continued along our growth path and
increased our sales to 900 units (2016: 500). At 3,400 units,
sales in Mexico were significantly lower than in the previous
year (2016: 3,800).
Varied business development in the core regions
Daimler Buses sold 28,700 buses and bus chassis worldwide in
financial year 2017 (2016: 26,200). The significant increase
was due in particular to the gradual recovery of the economy in
Brazil. The division thus maintained its clear market leadership
in its most important traditional core markets (EU30, Brazil,
Argentina and Mexico). Sales of complete buses in the EU30
region were at the same high level as in the previous year.
Revenue grew by 4% and EBIT of €243 million was at the prior-
year level (2016: €249 million).
Earnings at the prior-year level
-27
2,012
1,461
Other markets
+33
1,759
MANFU180
Mercedes-Benz Vans continued to grow also in the NAFTA
region, where sales rose to 44,800 units (2016: 43,400).
This included a new record of 34,200 units sold in the United
States (2016: 33,700).
Unit sales in the EU30 region, our core market, rose by 9% to
273,300 vans in the year under review. The markets grew
at double-digit rates for example in the United Kingdom (+12%),
Spain (+10%), Italy (+13%), Poland (+17%), Switzerland (+10%)
and Austria (+14%). Mercedes-Benz Vans posted substantial
growth (+10%) also in its important German market. We also set
a new record in Germany of 105,800 units sold (2016: 96,100).
Unit sales developed favorably also in Turkey (+14%) and
Russia (+6%).
Mercedes-Benz Vans' products remained very successful in
financial year 2017. Our Sprinter, Vito and Citan vans are
tailored mainly to commercial customers, while the V-Class
is designed primarily for private use. The X-Class is targeted
at a variety of private and commercial customers.
Revenue
4,351
4,176
+4
EBIT
243
249
-2
Return on sales (in %)
5.6
-3
6.0
plant and equipment
Research and
development expenditure
194
202
-4
thereof capitalized
30
11
+173
Investment in property,
Production
97
17/16
% change
C | THE DIVISIONS | MERCEDES-BENZ VANS
Driving the electric future
The new electric Vito
The Mercedes-Benz eVito has been available to order since November 2017, with deliveries to commence in the second half of 2018.
191
New HORIZON added to the Marco Polo family
In January 2017, Mercedes-Benz Vans added a new member to
its range of compact camper vans. Following the Marco Polo
and the Marco Polo ACTIVITY, our product range is now supple-
mented by the new Marco Polo HORIZON. Thanks to its ver-
satile seating configuration offering up to seven seats and five
beds, the Marco Polo HORIZON combines maximum function-
ality with the high-quality design of the V-Class. The compact
new camper van from Mercedes-Benz is geared toward trend-
conscious adventurers who are looking for a versatile and func-
tional vehicle for short vacation trips and outdoor activities,
but also appreciate a stylish image.
Full speed ahead: first concrete results of the
future-oriented "adVANce" initiative
With its future-oriented “adVANce" initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for the trans-
portation of goods and passengers. The division is thus
playinga pioneering role in its sector. We aim to develop new
business models and tailored solutions that are adapted to
our customers' respective sectors.
In November 2017, Mercedes-Benz Vans provided information on
its plans to offer all of its commercial van models with electric
drive systems. This has already started with the mid-size eVito,
which has been available to order since the announcement
was made. Deliveries of the eVito will begin in the second half
of 2018, followed by the eSprinter in 2019. The product range
will be rounded out by the Citan. The electric-drive strategy of
Mercedes-Benz Vans focuses not only on the electric van itself,
but also on a technological ecosystem that is optimally aligned
with customers' business needs. Here, the division is taking
a holistic approach based on five pillars ("Holistic Ecosystem",
"Sector Focus", "Cost Effectiveness", "Co-Creation" and
"Technology Transfer") in order to create an innovative integrated
system solution. This solution covers the entire value chain
for commercial applications. Customer co-creation plays a key
role in product development, so strategic partners and their
sector expertise are being incorporated into the development
94
process. Hermes, a provider of logistics services, is a good
example of that. In early 2018, Hermes and Mercedes-Benz Vans
will launch the partnership they agreed upon in the spring
of 2017 with a pilot phase in Hamburg and Stuttgart. After the
projects are completed, we will expand the electric fleet to a
total of 1,500 electric Vito and Sprinter vans by 2020, and launch
it for parcel deliveries in other metropolitan areas. The
strategic partnership also involves the joint development of a
concept for an efficient charging infrastructure at Hermes
logistics centers, as well as IT services to ensure optimal man-
agement of the electric fleet. The two partners also plan to
develop integrated system solutions to boost the efficiency of
the entire delivery process. They are also working together to
create additional efficiency drivers, such as intelligent systems
for the cargo space that will enable the vehicle to be loaded
and unloaded faster.
Mercedes-Benz Vans is also studying new delivery models,
including the combination of vans and drones. For example, the
division cooperated with the US drone system developer
Matternet and the Swiss online marketplace siroop to run a
three-week pilot project in Zürich during the year under
review. The project involved the use of vans and drones for the
efficient on-demand delivery of e-commerce products.
192
C | THE DIVISIONS | DAIMLER BUSES
Daimler Buses
In 2017, business development at Daimler Buses was strongly influenced by the recovering
economic conditions in Latin America and a significant sales increase in India. Lower demand for
our buses in Turkey had a negative impact. Our earnings, which were at the very good level of
the previous year, enabled us to achieve a 5.6% return on sales. As the market leader in its most
important traditional core markets, Daimler Buses focuses on innovative and pioneering city
buses and coaches. In 2017, Daimler Buses once again presented itself as a future-oriented manu-
facturer with new products and digital services, a “future package” for our production network,
and the implementation of the CASE strategy.
C.07
Daimler Buses
2017
2016
€ amounts in millions
In July 2017, Mercedes-Benz Vans Mobility GmbH launched
its first mobility service in the German market. Called Mercedes-
Benz Van Rental, this innovative and highly flexible rental
service from the Daimler subsidiary is mainly targeted at com-
mercial van customers. In addition, Mercedes-Benz Vans is
entering the business of shared mobility and ride sharing. To
this end, the Vans division teamed up with the successful US
startup Via to create the ViaVan joint venture for the European
market. The new ridesharing service will be launched in a
major European city in early 2018. After that, the service will
be gradually expanded to other cities.
28,518
26,180
Unit sales
The trucks were previously tested on the new DTNA test grounds
in the desert of Oregon. This new facility with an area of over
35 hectares allows our vehicles to be tested for the NAFTA region
under difficult climatic conditions. Test drives of automated
vehicles are also to be carried out there.
H
The new Freightliner Cascadia features impressive fuel efficiency, connectivity and safety.
188
C❘ THE DIVISIONS | DAIMLER TRUCKS
Connected Mercedes-Benz Arocs trucks in driverless
test operation
Daimler Trucks continues to work on reducing the burden on
drivers by means of automated driving in normal road traffic,
while enhancing safety on highways and freeways. In parallel,
Daimler Trucks is also testing driverless vehicles in closed-off
areas. This offers further potential, for example to significantly
increase customers' productivity. Fitted with a Remote Truck
Interface (RTI), which in the technological context will be devel-
oped for automated driving, four Mercedes-Benz Arocs trucks
demonstrated a new dimension of snow removal on an airfield.
Using the RTI, all vehicles are fully connected with telematics
systems and can either lead or follow in a convoy. Vehicle func-
tions can be controlled remotely and thus allow the truck con-
voy to be driven from outside the driver's cab. Following vehicles
in the convoy can therefore be used to clear snow in driverless
mode. The project was initiated in close collaboration between
the Daimler innovation incubator Lab1886, Daimler Trucks and
Fraport AG.
New connectivity solutions for the logistics sector
and truck servicing
The Truck Data Center forms the basis for our truck-related
digital services and is installed in vehicles from all Daimler
Trucks brands as a key component of the platform strategy.
The connectivity module receives truck data, evaluates it and
communicates with the infrastructure, other vehicles and
other logistics participants. Using linked connectivity solutions
from Fleetboard, Detroit Connect and Truckonnect that
are tailored to local customers' needs, logistics companies
receive extensive insights and useful analyses for their fleets,
as well as access to new digital connectivity services. Big data
and technology offer new potential for significantly increasing
the profitability of the logistics sector. Using a variety of new
apps, it is possible to display relevant information such as
fleet utilization, vehicle position, cost-savings potential, fuel
consumption and driving-style evaluation. And for the opti-
mization of vehicle servicing, Daimler Trucks last year launched
a new digital service: Mercedes-Benz Uptime. This connects
the truck with the Mercedes-Benz service organization and the
transport company, thus facilitating significantly better
plannability and higher efficiency through maximum vehicle
availability. Unplanned repairs can be avoided to a great
extent and scheduled workshop visits can be further optimized.
Customer Fleet
Truck platooning on public highways in the United States
In the past financial year, Daimler Trucks was the first truck
manufacturer to test digitally connected trucks on public high-
ways in the United States. This so-called platooning makes
use of connectivity and partially automated driving to reduce the
gaps between trucks on the road, and can result in better
fuel efficiency, easier work for the drivers and enhanced safety.
Tests with three Mercedes-Benz Actros trucks driving in par-
tially automated mode and connected had previously been car-
ried out in Germany in 2016. Daimler Trucks North America
(DTNA) linked two Freightliner New Cascadia trucks with the
use of Wi-Fi-based V2V communication in connection with
driver-assistance systems featured in the new Cascadia under
the product name Detroit Assurance 4.0. They include Adap-
tive Cruise Control, Lane Departure Assist and Active Brake
Assist 4. DTNA is thus responding to growing customer inter-
est in solutions for automated and connected driving in trucks.
Together with fleet customers in the United States, DTNA is
examining the impact of platooning solutions on fleet operations.
R
Mercedes-Benz Uptime
The Truck Data Center connectivity module will be the brain of the connected truck across the Daimler Trucks brands.
Mercedes-Benz
Service
C | THE DIVISIONS | MERCEDES-BENZ VANS 189
Mercedes-Benz Vans
-
Mercedes-Benz Vans continued on its successful course of recent years, with a new record for
unit sales in 2017. At €1.2 billion, EBIT remained at the high level of the previous year. Growth was
mainly driven by the mid-size segment with the Vito van and the V-Class full-size MPV. We con-
tinued our "Mercedes-Benz Vans goes global" growth strategy by expanding our product range to
include the X-Class – the first pickup from a premium manufacturer. Mercedes-Benz Vans' future-
oriented "adVANce" initiative delivered its first concrete results, and the division is systematically
forging ahead with its transformation from a vehicle manufacturer into a supplier of transportation
and mobility solutions for cargo and passengers. Among other things, Mercedes-Benz Vans plans
to electrify its commercial fleet, beginning with the Vito in the second half of 2018.
New record for unit sales
Mercedes-Benz Vans set a new sales record once again in
financial year 2017, with an increase of 12% to 401,000 units.
At €13.2 billion, revenue was also higher than in the previous
year (2016: €12.8 billion). EBIT reached €1,181 million and was
thus at the high prior-year level.
Continued growth
G
we plan to deliver 500 trucks of this generation to selected
customers. Large-scale series production will probably begin in
2019. The development of the vehicle benefited from extensive
experience gained from several customer test phases in Portugal
and Germany. Production of the eCanter models for Europe
and the United States started in Tramagal, Portugal in July 2017.
The trucks for Japan are produced in Kawasaki, where the
first rapid-charging station for electric trucks in the Japanese
market has been in operation since May. Thomas Built Buses,
a subsidiary of Daimler Trucks North America, presented a fully
electric school bus in September, which is to go into produc-
tion in 2019. The 160 kWh battery should allow a range of up to
160 kilometers and the range can be extended with additional
battery modules if required. With the development of the Saf-T-
Liner C2 electric bus, Thomas Built Buses profited significantly
from the electric-drive expertise within the Daimler Group. In
parallel with its activities on the vehicle side, Daimler Trucks
invested last year in the Israeli company StoreDot Ltd. and
agreed with it on a strategic partnership. Store Dot is a pioneer
for nanotechnology materials and is one of the leading com-
panies for electric-charging systems and energy-storage mate-
rials. The main area of cooperation is the rapid charging of
batteries to provide customers with better vehicle utilization.
187
C | THE DIVISIONS | DAIMLER TRUCKS
28,676
26,226
+9
+9
Employees (December 31)
18,292
17,899
C.08
Unit sales by Daimler Buses
2017
2016
186
C | THE DIVISIONS | DAIMLER TRUCKS
ECANTER
POWERED BY
POSITIVE
The FUSO eCanter is our first light-duty truck from series production with purely electric drive.
In India, the first half of the year was affected by weaker demand
in connection with regulatory and tax changes. Although the
Indian truck market contracted compared with the previous year,
we were able to significantly increase our unit sales to 16,700
BharatBenz trucks in the fifth year since the brand was launched
and our market share grew to 9.1% (2016: 13,100 and 6.8%).
This development was aided by, among other things, the new
emission standard Bharat Stage IV, which our BharatBenz
truck already fulfilled before it was introduced in April 2017.
Meanwhile, more than 60,000 BharatBenz trucks are on the
roads in India and a further 14,000 trucks have been exported
from there to more than 40 other markets in Asia, Latin
America and Africa.
Presence in important growth regions
In China, the world's biggest truck market, Daimler AG has a 50%
stake in Beijing Foton Daimler Automotive Co. Ltd.(BFDA), a
joint venture with Beiqi Foton Motor Co. Ltd. Medium- and heavy-
duty trucks of the Auman brand have been produced there
since 2012. Along with the significant market recovery in China,
sales of 112,400 Auman trucks were significantly higher than
in the previous year (2016: 77,800). More than 460,000 Auman
trucks have been sold since the joint venture was established.
In Iran, Mercedes-Benz Trucks signed a framework agreement
on a joint venture with the Iran Khodro Industrial Group in 2017.
This creates a basis for future sales and aftersales activities for
Mercedes-Benz trucks in Iran. In addition, Daimler Trucks
signed a supply agreement for the FUSO brand with Mayan, a
company of the Mammut Group. The supply of FUSO trucks
to customers in Iran started in 2017.
Electrification has top priority
Mercedes-Benz presented a fully electric heavy-duty truck for
distribution transport already in 2016. Last year, we launched
the new Japanese product brand, E-FUSO, a separate brand
for electric trucks and buses. It is planned to have an additional
electric version of each FUSO truck and bus model in the com-
ing years. With the presentation of the new fully electric E-FUSO
Vision One heavy-duty truck for inner-city and regional distri-
bution transport, we are underscoring our claim to be a pioneer
in the field of electric commercial vehicles. The Vision One
has a battery capacity of 300 kWh and a range of up to 350 kilo-
meters. We intend to launch the series-produced version of
the heavy-duty distribution trucks from FUSO in mature markets
in four years.
page 34 In New York last September, we
handed over the FUSO eCanter to customers including United
Parcels Services (UPS). According to our market knowledge,
this is the world's first fully electric light-duty truck from series
production. In Europe and Japan, other leading logistics pro-
viders were among the first customers of the small-series pro-
duction. They will use the fully electric light-duty truck for
various tasks in urban delivery transport. In the coming years,
IHULY
YBG
ФОЛ
+2
The countdown for our electric city bus has begun
By the end of 2018, Daimler Buses plans to begin series pro-
duction of a city bus with fully electric drive based on the
Mercedes-Benz Citaro. The battery-electric Citaro has already
undergone an extensive cycle of testing and test drives. Its
prototypes have successfully completed a winter test cycle
under below-zero conditions at the Arctic Circle and a summer
test cycle under very high temperatures. The cycles are being
followed by endurance testing and detailed fine tuning. The
bus has reached such a degree of maturity that the brand is
already participating in invitations to tender. The first state-
ment of intent for the purchase of this electric city bus was
already signed at the end of 2017. As a result, we plan to
deliver the first buses starting in late 2018 and to put them into
operation in a customer-oriented vehicle testing program.
2017
The moovel app also underwent further development in 2017.
moovel enables customers in Germany to compare various
mobility and transport-system options and then choose the
best way to get from point A to point B. The app can also be
used to book and directly pay for services provided by compa-
nies such as car2go, mytaxi and Deutsche Bahn. With the
introduction of the moovel transit product portfolio, the moovel
Group is offering "white label" solutions for transportation
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
200
D | CORPORATE GOVERNANCE | CONTENTS 199
Shareholders and the Shareholders' Meeting
Supervisory Board
Board of Management
Overall requirements for the composition of the Board of
Management and Supervisory Board
in executive positions
Law for the equal participation of women and men
Mediation Committee
Audit Committee
Nomination Committee
Presidential Committee
Supervisory Board
Supervisory Board and its Committees
Report of the Audit Committee
Composition and mode of operation of the
Dear Shareholders,
Responsibility
report and the recommendation of the Board of Management
to pay a dividend of €3.25 per share entitled to a dividend.
Furthermore, the Audit Committee approved the Report of the
Audit Committee for the financial year 2016.
201
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Dr. Clemens Börsig, Chairman of the Audit Committee
In another meeting held on February 10, 2017, the Audit Com-
mittee dealt with the annual financial statements, the consoli-
dated financial statements and the combined management
report for Daimler AG and the Daimler Group for the financial
year 2016, each of which had been issued with an unqualified
auditor's opinion by the external auditors, as well as with the
proposal on the appropriation of profits. At the meeting, the
external auditors reported on the results of their audit and were
available to answer supplementary questions and to provide
additional information. The audit reports on the annual company
and consolidated financial statements and on the internal
control system (ICS), the report on the risk management system
(RMS) for the year 2016, Annual Report 2016 and important
issues related to accounting were discussed with the external
auditors. Following an in-depth review and discussion, the
Audit Committee recommended that the Supervisory Board
approve the financial statements, the combined management
In the meeting held on February 1, 2017, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2016, as well as with the proposal on the appropriation
of profits made by the Board of Management. Following an in-
depth review, the Audit Committee took positive note of the
presented figures and determined that no objections were to
be made to their proposed publication. The Committee further
recommended that the Supervisory Board, which met immedi-
ately thereafter, adopt the same view. The preliminary key
figures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 2, 2017.
Topics in 2017
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following Super-
visory Board meetings.
Reporting to the Supervisory Board
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the external auditors,
the members of the Board of Management responsible for
Finance and Controlling and for Integrity and Legal Affairs, the
head of Internal Auditing and, if required, further heads of the
relevant specialist departments. Such individual discussions
were mainly held to prepare for the next committee meetings.
The Audit Committee met six times in financial year 2017. All of
these meetings were also attended by the Chairman of the
Supervisory Board, Dr. Manfred Bischoff, as a permanent guest.
The other permanent participants in the meetings were the
Chairman of the Board of Management, the members of the
Board of Management responsible for Finance and Controlling
and for Integrity and Legal Affairs, and the external auditors.
The heads of specialist departments such as Accounting, Inter-
nal Auditing, Group Compliance and Legal were also present to
report on individual items of the agenda.
Meetings and participants
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit Com-
mittee in financial year 2017. Both are independent and have
expertise in the field of financial reporting, as well as special
knowledge of and experience in the auditing of financial state-
ments and the application of methods of internal control. Dur-
ing financial year 2017, the employees were represented on the
Audit Committee by Michael Brecht as the Deputy Chairman
of the Committee and by Ergun Lümali.
Equal representation
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting, financial reporting and non-
financial reporting. In addition, it deals with the annual audit
and reviews the qualifications and independence of the exter-
nal auditors. Furthermore, it discusses the effectiveness and
functional capabilities of the risk management system, the
internal control system, the internal auditing system and the
compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the annual
audit and the auditors' review of interim financial statements,
determines the important audit issues and negotiates the audit
fees with the external auditors.
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that
body in financial year 2017.
Diversity
CASE Steering Committee
Board of Management
D | Corporate Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance.
Our actions take place within the framework of responsible, transparent
and sustainable córporate governance.
MA MB 180
66
RESPONSIBLY AND
SUSTAINABLY!
WE ACT
"
Daimler Financial Services customers can conveniently find out about financing and leasing offers on all channels - online or in a direct discussion.
Toll4Europe collects truck tolls all over Europe
The Toll Collect automatic system for truck-toll collection on
German autobahns and selected federal highways continued
to operate smoothly and reliably in 2017. The system recorded a
total of 33.6 billion kilometers driven in the year under review.
Daimler Financial Services holds a 45% interest in the Toll Col-
lect consortium. The Federal Republic of Germany has collected
a total of more than €53 billion in tolls since Toll Collect went
into operation at the beginning of 2005. Toll Collect is also
preparing to extend toll collection to all federal highways, which,
as planned by the German government, is to start on July 1,
2018. In addition, Daimler has held a 30% share in the European
Electronic Toll Service (EETS) since April 2017 and has founded
the joint venture Toll4Europe together with T-Systems (55%) and
DKV (15%). The new service is scheduled to begin in the sec-
ond half of 2018. The objective is to offer a one-stop shop for
truck-toll payment, with tolls charged by means of an onboard
unit and Europe-wide invoicing.
-
world with regard to customers' and dealers' assessments
of our service quality. In the United States, Mercedes-Benz
Financial Services once again finished at the top of three
categories in a J.D. Power study of dealer satisfaction. The foun-
dation of these and many other successes is formed by our
highly motivated employees. In the independent worldwide Great
Place to Work Institute survey to determine the world's best
employers, Daimler Financial Services was listed - in 2016 for
example among the top ranks in many countries.
Focus on customer and employee satisfaction
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2017, independent surveys once again
showed that we are a leader in numerous countries around the
In 2017, Daimler Financial Services was active in the fleet-
management business with Daimler Fleet Management and
Athlon. In Europe, a total of 383,300 contracts with fleet
customers were on the books at the end of 2017, representing
an increase of 6% compared with a year earlier. Contract
volume amounted to €6.4 billion. Mercedes-Benz Connectivity
Services GmbH has been offering fleets and business cus-
tomers connectivity services for telematics-based fleet
management under the brand "connect business” since
April 2017.
Growth of fleet business in Europe
A total of 17.8 million customers are registered for Daimler
mobility services, which are offered in more than 100 cities in
Europe, China and the Americas. In addition to car2go, moovel
and mytaxi, Daimler Mobility Services also has holdings in inno-
vative mobility services companies all over the world, including
Blacklane and Flixbus. In 2017, Daimler Mobility Services acquired
an interest in Turo, which is the US market leader in peer-to-
peer car sharing, and in the ride-sharing service Via, as well as
in Careem, a ride-sharing service based in Dubai. It also
completely took over flinc, the first ride-sharing platform for
short trips, which was founded in Darmstadt.
Report of the Audit Committee
200 - 202
Responsibilities and composition
Meetings and participants
Board of Management
Composition and mode of operation of the
Accounting principles
Risk management at the Group
What we expect of our business partners
Guidelines for behaving with integrity
Principles of our actions
Also in this meeting, the Audit Committee discussed the report
on the total fees paid to the external auditors in the financial year
2016 for auditing and non-auditing services. The Audit Com-
mittee also decided to recommend to the Supervisory Board,
and subsequently to the Annual Shareholders' Meeting, that
KPMG be engaged to conduct the annual external audit and the
external auditors' review of interim financial reports for the
financial year 2017 and also to conduct the external auditors'
review of interim financial reports for the financial year 2018
in the period leading up to the Annual Shareholders' Meeting in
2018. The Audit Committee based this recommendation on the
quality of the annual audit and the results of the independence
review, for which no indications of partiality or a threat to inde-
pendence were found. Subject to the election of the proposed
external auditors by the Annual Shareholders' Meeting, the Audit
Committee also discussed the proposal to be made regarding
the fees to be agreed upon with the external auditors for the
financial year 2017. Finally, within the framework of its respon-
sibility, the Audit Committee dealt with the draft agenda for the
2017 Annual Shareholders' Meeting and the annual audit plan
for 2017 of the Internal Auditing department.
German Corporate Governance Code
D & O insurance deductible for the Supervisory Board
203-213
Corporate Governance Code
Declaration of compliance with the German
Corporate Governance Report
Declaration on Corporate Governance,
- Topics dealt with
Corporate government in practice
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 197
In the meetings during 2017 related to the quarterly results, the
Audit Committee discussed the interim financial reports before
their publication with the Board of Management and with the
external auditors engaged to carry out the auditors' review of
interim financial statements. In addition, the Committee received
reports from the Internal Auditing, Group Compliance and Legal
departments. In this connection, the Board of Management
reported regularly to the Audit Committee, on the current status
of the main legal proceedings, in particular also on the requests,
inquiries, investigations and proceedings in connection with
In April 2017, the Audit Committee approved the fees agreed
upon with the external auditors for the financial year 2017 after
the Annual Shareholders' Meeting made its decision on March
29, 2017 regarding the election of the proposed external audi-
tors for the annual financial statements and the consolidated
financial statements.
The Audit Committee instructed the external auditor to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit
or the auditors' review of interim financial statements, and of
all key findings and events relevant to the tasks of the Supervi-
sory Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditor stipulating that the ex-
ternal auditor would inform the Audit Committee, and make a
note in the audit report, of any facts uncovered during the an-
nual audit that would reveal inaccuracies in the Board of Man-
agement's and the Supervisory Board's declaration of compli-
ance with the German Corporate Governance Code.
Prior to issuing its recommendation to the Shareholders' Meet-
ing, the Audit Committee of the Supervisory Board obtained a
declaration from the external auditor under consideration. The
external auditor was requested to state whether any business,
financial, personal or other relationships existed between the
external auditor and its bodies and audit managers on the one
hand, and the Company and the members of its bodies on the
other, which could justify concerns regarding a conflict of in-
terest. Further, the external auditor was asked to describe the
nature of any such relationships that may have in fact existed.
This statement also described the extent to which other services
were performed for the Daimler Group in the previous year
or had been contractually agreed upon for the following year.
the audit of the annual financial statements and the consoli-
dated financial statements, and the external auditors' review of
interim financial reports, for the financial year 2017, as well as
the external auditors' review of interim financial reports for the
financial year 2018 in the period leading up to the Sharehold-
ers' Meeting in 2018. Since 2014, the responsible auditor com-
missioned to carry out the external audit has been Dr. Axel
Thümler. KPMG AG Wirtschaftsprüfungsgesellschaft has been
conducting the audit of the annual financial statements and
the annual consolidated financial statements of Daimler AG
since the 1998 financial year.
205
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders' Meeting for the election of the external auditors for
the annual financial statements, the external auditors for the
consolidated financial statements and the auditors for the
external auditors' review of interim financial reports. At the
Shareholders' Meeting on March 29, 2017, KPMG AG
Wirtschaftsprüfungsgesellschaft, Berlin was elected to conduct
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of the
German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual financial
statements and consolidated financial statements of Daimler
AG are audited by the external auditor; interim financial reports
are also reviewed by an external auditor. The consolidated fi-
nancial statements and the Group management report shall be
made publicly accessible via the Company's website within 90
days from the end of the reporting year; the interim financial
reports shall be made publicly accessible in the same manner
within 45 days from the end of the reporting period.
Accounting and the external audit
pages 155 ff of the Annual Report 2017. The risk manage-
ment system is one component of the overall planning, control-
ling and reporting process. Its goal is to enable the company's
management to recognize significant risks at an early stage
and to initiate appropriate countermeasures in a timely man-
ner. At least once a year, the Audit Committee discusses the
effectiveness and functionality of the risk management system
with the Board of Management. The Chairman of the Audit
Committee reports to the Supervisory Board on the commit-
tee's work at the latest in the meeting of the Supervisory
Board following each committee meeting. The Supervisory
Board also deals with the risk management system on the
occasion of the approval of the operational planning and the
audit of the annual company and consolidated financial state-
ments. In addition, the Board of Management regularly informs
the Audit Committee and the Supervisory Board of the most
important risks facing the company and the Group as a whole.
The Chairman of the Supervisory Board has regular contacts
between Supervisory Board meetings with the Board of Man-
agement, and in particular with the Chairman of the Board of
Management, to discuss not only the Group's strategy and
business development but also the issue of risk management.
The Internal Auditing department monitors adherence to the
legal framework and to Group standards by means of targeted
audits and initiates appropriate actions as required.
Daimler has a risk management system commensurate with
its size and position as a company with global operations,
Risk management at the Group
We also require our business partners to adhere to compliance
stipulations because we regard our business partners' integrity
and behavior in conformity with regulations as an indispens-
able prerequisite for trusting cooperation. When selecting our
direct business partners, we therefore pay close attention that
they comply with the law, follow ethical principles and do the
same themselves towards other partners in the supply chain.
For the expectations we place on our business partners, see
also daimler.com/sus/obr.
Expectations for our business partners
We have also reached agreement on "Principles of Social Re-
sponsibility" with the World Employee Committee. These princi-
ples apply throughout Daimler AG and the entire Group. In the
Principles of Social Responsibility, Daimler commits itself to the
principles of the UN Global Compact and thus to internation-
ally recognized human and workers' rights, the proscription of
child labor and forced labor, freedom of association and sus-
tainable protection of the environment. Daimler also commits
itself to guaranteeing equal opportunities and adhering to the
principle of "equal pay for equal work."
Our Integrity Code is based on a shared understanding of val-
ues, which we developed together with our employees. The
Code defines our principles of behavior in daily business. This
applies to interpersonal conduct within the company as well
as conduct toward customers and business partners. The key
principles here include fairness and responsibility on the basis
of compliance with applicable laws. In addition to general prin-
ciples of behavior, the Code includes requirements and regu-
lations concerning respect for and the protection of human
rights and the handling of conflicts of interest. It also prohibits
all forms of corruption. The Integrity Code applies to all em-
ployees at Daimler AG and the Group. The Integrity Code is
available on the Internet at daimler.com/dai/caag.
Information on the areas of responsibility and the curricula vi-
tae of the Board of Management members are posted on the
Daimler AG website at daimler.com/dai/bom. The members
of the Board of Management and their areas of responsibility
are also listed on pages 62 f of the Annual Report 2017.
Integrity Code
D.01
Annual Shareholders' Meeting
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2017. In accordance with the Ger-
man law requiring equal participation of women and men in ex-
ecutive positions, the Supervisory Board has defined a target
for the proportion of women on the Board of Management and
a deadline for achieving this target. The details are described
in a separate section: page 209. With regard to the compo-
sition of the Board of Management, the Supervisory Board has
also adopted a diversity concept that is embedded in an overall
requirements profile. The details of this concept are also de-
scribed in a separate section: page 210.
Board of Management
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict per-
sonal and functional separation between the Board of Manage-
ment and the Supervisory Board (two-tier board). Accordingly,
the Board of Management manages the company while the Su-
pervisory Board monitors and advises the Board of Management.
Composition and mode of operation of the
Board of Management > D.01
the actions of
ratifies
8 members
Board of Management
appoints,
advises and
monitors
reports
20 members
Supervisory Board
elects members
representing the
shareholders,
ratifies the
actions of
reports
reports
Governance structure
Our business conduct is based on Group-wide standards that go
beyond the requirements of relevant legislation and the Ger-
man Corporate Governance Code. These standards are based
on the four corporate values integrity, respect, passion and
discipline. In order to achieve viable and thus sustainable busi-
ness success on this basis, our goal is to ensure that our activi-
ties are in harmony with the environment and society. This is
due to the fact that we as one of the world's leading automak-
ers also strive to be a leader in sustainability. We have defined
the most important principles in our Integrity Code, which
serves as a frame of reference for compliant and ethical con-
duct in everyday activities for all employees at Daimler AG and
the Group.
The principles guiding our conduct
Beyond the legal requirements of German securities, codeter-
mination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Covernance Code ("Code") with the excep-
tions disclosed and justified in the declaration of compliance.
Daimler AG has also followed and continues to follow the sug-
gestions of the Code with just one exception: Deviating from the
suggestion in Clause 2.3.3, which stipulates that companies
should enable shareholders to view the Shareholders' Meeting
with modern communications media such as the Internet, the
Shareholders' Meeting is not transmitted in its entirety on the
Internet, but only until the end of the report by the Board of
Management, in order to protect the character of the Share-
holders' Meeting as a meeting attended by our shareholders in
person. An additional factor is that continuing the broadcast
after that point, in particular broadcasting comments made by
individual shareholders, could impair the discussion between
shareholders and management.
Dr. Clemens Börsig
Жилно приз
The Audit Committee
Stuttgart, February 2018
As in previous years, the Audit Committee once again conducted
a self-evaluation of its own activities in 2017 on the basis of an
extensive company-specific questionnaire. The results of this
efficiency review were once again very positive and were pre-
sented and discussed in the meeting on February 9, 2018. This
did not result in any need for action with regard to the Commit-
tee's tasks, or with regard to the content, frequency or proce-
dure of its meetings.
Efficiency review
In another meeting held on February 9, 2018, the Audit Com-
mittee reviewed and discussed in detail the annual financial
statements, the consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the financial year 2017, each of which had been
issued with an unqualified auditor's opinion by the external
auditors, as well as the proposal on the appropriation of profits
and the non-financial report. At the meeting, the external audi-
tors reported on the results of their audit and the voluntary
audit of the non-financial report within the framework of a lim-
ited assurance engagement and were also available to answer
supplementary questions and to provide additional information.
The audit reports on the annual financial statements and con-
solidated financial statements (including the particularly impor-
tant audit issues in the audit opinions) and on the internal con-
trol system (ICS), the report on the risk management system
(RMS) for the year 2017, the Annual Report 2017, and impor-
tant issues related to financial reporting were discussed with
the external auditors. Following an in-depth review and discus-
sion, the Audit Committee recommended that the Supervisory
Board approve the financial statements, the combined manage-
ment report, the declaration on corporate governance included
in the corporate governance report, the non-financial report,
and the recommendation of the Board of Management to pay a
dividend of €3.65 per share entitled to a dividend. Further-
more, the Audit Committee approved the Report of the Audit
Committee for the financial year 2017.
Company and consolidated financial statements 2017
In the meeting held on January 31, 2018, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2017, as well as with the proposal on the appropriation of
profits made by the Board of Management. Following an in-depth
review, the Audit Committee took positive note of the presented
figures and determined that no objections were to be made to
their proposed publication. The Committee further recommended
that the Supervisory Board, which met immediately thereafter,
adopt the same view. The preliminary key figures and the proposal
on the appropriation of profits were announced at the Annual
Press Conference on February 1, 2018.
In the meeting held in October 2017, the Audit Committee dealt
with the interim financial report for the third quarter of 2017
and the quarterly reports from the Internal Auditing, Group
Compliance and Legal departments. The Committee also once
again discussed the effects of the EU CSR Directive on non-
financial reporting at Daimler.
In the meeting held in July 2017, the Audit Committee dealt
mainly with the second-quarter results and the risk report. Along
with production and technology risks, the Committee members
also discussed the possible effects of software retrofitting of
Mercedes-Benz diesel vehicles in Europe, the comprehensive
plan for diesel engines approved by the Board of Management
in July 2017, and the risks stemming from current legal issues.
Also in the meeting in June 2017, the Audit Committee dealt
in depth with the impact that implementation of the EU CSR
Directive will have on reporting at Daimler and on the disclo-
sure of non-financial information. Furthermore, the Committee
was informed of new developments in accounting and financial
reporting, such as the new financial accounting standards IFRS
9 (Financial Instruments) and IFRS 15 (Revenue Recognition),
and other audit-relevant areas such as tax law. The Committee
also received detailed information on the audit from the Finan-
cial Reporting Enforcement Panel (Deutsche Prüfstelle für Rech-
nungslegung), which did not result in any objections. Finally,
the Audit Committee took note of a report on pension manage-
ment and of another on current tax issues, and also discussed
with the Board of Management the annual report produced by
the Group's Data Protection Officer.
the legally required transparency at the Group. This meeting
was also used to discuss the results of the internal quality
analysis of the external audit for the financial year 2016.
D❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
202
In its meeting in June 2017, the Audit Committee was informed
of a recent development regarding searches of Daimler AG
premises conducted by the Stuttgart State Attorney's Office
within the framework of its investigation of known and unknown
employees of Daimler AG. The Audit Committee then dis-
cussed the Group's risk management system and dealt in par-
ticular with its changes and further development. It also dis-
cussed the methods and processes of, and possible changes
to, the internal control system, which along with accounting
also encompasses the internal auditing function and the com-
pliance management system. In addition, the Audit Committee
was informed about the Group Legal System and Group Legal
Risk Reporting. Furthermore, the Committee received a report
on the non-auditing services provided by the external auditors.
In this meeting, the Committee also defined key audit issues
for the external audit of the financial year 2017, including new
requirements for the audit opinion as well as planning measures
for the external audit for 2017 and the framework of approval
for engaging the external auditors to provide non-audit services.
In addition, the Committee extensively addressed the status of
implementation of the EU Audit Reform at Daimler. In this con-
nection, the Committee congruently aligned the period for the
approval framework for engaging the external auditors to pro-
vide non-audit services with the financial year, thus enhancing
Chairman
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
203
Declaration on Corporate Governance,
Corporate Governance Report
German Corporate Governance Code
The main principles applied in our corporate
governance
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
204
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
at our website at daimler.com/dai/gcgc.
Dr. Dieter Zetsche
Chairman
For the Board of
Management
the issue of diesel exhaust emissions. In addition, the Audit
Committee dealt with notifications concerning possible viola-
tions of rules submitted by employees and third parties to
the Group's own whistleblower system BPO (Business Prac-
tices Office).
Dr. Manfred Bischoff
Chairman
Stuttgart, December 2017
The deviation from Clause 5.4.1 Paragraph 2, declared as pre-
cautionary measure in the compliance declaration dated Decem-
ber 2016, namely the specific objectives for the composition
of the Supervisory Board has ceased to apply from December
2017. The Supervisory Board has set a target objective for its
composition regarding the number of independent members of
the Supervisory Board and in consideration of potential con-
flicts of interest no longer to the appointments for the share-
holders' side only, but in the light of the German Co-Determi-
nation Act also for the entire Supervisory Board.
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible for
the members of the Supervisory Board, which is appropriate in
the view of Daimler AG. However, this deductible does not cor-
respond to the legally required deductible for members of the
Board of Management in the amount of at least 10% of the dam-
age up to at least one and a half of the fixed annual remu-
neration. Since the remuneration structure of the Supervisory
Board is limited to function-related fixed remuneration without
performance bonus components, setting a deductible for Su-
pervisory Board members in the amount of 1.5 times the fixed
annual remuneration would have a disproportionate economic
impact when compared with the members of the Board of
Management, whose compensation consists of fixed and per-
formance bonus components.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section
of the German Federal Gazette on April 24, 2017 in the Code
version dated February 7, 2017, with the exception of Clause
3.8 Paragraph 3 (D & O insurance deductible for the Supervi-
sory Board) and will continue to observe the recommendations
with the aforesaid deviation. Since the issuance of the last
compliance declaration in December 2016, Daimler AG has
observed the recommendations of the German Corporate
Governance Code in the version dated May 5, 2015, published
on June 12, 2015, with the aforementioned exception as well
as with a deviation from Clause 5.4.1 Paragraph 2 (Specific
objectives for the composition of the Supervisory Board) de-
clared as a precautionary measure.
Declaration by the Board of Management and
Supervisory Board of Daimler AG pursuant to
Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
The declaration on corporate governance pursuant to Section 289 f and Section 315 d of the Ger-
man Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well
as with the Corporate Governance Report. The following statements thus apply to Daimler AG and
the Daimler Group insofar as not otherwise stated. The declaration on corporate governance,
which is combined with the corporate governance report, can also be viewed on the Internet at
daimler.com/dai/gcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German Com-
mercial Code (HGB), the purpose of the audit of the contents of the statements pursuant to Sec-
tion 289 f Subsections 2 and 5 and Section 315 d of the HGB is limited to determining whether such
statements have actually been provided.
For the Supervisory Board
In 2017, mytaxi further expanded and consolidated its position
as Europe's biggest taxi app through its successful merger with
Hailo and its acquisition of Taxibeat and Clever Taxi. mytaxi's
geographic coverage was expanded to the United Kingdom, Ire-
land, Greece and Romania, which means that it now operates
in 11 European countries. It has also entered two rapidly grow-
ing markets in South America (Peru and Chile). mytaxi now
has 120,000 registered taxi drivers in 70 cities. The number of
registered mytaxi users increased compared with the end of
2016 by 85% to 11.1 million.
companies all over the world. In the United States, mobile
ticketing applications from moovel are now used by 16 trans-
portation companies. That makes moovel North America the
leading provider of mobile ticketing technology for US local
public transportation apps. In May 2017, moovel teamed up with
the public transportation provider in Karlsruhe (KVV) to launch
the joint mobility app "KVV.mobil powered by moovel." KVV
tickets can be booked and paid for directly via the app. In
addition, the app shows users available rental bicycles and
vehicles from the car-sharing company Stadtmobil. The number
of registered app users in Germany and the United States
had risen to 3.7 million by the end of 2017 (2016: 2.2 million). In
August 2017, moovel also acquired the Hamburg-based com-
pany Familonet GmbH, the provider of the location-messenger
app Familonet. The acquisition of this startup, which has
received numerous awards, enables moovel to apply the com-
pany's expertise in the areas of geofencing and localization.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
196
8-003740
9
True to the motto "Mobility at your fingertips," Daimler Financial Services is a leading provider of digital mobility services.
Mobility services on the right track
Daimler Financial Services once again expanded its range of
innovative mobility services in 2017. The number of registered
users of the car2go car-sharing service increased to more
than 3.0 million, enabling car2go to maintain its position as the
world's leading flexible car-sharing company.
In 2017, car2go upgraded its worldwide fleets with new vehicle
models. In Europe and North America, it added more Mercedes-
Benz vehicles to its fleets; in Stuttgart, the fleet was supple-
mented with B-Class electric drive vehicles; and in Italy, the
fleets were augmented for the first time with smart forfour
cars. At the same time, the car2go services were technically
refined and simplified for the customers. Thanks to the intro-
duction of online validation of driver's licenses, customers in
all markets can now register online from start to finish and
use car2go services immediately. In addition, with the option of
hourly packages, car2go is offering its customers affordable
and stress-free long-term rental conditions.
212
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
As described in the report of the Supervisory Board on
pages 64 ff of the Annual Report 2017, there were indi-
vidual cases concerning three Supervisory Board members
in particular situations during the reporting period where
there might have been the appearance of a potential conflict
of interest at the time a Board of Management report was
submitted to the Supervisory Board. The Supervisory Board
members in question in these cases refrained from being
present during the presentation of a Board of Management
report regarding the issue that might have been affected by
a potential conflict of interest.
As a result, in the case of at least half of the shareholder rep-
resentatives on the Supervisory Board and at least 15 mem-
bers of the entire Supervisory Board, there were no indications
of a potential conflict of interest during the reporting period
based on the premise described above. No actual instances
of conflicts of interest were reported during financial year
2017.
does not contain a conclusive definition of independence but
instead presents examples of circumstances that would call
the independence of a Supervisory Board member into ques-
tion. Within the meaning of the German Corporate Governance
Code, a Supervisory Board member is to be considered non-
independent if he or she has a personal or business relation-
ship with the Company, its governing bodies, a controlling
shareholder or a company affiliated with a controlling share-
holder that may cause a substantial and not merely tempo-
rary conflict of interest. It is the responsibility of the Supervi-
sory Board to evaluate the independence of its members on
the basis of such criteria. The Kuwait Investment Authority is
not a controlling shareholder of Daimler AG that could attain
an effective majority at an Shareholders' Meeting. No other
discernible circumstances exist that might call into question
the independence of Bader Al Saad.
Under the premise that the performance of Supervisory Board
duties as an employee representative does not by itself call
into question the independence of such an employee repre-
sentative as defined by the German Corporate Governance
Code, at least 15 members of the Supervisory Board are also
to be independent in the future. In addition, the Supervisory
Board may not include more than two former members of the
Board of Management of Daimler AG or anyone who is a
member of a board of, or advises, a significant competitor of
the Daimler Group.
Under the premise described above, there are, in the view of
the Supervisory Board, at present no indications for any of
the members of the Supervisory Board that relevant relation-
ships or circumstances exist, in particular with the Company,
members of the Board of Management or other Supervisory
Board members, that could be construed as a substantial
and permanent conflict of interest that would compromise
their independence. No member of the Supervisory Board is
a member of a board of, or advises, a significant competitor.
With regard to Supervisory Board member Bader Al Saad,
the Supervisory Board takes the view that his function as a
member of the Executive Committee of the Board of Direc-
tors of Kuwait Investment Authority does not compromise his
independence within the meaning of the German Corporate
Governance Code. The German Corporate Governance Code
Under the premise that the performance of Supervisory Board
duties as an employee representative does not by itself
constitute a potential conflict of interest as defined by the
German Corporate Governance Code, the requirements de-
scribed here shall also be met by at least 15 members of the
Supervisory Board in the future.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, is a former member of the Board of Management.
The rules of procedure of the Supervisory Board also define a
general time limit for Supervisory Board membership. As a
result, only candidates who have not yet been members of the
Supervisory Board for three full terms of office at the time of
their election should generally be nominated for membership
of the Supervisory Board for a full term of office. This general
length of service on the Supervisory Board has not been ex-
ceeded by any current member, and the candidates Sari
Baldauf, Dr. Jürgen Hambrecht and Marie Wieck nominated
for election at the Shareholders' Meeting in 2018 also meet
this requirement.
- In order to ensure the independent advice to, and supervi-
sion of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate
that more than half of the members of the Supervisory Board
representing the shareholders are to be independent as de-
fined by the German Corporate Governance Code and that
no person may be a member of the Supervisory Board who is
a member of a board of, or advises, a significant competitor
of the Daimler Group.
whose specific design could cause a conflict of interests.
- At least half of the members of the Supervisory Board repre-
senting the shareholders should have
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
.
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and participate
in all courses of training and further training that might be
necessary for the performance of their tasks. Prior to issuing
its recommendations, the Supervisory Board determines
whether the candidate in question will have sufficient time
available to perform his or her duties on the Supervisory
Board.
- In order to ensure sufficient internationality, for example by
means of many years of international experience, the Super-
visory Board has set a target of a proportion of at least 30%
of international members representing the shareholders, and
the resulting proportion of at least 15% of the entire Supervi-
sory Board. Irrespective of the many years of international
experience of a large majority of the shareholder representa-
tives on the Supervisory Board, this target is currently signifi-
cantly overachieved with 30% for the entire Supervisory
Board due to the international origins of Bader Al Saad, Sari
Baldauf, Petraea Heynike, Andrea Jung and Dr. Paul Achleitner
on the shareholders' side (50%) and Valter Sanches on the
employees' side.
- A sufficient generational mix among Supervisory Board mem-
bers is now also to be taken into account in appointment
decisions. In the future, at least eight members of the Super-
visory Board should be 62 years of age or younger at the
time of their election or reelection. Among the current mem-
bers of the Supervisory Board, all except Petrae Heynicke,
Dr. Manfred Bischoff, Dr. Clemens Börsig, Dr. Jürgen Ham-
brecht and Dr. Bernd Pischetsrieder (i.e. 15 members) were 62
or younger at the time they were elected to their current term.
- The rules of procedure of the Supervisory Board stipulate
that candidates for election who are to hold the position for a
full term of office should generally not be over the age of 72
at the time of the election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulat-
ing a strict upper age limit and instead decided in favor of a
flexible general limit that leaves the scope to appropriately
assess each individual case, keeps the range of potential
Supervisory Board candidates sufficiently broad and allows
reelection. In deciding to propose Dr. Manfred Bischoff for
reelection as a shareholder representative on the Supervi-
sory Board to the Shareholders' Meeting in 2016, it used this
scope after careful consideration and proper assessment. All
other members of the Supervisory Board and the candidates
Sari Baldauf, Dr. Jürgen Hambrecht and Marie Wieck to be
proposed for election at the 2018 Shareholders' Meeting had
not or will have not reached the age limit at the time of their
election.
- The gender composition of the Supervisory Board meets the
requirements of Germany's law on the equal participation of
women and men in executive positions, which stipulates that
at least 30% of the members of the Supervisory Board must
be women and at least 30% must be men. This quota has
been binding for all new appointments since January 1, 2016.
The Supervisory Board currently has three women who rep-
resent shareholders and two women who represent employ-
ees. The proportion of women is thus 30% among the share-
holder representatives and 20% among the employee
representatives. The next election of employee representa-
tives to the Supervisory Board will take place in 2018.
- The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical train-
ing or education program or possess specific technological
knowledge in fields such as information technology (including
digitization), chemistry, mechanical engineering or electrical
engineering. Decisions related to the composition of the Super-
visory Board should also take into account the fact that it
may be necessary to obtain new skills and knowledge in order
to be able to address product and market developments.
Irrespective of the specific knowledge acquired by many mem-
bers of the Supervisory Board in the above-mentioned areas,
Dr. Jürgen Hambrecht, Dr. Bernd Pischetsrieder and Dr. Frank
Weber (two shareholder representatives and one employee
representative) have related university degrees, while another
five employee representatives have completed vocational
training in the above-mentioned fields or similar areas.
On the basis of the further development of the existing catalog
of criteria for selecting Supervisory Board candidates, and with
consideration of the targets that have already been defined for
the Supervisory Board's composition, the requirements profile
for the Supervisory Board includes the following aspects in
particular:
The requirements profile for the Supervisory Board of Daimler
AG aims at a Supervisory Board as diverse and mutually sup-
portive as possible. The Supervisory Board as a whole must
understand the Company's business model and also possess
the knowledge, skills and experience needed to properly exe-
cute its task of supervising and advising the Board of Manage-
ment, in particular specialized knowledge in the areas of fi-
nance, accounting, annual audits, risk management, methods
of internal control and compliance. The members of the Super-
visory Board should complement one another with regard to
their specialist knowledge and professional experience in such
a manner as to ensure that the Supervisory Board can utilize
the most broadly based wealth of experience and specific ex-
pertise possible when making decisions. The Supervisory
Board also views the diversity of its members in terms of age,
gender, internationality and other personal attributes as an im-
portant foundation for effective cooperation. The foundation
for Supervisory Board decisions regarding election proposals
to the Shareholders' Meeting is always the Company's inter-
ests under consideration of all circumstances in each individ-
ual case.
In accordance with applicable law, the Supervisory Board is
to be composed so that its members together are familiar with
the business sector in which the Company operates.
Supervisory Board
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 211
• nor a business or personal relationship to the company or
its boards
- In order to ensure compliance with the associated recommen-
dation in the German Corporate Governance Code, the rules
of procedure already stipulate that no member of the Super-
visory Board who is also a member of the board of manage-
ment of a listed company may hold more than three member-
ships on supervisory boards of listed companies (including
his or her membership of the Supervisory Board of Daimler AG)
or on bodies of other companies with similar requirements
outside of the group of his Board of Management member-
ship. One member of the Supervisory Board is a member of
the board of management of a listed company, but has not
exceeded the maximum number of memberships.
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall in the
future take into consideration not only the requirements of
applicable law, the Articles of Incorporation and the German
Corporate Governance Code, but also the aspects described
above and aim at fulfilling the overall requirements profile for
the Supervisory Board as a whole. On the basis of a target pro-
file that takes into account specific qualification requirements
and the above-mentioned criteria, the Nomination Committee
creates a shortlist of available candidates with whom it conducts
structured discussions in which it also determines whether the
candidate in question will have sufficient time available to per-
form his or her duties on the Supervisory Board with due care.
The Nomination Committee then recommends a candidate to
the Supervisory Board for its approval and includes an explana-
tion of its recommendation. The foundation for Supervisory
Board decisions regarding election proposals to the Sharehold-
ers' Meeting is always the Company's interests under consid-
eration of all circumstances in each individual case.
213
218
Environmental issues
229
Compliance
217
228
Political dialogue and representation of interests
217
227
Stakeholder dialogue
216
227
Social issues
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
216
Our Sustainability Strategy 2030
Sustainable corporate governance
Sustainability in our supply chain
Sustainability at Daimler
E| Non-Financial Report
66
On the following pages, we publish for the first time a non-financial report in
accordance with Sections 289b - 289e, 315b and c of the German Commercial
Code (HGB). This report applies to Daimler AG and to the Daimler Group. It contains
the main information on the aspects of environmental, employee and social matters,
combating corruption and bribery, and respect for human rights.
BECOMING INCREASINGLY IMPORTANT
FOR THE GROUP'S SUCCESS!
99 NON-FINANCIAL FACTORS ARE
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor rela-
tions activities. All of the important information disclosed in 2017,
including annual and interim reports, press releases, voting
rights notifications from major shareholders, presentations, and
audio recordings of analyst and investor events and confer-
ence calls, as well as the financial calendar, can be found at
daimler.com/investors. All the dates of important disclo-
sures such as annual reports and interim reports and the dates
of the Shareholders' Meeting, the annual press conference and
the analyst conferences are announced in advance in the fi-
nancial calendar. The financial calendar can also be found inside
the rear cover of this Annual Report.
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the media
and the interested public about the situation of the Group and
inform them without delay about any significant changes in its
business. Within reasonable limits, the Chairman of the Supervi-
sory Board is also prepared to talk to investors about specific
Supervisory Board issues.
The shareholders exercise their membership rights, in particular
their information and voting rights, at the Shareholders' Meet-
ing. Each share in Daimler AG entitles its owner to one vote.
There are no multiple voting rights, preferred voting rights, or
maximum voting rights at Daimler AG. Documents and informa-
tion related to the Shareholders' Meeting can be found on our
website at daimler.com/ir/am. The Shareholders' Meeting
is generally held within four months of the end of a financial year.
The Company facilitates the personal exercise of the share-
holders' rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders' voting instructions and who are available during
the Shareholders' Meeting. Absentee voting is also possible. It
is possible to authorize the Daimler-appointed proxies and give
them voting instructions or to cast absentee votes by using the
e-service for shareholders.
Shareholders and the Shareholders' Meeting
The aspects described above are to be taken into consideration
when making Board of Management appointments. On the basis
of a target profile that takes into account specific qualification
requirements and the above-mentioned criteria, the Presiden-
tial Committee creates a shortlist of available candidates whom
it interviews. It then recommends a candidate to the Super-
visory Board for its approval and includes an explanation of its
recommendation. Decisions regarding appointments to the
Board of Management are always governed by the Company's
interests under consideration of all circumstances in each indi-
vidual case.
In the case of Supervisory Board members who are not also
members of the board of management of a listed company,
the legal limit of membership of ten statutorily constituted
supervisory boards applies, whereby chairmanship of a super-
visory board counts double. In order to ensure that members
of the Supervisory Board have sufficient time to fulfill their
mandate, Supervisory Board members who are not also mem-
bers of the board of management of a listed company shall in
the future generally be permitted membership of a maximum
of eight supervisory boards (including that of Daimler AG),
whereby chairmanship of a supervisory board counts double.
This maximum number was not exceeded by any member of
the Supervisory Board during the reporting year.
E | NON-FINANCIAL REPORT | CONTENTS 215
The rules of procedure of the Board of Management stipulate
that no member of the Board of Management is a member of
more than three supervisory boards of listed companies out-
side the Daimler Group or of similar boards or committees at
companies outside the Daimler Group that have comparable
requirements. This stipulation has been met. The only listed
company in which Hubertus Troska is a member of a supervi-
sory board or similar board outside the Daimler Group is
BAIC Motor Corporation Ltd. His other board memberships
are at joint ventures that fall within his areas of
responsibility.
The composition of the Board of Management should also
take into account internationality in the sense of varied cul-
tural backgrounds or international experience through as-
signments abroad lasting several years, whereby if possible
at least one member of the Board of Management should
come from a country other than Germany. Irrespective of the
many years of international experience of a large majority of
members of the Board of Management, this target is cur-
rently overachieved due to the international origins of Renata
Jungo Brüngger and Ola Källenius.
- In addition, a sufficient generational mix among Board of
Management members is to be taken into account in appoint-
ment decisions in the future, whereby if possible at least
three members of the Board of Management should be 57
years of age or younger at the beginning of their respective
term of office. Five members of the Board of Management -
Renata Jungo Brüngger, Ola Källenius, Britta Seeger, Huber-
tus Troska and Bodo Uebber - currently meet this
requirement.
of the Annual Report 2017.
Irrespective of this overall responsibility, the individual mem-
bers of the Board of Management manage their allocated areas
on their own responsibility and within the framework of the in-
structions approved by the entire Board of Management. Spe-
cific issues defined by the Board of Management as a whole
are dealt with by the Board as a whole, which must approve all
related decisions. The Chairman of the Board of Management
coordinates the work of the Board of Management.
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler
AG, the annual consolidated financial statements, and the
combined management report of the Company and the Group,
as well as the separate combined non-financial report pro-
duced for Daimler AG and the Group. It ensures that the provi-
sions of applicable law, official regulations and the Group's
internal guidelines are adhered to, and works to make sure that
the companies of the Group comply with those rules and regu-
lations. The Board of Management has also established an ade-
quate compliance management system that takes into account
the Company's risk situation. The main features of this system
are described on pages 229 ff of the Annual Report 2017.
Such features include the Company's whistleblower system, the
BPO (Business Practices Office), which enables Daimler em-
ployees and external whistleblowers to report misconduct any-
where in the world. The tasks of the Board of Management
also include establishing and monitoring an appropriate and effi-
cient risk management system.
For certain types of transactions of fundamental importance
as defined by the Supervisory Board, the Board of Manage-
ment requires the prior consent of the Supervisory Board. At
regular intervals, the Board of Management reports to the
Supervisory Board on corporate strategy, corporate planning,
profitability, business development and the situation of the
Group, as well as on the internal control system, the risk man-
agement system and the compliance management system. The
Supervisory Board has specified the information and reporting
duties of the Board of Management.
The Board of Management has also given itself a set of
rules of procedure, which can be seen on our website at
daimler.com/dai/rop. Those rules describe, for example,
the procedure to be observed when passing resolutions and
ways to avoid conflicts of interest.
CASE Steering Committee
The Board of Management has formed a Steering Committee
consisting of Board of Management members to address the
future-oriented CASE topics of connectivity (Connected), driv-
erless driving (Autonomous), flexible use and services (Shared
& Services) and electric drive systems (Electric). The responsi-
bilities of the Board of Management as a whole, in particular
those regarding the catalog of issues that require its approval,
as well as the areas of responsibility of individual Board mem-
bers, remain unchanged despite the creation of the
Committee.
The Steering Committee consists of the Chairman of the Board
of Management, who is also responsible for Mercedes-Benz
Cars, as well as the members of the Board of Management re-
sponsible for Finance & Controlling/Daimler Financial Services,
Mercedes-Benz Cars Marketing & Sales and Group Research &
Mercedes-Benz Cars Development. The Chairman of the Board
of Management is also the Chairman of the Steering Commit-
tee. In line with the Committee's structure as described above,
the members of the Steering Committee on December 31,
2017, were Dr. Dieter Zetsche (Chairman), Bodo Uebber, Britta
Seeger and Ola Källenius.
Within the framework of the strategic approach adopted by the
Board of Management, the Steering Committee defines the
management model and the strategic guidelines for CASE. The
Board of Management has defined rules of procedure for the
Steering Committee. The Committee can make changes to
these rules on its own authority, provided such changes do not
affect the steering model.
Along with the composition of the Steering Committee, the
responsibilities of its Chairman, the responsibility for the rules
of procedure and the options available for establishing other
CASE bodies below the Steering Committee, the rules of pro-
cedure of the Steering Committee also define the structure
and format of Committee meetings and the adoption of resolu-
tions, as well as the rules on reporting to the Board of Manage-
ment of Daimler AG.
Diversity
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employees
and the differences between them because such differences
form the foundation of an effective and successful company.
The aim of our activities is to bring together the right people
to tackle our challenges, create a work culture that promotes
the performance, motivation and satisfaction of our employees
and managers, and help attract new target groups to our prod-
ucts and services. Our activities for shaping diversity at Daimler
focus on three areas: best mix, work culture and customer in-
teraction. With our measures, activities and initiatives for every-
thing from training formats for employees and managers to
workshops, conferences, guidelines and target group-specific
communication and awareness-raising measures, our diversity
management system makes a major contribution to the further
development of our corporate culture.
Targeted support for women on the basis of the best-mix prin-
ciple was a central component of our diversity management
activities even before the legislation on the equal participation
of women and men in management positions went into effect.
Such support has also included and continues to include flexi-
ble working-time arrangements, company nurseries and spe-
cial mentoring programs for women. To meet the new legal re-
quirements, the Board of Management has defined targets for
the proportion of women at the two management levels below
the Board of Management and a deadline for achieving those
targets. The details are described in a separate section. Inde-
pendently of the legal requirements, Daimler continues to af-
firm the goal it already set itself in 2006 of increasing the pro-
portion of women in executive positions at the Group to 20%
by 2020. At the end of 2017, this proportion amounted to 17.6%
(2016: 16.7%).
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
207
Composition and mode of operation of the
Supervisory Board and its committees
Supervisory Board
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure of
the Supervisory Board can be viewed on our website at
daimler.com/dai/rop
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
208
For financial year 2017, Daimler AG produced for the first time
a separate combined non-financial report for the Company and
the Group in accordance with the requirements of legislation
for implementing an EU CSR directive in Germany. The Supervi-
sory Board commissioned an external audit of this non-financial
report within the framework of a limited assurance engagement
and then approved the report after consulting with the external
auditor and examining the report itself.
The Supervisory Board reviews the annual financial state-
ments, the annual consolidated financial statements and the
combined management report of the Company and the Group,
as well as the proposal for the appropriation of distributable
profits. Following discussions with the external auditors and
taking into consideration the audit reports of the external audi-
tors and the results of the review by the Audit Committee, the
Supervisory Board states whether, after the final results of its
own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Shareholders' Meeting on the results of
its own review and on the manner and scope of its supervision
of the Board of Management during the previous financial year.
The Report of the Supervisory Board for the year 2017 is avail-
able on
pages 64 ff of the Annual Report 2017 and on the
Internet at daimler.com/dai/sb.
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly and deter-
mines the total individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the se-
nior executives and the workforce as a whole, also with regard
to development over time. For this comparison, the Supervi-
sory Board has defined the senior executives by applying Daim-
ler's internal terminology for the hierarchical levels and has de-
fined the workforce of Daimler AG in Germany as the relevant
workforce. Variable components of remuneration are generally
based on an assessment period that lasts several years and is
essentially future-oriented. Multi-year variable remuneration
components are not paid out until they come due. The Supervi-
sory Board has set upper limits for the individual Board of Man-
agement remuneration in total and with regard to its variable
components. Further information on Board of Management re-
muneration can be found in the Remuneration Report on
pages 136 ff of the Annual Report 2017.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
page 210
and reporting duties of the Board of Management to the Super-
visory Board, to the Audit Committee and – between the meet-
ings of the Supervisory Board – to the Chairman of the Super-
visory Board.
The Supervisory Board monitors and advises the Board of Man-
agement with regard to its management of the Company. At
regular intervals, the Board of Management reports to the Su-
pervisory Board on corporate strategy, corporate planning,
revenue development, profitability, business development and
the situation of the Group, as well as on the internal control
system, the risk management system and the compliance man-
agement system. The Supervisory Board has retained the right
of approval for transactions of fundamental importance. Fur-
thermore, the Supervisory Board has specified the information
The members of the Supervisory Board attend on their own re-
sponsibility courses of training and further training that might
be necessary for the performance of their tasks and are sup-
ported by the Company in doing so. Such courses may address
corporate governance, changes brought about by new legisla-
tion, or the launch of new products and pioneering technolo-
gies, for example. New members of the Supervisory Board are
offered an "Onboarding” program that gives them the opportu-
nity to exchange views with members of the Board of Manage-
ment and other executives on current issues related to the var-
ious areas of responsibility of the Board of Management, and
thus obtain an overview of important topics at the Company.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal par-
ticipation of women and men in management positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
described in a separate section: page 209. With regard to
its composition on the basis of the further development of the
existing catalog of criteria for selecting Supervisory Board can-
didates, and with consideration of the targets that have already
been defined for the Supervisory Board's composition, the
Supervisory Board has also created an overall requirements
profile combining a skills profile and a diversity concept for the
entire Supervisory Board. The details of the overall requirements
profile are also described in a separate section: O pages 211
ff. Proposals by the Supervisory Board of candidates for elec-
tion by the Shareholders' Meeting as members representing the
shareholders of Daimler AG, for which the Nomination Commit-
tee makes recommendations, aim at fulfilling the overall
requirements profile of the Supervisory Board as a whole.
Information on major functions and curricula vitae of the mem-
bers of the Supervisory Board aside from their positions on
the Supervisory Board of Daimler AG are posted on our web-
site at daimler.com/dai/sb and can also be found on
pages 70f of the Annual Report 2017.
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Sharehold-
ers' Meeting. The other half comprises members who are
elected by the Group's employees who work in Germany. The
members representing the shareholders and the members
representing the employees are equally obliged by law to act in
the Company's best interests.
The Supervisory Board's duties include appointing and recalling
the members of the Board of Management. Initial appointments
are usually made for a period of three years. In accordance with
the German law requiring equal participation of women and
men in executive positions, the Supervisory Board has defined
a target for the proportion of women on the Board of Manage-
ment and a deadline for achieving this target. The details are
described in a separate section: page 209. With regard to
the composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded i
n an overall requirements profile. The details of this concept are
also described in a separate section:
206
Presidential Committee
page 71
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels below the Board of Manage-
ment, with a deadline of December 31, 2020. At the time of the
resolution, the proportion of women in the first and second
management levels below the Board of Management was 8.0%
and 12.4% respectively. As of December 31, 2017, the propor-
tion of women at the first management level below the Board
of Management was 8.7%, at the second level it was 11.9%.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to have a proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Supervi-
sory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the em-
ployees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board before the election, the minimum ratio is to apply sepa-
rately to the shareholders' side and to the employees' side for
that election.
On December 31, 2017, 30% of the shareholder representa-
tives in the Supervisory Board of Daimler AG were women (Sari
Baldauf, Andrea Jung and Petraea Heynike), while 70% were
men. On that date, 20% of the employee representatives on the
Supervisory Board were women (Elke Tönjes-Werner and Sib-
ylle Wankel), while 80% were men. In its meeting on December
7, 2017, the Supervisory Board considered its nominations for
the election at the Shareholders' Meeting 2018 and came to the
conclusion that the shareholders and employee representa-
tives should achieve the legally required share of women board
members separately. Before this background the shareholder
representatives declared that they object to the Supervisory
Board's joint fulfillment of the legally required gender ratio.
Thereafter, based on the recommendation of the Nomination
Committee, the Supervisory Board decided to nominate Sari
Baldauf as well as Dr. Jürgen Hambrecht again and Marie Wieck
for the first time for election to the Supervisory Board by the
Shareholders' Meeting in 2018. The legally required gender ra-
tio will be met on the shareholder representatives' side if these
persons are elected to the Supervisory Board, provided that no
other changes occur. The next election of employee represen-
tatives to the Supervisory Board will also take place in 2018.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their supervi-
sory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. Relevant information
here has been published in accordance with applicable law.
210
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
On December 8, 2016, the Supervisory Board passed a resolu-
tion stipulating that the target figure for the proportion of women
on the Board of Management of Daimler AG would be 12.5%,
while the deadline would be December 31, 2020. As of Decem-
ber 31, 2017, the eight-member Board of Management in-
cluded two women, Renata Jungo Brüngger and Britta Seeger.
This means that women account for 25% of the Board of Man-
agement members.
Overall requirements profiles for the
composition of the Board of Management
and the Supervisory Board
Board of Management
The requirements profile for the Board of Management of Daimler
AG aims at a Board of Management as diverse, mutually sup-
portive and effective as possible. The Board of Management as
a whole should possess the knowledge, skills and experience
required for the proper execution of its tasks and be composed
of members whose varied personal backgrounds and experi-
ences embody the desired management philosophy. Decisions
regarding appointments to the Board of Management are al-
ways governed by the Company's interests under consideration
of all circumstances in each individual case.
The requirements profile for the Board of Management includes
in particular the following aspects, which are to be taken into
account as far as possible when making decisions on appoint-
ments to the Board of Management:
The members of the Board of Management should have dif-
ferent educational and professional backgrounds, whereby
at least two members should have a technical background.
With Dr. Dieter Zetsche and Wilfried Porth, the Board of Man-
agement currently has two members who are engineers.
Bodo Uebber is an industrial engineer. Since taking over as
Head of Group Research & Mercedes-Benz Cars Develop-
ment on January 1, 2017, Ola Källenius has sustainably dis-
played the expertise he acquired in various technical man-
agement positions throughout the Company.
- In order to meet the requirements of the German law requir-
ing equal participation of women and men in executive posi-
tions, the Supervisory Board defined on December 8, 2016,
a target of 12.5% for the proportion of women on the Board
of Management, with a deadline of December 31, 2020. This
means that of the eight current members of the Board of
Management, at least one member must be a woman. The
Board of Management currently has two female members,
Renata Jungo Brüngger and Britta Seeger. This means the
proportion of women on the Board of Management is cur-
rently 25%.
- In accordance with the recommendations of the German Cor-
porate Governance Code, the Supervisory Board has set
an age limit for members of the Board of Management. As a
rule, 62 years of age serves as orientation for age-related
discharge. When it set this age limit, the Supervisory Board
deliberately decided in favor of a flexible rule allowing the
required scope for the appropriate assessment of the circum-
stances of each individual case. Seven of the eight Board of
Management members are younger than the age limit. Dr. Di-
eter Zetsche was older than the age limit when he began his
current term of office in January 2017. The Supervisory Board
nevertheless reappointed Dr. Zetsche as Chairman of the
Board of Management in recognition of his being primarily re-
sponsible for the Company's successful strategy and its im-
plementation. This decision was taken in the best interest of
the Company in that it enables the continuation of leadership
at the top executive level that is needed to ensure the sus-
tained success of the Company.
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. For this reason, the Company was re-
quired to describe these concepts in its declaration on corpo-
rate governance for the first time for financial year 2017, and
to also explain the aims of the diversity concepts, the manner
in which they are implemented and the results achieved with
them in the financial year. The Supervisory Board has combined
the diversity concepts with the requirements of the German
law regulating equal participation of women and men in execu-
tive positions and the specific targets for the composition of
executive management bodies as defined by the recommenda-
tions of the German Corporate Governance Code. These com-
bined requirements are presented in the overall requirements
profiles for the composition of the Board of Management and
the Supervisory Board described below. The requirements pro-
files also serve as the basis for long-term succession planning.
Our Compliance Management System
In accordance with the German law requiring equal participa-
tion of women and men in executive positions in both the pri-
vate and the public sector, the supervisory boards of listed
companies or companies subject to Germany's system of co-
determination have to set a target for the proportion of women
on the board of management. The board of management of
such a company has to set a target for the proportion of women
at the two management levels below that of the board of man-
agement. If the proportions of women at the time when these
targets are set by the Board of Management and the Supervi-
sory Board are below 30%, the targets may not be lower than
the proportions already reached. At the same time that the
targets are set, the boards have to set periods for their achieve-
ment, which may not be longer than five years.
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member of
the Supervisory Board representing the employees and one
member elected with the majority of the votes cast of the Su-
pervisory Board members representing the shareholders. It is
formed solely to perform the functions laid down in Section 31
Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved. As in
previous years, the Mediation Committee did not have to take
any action in 2017.
The Presidential Committee is composed of the Chairman of
the Supervisory Board, his Deputy, and two other members,
who are elected by a majority of the votes cast on the relevant
resolution of the Supervisory Board.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, whereby it takes into account the over-
all requirements profile it has defined, including the diversity
concept, for the position to be filled, as well as the Supervisory
Board's target for the proportion of women on the Board of
Management. It submits proposals to the Supervisory Board
on the design of the remuneration system for the Board of
Management and on the appropriate total individual remunera-
tion of its members. In this context, it follows the relevant
recommendations of the German Corporate Governance Code.
The Presidential Committee is also responsible for the Board
of Management members' contractual affairs. In addition, it
decides on the granting of approval for sideline activities of the
members of the Board of Management, reports to the Supervi-
sory Board regularly and without delay on consents it has is-
sued, and once a year submits to the Supervisory Board for its
approval a complete list of the sideline activities of each mem-
ber of the Board of Management.
In addition, the Presidential Committee decides on questions
of corporate governance, on which it also makes recommenda-
tions to the Supervisory Board. It supports and advises the
Chairman of the Supervisory Board and his Deputy and pre-
pares the meetings of the Supervisory Board within the limits
of its responsibilities.
Nomination Committee
The Nomination Committee is composed of at least three
members, who are elected by a majority of the votes cast by
the members of the Supervisory Board representing the share-
holders. It is the only Supervisory Board Committee consisting
solely of members representing the shareholders and makes
recommendations to the Supervisory Board concerning per-
sons to be proposed for election as members of the Supervisory
Board representing the shareholders at the Shareholders'
Meeting. In doing so, the Nomination Committee takes into
consideration the requirements of the German law regulating
equal participation of women and men in executive positions,
the recommendations of the German Corporate Governance
Code and the specific goals that the Supervisory Board has set
for its own composition. The recommendations made by the
Nomination Committee aim at fulfilling the overall requirements
profile - including the skills profile for the entire Supervisory
Board.
Audit Committee
Germany's law on the equal participation of
women and men in executive positions
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast on the relevant resolu-
tion of the Supervisory Board. The Chairman of the Supervi-
sory Board is not simultaneously the Chairman or a member of
the Audit Committee. The Chairman of the Supervisory Board
attends the meetings of the Audit Committee as a guest.
The Audit Committee deals with the supervision of the account-
ing and its process as well as with the annual external audit.
At least once a year, it discusses with the Board of Management
the effectiveness and functionality of the risk management
system, the internal control and auditing system and the com-
pliance management system. It regularly receives reports on
the work of the Internal Auditing department and the Compli-
ance Organization. At least four times a year, the Audit Com-
mittee receives a report from the whistleblower system BPO
(Business Practices Office) on complaints and information
about any breaches of regulations or guidelines by high-level
executives, as well as violations by other employees of the
regulations in a defined catalog of legal provisions. It regularly
receives information about the handling of these complaints
and notifications.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
209
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis of
the report of the external auditors, the Audit Committee re-
views the annual company financial statements and the annual
consolidated financial statements, as well as the management
report of the Company and the Group, and discusses them
with the external auditors. The Audit Committee makes a pro-
posal to the Supervisory Board on the adoption of the annual
company financial statements of Daimler AG, on the approval
of the annual consolidated financial statements, and on the ap-
propriation of profits. The Committee also makes recommen-
dations for the Supervisor Board's proposal on the election of
external auditors, assesses those auditors' suitability, qualifi-
cations and independence, and, after the external auditors are
elected by the Shareholders' Meeting, it engages them to con-
duct the audit of the annual company and consolidated finan-
cial statements and to review the interim reports, negotiates
an audit fee, and determines the focus of the annual audit. The
external auditors report to the Audit Committee on all account-
ing matters that might be regarded as critical and on any mate-
rial weaknesses of the internal control and risk management
system with regard to accounting that might be discovered
during the audit.
Finally, the Audit Committee approves permitted services that
are not directly related to the annual audit and which are pro-
vided by the firm of external auditors or its affiliates to Daimler
AG or to companies of the Daimler Group.
Mediation Committee
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit Commit-
tee, Joe Kaeser, fulfill the criteria for independence and have
expertise in the field of accounting, as well as special knowl-
edge and experience with regard to auditing and methods of
internal control. Due to his work at Robert Bosch GmbH and
his long-standing membership of the Supervisory Board of
Daimler AG, Dr. Clemens Börsig is furthermore very familiar
with the automotive industry.
229
The Board of Management manages Daimler AG and the Daimler
Group. With the consent of the Supervisory Board, the Board
of Management determines the Group's strategic focus, defines
the corporate goals, and makes decisions concerning opera-
tional planning issues. The members of the Board of Manage-
ment are bound to the interests of the Company and share
responsibility for managing the Group's entire business.
218
The information provided in this report is presented in conformity with the GRI Stan-
dards of the Global Reporting Initiative, insofar as this complies with applicable law.
Some aspects are presented in accordance with internal guidelines and definitions.
226
Health management and safety at work
224
A competitive workforce
223
High attractiveness as an employer
223
Partnership with the employees
234
Statement on the review of the
Non-Financial Report
222
Employee issues
233
Other compliance issues
221
Mobility services
Anticorruption compliance
231
Clean air
219
Antitrust compliance
231
Information on our business model page 90 ff of the Annual Report 2017 and on
non-financial risks connected with the aspects presented in this report (Risk and
Opportunity Report pages 167, 168 of the Annual Report 2017) is provided in the
Combined Management Report in the Annual Report 2017.
Conservation of resources
Technical compliance
232
Environmental protection in production
221
Human rights compliance
232
221
Climate protection
The Supervisory Board has formed four committees, which
perform to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board. The committee chairpersons report to the entire Super-
visory Board on the committees' work at the latest in the meet-
ing of the Supervisory Board following each committee meet-
ing. The Supervisory Board has issued rules of procedure for
each of its committees. Those rules of procedure can be viewed
on our website at ④ daimler.com/dai/rop. Information on the
current composition of these committees can be viewed at
daimler.com/dai/sbc and is also available on
Further information on our sustainability activities can be found online at daimler.
com/sustainability and in our annual Sustainability Report, which can be downloaded
there as a PDF data file.
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employ-
ees and of the members representing the shareholders with
the members of the Board of Management. Each Supervisory
Board meeting included a so-called executive session for dis-
cussions of the Supervisory Board in the absence of the mem-
bers of the Board of Management. The Supervisory Board
members can also take part in the meetings by means of con-
ference calls or video conferences. However, this is generally
not the case.
Basic
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
223
Partnership with the employees
We want to work together with our employees as partners,
respect their interests and get them involved in the company
by continuously providing them with information and enabling
them to participate in decision-making processes. To achieve
these goals, we are guided not only by the International Labor
Organization's (ILO) work and social standards but also by our
"Principles of Social Responsibility." In these principles, we
commit ourselves, among other things, to respect key employee
rights, ranging from the provision of equal opportunities to the
right to receive equal pay for equal work. Violations of these
principles can be reported to the whistleblower system BPO,
which adresses further investigations to the pertinent units.
Our employees have the right to organize themselves in labor
unions. We also ensure this right in countries in which freedom
of association is not legally protected. We work together con-
structively with the employee representatives and the trade
unions. Important partners here include the local works coun-
cils, the European Works Council and the World Employee
Committee (WEC). We have signed collective bargaining agree-
ments for all of the employees at Daimler AG, and this also
applies to the majority of our employees throughout the Group.
In a variety of committees, we regularly inform the employee
representatives about the economic situation and all of the key
changes at Daimler AG and the Group. We conclude agree-
ments with the respective workers' representative bodies con-
cerning the effects of our decisions on the employees. In Ger-
many, comprehensive regulations to this effect are contained
in the Works Council Constitution Act. We notify our employ-
ees about far-reaching changes early on.
One result of the ongoing dialogue between the corporate
management and the employees' association was the renewal
of the company-wide "Safeguarding the Future of Daimler"
agreement in 2015. This accord, which is valid until 2020,
enables the company to respond to the “future plan" agree-
ments that have been reached at many of the locations of
Daimler AG with concrete investment commitments, flexible
personnel assignment models and the possibility of selectively
increasing staffing requirements. As a result, we can make
use of market opportunities and better absorb fluctuations in
demand. The company-wide agreement essentially protects
all of the employees of Daimler AG in Germany from being laid
off until the end of 2020. The expansion of this Safeguarding
the Future agreement is also an integral part of the "Project
Future" and is being implemented in close cooperation with
the employee representatives. If “Project Future" is imple-
mented, Daimler AG's Safeguarding the Future agreement will
be extended until 2029, thus in principle excluding terminations
for operational reasons until December 31, 2029. Another key
point of this reconciliation of interests for the employees is the
nearly full funding of the pension obligations. With regard to
the latter, Daimler contributed €3 billion to Daimler AG's German
pension assets in the fourth quarter of the year under review.
High attractiveness as an employer
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain a
sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary objec-
tives here are to ensure attractive and fair compensation and
to establish and maintain a work culture that enables outstand-
ing performance and a high level of motivation and satisfaction
among our employees and managers.
Attractive and fair remuneration
Flexible working arrangements
We remunerate work in accordance with the same principles at
all our affiliates around the world. Our Corporate Compensa-
tion Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum requirements
for the design of the remuneration systems. Internal audits are
conducted on a random basis to make sure these conditions
and requirements are met. In our desire to offer salaries and
benefits that are customary in the industry and the respective
markets, we also give consideration to local market conditions
within the specified framework. The salaries are determined on
the basis of the employees' tasks and performance, and in
line with their qualifications and experience. In setting the remu-
neration of the employees we are not guided by gender or place
of origin, but exclusively by the employee's job and responsibility.
The general remuneration level is significantly above the legal
minimum wages that apply to many locations. In cases where
Daimler AG and its Group companies have signed collective
bargaining agreements, they often also offer voluntary benefits
that are agreed upon with the respective employees' associa-
tions. These benefits primarily consist of employer-funded retire-
ment contributions as well as profit-sharing agreements for
the respective company. For example, the eligible employees
of Daimler AG will receive a profit-sharing payout of €5,700
(2016: €5,400) for 2017. In addition, our employees can avail
themselves of a wide variety of sports facilities and social ame-
nities, ranging from daycare centers to the counseling service
for people in extreme situations.
In 2017, the Group spent €18.2 billion (thereof Daimler AG:
€11.5 billion) on wages and salaries, €3.3 billion (thereof Daimler
AG: €1.8 billion) on social welfare services, and €0.7 billion
(thereof Daimler AG: €0.6 billion) on retirement benefits for a
workforce numbering 289,530 on average (thereof Daimler AG:
151,091).
Modern working conditions
Working conditions are being increasingly influenced by work-
ing hours, workplaces, the work environment, the level of
employee empowerment and a state-of-the-art management
culture. The length of our employees' workweek is generally
regulated by the company or by a collective bargaining agree-
ment. In Germany, overtime is only performed within the
framework of a requirements planning forecast and has to be
approved by the employee representatives. In general, we
allocate working times in such a way that remuneration remains
stable even if the amount of work sometimes fluctuates. This
is made possible by a time-account system.
25.0
8.1
8.7
Share of women on the Board of Manage-
ment
Mission
Pillar
Mission
Share of women at the first management
level below that of the Board of Manage-
ment (Daimler AG)
Accident downtime
(worldwide, number of lost days
per 1 million hours of attendance)
Incidence of accidents (worldwide, number
of work-related accidents that resulted in
at least one lost day per 1 million hour of
attendance)
Incidence of accidents
Number of accidents (worldwide)
Accident figures¹
E.05
25.0
25.0
Share of women on the Supervisory Board
12.5
Strategic
1011 011
10100 01010
1101
ND
0001
10110
001001
111110
110100
101000101
0101111010
Vision
1010
12.4
11.9
management level below that of the
Board of Management
(Daimler AG)
Once every quarter, the Board of Management discusses our
diversity management activities and the associated results.
We also hold discussions with external stakeholders as part of
our involvement in the Diversity Charter, of which we are a
founding member.
The age differences at the company will rise in the future due to
the increase in the retirement age and the extension of peo-
ple's working lives. The average age of our global workforce in
2017 was 42.8 years (2016: 42.7). Our employees at Daimler
AG were 44.7 years old on average (2016: 44.5). Demographic
development will cause the average age to continue to rise in
the years ahead. However, the proportion of older employees
will decrease again over the long term because many baby
boomers will retire from the company. We consider this trans-
formation to be an opportunity, and we are adjusting the
framework conditions accordingly. Our generation management
system focuses on measures for maintaining the performance
and health of younger and older employees as well as for pro-
moting cooperation between people of different ages.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES 225
Our aim is to increase the share of women in management posi-
tions to 20% by the year 2020. More than 17% of our execu-
tives in middle and upper management currently are women.
For Daimler AG, we signed a company-wide agreement for
the advancement of women. It stipulates a target corridor for
the proportion of women in the total workforce, in vocational
training and in Level 4 and 5 management positions. In order to
achieve our goals, we have installed an ongoing internal report-
ing and planning system.
Daimler's more than 289,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways
of life. We utilize this diversity to put together optimized teams.
Most of our managers abroad come from the respective
regions. We promote the cultural diversity of our employees
with worldwide staff assignments, mentoring, intercultural
skills training and targeted recruiting measures. International
candidates account for more than one third of the people
recruited through our CAReer trainee program.
Daimler promotes the diversity and heterogeneity of its
employees, because they serve as the basis of a high-perform-
ing company. As a result, diversity management is included in
our corporate strategy. The various skills and talents of our
workforce enable us as a global company to effectively reflect
the diversity of our customers, suppliers and investors around
the world.
Diversity management
We can only be successful if we have a skilled and high-per-
forming workforce. We therefore aim to continuously develop
our employees and make sure they stay competitive. We are
pursuing this goal by implementing measures in four overarch-
ing areas of action: diversity management, the securing of
young talent, qualification, and health management and occu-
pational safety.
A competitive workforce
Our employees' great loyalty to the company is also expressed
by the amount of time they have worked for Daimler. During
the year under review the average number of years our employ-
ees have worked for Daimler decreased slightly to 16.1 years
(2016: 16.3 years). In Germany, employees had worked for the
Group for an average of 19.5 years at the end of 2017 (2016:
19.5 years). The comparative figure for Daimler AG was 20.3
years (2016: 20.1 years). Daimler employees outside Germany
had worked for the Group for an average of 11.0 years (2016:
11.3 years). In 2017, our labor turnover amounted to 5.1% world-
wide (2016: 6.7%).
of 76% underscores our employees' interest and their willing-
ness to actively help shape the further development of the
company. Overall, the results of the survey were much better
than those from previous years. Some of the production
facilities in certain countries identified areas of action for the
reconciliation of the needs of work and family, communication,
individual development opportunities and working conditions.
These topics are now being addressed during the follow-up
process. In 2018, we will reorganize the employee survey in
order to measure and promote the company's continued cul-
tural development.
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees,
and what we need to do to improve the company in the future.
In September 2016, nearly 263,000 employees in more than
40 countries were invited to participate in the survey and
express their opinions to us. The outstanding participation rate
Successful employee survey
Our business is changing at a rapid pace. In order to remain
successful in the future, we are changing our management cul-
ture and the way we cooperate. This is why we launched the
Leadership 2020 initiative in 2016. Employees from more than
40 countries and all levels of management are currently work-
ing on Daimler's future management culture. Guidance is pro-
vided by new management principles that, among other things,
make the company faster and more flexible and boost its inno-
vative potential. Procedures, processes and structures are
being called into question and changed in eight "game chang-
ers." In its meetings, the Board of Management of Daimler AG
regularly discusses the initiative's progress and decides which
measures need to be taken.
Leadership 2020 - further development of the
management culture
In 2017, around 3,950 employees at Daimler AG availed them-
selves of the opportunity to take parental leave. Moreover,
around 500 employees took advantage of the opportunity to
take off work for a prolonged period. In mid-2017, more than
160 employees were working in job-sharing positions at the team
and department levels.
We encourage all employees who take parental leave to subse-
quently return to their jobs at the company because we value
their knowledge and experience. In Germany, we offer 710 places
in daycare centers in close proximity to our company locations
as well as more than 180 reserved places at cooperating facili-
ties. In addition, we cooperate with a third party that assists
employees in finding childcare providers.
Furthermore, company agreements at Daimler AG enable
employees to suspend their careers for several years for a qual-
ification program or a sabbatical or to provide home care -
with the promise that they can return to Daimler AG afterwards.
We also promote job sharing, in which two employees share
the same task/position and work together up to 60 hours per
week. This provides managers in particular with a means of
reconciling the needs of work and family.
We also boost employees' flexibility and self-determination by
giving them the opportunity for mobile working. An associated
company agreement has been in force at Daimler AG since
December 2016. The agreement gives employees the right to
mobile working if the task permits.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve top
performance and support their efforts to do so, rather than
focusing on their mere presence at work. For this reason, we also
seek to improve performance by helping employees and manag-
ers reconcile their professional and personal responsibilities.
Securing young talent
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Daimler takes a holistic approach to securing young talent.
Our "Genius" initiative gives children and teenagers valuable
insights into future technologies and information about jobs in
the automotive industry. Along with technical and commercial
apprenticeships and courses of study at the Cooperative Uni-
versity, we also conduct various activities that address young
talents. We offer extensive possibilities to personally interact
with the company via social media, hackathons, competitions
and internships. After completing their college degrees, gradu-
ates can directly join our company or launch their careers at
Daimler by taking part in our global CAReer training program.
We recruit most of the young talent we need through our
industrial-technical and commercial apprenticeships and the
courses of study at the Cooperative University, which had
194 students in 2017.
Share of women at the second
16.7
17.6
Levels 1-3 (worldwide)
Women in senior management positions
17.2
18.0
positions (Daimler AG)
Share of women in Level 4 management
15.5
16.1
17.7
18.5
2016
2017
224
In percent
Share of women
E.04
Programs such as "Facharbeiter im Fokus" and the new team
leader development program ensure that employees are exten-
sively qualified according to uniform standards. The participants
are given the opportunity to obtain good career prospects and
plan concrete development goals. Our company's sustained
success is closely linked to the high quality of our managers.
At the end of 2017, we had 8,097 trainees throughout the Group
(2016: 7,960), 4,409 (2016: 4,824) of them at Daimler AG.
During the year under review, 1,278 (2016: 1,662) young people
began an apprenticeship at Daimler AG; 1,197 (2016: 1,448)
were hired after completing their apprenticeships. The costs
for vocational training for Daimler AG totaled €114 million in
2017 (2016: €110 million).
In 2017 we hired 97 trainees through our CAReer program.
About 47% of the trainees were women and more than one third
were international participants.
Share of women (worldwide)
Share of women (Daimler AG)
Number of employee deaths as a result of
work-related accidents
2 Unfortunately, a third-party employee suffered a fatal work-related
accidents in the United States in 2017.
Basic development of the overall
vehicle, validation modules
▼ H G F E D C BA
Job No. 1
Launch of Launch of
body-in-white production
production test
Approval of
specifications
Concept Initial
specifica- specifica-
tions
tions
start
Architecture Project
decision
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES 219
Vehicle product creation process for individual vehicles
Vehicle-specific integration and validation
E.01
The new WLTP test cycle
We are working hard to reduce the fuel consumption of our
vehicles. As early as 2015, we were able to reduce the CO2
emissions of newly registered vehicles from Mercedes-Benz
Cars in the EU to an average of 123 grams per kilometer.
This means we achieved our 2016 target of 125 g/km ahead
of schedule. In 2017, emissions rose slightly to 125 g/km
because of the shift in sales toward vehicles equipped with
higher-quality appointments.
CO2 emissions per car: 125 g/km
The actual values may deviate from the projected target values
because of various external factors such as alterations in the
sales structure, changes in the political framework conditions
or changes in the fuel consumption target values of the vehi-
cles that are still in the development phase. In case of a devia-
tion, the CO2 steering committee organizes an assessment
of various options and then decides on the measures to be
initiated. If the need for adjustment is especially urgent, the
process is escalated to the responsible managing body. From
a strategic standpoint, this process takes place over a period
of approximately ten years.
The fleet values for CO2 emissions are calculated on the basis
of the fuel economy figures of the vehicles available on the
market and the fuel economy specifications and prognoses for
vehicles that are still in the development phase. These values
are combined with the sales forecasts to arrive at the projected
fleet consumption values for CO2 emissions.
The key factors for determining the target values for fuel
consumption and CO2 emissions are the technological possi-
bilities, the legal requirements including the fleet targets for
fuel consumption, and customer wishes. The body responsible
for complying with these goals is the CO2 steering committee,
which is headed by the Board of Management member responsi-
ble for Group Research and Mercedes-Benz Cars Development.
In many markets there are fleet targets for the fuel consump-
tion and CO2 emissions of cars and light commercial vehicles -
in other words, overall targets for all the vehicles sold in a
given market. The corresponding controlling process for reach-
ing the CO2 fleet consumption target for Cars Europe (EU 28)
is shown as an example.
All of the divisions integrate all vehicle-related goals, including
those that are relevant to the environment, into their vehicle
development process according to a similar pattern. The chart
7 E.01 shows the Mercedes-Benz Development System (MDS)
as an example.
The CO2 process in vehicle development
In a committee situated directly below the Board of Manage-
ment level, the managers responsible for each vehicle model
series evaluate the results of this monitoring process and
decide on any necessary corrective measures. If corrections
are needed, the responsible member of the Board of Manage-
ment is included in the decision-making. If the situation con-
tinues to escalate, the managing body of the respective division
is also included.
Since September 2017, all of our new car models in Europe
have been certified according to the Worldwide Harmonized
Light Vehicles Test Procedure (WLTP). This test procedure
includes numerous changes compared to the previous New
European Driving Cycle (NEDC). The changes include higher
average and maximum speeds, more dynamic handling, gliding
inertial masses instead of inertia classes, a smaller standstill
For every vehicle model and every engine variant, we have cat-
alogues of specifications that define the characteristics and
target values that must be achieved. These specifications
include requirements concerning fuel consumption and emis-
sions limit values for CO2 and nitrogen oxides. During the
development process we regularly monitor compliance with
these specifications.
Testworthiness
Series production
suitability
Tours
Interviews
documents
Inspection of
Methodology for assessing environmental risks
E.02
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220
The RDE threshold values have applied since September 2017
to newly registered vehicle models. Starting in September
2019, they will apply to all new vehicles. During the first stage,
the Euro 6 threshold value for certification may be exceeded
by a factor of 2.1. During the second stage, which will start in
September 2020 or 2021, the Euro 6 threshold value may be
exceeded by a factor of 1.5.
In order to more accurately correlate exhaust gas emissions
from real-life driving operation with the threshold values of the
test cycle, a new mandatory testing process has been intro-
duced in Europe. Since the introduction of the Real Driving
Emissions (RDE) test procedure in September 2017, vehicles
must, among other things, have the number of particulates and
the concentration of nitrogen oxides determined with the help
of a mobile emission measurement system. The new testing
process supplements the mandatory exhaust gas tests that are
still conducted on test rigs.
Concept suitability
New RDE emission legislation
pages 124 ff of the Annual Report 2017
We continue to work hard to meet all statutory CO₂ require-
ments, including the very challenging EU limits for 2021. As
we often emphasize, the fulfillment of these challenging fleet
targets depends not only on offering appealing and highly
efficient products with electric drive systems, but also on our
customers' actual decisions to buy those models. In order to
optimally position ourselves in this respect, we are systemati-
cally changing over our product range to the latest engine
generations, and are also systematically electrifying our port-
folio with plug-in hybrids and all-electric vehicles.
In order to obtain data that is comparable, the fleet emissions
of the individual automakers are now being calculated back
from the certification values of the WLTP test cycle to the CO₂
fleet values of the New European Driving Cycle (NEDC). The
transition to WLTP basically means for all manufacturers that
the requirements regarding a fleet's fuel consumption, and
thus its CO2 emissions, have become much more stringent.
However, this transition did not yet have significant effects in
2017. By means of extensive investment in innovative drive
technologies and a comprehensive expansion of the product
range with more than 50 electrified models, Daimler/Mercedes-
Benz Cars is preparing to achieve the more stringent EU tar-
gets. At the same time, strong customer demand for SUVs is
leading to a shift of the structural mix towards mid-sized and
large automobiles, which presents us with a significant chal-
lenge to meet the targets of the European Union in 2021.
share of total fuel consumption, and consideration of optional
extras and the quiescent current requirement. Overall, these
changes are leading to more realistic, but also higher, fuel
economy values.
= Quality gate
Functionality
Customer appeal
measures
Series
support
Principle suitability
Clean air
Topic areas
A vehicle's environmental impact is largely decided during the
first stages of its development. The earlier we integrate envi-
ronmentally responsible product development (Design for Envi-
ronment, DfE) into the development process, the more effi-
ciently we can minimize the impact on the environment.
Climate protection
By developing and implementing a risk-based management
approach to respecting and upholding human rights in our
own units and our supply chain, we support the implementa-
tion of decent work as defined by SDG 8.
SDG 8 Decent Work and Economic Growth
Through our Sustainability Strategy 2030, we would like to
explicitly help to achieve the Sustainable Development Goals
(SDGs) that were approved by the United Nations in Septem-
ber 2015. Our four prioritized focal topics and the sustainabil-
ity-related activities that underlie them support the following
Sustainable Development Goals (SDGs) in particular:
4. Responsible conduct
3. Mobility services
2. Digitalization
In the year under review we involved the relevant stakeholders
in the restructuring of our sustainability strategy and reorga-
nized our priorities with the help of a multistage materiality
analysis. We have focused on the areas that are significantly
influenced by our business model and our value chain - areas
where we can actually bring about change. Our Sustainability
Strategy 2030 concentrates on four focal topics:
1. Vehicles
We believe that a long-term sustainability strategy and effec-
tive sustainability management are the preconditions for
ensuring that we remain one of the world's leading automobile
manufacturers in the future. As part of our Group-wide sus-
tainability strategy, we set targets and define target indicators.
Taken together, all of these targets form our comprehensive
target program for the medium and long terms.
Our Sustainability Strategy 2030
For Daimler, acting in line with the principles of sustainability means striving to achieve long-term
business success. Sustainability is a basic principle of our corporate strategy as well as a metric
for our success as a company. We aim to make our activities compatible with the interests of the
environment and society. One of our core tasks is to offer safe, fuel-efficient and low-emission
vehicles.
-
Sustainability at Daimler
216
3,444
Rate
7.5
9.4
106
123
Number of deaths as a result of work-
related accidents
1
4
E | NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
Product development
SDG 9 Industry, Innovation and Infrastructure
Through the advanced development of automated and auton-
omous driving and the expected benefits for safety and cli-
mate protection, we demonstrate the long-term potential of
digital innovations.
As the global leader for flexible car sharing (car2go), we sup-
port the creation of sustainable urban spaces for traffic and
community life.
Protecting the environment is a primary corporate objective of our Group. Environmental protection
is not separate from other objectives at Daimler; instead, it is an integral component of a corpo-
rate strategy aimed at long-term value creation. The environmental and energy-related guidelines
approved by the Board of Management define the environmental and energy-related policy of the
Daimler Group. They also express our commitment to integrated environmental protection that
addresses the underlying factors with an impact on the environment, assesses the environmental
effects of production processes and products in advance, and takes these findings into account in
corporate decision making.
Environmental Issues
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
218
In the year under review, reports were received concerning
suspected violations by suppliers of rules concerning working
conditions and the treatment of employees, which we are sys-
tematically investigating.
We have established a complaint-management process that
enables individuals to draw attention to possible human rights
violations at suppliers. In this context, we work together closely
with the world employee committee. We bring together all the
available information and take action only if the reports are
well-founded. The suppliers are requested to respond to the
accusations; after that, the responsible management commit-
tees assess the facts of the case and take the necessary mea-
sures. This can lead up to the termination of a business rela-
tionship. In addition to the complaint-management process,
information on misconduct can always be submitted to the
whistleblower system BPO established by Daimler.
O page 229
In the case of suppliers selected on a risk basis, our employees
ask specific questions during their on-site assessments con-
cerning compliance with sustainability standards. We also con-
duct a more thorough assessment whenever this is necessary.
To ensure that our direct suppliers comply with the sustainabil-
ity standards, we regularly conduct a risk analysis of our sup-
pliers according to country and product group. We use regular
database research to discover any violations of our sustainabil-
ity and compliance rules by our current suppliers. We system-
atically follow up all reports of violations. With the help of an
online survey, we also question our main suppliers about their
sustainability management and their communication of these
requirements to their upstream value chains. On the basis of the
results, we reach agreements with our suppliers on improving
their sustainability performance.
Our commitment to sustainable corporate management does
not end at the factory gates. We also urgently require our
direct suppliers all over the world to comply with our sustain-
ability standards. Moreover, we expect them to behave with
integrity and in conformity with all the applicable rules and
regulations. Our direct suppliers are subject to our Supplier
Sustainability Standards, which require, among other things,
compliance with wide-ranging environmental regulations and
respect for human rights. Our direct suppliers commit them-
selves to observing our sustainability standards, communicat-
ing them to their employees and passing them along to their
own supplier companies. We support them in these activities
by regularly providing them with information as well as training
and qualification measures.
Sustainability in our supply chain
SDG 11 Sustainable Cities and Communities
The ten principles of the UN Global Compact provide a funda-
mental guideline for our business operations. As a founding
member and part of the LEAD group, we are strongly commit-
ted to the Global Compact. Our internal principles and guide-
lines are founded on this international frame of reference and
other international principles, including the Core Labor Stan-
dards of the International Labor Association (ILO) and the OECD
Guidelines for Multinational Enterprises.
The Corporate Sustainability Board (CSB) is our central man-
agement body for all sustainability issues. The CSB is headed
by Renata Jungo Brüngger (the Board of Management member
responsible for Integrity and Legal Affairs) and Ola Källenius
(the Board of Management member responsible for Group
Research & Mercedes-Benz Cars Development). The opera-
tional work is done by the Corporate Sustainability Office
(CSO), which consists of representatives from the specialist
units and the business divisions.
Our sustainability objectives and their management are part of
our corporate governance system and are also incorporated
into the targets of our executives.
Sustainable corporate governance
217
E | NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
The Daimler Sustainability Strategy 2030 determines the
structure of our sustainability management activities and our
annual sustainability reporting. In addition, when we identified
the key aspects to be addressed by this non-financial report,
we took the focal topics of our sustainability strategy as our
starting point. However, in some cases we emphasize different
aspects because of the divergent requirements set by the
standards and laws that are relevant to this report.
By setting ambitious targets for reducing the emissions of
our fleets, we are helping to protect the planet from the
effects of climate change.
SDG 13 Climate Change
By significantly reducing and reinforcing the material cycles
of primary raw materials that are needed for our e-drive sys-
tem, we are setting the course for sustainable production
models in line with this SDG.
SDG 12 - Responsible Consumption and Production
Integrity, compliance and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions. Our Integrity Code defines the
guidelines for our daily business conduct, offers our employees
orientation and helps them make the right decisions even in
difficult business situations. The Integrity Code is supplemented
by other in-house principles and guidelines.
Feedback to plant management and divisional
management
Environmental management
Emissions into the atmosphere
101
0 010
1 111
0 10
0
HR
001111001
1000001
00011
01111
이
10100
100
001
0100
100
110
011
10
01
100
11
0101
& inspiring culture
01
011 01
1 Coverage rate of Daimler production locations (Mercedes-Benz
Cars, Daimler Trucks, Daimler Buses, Mercedes-Benz Vans) world-
wide: >98%.
2
1
as a result of work-related accidents²
Number of deaths of third-party employees
2
101
010
11 00
01 10
110 10
11
01
11
0
...ensure continuous
competiveness
Profitability
and we act as one team
Operational Excellence in HR
Digitalization
11000010
1001 101
0010 1101
00
...foster a diverse, empowering
...enable our management to shape
the framework of the future
2,766
Production-related environmental protection
the workshop waste disposal system MeRSy (Mercedes-Benz
Recycling System).
- the remanufacturing of used parts, and
The key aspects of our activities in the area of recycling are:
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
During the development process of a vehicle, we prepare a recy-
cling concept for each vehicle model in which all of its compo-
nents and materials are examined with a view to their suitability
for the various stages of the recycling process. As a result, all
Mercedes-Benz car models are up to 85% recyclable and up to
95% recoverable.
To make our vehicles more environmentally friendly, we are
working to continuously reduce the resources our automobiles
consume over their entire life cycles.
Consistently high recyclability
Conservation of resources
221
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Our commitment to the environment is an integral component
of our corporate strategy, which focuses on increasing the
value of the company over the long term. For this reason, we
have established environmental management systems at our
manufacturing locations with the goal of ensuring that we can
produce our vehicles safely, efficiently and at a high level of
quality in an environmentally friendly manner that complies with
all legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group has
a majority interest in the ownership structure.
Daimler is participating in the mobility fund that has been jointly
launched by the German government and German industry, in
line with our company's market share. This fund will primarily be
used to finance measures that improve traffic flows in inner cities.
We are convinced that diesel engines will continue to be an
integral part of the drive-system mix, not least due to their low
CO2 emissions. For this reason, the Daimler Board of Manage-
ment approved a comprehensive plan for the future of diesel
engines in July 2017. The plan calls for a massive expansion
of the previously introduced voluntary service measures for
vehicles already in customers' hands, as well as the rapid
market launch of a completely new diesel engine family. As early
as March 2017, Mercedes-Benz began offering its compact-
class customers an improvement in NOx emissions for one
engine variant. The company is also carrying out voluntary ser-
vice measures for V-Class customers. In order to effectively
lower the emissions of other model series, we decided in July
2017 to extend the service measures, which are free of charge
for our customers, to encompass more than three million
Mercedes-Benz vehicles at a cost of approximately €285 million.
The measures are being carried out for most Euro 5 and Euro 6
vehicles in Europe and other markets in close cooperation with
vehicle registration authorities.
Plan for the future of diesel vehicles
As early as 2016, Mercedes-Benz began offering diesel vehi-
cles that were able to meet the Real Driving Emissions (RDE)
limit values long before they went into effect in the EU in 2017.
This achievement was made possible by an all-new modular
family of efficient and low-emission diesel engines. In the future,
this modular engine family will be utilized across the entire
product range of Mercedes-Benz Cars and also at Mercedes-
Benz Vans. The first engines of this family - the four-cylinder
OM654 and the six-cylinder OM656 – are already on the
road. The new engines' exemplary emission values have also
been validated by measurements conducted at independent
institutes.
Our goal is to fulfill emission requirements as far in advance as
possible and to reduce potential risks for humans and environ-
ment. In order to comply with the tougher requirements of the
RDE regulations, we have had to make, and are still making,
extensive changes, at considerable expense, to the drivetrains
of our vehicles. Especially significant in this regard is the
exhaust gas aftertreatment near the engine. In the past, for
most of the vehicle models of many manufacturers, catalytic
converters and diesel particulate filter (DPF) systems were
mounted on the underbody of the vehicle, relatively far from
the engine. In the new Mercedes-Benz diesel engines, we
have successfully managed to position the entire exhaust gas
aftertreatment system extremely close to the engine. As a
result, the system is heated up very rapidly and doesn't quickly
cool off. As a result, the working temperature needed by the
system is reached considerably faster. This enables more effec-
tive exhaust gas aftertreatment and significantly reduces the
NOx emissions in stationary testing situations and also in the
RDE testing procedure in real-life driving operation.
High tech against pollutants
Dealing with hazardous materials
Soil/groundwater contamination
Waste management
Implementing
measures at the
plants
Discharge into bodies of water
Additional measures were added to this initiative for better air
quality following a summit meeting between the government
and the automotive industry in Berlin in August 2017. In order
to modernize the fleet of vehicles on the road effectively, we
are offering owners of Euro 1 to Euro 4 diesel cars an "environ-
ment bonus" of €2,000 if they trade in their vehicles for a new
Euro 6 diesel-powered car or a plug-in hybrid from Mercedes-
Benz. We are also supporting the introduction of vehicles that
meet the stricter emission limits of the RDE testing procedure.
We have achieved a high level of air quality control, climate
protection and resource conservation (in terms of water con-
sumption, waste management and soil conservation). We
intend to maintain this high level with the help of the Daimler
Group standards. The environmental and energy-related
guidelines approved by the Board of Management define the
environmental and energy-related policy of the Daimler Group.
The guidelines also express our commitment to integrated
environmental protection. That begins with the assessment of
the causes of environment problems and takes into account
the environmental effects of production processes and products
as early as the planning and development phases.
Environmental protection measures at our production locations
are coordinated across business units by three regional com-
mittees (Germany/Europe, North and South America, and Asia)
that are centrally managed. These measures are regulated
in line with a Group guideline and organizational and technical
standards.
The environmental measures are monitored by external audi-
tors (ISO 14001 certification, EMAS validation) and by internal
environmental risk assessments (the due diligence process).
Employer of choice
Excellent leadership
We provide innovative & efficient HR solutions to...
...attract, develop and retain
the right people
Competitive Workforce
Daimler - best Team
HR Strategy 2025
E.03
The main control tool we use is our HR Scorecard, which uses
key performance indicators concerning demographic develop-
ment, diversity and sick rates to provide information about the
sustainability of human resources measures and processes in
the individual areas of action.
A professional HR organization and efficient operating processes
form the basis for the implementation of these overarching
goals, from which we have derived key areas of action that are
linked to clearly defined objectives.
In order to recruit, develop and retain highly qualified staff, we
are continuously striving to further improve our attractiveness
as an employer. Because our managers should motivate their
employees to achieve top performance, it is crucial that we
equip our managers with outstanding leadership skills. In addi-
tion, we want to take on social responsibility and let diversity
flourish in our global company.
General figures regarding the development of our workforce
numbers can be found in the Employees section of the Man-
agement Report. page 129 f of the Annual Report 2017
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment of
our employees. More than 289,000 people promote our company's success worldwide by contributing
their concepts and ideas to their respective tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore more than
just an ethical and legal requirement for us – without them we would not be able to conduct our
business successfully.
Employee Issues
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
222
In addition to our products' high level of environmental com-
patibility and our environmentally friendly and efficient produc-
tion processes, we also strive to provide innovative mobility
services on the road to emission-free driving. That's why we
have developed a range of pioneering mobility concepts and
are forging ahead with innovative approaches - from the car-
sharing provider car2go and the mobility platform moovel to
the taxi app mytaxi and our participation in the coach company
FlixBus and the Bus Rapid Transit (BRT) system. Recent addi-
tions to this list were the service portal Blacklane and Croove,
a car rental service operated by and for private individuals.
Mobility services
In 2017 we were also able to audit all the locations of the
Daimler Buses division. The most important results were in the
areas of rainwater pollution and rainwater drainage, as well as
the proper storage of hazardous substances.
In this way, all the production locations are being visited and
assessed in five-year cycles according to well-established and
standardized procedures. The results are reported to the plant
and divisional managements, and the Group annually assesses
the implementation of the recommendations for minimizing
risks at the locations. In this way, we are striving to enforce the
high environmental standards to which we have committed
ourselves at all of our production locations around the world.
In 1999 we developed a methodology for assessing environmen-
tal risks (environmental due diligence) as a tool for preventing
risks to the environment and complying with statutory require-
ments. We have applied this methodology throughout the
Group since 2000, both internally and also externally in connec-
tion with our acquisition plans. During this period we have
conducted three complete risk assessments at the Daimler
production plants of Mercedes-Benz Cars, Mercedes-Benz
Vans, Daimler Trucks and Daimler Buses. The results of these
assessments were reported to the management of the loca-
tions, and summaries were provided to the management of the
respective divisions. The fourth round of environmental risk
assessments began in 2014. A number of new risk aspects have
been integrated into the topic areas. Nonetheless, we have
not changed the methods or the tools, because we want these
results to be comparable with the results of the assessments
that have already been carried out. 71 E.02
2017 2016
We conduct training sessions through the respective local
organizations. The important content of our training sessions
includes water pollution control, wastewater treatment,
emergency management in case of environmentally relevant
malfunctions, and the planning of plants and workplaces in
accordance with environmental protection principles.
0
Minimizing environmental risks
(e.g. Daimler China Sustainability Report)
- Intranet and internal communication
Compliance
E❘ NON-FINANCIAL REPORT | COMPLIANCE 229
- Consultation of stakeholders in thematic
working groups (environment, human rights
etc.)
- Peer review within the framework of sustain-
ability initiatives such as the UN Global Com-
pact
- Stakeholder survey and materiality analysis
- Advisory Board for Integrity and Corporate
Responsibility
Participation
- New dialogue formats for future-oriented is-
sues: think tanks, hackathons, idea competi-
tions
- Board of Management involvement in the
Ethics Commission on Automated and Con-
nected Driving (German Ministry of Transport
and Digital Infrastructure)
- Dialogue concerning specific occasions and
projects
- Local dialogue with residents and communi-
ties
- Membership in sustainability initiatives and
networks
- Daimler Supplier Portal
- Conferences on social issues; debates
-Group-wide internal integrity dialogue
- Annual Daimler Sustainability Dialogue
(Germany/regions)
Dialogue
- Environmental statements of the plants
- Sustainability newsletter and magazines
Mercedes-Benz Museum
Compliance is an indispensable part of the culture of integrity at Daimler. For us, compliance means
acting in conformance with laws and regulations. Our objective here is to ensure that all Daimler
employees worldwide are always able to carry out their work in a manner that is in conformance
with applicable laws, regulations, voluntary commitments and our basic values, as set out in
binding form in our Integrity Code. Our activities focus on compliance with all applicable anti-corrup-
tion regulations, the maintenance and promotion of fair competition, adherence to legal and regu-
latory stipulations related to product development, respect for and preservation of human rights,
compliance with data protection laws, compliance with sanctions lists and the prevention of
money laundering.
Our Compliance Management System
Our Compliance Management System (CMS) consists of basic
principles and measures intended to ensure rule-based behavior
throughout the company. The CMS is based on national and
international standards and is applied on a global scale at all
Daimler AG units and majority holdings. The CMS consists of
seven elements that build on one another. 7 E.07
Our Compliance Management System (CMS) is designed to
help Daimler and its employees avoid inappropriate or illegal
behavior. The measures needed for this are defined by Group
Compliance and the Legal department in a process that also
takes the company's business requirements into account.
With regard to those cases that are closed “with merit," appro-
priate response measures are decided in line with the princi-
ples of proportionality and fairness. Such measures are only
taken if the investigation of the case in question leaves no
doubt of misconduct on the part of the accused individual(s).
Measures taken in 2017 included the issuing of verbal and writ-
ten warnings and final warnings, as well as seperation agree-
ments and extraordinary terminations. In some cases, there
were claims for damages, while in others those guilty of viola-
tions stepped down voluntarily.
E | NON-FINANCIAL REPORT | COMPLIANCE
230
IV. Compliance risks
V. Compliance
program
III. Compliance
organization
VI. Communication &
training
II. Compliance goals
VII. Monitoring &
improvement
- Plant tours, receptions,
I. Compliance values
E.07
A total of 95 new BPO cases were opened in 2017. During the
year under review, 96 cases were closed, 61 of them "with
merit," which means the initial suspicion was confirmed. Three
of these cases were categorized as "corruption."
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail. Such information can also be provided to the
BPO by calling an external toll-free hotline or by filling out a
special form. Reports can be submitted anonymously if local
laws permit this. In Germany, reports to the BPO can also be
submitted via a neutral intermediary, who in this case is an inde-
pendent external attorney. The information provided to the
BPO enables us to learn about potential risks and specific vio-
lations and thus prevent damage to the company and its repu-
tation. A globally valid corporate policy aims to ensure a fair
and transparent approach that takes into account the principle
of proportionality for the affected parties, while also giving
protection to whistleblowers. In an effort to increase trust in
our whistleblower system and make it even better known
within the Group, we have established a continuous communi-
cation process that includes the periodic provision of informa-
tion to employees about the type and number of reported vio-
lations, as well as the staging of informational and dialogue
events at our locations.
Our compliance program comprises all the principles and mea-
sures designed to reduce compliance risks and prevent violations
of regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance analyses, focus on the following aspects:
Compliance program
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of all
our business units every year. These analyses are based on
centrally compiled information on all business units and take
into account specific additional details in line with the given
risk assessment. The results of the analyses form the basis of
our risk management.
Compliance risks
Group Compliance and the Legal department play a major role
in ensuring that applicable regulations are adhered to through-
out the Group. Our compliance organization is structured in a
divisional and regional manner, while our Legal department is
organized regionally and along the value chain. These structures
enable us to provide optimal support and advice to our divisions.
A contact person is made available to each function, division
and region. In addition, a global network of local contact persons
make sure that our standards are met throughout the Group
and also help local management at selected Daimler facilities
and sales companies implement our compliance program.
Our compliance organization
Daimler Compliance Management System (CMS)
- Press and public relations work
- Blogs and social media
- Annual Daimler Sustainability Report and
regional sustainability reports
We seek to engage with all stakeholders in order to share views
and experiences and discuss controversial issues in a con-
structive manner. Our goal here in every situation is to achieve
a fruitful dialogue that benefits all parties.
Stakeholder dialogue
As a global automotive company, we operate in an environment that is subject to a variety of societal,
social and political influencing factors. In order to ensure we can continue operating effectively in
the future, we need to make our company's interests understandable to governments and society,
and also address the concerns of social groups. We therefore regularly share information with our
stakeholders and communicate our interests in an open and fair dialogue with governments and
political representatives.
Social Issues
227
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
The Board of Management receives a Health & Safety report at
regular intervals and is, among other things, given monthly
updates about the frequency of accidents. A Group crisis unit,
in which the Board of Management is also involved, enables
Daimler to respond quickly to various incidents such as serious
accidents and pandemics.
Every organizational unit within the Daimler Group has to
approve and pursue occupational safety objectives on a regu-
lar basis in accordance with our globally valid occupational
health and safety guidelines and occupational safety strategy
and the results of internal audits and reviews. The content
and criteria of our internal occupational safety management
system correspond to the standards of BS OHSAS 18001 and
are regularly updated.
Occupational safety is firmly embedded at all levels of Daimler
and is addressed by an extensive portfolio of measures for
the prevention of work accidents, work-related illnesses and
occupational diseases. Our Center of Competence Safety cre-
ates the associated Group-wide guidelines. We have standard-
ized key occupational health and safety processes in order to
enable the creation and advancement of integrated processes
and systems. Every manager at Daimler is responsible for
ensuring that all internal guidelines and legal requirements for
occupational health and safety are complied with.
We define stakeholders as individuals and organizations that
have legal, financial, ethical or ecological expectations regard-
ing Daimler. One of the criteria for identifying and weighting
stakeholders is the extent to which a person or group is affected
by our company's decisions or, conversely, can influence such
decisions. Our primary stakeholders are our employees, custom-
ers, creditors and shareholders, as well as our suppliers.
However, we also communicate regularly with civil groups such
as NGOs, as well as with analysts, professional associations,
trade unions, the media, scientists, politicians, municipalities and
residents and neighbors in the communities where we operate.
Company health promotion is aimed at motivating employees to
develop healthy lifestyles and reinforcing their sense of per-
sonal responsibility regarding health issues. This objective is
promoted worldwide with the help of campaigns, counseling
and qualification offerings, as well as therapeutic and rehabili-
tation measures. All of our plants in Germany have health cen-
ters on their premises or cooperate with health centers located
near the plants.
As part of Daimler AG's health management approach, we
develop and implement anticipatory solutions that range from
the job-related "Daimler GesundheitsCheck" and the ergo-
nomic design of workstations to the IT system that makes it
easier to permanently reintegrate employees suffering from
limitations imposed by their health.
We want to maintain our employees' health and physical well-
being for the long term. To this end, the Daimler Group has
uniform preventive healthcare standards in place worldwide.
Health management and safety at the
workplace
Our production locations are responsible for the qualification
of managers and specialized employees in manufacturing. The
Global Training unit safeguards and increases the skills of our
employees at the Mercedes-Benz sales organization by having
700 trainers instruct about 200,000 participants each year at
100 training locations in 80 countries around the world. A total
of 1.2 million training courses are held each year. The Daimler
Corporate Academy program helps the Group develop a new
management culture and world of work. In 2017, the Corporate
Academy enabled a total of 63,000 specialized employees and
managers from more than 50 locations to develop themselves
further personally and professionally. At Daimler AG, we spent
€121 million on the training and qualification of our employees
in the year under review (2016: €122 million). On average,
every employee spent three days on qualification courses in
2017 (2016: three days).
We provide our staff with training and continuing education
opportunities for their professional and personal development
throughout their careers. At least once a year, employees
discuss qualification topics with their managers and agree on
appropriate measures. The company agreement on qualifica-
tion regulates continuing education at Daimler AG. This agree-
ment also stipulates that employees can leave the company
for up to five years in order to learn additional skills and are
guaranteed that they can return. In 2017, around 370 employ-
ees availed themselves of this opportunity.
Qualification
The Board of Management member responsible for human
resources regularly receives reports about the measures and
results of our training activities and the development paths of
the people who enter the company via our CAReer program.
That's why we focus especially on the development of talented
young managers. We validate young employees' leadership
potential in our PV44 in-house assessment center, which uses
a uniform standard for all of our locations.
226 E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Our Health & Safety unit is responsible for occupational health
and safety, company health-promotion efforts, ergonomics,
counseling service and integration management. Health man-
agement and work safety are also governed by our risk man-
agement systems.
Compliance on the part of our business partners. We also
require our business partners to adhere to clear compliance
requirements because we regard our business partners' integ-
rity and behavior in conformity with regulations as an indis-
pensable precondition for trusting cooperation. In the selec-
tion of our direct business partners, we therefore ensure that
they comply with the law and observe ethical principles. In
financial year 2017, we began reviewing our standardized pro-
cess for examining all of our business partners (Business Part-
ner Due Diligence Process) and implementing ongoing monitor-
ing measures to increase process effectiveness and efficiency.
Back in 2016, we published a "Compliance Awareness Module"
that can be made available to our business partners on request
and is designed to increase their awareness of the latest com-
pliance requirements. We also reserve the right to terminate
cooperation with business partners who fail to comply with our
standards. For the expectations we place on our business part-
ners, see also
daimler.com/nh/ugb.
Dialogue at the Group level
In order to discuss local challenges and promote the implemen-
tation of sustainability standards around the world, we organize
Daimler Sustainability Dialogue events in other countries as
well. Such dialogue events have been held in China, Japan, the
United States and Argentina. During the year under review,
external experts and stakeholders also attended the fifth Daimler
Sustainability Dialogue in Beijing, where they spoke to Daimler
representatives about environmental protection, economics,
human resources, and integrity and legal affairs.
Information
Sample stakeholder dialogue instruments
E.06
As in previous years, Daimler AG made donations totaling
€320,000 to political parties in 2017. Of this total, the CDU
and SPD each received €100,000, and the FDP, CSU and
Bündnis 90/the Green Party €40,000 each. All donations to
political parties require a Board of Management resolution.
The Group-wide Lobbyists Register ensures that political lob-
bying is carried out in accordance with applicable regulations
and ethical standards. The register also helps us meet the reg-
istration requirements of public institutions.
Our central coordinating body for political dialogue at the
national and international levels is the External Affairs and Public
Policy department, which falls under the responsibility of the
Chairman of the Board of Management. This department oper-
ates a global network with offices in Berlin, Brussels, Beijing,
Singapore, Stuttgart and Washington and also has corporate
representations in other key markets. In order to ensure that
political lobbying activities are coordinated, and also to avoid
political target groups being addressed in an uncoordinated
manner, employees in the External Affairs and Public Policy
department must be registered.
The management guideline on Lobbying and Political Donations
governs, among other things, the use of lobbying instruments
and other methods for making our interests known in the political
realm. We represent the company's interests through dialogue
with decision-makers, including elected officials or politicians
who have been nominated for office, government officials, and
representatives of political interest groups, trade organizations,
business associations and government agencies. Participation
in specialized government committees and product sales to
ministries, government agencies and diplomatic missions are
part of our business operations and therefore not considered a
component of lobbying.
as vehicle safety, emission regulations, new mobility concepts
and electric mobility. Other important issues include trade policy,
location-specific matters, education and human resources policy.
The aim of our discussions with political decision-makers is
to achieve greater planning security and contribute our ideas
to processes of social change. We focus here on issues such
In order to maintain effective relationships with our stakehold-
ers, we have defined areas of responsibility, communication
channels and dialogue formats that are valid throughout the
Daimler Group. Our Corporate Responsibility Management
department is responsible for establishing an institutionalized
and proactive dialogue with our stakeholders. This dialogue
is then coordinated by our Corporate Sustainability Board and
the Corporate Sustainability Office. The central format for
our stakeholder dialogue is the Daimler Sustainability Dialogue,
which has been held annually in Stuttgart since 2008 and
brings various stakeholder groups together with representa-
tives of our Board of Management and executive management.
Each Sustainability Dialogue event focuses on sharing ideas
in a variety of themed workshops. The Daimler representatives
obtain feedback from the external participants and work
together with the stakeholders to achieve agreed-upon targets
throughout the course of the year. They then report at the
event in the following year on the progress made in the interim.
We held our tenth Daimler Sustainability Dialogue in Stuttgart
during the year under review.
Our principles for political dialogue and communicating our
interests form the basis of responsible lobbying in compliance
with all laws and regulations. This also includes the idea of
maintaining neutrality when dealing with political parties and
representatives of interest groups.
Political dialogue and representation of interests
In connection with specific occasions and projects, we address
questions, concerns, criticism and suggestions made by stake-
holders at our locations and conduct an open-ended dialogue
with them. We also stage proactive dialogue and information
events on current topics. The results of all of our dialogue mea-
sures are incorporated into decision-making and decision-
implementation processes at the company.
We also engage in a dialogue with the stakeholders at our loca-
tions. One example here is our planned Testing and Technology
Center in Immendingen on the Danube. We sought to engage in
a dialogue with the people in the region and address their con-
cerns from the very beginning. Our Daimler Forum Immendingen
also makes it possible for local residents to obtain information
on the status of the project at any given time.
Dialogue on the local and regional levels
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
228
We regularly receive inquiries from stakeholders concerning var-
ious sustainability-related topics. These inquiries are addressed
directly by specific specialist departments and units in a decen-
tralized manner. This approach brings our stakeholders closer
to our business operations and enables specialized knowledge
to be directly incorporated into the dialogue. Reports on stake-
holder inquiries are also presented in the meetings of our Sus-
tainability Board and Sustainability Office. These reports are
used to formulate key strategic policies for sustainability man-
agement. The Sustainability Board and the Sustainability Office
also serve as coordination centers for dialogue with our stake-
holders on interdisciplinary issues.
We also utilize online and print media, discussions with experts,
workshops, local and regional dialogue events and stakeholder
surveys for our dialogue with stakeholders. For example, as
part of the process for validating our new Sustainability Strat-
egy 2030, we once again conducted an extensive online survey
of our stakeholders in 2017. This survey basically confirmed
the prioritization of focus topics carried out within the frame-
work of our strategy process. Representatives from various
specialist units at Daimler-participate in associations, commit-
tees and sustainability initiatives such as the UN Global Com-
pact and econsense - Forum for Sustainable Development of
German Business. We also stage interdisciplinary conferences
as a way to conduct an active dialogue with stakeholders. One
example is the second specialist conference on ethics and the
legal situation with regard to autonomous driving, which was
held in October 2017.
The Advisory Board for Integrity and Corporate Responsi-
bility has been an important source of input for Daimler since
2012. The board's independent members from the fields of sci-
ence and business, as well as from civic organizations, utilize
an external point of view to offer critical and constructive sup-
port for the integrity and corporate responsibility process at
Daimler. Board members have extensive experience with issues
related to ethical conduct and transportation and environmen-
tal policy and contribute their different points of view to discus-
sions. The board holds regular meetings with members of the
Board of Management and other Daimler executives. During the
year under review, the Advisory Board also held a joint meet-
ing with the Board of Management and the Supervisory Board.
Meetings of the Advisory Board during the reporting year
focused on current topics and challenges, including ethical
aspects in connection with autonomous driving, methods
for measuring progress with regard to integrity, the current
debate on emissions, Daimler's approach to respecting human
rights, and the development of a management culture for the
digital age.
As a company with global operations, we have to deal with a
wide
range of political changes and decisions that impact our
business activities. In order to safeguard the future of the
Daimler Group, it is therefore important that we represent the
interests of our company in an open dialogue with govern-
ments, associations, organizations and various groups in society.
Conversely, such a dialogue also allows us to hear their con-
cerns and consider their interests.
Communication and training
Our compliance values and goals
Every employee with e-mail access who works at a Daimler-
controlled company can participate in a web-based and target
group-focused training program consisting of several modules
- a basic module, a management module (for managers) and
expert modules on antitrust law, data protection, procurement,
sales, and non-cash rewards for employees etc. This program
is being continuously expanded in line with the requirements of
specific target groups.
Our extensive training courses are based on our Integrity Code.
The integrated training program is defined on the basis of an
annual planning cycle that includes everything from a needs
analysis to the implementation of the program and a monitor-
ing process. Among other things, the program covers the top-
ics of integrity, compliance (including corruption prevention
and technical compliance), data protection and antitrust law.
Depending on the risk and the target group, we use classroom
training or digital learning techniques such as web-based train-
ing courses.
Our audit firm applies the legal provisions and professional
pronouncements for quality assurance, in particular the pro-
fessional code for German Public Auditors and Chartered
Accountants (in Germany) and the quality assurance standard
of the German Institute of Public Auditors (Institut der
Wirtschaftsprüfer, IDW) regarding quality assurance require-
ments in audit practice (IDW QS 1).
We are independent from the company in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and have
fulfilled our additional professional obligations in accordance
with these requirements.
Independence and quality assurance on the part of the
auditing firm
This responsibility of the legal representatives includes the selec-
tion and application of appropriate methods to prepare the
Non-Financial Report and the use of assumptions and estimates
for individual sustainability disclosures which are reasonable
under the given circumstances. Furthermore, the responsibility
includes designing, implementing and maintaining systems
and processes relevant for the preparation of the Non-Financial
Report in a way that is free of - intended or unintended -
material misstatements.
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and 315c
in conjunction with 289b to 289e HGB.
Management's Responsibility
We have performed an independent limited assurance engage-
ment on the separate combined Non-Financial Report of
Daimler AG and the Group as well as the by reference qualified
parts "Business model”, “Legal risks” and “Non-Financial
risks" according to §§ 315b and 315c in conjunction with 289b
to 289e (further "Report") of Daimler AG, Stuttgart (further
"Daimler") for the business year from January 1 to December
31, 2017.
To the Supervisory Board of Daimler AG,
Stuttgart
Our responsibility is to express a conclusion based on our
work performed of the Report within a limited assurance
engagement.
Concerning a Limited Assurance Engagement
on the Non-Financial Group Reporting
E❘ NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
234
We have introduced a risk-focused, system-based process at
relevant specialist departments and Daimler AG-controlled
holdings that ensures compliance with EU and US sanctions
and internal regulations. The Center of Competence CSL
(Checks against Sanctions Lists/Sanctions Compliance) pro-
vides implementation support to the relevant specialist depart-
ments and the Daimler AG-controlled holdings.
Sanctions compliance
Our Anti-Money Laundering Policy is designed to prevent money
laundering and the financing of terrorism in the trade with
goods and in activities carried out by Daimler Financial Services.
It is meant to proving that legislation in various countries is
complied with throughout the Group, and that internal regula-
tions that go beyond such legislation are complied with as well.
The Chief Compliance Officer serves as the anti-money laun-
dering officer of Daimler AG as a distributor of goods. An Anti-
Money Laundering Policy of competence supports the Chief
Compliance Officer in the management and coordination of
money laundering prevention measures. The Divisional Compli-
ance Office Financial Services coordinates and supports the
implementation of the Anti-Money Laundering Policy at Daimler
Financial Services.
Anti-money laundering compliance
The Corporate Data Protection department provides worldwide
support to all Group companies and helps ensure compliance
with data protection requirements. The Chief Officer Corporate
Data Protection is independent and reports directly to the Board
of Management member for Integrity and Legal Affairs. The
annual data protection report is submitted to the Supervisory
Board. Our Corporate Data Protection Policy creates Group-
wide standards for handling the data of employees, customers
and business partners, and also meets the requirements of
current European data protection laws. Preparations are now
under way for implementation of the new European data pro-
tection regulation that will go into effect in May 2018. The Cor-
porate Data Protection department is the point of contact for
data protection complaints. It also carries out checks and audits,
raises employees' awareness of data protection and advises
the relevant specialist departments. Product-related advice
focuses on data protection for connected vehicles and auto-
mated driving functions, as well as mobility services.
Data protection compliance
It is very important to Daimler to minimize all legal and economic
risks. Along with the issues described above, our Compliance
Management System therefore also addresses other issues, such
as compliance with our data protection policy and data protec-
tion legislation, the prevention of money laundering and com-
pliance with sanctions lists.
Independent Auditor's Report
Other compliance issues
We conducted our work in accordance with the International
Standard on Assurance En-gagements (ISAE) 3000 (Revised):
"Assurance Engagements other than Audits or Reviews of His-
torical Financial Information" published by IAASB. This Stan-
dard requires that we plan and perform the assurance engage-
ment to obtain limited assurance whether any matters have
come to our attention that cause us to believe that the Report
235
Mokler
Auditor
Dr. Thümler
Auditor
Wirtschaftsprüfungsgesellschaft
KPMG AG
Stuttgart, February 9, 2018
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Conditions of Assignment for Wirtschaftsprüfer and
Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedin-
gungen für Wirtschaftsprüfer und Wirtschaftsprüfungsgesell-
schaften) in the version dated January 1, 2017 https://
kpmg.de/bescheinigungen/lib/aab_englisch.pdf. By reading
and using the information contained in this report, each recipi-
ent confirms notice of provisions of the General Conditions of
Assignment (including the limitation of our liability for negli-
gence to EUR 4 Mio as stipulated in No. 9) and accepts the
validity of the attached General Conditions of Assignment with
respect to us.
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Limited liability
Based on the procedures performed and the evidence received
to obtain assurance, nothing has come to our attention that
causes us to believe that the Report of Daimler for the business
year from January 1 to December 31, 2017 is not prepared, in
all material respects, in accordance with §§ 315b and 315c in
conjunction with 289b to 289e HGB.
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Conclusion
- Assessment of local data collection and reporting processes
and reliability of reported data via a sampling survey in Stutt-
gart and Mannheim (both Germany).
- Analytical evaluation of data and trends of quantitative infor-
mation which are reported by all sites on group level
- Evaluation of selected internal and external documents
- Interviews with employees on group level who are responsi-
ble for the collection of the information to concepts, due dili-
gence processes, results and risks, the conduction of internal
controls and the information consolidation
- Assessment of the design and implementation of systems
and processes for the collection, processing and monitoring
of information on environmental, employee and social mat-
ters, human rights, corruption and bribery, including data
consolidation
- A risk assessment, including a media research, of relevant
information about the sustainability performance of Daimler
in the reporting period
- Interviews with employees on group level who are responsi-
ble for the materiality analysis to get an understanding of the
process for identifying material topics and respective report
boundaries for Daimler
Within the scope of our engagement, we performed amongst
others the following procedures:
for the period from January 1 2017 to December 31, 2017, has
not been prepared, in all material respects in accordance with
§§ 315b and 315c in conjunction with 289b to 289e HGB. We
do not, however, issue a separate conclusion for each sustain-
ability disclosure. In a limited assurance engagement the evi-
dence gathering procedures are more limited than in a reason-
able assurance engagement and therefore less assurance
is obtained than in a reasonable assurance engagement. The
choice of audit procedures is subject to the auditor's own
judgement.
- Assessment of the overall presentation of the information
The member of the Board of Management responsible for Integ-
rity and Legal Affairs is regularly informed on human rights
activities at regular intervals. This is supplemented by regular
reports submitted to the Board of Management and the Corpo-
rate Sustainability Board (CSB), as well as to the Procurement
Council (PC) within the framework of our sustainability strategy.
Practitioner's Responsibility
With the exception of industrial employees, employees are
automatically assigned mandatory modules relevant to their
role and function. This ensures that each employee is given
exactly the modules needed for his or her line of work. These
training modules are assigned when an employee is hired, pro-
moted, or transferred to a position that involves a heightened
risk. This approach ensures that all personnel changes are
properly addressed. In general, the program must be repeated
every three years.
By means of an advisory hotline set up by our Legal depart-
ment, as well as guidelines and practical support, we help our
employees around the world recognize situations that might
be critical from an antitrust perspective, and also act in com-
pliance with regulations in their daily work, especially when
dealing with competitors, cooperating with dealers and general
agencies around the world, and participating in business asso-
ciation committees. In addition to Daimler's Legal department
and its specialist advisers, the Group's global units and their
employees can turn to legal advisers in local at-risk units, who
also ensure that our standards are consistently upheld. We
also utilize a variety of communication measures to make our
employees aware of the importance of competition and anti-
trust laws and issues.
Our Group-wide Antitrust Compliance Program is oriented to
national and international standards. The program establishes
a binding, globally valid Daimler standard that defines how
matters of competition law are to be assessed. The Daimler
standard is based on the standards of the European antitrust
authorities and courts. The objective of the Daimler standard is
a uniform level of compliance and advice in all countries and
thus compliance with all local and international antitrust laws.
Antitrust compliance
Daimler places the same strict requirements on all of its activi-
ties around the world. In addition, we continuously improve our
methods and processes and use a variety of communication
measures to make our employees aware of the importance of
fighting corruption. Among other things, we released a film and
set up a separate website to address this issue during the year
under review. Further information on communication and train-
ing: page 230
The responsibility for implementing and monitoring measures
lies with each company's management, which cooperates
closely with the specialist units within Integrity and Legal Affairs.
Our anti-corruption compliance program is based on our com-
prehensive Compliance Management System. The program
is globally valid and primarily consists of the following compo-
nents: integrated risk assessment, risk-based measures for
avoiding corruption in all business activities (e.g. reviews of
business partners and transactions), and special care in con-
tacts with authorities and public officials. Our risk-minimization
measures focus in particular on sales companies in high-risk
countries and business relationships with wholesalers and gen-
eral agencies worldwide.
Daimler has committed itself to fighting corruption in its own
business activities. Along with complying with all applicable
laws, this also involves adhering to the rules of the OECD Con-
vention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997) and the United
Nations Convention against Corruption (2003). As a founding
member of the UN Global Compact and a part of its LEAD
Group, Daimler also seeks to ensure that not only the company
itself but also its business partners and customers act in
accordance with the principles of the UN Global Compact. The
most important goals here are to fight corruption around the
world in order to enable fair competition, eliminate the damage
corruption does to society and thus improve conditions for
everyone.
Anti-corruption compliance
Important non-financial reporting topics
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing, implementing and moni-
toring measures lies with each company's management. Man-
agers in turn cooperate closely with Integrity and Legal Affairs,
which also provides information on how to implement the mea-
sures effectively. The at-risk units in particular must regularly
systematically assess the adequacy and effectiveness of locally
implemented antitrust compliance measures. In addition, our
Legal and Corporate Audit departments conduct additional mon-
itoring activities at our company's units, as well as random
audits of at-risk units on the basis of a predefined audit plan
in order to ensure that antitrust laws are complied with and
internal processes are carried out properly. This helps us con-
tinuously improve the effectiveness of our Antitrust Compli-
ance Program and adapt it to global developments and new legal
requirements. The associated methods and processes are
being constantly refined and improved.
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers' independence from the business divisions. The
Chief Compliance Officer and Group General Counsel report
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Audit Committee of the Supervi-
sory Board. They also report four times each year to the Board
of Management of Daimler AG on matters such as the status of
the Compliance Management System and its further develop-
ment, the status of the whistleblower system and, if necessary,
on other topics. In addition, the Group General Counsel regu-
larly reports to the Antitrust Steering Committee and the
Group Risk Management Committee, to which the Chief Com-
pliance Officer also reports.
E | NON-FINANCIAL REPORT | COMPLIANCE 231
Every year, we review the effectiveness and efficiency of our
Compliance Management System and adapt it to global devel-
opments, changed risks and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process dura-
tion and quality. To determine these indicators, we check, among
other things, whether formal requirements are met and all
information is complete. In addition, we analyze the knowledge
gained through independent internal and external assessments
and participate in selected benchmark studies. These activities
are used to define any required improvement measures, which
are implemented by the responsible units and departments and
then monitored on a regular basis. The relevant management
bodies continuously receive reports on these monitoring
activities.
Monitoring and improvements
In addition to our internal training measures, our training pro-
gram also includes special courses on integrity and compli-
ance (including corruption prevention) that are offered to our
business partners in line with their specific risks. The courses
are offered as web-based training or classroom training ses-
sions. Daimler informs its business partners about the courses
and invites them to participate.
We have also further expanded our qualification and consulting
program for individuals who perform supervisory and manage-
ment functions. New members of executive bodies at companies
in which Daimler is the majority shareholder are given a com-
pact overview of key aspects of corporate governance via the
Corporate Governance Navigator, which is a target group-
focused program that supports them in their new role by pro-
viding information on their tasks and responsibilities, contact
partners, and units that deal with central issues addressed by
the Integrity and Legal Affairs division and adjacent units.
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the company
and also help our employees deal with specific issues that can
occur at work. The same is true of the new Daimler app for
integrity, compliance and legal affairs. The app can be down-
loaded and used by all employees with an iOS company owned
device. Among other things, the app enables mobile access to
information on corruption prevention and antitrust law.
Our integrated training program also includes target group-spe-
cific qualification measures that help staff at Group Compli-
ance and the Legal department address changes to regulations
and the legal framework. In addition, all new employees at both
departments attend a special practical seminar that offers a
comprehensive introduction to this topic.
A new mandatory version of the training program was rolled
out at the end of the year under review. The web-based train-
ing courses are supplemented by classroom training sessions
that are conducted by central or local trainers. We provide our
internal trainer network with modular training documents and
materials for the methodical implementation of the courses.
Such materials include a guideline for trainers and explanatory
videos that can be used in a target group-specific manner in
accordance with the risks associated with the functions of the
participants. A total of approximately 96,300 employees from
various hierarchy levels attended a classroom training course
or participated in web-based training courses in 2017.
Involvement at the executive level
Involvement of company management
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschaftsprü-
fungsgesellschaft audited the Compliance Management System
for antitrust law in accordance with the 980 standard of the
Institute of Public Auditors in Germany. This audit, which was
based on the principles of appropriateness and effective imple-
mentation, was successfully completed at the end of 2016.
Eliminating corruption, preventing cartel arrangements and
ensuring compliance with technical regulations - we introduced
our Compliance Management System in order to address
exactly these issues, which are extremely important to us. Our
Group-wide approach to respecting and upholding human
rights is also based on the Daimler CMS.
Since 2008 we have defined our expectations towards our
suppliers regarding sustainability in our Supplier Sustainability
Standards. Stipulations concerning working conditions and
human rights are key components of these. In order to ensure
that we can meet our human-rights due-diligence obligations
even more systematically, we are gradually introducing the HRRS
in our supply chain as well. To this end, clear risk classifica-
tions for Daimler supply chains were developed in line with
specific product areas (e.g. production materials or services)
in 2017. This also includes minerals commonly associated with
conflicts. We are utilizing our risk-based approach in order to
determine which supplier products and at which stages of our
extensive supply chain we should take targeted and appropri-
ate measures beyond our direct suppliers.
232
Identification of human rights risks in our
supply chain
In 2017 we used the experience gained with the pilot projects
to make adjustments to our previous two-step risk assessment
process. We also had external stakeholders verify the HRRS
in general and our risk assessment methodology in particular.
During this verification process, we were given valuable sug-
gestions for further adapting and expanding the system. We
are also currently developing an effective approach to program
implementation, monitoring and reporting.
The risk assessment is a two-step process. The first step
involves a categorization of the majority holdings on the basis
of predefined criteria, such as the risk situation in specific
countries and risks associated with specific business opera-
tions. In the second step, units that display a heightened
human rights risk are subject to an on-site assessment. To this
end, a modular approach was developed that makes it possible
to take into account fundamental human rights standards such
as those defined in the Universal Declaration of Human Rights
and the Core Labor Standards of the International Labor Orga-
nization (ILO).
Identification of human rights risks at Daimler majority
holdings
4. Periodic internal reporting on relevant issues, compliance
with external reporting requirements (reporting)
2. Definition, implementation and management of preventive
measures and countermeasures (program implementation)
3. Monitoring of the effectiveness of the measures, in particu-
lar at high-risk units and in supply chains that are at a high
risk of human rights violations (monitoring)
E | NON-FINANCIAL REPORT | COMPLIANCE 233
We continue to develop the HRRS and implement it step by
step. In the last two years, for example, we conducted two
HRRS pilot projects for Daimler majority-owned companies at
our international locations and, where necessary, initiated
improvements and also identified best practices for other loca-
tions. We were also able to further improve the system we
use to classify all Daimler majority holdings in terms of human
rights risks. We are working to firmly establish the HRRS for
Daimler majority-owned companies by 2020 at all our loca-
tions thereby supplementing the already existing decentralized
measures with a dedicatd system.
The protection of human rights is also a key component of our
Group-wide sustainability strategy. We are committed to
proving to the greatest extent possible that these elementary
rights are respected and upheld throughout our organization,
our partners and by our suppliers as well. The UN Guiding Prin-
ciples on Business and Human Rights and Germany's National
Action Plan on Business and Human Rights define the associ-
ated principles and due diligence obligations. It is our aim to
fulfill these obligations and we are therefore gradually expand-
ing our Human Rights Respect System (HRRS) as our Due Dili-
gence Framework, including regular consultations with exter-
nal stakeholders. As a proactive risk management system
for human rights, the HRRS is designed with the aim to identify
and avoid systemic risks and potential negative impacts of
our business activities on human rights early on. The HRRS
thus primarily protects third parties and is aimed at exerting
its effect along at our supply chain as well. Along with rele-
vant legislation, we also focus on multinational initiatives and
frameworks, in particular the UN Guiding Principles on Busi-
ness and Human Rights and the principles of the UN Global
Compact. In line with the expectations regarding a human rights
policy expressed in these documents, we have clearly defined
what we expect from all of our employees and business partners.
These expectations are formulated in our Integrity Code, our
Supplier Sustainability Standards and our supplier agreements.
The responsibility for human rights issues lies with the Integrity
and Legal Affairs division. The HRRS, which orientates itself
on our Group-wide Compliance Management System (CMS),
utilizes a risk-based approach in its focus on Daimler majority
holdings (including production locations) and our supply chain.
Also part of the HRRS is the consultation and exchange with rights
holders, for example our employees and their representatives.
Due diligence with the Human Rights Respect System
The HRRS is designed to identify and avoid systemic risks and
possible negative effects of our business activities on human
rights early on. It consists of four steps that are to be applied
to Daimler majority-owned companies and the supply chain:
1. Identification of potential human rights risks (risk assess-
ment)
Technical compliance
Human rights compliance
Technical compliance is managed Group-wide by an internal
team consisting of employees with expertise in various fields,
such as development, legal affairs, integrity and compliance.
The Board of Management members responsible for Integrity
and Legal Affairs and Group Research and Development
receive regular reports on the status of the technical Compli-
ance Management System.
Employees at Group Research and Development are supported
here by a network of disseminators - direct contact partners
for questions concerning technical compliance in their areas of
responsibility. This network of disseminators is being expanded
throughout the Group. We also employ various communication
measures to raise awareness among selected target groups.
Such measures include special dialogue events and guidelines
on integrity, compliance and legal considerations in the prod-
uct development process. For example, some 3,600 employees
at Mercedes-Benz Cars Development had taken part in class-
room training courses on technical compliance by the end of
2017.
Our technical Compliance Management System helps create
clarity with regard to compliance with technical regulations
and also offers guidance with regard to these regulations, which
can be very complicated. These questions are jointly examined
and answered in an interdisciplinary process that takes into
account legal and technical criteria. The tCMS addresses both
the complexity of regulatory requirements and ongoing devel-
opments in the automotive industry.
In order to address the specific risks associated with the prod-
uct development process, we combined all existing systems
and additional measures and processes at Mercedes-Benz Cars
into a technical Compliance Management System (tCMS) dur-
ing the reporting year. This system includes fundamental princi-
ples and elements intended to ensure ethical conduct and
work processes throughout the Group and compliance with
applicable laws. Measures are currently under way to intro-
duce the tCMS at Mercedes-Benz Vans, Daimler Trucks and
Daimler Buses.
-
As part of our efforts to continuously improve our products,
technologies and organization, we repeatedly examine new
development possibilities and also optimize our processes.
This includes adjusting and improving our existing Compliance
Management System – for example in terms of compliance
with technical regulations.
Daimler has been working on a company-specific approach to
human rights since 2008. In 2011 we began developing a sys-
tematic due diligence approach for our company, initially on
the basis of the Human Rights Compliance Assessments of the
Danish Institute for Human Rights. Since 2015, we have been
working with the Daimler Human Rights Respect System (HRRS),
which we developed ourselves with the specifsic requirements
of the company in mind.
E | NON-FINANCIAL REPORT | COMPLIANCE
-938
-1,010
Other comprehensive income/loss, net of taxes
-125
-127
Items that will not be reclassified to profit/loss
-125
-72
-127
نہ نہ نہ
267
-1,246
-1,246
-1,246
-490
-487
-3
Total comprehensive income
9,854
9,587
similar obligations (after tax)
-1,246
Actuarial gains/losses from pensions and
25
748
8,294
-12
-12
Items that may be reclassified to profit/loss
-883
-813
-70
756
759
-3
Actuarial gains/losses from pensions and
similar obligations (pre-tax)
-108
-106
-2
-1,994
-1,994
Taxes on actuarial gains/losses from pensions
and similar obligations
-19
-19
748
8,039
Dividends
1 See Note 20 for other information on comprehensive income/loss.
14
46,413
42,881
Marketable debt securities
15
990
1,100
Other financial assets
16
3,221
2,899
Deferred tax assets
Other assets
9
2,853
3,870
17
1,145
667
Total non-current assets
25
Receivables from financial services
4,098
4,818
13
The accompanying notes are an integral part of these consolidated financial statements.
240
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
F.03
In millions of euros
Note
At December 31,
2017
2016
Assets
255
10
12,098
Property, plant and equipment
11
27,981
26,381
Equipment on operating leases
12
47,714
46,942
Equity-method investments
13,735
Equity-method investments (after tax)
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the consolidated financial statements.
Issue and disposal of treasury shares
The accounting policies applied in the consolidated financial
statements comply with the IFRSS required to be applied in the
EU as of December 31, 2017.
Applied IFRSS
Basis of preparation
The Board of Management authorized the consolidated
financial statements for publication on February 9, 2018.
The consolidated financial statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The Company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 137, 70327 Stuttgart, Germany.
The consolidated financial statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315e of the German Commercial
Code (HGB) and comply with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
General information
1. Significant accounting policies
Notes to the Consolidated Financial Statements
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
244
Balance at December 31, 2017
65,314
1,291
64,023
9
1,208
Other
4
11
IFRSS issued, EU endorsed and initially adopted
in the reporting period
-7
IFRSS with mandatory initial application in the EU as of
January 1, 2017 had no significant impact on the consolidated
financial statements.
Application of IFRS 15 is mandatory at the latest for reporting
periods beginning on or after January 1, 2018. Early adoption
is permitted. Daimler will apply IFRS 15 for the first time for the
financial year beginning on January 1, 2018. Daimler plans for
retrospective first-time application so that the comparative
period is presented according to IFRS 15.
The consolidated statement of income is presented using the
cost-of-sales method.
Presentation in the consolidated statement of financial position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
Presentation
148,870
IFRSS issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on or
after January 1, 2021. Early adoption is permitted. Daimler
currently does not expect any material impacts on the Group's
profitability, liquidity and capital resources or financial
position due to the application of IFRS 17. Early adoption is not
currently planned.
The effects on the consolidated financial statements of the
application of IFRS 16 are currently being examined. Daimler will
probably apply IFRS 16 for the first time for the financial year
beginning on January 1, 2019. Daimler currently plans, in com-
pliance with the transition regulations, not to adjust the prior-
year figures and to present the accumulated transitional effects
in retained earnings.
IFRS 16 is to be applied to annual reporting periods beginning
on or after January 1, 2019; early adoption is permitted if
IFRS 15 is already applied.
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 and IFRIC 4 and other interpretations. IFRS 16 abolishes
for lessees the previous classification of leasing agreements
as either operating or finance leases. Instead, IFRS 16 intro-
duces a single lessee accounting model, requiring lessees to
recognize assets for the right to use as well as leasing
liabilities for leases with a term of more than twelve months.
This means that leases that were previously not reported
in the statement of financial position will have to be reported
in the future - very similar to the current accounting of
finance leases. Lease accounting for lessors has been taken
over almost identically from IAS 17 into IFRS 16.
recognition through other comprehensive income of certain
undesignated components of derivatives, which is to be
applied retrospectively to the comparative figures. Examination
of the effects on the consolidated financial statements of
applying IFRS 9 with regard to classification and measurement,
impairment and hedge accounting indicates that no material
impact on the Group's profitability, liquidity and capital resources
or financial position is to be expected from the transition
to IFRS 9.
Application of IFRS 9 is mandatory at the latest for reporting
periods beginning on or after January 1, 2018. Early adoption is
permitted. Daimler will apply IFRS 9 for the first time for the
financial year beginning on January 1, 2018. In compliance with
the transitional regulations, Daimler will not adjust the
prior-year figures and will present the accumulated transitional
effects in retained earnings. One exception to this is the
Additional effects will result from the possibility to exclude
certain components of derivatives from designation to a hedge
relationship and to defer the changes in these components'
fair value in other comprehensive income. This change applies
for example to the fair value of options whose changes in
carrying amounts are regularly remeasured through profit and
loss during the term of the options according to IAS 39. The
newly introduced possibility to designate risk components of
non-financial hedged items will facilitate hedge accounting
for commodities.
All equity instruments are to be measured at fair value, either
through profit or loss or at fair value through other comprehensive
income. If changes in carrying amounts are recognized in
other comprehensive income, they are no longer to be reclassified
to profit or loss when these instruments are sold. In addition,
some debt instruments will be measured at fair value through
profit or loss due to the new classification requirements of
IFRS 9. Possible effects can be in higher fluctuations in carrying
amounts and fluctuations in the income statement and/or
the statement of other comprehensive income.
Effects result above all from the fact that the new regulations for
recognizing impairments also include expected future losses,
whereas IAS 39 only requires the recognition of impairments that
have already occurred. Especially receivables from financial
services in the Daimler Financial Services segment are affected.
In July 2014, the IASB published IFRS 9 Financial Instruments,
which replaces IAS 39. IFRS 9 includes a uniform model for
classification and measurement methods (including impairments)
for financial instruments. It also includes regulations for
general hedge accounting. IFRS 9 requires additional notes
disclosure, resulting from the amendment to IFRS 7 Financial
Instruments - Disclosures.
The IASB published Amendments to IFRS 15 in April 2016.
These changes allow for transitional arrangements for modified
and fulfilled contracts, and clarify the identification of
performance obligations, principal-agent relationships, and
licenses. The application of these amendments is also not
expected to have any major impact on the Group's profitability,
liquidity and capital resources or financial position.
Group-wide investigation of the effects on the consolidated
financial statements of adopting IFRS 15 has been completed.
The application of IFRS 15 is not expected to have any major
impact on the Group's profitability, liquidity and capital resources
or financial position. The preliminary opening balance for
January 1, 2017 will show an increase in equity of approximately
€0.1 billion compared to the figure disclosed as of December 31,
2016. The option that contracts concluded before January 1, 2017
need not be reassessed under IFRS 15 has been made use of.
However, the determination of the effects for the comparative
period 2017 has not yet been finalized at the time of publication
of the consolidated financial statements.
245
|
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The statement of financial position will be affected in particular
by the separate presentation of "Contract liabilities."
Effects on Daimler may occur in particular with regard to the
date of recognition of sales incentives and also with regard to
the sale of vehicles for which the Group enters into a repurchase
obligation or grants a residual-value guarantee. The latter are
currently reported as operating leases. Under IFRS 15, such
vehicle sales can necessitate the reporting of a sale with the
right of return. Additionally, the accounting of contract manu-
facturing may lead to effects. Under a contract manufacturing
agreement Daimler sells assets to a third-party manufacturer
from which Daimler buys back the manufactured products
after completion of the commissioned work. If the sale of the
assets is not accompanied by the transfer of control to the
third-party manufacturer no revenue will be recognized under
IFRS 15.
IFRSS issued, EU endorsed and not yet adopted
In May 2014, the IASB published IFRS 15 Revenue from
Contracts with Customers. It replaces existing guidance
for revenue recognition, including IAS 18 Revenue, IAS 11
Construction Contracts and IFRIC 13 Customer Loyalty Pro-
grammes. The new standard lays down a comprehensive
framework for determining in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. As a result
of IFRS 15, new items are introduced in the statement of financial
position: "Contract assets” and “Contract liabilities." These
items can arise through advance payment or advance delivery
at the contract level. In addition, disclosure requirements
are extended.
-12
Changes in ownership interests in subsidiaries
24
-763
1
-764
-742
-247
-73
-174
25
2,487
Net profit
10,864
339
10,525
Balance at January 1, 2017
59,133
1,183
57,950
-16
-537
Balance at December 31, 2016
Changes in ownership interests in subsidiaries
1,745
29
25
267
5
Issue and disposal of treasury shares
42
42
42
Acquisition of treasury shares
-42
-42
-42
Capital increase/Issue of new shares
56
56
-
Changes in the consolidated group
-35
-35
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
-3,727
-250
-3,477
9,854
9,587
Capital increase/Issue of new shares
140,936
18
697
-1,994
8,526
1,121
2,145
36,991
11,917
3,070
Dividends
-1,069
Total comprehensive income/loss
Other comprehensive income/loss before taxes
Net profit
Balance at January 1, 2016
assets
available
for sale
Financial
Currency
translation
Retained
earnings²
reserves
capital
Deferred taxes on other comprehensive income
Capital
748
7,280
40,794
11,744
3,070
Balance at January 1, 2017
53
2,842
40,794
11,744
3,070
1
Balance at December 31, 2016
Other
-170
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Acquisition of treasury shares
Capital increase/Issue of new shares
-3,477
-1,068
697
-3
Share
In millions of euros
F.05
-201
-250
-3,477
-3,477
-35,463
-47,073
50,723
63,116
Cash provided by financing activities
114
Acquisition of non-controlling interests in subsidiaries
Proceeds from the issue of share capital
Dividends paid to non-controlling interests
Dividend paid to shareholders of Daimler AG
Repayment of long-term financing liabilities
Additions to long-term financing liabilities
503
751
Change in short-term financing liabilities
-14,666
Acquisition of treasury shares
65
-42
-38
Consolidated Statement of Changes in Equity1
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
242
The accompanying notes are an integral part of these consolidated financial statements.
1 See note 28 for other information on consolidated statements of cash flows.
10,981
12,072
Cash and cash equivalents at end of period
9,936
10,981
Cash and cash equivalents at beginning of period
1,045
1,091
Net increase in cash and cash equivalents
-9
-868
Effect of foreign exchange rate changes on cash and cash equivalents
12,009
13,129
-103
-10
2,842
5,394
36
53
10,525
-3,477
8,294
255
8,039
-12
1,142
254
1
253
-201
-496
-4
-740
-12
1,638
Balance at January 1, 2016
Net profit
8,784
258
8,526
54,624
-744
1,063
-3,678
35
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Other comprehensive income/loss before taxes
59,133
1,183
57,950
-16
-537
Other
-7
35
-4
-135
35
-170
38
38
38
-38
-38
-38
-3
53,561
-4
-1,679
1 See Note 20 for other information on changes in equity.
Balance at December 31, 2017
Other
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Acquisition of treasury shares
Capital increase/Issue of new shares
13
-2,596
3,070
10,400
-3,477
-35
Dividends
Total comprehensive income/loss
-3
-19
Deferred taxes on other comprehensive income
16
-2,596
-106
Other comprehensive income/loss before taxes
Changes in the consolidated group
5
-7
11,742
In millions of euros
Total
equity
Non-
controlling
interests
Equity
attributable to
shareholders
of Daimler AG
Treasury
share
equity method
accounted
for using the
financial
instruments
Derivative
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 243
investments
Share of
in profit/loss
may be reclassified
items that
Other reserves
The accompanying notes are an integral part of these consolidated financial statements.
2 Retained earnings also include items that will not be reclassified to the consolidated income statement.
Actuarial losses from pensions and similar obligations amount to €7,562 million net of tax in 2017 (2016: €7,437 million net of tax).
66
246
Acquisition of treasury shares
Net profit
7,266
-22
-9,518
Cash used for investing activities
Other
57,950
64,023
2,342
1,529
40,794
47,682
11,744
11,742
3,070
1,291
3,070
Total equity and liabilities
Total current liabilities
Other liabilities
Deferred income
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for income taxes
Trade payables
The accompanying notes are an integral part of these consolidated financial statements.
Total non-current liabilities
1,183
22
26
3,467
2,402
9
3,327
2,589
25
70,398
78,378
20
24
7,192
23
966
1,046
9,034
5,767
59,133
65,314
22
6,632
Other liabilities
Deferred income
Deferred tax liabilities
9,648
9,073
15
Total current assets
Other assets
Other financial assets
Marketable debt securities
10,981
12,072
16
Cash and cash equivalents
39,374
14
Receivables from financial services
10,614
11,990
19
Trade receivables
25,384
25,686
37,626
3,580
2,837
17
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for income taxes
Provisions for pensions and similar obligations
Total equity
Non-controlling interests
Equity attributable to shareholders of Daimler AG
Treasury shares
Other reserves
Retained earnings
Capital reserves
Share capital
Equity and liabilities
242,988
255,605
Total assets
102,052
106,735
4,962
4,960
5,802
5,559
27
10
-2,950
-3,879
Income taxes paid
103
843
Dividends received from equity-method investments
2,150
-48
-4,209
Cash used for/provided by operating activities
-3,681
-11,145
757
1,288
-962
-1,592
-1,272
-1,455
Other operating assets and liabilities
Vehicles on operating leases
-6,848
-1,652
3,711
Additions to property, plant and equipment
Proceeds from sales of marketable debt securities
-7,724
-6,729
Acquisition of marketable debt securities
79
418
Proceeds from disposals of shareholdings
-334
-1,146
Investments in shareholdings
-3,650
41
Acquisition of Athlon Car Lease International B.V.
366
812
Proceeds from disposals of property, plant and equipment and intangible assets
-2,944
-3,414
Additions to intangible assets
-5,889
-6,744
Receivables from financial services
Inventories
Trade payables
Inventories
2,672
27
3,444
3,668
26
9,542
8,933
25
47,288
2,438
48,746
9,427
10,052
23
751
560
11,567
99,398
103,186
12,474
15
24
87,105
84,457
255,605
Change in operating assets and liabilities
-46
-453
Gains (-)/losses (+) on disposals of assets
-1,064
-1,507
Other non-cash expense and income
5,478
5,676
12,574
14,301
Depreciation and amortization/impairments
Profit before income taxes
2016
2017
In millions of euros
F.04
Consolidated Statement of Cash Flows¹
241
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
242,988
Trade receivables
47,682
Intangible assets
283
Selling expenses
31,963
34,331
Gross profit
-121,298
-129,999
5
153,261
164,330
4
Cost of sales
Revenue
5
2016
Note
In millions of euros
F.01
Consolidated Statement of Income
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
238
312
39. Additional information
275
21. Share-based payment
312
38. Principal accountant fees
2017
273
-12,965
General administrative expenses
25
-12
-1,042
6
for profit attributable to shareholders of Daimler AG
Earnings per share (in euros)
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
Net profit
Income taxes
Profit before income taxes¹
Interest expense
Interest income
-12,226
Other financial income/expense, net
Other operating expense
2,350
2,824
6
Other operating income
-5,257
-5,938
5
Research and non-capitalized development costs
-3,419
-3,809
5
Profit/loss on equity-method investments, net
20. Equity
311
Supervisory Board
11. Property, plant and equipment
287
and other financial obligations
264
10. Intangible assets
30. Financial guarantees, contingent liabilities
261
9. Income taxes
286
29. Legal proceedings
260
8. Interest income and interest expense
265
285
260
7. Other financial income/expense, net
284
27. Other liabilities
260
6. Other operating income and expense
284
26. Deferred income
258
5. Functional costs
284
25. Other financial liabilities
28. Consolidated statement of cash flows
31. Financial instruments
290
12. Equipment on operating leases
272
19. Trade receivables
Board of Management and the
272
18. Inventories
37. Remuneration of the members of the
272
17. Other assets
310
36. Related party relationships
271
16. Other financial assets
309
35. Earnings per share
271
15. Marketable debt securities
309
34. Capital management
270
14. Receivables from financial services
305
33. Segment reporting
267
13. Equity-method investments
298
32. Management of financial risks
266
25
258
Unrealized gains/losses (pre-tax)
-2
The accompanying notes are an integral part of these consolidated financial statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
239
Consolidated Statement of Comprehensive
Income/Loss¹
F.02
In millions of euros
Daimler
Shareholders
Group
of Daimler AG
Non-
controlling
interests
Daimler
7.97
Shareholders
of Daimler AG
Non-
controlling
interests
2017
2017
2017
2016
2016
2016
Net profit
Currency translation adjustments
10,864
10,525
Group
339
9.84
9.84
1,498
502
7
-230
275
8
214
230
8
-582
-546
14,301
7.97
12,574
-3,437
-3,790
10,864
8,784
339
258
10,525
8,526
Basic
Diluted
1 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.
35
9
8,784
8,526
258
Unrealized gains/losses (pre-tax)
2,519
2,523
-4
123
126
-3
Reclassifications to profit and loss (pre-tax)
-36
-36
1,512
1,512
Derivative financial instruments
Taxes on unrealized gains/losses
-741
-742
1
-495
-496
1
Derivative financial instruments (after tax)
1,742
1,745
-3
1,140
1,142
and on reclassifications
-1,068
-1,068
1
-2,664
-2,596
-68
696
697
-1
Financial assets available-for-sale
Unrealized gains/losses (pre-tax)
18
17
1
-448
-448
Reclassifications to profit and loss (pre-tax)
-1
-1
-621
-621
Taxes on unrealized gains/losses
and on reclassifications
-3
-3
1
1
Financial assets available-for-sale (after tax)
14
13
Equity-method investments
4. Revenue
-1,298
24. Financing liabilities
239
of Comprehensive Income/Loss
Consolidated Statement of
238
Consolidated Statement of Income
F| Consolidated Financial Statements
Consolidated Statement of
237
The Consolidated Financial Statements presented as follows have
been prepared in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU).
They also comply with additional requirements set forth in
Section 315e (paragraph 1) of the German Commercial Code (HGB).
66
FINANCIAL BASIS!
WE HAVE A SOUND
"
13
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
Financial Position
S.MB 4713
Consolidated Statement of Cash Flows
256
240
282
23. Provisions for other risks
276
22. Pensions and similar obligations
244
2. Accounting estimates and management judgments 255
3. Consolidated Group
244
Statements
Notes to the Consolidated Financial
241
242
Changes in Equity
1. Significant accounting policies
Consolidated Statement of
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
This reversal is restricted to the impairment loss previously
recognized for the assets or disposal group concerned. The Group
generally discloses these assets or disposal groups separately
in the consolidated statement of financial position.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by the Management and which is valid at the date
when the impairment test is conducted. This planning is
based on expectations regarding future market share, the
general development of respective markets as well as the
products' profitability. The multi-year planning comprises a
planning horizon until 2025 and therefore mainly covers
the product life cycles of our automotive business. The rounded
risk-adjusted interest rates used to discount cash flows, which
are calculated for each cash-generating unit, are unchanged
from the previous year at 8% after taxes for the cash-gener-
ating units of the automotive business. For the cash-generating
unit Daimler Financial Services Classic, a risk-adjusted interest
rate of 9% after taxes is applied (unchanged from the previous
year); for Daimler Financial Services Mobility, the risk-adjusted
interest rate is 15% after taxes (2016: 14%). Whereas the discount
rate for the cash-generating unit Daimler Financial Services
Classic represents the cost of equity, the risk-adjusted interest
rate for the other cash-generating units is based on the
weighted average cost of capital (WACC). These are calculated
based on the capital asset pricing model (CAPM) taking into
account current market expectations. In calculating the risk-
adjusted interest rate for impairment test purposes, specific
peer group information is used for beta factors, capital-structure
data and cost of debt. Periods not covered by the forecast are
taken into account by recognizing a residual value (terminal value),
which generally does not consider any growth rates. In addi-
tion, several sensitivity analyses are conducted. These show
that generally even in the case of more unfavorable premises
for main influencing factors with respect to the original planning,
no need for impairment exists. If value in use is lower than the
carrying amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
The recoverable amount is the higher of fair value less costs of
disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments. At Daimler
Financial Services, impairment tests are carried out below the
segment level. There is a differentiation between the two
cash-generating units Daimler Financial Services Classic
(typical financial services business) and Daimler Financial
Services Mobility (innovative mobility services).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Impairment of non-current non-financial assets
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is
an indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset gener-
ates cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). In
addition, goodwill and other intangible assets with indefinite
useful lives are tested annually for impairment; this takes
place at the level of the cash-generating units. If the carrying
amount of an asset or of a cash-generating unit exceeds the
recoverable amount, an impairment loss is recognized for the
difference.
Inventories
Gains or losses (to be eliminated) from transactions with com-
panies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments' carrying amounts.
251
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable
value is the estimated selling price less estimated costs of
completion and estimated costs to sell. The acquisition or
manufacturing costs of inventories are generally based on the
specific identification method and include costs incurred in
acquiring the inventories and bringing them to their existing
location and condition. Costs for large numbers of inventories
that are interchangeable are allocated under the average cost
formula. In the case of manufactured inventories and work in
progress, acquisition or manufacturing cost also includes
production overheads based on normal capacity.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include those finan-
cial assets designated as held for trading.
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments in the form of financial
assets and financial liabilities are generally presented sepa-
rately. Financial instruments are recognized as soon as Daimler
becomes a party to the contractual provisions of the financial
instrument. In the case of purchases or sales of financial assets
through the regular market, Daimler uses the transaction date
as the date of initial recognition or derecognition.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable to
acquisition or issuance are considered by determining the
carrying amount if the financial instruments are not measured
at fair value through profit or loss.
252
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial assets
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash on
hand, derivative financial assets and marketable securities and
financial investments.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instru-
ments in hedge accounting, as well as shares and marketable
debt securities acquired for the purpose of selling in the near
term are classified as held for trading. Gains or losses on
these financial assets are recognized in profit or loss.
Loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that
are not quoted in an active market, such as receivables from
financial services or trade receivables. After initial recognition,
loans and receivables are subsequently carried at amortized
cost using the effective interest method less any impairment
losses. Gains and losses are recognized in the statement of
income when the loans and receivables are impaired or derec-
ognized. Interest effects on the application of the effective
interest method are also recognized in profit or loss.
Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial paper.
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals
of equity-method investments. If such indications exist, the Group
determines the impairment loss or reversal to be recognized.
If the carrying amount exceeds the recoverable amount of an
investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater of
fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an impair-
ment reversal. If such an assessment is made, the recoverable
amount is remeasured. The amount of an impairment reversal
is limited to the amount by which an asset has been impaired.
Financial instruments
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company
or joint venture is determined and recognized as investor
level goodwill. The goodwill is included in the carrying amount
of the equity-method investment. With step acquisition of
an equity interest by which significant influence or joint control
is achieved for the first time, the investment is generally
accounted for on the basis of IFRS 3 Business Combinations.
This means that the previously held equity interest is
remeasured on the date of acquisition; any resulting gain or
loss is recognized through profit and loss. If an equity
interest in an existing associated company is increased without
change in significant influence, goodwill is determined only
for the additionally acquired interest; the previous investment
is not remeasured at fair value.
Leasing includes all arrangements that transfer the right to use
a specified asset for a stated period of time in return for a
payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of
property, plant and equipment and a lessor of its products.
It is evaluated on the basis of the risks and rewards of a
leased asset whether the ownership of the leased asset is
attributed to the lessee (finance lease) or to the lessor
(operating lease).
In the case of finance leases, the Group presents the receivables
under receivables from financial services in an amount
corresponding to the net investment of the lease agreements.
The net investment of a lease agreement is the gross invest-
ment (future minimum lease payments and non-guaranteed
residual value) discounted at the rate upon which the lease
agreement is based.
For acquisitions, goodwill represents the excess of the con-
sideration transferred over the fair values assigned to the iden-
tifiable assets proportionally acquired and liabilities assumed.
Goodwill is accounted for at the subsidiaries in the functional
currency of those subsidiaries.
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
Property, plant and equipment
Property, plant and equipment are measured at acquisition
or manufacturing costs less accumulated depreciation.
If necessary, accumulated impairment losses are recognized.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 F.07.
Leasing
After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income using
the effective interest method. Dividends are recognized in profit
or loss when the right of payment has been established.
Daimler as lessee
In the case of an operating lease, the lease payments or
rental payments are expensed on a straight-line basis in the
consolidated statement of income.
Equity-method investments
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of the
minimum lease payments and the fair value of the leased object,
and in the following periods less accumulated depreciation
and other accumulated impairment losses. Depreciation is on
a straight-line basis; residual values of the assets are given
due consideration. Payment obligations resulting from future
lease payments are discounted and disclosed under financing
liabilities.
Useful lives of property, plant and equipment
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
10 to 50 years
6 to 25 years
3 to 30 years
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sale and lease back
The same accounting principles apply to assets if Daimler sells
such assets and leases them back from the buyer.
Daimler as lessor
Operating leases relate to vehicles that the Group produces
itself and leases to third parties or to vehicles that the Group
sells and grants a buy-back or residual-value guarantee.
These vehicles are capitalized at (depreciated) cost of production
under leased equipment in the vehicle segments and are
depreciated over the contract term on a straight-line basis with
consideration of the expected residual values. Changes in
the expected residual values lead either to prospective adjust-
ments of the scheduled depreciation or to an impairment
loss if necessary.
Operating leases also relate to vehicles, primarily Group
products that Daimler Financial Services acquires from
non-Group dealers or other third parties and leases to end
customers. These vehicles are presented at (amortized)
cost of acquisition under leased equipment in the Daimler
Financial Services segment. If these vehicles are Group
products and are subsidized, the subsidies are deducted
from the cost of acquisition. After revenue is received
from the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent
resale on the basis of the separate leasing contracts. The
revenue received from the sale of Group products to the
dealers is estimated by the Group as being of the magnitude
of the respective addition to leased equipment at Daimler
Financial Services. In 2017, additions to leased equipment from
these vehicles at Daimler Financial Services amounted to
approximately €13 billion (2016: approximately €13 billion).
F.07
Cash and cash equivalents. Cash and cash equivalents consist
primarily of cash on hand, checks and demand deposits at
banks, as well as debt instruments and certificates of deposits
with a remaining term when acquired of up to three months,
which are not subject to any material value fluctuations. Cash
and cash equivalents correspond with the classification in
the consolidated statement of cash flows.
If the requirements for hedge accounting set out in IAS 39 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair
value of a recognized asset or liability or an unrecognized firm
commitment is hedged. In a cash flow hedge, the variability
of cash flows to be received or paid from expected transactions
related to a recognized asset or liability or a highly probable
forecast transaction are hedged. The documentation of the
hedging relationship includes the objectives and strategy of
risk management, the type of hedging relationship, the nature
of the risk being hedged, the identification of the hedging
instrument and the hedged item, as well as a description of
the method used to assess hedge effectiveness. Hedging
transactions are expected to be highly effective in achieving
offsetting risks from changes in fair value or cash flows and
are regularly assessed to determine that they have actually been
highly effective throughout the financial reporting periods for
which they are designated.
At each reporting date, the carrying amounts of financial
assets other than those to be measured at fair value through
profit or loss are assessed to determine whether there is
objective evidence of impairment. Objective evidence may
exist for example if a debtor is facing serious financial
difficulties or there is a substantial change in the debtor's
technological, economic, legal or market environment. For
quoted equity instruments, a significant or prolonged decline
in fair value is additional objective evidence of possible
impairment. Daimler has defined criteria for the significance
and duration of a decline in fair value. A decline in fair value
is deemed significant if it exceeds 20% of the carrying amount
of the investment; a decline is deemed prolonged if the
carrying amount exceeds the fair value for a period longer
than nine months.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based
on historical experience.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group
has a detailed formal plan that has either commenced
implementation or been announced.
Share-based payment
Share-based payment comprises cash-settled liability awards.
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions.
The profit or loss of the period equals the addition to and/or
the reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
Presentation in the consolidated statement of cash flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activities.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
2. Accounting estimates and management
judgements
In the consolidated financial statements, to a certain degree,
estimates and management judgements have to be made
which can affect the amounts and reporting of assets and
liabilities, the reporting of contingent assets and liabilities on
the balance sheet date, and the amounts of income and
expense reported for the period. The major items affected
by such estimates and management judgements are described
as follows. Actual amounts may differ from the estimates.
Changes in the estimates and management judgements can
have a material impact on the consolidated financial statements.
Recoverable amounts of cash-generating units and
equity-method investments
A provision is recognized when a liability to third parties
has been incurred, an outflow of resources is probable and
the amount of the obligation can be reasonably estimated.
The amount recognized as a provision represents the best
estimate of the obligation at the reporting date. Provisions
with an original maturity of more than one year are discounted
to the present value of the expenditures expected to settle
the obligation at the end of the reporting period. If the criteria
of the regulations on recognition and measurement of provi-
sions are not fulfilled and the possibility of a cash outflow upon
settlement is not unlikely, the item is to be presented as a
contingent liability, insofar as it is adequately measurable.
Provisions and contingent liabilities are regularly reviewed
and adjusted as further information becomes available or
circumstances change.
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods.
The estimates include assumptions regarding future market
share and the growth of the respective markets as well as
regarding the products' profitability. On the basis of the impair-
ment tests carried out in 2017, the recoverable amounts are
larger than the net assets of the Group's cash-generating units,
in most cases substantially larger.
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values
of its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases,
which constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions are
made regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing results
and future vehicle model changes. Those assumptions are
determined either by qualified estimates or by publications
provided by expert third parties; qualified estimates are based,
as far as publicly available, on external data with consideration
of internally available additional information such as historical
experience of price developments and recent sale prices.
The residual values thus determined serve as a basis for depre-
ciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to impairment. If deprecia-
tion is prospectively adjusted, changes in estimates of residual
values do not have a direct effect but are equally distributed
over the remaining periods of the lease contracts.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consider-
ation in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and adequacy
of collaterals. Changes in economic conditions can lead to
changes in our customers' creditworthiness and to changes in
used-vehicle prices, which would have a direct effect on the
market values of the vehicles assigned as collateral. Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also Notes 14 and 32 for further
information.
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
The Group provides various types of product warranties depend-
ing on the type of product and market conditions. Provisions
for product warranties are generally recognized when vehicles
are sold or when new warranty programs are initiated. Based
on historical warranty claim experience, assumptions have to
be made on the type and extent of future warranty claims
and customer goodwill, as well as on possible recall campaigns
for each model series. These assessments are based on
experience of the frequency and extent of vehicle faults and
defects in the past. In addition, the estimates also include
assumptions on the amounts of potential repair costs per
vehicle and the effects of possible time or mileage limits. The
provisions are regularly adjusted to reflect new information.
Further information on provisions for other risks is provided in
Note 23.
Legal proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on
a wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date as
a result of an event in the past, and whether a future cash out-
flow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings, also
with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or potential
litigation will have to be adjusted due to future developments.
Changes in estimates and premises can have a material effect
on the Group's future profitability. It is also possible that
provisions accrued for some legal proceedings may turn out to
be insufficient once such proceedings have ended. Daimler
may also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on Daimler's
operating results and cash flows for a particular reporting
period, Daimler believes that it should not materially affect
the Group's financial position.
Further information on liability and litigation risks is provided
in Note 29.
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity method
financial investment. The determination of the recoverable
amount is based on assumptions regarding future business
developments for the determination of the expected future
cash flows of that financial investment. See Note 13 for the
presentation of carrying amounts and fair values of equity-
method financial investments in listed companies.
Provisions for other risks
Gains or losses on the curtailment or settlement of a defined
benefit plan are recognized in profit or loss when the curtail-
ment or settlement occurs.
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
- with maturities and currencies matching the pension
payments by reference to market yields at the end of the
reporting period on high-quality corporate bonds in the
respective markets. For very long maturities, there are no
high-quality corporate bonds available as a benchmark.
The respective discount factors are estimated by extrapolating
current market rates along the yield curve.
Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted at
the original effective interest rate of the financial asset. The
amount of the impairment loss is recognized in profit or loss.
If, in a subsequent reporting period, the amount of the impairment
loss decreases and the decrease can be attributed objectively
to an event occurring after the impairment was recognized, the
impairment loss recorded in prior periods is reversed and
recognized in profit or loss.
In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance lease
receivables and trade receivables) is recorded using allowance
accounts. The decision to account for credit risks using an
allowance account or by directly reducing the receivable depends
on the estimated probability of the loss of receivables.
Available-for-sale financial assets. If an available-for-sale financial
asset is impaired, the difference between its cost (net of any
principal payment and amortization) and its current fair value
(less any impairment loss previously recognized in the
statement of income) is reclassified from other comprehensive
income/loss to the statement of income. Reversals with
respect to equity instruments classified as available for sale
are recognized in other comprehensive income/loss.
Reversals of impairment losses on debt instruments are recog-
nized through the statement of income if the increase in fair
value of the instrument can be objectively attributed to an event
occurring after the impairment losses were recognized in the
consolidated statement of income.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net
amount is presented in the consolidated statement of financial
position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Financial liabilities
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities
and other liabilities.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest method.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting, are classified
as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks.
Embedded derivatives are separated from the host contract,
which is not measured at fair value through profit or loss,
if an analysis shows that the economic characteristics and risks
of embedded derivatives are not closely related to those of
the host contract.
Derivative financial instruments are measured at fair value upon
initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive or
negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models.
Derivatives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
Goodwill
Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other com-
prehensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged item
and the derivative are recognized in profit or loss. For cash
flow hedges, fair value changes in the effective portion of the
hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the state-
ment of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
254
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pensions and similar obligations
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valuation
of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the consolidated statement of
financial position or on the consolidated statement of com-
prehensive income/loss.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement
of the gross pension obligation. The resulting net interest
expense or income is recognized in profit and loss under
interest expense or interest income in the consolidated state-
ment of income. The other expenses resulting from pension
obligations and other post-employment benefit obligations
(medical care), which mainly result from entitlements acquired
during the year under review, are taken into consideration in
the functional costs in the consolidated statement of income.
-
Impairment of financial assets
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized
on a straight-line basis over the expected product life cycle
(a maximum of ten years). Amortization of capitalized
development costs is an element of manufacturing costs and
is allocated to those vehicles and components by which
they were generated and is included in cost of sales when the
inventory (vehicles) is sold.
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
Intangible assets with indefinite useful lives are reviewed annually
to determine whether indefinite-life assessment continues to
be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
The Group offers extended, separately priced extended
warranties for certain products. Revenue from these contracts
is deferred and recognized over the contract period in pro-
portion 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 the
expected costs for services under the contract exceeds
unearned revenue.
For multiple-element arrangements, such as when vehicles are
sold with free or reduced-in-price maintenance programs or
with free online services, the Group allocates revenue to the
various elements based on their estimated fair values.
Research and non-capitalized development costs
Expenditure for research and development that does not meet
the conditions for capitalization according to IAS 38 Intangible
Assets is expensed as incurred.
Borrowing costs
Borrowing costs are expensed as incurred unless they
are directly attributable to the acquisition, construction
or production of a qualifying asset and are therefore
part of the cost of that asset. Depreciation of the capitalized
borrowing costs is presented within cost of sales.
Government grants
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in
earnings over the life of a depreciable asset as a reduced
depreciation expense. Government grants which compensate
the Group for expenses are recognized as other operating
income in the same period as the expenses themselves.
F.06
Exchange rates
2017
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services business
at Daimler Financial Services. The revenue from the rental
and leasing business results from operating leases and is recog-
nized on a straight-line basis over the periods of the contracts.
In addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles. Revenue
from receivables from financial services is recognized using
the effective interest method. When loans are issued below
market rates, related receivables are recognized at present
value and revenue is reduced for the interest incentive granted.
If subsidized leasing fees are agreed upon in connection with
finance leases, revenue from the sale of a vehicle is reduced by
the amount of the interest incentive granted.
2016
GBP
JPY
CNY
RUB
USD
1 € =
1€ =
1 € =
1€ =
1 € =
USD
1€ =
GBP
1 € =
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.
Revenue recognition
246
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement
The consolidated financial statements have been prepared on
the historical-cost basis with the exception of certain items
such as available-for-sale financial assets, derivative financial
instruments, hedged items, and pensions and similar obliga-
tions. The measurement models applied to those exceptions
are described below.
Principles of consolidation
The consolidated financial statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities which are directly
or indirectly controlled by Daimler AG. Control exists if the parent
company has the power of decision over a subsidiary based
on voting rights or other rights, if it participates in positive and
negative variable returns from a subsidiary, and if it can affect
these returns by its power of decision.
Structured entities which are controlled also have to be consoli-
dated. Accordingly, the assets and liabilities remain in the
consolidated statement of financial position. Structured entities
are entities which have been designed so that voting or similar
rights are not relevant in deciding who controls the entity. This
is the case for example if voting rights relate to administrative
tasks only and the relevant activities are directed by means of
contractual arrangements.
The financial statements of consolidated subsidiaries which are
included in the consolidated financial statements are generally
prepared as of the reporting date of the consolidated financial
statements. The financial statements of Daimler AG and its
subsidiaries included in the consolidated financial statements
are prepared using uniform recognition and measurement
principles. All intercompany assets and liabilities, equity, income
and expenses as well as cash flows from transactions
between consolidated entities are entirely eliminated in the
course of the consolidation process.
Business combinations are accounted for using the purchase
method.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without loss of
control are accounted for as an equity transaction between
Revenue from sales of vehicles, service parts and other related
products is recognized when the risks and rewards of owner-
ship of the goods are transferred to the customer, the amount
of revenue can be estimated reliably and collectability is rea-
sonably assured. Revenue is recognized net of sales reductions
such as cash discounts and sales incentives granted.
owners.
An associated company is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee. Associated companies are generally accounted for
using the equity method.
For entities over which Daimler has joint control together with
a partner (joint arrangements), it is necessary to differentiate
whether a joint operation or a joint venture exists. In a joint ven-
ture, the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. For joint ven-
tures, the equity method has to be applied. A joint operation
exists when the jointly controlling parties have direct rights to
the assets and obligations for the liabilities. In this case,
the prorated assets and liabilities and the prorated income and
expenses are generally to be recognized (proportionate
consolidation). Joint operations that have no significant impact
on the consolidated financial statements are generally
accounted for using the equity method.
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's consolidated
financial statements with a one to three-month time lag.
Significant events or transactions are accounted for without
a time lag, however (see also Note 13).
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group
and the fair presentation of financial position, liquidity and
capital resources, and profitability are generally measured
at amortized cost in the consolidated financial statements.
Foreign currency translation
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated using period-end exchange
rates; gains and losses from this measurement are recognized
in profit and loss (except for gains and losses resulting from
the translation of available-for-sale equity instruments, which
are recognized in other comprehensive income/loss).
Assets and liabilities of foreign companies for which the functional
currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.
The exchange rates of the US dollar, the British pound, the
Japanese yen, the Chinese renminbi and the Russian ruble -
the most significant foreign currencies for Daimler - were as
shown in table 71 F.06.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
247
Accounting policies
Investments in associated companies, joint ventures or
joint operations
JPY
1 € =
CNY
1 € =
RUB
1.0789
0.7704 127.0000
0.7868 121.9500
0.8497 114.2900
0.8691 117.9200
7.2101 82.4506
7.3788 74.3348
7.4431 72.1154
7.3691 67.9975
248
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
This item includes all income and expenses in connection with
investments accounted for using the equity method. In addition
to the prorated profits and losses from financial investments,
it also includes profits and losses resulting from the sale of equity
interests or the remeasurement of equity interests following
a loss of significant influence. Daimler's share of dilution gains
and losses occurring if the Group or other owners do not
participate in capital increases of companies in which shares
are held and accounted for using the equity method are
also included in profit/loss from equity-method investments.
This item also includes losses on the impairment of an
investment's carrying amount and/or gains on the reversal
of such impairments.
Other financial income/expense, net
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of interest
on provisions for other risks is recorded in this line item.
Interest income and interest expense
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents as
well as interest expense from liabilities. Furthermore, interest
and changes in fair values related to interest rate hedging
activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The inter-
est components of defined benefit pension obligations and
other similar obligations as well as of the plan assets available
to cover these obligations are also presented in this line item.
7.7899 68.8150
For the segment Daimler Financial Services interest income
and expense and gains or losses from derivative financial
instruments from financial services business are disclosed
under revenue and cost of sales respectively.
Income taxes are comprised of current income taxes and
deferred taxes.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period.
In addition, current income taxes presented for the period
include adjustments for uncertain tax payments or tax
refunds for periods not yet finally assessed, including interest
expense and penalties on the underpayment of taxes.
For the case that amounts declared as expenses in the tax
returns might not be recognized (uncertain tax positions),
a provision for income taxes is recognized. The amount is based
on the best possible assessment of the expected tax payment.
Tax refund claims from uncertain tax positions are recognized
when it is predominantly likely and thus reasonably expected
that they can be realized. Only in the case of tax loss carry-
forwards or unused tax credits, no provision for taxes or tax claim
is recognized for these uncertain tax positions. Instead, the
deferred tax assets for the unused tax loss carryforwards or tax
credits are to be adjusted.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.
Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the
financial reporting of assets and liabilities including differences
from consolidation, on unused tax loss carryforwards and
unused tax credits. Measurement is based on the tax rates
expected to be effective in the period in which an asset is
recognized or a liability is settled. For this purpose, the tax
rates and tax rules are used which have been enacted at the
reporting date or are soon to be enacted. Daimler recognizes
a valuation allowance for deferred tax assets when it is unlikely
that a corresponding amount of future taxable profit will be
available against which the deductible temporary differences,
tax loss carryforwards and tax credits can be utilized. Deferred
tax liabilities for taxable temporary differences in connection
with investments in subsidiaries, branches, associates and
interests in joint arrangements are not recognized if the Group
is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
249
Earnings per share
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years 2017 and 2016 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Intangible assets
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Income taxes
0.8875 132.9100
1.1776
Fourth quarter
1€ =
Average exchange
rate on December 31
1.1993
0.8872 135.0100
7.8044 69.3920
1.0541
0.8562
123.4000
7.3202
64.3000
Average exchange rates
during the respective period
First quarter
1.0648
Second quarter
1.1021
Third quarter
1.1746
0.8601 121.0100
0.8611 122.5800
0.8978 130.3500
7.3353 62.5218
7.5597 63.1033
7.8340 69.2851
1.1020
1.1292
1.1166
Intangible assets other than development costs with finite useful
lives are generally amortized on a straight-line basis over
their useful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed at
least at each year-end. Changes in expected useful lives are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is recorded
in functional costs.
250
Profit/loss from equity-method investments
17
-41
-196
Other operating income
F.13
Average number of employees
2017
2016
Mercedes-Benz Cars¹
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Other
143,586
140,591
80,155
81,810
24,823
23,763
17,978
17,937
12,621
10,880
10,367
94
133
-45
Other operating expenses
Table
F.11 shows the effects of the optimization programs
on the key figures of the segments.
Beside gains and/or losses from the sale of selected operations
of the Group's current sales network, the EBIT effects listed
in table F.11 primarily relate to personnel measures and are
included in the line items within the consolidated statement
of income as shown in table 7 F.12.
Cash effects resulting from the optimization programs are
expected in the years 2018 and 2019.
Personnel expenses and average number of employees
Personnel expenses included in the consolidated statement of
income amounted to €22,186 million in 2017 (2016: €21,141
million). The personnel expenses are composed of wages and
salaries in the amount of €18,188 million (2016: €17,150 million),
social contributions in the amount of €3,292 million (2016:
€3,242 million) and expenses from pension obligations in the
amount of €706 million (2016: €749 million). The average
numbers of people employed are shown in table 7 F.13.
Information on the total remuneration of the current and
former members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.
F.12
Income and expenses associated with optimization programs
In millions of euros
2017
2016
9,976
Cost of sales
-127
Selling expenses
-16
-108
General administrative expenses
-27
-8
Research and non-capitalized
development costs
-38
-2
-93
In the year 2016, Mercedes-Benz Vans initiated a socially
acceptable voluntary severance program for the Düsseldorf
plant. In 2016, the program led to an expense of €38 million.
In the reporting period 2017, this resulted in only a small
amount of expenses.
289,530
1 Including proportionally 1,203 employees from proportionately
consolidated companies in 2017 (2016: 337).
741
743
2,824
2,350
F.15
Other operating expense
In millions of euros
2017
2016
Losses on sales of property,
plant and equipment
- 117
-111
Expenses associated with
optimization programs
Other miscellaneous expenses
-925
-1,042
-45
-1,142
- 1,298
F.16
Other financial income/expense, net
In millions of euros
Income and expense from compounding
and effects from changes in discount rates
of provisions for other risks
Other miscellaneous income
94
133
programs
259
260
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.14
Other operating income
In millions of euros
2017
2016
Income from costs recharged
to third parties
1,309
284,957
1,219
107
144
Gains on sales of property,
plant and equipment
385
24
Rental income not relating
to sales financing
149
126
Income associated with optimization
Government grants and subsidies
In the year 2016, a workforce-reduction program was
implemented in Brazil. That program resulted in expenses
of €91 million in the Daimler Trucks segment in 2016.
Daimler Trucks anticipates expenses in connection with the
optimization of fixed costs, especially at the Mercedes-Benz
brand, of approximately €0.2 billion, of which €172 million were
recognized in 2017. Due to the employee-transfer opportunities
within the Daimler Group, the expenses were lower than originally
assumed.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
153,261
F.10
Cost of sales
In millions of euros
2017
2016
41
Expense of goods sold
Depreciation of equipment
on operating leases
-7,978
-6,652
Refinancing costs at
Daimler Financial Services
-2,187
- 1,789
Impairment losses on receivables from
financial services
-500
Other cost of sales
-5,280
-499
-4,433
-129,999
164,330
541
1,055
Revenue from sales of other services
513
Germany
International
258
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.09
Revenue
In millions of euros
2017
2016
4. Revenue
- 121,298
Table 71 F.09 shows the composition of revenue at Group level.
Revenue from sales of goods
140,272
132,577
Revenue from the rental and
leasing business
18,394
15,997
Interest from the financial services
business at Daimler Financial Services
4,609
4,146
Revenue by segment 7 F.81 and region 7 F.83 is presented in
Note 33.
F.11
Optimization programs
In millions of euros
3
Daimler Buses
EBIT
Cash flow
1
-9
2
-3
5. Functional costs
Cost of sales
Items included in cost of sales are shown in table F.10.
2
Amortization expense of capitalized development costs in the
amount of €1,310 million (2016: €1,268 million) is presented
in expense of goods sold.
In 2017, selling expenses amounted to €12,965 million (2016:
€12,226 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
General administrative expenses
General administrative expenses amounted to €3,809 million
in 2017 (2016: €3,419 million). They consist of expenses
which are not attributable to production, sales or research
and development functions, and comprise personnel
expenses, depreciation and amortization of fixed and
intangible assets, and other administrative costs.
Research and non-capitalized development costs
Research and non-capitalized development costs were €5,938
million in 2017 (2016: €5,257 million) and primarily comprise
personnel expenses and material costs.
Optimization programs
Measures and programs with implementation costs that
materially impacted the EBIT of the segments are briefly
described below.
In the course of the organizational focus on the divisions,
programs for restructuring the Group's dealer network abroad
were initiated in 2015, involving the sale of selected Daimler-
owned dealerships. The restructuring was mainly completed in
2017. In the reporting period 2017, these measures resulted
in income of €133 million (2016: net expense of €58 million).
At December 31, 2016, the disposal group's assets for those
dealerships abroad amounted to €240 million and its liabilities
amounted to €135 million. At December 31, 2017, only non-
significant assets and liabilities of the disposal group exist. Due
to their minor impact on the Group's financial position, the
assets and liabilities held for sale are not presented separately
in the consolidated statement of financial position.
Provisions for optimization programs¹
1 Amounts of provisions for optimization programs
as of December 31.
Selling expenses
Miscellaneous other financial
Provisions for optimization programs¹
Cash flow
2017
2016
Mercedes-Benz Cars
EBIT
105
-33
Cash flow
203
253
Provisions for optimization programs¹
8
24
11
EBIT
Cash flow
Provisions for optimization programs¹
- 160
-17
3
-105
-68
3
Mercedes-Benz Vans
EBIT
13
-49
Daimler Trucks
548
income/expense, net
Balance at December 31, 2016
-504
-709
-152
- 1,840
Balance at December 31, 2017
16,987
25,964
27,398
4,470
74,819
Depreciation/impairment
Balance at January 1, 2016
8,506
15,548
18,983
1
43,038
Additions
425
1,423
2,043
3,891
Reclassifications
-475
Other changes¹
-2,507
- 123
305
1,020
Balance at December 31, 2016
16,756
25,624
26,348
3,489
72,217
Additions due to business acquisitions
Other additions
562
-8
1,032
3,603
6,949
Reclassifications
559
985
803
-2,347
Disposals
-415
-1,173
-796
1,752
296
-13
Disposals
-156
-289
-549
-994
Balance at December 31, 2017
8,743
16,630
21,465
46,838
Carrying amount at December 31, 2016
8,007
9,155
5,730
3,489
26,381
Carrying amount at December 31, 2017
8,244
9,334
5,933
4,470
27,981
1 Primarily changes from currency translation.
265
Other changes¹
-1,925
-640
- 1,084
-234
-627
-649
- 1,510
Other changes¹
60
138
Balance at December 31, 2016
8,749
16,469
220
20,618
21
-1
45,836
Additions
352
1,534
2,035
3,921
Reclassifications
-1
1
Disposals
-201
417
226
193
Other changes¹
Carrying amount at December 31, 2017
1,115
10,280
2,340
13,735
1 Primarily changes from currency translation.
2 Including capitalized borrowing costs on development costs of €47 million (2016: €54 million).
Amortization amounted to €13 million (2016: €12 million).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Property, plant and equipment
Property, plant and equipment developed as shown
in table F.28.
In 2017, government grants of €50 million (2016: €151 million)
were deducted from property, plant and equipment.
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a carry-
ing amount at December 31, 2017 of €320 million (2016:
€178 million). In 2017, additions to and depreciation expense
on assets under finance lease arrangements amounted to
€204 million (2016: €7 million) and €34 million (2016: €40 million),
respectively.
F.27
Amortization expense for intangible assets
in the consolidated statement of income
In millions of euros
F.17
Cost of sales
2017
2016
1,585
1,443
Selling expenses
12,098
2,083
8,827
1,188
293
5,136
2,301
7,730
Additions
1,323
445
1,768
Reclassifications
Disposals
Other changes¹
89
Balance at December 31, 2017
-368
-889
-22
-26
-99
-147
271
5,912
2,279
8,462
Carrying amount at December 31, 2016
-521
74
General administrative expenses
45
24,773
2,846
67,360
Additions due to business acquisitions
7
1
8
Other additions
Reclassifications
Disposals
588
23,978
1,002
2,692
5,689
591
1,088
607
-2,286
-379
-670
-742
-69
-1,860
1,407
63
15,763
Acquisition or manufacturing costs
37
Research and non-capitalized
development costs
Other operating expense
48
36
1
10
1,768
1,600
F.28
Property, plant and equipment
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Balance at January 1, 2016
Technical
equipment
and machinery
Other
Advance
payments
equipment,
relating to plant
factory and
and equipment
office and construction
equipment
in progress
Total
In millions of euros
13
-114,054 -107,925
13
451
Deferred tax assets, net
-2,098
-139
-210
-16,731
-15,161
Deferred tax liabilities, gross
-226
Miscellaneous liabilities
-3,082
- 147
Other provisions
similar obligations
Provisions for pensions and
-68
-1,124
-620
-377
Miscellaneous assets
-1,302
Receivables from financial services
-55
Inventories
-7,919
-5,211
Equipment on operating leases
-1,013
17,134
-2,625
-274
-1,654
-1,574
Development costs
Other intangible assets
403
The law signed in 2017 by the President of the United States of
America for a comprehensive tax reform ("H.R. 1/Tax Cuts
and Jobs Act"), includes the reduction of the nationwide federal
corporate income tax rate for US-companies from 35% to 21%,
starting on January 1, 2018. At yearend 2017, the reduction of
the federal corporate income tax rate required the remea-
surement of the deferred tax liabilities and deferred tax assets
of the US-subsidiaries of Daimler. The resulting tax benefit
of €1,668 million is included in the line item tax law changes.
as of December 31
Deferred tax assets, net
Change in deferred tax expense/benefit on
financial assets available-for-sale included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on actuarial gains/losses from defined
benefit pension plans
Other changes¹
1,069
403
Deferred tax assets, net as of January 1
Deferred tax expense/benefit in the
financial statement of income
In millions of euros
2016
2017
Change of deferred tax assets, net
F.24
Property, plant and equipment
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group did
not recognize deferred tax liabilities on retained earnings of
non-German subsidiaries of €28,733 million (2016: €28,750
million) which are intended to be reinvested. If those earnings
were paid out as dividends, an amount of 5% would be taxed
under German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences might
arise if the dividends first have to be distributed a non-German
subsidiary to a non-German holding company. Normally, the
distribution would lead to an additional income tax expense. It is
not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
At December 31, 2017, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€904 million). €12 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carry-
forwards which expire at various dates from 2018 through
2020, €258 million relates to tax loss carryforwards which
expire at various dates from 2021 through 2027, €17 million
relates to tax loss carryforwards which expire at various dates
from 2028 through 2037 and €617 million relates to tax loss
carryforwards which can be carried forward indefinitely. Further-
more, the valuation allowance primarily relates to temporary
differences at non-German companies as well as net operating
losses for state and local taxes at the US-companies. Daimler
believes that it is more likely than not that those deferred tax
assets cannot be utilized. In 2017 and prior years, the Group
had tax losses at several subsidiaries in several countries. After
offsetting the deferred tax assets with deferred tax liabilities,
the deferred tax assets not subject to valuation allowances
amounted to €135 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income will
be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax assets
that is considered realizable may change in the future, neces-
sitating higher or lower valuation allowances.
263
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the consolidated statement of financial position, the valuation
allowances on deferred tax assets, which are mainly attribut-
able to foreign companies, increased by €43 million compared
to December 31, 2016. This is primarily a result of the addi-
tional valuation allowances of €171 million recognized in net
profit. Furthermore, a decrease in the valuation allowance
was recognized in equity, mainly due to currency translation.
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments), the
expense for income taxes is comprised as shown in table 71 F.25.
The development of deferred tax assets, net, is shown in table
71 F.24.
In respect of each type of temporary difference and in respect
of each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table F.23.
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities. In
the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets and lia-
bilities are presented as shown in table 71 F.22.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
In 2016, tax-free gains recognized on the contribution of
our shares in Renault and Nissan into the German pension plan
assets are shown in this line item. Furthermore, in 2017, the
line item also includes tax expenses in connection with the
interpretation of tax laws. In 2016, tax benefits relating to
tax assessments of prior years are included in this line item.
In 2017 and 2016, the Group impaired deferred tax assets of
foreign subsidiaries. The resulting tax expenses are included in
the line item change of valuation allowance on deferred tax
assets.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed
for all open tax years.
572
-3,060
-127
Deferred tax assets, gross
1,129
977
Inventories
1,798
2,319
Equipment on operating leases
340
134
Property, plant and equipment
51
48
Intangible assets
18,382
2016
At December 31,
2017
403
In millions of euros
Split of tax assets and liabilities before offset
F.23
451
Deferred tax assets, net
3,870
-3,467
-2,402
Receivables from financial services
392
328
Miscellaneous assets,
-1,097
and tax credits
thereof on tax loss carryforwards
- 1,248
-235
-194
thereof on temporary differences
-1,291
Valuation allowances
16,903
891
2,348
1,518
1,702
2
671
1,861
931
1,332
2
15,612
Miscellaneous liabilities
Liabilities
Other provisions
and similar obligations
16
2,256
1,813
and unused tax credits
Tax loss carryforwards
6,019
6,423
mainly other financial assets
Deferred income
-704
-3
1
-396
-524
-34
Disposals
Reclassifications
3,535
755
2,779
1
Other additions
25
16
9
Additions due to business combinations
-1,435
82
19,828
4,384
13,963
1,481
Balance at December 31, 2016
52
13
17
Other changes¹
-954
Other changes¹
-71
-26
5
Other changes¹
-1,423
-89
- 1,334
Disposals
Reclassifications
1,600
320
1,280
7,490
-100
2,029
288
Additions
Balance at January 1, 2016
Amortization/impairment
22,197
4,619
16,192
1,386
Balance at December 31, 2017
-237
- 140
5,173
- 1,335
Disposals
2,952
Intangible assets developed as shown in table 71 F.26.
10. Intangible assets
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
264
254
-3,536
-763
-4,200
-3,790
-3,437
2016
2017
403
At December 31, 2017, goodwill of €455 million (2016:
€480 million) relates to the Daimler Financial Services segment,
goodwill of €418 million (2016: €456 million) relates to the
Daimler Trucks segment and goodwill of €180 million (2016:
€185 million) relates to the Mercedes-Benz Cars segment.
Income tax expense/benefit
recorded in other reserves
In millions of euros
Tax expense in equity
F.25
1 Additions to the scope of consolidation in the amount of
€-112 million are included in 2016. The other changes primarily
relate to effects from currency translation.
451
-216
239
748
-19
-495
-741
Income tax expense in the consolidated
financial statement of income
Deferred tax liabilities
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2017: €5,086
million; 2016: €3,780 million). In addition, other intangible
assets with a carrying amount of €255 million (2016: €266 million)
are not amortizable. Other non-amortizable intangible assets
are distribution rights in the vehicle segments with indefinite
useful lives as well as trademarks in the Daimler Trucks seg-
ment with indefinite useful lives. The Group plans to continue
to use these assets unchanged.
F.26
629
2,323
670
221
17,559
3,582
12,962
1,015
449
Total
(acquired)
assets
Table 71 F.27 shows the line items of the consolidated statement
of income in which total amortization expense for intangible
assets is included.
Other intangible
costs
(acquired)
Goodwill
Development
Reclassifications
Other additions
Additions due to business combinations
Balance at January 1, 2016
Acquisition or manufacturing costs
In millions of euros
Intangible assets
(internally
generated)²
2,853
Provisions for pensions
2016
The calculation of provisions for pensions and similar obligations
and the related pension cost are based on various actuarial
valuations. The calculations are subject to various assumptions
on matters such as current actuarially developed probabilities
(e.g. discount factors and cost-of-living increases), future
fluctuations with regard to age and period of service, and
experience with the probability of occurrence of pension
payments, annuities or lump sums. As a result of changed
market or economic conditions, the probabilities on which
the influencing factors are based, may differ from current
developments. The financial effects of deviations of the
main factors are calculated with the use of sensitivity analyses.
See Note 22 for further information.
Income taxes
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable
in the various countries. Due to their complexity, the tax items
presented in the financial statements are possibly subject to
different interpretation by taxpayers on the one hand and local
tax authorities on the other hand. For the calculation of
deferred tax assets, assumptions have to be made regarding
future taxable income and the time of realization of the
deferred tax assets. In this context, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal of
taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are some-
times beyond Daimler's control, the assumptions to be made
in connection with accounting for deferred tax assets are
connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the proba-
bility of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired.
Further information is provided in Note 9.
3. Consolidated Group
Composition of the Group
Deferred tax assets
The aggregate balance sheet totals of the subsidiaries, associ-
ated companies, joint ventures and joint operations accounted
for at amortized cost whose business is non-active or of low
volume and which are not material for the Group and the fair
presentation of its profitability, liquidity and capital resources
and financial position would amount to approximately 1% of the
Group's balance sheet total; the aggregate revenues and the
aggregate net profit would amount to approximately 1% of the
Group's revenue and net profit.
A detailed list of the companies included in the consolidated
financial statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Fur-
ther information is provided in Note 39.
Structured entities
The structured entities of the Group are rental companies, asset-
backed-securities (ABS) companies and special funds. The
purpose of the rental companies primarily is the acquisition,
renting and management of assets. The ABS companies
are primarily used for the Group's refinancing. The assets
transferred to structured entities usually result from the
Group's leasing and sales financing business. Those entities
refinance the purchase price by issuing securities. The
special funds are set up in particular in order to diversify the
capital investment strategy.
At the reporting date, the Group has business relationships
with 24 (2016: 20) controlled structured entities, of which 22
(2016: 18) are fully consolidated. In addition, the Group has
relationships with 6 (2016: 5) non-controlled structured entities.
The unconsolidated structured entities are not material for
the Group's profitability, liquidity and capital resources and
financial position.
Consolidated subsidiaries
On June 30, 2016, Daimler signed the agreements for the acquisi-
tion of 100% of the shares of Athlon Car Lease International
B.V. (Athlon), a subsidiary of the Dutch Rabobank Group. Athlon
is one of the leading providers of mobility solutions in Europe,
especially of leasing and fleet management for commercial
customers. The transaction was closed on December 1, 2016.
Upon closing, the purchase price of €1.1 billion was paid and
financial liabilities of the Athlon companies in an amount of
approximately €2.7 billion were settled. In 2017, Daimler
received total purchase price refunds of €41 million. Purchase-
price allocation was finalized in the fourth quarter of 2017.
In the context of allocated purchase-price difference of €637,
€402 million was allocated to goodwill, €311 million to
intangible assets and €6 million to other assets. €82 million
was accounted for by deferred tax liabilities.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
257
Effective as of June 30, 2016, Daimler placed its 3.1% interest
in each of Renault S.A. (Renault) and Nissan Motor Company
Ltd. (Nissan) at the amount of the fair value (€1,800 million)
into the Daimler Pension Trust e.V. for the purpose of strength-
ening the German pension plan assets over the long term.
Before this transfer, the investments in Renault and Nissan
were presented under other financial assets. The investments
were measured at fair value, whereby unrecognized gains
were shown under other comprehensive income. The contribution
of the shares led to other financial income in an amount of
€605 million, which was shown in the reconciliation in 2016.
Joint operations accounted for using proportionate
consolidation
Daimler AG together with Nissan Motor Company Ltd. founded
the joint operation Cooperation Manufacturing Plant
Aguascalientes, S.A.P.I. de C.V. in Mexico in 2015. The company
has been producing cars for the Infiniti brand since November
2017. Production for the Mercedes-Benz brand will start in 2018.
Daimler and Nissan each hold a 50% interest in the company.
The joint operation has been accounted for using proportionate
consolidation since July 1, 2016. The company is allocated to
the Mercedes-Benz Cars segment.
Equity-method investments
In May 2017, Daimler acquired for a purchase price of €0.3 bil-
lion an interest of 15% in LSH Auto International Limited
(LSHAI), which is responsible for the Mercedes-Benz retail
business of Lei Shing Hong Group. LSHAI, a subsidiary of Lei
Shing Hong Group, is one of the biggest Mercedes-Benz deal-
ers worldwide. See Note 13 for further information.
In January 2017, There Holding B.V. sold an equity interest
of 15% in HERE International B.V to Intel Holdings B.V. and
recognized a gain of €183 million in connection with the sale.
See Note 13 for further information.
F.08
Composition of the Group
Pensions and similar obligations
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
256
Interest income and interest expense
Interest and similar expense
-227
-211
Net interest expense on the net obligation
from defined benefit pension plans
Interest expense
230
214
225
212
5
2
2017
2016
399
275
-169
-230
-124
-61
2016
2017
Interest and similar income
of defined benefit pension plans
Net interest income on the net assets
Interest income
In millions of euros
2017
-371
At December 31,
2016
363
Joint ventures accounted for
using the equity method
16
14
Germany
5
4
International
11
10
Associated companies accounted
for using the equity method
Germany
14
13
3
3
International
11
10
Joint operations, joint ventures,
associated companies and substantial
other investments accounted
for at (amortized) cost
32
26
16
2
2
1
1
359
64
62
International
299
297
Unconsolidated subsidiaries
119
97
Germany
41
Consolidated subsidiaries
Germany
30
78
67
Joint operations accounted for
using proportionate consolidation
Germany
International
Joint operations accounted for
using the equity method
1
1
1
1
3
3
Germany
International
International
-319
Table 71 F.08 shows the composition of the Group.
-546
-80
Foreign tax rate differential
-4,265
Expected income tax expense
2016
2017
In millions of euros
to actual income tax expense
Reconciliation of expected income tax expense
F.21
-660
-400
and tax credits
due to tax loss carryforwards
-44
972
due to temporary differences
-704
572
Deferred taxes
In millions of euros
2016
2017
-3,750
-41
Components of deferred tax expense/benefit
Trade tax rate differential
31
At December 31,
2017
In millions of euros
Deferred tax assets and liabilities
F.22
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
262
-3,790
-3,437
Actual income tax expense
34
35
Other
113
-632
expenses
Tax-free income and non-deductible
-582
-171
on deferred tax assets
Change of valuation allowance
48
1,624
Tax law changes
52
F.20
-225
-3,437
Table 71 F.21 shows a reconciliation of expected income tax
expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
For non-German companies, the deferred taxes at period-end
were calculated using the tax rates of the respective countries.
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%.
For German companies, in 2017 and 2016, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
The deferred tax expense/benefit is comprised of the
components shown in table 71 F.20.
The current tax expense includes tax expenses at German and
foreign companies of €268 million (2016: tax benefits of €292
million) recognized for prior periods.
Table 7 F.19 shows the components of income taxes.
Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in
those companies are held by German companies.
Profit before income taxes is comprised as shown in table
7 F.18.
9. Income taxes
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
F.18
Table 7 F.17 shows the components of interest income and
interest expense.
In 2016, miscellaneous other financial income included the
recognition of gains of €605 million from the contribution of
the shareholdings in Renault and Nissan to the German
pension plan assets at fair value. Those gains were presented
within other comprehensive income/loss until the transfer.
7. Other financial income/expense, net
Other miscellaneous expense primarily comprises losses from
disposals of current assets and changes in other provisions.
In 2016, other operating expense included expenses of €400
million connected with a lawsuit.
The composition of other operating expense is shown in table
7 F.15.
Further information on income and expenses associated with
optimization programs is provided in Note 5.
Gains on sales of property, plant and equipment include gains
of €267 million from the sale of real estate by Mitsubishi Fuso
Truck and Bus Corporation at the Kawasaki site in Japan.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
The composition of other operating income is shown in table
7 F.14.
6. Other operating income and expense
-549
-3,790
8. Interest income and interest expense
Profit before income taxes
Table 71 F.16 shows the components of other financial income/
expense, net.
2016
973
2017
Non-German companies
-155
-401
German companies
-2,024
- 1,985
Non-German companies
Deferred taxes
German companies
Current taxes
In millions of euros
-1,396
- 1,690
7,902
2017
Components of income taxes
F.19
12,574
14,301
In millions of euros
6,799
German companies
Non-German companies
5,775
6,399
2016
4,818
11
500
4,282
Total
36
1,541
468
-1
1,498
3,582
48
4,098
Joint
operations
485
-42
ventures
Summarized carrying amounts and profits/losses from equity-method investments
Associated
companies
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6
F.30.
13. Equity-method investments
Table 71 F.31 shows the carrying amounts and profits/losses
from equity-method investments.
Table 71 F.32 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's consolidated financial statements.
F.31
In millions of euros
At December 31, 2017
Equity investment¹
Equity result¹
At December 31, 2016
Equity investment¹
Equity result¹
1 Including investor-level adjustments.
Joint
502
1,541
Key figures on interests in associated companies accounted for using the equity-method
1,143
290
121
- 13
Dividend payment to Daimler
1,134
29
At December 31, 2016
Equity interest (in %)
Stock market price¹
Equity investment²
Equity result²
Dividend payment to Daimler
Non-cancelable future lease payments to Daimler
for equipment on operating leases are due as presented
in table
1 Proportionate stock market prices.
Equity result²
4,282
643
732
BBAC
BAIC Motor³
THBV (HERE)
Others
Total
In millions of euros
At December 31, 2017
F.32
Equity interest (in %)
10.1
33.3
Stock market price¹
832
Equity investment²
2,130
777
49.0
Minimum lease payments
645
is shown in table 71 F.29.
Other additions
25,292
Reclassifications
Disposals
-19,657
Other changes¹
-3,446
Balance at December 31, 2017
59,519
Depreciation/impairment
Balance at January 1, 2016
9,149
Additions
6,652
Reclassifications
Additions due to business acquisitions
Disposals
Balance at December 31, 2016
379
2 Including investor-level adjustments.
266
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.29
Equipment on operating leases
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2016
Additions due to business acquisitions
Other additions
48,091
3,560
23,504
Reclassifications
Disposals
Other changes¹
- 18,204
57,330
-5,487
Other changes¹
74
2016
Maturity
within one year
7,922
7,660
between one and five years
8,607
8,306
later than five years
71
63
16,600
16,029
12. Equipment on operating leases
The development of equipment on operating leases
At December 31,
2017
In millions of euros
Maturity of minimum lease payments
for equipment on operating leases
F.30
Balance at December 31, 2016
10,388
Additions
7,978
Reclassifications
Disposals
-5,904
At December 31, 2017, equipment on operating leases with
a carrying amount of €8,684 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2016: €7,465 million) (see also Note 24).
Other changes¹
Balance at December 31, 2017
11,805
Carrying amount at December 31, 2016
46,942
Carrying amount at December 31, 2017
47,714
1 Primarily changes from currency translation.
-657
49.0
1,173
33.3
14
13
-5
-7
-105
Medium-term compo-
nent of annual bonus of
the members of the
Board of Management
284
191
-62
-67
-98
Expense
2016
2017
Provision
PPSP
In millions of euros
Effects of share-based payment
F.45
The details shown in table 7 F.46 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2017 can be found in the
Remuneration Report. Management Report from page 136
At December 31,
2017
2016
204
298
F.46
- 1.4
-1.8
of the annual bonus
Medium-term component
-0.8
-1.6
-0.2
-3.8
-3.9
PPSP
Martin Daum²
2016
2017
2016
Dr. Wolfgang Bernhard¹
2017
2016
2017
Dr. Dieter Zetsche
In millions of euros
Expenses in the consolidated statement of income resulting from
share-based payments of current members of the Board of Management
Table 71 F.46 shows expenses in the consolidated statement of
income resulting from the rights of current members of the
Board of Management.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table 7 F.45.
Moreover, 50% of the annual bonus of the members of the Board
of Management is paid out after a waiting period of one year.
The actual payout is determined by the development of Daimler
shares compared to an automobile related index (Auto-STOXX).
The fair value of this medium-term annual bonus, which depends
on this development, is measured by using the intrinsic value
at the reporting date.
The PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined conditions
are met. PPSP 2013 was paid out as planned in the first
quarter of 2017.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to
issue convertible and/or warrant bonds or a combination
of these instruments ("bonds") with a total face value of up
to €10.0 billion and a maturity of no more than ten years.
The Board of Management is allowed to grant the holders of
these bonds conversion or warrant rights for new registered
no-par-value shares in Daimler AG with an allocable portion of
the share capital of up to €500 million in accordance with the
details defined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-cash
contributions, in particular for shares in other companies. The
terms and conditions of the bonds can include warranty
obligations or conversion obligations. The bonds can be issued
once or several times, wholly or in installments, or simulta-
neously in various tranches as well by affiliates of the Company
within the meaning of Sections 15 et seq. of the German Stock
Corporation Act (AktG). Among other things, the Board of Man-
agement was authorized to exclude shareholders' subscription
rights for the bonds under certain conditions and within defined
constraints with the consent of the Supervisory Board.
Conditional capital
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
274
10,614
11,990
2,385
2,644
1,148
1,626
142
103
27
70
39
61
127
164
813
This authorization to issue convertible and/or warrant bonds
has not yet been utilized.
-0.6
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to acquire
treasury shares in a volume up to 10% of the share capital issued
as of the day of the resolution to be used for all legal purposes.
The shares can be used, amongst other things excluding share-
holders' subscription rights, for business combinations or to
acquire companies or to be sold to third parties for cash at a
price that is not significantly lower than the stock-exchange price
of the Company's shares. The acquired shares can also be used
to fulfill obligations from issued convertible bonds and/or bonds
with warrants and to be issued to employees of the Company
and employees and board members of the Company's affiliates
pursuant to Sections 15 et seq. of the German Stock Corporation
Act (AktG). The treasury shares can also be canceled.
As of December 31, 2017, the Group has the 2014-2017
Performance Phantom Share Plans (PPSP) outstanding.
21. Share-based payment
275
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 71 F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on the measurement of financial assets available-
for-sale, derivative financial instruments and equity-method
investments.
Other reserves
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2017, the Daimler management
will propose to the shareholders at the Annual Shareholders'
Meeting to pay out €3,905 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€3.65 per no-par-value share entitled to a dividend (2016:
€3,477 million and €3.25 per no-par-value share entitled
to a dividend respectively).
Dividend
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's consolidated
financial statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as the
related deferred taxes are presented within retained earnings.
Retained earnings
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise
of the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership
interests in consolidated entities and directly attributable
related transaction costs.
Capital reserves
In 2017, 0.6 million Daimler shares representing €1.7 million
or 0.06% of the share capital were purchased for a price of €42
million and reissued to employees (2016: 0.6 million Daimler
shares representing €1.7 million or 0.05% of the share capital
were purchased for a price of €38 million).
Employee share purchase plan
As was the case at December 31, 2016, no treasury shares
are held by Daimler AG at December 31, 2017.
The authorization to acquire treasury shares was not exercised
in the reporting period.
The Board of Management is further authorized, with the consent
of the Supervisory Board, to exclude shareholders' subscription
rights.
In a volume up to 5% of the share capital issued as of the day of
the resolution, the Company was authorized to acquire treasury
shares also by using derivatives (put options, call options, forward
purchases or a combination of these instruments), whereas
the term of a derivative must not exceed 18 months and must
not end later than March 31, 2020.
Treasury shares
1,228
-0.7
Ola Källenius
Further information on other financial assets is provided
in Note 31.
F.38
Credit risks included in receivables
from financial services
In millions of euros
Receivables, neither past due
nor impaired individually
Receivables past due,
not impaired individually
less than 30 days
30 to 59 days
4 Appointment to the Board of Management ended on December 31, 2016.
3 Appointed to the Board of Management as of January 1, 2017.
At December 31, 2017, receivables with a carrying amount of
€511 million (2016: €648 million) were pledged as collateral for
liabilities (see also Note 24).
2 Appointed to the Board of Management as of March 1, 2017.
-0.5
of the annual bonus
Medium-term component
-0.6
-0.9
-0.5
-0.7
- 1.8
1 Appointment to the Board of Management ended on February 10, 2017. Amounts are included pro rata for 2017.
Financial assets measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
The line item other financial assets presented in the
consolidated statement of financial position is comprised
as shown in table 71 F.39.
16. Other financial assets
Other financial assets
F.39
60 to 89 days
1,054
1,016
480
491
Amounts written off
-265
-290
Reversals
-299
-181
Currency translation and other changes
- 100
18
Balance at December 31
870
1,054
- 1.9
- 1.5
-1.6
- 1.6
-0.6
-0.7
of the annual bonus
Medium-term component
-1.6
-1.6
-0.7
-1.2
-0.5
-0.8
PPSP
In millions of euros
2016
2017
2016
2017
2016
2017
Wilfried Porth
-0.7
Renata Jungo Brüngger
-0.5
-0.5
PPSP
In millions of euros
2016
Prof. Dr. Thomas Weber4
2017
-0.8
of the annual bonus
Medium-term component
-0.4
PPSP
In millions of euros
2016
2017
2016
2017
2016
10.1
Bodo Uebber
Hubertus Troska
Britta Seeger³
-0.7
In millions of euros
Net carrying amount
Total
3,094
262
2,832
Reimbursements due to other tax refunds
Reimbursements due to the Medicare Act (USA)
759
249
510
Reimbursements due to income tax refunds
734
2,905
Total
Current
At December 31, 2017
Non-current
Total
Current
In millions of euros
Other assets
F.40
is provided in Note 32.
Further information on financial risk and types of risk
At December 31, 2016
Non-current
51
785
38
678
112
566
744
112
632
Prepaid expenses
364
173
191
485
211
274
Other expected reimbursements
72
72
68
68
2,943
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Receivables not subject to an individual impairment
Table 71 F.44 provides an overview of credit risks included
in trade receivables.
Credit risks
3,089
986
2,103
3,167
876
2,291
106
25
81
82
28
54
1,730
1,077
653
2,379
1,144
1,235
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
3,580
Others
3,221
2,837
The total expense from the impairment of trade receivables
amounted to €131 million in 2017 (2016: €97 million).
Table 71 F.43 shows changes in the allowance account for
trade receivables.
Allowances
At December 31, 2017, €38 million of the trade receivables
mature after more than one year (2016: €49 million).
Trade receivables are comprised as shown in table 7 F.42.
19. Trade receivables
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €112 million at December 31, 2017 (December 31, 2016:
€126 million). Those assets are utilized in the context of normal
business operations.
In addition, inventories with a carrying amount of €419 million
at December 31, 2017 (December 31, 2016: €296 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars at
Mercedes-Benz Cars and Mercedes-Benz Vans included in
inventories at Daimler AG were pledged as collateral to the
Daimler Pension Trust e.V. in an amount of €1,033 million at
December 31, 2017 (December 31, 2016: €1,008 million).
The amount of write-down of inventories to net realizable value
recognized as expense in cost of sales was €411 million in
2017 (2016: €842 million). Inventories that are expected to
be recovered or settled after more than twelve months
amounted to €954 million at December 31, 2017 (December
31, 2016: €974 million) and are primarily spare parts.
Inventories are comprised as shown in table 7 F.41.
18. Inventories
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
Non-financial other assets are comprised as shown in table
7 F.40.
17. Other assets
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
272
5,736
2,899
6,801
Receivables impaired individually
712
955
Amounts written off
- 10
63
Charged to costs and expenses
392
340
Balance at January 1
2016
-107
2017
Changes in the allowance account for trade receivables
F.43
10,614
11,990
-340
-300
Allowances for doubtful accounts
Net carrying amount
10,954
In millions of euros
-62
Currency translation and other changes
4
120 days or more
90 to 119 days
not impaired individually
60 to 89 days
30 to 59 days
less than 30 days
Receivables past due,
7,081
7,720
Receivables, neither past due
nor impaired individually
In millions of euros
2016
At December 31,
2017
Credit risks included in trade receivables
F.44
340
300
Balance at December 31
20
12,290
Gross carrying amount
2016
At December 31,
2017
Approved Capital 2014 has not yet been utilized.
The Annual Shareholders' Meeting held on April 9, 2014
authorized the Board of Management, with the consent of the
Supervisory Board, to increase the share capital of Daimler AG
in the period until April 8, 2019 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2014).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of
Management was authorized with the consent of the Supervisory
Board to exclude shareholders' subscription rights under
certain conditions and within defined limits.
Approved capital
Since January 1, 2016, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2017 is 1,070 million, unchanged from December 31, 2016.
The share capital (authorized capital) is divided into no-par-
value shares. All shares are fully paid up. Each share confers
the right to one vote at the Annual Shareholders' Meeting
of Daimler AG and, if applicable, with the exception of any new
shares potentially not entitled to dividends, to an equal portion
of the profits as defined by the dividend distribution decided
upon at the Annual Shareholders' Meeting. Each share
represents a proportionate amount of approximately €2.87
of the share capital.
Share capital
See also the consolidated statement of changes
in equity 7 F.05.
20. Equity
273
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5,629
667
4,962
6,105
1,145
4,960
787
221
566
F.41
243
Inventories
At December 31,
2017
In millions of euros
Trade receivables
F.42
25,384
25,686
238
297
Advance payments to suppliers
18,609
19,361
held for resale
Finished goods, parts and products
3,814
3,373
Work in progress
2,723
2,655
Raw materials and manufacturing supplies
2016
In millions of euros
At December 31,
2017
2017
81,214
712
720
732
2016
Unrealized profit (-)/loss (+) on sales to/purchases from
-93
-91
-9
2,233
Equity-method goodwill
70
74
Other
-1
-1
4
-237
Carrying amount of equity-method investment
-
2,224
attributable to the Group
Equity (excluding non-controlling interests)
Non-current liabilities
741
694
3,077
2,333
1,044
Current liabilities
6,335
5,623
10,954
11,584
518
Equity (including non-controlling interest)
4,540
4,557
9,198
9,368
2,195
1,832
2,130
2,141
777
557
-
-
Other comprehensive income/loss
-1
-1
Total comprehensive income/loss
60
21
-28
-28
270 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Receivables from financial services
Table 71 F.35 shows the components of receivables from
financial services.
Types of receivables
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded
in by dealers' customers or real estate such as dealers' show-
rooms.
Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.
At December 31, 2017, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €103 million (December 31, 2016: €165 million)
-28
2,802
592
-28
61
732
611
1 BBAC:
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
Daimler recognizes its proportionate share of the profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Figures for the 2016 statement of income relate to the period of December 5, 2015 to December 31, 2016.
According to IFRS 5.34 the statement of income for 2016 was adjusted retrospectively.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
Revenue at THBV relates to HERE; revenue for the year 2017 is solely for the month of January until the change in the consolidation of HERE at THBV.
F.34
Summarized aggregated financial information on minor
equity-method investments
In millions of euros
Summarized aggregated financial information (pro rata)
Associated companies
Joint ventures
2017
2016
2017
2016
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
22
Maturities of the finance-lease contracts are shown
in table 71 F.36.
289
10,140
There Holding B.V. (THBV) was founded in 2015. Daimler, Audi
and BMW each holds an interest in the company of 33.3%.
THBV holds an interest in HERE International B.V. (HERE).
Effective December 4, 2015, HERE acquired the roadmap
service HERE from Nokia Corporation. HERE is one of the
biggest manufacturers of digital roadmaps for navigation
systems worldwide. Future expected high resolution maps will
be one of the fundamentals for future autonomous driving.
THBV is accounted for in the consolidated financial statements
of Daimler AG as an associated company using the equity
method, and is allocated to the Mercedes-Benz Cars segment.
In 2015, Daimler's proportionate share of its profits and
losses was included with a one-month time lag, which was
cancelled as of December 31, 2016.
In December 2016, THBV signed agreements on the sale of
shares in its then 100% subsidiary, HERE. It was agreed to sell
a 15% shareholding to Intel Holdings B.V. (Intel) and a 10%
shareholding to a Chinese consortium consisting of NavInfo Co.
Ltd., Tencent Holdings Ltd. and GIC Private Ltd. However,
the transaction with the Chinese consortium was not com-
pleted. During a regulatory review process, the Chinese
consortium decided no longer to proceed with the transaction.
The transaction with Intel was concluded on January 31, 2017.
As a result, THBV now only has a significant influence on
HERE. Therefore, as of February 1, 2017, HERE is no longer fully
consolidated in the financial statements of THBV, but is
presented as an associated company using the equity method.
The change in the consolidation method led to the remea-
surement of the HERE shares at fair value in the first quarter
of 2017. The income of €183 million from this transaction
that is attributable to Daimler is included in profit/loss on
equity-method investments in the first quarter of 2017.
In December 2017, Daimler, Audi and BMW signed agreements
on the sale of shares in THBV. It was agreed to sell interests
of 5.9% in THBV to each of Robert Bosch Investment Nederland
B.V. and Continental Automotive Holding Netherlands B.V.
Both sales of shares involve equal numbers of shares currently
owned by Daimler, Audi and BMW. Due to the remeasure-
ment that already occurred in 2017 Daimler does not anticipate
any significant impact on earnings from these transactions.
Completion of the transactions is expected in the first quarter
of 2018, after receiving the approval of the relevant authorities.
Due to the minor importance for the Group's assets and liabilities,
there is no separate presentation in the statement of financial
position of non-current assets available for sale.
Table 71 F.33 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group's consolidated financial statements.
Other minor equity-method investments
In 2017, minor equity-method investments include LSH Auto
International Limited (LSHAI). In the second quarter of
2017, Daimler acquired an interest of 15% in LSHAI, which is
responsible for the Mercedes-Benz retail business of Lei Shing
Hong Group. LSHAI, a subsidiary of Lei Shing Hong Group,
is one of the biggest Mercedes-Benz dealers worldwide. The
transaction was concluded after receiving the approval of
the relevant antitrust authorities on May 22, 2017. The purchase
price was €0.3 billion. Due to Daimler's possibility to exercise
a significant influence on the board of directors of LSHAI, as
well as other contractual agreements and significant supply
relations, the Group classifies this investment as an investment
in an associate, to be accounted for using the equity method;
in the segment reporting, the investment's carrying amount and
its proportionate share of profit or loss are presented in the
reconciliation of total segment's assets to Group assets and total
segments' EBIT to Group EBIT, respectively. Earnings of LSHAI
are included in Daimler's consolidated financial statements
with a three-month time lag.
THBV (HERE)
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
269
The equity-method result of joint ventures in 2017 includes
impairments of investments of €125 million.
Table 71 F.34 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in Notes 3 and 36.
F.33
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
In millions of euros
2017
|
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger car
division of BAIC Group, one of the leading automotive
companies in China. Directly or via subsidiaries, BAIC Motor
is engaged in the business of researching, developing,
manufacturing, selling, marketing and servicing automotive
vehicles and related parts and components and all related
services. Due to Daimler's representation on the board of
directors of BAIC Motor and other contractual arrangements,
Daimler classifies this investment as an investment in an
associate, to be accounted for using the equity-method; in the
segment reporting, the investment's carrying amount and
its proportionate share of profit or loss are presented in the
reconciliation of total segment's assets to Group assets
and total segments' EBIT to Group EBIT, respectively. In the
first quarter of 2016, due to the lower stock-exchange
price, the Group recognized an impairment loss of €244 million
with respect to its investment in BAIC Motor. In the first
quarter of 2017, the impairment was fully reversed due to the
increased share price. The effect of the reversal amounts
to €240 million including minor currency effects. Both, the gain
and the loss are included in the line item profit/loss on equity-
method investments, net.
BAIC Motor
In the first quarter of 2017, the shareholders of BBAC
approved the payout of a dividend. The amount of €401 million
attributable to Daimler was paid out in the second quarter
of 2017 and decreased the carrying amount of the investment
accordingly. In the second quarter of 2017, the shareholders
of BBAC approved the payout of another dividend. The amount
of €733 million attributable to Daimler decreased the carrying
amount of the investment accordingly. The first half of that
dividend was paid out in August 2017. The second half will be
paid out in 2018.
647
2,141
557
611
273
3,582
678
-176
-56
39
485
16
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's consolidated financial
statements with a three-month time lag.
4 The dividend from BBAC of €1,134 million was partly paid out in the year 2017 with an amount of €768 million.
267
268 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BBAC
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz passenger cars and spare parts
in China. The investment and the proportionate share
in the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
In the first quarter of 2017, Beijing Benz Automotive Co., Ltd.
(BBAC) received a capital increase of €97 million from Daimler.
The capital increase took place through the contribution of
dividend receivables. Daimler plans to contribute equity of up to
€0.4 billion, in accordance with its shareholding ratio, to BBAC
in the coming years.
BBAC¹
2016
2017
BAIC Motor²
2016
THBV³ (HERE)
-4
Total comprehensive income/loss
2,373
1,428
1,752
1,285
364
-171
Information on the statement of financial position
and reconciliation to equity-method carrying amounts
Non-current assets
4,558
4,354
13,089
13,280
1,906
Current assets
7,058
6,520
2
10,005
103
23
2017
2016
Information on the statement of income
Revenue
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
15,373
2,350
11,673
1,449
18,510
15,117
71
1,240
1,649
1,285
-151
-1
-
513
-166
Other comprehensive income/loss
-21
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for
operating activities in the consolidated statement of cash flows.
611
Changes in the allowance account for receivables from financial
services are shown in table 71 F.37.
-171
-2
-309
-156
-225
-5
Net carrying amount
7,840
- 136
16,305
24,441
6,856
13,456
500
-386
20,812
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 271
15. Marketable debt securities
The marketable debt securities with a carrying amount
of €10,063 million (2016: €10,748 million) are part of the
Group's liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those securities
are presented as current assets.
296
Allowances for doubtful accounts
21,198
505
15,055
594
23,449
Unearned finance income
-1,028
-1,640
-38
-2,706
-788
- 1,374
-89
-2,251
Gross carrying amount
7,976
16,476
298
24,750
7,012
13,681
Further information on marketable debt securities is provided
in Note 31.
F.37
Changes in the allowance account
for receivables from financial services
In millions of euros
1,894
1,928
Receivables impaired individually
2,486
2,645
Total
138
105
120 days or more
58
43
90 to 119 days
91
136
403
315
1,796
2,046
76,127
Net carrying amount
7,800
85,787
At December 31, 2017
Current Non-current
Balance at January 1
Additions
2017
2016
1,002
1,002
thereof equity instruments carried at cost
166
166
171
811
811
645
1,173
171
thereof equity instruments recognized at fair value
Allowances
Total
Current Non-current
Total
At December 31, 2016
80,507
27,456
Available-for-sale financial assets
18,116
16,065
3,061
19,126
16,302
2,970
19,272
Finance-lease contracts
7,976
16,774
24,750
7,012
14,186
21,198
Gross carrying amount
39,778
46,879
86,657
38,117
43,444
Sales financing with dealers
81,561
41,091
14,803
336
The total expense from the impairment of receivables
from financial services amounted to €500 million in 2017
(2016: €499 million).
Credit risks
Table 71 F.38 provides an overview of credit risks included
in receivables from financial services.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Further information on financial risks and nature of risks
is provided in Note 32.
At December 31, 2017, receivables from financial services with
a carrying amount of €6,049 million (December 31, 2016:
€5,909 million) were pledged as collateral for liabilities from
ABS transactions (see also Note 24).
F.35
Receivables from financial services
Current
At December 31, 2017
Non-current
Total
Current
At December 31, 2016
Non-current
Total
Sales financing with customers
15,737
27,044
42,781
26,288
Allowances for doubtful accounts
In millions of euros
Net carrying amount
15,591
324
24,317
7,407
13,175
583
21,165
Unguaranteed residual values
8,402
602
3,139
393
1,880
11
2,284
Gross investment
-404
9,004
12
Contractual future lease payments
2,525
> 5 years
-466
46,413
39,374
Total
-870
85,787
-491
37,626
-563
-1,054
80,507
F.36
Maturities of the finance lease contracts
42,881
At December 31, 2017
<1 year
1 year up
to 5 years
> 5 years
1 year up
to 5 years
At December 31, 2016
Total
<1 year
In millions of euros
155
Contributions by plan participants
58
54
66
-23
71
5
in demographic assumptions
595
Actuarial gains (-)/losses from changes
4
750
96
495
648
Interest cost
3,837
89
512
23,803
27,640
601
591
687
Current service cost
-13
4,191
26,982
153
-10
351
6
20
31,173
-37
-117
-117
Past service cost, curtailments and settlements
297
2,718
3,015
704
1,055
Actuarial gains (-)/losses
26
-11
-21
57
-55
2
Actuarial gains (-)/losses from experience
adjustments
288
2,733
3,021
657
419
1,076
in financial assumptions
Actuarial gains (-)/losses from changes
-17
5
Present value of the defined benefit obligation
at January 1
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee a life
annuity.
Plans
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable develop-
ments, especially of equity prices and fixed-interest securities,
could reduce that fair value. The diversification of fund assets,
the engagement of asset managers using quantitative and
qualitative analyses, and the continual monitoring of performance
and risk help to reduce associated investment risk. The Group
regularly makes additional contributions to the plan assets
in order to cover future obligations from defined benefit pension
plans. Furthermore, in 2017, the Group made an extraordi-
nary contribution of €3.0 billion into the German pension plan
assets, in order to sustainably strengthen them. In 2016,
shares in Renault and Nissan with a fair value of €1.8 billion
were contributed to the German plan assets.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obligations
result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
to contribute to additional financial security during retirement,
and in the case of death or invalidity to be capable of being
planned and fulfilled by the respective company of the Group
and to have a low-risk structure. In addition, a committee
exists that approves new pension plans and amendments to
existing pension plans as well as guidelines relating to com-
pany retirement benefits.
The general requirements with regard to retirement benefit
models are laid down in the Pension Policy, which has Group-wide
validity. Accordingly, the committed benefits are intended
Risks from defined benefit pension plans
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets outplaced into long-term investment funds.
Non-German plans
In Germany, there are no statutory or regulatory minimum
funding requirements.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-
term outsourced funds. Contractual trust arrangements (CTA)
exist between Daimler AG as well as some subsidiaries
in Germany and the Daimler Pension Trust e.V. The Daimler
Pension Trust e.V. acts as a collateral trust fund.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
277
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year, and for executives it depends on their respective
income. For the commitments to retirement benefits made
until 2011, the contributions continue to be converted into
capital components and credited to the individual pension
account with the application of fixed factors related to each
employee's age. The conversion factors include a fixed value
increase. The pension plans were newly structured for new
entrants in 2011 to reduce the risks associated with defined
benefit plans. New entrants now benefit from value increases
of the contributions through an investment fund with a special
lifecycle model. The Company guarantees at a minimum the
value of the contributions paid in. Pension payments are made
either as a life annuity, twelve annual installments, or a single
lump sum.
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
German plans
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension plans
provided by Daimler generally vary according to the economic,
tax and legal circumstances of the country concerned. Most
of the defined benefit pension plans also provide benefits in the
case of invalidity and death.
Defined benefit pension plans
At the Daimler Group, defined benefit pension obligations exist
as well as, to a smaller extent, defined contribution pension
obligations, specific to the various countries. In addition,
healthcare benefit obligations are recognized outside Germany.
Table 71 F.47 shows the composition of provisions for pension
benefit plans and similar obligations.
22. Pensions and similar obligations
The Group recognizes a provision for awarding the PPSP in the
consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially
represents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the
individual years are measured based on the price of Daimler
ordinary shares and the estimated target achievement.
The number of phantom shares that vest of the PPSPs granted
in 2014 to 2017 will be based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
RoS compared with benchmarks oriented towards competitors.
Special rules apply for the members of the Board of Management:
Daimler's RoS must be not equal to but higher than that of
the competitors in order to achieve the same target achievement
as the other plan participants. For the PPSP granted in 2015
and until 2017, an additional limit on target achievement was
agreed upon for the reference parameter RoS for the members
of the Board of Management. In the case of target achievement
between 195% and 200%, an additional comparison is made on
the basis of the RoS achieved in absolute terms. If the actual
RoS for the automotive business is below the strategic target
(currently 9%) in the third year of the performance period,
target achievement is limited to 195%.
Determination of the number of phantom shares that vest of the
paid-out PPSP 2013 is based on return on net assets derived
from internal targets and return on sales (ROS) compared with
benchmarks oriented towards competitors.
In 2017, the Group adopted a Performance Phantom Share Plan
(PPSP), similar to those used in previous years, under which
eligible employees are granted phantom shares entitling them
to receive cash payments after four years. During the four-
year period between the allocation of the preliminary phantom
shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares. The
amount of cash paid to eligible employees at the end of the
holding period is based on the number of vested phantom
shares (determined over a three-year performance period)
multiplied by the quoted price of Daimler's ordinary shares
(calculated as an average price over a specified period at the
end of the four-year plan period). The vesting period is
therefore four years. For the existing plans, the quoted price
of Daimler's ordinary shares to be used for the payout is
limited to 2.5 times the Daimler share price at the date of grant.
Furthermore, the payout for the members of the Board of
Management is also limited to 2.5 times the allotment value
used to determine the preliminary number of phantom
shares. The limitation of the payout for the members of the
Board of Management also includes the dividend equivalent.
Performance Phantom Share Plans
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
276
-57
The Group's main German and non-German pension plans
are described below.
In millions of euros
F.47
In millions of euros
December 31, 2016
Non-German
German
Plans
Total
Plans
Plans
Total
December 31, 2017
Non-German
German
Present value of defined benefit pension obligations and fair value of plan assets
F.48
The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
Market prices are available for equities and bonds due
to their listing in active markets. Most of the bonds
have investment grade ratings. They include government
bonds of very good creditworthiness.
Plan assets and income from plan assets are used solely
to pay pension benefits and to administer the plans.
The composition of the Group's pension plan assets is
shown in table 7 F.49.
Composition of provisions for pensions
and similar obligations
Composition of plan assets
defined benefit pension plans
Reconciliation of the net obligation from
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
278
9,034
5,767
1,187
1,142
7,847
4,625
Provision for pension benefits
Provision for other
post-employment benefits
December 31,
2016
2017
The development of the relevant factors is shown in table
7 F.48.
Pension benefits paid
-304
-744
11,037
5,823
4,745
10,568
Liabilities from finance leases
27
325
352
30
203
4,823
233
642
960
1,602
510
48,746
78,378
127,124
47,288
278
70,398
788
Loans, other financing liabilities
117,686
6,214
11,642
67,073
13,820
49,260
63,080
Commercial paper
1,045
1,045
1,701
1,701
Liabilities to financial institutions
Liabilities from ABS transactions
17,583
34,555
16,528
13,146
29,674
Deposits in the direct banking business
9,450
2,010
11,460
8,876
2,766
16,972
F.57
Reconciliation of minimum lease payments to liabilities
from finance lease arrangements
In millions of euros
307
158
71
48
236
110
496
361
144
128
later than five years
352
284
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Other financial liabilities
The composition of other financial liabilities is shown
in table
F.58.
Financial liabilities measured at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
Further information on other financial liabilities is provided
in Note 31.
26. Deferred income
The composition of deferred income is shown in table
71 F.59.
27. Other liabilities
233
93
89
68
Liabilities from finance
lease arrangements
at December 31,
Future minimum
lease payments
Interest included in future
minimum lease payments
at December 31,
2017
2016
2017
at December 31,
2016
2017
2016
Maturity
within one year
39
42
12
12
27
30
between one and five years
150
161
61
53,288
13,785
Notes/bonds
Total
Provisions for other risks
In millions of euros
Product
warranties
Personnel and
social costs
Other
Total
Balance at December 31, 2016
6,102
4,260
5,697
F.55
16,059
2,512
2,181
4,734
9,427
thereof non-current
3,590
2,079
963
6,632
Additions
thereof current
Further information on other provisions for other risks
is provided in Notes 5 and 29.
Provisions for other risks include obligations for expected
reductions in revenue already recognized, such as bonuses,
discounts and other price reduction commitments. They also
include expected costs in connection with liability and litigation
risks as well as risks from legal proceedings, provisions for
optimization programs, provisions for environmental protection
risks, as well as provisions for other taxes and various other
risks which cannot be allocated to any other class of provision.
Other
2017
2016
Present value of defined
benefit obligations
1,142
1,187
Fair value of plan assets and
Funded status
reimbursement rights
Net periodic cost for other
post-employment benefits
68
- 1,074
72
-1,115
-71
-75
282 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Provisions for other risks
The development of provisions for other risks is summarized
in table F.55.
Product warranties
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The
provision for these product warranties covers expected costs
for legal and contractual warranty claims as well as expected
costs for goodwill consessions and recall campaigns. The
utilization date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties is principally expected within a period until 2020.
Personnel and social costs
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans. The
additions recorded to the provisions for profit sharing and man-
agement bonuses in the reporting year usually result in cash
outflows in the following year. The cash outflow for non-current
provisions for personnel and social costs is primarily expected
within a period until 2028.
3,414
Table 71 F.60 shows the composition of other liabilities.
2,379
9,972
2,209
4,708
10,052
thereof non-current
3,519
2,216
1,457
7,192
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
283
3,135
24. Financing liabilities
in table
F.56.
Liabilities from finance leases relate to leases of property,
plant and equipment which transfer substantially all risks
and rewards to the Group as lessee. Future minimum lease
payments under finance leases amounted to €496 million
at December 31, 2017 (2016: €361 million). The reconciliation
of future minimum lease payments from finance lease arrange-
ments to the corresponding liabilities is shown in table 7 F.57.
F.56
Financing liabilities
In millions of euros
Current
At December 31, 2017
Non-current
Total
Current
At December 31, 2016
Non-current
The composition of financing liabilities is shown
thereof current
17,244
6,165
Utilizations
-2,576
-2,030
-2,934
-7,540
Reversals
-217
-134
-578
-929
Compounding and effects from changes in discount rates
15
35
11
61
Currency translation and other changes
-84
-85
-210
-379
Balance at December 31, 2017
6,654
4,425
4,179
In millions of euros
F.58
In millions of euros
1,793
Miscellaneous other liabilities
388
-
388
342
4
346
2,672
10
1
2,682
15
2,453
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
285
28. Consolidated statement of cash flows
Calculation of funds
At December 31, 2017 similar to the prior year, cash and cash
equivalents included restricted funds of less than €1 million.
Cash used for/ provided by operating activities
Changes in other operating assets and liabilities
are shown in table 7 F.61.
The decrease in provisions in the reporting year mainly resulted
from provisions for pensions and similar obligations primarily
due to an extraordinary contribution to the German pension plan
assets.
Table 71 F.62 shows cash flows included in cash used for/
provided by operating activities.
2,438
The line item other non-cash expense and income within
the reconciliation of profit before income taxes to cash
provided by operating activities in the reporting year primarily
comprised the Group's share in the profit/loss of companies
accounted for using the equity method (see Note 13). In the
prior year, the reconciling item mainly comprised the Group's
share in the profit/loss of companies accounted for using the
equity method. An additional effect resulted from the income
related to the contribution of the shares of Renault S.A. and
Nissan Motor Company Ltd. into the pension plan assets.
314
304
1,792
9,470
3,444
5,559
9,003
F.60
Other liabilities
In millions of euros
Current
At December 31, 2016
Total
10
Current
Total
At December 31, 2017
Non-current
Income tax liabilities
413
9
422
Other tax liabilities
1,871
1
1,872
Non-current
Cash used for investing activities
In the prior year the cash flow was affected by the acquisition
of Athlon Car Lease International B.V.
The consideration paid for the acquisition comprised the
purchase price amounting to €1,100 million and financing
liabilities settled upon finalizing the transaction in an
amount of €2,741 million. The consideration was reduced
by the acquired cash and cash equivalents amounting
to €191 million.
187
211
Dividends received from
equity-method investments
843
103
Dividends received from
other shareholdings
52
85
F.63
Interest received
Changes in liabilities arising from financing activities
In millions of euros
Cash flows
16,794
Obtaining or losing control of subsidiaries
Changes in foreign exchange rates
-7,135
Fair value changes
-119
-325
Other changes
-973
2017
-229
2016
2017
Cash provided by financing activities
Cash provided by financing activities includes cash flows
from hedging the currency risks of financial liabilities. In 2017,
cash provided by financing activities included payments for the
reduction of outstanding finance lease liabilities of €39 million
(2016: €43 million).
Table 71 F.63 includes changes in liabilities arising from financing
activities, divided into cash and non-cash components, which
have to be prospectively disclosed starting January 1, 2017.
F.61
Changes in other operating assets and liabilities
In millions of euros
Provisions
Financial instruments
2017
2016
- 1,467
341
- 108
165
Miscellaneous other assets and liabilities
1,527
1,644
-48
2,150
F.62
Cash flows included in cash used for/
provided by operating activities
In millions of euros
Interest paid
5,802
3,668
695
336
1,292
25
1,317
1,107
48
1,155
Accrued interest expenses
905
905
883
Liabilities from wages and salaries
883
496
539
1,035
477
556
1,033
Other
4,902
231
5,133
Deposits received
2,292
1,230
1,062
Current
At December 31, 2017
Non-current
Total
Current
At December 31, 2016
Non-current
Total
Derivative financial instruments used
in hedge accounting
168
528
696
1,312
1,151
2,463
Financial liabilities recognized at fair
value through profit or loss
62
49
111
107
79
186
1,108
1,217
2,325
4,594
Other financial liabilities
263
Miscellaneous other financial liabilities
3,450
5,198
Deferral of sales revenue received from sales
with residual-value guarantees
534
963
1,497
498
950
1,448
Deferral of advance rental payments received
1,748
from operating lease arrangements
900
1,724
839
823
1,662
Other deferred income
596
558
1,154
359
824
5,095
3,381
1,714
8,703
2,012
10,715
8,123
2,097
10,220
8,933
2,589
11,522
9,542
3,327
12,869
F.59
Deferred income
In millions of euros
Current
At December 31, 2017
Non-current
At December 31, 2016
Total
Current
Non-current
Total
Deferral of revenue from multi-year service
and maintenance agreements
4,857
Key data for other post-employment benefits
Liabilities from residual value guarantees
17
107
664
559
105
Industrials¹
2,535
2,440
95
2,893
2,783
440
110
1,149
942
207
1,374
1,146
228
Technology and telecommunication
1,127
932
195
Consumer goods
1,167
547
219
Composition of plan assets
In millions of euros
At December 31, 2017
German Non-German
Total
Plans
Plans
Total
At December 31, 2016
German Non-German
Plans
Plans
Energy, commodities and utilities
Healthcare
959
128
1,048
907
141
Financials
1,193
1,027
166
1,366
1,147
831
981
186
Others
30
16
57
5
52
Bonds
14,189
12,430
1,759
12,707
46
10,949
Other exchange-traded instruments
5
1
4
5
3
2
Total exchange-traded instruments
21,750
19,043
1,758
Securitized bonds
665
7,547
46
46
43
43
Equities
7,556
6,612
944
8,555
7,523
1,032
Government bonds
4,658
3,844
814
4,438
3,397
1,041
Corporate bonds
9,485
8,556
929
8,212
F.49
The components of pension cost included in the consolidated
statement of income are shown in table > F.50.
Pension cost
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
489
377
112
582
465
117
Actuarial gains/losses (-)
996
541
455
Interest income from plan assets
994
164
Actual return on plan assets
1,485
918
567
1,576
1,295
281
Contributions by the employer
3,692
830
2,920
17,306
20,226
-229
F.54
-932
-748
- 184
Currency exchange-rate changes and other changes¹
-787
17
-804
65
16
49
Present value of the defined benefit obligation
at December 31
31,744
27,746
3,998
31,173
26,982
4,191
Fair value of plan assets at January 1
23,384
20,315
3,069
3,596
2,707
96
2,337
24,197
3,018
23,384
20,315
3,069
Funded status
-4,529
-3,549
thereof recognized in other assets
96
27,215
-980
96
-6,667
-1,122
58
thereof recognized in provisions for pensions
-4,625
-3,549
- 1,076
-7,847
-6,667
- 1,180
1 Including reclassifications to provisions for other risks.
-7,789
58
Fair value of plan assets at December 31
-12
16
90
Contributions by plan participants
58
54
4
71
66
5
Settlements
-52
-52
Pension benefits paid
-910
-702
-208
-868
-705
- 163
Currency exchange-rate changes and other changes¹
-494
16
-510
4
2,427
21,267
and similar obligations
2,792
1.9
1.7
3.7
3.9
1 For German Plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation
to the Group's active employees as well as retirees and their survivors. For most non-German Plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
F.52
Sensitivity analysis for the present value of defined benefit pension obligation
Total
German
Plans
December 31, 2017
Non-German
1.7
Plans
German
Plans
December 31, 2016
Non-German
Plans
In millions of euros
Sensitivity for discount rates
Sensitivity for discount rates
+ 0.25%
-1,184
-1,045
- 139
-1,193
Total
1.8
Expected increase in cost of living¹
Discount rates
Effect on future cash flows
Daimler currently plans to make contributions of €0.7 billion to
its pension plans for the year 2018; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€1.0 billion in 2018.
The weighted average duration of the defined benefit
obligations is shown in table 71 F.53.
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2017, the total cost from defined contri-
bution plans amounted to €1.6 billion (2016: €1.5 billion).
Of those payments €1.5 billion (2016: €1.4 billion) was related
to governmental pension plans.
Multi-employer plans
Daimler participates in some collectively bargained defined
benefit pension plans maintained by more than one employer.
The Group presents several of these plans in its consolidated
financial statements as defined contribution plans because the
information required to use defined benefit accounting is not
available in a timely manner or in sufficient detail. The Group
cannot exercise direct control over such plans and the plan
trustees have no legal obligation to share information directly
with participating employers. Higher contributions by the
Group to such a pension plan could be required in particular
when an underfunded status exceeds a specific level. Exit
from such a plan can lead to the companies involved having
to offset the potential future shortfall relating to their share
of the plan. Furthermore, the possibility exists that Daimler
can be liable for other participants' obligations.
The multi-employer pension plans previously included a pension
plan in the NAFTA region, for which the information required
to use benefit accounting for defined benefit plans was available
for the first time in 2017. The company withdrew from the
plan by the end of November 2017. The settlement of the plan
resulted in a gain for Daimler Trucks of €117 million. The EBIT
effect is presented in cost of sales in the consolidated statement
of income. The present value of future financial obligations is
presented in provisions for other risks as of December 31, 2017.
As a result, multi-employer plans at the Daimler Group are
classified as not material at December 31, 2017.
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to
be accounted for as defined benefit plans. These obligations
are funded to a small extent through reimbursement rights
and plan assets. Table 71 F.54 shows key data for other post-
employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to the
usual risks for defined benefit plans, in particular the risk of
changes in discount rates.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
281
F.51
Significant factors for the calculation of pension benefit obligations
In percent
German Plans
At December 31,
Non-German Plans
2017
2016
2017
At December 31,
2016
-1,040
For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is achieved.
-153
1,308
407
68
Sensitivity for life expectancy
- 1 year
-437
-366
-71
-448
-375
-73
475
F.53
benefit obligations
In years
2017
2016
German Plans
16
17
18,475
Non-German Plans
17
Weighted average duration of the defined
70
417
487
1,113
195
1,247
1,090
157
Sensitivity for expected increases
in cost of living
+ 0.10%
109
90
19
105
83
22
Sensitivity for expected increases
-0.10%
- 107
-89
-18
- 120
- 100
-20
Sensitivity for life expectancy
+ 1 year
-0.25%
The calculations carried out by actuaries were done in isolation
for the evaluation parameters regarded as important. This
means that if there is a simultaneous change in several param-
eters, the individual results cannot be summed due to correla-
tion effects. With a change in the parameters, the sensitivities
shown cannot be used to derive a linear development of the
defined benefit obligation.
in cost of living
Sensitivity analysis
40
Total non-exchange-traded instruments
5,465
5,154
311
2,117
1,840
277
Fair value of plan assets
27,215
853
24,197
23,384
20,315
3,069
thereof fair value of own transferable
financial instruments
thereof fair value of self-used plan assets
50
50
64
64
3,018
893
46
3,952
Alternative investments²
512
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 71 F.52.
388
124
555
75
Real estate
537
436
101
570
450
120
Other non-exchange-traded instruments
418
378
40
99
57
42
Cash and cash equivalents
3,998
1 Including the shares in Renault and Nissan in the amount of €2,010 (in 2016: €2,178) million.
2 Alternative investments mainly comprise private equity.
F.50
480
In millions of euros
-118
-43
- 173
Table 7 F.51 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
- 130
-43
Net interest income
2
2
5
-161
5
-20
-784
-662
-122
280
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement assumptions
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost
is generally January 1. The assumptions used to calculate
the defined benefit obligations vary according to the economic
conditions of the countries in which the pension plans
are situated.
Calculation of the defined benefit obligation uses life
expectancy for the German plans based on the 2005 G
mortality tables of K. Heubeck. For non-German plans,
comparable country-specific calculation methods are used.
Pension cost
-729
Net interest expense
-709
German
Plans
2017
Non-German
Plans
Total
Total
Non-German
Plans
2016
Current service cost
-687
279
-96
-20
-15
117
-591
Past service cost, curtailments and settlements
117
-89
-512
-601
German
Plans
5
Two coaches celebrate world premieres in the booming intercity
bus market. The year 2017 was a special one for Daimler Buses.
The new Setra S 531 DT double-decker bus and the Setra TopClass 500
impress with their efficiency, versatility, comfort and safety. The
Mercedes-Benz Tourismo RHD high-decker coach also celebrated its
premiere in 2017. It's impressing transportation companies, passengers
and drivers alike through its cost-effectiveness, safety, functionality
and high level of comfort.
daimler.com/company/business-units/daimler-buses
④daimler.com/products/buses/setra
daimler.com/products/buses/mercedes-benz
Our city buses are also scoring points with their innovations.
For example, the hybrid drive of the Mercedes-Benz Citaro,
combined with its new electrohydraulic steering system, is further
reducing its fuel consumption. And our sales offensive in the
emerging markets is in full swing. Daimler Buses has launched two
new bus models on the market in Kenya, Cameroon and the Ivory
Coast. This is how Daimler Buses is responding in eastern and
central Africa to the growing demand for comfortable and safe
buses for passenger transportation. Our global production net-
work is also part of this campaign: The chassis for local assembly
come from our bus production plants in India and Brazil.
The Mercedes-Benz Sprinter established the market for large vans - and has broken records
ever since. More than 3.4 million units have been delivered to customers in over 130 countries to date.
That makes the Sprinter one of the most successful commercial vehicles of all time and a bestseller
in the Daimler product portfolio. In addition to its commercial applications, the Sprinter is playing an
increasingly important role in the growing market for camper vans. With the introduction of the fully
connected new Sprinter, Mercedes-Benz Vans is ushering in the age of the digital van and once again
reinventing the worldwide van segment. Through numerous innovations and even greater versatility, our
new large van offers customized solutions to a wide range of customers and sectors. In addition, the
new model generation equipped with new drive variations offers tailor-made solutions for the diverse
requirements of the growing camper van market.
MUSEUM
24
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
Daimler Buses is still on the upswing, thanks to its pioneering
city buses and coaches with over eight tons gross vehicle
weight, its global positioning and its innovative mobility solu-
tions. Our full line of vehicles from the Mercedes-Benz, Setra
and BharatBenz brands covers a wide range of requirements. In
addition, our products impress customers through their safety,
efficiency and environmental friendliness. Our portfolio is rounded
out by the OMNIplus and BusStore service brands, our worldwide
workshop network and our comprehensive range of services -
everything that keeps Daimler's bus segment on the move.
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 25
H
The new Setra S 531 DT double-decker bus
and the Setra TopClass 500 are now rounding
out our successful portfolio.
Citaro hybrid
EF
ON THE ROAD
SUCCESS
STORY
99 FUTURE VEHICLES WILL BE
CONNECTED, AUTONOMOUS,
ELECTRIC AND SHARED... 66
daimler.com/company/business-units/mercedes-benz-vans
5E6244
The launch of the new Sprinter will begin in
the first half of 2018 in Europe, followed
by other markets. It will once again redefine
the van segment.
The Vito is a reliable partner for tradesmen,
a delivery van, a high-capacity taxi and an
emergency vehicle - a real all-rounder on
course for success in many sectors all over
the world.
New V
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 21
RECORD
BREAKERS
The Vito and the V-Class full-size MPV are also
pacesetters for the global growth strategy
of Mercedes-Benz Vans. The mid-size vans with
the star are exciting and impressing our customers
all over the world. The Mercedes-Benz Vito and the
V-Class are proving to be strong sales drivers with
sustained high growth rates. Their attractive design
and diverse variants are setting the benchmarks in
their respective segments. The versatile Vito mid-size
van combines spaciousness with high quality and
stands out through its great adaptability. For its part,
the V-Class combines the high-quality design of a
Mercedes-Benz car with the strengths of a mid-size
van. Mercedes-Benz Vans has been delivering Vito
and V-Class models in China, the world's largest auto-
mobile market, since 2016. Both vehicles are "Made
in China for China" and manufactured by our local
joint venture Fujian Benz Automotive Co., Ltd. (FBAC)
in Fuzhou.
22
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
WORLDWIDE
SUCCESS
The Mercedes-Benz Citaro, our best-selling
city bus, is now also on the market in
a future-oriented hybrid variant.
О НЕТВО
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 17
99...WE ARE BASICALLY
VEHICLES FOR
EVERY MARKET
S MB3098
In another milestone, Daimler Trucks has put more than 60,000 BharatBenz
trucks on the road in India in the five years since the brand's market launch.
As a world market leader with a global pres-
ence, Daimler Trucks is close to its customers.
We identify customer needs quickly and respond
to them with tailor-made solutions. That's why
we aim to expand our strong position in our core
markets and enter new markets as well. For exam-
ple, in 2012 Daimler Trucks launched BharatBenz,
its first brand specially tailored to the needs of
a specific market. Modern BharatBenz trucks
in weight classes between nine and 49 tons are
manufactured locally for the Indian market. At
our production plant in Wanaherang, Indonesia,
Mercedes-Benz trucks have been rolling off the
assembly line since 2017. In addition to FUSO
vehicles, Daimler Trucks will produce heavy-duty
trucks with the star for the Indonesian market
at this plant in the future. Daimler Trucks' FUSO
brand has occupied a very strong position in
Indonesia for more than 40 years. In China, the
world's biggest truck market, Daimler is also
stepping on the gas through Beijing Foton Daimler
Automotive (BFDA), its joint venture with Beiqi
Foton Motor. All in all, these are the ideal precondi-
tions for keeping Daimler Trucks in the forefront of
the international truck markets in the future.
CASE
daimler-trucks
In 2017, Daimler and its partner Beiqi
Foton Motor produced more than
112,000 Auman brand mid-size and
heavy-duty trucks in China.
18 DAIMLER ANNUAL REPORT 2017 | #1 | CORE
A STRONG
VAN PORTFOLIO
④ daimler.com/company/business-units/
Mercedes-Benz is the world's first premium automaker in
the promising segment of mid-size pickups, represented
by the X-Class. The mid-size pickup segment is global in scope,
high-volume and set for further growth. Thanks to its typical
pickup strengths and Mercedes-Benz standards of design, com-
fort, safety and connectivity, the X-Class forms a bridge between
commercial and private use and between rural and urban appli-
cations. That makes it not only a commercial vehicle but also a
lifestyle and family vehicle. So the X-Class is adding a fourth
category to the Mercedes-Benz Vans portfolio - at the interface
between cars and commercial vehicles, where we're already
A comprehensive product range is the engine of our
"Mercedes-Benz Vans goes global" strategy. Thanks to its
complete range of vans for private and commercial use,
Daimler is ideally positioned in the growing global van market.
The mid-size pickups, commercial vehicles, full-size MPVs and
travel and recreational vehicles from Mercedes-Benz stand
for reliability, quality and value retention all over the world. The
portfolio ranges from the X-Class to the Citan urban delivery van,
the mid-size Vito ("Metris" in the United States) and V-Class vans
including the Marco Polo models, and the large Sprinter van.
REDEFINING MOBILITY WITH
AN INTELLIGENT MIX.
66
Stylish and robust: Mercedes-Benz has
created the X-Class for a wide range of
customer groups all over the world.
S.MB 4704
daimler.com/products/camper-vans
Mid-size vans with the star are a major pillar of Mercedes-Benz
Vans' success. The V-Class full-size MPV is a standout vehicle
for family, sports and recreational activities. It combines the func-
tionalities of traditional vans with the strengths of Mercedes-Benz
sedans. The new V-Class RISE was added to the line in 2017.
The Marco Polo travel and camper vans, which are based on the
V-Class and the Vito, have been especially successful. For the first
time, they are now also offered with right-hand drive in Australia
and the United Kingdom. Following the Marco Polo and the Marco
Polo ACTIVITY, the product family has been supplemented by the
compact Marco Polo HORIZON camper van since 2017.
④ daimler.com/products/vans
enjoying success with the Vito and the V-Class. The X-Class
appeals to pickup owners who would like their vehicles to have
more of the qualities typical of cars. It also attracts customers
who have previously driven a car, a van or an SUV.
The new Marco Polo HORIZON combines
functionality with high quality design -
and it's thrilling new customer groups.
2,463
2,649
2,649
2,463
807
696
3 Fair value measurement is based on inputs for which no observable market data is available.
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
186
186
F.69
Level 11
In millions of euros
3 Fair value measurement is based on inputs for which no observable market data is available.
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
44,037
294
111
9,577
9,144
62,758
118,929 56,171
63,944 54,800
10,948
1,371
44,037
48,934
781
128,437 58,496 69,941
68,422 57,715 10,707
11,081
10,300
48,934
thereof other financing liabilities
thereof liabilities from ABS transactions
thereof bonds
Fair values of financial liabilities measured at cost
Financing liabilities
80,851
80,851
86,136
86,136
Fair values of financial assets measured at cost
Receivables from financial services
Level 33
At December 31, 2016
Level 22
Level 11
Total
At December 31, 2017
Level 22 Level 33
Total
Measurement hierarchy of financial assets and liabilities not measured at fair value
111
5,071
Financial liabilities measured
106
6,615
10,063
thereof marketable debt securities
171
measured at fair value
thereof equity instruments
5,750
5,164
65
10,914
6,721
10,234
Financial assets available-for-sale
Financial assets measured at fair value
Total
At December 31, 2016
Level 22 Level 33
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Level 11
3,513
at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
3,448
93
Liabilities measured at fair value
7,586
5,164
12,750
5,974
6,721
1,730
1,730
166
10,748
2,379
Derivative financial instruments
used in hedge accounting
106
106
82
82
at fair value through profit or loss
Financial assets measured
73
5,677
2,379
12,695
F.70
at (amortized) cost
according to IAS 39 measurement categories
Fair value hedges
Table 71 F.73 shows the fair values of hedging instruments
at the end of the reporting period.
Fair values of hedging instruments
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks. For these hedging
purposes, the Group mainly uses currency forward transac-
tions, cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
See Note 1 for qualitative descriptions of accounting for
financial instruments (including derivative financial instruments).
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at
fair value through profit or loss are shown in table > F.72.
The Group uses fair value hedges primarily for hedging
interest rate risks.
Total interest income and total interest expense
Net gains/losses on financial liabilities measured at (amortized)
cost mainly include gains and losses from currency translation.
Net losses on loans and receivables mainly include impairment
losses that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign currency
gains and losses are also included.
Net gains on available-for-sale financial assets mainly include
income from the measurement of equity interests as well as
gains realized on their disposal. In 2016, these gains primarily
comprise income of €605 million from the transfer of the
investments in Renault and Nissan into the Daimler Pension
Trust e.V. (see Note 3).
Net gains/losses of financial assets and liabilities measured
at fair value through profit or loss primarily include gains
and losses attributable to changes in fair values.
Table 71 F.71 shows the net gains or losses of financial
instruments included in the consolidated statement
of income (excluding derivative financial instruments
used in hedge accounting).
Net gains or losses
The carrying amounts of financial instruments presented
according to IAS 39 measurement categories are shown
in table 7 F.70.
Measurement categories
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 295
4 This does not include liabilities from financial guarantees
of €141 million as of December 31, 2017 (2016: €169 million)
as these are not assigned to an IAS 39 measurement category.
Net gains and losses from these hedging instruments
and the changes in the value of the underlying transactions
are shown in table 71 F.74.
Net gains/losses
Total interest income and total interest expense
At December 31, 2017
Level 22
Level 33
F.72
1 Financial instruments classified as held for trading;
these amounts relate to financial instruments that are
not used in hedge accounting.
-165
-50
-346
-542
F.71
735
-229
131
2016
2017
Financial liabilities measured
Loans and receivables
Financial assets and liabilities recognized
at fair value through profit or loss¹
Available-for-sale financial assets
In millions of euros
27
3 This does not include liabilities from finance leases of €352 million
as of December 31, 2017 (2016: €233 million) as these are not
assigned to an IAS 39 measurement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used
in hedge accounting.
1 This does not include lease receivables of €24,441 million
as of December 31, 2017 (2016: €20,812 million) as these
are not assigned to an IAS 39 measurement category.
10,063
Marketable debt securities
73,398
76,503
Loans and receivables
3,089
3,167
Other receivables and financial assets
10,748
10,614
Trade receivables
59,695
61,346
Receivables from financial services¹
Assets
In millions of euros
2016
At December 31,
2017
11,990
Other financial assets
1,173
Available-for-sale financial assets
The table above does not include cash and cash equivalents
or the carrying amounts of derivative financial instruments
used in hedge accounting as these financial instruments are
not assigned to an IAS 39 measurement category.
186
111
Financial liabilities measured at fair value
through profit or loss²
139,071
149,820
(amortized) cost
Financial liabilities measured at
11,567
117,453
10,051
12,474
126,772
10,574
Other financial liabilities4
106
82
Financing liabilities³
Trade payables
Liabilities
Financial assets measured at fair value
through profit or loss²
811
11,559
11,236
Carrying amounts of financial instruments presented
Level 11
Contingent liabilities
In millions of euros
The fair values of financial instruments were calculated on
the basis of market information available on the balance
sheet date. The following methods and premises were used:
Table 71 F.66 shows the carrying amounts and fair values
of the respective classes of the Group's financial instruments.
The fair value of a financial instrument is the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at
the measurement date. Given the varying influencing factors,
the reported fair values can only be viewed as indicators
of the prices that may actually be achieved on the market.
Carrying amounts and fair values of financial instruments
31. Financial instruments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
290
2,528
3,009
597
890
later than five years
1,335
1,421
later than one year and not later
than five years
596
698
2016
At December 31,
2017
not later than one year
Maturity
In millions of euros
Future minimum lease payments under non-cancelable
long-term rental and lease agreements (nominal amounts)
F.65
In addition, the Group had issued irrevocable loan
commitments as of December 31, 2017. These loan commit-
ments had not been utilized as of that date. An overview
of the maturities of irrevocable loan commitments is shown
in Table 7 F.79 in Note 32.
Furthermore, other financial obligations exist from the
acquisition of intangible assets, property, plant
and equipment and lease property of €4,876 million (2016:
€3,977 million).
Receivables from financial services
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the
respective carrying amounts because the interest rates agreed
and those available in the market do not significantly differ.
The fair values of receivables from financial services with fixed
interest rates are determined on the basis of discounted
expected future cash flows.
F.66
Carrying amounts and fair values of financial instruments
10,063
10,063
10,981
10,981
12,072
12,072
10,614
10,614
11,990
11,990
80,851
80,507
The Group has financial obligations resulting from
non-cancelable long-term rental agreements and operat-
ing leases for property, plant and equipment; the contracts
partially include renewal or purchase options and price-escalation
clauses. In 2017, Daimler recognized expense payments
from operating leases of €563 million (2016: €539 million).
Table 71 F.65 provides an overview of when future minimum
lease payments under non-cancelable long-term rental and
lease agreements fall due (nominal amounts).
86,136
Fair value
At December 31, 2016
Carrying
amount
Fair value
amount
At December 31, 2017
Carrying
Available-for-sale financial assets
Marketable debt securities
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
In millions of euros
85,787
10,748
Other financial obligations
While Daimler's maximum future obligation resulting from the
guarantee of the bank loan can be determined (2017: €100
million), the Group is unable to reasonably estimate the amount
or range of amounts of possible loss resulting from the financial
guarantee in form of the equity maintenance undertaking due
to the various uncertainties described above, although it could
be material. Only the guarantee for the bank loan is included in
the above disclosures for financial guarantees.
Financial guarantees principally represent contractual arrange-
ments. These guarantees generally provide that in the event
of default or non-payment by the primary debtor, the Group will
be required to settle such financial obligations. The maximum
potential obligation resulting from these guarantees amounted
to €667 million at December 31, 2017 (2016: €784 million)
and includes liabilities recognized in the amount of €141 million
(2016: €169 million).
Financial guarantees
30. Financial guarantees, contingent
liabilities and other financial obligations
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized
in the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connection
with legal proceedings are disclosed in the Group's consolidated
financial statements. Risks resulting from legal proceedings
sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such
proceedings have ended. The Group may also become liable
for payments in legal proceedings for which no provisions
were recognized and/or contingent liabilities were disclosed.
Uncertainty exists with regard to the amounts or due dates
of possible cash outflows. Although the final resolution of any
such proceedings could materially affect Daimler's operating
results and cash flows for a particular reporting period, Daimler
believes that it should not exert a sustained influence on the
Group's financial position.
and the defendants have been filed since then. A hearing of
witnesses and experts took place between December 6 and
14, 2010. The parties submitted further written statements
on July 15 and November 15, 2011. After the Tribunal's President
resigned for personal reasons as of March 30, 2012, the new
President was determined by the Administrative Court in Berlin
as of October 29, 2012. In the meantime, further briefs were
exchanged and the arbitrators held further hearings in May and
October 2014, in June 2015 and June 2016 as well as in March,
July and September 2017. In the first half of 2017, the sharehold-
ers Deutsche Telekom AG and Daimler Financial Services AG
asserted counterclaims relating to breaches of duty by the
Federal Republic of Germany with regard to the delay in the start
of the toll system. Daimler considers the claims of the Federal
Republic of Germany to be without merit and will continue to
defend itself.
Since, among other things, some of the contractual penalties
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.
The defendants submitted their response to the statement of
claims on June 30, 2006. The Federal Republic of Germany
delivered its reply to the arbitrators on February 15, 2007, and
the defendants delivered their rebuttal on October 1, 2007
(see also Note 30). The arbitrators held the first hearing on
June 16 and 17, 2008. Additional briefs from the claimant
- lost revenue of €3.33 billion for the period September 1, 2003
through December 31, 2004 plus interest at 5% per annum
above the respective base rate since submission of claims (an
amount of €2 billion as at the date of September 29, 2014),
- contractual penalties of approximately €1.65 billion through
July 31, 2005 plus interest at 5% per annum above the
respective base rate since submission of claims (an amount
of €225 million as at the date of September 29, 2014) and
- refinancing costs of €196 million.
The Federal Republic of Germany initiated arbitration proceed-
ings against Daimler Financial Services AG, Deutsche Telekom
AG and Toll Collect GbR and submitted its statement of claims
in August 2005. It seeks damages, contractual penalties and the
transfer of intellectual property rights to Toll Collect GmbH.
In particular, the Federal Republic of Germany is claiming
As already reported, in August 2016, Mercedes-Benz Canada
(MB Canada) was added as a defendant to a putative nation-
wide class action pending in Ontario Superior Court. The main
allegation in the matter is that MB Canada, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, was allegedly negligent in selling
such vehicles, purportedly not recalling them quickly enough,
and failing to provide an allegedly adequate replacement
airbag inflator. In addition, on June 28, 2017, Takata entities
along with Daimler AG and MBUSA were named as defendants
in a US nation-wide class action, which was filed in New Jersey
federal court and includes allegations that are similar to the
Canadian action. In the third quarter of 2017, the New Jersey
lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multi-district
litigation proceedings. The previously reported lawsuit filed
by the State of New Mexico, which also made similar claims
against MBUSA and many other companies that sold vehicles
equipped with Takata airbag inflators, was dismissed without
prejudice on June 22, 2017. It may, however, be filed again
under specific conditions. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz vehi-
cles as being without merit, and the Daimler Group affiliates
respectively affected will further defend themselves against
the claims.
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
is cooperating in full with the authority. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler AG's position.
recognized and/or contingent liabilities have been disclosed,
so as not to prejudice Daimler AG's position.
287
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust
proceedings, Daimler AG faces customers' claims for damages
to a considerable degree. Respective legal actions have been
initiated in various states in and outside of Europe. Appropriate
legal remedies are taken to defend the company. In accor-
dance with IAS 37.92, no further information is disclosed with
respect to whether, or to what extent, provisions have been
In this context, Daimler AG may now disclose that it filed an
application for immunity from fines (leniency application) with
the European Commission some time ago. In late October
2017, the European Commission conducted preannounced
inspections with Daimler in Stuttgart (as well as further
inspections with other manufacturers) in order to further clarify
the facts of the case. Currently, it continues to be uncertain
whether the European Commission will initiate formal antitrust
proceedings. At present, Daimler does not expect this unquan-
tifiable contingent liability to have any material impact on its
profitability, cash flow and financial situation.
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anticom-
petitive behavior relating to vehicle technology, costs, suppliers,
markets, and other competitive attributes, including diesel
emissions control technology, since the 1990s. On October 4,
2017, all pending US class actions were centralized in one pro-
ceeding by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Northern District
of California. Daimler AG and the other Daimler group affiliates
respectively affected regard the US and Canadian lawsuits
as being without merit, and will defend against the claims.
and/or Daimler's interaction with the relevant state and federal
authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities, criminal and antitrust laws. These authorities and
institutions include, among others, the U.S. Department of Justice
(DOJ), which in April 2016 requested that Daimler AG review
its certification and admissions processes related to exhaust
emissions of diesel vehicles in the United States by way of
an internal investigation in cooperation with the DOJ, the U.S.
Environmental Protection Agency (EPA), the California Air
Resources Board (CARB) and other US state authorities, the U.S.
Securities and Exchange Commission (SEC), the European
Commission, with which Daimler AG has filed a leniency applica-
tion, as well as national cartel authorities and other authorities
of various foreign states as well as the German Federal Financial
Supervisory Authority (BaFin) and the German Federal Motor
Transport Authority (KBA), the diesel emissions committee of
inquiry of the German Parliament and the Stuttgart district
attorney's office. The Stuttgart district attorney's office is con-
ducting criminal investigation proceedings against Daimler
employees concerning the suspicion of fraud and criminal
advertising, and searched the premises of Daimler at several
locations in Germany. Daimler continues to fully cooperate
with the DOJ and the other authorities and institutions. As these
inquiries, investigations and the replies to these information
requests as well as Daimler's internal investigation are ongoing,
we rely on IAS 37.92 in not disclosing any further information
on whether or not, or to what extent, provisions have been rec-
ognized and/or contingent liabilities have been disclosed.
Several state and federal authorities and institutions worldwide
have inquired about and/or are investigating test results, the
emission control systems used in Mercedes-Benz diesel vehicles
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations was
filed in Canada in April 2016. On June 29, 2017, the court granted
a procedural motion to certify certain issues for class treatment.
Daimler also regards this lawsuit as being without merit and will
defend against the claims. On July 14, 2017, an additional class
action was filed in the Superior Court of California, Los Angeles
County, against Daimler AG and other companies of the Group,
alleging similar claims as the existing US class action. That action
was removed to federal court and, on October 31, 2017, was
transferred to the District of New Jersey. On December 21, 2017
the parties stipulated to dismiss, without prejudice, that lawsuit. It
may be filed again under specific conditions, but Daimler also
regards this lawsuit as being without merit.
As already reported, several consumer class-action law-
suits were filed against Mercedes-Benz USA, LLC (MBUSA)
in federal courts in the United States in early 2016. The main
allegation was the use of devices that impermissibly impair
the effectiveness of emission control systems in reducing
nitrogen-oxide (NOx) emissions and which cause excessive
emissions from vehicles with diesel engines. In addition,
plaintiffs alleged that consumers were deliberately deceived
in connection with the advertising of Mercedes-Benz diesel
vehicles. Those consumer class actions were consolidated into
one class action pending against both Daimler AG and MBUSA
in the US District Court for the District of New Jersey, in which
the plaintiffs asserted various grounds for monetary relief on
behalf of a nation-wide class of persons or entities who owned
or leased certain models of Mercedes-Benz diesel vehicles as
of February 18, 2016. Daimler AG and MBUSA moved to dismiss
the lawsuit in its entirety. By order dated December 6, 2016,
the court granted Daimler AG's and MBUSA's motion to dismiss
and dismissed the lawsuit without prejudice, based on plain-
tiffs' failure to allege with sufficient specificity the advertising
that they contended had misled them. Plaintiffs subsequently
filed an amended class action complaint in the same court making
similar allegations. The amended complaint also adds as defen-
dants Robert Bosch LLC and Robert Bosch GmbH (collectively;
"Bosch"), and alleges that Daimler AG and MBUSA conspired
with Bosch to deceive US regulators and consumers. Daimler
AG and MBUSA view the lawsuit as being without merit and
will defend against the claims.
Various legal proceedings, claims and governmental investiga-
tions (legal proceedings) are pending against Daimler AG
and its subsidiaries on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters (including actions for damages) and shareholder matters.
Legal proceedings relating to products deal with claims on
account of alleged vehicle defects. Some of these claims are
asserted by way of class action suits. If the outcome of
such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns,
monetary penalties or other costly actions. Some of these
proceedings may have an impact on the Group's reputation.
29. Legal proceedings
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
286
2017
Table 7 F.64 shows estimates of the financial effects of
contingent liabilities at December 31, 2017.
F.64
Composition of contingent liabilities
In millions of euros
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG are
jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several
basis, additional funds to Toll Collect GmbH as may be nec-
essary for Toll Collect GmbH to maintain a minimum equity
(based on German Commercial Code accounting principles)
of 15% of total assets (a so-called “equity maintenance
undertaking"). This obligation will terminate on August 31,
2018, when the extended operating agreement expires, or
earlier if the agreement is terminated. Such obligation may
arise if Toll Collect GmbH is subject to revenue reductions
caused by underperformance, if the Federal Republic of
Germany is successful in claiming lost revenue 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 agree-
ments. If such penalties, revenue reductions or other
events reduce Toll Collect GmbH's equity to a level below the
minimum equity percentage agreed upon, the consortium
members are obligated to fund Toll Collect GmbH's opera-
tions to the extent necessary to reach the required minimum
equity.
Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group's 50% share of Toll Collect
GmbH's external financing guaranteed by its shareholders.
Each of the consortium members (including Daimler Financial
Services AG) has provided guarantees supporting the obli-
gations 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, Daimler AG has guaranteed bank loans
obtained by Toll Collect GmbH. The guarantees are described
in detail below:
289
|
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The operating agreement calls for the submission of all disputes
related to the toll collection system to arbitration. The Federal
Republic of Germany has initiated arbitration proceedings against
Daimler 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 revenue that allegedly arose from delays in the oper-
ability of the toll collection system. See Note 29 for additional
information.
Beginning in June 2006, the Federal Republic of Germany began
reducing monthly payments to Toll Collect GmbH by €8 million
in partial set-off against amounts claimed in the arbitration
proceedings referred to below. This offsetting may require
the consortium members to provide additional operating funds
to Toll Collect GmbH.
However, penalties and revenue reductions are capped at
€150 million per year until the final operating permit has been
issued and at €100 million per year following the issuance of
the final operating permit. These cap amounts are subject to
a 3% increase for every year of operation.
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.
According to the operating agreement, the toll collection system
had to be operational no later than August 31, 2003. After
a delay of 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 Collect GmbH received a preliminary operating permit
as specified in the operating agreement. Toll Collect GmbH
expects to receive the final operating permit, and continues
to operate the toll collection system under the preliminary
operating permit in the interim.
Obligations from product warranties and extended
product warranties are not included in the above disclosures.
See Note 23 for provisions relating to such obligations.
Furthermore, in 2002, our subsidiary Daimler Financial Services
AG, Deutsche Telekom AG and Compagnie Financière et Indus-
trielle des Autoroutes S.A. (Cofiroute) entered into a consortium
agreement in order to jointly develop, install and operate
under a contract with the Federal Republic of Germany (operating
agreement) a system for the electronic collection of tolls for
all commercial vehicles over 12 tons gross vehicle weight using
German highways. After concluding supplementary agreements
to the operating agreement with the Federal Republic of Germany
tolls are now charged for vehicles over 7.5 tons gross vehicle
weight and on specific sections of federal highways. Daimler
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).
Guarantees under buyback commitments represent
arrangements whereby the Group guarantees specified trade-in
or resale values for sold vehicles. Such guarantees provide the
holder with the right to return purchased vehicles to the Group,
the right being primarily contingent on the future purchase of
vehicles or services. The amounts of the buyback commitments
are close to the fair values of the vehicles to be taken back.
The provisions recognized in connection with these buyback
commitments, amounted to €125 million at December 31, 2017
(2016: €95 million). On the other hand, residual value guarantees
related to arrangements for which revenue recognition is
precluded due to the Group's obligation to repurchase assets
are included in other financial liabilities.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
288
1,994
2,197
268
589
1,726
1,608
Guarantees under buyback commitments
Other contingent liabilities
2016
At December 31,
2017
At December 31, 2017, the best estimate for potential obli-
gations from other contingent liabilities was €589 million
(2016: €268 million). Some contingent liabilities are not
quantifiable. This applies in particular to the assessment
of the legal risks arising from the class-action lawsuits
mentioned in Note 29.
Total
10,748
Available-for-sale financial assets
Table 7 F.68 provides an overview of the classification into
measurement hierarchies of financial assets and liabilities
measured at fair value (according to IFRS 13).
Measurement hierarchy
Table 71 F.67 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
The Group concludes derivative transactions in accordance with
the master netting arrangements (framework agreement) of
the International Swaps and Derivatives Association (ISDA) and
other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in the
consolidated statement of financial position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Offsetting of financial instruments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
292
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of
these financial instruments, it is assumed that the fair values
approximate the carrying amounts.
Financial liabilities measured at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instruments
as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt
securities and other financial assets.
Other financial liabilities
Due to the short maturities of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
Trade payables
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows. Market interest rates for the appropriate terms are
used for discounting.
Financing liabilities
Other receivables and assets are carried at amortized cost.
Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values
approximate the carrying amounts.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices with
consideration of forward premiums and discounts.
Financial assets measured at fair value through profit or loss
include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
derivative currency hedging contracts; the fair values of cross
currency interest rate swaps are determined on the basis
of the discounted estimated future cash flows using market
interest rates appropriate to the remaining terms of the
financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using option pricing models using
market data.
equity interests measured at cost; fair values could not be
determined for these financial instruments because no
stock exchange or market prices are available. These equity
interests comprise investments in non-listed companies
for which no objective evidence existed at the balance sheet
date that these assets were impaired and whose fair values
cannot be determined with sufficient reliability. It is assumed
that the fair values approximate the carrying amounts of
these financial instruments. Daimler does not intend to sell the
equity interests which are presented at December 31, 2017.
- debt and equity instruments measured at fair value; these
instruments were measured using quoted market prices
at December 31. If quoted market prices were not available
for these debt and equity instruments the fair value
measurement is based on inputs that are either directly
or indirectly observable on active markets.
Marketable debt securities and other financial assets
Financial assets available-for-sale include:
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
at which similar loans with identical terms could have been
obtained as of December 31, 2017 and December 31, 2016.
The discounting is based on the current interest rates
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 291
143,365
At the end of each reporting period, Daimler reviews the neces-
sity of reclassification between the measurement hierarchies.
For the determination of the credit risk from derivative financial
instruments which are allocated to Level 2 measurement hierar-
chy, portfolios managed on basis of net exposure are applied.
Table 71 F.69 shows into which measurement hierarchy
(according to IFRS 13) the fair values of the financial assets
and liabilities are classified which are not measured at
fair value in the consolidated statement of financial position.
F.67
Measurement hierarchy of financial assets and liabilities measured at fair value
F.68
293
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,256
-1,393
443
-1,393
Net amounts
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
1,836
2,649
1,895
241
10,220
-566
-566
Other financial liabilities²
Amounts
subject to a
master netting
arrangement
At December 31, 2016
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Net amounts
Amounts
subject to a
master netting
arrangement
At December 31, 2017
ments in the
balance sheet
Gross and net
amounts of
financial instru-
Other financial assets¹
In millions of euros
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
2,461
807
Other financial assets
10,220
142,122
151,120
Other receivables and financial assets
1,730
1,730
2,379
2,379
Derivative financial instruments used in hedge accounting
106
106
82
82
Financial assets recognized at fair value through profit or loss
645
645
1,002
1,002
thereof equity instruments measured at cost
166
166
171
171
thereof equity instruments measured at fair value
811
811
1,173
1,173
3,167
3,167
3,089
3,089
10,715
10,715
2,463
2,463
696
696
186
186
111
111
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
Other financial liabilities
152,433
11,567
12,474
118,929
117,686
128,437
127,124
12,474
Trade payables
Financing liabilities
Financial liabilities
118,930
118,586
127,062
126,713
11,567
2016
696
807
Total interest income
Total interest expense
In millions of euros
187
349
transactions
Net gains/losses from underlying
-329
hedging instruments
Net gains/losses from
2016
2017
In millions of euros
Net gains/losses from fair value hedges
F.74
-157
- 180
-195
Hedges of net investments
in foreign operations
4,579
-2,415
4,166
-1,932
Fair values of hedging instruments
At December 31,
2017
F.73
In millions of euros
Fair value hedges
Cash flow hedges
-68
1,751
72
-805
2016
25,615
298
62,520
thereof fair value hedges
37,407
933
36,474
43,478
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
General information on financial risks
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An
equity price risk results from investments in listed companies
(especially BAIC Motor). In addition, the Group is exposed
to credit risks from its leasing and financing activities and from
its operating business (trade receivables). With regard to the
leasing and financing activities, credit risks arise from operating
lease contracts, finance lease contracts and financing
contracts. Furthermore, the Group is exposed to liquidity
and country risks relating to its credit and market risks
or a deterioration of its operating business or financial market
disturbances. If these financial risks materialize, they could
adversely affect Daimler's profitability, liquidity and capital
resources and financial position.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable
and up-to-date administrative and information systems. The
guidelines and systems are regularly reviewed and adjusted
to changes in markets and products.
The Group manages and monitors these risks primarily
through its operating and financing activities and, if required,
through the use of derivative financial instruments. Daimler
uses derivative financial instruments exclusively for hedging
financial risks that arise from its commercial business or
refinancing activities. Without these derivative financial instru-
ments, the Group would be exposed to higher financial risks
(additional information on financial instruments and especially
on the nominal values of the derivative financial instruments
used is included in Note 31). Daimler regularly evaluates its
financial risks with due consideration of changes in key
economic indicators and up-to-date market information.
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and other
post-employment healthcare benefits are not included in
the following quantitative and qualitative analysis. See Note 22
for additional information on Daimler's pension and other
post-employment benefits.
Credit risk
The maximum risk positions of financial assets which
are generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available).
Table 7 F.78 shows the maximum risk positions.
Liquid assets
36,888
32. Management of financial risks
62,503
Forward commodity contracts
119,143
35,731
572
8,209
35,159
49,483
2,183
41,856
Hedging of commodity price risks from forecasted transactions
Liquid assets consist of cash and cash equivalents and market-
able debt securities classified as available-for-sale. With the
investment of liquid assets, banks and issuers of securities are
selected very carefully and diversified in accordance with a
limit system. In the recent years, the limit methodology was
continuously enhanced to counteract the decline of the
creditworthiness of the banking sector in the course of the
financial crisis. Liquid assets are mainly held at financial
institutions within and outside Europe with high creditworthi-
ness, as bonds issued by German federal states and as
money market funds. At the same time, the Group has increased
the number of financial institutions with which investments
are made. In connection with investment decisions, priority is
placed on the borrower's very high creditworthiness and on
balanced risk diversification. The limits and their utilizations
are reassessed continuously. In this assessment, Daimler
also considers the credit risk assessment of its counterparties
by the capital markets. In line with the Group's risk policy,
most liquid assets are held in investments with an external
rating of "A" or better.
742
495
thereof cash flow hedges
247
thereof cash flow hedges
649
403
246
959
Total nominal values of derivative financial instruments
108,750
41,808
66,942
1,128
Receivables from financial services
Maximum
risk position
2016
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Derivative financial
instruments used
in hedge accounting
(assets only)
16
2,379
1,730
Derivative financial
instruments not used
16
10,614
82
30
1,894
106
1,502
Other receivables and
financial assets
16
3,167
3,089
in hedge accounting
(assets only)
Loan commitments
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its credit
risk irrespective of whether it is related to a financing contract
or to an operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Daimler
Financial Services refer to the entire financing and leasing
business, unless specified otherwise.
11,990
80,507
299
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio
that is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases
in the Group's consolidated financial statements. Overdue lease
payments from operating lease contracts are recognized
in trade receivables.
In addition, the Daimler Financial Services segment is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2017, irrevocable loan
commitments of Daimler Financial Services amounted to
€1,880 million (2016: €1,493 million). These loan commitments
had a maturity of less than one year.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes,
the definition of financing products offered, the evaluation
of customer quality, requests for collateral as well as the
treatment of unsecured loans and non-performing claims.
The limitation of concentration risks is implemented primarily
by means of global limits, which refer to single customer
exposures. As of December 31, 2017, exposure to the biggest
15 customers did not exceed 4.0% (2016: 5.4%) of the total
portfolio.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of
collateral generally depends on the amount of the financed
assets. The financed vehicles usually serve as collateral.
Furthermore, Daimler Financial Services mitigates the credit
risk from financing and lease activities, for example through
advance payments from customers.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate customers
are evaluated using internal rating instruments. Both evaluation
processes use external credit bureau data if available. The scoring
and rating results as well as the availability of security and other
risk mitigation instruments, such as advance payments, guar-
antees and, to a lower extent, residual debt insurances, are
essential elements for credit decisions.
Significant loans and leases to corporate customers are
tested individually for impairment. An individual loan or lease
is considered impaired when there is objective evidence that
the Group will be unable to collect all amounts due as specified
by the contractual terms. Examples of objective evidence that
loans or lease receivables may be impaired include the following
factors: significant financial difficulty of the borrower, a rising
probability that the borrower will become bankrupt, delinquency
in his installment payments, and restructured or renegotiated
contracts to avoid immediate default.
Loans and finance lease receivables related to retail or small
business customers are grouped into homogeneous pools and
collectively assessed for impairment. Impairments are required
for example if there are adverse changes in the payment status
of the borrowers included in the pool, adverse changes in
expected loss frequency and severity, and adverse changes in
economic conditions.
Within the framework of testing for impairment, existing
collateral is generally given due consideration. In that context,
any excess collateral of individual customers is not netted
off with insufficient collateral of other customers. The maxi-
mum credit risk is limited by the fair value of collateral
(e.g. financed vehicles).
19
F.78
see also
Note
Maximum
risk position
2017
thereof fair value hedges
In millions of euros
Liquid assets
Receivables from
financial services
Trade receivables
22,135
21,729
14
85,787
Maximum risk positions of financial assets
and loan commitments
1,485
56,591
thereof cash flow hedges
27
-2
-1,511
Cash flow hedges
The Group uses cash flow hedges for hedging currency
risks, interest rate risks and commodity price risks.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized in other comprehensive
income, are shown in table 7 F.75.
Table 71 F.76 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
Net profit for 2017 includes net gains (before income taxes)
of €11 million (2016: net losses (before income taxes) of
€8 million) attributable to the ineffectiveness of derivative
financial instruments entered into for hedging purposes
(hedge-ineffectiveness).
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 7 F.77. As of December 31, 2017,
Daimler utilized derivative instruments with a maximum maturity
of 39 months (2016: 44 months) as hedges for currency risks
arising from future transactions.
Hedges of net investments in foreign operations
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
Nominal values of derivative financial instruments
Table 71 F.77 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
Hedging transactions for which the effects from the
measurement of the hedging instrument and the underlying
transaction to a large extent offset each other in the
consolidated statement of income mostly not classify
for hedge accounting.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in Note 32
in the sub-item finance market risk.
F.77
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
297
Nominal values of derivative financial instruments
In millions of euros
-1
Interest expense
-
Interest income
296
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.75
Unrealized gains/losses from cash flow hedges
In millions of euros
Unrealized gains/losses
F.76
2017
2016
Hedging of currency risks from receivables/liabilities
2,525
Reclassifications of pre-tax gains/losses from equity
to the statement of income
In millions of euros
2017
2016
Revenue
-6
Cost of sales
34
-1,423
-86
125
Forward exchange contracts
thereof cash flow hedges
Cross currency interest rate swaps
1,315
1,622
Forward exchange contracts and currency options
45,996
30,506
15,490
300
thereof cash flow hedges
45,542
361
30,061
55,925
Hedging of currency risks of net investments in foreign operations
Currency swaps
thereof hedging of net investments in foreign operations
Hedging of interest rate risks from receivables/liabilities
Interest rate swaps
49,934
2,395
47,539
15,481
9,694
1,676
1,679
thereof cash flow hedges
thereof fair value hedges
Hedging of currency risks from forecasted transactions
Maturity
At December 31, 2017
Maturity
>1 year
Nominal values
≤1 year
At December 31, 2016
Nominal values
3,453
6,267
8
5,921
3,380
5,811
2,153
3,658
6,020
3,238
1,559
6,259
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3,380
The allowance ratio decreased compared to the already
low level of the previous year.
In millions of euros
Exchange rate risk
(from derivative financial instruments)
779
877
779
815
912
Interest rate risk
2016
Average
43
43
46
Commodity price risk
(from derivative financial instruments)
14
25
14
17
ཆེ ༄Ë
48
1,525
Low
Period-end
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over
the holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value
at risk can be determined based on this distribution as the
portfolio value loss which is reached or exceeded with a
probability of 1%.
Oriented towards the risk management standards of the
international banking industry, Daimler maintains its financial
controlling unit independent of operating Corporate Treasury
and with a separate reporting line.
Exchange rate risk
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows and
earnings to risks arising from fluctuations in exchange rates.
These risks primarily relate to fluctuations between the
euro and the US dollar, the Chinese renminbi, the British pound
and other currencies such as currencies of growth markets.
In the operating vehicle business, the Group's exchange rate risk
primarily arises when revenue is generated in a currency that
is different from the currency in which the costs of generating
the revenue are incurred (transaction risk). When the revenue
is converted into the currency in which the costs are incurred,
it may be inadequate to cover the costs if the value of the
currency in which the revenue is generated declined in the
interim relative to the value of the currency in which the
costs were incurred.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
303
This risk exposure primarily affects the Mercedes-Benz Cars
segment, which generates a major portion of its revenue
in foreign currencies and incurs manufacturing costs primarily
in euros. The Daimler Trucks segment is also subject to
transaction risk, but to a lesser extent because of its global
production network. The Mercedes-Benz Vans and Daimler
Buses segments are also directly exposed to transaction risk,
but also only to a minor degree compared to the Mercedes-
Benz Cars segment. In addition, the Group is indirectly exposed
to transaction risk from its equity-method investments.
Cash inflows and outflows of the business segments are offset
if they are denominated in the same currency. This means
that the exchange rate risk resulting from revenue generated
in a particular currency can be offset by costs in the same
currency, even if these costs are not directly related to the
revenue. As a result, only the net exposure is subject to
transaction risk. The Group's currency exposure is reduced
by natural hedging to the extent that currency exposures
of the operating businesses of individual segments offset each
other partially at Group level, thereby reducing overall
currency exposure. These natural hedges eliminate the need
for hedging to the extent of the matched exposures. To
provide an additional natural hedge against any remaining
transaction risk exposure, Daimler generally strives to
increase cash outflows in the same currencies in which the
Group has a net excess inflow.
High
In order to mitigate the impact of currency exchange rate
fluctuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign
currency exposures from Daimler's subsidiaries and operative
units and implements the FXCo's decisions concerning
foreign currency hedging through transactions with international
financial institutions. Any over-hedge caused by changes
in exposure is generally reversed by taking suitable measures
without delay.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally
limited by uncertainty related to cash flows that lie far in the
future; on the other hand, it may also be limited by the fact
that appropriate currency contracts are not available. This refer-
ence model aims to limit risks for the Group from unfavorable
movements in exchange rates while preserving some flexibility
to participate in favorable developments. Based on this refer-
ence model and depending on the market outlook, the FXCo
determines the hedging horizon, which usually varies from
one to five years, as well as the average hedge ratios. Reflec-
ting the character of the underlying risks, the hedge ratios
decrease with increasing maturities. At year-end 2017, foreign
exchange management showed an unhedged position in the
automotive business for the underlying forecasted cash flows
in US dollars in calendar year 2018 of 21%, for the underlying
forecasted cash flows in Chinese renminbi in calendar year 2018
of 22%, as well as for the underlying forecasted cash flows in
British pounds in calendar year 2018 of 28%.
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts
held. The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange
contracts and currency options. Daimler's guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the exchange
rate risk inherent in these derivative financial instruments.
Table 7F.80 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2017 and
2016 portfolios of derivative financial instruments, which were
entered into primarily in connection with the operative vehicle
businesses. Average exposure has been computed on an
end-of-quarter basis. The offsetting transactions underlying
the derivative financial instruments are not included in the
following value at risk presentation. See also table > F.77 for
the nominal volumes on the balance sheet date of derivative
currency instruments entered into to hedge the currency risk
from forecasted transactions.
F.80
Value at risk for exchange rate risk, interest rate risk and commodity price risk
Period-end
High
Low
2017
Average
Risk Controlling regularly informs the Board of Management
of the actions taken by Corporate Treasury based on the FXCo's
decisions.
When calculating the value at risk by using the variance-
covariance approach, Daimler first computes the current
market value of the Group's financial instruments portfolio.
Then the sensitivity of the portfolio value to changes in the
relevant market risk factors, such as particular foreign currency
exchange rates or interest rates of specific maturities, is
quantified. Based on volatilities and correlations of these market
risk factors, which are obtained from the RiskMetrics™
dataset, a statistical distribution of potential changes in the
portfolio value at the end of the holding period is computed.
The loss which is reached or exceeded with a probability of only
1% can be derived from this calculation and represents the
value at risk.
812
42
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
305
33. Segment reporting
Reportable segments
The reportable segments of the Group are Mercedes-Benz
Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately, according to nature of products and
services provided, brands, distribution channels and profile
of customers.
The vehicle segments develop and manufacture passenger
cars, trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products will be marketed under the EQ
brand in the future. Daimler Trucks distributes its trucks under
the brand names Mercedes-Benz, Freightliner, Western Star,
FUSO and BharatBenz. Furthermore, buses under the brands
Thomas Built Buses and FUSO are included in the Daimler Trucks
range of products. The vans of the Mercedes-Benz Vans
segment are primarily sold under the brand name Mercedes-
Benz and also under the Freightliner brand. Daimler Buses
sells completely built-up buses under the brand names Mercedes-
Benz and Setra. In addition, Daimler Buses produces and
sells bus chassis. The vehicle segments also sell related spare
parts and accessories.
The Daimler Financial Services segment supports the sales
of the Group's vehicle segments worldwide. Its product portfolio
primarily comprises tailored financing and leasing packages
for end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services
such as fleet management in Europe, which primarily takes
place through the Athlon brand, which was acquired in 2016.
Furthermore, Daimler Financial Services is active in the area
of innovative mobility services, in particular under the
brands moovel, mytaxi and car2go.
Management and reporting system
The Group's management reporting and controlling systems
principally use accounting policies that are the same as those
described in Note 1 in the summary of significant accounting
policies according to IFRS.
Daimler predominantly holds investments in shares of
companies which are classified as long-term investments
or which are accounted for using the equity method,
such as BAIC Motor. Therefore, the Group does not include
these investments in a market risk assessment.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred
to as "EBIT" in our management and reporting system.
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
Segment assets principally comprise all assets. The vehicle seg-
ments' assets exclude income tax assets, assets from defined
benefit pension plans and other post-employment benefit plans,
and certain financial assets (including liquidity). Segment
liabilities principally comprise all liabilities. The vehicle segments'
liabilities exclude income tax liabilities, liabilities from defined
benefit pension plans and other post-employment benefit plans,
and certain financial liabilities (including financing liabilities).
Daimler Financial Services' performance is measured
on the basis of return on equity, which is the usual procedure
in the banking business.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms vary
by vehicle segment and geographic region.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs, goodwill
or finance leases.
Depreciation and amortization may also include impairments
as far as they do not relate to goodwill impairment pursuant
to IAS 36.
If, in connection with contracts, a worsening of payment
behavior or other causes of a need for impairment are recog-
nized, collection procedures are initiated by claims manage-
ment to obtain the overdue payments of the customer, to take
possession of the asset financed or leased or, alternatively,
to renegotiate the impaired contract. Restructuring policies and
practices are based on the indicators or criteria which, in
the judgment of local management, indicate that repayment will
probably continue and that the total proceeds expected to
be derived from the renegotiated contract exceed the expected
proceeds to be derived from repossession and remarketing.
Amortization of capitalized borrowing costs is not included
in the amortization of intangible assets or depreciation
of property, plant and equipment since it is not considered
as part of EBIT.
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
from equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized
borrowing costs is included in cost of sales, it is not included
in EBIT.
90
Equity price risk
Table 7 F.80 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2017
and 2016 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 F.77
for the nominal values of derivative commodity price hedges
at the balance sheet date.
1,182
62
44
==
34
39
304
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In 2017, the development of the value at risk from foreign
currency hedging was mainly driven by changes of nominals
and foreign currency rate volatilities.
The Group's investments in liquid assets or refinancing
activities generally are not allowed to result in currency risk.
Transaction risks arising from liquid assets or payables
in foreign currencies that result from the Group's investment
or refinancing on money and capital markets are generally
hedged against currency risks at the time of investing or refi-
nancing in accordance with Daimler's internal guidelines.
The Group uses appropriate derivative financial instruments
(e.g. cross currency interest rate swaps) to hedge against
currency risk.
Compared to the previous year, the value at risk of commodity
derivatives has decreased. The main reasons for this develop-
ment were the decrease in nominal hedge volumes and lower
commodity-price volatilities.
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
Interest rate risk
Daimler uses a variety of interest rate sensitive financial
instruments to manage the liquidity needs of its day-to-day
operations. A substantial volume of interest rate sensitive
assets and liabilities results from the leasing and sales financ-
ing business operated by the Daimler Financial Services
segment. The Daimler Financial Services companies enter into
transactions with customers that primarily result in fixed-
rate receivables. Daimler's general policy is to match funding
in terms of maturities and interest rates wherever economically
feasible. However, for a limited portion of the receivables port-
folio in selected and developed markets, the Group does not
match funding in terms of maturities in order to take advantage
of market opportunities. As a result, Daimler is exposed to
risks due to changes in interest rates. In this regard, the Group
is not exposed to any liquidity risks.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate
Treasury department manages the interest rate risk relating
to Daimler's leasing and financing activities by setting
targets for the interest rate risk position. The Treasury Risk
Management department and the local Daimler Financial
Services companies are jointly responsible for achieving these
targets. As separate functions, the Daimler Financial Services
Risk Management and the Daimler Financial Services Control-
ling & Reporting department monitors target achievement
on a monthly basis. In order to achieve the targeted interest
rate risk positions in terms of maturities and interest rate
fixing periods, Daimler also uses derivative financial instruments
such as interest rate swaps. Daimler assesses its interest
rate risk position by comparing assets and liabilities for corre-
sponding maturities, including the impact of the relevant
derivative financial instruments.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments.
Daimler coordinates the funding activities of the automotive
and financial services businesses at the Group level.
Table 7F.80 shows the period-end, high, low and average
value at risk figures of the interest rate risk for the 2017 and
2016 portfolio of interest rate sensitive financial instruments
and derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing
business. In this respect, the table shows the interest rate risk
regarding the unhedged position of interest rate sensitive
financial instruments. The average values have been computed
on an end-of-quarter basis.
In the course of 2017, changes of the value at risk of interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Commodity price risk
For precious metals, central commodity management shows
an unhedged position of 38% of the forecasted commodity
purchases at year-end 2017 for calendar year 2018. The corre-
sponding figure at year-end 2016 was 27% for calendar
year 2017.
Effects of currency translation. For purposes of Daimler's
consolidated financial statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities
of the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book
values caused by exchange rates. In general, Daimler does
not hedge against exchange rate translation risk.
Daimler calculates the value at risk for exchange rate and
interest rate risk according to the variance-covariance
approach. The value at risk calculation method for commodity
hedging instruments is based on a Monte Carlo simulation.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw material
price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
The value at risk calculations employed:
At December 31, 2017, liquidity amounted to €22.1 billion (2016:
€21.7 billion). In 2017, significant cash inflows resulted from
the positive business development of the automotive business
segments. One cash inflow of €0.8 billion resulted from the
dividend distributed by Beijing Benz Automotive Co., Ltd. Cash
outflows resulted in particular from the portfolio growth of the
leasing and sales finance activities at Daimler Financial Services
as well as from the intensified investment offensive. In addition,
there were cash outflows of €3.0 billion for the extraordinary con-
tribution to the pension plan assets of Daimler AG.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling pro-
cess. This process enables Daimler to manage its liquidity surplus
and liquidity requirements according to the actual needs
of the Group and each subsidiary. The Group's short-term
and mid-term liquidity management takes into account
the maturities of financial assets and financial liabilities and
estimates of cash flows from the operating business.
Table 71 F.79 provides an overview of how the future liquidity
situation of the Group is affected by the cash flows from
liabilities and financial guarantees as of December 31, 2017.
Information on the Group's financing liabilities is also
provided in Note 24.
F.79
Liquidity runoff for liabilities and financial guarantees¹
In millions of euros
Total
2018
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accord-
ance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
2019
2021
2022
≥ 2023
Financing liabilities²
Derivative financial instruments³
135,329
368
Trade payables4
12,474
51,156
170
12,459
2020
29,656
110
12
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
301
Further details on receivables from financial services and the
balance of the recorded impairments are provided in Note 14.
Trade receivables
- express potential losses in fair values, and
assume a 99% confidence level and a holding period
of five days.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. Daimler manages its
credit risk from trade receivables using appropriate IT
applications and databases on the basis of internal guidelines
which have to be followed globally.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and cash
deposits. In order to prevent the credit risk Daimler assesses
the creditworthiness of the counterparties.
For trade receivables from export business, Daimler also
evaluates each general distribution company's creditworthiness
by means of an internal rating process and its country risk.
In this context, the year-end financial statements and other
relevant information on the general distribution companies
such as payment history are used and assessed.
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits
and limits credit risks with the following types of collateral:
credit insurances,
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. Bank credit lines are also
used to cover financing requirements. These credit lines
include a syndicated €9.0 billion credit facility of Daimler AG
which was signed with a syndicate of international banks
in September 2013 with a term until September 2020. This
syndicated facility can be used to finance general corporate
purposes and serves as a back-up for commercial paper draw-
ings. At December 31, 2017, this facility had not been utilized.
Potential downgrades of Daimler's credit ratings could have
a negative impact on the Group's financing.
- first-class bank guarantees and
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
Appropriate provisions are recognized for the risks inherent
in trade receivables. For this purpose, all receivables are
regularly reviewed and impairments are recognized if there
is any objective indication of non-performance or other
contractual violations. In general, substantial individual receiv-
ables and receivables whose realizability is jeopardized are
assessed individually. In addition, taking country-specific risks
and any collateral into consideration, the other receivables
are grouped by similarity of contract and tested for impairment
collectively. One important factor for the definition of the
impairment to be recognized is the respective country risk.
Further information on trade receivables and the status
of impairments recognized is provided in Note 19.
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. Daimler manages its credit
risk exposure in connection with derivative financial instru-
ments through a limit system, which is based on the review
of each counterparty's financial strength. This system limits
and diversifies the credit risk. As a result, Daimler is exposed
to credit risk only to a small extent with respect to its derivative
financial instruments. In accordance with the Group's risk
policy, most derivatives are contracted with counterparties
which have an external rating of "A" or better.
Other receivables and financial assets
With respect to other receivables and financial assets
in 2017 and 2016, Daimler is exposed to credit risk only
to a small extent.
Liquidity risk
Liquidity risk comprises the risk that a company cannot
meet its financial obligations in full.
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents as well as debt instruments classified as held
for sale. The Group can dispose of these liquid assets at
short notice.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
- letters of credit.
21,122
-15
Derivative financial instruments
5,813
21,556
10,278
5,966
17,957
1 The amounts were calculated as follows:
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can
be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods,
this may also include negative cash flows from derivatives with an overall positive fair value.
4 The cash outflows of trade payables are undiscounted.
5 The maximum available amounts are stated.
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Country risk
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the
respective country, e.g. resulting from sovereign measures
such as expropriation or interdiction of foreign currency
transfers.
Daimler is exposed to country risk mainly resulting from
cross-border funding or collateralization of Group companies
and customers (for example, Turkey), from investments in
subsidiaries and joint ventures as well as from cross-border
trade receivables (for example, China). Country risks also
arise from cross-border cash deposits at financial institutions.
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management;
it assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
Finance market risks
As part of its risk management system, Daimler employs value
at risk analyses. In performing these analyses, Daimler quanti-
fies its market risk due to changes in foreign currency
exchange rates and interest rates and certain commodity
prices on a regular basis by predicting the potential loss over a
target time horizon (holding period) and confidence level.
9,996
Daimler manages market risks to minimize the impact
of fluctuations in foreign exchange rates, interest rates and
commodity prices on the results of the Group and its
segments. The Group calculates its overall exposure to these
market risks to provide the basis for hedging decisions,
which include the selection of hedging instruments and the
determination of hedging volumes and the corresponding
periods. Decisions regarding the management of market risks
resulting from fluctuations in foreign exchange rates,
interest rates (asset-/liability management) and commodity
prices are regularly made by the relevant Daimler risk
management committees. Exposures are the basis of the
hedging strategies and are updated regularly.
The global nature of its businesses exposes Daimler to sig-
nificant market risks resulting from fluctuations in foreign
currency exchange rates and interest rates. In addition, the
Group is exposed to market risks in terms of commodity
price risk associated with its business operations, which the
Group hedges for certain metals partially through derivative
financial instruments. The Group is also exposed to equity
price risk in connection with its investments in listed com-
panies (including BAIC Motor). If these market risks materialize,
they will adversely affect the Group's profitability, liquidity
and capital resources and financial position.
30,641
667
74,144
302
667
2
1
160,542
-4
Miscellaneous other financial liabilities excluding
accrued interest
17,586
107
7,798
863
447
285
9,810
264
Irrevocable loan commitments
of the Daimler Financial Services segment
and of Daimler AG5
1,894
153
Financial guarantees
1,894
3 Unless allocated to Daimler Financial Services.
In millions of euros
190,291
183,855
Group liabilities
1 Amortization of capitalized borrowing costs is not considered
2 In 2016 mainly comprises the carrying amount of the investment
in cost of sales.
in BAIC Motor and in 2017 mainly comprises the carrying amount
of the investments in BAIC Motor and LSHAI.
Revenue and non-current assets by region
F.83
in the internal performance measure "EBIT" but is included
-20,441
Unallocated financial liabilities
9,190
255,605
Group assets
242,988
Revenue
Total of segments' liabilities
Income tax liabilities³
-22,065
204,854
946
809
and liabilities from pensions and
similar obligations³
Other corporate items and eliminations
6,556
194,297
Non-current assets
40,459
2016
22,623
24,118
Asia
38,766
35,562
2,510
39,169
2,482
18,280
15,984
166
19,550
-22,863 -21,031
140
Other markets
thereof China
thereof United States
26,898
25,510
2017
2016
Europe
68,437
63,417
59,583
54,054
thereof Germany
23,939
23,509
42,998
39,074
NAFTA region
46,916
44,960
2017
Other corporate items and eliminations
2017
similar obligations³
3,890
1
3,891
308
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.82
18
Reconciliation to Group figures
2016
17
Reconciliations
Reconciliations of the segment amounts to the respective
items included in the consolidated financial statements are
shown in table 7 F.82.
In 2017, the line item Equity-method investments comprises
the reversal of an impairment of €240 million of Daimler's equity
investment in BAIC Motor. In 2016, the impairment of €244
million of the equity investment in BAIC Motor had a negative
effect on EBIT. In addition, both years primarily comprise the
Group's proportionate share of profits and losses of BAIC Motor.
In 2017, the line item Other corporate items primarily comprises
expenses related to legal proceedings. In the year 2016,
expenses of €400 million related to a legal proceeding and
losses of €241 million from currency transactions not
allocated to business operations, affected the EBIT negatively.
On the other hand, income of €605 million from the contribution
of shares in Renault and Nissan to pension plan assets had a
positive effect on earnings.
In millions of euros
Revenue and non-current assets by region
75
802
thereof amortization
10,211
of intangible assets
1,161
279
70
196
16
62
1,588
1,588
thereof depreciation of property,
plant and equipment
2,799
16
Revenue from external customers and non-current assets
by region are shown in table 71 F.83.
Total of segments' profit (EBIT)
Equity-method investments
14,301
12,574
Total of segments' assets
254,610
240,168
Carrying amount of
Profit before income taxes
equity-method investments²
Income tax assets³
2,665
557
3,744
Unallocated financial assets
(including liquidity) and
assets from pensions and
1,060
-546
-582
Interest expense
14,981
256
Other corporate items
-510
13,218
-175
-158
Eliminations
-45
Group EBIT
14,682
12,902
Amortization of capitalized
borrowing costs¹
- 13
Interest income
214
-12
230
20,133
9,322
127
1,987
thereof BBAC
3,933
3,262
80
59
1,673
1,075
1,178
27
Joint ventures
946
507
75
64
65
183
298
thereof LSHAI¹
Receivables
2016
At December 31,2
2017
2016
Payables
At December 31,3
2017
2016
Associated companies
5,177
9,507
703
428
2,827
1,233
253
89
3,586
2017
150
110
Board members
Throughout the world, the Group has business relationships
with numerous entities that are customers and/or suppliers
of the Group. Those customers and/or suppliers include com-
panies that have a connection with some of the members
of the Board of Management or of the Supervisory Board and
close family members of those board members of Daimler AG
or of its subsidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also
purchase goods and services from Daimler AG or its subsidiar-
ies as customers. When such business relationships exist,
transactions are concluded on the basis of customary market
conditions.
See Note 37 for information on the remuneration
of board members.
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activity, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accordance
with their contracts of employment, no remuneration was paid
in 2017 for services provided personally beyond board and
committee activities, in particular for advisory or agency services.
No advance payments or loans were made or abated to
members of the Board of Management or to the members
of the Supervisory Board of Daimler AG in 2017.
In 2017 and 2016, the Group made contributions of €3,692 million
and €2,427 million to its external funds to cover pension and
other post-employment benefits. See also Note 22 for further
information.
The payments made in 2017 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €19.0 million (2016: €15.6 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €270.5 million as of December 31, 2017
(2016: €252.9 million).
F.86
Remuneration of the members of the Board of Management
and the Supervisory Board
In millions of euros
20171
2016
12,143
Information regarding the remuneration of the members
of the Board of Management and of the Supervisory Board
is disclosed on an individual basis in the Remuneration
Report, which is part of the combined Management Report.
Management Report from page 136
115
Contributions to plan assets
Joint operations primarily relate to significant business trans-
actions with Beijing Mercedes-Benz Sales Service Co., Ltd. and
EM-motive GmbH.
Joint operations
46
40
278
288
28
Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as
well as significant transactions in the years 2017 and 2016.
38
30
1 Since the equity interest in LSHAI was acquired in May 2017, business relations with LSHAI are reported from June 2017 onward.
2 After write-downs totaling €52 million (2016: €51 million).
3 Including liabilities from default risks from guarantees for related parties.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
311
Joint operations
54
2016
In millions of euros
2017
Daimler Buses
Mercedes-Benz Cars
23,975
22,345
Daimler Trucks
8,421
In millions of euros
8,448
2,385
1,739
978
887
11,165
10,000
Mercedes-Benz Vans
46,924
2016
Average net assets
164,330
153,261
89,430
85,421
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
309
2017
34. Capital management
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 7 F.84.
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's cost
of capital comprises the cost of equity as well as the costs
of debt and pension obligations unless these are allocated to
Daimler Financial Services; in addition, the expected returns
on liquidity and on the plan assets of the pension funds which
are not allocated to Daimler Financial Services are considered
with the opposite sign. In the reporting period, the cost of capital
used for our internal capital management amounted to 8%
after taxes.
The objective of capital management is to increase value added
among other things by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
for instance by optimizing working capital, which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between equity
and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
35. Earnings per share
The calculation of basic and diluted earnings per share is based
on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014, dilutive
effects no longer exist. The profit attributable to shareholders
of Daimler AG (basic and diluted) amounts to €10,525 million
(2016: €8,526 million). The weighted average number of
shares outstanding (basic and diluted) amounts to 1,069.8 million
(2016: 1,069.8 million).
F.84
"Net assets" and "value added" represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The vehicle segments
are accountable for the operational net assets; all assets,
liabilities and provisions which they are responsible for in day-
to-day operations are therefore allocated to them. Performance
measurement at Daimler Financial Services is on an equity basis,
in line with the usual practice in the banking business. Net
assets at Group level additionally include assets and liabilities
from income taxes as well as other corporate items and
eliminations.
43,419
941
555
The purchases of goods and services shown in table 7 F.85
were primarily from LSH Auto International Limited and
MBtech Group GmbH & Co. KGaA (MBtech Group). MBtech
Group develops, integrates and tests components,
systems, modules and vehicles worldwide.
Joint ventures
Significant sales of goods and services took place with Fujian
Benz Automotive Co., Ltd. (FBAC), as well as with DAIMLER
KAMAZ RUS O00, a company established with Kamaz PAO,
another of the Group's associated companies.
On November 7, 2016, the joint venture Shenzhen BYD Daimler
New Technology Co., Ltd. was renamed as Shenzhen DENZA
New Energy Automotive Co., Ltd. (DENZA).
DENZA is allocated to the Mercedes-Benz Cars segment.
Daimler provided guarantees in a total amount of RMB 1,250
million (€160 million) to external banks which provided two
loans to DENZA. As of December 31, 2017, loans amounting
to RMB 705 million (€90 million) were utilized. In addition,
Daimler provided a shareholder loan of RMB 250 million
(€32 million) to DENZA, which is fully utilized. In accordance
with its shareholding ratio, Daimler contributed additional
equity of RMB 500 million (€64 million) to DENZA in July 2017.
In connection with its 45% equity interest in Toll Collect GmbH,
Daimler has issued guarantees which are not shown in table
7 F.85 (€100 million at December 31, 2017 and at December
31, 2016).
A large proportion of the Group's sales of goods and services
with associated companies as well as receivables relates to
business relations with LSH Auto International Limited (LSHAI)
and with Beijing Benz Automotive Co., Ltd. (BBAC). In 2017,
Daimler acquired a 15% stake in LSHAI. In the reporting period,
Daimler sold the Group's own Mercedes-Benz dealership
in Melbourne, Australia, to LSHAI.
F.85
Sales of goods
Purchases of goods
and services
and services
and other income
and other expense
Transactions with related parties
Associated companies
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies, joint ven-
tures and joint operations, and are shown in table 7 F.85.
Related parties are deemed to be associated companies, joint
ventures, joint operations and unconsolidated subsidiaries,
as well as persons who exercise a significant influence on the
financial and business policy of the Daimler Group. The latter
category includes all persons in key positions and their close
family members. At the Daimler Group, those persons are the
members of the Board of Management and of the Supervisory
Board.
2,141
3,372
-1,492
-292
48,514
47,054
Daimler Financial Services¹
Net assets of the segments
Equity-method investments²
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
1 Equity.
2 Unless allocated to the segments.
3 Unless allocated to Daimler Financial Services.
310
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. Related party relationships
1,827
52
1,060
4,772
-14,563
190,291
Additions to non-current assets
16,034
2,350
2,000
137,608 204,854
474
35,754
22
35,776
thereof investments in
intangible assets
2,668
14,896
97
2,972
13,903
995
255,605
thereof carrying amounts of
equity-method investments
2,930
491
5,761
180
148
3,758
37. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board of
Management and the Supervisory Board who were active
as of December 31, 2017, affected net profit for the year
ended December 31 as shown in table 7 F.86.
4,818
Segment liabilities
44,610
9
254,610
525
90
279
5,979
13,579
88
13,667
thereof amortization
447
of intangible assets
291
84
18
131
1,754
1
1,230
33
1,540
of non-current assets
3,413
1
3,414
thereof investments in property,
plant and equipment
4,843
5,334
1,028
94
43
6,718
26
6,744
Depreciation and amortization
710
149,986
3,928
8,743
Daimler
Group
In millions of euros
2017
External revenue
90,992
Intersegment revenue
Recon-
ciliation
3,703
94,695
34,182
1,525
35,707
12,601
563
13,164
4,246
105
4,351
22,309
1,466
23,775
164,330
Total revenue
164,330
Total
Segments
Daimler
Buses
Reconciliation
Reconciliation includes corporate items for which headquarters
are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of
the segments if such items are not indicative of the segments'
performance, since the related results of operations may be
distorted by the amount and the irregular nature of such events.
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
Information related to geographic areas
With respect to information about geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented according
to the physical location of these assets.
Daimler
Financial
Services
Table 71 F.81 presents segment information as of and
for the years ended December 31, 2017 and 2016.
In the year 2017, Mercedes-Benz Cars segment's earnings
include expenses for voluntary service activities in
connection with a comprehensive plan for diesel engines
and expenses for a specific vehicle recall of in total
€425 million. On the other hand, the remeasurement of
the equity investment in THERE Holding B.V. had a
positive effect of €183 million on EBIT. In the year 2016,
expenses of €480 million in connection with Takata
airbags and of €238 million in connection with the remea-
surement of inventories impacted earnings negatively.
The optimization programs led to a cash inflow of €203
million (2016: €253 million) (see also Note 5).
F.81
Segment information
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Mercedes-Benz Cars
7,362
171,692
-7,362
-7,362
164,330
thereof profit/loss from
compounding and effects
from changes in discount rates
of provisions for other risks
-33
-17
1,498
-5
-4
-61
-61
Segment assets
70,191
21,762
-2
256
1,242
1
Segment profit (EBIT)
9,207
2,380
1,181
243
1,970
14,981
-299
14,682
thereof profit/loss from
equity-method investments
1,198
-3
43
3
1,755
12,091
thereof depreciation of property,
2,832
545
118
11
55
3,541
557
2,812
4,098
41,133
13,423
5,393
2,954
131,394
194,297
Segment liabilities
-10,442
equity-method investments
242,988
-10
-4
-5
-128
4
-124
thereof carrying amounts of
Segment assets
22,110
7,351
3,841
141,842
240,168
2,820
65,024
-27
183,855
14,289
4,147
1,243
373
97
37
5,897
plant and equipment
-8
Depreciation and amortization
of non-current assets
5,061
1,547
445
266
5,889
Additions to non-current assets
thereof investments in property,
2,944
2,403
1,526
476
13,461
32,155
- 10
2,944
32,145
intangible assets
2,272
121
457
18
76
thereof investments in
-82
of provisions for other risks
from changes in discount rates
Mercedes-
Benz Cars
Daimler
Mercedes-
Daimler
Financial
Total
Daimler
Trucks
Buses
Services Segments
Recon-
ciliation
Daimler
Group
In millions of euros
2016
Benz Vans
External revenue
The interest income and interest expense of Daimler Financial
Services are included in revenue and cost of sales, and are
presented in Notes 4 and 5.
In the reporting year, there were no significant issues
at the Daimler Buses segment.
791
198
75
24
3,920
1
Daimler Financial Services
3,921
307
Daimler Trucks
In 2017, expenses of €172 million for fixed-cost optimizations
affected EBIT negatively. On the other hand, the sale of real
estate by Mitsubishi Fuso Truck and Bus Corporation at the
Kawasaki site in Japan increased earnings by €267 million.
In addition, the settlement of a pension plan in the NAFTA region
had a positive impact of €117 million on EBIT. In the year 2016,
expenses of €91 million resulted from Daimler Trucks' workforce
adjustments.
Mercedes-Benz Vans
In the year 2016, expenses of €83 million in connection with
Takata airbags had a negative effect on EBIT.
Daimler Buses
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
85,785
Intersegment revenue
3,499
-316
12,902
thereof profit/loss from
equity-method investments
627
38
13,218
12
-1
677
-175
502
thereof profit/loss from
compounding and effects
1
1,739
249
1,170
Total revenue
89,284
31,719
1,468
33,187
12,298
537
12,835
4,101
75
4,176
19,358
1,302
20,660
153,261
153,261
6,881
160,142
-6,881
-6,881
153,261
Segment profit (EBIT)
8,112
1,948
plant and equipment
Expenses for variable remuneration of the Board of
Management with a long-term incentive effect, as shown in
table F.86, result from the ongoing measurement at
fair value at each balance sheet date of all rights granted
and not yet due under the Performance Phantom Share
Plans (PPSP), i.e. for the plans of the years 2014-2017. In 2017,
the active members of the Board of Management were
granted 151,157 (2016: 162,033) phantom shares in connection
with the PPSP; the fair value of these phantom shares at
the grant date was €10.2 million (2016: €10.2 million). See
Note 21 for additional information on share-based payment
of the members of the Board of Management.
Wilmington, USA
Remuneration of the Board of Management
100.00
Hong Kong, China
Wilmington, USA
67.55
100.00
100.00
Detroit Diesel Corporation
Milton Keynes, United Kingdom
Detroit Diesel Remanufacturing LLC
100.00
5
Schönefeld, Germany
100.00
5
Berlin, Germany
Stuttgart, Germany
100.00
Mexico City, Mexico
S. de R.L. de C.V.
Wilmington, USA
100.00
100.00
Farmington Hills, USA
100.00
Wilmington, USA
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daiprodco Mexico S. de R.L. de C.V.
100.00
Farmington Hills, USA
100.00
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans USA, LLC
Daimler Vehículos Comerciales Mexico
Daimler Trust Leasing LLC
100.00
5
100.00
San Juan Ixtacala, Mexico
100.00
Kirchheim unter Teck, Germany
100.00
5
Stuttgart, Germany
100.00
100.00
Kloten, Switzerland
100.00
EvoBus (U.K.) Ltd.
Coventry, United Kingdom
100.00
EvoBus Austria GmbH
5
Mexico City, Mexico
Toluca, Mexico
EHG Elektroholding GmbH
Detroit, USA
100.00
Detroit, USA
100.00
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EvoBus (Schweiz) AG
Domicile, Country
Footnote
315
Detroit Diesel Remanufacturing Mexicana,
S. de R.L. de C.V.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Deutsche Accumotive GmbH & Co. KG
Capital share
in %1
Seoul, South Korea
Portland, USA
Daimler Trust Leasing Conduit LLC
Utrecht, Netherlands
100.00
Daimler Nederland Holding B.V.
Daimler North America Corporation
Daimler North America Finance Corporation
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
100.00
Daimler Parts Brand GmbH
Wilmington, USA
Newark, USA
Beijing, China
100.00
100.00
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Daimler Manufactura, S. de R.L. de C.V.
Mexico City, Mexico
5
100.00
Daimler Mobility Services GmbH
Daimler Motors Investments LLC
Daimler Nederland B.V.
Mexico City, Mexico
100.00
Leinfelden-Echterdingen, Germany
Daimler Mexico, S.A. de C.V.
Stuttgart, Germany
100.00
5
100.00
Singapore, Singapore
100.00
Mulgrave, Australia
100.00
Beijing, China
Mexico City, Mexico
100.00
Mississauga, Canada
100.00
Daimler Trucks Korea Ltd.
Daimler Trucks North America LLC
Daimler Trucks Remarketing Corporation
Daimler Trust Holdings LLC
Daimler Trucks Canada Ltd.
100.00
Farmington Hills, USA
5
Daimler Re Brokers GmbH
Bremen, Germany
74.90
5
Daimler Re Insurance S.A. Luxembourg
Daimler Real Estate GmbH
Daimler Retail Receivables LLC
DAIMLER SERVICIOS CORPORATIVOS MEXICO
S. DE R.L. DE C.V.
Daimler South East Asia Pte. Ltd.
Daimler Truck and Bus Australia Pacific Pty. Ltd.
Daimler Trucks and Buses (China) Ltd.
Luxembourg, Luxembourg
100.00
Berlin, Germany
100.00
EvoBus Belgium N.V.
100.00
EvoBus Ceská republika s.r.o.
EvoBus France S.A.S.U.
5,8
Gamma 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
100.00
Gamma 2 OHG
Schönefeld, Germany
100.00
5,8
Gamma 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
100.00
Schönefeld, Germany
Epsilon OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Beta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
5,8
Delta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
100.00
Alpha 7 OHG
5,8
Grundstücksverwaltungsgesellschaft EvoBus
Hamburg, Germany
78.98
Windhof, Luxembourg
100.00
São Paulo, Brazil
100.00
0.00
Zwartkop, South Africa
Luxembourg, Luxembourg
0.00
3
Stuttgart, Germany
0.00
3
100.00
Gamma 4 OHG
Amsterdam, Netherlands
London, United Kingdom
Schönefeld, Germany
100.00
5,8
GmbH & Co. OHG
Hailo Network Iberia S.L.
Hailo Network IP Limited
100.00
Highway 2015-I. B.V.
Interleasing Luxembourg S.A.
Invema Assessoria Empresarial Ltda
Koppieview Property (Pty) Ltd
LBBW AM - Daimler Re Insurance
LBBW AM-MBVEXW
Madrid, Spain
100.00
Intelligent Apps GmbH
5,8
100.00
Schönefeld, Germany
100.00
5
Sámano, Spain
100.00
Bomporto, Italy
100.00
Stuttgart, Germany
Nijkerk, Netherlands
Wolica, Poland
100.00
Mem Martins, Portugal
100.00
Vetlanda, Sweden
100.00
100.00
Freightliner Custom Chassis Corporation
100.00
100.00
EvoBus GmbH
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus Nederland B.V.
EvoBus Polska Sp. z o.o.
EvoBus Portugal, S.A.
Sarcelles, France
EvoBus Sverige AB
100.00
Kobbegem-Asse, Belgium
100.00
Prague, Czech Republic
100.00
Koege, Denmark
Wiener Neudorf, Austria
Gaffney, USA
100.00
Friesland Lease B.V.
100.00
5,8
Alpha 4 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
Schönefeld, Germany
5,8
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Alpha 6 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
5,8
Drachten, Netherlands
51.11
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Alpha 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Alpha 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
EvoBus Danmark A/S
According to Section 314 Subsection 1 Number 6a of the German
Commercial Code (HGB) the overall remuneration granted
to the members of the Board of Management, excluding service
cost resulting from entitlements to post-employment
benefits, amounted to €35.0 million (2016: €31.8 million).
Milton Keynes, United Kingdom
Tokyo, Japan
Rome, Italy
100.00
Almere, Netherlands
100.00
Warsaw, Poland
100.00
100.00
Oeiras, Portugal
Athlon Car Lease Rental Services B.V.
Almere, Netherlands
100.00
Athlon Car Lease Rental Services Belgium N.V.
Machelen, Belgium
100.00
100.00
Athlon Car Lease S.A.S.
Almere, Netherlands
Machelen, Belgium
F.88
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
100.00
313
Athlon Beheer International B.V.
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Athlon Car Lease Italy S.R.L.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp.z.o.o
Athlon Car Lease Portugal, Ida
Almere, Netherlands
100.00
Almere, Netherlands
100.00
I. Consolidated subsidiaries
The statement of investments of the Daimler Group pursuant
to Section 313 Subsection 2 No. 1-6 of the German Commercial
Code (HGB) is presented in table 71 F.88. In general coopera-
tions without capital share are not reported. Information on
equity and earnings and information on investments pursuant
to Section 313 Subsection 2 No. 4 of the German Commercial
Code is omitted insofar as, pursuant to Section 313 Subsection 3
Sentence 4 of the HGB, such information is of minor rele-
vance for a fair presentation of the profitability, liquidity and
capital resources, and financial position of the Daimler
Group. In addition, the statement of investments indicates
which consolidated companies make use of the exemption
pursuant to Section 264 Subsection 3 of the HGB and/or
Section 264b of the HGB. The consolidated financial
statements of Daimler AG release those subsidiaries from
the requirements that would otherwise apply.
Le Bourget, France
Athlon Car Lease Spain, S.A.
Amsterdam, Netherlands
100.00
Machelen, Belgium
100.00
Düsseldorf, Germany
100.00
100.00
Malmö, Sweden
Irvine, USA
100.00
100.00
80.00
São Paulo, Brazil
100.00
Schlieren, Switzerland
100.00
Düsseldorf, Germany
Le Bourget, France
Barcelona, Spain
100.00
Athlon Dealerlease B.V.
Almere, Netherlands
100.00
Athlon France S.A.S.
100.00
Athlon Germany GmbH
Athlon Mobility Consultancy N.V.
Athlon Rental Germany GmbH
Athlon Sweden AB
Athlon Switzerland AG
AutoGravity Corporation
Banco Mercedes-Benz do Brasil S.A.
Athlon Mobility Consultancy B.V.
Information on investments
declaration-en-12-2017.pdf.
company/corporate-governance/declarations/daimler-
4.2
3.5
42.8
40.4
1 Including the Board of Management remuneration paid
to Dr. Wolfgang Bernhard until February 10, 2017.
312
Remuneration of the Supervisory Board
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The shareholders of Daimler AG elected KPMG AG
Wirtschaftsprüfungsgesellschaft as the external auditor
at the Annual Shareholders' Meeting held on March 29,
2017. Table 71 F.87 shows the fees for services provided
by KPMG AG Wirtschaftsprüfungsgesellschaft and the
companies of the worldwide KPMG network to Daimler AG,
the subsidiaries and the joint operations that are
included in the Group's consolidated financial statements
for the respective reporting periods.
The review of the interim financial statements (2016: €5 million),
the audit of the accounting-related internal control system
(2016: €3 million), as well as additional audit services that
are caused by an audit or are made use of within an audit
such as for instance accounting-related IT and process audits
accompanying projects (2016: €5 million) have to be
assigned to Audit Services as of the 2017 financial year due
to underlying regulations.
F.87
Accountant fees
2017
2016
38. Principal accountant fees
In millions of euros
36.9
2.8
Fixed remuneration
(base salary)
Short-term variable remuneration
(50% of annual bonus)
9.5
10.0
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.7
Mid-term variable remuneration
(50% of annual bonus, "deferral")
Variable remuneration with a
long-term incentive effect (PPSP)
Post-employment benefits (service cost)
Termination benefits
7.0
5.2
12.4
13.1
2.0
5.8
44
39
Audit Services
7
4
1
2
5
4
Wirtschaftsprüfungsgesellschaft
60
The previous year's figures for Other Attestation Services have
been reduced accordingly. Other Attestation Services comprise
in particular audits in connection with non-accounting-related
IT systems and processes. Audits in connection with compliance
management systems, the issuance of comfort letters, non-
financial disclosures and reports as well as the application of
funds audits are also included.
The tax advisory services primarily comprise tax advice
in conjunction with value-added tax.
Other Services were performed primarily in connection
with non-accounting-relevant processes, the implementation
of new standards and M&A activities.
39. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of
Daimler AG have issued a declaration pursuant to Section 161
of the German Stock Corporation Act (AktG) and have made
it permanently available to their shareholders on Daimler's
website at https://www.daimler.com/documents/
53
thereof KPMG AG
5
6
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
21
21
Other Attestation Services
9
7
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Tax Services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
1
1
Other Services
Brooklands Estates Management Limited
100.00
Milton Keynes, United Kingdom
Campo Largo Comercio de Veículos e Peças Ltda.
in %1
Daimler Financial Services Japan Co., Ltd.
Kawasaki, Japan
100.00
Daimler Financial Services México, S. de R.L. de C.V.
Mexico City, Mexico
Footnote
100.00
Mexico City, Mexico
100.00
S.A. de C.V., S.O.F.O.M., E.N.R.
Daimler Fleet Management GmbH
Stuttgart, Germany
100.00
Daimler Financial Services,
5
Capital share
Name of the Company
Berlin, Germany
100.00
5
Wilmington, USA
100.00
Singapore, Singapore
Domicile, Country
100.00
100.00
5
Chennai, India
100.00
314
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Stuttgart, Germany
Daimler Financial Services India Private Limited
Daimler Fleet Management Singapore Pte. Ltd.
100.00
Daimler Insurance Services UK Limited
Daimler International Finance B.V.
Daimler Investments US Corporation
Beijing, China
100.00
Schönefeld, Germany
100.00
Daimler Insurance Services Japan Co., Ltd.
5
100.00
Wilmington, USA
100.00
Stuttgart, Germany
100.00
5
Chennai, India
Singapore, Singapore
Daimler Insurance Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler Fleet Management South Africa (Pty.) Ltd.
Daimler Fleet Management UK Limited
Centurion, South Africa
65.00
Milton Keynes, United Kingdom
100.00
Daimler Fleet Services A.S.
Daimler Insurance Agency LLC
Istanbul, Turkey
Daimler FleetBoard GmbH
Stuttgart, Germany
100.00
5
Daimler Greater China Ltd.
Daimler Grund Services GmbH
100.00
Daimler Financial Services AG
Daimler Financial Services Africa & Asia Pacific Ltd.
Daimler Finance North America LLC
car2go Iberia S.L.U.
Madrid, Spain
100.00
car2go Italia S.R.L.
Milan, Italy
100.00
5
car2go N.A. LLC
Wilmington, USA
100.00
Utrecht, Netherlands
100.00
car2go Österreich GmbH
CARS Technik & Logistik GmbH
car2go Nederland B.V.
CLIDET NO 1048 (Proprietary) Limited
Conemaugh Hydroelectric Projects, Inc.
100.00
car2go Group GmbH
São Bernardo do Campo, Brazil
100.00
car2go Canada Ltd.
Vancouver, Canada
100.00
car2go China Co., Ltd.
Leinfelden-Echterdingen, Germany
Beijing, China
car2go Deutschland GmbH
Leinfelden-Echterdingen, Germany
100.00
car2go Europe GmbH
Leinfelden-Echterdingen, Germany
75.00
100.00
DA Investments Co. LLC
DAF Investments, Ltd.
Daimler Australia/Pacific Pty. Ltd.
Daimler Automotive de Venezuela C.A.
Daimler Buses North America Inc.
Daimler Canada Finance Inc.
Daimler Canada Investments Company
Daimler Capital Services LLC
100.00
Halifax, Canada
100.00
100.00
Daimler Ceská republika Holding s.r.o.
Prague, Czech Republic
100.00
100.00
Bogota D.C., Colombia
100.00
Daimler Compra y Manufactura Mexico
S. de R.L. de C.V.
Mexico City, Mexico
100.00
Daimler Export and Trade Finance GmbH
Daimler Colombia S. A.
Oriskany, USA
Montreal, Canada
100.00
Valencia, Venezuela
Vienna, Austria
100.00
Wiedemar, Germany
100.00
5
Centurion, South Africa
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Melbourne, Australia
100.00
100.00
306
38.6
325
Wemmel, Belgium
100.00
Wilmington, USA
100.00
100.00
89.29
100.00
Mercedes-Benz Vertrieb NFZ GmbH
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wholesale Receivables LLC
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
Toronto, Canada
Kawasaki, Japan
Tramagal, Portugal
Mitsubishi Fuso Truck of America, Inc.
Logan Township, USA
100.00
100.00
moovel Group GmbH
Wavre, Belgium
Braine-l'Alleud, Belgium
Milton Keynes, United Kingdom
100.00
Wilmington, USA
100.00
Stuttgart, Germany
100.00
5
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Stuttgart, Germany
100.00
5
Stuttgart, Germany
100.00
5
Ho Chi Minh City, Vietnam
Warsaw, Poland
70.00
100.00
100.00
100.00
moovel North America, LLC
myTaxi Iberia SL
Kirchheim unter Teck, Germany
100.00
Jakarta, Indonesia
100.00
Bogor, Indonesia
100.00
P.T. Star Engines Indonesia
Bogor, Indonesia
100.00
4
Renting del Pacífico S.A.C.
Sandown Motor Holdings (Pty) Ltd
SelecTrucks of America LLC
Lima, Peru
100.00
Bryanston, South Africa
62.62
Portland, USA
100.00
SelecTrucks of Toronto, Inc.
Setra of North America, Inc.
P.T. Mercedes-Benz Indonesia
Multifleet G.I.E
P.T. Mercedes-Benz Distribution Indonesia
100.00
mytaxi Network Ireland Ltd.
mytaxi Network Ltd.
N.V. Mercedes-Benz Aalst
Stuttgart, Germany
100.00
5
Portland, USA
100.00
Le Bourget, France
Barcelona, Spain
Dublin, Ireland
50.10
8
100.00
100.00
London, United Kingdom
100.00
Erembodegem, Belgium
100.00
N.V. Mercedes-Benz Mechelen
Mechelen, Belgium
NuCellSys GmbH
Mississauga, Canada
Berlin, Germany
Mercedes-Benz Vans, LLC
Mercedes-Benz Romania S.R.L.
Milton Keynes, United Kingdom
100.00
Madrid, Spain
100.00
Centurion, South Africa
100.00
Rome, Italy
100.00
Bucharest, Romania
100.00
Mercedes-Benz Russia AO
Moscow, Russian Federation
100.00
Mercedes-Benz Schweiz AG
Schlieren, Switzerland
100.00
Mercedes-Benz Service Leasing S.R.L.
Bucharest, Romania
100.00
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Roma S.p.A.
Alcobendas, Spain
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail Group UK Limited
100.00
Milton Keynes, United Kingdom
100.00
Shanghai, China
100.00
Mercedes-Benz Polska Sp. z.o.o
Warsaw, Poland
100.00
Mercedes-Benz Portugal, S.A.
Mem Martins, Portugal
100.00
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Renting, S.A.
Mercedes-Benz Research & Development
North America, Inc.
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Wilmington, USA
100.00
Mercedes-Benz Retail, S.A.
Mercedes-Benz Versicherung AG
100.00
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz Vans Australia Pacific Pty. Ltd.
Mercedes-Benz Vans España, S.L.U.
Warsaw, Poland
Wilmington, USA
Genas, France
Wissous, France
Mulgrave, Australia
Vance, USA
100.00
100.00
100.00
100.00
100.00
100.00
Madrid, Spain
100.00
Mercedes-Benz Vans Mobility GmbH
Mercedes-Benz Vans UK Limited
Mercedes-Benz USA, LLC
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
66.91
100.00
Petaling Jaya, Malaysia
100.00
Istanbul, Turkey
100.00
Sosnowiec, Poland
100.00
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sverige AB
Mercedes-Benz Taiwan Ltd.
Mercedes-Benz Trucks España S.L.U.
Pretoria, South Africa
100.00
Malmö, Sweden
100.00
Taipei, Taiwan
51.00
Alcobendas, Spain
100.00
Mercedes-Benz Trucks UK Limited
Mercedes-Benz Türk A.S.
Milton Keynes, United Kingdom
Istanbul, Turkey
Azuqueca de Henares, Spain
100.00
100.00
100.00
Nairobi, Kenya
100.00
Daimler Commercial Vehicles MENA FZE
Dubai, United Arab Emirates
100.00
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Singapore, Singapore
100.00
Daimler Culture Development Co., Ltd.
Daimler Financial Services UK Trustees Ltd.
Beijing, China
50.00
3
Milton Keynes, United Kingdom
100.00
Daimler Gastronomie GmbH
Daimler Group Services Berlin GmbH
Esslingen am Neckar, Germany
100.00
Berlin, Germany
Bangkok, Thailand
100.00
Daimler Commercial Vehicles Africa Ltd.
8
100.00
Santiago, Chile
Brussels, Belgium
100.00
100.00
Copenhagen, Denmark
100.00
Stockholm, Sweden
100.00
Milton Keynes, United Kingdom
100.00
Buenos Aires, Argentina
72.17
Bucharest, Romania
100.00
Bucharest, Romania
100.00
Stuttgart, Germany
100.00
Schönefeld, Germany
100.00
Daimler Commercial Vehicles (Thailand) Ltd.
Berlin, Germany
Daimler Group Services Madrid, S.A.U.
Daimler International Assignment Services USA, LLC
51.00
Ulm, Germany
100.00
Milton Keynes, United Kingdom
100.00
Daimler UK Trustees Limited
Milton Keynes, United Kingdom
100.00
Daimler Unterstützungskasse GmbH
Stuttgart, Germany
100.00
7
Deutsche Accumotive Verwaltungs-GmbH
Kirchheim unter Teck, Germany
100.00
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
EvoBus Reunion S. A.
Le Port, France
96.00
Taipei, Taiwan
Daimler Innovation Technology (China) Co., Ltd.
Daimler UK Share Trustee Ltd.
Daimler Trucks Asia Taiwan Ltd.
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Parts Logistics Australia Pty. Ltd.
Daimler Protics GmbH
San Sebastián de los Reyes, Spain
100.00
Beijing, China
100.00
Wilmington, USA
100.00
Stuttgart, Germany
100.00
Mulgrave, Australia
100.00
Leinfelden-Echterdingen, Germany
100.00
Daimler Purchasing Coordination Corp.
Wilmington, USA
100.00
Daimler Starmark A/S
Horsholm, Denmark
100.00
Daimler TSS GmbH
Oriskany, USA
100.00
Daimler AG & Co. Anlagenverwaltung OHG
Luxembourg, Luxembourg
0.00
3
smart France S.A.S.
Hambach, France
100.00
smart Vertriebs gmbh
Berlin, Germany
100.00
5
Special Lease Systems (SLS) B.V
Almere, Netherlands
100.00
Star Assembly SRL
Sebes, Romania
100.00
Starexport Trading S.A.
São Bernardo do Campo, Brazil
100.00
Sterling Truck Corporation
Portland, USA
Silver Arrow S.A.
100.00
3
Wilmington, USA
Silver Arrow Australia Trust 2017-1
SILVER ARROW CHINA 2016-1 Auto Loan Asset Backed
Notes Trust c/o CITIC Trust Co., Ltd.
Melbourne, Australia
0.00
3
Beijing, China
0.00
3
SILVER ARROW CHINA 2016-2 Auto Loan Asset Backed
Notes Trust c/o CITIC Trust Co., Ltd.
Beijing, China
0.00
3
SILVER ARROW CHINA 2017-1 RETAIL AUTO LOAN ASSET
BACKED NOTES TRUST c/o CITIC TRUST CO., LTD.
Beijing, China
0.00
3
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET
BACKED NOTES TRUST c/o CITIC TRUST CO., LTD.
Beijing, China
0.00
3
Silver Arrow Lease Facility Trust
0.00
Stuttgart, Germany
Sumperská správa majetku k.s.
100.00
100.00
319
320
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
Footnote
in %1
II. Unconsolidated subsidiaries²
AEG Olympia Office GmbH
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Beat Chile SpA
car2go Belgium SPRL
car2go Danmark A/S
car2go Sverige AB
car2go UK Ltd.
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Clever Tech S.R.L.
Clever Tech Sud S.R.L.
Cúspide GmbH
Halifax, Canada
Prague, Czech Republic
3218095 Nova Scotia Company
Sittard, Netherlands
8
Thomas Built Buses of Canada Limited
Calgary, Canada
100.00
Thomas Built Buses, Inc.
High Point, USA
100.00
Trona Cogeneration Corporation
Wilmington, USA
100.00
Ucafleet S.A.S
Le Bourget, France
65.00
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
5
Western Star Trucks Sales, Inc
Portland, USA
100.00
Zuidlease B.V.
51.00
100.00
Port-Marly, France
100.00
Moscow, Russian Federation
100.00
Berlin, Germany
100.00
5
Saarbrücken, Germany
100.00
5
Mercedes-Benz Belgium Luxembourg S.A.
Brussels, Belgium
100.00
Mercedes-Benz Bordeaux S.A.S.
Begles, France
100.00
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Budapest, Hungary
100.00
Mercedes-Benz Brooklands Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Canada Inc.
100.00
Toronto, Canada
Warsaw, Poland
Salzburg, Austria
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
Mercedes-Benz Auto Receivables Trust 2015-1
Mercedes-Benz Auto Receivables Trust 2016-1
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
Mercedes-Benz Bank AG
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Banking Service GmbH
Stuttgart, Germany
100.00
100.00
3
100.00
Moscow, Russian Federation
Mercedes-Benz Corretora de Seguros Ltda
Buenos Aires, Argentina
Stuttgart, Germany
São Paulo, Brazil
100.00
100.00
5
99.98
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz CPH A/S
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz Danmark A/S
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz Drogenbos N.V.
Mercedes-Benz Espana, S.A.U.
100.00
Mercedes-Benz Capital Rus O00
Mem Martins, Portugal
Trent, Italy
100.00
Mercedes-Benz Cars UK Limited
Mercedes-Benz Ceská republika s.r.o.
Mercedes-Benz CharterWay España, S.A.
Mercedes-Benz CharterWay Gesellschaft
mit beschränkter Haftung
Milton Keynes, United Kingdom
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Berlin, Germany
100.00
5
Mercedes-Benz CharterWay S.A.S.
Montigny-le-Bretonneux, France
100.00
Mercedes-Benz CharterWay S.r.l.
Mercedes-Benz Comercial, Unipessoal Lda.
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz Connectivity Services GmbH
100.00
Mercedes-Benz Finance Co., Ltd.
0.00
3
100.00
5
Mercedes AMG High Performance Powertrains Ltd
Brixworth, United Kingdom
100.00
Mercedes pay AG
Küsnacht, Switzerland
100.00
Mercedes pay S.A.
Luxembourg, Luxembourg
100.00
Mercedes-AMG GmbH
Affalterbach, Germany
100.00
5
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
Mem Martins, Portugal
100.00
Mercedes-Benz (China) Ltd.
Mercedes-Benz (Thailand) Limited
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
Arnstadt, Germany
Mercedes-Benz Accessories GmbH
MDC Technology GmbH
100.00
G | FURTHER INFORMATION | CONTENTS
316
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Li-Tec Battery GmbH
Mascot Truck Parts Canada Ltd (2017)
Mascot US LLC
MBarc Credit Canada Inc.
MDC Power GmbH
Kamenz, Germany
Mississauga, Canada
Wilmington, USA
Mississauga, Canada
100.00
5
100.00
100.00
100.00
Kölleda, Germany
5
Wilmington, USA
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Leipzig und Magdeburg KG
Mercedes-Benz Argentina S.A.
100.00
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2015-B
Mercedes-Benz Auto Lease Trust 2016-1
Beijing, China
100.00
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2016-2
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2016-A
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2016-B
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Receivables Trust 2013-1
Mercedes-Benz Auto Receivables Trust 2014-1
Wilmington, USA
0.00
Melbourne, Australia
Mercedes-Benz Antwerpen N.V.
100.00
5
Mercedes-Benz Asia GmbH
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Beijing, China
75.00
Bangkok, Thailand
100.00
Yangzhou, China
100.00
Stuttgart, Germany
100.00
5
Düsseldorf, Germany
100.00
3
Antwerp, Belgium
100.00
Buenos Aires, Argentina
100.00
Stuttgart, Germany
100.00
Utrecht, Netherlands
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
100.00
5
Zagreb, Croatia
100.00
Bucharest, Romania
100.00
Budapest, Hungary
100.00
Warsaw, Poland
100.00
317
318
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Malaysia Sdn. Bhd.
Taipei, Taiwan
Stuttgart, Germany
100.00
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Hrvatska d.o.o.
100.00
Mercedes-Benz Italia S.p.A.
Rome, Italy
100.00
Mercedes-Benz Japan Co., Ltd.
Tokyo, Japan
100.00
Mercedes-Benz Korea Limited
Seoul, South Korea
51.00
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Bangkok, Thailand
100.00
Mercedes-Benz Leasing Co., Ltd.
Beijing, China
65.00
Mercedes-Benz Leasing do Brasil
Barueri, Brazil
100.00
Arrendamento Mercantil S.A.
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Taipei, Taiwan
Stuttgart, Germany
5
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Stuttgart, Germany
100.00
5
Mercedes-Benz Molsheim S.A.S.
Molsheim, France
100.00
Mercedes-Benz Nederland B.V.
Utrecht, Netherlands
100.00
Mercedes-Benz New Zealand Ltd
Auckland, New Zealand
100.00
Mercedes-Benz Ninove N.V.
Ninove, Belgium
100.00
Mercedes-Benz Österreich GmbH
Mercedes-Benz Paris SAS
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
Salzburg, Austria
5
100.00
100.00
100.00
Ludwigsfelde, Germany
100.00
5
Kuala Lumpur, Malaysia
51.00
Mercedes-Benz Manhattan, Inc.
Wilmington, USA
100.00
Mercedes-Benz Manufacturing (Thailand) Limited
Bangkok, Thailand
100.00
Mercedes-Benz Manufacturing Hungary Kft.
Kecskemét, Hungary
100.00
Mercedes-Benz Master Owner Trust
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mercedes-Benz Minibus GmbH
Wilmington, USA
0.00
3
Mexico City, Mexico
Dortmund, Germany
100.00
Utrecht, Netherlands
100.00
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Montigny-le-Bretonneux, France
100.00
80.00
100.00
80.00
Utrecht, Netherlands
100.00
Auckland, New Zealand
100.00
Mem Martins, Portugal
100.00
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Moscow, Russian Federation
100.00
Schlieren, Switzerland
Mississauga, Canada
100.00
100.00
100.00
Horsholm, Denmark
Tokyo, Japan
Melbourne, Australia
Salzburg, Austria
Brussels, Belgium
Hong Kong, China
Rome, Italy
Seoul, South Korea
100.00
Budapest, Hungary
Copenhagen, Denmark
100.00
100.00
The Hague, Netherlands
100.00
São Paulo, Brazil
100.00
São Bernardo do Campo, Brazil
100.00
Drogenbos, Belgium
100.00
Alcobendas, Spain
100.00
90.00
100.00
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Bratislava, Slovakia
Mercedes-Benz Gent N.V.
Montigny-le-Bretonneux, France
100.00
Gent, Belgium
100.00
Mercedes-Benz Grand Prix Ltd.
Brackley, United Kingdom
60.00
Mercedes-Benz Hellas S.A.
Mercedes-Benz Hong Kong Limited
Mercedes-Benz India Private Limited
Kifissia, Greece
100.00
Hong Kong, China
100.00
Pune, India
100.00
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Voluntari, Romania
Mercedes-Benz France S.A.S.
100.00
Malmö, Sweden
100.00
75.00
Centurion, South Africa
100.00
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Taipei, Taiwan
100.00
Milton Keynes, United Kingdom
100.00
EvoBus Russland OOO
Wilmington, USA
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Försäljnings AB
Copenhagen, Denmark
100.00
Malmö, Sweden
100.00
Istanbul, Turkey
100.00
Istanbul, Turkey
100.00
Familonet GmbH
Mercedes-Benz Parts Manufacturing & Services Ltd.
100.00
Berlin, Germany
Beijing, China
10.08
Beijing, China
Via Transportation Inc.
There Holding B.V.
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
MBtech Group GmbH & Co. KGaA
LSH Auto International Limited
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
KAMAZ PAO
FUSO LAND TRANSPORT & Co. Ltd.
FlixMobility GmbH
BlackLane GmbH
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
VI. Associated companies accounted for using the equity method
Wagenplan B.V.
50.00
Almere, Netherlands
50.00
Amsterdam, Netherlands
45.00
Berlin, Germany
Via Netherlands B.V.
49.00
Toll Collect GmbH
30.57
5.62
Abgaszentrum der Automobilindustrie GbR
VII. Joint operations, joint ventures, associated companies and substantial other investments accounted
for at (amortized) cost²
Footnote
Capital share
in %1
Domicile, Country
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Okayamashi, Japan
Sindelfingen, Germany
Hong Kong, China
12.38
New York, USA
33.33
Rijswijk, Netherlands
32.28
Jakarta, Indonesia
30.00
Jakarta, Indonesia
50.00
35.00
15.00
43.83
Yokohama, Japan
15.00
Naberezhnye Chelny, Russian Federation
21.67
Kawasaki, Japan
Munich, Germany
8
45.00
Berlin, Germany
Vienna, Austria
50.00
Beijing, China
50.00
Kentwood, USA
50.00
Hildesheim, Germany
50.10
Burnaby, Canada
50.00
Mexico City, Mexico
100.00
Stuttgart, Germany
100.00
Chemnitz, Germany
100.00
Istanbul, Turkey
100.00
Lima, Peru
100.00
London, United Kingdom
51.00
Schlieren, Switzerland
100.00
Maribor, Slovenia
100.00
Cugir, Romania
50.00
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
Munich, Germany
Toll Collect GbR
60.00
Stuttgart, Germany
TASIAP GmbH
50.00
Shenzhen, China
Shenzhen DENZA New Energy Automotive Co. Ltd.
50.00
Council Bluffs, USA
SelecTrucks of Omaha LLC
50.00
Houston, USA
SelecTrucks of Houston Wholesale LLC
BDF IP Holdings Ltd.
50.00
SelecTrucks of Houston LLC
50.00
McDonough, USA
26.00
Garcia, Mexico
25.00
Munich, Germany
SelecTrucks of Atlanta LLC
Polomex, S.A. de C.V.
IONITY Holding GmbH & Co. KG
50.00
Fuzhou, China
25.10
Houston, USA
99.50
Beijing Mercedes-Benz Sales Service Co., Ltd.
COBUS Industries GmbH
19.42
13.38
Hinxworth, United Kingdom
Seattle, USA
10.17
Bruchsal, Germany
11.75
Stuttgart, Germany
11.11
Berlin, Germany
5.38
San Francisco, USA
28.20
Sannoseki, Japan
30.00
Berlin, Germany
20.84
Munich, Germany
51.00
Most, Czech Republic
50.00
Bottrop, Germany
12.33
New York, USA
8
20.00
Ingolstadt, Germany
33.51
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
Ohmuta, Japan
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
338
Daimler Worldwide
337
Moscow, Russian Federation
336
Glossary
334
Ten Year Summary
327
Independent Auditor's Report
326
Responsibility Statement
G| Further Information
B
08
At the Annual Shareholders' Meeting on April 5, 2018, the Board of Management
and the Supervisory Board will therefore propose the payment of an increased
dividend of €3.65 per share (prior year: €3.25). We aim to achieve a sustainable
dividend development also in the coming years. In setting the dividend, our
target is generally to distribute approximately 40% of the net profit attributable
to Daimler shareholders.
UN
na
TU
DIVIDEND POLICY!
66
SUSTAINABLE AND SOUND
99 WE PURSUE A
323
Furthermore, Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability in MOST Cooperation GbR,
Karlsruhe (Germany).
8 Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability.
7 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
6 Joint control due to economic circumstances.
4 In liquidation.
26.00
Jeddah, Saudi Arabia
33.40
Zonar Systems, Inc.
what3words Ltd.
Volocopter GmbH
VfB Stuttgart 1893 AG
Verimi GmbH
Turo Inc.
Toyo Kotsu Co., Ltd.
Toll4Europe GmbH
tiramizoo GmbH
STARCAM s.r.o.
smart-BRABUS GmbH
Rally Bus Corp.
PDB Partnership for Dummy Technology and Biomechanics GbR
Omuta Unso Co., Ltd.
National Automobile Industry Company Ltd.
MFTB Taiwan Co., Ltd.
MercedesService Card GmbH & Co. KG
MBtech Verwaltungs-GmbH
Laureus World Sports Awards Limited
Juffali Industrial Products Company
inpro Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
H2 Mobility Deutschland GmbH & Co. KG
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Gottapark, Inc.
EvoBus Hungária Kereskedelmi Kft.
European Center for Information and Communication
Technologies - EICT GmbH
Esslinger Wohnungsbau GmbH
Weissach, Germany
Burnaby, Canada
Beijing, China
25.00
33.00
Taipei, Taiwan
51.00
Kleinostheim, Germany
35.00
Sindelfingen, Germany
50.00
London, United Kingdom
6
0.00
Jeddah, Saudi Arabia
Berlin, Germany
20.00
2.90
ChargePoint Inc.
18.37
33.33
San Francisco, USA
Berlin, Germany
Berlin, Germany
Budapest, Hungary
33.33
Berlin, Germany
26.57
Esslingen am Neckar, Germany
40.82
Wiesbaden, Germany
5.39
Campbell, USA
51.00
8
18.09
New Cairo, Egypt
Index
0.00
51.00
Lisbon, Portugal
100.00
Vienna, Austria
100.00
100.00
100.00
Mercedes-Benz Formula E Limited
Mercedes-Benz G GmbH
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Hungária Kft.
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Manufacturing Poland sp. zo. o.
Mercedes-Benz Manufacturing Rus Ltd
Mercedes-Benz Museum GmbH
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Mercedes-Benz Project Consult GmbH
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Solihull Ltd.
Mercedes-Benz Srbija i Crna Gora d.o.o.u likvidaciji
Mercedes-Benz Trucks Ceská republika s.r.o.
Mercedes-Benz Trucks Nederland B.V.
Esparraguera, Spain
Mercedes-Benz Vans Ceská republika s.r.o
100.00
100.00
100.00
Milton Keynes, United Kingdom
100.00
Novi Beograd, Serbia
100.00
4
Prague, Czech Republic
100.00
Utrecht, Netherlands
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Utrecht, Netherlands
100.00
Valencia, Venezuela
100.00
Stuttgart, Germany
100.00
Kleinostheim, Germany
51.00
Toyama, Japan
Milton Keynes, United Kingdom
Mercedes-Benz Vans Mobility S.L.
Mercedes-Benz Vans Nederland B.V.
Mercedes-Benz Venezuela S.A.
100.00
100.00
Ebina, Japan
Schönefeld, Germany
Jakarta, Indonesia
100.00
Banbury, United Kingdom
88.89
Cunac, France
100.00
100.00
100.00
8
myTaxi USA Inc.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
ogotrac S.A.S.
PABCO Co., Ltd.
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
PT Daimler Commercial Vehicles Indonesia
R.T.C. Management Company Limited
Paris, France
Reva SAS
322
Stuttgart, Germany
100.00
New York, USA
100.00
Mercedes-Benz.io GmbH
MercedesService Card Beteiligungsgesellschaft mbH
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Monarch Cars (Tamworth) Ltd.
Montajes y Estampaciones Metálicas, S.L.
mytapp Portugal Unipessoal LDA
mytaxi Austria GmbH
MYTAXI ITALIA S.R.L.
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
mytaxi Sweden AB
Bratislava, Slovakia
Stuttgart, Germany
Milan, Italy
Warsaw, Poland
Stockholm, Sweden
myTaxi Swiss GmbH
myTaxi UG
myTaxi UK Ltd.
100.00
Zug, Switzerland
100.00
Hamburg, Germany
100.00
London, United Kingdom
Tel Aviv, Israel
100.00
Bangalore, India
100.00
100.00
LEONIE PV AG
LEONIE PV DVB GmbH
LEONIE TB AG
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
LEONIE TB DVB GmbH
LEONORE IP GmbH
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
MBition GmbH
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Neuhausen auf den Fildern, Germany
100.00
Berlin, Germany
100.00
Name of the Company
Stuttgart, Germany
LEONIE FSM DVB GmbH
100.00
Stuttgart, Germany
Hamburg, Germany
100.00
FLINC GmbH
Darmstadt, Germany
100.00
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
Stuttgart, Germany
100.00
LAB1886 GmbH
Stuttgart, Germany
100.00
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Lapland Car Test Aktiebolag
100.00
Legend Investments Ltd.
Milton Keynes, United Kingdom
100.00
LEONIE CORP DVB GmbH
Stuttgart, Germany
100.00
LEONIE DMS DVB GmbH
Stuttgart, Germany
100.00
LEONIE FS DVB GmbH
Arvidsjaur, Sweden
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
321
Mercedes-Benz AG & Co. Grundstücksvermietung
Kamenz, Germany
100.00
Farmington Hills, USA
100.00
Brackley, United Kingdom
100.00
Raaba, Austria
100.00
Cebu City, Philippines
100.00
Budapest, Hungary
100.00
Montigny-le-Bretonneux, France
100.00
Warsaw, Poland
100.00
Moscow, Russian Federation
80.00
Stuttgart, Germany
100.00
Prague, Czech Republic
100.00
100.00
100.00
Wilmington, USA
100.00
New Cairo, Egypt
Objekte Baden-Baden und Dresden OHG
Mercedes-Benz Cars Middle East FZE
Mercedes-Benz Commercial Vehicles Iran GmbH
Mercedes-Benz Consulting GmbH
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Energy Americas LLC
Mercedes-Benz Energy GmbH
Mercedes-Benz ExTra LLC
Domicile, Country
Capital share
in %1
Mercedes-Benz Adm. Consorcios Ltda.
Footnote
100.00
100.00
3,8
Dubai, United Arab Emirates
100.00
Stuttgart, Germany
100.00
Leinfelden-Echterdingen, Germany
100.00
Maastricht, Netherlands
100.00
São Bernardo do Campo, Brazil
Düsseldorf, Germany
Name of the Company
3
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Clinton, USA
Ring Garage AG Chur
SportChassis LLC
Star Egypt For Import LLC
Star Transmission srl
STARKOM d.o.o.
T.O.C (Schweiz) AG
Taxibeat Ltd. UK
Taxibeat Peru S.A.
Taxibeat Teknoloji Hizmetleri A.S.
trapoFit GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
100.00
III. Joint operations accounted for using the equity method
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
North America Fuel Systems Remanufacturing LLC
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Daimler Kamaz Trucks Holding GmbH
Domicile, Country
Capital share
in %1
Footnote
Chur, Switzerland
100.00
Stuttgart, Germany
100.00
Mauá, Brazil
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
EM-motive GmbH
SelecTrucks Comércio de Veículos Ltda
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the audit commit-
tee pursuant to Article 11 of the EU Audit Regulation (long-
form audit report).
From the statements of cash flows
From the stock exchanges
-696 -1,100 3,285 -1,274 222 3,711 -1,652
-6,537 -8,864 -6,829 -2,709 -9,722 -14,666 -9,518
5,842 11,506 3,855
2,274 9,631 12,009 13,129
989 1,452 4,842 5,479 3,960 3,874 2,005
-786 10,961 8,544
-4,812 -8,950 -313
-2,915 1,057 -7,551
-3,915 2,706 5,432
Free cash flow of the industrial business
financing activities
investing activities
operating activities
Cash provided by (used for)
5,889 6,744
5,478 5,676
5,384
2017
4,999
5,075
4,844
4,975
4,158 4,827
3,575 4,067
2,423 3,653
3,264
3,364
3,023
3,559
Depreciation and amortization
plant and equipment
Investments in property,
4,368
2016
2015
2014
24.3
2,768 3,045 3,058 3,060 3,063 3,069 3,070 3,070 3,070 3,070
16,087 15,965 17,593 19,180 20,599 21,779
18,672 18,532 19,925 22,811 26,058 28,160
42,077 40,044 41,309 45,023 48,947 48,138
16,805 12,845 14,544 17,081 17,720 17,349
6,912 9,800 10,903 9,576 10,996 11,053 9,667 9,936 10,981 12,072
31,672 31,635 31,556 34,461 38,742 42,039 46,614 58,151 65,687 68,977
132,225 128,821 135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,605
32,730 31,827 37,953 41,337 39,330 43,363 44,584 54,624 59,133 65,314
23,182 24,322 26,381 27,981
33,050 38,942 46,942 47,714
56,258 62,055 67,613 73,175
20,864 23,760 25,384 25,686
Current liabilities 1
Non-current liabilities
Equity ratio industrial business (%) 1
Equity ratio Group (%) 1
thereof share capital
Shareholders' equity¹
Total assets
Other current assets
Liquid assets
Inventories
Other non-current assets 1
Leased equipment
Property, plant and equipment
From the statements of financial position
3.65
3,477 3,905
3.25
3,477
3.25
2.45
2.25
42.7
24.7
42.6
26.5
45.8
2013
2012
2011
2010
2009
2008
G | FURTHER INFORMATION | TEN YEAR SUMMARY
€ amounts in millions
47,313 49,456 44,738 51,940 65,016 66,047 78,077 85,461 99,398 103,186
52,182 47,538 53,139 54,855 58,716 59,108 66,974 77,081 84,457 87,105
3,106 7,285 11,938 11,981 11,508 13,834 16,953 18,580 19,737 16,597
31,466 31,778 29,338 31,426 37,521 40,648 40,779 44,796 47,054 48,514
Net assets (average) 1, 3
Net liquidity industrial business
Share price at year-end (€)
46.4
44.2
40.8
43.4
39.8
24.0
22.9
23.6
22.1
24.3
22.7
26.3
46.4
44.7
Average shares outstanding (in millions)
A-
26.70 37.23 50.73 33.92 41.32 62.90
957.7 1,003.8 1,050.8 1,066.0 1,066.8 1,068.8
A-
A-
A-
A-
BBB+
BBB+
A-
A-
Fitch
A3
A3
326
G | FURTHER INFORMATION | RESPONSIBILITY STATEMENT
Responsibility Statement
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the
Group management report, which has been combined with
the management report for DAG, includes a fair review
of the development and performance of the business and
the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, February 9, 2018
A2
A-
A-
DBRS
3 In the context of fine tuning the performance measurement system, the definition of net assets was adjusted with retroactive effect
as of 2015.
2 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
1 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
274,330 258,628 258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530
Average annual number of employees
Scope
A
A
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
Dil A
Average diluted shares outstanding
(in millions)
Dieter Zetsche
Renata Jungo Brüngger
A-
A-
A-
2.20
BBB+
BBB+
BBB+
A
A-
Credit rating, long-term
Ratings
1,069.8 1,069.8 1,069.8
1,051.5 1,067.1 1,067.1 1,069.1 1,069.8
1,003.8
959.9
68.97 77.58 70.72 70.80
1,069.8 1,069.8 1,069.8 1,069.8
Standard & Poor's
A
Moody's
A3
alle +8 =
Martin Daum
Auflaro
Ola Källenius
Wilfried Paste
Wilfried Porth
Huberten Diz
Hubertus Troska
Зміна кварт
Britta Seeger
Bodo Cecco
Bodo Uebber
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
A3
A3
A3
A3
2. родоводу
2.20
2,346 2,349 2,407 2,621
9.84
The provision for product warranties amounts to € 6,654 million.
Daimler faces various claims under product guarantees or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature
and volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
Significant uncertainty for the calculation of the provision ari-
ses with regard to the future loss event. The risk for the finan-
cial statements is that the provision is not properly measured.
Our Audit Approach
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provisions. These
include primarily assumptions on expected susceptibility to
and the course of damage, and in addition the value of the
damage per vehicle based on the actual warranty, guarantee
and goodwill losses. We assessed the accuracy of the forecasts
of past warranty, guarantee and goodwill costs on the basis of
historical analyses. Furthermore, we examined wether updated
assessments of future repaid costs and procedures were taken
into account. We obtained an understanding for the underlying
quantities of vehicles through the actual unit sales.
Our Observations
The calculation methods and the assumptions made are ap-
propriate.
330
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Accounting Treatment of legal proceedings
The Financial Statement Risk
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 2 "Accounting estimates and management judgements".
Further information on the legal proceedings can be found in
the notes to the consolidated financial statements Note 29
"Legal proceedings" and in the comments in the combined
management report on “Risks from guarantees, legal and tax
risks - legal risks".
Various legal proceedings, claims and governmental investiga-
tions and inquiries (legal proceedings) are pending against
Daimler on a wide range of topics, including for example vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters (including actions for damages), criminal proceedings
against employees and shareholder matters. Legal procee-
dings relating to products deal with claims on account of alle-
ged vehicle defects. Some of these claims are asserted by way
of class action suits. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages or to under-
take service actions, recall campaigns, monetary penalties or
other costly actions and sanctions.
Whether the recognition of a provision and, if so, in what
amount it is necessary on account of legal proceedings is
dependent to a high degree on estimates and assumptions by
the legal representatives. In view of this and the monetary
amounts involved with regard to the risks, the following legal pro-
ceedings of Daimler are in our opinion of particular importance.
a) Enquiries and investigations by the authorities on test results
and the use of emission control systems
Several state and federal authorities and institutions world-
wide have made inquiries and / or performed investigations.
The inquiries and investigations cover test results, the emis-
sion control systems used in Mercedes-Benz diesel vehicles
and Daimler's interaction with the relevant state and federal
authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities and criminal and antitrust laws.
b) Class-action lawsuits NOx USA/Canada
Since the beginning of 2016, several consumer class-action
lawsuits have been filed against Mercedes-Benz USA, LLC
in federal courts in the USA, which have been combined to
form a single class-action lawsuit against Daimler AG and
Mercedes-Benz USA, LLC, and against Daimler AG and further
group companies in Canada. The main allegation is the use
of devices that impermissibly impair the effectiveness of emis-
sion control systems in reducing nitrogen-oxide (NOx) emissi-
ons and which cause excessive emissions from vehicles with
diesel engines, and the deliberate misleading of customers in
connection with advertising for Mercedes-Benz diesel vehicles.
c) Antitrust and subsequent proceedings
Following the imposition of a fine by the European Commis-
sion against Daimler and other truck manufacturers in July
2016, truck customers have raised damage claims against
Daimler.
Since July 25, 2017 several class-action lawsuits have been
filed in the USA and in Canada against Daimler AG and other
automobile manufacturers and several of their North Ameri-
can subsidiaries. The plaintiffs claim to have suffered losses
because the defendants have engaged since the nineteen
nineties in anticompetitive behaviour with regard to motor
vehicle technology, costs, suppliers, markets and other anti-
competitive matters, including diesel exhaust cleansing tech-
nology. In the meantime all pending US class actions have
been centralized in one proceeding.
Daimler AG already filed an application for immunity ("leniency
application") some time ago with the European Commission in
this connection.
d) Toll Collect
The Financial Statement Risk
The arbitration proceedings initiated in 2004 by the Federal
Republic of Germany in connection with the establishment and
operation of a toll system were filed among others against
Daimler Financial Services AG and its Toll Collect GbR invest-
ment. In the course of these arbitration proceedings, damages
due to lost toll revenue and contractual penalties due to violat-
ions of the contracts have been claimed.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 2 "Accounting estimates and management judgements".
Further information on the guarantees and product warranties
can be found in the notes to the consolidated financial state-
ments Note 23 "Provisions for other risks" and in the com-
ments in the combined management report on "Company-spe-
cific risks and opportunities - Warranty and goodwill cases".
Measurement of the Provision for
The Financial Statement Risk
The balance sheet caption “Equipment on operating leases"
(€ 47,714 million) comprises motor vehicles on operating lea-
ses. The impairment risk with regard to these vehicles is pri-
marily dependent on the residual value achievable at the end
of the lease. These future residual values depend on the situ-
ation in the used-vehicle markets prevailing when the vehicles
are returned. The future-oriented valuation is based on a
number of discretionary assumptions. The risk for the finan-
cial statements is that any impairment losses will not be
recognized or that the amounts recognized will be inadequate.
Our Audit Approach
We audited the recoverability of the balance sheet caption
"Equipment on operating leases" based on Daimler's internal
portfolio allocation. The main focus of our risk-oriented audit
approach was addressed to those vehicles with an enhanced
impairment risk. We investigated and assessed the indications
assumed by the group for a possible requirement for the reco-
gnition on an impairment loss. We appraised Daimler's assess-
ment with regard to the residual values that can be achieved at
the end of the term of the leases. We also included vehicles
with diesel technology in this appraisal. In this connection, we
in particular critically reviewed the main influencing factors,
such as the expected number of returns from leasing, the cur-
rent remarketing results in order to assess the accuracy of the
estimates and future vehicle model changes. For significant
markets we furthermore also audited the consistency of the
assumptions made by Daimler with residual value forecasts by
independent expect third parties.
Our Observations
The assumptions and assessments providing the basis for the
valuation of the carrying amounts of "equipment on operating
leases" are appropriate.
Allowances on Receivables from
Financial Services
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables
from financial services can be found in the notes to the conso-
lidated financial statements Note 14 "Receivables from finan-
cial services and Note 32 "Management of financial risks" and
in the comments in the combined management report on
"Industry and business risks and opportunities".
The Financial Statement Risk
Product Warranties
The receivables from financial services (€ 85,787 million) resul-
ting from the financing and leasing activities of the Group
include receivables from sales financing with customers, recei-
vables from sales financing with dealers and receivables from
finance lease contracts. The allowances on these receivables
amounted at the balance sheet date to € 870 million.
The risk for the financial statements is that the credit-worthi-
ness of customers and future cash flows is misjudged or that
the calculation of the risk provision parameter is incorrect so
that allowances are not recognized or are insufficient.
Our Audit Approach
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, and through interrogations and the review of guide-
lines and working instructions.
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
329
We audited the appropriateness and effectiveness of the inter-
nal control system with regard to the risk classification pro-
cess and the determination of the probability of defaults, the
loss rates and the allowances. To this end, we also evaluated
the relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the systems
affected and related interfaces to ensure the completeness and
correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing.
The main focus of our audit was the evaluation of the methodi-
cal approach in the determination of risk categories, default
probabilities and loss rates that are derived from historical
data. We obtained an understanding of this based on a risk-ori-
ented selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler Finan-
cial Services and evaluated the adjustments of the parameters
to the current market situation. In addition, we satisfied our-
selves in conjunction with a conscious sample of audits of indi-
vidual cases that the risk classification is correct and that the
amount of the calculated specific allowance is appropriate.
Our Observations
The methodical approach, the procedures and processes to
calculate the allowance and the assumptions and risk parame-
ters flowing into the measurement are appropriate for the
timely identification of credit risks and the establishment of
adequate allowances.
335
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
by the legal representatives.
The risk for the financial statements is that provisions for legal
proceedings are not set up or are inadequate.
Our Audit Approach
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec-
tion 317 HGB and the EU Audit Regulation and in compliance
with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschafts-
prüfer (IDW) and supplementary compliance with the ISAs will
always detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if, indivi-
dually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the
basis of these consolidated financial statements and this com-
bined management report.
332
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatements of
the consolidated financial statements and the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, for-
gery, , intentional omissions, misrepresentations, or the over-
ride of internal control.
Obtain an understanding of internal control relevant to
the audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the combined management report in order to de-
sign audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion
on the effectiveness of these systems.
Evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures.
Conclude on the appropriateness of management's use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast signif-
icant doubt on the Group's ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in the auditor's report to
the related disclosures in the consolidated financial state-
ments and in the combined management report or, if such
disclosures are inadequate, to modify our respective opini-
ons. Our conclusions are based on the audit evidence obtai-
ned up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to be
able to continue as a going concern.
Our objectives are to obtain reasonable assurance about whe-
ther the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error,
and whether the combined management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated
financial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropria-
tely presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
opinions on the consolidated financial statements and on the
combined management report.
Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group in compliance with
IFRSS as adopted by the EU and the additional requirements
of German commercial law pursuant to Section 315e (1) HGB.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely respon-
sible for our opinions.
Evaluate the consistency of the combined management
report with the consolidated financial statements, its con-
formity with (German) law, and the view of the Group's
position it provides.
Perform audit procedures on the prospective information
presented by management in the combined management
report. On the basis of sufficient appropriate audit evi-
dence, we evaluate, in particular, the significant assump-
tions used by management as a basis for the prospective
information, and evaluate the proper derivation of the pros-
pective information from these assumptions. We do not
express a separate opinion on the prospective information
and on the assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will differ materially
from the prospective information.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant defi-
ciencies in internal control that we identify during our audit.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about the
matter.
Other Legal and Regulatory Requirements
Further Information pursuant to Article 10 of the EU Audit
Regulation
We were elected as group auditor by the annual general mee-
ting on March 29, 2017. We were engaged by the supervisory
board on April 25, 2017. We have been the group auditor of
the Daimler AG without interruption since the financial year
1998.
-
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
The supervisory board is responsible for overseeing the Group's
financial reporting process for the preparation of the consolida-
ted financial statements and of the combined management
report.
Furthermore, management is responsible for the preparation
of the combined management report that, as a whole, provides
an appropriate view of the Group`s position and is, in all
material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future
development. In addition, management is responsible for such
arrangements and measures (systems) as they have consid-
ered necessary to enable the preparation of a combined man-
agement report that is in accordance with the applicable Ger-
man legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the combined
management report.
Our audit procedures comprised on the one hand an evaluation
of the process established by Daimler to ensure the recording,
the estimation of the outcome of the proceedings and the reflec-
tion in the balance sheet of the legal proceedings. On the other
hand, we held discussions with the internal legal department
and with further departments familiar with the matters under
dispute and Daimler's external advisors and attorneys, in order
to obtain explanations on the developments and the reasons
that had led to the respective estimations. Above that we have
reviewed the underlying documents and minutes. We were pro-
vided by Daimler with the estimation of the legal representati-
ves in the aforementioned areas in writing. External attorneys'
letters, which support the assessment of the risks by the legal
representatives, were obtained at the balance sheet date.
Finally, we evaluated the appropriateness of the description
in the notes to the consolidated financial statements of the
aforementioned legal proceedings.
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
331
Our Observations
The assumptions are appropriate.
Other Information
Management is responsible for the other information.
The other information comprises:
-
the non-financial statement and the corporate governance
statement, and
the remaining parts of the annual report, with the exception
of the audited consolidated financial statements and
combined management report and our auditor's report.
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other infor-
mation, and consequently we do not express an opinion or any
other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
is materially inconsistent with the consolidated financial
statements, with the combined management report or our
knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
As instructed, we have performed a separate business man-
agement review of the separate non-financial statement. Ple-
ase refer with regard to the nature, scope and results of this
business management review to our audit opinion dated
Februrary 9, 2018.
Responsibilities of Management and the Supervisory
Board for the Consolidated Financial Statements and the
Combined Management Report
Management is responsible for the preparation of the consoli-
dated financial statements that comply, in all material respects,
with IFRSS as adopted by the EU and the additional require-
ments of German commercial law pursuant to Section 315e (1)
HGB and that the consolidated financial statements, in compli-
ance with these requirements, give a true and fair view of the
assets, liabilities, financial position, and financial performance of
the Group. In addition, management is responsible for such
internal control as they have determined necessary to enable
the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern. They also have the responsibility for disclosing,
as applicable, matters related to going concern. In addition,
they are responsible for financial reporting based on the going
concern basis of accounting unless there is an intention to
liquidate the Group or to cease operations, or there is no reali-
stic alternative but to do so.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 1 "Significant accounting policies” and Note 2 "Accounting
estimates and management judgements". Further information
on the operating leases can be found in the notes to the consoli-
dated financial statements Note 12 "Equipment on operating
leases" and in the comments in the combined management
report on "Industry and business risks and opportunities".
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
Impairment Risk on Operating Leases
328
-2.63
1.41
Net profit (loss) per share (€) 1
22.9
10,864
8.9
14,301
11,127
12,902
8.4
12,574
9,007
19.1
12,744
9,007
20.1
8,711 8,784
8,720
98,469 78,924 97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,330
15,066 13,928 16,454 17,424 18,002 18,753 19,607 20,949 21,141 22,186
4,442 4,181 4,849 5,634 5,644 5,489 5,680 6,564 7,572 8,711
1,387 1,285 1,373 1,460 1,465 1,284
1,148 1,804 2,315 2,773
2,730 -1,513 7,274 8,755 8,820
10,815
10,752 13,186
14,682
2.8
-1.9
7.4
9.2
8.3
8.8
-2,298
10,139 10,173
1,370 -2,102
9,173 7,678
22.6
18.8
7,290
4.28
6,830
4,674
-2,644
1,414
Net profit (loss) 1
7.7
8,116
7,302
19.6
19.9
17.5
-6.6
4.4
6,029
as % of net assets (RONA) 1,3
5.32
6.40
7.97
7.87
6.51
6.40
6.02
5.31
4.28
1,971
1.85
0.00
0.60
6.02
Dividend per share (€)
556
Total dividend
-2.63
1.40
Diluted net profit (loss) per share (€)
9.84
7.97
7.87
6.51
0
6,240
5,120
Net operating profit (loss) 1
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfer
Becker
KPMG AG Wirtschaftsprüfungsgesellschaft
Stuttgart, February 9, 2018
327
Independent Auditor's Report
To Daimler AG, Stuttgart
Report on the Audit of the Consolidated Finan-
cial Statements and of the Combined Manage-
ment Report
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 333
Opinions
In our opinion, on the basis of the knowledge obtained in the
audit,
-
the accompanying consolidated financial statements com-
ply, in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e (1) HGB [Handelsgesetzbuch:
German Commercial Code] and, in compliance with these
requirements, give a true and fair view of the assets, liabili-
ties, and financial position of the Group as at December 31,
2017, and of its financial performance for the financial year
from January 1 to December 31, 2017, and
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development.
Pursuant to Section 322 (3) sentence 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of the
combined management report.
Basis for the Opinions
We conducted our audit of the consolidated financial statements
and of the combined management report in accordance with
Section 317 HGB and the EU Audit Regulation No. 537/2014
(referred to subsequently as “EU Audit Regulation") and in
compliance with German Generally Accepted Standards for
Financial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
We performed the audit of the consolidated financial state-
ments in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under those
requirements, principles and standards are further described
in the "Auditor's Responsibilities for the Audit of the Consolida-
ted Financial Statements and of the Combined Management
Report" section of our auditor's report. We are independent of
the group entities in accordance with the requirements of Euro-
pean law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in accordance
with Article 10 (2) point (f) of the EU Audit Regulation, we declare
that we have not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe that the evi-
dence we have obtained is sufficient and appropriate to pro-
vide a basis for our opinions on the consolidated financial state-
ments and on the combined management report.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2017. These matters were addressed in the
context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, we do not pro-
vide a separate opinion on these matters.
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at
December 31, 2017, and the consolidated statement of income,
consolidated statement of comprehensive income/loss, con-
solidated statement of changes in equity and consolidated
statement of cash flows for the financial year from January 1 to
December 31, 2017, and notes to the consolidated financial
statements, including a summary of significant accounting
policies. In addition, we have audited the combined manage-
ment report of Daimler AG for the financial year from January 1
to December 31, 2017.
334
G❘ FURTHER INFORMATION | TEN YEAR SUMMARY
Ten Year Summary
8.2
8,449
6,628
2,795
Profit (loss) before income taxes 1
Operating margin (%) 1
EBIT 1
Research and development expenditure²
thereof capitalized
Personnel expenses 1
From the statements of income
Revenue
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
€ amounts in millions
G.01
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
The calculation of the allowances is based on various value-
determining factors such as the risk classification of the cus-
tomers, the definition of statistical default probabilities and
assumptions regarding future cash flows, the determination of
which includes to a high degree discretionary assessments
and uncertainties.
A3
A3
Annual Shareholders' Meeting
490
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Value at risk
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 105f
Value added
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT
and revenue.
ROS - return on sales
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT
and shareholders' equity.
ROE - return on equity
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
page 219
RDE
An assessment of a company's creditworthiness issued
by a rating agency.
Rating
Net assets represent the capital employed by the Group
and the industrial divisions. The relevant capital basis
for Daimler Financial Services is equity capital.
page 106
Net assets
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption.
NEDC - New European Driving Cycle
337
Bonds
Capital expenditure
CASE
Cash flows
Pension obligations
Portfolio changes
Production
Net profit
Net assets
Mobility services
Investor Relations
Integrity Code
Integrity
Independent auditor's report
Innovations
G❘ FURTHER INFORMATION | INDEX
Income taxes
Electric mobility
EBIT
Earnings per share (EPS)
Dividend
Digitization
Corporate governance
Consolidated Group
CO₂ reductions
Connectivity
Compliance
Financial income
Index
They are at the heart of future electric drive systems.
Compared with conventional batteries, lithium-ion batteries
are considerably smaller and feature significantly higher
power density, short charging times and long lives.
Lithium-ion batteries
Corporate governance
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Consolidated Group
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as the
related internal guidelines and policies in connection with all
activities of the Daimler Group.
Compliance
Four strategic fields for the future of mobility: connectivity
(Connected), autonomous driving (Autonomous), flexible use
and services (Shared & Services), and electric drive systems
(Electric).
CASE
This abbreviation stands for the four countries of Brazil,
Russia, India and China.
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
BRIC
G | FURTHER INFORMATION | GLOSSARY
336
10,438
1,922
2
2
1
3
688
Glossary
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate
of return.
page 94
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
INTELLIGENT DRIVE
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for everyday
conduct that are applicable at Daimler. Fairness, responsibility
and compliance with legislation are key principles in this context.
Integrity Code
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately
or together depending on the type of vehicle and driving
situation.
Hybrid drive
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Goodwill
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable and
willing parties who are independent of each other.
Fair value
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
EU30
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
Equity method
Earnings before interest and taxes are the measure
of operating profit before taxes. pages 101ff
EBIT
A collective term for the social responsibility assumed
by companies, including economic, environmental and
social aspects.
CSR - corporate social responsibility
Profitability
Ratings
Remuneration system
Revenue
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
3,940
15,774
22,231
35,808
124,565
Employees
3,081
9,798
54
11,226
Revenue (in millions of euros)
Sales outlets
7
3
7
14
Production locations
Trucks
40,426
10,592
8,549
NAFTA
Production locations
9,383
280
1,522
14,822
20,226
4
1,516
1
1
14
1
Employees
Revenue (in millions of euros)
Sales outlets
Production locations
Latin America (excluding Mexico)
Employees
Revenue (in millions of euros)
Sales outlets
Daimler Mercedes-Benz
Daimler
Financial
Services
Businesses
Sales
Organization
Automotive
35ff, 196f
81
132
132 ff, 229 ff
329 ff
24 ff, 82ff
104, 261 ff
104, 260
24ff, 123ff
101 ff
24 ff, 84
79, 105
78 ff, 309
64ff, 198 ff
132 ff, 229 ff
246f
218ff
24 ff
109 ff, 135, 173, 241
111ff, 174
24 ff, 84ff
80
81, 112f
Workforce
Sustainability
Unit sales
Value added
Strategy
106
104, 238
2
107, 276 ff
90ff
Daimler
Buses
Vans
Cars
Mercedes-Benz
Europe
G.02
Daimler Worldwide
G | FURTHER INFORMATION | DAIMLER WORLDWIDE
338
129 ff, 227 ff
93f, 105f
97ff, 178, 184, 189, 192
121 ff, 214 ff
82ff
115 ff, 242
78ff, 152 f
305ff
94, 134, 178, 184,189, 192
114
136 ff
100, 258
102
101 ff, 238 f
92f
1,037
1,699
521
673
255
49
288
203
84
31
222
1,901
333
Notes: Unconsolidated revenue of each division (segment revenue).
Information on the Internet
Special information on our shares and earnings development
can be found in the "Investor Relations" section of our website.
daimler.com It includes the Group's annual and interim
reports and the company financial statements of Daimler AG.
You can also find topical reports, presentations, an overview
of various key figures, information on our share price and other
services.
daimler.com/investors
Financial Calendar 2018
Annual Shareholders' Meeting 2018
April 5, 2018
Interim Report Q1 2018
April 27, 2018
Internet, Information, Financial Calendar
Employees
Revenue (in millions of euros)
2
Sales outlets
2,409
9
Revenue (in millions of euros)
29,673
6,351
839
159
1,774
Employees
3,768
13,601
62
449
1,819
Australia/Oceania
Production locations
Sales outlets
253
Interim Report Q2 2018
July 26, 2018
Interim Report Q3 2018
October 25, 2018
Publications for our shareholders:
Annual Report
Fax +49 711 17 92287
order.print@daimler.com
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responsible sources
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Daimler AG
70546 Stuttgart
Phone +49 711 17 0
Fax +49 711 17 22244
www.daimler.com
Investor Relations
Phone +49 711 17 95277
+49 711 17 92261
+49 711 17 95256
Fax +49 711 17 94075
ir.dai@daimler.com
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
Daimler AG
Mercedesstraße 137
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www.daimler.com
Phone +49 711 17 92262
2
70546 Stuttgart, Germany
Realization by xoio GmbH on behalf of
(German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
Responsibility - Focus Sustainability 2017
(German, English)
Daimler Corporate Brochure
(German, English)
daimler.com/ir/reports
daimler.com/downloads/en
As changes to the above dates cannot
be ruled out, it is advisable to check on
our website a short time in advance.
daimler.com/ir/calendar
The aforementioned publications can be requested from:
Daimler AG,
Investor Relations, HPC 0324
Picture credit
page 44/45:
O&O Baukunst/Finest Images
page 53:
Jürgen Engel Architekten GmbH, Frankfurt
pages 54/55:
Concept and mobility vision:
Daimler AG, Future Innovation.
Daimler AG
21,507
3
Production locations
734
290
837
7,866
2,023
1,474
335
Africa
Production locations
1
1
2
Sales outlets
380
713
Revenue (in millions of euros)
1,413
936
229
58
381
Employees
1
498
142
74
165
Asia
3,780
GO 3999
transportation options.
Reaching destinations
quickly and flexibly using
your own car and other
Shared & Services
S
self-driving vehicles.
Smoothly flowing traffic,
flexible logistics processes
and stress-free travel in
Autonomous
A
support drivers and
communicate with their
surroundings.
((101))
Connected
C
hello
E
④daimler.com/case/en
Connected, Autonomous, Shared & Services, Electric -
by connecting all the future-oriented CASE fields,
Daimler is transforming itself from an automaker to
a provider of mobility services. It's shaping “intuitive
mobility" with comfortable, user-friendly products
and services that are making our customers' mobility
and daily lives easier. For one thing, we are electri-
fying our cars, trucks, vans and buses. In the car
division alone, we intend to launch at least ten fully
electric models, ranging from the smart to the SUV,
by 2022. Connected vehicles and digital services are
already sales clinchers today. Through Mercedes me,
Mercedes PRO and Uptime, we offer our customers
comprehensive access to a wide range of brands and
services. Mobility services such as car2go, moovel,
mytaxi and the piloted on-demand ride-sharing service
ViaVan are becoming increasingly important. We're
also developing additional impetus through innova-
tion platforms such as the STARTUP AUTOBAHN
and Lab1886. The smart vision EQ fortwo is fully-
automated, customizable, communicative and
electric. In this concept vehicle, we have combined
all the CASE areas for the first time and exploited
the tremendous potential of this intelligent mix.
7:15
Driving transformation
CASE
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 27
Connected automobiles
28 DAIMLER ANNUAL REPORT 2017 | #1 | CASE
Electric vehicles plus
a service infrastructure
will shape the future.
CASE these four letters are radically changing
mobility. Our new interactive website shows how
Daimler is reshaping the mobility of the future by
combining these four future fields.
OF THE FUTURE!
The smart vision EQ fortwo is flipping the switch to bring more flexibility and individuality to
local public transportation. Thanks to swarm intelligence and demand prediction, the fully automated
driving electric smart vision EQ fortwo picks up its customers wherever they wish. This concept car is
operated entirely via smartphone. Through the black panel grill at the front and the projection surfaces
along the sides, the smart vision EQ fortwo offers previously undreamed-of options for individualized car
sharing. Relieved of driving obligations, people inside the car can relax or chat with their fellow passen-
gers. The smart vision EQ fortwo is the first concept vehicle from Daimler to dispense with the steering
wheel and the gas and brake pedals. It's also the first vehicle in which we have installed all the future-
oriented features of CASE. This approach offers huge advantages to our customers: urban mobility with
the highest level of comfort, more individuality and a whole new form of communication.
No steering wheel, pedals or driving tasks: The
smart vision EQ fortwo offers customers innovative
options for urban mobility in the future.
34
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
URBAN MOBILITY?
OUR CONCEPT
The fully electric E-FUSO Vision One is a
future-oriented solution for the transportation
of heavy cargo in inner-city traffic.
IDEAS
The new E-FUSO brand from Daimler is electrifying the entire FUSO product range.
People are increasingly calling for clean and quiet urban delivery traffic. In response, our
commercial vehicle subsidiary Mitsubishi Fuso Truck and Bus Corporation (MFTBC) is
putting the FUSO eCanter on the road. This light-duty eCanter is environmentally friendly
and cost-efficient, with an impressive range of up to 100 kilometers. The drive system
is powered by six high-voltage lithium-ion batteries. FUSO is taking advantage of many
Daimler partnerships to establish the eCanter in the market, including Mercedes-Benz
Energy as a supplier of local energy storage and the charging station provider ChargePoint.
MFTBC aims to fully electrify all of FUSO's truck series. The concept vehicle of the fully
electric E-FUSO Vision One heavy-duty truck with a range of up to 350 kilometers exempli-
fies our claim to be a pioneer in the segment of electric commercial vehicles.
TOTALLY CONNECTED
Daimler Trucks is setting the pace for our customers with the Truck Data Center and digital services.
Connectivity and digitization make it possible to use trucks more efficiently. In a pioneering move,
Mercedes-Benz Trucks is offering a smart network consisting of vehicles, Mercedes-Benz services and freight
companies - through Mercedes-Benz Uptime. When Uptime is in use, it monitors the vehicle systems in real
time and promptly warns of critical situations. The aim is to avoid breakdowns and unplanned repairs and
optimize scheduled trips to the workshop. Thanks to the new FleetBoard Manager app, Mercedes-Benz offers
quick entry into connectivity free of charge. This smartphone app enables users to call up information
about a vehicle fleet, such as capacity utilization, mileage, vehicle positions, fuel consumption and cost-saving
potential. The key element for both of these services as well as previously introduced solutions is the new
Truck Data Center – the "brain" of connected trucks. This connectivity module is based on internationally
standardized electric/electronic architecture. We are installing it across all brands at Daimler Trucks and
adapting it to regional customer needs.
PERFORMANCE BOOST
Daimler is the first truck manufacturer to put a truck platoon on public highways in the United States.
Public interest in digitally connected trucks for road freight transport is growing. Trucks driving independently
behind one another can be linked together to form a partially automated truck platoon. This helps to enhance
safety, relieves strain on the drivers and improves fuel efficiency, thanks to shorter distances between the
vehicles. Following successful trials on test tracks, the regional regulatory authorities in the United States have
authorized Daimler Trucks North America (DTNA) to continue its platooning tests on public highways. To being
with, two Freightliner New Cascadia tractor-trailers are being paired. Digitally connected commercial vehicles
also perform well in off-road applications. In a trial near Frankfurt Airport, four connected Mercedes-Benz Arocs
semitrailer trucks showed how cost-efficient it is to clear an airfield with driverless vehicles - and how the
cutting-edge "Remote Truck Interface" technology from Daimler Trucks is opening up the road to the future.
ELECTRIFYING
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 33
mercedes-benz.com/en/mercedes-me/inspiration/she
Women in focus. Through the community and inspiration platforms of "She's Mercedes", we are emphasizing
our claim to be totally responsive to the wishes and needs of women customers - in areas ranging from sales
to communication and aftersales services. Through these platforms, Mercedes-Benz is engaging in a more
intensive dialogue with women and offering an even more impressive premium brand experience.
daimler.com/case/en
30
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
EQ: ELECTRIC
INTELLIGENCE
Our electric offensive is taking off with the Concept EQA. The modular basic
architecture of our EQ technology and product brand can be individually varied to
suit SUVs, sedans and other lines. With its Concept EQA, Mercedes-Benz is now show-
ing what a compact EQ could look like. This concept vehicle has two electric motors
with a system performance of up to 200 kilowatts. Permanent all-wheel drive ensures
great handling. The battery-electric Concept EQA study achieves a range of about
400 kilometers thanks to its intelligent operating-mode strategy, and offers a techno-
logical vision of the electrified future. Its lithium-ion battery comes from the Daimler
subsidiary Accumotive. The Concept EQA can be charged by means of induction or a
wall box. It can also be used with fast-charging systems. As a result, the Concept EQA
from Daimler, the inventor of the automobile, embodies all the essentials of state-of-
the-art electric mobility.
mercedes-benz.com/EQ/en
The EQ ecosystem is a trailblazer for comprehensive customer-oriented
electric mobility. EQ stands for "electric intelligence" and is derived from the
Mercedes-Benz brand values of emotion and intelligence. In 2019, we will launch
the first series-produced EQ model, the EQC. And in addition to electric vehicles,
we will also be offering much more: charging services and products ranging
from wall boxes to home energy-storage units. Seamless Charging is one vision
of how to recharge electric vehicles at public charging stations in the future. This
Mercedes me-based service would enable drivers to recharge their vehicles and
pay for this service anywhere. Through strategic partnerships with companies such
as the leading global charging solution provider ChargePoint, we are forging ahead
with the expansion of our intelligent EQ ecosystem. A further important step is
the founding of the IONITY joint venture for creating a public high-power charging
station infrastructure along the main traffic arteries of Europe.
wwww
The Concept EQA combines electrifying
aesthetic appeal, driving pleasure, suitability
for daily use and safety.
www
The intuitive and adaptive multimedia system
"MBUX Mercedes-Benz User Experience", which
will be standard equipment in the new A-Class,
is ushering in a new era of infotainment.
IN DIALOGUE
WITH YOUR CAR
Mercedes me transforms vehicles into mobile assistants.
Our personalized digital services in the areas of connectivity,
service, financing and mobility have been expanded further.
The "Digital Anticipation" service, which has been honored with
the German Award for Online Communication, supports our
customers from the time they buy a car until their new vehicle
is delivered. In Germany, customers can track the production
status of their new car in real time. It's an exclusive interactive
service that provides a completely new kind of brand experi-
ence. To make sure customers stay mobile even without their
Mercedes-Benz vehicle, the Mercedes me app is integrated
with moovel, mytaxi and car2go to provide mobility services
across the board. The Mercedes me connect service "In-Car
Office" enables customers to use certain office functions as
well as their own telephone and calendar data while they're on
the road. The "In Score" feature offers discounts of up to 20
percent on insurance premiums, depending on the customer's
personal driving style. And coming soon is the "Ask Mercedes"
app, a digital users' manual with an augmented reality function
and additional online services that will make our customers'
daily lives noticeably easier.
mercedes-benz.com/en/mercedes-me
The digital service portal Mercedes me is now actively
used and appreciated by well over 1.5 million Mercedes me
customers in 36 countries.
Electric
000
pro.mercedes-benz.com/uk/en
66
即行
GET IN AND
DRIVE OFF
CAR
2GO
Innovative mobility services from Daimler are on an upswing. Demand is increasing in the area
of future-oriented shared and services all over the world, especially in China. Our mobility services
provider, Daimler Financial Services, has a wide range of responses to every need – for example,
through the world's leading company for flexible car sharing, car2go, as well as moovel mobility services
and transport services ranging from Blacklane to our stake in Flixbus. Thanks to mytaxi, Daimler is the
leading app-based taxi broker in Europe. We've also become a full-service fleet management provider
for cars and vans in Europe through our acquisition of Athlon Car Lease. We aim to continue expanding
our mobility portfolio in the future. For example, our acquisition of shares in Turo is another step in our
expansion of peer-to-peer car sharing. And our investment in Via has made Mercedes-Benz Vans a
player in the field of on-demand ride sharing. In all of these ways, Daimler is using smartphone-based
mobility concepts to support the optimal use of existing transportation infrastructures on the way to
the flexible and environmentally friendly mobility of tomorrow.
④ daimler-financialservices.com/en
Journey details
Series production of the fully electric
Mercedes-Benz Citaro will begin in
late 2018.
Your journey begun.
Today, 11:20 16:15
Internjou.
mytaxi
S.LT
→moovel
The mytaxi app has revolutionized an entire industry. Taxi rides via mytaxi are simple
and efficient - from ordering the car to cashless payment and finally an evaluation of the
ride. mytaxi is the biggest service platform of its kind in Europe, with 70 million passen-
gers and 120,000 registered taxi drivers in over 70 cities in eleven European and two South
American countries. It's the leading app-based taxi broker, and as a result of its merger
with Hailo and Taxibeat, it now operates in Germany, Greece, the United Kingdom, Ireland,
Italy, Austria, Poland, Portugal, Spain and Sweden. Taxibeat also operates today in Peru
and Chile. The network also includes the Clever Taxi subsidiary in Romania.
mytaxi.com/de/en
patalimatı 11, Stat
FIND. BOOK. PAY.
HA EV 1053
Daimler Buses is shaping the future of mobility through innovative vehicles and novel
services. In a strategic partnership with the on-demand ride-sharing service CleverShuttle,
Daimler Buses will offer flexible solutions for on-demand mobility. This will enable transport
associations and companies to optimally adapt their services to passenger needs at any time.
Mercedes PRO takes service for the transport sector
to a new level. This online services platform provides
centralized access to existing professional services as well
as newly developed applications for daily operations. Here,
commercial customers can receive customizable holistic
solutions and services from Mercedes-Benz Vans. Plans
call for the step-by-step expansion of the range of offers to
include concepts that go far beyond traditional van features,
ranging from connectivity, mobility and transport solutions
to fleet and overall system solutions.
Connected delivery processes for more efficiency in the
last mile. As part of the future-oriented adVANce initiative,
Mercedes-Benz Vans is combining vans with delivery drones
and delivery robots. In a pilot project, a Mercedes-Benz
Sprinter became a mobile loading and transport hub for
eight autonomously operating robots. The overall concept is
now being extensively tested in cooperation with logistics
companies. In the Vans & Drones pilot project in Zurich -
a world first-products that have been ordered online
are being delivered to customers by two drones and two
Mercedes-Benz Vito vans with integrated landing platforms.
Mercedes-Benz Vans is electrifying all of its commercial
van model series. It has already begun with the mid-size
eVito van, which has been available for ordering since
November 2017. Deliveries are scheduled to start in the
second half of 2018. The battery-electric Vito will be
followed by the eSprinter in 2019. The holistic electric drive
strategy eDRIVE@VANS focuses not only on the electric
van itself, but also on an ecosystem geared to provide eco-
nomic benefits to electrified fleets. The customized system
solutions, which will cover the entire value chain, include
a powerful and intelligent charging infrastructure, rental
vehicles, a driver training program for efficient vehicle use,
and connectivity solutions that will ensure optimal vehicle
capacity in relation to an individual vehicle's state of charge
and battery range, as well as route planning in real time.
Mercedes PREL
PIONEERING
CONCEPTS
Fleet managers are connected with all the vehicles
and drivers in their fleets via the web-based service
Mercedes PRO connect.
Delivers revolutionary concepts: With its fully automatic
cargo area, delivery drones and other innovations,
the intelligent Vision Van defines the requirements for the
networked delivery chains and vans of the future.
1053
Mercedes-Benz Vans is offering customized sector solutions through adVANce.
Through the strategic initiative adVANce, Mercedes-Benz Vans is transforming itself
from an automobile manufacturer to a provider of holistic transport and mobility
solutions. adVANce comprises all of the CASE future fields. In five areas of innovation,
it will offer responses to the megatrends and central challenges in the transport sector.
At DIGITAL@VANS, the main focus is on connectivity and the digital networking of
vehicles. At SOLUTIONS@VANS, we develop hardware solutions that can make our
customers' daily business operations more efficient. Meanwhile, RENTAL@VANS is all
about innovative rental models, SHARING@VANS presents new concepts for local public
transport, and eDRIVE@VANS presents a comprehensive approach to electric mobility.
Mercedes-Benz Vans is developing innovative products and services - and once again
defining the route to the future of transportation.
OF COMPLETE
SUPPLIER
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
36
38
EMISSION-FREE
The countdown has started for the fully electric Mercedes-Benz Citaro. All over the
world, the demand for clean and economical local public transport is growing. That is giving an
additional boost to the development of our best-selling city bus, the Citaro. For Daimler Buses,
the logical next step after the Citaro hybrid will be the fully electric Citaro. The new model will
set milestones with its lithium-ion battery drive system and its modular battery package for
diverse applications in city traffic. In addition to a network for powering the vehicles at wall
sockets in the depots, Mercedes-Benz will also provide interim charging systems. A special
feature of the new bus model is thermal management of the climate control and drive systems.
The developers have significantly reduced the model's energy consumption, thus expanding its
range without having to enlarge the batteries. As a result, the new Mercedes-Benz Citaro will
run locally emission-free in cities - and in the local public transportation network of the future.
SOLUTIONS
car2go is an important part of Daimler's mobility
strategy. car2go makes Daimler a pioneer and market
leader in the field of flexible car sharing at 26 locations in
eight countries on three continents: Europe, North America
and Asia. In Europe and North America, car2go vehicles
can be taken across national borders. Today, almost three
million customers have access to the car2go fleet of more
than 14,000 smart and Mercedes-Benz vehicles. Customers
find, book and pay for car2go vehicles via their smartphones.
There are fully electric fleets with a total of 1,400 vehicles in
Stuttgart, Amsterdam and Madrid. That makes car2go one
of the biggest providers of electric car sharing. In April 2016,
car2go opened its first operation in the growth market of
China in the city of Chongqing. Demand for the 600 smart
fortwo vehicles at this car2go location developed rapidly
within just one year: 234,000 customers were using car2go
in Chongqing at the end of 2017. This makes Chongqing the
metropolis with the most car2go customers, ahead of cities
such as Berlin and Madrid.
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
Daimler's moovel is an operating system for urban
mobility. The smart connection of diverse means of
transportation is a trend of our time. Our moovel mobility
app offers access to a wide range of mobility services
and shows the duration and cost of trips made via local
public transport, car sharing, mytaxi, rental bicycle and the
Deutsche Bahn rail network. Most of these services can be
directly booked and paid for via the app. Over 3.7 million
customers in Germany and the United States use the moovel
app and moovel transit, a worldwide service from the
moovel Group which offers solutions that transit associa-
tions and companies can make available to their customers
under their own brand names. In the USA, moovel transit
is the market leader for mobile ticketing systems. More
than 22.3 million transactions were conducted via moovel
products in 2017.
DRINKS
EXIT/WC ↑
car2go.com/de/en
IDEAS FOR
TOMORROW
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 43
Even more drive for Daimler innovations - thanks to the entrepreneurial spirit of the startup
community. We are forging ahead with new ideas for mobility, in many cases through our dialog
with young companies. Our points of entry include initiatives such as CASE Invest, Lab1886, Startup
Intelligence Center, DigitalLife@Daimler and STARTUP AUTOBAHN. As one of the leading European
startup accelerators in the fields of mobility and Production 4.0, STARTUP AUTOBAHN works with
established companies to support selected startups. Projects are rapidly advanced with space, a
hardware lab and a network of investors and mentors. Daimler and the other founding partners have
been joined by additional partners since 2016. A total of 41 startups conducting a large number of
pilot projects have completed the first two STARTUP AUTOBAHN programs in Stuttgart. One of the
first products to have been realized is the innovative address system "what3words," which makes
every location on earth unmistakably identifiable by means of three words. Mercedes-Benz is the
first auto manufacturer to use the system. In the third program at STARTUP AUTOBAHN, 34 young
tech companies are developing their projects to market maturity. STARTUP AUTOBAHN is also widely
established internationally: Alongside Stuttgart, startups are also being sought, sponsored and
supported in Beijing, Singapore and South Africa.
④daimler.com/innovation/venture/en
X +
44
DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE 45
99 DAIMLER'S CULTURE IS BEING
TRANSFORMED TOO...
CULT
URE
99
...INTO A VALUE-ORIENTED,
EVEN MORE AGILE AND INNOVATIVE
WORK ENVIRONMENT.
DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
STAGE ↑
66
STARTUPAUTOBAHN
KIT/WC
R
moovel.com/de/en
RINKS
powered by PLUGANDPLAY
AGE
CASE
DAIMLER ANNUAL REPORT 2017
AR
GO
TEK
DUCT!
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www
INFRINET
THE BASIS OF
OUR CONDUCT
Integrity is our motivation - for balanced economic, environmental and social results. Together with
passion, discipline and respect, integrity is one of our four corporate values at Daimler. In our understanding,
integrity includes compliance with laws and regulations, as well as fairness, responsibility, mutual respect,
openness and tolerance. Daimler's management culture is based on this understanding. Integrity is also the
basis of our respectful dealings with one another. It gives our employees orientation, even in difficult situa-
tions. That's especially important in times of change and transformation. Integrity and Leadership 2020 are
part of Daimler's DNA, and they are essential if we are to remain on our successful course in the future.
daimler.com/sustainability/integrity
TELM
The
IAN
This is where Daimler is enabling new forms
of cooperation and direct communication across
hierarchies and functions.
New forms of cooperation will make us even faster, more agile, and closer to our customers.
Daimler has shaped the automotive sector for more than 130 years. But the markets are becoming
increasingly fast-paced and focusing on customers even more than before. Daimler is adapting itself
to this fundamental transformation. That's because the more precisely we know our customers, the
faster we can react to their ever-changing requirements. The sooner we launch the right products on
the market, the more we distinguish ourselves from our competitors. And the more flexibly we react
to changes, the more effectively we can use trends to our advantage. We are shaping our future success
by means of a new kind of cooperation: one that is faster and more flexible and involves more sharing
and more innovation. An international Leadership 2020 team across hierarchies, locations and functions
is shaping the new culture at Daimler. In eight focus areas – the “game changers” – we are creating
completely new systems, processes and tools. Supported by a mandate from the Board of Management,
this process is also deliberately altering previous structures and work methods – in order to prepare
the way for a new era of mobility.
FREE SPACE FOR
INNOVATIONS!
48 DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
daimler.com/career/thats-us/leadership2020
LEADERSHIP 2020
At Daimler, the expansion of our attractive core busi-
ness operations is inseparable from our systematic
development of the CASE fields. We want to safeguard
and enhance our corporate success through optimal
customer orientation and innovative business models.
To this end, we are establishing a corporate culture
that effectively supports transformation and keeps
Daimler on its successful path. Integrity, one of our
four corporate values, is its foundation. Together with
our employees, we have developed future-oriented
management principles and work methods within the
framework of the Leadership 2020 program. This is
how we can shape the mobility of the future from a
position of leadership, flexibly address ever-changing
customer requirements, and quickly establish our-
selves in new markets. State-of-the-art office environ-
ments support agile Group-wide cooperation through
the options offered by connectivity, communication
and collaboration.
Call a Service
Cafe
112-tech
SEASIDE SUSHI
DAIMLER ANNUAL REPORT 2017 | #1 | CORE CASE CULTURE COMPANY 55
(31)
Car2go
Today's modern work environments already offer us scope for future operations. To sup-
plement Leadership 2020 and our new work culture, we are developing our business premises
into future-oriented office environments. Traditional single-occupancy offices are giving way to
flexible, activity-oriented work settings. As a result of this reorganization, Daimler employees
can work flexibly in terms of their work space and work organization. They can take advantage
of all the potential offered by agile, project-related teamwork. We have transformed traditional
offices into state-of-the-art work environments in pilot projects at various locations such as
Mercedes-Benz in Sindelfingen and Daimler Financial Services at Pragsattel in Stuttgart. In the
future, we will launch pilot projects at the new Daimler Trucks campus in Leinfelden-Echterdingen
and the campus in Stuttgart-Vaihingen. Through these experiences and in line with the needs
of the dynamically changing world of work, we are continuously developing our "me@work"
concept. This is where we can implement the dynamic culture and values that we, the inventors
of the automobile, have embodied for over 130 years and will continue to embody in the future.
daimler.com/career/thats-us/daimler-as-an-employer
50
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY 51
BUS
The next level of mobility will have many dimensions: People all over the
world want to be mobile in highly individual ways. Vehicles will be connected
and electric, drive autonomously and be shared with other individuals. As
one of the world's leading auto manufacturers, Daimler is already shaping
the mobility of tomorrow. Through the combination of our strategic fields of
action - CORE, CASE, CULTURE and COMPANY - we will systematically
write new chapters in our success story in the future.
Innovative, flexible corporate culture
A NEW ERA
OF MOBILITY
OUR GOAL:
TO PIONEER
DAIMLER
Through our future-oriented strategy, we aim to
boost our effectiveness and also set benchmarks in
the global mobility sector as a corporate family.
Daimler
Mobility
Services
Daimler
Financial
Services
Daimler
Buses
Daimler
Trucks
Mercedes-Benz Mercedes-Benz
Cars
Vans
Daimler Financial Services
Daimler Trucks & Buses
50
Mercedes-Benz Cars & Vans
We continue to be a family under the roof of Daimler AG
The planned new structure
④daimler.com/company/strategy
This is the right moment to prepare Daimler optimally for the future and to safeguard
our employees. New competitors, breakneck technological change and increasingly diverse
customer requirements – never before has the automotive sector changed so hard and fast.
To stay competitive, we want to continuously develop - technologically, culturally and struc-
turally. In the highly dynamic fields where we operate, we need an organization that enables
us to act fast and flexibly, with the power of a globally operating company. In "Project Future”,
we will strive to further focus and strengthen our structure. We are considering the forma-
tion of three legally independent business entities under the management of Daimler AG:
Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and Daimler Financial Services AG,
which is already a successful legally independent company. This is how we want to create
the preconditions for optimally utilizing market potential - with new cooperation partners as
well - and to safeguard our employees at the Group.
pages 93 f
PROJECT
FUTURE
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY
52
66
OF THE AUTOMOTIVE SECTOR.
99...TO KEEP DAIMLER AT THE TOP
COM
PANY
66
OURSELVES...
99 WE WANT TO REALIGN
Daimler AG
2
46 DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
CULTURE
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the Group
and the divisions. It continually provided information to it on all
fundamental questions of corporate planning, including finance,
investment, sales and personnel planning, current developments
at the companies of the Group, the development of revenue,
the situation of the Company and the divisions, and legal risks.
Furthermore, the Board of Management reported to the
Supervisory Board continually on return on equity and the
Group's liquidity situation, the development of sales and
procurement markets, the overall economic situation, and
developments in the capital markets and the area of financial
services. Additional topics included the further development of
the product portfolio, securing the Group's long-term com-
petitiveness, and the ongoing implementation of measures for
Ola Källenius | 48
Appointed until December 2023
Integrity and Legal Affairs,
Renata Jungo Brüngger | 56
Appointed until February 2022
Daimler Trucks and Buses,
Martin Daum | 58
Chairman of the Board of Management, Head of
Mercedes-Benz Cars, Appointed until December 2019
Dieter Zetsche | 64
The Board of Management
82
Objectives and Strategy
78
Daimler and the Capital Market
72
Highlights of 2017
70
The Supervisory Board
Group Research & Mercedes-Benz Cars Development,
Appointed until December 2022
A | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 63
Wilfried Porth | 59
Human Resources and Director of Labor Relations,
Mercedes-Benz Vans, Appointed until April 2022
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the external auditors, who reported on the
results of their audit and were available to answer questions
and to provide further information. Following the final results
of the review by the Audit Committee and its own review, the
Supervisory Board declared its agreement with the results
of the audit carried out by the external auditors. It determined
that no objections were to be raised, approved the financial
statements and the combined management report as presented
by the Board of Management, and thus adopted the financial
statements for the year 2016. On this basis, the Supervisory
Board consented to the proposal made by the Board of
Management on the appropriation of distributable profit. In
addition, the Supervisory Board approved the report of the
In the Supervisory Board meeting held on February 10, 2017,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on page 68.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the year 2016, each of which had been issued with
an unqualified audit opinion by the external auditors, as well as
with the reports of the Audit Committee and the Supervisory
Board, the declaration on corporate governance combined with
the corporate governance report, the remuneration report
and the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with
comprehensive documentation.
2016 and the dividend proposal to be made at the 2017 Annual
Shareholders' Meeting. The Supervisory Board determined
that no objections were to be raised to their publication. The
preliminary key figures for the year 2016 and the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 2, 2017.
In its meeting on February 1, 2017, which was attended by
the external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the
annual company and consolidated financial statements for
The members of the Supervisory Board independently attend
such courses of training and further training regarded as
necessary for the performance of their tasks, relating for exam-
ple to questions of corporate governance, changes in the
legal framework, new products and future-oriented technologies,
in which they are supported by the Company. In a special
onboarding program, new members of the Supervisory Board
have the opportunity to meet the members of the Board of
Management and other senior executives for a bilateral exchange
of opinions and information on the current topics of the various
Board of Management areas, allowing them to gain an overview
of the topics relevant to the Daimler Group.
The members of the Supervisory Board and of the Board of
Management came together for the bilateral exchange of
opinions also outside the regular meetings. The Board of Manage-
ment informed the Supervisory Board with written reports
about the most important indicators of business development
and existing risks, and submitted the interim financial reports
to the Supervisory Board. The Supervisory Board was informed of
special occurrences also between the meetings.
of Management. Furthermore, the members representing the
employees and the members representing the shareholders
regularly prepared the Supervisory Board meetings in separate
discussions, which were attended by members of the Board of
Management. The Supervisory Board was intensively supported
by its committees and the members of the Supervisory Board
intensively discussed the measures and business matters to be
decided upon with the Board of Management. For the meetings,
executive sessions were regularly arranged so that topics could
be discussed also in the absence of the Board of Management.
Supervisory and advisory activities of the Supervisory
Board
Dear Shareholders, Daimler is a successful and strong company. Despite various challenges,
Daimler AG concluded financial year 2017 with excellent results once again and, as in the
previous years, with solid earnings. We can therefore strengthen our core business while
investing in new technologies and businesses. From a position of strength, the company
has initiated a far-reaching process of transformation. Daimler is actively shaping the future
of mobility.
Report of the Supervisory Board
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
64
Finance & Controlling, Daimler Financial Services,
Appointed until December 2019
Bodo Uebber | 58
Mercedes-Benz Cars Marketing & Sales,
Appointed until December 2019
Britta Seeger | 48
Appointed until December 2020
The Supervisory Board of Daimler AG fully performed its tasks as
defined by the law, the Company's Articles of Incorporation
and rules of procedure. The Supervisory Board continually advised
and supervised the Board of Management in the management
of the Company and provided support with strategically important
issues relating to the Group's further development. The
Supervisory Board examined whether the annual company and
consolidated financial statements, the combined management
report and the other financial reporting were in conformance with
the applicable requirements. In addition, it approved numerous
business matters for which its consent was required following
careful reviews and consultations. As well as approving the
further review and initiating the first preparatory measures for
the strengthening of the divisional structure by creating legally
independent entities in the context of further developing the
Daimler Group's structures, this also included finance and
investment planning, major equity measures at companies of
the Group, key individual investments and the conclusion of
contracts with particular importance for the Group. The Board
of Management informed the Supervisory Board about a
large number of further measures and business transactions,
and discussed them with it intensively and in detail, including
the comprehensive future plan for diesel engines, which was
approved by the Board of Management in July 2017. Finally, the
Board of Management reported continually to the Supervisory
Board on the current status of the main legal proceedings.
Hubertus Troska | 57
64
Report of the Supervisory Board
Greater China,
The Board of Management
58 CHAIRMAN'S LETTER
Mercedes-Benz Cars remains on its path of profitable growth. In 2017, we
sold nearly 2.4 million cars an increase of 8 percent compared with the
prior year. Mercedes-Benz continues to be the leading premium brand and
further extended its lead over its direct competitors. A key reason for that
is our success in China. In 2017, unit sales by Mercedes-Benz in the world's
largest car market increased by 28 percent. This is the result of our hard
work in recent years. smart was also very popular in China in 2017. The strong
demand for the electric smart models is also very pleasing. Worldwide, the
brand sold 136,000 cars.
-
Let's have a look at the development of the individual divisions.
In the year 2017, we sold more vehicles than ever before in our company's
history of more than 130 years, nearly 3.3 million altogether. Revenue reached
164.3 billion euros and was thus 7 percent higher than in the previous year.
EBIT increased by 14 percent to 14.7 billion euros. And at 9 percent, we achieved
our targeted return on sales in the automotive business. The bottom line is a
net profit of 10.9 billion euros. At the Annual Shareholders' Meeting, the Board
of Management and the Supervisory Board will propose the distribution of a
dividend of 3 euros and 65 cents per share.
In 2017, Daimler once again succeeded in breaking its record of the previous
year. I would therefore like to thank everyone at Daimler for their great efforts
last year, as well as for their willingness and enthusiasm to actively push for-
ward with our company's transformation. I would also like to thank you. You
have placed your trust in our strategy. And you have given us the freedom
to act and the time to implement that strategy. And it has been worthwhile!
Than holders,
Dea
CHAIRMAN'S LETTER 57
"With the four strategic areas
for action - CORE, CASE, CULTURE
and COMPANY - we are setting the
course for a successful future."
Press Feed
D
EQ
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 65
Dr. Manfred Bischoff, Chairman of the Supervisory Board
Working culture and areas of Supervisory Board activity
In the year 2017, the Supervisory Board convened for nine
meetings. Participation in the meetings by the members of the
Supervisory Board was at a high level once again. All members
of the Supervisory Board participated in significantly more than
half of the meetings of the Supervisory Board and its com-
mittees of which they are members during the year under review.
The work of the Supervisory Board featured open and intensive
exchanges of information and opinions. The members of the
Supervisory Board regularly prepared for upcoming resolutions
with the use of documentation provided in advance by the Board
Daimler is a strong and successful company and systematically
pushed forward with the implementation of its strategy also in
financial year 2017. The Group's financial strength and sound
balance sheet allow our growth strategy to be continued
while paying out an attractive dividend to our shareholders.
In addition to the core business, we have summarized the
topics "Connected", "Autonomous", "Shared & Services", and
"Electric" under the acronym CASE. From a position of strength,
we have initiated a far-reaching transformation process in order
to be active in shaping the upcoming fundamental changes
facing the automotive industry in the coming years. For that
purpose, high levels of advance expenditure will be made in the
coming years. With the presentation of important products and
concept vehicles in 2017, Daimler demonstrated its strong
expertise in the core business and in the CASE areas. The Super-
visory Board and the Board of Management are convinced
that the new challenges require both a cultural change as well
as a changed structure. The cultural change has been
initiated with the involvement of all employee groups. Work is
now being done at all levels to implement that change in
order to be prepared for the challenges ahead of us. Daimler will
become faster, more flexible and more digital in order to
safeguard its future strength. For this purpose, a start has been
made with the review and initiation of the first preparatory
measures to strengthen the divisional structure by creating
legally independent entities. The Supervisory Board firmly
supports all of these steps.
safeguarding sustainable and future-oriented mobility. The
Supervisory Board also dealt in detail with the development of
the share price and the related background, as well as the
expected impact of strategic projects on the share price.
62
Daimler Trucks sold 471,000 vehicles in 2017 - significantly more than in the
previous year and significantly more than we had expected at the beginning
of the year. As overall demand from the markets was only moderate, that is a
strong performance, which was primarily driven by our positive business
development in the NAFTA region. With the efficiency activities we have initi-
ated, in particular at Mercedes-Benz Trucks, we have good prospects also of
reaching our targeted level of profitability in the medium term.
At Mercedes-Benz Vans, the year featured further strong growth. All model
series helped to achieve the fourth consecutive record year. Towards the end of
the year, we had the successful launch of the X-Class, the world's first pickup
from a premium manufacturer. In 2017, we also showed how we imagine the
transformation from a van producer into a provider of system solutions. That
ranges from ride-sharing projects to new delivery methods with vans and drones.
Stuttgart, February 2018
Daimler Financial Services has been delivering record results for many years
now, and it was the same in 2017. We lease or finance half of the vehicles we
sell. And we increasingly also broker suitable insurance policies: 20 percent
more in 2017 than in the previous year. The core business of DFS now also in-
cludes mobility services. Nearly 18 million people in more than 100 cities around
the world already use such services provided by Daimler: from flexible car
sharing to an app-based taxi service and mobile ticketing solutions for trans-
portation companies. And we plan to further strengthen this leading position.
A | To Our Shareholders
The development of Daimler Buses benefited from the improved economic
situation in Latin America. We sold a total of 28,700 buses and bus chassis last
year, which is 9 percent more than in 2016. At the same time, we continued
our product offensive: With a new hybrid city bus, we would like to help make
public transportation even more efficient. And with two new coaches, we aim
to continue profiting from the growing long-distance bus market.
66
FOR A SUCCESSFUL FUTURE!
99 CORE, CASE, CULTURE, COMPANY:
WE HAVE SET THE COURSE
A | TO OUR SHAREHOLDERS | CONTENTS 61
Dieter Zetsche
Die t
Sincerely yours,
Together, we have seen three phases in the development of our company in the
past three years. The first phase was the restructuring. We focused on our core
competence, the production of motor vehicles. In the second phase, we wanted
to become the number one. We achieved that goal ahead of time and confirmed
it in 2017. We are now in the phase of shaping the future. Our ambition is un-
changed: Daimler belongs at the top. 132 years after the invention of the auto-
mobile, Daimler is once again a company on the move. And we will be delighted
if you continue to accompany us on this journey.
As the inventor of the automobile, we intend to shape the fundamental transformation
of the automotive industry from the forefront. With a strong core business (CORE),
we are creating the financial basis to invest in the future-oriented areas of connectivity,
autonomous driving, the flexible use of vehicles and services, and electric mobility
(CASE). In parallel, we are developing an innovation-friendly and flexible corporate
culture under the roof of Leadership 2020 (CULTURE). In addition, we started "Project
Future" in the year under review (COMPANY), with which we will strengthen the future
viability of our divisions. We reached some important milestones in the implementa-
tion of our strategy last year, and we were once again very successful in our business
operations. This is also to the benefit of our shareholders: in the form of an attractive
dividend and an attractive share price.
CORE, CASE, CULTURE and COMPANY. Those are the four fundamental ele-
ments of our future strategy. But another "C" is still missing: the customers -
our customers. They are at the center of everything. Because what convinces
our customers is also good for our employees, for our business partners and
for you, our shareholders.
We want to reflect the entrepreneurial spirit that we promote with Leadership
2020 also in the structure of the Daimler Group (COMPANY). Because an inner
attitude and the external image should complement each other. We would like
to strengthen individual responsibility in our organization while maintaining the
synergies that we have at Daimler.
CHAIRMAN'S LETTER
60
60
Working on the CASE topics requires of us a culture of openness (CULTURE).
We are working on that with Leadership 2020. We wanted to make the trans-
formation quickly tangible. That's why we focused right from the start on
changing processes, rules and tools. A new phase is now starting. We are
focusing on the basis of Leadership 2020: the principles according to which
we manage and work together. This is also a matter of the right inner attitude,
on cooperation or agile actions for example.
We are making use of our technological expertise and the profitability of our
core business to vigorously tackle the major future issues of our industry.
We summarize them under the acronym CASE. It stands for a combination of
connectivity, autonomous driving, sharing and electric mobility. So it's about
nothing less than the reinvention of individual mobility. We showed what that
could look like at the Frankfurt Motor Show in the fall: The smart vision EQ
fortwo concept car that we presented there drives to you autonomously and
emission-free whenever you need it. Along the route, it suggests ride sharers
with similar destinations. It is constantly in contact with the other cars in the
fleet. Thanks to artificial intelligence, it drives in good time to where it will
be needed next. That might sound like science fiction. But in the early 2020s,
we at Mercedes-Benz want to put the first self-driving taxis on the roads.
The focus on our core business (CORE) is the foundation for our success
today. It is the financial backbone of Daimler and we will make it even stronger.
Above all, we are investing in new products. In the areas of cars alone, we will
launch a total of more than a dozen new models in 2018.
The results for 2017 show that our company is in excellent shape and highly
profitable. It stands for sustainable success in volatile times. We are proud of
that. But it's no reason to stand still. That's why we are pushing forward with
the transformation in all areas at Daimler.
CHAIRMAN'S LETTER 59
Frankfurt am Main
Sibylle Wankel*
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
elected until 2018
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
Wolfgang Nieke*
appointed until 2018
elected until 2018
Sindelfingen
Stuttgart
General Counsel of the German Metalworkers' Union
(IG Metall)
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Dr. Frank Weber*
Sindelfingen
elected until 2018
Ergun Lümali*
Roman Zitzelsberger*
Stuttgart
appointed until 2018
German Metalworkers' Union (IG Metall), District Manager
Chairman
Dr. Bernd Pischetsrieder
Munich
elected until 2019
Other supervisory board memberships/directorships:
Siemens AG (until January 31, 2018)
NXP Semiconductors N.V.
Former Executive Vice President of the Executive Board
Chairman of the Board of Management of Siemens AG
Trumpf GmbH + Co. KG - Chairman
Nyxoah SA (until December 31, 2017)
Petraea Heynike
Vevey
elected until 2021
of Nestlé S.A.
Sari Baldauf
Helsinki
elected until 2018
Chairwoman of the Supervisory Board of Fortum OYj
Other supervisory board memberships/directorships:
Other supervisory board memberships/directorships:
Allianz Deutschland AG
Andrea Jung
elected until 2018
President and Chief Executive Officer of Grameen America, Inc.
Other supervisory board memberships/directorships:
Apple Inc.
General Electric Company
Deutsche Telekom AG
Fortum OYjChairwoman
Vexve Holding OY - Chairwoman
AkzoNobel N.V. (until December 1, 2017)
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 71
Joe Kaeser
Munich
elected until 2019
New York
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG
In the meeting in December 2017, the members of the Super-
visory Board representing the shareholders decided, on the
basis of a recommendation by the Nomination Committee, to
propose the election to the Supervisory Board of Sari Baldauf,
Dr. Jürgen Hambrecht and Marie Wieck at the Annual Share-
holders' Meeting in 2018.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Michael Brecht*
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
appointed until 2018
Nuremberg
Michael Bettag*
Other supervisory board memberships/directorships:
SMS Holding GmbH
Chairman of the Supervisory Board of Daimler AG
elected until 2021
Munich
Gaggenau
Dr. Manfred Bischoff
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
70
Dr. Manfred Bischoff
Chairman
Maped Rifl
Мара
The Supervisory Board
Stuttgart, February 2018
In addition, the Supervisory Board thanks Dr. Wolfgang Bernhard
for his successful work at the Group.
The Supervisory Board also thanks Dr. Bernd Bohr, who closely
supported the Daimler Group through his committed work in
the Supervisory Board and who stepped down as of March 29,
2017.
The Supervisory Board warmly thanks all of the employees
and the management of the Daimler Group for their committed
contributions to the very successful year 2017.
The Supervisory Board
Appreciation
elected until 2018
Dr. Clemens Börsig
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft
Other supervisory board memberships/directorships:
BASF SE
Chairman of the Supervisory Board of BASF SE
elected until 2018
Dr. Jürgen Hambrecht
Ludwigshafen
Other supervisory board memberships/directorships:
Member of the Executive Committee of the Board of Directors
of Kuwait Investment Authority
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
(since March 29, 2017)
elected until 2022
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council Daimler Group;
Chairman of the General Works Council Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
Kuwait
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
elected until 2020
Dr. Paul Achleitner
Munich
Emerson Electric Co.
Linde AG
Other supervisory board memberships/directorships:
Bayer AG (until April 28, 2017)
Former Chairman of the Supervisory Board of Deutsche Bank
AG
elected until 2022
Frankfurt am Main
Bader M. Al Saad
66
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the responsible external auditors, who reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
Following the final results of the review by the Audit Committee
and its own review, the Supervisory Board declared its agreement
with the results of the audit by the external auditors; it
determined that no objections were to be raised and approved
the financial statements and the combined management report
as presented by the Board of Management. The company
financial statements of Daimler AG for the year 2017 were
thereby adopted. On this basis, the Supervisory Board consented
to the proposal made by the Board of Management on the
appropriation of distributable profit. Furthermore, it approved
the report of the Supervisory Board, the declaration on cor-
porate governance combined with corporate governance report,
the remuneration report and the non-financial report, as well
as its own proposed resolutions for the items of the agenda of
the 2018 Annual Shareholders' Meeting.
In a meeting held on January 31, 2018 attended by the external
auditors, the Supervisory Board discussed, took note of and
approved the preliminary key figures of the annual company and
consolidated financial statements for 2017 and the the proposal
on the appropriation of profit to be made at the 2018 Annual
Shareholders' Meeting. The Supervisory Board determined that
no objections were to be made to their publication. The pre-
liminary key figures for the year 2017 as well as the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 1, 2018.
There were no indications of any actual conflicts of interest in
2017. In order to avoid individual conflicts of interest, some
members of the Supervisory Board did not participate in dis-
cussions of certain items of the agendas in the year 2017: Dr.
Bernd Bohr, Dr. Jürgen Hambrecht and Dr. Bernd Pischetsrieder
left the room during the Supervisory Board meetings for dis-
cussion of the legal status report on the issue of diesel exhaust
emissions. As a result, in compliance with the goals of the
Supervisory Board, there were no potential conflicts of interest
during the year under review for at least half of the members
representing the shareholders and for at least 15 members of the
entire Supervisory Board.
In accordance with good corporate governance, the members of
the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to an
advisory or board function for a customer, supplier or creditor
of Daimler, or for other third parties - to the entire Supervisory
Board.
In its meeting in December 2017, the Supervisory Board
approved the 2017 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of the
German Stock Corporation Act (AktG). With the exception
explained there, all the recommendations of the Code have
been complied with and continue to be complied with. In the
same meeting, the Supervisory Board updated the rules of
procedure for the Supervisory Board and its committees.
Corporate Governance and declaration of compliance
During the year 2017, the Supervisory Board was continually
occupied with standards of good corporate governance.
Also in this meeting, the Supervisory Board dealt with various
equity contributions at companies of the Group, including at
Daimler India Commercial Vehicles Pvt. Ltd., and consented to
the plans. Subsequently, the Supervisory Board was informed
in detail on the status of the review and on the initiation of the
first preparatory measures to strengthen the divisional structure.
A further focus of the meeting was information on the current
legal issues, also with regard to the requests, inquiries,
investigations and legal proceedings in connection with the issue
of diesel exhaust emissions. In the further course of the
meeting, the Supervisory Board dealt with Leadership 2020
and the Personnel Strategy Digitalization, in particular the
initiatives relating to the recruitment of digital talent, employees'
digital qualification and the digitization of HR tools. Further-
more, the Supervisory Board approved the creation of a steering
committee for the CASE future topics composed of members
of the Board of Management. Other topics discussed at the
December meeting were corporate governance, also with regard
to the recommendations of the German Corporate Governance
Code, and Board of Management remuneration. Thereby,
the focus was on the qualifications profiles, including diversity
concepts, for the Board of Management as well as for the
Supervisory Board, which are explained on
pages 210 ff
of the declaration on corporate governance combined with
the corporate governance report. Finally, the Supervisory Board
dealt with the probable main topics of the year 2018 and
with the planning of a meeting of the Supervisory Board abroad
in 2018.
On the day before the meeting in December 2017, the members
of the Supervisory Board had the opportunity to participate
in a product presentation and to be informed about new vehicle
models, design studies and forward-oriented technologies.
In the context of the actual meeting on December 7, 2017, the
Supervisory Board dealt with, among other things, the imple-
mentation of non-financial reporting at Daimler resulting from the
EU CSR Directive, and in this context decided that KPMG should
be commissioned to carry out a voluntary review in the form of
a limited assurance. The Supervisory Board then decided on
the election proposals to be made to the Annual Shareholders'
Meeting in 2018 as described on page 68. During the
further course of the meeting, on the basis of comprehensive
documentation, the Supervisory Board discussed in detail and
approved the operational planning for the years 2018 and 2019.
This included discussion of existing opportunities and risks as
well as the Group's risk management.
Meeting on operational planning 2018/2019
At an extraordinary meeting held in mid-October 2017, the Super-
visory Board was informed about the current status of the
review of the future business structures at Daimler. In late
October, the Supervisory Board granted its consent to the
ongoing review and to the initiation of the first preparatory
measures for strengthening the divisional structure.
in detail about the current legal issues and about the subject of
technical compliance management at Daimler. Furthermore, the
members discussed the key financial metrics and the targets
for the Group and the divisions.
Law for the equal participation of women and men in
management positions
67
Strategy meeting of the Supervisory Board
During a two-day strategy workshop held in Sindelfingen in late
September 2017, the Supervisory Board was informed about
the status of the transformation in relation to the individual
divisions. The Supervisory Board discussed with the Board of
Management about how, based on the existing core business
and the new businesses summarized under CASE, the future
challenges were to be mastered and the mobility of tomorrow
was to be shaped. The four areas of CASE - "Connected",
"Autonomous", "Shared & Services” and “Electric" - were dis-
cussed and it was explained with the use of examples where
Daimler currently stands in these areas. Information was pro-
vided inter alia with regard to "Connected” on mercedes.me
and the Fleetboard solutions, with regard to "Autonomous" among
other things on the cooperation between Daimler and Bosch,
and with regard to "Shared & Services" also on mobility services.
The discussion with the Board of Management with regard
to "Electric" focused on the EQ brand and brand strategy, as
well as on the transition to electric mobility. The members of
the Supervisory Board and the Board of Management, with
participation by the senior executives responsible for the
topics discussed, held a constructive and open dialog about how
Daimler will adapt to new challenges and which further
developments are imminent. The topic of the changing competi-
tive environment was also discussed. In the context of a vehicle
exhibition, various models were presented to the Supervisory
Board. In this meeting, the Supervisory Board was also informed
In a subsequent meeting of the Supervisory Board together with
the Advisory Board for Integrity and Corporate Responsibility,
the participants discussed the role of the Advisory Board as well
as the cultural change, which constitutes an important success
factor for Daimler, with the examples of Leadership 2020 and
integrity.
In the meeting in late July 2017, the Board of Management
informed the Supervisory Board about the review of the general
feasibility and the advantages and disadvantages of the
possibility of reflecting the divisional structure of the Group with
legally independent entities. Also in this meeting, the Super-
visory Board discussed in detail with the Board of Management
about the course of business and the results of the first half of
the year, and was informed in detail about current legal issues
and about the antitrust accusations made in the press against
the German automotive industry. Finally, also in this meeting, the
Supervisory Board dealt with and approved the new product
platform for construction vehicles from Western Star.
In another meeting held in late April 2017, the Supervisory Board
received detailed reports on current legal issues, also relating
to the requests, inquiries, investigations and court proceedings
in connection with the issue of diesel exhaust emissions.
Furthermore, the Supervisory Board was informed about current
business developments in China and Brazil and the respective
economic and political situations, and discussed those matters
in detail with the Board of Management.
Börsig was reelected to the Audit Committee and was
appointed as its Chairman.
The items on the agenda of the Annual Shareholders' Meeting
held on March 29, 2017 included the reelection of Dr. Clemens
Börsig and the election of Bader Mohammad Al Saad as members
of the Supervisory Board representing the shareholders. In
the subsequent meeting of the Supervisory Board, Dr. Clemens
In its meeting on February 10, 2017, the Supervisory Board dealt
also with questions of corporate governance and discussed the
results of the efficiency review carried out in financial year 2016,
which once again confirmed the very good and constructive
cooperation within the Supervisory Board and with the Board of
Management. There was no fundamental need for action or
change; however, some suggestions for further optimization were
made, which were implemented during the financial year.
Furthermore, the Supervisory Board dealt with matters pertain-
ing to the remuneration of the members of the Board of
Management and approved the memberships in other boards
and further external secondary employments of the members
of the Board of Management that were presented in the meeting.
Finally, the Supervisory Board addressed at this meeting once
again whether, in connection with the antitrust investigations of
the European Commission against truck manufacturers, claims
for compensation were to be made against former or current
members of the Board of Management. On the basis of the
reviews carried out so far and repeatedly updated by an inde-
pendent law firm, a further review by an independent legal
academic, as well as detailed discussions in the Supervisory
Board taking into account the welfare of the Company, the
Supervisory Board maintained its previous resolution, based
on the information available, that no such claims were to be
made at the present time. The grounds for this resolution did not
change in the further course of the year.
In connection with the adjustment of Supervisory Board
remuneration proposed at the Annual Shareholders' Meeting,
the Supervisory Board called for a self-commitment by the
members of the Supervisory Board to purchase Daimler shares.
In this self-commitment, the members of the Supervisory Board
state to the Supervisory Board that they will purchase shares
of the Company each year for 20% of their adjusted Supervisory
Board remuneration (excluding committee remuneration and
meeting fees and before taxes) and hold them at least until the
end of the year following their departure from the Supervisory
Board of the Company (self-commitment according to the
principle of comply or explain). This does not apply for members
of the Supervisory Board whose Supervisory Board remuneration
is transferred to the Hans-Böckler-Stiftung due to compulsory or
voluntary application of the guidelines of the German Federation
of Trade Unions, or is transferred to the member's employer due
to a contract of employment, or is credited to the member's
contractual remuneration entitlement. All members of the Super-
visory Board who are not subject to any of the described trans-
fer or credit arrangements made the self-commitment in 2017.
Supervisory Board, the corporate government statement
combined with the corporate governance report, and the
remuneration report, as well as its proposed decisions on
the items of the agenda for the 2017 Annual Shareholders'
Meeting.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
In the meeting held on February 9, 2018, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined manage-
ment report for Daimler AG and the Daimler Group, each of
which had been issued with an unqualified audit opinion by the
external auditors, as well as with the reports of the Audit Com-
Imittee and the Supervisory Board, the corporate government
statement combined with the corporate governance report, the
remuneration report, the proposal on the appropriation of profit
and the non-financial report, the latter prepared for the first time
and reviewed by the external auditors pursuant to ISAE 3000. In
preparation, the members of the Supervisory Board had been
provided with comprehensive documentation including the Annual
Report with the consolidated financial statements according to
IFRS, the combined management report for Daimler AG and the
Daimler Group, the declaration on corporate governance com-
bined with the corporate governance report, the remuneration
report, the non-financial report, the annual company financial
statements of Daimler AG, the proposal of the Board of Manage-
ment on the appropriation of profit, the audit reports of KPMG
on the annual company financial statements of Daimler AG and
the consolidated financial statements, each including the com-
bined management report, as well as drafts of the reports of the
Supervisory Board and of the Audit Committee.
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
68
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2017
were duly audited by KPMG AG, Wirtschaftsprüfungsgesellschaft,
Berlin, and were given an unqualified audit opinion. The same
applies to the consolidated financial statements for 2017 pre-
pared according to IFRS.
Audit of the company and consolidated financial
statements
In the Supervisory Board meeting on February 9, 2018, Renata
Jungo Brüngger was reappointed to the Board of Management of
Daimler AG as the member responsible for "Integrity and Legal
Affairs" for further five years effective from January 1, 2019.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 69
In its extraordinary meeting in late February 2017, the Supervi-
sory Board appointed Martin Daum as a member of the Board
of Management with responsibility for "Daimler Trucks & Buses"
effective as of March 1, 2017 for a period of five years until
February 28, 2022.
In advance of this meeting, Dr. Wolfgang Bernhard, who had been
appointed as a member of the Board of Management with
responsibility for "Daimler Trucks & Buses" until February 2018,
stated that he would not be available for a contract extension.
The appointment of Dr. Wolfgang Bernhard was terminated as of
February 10, 2017. Until the appointment of his successor,
Dr. Dieter Zetsche, the Chairman of the Board of Management,
took charge of those divisions.
In the Supervisory Board meeting on February 10, 2017,
Ola Källenius was reappointed as a member of the Board of
Management Member with responsibility for "Group Research
and Mercedes-Benz Cars Development", effective from Janu-
ary 1, 2018 for a period of another five years.
On March 29, 2017, the Annual Shareholders' Meeting elected
Bader Mohammad Al Saad and Dr. Clemens Börsig as members
of the Supervisory Board representing the shareholders until the
end of the Annual Shareholders' Meeting that decides on
ratification of board members' actions for financial year 2021.
In the meetings in December 2016 and on February 10, 2017,
the members of the Supervisory Board representing the
shareholders decided, on the basis of a recommendation by
the Nomination Committee, to propose the election to the
Supervisory Board of Dr. Clemens Börsig and Bader Mohammad
Al Saad at the Annual Shareholders' Meeting in 2017. Dr. Bernd
Bohr had previously stated that in the interests of the Daimler
Group, he would step down from the Supervisory Board as of
the end of the Annual Shareholders' Meeting in 2017. The Super-
visory Board had stated its intention to propose Dr. Bernd
Bohr for reelection to the Supervisory Board within the next
two years.
As of December 31, 2017, the Supervisory Board of Daimler AG is
composed of 30% women (the members Sari Baldauf, Andrea
Jung and Petraea Heynike) and 70% men. On the employees'
side, the proportions as of that date are 20% women (the
members Elke Tönjes-Werner and Sibylle Wankel) and 80% men.
In its meeting on December 7, 2017, the Supervisory Board
dealt with the specific proposals for candidates for election to
be made at the Annual Shareholders' Meeting in 2018 and,
against this backdrop, stated that the shareholders' side and
the employees' side should separately achieve the legally
prescribed proportion of women. The members representing the
shareholders and the members representing the employees
Personnel changes in the Supervisory Board and the
Board of Management
In two meetings in 2017, the Nomination Committee prepared
recommendations for the Supervisory Board's proposals to
be made at the Annual Shareholders' Meeting in 2018 on the
candidates for election to the Supervisory Board. Among other
things, and taking into consideration all circumstances of each
individual case, the proposals are oriented towards the Daimler
Group's interests and aim to fulfill the overall qualifications
profile, including expertise profile and diversity concept, for
the entire Supervisory Board.
on
The Audit Committee met six times in 2017. Details of those
meetings are provided in a separate report of that committee
pages 200 ff.
The Presidential Committee convened eight times last year.
It dealt primarily with corporate governance topics as well as
Board of Management matters concerning remuneration and
personnel. As in previous years, compliance targets constituted
part of the individual target agreements of the members of
the Board of Management. Once again, additional non-financial
targets were also included as criteria in the target agreements.
For the past financial year, they were the further development
and permanent establishment of the corporate value integrity,
diversity with regard to increasing the proportion of women in
management positions, the maintenance and enhancement of
a high level of employee satisfaction, and high product quality.
The work of the committees
Corporate governance at Daimler is described in detail in the
declaration on corporate governance combined with the
corporate governance report on pages 203 ff and in the
remuneration report on pages 136 ff of this Annual Report.
For the composition of the Board of Management, the Super-
visory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020.
stated that they object to the overall fulfilment of the statutory
gender quota. Subsequently, based on the recommendation of
the Nomination Committee, the Supervisory Board decided to
nominate Sari Baldauf as well as Dr. Jürgen Hambrecht again and
Marie Wieck for the first time for election to the Supervisory
Board at the Annual Shareholders' Meeting in 2018. Marie Wieck
is a General Manager at IBM Blockchain. If the proposed
persons are elected, the statutory quota will be fulfilled on the
shareholders' side, insofar as no other changes occur. The
next election to the Supervisory Board of members representing
the employees will also take place in 2018.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
There was no occasion to convene the Mediation Committee
in 2017.
in München
Baden-Württemberg
Tetra Laval Group
The Annual Shareholders' Meeting approves
The Truck Data Center facilitates the market launch of new
digital services from Mercedes-Benz Trucks: the revolutionary
service product Mercedes-Benz Uptime and the new Fleet-
Board Manager app. A precondition for both services is the
installation of the Truck Data Center, which will be the brain
of the connected truck across all brands at Daimler Trucks.
It communicates via Bluetooth, 3G mobile telephony or GPS
with the infrastructure, other vehicles and other parties involved
in the logistics process.
new digital services
Launch of Truck Data Center and
Hermes and Mercedes-Benz Vans agree on a strategic
partnership to electrify the parcel service's vehicle fleet.
The focus is on the economy, sus-
tainability and practicality of locally
emission-free delivery vans used
for the last mile. By 2020, Hermes
plans to use 1,500 Mercedes-Benz
electric vans of the Vito and Sprinter
model ranges in urban areas all over
Germany.
1,500 Mercedes-Benz Sprinter and Vito vans with
electric drive for Hermes
ChargePoint is regarded as the world's leading provider in the
segment of charging stations for electric vehicles, and is the
market leader in the United States. Expansion of the business
to the European market is planned. Strategic involvement in
ChargePoint is another important step in the spread of electric
mobility. The cooperation lays the foundation for a compre-
hensive, customer-oriented charging service.
Daimler invests in ChargePoint
Daimler Financial Services is continuing along its growth path
with digital finance and mobility services. With the finance
startup AutoGravity, which was founded in Irvine, California
in late 2015, Daimler Financial
Services is now starting the national
rollout in 46 federal states of the
USA. The customer-focused comparison
app for automobile purchase and
finance provides information on up to
four tailored and binding offers within
just a few minutes.
a constant dividend of €3.25 per share.
Daimler Financial Services invests in smartphone app
for auto financing
Startup culture at Daimler
€
With its entry into the e-payment business, Daimler
will launch its own electronic payments service under
the "Mercedes pay" brand name.
Mercedes pay is a key component of
Daimler's mobility and digitization
strategy. The new payment system
demonstrates the goal of making
Daimler even more attractive as the
leading provider of digital mobility
services.
PayCash Europe S.A.
Daimler Financial Services acquires
Q1
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017
74
The year 2017 was very successful for Daimler. We strengthened our core
business with attractive new products and services. Important new products
included the upgraded S-Class and the new X-Class from Mercedes-Benz,
the new FUSO Super Great and the new SETRA double-decker bus. We expanded
our business portfolio with targeted acquisitions and joint operations.
We made very good progress in the future strategic areas of connectivity,
autonomous driving, flexible use and services and above all with electric
mobility. Furthermore, we aim to strengthen Daimler's future viability with
a new divisional Group structure.
Daimler expands its "Knowledge College" program, a series
of workshops for students, with a seminar on the subject
of startup culture at the Group. The company has the clear
goal of combining the strength of a global corporation with
the flexibility of the startup scene. Daimler is creating new
impetus to strengthen the entrepreneurial spirit at the
Group with numerous initiatives. For this purpose, it has
designed a new seminar at which students can acquire
startup know-how.
Approximately 6,200 shareholders
(2016: 5,500) come to the CityCube in
Berlin on March 29. The resolutions
proposed by the management are all
approved with large majorities. The
dividend payout amounts to €3,477
million and is the highest of the DAX
companies.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 75
Q2
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
in München - Chairman
Start of construction for new engine plant in Jawor, Poland
The engine plant in Jawor is designed to combine the latest
standards in the sector with Industry 4.0, and to be a benchmark
for engine production. As well as state-of-the-art machinery
and technology, it is also planned to utilize the potential of
digitization, for example with app-based systems in the areas
of human resources and energy management. Daimler is investing
approximately €500 million in the new production facility
for four-cylinder engines.
nologies, the new truck's fuel consumption can be reduced
by up to 15 percent. The FUSO Super Great makes full use of
Daimler Trucks' global platform strategy. This allows uniform
quality standards, cost advantages through economies of scale,
and flexibility in the utilization of production capacities.
the application of various new tech-
truck manufacturer sets new
standards in Japan for efficiency,
safety and connectivity. Through
With the latest generation of the
FUSO flagship, the world's biggest
the Japanese market
New FUSO Super Great for
World premiere for the Mercedes-Benz Tourismo RHD
With sales of more than 23,000 units, the Mercedes-Benz
Tourismo is the most successful coach from Daimler Buses
and a key driver for the division's success. The new model
sets standards for economy, comfort and safety. With its four
model versions and a broad spectrum of powertrains and
equipment, it covers diverse customer requirements in the
entire coach segment.
Foundation stone for new car plant in Russia
Mercedes-Benz starts the construction work for a new, fully
flexible car plant in the Moscow region,
which is due to go into operation in
2019. The production facility is planned
for maximum flexibility so that multiple
architectures can be assembled on one
line. A total of more than €250 million
is to be invested.
50th record month in succession
Mercedes-Benz Cars sets an unprec-
edented series of records: It has now
increased its unit sales every month
for more than four years - without a
break. In April, unit sales grow com-
pared with the prior-year month for
the 50th month in succession.
50
World premiere of the upgraded S-Class in Shanghai
Offering a wide range of improvements, the upgraded S-Class
has its world premiere at Auto Shanghai. The highlights include
an all-new, highly efficient family of engines with various
new technologies for electrifying the drivetrain. Intelligent
drive takes a further step towards autonomous driving. And
in the interior, new standards are set for comfort and wellness
in the premium segment.
+
-
€500m
Daimler takes a further step in its electric offensive by laying the
foundation stone for one of the largest and most modern battery
factories. The Group's second factory for lithium-ion batteries
is being built at the 100-percent subsidiary ACCUMOTIVE in
Kamenz with an investment of approximately €500 million.
New battery factory in Kamenz
less cars on the road in urban environments by early in the
next decade. The project combines the overall vehicle expertise
of the world's leading premium carmaker with the system and
hardware expertise of the world's biggest automotive supplier.
Bosch and Daimler are cooperating to
advance the development of highly
automated driving and driverless cars.
The joint development aims to put
highly automated driving and driver-
Bosch and Daimler cooperate on
highly automated driving in an
urban environment
Highlights of 2017
Project ONE
Fuchs Petrolub SE - Chairman
ere
* Representative of the employees
Mercedes-AMG
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
elected until 2018
Bremen
Elke Tönjes-Werner*
Chairman of the Works Council, Headquarters, Daimler AG
elected until 2018
Committees of the Supervisory Board:
Stuttgart
Other supervisory board memberships/directorships:
Formula D GmbH
Robert Bosch GmbH
Former Member of the Management Board of
retired on March 29, 2017
Stuttgart
Dr. Bernd Bohr
Retired from the Supervisory Board:
General Secretary IndustriALL Global Union
Jörg Spies*
elected until 2018
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Presidential Committee
On my way
25
Trankfest
smart
World Premi
vision EQ fortwo
smart
Sari Baldauf
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Paul Achleitner
Nomination Committee
Ergun Lümali*
Joe Kaeser
Michael Brecht*
Dr. Clemens Börsig - Chairman
Audit Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Manfred Bischoff - Chairman
Geneva
Valter Sanches*
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 73
At the Frankfurt Motor Show, Mercedes-Benz presented pioneering solutions
for the mobility of the future. The Mercedes-AMG Project ONE show car with its
Formula 1 hybrid technology stands for the future of driving performance.
And the smart vision EQ fortwo offers an electric and fully automated solution
for highly efficient and flexible local transport.
wor
OU WA MSA
76
The aforementioned and all other voting-rights notifications are
published on the Internet at
voting-rights.
Institutional investors hold a total of 71% of our equity capital,
while private investors own 19%. Approximately 65% of our
capital is in the hands of European investors and around 23%
is held by US investors.
A.03
Daimler share price (high/low), 2017
In euros
80
75
70
60
65
daimler.com/investors/share/
55
A.04
-
1/17 2/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 11/17 12/17
Share price index
59
shares, making it Daimler AG's largest individual shareholder. The
Renault-Nissan Alliance continues to hold 3.1% of Daimler's
shares. BlackRock Inc., New York, still holds a stake above the
5% reporting limit as defined by Germany's Securities Trading
Act (WpHG). In November 2017, BlackRock notified us that its
proportion of the voting rights was 5.95% on November 8, 2017.
In March 2017, Harris Associates L. P., Wilmington, notified us
that its proportion of the voting rights rose above the 3%
reporting limit to 3.01% on March 9, 2017.
A broad shareholder structure 7 A.07
Daimler continues to have a broad shareholder base of
approximately 0.9 million shareholders. Shareholder numbers
decreased slightly during the reporting year, particularly as
fewer private investors purchased our shares. The Kuwait Invest-
ment Authority (KIA) currently owns 6.8% of the company's
The Board of Management and the Supervisory Board will
recommend an increased dividend payment of €3.65 per share
for financial year 2017 at the Annual Shareholders' Meeting
on April 5, 2018. The total dividend amount will thus reach the
new record level of €3,905 million (2016: €3,477 million).
54.17
+10
Xetra price at year end¹
70.80
70.72
Highest¹
73.25
73.64
Lowest¹
59.84
59.29
+0
-1
+14
1 Closing prices
Global stock markets significantly improve in 2017
Global stock markets started the year 2017 in an optimistic mood,
with many investors anticipating that the new administration in
the Unites States would implement measures to stimulate the
economy. In this environment, the key US stock-market indices
rose to all-time highs. At the same time, investors in automotive
stocks behaved in a very risk-averse manner. Following a short
phase of uncertainty prior to the presidential elections in France,
stock markets rose significantly at the end of April after the
first round of the elections. During this period, the German DAX
share index surpassed its previous record of 12,375 from the
year 2015. The positive development that followed was supported
by the ongoing expansionary monetary policy of the European
Central Bank (ECB) and a course of rather moderate interest-rate
increases in the United States on the part of the Federal
Reserve, which, as expected, raised base interest rates by 25
basis points in March and then again in June. Market volatility
increased in mid-August, partly due to the rising tension between
the US and North Korea. Automotive stocks were also subject
to major fluctuations in this environment, but markets as a whole
then recovered strongly once again in September. Along with
robust economic data and the strong US dollar, the prospect of
a new business-friendly government in Germany had a stimu-
lating effect on the German economy. During the rest of the year,
the global economic recovery and positive financial reporting
by European companies increased investors' propensity to
purchase shares. Many stock-market indices around the globe
reached all-time highs in the fourth quarter. Nevertheless,
expectations regarding the future behavior of central banks
worldwide remained very much on investors' minds.
Daimler's Indian commercial-vehicle brand is on a successful
path. The vehicles are specially tailored for the Indian market and
the requirements of customers there. Meanwhile, BharatBenz
has delivered more than 60,000 BharatBenz trucks to customers
in India. In recent months, it achieved a double-digit market
share for the first time. The brand is well established among the
top 4 in the Indian market and is actually the number 3 in the
heavy-duty segment.
The index of the most important shares in the euro zone, the
Dow Jones Euro STOXX 50, rose by 6% in 2017. The leading
German share index, the DAX, performed significantly better,
rising by 13%. The DAX also broke the 13,000 mark for the first
time ever in October 2017, and reached a new all-time high of
13,479 on November 3. In Japan, the Nikkei index also finished
the year with a significant increase, to 22,765 (+19%), its highest
level in several years. In the United States, the Dow Jones
reached an all-time high of 24,719 in December 2017 and re-
corded a 25% increase for the year as a whole.
Volatile development of Daimler share price
Automotive stocks were able to carry over their momentum from
the prior year in the early part of 2017, but this momentum
began to dissipate once again at the beginning of the second
quarter. Along with their general concern regarding the sus-
tainability of demand for cars in Western Europe, North America
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 79
and Japan, investors were also very much focused on the
further development of the Chinese car market after adjustments
to subsidies there in late 2016. The discussions regarding diesel
technology and ongoing litigation also had an increasingly
negative effect on automotive stocks. On the other hand, inves-
tors did recognize the fact that business continued to develop
favorably in the automotive industry. Nevertheless, automotive
stocks came under further pressure on global markets in the
months that followed. Discussions regarding the future of diesel
engines now spread to many other countries with a negative
impact on the entire sector, and thus on our share price as well.
Investors believe that the expansion of drivetrain electrification
in the coming years will lead to a high level of capital investment
and a comparatively lower level of profitability. Investors and
analysts also continued to pay close attention to the various
automotive markets during the year under review. The focus
here was on the development of the car market in the United
States, where a declining number of new registrations and
concerns about residual values led to increased uncertainty on
the capital market as to whether demand could be sustained.
In general, the appreciation of the euro against the dollar had
a negative effect on the shares of companies with a high pro-
portion of exports to dollar-based markets. In this situation,
the Daimler share price dropped to its lowest point of the year
2017 when it fell to €59.29 on July 31. Following the diesel
summit in Germany at the beginning of August, the debate on
diesel technology took on a more objective tone, and greater
clarity was also achieved regarding the measures planned by
the German federal government and automakers. This led to
greater investor confidence in the automotive sector, and many
investors took advantage of the favorable opportunity to
purchase automotive shares. Investors' new share-price ex-
pectations were also reinforced by the innovations presented
at the Frankfurt International Motor Show (IAA) and by the strate-
gic course adopted by the automotive industry. Our ongoing
product offensive and the solid financial results that we recorded
once again in the third quarter of 2017 led to further increases
in our share price in September and October. On November 3,
Daimler's share price reached €73.25, which was the highest
price for the year. The Daimler share closed at €70.80 on
December 29. At the end of the year, the company had a market
capitalization of €75.7 billion (2016: €75.7 billion). Daimler's
share price was thus at the same level as a year earlier year and
therefore failed to keep pace with the development of the
German share index DAX (+13%) and the Dow Jones STOXX Auto
Index (+13%). When the dividend payout of €3.25 per share is
included, our shareholders saw the value of their investment
increase by 5%. In the first few weeks of the year 2018 our
share price developed very positively. Daimler's shares were
listed at €73.73 at the end of January, which is 4% above the
closing price at the end of 2017.
Dividend of €3.65 7 A.02
51.97
Equity (December 31)
Q3
120
Electric icons
Thomas Built Buses, the subsidiary of Daimler Trucks North
America, presents the first fully electric school bus, which is to
go into series production in early 2019. With the development
of the "Saf-T-Liner C2 Electric Bus," Thomas Built Buses profited
significantly from the electric-vehicle expertise of Daimler.
SCHOOL BAS
JOOLEY
Lewis Hamilton
#4TheTeam
World Champion
2000 2014 2015 2017
Formula 1 World Champion for the fourth time
Lewis Hamilton wins the Formula 1 World Championship for
the fourth time and ensures that the Silver Arrows win the
Driver's World Championship for the fourth time in succession!
In addition, Mercedes-AMG Petronas Motorsport wins the
Constructors' World Championship by a large margin.
78
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Daimler and the Capital Market
Global stock markets significantly improved in 2017 and reached record levels in several regions.
Daimler's share price was volatile during 2017 and closed the year at the level of a year earlier.
The Board of Management and the Supervisory Board will propose to the Annual Shareholders'
Meeting that an increased dividend of €3.65 (2016: €3.25) per share be paid for 2017.
A.01
Development of Daimler's share price and of major indices
End of
2017
Mercedes-Benz Vans plans to offer all of its commercial
vans with electric drive. This starts with the eVito, which can
be ordered as of November 2017 for delivery as of the second
half of 2018. Further model series are to follow as of 2019. In
addition to the actual vehicles, Mercedes-Benz Vans also offers
a technical ecosystem, for example with an intelligent charging
infrastructure for the vehicles' operation.
Electric vans from Mercedes-Benz Vans
Daimler Financial Services (DFS) presents its Startup
Intelligence Center (SIC) in Lisbon. This is where cooperative
ventures and partnerships are fostered with promising
mobility, fintech and insurtech startups. With the Startup
Intelligence Center, DFS is bringing together its various
activities in the area of innovation cooperation management.
Investment in startup cooperation
World premiere of the Mercedes-Benz X-Class
With the "Mercedes-Benz Vans goes global" strategy,
Mercedes-Benz Vans is entering a new market segment.
The Mercedes-Benz X-Class is the first pickup from a
premium manufacturer. The X-Class with space for up to five
persons supplements the traditional strengths of a
midsize pickup with the typical Mercedes-Benz characteristics
of driving dynamics, comfort, design, safety, connectivity
and comprehensive individualization.
Full speed ahead
into the future:
1,900 young people start their
vocational training at Daimler
Investing today in the qualified
1,900
personnel of tomorrow: In Germany alone, approximately 1,900
young people start their careers at 50 Daimler locations.
Dr. Dieter Zetsche visits the 279 new apprentices and students
on their first day at the Mercedes-Benz plant in Sindelfingen.
Daimler Board of Management decides on plan
for future diesel engines
The plan entails the massive expansion of the existing voluntary
service actions on vehicles in customers' hands, as well as
the rapid market launch of an all-new family of diesel engines.
This package is extended with additional measures on the
occasion of a summit meeting between politicians and repre-
sentatives of the automotive industry.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 77
End of
2016
Q4
With the operation of additional testing modules at the site in
Immendingen, Daimler is taking an important step towards the
mobility of the future. Test operations at the Daimler proving
ground and technology center start on the four testing modules:
urban environment, 4x4 ground, hill endurance, and the
"Bertha area," a proving ground for autonomous vehicles.
IONITY facilitates electric mobility on long distances
With the establishment of the IONITY joint venture for the
development of a high-power charging (HPC) network for electric
vehicles, Daimler is in cooperation with other companies to set
the course for the installation of the largest fast-charging network
in Europe. The installation and operation of up to 400 fast-
charging stations by 2020 should guarantee electric mobility on
long journeys and accelerate its market acceptance.
The Board of Management and Supervisory Board decide
on initial steps to strengthen the divisional structure
Daimler is working on how the divisions can be changed into
legally independent entities. This "Project Future" is intended
to strengthen the business units' future viability so that growth
and earnings potential can be better utilized in the various
markets. The project is to be continued in close consultation with
the employee representatives. Subject to a final assessment,
the goal is to obtain approval for the new entities at the Annual
Shareholders' Meeting of Daimler AG in 2019.
C
Daimler Trucks presents E-FUSO
and fully electric heavy truck
Vision One
At the Tokyo Motor Show, Daimler
Trucks announces the full electrification
of all truck and bus model series of
the FUSO brand in the coming years.
Daimler Trucks is thus the first
manufacturer with its own brand for electric trucks and buses.
The first fully electric FUSO eCanter trucks are delivered to
customers in December 2017.
400 R$
Daimler starts with four new modules at the proving
ground and technology center in Immendingen
17/16
% change
Daimler share price (in euros)
70.80
2017
2016
17/16
% change
Net profit
9.84
7.97
+23
Dividend
Amounts in euros
3.65
+12
Mercedes-Benz Vans enters the ride-sharing market. For this
purpose, the van division of the Daimler Group has founded the
joint venture ViaVan with Via, a New York-based startup. The
technology from Via and the engineering from Mercedes-Benz
Vans form a perfect combination for efficient, cost-effective
and sustainable ride sharing.
Mercedes-Benz Vans founds joint venture ViaVan with
US startup Via
V-Class
New Setra double-decker bus continues coach initiative
World premiere of the Setra double-decker, the biggest and
most comfortable coach from Daimler Buses. As a result of
improved aerodynamics, it is significantly more fuel efficient
than its predecessor. In addition, it is equipped as standard
with an emergency braking system with obstacle and pedestrian
recognition, and Sideguard Assist for taking the blind spot
into account is offered as an optional extra.
In order to remain fit for the future at the sites in Europe,
management and works council agree on a future package for
efficiency enhancements in production. Furthermore, Daimler
Buses will continue shaping the future of mobility. Within this
context, in the years ahead, we aim to invest approximately
€340 million.
Daimler Buses makes its production network fit for
the future
Production of battery-electric vehicles in China
Daimler and BAIC agree to jointly invest €650 million in the
production of battery-electric Mercedes-Benz vehicles at the
local production facility of Beijing Benz Automotive Co. (BBAC)
in Beijing. As part of this strategic framework agreement, the
partner companies will prepare for the local production of
battery-electric vehicles at BBAC by 2020, and aim to establish
the required infrastructure as well as research and develop-
ment capacities in China.
3.25
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017
Key figures per share
+13
70.72
+0
DAX 30
12,918
11,481
Dow Jones Euro STOXX 50
3,504
3,291
A.02
Dow Jones Industrial Average
19,763
Nikkei
22,765
19,114
+13
+6
+25
+19
Dow Jones STOXX Auto Index
615
543
24,719
115
Five years of BharatBenz
105
We want all of our divisions to be the leaders in their business
segments. Our goal for Mercedes-Benz Cars is to play the
leading role in the worldwide premium segment over the long
term. We also aim to enhance the smart brand's pioneering
role in urban, electric mobility. Daimler Trucks intends to further
strengthen its position as the leading truck manufacturer in
the global truck business. Mercedes-Benz Vans is striving to
achieve further profitable growth with the help of its "Mercedes-
Benz Vans goes global" divisional strategy. Daimler Buses
wants to strengthen its leading position in the segment for buses
above eight metric tons gross vehicle weight. Daimler Financial
Services plans to maintain its position as the best captive finan-
cial and mobility services provider; it will continue to expand
its mobility services and continue growing in close cooperation
with our other divisions. Through our core business, we are
creating the financial foundation for investments in the future of
our company. To this end, we intend to achieve a 9% return
on sales (EBIT in relation to revenue) for the automotive business
on a sustained basis. This overall figure is based on the return
targets for the individual divisions: 8-10% for Mercedes-Benz
Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and
6% for Daimler Buses. For Daimler Financial Services, we have
set a target of 17% for return on equity. In general, we want to
achieve profitable growth on a sustained basis, thus increasing
the value of our company.
Number one in our core business
Our objectives
Today, the automotive industry is on the verge of a fundamental transformation. Four future-oriented
fields are set to radically change the nature of mobility: greater vehicle connectivity, advances in
autonomous driving, the development of digital mobility and transport services, and electric mobility.
Our goal as one of the leading vehicle manufacturers is to become a leading provider of mobility
services as well. To this end, we will further strengthen our core business and lead the way in these
four future-oriented fields. Our efforts will be supported by a cultural and organizational transfor-
mation. We have not lost sight of our overriding corporate objective: to achieve profitable growth and
increase the value of our company.
Objectives and Strategy
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
82
During the year under review, Daimler conducted asset-backed
security (ABS) transactions in two new countries in addition to
the existing ABS platforms in the United States, Canada, Germany
and China. In the United Kingdom, for example, GBP 0.4 billion
was successfully placed with investors, while the first transaction
in Australia had a volume of AUD 0.75 billion. In the United
States, the company generated a refinancing volume of $4.7
billion through three transactions in 2017; in Canada, a volume
of CAD 0.4 billion was generated in one transaction. In addition,
Mercedes-Benz Bank used the Silver Arrow Platform to sell
€1.1 billion in ABS bonds to European investors. And in China,
two ABS transactions were successfully conducted with a
total volume of CNY 10.2 billion.
At the end of 2017, Daimler Group companies had issued bonds
that were still outstanding in a volume of €67.1 billion (2016:
€63.1 billion). Besides raising funds through the issuance of
bonds, Daimler also issued a small volume of commercial
paper in 2017.
In 2017, the Group primarily covered its refinancing needs by
issuing bonds. A large proportion of those bonds were sold as
benchmark bond issuances (bonds with high nominal volumes)
in euro and dollar markets. In the US capital market, for example,
Daimler Finance North America LLC issued bonds worth a
total of $6.5 billion in January, May and November 2017. The
bonds had terms of 18 months and three, five and ten years.
In addition, Daimler AG issued euro bonds in benchmark format
with a total volume of €6.3 billion and terms of seven, eight,
ten, 12 and 20 years. In 2017, Daimler AG also issued four
bonds in China (so-called Panda bonds) worth a total of
CNY 16.0 billion. Furthermore, many smaller bonds were issued
by the Daimler Group in a variety of currencies and markets.
Central banks' ongoing expansionary monetary policies also
impacted bond markets during the year under review. As a
result of the high level of liquidity, companies with investment-
grade ratings saw their risk premiums remain at a moderate
level.
Refinancing benefits from high level of capital-market
liquidity and good ratings
Number of online shareholders remains at a high level
Our shareholders continue to make good use of our range of
personalized electronic information and communication. The
increase in online shareholders was particularly high in 2017,
as a total of 95,000 (2016: 86,500) shareholders received the
invitation and the agenda for the Annual Shareholders' Meeting
by e-mail rather than by post. We would like to thank those
shareholders for helping to protect the environment and cut
costs. As was the case in the past, those shareholders once
again had the opportunity to win attractive prizes in a lottery.
Access to the e-service for shareholders and additional in-
formation can be found at O https://register.daimler.com.
Continual further development of the corporate website
Since December 2016, we have upgraded both the content and
the visuals of numerous sections of our Investor Relations site
at daimler.com/investors. Among other things, we have
introduced key-figure modules, information charts, detailed
explanations and quotes. A representative online user survey
revealed that visitors to the Investor Relations site are very
satisfied with what they find there. The survey also yielded
valuable information on user structure, information require-
ments and the potential for further improvement. The additional
optimization measures we implemented for Internet search
engines also now make it easier for users to find and access the
content they need.
Awards once again for online version of the Annual Report
Our Annual Report, which boasted numerous additional features
for 2016 (annualreport2016.daimler.com), won prestigious
international awards once again in 2017, including the Stevie
Award. The online report also captured Gold at the 2016 LACP
Vision Awards.
Continuation of comprehensive investor relations activities
In 2017, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development. We organized
road shows for institutional investors and analysts in the
finance capitals of Europe, North America, Asia and Australia.
We also held many one-on-one meetings at investor
conferences. This was especially the case at the international
motor shows in Geneva and Frankfurt. Sustainability-focused
investors were also able to meet and talk with company
representatives at two events held at the IAA in Frankfurt and
at conferences in Frankfurt in February and in Paris in
November. We reported on our quarterly results in conference
calls and webcasts. The presentations can be viewed on our
website at daimler.com/investors/events/presentations.
The talks with analysts and investors focused on the latest
earnings expectations for 2017, as well as on business develop-
ments and the profitability of the individual divisions and
regions. In addition, top-level managers from Daimler Financial
Services discussed the strategies and goals for financial
services and mobility services at a capital market event held
in London in February. In September, numerous analysts and
investors attended an event in Sindelfingen, where Daimler pre-
sented an overview of the latest business developments and
offered a look at the future strategy of the Mercedes-Benz Cars
division with speeches, discussions and workshops. The audio
recordings and charts and illustrations from the events are avail-
able at daimler.com/investors/events/capital-market-days.
of local public transportation in the future. Daimler Financial
Services was also on hand at the Annual Shareholders Meeting
to present its mobility services, and Mercedes me and various
connectivity services were on display as well. Some of our
trainees were also at the meeting to provide an insight into their
work. The presentation of our program for the further develop-
ment of our corporate culture, Leadership 2020, showed how
Daimler is responding to the changes occurring with regard to
products, customer expectations and the working world.
Leading in the CASE fields
Connected, Autonomous, Shared & Services and Electric:
Our goal is to play the leading role in each one of these future
fields and to generate additional potential by linking the four
fields together. We want to expand vehicle connectivity even
further, thus creating added value for our customers. We also
seek to be the leader in the use of digital technologies, both in
our products and services and along the entire value chain.
The digitization of our core processes is the key to our ability
to link individual customer needs with the technologies of
the future and with mobility requirements. We seek to play the
leading role in autonomous driving at all of our divisions.
This will result in the creation of new and attractive business
models for private car customers, fleet customers, and the
public transport and commercial cargo transport sectors. We
are expanding our strong portfolio in the field of mobility
services. With our broad customer base and presence in all of
the relevant mobility segments, Daimler Mobility Services
already has a strong foundation for future success. We remain
on course for growth through innovative mobility services
and strong cooperation partners. We are also forging ahead with
the development of new mobility and transport services in the
commercial vehicle segment. In the field of electric mobility,
we are establishing an ecosystem of products and services
in order to make electric vehicles as convenient and pleasant to
use as those with combustion engines. We plan to offer the
best electric vehicles on the market in the coming years and to
significantly increase our market share in the sector. The
smart brand intends to offer solely cars with electric drive sys-
tems in Europe and North America as of 2020, with the other
regions to follow soon after. We also plan to become the leader in
the area of electric commercial vehicles for urban applications.
A cultural and organizational transformation for a
successful future
Daimler Buses continues to grow around the globe with the
help of its regional strategies and new products in the city bus
and touring coach segment. With its new flagship model, the
Setra double-decker coach, Daimler Buses aims to safeguard
its current market leadership in this market segment. And
with the new Citaro hybrid city bus, we want for the first time
anywhere in the world to offer hybrid technology as optional
equipment for a wide range of city buses with both diesel and
natural-gas engines, rather than in the form of stand-alone
models. The Daimler Buses European production network, which
has manufacturing locations in Germany, France, Spain and
the Czech Republic, is being reorganized to make it more efficient
and more competitive. Within the framework of this reorgani-
zation, the Mannheim plant is being expanded into the center of
competence for city buses and electric mobility. Meanwhile,
the plant in Neu-Ulm is being transformed into the center of
competence for touring coaches, connectivity and autonomous
driving. We are also strengthening our development expertise in
the fields of electric mobility and autonomous driving. Through
new regional centers, the production of school buses and fully
equipped buses in India and the use of the Brazilian production
location as a hub for exports to other countries in South America,
Africa and Asia, Daimler Buses continues to expand its inter-
national business operations, particularly in emerging markets.
The success of Daimler Buses is primarily the result of its
position as a global manufacturer and distributor of products
featuring cutting-edge technologies. As one of the leaders in
safety technology and with highly efficient vehicles, Daimler
Buses offers an impressive overall package of new and used
vehicles, service and maintenance contracts, financing plans
and new mobility solutions.
84
Mercedes-Benz Vans is pursuing three approaches with its
"Mercedes-Benz Vans goes global" strategy: the implementation
of market strategies for global expansion, the use of product
strategies for the further expansion and differentiation of its prod-
uct portfolio, and the adVANce future initiative, which bundles
the development and commercialization of customer-focused,
holistic transport and mobility solutions. Mercedes-Benz Vans
plans to continue to grow profitably and conquer new markets
in the future. The continued growth of online retail sales of
goods can be expected to lead to increased sales of commercial
vans in the future as well. Our product pipeline is in outstand-
ing shape with the new Mercedes-Benz X-Class - the first pre-
mium pickup from Mercedes-Benz Vans - and the new Sprinter,
which will be launched in 2018. We are modernizing our plants
in Ludwigsfelde and Düsseldorf in preparation for the new
Sprinter. Ludwigsfelde is also set to become our first fully con-
nected manufacturing facility. Our objective is to completely
digitize all of our van plants worldwide by 2025. We are also
building a new production plant in North Charleston, South
Carolina. This will expand our existing assembly operations and
support our growth on the North American market.
The Daimler Trucks division works continuously on improving
its efficiency. Levers in this regard are optimizing our production
network and supply chain, integrating new technologies and
reducing our product portfolio's complexity. We plan to optimize
our fixed costs by €400 million by the end of 2018 in order to
strengthen our competitiveness. This will be achieved through
a range of measures, including the restructuring and optimi-
zation of Mercedes-Benz Trucks' development, production and
sales organizations in Germany and Brazil. Together with the
cost optimizations previously planned, some of which have
already been implemented, we aim to achieve improvements for
Daimler Trucks with a direct impact on earnings in an amount
of €1.4 billion by the end of 2018. Our goal is for these measures
to become fully effective in the year 2019.
Fuel efficiency is a key selling point for commercial vehicles. In
order to improve fuel efficiency even further, we are continuously
developing new measures for vehicles and drivetrains. With a
number of measures, the new FUSO Super Great sets standards
in terms of efficiency. Additional measures for reducing the
fuel consumption of the Mercedes-Benz Actros and the new
Freightliner Cascadia are planned to be implemented in 2018
and 2019.
Daimler Trucks is focusing on global growth, technology leader-
ship and the continued implementation of its platform strat-
egy. In everything we do, we focus on our customers. We want
to safeguard our strong position in Europe and North America
and to grow in Brazil in line with the market recovery we expect
to see there. We will therefore invest in our product program
in Brazil during the coming years, as well as in vehicle connec-
tivity and the modernization of our plants in São Bernardo do
Campo and Juiz de Fora. We plan to achieve significant growth
in Asia. We launched assembly operations for the Mercedes-
Benz Axor in Indonesia in 2017, so that we will be present with
two strong brands in this Southeast Asian market. We are well
established in India with our local BharatBenz brand. Using this
good position as a starting point, we plan to further develop
through an updated product program as well as in export mar-
kets. Our platform strategy has generated substantial synergy
benefits for us as a vehicle manufacturer. Our customers also
benefit from this strategy, as it speeds up the broad availability
of technologies that are relevant for trucks.
In order to safeguard the future profitability of Mercedes-Benz
Cars, we intend to optimize the business system and processes
in the context of the "Fit for Leadership" efficiency program
with the goal of a further earnings improvement of €4 billion by
2025.
Our market position in China plays a key role in safeguarding our
market leadership. We have already transformed China into
thebiggest market for Mercedes-Benz cars, thanks to products
that are aligned with Chinese customers' requirements and
our establishment of local development and manufacturing
facilities. We want to strengthen this position even further.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 81
Our "Best Customer Experience" initiative is designed to
offer our customers the best experience compared to all other
automakers. All of our sales, service and financial services
activities are aligned with each other, from the first contact
throughout the entire duration of the customer relationship.
Depending on our customers' needs, we make use of physical
and digital channels for customer communication.
Strengthening our global core business (CORE)
- adapting our corporate culture (CULTURE), and
- strengthening our divisional structure (COMPANY).
strengthening our global core business (CORE)
-leading in new future fields (CASE)
We plan to achieve our goals through four strategic focus
areas:
Four strategic focus areas
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 83
Integrity is extremely important for our company, especially as
we are undergoing a phase of fundamental transformation.
Integrity guides our dealings with respect to our company and
its employees, business partners and customers. We are firmly
convinced that conducting business with integrity provides us
with orientation in times of major transformation as well. It
makes us more successful over the long term - and it also ben-
efits society as a whole.
The increasingly dynamic developments and growing challenges
in the automotive sector require rapid innovation as well as
operations that are quick, agile, market-oriented and customer-
focused. We are systematically promoting new approaches to
vehicle development and interdisciplinary cooperation models.
We support and implement promising innovations that are
developed by our employees and external partners. We are also
safeguarding our transformation with new management tools
and team-oriented remuneration systems. We aim to change our
divisions into legally independent entities, thus further focus-
ing and strengthening the divisional structure of the Daimler
Group. With "Project Future", we are pursuing the goal of
strengthening the future viability of the divisions so that we can
better utilize the growth and earnings potential of the respec-
tive markets.
Mercedes-Benz Cars will continue to implement its growth
strategy with the goal of safeguarding its leading position in the
global premium segment. We will inspire our customers with
our leading brands and outstanding products. New and innova-
tive models in the compact segment, a C-Class model upgrade
and new versions of our iconic G-Class series will be part of
this campaign. We are pursuing three different technological
approaches as we move ahead on the road to emission-free
driving: the further improvement of ultra-modern combustion
engines, hybridization, and locally emission-free vehicles
with batteries and fuel cells. One important lever for the improve-
ment of combustion engines is the full electrification of
the drivetrain through the use of new technologies such as the
integrated starter-generator (ISG) and the 48-volt electrical
system. Systematic hybridization is another important interim
solution on the road to emission-free mobility. We continue
to expand our range of currently eight hybrid vehicles on the
road. By 2022, we plan to offer at least one electrified option
in each segment, with more than 50 variants in total. This includes
more than ten fully electric vehicles, the plug-in hybrid versions,
and the models with 48-volt technology. We are systematically
implementing our architectural and modular strategy in order
to ensure that we can continue our model initiative efficiently,
rapidly and at a high level of quality. Our global development
network and the establishment of new technology centers and
digital hubs keep us close to our customers, our markets and
new technologies. We have also designed our global production
network to with the aim to achieve uniform standards and
the high quality of "Made by Mercedes" worldwide. Within the
framework of our growth strategy, we are expanding our pro-
duction network and thus improving our global competitiveness.
Annual Shareholders' Meeting in the CityCube in Berlin
Our Annual Shareholders' Meeting was held on March 29, 2017 in
the CityCube in Berlin. Some 6,200 shareholders (2016: 5,500)
attended the meeting. A total of 49.18% (2016: 50.77%) of equity
capital was represented at the meeting (actual attendees and
shareholders who voted by absentee ballot). A large majority of
the shareholders approved each of the agenda points proposed
by the company's management. For example, the Annual Share-
holders' Meeting once again approved a very attractive dividend
of €3.25 per share (2016: €3.25) and reelected Dr. Clemens
Börsig as a member of the Supervisory Board of Daimler AG
representing the shareholders. At its subsequent meeting, the
Supervisory Board reelected Dr. Börsig to the Audit Committee,
which in turn elected Dr. Börsig as Chairman of the Audit
Committee. The Annual Shareholders' Meeting also elected
Bader Mohammad Al Saad, a member of the Executive Commit-
tee of the Board of Directors of Kuwait Investment Authority (KIA),
as a member of the Supervisory Board of Daimler AG represent-
ing the shareholders. The terms for both newly elected Super-
visory Board members will expire at the end of the Annual
Shareholders' Meeting held in 2022. Important documents and
information related to the Annual Shareholders' Meeting can be
found on the Internet at Odaimler.com/investors/events/
annual-meetings/2017. In the exhibition areas of the CityCube,
Daimler presented its technological expertise and a broad range
of products and services under the motto "Future Mobility." The
exhibition highlights showcased future mobility: Along with the
elegant Vision Mercedes Maybach 6 and the first model from the
EQ brand, as well as a Mercedes-Benz electric truck for heavy-
duty distribution transportation, the presentation also featured
the Vision Van, which attracted a great deal of attention. The
vehicle boasts a fully automated cargo compartment, integrated
drones for autonomous air deliveries and state-of-the-art
joystick control. The Mercedes-Benz Future Bus, a partially
automated city bus with the CityPilot system, offered a preview
Employee share purchase plan implemented once again
Staff members entitled to purchase employee shares were
able to do so once again in March 2017. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 19.8%, the participation rate in the year under
review was significantly higher than in previous years (2016:
11.7%). A total of 36,200 employees took part in the program
(2016: 34,500), which is the highest number since 2008. The
total number of shares purchased by employees also increased
substantially once again, from 576,000 in 2016 to approximately
604,000 (of which just under 54,400 were bonus shares) in the
year under review. The high degree of participation in the
employee share-purchase plan was likely due to the positive
outlook for the company, a high profit-sharing payout once
again, and the attractiveness of dividend yields in the current low
interest-rate environment.
With a weighting of 6.79% (2016: 7.52%), Daimler was ranked
sixth in the German share index DAX30 at the end of 2017. In
the Dow Jones Euro STOXX 50 index, our shares had a weighting
of 2.92% (2016: 3.18%), which put Daimler in eleventh place.
Daimler shares are listed on the stock exchanges in Frankfurt
and Stuttgart. A total volume of 942 million shares were traded
in Germany in 2017 (2016: 1,210 million). Daimler shares are also
increasingly being traded on multilateral trading platforms
and in the over-the-counter market.
Institutional investors
3.1%
Renault-Nissan
6.8%
Kuwait Investment Authority
Shareholder structure as of December 31, 2017
By type of shareholder
A.07
Bloomberg ticker symbol
71.2%
Reuters ticker symbol
Identification Number
German Securities
ISIN
Stock-exchange data for Daimler shares
A.06
A (low)-
A
A
Stock exchange symbol
Daimler Financial Services plans to strengthen its core busi-
ness in the context of its "balanced STRATEGY", while also
investing in mobility and digitalization. Daimler Financial Services
will continue to grow in its core business areas of financing,
leasing and insurance by offering customized services and mak-
ing use of increasing vehicle connectivity. About half of all the
vehicles delivered by Daimler around the world today are either
financed or leased by Daimler Financial Services. At the end
of 2017 the division was financing or leasing 4.8 million cars and
commercial vehicles worldwide, and it plans to increase this
number in the future. Daimler Financial Services supports the
worldwide sales of Daimler vehicles in approximately 40
countries. In line with the motto “Engaging customers for life",
the division focuses on the highest possible degree of cus-
tomer satisfaction and on enhancing customer loyalty. This is
to be achieved by offering a holistic ecosystem and relevant
financing and mobility services - ideally throughout the custom-
er's entire life. In order to focus our business activities even
more effectively on the needs of existing and new customers, we
have expanded the Board of Management of Daimler Financial
Services with the position of Customer Experience Officer (CXO).
The division is also looking to completely digitize its business
processes in order to become an even faster and more efficient
organization.
110
18.9%
DAIGN.DE
DAI:GR
DAI
710000
DE0007100000
2.1%
Rest of the world
2.9%
Asia
Retail investors
6.8%
22.8%
USA
30.9%
Europe, excluding Germany
34.5%
Germany
Shareholder structure as of December 31, 2017
By region
A.08
Kuwait
Leading in new future fields (CASE)
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Connected
euros)
Number of shares (in millions)
1,069.8
1,069.8
0
Market capitalization
75.7
75.7
0
+0
Number of shareholders
0.9
1.0
-10
(in millions)
Weighting in share indices
As a pioneer of automotive engineering, we seek to be the
leader in all CASE fields (Connected, Autonomous, Shared &
Services, Electric), and to generate additional potential by
linking up these four fields.
6.79%
(in billions of euros)
7.52%
3,070
Share capital (in millions of
100
95
45
90
85
80
75
70
3,070
12/30/16 2/28/17 4/28/17 6/30/17 8/31/17 10/30/17 12/31/17
Dow Jones STOXX Auto Index
DAX
80
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
A.05
Key figures for Daimler shares
End of 2017
End of 2016
17/16
% change
Daimler AG
Dow Jones Euro STOXX 50
DAX 30
3.18%
Strengthening global core business
business models
2.92%
Investments
Innovations
Connected, Autonomous,
Shared & Services, Electric
CASE
Leading in new future fields
CORE
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 85
Innovative corporate culture
Strategic focus areas
A.09
Daimler Financial Services aims to expand digital business
models in the area of financing and mobility services in the
context of its balancedSTRATEGY, and is utilizing connectivity to
further develop its services. For example, the InScore insurance
feature analyzes driving data by means of a factory-installed
telematic control unit. This allows customers who drive safely to
receive a discount of up to 20% on their insurance premium. With
Mercedes pay, our own electronic payment system, customers
Connectivity at Daimler Buses also offers benefits for every-
one involved - for example, bus operators in terms of fleet
management and maintenance costs, bus drivers traveling their
routes, and passengers using the e-ticketing service. In 2018,
Daimler Buses will bring together all of its current and future
digital services for buses on its "OMNIplus ON” digital portal,
and will also launch a new preventive maintenance system known
as OMNIplus Uptime. The wide-ranging telematics services
from Fleetboard will also be integrated into the digital portal in
the future.
With its adVANce strategic initiative, Mercedes-Benz Vans is
underscoring its transformation from a pure vehicle manufac-
turer into a provider of holistic and customer-focused transport
and mobility solutions. Our Vision Van concept vehicle offers
a preview of future delivery transport. Thanks to full connectiv-
ity, the supply chain will be optimized down to the last mile.
Mercedes-Benz Vans Mobility GmbH, which was established
under the roof of Daimler Financial Services in 2017, puts us
at the center of a future business model between connectivity
and sharing, which will enable us to meet the growing demand
for flexible and innovative concepts for the utilization of our
vehicles. The new Mercedes PRO overarching service brand
brings together all commercial transport services on a digital
platform. Mercedes PRO connect is the first innovative con-
nectivity solution launched by this umbrella brand.
Connectivity will be a crucial success factor also in the logistics
sector in the future. Truck connectivity plays an important
role at Daimler Trucks. Our goal is to create a seamless trans-
port logistics system with connected trucks and technologies
to ensure that all vehicles are ideally always fully loaded, with no
downtimes or waiting periods. Our new Truck Data Center
connectivity hardware is the foundation for such a logistics sys-
tem. The module records all internal truck data and serves
as the interface for external communication as well. With Fleet-
Board for Mercedes-Benz Trucks, Detroit Connect for Freight-
liner and Truckonnect for FUSO, we offer digital platforms in all
of the world's major regions on the basis of the Truck Data
Center. These platforms can be gradually expanded to include
additional services.
Mercedes-Benz Cars customers experience connectivity
through the digital brand, Mercedes me. The digital platform of
the same name brings together all mobility, financing and other
services (connect, assist, move and finance), and also provides
information and news about the Mercedes-Benz brand (inspire).
Customers should be able to access their vehicles online at any
time and from any location. We are also digitalizing the value
chain in order to benefit from the full scope of connectivity. Such
digitization is the only way to effectively link individual cus-
tomer requirements with value-adding potential. And the smart
brand is offering a range of digital services for urban mobility
with "smart ready to ..."
CULTURE
Financial foundation for
investments in CASE
New
Forward-looking structure
Long-term credit ratings
Standard & Poor's
Moody's
Fitch
A-
DBRS
A
A
A2
Scope
A-
Mercedes-Benz Vans is also benefiting from the further
development throughout the Group of safety and assistance
systems related to automated and autonomous driving. Our
plans here cover everything from automated and autonomous
cargo transport and passenger transport systems.
Daimler Trucks is consolidating its excellent position in the
area of safety through the further development of tried-and-
tested safety technologies. With the fourth-generation Active
Brake Assist system and Sideguard Assist - both of which fea-
ture pedestrian detection - Mercedes-Benz Trucks is one of
the leaders for active safety technology. We are also among the
technological pioneers with automated and autonomous
driving systems for trucks, which should lead to another step in
the improvement of transport safety and efficiency. Platoon-
ing - the electronic linking of several trucks - is becoming more
important as an interim step on the road to autonomous
driving for trucks. Daimler Trucks is one of the leaders for inno-
vative platooning concepts. In 2016, we successfully tested
our platooning system under real conditions in Europe. In 2017,
we were the first manufacturer to test digitally connected
trucks on public highways in the United States, and we also
want to test platooning under real conditions with our fleet
customers in the United States as of 2018.
the joint development of technology for highly automated
and driverless driving. These new technologies can only be
rolled out on a broader scale if changes are made to the
current regulatory framework.
Our approach to autonomous driving is based on the use of
comprehensive safety and assistance systems combined with
vehicle connectivity technology and real-time digital maps.
We have demonstrated our leading position at Mercedes-Benz
Cars with the upgraded S-Class. Our driving assistance sys-
tems have been significantly expanded in many of their functions
and are currently regarded as the benchmark in the industry.
We are developing fully automated systems without a driver,
which can be used exclusively or shared with others. With our
research vehicle Mercedes-Benz F 015 Luxury in Motion, we
demonstrated at an early stage the kinds of technological and
social changes that this will bring about. The vehicle's fully
connected digital interior concept shows how people can use
the additional time that autonomous driving will make avail-
able to them. Our smart Vision EQ concept car offers another
preview of the future of shared and fully automated mobility.
In order to accelerate the development of autonomous driving,
we have launched a number of partnerships - for example
with HERE for high-resolution digital maps and with Bosch for
Autonomous
COMPANY
can easily pay for our mobility and other services using their
smartphone. In this way, Daimler Financial Services is imple-
menting another stage of its "mobility at your fingertips" philoso-
phy. Furthermore, Mercedes-Benz Connectivity Services,
which was established in 2017, offers specialized connectivity
services for vehicle fleets, and the "Connect Business" brand
provides connectivity services for individual companies and large
fleets.
A3
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
mytaxi
moovel
CAR
2GO
SETRA
Daimler Truck Financial
FREIGHTLINER
70,721
139,907
WESTERN STAR
+5
Employees (December 31)
26,210
25,255
24,029
+4
Daimler Buses
Revenue
4,529
4,524¹
4,176
+0
EBIT
265
2811
249
-6
Return on sales (in %)
5.9
6.21
6.0
Investment in property, plant and equipment
144
94
97
+53
Research and development expenditure
359,096
401,025
421,401
Unit sales
Revenue
13,626
13,1611
12,835
+4
EBIT
312
1,1471
-73
Return on sales (in %)
2.3
8.71
9.1
199
Investment in property, plant and equipment
710
373
-34
Research and development expenditure
666
565
442
+18
thereof capitalized
176
310
238
-43
468
BHARATBENZ
194
+3
71,927
154,072
61,810
132,565
+2
+10
Investment in property, plant and equipment
64
43
37
+49
Employees (December 31)
14,070
13,012
12,062
+8
1 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
2 At the Daimler Financial Services segment, the Group's internal revenue and cost of sales have been adjusted by the same amount.
These adjustments have been fully eliminated in the reconciliation.
Daimler AG is one of the world's most successful automotive companies. With its
divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses
and Daimler Financial Services, Daimler is one of the biggest suppliers of premium
cars and the world's largest producer of trucks above 6 tons. Daimler Financial Services
provides financing, leasing, fleet management, investment products, brokerage of
insurance and credit cards, as well as innovative mobility services.
For more information: ④ daimler.com
AMG
MAYBACH
Mercedes me
EQ
smart
M
FREIGHTLINER
FUSO
BUILT BUSES.
Contract volume
New business
17.4
17.7
thereof capitalized
41
30
11
+37
Unit sales
30,888
28,676
26,226
+8
Employees (December 31)
18,770
18,292
202
17,899
Daimler Financial Services
Revenue
26,269
24,530,2
20,660
+7
EBIT
1,384
1,970
1,739
-30
Return on equity (in %)
11.1
+3
1,170
Consolidated Statement of Cash Flows
THE POWER OF
Index
345
Daimler Worldwide
346
Information guidance system
Refers to an illustration or a table in the Annual Report
Refers to additional information on the Internet
Cross-reference to additional information within
the Annual Report
THE POWER OF
0
40
km/h
Claire
& Apps
Phone
Radio
Claire's Phone
158
Outlook
344
Glossary
118
G | Further Information
332
Events after the Reporting Period
119
Remuneration Report
120
Responsibility Statement
FM
334
Independent Auditor's Report
335
and Explanation
140
Ten-Year Summary
342
Risk and Opportunity Report
143
Takeover-Relevant Information
Overall Assessment of the Economic Situation
22.5°C
100
Mercedes me & Apps
Prohe
Clare's Phone
Radio
FM
8
ENGINE
$21.0
÷ 21.0 ->
CULTURE
CASE CORE
CUSTOMER
COMPANY
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
5
Daimler is committed to shaping a new era of mobility in which
the focus is on the CUSTOMER. We aim to completely fulfill our
customers' changing requirements.
We are laying the groundwork for that with four components of our
strategy. They are our strong global CORE business, pioneering
innovations in the future-oriented areas of CASE (Connected,
Autonomous, Shared & Services, Electric), a flexible CULTURE
of cooperation, and the effective restructuring of our COMPANY.
By means of this 5C strategy, we intend to offer the best customer
experiences and to continue along our successful path - also to
the benefit of our employees, partners and investors.
B
20:30
Search
1000-
160
し
180
200
160.0
220
1535
240
120 140
0.0
0
km/h
40
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
3
4
Claire
5
1/100 km
105
Sustainability and Integrity
102
202
A | To Our Shareholders
43
43
Sustainability at Daimler
204
Environmental Issues
206
The Board of Management
Employee Issues
210
44
Social Issues
215
Report of the Supervisory Board
46
Compliance
E | Non-Financial Report
38
Chairman's Letter
191
C| The Divisions
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
164
166
217
172
180
183
D | Corporate Governance
186
Report of the Audit Committee
188
Declaration on Corporate Governance,
Corporate Governance Report
177
The Supervisory Board
54
Statement on the Review of the
Profitability
85
Liquidity and Capital Resources
Financial Position
99
200
Consolidated Statement of Financial Position
230
79
Mercedes-Benz Vans
91
Consolidated Statement of Changes in Equity
232
Notes to the Consolidated Financial
Daimler AG
Statements
234
(condensed version according to HGB)
231
Contents
Development
Income/Loss
Highlights of 2018
56
Non-Financial Report
224
Daimler and the Capital Market
62
Objectives and Strategy
66
229
F| Consolidated Financial
Statements
B | Combined Management Report
72
Consolidated Statement of Income
228
Corporate Profile
74
Consolidated Statement of Comprehensive
Economic Conditions and Business
226
+4
% change
79,483
9.612
-29
Dividend per share (in €)
3.25
3.65
-11
Employees (December 31)
298,683
289,321
+3
1 Adjusted for the effects of currency translation, revenue increased by 4%.
2 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
Cover photo
6.78
The EQC (combined electricity consumption: 22.2 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures)1 will be the first
Mercedes-Benz model of the EQ brand on the road. With its seamless,
clear design and brand-typical color accents, it is the pioneer of avant-
garde electro-aesthetics. In terms of quality, safety and comfort, the
EQC is the Mercedes-Benz among electric vehicles. It convinces in the
sum of its characteristics, in particular with its impressive driving
dynamics and a range of up to 450 kilometers according to NEDC.1
Daimler's Divisions >
The Divisions and Brands
€ amounts in millions
Mercedes-Benz Cars
2018
2017
2016
18/17
% change
Revenue
93,103
94,351¹
89,284
-1
1 Figures on electricity consumption and CO2 emissions are provisional
and were determined by an external technical service and are non-
binding. Figures for range are also provisional and non-binding. An EU
type approval and certificate of conformity with official figures are
not yet available. Deviations between the figures stated and the official
figures are possible.
Earnings per share (in €)
-29
10,6172
78,642
DAIMLER
Annual Report 2018
Key Figures
Daimler Group
€ amounts in millions
2018
2017
18/17
Revenue
167,362
164,1542
+2
Investment in property, plant and equipment
7,534
6,744
+12
7,582
Net profit
-22
14,3482
11,132
EBIT
EBIT
+45
2,898
Free cash flow of the industrial business
+5
8,711
9,107
Research and development expenditure
2,005
7,216
S.N 2931E
8,112
35,755¹
2,3831
33,187
+7
1,948
+16
Return on sales (in %)
7.2
6.7
5.9
Investment in property, plant and equipment
1,105
1,028
1,243
+7
2,753
Research and development expenditure
1,322
1,265
-2
thereof capitalized
40
45
57
-11
Unit sales
517,335
470,705
415,108
Employees (December 31)
8,843¹
1,295
EBIT
+10
Revenue
6,642
6,962
Research and development expenditure
+17
4,147
4,843
5,671
5,684
9.1
9.4'
7.8
Return on sales (in %)
38,273
-18
Investment in property, plant and equipment
+5
82,953
2,269
thereof capitalized
+2
139,947
142,666
145,436
Employees (December 31)
+0
Daimler Trucks
2,373,527
2,008
2,382,791
Unit sales
-5
2,388
2,197,956
2016
2017
12
9
6-
3
Cars
Mercedes-Benz Daimler
Trucks
Vans
B.15
Return on Equity
0
2014
2015
B.14
Return on Sales
3.25
3.25
2.45
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 89
4 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal
revenue and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
1 The columns "Industrial business" and "Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
In %
339
10,278
thereof attributable to shareholders of Daimler AG
thereof attributable to non-controlling interests
Daimler Financial Services
982
86
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
333
7,249
2,679
2014
2250
10,595
-582
3.65
-793
-13
214
271
-15
Profit before income taxes
Interest expense
Interest income
capitalized borrowing costs²
Amortization of
14,348
11,132
In %
Group EBIT
20171
2018
Reconciliation of Group EBIT to profit before income taxes
B.16
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
2018
20171
2016
Mercedes-Benz Daimler
Buses
2015
0
5
10
15
In millions of euros
2018
Value added at Mercedes-Benz Cars of €4.1 billion was
significantly below the prior-year amount of €6.0 billion. This
was primarily due to the negative earnings development mainly
resulting from expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles.
In addition, EBIT was also reduced by advance expenditure
for new technologies and vehicles, weaker pricing, unfavorable
exchange-rate effects and higher expenses for raw materials.
A positive effect resulted from the remeasurement at fair value
of the investment in Aston Martin Lagonda Global Holdings
plc. In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall.
On the other hand, income in connection with a new investor in
HERE affected EBIT positively in the prior year. An additional
negative impact on value added resulted from the increase in
average net assets to €26.3 billion primarily caused by higher
investments in fixed assets.
Dividend
Daimler Trucks
2,753
2,383
+16
Mercedes-Benz Vans
312
1,147
-73
Daimler Buses
265
281
-6
Daimler Financial Services
EBIT of the divisions
1,384
1,970
-30
11,930
14,624
-18
Income taxes¹
Other reconciliation
Net operating profit
-3,169
-3,468
+9
-798
-276
-189
13,967
7,963
-18
8,843
7,216
Mercedes-Benz Cars
In line with a sustainable dividend policy, Daimler sets the
dividend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. In the light of the
business development in 2018, the Board of Management and
the Supervisory Board will propose to the Annual Sharehold-
ers' Meeting to be held on May 22, 2019, that a dividend per
share of €3.25 (2017: €3.65) be distributed for financial year
2018. This corresponds to a total dividend distribution of €3.5
billion to our shareholders (2017: €3.9 billion). 7 B.18
B.18
Dividend per share
In euros
4.00
3.50
3.00
2.50
Net operating profit
Table B.19 shows the reconciliation of the EBIT of the
divisions to net operating profit. In addition to the EBIT of
the divisions, net operating profit also includes earnings
effects for which the divisions are not accountable, such as
income taxes and other reconciliation items.
2.00
1.50
1.00
0.50
3.25
0
2015
2016
2017
2018
B.19
Reconciliation to net operating profit
2018
2017
18/17
In millions of euros
% change
Value added
As described in the Performance Measurement System section
of the Corporate Profile chapter in chart 7 B.03, the cost of
capital is the result of net assets and cost of capital expressed
as a percentage, which is subtracted from earnings in order
to calculate value added. Tables 7 B.20 and 7 B.21 show value
added and net assets for the Group and for the individual
divisions. Table 7 B.22 shows how net assets are derived from
the consolidated statement of financial position.
The Group's value added decreased by €3.3 billion to
€3.7 billion in 2018, representing a return on net assets of 14.8%
(2017: 22.5%). This was once again higher than the minimum
required rate of return of 8%. The significant decrease in value
added was mainly due to the development of the divisions'
EBIT. In addition, further negative effects resulted from the
increase in average net assets, mainly attributable to higher
investment in fixed assets and an increase in inventories.
2014
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
-993
Services was also unable to meet the forecast made in Annual
Report 2017 of earnings at the prior-year level, due to the
agreement reached to conclude the Toll Collect arbitration pro-
ceedings.
-209
218
-210
210
Other financial income/expense, net
1
-452
1,497
1,108
1,498
656
Profit/loss on equity-method investments, net
-43
-58
-1,000
-1,404
-1,043
-1,462
Other operating expense
203
193
2,056
2,137
2,259
2,330
Other operating income
-5,938
-6,581
-5,938
-1
Interest income
Interest expense
Profit before income taxes
10,880
7,938
6,600
10,617
7,582
714
-398
-4,064
-2,615
-3,350
1,965
1,380
12,002
9,215
-6,581
13,967
-5
-5
-577
-788
-582
-793
0
1
214
270
214
271
Net profit
Income taxes
10,595
2 Amortization of capitalized borrowing costs is not included in
the internal performance measure EBIT, but is a component of
cost of sales.
Research and non-capitalized development costs
-2,815
Net interest expense amounted to €0.5 billion (2017: €0.4 bil-
lion). Net expenses related to defined-benefit pension plans
improved primarily due to higher interest income resulting from
the extraordinary contribution of €3.0 billion to the pension
plan assets in 2017. Other interest expense increased mainly
because of higher refinancing costs. 7 B.17
Other financial expense/income increased from an expense
of €0.2 billion to income of €0.2 billion. This improvement is
partly the result of the gain of €0.1 billion included in the year
2018 due to the measurement at fair value of the interest in
Aston Martin. Furthermore, income in connection with deriva-
tive financial transactions also improved. 7 B.17
In 2018, our share of profit from equity-method investments
of €0.7 billion was significantly lower than the prior-year level
(2017: €1.5 billion). The decrease was on the one hand due to
the agreement reached with the German Federal Government
to conclude the Toll Collect arbitration proceedings. This agree-
ment had a negative impact on earnings of €0.4 billion in the
year 2018. Furthermore, in the year 2018, a negative impact
resulted from the impairment of €0.2 billion of the investment
in BAIC Motor (2017: positive impact from the reversal of
the impairment of €0.2 billion of the investment in BAIC Motor).
71 B.17
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
88
Other operating income of €2.3 billion is at the same level
as in previous year. In 2018, insurance compensation of
€0.2 billion is included. Income of €0.4 billion from the sale of
property, plant and equipment was included in 2017. Other
operating expense increased to €1.5 billion (2017: €1.0 billion),
mainly due to additions to other provisions. Further infor-
mation on the composition of other operating income and
expense is provided in Note 6 of the Notes to the
Consolidated Financial Statements. 7 B.17
Research and non-capitalized development costs increased
by €0.6 billion to €6.6 billion in 2018. They were mainly related
to the development of new models, advance expenditure for
the renewal of existing models, and the further development of
fuel-efficient and environmentally friendly drive systems, as
well as safety technologies, automated and autonomous driving
and the digital connectivity of our products. As a proportion
of revenue, research and non-capitalized development costs
increased from 3.6% to 3.9%. Further information on the
Group's research and development costs is provided in the
Research and Development section of the Sustainability
chapter of this Combined Management Report. 7 B.17
General administrative expenses of €4.0 billion were above
the level of the previous year (2017: €3.8 billion). The increase
was mainly due to higher expenses for consulting services and
personnel. As a percentage of revenue, general administrative
expenses increased slightly to 2.4% (2017: 2.3%). 71 B.17
Due to the growth in unit sales, selling expenses increased by
€0.1 billion to €13.1 billion. As a percentage of revenue, selling
expenses decreased slightly from 7.9% to 7.8%. 7 B.17
Overall, gross profit in relation to revenue decreased from
21.0% to 19.8%.
Cost of sales amounted to €134.3 billion in 2018, increasing
by 3.6% compared with the previous year. The rise in cost of
sales was caused by higher business volumes and consequen-
tially higher material expenses. The higher material expenses
also reflect increased prices of raw materials. At Daimler
Financial Services, the higher interest-rate level led to higher
refinancing costs. In the prior year, cost of sales included
expenses for voluntary service activities and expenses for a
specific vehicle recall of €0.4 billion. Further information
on cost of sales is provided in → Note 5 of the Notes to the
Consolidated Financial Statements. 7 B.17
The Group's total revenue increased by 2.0% to €167.4 billion
in 2018; adjusted for exchange rate effects, it increased by
4.3%. The revenue growth primarily reflects an increase in sales
for our products at Daimler Trucks, as well as increased con-
tract volume at Daimler Financial Services. Further information
on the development of revenue is provided in the Business
Development section of this Combined Management Report.
7 B.17
Statement of income
The reconciliation of Group EBIT to profit before income taxes
is shown in table 7 B.16.
The elimination of intra-group transactions resulted in
expenses of €41 million in 2018 (2017: €44 million).
Items at the corporate level resulted in expenses of €757 million
(2017: €232 million). In both years, expenses connected
with legal proceedings are included. The increase was caused
by, among other things, higher expenses in connection with
the development of the divisional structure ("Project Future").
In addition, the impairment of Daimler's equity investment
in BAIC Motor Corporation Ltd. (BAIC Motor) by €150 million
impacted earnings negatively. On the other hand, the reversal
of the impairment of Daimler's equity investment in BAIC
Motor of €240 million had a positive effect on earnings in the
year 2017.
The reconciliation of the divisions' EBIT to Group EBIT
comprises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-group transactions
between the divisions.
Due to the agreement reached to conclude the Toll Collect
arbitration proceedings, earnings were reduced by €418 million.
The increasing level of interest rates had a negative impact
on earnings. Rising cost of credit risks in individual markets
impacted earnings negatively in the still relatively stable
risk environment. Increased contract volume had a positive
impact on EBIT.
Daimler Financial Services posted EBIT of €1,384 million
in 2018, significantly lower than in the previous year
(2017: €1,970 million). The division's return on equity was
11.1% (2017: 17.7%). 71 B.15
Higher unit sales only partially offset the product-mix and
inflation-related cost increase.
The Daimler Buses division's EBIT of €265 million in 2018 was
slightly below the prior-year level (2017: €281 million). Its
return on sales decreased slightly to 5.9% (2017: 6.2%). 71 B.14
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 87
The positive development of unit sales, especially in the NAFTA
region, China and Western Europe, had a positive impact on
EBIT. However, earnings were reduced by advance expenditure
for new technologies and future products and by expenses
for the Sprinter model change. Furthermore, EBIT was reduced
by expenses in connection with ongoing governmental pro-
ceedings and measures relating to diesel vehicles, by delivery
delays and by the remeasurement of assets in connection
with production capacities.
Mercedes-Benz Vans achieved EBIT in 2018 of €312 million,
significantly below the prior-year level (2017: €1,147 million).
The division's return on sales was 2.3% (2017: 8.7%). 71 B.14
The positive development of earnings was primarily the result of
increased unit sales in the NAFTA region as well as further
efficiency enhancements. Higher expenses for exchange-rate
effects and expenses for raw materials affected EBIT nega-
tively. Additional costs, mainly resulting from supply-chain
constraints, also had a negative impact on earnings. In the pre-
vious year, EBIT was boosted by €267 million due to income
from the sale of real estate by Mitsubishi Fuso Truck and Bus
Corporation in Japan. In addition, expenses of €172 million
related to fixed-cost optimization were included in the prior
year.
The Daimler Trucks division achieved EBIT in the
year 2018
of €2,753 million, which is significantly above the prior-year
figure of €2,383 million. The division's return on sales was 7.2%
(2017: 6.7%). 7 B.14
In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall
(€425 million). On the other hand, EBIT was boosted in the prior
year by income of €183 million in connection with a new
investor in HERE.
The negative earnings development reflects expenses in con-
nection with ongoing governmental proceedings and measures
relating to diesel vehicles. In addition, EBIT was also reduced
by advance expenditure for new technologies and vehicles, as
well as by weaker pricing. Unfavorable exchange-rate effects
and higher expenses for raw materials also affected earnings
adversely. On the other hand, a positive effect resulted from
the remeasurement at fair value (€111 million) of the investment
in Aston Martin Lagonda Global Holdings plc (Aston Martin).
The Mercedes-Benz Cars division posted EBIT of €7,216 million
in 2018, which is significantly below its prior-year earnings
of €8,843 million. The division's return on sales was 7.8% (2017:
9.4%). 71 B.14
The tax expense of €3.0 billion (2017: €3.3 billion) stated under
income tax expense decreased only insignificantly despite the
reduction in profit before income taxes. The effective tax rate
for 2018 was 28.4% (2017: 24.0%). The prior year included high
income tax benefits resulting from the comprehensive tax
reform in the United States. Due to the reduction in the nation-
wide federal corporate income tax rate for US companies,
the future net tax liabilities of the US-subsidiaries of Daimler
had to be remeasured with the new tax rate, resulting in an
income tax benefit of €1.6 billion. Opposing the positive impact
from the US tax reform, tax expenses were recognized in
2017 in connection with the interpretation of tax laws. 7 B.17
Net profit for the year 2018 of €7.6 billion (2017: €10.6 billion)
was significantly below the prior-year figure. Net profit of
€0.3 billion is attributable to non-controlling interests (2017:
€0.3 billion). Net profit attributable to the shareholders of
Daimler AG amounts to €7.2 billion (2017: €10.3 billion), repre-
senting a decrease in earnings per share to €6.78 (2017:
€9.61). 7 B.17
The calculation of earnings per share is based on
an unchanged average number of outstanding shares
of 1,069.8 million.
B.17
-3,075
-3,808
-4,036
General administrative expenses
-741
-893
-12,210
-12,174
-13,067 -12,951
Selling expenses
3,544
3,563
30,984
29,504
-961
24,530
-20,986
167,362 164,154
-134,295 -129,626
33,067 34,528
Gross profit
Cost of sales4
Revenue4
Daimler Financial
Services
20173
2018
20173
2018
20173
2018
Industrial Business²
Consolidated
In millions of euros
Statement of income¹
141,093 139,624 26,269
-111,589 -108,640 -22,706
-27
-8
B.20
Value Added
343
-1,652
12,915
11,967
-12,572
-13,619
-10,701 -10,158
-10,534
-10,025
-167
-133
-417
-164
-687
-626
-431
-61
471
537
505
435
-34
102
726
790
1 Adjusted for tax effects on interest income/expense and
amortization of capitalized borrowing costs.
14
708
-1,160
-1,698
1,130
-29
129
-10,257 -11,412
-7
-67
-10,250
-11,345
-1,609 -3,304
1,208
877
210
-3,715
1,067
-2,817
-4,323
-190
596
1,380
843
1,304
842
76
1
-2,858
-3,879
1,019
-386
791
18
-1
133
15,853
-868
12,072
149
12,799
-778
-16
-90
9,515
3,054
2,557
1 The columns "Industrial business" and "Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with
financial institutions, issuers of securities, and customers in the
financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our
liquidity management and from trading in derivative financial
instruments. The management of these credit risks is mainly
based on an internal limit system that reflects the creditworthi-
ness of the respective financial institution or issuer. The credit
risk with customers of our automotive business relates to con-
tracted dealerships and general agencies, other corporate
customers and retail customers. In connection with the export
business, general agencies that according to our creditwor-
thiness analyses are not sufficiently creditworthy are generally
required to provide collateral such as first-class bank guaran-
tees. The credit risk with end-customers in the financial services
business is managed by Daimler Financial Services on the
basis of a standardized risk management process. In this pro-
cess, minimum requirements are defined for the sales-financ-
ing and leasing business and standards are set for credit pro-
cesses as well as for the identification, measurement and
management of risks. Key elements for the management of
credit risks are appropriate creditworthiness assessments,
supported by statistical risk-classification methods, as well as
structured portfolio analysis and portfolio monitoring.
14,129
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93
Further information on the management of market-price risk,
credit-default and liquidity risk is provided in
Note 33 of
the Notes to the Consolidated Financial Statements.
B.24
Free cash flow of the industrial business
In millions of euros
Cash provided by
operating activities
Cash used for
Dec. 31,
2018
Dec. 31,
2017
18/17
Change
12,915
11,967
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and joint
ventures, the risk from the cross-border financing of Group
companies in risk countries, and the risk from direct sales to
customers in those countries. Daimler has an internal rating
system that divides all countries in which it operates into risk
categories. With equity capital transactions of considerable
size in risk countries, the Group generally hedges against polit-
ical risks with the use of investment protection insurance
such as the German government's investment guarantees. Risks
from cross-border receivables are partially protected with
the use of export credit insurance, letters of credit and bank
guarantees in favor of Daimler AG. In addition, a committee
sets and restricts the level of hard-currency credits granted to
financial services companies in risk countries.
13,699
-1,000
6,233
-9,921
-9,518
-9,307
-9,425
-614
-93
17,456
16,794
8,889
8,976
8,567
7,818
-4,220
-10
-3,727
62
-4,215
-3,723
-5
-4
13,226
13,129
-20
-5,127
-473
-20
10
82
-6,233
5,127
1,723
-510
-105
-1,087
Daimler Group
56,531
51,582
+10
1 To the extent not allocated to Daimler Financial Services.
Daimler Trucks' value added was significantly higher than in
the previous year at €1.8 billion (2017: €1.4 billion). This
increase was primarily the result of the positive development
of earnings due to higher unit sales in the NAFTA region as
well as further efficiency enhancements. Higher expenses for
exchange-rate effects, higher expenses for raw materials
as well as additional costs, mainly resulting from supply-chain
constraints affected EBIT negatively. In the previous year,
EBIT included income from the sale of real estate at Mitsubishi
Fuso Truck and Bus Corporation in Japan as well as expenses
related to fixed cost optimization. Average net assets level
remains nearly unchanged.
At Mercedes-Benz Vans, value added significantly decreased
by €1.0 billion to negative €0.1 billion. Despite a growth in unit
sales, especially in the NAFTA region, in China and in Western
Europe, EBIT was negatively impacted by advance expenditure
for new technologies and future products, expenses for the
Sprinter model change, costs in connection with ongoing govern-
mental proceedings and measures taken for diesel vehicles,
expenses due to delivery delays and for the remeasurement of
assets in connection with production capacities. The increase
in average net assets due to higher investments in fixed assets
and higher inventories led to a further deterioration of value
added.
The value added of the Daimler Buses division was lower than
in the previous year at €117 million (2017: €149 million). This
primarily reflects the development of earnings. The decrease in
earnings due to the product mix and the inflation-related cost
increase was partially offset by higher unit sales. The reduction
in value added was also caused by the increase in average net
assets.
Daimler Financial Services' value added of minus €0.2 billion
was significantly under the prior-year level of plus €0.5 billion.
The division's return on equity amounted to 11.1% (2017: 17.7%).
The development of value added primarily reflects the decrease
in earnings of €0.6 billion. Earnings were significantly reduced
by the agreement reached to conclude the Toll Collect arbitra-
tion proceedings. The higher interest-rate level impacted EBIT
negatively. Rising cost of credit risks in individual markets
negatively impacted earnings in the still relatively stable risk
environment. On the other hand, increasing contract volume
had a positive impact on EBIT. The rise in average equity also
led to a further negative effect on value added.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 91
Liquidity and Capital Resources
Principles and objectives of
financial management
+3
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements
consistently for all Group entities by Treasury. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this purpose,
the Group records the cash flows from operating and financial
activities in a rolling plan. The resulting financial requirements
are covered by the use of appropriate instruments for liquidity
management (e.g. bank credit, commercial paper and notes);
liquidity surpluses are invested in the money market or the capi-
tal market taking into account risk and return expectations.
The goal is to ensure the level of liquidity regarded as necessary
at optimal costs. Besides operational liquidity, Daimler main-
tains additional liquidity reserves, which are available in the short
term. Those additional financial resources include a pool of
receivables from the financial services business which are avail-
able for securitization in the capital market, as well as a con-
tractually confirmed syndicated credit facility.
Cash management determines the Group's cash requirements
and surpluses. Via cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of Daimler in various
currencies. Most of the payments between Group companies
are made via internal clearing accounts, so that the number of
external cash flows is reduced to a minimum. Daimler has
established standardized processes and systems to manage its
bank accounts and internal cash-clearing accounts, and to
execute automated payment transactions.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the earnings of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Starting in 2019, exposure to currency risks will be determined
for each segment. The hedging strategy is specified at the
Group level and uniformly implemented in the segments. Deci-
sions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices, as
well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are legally separated from the Group's assets
and are invested primarily in funds; pension assets are not
available for general business purposes. The funds are allocated
to different asset classes such as equities, fixed-interest secu-
rities, alternative investments and real estate, depending on
the expected development of pension obligations and with the
help of a risk-return optimization. The performance of asset
management is measured by comparing with defined reference
indices. Local custodians of the pension assets are responsible
for the risk management of the individual pension assets. "The
Global Pension and Healthcare Committee" limits these risks
by means of Group-wide binding guidelines. Additional informa-
tion on pension plans and similar obligations is provided
in Note 22 of the Notes to the Consolidated Financial
Statements.
92
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.23
Condensed statement of cash flows¹
In millions of euros
Consolidated
Industrial Business²
Daimler Financial
Services
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as pro-
duction, sales and financing companies - are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. We also take care that restrictions on
capital transactions and on the transfer of capital and curren-
cies are complied with.
12,379
12,810
of Daimler Financial Services
2017
18/17
% change
In millions of euros
Net assets¹
Intangible assets
Property, plant and equipment
Leased assets
Inventories
Trade receivables
Less provisions for other risks
Less trade payables
13,872
30,859 27,914
18,509 18,071
28,096 24,492
10,545 9,742
-14,604 -14,031
-13,395 -11,632
12,742
+9
+11
+2
+15
+8
-4
-15
Less other assets
and liabilities
-31,832 -29,861
-7
Assets and liabilities
from income taxes¹
1,671
1,766
-5
Total equity
2018
+948
20173
20173
Trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash used for/provided by operating activities
Additions to property, plant and equipment and intangible assets
Investments in and disposals of shareholdings
Acquisitions and sales of marketable debt securities
and similar investments
Other
Trade receivables
Cash used for investing activities
Dividends paid
Other transactions with shareholders
Internal equity and financing transactions
Cash used for/provided by financing activities
Effect of foreign exchange rate changes on cash
and cash equivalents
Cash and cash equivalents at end of period
-3,850 -1,455
-884 -1,597
1,694 1,259
-3,738
-1,264
-112
-191
-779
Change in financing liabilities
Inventories
Change in operating assets and liabilities
68
2018
20173
Cash and cash equivalents at beginning of period
12,072 10,981
9,515
8,751
2,557
2,230
Profit before income taxes
10,595
13,967
9,215
12,002
1,380
1,965
Depreciation and amortization/impairments
6,305 5,676
6,177
5,521
128
155
Other non-cash expense and income and
gains/losses on disposals of assets
-1,050 -1,960
-1,557
-2,028
507
2018
investing activities
-3,013
-9,425
Daimler Buses
5.4
3.4
in % of revenue
-34
710
468
Mercedes-Benz Vans
2.9
2.9
in % of revenue
+7
144
1,028
Daimler Trucks
5.1
6.1
in % of revenue
+17
4,843
5,684
+12
6,744
4.1
7,534
4.5
in % of revenue
Mercedes-Benz Cars
Daimler Group
1,105
Detailed information on contingent liabilities and other
financial obligations are provided in Note 31 of the Notes
to the Consolidated Financial Statements.
94
in % of revenue
Assets and liabilities from
income taxes³
1,707
2,190
Other reconciliation³
-547
-1,435
-22
+62
Daimler Group
1 Total equity.
53,809 48,446
+11
+53
2 To the extent not allocated to the segments.
B.22
Net assets of the Daimler Group at year-end
2018
0.2
0.2
in % of revenue
+49
43
64
Daimler Financial Services
2.1
3.2
3 To the extent not allocated to Daimler Financial Services.
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet
at December 31, 2018. These financial obligations result from
non-cancelable long-term rental agreements and operating
leases, contractual commitments to acquire intangible assets,
property, plant and equipment and lease property, and irre-
vocable loan commitments.
At December 31, 2018, the best estimate for potential obliga-
tions from contingent liabilities is €0.8 billion (2017: €0.6 billion).
Contingent liabilities and other
financial obligations
-17,646
-14,351
-127,353
-105,218
-119,569
-144,999
Net debt
(nominal)
Financing liabilities
+132
-229
-97
financing liabilities
and currency hedges for
The free cash flow of the industrial business amounted to
€2.9 billion in 2018 and was significantly higher than the
prior-year figure of €2.0 billion; however, it did not exceed the
dividend payment for 2018 of €3.9 billion. The free cash
flow of the industrial business thus did not fully achieve all our
expected targets as stated in the Outlook section of Annual
Report 2017.
Market valuation
10,063
25,430
22,135
-144,902 -127,124
Financing liabilities
Liquidity
9,577
Marketable debt securities
and similar investments
+3,781
12,072
15,853
Cash and cash equivalents
18/17
Change
-9,307
Dec. 31,
2017
-486
+3,295
-17,778
The €0.9 billion increase in the free cash flow to €2.9 billion
resulted primarily from the prior-year cash outflow for the
extraordinary contribution to the pension plan assets and the
lower income taxes paid in the current year. The increased
cash inflow also resulted from the dividends distributed by
Beijing Benz Automotive Co., Ltd. Furthermore, there were
lower cash outflows for the investments in shareholdings, due
to a prior year acquisition of an interest in LSHAI.
Opposing effects were due to the general business performance
and the development of working capital, reflecting in particular
the stronger increase in inventories. At Mercedes-Benz Cars
and Mercedes-Benz Vans, this resulted from the launch of new
models and capacity expansions in the NAFTA region, among
other things. Furthermore, the temporary increase in inventories,
due to delivery delays was not fully reduced. The higher
increase in inventories at Daimler Trucks was partially due to
higher sales expectations in the NAFTA region and in Europe.
In addition, higher investments in property, plant and equipment
affected the free cash flow of the industrial business.
In 2018, the free cash flow of the Daimler Group led to
a cash outflow of €10.2 billion (2017: €11.9 billion). Besides the
effects of the free cash flow of the industrial business, the
free cash flow of the Daimler Group is mainly affected by the
leasing and sales-financing business of Daimler Financial
Services.
In millions of euros
% change
18/17
2017
2018
Investment in property, plant and equipment by division
B.28
2018
2017
2016
2015
2014
0
1
2
4
3
5
6
7
8
In billions of euros
Investment in property, plant and equipment
B.27
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2017 by €14.4 billion to €119.6 billion.
71 B.26.
Compared with December 31, 2017, the net liquidity of the
industrial business remained almost unchanged at €16.3 billion.
The dividend payment to the shareholders of Daimler AG led
to a decrease in net liquidity, which was offset by the positive
free cash flow and positive exchange-rate effects.
The net liquidity of the industrial business 7 B.25 is
calculated as the total amount as shown in the statement of
financial position of cash, cash equivalents and the market-
able debt securities and similar investments included in liquid-
ity management, less the currency-hedged nominal amounts
of financing liabilities.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 95
+13
941
To the extent that the Group's internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Equity method investments²
+3,284
Marketable debt securities
and similar investments
8,364
8,894
Liquidity
21,163
18,409
Financing liabilities
-4,771
-1,600
-530
+2,754
-3,171
9,515
Market valuation
financing liabilities
-104
-212
+108
Financing liabilities
(nominal)
Net liquidity
-4,875
-1,812
16,288
16,597
-3,063
-309
and currency hedges for
12,799
Cash and cash equivalents
18/17
Change
Change in marketable
debt securities and
similar investments
Other adjustments
1,066
+118
-505
-435
-70
-205
-102
-103
Free cash flow of the
industrial business
2,898
2,005
+893
Cash flows
Cash used for/provided by operating activities 7 B.23
resulted in a cash inflow of €0.3 billion in 2018 (2017: cash out-
flow of €1.7 billion). The positive development was primarily
due to the prior-year cash outflow of €3.0 billion resulting from
the extraordinary contribution to the German pension plan
assets. This was supplemented by positive effects from the
leasing and sales-financing business. In addition, cash used
for/provided by operating activities reflects lower income taxes
paid, as well as a higher cash inflow due to dividends distrib-
uted by Beijing Benz Automotive Co., Ltd. Opposing effects were
due to the general business performance and the development
of working capital, reflecting in particular the stronger increase
in inventories. At Mercedes-Benz Cars and Mercedes-Benz
Vans, this resulted from the launch of new models and capacity
expansions in the NAFTA region, among other things. Further-
more, the temporary increase in inventories, due to delivery
delays was not fully reduced. The higher increase in inventories
at Daimler Trucks was partially due to higher sales expecta-
tions in the NAFTA region and in Europe.
Cash used for investing activities 7 B.23 amounted to
€9.9 billion (2017: €9.5 billion). The change compared with the
prior year primarily resulted from increased investments in
property, plant and equipment. Opposing effects resulted from
lower cash outflows for the investments in shareholdings,
due to a prior year acquisition of an interest in LSH Auto Inter-
national Limited (LSHAI).
Cash provided by financing activities 7 B.23 amounted to
€13.2 billion (2017: €13.1 billion). The slight increase was
primarily caused by higher net cash inflows from financing
liabilities in the context of refinancing the leasing and sales-
financing business, as well as by making use of good conditions
in the international money and capital markets. Opposing
effects resulted from the increased dividend payment to share-
holders of Daimler AG.
Cash and cash equivalents increased by €3.8 billion compared
with December 31, 2017, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities and similar investments, increased by
€3.3 billion to €25.4 billion.
Other adjustments relate to non-cash additions to property,
plant and equipment that are allocated to the Group as their
beneficial owner due to the form of their underlying lease
contracts. Furthermore, effects from the financing of dealer-
ships and effects from internal deposits within the Group
are adjusted. In addition, the calculation of the free cash flow
includes those cash flows to be shown under cash from
financing activities in connection with the acquisition or sale
of interests in subsidiaries without loss of control.
94
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.25
Net liquidity of the industrial business
In millions of euros
Dec. 31,
2018
Dec. 31,
2017
B.26
Net debt of the Daimler Group
The parameter used by Daimler to measure the financial capa-
bility of the Group's industrial business is the free cash flow
of the industrial business 7 B.24, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable debt
securities and similar investments included in cash flows
from investing activities are deducted, as those securities are
allocated to liquidity and changes in them are thus not a part
of the free cash flow.
Dec. 31,
2018
2017
In millions of euros
18/17
% change
Mercedes-Benz Cars
26,289
23,705
+11
Daimler Trucks
8,240
8,417
-2
Mercedes-Benz Vans
3,355
2,358
+42
Daimler Buses
1,105
+12
Daimler Financial Services¹
12,466
11,165
+12
Net assets of the divisions
51,583
+10
In millions of euros
46,750
2018
Net assets (average)
1,233
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
2017
In millions of euros
18/17
% change
2018
B.21
Daimler Group
3,658
-48
Mercedes-Benz Cars
4,062
5,998
-32
1,765
1,373
7,004
Mercedes-Benz Vans
+29
Daimler Trucks
90
519
149
-21
Daimler Buses
Daimler Financial Services
864
-91
117
-236
Cash flows from financing activities resulted in a net cash
inflow of €5.5 billion (2017: outflow of €0.6 billion). The inflow is
explained by higher liabilities from the Group's internal trans-
actions in connection with central financial and liquidity manage-
ment. On the other hand, the decrease in external financing
liabilities resulted in higher cash outflows than in the previous
year. Cash flows from financing activities include the payment
of the dividend for the year 2017 in an amount of €3.9 billion.
B.34
Financial income increased by €1.4 billion to €7.3 billion. The
increase is primarily due to an increase of €4.6 billion in income
from investments in subsidiaries. On the other hand, financial
income was adversely affected by an increase of €3.2 billion in
interest expenses, primarily in connection with company
pensions. This was mainly due to significant higher interest
expenses as a result of the return on the special-purpose
assets, which was negative, unlike in the previous year, and
to expenses resulting from the proportionate transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG. In addition, the measurement of pension
obligations also contributed to higher interest expenses.
Cash flows from investing activities resulted in a net cash
outflow of €14.7 billion in 2018 (2017: €6.5 billion). The increase
is primarily a reflection of restructuring within the Group in
the area of financial assets in connection with Project Future.
Positive effects resulted from acquisitions and sales of secu-
rities within the framework of liquidity management. Investments
in intangible assets and in property, plant and equipment
were at the prior-year level.
Cash provided by operating activities amounted to €13.8 bil-
lion in the 2018 financial year (2017: €7.2 billion). The increase
resulted in particular from higher dividends from subsidiaries
and lower receivables from the supply of goods and services to
Group companies. In addition, higher cash-effective contri-
butions were made to pension plan assets in the previous year.
Condensed income statement of Daimler AG
Gross liquidity - defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits
presented under other assets - increased by €4.7 billion to
€14.3 billion on the balance sheet date. The main reason
for the increase in gross liquidity was the €4.6 billion increase
in cash and cash equivalents.
Inventories increased compared with December 31, 2017
by €1.0 billion to €10.5 billion. The increase is mainly related to
unfinished and finished products.
Non-current assets increased during the year by €12.4 billion
to €55.1 billion, reflecting the €11.9 billion increase in financial
assets, which resulted primarily from internal restructuring
within the Group as part of Project Future. Furthermore, property,
plant and equipment increased by €0.4 billion to €9.5 billion.
Investments in property, plant and equipment (excluding leased
assets, approximately €3.0 billion) mainly relate to investments
in the production of the new S-, A- and B-Class models and the
new Sprinter, as well as investments in engine and trans-
mission projects.
The balance sheet total of €117.2 billion is €9.9 billion higher
than at the end of 2017. 71 B.35
resources
Financial position, liquidity and capital
The economic situation of Daimler AG is primarily deter-
mined by its business operations and those of its subsidiaries.
Daimler AG participates in the operating results of its sub-
sidiaries through profit distributions. The economic situation of
Daimler AG is therefore fundamentally the same as that of
the Daimler Group, which is described in the chapter Overall
Assessment of the Economic Situation.
page 118
In millions of euros
The income tax expense amounts to €1.1 billion (2017:
€2.0 billion). The lower operating profit led to a lower income
tax expense. Furthermore, the prior-year figure included
high tax expenses from other periods.
Net profit amounts to €5.0 billion (2017: €5.0 billion), and
was thus in line with the expectations stated in the Outlook
section of last year's Annual Report.
Receivables, securities and other assets decreased com-
pared with December 31, 2017 by €4.7 billion to €44.8 billion.
The main reason for this development was the lower level
of €5.4 billion in receivables due from subsidiaries, primarily
resulting from sales of receivables in foreign currencies in
the amount of €4.2 billion to a Group company during the year,
and the decrease of €0.4 billion in securities. However, other
assets increased by €1.0 billion. Cash and cash equivalents
rose by €4.6 billion to €6.4 billion.
2018
-2,010
Revenue
Income taxes
5,866
Other operating expense, net amounted to €0.3 billion
(2017: €0.4 billion). Income from other periods increased, on the
other hand, expenses for legal proceedings had an impact.
7 B.34
7,318
Financial income
1,134
-1,241
Operating profit
2017
-355
Other operating expense, net
-2,304
General administrative expenses
-7,312
-7,904
112,685
-101,874
112,491
-103,232
Cost of sales (including R&D expenditure)
Selling expenses
-292
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 103
― Non-current liabilities
The aforementioned functional costs include expenses in
the amount of €0.6 billion in connection with the transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG.
107
122
103
118
65
148
255 66
282
98
282
160 255
Equity and liabilities
2017
2018
thereof liquidity
Current assets
Non-current assets
Assets
-1,055
Balance sheet structure Daimler Group
In billions of euros
Equity
87
Current liabilities
25 22
General administrative expenses of €2.3 billion were
higher than in the previous year (2017: €2.0 billion). They include
costs in connection with Project Future amounting to
€0.2 billion. As a proportion of revenue, general administrative
expenses amounted to 2.0% (2017: 1.8%).
Selling expenses increased by €0.6 billion to €7.9 billion. This
was primarily due to higher expenses for freight, marketing
and sales systems. As a proportion of revenue, selling expenses
increased from 6.5% to 7.0%.
Cost of sales rose by 1% to €103.2 billion. The increase results
primarily from higher expenses for production materials and
purchased services. This was mainly due to higher expenses for
new products and technologies, expenses related to certifi-
cation according to the new WLTP (Worldwide Harmonized Light
Vehicles Test Procedure) standard and expenses for service
measures. Research and development expenses, which are
reported under cost of sales, were higher than in the previous
year at €8.1 billion (2017: €7.6 billion); as a proportion of
revenue, they amounted to 7.2% (2017: 6.8%). Research and
development expenses primarily related to the renewal and
expansion of the product portfolio, in particular electric vehicles
and the S-Class, C-Class, SUVs and the new Sprinter. In
addition, work is continuously being carried out on new engine
generations, alternative drive systems and the intensification
of the module strategy. At the end of the year, approximately
20,500 people were employed in the area of research and
development.
At €112.5 billion, revenue remained at the prior-year level
and in line with our expectations as stated in the Outlook
section of last year's Annual Report. Revenue in the car business
decreased by 4% to €83.8 billion due to lower vehicle sales.
Along with higher unit sales, revenue in the commercial-vehicle
business increased again by 12% to €28.7 billion.
Unit sales by Daimler AG in 2018 were slightly lower than in the
prior year and thus lower than our expectation as stated in
the Outlook section of last year's Annual Report. Sales of cars
decreased by 4% to 1,791,000 units¹. Due to starts of produc-
tion, sales decreased of the GLE-Class by 18% to 137,000 units¹
and of the B-Class by 21% to 62,000 units¹. Sales of 303,000
units of the C-Class were lower than in the previous year, par-
tially for lifecycle reasons (2017: 336,000 units¹). The GLC-
Class was extremely successful in 2018, with a sales increase
of 18% to 293,000 units¹. Truck sales increased by 6% to
112,000 units¹ and van sales rose by 8% to 386,000 units¹.
The development of profitability was affected in financial
year 2018 by the increase in financial income of €1.4 billion to
€7.3 billion, as well as by the decrease in operating profit of
€2.3 billion to €-1.2 billion. 7 B.34
Profitability
The main performance indicators for Daimler AG are unit sales,
revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement,
primarily relating to intangible assets, provisions, financial
instruments, the leasing business and deferred taxes.
The vehicles are produced at the domestic plants of Daimler AG,
as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its
own sales-and-service network, which is organized in seven
regional centers for cars and seven for commercial vehicles,
through foreign sales subsidiaries and through third parties.
Daimler AG is the parent company of the Daimler Group and its
headquarters are in Stuttgart. Its principal business activities
comprise the development, production and distribution of cars,
vans and trucks in Germany and the management of the activi-
ties of the Daimler Group.
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
Condensed version according to the German Commercial Code (HGB)
Daimler AG
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
102
Further information on the assets presented in the statement
of financial position and on the Group's equity and liabilities
is provided in the Consolidated Statement of Financial Position
page 230, the Consolidated Statement of Changes in
Equity page 232 and the related notes in the Notes to the
Consolidated Financial Statements.
Other liabilities of €9.3 billion (2017: €8.0 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase was primarily the result of higher deferred taxes.
Contract and refund liabilities of €12.5 billion are higher
than a year earlier (2017: €11.2 billion). They mainly comprise
deferred revenue from service and maintenance contracts
and extended warranties as well as obligations from sales trans-
actions in the scope of IFRS 15. Higher revenues from service
and maintenance contracts and extended warranties mainly led
to the increase in contract and refund liabilities.
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
to subsidiaries of Daimler AG are not counted in unit sales.
-2,018
16,433
7,210
5,022
50,337
56,442
Liabilities
43,838
49,232
Other liabilities
13,981
13,981
6,499
Trade payables
Deferred income
Provisions
Other provisions
838
similar obligations
Provisions for pensions and
11,480
23,637
3,905
42,092
43,209
Equity
25,182
3,477
15,595
1,076
117,160
900
107,310
B.33
We are open to cooperation - worldwide. Our partners include
promising startups such as what3words and Anagog, as well
as suppliers such as Bosch, or, in selected fields, competitors
such as BMW. Some of our Chinese partners are Baidu, Alibaba
and Tsinghua University. We operate digital hubs as develop-
ment centers around the world, for example in Berlin, Seattle,
Lisbon and Tel Aviv.
Along with our internal activities, we also maintain close
contacts with external research institutions. For example, we
work together with various renowned research institutes
around the world and participate in international exchange
programs for next-generation scientists.
In September, we opened our new Test and Technology Center
in Immendingen. We have invested more than €200 million
in this new Daimler research location, which is located at a for-
mer military site and covers a total area of 520 hectares.
The center brings together our global vehicle testing activities.
Among other things, we will use the facility to develop alter-
native drive systems such as hybrid and electric vehicles of the
EQ product and technology brand, and to test future assis-
tance systems and automated driving functions.
Our international research and development network
With our global research and development network, we are pres-
ent in the key markets with direct proximity to our customers.
Our biggest facilities are in Sindelfingen and Stuttgart-Untertürk-
heim in Germany. Our most important research locations in
North America are the US R&D headquarters in Sunnyvale,
California (main facility); Long Beach, California; Portland, Ore-
gon; and Redford, Michigan. Our most important facilities in
Asia are in Bangalore, India; the Global Hybrid Center in Kawa-
saki, Japan; and our research and development center in
Beijing. Mercedes-Benz Research & Development India (MBRDI,
with headquarters in Bangalore) is Daimler's largest research
and development center outside Germany. Activities at MBRDI
focus on digitization, simulations and data science. In Novem-
ber 2018, we announced plans to build a Research and Develop-
ment Tech Center China with a total investment of approxi-
mately €145 million. This new center will further expand our
presence in what is now our biggest single market. It will
also be our second major R&D site in Beijing, following the
Mercedes-Benz R&D Center, which was established in 2014.
The new R&D Tech Center is scheduled to begin operating in
2020.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2018, Daimler employed 25,600 men and
women at its research and development units around the
world (2017: 24,600). A total of 17,700 of those employees (2017:
16,800) worked at Group Research & Mercedes-Benz Cars
Development, 5,300 (2017: 5,300) at Daimler Trucks, 1,300
(2017: 1,300) at Mercedes-Benz Vans and 1,300 (2017: 1,200)
at Daimler Buses. Around 5,800 researchers and development
engineers (2017: 5,400) worked outside Germany.
Research and development as key success factors
Research and development have always played a key role
at Daimler. Gottlieb Daimler and Carl Benz invented the auto-
mobile more than 130 years ago. Today, we are shaping the
future of mobility. Our goal is to offer our customers fascinat-
ing products and customized solutions for needs-oriented,
safe and sustainable mobility. Our technology portfolio and
our key areas of expertise are focused on this objective.
Research & development
The new Daimler Sustainability Report for financial year 2018
will be available on the Group's website in late March 2019.
daimler.com/sustainability
daimler.com/nonfinancial-report.
Additional information on “Sustainability at Daimler" can
be found in the "Non-Financial Report" section of this Annual
Report. pages 202 ff The "Non-Financial Report" is also
available on the Internet at
Sustainability is one of the basic principles of our corporate
activities as well as a benchmark for our success as a company.
This approach means that we take advantage of the oppor-
tunities offered by sustainability for our business success while
including ecological and social impacts in these consider-
ations.
Sustainability at Daimler
Sustainability and Integrity
105
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Following the approval of Project Future at the 2019 Annual
Shareholders' Meeting of Daimler AG, the car and van business
as well as the truck and bus business will be separated into
the legally independent entities Mercedes-Benz AG and Daimler
Truck AG. As a result, Daimler AG will not sell any vehicles in
the future. The remaining, significantly lower revenue will relate
to intra-Group charging for services. Mercedes-Benz AG and
Daimler Truck AG will each have a profit-and-loss-transfer agree-
ment with Daimler AG. We therefore expect net profit for
financial year 2019 to remain at the previous year's level.
Due to the interrelations between Daimler AG and its subsid-
iaries and the relative size of Daimler AG within the Group, we
refer to the statements in the Outlook chapter, which largely
reflect our expectations also for the parent company. We also
have adjusted the sensitivities for forecasting the unit sales,
revenue and net profit in accordance with the Group for Daimler
AG, effective with financial year 2019. pages 158 ff Exclud-
ing the effect of the planned separation as part of Project Future,
we expect Daimler AG to achieve net profit in 2019 at the level
of financial year 2018. We anticipate a higher operating profit
and lower financial income. In 2019, we expect Daimler AG
to achieve unit sales and revenue slightly above the prior-year
levels.
Outlook
Distributable profit
Net profit
Retained earnings
Capital reserve
Risks and opportunities
384
Dec. 31,
2018
In millions of euros
Balance sheet structure of Daimler AG
B.35
Liabilities increased by €6.1 billion to €56.4 billion. This
primarily reflects higher liabilities to subsidiaries and results in
particular from purchase-price obligations from the Group's
internal restructuring in connection with Project Future. On the
other hand, there were decreases in bonds and notes and
liabilities to banks.
Provisions for pensions and similar obligations amounted
to €0.8 billion at December 31, 2018 (2017: net defined-benefit
plan asset of €3.5 billion). The change is primarily attributable
to the transfer of pension obligations of €6.9 billion for retired
employees and their surviving dependents to Daimler Pen-
sionsfonds AG. To cover these pension obligations, special-pur-
pose assets of €8.2 billion were transferred to Daimler
Pensionsfonds AG. Additionally, the measurement of the pension
obligations and the negative return on the special-purpose
assets led to an increase in the provision.
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as that of the Daimler
Group. Daimler AG generally participates in the risks of its sub-
sidiaries and associated companies in line with the percentage
of each holding. Risks and opportunities are described in the
Risk and Opportunity Report. pages 143 ff Risks may addi-
tionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual obliga-
tions (in particular with regard to financing), as well as from
the impairment of investments in subsidiaries and associated
companies.
Provisions increased compared with December 31, 2017 by
€2.4 billion to €16.4 billion. This resulted mainly from increased
provisions for pensions and similar obligations, increased
obligations in connection with sales transactions and warran-
ties, legal proceedings and higher personnel and social
provisions.
104 B | COMBINED MANAGEMENT REPORT | DAIMLER AG
3,905
3,477
Distributable profit
-1,077
-1,545
Transfer to retained earnings
4,982
Equity increased in 2018 by €1.1 billion to €43.2 billion.
This change primarily resulted from the net profit for 2018, of
which, in accordance with Section 58 Subsection 2 of the
German Stock Corporation Act (AktG), €1.5 billion was trans-
ferred to retained earnings. The equity ratio at December 31,
2018 was 36.9% (December 31, 2017: 39.2%). As stated in the
notes to the annual financial statements according to the
German Commercial Code (HGB), Daimler AG holds no treasury
shares at December 31, 2018.
Assets
Non-current assets
Inventories
(Conditional capital €500 million)
3,070
3,070
Share capital
Equity and liabilities
3,462
107,310
117,160
Net defined-benefit plan asset
406
Prepaid expenses
1,782
60,764
61,662
Current assets
6,354
Cash and cash equivalents
42,700
9,466
49,516
44,784
Receivables, securities and other assets
55,092
10,524
11,480
Other financial liabilities of €10.0 billion (2017: €9.3 billion)
mainly consist of liabilities from residual-value guarantees,
liabilities from wages and salaries, deposits received and accrued
interest on financing liabilities. The increase was primarily
caused by higher negative fair values of derivative financial
instruments and by the liability caused by the Toll Collect
settlement.
Dec. 31,
2017
Financing liabilities of €144.9 billion were significantly above
the prior-year level (2017: €127.1 billion). The increase of
€17.5 billion adjusted for exchange-rate effects was primarily due
to the refinancing of the growing leasing and sales-financing
business and the utilization of favorable interest terms for refi-
nancing. 53% of the financing liabilities were accounted for
by bonds, 27% by liabilities to financial institutions, 8% by depos-
its in the direct banking business and 9% by liabilities from
ABS transactions.
S&P
Moody's
Fitch
Scope
DBRS
End of 2018 End of 2017
A
A
Long-term credit rating
A2
A-
A-
A
A
A
A
Short-term credit rating
S&P
A2
Credit ratings
B.31
The short-term ratings of Daimler AG and its financing compa-
nies were unchanged with all five rating agencies in 2018.
€1,500 million
Aug/2018
Aug/2021
Daimler International
Finance B.V.
€1,000 million
Aug/2018 Apr/2024
Daimler International
Finance B.V.
Daimler Finance
North America LLC
US$500 million
Aug/2018 Feb/2027
US$1,750 million
Nov/2018 Nov/2021
98 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Credit ratings
In financial year 2018, the credit ratings of Daimler AG remained
unchanged with all the agencies we have engaged to provide
ratings. At the end of 2018, therefore, the outlook for Daimler AG
was assessed as "stable" by the five agencies listed below.
7 B.31
Moody's Investors Service (Moody's) affirmed its A2 long-term
rating for Daimler AG and its rated subsidiaries on February 9,
2018. Moody's pointed out that Daimler's credit metrics place
the Group solidly in the A2 rating category. The stable outlook
reflects Moody's expectation that Daimler's business setup has
the capacity to successfully meet the upcoming challenges in
the automobile markets.
On June 14, 2018, the European agency Scope Ratings (Scope)
affirmed its issuer rating of A on Daimler AG and its financing
subsidiaries. Scope emphasized our company's track record in
recent years and expects that Daimler will continue to main-
tain the strong market positions held by Mercedes-Benz Cars
and Daimler Trucks. Furthermore, Scope assesses Daimler's
financial risk profile as very strong.
On May 23, 2018, Fitch Ratings (Fitch) once again affirmed
its long-term issuer default rating for Daimler AG of A- with
a stable outlook. Fitch stated that the rating reflects Daimler's
strong business profile and robust credit metrics. In addition,
Fitch pointed out the wide geographical and product diversifica-
tion of Daimler.
On December 19, 2018, S&P Global Ratings (S&P) also
affirmed its long-term corporate rating of A for Daimler AG and
underscored its leading position among the premium auto-
mobile and truck manufacturers. S&P assumes that Daimler will
be able to maintain its competitive position. In addition, S&P
anticipates the continuation of very good financial metrics. The
business risk of Daimler AG is assessed as "satisfactory" and
the financial risk as "minimal".
The Canadian agency DBRS confirmed its issuer rating and
senior debt rating of Daimler AG at A with stable trends in
a press release on November 29, 2018. The confirmation of
the ratings from the previous year was based on a solid
business risk assessment with commensurate financial risk.
A-1
Daimler International
Finance B.V.
A-1
P-1
Cash and cash equivalents increased compared with the end
of 2017 by €3.8 billion to €15.9 billion.
Marketable debt securities and similar investments
decreased compared with December 31, 2017 from €10.1 billion
to €9.6 billion. Those assets include the debt instruments
that are allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or better.
Other financial assets decreased by €1.1 billion to €5.7 billion.
They primarily consist of derivative financial instruments,
equity and debt instruments, investments in non-consolidated
subsidiaries, and loans and other receivables due from third
parties. The decrease is primarily attributable to lower positive
fair values of currency derivatives.
Other assets of €11.0 billion (2017: €9.1 billion) primarily com-
prise deferred tax assets and tax refund claims. The increase
in deferred tax assets is due among other things to effects from
the remeasurement of derivative financial instruments not
recognized in profit or loss.
Assets held for sale of €0.5 billion and liabilities held for sale
of €0.2 billion result from an agreement signed between
the Daimler Group and the BMW Group in March 2018 to merge
their business units for mobility services.
See
Note 3 of the Notes to the Consolidated Financial
Statements for further information.
B.32
100 B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Condensed statement of financial position'
Consolidated
Industrial Business²
Daimler Financial
Services
At December 31,
At December 31,
2018
20173
2018
In millions of euros
Trade receivables of €12.6 billion are above the prior-year
level of €12.0 billion. The Mercedes-Benz Cars division
accounts for 45% of these receivables (2017: 43%) and the
Daimler Trucks division accounts for 25% (2017: 24%).
Inventories increased from €25.7 billion to €29.5 billion,
equivalent to 10% of total assets, and were thus at the prior-year
level. The increase applies to all automotive divisions and
relates primarily to finished goods and work in process. At
Mercedes-Benz Cars and Mercedes-Benz Vans, higher
inventories were in particular due to the launch of new models
and increased production capacity in the NAFTA region.
The increase during the year caused by delivery delays was not
fully reduced in the last quarter. In addition, inventories
increased at Daimler Trucks due among other things to the
expected positive sales development in the NAFTA region
and in Europe.
See Note 13 of the Notes to the Consolidated Financial
Statements for further information.
P-1
Fitch
F2
F2
Scope
S-1
S-1
DBRS
R-1 (low)
R-1 (low)
Financial Position
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 99
The balance sheet total increased compared with December
31, 2017 from €255.3 billion to €281.6 billion; adjusted for
the effects of currency translation, the increase amounts to
€25.4 billion. Daimler Financial Services accounts for
€165.3 billion of the balance sheet total (2017: €150.0 billion),
equivalent to 59% of the Daimler Group's total assets
(2017: 59%).
The increase in total assets is primarily due to the increased
volume of the financial services business, higher inventories,
and cash and cash equivalents. In addition, the higher volume
of capital expenditure led to an increase in intangible assets
and property, plant and equipment. On the liabilities side, the
increased refinancing requirement resulting from the port-
folio growth led to increased financing liabilities. Furthermore,
there was an increase in provisions and in trade liabilities.
Current assets accounted for 43% of the balance sheet total,
which was above the prior-year level (2017: 42%). Current
liabilities amounted to 35% of total equity and liabilities, which
was slightly above the prior-year level (2017: 34%).
Intangible assets of €14.8 billion (2017: €13.7 billion) include
€11.3 billion of capitalized development costs (2017: €10.3 bil-
lion), €2.0 billion of franchises, industrial property and similar
rights (2017: €2.0 billion) and €1.1 billion of goodwill (2017:
€1.1 billion). The Mercedes-Benz Car division accounts for 81%
(2017: 79%) and Daimler Trucks accounts for 8% (2017: 10%)
of development costs. Capitalized development costs amount
to €2.5 billion in 2018 (2017: €2.8 billion) and account for
28% of the Group's total research and development expenditure
(2017: 32%).
page 262
Property, plant and equipment page 263 increased
to €30.9 billion (2017: €28.0 billion). In 2018, €7.5 billion was
invested worldwide (2017: €6.7 billion), in particular at our
production and assembly sites for new products and technolo-
gies and for the expansion and modernization of production
facilities. The sites in Germany accounted for €4.4 billion of the
capital expenditure (2017: €4.0 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €146.2 billion (2017:
€133.1 billion). The increase adjusted for exchange-rate effects
of €12.3 billion was primarily caused by the higher level of new
business at Daimler Financial Services. The growth in business
operations with customers reflects the successful course
of business, especially in the NAFTA region, Asia and Western
Europe. The leasing and sales-financing business as a pro-
portion of total assets was at the prior-year level of 52%.
Equity-method investments of €4.9 billion (2017: €4.8 billion)
mainly comprise the carrying amounts of our equity interests
in Beijing Benz Automotive Co., Ltd., BAIC Motor Corporation
Ltd. and There Holding B.V.
Moody's
20173
Nov/2025
€1,250 million
B.29
Refinancing instruments
Notes/bonds and
liabilities from
ABS transactions
Average interest rates
Dec. 31,
2018
Dec. 31,
2017
Dec. 31,
2018
Carrying values
Dec. 31,
2017
Detailed information on the amounts and terms of financing
liabilities is provided in Note 24 and 33 of the Notes to
the Consolidated Financial Statements. ①Note 33 also pro-
vides information on the maturities of the other financial
liabilities.
in %
2.24
1.88
88,942
78,110
Commercial paper
Liabilities to
financial
institutions
1.13
2.64
2,835
In millions of euros
At December 31, 2018, the total of financial liabilities shown
in the consolidated statement of financial position amounted to
€144.9 billion (2017: €127.1 billion).
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.29.
At December 31, 2018, they are mainly denominated in
the following currencies: 42% in euros, 25% in US dollars, 9%
in Chinese renminbi, 4% in British pounds, 3% in Canadian
dollars and 3% in Japanese yen.
At the end of 2018, Daimler had unutilized short- and long-term
credit lines totaling €26.8 billion (2017: €21.0 billion). They
include the credit facility arranged in July 2018 with a volume
of €11 billion.
96
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Investment
In the context of our strategy of strengthening our core business
and with the transformation of the automotive industry, we
aim to make good use of the opportunities presented by the
global automotive markets. In this context, we always focus
on the dynamically changing wishes of our customers. We
therefore intend to play a major role in shaping the fundamental
technological change taking place in the automotive industry,
and to assume a leading role with the development of the future
areas of CASE (Connected, Autonomous, Shared & Services
and Electric). This requires substantial investment in innovative
products and new technologies, as well as in the expansion of
our worldwide production network. In 2018, we therefore once
again significantly increased our investment in property, plant
and equipment - as already announced in Annual Report 2017 -
from an already high level to €7.5 billion (2017: €6.7 billion).
At December 31, 2018, financial obligations of €4.3 billion
exist in connection with future investments in property, plant
and equipment.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €5.7 billion in 2018 was significantly above the
prior-year level (2017: €4.8 billion), primarily due to the ongoing
product offensive. The most important projects included the
successor generation of the current C-Class and the product
ramp-up of the new GLE sports utility vehicle. We also made
substantial investments in the reorganization of our German
production facilities as competence centers, in the expansion
of our international production network, and in the worldwide
production network for electric mobility. The main areas of
investment at Daimler Trucks in 2018 were successor genera-
tions for existing products, new products, global component
projects and the optimization of the worldwide production net-
work. Total investment in property, plant and equipment at
Daimler Trucks amounted to €1.1 billion (2017: €1.0 billion). At
the Mercedes-Benz Vans division, the focus of investment
was on production of the next-generation Sprinter in Germany
and the United States. The main investments at Daimler
Buses last year were in alternative drive systems, new products
and the modernization of the production network.
In addition to property, plant and equipment, we also invested
in associated companies and joint ventures in the reporting
period. Through targeted investments, we strengthened our
position especially in the area of mobility services and in the
development of a charging infrastructure for electric mobility.
Furthermore, we capitalized development costs of €2.5 billion
in 2018 (2017: €2.8 billion); this is presented under intangible
assets.
page 262
Refinancing
The funds raised by Daimler in the year 2018 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank, and the securitization of receivables
from customers in the financial services business (asset backed
securities).
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €60 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The monetary policy of the central banks also affected the
situation in the bond markets significantly in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit
ratings largely remained moderate.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark emissions (bonds with high nominal volumes) in
the US dollar and euro markets. 7 B.30
In the Chinese market, Daimler placed seven so-called panda
bonds with a total volume of CNY 16.0 billion. In addition, a
large number of smaller bonds were issued in various currencies
and markets.
Daimler also issued small volumes of commercial paper in
2018.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 97
In 2018, asset-backed securities (ABS) were issued in the
United States, Canada, Germany, the United Kingdom and
China. In the United States, a total refinancing volume of USD
7.6 billion was generated in six transactions, and in Canada,
a volume of CAD 1.0 billion in two transactions. In addition,
Mercedes-Benz Bank sold an ABS bond worth €0.75 billion to
European investors via the Silver Arrow platform. In the
United Kingdom, GBP 0.4 billion was successfully placed with
investors. In China, two ABS transactions with a volume of
CNY 16.0 billion were successfully placed.
Bank credit was another important source of refinancing in
2018. Loans were provided by globally active banks as well
as by nationally operating banks. The lenders also included
supranational banks such as the European Investment Bank
and the Brazilian Development Bank.
In July 2018, Daimler successfully concluded negotiations
with a consortium of international banks for a new syndicated
credit facility with a volume raised from €9 billion to €11 billion.
With a term of five years, it grants Daimler additional financial
flexibility until 2023. The term can be extended to 2025.
Daimler does not intend to utilize the credit line.
1,045
May 2018
Deposits in the
direct banking
business
3.73
€500 million
Apr/2018 Apr/2020
€1,000 million
May 2018
May 2020
US$1,700 million
May 2018
May 2021
Feb/2018 Feb/2028
US$1,000 million
May 2023
US$300 million
May 2018
Feb/2028
€1,000 million
May 2018
May 2022
Daimler International
Finance B.V.
May 2018
Feb/2018 Feb/2023
US$675 million
Feb/2018 Feb/2021
3.09
39,400
34,555
0.58
0.42
11,774
11,460
Benchmark issuances
Issuer
Volume
Month of
emission
Maturity
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
US$625 million
Daimler International
Finance B.V.
€750 million
Jan/2018 Jan/2023
US$1,700 million
B.30
Trade payables increased to €14.2 billion due to the higher
volume of business (2017: €12.5 billion). The Mercedes-Benz
Cars division accounts for 60% (2017: 63%) of those payables
and the Daimler Trucks division accounts for 24% (2017: 20%).
212
1,169
8,364
10,063
9,577
Marketable debt securities and similar investments
2,557
3,054
9,515
12,799
8,894
12,072
Cash and cash equivalents
2,253
2,041
9,742
10,545
11,995
12,586
Trade receivables
15,853
1,194
1,213
8,855
18,452
-10,661
-12,719
1,376
989
720
1
2
990
6,806
9,061
thereof current
Other assets
Other financial assets
722
thereof non-current
180
493
8,893
8,362
9,073
5,733
17,467
1,393
28,096
49,476
Equipment on operating leases
89
27,914
30,859
27,981
30,948
Property, plant and equipment
47,074
946
12,789
13,913
13,735
14,801
Intangible assets
Assets
At December 31,
20173
2018
888
24,492
18,509
30,967
25,686
29,489
Inventories
148
209
4,670
4,651
4,818
18,071
4,860
86,163
96,830
-109
-90
86,054
96,740
Receivables from financial services
67
29,003
Equity-method investments
39
11,025
531
12,146
11,208
12,519
819
3,900
4,144
5,375
5,888
9,275
10,862
10,032
Assets held for sale
13,395
12,451
14,185
57,343
62,898
21,035
25,764
790
9,310
7,992
3,591
Provisions increased from €22.1 billion to €24.4 billion;
as a proportion of the balance sheet total, they were at the prior-
year level at 9%. They primarily comprise provisions for pen-
sions and similar obligations of €7.4 billion (2017: €5.8 billion),
which mainly consists of the difference between the present
value of defined benefit pension obligations of €31.7 billion
(2017: €31.7 billion) and the fair value of the pension-plan assets
applied to finance those obligations of €25.5 billion (2017:
€27.2 billion). Provisions also relate to liabilities from income
taxes of €1.5 billion (2017: €1.6 billion), from product warran-
ties of €7.0 billion (2017: €6.7 billion) and for personnel and
social costs of €4.3 billion (2017: €4.4 billion), as well as other
provisions of €4.3 billion (2017: €3.6 billion).
Equity increased by 1% and thus by a significantly lower pro-
portion than the increase in the balance sheet total of 10%.
Due to the effects described above, the Group's equity ratio
of 22.2% was below the level at the end of 2017 (24.0%);
the equity ratio for the industrial business was 42.8% (2017:
46.4%). It is necessary to consider the fact that the equity
ratios at the end of 2017 and 2018 are adjusted for the paid
and proposed dividend payments.
The Group's equity increased compared with December 31,
2017 from €65.2 billion to €66.1 billion; adjusted for the effects
of currency translation, the increase amounts to €0.7 billion.
The increase in equity was mainly due to net profit of €7.6 billion
page 88 and the effects of currency translation of
€0.2 billion. The increase was partially offset by the dividend of
€3.9 billion paid out to Daimler's shareholders, the effect of
remeasurement of derivative financial instruments not recog-
nized in profit or loss of €1.3 billion, and actuarial losses from
defined benefit pension plans recognized in retained earnings
of €1.5 billion. Equity attributable to the shareholders of
Daimler AG increased to €64.7 billion (2017: €63.9 billion).
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 101
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to prior-year
figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
1 The columns "Industrial Business" and "Daimler Financial Services" represent a business point of view.
149,989
165,316
105,356
116,303
255,345
281,619
212
Total equity and liabilities
Liabilities held for sale
5,995
346
373
5,719
1,997
78,378
88,662
11,632
Contract and refund liabilities
22,136
24,406
Provisions
52,780
53,243
65,159
66,053
Equity
23,269
Other liabilities
165,316
105,356
116,303
255,345
281,619
Total assets
9,022
9,649
531
149,989
21,110
Equity and liabilities
-19,435
68,181
77,233
Other financial liabilities
-20,993
48,746
56,240
12,810
1,137
thereof current
125,524
140,131
1,600
4,771
127,124
144,902
Financing liabilities
1,026
12,379
thereof non-current
Trade payables
The goals associated with our social commitment
Daimler operates all over the world. Achieving business success
while simultaneously shaping progress and contributing to
the improvement of the way we live together in society - for
us these goals go hand in hand and are of fundamental
importance. With this in mind, the activities related to our social
commitment are designed to achieve a sustained and visible
positive effect that promotes the common good.
DaimlerWeCare
In 2018, we spent approximately €66 million on donations
to non-profit institutions and the sponsorship of socially bene-
ficial projects. This does not include our foundations or
self-initiated projects.
"With our employees," "For our locations," "Worldwide" -
these three pillars form the foundation of our social commit-
ment. We encourage our employees to get involved in socially
beneficial projects and help improve the social environment in
the communities where we operate. We also aim to strengthen
communities, promote education, science, the arts and
culture, and nature conservation, and to support initiatives
such as Mobile Kids that improve road safety. 7 B.40
10,613
ProCent is a good example of how our employees take the
initiative when it comes to social commitment. In this program,
Daimler employees voluntarily donate the cent amounts of
their net salaries, and Daimler matches every cent donated. The
total amount then goes into a support fund for socially
beneficial projects, which can be nominated by the employees.
In 2018, approximately 230 projects were approved in a
volume of more than €2 million. Within the framework of this
initiative, sanitary facilities were renovated and the construc-
tion of a new biogas plant was financed at the Shangri-La Inter-
national School near Kathmandu, Nepal, for example.
"Social Days," the "Day of Caring" and other hands-on cam-
paigns such as "Give a Smile" give our employees the opportu-
nity to participate in socially beneficial projects. During the
year under review, almost 1,300 employees in 43 different proj-
ects participated in the "Social Days." Employees from our
IT department participated in a socially beneficial project at an
organic farm in the German state of Rhineland-Palatinate in
September 2018. Together with the "Lebenshilfe Bad Dürkheim
e.V." charitable organization, these staff members helped
refurbish the farm's facilities in order to safeguard the jobs the
farm offers to people with disabilities. All of these activities
are for a good cause, and they also strengthen the motivation
of our employees as well as social cohesion within the
Social responsibility
company.
With our employees
Further information on employee matters can be found in the
Non-Financial Report on pages 210 ff of this Annual Report.
+6
We provide our staff with training and continuing education
opportunities throughout their entire careers in order to
safeguard the long-term innovative capability and outstanding
performance of our workforce. Our range of qualification
measures includes practical training courses, e-learning courses,
seminars, workshops, specialist conferences and financial
support for employees who participate in a course of study
while continuing to work.
Employee qualification
Daimler takes a holistic approach to securing young talent. This
begins with programs for children and teenagers (in our
Genius initiative, for example) and extends to a broad range of
activities such as social media campaigns, hackathons, com-
petitions and internships that offer young talents the possibility
to get in touch and interact with the company. After university
students graduate, we offer them attractive possibilities to join
our company directly or launch their careers at Daimler by
taking part in our global training programs.
Securing young talent
Further details are provided in the "Declaration on Corporate
Governance, Corporate Governance Report" section on
pages 191ff of this Annual Report.
In order to fulfill the requirements of legislation regarding
the equal participation of women and men in management
positions, the Board of Management has set targets for the
proportion of women at the two management levels below the
Board of Management and a deadline for achieving those
targets. In setting all targets, we have taken industry-specific
circumstances into consideration.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
114
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 115
Health management and occupational safety
Healthy and motivated employees are important for our
competitiveness. We therefore promote the health and safety
of our employees through numerous programs that focus
on adequate protection measures, ergonomics, the provision
of medical care, nutritional advice, individual exercise courses
and much more. Our Health & Safety unit defines, coordinates
and monitors measures that promote and ensure occupational
health and safety at the company.
For our locations
In billions of euros
Worldwide
11,244
106
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Further information on social matters can be found in the
Non-Financial Report of this Annual Report. pages 215 ff
More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
abroad.
The Daimler Fund in the Donors' Association focuses on
structural problems related to research and teaching, as well as
on the engineering sciences and international and scientific
cooperation. Since 1993, it has helped establish 27 endowed
professorships/assistant professorships in Germany and
1%
6%
Science & Technology &
Environment
Political dialogue
We conduct a wide variety of projects that not only support
social development at our locations but also specifically
improve the quality of life there. Among those that benefited
from our activities in 2018 were the various charitable organi-
zations in Stuttgart to which we donated 45 smart EQ vehicles
within the framework of the project "Im E-insatz für meine
Stadt" ("E-mobility for my city") that we launched together with
the Stuttgart Civic Foundation. The vehicle donation was
intended to support civic engagement and locally emission-free
mobility for volunteer workers.
12%
6%
Arts & Culture
75%
Charity & Community
Donations and sponsoring in 2018
B.40
The Daimler and Benz Foundation supports interdisciplinary
scientific dialog and research projects. The purpose of
the foundation is to examine and clarify the interrelationships
between humans, the environment and technology. The
foundation offers scholarships to outstanding young scientists,
and it also designs and implements innovative research
formats and organizes lecture series.
Our foundations support projects around the world related to
science, research, technology, education and sports. The
Laureus Sport for Good Foundation uses sports to bring people
together. It primarily enables socially disadvantaged children
and teenagers to discover their potential through sports, and
thus creates opportunities for a better future. There are now
over 150 Laureus projects under way in more than 40 countries.
These projects have helped more than two million children
worldwide. One example is the Boxgirls Kenya project, in which
young socially disadvantaged girls from poor Nairobi neighbor-
hoods are taught martial arts in order to help them overcome
trauma and strengthen their self-confidence.
Funding through foundations
We initiate aid projects worldwide to help people determine the
course of their lives independently, on their own responsibility
and without material deprivation, and in this manner create a
better future for the generations to come. The "Water for Life"
cooperation project with Caritas International is an example
of an international charitable undertaking that extends across
three continents. The project is being carried out in semi-
desert regions in India, Brazil and Mozambique and supports
the sustainable utilization of existing water resources in order
to improve the living conditions of local populations. During
2018, we focused in particular on analyzing the results of the
project in Brazil and assessing the effectiveness of our fund-
ing activities there. Our project in Brazil helped families and
cooperatives adapt to difficult climatic conditions, test new
farming approaches and develop new marketing channels. On
the basis of our analyses, it is clear that the project is begin-
ning to bear fruit.
Education
Group functions and services
+8
13,012
Shared & Services: ideas for new mobility
The next phase will take place in the city of San Jose, Califor-
nia, where Bosch and Daimler are creating a system for fully
automated autonomous driving (SAE Levels 4/5) and setting the
stage for other important developments. In the second half
of 2019, Bosch and Daimler plan to begin offering customers
a ride-hailing service with fully automated Mercedes-Benz
S-Class vehicles on selected routes. Daimler Financial Services
AG will operate and manage the test fleet and the app-based
mobility service.
Autonomous: From Stop-and-Go Assist to driverless cars
Connectivity also plays a key role in the development of auto-
mated driving functions. Today's driving assistance systems
already use live traffic information and data obtained from car2x
communication systems. Our goals here extend far beyond
such applications, however. The 2017/2018 Mercedes-Benz
Intelligent World Drive demonstrated that learning-enabled
systems play a key role in the development of autonomous driv-
ing applications for real road traffic, in line with the given
conditions in a country. In the Mercedes-Benz Intelligent World
Drive, a test vehicle based on the current S-Class completed
a demanding study trip on five continents in order to "learn"
from automated test drives in real traffic conditions. Whether
it was crosswalks on Chinese highways, making right turns from
the left-hand lane in Melbourne, Australia, or pedestrian traffic
on different types of roads in South Africa - on every continent
the S-Class faced challenges that will have an influence on
the way future automated and autonomous vehicles operate.
The digital services from Mercedes me have long since begun
evolving into intelligent, personal and mobile assistants of
Mercedes-Benz drivers, and this fact is confirmed by the very
high customer activation rates for Mercedes me services.
With regard to the key field of Connected, MBUX - Mercedes-
Benz User Experience - has been available for our customers
since the launch of the new A-Class. Thanks to artificial intelli-
gence, the all-new infotainment system has the ability to
learn; it can also be personalized and adjusts itself to users'
habits and preferences. It thus creates an emotive and
intuitive link between the vehicle and its driver. Its voice control
system with natural speech recognition can now be operated
in a more intuitive manner. The GLE will be the first model to
feature the Interior Assistant, which can recognize individual
hand and arm movements of the driver and the front passenger
and support their personal operating intentions and preferences.
Connected: MBUX - Mercedes-Benz User Experience sets
standards
New mobility is taking shape and is becoming a reality
The automotive industry is undergoing a profound transforma-
tion. As the inventor of the automobile and a provider of per-
sonal mobility solutions ranging from smart vehicles and the
broad range of Mercedes-Benz cars to vans, buses and trucks,
we seek to shape and lead this far-reaching transformation.
Our CASE corporate strategy focuses on the key fields decisive
for the future of mobility - connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use and
services (Shared & Services) and electric drive systems
(Electric). The combination of these four fields offers possibilities
for developing entirely new products and services for custom-
ers and making mobility as intuitive as possible. An autonomously
driving taxi that can be ordered using a smartphone offers a
good example of what we can expect to see here in the future.
In the meantime, our electric mobility offensive in the field
of cars is being consolidated under our new EQ technology and
product brand, which represents an important component
on the road to emission-free driving and an effective instrument
for achieving ever more ambitious global CO2 reduction
targets.
Innovation, safety and environmental protection
107
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
The most important development projects at Mercedes-Benz
Cars focused on the successor models of the current S-Class
and C-Class, as well as on the EQ electric brand. We are also
investing in low-emission combustion engines, vehicle connec-
tivity, automated and autonomous driving, and the development
of new innovative safety technologies. Mercedes-Benz Cars
spent a total of €7.0 billion on research and development in the
year under review (2017: €6.6 billion). Daimler Trucks invested
€1.3 billion in research and development projects, as in the
previous year. The division's most important projects were in
the areas of emission standards and fuel efficiency, as well
as customized products and technologies for important growth
markets. Forward-looking technologies for electric mobility,
connectivity, and automated and autonomous driving are also
becoming more important. R & D expenditure at Mercedes-
Benz Vans focused mainly on the new Sprinter generation and
the further development of the Vito and the V-Class. In addi-
tion, Mercedes-Benz Vans continued to forge ahead with the
electrification of its commercial model series. Daimler Buses
primarily focused its development activities on new products,
the fulfillment of future emissions standards and measures
to further reduce fuel consumption. Alternative drive systems,
in particular electrification technology and other forward-look-
ing projects related to automation functions and autonomous
driving also played a key role during the year under review.
7 B.36 71 B.37
The pilot project for fully automated driving in San Jose will
also demonstrate how mobility services from Daimler that
are already established, such as car sharing (car2go), ride
hailing (mytaxi) and multimodal platforms (moovel), can be
intelligently linked and used to shape the future of mobility.
We want to continue helping shape mobility through our pio-
neering innovations in the coming years while moving ahead
with digitization throughout the entire Group. As announced in
our Annual Report 2017, we therefore slightly increased our
very high level of investment in research and development to
€9.1 billion in 2018 (2017: €8.7 billion). Of that amount, €2.5
billion (2017: €2.8 billion) was capitalized as development costs,
which represents a capitalization rate of 28% (2017: 32%).
The amortization of capitalized research and development expen-
diture totaled €1.5 billion during the year under review (2017:
€1.3 billion). With a rate of 5.4% (2017: 5.3%), research and
development expenditure also remained at a high level in com-
parison with revenue. Research in the year under review
focused on new vehicle models, extremely fuel-efficient and
environmentally friendly drive systems, new safety tech-
nologies, automated and autonomous driving and the digital
connectivity of our products.
In today's fast-paced digital world, it is no longer enough
simply to develop good ideas. For this reason, within the frame-
work of our "Project Future," we have taken the opportunity
to consolidate under one roof all topics and tasks relating to our
patents, our strong brands, our copyrights and the licenses
we issue to contract manufacturers. The result is the establish-
ment of the Daimler Brand & IP Management GmbH & Co. KG
subsidiary. This organizational unit will focus exclusively in the
future on the management, utilization, protection and asser-
tion of all intellectual and other property rights at the Daimler
Group.
term, the unique visual aspects of our products are protected
with over 7,500 designs registered in 2018 (2017: 7,800).
Our portfolio of nearly 36,300 trademark rights worldwide
(2017: 35,800) also serves to protect the Mercedes-Benz
brand, our new EQ brand for electric mobility, and all our other
brands in each relevant market.
Without the protection and management of its patents, brands
and designs, Daimler could never have become as successful as
it is today. That is why we seek to effectively protect and
manage the Group's intellectual property and the innovations
that inspire our customers around the globe. In this manner,
we also intend to ensure the successful continuation of our tra-
dition that goes back more than 130 years. We upheld this
tradition in 2018 by registering almost 1,900 new ideas for pat-
ents, with an increasing focus on the CASE technologies.
In addition to industrial property rights, which are intended to
safeguard our innovations for future mobility over the long
New strategy for brands and patents: everything under
one roof
In order to achieve our ambitious goals, we also cooperate very
closely with research and development units from the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly
bring new technologies to market maturity. Such cooperation is
all the more important in light of the increasing digitization
of processes throughout all stages of the value chain. Strong
partners from the supplier industry are also essential for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we aim
to ensure that the Group retains the key technological expertise
it needs in order to maintain the uniqueness of our brands
and to safeguard the future of the automobile in general.
Targeted involvement of the supplier industry
thereof capitalized
+3
+37
30
41
194
€9.1 billion for research and development
199
Those who wish to share their private vehicle with friends or
colleagues can use the ready-to-share app function for smart
cars and the Mercedes me car-sharing app for Mercedes-Benz
cars. Both apps offer holistic solutions that make it possible
for customers to allow access to the vehicle for a predefined
group of users. Friends, family members or colleagues can
then easily book and borrow the vehicle for a specific period.
Services related to electric mobility are starting to play a
special role. With Mercedes me, EQ offers extensive services
for electric mobility today and in the future. Auxiliary climate
control is one of the most important new services and features
available in the EQ models from Mercedes-Benz. It ensures
that the vehicle interior is already at the desired temperature
upon departure. The system can be programmed directly via
MBUX or via the Mercedes me app.
Good visibility means greater safety. MULTIBEAM LED head-
lights with Adaptive Highbeam Assist Plus are now available
throughout our entire product range. This assistance system can
control the LEDs in the headlamps individually and thus con-
tinuously adapt the range and shape of the light cone to the
given traffic situation. We are also currently testing the next
technological lighting leap in a small batch of Mercedes-
Maybach models being driven by customers: DIGITAL LIGHT.
This software-controlled light has high precision thanks to
its resolution of more than two million pixels, and is leading the
way in driver assistance, performance and communication.
and also help create an emergency lane for rescue crews in the
event of an accident.
Starting with the new A-Class, which was launched in May
2018, our compact-class cars can be equipped with assistance
systems that provide cooperative support to the driver.
Such systems, which were previously only available in S-Class
vehicles, also include features that enable partially automated
driving. The high level of active safety achieved by our engineers,
which prevents accidents while simultaneously enhancing
comfort for drivers, is also demonstrated in the new GLE -
several Intelligent Drive functions in its Driving Assistance
Package are also leading the way beyond the SUV segment. For
example, the Stop-and-Go Assist system in the new GLE can
detect traffic jams early on, actively support the driver in stop-
and-go traffic up to a speed of approximately 60 km/h,
Vehicle safety is one of our core areas of expertise and a
key component of our product strategy. Our vision of accident-
free driving will continue to motivate us to make mobility as
safe as possible for everyone in the future.
Our "vision of accident-free driving"
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 109
2 Information on electricity consumption and CO2 emissions is provisional
and has been determined by an external technical service and is non-bind-
ing. Range figures are also provisional and non-binding. EU type approval
and a certificate of conformity with official figures are not yet available.
The figures given above may deviate from the official figures.
1 Information on fuel consumption, electricity consumption and CO₂
emissions is provisional and has been determined by an external technical
service for the certification procedure in accordance with the provisions
of the WLTP test procedure; the figures are non-binding and have been
correlated with NEDC values. EU type approval and a certificate of con-
formity with official figures are not yet available. The figures given above
may deviate from the official figures.
Modern combustion engines remain indispensable
Combustion engines will continue to form the backbone of
global personal mobility for many years to come. This makes it
all the more important to further improve the efficiency and
environmental compatibility of combustion engines. As planned,
we continued and expanded our engine offensive in the year
under review. Our new highly efficient four and six-cylinder
engines are already available in diesel or gasoline versions in
numerous models.
We take a holistic view of electric mobility. In an effort to imple-
ment the recycling process chain and to safeguard future
raw-material supplies for electric mobility, Daimler AG is actively
involved in the research and development of new recycling
technologies. With the establishment of a wholly owned subsid-
iary Mercedes-Benz Energy GmbH, we are now focusing, for
example, on reusing batteries. After all, the lifecycle of a battery
does not have to end after it has done its job in a vehicle, as
the battery can be reused for stationary energy storage devices.
Battery systems that have yet to be installed in electric vehi-
cles and remain in stock as spare parts can also be used as
energy storage units. A large storage device consisting of
battery modules for electric vehicle applications went into
operation in Elverlingsen in the southern Westphalia region
of Germany at the end of June 2018. A total of 1,920 battery
modules are stored there as a "living spare parts depot" for
third-generation electric smart models.
smart is well on its way to becoming an all-electric brand
by 2020. The battery-electric smart models combine the agility
of the smart with locally emission-free driving - the ideal
combination for urban mobility.
In mid-July 2018, an attractive subscription model started
under the Mercedes me brand at first as a pilot project in various
German cities. We offer interested customers the possibility
to flexibly select and drive up to 12 different vehicles within a
one-year period. So instead of owning just one car, those
who use the service can switch cars in line with their changing
situations or activities; for example, they can drive a con-
vertible in the summer or use an E-Class wagon for family trips.
The EQC (power consumption combined: 22.2 kWh/100 km;
CO2 emissions combined: 0 g/km, preliminary figures)², which
is the first all-electric SUV from Mercedes-Benz, had its world
premiere in Stockholm in early September. The model will
go into series production in 2019, after which, additional EQ
models will be launched in quick succession.
The GLC F-CELL is another fully electric vehicle (hydrogen
consumption combined: 0.34 kg/100 km, CO₂ emissions com-
bined: 0 g/km, power consumption combined: 13.7 kWh/100
km)1. This SUV, which has been delivered to the first selected
customers since late 2018, can run on electricity as well as
hydrogen because it is equipped with a lithium-ion battery in
The third and fast-growing pillar on the road to emission-free
mobility is the all-electric drive system.
We have refined our intelligent drive management system in
order to further improve efficiency. The route-based operating-
mode strategy for hybrid and electric vehicles anticipates
the course of the road and the traffic situation. This also includes
radar-based recuperation, anticipatory route-based gear
shifting and operation strategy, and ECO Assist.
As the second pillar of its electrification strategy, Daimler is
currently launching new plug-in hybrid models from the C-Class
to the S-Class model series. Such hybrid variants are to be
made available also in the compact segment over the medium
term. Plug-in hybrids, which are marketed under the EQ Power
brand at Mercedes-Benz, represent a key technology on the
road to a locally emission-free future for the automobile. Such
vehicles offer customers the best of both worlds: They can be
driven in the all-electric mode in cities, while on long journeys,
customers benefit from the combustion engine's range. We are
also now combining highly efficient diesel engines with plug-in
hybrid technology for the first time.
Mercedes-Benz Cars is also a pioneer when it comes to the
introduction of the 48-volt electrical system. Integration of the
starter motor and generator and the electrification of auxiliary
assemblies are to gradually and systematically make their way
into the market to do more than just make cars more efficient,
as temporarily available torque (EQ boost) will also provide
additional thrust and enable "coasting" without CO2 emissions.
Electric: Mercedes-Benz and smart focus on EQ
Mercedes-Benz is forging ahead with the electrification of
its vehicles. Plans call for electrification of the entire Mercedes-
Benz portfolio by 2022, which means that various electric
alternatives are to be offered in every segment - from compact
cars to large SUVs. Well over 130 electric vehicle variants are
currently planned. Depending on customer preferences and
the expansion of the public infrastructure, all-electric vehicles
should account for 15 to 25% of our total car sales by 2025.
To that end, we plan to launch more than ten all-electric cars.
Drivers of all vehicles with electric drive systems benefit from
an intelligent and networked variant of the Mercedes-Benz
wallbox, which makes charging easier and also offers a range
of additional functions that can be accessed via a new app.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
108
EQ-optimized navigation always bases its calculation on the
fastest route while also taking into account the shortest
charging time. The route planning system also responds dynam-
ically to changes, while EQ-optimized navigation ensures that
Mercedes-Benz customers can easily find charging stations. In
addition, Mercedes me Charge gives customers convenient
access to the charging stations of numerous providers, includ-
ing those outside the country the vehicle is registered in. In
this context, customers also benefit from an integrated payment
function with simple billing features.
The EQ-specific content in MBUX includes the display of range,
charge level and energy flow. Drive programs, charging current
and departure time can also be controlled and set via MBUX.
The MBUX display also has a special EQ tile via which numerous
EQ features can be accessed.
addition to its fuel cell. Intelligent interplay between the
battery and the fuel cell, as well as short refueling times, make
the GLC F-CELL a dynamic and practical vehicle for long-
distance travel. Two tanks with a carbon-fiber outer layer in the
vehicle floor hold 4.4 kg of hydrogen. Thanks to 700-bar tank
technology, the hydrogen tank can be refilled within just three
minutes as quickly as one is used to filling the tank of a
conventional car. With hydrogen consumption of approximately
1 kg/100 km, the GLC F-CELL achieves about 430 hydrogen-
powered kilometers¹ in the NEDC; in hybrid mode, up to 51 km¹
are added when the battery is fully charged. And driving
dynamics are ensured by an output of 155 kW.
Daimler Buses
-43
310
Daimler Group
18/17
% change
2017
2018
In millions of euros
Research and development expenditure by division
B.37
2018
2017
2016
2015
9,107
2014
1
thereof capitalized
total
2
3
4
5
6
7
8
10
9
0
8,711
+5
thereof capitalized
176
thereof capitalized
+18
565
666
Mercedes-Benz Vans
-11
45
40
thereof capitalized
-2
1,322
1,295
Daimler Trucks
-5
2,388
2,269
thereof capitalized
+5
6,642
6,962
Mercedes-Benz Cars
-9
2,773
2,526
Trucks and buses of the future
Research and development expenditure
Our customers move the world: goods, people, ideas. Our
shared task at Daimler Trucks & Buses is to provide them with
the best possible support. We develop the vehicles and
services with which they can advance our society today and
tomorrow: efficiently, safely and reliably. To this end, we are
putting important new technologies into series production such
as electric drive systems and partially automated driving -
across brands, divisions and regions. In this way, we make goods
and passenger transportation even safer and more sustainable
worldwide, and our customers even more successful. We first
listen to our customers on the spot and then we develop the
right solutions.
The new Mercedes-Benz Actros had its world premiere in
September 2018. The Mercedes-Benz brand's flagship truck
for long-distance haulage applications takes efficiency for
business owners, comfort for drivers and safety for all road
users and pedestrians to new levels. Fuel consumption has
been further reduced compared to the predecessor model. For
better aerodynamics, the truck features new, aerodynamically
improved wind deflectors and, above all, the world's first mirror
camera in a series-production truck, which will replace large
exterior mirrors in the future. Thanks to its expanded map
material, the Predictive Powertrain Control (PPC) system for
cruise control and gear shifting can now also be used for
long-distance haulage on both secondary roads and major
highways.
China*
Japan
10.1%
1.5%
3.3%
3.5%
Brazil
8.8%
USA
14.3%
Europe, excluding Germany
Other
58.5%
Employees at 12/31/2018
By region
B.38
Daimler's nearly 300,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways of
life. We have committed ourselves to raising the proportion
of women in senior management at the Group to at least 20%
by the year 2020. The proportion of women in such positions
has continually risen in recent years to reach 18.8% at the end
of 2018 (2017: 17.6%). Our instruments for supporting the
targeted promotion of women include mentoring, special events
and training courses, and employee networks.
The statement "Diversity shapes our future" underscores
the importance of diversity management as a strategic factor
for success at Daimler. Diversity management enables us
to reflect the diversity of our customers, suppliers and investors
around the world.
Diversity management
Our activities and measures for enhancing our appeal as an
employer are designed to enable us to recruit and retain a
sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that promotes
outstanding performance and a high level of motivation and
satisfaction among our employees and management staff.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs.
Our approach is therefore to challenge our employees to achieve
top performance and to support their efforts to do so, rather
than focusing on their mere presence at work. For this reason,
we also seek to improve performance by helping employees
reconcile their professional and personal responsibilities.
High attractiveness as an employer
The key aims of our human resources strategy are to further
increase our appeal as an employer and to safeguard the com-
petitiveness of our workforce. Because our executives should
motivate their employees to achieve top performance, it is
crucial that we further develop our management culture and
establish outstanding leadership capabilities in our manage-
ment. In addition, we want to take on social responsibility and
let diversity flourish in our global company.
Human resources strategy
The Group's total workforce also does not include the employ-
ees of companies that we manage together with Chinese
partners; at December 31, 2018, they numbered approximately
19,900 people (2017: 19,900).
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT
and development tasks, sales functions and certain location-
specific services, into shared service centers. Some of the
shared service centers are not consolidated because they do
not affect our financial position, cash flow or profitability;
those companies employed approximately 11,900 men and
women at the end of 2018.
Germany
The number of employees in Germany increased
from 172,089 in 2017 to 174,663 in the year under review.
Whereas employee numbers rose in the United States to
26,310 (2017: 23,513) and in Brazil to 10,307 (2017:9,800),
the number of employees in Japan remained close to the
prior-year level at 9,918 (2017: 10,016). 7 B.38 Our consoli-
dated subsidiaries in China had a total of 4,424 employees
at the end of the year (2017: 4,099). At the end of the year
under review, Daimler AG employed a total of 149,797 men
and women (2017: 148,953).
* excluding non-consolidated associated companies and joint ventures
Employees by division
14,070
Daimler Financial Services
+3
18,292
18,770
Daimler Buses
+4
25,255
26,210
Mercedes-Benz Vans
+4
B.39
79,483
+2
145,436 142,666
Mercedes-Benz Cars
+3
298,683 289,321
18/17
% change
2017
2018
Daimler Trucks
Daimler Group
Employees (December 31)
82,953
At December 31, 2018, the Daimler Group employed a total
of 298,683 men and women (2017: 289,321). As was forecast
in Annual Report 2017, the number of employees increased
slightly (+3%). This increase was primarily a result of the positive
overall business situation. Workforce numbers increased at
all divisions in 2018. 7 B.39
Slight increase in the number of employees
The workforce
Efficient and clean drive technology for buses
Daimler has already made tremendous advances in terms of
exhaust treatment technology for the bus sector. For example,
all Mercedes-Benz and Setra model series were made available
with Euro VI technology at a very early stage. Despite the
application of this significantly more sophisticated exhaust treat-
ment technology, use of the new Mercedes-Benz engines
has enabled us to achieve a further reduction in fuel consump-
tion for our already economical vehicles, with a simultaneous
increase in engine output.
digital@Vans bundles innovative solutions in the field of digiti-
zation. Under the web-based brand Mercedes PRO, Mercedes-
Benz Vans combines all digital services and solutions for the
daily requirements of its customers, from small businesses to
major clients. For example, Mercedes PRO optimizes commu-
nication between fleet managers, vehicles and drivers. In addi-
tion, it enables the online control of vehicles and the retrieval
of vehicle information such as location, fuel level or maintenance
intervals almost in real time.
With Vision URBANETIC, Mercedes-Benz Vans is presenting
under autonomous@Vans a supplement to its electrification
solutions with a revolutionary mobility concept showing how
autonomous mobility might work in the future. Vision URBANETIC
removes the separation between passenger and goods trans-
port by utilizing an innovative body-switching approach that
enables the needs-based, sustainable and efficient movement
of people and goods. In this manner, Vision URBANETIC
meets the requirements of cities, companies from diverse sec-
tors, urban residents and travelers in an innovative way.
The concept reduces traffic flows, eases the strain on inner-city
infrastructure and helps improve the quality of life in cities.
pages 28f
B.36
More than ever before, Mercedes-Benz Vans is making the
choice of a drivetrain dependent on customer utility. In addition
to vehicle technology, system weight, charging/refueling
time, range and profitability are also taken into consideration.
Mercedes-Benz Vans is expanding its eDrive@VANs strategy
with the fuel cell. Based on the example of a semi-integrated
travel van, the Concept Sprinter F-CELL showcases the full
spectrum of the typical advantages of a fuel cell, from a long
range to locally emission-free mobility. These attributes are
also extremely well suited for other applications, such as long
courier trips or small intercity buses.
Mercedes-Benz Vans: innovative solutions
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 111
2 Actual range also depends on individual driving style, road and traffic
conditions, ambient temperature, use of air-conditioning/heating etc., and
may deviate from the stated figures.
1 Range depends on vehicle configuration, specially on the selection of
maximum speed limitation. Electricity consumption and range have been
calculated on the basis of Commission Regulation (EC) No 692/2008.
Mercedes-Benz Vans plans to offer all its commercial van
model series with electric drive systems. The initial step was
taken with the launch of the mid-size eVito in November
2018. The eVito is the second all-electric production model
from Mercedes-Benz Vans; the first was the Vito E-Cell in
2010. With a range of 149-1891,2 kilometers, the mid-size van is
thus perfect for inner-city deliveries and other commercial
operations. The battery can be fully charged in about six hours.
In addition, customers can choose between two options with
regard to top speed: a maximum of 80 km/h for city traffic and
urban areas, while also conserving energy and increasing
the vehicle's range, or a maximum of 100 km/h or 120 km/h if
required for driving on highways. The electric Vito for goods
transport will be followed by the eVito Tourer for passenger
transport and the eSprinter in 2019.
Mercedes-Benz Vans: electric drive
The new Mercedes-Benz Tourismo touring coach reduces
fuel consumption primarily through optimized aerodynamics
and the all-new and lighter body. Lower fuel consumption
and emissions are achieved also as a result of optional equip-
ment such as Predictive Powertrain Control (PPC) and Eco
Driver Feedback (EDF).
Similar connectivity solutions in the form of services from
Detroit Connect and Detroit Assurance are available for
Daimler Trucks customers in North America from Freight-
liner. FUSO now offers customers in Asia the Truckonnect
connectivity solution in its new Super Great truck.
systems involved in the logistics process. The Truck Data
Center creates a permanent connection between vehicles from
Daimler Trucks and the cloud, and makes the division's
trucks part of the Internet of things.
The Truck Data Center is the centerpiece of all the connectivity
solutions offered by Daimler Trucks. The Truck Data Center
receives data from the sensors and cameras in the truck and
analyzes this information for various applications. It also
serves as the interface for all connectivity services and is thus
responsible for the truck's external communications as well.
This connectivity module forms the technological foundation for
the Fleetboard and Mercedes-Benz Uptime connectivity ser-
vices and the telematics solutions offered by Detroit Connect
for the Freightliner brand and by Truckonnect for FUSO. Like
a modern smartphone, the Truck Data Center uses Bluetooth,
the mobile-telephony network or GPS to communicate with
the traffic infrastructure, with other vehicles and with further
Daimler Trucks: reliable and connected
Commercial vehicles from Daimler Trucks & Buses need to be
reliable. Unnecessary downtime prevents customers from
conducting their business successfully, so vehicle reliability is
always the top priority. Before vehicles go into series pro-
duction, the company has already tested them over millions of
kilometers under the most difficult conditions around the
globe. Daimler also works continuously to increase the avail-
ability of its trucks and buses. Digitization and connectivity
play a decisive role here. Meanwhile, several hundred thousand
connected vehicles from Daimler are on the roads.
The Mercedes-Benz Actros also features the latest generation
of the Active Brake Assist emergency braking system. Active
Brake Assist 5 supports the driver when there is a danger of a
rear-end collision or a collision with a person crossing the road,
approaching the truck or walking in the truck's lane - with
automatic maximum braking if necessary. Active Brake Assist
5 also works with a combination of radar and a camera, which
allows it to monitor the space ahead of the vehicle and react
to persons on the road in an even more effective manner. Side-
guard Assist helps protect the most vulnerable road users -
cyclists and pedestrians. This system has been available since
the spring of 2018 in Mercedes-Benz Actros, Antos and
Arocs heavy-duty trucks, as well as in the Econic. It is also
now offered in Asia in the FUSO Super Great.
The new Mercedes-Benz Actros also sets new standards in
terms of safety and partially automated driving. Just four years
after the presentation of the automated Mercedes-Benz Future
Truck 2025, the company is now putting a partially automated
(Level 2) driver assistance system into a series-production
truck for the first time ever. This new system, which is known as
Active Drive Assist, enables partially automated driving in all
speed ranges for the driver in a series-produced truck. The new
features here are active lateral guidance and the combination
of longitudinal and lateral guidance, which is made possible by
the fusion of radar and camera information. Active Drive Assist
enables interplay between the Proximity Control Assist system
with its stop-and-go function and Active Lane Keeping Assist.
Although the driver is still responsible for monitoring the traffic
situation, the system provides significant relief to him or her
and makes an important contribution to increasing road safety.
Starting in 2019, Daimler Trucks offers partially automated
driving (Level 2) to its Freightliner customers in North America
under the product name Detroit Assurance 5.0. Level 2 func-
tions are also to be available for customers in Asia in the FUSO
Super Great in 2019.
Daimler Trucks: safe and automated
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
110
In June 2018, we consolidated all electrification activities for
trucks and buses in the E-Mobility Group. The E-Mobility Group
defines the strategy for all electric components and for com-
plete electric vehicles across all brands and divisions. It is also
developing a globally standardized electric architecture similar
to the successful global platform strategy used for conventional
drive systems and major components. The employees work at
many locations throughout the company's worldwide network -
for example in Portland, Oregon, in the United States; in
Stuttgart, Germany; and in Kawasaki, Japan.
Along with its efforts to increase the efficiency of conventional
drive systems, Daimler Trucks is also working on the devel-
opment of sustainable, all-electric, quiet and locally emission-
free commercial vehicles that offer outstanding benefits for
both customers and the environment. The company conducts
analyses to identify applications for which electric mobility
makes the most economic sense, in the interest of both the
company's shareholders and its customers. The year 2018
marked the first time that Daimler Trucks unveiled all-electric
trucks across all its vehicle segments, ranging from the FUSO
eCanter in the light-duty segment to the Freightliner eM2 in the
medium-duty segment and the Mercedes-Benz eActros,
Freightliner eCascadia and FUSO Vision One in the heavy-duty
segment. The FUSO eCanter and the Mercedes-Benz eActros
are currently being tested under real conditions by customers
in the United States, Europe and Japan. In December 2018,
Freightliner delivered its first Freightliner eM2 to a customer in
the United States. The Freightliner eCascadia and eM2 are
especially geared toward the requirements of customers who
use electric commercial vehicles on predefined local distri-
bution haulage routes that generally do not change.
The new Actros will also be offered with natural-gas drive in
the future. Significantly lower CO2 emissions when operating
on natural gas and a further significant improvement in the
CO2 balance when using biomethane, in addition to low noise
emissions and zero emissions of particulate matter from the
drive engine - with the new Actros NGT, Mercedes-Benz Trucks
offers the benefits of this alternative drive system.
At the IAA Commercial Vehicles trade fair in September 2018,
Fleetboard unveiled the new customer interface that we plan
to offer to Fleetboard customers in the spring of 2019. The
improvement to the Fleetboard Cockpit involves the introduction
of a new, intuitive and web-based interface that clearly com-
bines all data from booked Fleetboard services. The refined and
free Fleetboard Driver app has been available for downloading in
the Apple App Store and the Google Play Store since July 2018.
The Mercedes-Benz Citaro NGT with the all-new M 936
natural-gas engine also helps to make public transportation in
cities more environmentally friendly. The Citaro NGT is also
even more efficient than its predecessor model - and the CO2
balance is even better when biomethane is used.
Depending on the vehicle's use profile and specifications, the
new electrohydraulic steering system in the Mercedes-Benz
Citaro hybrid further improves on the fuel consumption of the
conventional Citaro, which is already highly efficient. Hybrid
drive is available for many model variants of the best-selling
Citaro city bus, including the natural gas-powered Citaro
NGT. The reductions in fuel consumption quickly pay off for
transport companies, and the environment and society
benefit from the decrease in emissions.
With the new all-electric Mercedes-Benz eCitaro, which had
its world premiere at the 2018 IAA Commercial Vehicles trade
fair, we now have in our portfolio a key component of environ-
mentally friendly local public transport with low-emission and
locally emission-free buses.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 113
More detailed information can be found in the Non-Financial
Report section of this Annual Report. pages 206 ff
Another important aspect is climate protection at our pro-
duction plants. Mercedes-Benz Cars is setting the course for
green production in Germany and Europe. Plans call for all
manufacturing facilities in Germany to be supplied with CO2-
neutral energy by 2022. The preparations for the exclusive
use of green electricity for a climate friendly production in
Europe are already well advanced. Our vehicle and powertrain
factories in Bremen, Rastatt, Sindelfingen, Berlin, Hamburg,
Kamenz, Kölleda and Stuttgart-Untertürkheim buy electricity or
operate their own power plants. In the future, 100% of purchased
electricity is to come from verified renewable sources such
as wind and water power. This corresponds to about three quar-
ters of the total electricity requirements of our German plants.
The remainder is generated in our own highly efficient gas-fired
combined heat and power plants. We intend to offset the
resulting CO2 emissions through qualified compensation proj-
ects. This also applies to all other energy purchases by
the plants, such as natural gas for heating buildings or fuel for
transport within the plant grounds.
For this reason, we have established environmental manage-
ment systems at our manufacturing locations with the goal
of ensuring that we can produce our vehicles safely, efficiently
and at a high level of quality in an environmentally friendly
manner that complies with all legal stipulations. We also carry
out environmental risk assessments at all production facilities
in which the Group has a majority interest. We are striving for a
high level of air quality, climate protection and resource con-
servation (in terms of water consumption, waste management
and soil conservation), and we support this high level with the
help of Daimler Group's standards.
Daimler follows an integrated approach for its corporate
environmental protection measures. This approach begins
with the potential causes of environmental effects.
Environmental protection in production
the remanufacturing of used parts, and
the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System)
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
Resource conservation: consistently high recyclability
Evaluating the environmental compatibility of a vehicle requires
an analysis of the emissions and use of resources throughout
the entire lifecycle. During vehicle development, we also prepare
a recycling concept for every vehicle model. This concept
includes an analysis of the suitability of all components and
materials for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable. The key aspects of our activities in
this area are:
Further information can be found in the "Non-Financial Report"
section of this Annual Report.
pages 206 ff
Following the coalition decision in early October 2018, Daimler
announced that it would also participate in a hardware retrofit
program for diesel vehicles in the defined key regions as part
of the concept of the German federal government for clean
air and securing individual mobility. Against this background,
Daimler is prepared to cover the costs of hardware retrofitting
up to a maximum amount of €3,000 for Mercedes-Benz custom-
ers with Euro 5 diesel vehicles in the core regions. The retrofit
hardware must be developed and offered by a third-party sup-
plier and approved by the German Federal Motor Transport
Authority. It must specifically entitle customers also to drive
on roads on which there are driving bans in certain cities.
Daimler's goal is to attain clarity in the interests of the custom-
ers about which third-party hardware solutions can be
offered and when.
Daimler supports the German government's concept for clean
air and safeguarding individual mobility. With an attractive
incentive program in the defined core regions, we are acceler-
ating the renewal of the country's stock of vehicles. Daimler
is thus making a significant contribution to the federal govern-
ment's concept of preventing any disadvantages for diesel
drivers.
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018, and by order of
the German Federal Motor Transport Authority (KBA), Daimler is
carrying out a mandatory recall of approximately 690,000 vehi-
cles in Europe (including approximately 280,000 in Germany).
The great majority of these vehicles were already covered by
the voluntary service measures announced in July 2017. The
measures are being taken in close cooperation with the German
certification authorities.
Plan for the future of diesel vehicles
Our plan for the future of diesel vehicles includes the develop-
ment of software updates for a total of well over three million
customer-owned vehicles in Europe, of which well over one
million are located in Germany. With the software updates, we
will reduce NOx emissions by 25 to 30% on average for
these vehicles. This will be verified with the measurement
cycle agreed upon with the authorities (WLTC 1, 2, 3).
More detailed information can be found in the "Non-Financial
Report" section of this Annual Report.
pages 206ff
Because all vehicle models will be certified in accordance
with the WLTP by September 2019, we expect only a slightly
lower CO2 figure for our fleet in 2019 despite further prog-
ress with reducing our vehicles fuel consumption. In 2020,
vehicle electrification measures should contribute to a
substantial decrease in fleet CO2 emissions.
The transition for the individual vehicles from NEDC to WLTP
as the legally stipulated CO2 emission measurement cycle has
led to a significant increase in our fleet emission figures. At
the same time, the shift in sales from diesel to gasoline engines
and a further increase in sales of larger SUVs and all-wheel-
drive vehicles have contributed to a higher CO2 figure for our
fleet.
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 + Iceland)
increased to 132 g/km (NEDC) (2017: 125 g/km).
Car CO2 emissions
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
112
A vehicle's environmental impact is largely determined during
the first stages of its development. The earlier we integrate
environmentally responsible product development (design for
the environment, DfE) into the development process, the more
efficiently we can minimize the impact on the environment.
pages 206 ff
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective of
the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; but is an integral component
of a corporate strategy aimed at long-term value creation.
The environmental and energy-related guidelines approved by
the Board of Management define the environmental and
energy-related policy of the Daimler Group. This expresses our
commitment to integrated environmental protection that
begins with the underlying factors with an impact on the envi-
ronment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision making.
Innovative safety and assistance systems for buses
With new safety and assistance systems, we are showing that
safety has top priority also for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns drivers of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist - the first active emergency
braking assist system for city buses - will be available as an
option for the entire Mercedes-Benz Citaro model family
and the Mercedes-Benz Conecto starting in 2019. Sideguard
Assist, a radar-based turning assistant with pedestrian detec-
tion for buses, supports bus drivers during right turns, which
can be dangerous in certain situations. Sideguard Assist
is available for all variants of the Mercedes-Benz Citaro and
Tourismo and all Setra ComfortClass 500 and Top Class
500 Setra touring coaches.
pages 20f
Daimler Trucks: efficient and electric
The eDrive@VANS strategy involves not only the electrification
of the vehicle fleet but also a customized overall system
solution for each individual fleet. This includes advice on vehicle
selection, assistance with tools such as the eVAN Ready app,
and an overview of the total cost of ownership. In addition, the
integration of an intelligent charging infrastructure concept
lays the foundation for conserving resources with a commercial
fleet while remaining economically competitive.
With Mercedes-Benz Uptime, we are pursuing the clear goal
of permanently minimizing vehicle downtime and ensuring that
necessary downtime can be planned, to further increase
vehicle availability for customers. Constant communication by
all onboard connected systems generates several gigabytes
of data per truck every day, and this data can be used for vari-
ous vehicle diagnostics procedures. After collecting all of
the truck data, Mercedes-Benz Uptime can issue recommenda-
tions for service and repair center action to dealers within
240 seconds. This feature has, for example, substantially reduced
vehicle diagnostics times during initial service center tests
at the more than 1,500 Mercedes-Benz retail outlets in Europe
that have been certified to use Mercedes-Benz Uptime.
- Autonomous driving
Strategic/organizational/
structural contribution of
the Board of Management
Base salary in 2018
Members of the Board of Management
Chairman of the Board of Management
Maximum limit of total remuneration¹ 2018
approx. 40%
approx. 30%
B.43
long-term performance-related
components
short- and medium-term
performance-related
components
(non-performance-related) approx. 30%
base salary
Target remuneration consists of non-performance-related
and performance-related components:
Remuneration structure
B.42
The base salary is fixed remuneration relating to the entire year,
oriented towards the area of responsibility of each Board of
Management member and paid out in twelve monthly install-
ments. B.44
The individual components of the remuneration system are as
follows:
As in the prior year, the maximum amounts of remuneration of
the members of the Board of Management were set for finan-
cial year 2018 at 1.9 times the target remuneration for its mem-
bers and 1.5 times the target remuneration for its Chairman.
The target remuneration consists of the base salary, the target
annual bonus and the grant value of the PPSP, excluding fringe
benefits and retirement benefit commitments. With the inclusion
of fringe benefits and retirement benefit commitments from
the respective financial year, the maximum limit of total remu-
neration increases by these amounts. The possible cap on
the amount exceeding the maximum limit takes place with the
payment of the PPSP issued in the relevant financial year, i.e.
for the year 2018, with payment of the PPSP in 2022. 7 B.43
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
As before, only 50% of the annual bonus is paid out in the March
of the following financial year. The other 50% is paid out a year
later (deferral) with the application of a bonus-malus rule, depend-
ing on the development of the Daimler share price compared
with an automotive index (STOXX Europe Auto Index) page
62 ff, which Daimler AG uses as a benchmark for the relative
share-price development. Both the delayed payout of the por-
tion of the annual bonus (with the use of the bonus-malus
rule) and the variable component of remuneration from the
PPSP with its link to additional, ambitious comparative param-
eters and to the share price reflect the recommendations of
the German Corporate Governance Code and give due consid-
eration to both positive and negative business developments.
The system of Board of Management remuneration in 2018
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the vari-
able component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 40% of the target remu-
neration. B.42
All members of the Supervisory Board and thus all members of
the Presidential Committee are obligated, pursuant to the pro-
cedural rules of the Supervisory Board and its committees, to
disclose any conflicts of interest to the Supervisory Board.
For its part, in its report to the Annual Meeting the Supervisory
Board informs of any conflicts of interest that have arisen and
of how they have been dealt with (cf. Report of the Supervisory
Board page 46 ff of the Annual Report). In the case of
significant and not merely temporary conflicts of interest the
Supervisory Board member in question is required to resign.
Furthermore, the Supervisory Board has set targets for a mini-
mum number of independent members of the Supervisory
Board and of members without potential conflicts of interest.
Further details of the contents of and compliance with these
targets are provided in the Declaration on Corporate Gover-
nance, Corporate Governance Report on page 191ff of this
Annual Report.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 121
After the end of each year, the achievement of, both financial and
non-financial targets by the Board of Management as a whole is
measured in order to determine the amount of the annual bonus.
The degree of achievement of individual targets by members of
the Board of Management is used as the basis for measuring
target achievement for the Board of Management as a whole.
The Presidential Committee then calculates the annual bonus and
submits its proposal to the Supervisory Board for its approval.
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management as well as on total remuneration limits. It also
decides on the relevant performance parameters and the respec-
tive targets that are to be used in the bonus calculations for
the upcoming financial year. Furthermore, individual targets and
compliance goals are decided upon for each member of the
Board of Management and additional non-financial goals related
to sustainability are drawn up for the Board of Management
as a whole. Both the individual goals, including the compliance
goals, and the non-financial goals for the Board of Manage-
ment as a whole are taken into consideration along with the
financial performance parameters after the end of the financial
year when the annual bonus is decided upon by the Supervi-
sory Board.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors.
In the event of significant changes in the relationship between the
remuneration of the Board of Management and the comparison
groups the Supervisory Board establishes the causes, and in
the absence of objective reasons for the deviation adjusts the
remuneration of the Board of Management as necessary.
has defined the group of senior executives for this purpose. It
consists of the Executive Vice Presidents and the management
level 1 of Daimler AG in Germany.
+ target bonus = 100% of the 2018 base salary
+ PPSP value when granted for 2018
Target remuneration¹ 2018
Base salary in 2018
Board of Management as a whole
(derived from individual targets)
+/- target achievement for the
+/- target achievement for the
target achievement EBIT
time of payment of annual bonus 2018
= 100% of
base salary
2018
target bonus
annual bonus 2018 = target bonus × overall target achievement
approx. 30%
components
performance-related
short- and medium-term
performance-related remuneration page 122
Annual bonus - short- and medium-term
B.45
The vertical comparison focuses on the ratio of Board of Manage-
ment remuneration to the remuneration of the senior execu-
tives and the entire workforce of Daimler AG in Germany, also
in terms of development over time. The Supervisory Board
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
approx. 30%
(non-performance-related)
paid out in twelve monthly
installments
base salary
base salary fixed - oriented towards the area of responsibility
Base salary - fixed page 121
B.44
1 Excluding fringe benefits and retirement benefit commitments in
all cases.
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2018 in 2022.
Total remuneration' in 2018
+ PPSP payment for 2018 (in 2022) incl. dividend equivalent
payments
1.9 times the target
remuneration¹
1.5 times the target
remuneration¹
(50% paid out in 2019 + 50% in 2020)
+ annual bonus for 2018
122
and the target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
the relative weighting of the components, that is, the rela-
tionship between the fixed base salary and the short-term
and long-term variable components;
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
In order to achieve that goal, we have prioritized five com-
ponents, which are closely interlinked. Within the framework of
our 5C strategy, we want to
In the opinion of the Board of Management, the Daimler Group's
economic situation continues to be generally satisfactory at
the time of publication of this Annual Report, although overall
conditions for our business are significantly less favorable.
This development was not without an influence on our financial
success. Nonetheless, we continued to pursue our strategy
with great determination and also with the corresponding allo-
cation of funds. We will continue to follow the course we have
set in a disciplined manner in order to remain competitive in
the long term and to grow profitably. Our goal is clear: We aim
to continue to be a leading vehicle manufacturer while evolving
into a leading provider of sustainable mobility.
Overall Assessment of the Economic Situation
118 B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
In order to ensure an independent external assessment
of our Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with Audit Standard
980 of the Institute of Public Auditors in Germany. This
audit, which was based on the principles of appropriateness,
implementation and effectiveness, was already successfully
completed at the end of 2016.
page 217 ff
Our Compliance Management System (CMS) is designed to
prevent inappropriate or illegal behavior by Daimler and its
employees, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined
by our compliance and legal affairs organizations in a process
that also takes business requirements into account. Our CMS
consists of basic principles and measures for the promotion of
compliant behavior throughout the Group. It is based on
national and international standards and is applied on a global
scale at all units and majority holdings of Daimler AG. The
systematic minimization of compliance risks is extremely impor-
tant here, and for this reason we analyze and assess the
compliance risks of all our business units every year. These
analyses are based on centrally compiled information on all
business units; specific additional details are taken into account
if necessary. The results of the analyses form the basis of
our risk management. More detailed information on the Daimler
Compliance Management System can be found in the Non-
Financial Report section of this Annual Report.
Our Compliance Management System (CMS) serves as
the foundation
Value-based compliance is an indispensable part of our daily
business activities at Daimler. For us, compliance means
acting in accordance with laws and regulations. Our objective
here is to ensure that all of our employees worldwide are
always able to carry out their work in a manner that is in com-
pliance with applicable laws, regulations, voluntary commit-
ments and our values, as set out in binding form in our Integ-
rity Code. Our compliance activities focus on complying
with all applicable anti-corruption regulations, the maintenance
and promotion of fair competition, adherence to legal and
regulatory stipulations regarding product development (tech-
nical compliance), respect for and the protection of human
rights, adherence to data protection laws, compliance with sanc-
tions and the prevention of money laundering. Our compliance
and legal organizations are designed to ensure that they can
advise and support all of our corporate units worldwide with
regard to their business operations, processes and services in
order to minimize legal and business risks.
Compliance and legal responsibility
We use various event formats to get employees to think about
integrity by approaching the issue from different perspectives.
At these events, we also increase the participants' awareness
of the importance of making ethical decisions. For example, we
present case studies that enable employees to experience and
discuss the relevance of integrity to daily business operations
from various viewpoints. We also have a network of integrity
contact persons who help the business units address specific
issues in a targeted manner. One of the things we focused on
in 2018 was dialog sessions that addressed the topic of techni-
cal integrity in the development departments of our various
divisions. We are also providing more support to our business
units with regard to ethical questions related to the respon-
sible use and management of data and the challenges associ-
ated with data-based business models.
We conduct an ongoing open dialog with our employees in
order to ensure that ethical behavior continues to be embedded
in the company's daily business. We regularly address integrity
issues in our internal media and make a wide range of materials
available to our business units - for example brochures, films
and an app that provides information on integrity, compliance
and legal affairs. We also place great value on face-to-face
discussions. For this reason, we regularly conduct individually
designed dialog sessions with employees at all levels of the
hierarchy, as well as with external stakeholders. These sessions
are held both in Germany and at our locations abroad.
Communication measures
117
strengthen the global core business (CORE),
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Contact and advice center
Integrity and compliance requirements are important criteria
for the target achievement of our executives. They are also
part of the agreed objectives for the remuneration of the Board
of Management.
pages 120 ff
Our Integrity Code also defines requirements for executives and
managers, who are expected to serve as role models in terms
of ethical behavior and to provide employees with orientation.
For optimal support with the fulfillment of their responsibilities,
they participate in a web-based Integrity@Work training pro-
gram that includes a management module compulsory for all
management staff. It explains in detail the role of executives
and managers at Daimler with regard to integrity, compliance
and applicable law. Furthermore, selected seminars designed
to enhance the qualifications and skills of our management staff
also include modules that focus on integrity.
Requirements for executives
Our Integrity Code forms the foundation of our business con-
duct. It is based on a shared understanding of values, which we
developed with our workforce in employee dialogs. It lays out
the principles governing our everyday business conduct. These
central principles include compliance with laws, as well as
fairness, responsibility, mutual respect, transparency and open-
ness. The Code is binding on all companies and employees
of the Daimler Group and is available in 23 languages. A guide is
available on the Group's intranet to support the employees
in their application of the Code in everyday situations, providing
answers to frequently asked questions. ④ daimler.com/
documents/sustainability/integrity/daimler-integritycode.pdf
Integrity Code
The task of Integrity Management is to support all departments
with the promotion and further development of the culture
of integrity at the Daimler Group. The unit's experts for change
management, corporate responsibility management, training,
consulting and communication develop innovative and
employee-focused approaches and formats that are designed
to strengthen the culture of integrity. These experts also
support disseminators throughout the Group with their integ-
rity-related activities. The unit's goal is to establish and
maintain a common understanding of integrity in order to reduce
risks and help ensure Daimler's sustained success. The Head
of Integrity Management reports directly to the member of the
Board of Management responsible for Integrity and Legal
Affairs.
Integrity management organization
During the year under review, we focused in particular on the
strategic further development of our culture of integrity, taking
recent developments in society into account as well. Imple-
mentation of the measures we derived as a result will begin in
2019. In 2018, we also designed and conducted a pilot survey
to assess the effectiveness of our integrity-related measures and
develop them further on this basis. Another survey to be
conducted in 2019 will build on our progress here and allow us to
target our activities toward specific groups and continuously
improve the programs we offer.
Integrity is one of the four corporate values that form the
foundation of our business activities. For us, integrity means
acting in accordance with ethical principles. We therefore
aim not only to comply with all applicable laws, internal regula-
tions and voluntary commitments, but also to live in accordance
with our corporate values and not to shy away from making
difficult decisions or addressing critical issues. We expect all of
our employees and business partners to adhere to the prin-
ciples of our culture of integrity out of a sense of conviction.
A culture of integrity
Organizationally established at the highest level
Because of their strategic significance, we have combined
the responsibilities for integrity, compliance and legal affairs
within a single Board of Management area. This Board of
Management area supports the divisions and units in their
efforts to ensure that those issues remain an integral com-
ponent of their organizations. We view integrity and compliance
as firm elements of our corporate culture and daily business
activities that contribute to our company's lasting success. The
basis for this is our Integrity Code, which defines guidelines
for our everyday business conduct, offers our employees orien-
tation, and helps them make the right decisions even in
difficult business situations. The Integrity Code is supplemented
by other in-house principles and guidelines.
For Daimler, integrity, compliance and legal responsibility
are inseparable from our daily business activities. We are con-
vinced that only those who act responsibly can achieve
sustained success over the long term. For us, this involves more
than just obeying laws, as we also seek to align our activities
with shared principles and values.
Integrity, compliance and legal affairs
Our "Infopoint Integrity" is available to our employees around
the world as a central contact and advice center. The Infopoint
team offers advice on integrity-related issues in the daily
working environment and puts employees in touch with the
right contact partner if necessary. A worldwide network of
local compliance and legal contact persons is also available to
our employees.
Board of Management as a whole:
non-financial targets
- lead in new fields of the future (CASE),
adapt the corporate culture (CULTURE) and
strengthen the divisional structure (COMPANY).
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appropri-
ateness, based on a horizontal and a vertical comparison. In
the horizontal comparison, the following aspects are given
particular attention in relation to a group of comparable com-
panies in Germany:
Practical implementation
The remuneration system for the Board of Management aims
to remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related
and performance-related components of remuneration is designed
to create an incentive to secure the Group's long-term suc-
cess. The fixed component of remuneration is paid as a base
salary; the variable components are intended to reflect, clearly
and directly, the joint performance of the members of the
Board of Management as a whole, as well as the long-term per-
formance of the Group. The interests of all stakeholders, in
particular those of the shareholders as the owners of the Com-
pany and those of the employees, are harmonized through the
focus on the Group's long-term success.
Goals
Principles of Board of Management remuneration
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Man-
agement of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
Remuneration Report
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
120
Since the end of the 2018 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2019 confirms
the statements made in the "Outlook" section of this Annual
Report.
Events after the
Reporting Period
With the components CORE, CASE, CULTURE and COMPANY,
we are aligning the Group towards the customers' requirements
(CUSTOMER). In this way, we are setting the course for a
successful future. This is precisely why we can continue to look
forward to the coming years with great confidence.
mobility services. In order to upscale rapidly for on-demand
mobility, the mobility services car sharing, ride hailing, parking,
charging and multimodality of today's Daimler Mobility
Services and the BMW Group are to be merged and strategically
expanded. To successfully transition from vehicle producer
to full-range supplier of innovative mobility solutions, we must
adapt our company to face new challenges. In doing so, we
aim to combine the flexibility and risk culture of the digital
industry with the perfection and innovativeness of our company's
strong traditions. Together with our workforce, we are therefore
developing a new and flexible corporate culture under the roof
of "Leadership 2020". In addition, we are working in "Project
Future" on further focusing and strengthening the divisional
structure of the Daimler Group.
Daimler Financial Services is continuously investing in the
development of a comprehensive mobility ecosystem. car2go
is a leading company for flexible car sharing. In the ride-hailing
segment, the Daimler subsidiary mytaxi is one of the leading
providers of app-based taxi services in Europe, and with
moovel, we offer our customers a platform with which they can
optimally compare, combine, book and pay for various
-
With the further development of autonomous driving, we rely
on the one hand on technical assistants and on the other hand
on automated systems that take customers from A to B with-
out a driver. Mercedes-Benz Cars has demonstrated its strong
position in the field of technical assistants with the S-Class.
On the other hand, we are developing automated systems that
can be used without a driver or can be shared with others.
We see great growth opportunities in the area of electric
mobility in particular. By the year 2022, the entire Mercedes-
Benz portfolio is to be electrified. This means that at least
one electrified alternative will be offered in each segment -
from compact cars to large SUVs. Significantly more than 130
electrified vehicle variants are planned. As well as all-electric
models, this will include plug-in hybrid versions and models
with 48-volt technology. By 2025, depending on the development
of the public infrastructure and customer preferences, 15 to
25% of the cars we sell are to be all-electric. To that end, we plan
to launch more than ten all-electric vehicles on the market.
To be able to implement our growth strategy with new products,
innovative technologies and modern production capacities,
we once again increased the advance expenditure to secure our
successful future, from an already very high level by a total of
€1.2 billion to €16.6 billion in the year under review: €9,1 billion
for research and development (2017: €8.7 billion) and €7.5
billion for property, plant and equipment (2017: €6.7 billion). In
the application of these funds, we are increasingly concen-
trating on the CASE future fields of connectivity (Connected),
automated and autonomous driving (Autonomous), flexible use
and services (Shared & Services) and electric drive systems
(Electric). We intend to be leaders in each of these areas and
to utilize additional potential by linking up the four areas. To that
end, we plan to launch more than ten all-electric cars.
measure financial strength - was €2.9 billion in 2018, which is
significantly higher than the prior-year figure of €2.0 billion.
However, it must be taken into consideration that the prior-year
figure was reduced by an extraordinary contribution of
€3 billion into the German pension plan assets of Daimler AG.
B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION 119
The Group's overall equity ratio and the equity ratio of the
industrial business reached 22.2% and 42.8% respectively in the
year under review (2017: 24.0% and 46.4%), and thus continued
to be at very solid levels. This also applies to the net liquidity of
the industrial business of €16.3 billion at the end of 2018,
which was almost unchanged from a year earlier. The free cash
flow of the industrial business - the parameter we use to
The fact that our key financial metrics remain very solid was
also confirmed by the rating agencies: Daimler AG's credit ratings
remained unchanged with the five rating agencies we
commissioned in the 2018 financial year. At the end of 2018,
Daimler's ratings were thus at a consistently high level with
a "stable" outlook.
As a result of the positive development of earnings, we again
achieved a very good return on net assets of 14.8% (2017:
22.5%). We therefore once again substantially surpassed our
target of 8% for the minimum return on capital employed.
Despite the decrease compared with the previous year, value
added of €3.7 billion shows that we created significant
value also in the year under review (2017: €7.0 billion).
We regard it as an ongoing task to strengthen the Group's
earning power and secure it in view of future challenges.
At Mercedes-Benz Cars, we further developed Fit for Leadership
as an efficiency program and firmly established it in the
organization. With Fit for Leadership, we aim to achieve further
improvements in earnings of €4 billion by 2025. Comparable
programs are running also in the other divisions.
The Daimler Group's operating profit (EBIT) of €11.1 billion was
significantly lower than in the previous year (€14.3 billion).
The Daimler Trucks division increased its EBIT significantly, while
the other divisions posted partially significant decreases. In
the overall vehicle business, our EBIT of 6.9% did not reach the
target corridor of 8-9%. Also at Daimler Financial Services,
our return on equity of 11.1% was significantly below the target
of 17%. This was partially due to expenses from the settlement
reached in the Toll Collect arbitration proceedings.
On this basis, the Group's revenue also increased, by 2% to the
record level of €167.4 billion. Adjusted for exchange-rate
effects, revenue grew by 4%.
Daimler Financial Services' business developed positively
once again in 2018. Worldwide contract volume continued to
grow and reached a new high of €154.1 billion (+10%).
In the year under review, Daimler sold a total of 3.4 million cars
and commercial vehicles (2017: 3.3 million), Contributions to
this growth came primarily from the divisions Daimler Trucks
(+10%), Mercedes-Benz Vans (+5%) and Daimler Buses (+8%).
The Mercedes-Benz Cars division also achieved record unit sales
with growth of 0.4% despite difficult conditions. Demand for
passenger cars of the Mercedes-Benz brand remained high;
however, the sales development was largely influenced by
lifecycle effects of various model series. Some additional factors
were increased tariffs in China on vehicles imported from the
United States, bottlenecks in the supply chain and the suspension
of deliveries of individual diesel models. Delays with vehicle
certification in some international markets also had an impact
on availability.
We succeeded in strengthening our core business also in the
year 2018: Daimler again set records for unit sales and revenue,
and the Group's EBIT was at a high level despite difficult
conditions and special challenges in our business operations.
The focus of our activities is on our fifth and most important C:
our customers (CUSTOMER). We are aligning our processes
and our organization with a strong customer focus and aim to
develop the best product and mobility solutions for and with
the customers.
We are progressing with electrification also with our commercial
vehicles. The Group is focusing on areas of application in
which e-mobility is also economical. In 2018, Daimler Trucks
for the first time presented all-electric trucks to the public
across all segments: from the FUSO eCanter in the light-duty
segment to the Freightliner eM2 in the medium-heavy
segment and the Mercedes-Benz eActros, Freightliner eCascadia
and FUSO Vision One in the heavy-duty segment. Mercedes-
Benz Vans plans to offer all its commercial model series with
electric drive. The first was the mid-size eVito, which has
been available since November 2018. With the new, all-electric
Mercedes-Benz eCitaro, which had its world premiere at the
IAA Commercial Vehicles trade fair in 2018, we have added an
important component to our portfolio for environmentally
friendly local public transport with low-emission and locally
emission-free buses.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
- non-achievement of individual
compliance targets
50% of annual bonus in March of the year after the reporting year (2019)
50% of annual bonus (deferral) = in March of the second year after the
reporting year (2020)
comparison
- EBIT targeted/actual
operational result
Financial targets
Strategic targets for the
Overview of the determination of the annual bonus from January 1, 2019
B.49
125
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Manage-
ment remuneration carried out by an external remuneration
expert at the end of 2018. The result was that the remunera-
tion system as described above was confirmed as being in
conformance with the requirements of applicable law. The
remuneration system was approved by the Annual Sharehold-
ers' Meeting in 2014 with an approval ratio of 96.8%.
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines" exist for the Board of Manage-
ment. These guidelines require the members of the Board of
Management to invest a portion of their private assets in
Daimler shares over several years and to hold those shares
until the end of their Board of Management membership. The
number of shares to be held is set between 20,000 and
75,000. In fulfillment of the guidelines, up to 25% of the gross
remuneration out of each Performance Phantom Share Plan
is generally to be used to acquire ordinary shares in the Com-
pany, but the required shares can also be acquired in other ways.
Guidelines for share ownership
The terms governing the PPSP include a provision that allows for
the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who clearly
violates the Integrity Code that applies to all employees and
Board of Management members, or any other professional obli-
gations, prior to the payout of the plan proceeds. The Supervi-
sory Board has the final decision on all such bonus reductions.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant for the pay-
out. This share price is limited to 2.5 times the share price
at the beginning of the plan. In addition, the amount to be paid
out is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant for the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period.
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Value of the phantom shares on payout:
Determined annually by the Supervisory Board; for 2018,
approximately 1.4 times the base salary.
Value upon allocation:
zero.
0 to 200%, that is, the plan has an upper limit. It may also be
Range of possible target achievement:
50% relates to "relative share performance”, i.e. the perfor-
mance of Daimler's share in a three-year comparison with
the performance of the defined group of competitors (index).
If the performance of Daimler's share (in percent) is the
same as that of the index (in percent), target achievement is
deemed to be 100%. If the performance of Daimler's share
(in percent) is 50 percentage points or more below (above) the
performance of the index, target achievement is deemed to be
0% (200%). In the deviation range of +/- 50 percentage points,
target achievement varies in proportion to the deviation.
- Target achievement of 0% occurs if Daimler's return on sales
is 2 percentage points or more lower. In the deviation
range of +/- 2 percentage points, target achievement var-
ies in proportion to the deviation.
- Target achievement of 100% only occurs when the average
return on sales of the Daimler Group reaches 105% of the
revenue-weighted average return on sales of the group of
competitors. Maximum target achievement of 200% occurs
if Daimler's return on sales exceeds 105% of the revenue-
weighted average of the competitors by 2 percentage
points or more. An additional limitation was implemented
starting with PPSP 2015: If a target achievement of
between 195% and 200% occurs, the maximum target
achievement calculated from the performance parameter
of return on sales compared to the group of competitors
will only be deemed to be 200% if the actual return on sales
for Daimler's automotive business reaches at least the
strategic target for return on sales (currently 9%) in the third
year of the performance period. Otherwise, target achieve-
ment will be limited to 195%.
-
50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, GM, Honda, Hyundai, Isuzu, Kia, Mazda,
Nissan, Paccar, Subaru, Suzuki, Toyota, Volvo and Volkswa-
gen). For the measurement of success, the competitors'
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler's return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average of
the competitors.
Performance parameters for Plan 2018:
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
124
7 B.47 71 B.48
Non-financial targets
Employee targets
- Customer targets
Diversity targets
- Integrity targets
Transformation targets
The range of possible target achievement is between 0% and
200%. The lower limit of this range is 50% of the EBIT target
value; the upper limit is approximately 117% of the EBIT target
value. If the actually achieved EBIT value is at or under the
lower limit of the range, the target achievement degree is always
0%. The total absence of a bonus is therefore possible. If the
actually achieved EBIT value is at or above the upper limit of the
range, the target achievement degree is always 200%. The
range of target achievement develops linearly within the range.
7 B.50
The financial target is oriented toward the operating result of
the Daimler Group (EBIT). The target value of EBIT for each
financial year is derived on the basis of the desired medium-term
return, which is set by the Supervisory Board and is especially
ambitious, oriented toward the competitive environment, and
derived from the growth targets. The starting point of the cal-
culation is the revenue of financial year 2018 (to date: financial
year 2013).
150% for
EBIT target
0% for
50% EBIT target
EBIT
Accumulated growth
factor revenue
base 2018
Revenue
Financial target
0%
100%
200%
Target achievement
ROS
target
After another plan year has elapsed (retention period), the amount
to be paid out is calculated from this final number of phantom
shares and the applicable share price at that time. The share
price relevant for the payout under this plan is also relevant
for allocating the preliminary number of phantom shares for the
plan newly issued in the respective year.
Achievement of EBIT target results in 150% and is determined by
B.50
71 B.49
At its meeting in December 2018, the Supervisory Board decided
to further develop the remuneration system for the Board of
Management in view of the fundamental technical changes in
our industry and the associated changes in the competitive
environment, as well as changing customer behavior, the need
for significant investments in new technologies, and the
expectations of our shareholders. The main focus was on the
implementation of the new corporate strategy: safeguarding
the Group's future by expanding our business model as an auto-
maker and a provider of mobility services. In times of com-
prehensive transformation, it is especially important to align the
incentives in the remuneration system with the necessary
investments in the future. In this connection, further aims were
to achieve a higher degree of transparency, reduce the com-
plexity of the methods used and more precisely define the col-
lective non-financial aims and criteria. The implementation
will affect the short-term and medium-term remuneration com-
ponent, the annual bonus. Because the Supervisory Board
and the Board of Management consider it important to have a
uniform basic incentive structure, the Board of Management
has also decided to make a corresponding adjustment for all
management levels. As a result, the short-term and medium-
term variable remuneration component (the annual bonus) for
the Board of Management and for managers will be calculated
according to uniform goals/criteria and a uniform system start-
ing with the 2019 financial year. This uniform approach is
already being used to calculate the long-term variable remuner-
ation component (Performance Phantom Share Plan = PPSP).
Change to the annual bonus as a short-term and
medium-term component of the remuneration
Further development of the remuneration
system effective as of January 1, 2019
Maximally 235% (cap)
-25% - +25%
-10% - +10%
+
0% - 200%
50% payout after one year
50% deferral coupled with
share price perfor-
mance compared to
competitors
- Electric driving/
Integrated services
- Digitalization/
Connectivity
- CASE ecosystem
Financial target
Also at the beginning of the plan, performance targets are set for
a period of three years (performance period). Depending on
the achievement of these performance targets with a possible
range of 0% to 200%, after three years the phantom shares
allocated at the beginning of the plan are converted into the final
number of phantom shares allocated.
The Performance Phantom Share Plan (PPSP) is a variable ele-
ment of remuneration with long-term incentive effects. At the
beginning of the plan, the Supervisory Board specifies a grant
value (absolute amount in euros) in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated
over a predefined long period of time, which results in the pre-
liminary number of phantom shares allocated.
The total amount to be paid out from the annual bonus is limited
to 2.35 times the base salary of the respective financial year.
In addition, the Supervisory Board uses individual target agree-
ments as a basis for measuring the target achievement for indi-
vidual Board of Management members and then uses this target
achievement value to measure the overall target achieve-
ment of the Board of Management as a whole. This overall target
achievement result can lead to an addition or reduction of up
to 25% from the degree of target achievement as measured on
the basis of the primary performance parameters. Only in excep-
tional cases may the Supervisory Board deviate from this
overall performance assessment and make individual additions
or deductions within the range described above. In addition,
on the basis of the sustainability-related non-financial targets
for the Board of Management as a whole, an amount of up
to 10% can be added or deducted, depending on the predefined
key figures/assessment basis. The non-financial targets
defined for 2018 were the further development and permanent
establishment of the corporate value of integrity, the promo-
tion of diversity in the sense of increasing the share of women
in management positions and the maintenance and enhance-
ment of a high level of employee satisfaction and product quality.
For the other primary performance parameter, which also relates
to half of the annual bonus, “comparison of actual EBIT in the
financial year with actual EBIT in the prior year," the limits of the
unchanged possible range of 0 to 200% are defined as a devi-
ation of +/- 2% of the prior-year revenue.
0 to 200%, that is, the annual bonus due to EBIT achievement has
an upper limit of double the base salary and may also be zero.
Both primary performance parameters, each of which relates to
half of the bonus, can vary between 0% and 200%. For the pri-
mary performance parameter defining 50% of the annual bonus,
"comparison of actual EBIT in the financial year with the EBIT
targeted for the financial year," the limits of the unchanged
possible range of 0 to 200% are defined as a deviation of +/- 3%
from prior-year revenue.
Range of possible target achievement:
In 2018, this is equivalent to the respective base salary.
Amount with 100% target achievement (target annual
bonus):
50% relates to a comparison of actual EBIT in 2018 with
actual EBIT in 2017.
50% relates to a comparison of actual EBIT in 2018 with EBIT
targeted for 2018.
Primary reference parameters:
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler
Group (EBIT). For the past financial year, the annual bonus was
also linked to the target for the financial year determined by
the Supervisory Board (derived from the level of return targeted
for the medium term and the growth targets), the actual result
compared with the prior year, the combined performance of the
Board of Management members, additional non-financial
sustainability-related targets for the Board of Management as
a whole and, as a possible individual reduction component,
the non-achievement of compliance targets. With the actual-
actual comparison, achievement of EBIT at the prior-year
level constitutes target achievement of 100%. With the target-
actual comparison, the particularly ambitious definition of
the targeted EBIT that is oriented towards the competition con-
stitutes target achievement of 150%. 7 B.45 7 B.46
1 May be subject to retention or repayment claims.
235% of the target bonus
and the maintenance and
enhancement of a high level
of employee satisfaction and
product quality.
Compliance agreements in
2018
Maximum target achievement
(total cap):
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 123
Range of possible target achievement:
-25% - 0%
Range of possible target achievement: value of integrity; diversity
-10% - +10%
For 2018: Further develop-
ment and permanent estab-
lishment of the corporate
- 50% relates to a comparison
of actual EBIT in 2018 with
actual EBIT in 2017
Individual target agreements
in 2018
50% relates to a comparison
Board of Management as a whole:
non-financial targets
Target achievement for the
Target achievement for the
Board of Management as a whole
(derived from individual targets)
Range of possible target achievement:
-25% - +25%
Range of possible target achievement:
0% - 200%
EBIT target achievement
dependent upon
Annual bonus¹ 2018
B.46
1 Depending on the development of the Daimler share price compared with the
STOXX Europe Auto Index.
amount paid out = 50% of annual bonus × "relative share performance"¹
Non-achievement of individual
compliance targets
overall target achievement
B.47
- long-term performance-related remuneration
In this context, agreements were reached with the members of
the Board of Management allowing for the partial reduction
or complete elimination of the annual bonus for any member
who clearly violates our Integrity Code. If it is not possible to
reduce a future bonus payment, or a payment that has yet to be
made, the Board of Management member in question will be
required to pay back the amount of the bonus reduction. The
Supervisory Board has the final decision on all such bonus
reductions.
As was the case in previous years, further qualitative targets
were agreed upon with the individual members of the Board of
Management with regard to the sustained implementation
and permanent establishment of the compliance management
system. The complete or partial non-achievement of individ-
ual compliance targets can be reflected by a deduction of up
to 25% from the individual target achievement. However, the
compliance targets cannot result in any increase in individual
target achievement, even in the case of full accomplishment.
1 Maximum of 195% if, in the event of target achievement of 195% -
200%, the strategic return target of 9% has not been reached.
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000)
have been purchased (shares to be held until the end of the term of
service)
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Maximum performance development (total cap):
2.5 times the amount granted
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Price when issued and price at the end of the
plan period
Bandwidth of possible target achievement:
0% - 200%
50% relates to the "relative share perfor-
mance", i.e. the performance of Daimler's
share in a three-year comparison with the
performance of the defined group of
competitors (index).
- 50% relates to the "return on sales” achieved
in a three-year comparison with the defined
group of competitors page 124
Bandwidth of possible target achievement:
0% - 200%¹
Development of the
Daimler share price
Development of
performance factors
dependent upon
Performance Phantom Share Plan (PPSP)
PPSP 2018
Time of payment of Performance Phantom Share Plan 2018
in February of the year 2022
final number of phantom shares × Daimler share price at end of plan
= amount paid out
after expiry of fourth plan year
= final number of phantom shares, dividend entitlement in fourth year
preliminary number of phantom shares × performance factor
three-year dividend entitlement
after expiry of third plan year
preliminary number
of phantom shares
(virtual shares)
price of Daimler shares when issued
amount when granted in euros page 123
page 123
approx. 40%
remuneration
long-term performance-related
B.48
116
of actual EBIT in 2018 with
EBIT targeted for 2018
1,130 1,130
4,661
4,707
0 11,814
92
Retirement pension expense (service costs)
46
Total remuneration
Total limit for components of remuneration
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
6,836
6,950 2,243 14,057
239
Total
10,224
0 7,000
(plan period of 4 years)
2,048
195
92
9
101
2,175 2,243 2,243 2,243
Annual variable remuneration
(50% of annual bonus, short-term)
1,004 1,024
0 2,407
46
Deferral (50% of annual bonus, medium-term)
1,004 1,024
0 2,407
46
Long-term variable remuneration
2,653 2,659
10,344
348
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
832
832
812
832
832
832
Taxable non-cash benefits and other fringe benefits
235
121
121
121
108
93
93
93
832
677
Base salary
max.
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
133
Martin Daum
Daimler Trucks & Buses
2,048
195
Renata Jungo Brüngger
Integrity & Legal Affairs
2017
2018
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2017
2018
Jan. 1 Dec. 31
min.
March 1 Dec. 31
2,048
195
167
2,008
5,285
2017
238
4,909
Bodo Uebber
2018
275
886
18,387
2017
275
690
17,263
Total
2018
244
2018
Hubertus Troska
1,072
Financial success
parameters 0% - 200%
Joint performance
+/- 25%
Non-financial success parameters
+/- 10%
☐ Non-achievement of compliance
targets -25% - 0% (not applied in 2018)
45% of the base salary
50% short-term
+7.5% of the base salary
+10% of the base salary
2017
50% medium-term
(deferral)
25
0
short-term
50
50%
75
base salary
100
ACTUAL 62.5% of the base salary
Total
1,481
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 2017: Dr. Bernhard pro rata until Feb. 10, 2017.
In thousands of euros
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Jan. 1 Dec. 31
2017 2018
max.
Jan. 1 Dec. 31 Jan. 1 - Feb. 10
min.
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 Dec. 31
2017
2018
min.
max.
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Benefits granted
B.60
the half of the share-based annual bonus payable in 2020 for
2018 at the value for target achievement of 100%,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018 (payable in 2022), and
the retirement pension expense in 2018 (service costs in
2018).
the half of the annual bonus payable in 2019 for 2018 at the
value for target achievement of 100%,
3 2017: Mr. Daum pro rata from March 1, 2017.
2,422
85,954
1,973
82,711
132 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Details of Board of Management remuneration in 2018
pursuant to the requirements of the German Corporate
Governance Code
1,481
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted for
the financial year and on the other hand the payments made
in or for the reporting year and the retirement pension expense
in or for the year under review in accordance with the recom-
mendations of Clause 4.2.5 paragraph 3 of the German Corpo-
rate Governance Code.
the base salary in 2017,
the taxable non-cash benefits and other fringe benefits in
2017,
the half of the annual bonus paid in 2018 for 2017 at the
value for target achievement of 100%,
the half of the share-based annual bonus payable in 2019
for 2017 at the value for target achievement of 100%,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017 (payable in 2021), and
the retirement pension expense in 2017 (service costs in
2017).
The total of "benefits granted" for financial year 2018
is calculated from
the base salary in 2018,
the taxable non-cash benefits and other fringe benefits
in 2018,
The total of "benefits granted" for financial year 2017 is calcu-
lated from
912
953
953
88
907
993
993
993
958
920
920
920
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
406
416
0
88
88
146
161
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2017
2018
Jan. 1 Dec. 31
min.
max.
812
832
978
832
812
832
832
832
95
161
161
832
2018
406
0
1,090 1,092
1,902 1,924
282 292
0 2,750
0 4,706
292 292
Total remuneration
Total limit for components of remuneration
granted in the reporting year
3,010 3,127 1,250
5,956
3,142
3,136 1,212 6,043
5,176
5,252
5,271
Annual variable remuneration
Excluding
0 4,706
257
257
257
248
Retirement pension expense (service costs)
978
406
416
0
978
406
416
416
0
Long-term variable remuneration
(plan period of 4 years)
1,043 1,045
0
2,750
Total
1,855 1,877
978
1 Positive target achievement of the defined performance criteria “unit-sales
development, revenue development, transformation in future technologies,
change in the corporate culture (Leadership 2020)".
2017
HR and Labor Relations Director &
Mercedes-Benz Vans
406
416
0
978
Long-term variable remuneration
(plan period of 4 years)
1,043
1,045
0
2,750
1,043
1,045
0
2,750
Total
978
0
416
338
953
920
925
925
925
Annual variable remuneration
(50% of annual bonus, short-term)
1,719 1,877
338
0
978
406
416
0
978
Deferral (50% of annual bonus, medium-term)
416
Jan. 1 Dec. 31
0
1,855 1,877
3,053
1,176
5,882
4,662
5,252
5,176
5,252
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Ola Källenius
Group Research &
Mercedes-Benz Cars Development
Wilfried Porth
3,020
3,074 1,197 5,903
2,733
- Retirement pension expense (service costs)
0
4,706
Retirement pension expense (service costs)
102
244
244
244
4,706
245
251
251
Total remuneration
Total limit¹ for components of remuneration
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
251
B.56
PPSP 2014 (paid in 2018)
(long-term variable remuneration 71 B.61)
282
10,280
Britta Seeger
2018
248
1,467
2017
122
167
195
Dr. Dieter Zetsche
2017
2018
In thousands of euros
Taxable non-cash benefits and other fringe benefits
156
2017
11,270
292
2018
251
1,290
2017
245
938
Ola Källenius
B.58
2018
2,971
2017
248
2,651
Wilfried Porth
2018
156
257
Renata Jungo Brüngger
B.58.
The total remuneration of the Board of Management for the finan-
cial year 2018 amounts to €24.7 million (2017: €35.0 million).
Of that total, €9.5 million was fixed, that is, non-performance-
related remuneration (2017: €9.5 million), €5.0 million (2017:
€15.3 million) was short-term and medium-term variable per-
formance-related remuneration (annual bonus with deferral),
and €10.2 million was variable performance-related remunera-
tion granted in the financial year 2018 with a long-term incen-
tive effect (2017: €10.2 million). 7 B.57
1,249
17,807
302
302
967
2018
Bodo Uebber
3,455
1,043
15,446
800
800
812
2017
2,397
2,820
2017
947
932
33,322
10,204
23,236
10,225
145,775
151,157
2,502
7,667
2,502
7,667
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2018 as shown
'in table
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
2017
2018
Total
4,057
1,246
18,464
932
8,007
7,784
1,045
2,860
2017
Total
1,480
1,703
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
3 Including an anniversary bonus of €69,456.50.
4 For the fulfillment of disclosure obligations pursuant to Section
285 No. 9a of the German Commercial Code (HGB), this amount is
reduced by €182,254 for the financial year 2018 (2017: €197,508).
The corresponding fringe benefits were granted and borne by a
subsidiary and are thus not included in the remuneration to be dis-
closed in the annual financial statements of the parent company,
Daimler AG.
130
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Commitments upon termination of service
Retirement provision
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan". This retirement
benefit system features the payment of annual contributions
by Daimler and is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to a
precautionary investment concept.
The Supervisory Board of Daimler AG has approved the applica-
tion of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base sal-
ary and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is
15%. This calculation takes into consideration the targeted level
of retirement provision for each Board of Management mem-
ber also according to the period of membership - and the
resulting annual and long-term expense for the Company.
The contributions to the retirement provision are granted until
the age of 62. The benefit from the pension plan is payable to
surviving Board of Management members at the earliest at the
age of 62, irrespective of their age upon retirement. If a member
of the Board of Management retires due to disability, the bene-
fit is paid as a disability pension, even before the age of 62.
The Pension Capital system was used from the beginning of 2006
until the end of 2011. The pension agreements of active Board
of Management members that were valid until that time were
modified accordingly. All Board of Management members newly
appointed during that period were subject exclusively to the
Pension Capital system.
Under this system, each Board of Management member is cred-
ited with a capital component each year. This capital compo-
nent comprises an amount equal to 15% of the sum of the Board
of Management member's fixed base salary and the total
annual bonus for the respective financial year on the balance
sheet date, multiplied by an age factor equivalent to a rate
of return of 6% until 2015 and 5% as of 2016 (Wolfgang Bernhard
and Wilfried Porth: 5% for all years). These contributions to
pension plans are granted only until the age of 60. The benefit
from the pension plan is payable to surviving Board of Man-
agement members at the earliest at the age of 60, irrespective
of their age upon retirement. If a member of the Board of
Management retires due to disability, the benefit is paid as a
disability pension, even before the age of 60.
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
- as a single amount;
Hubertus Troska4
Bodo Uebber
Britta Seeger
107
164
Martin Daum²
121
235
Renata Jungo Brüngger
93
108
Ola Källenius³
-
161
Wilfried Porth
88
146
164
366
494
470
95
102
in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
as an annuity with annual increases (Pension Capital 3.5% or
in accordance with applicable law; Daimler Pensions Plan in
accordance with applicable law).
Until the end of 2005, the pension agreements of Board of
Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the
corresponding hierarchical level applied to Wilfried Porth for
the period prior to his serving as a member of the Board of
Management. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
Present value¹1 of
obligations (for pension,
pension capital and
Daimler Pensions Plan)
Dr. Dieter Zetsche
2018
2017
1,050
1,050
42,023
42,738
Dr. Wolfgang Bernhard²
2018
2017
46
Martin Daum³
2018
244
3,261
Service cost
(for pension, pension
capital and Daimler
Pensions Plan)
Annual pension
(as regulated until 2005)
as of age 60
In thousands of euros
Individual entitlements, service costs and present values for members of the Board of Management
Payments of these retirement pensions start upon request when
the term of service ends at or after the age of 60, or are paid
as disability pensions if the term of service ends before the age
of 60 due to disability. The respective agreements provide for
3.5% annual increases starting when benefits are received (with
the exception that Wilfried Porth's benefits are adjusted in
accordance with applicable law). The agreements include a pro-
vision by which a spouse of a deceased Board of Management
member is entitled to 60% of that member's pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Departing Board of Management members with pension agree-
ments (pension commitments) modified as of the beginning
of 2006 receive, for the period between the end of the last con-
tract period and reaching the age of 60, payments in the
amounts of the pension commitments granted as described in
the previous section. These payments are made until the age of
60, possibly reduced due to other sources of income, and are
subject to the annual percentage increases described above in
the explanation of these pension agreements.
Departing Board of Management members are also provided
with a company car, in some cases for a defined period.
Service costs for pension obligations according to IFRS amounted
to €2.4 million in financial year 2018 (2017: €2.0 million). The
present value of the total defined benefit obligation according
to IFRS amounted to €86.0 million as of December 31, 2018
(December 31, 2017: €82.7 million). Taking age and period of
service into account, the individual entitlements, service
costs and present values are shown in the table. 7 B.59
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
131
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/reg-
istered partner or dependent children is/are entitled to the full
committed amount in the case of the Pension Capital system,
and to the credit amount reached plus an imputed amount until
the age of 62 in the case of the Daimler Pensions Plan. If a
Board of Management member passes away after retiring for
reason of age, in the case of payment of twelve annual install-
ments the heirs are entitled to the remaining present value. In
the case of a pension with benefits for surviving dependents,
the spouse/registered partner or dependent children is/are enti-
tled to 60% of the discounted terminal value (Pension Capital),
or the spouse/registered partner is entitled to 60% of the actual
pension (Daimler Pensions Plan).
Early termination of service
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus pro
rata for the period until the end of the contract of service or of
the Board of Management membership takes effect. Entitle-
ment to payment of the performance-related component of
remuneration with a long-term incentive effect (PPSP) that has
already been allocated is defined by the conditions of the
respective plans. To the extent that the payments described
above are subject to the provisions of the so-called severance
cap of the German Corporate Governance Code, their total
including fringe benefits is limited to double the annual remuner-
ation and may not exceed the total remuneration for the
remaining period of the service contract.
In the event of an early termination of the service contract,
both the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the
long-term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan.
Sideline activities of Board of Management members
The members of the Board of Management should accept man-
agement board or supervisory board positions and/or any
other administrative or honorary functions outside the Group only
to a limited extent. Furthermore, they require the consent of
the Supervisory Board before commencing any sideline activities.
This ensures that neither the time required nor the remunera-
tion paid for such activities leads to any conflict with the mem-
bers' duties to the Group. Insofar as such sideline activities
are memberships of other statutory supervisory boards or com-
parable boards of business enterprises, they are disclosed in
the notes to the annual financial statements of Daimler AG, which
is published on our website. In general, Board of Management
members have no right to separate remuneration for board
positions held at other companies of the Group.
Loans to members of the Board of Management
In 2018, no advances or loans were made or abated to mem-
bers of the Board of Management of Daimler AG.
Payments made to former members of the Board of
Management of Daimler AG and their survivors
Payments made in 2018 to former members of the Board of
Management of Daimler AG and their survivors amounted to
€16.2 million (2017: €19.0 million). Pension provisions accord-
ing to IFRS for former members of the Board of Management
and their survivors amounted to €270.2 million as of December
31, 2018 (2017: €270.5 million).
B.59
The durations of the contracts of service of the members of
the Board of Management correspond to their terms of
appointment.
page 44 f
- Taxable non-cash benefits and other fringe benefits
14,896
260
Dr. Dieter Zetsche
€67.49)
(2017: at share price
€70.13)
(2018: at share price
Number Value when granted
Total
Long-term variable
remuneration (PPSP)
Medium-term
Short and medium-term variable
remuneration (annual bonus)
Short-term
129
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Base salary
In thousands of euros
Board of Management remuneration in 2018
2018
2,048
640
2017
272
90
90
92
2017
2018
Dr. Wolfgang Bernhard¹
B.57
8,617
39,315
5,987
2,659
37,915
640
1,978
1,978
2,008
2,653
Martin Daum²
Overall target
achievement
final number of
phantom shares
times share price
at end of plan
(amount paid out
in €)
payments of PPSP 2014.
With more than 250% target
400
450
500
The possible upper limits with regard to the annual bonus and
the PPSP are shown in tables 7 B.55 and 7 B.56.
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and on the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018, and
the taxable non-cash benefits in 2018.
the half of the medium-term share-based component of the
annual bonus for 2018 payable in 2020 with its value at
the end of the reporting period (entitlement depending on the
development of Daimler's share price compared with the
STOXX Europe Auto Index),
the half of the annual bonus for 2018 payable in 2019 and
measured as of the end of the reporting period,
the base salary in 2018,
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the Board
of Management of Daimler AG is calculated as the total of the
amounts of
Board of Management remuneration in 2018 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
Board of Management remuneration
in financial year 2018
of the grant value
Maximum
theoretically 500%
achievement, the total cap' applies.
350
300
Maximum
1 Amount paid out including dividend-equivalent
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan)
0
50
100
100%
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
ACTUAL
126%
ACTUAL
108%
ACTUAL
150
200
Maximum
200%
250
250%
ACTUAL
117%
260
2018
260
16,148
800
800
812
2017
2,444
1,092
15,573
260
260
832
2018
Wilfried Porth
3,455
1,043
1,090
3,502
Britta Seeger
2018
832
2018
Hubertus Troska
3,455
1,043
15,446
800
15,446
800
2017
2,397
1,045
14,896
260
260
832
812
832
800
812
260
832
2018
Renata Jungo Brüngger
3,054
1,043
15,446
667
667
677
2017
2,397
1,045
14,896
260
260
14,896
1,045
2,397
2017
2,397
1,045
14,896
260
260
832
800
2018
3,455
1,043
15,446
800
800
812
2017
Ola Källenius
- Retirement pension expense (service costs)
5,347
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1,282
996
996
996
1,178
Total
494
494
494
470
164
164
164
366
Taxable non-cash benefits and other fringe benefits
832
832
832
812
832
832
832
812
Base salary
max.
min.
2018
1,326
1,326
1,326
Annual variable remuneration
>70%
Excellent
Good
2.0%
> 30%
> 65%
Good
2.5%
2.0%
Target overachieved ≥10%
Long-term variable remuneration
978
0
416
Jan. 1 Dec. 31
406
0
416
406
Deferral (50% of annual bonus, medium-term)
978
0
416
406
978
0
416
406
(50% of annual bonus, short-term)
978
> 35%
Average
> 25%
125
200% of the
(50% of annual bonus, short-term)
473
483
0
1,136
Deferral (50% of annual bonus, medium-term)
473
483
0
1,136
Long-term variable remuneration
(plan period of 4 years)
1,246 1,249
0 3,288
Total
2,192 2,215
Retirement pension expense (service costs)
690
886
0 5,560
886 886
Total remuneration
Total limit¹ for components of remuneration
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
150
(deferral)
175 medium-term
50%
Low
-2.5%
<25%
> 60%
<60%
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
1.0%
Low
-2.5%
Gender Diversity
Aspirational Guidelines
Target achieved <10%
Underperformed
Target not achieved
Transformation targets
Transformation targets will replace the previous shared perfor-
mance value for the Board of Management as a whole, which
was derived from the Board of Management members' individual
target agreements and degrees of target achievement. Espe-
cially during the transformation phase, these transformation
targets will refer to quantitative as well as qualitative aspects
and will be assessed and evaluated correspondingly by the Super-
visory Board.
1.0%
In order to take into account the implementation of the future-
oriented measures for the technological and sustainable
realignment of the Group, the divisions will annually define key
performance indicators and target values for the future-ori-
ented CASE fields – Connected, Autonomous, Shared & Services,
Electric. After the end of a financial year, a comparison of the
target values and the actual values will be conducted for each
division. The Supervisory Board will derive the Board of Man-
agement's shared degree of target achievement from the divi-
sions' degree of target achievement as well as the strategic,
organizational and structural contribution of the Board of Man-
agement as a whole, taking into account the economic environ-
ment and the competitive situation and positioning of the Group.
It will be possible to add or deduct 25 percentage points to/
from the degree to which the financial target has been achieved.
The description of the transformation criteria and the publication
of target achievement figures in the Remuneration Report will
ensure a higher degree of transparency in the future.
No change in the other components of the
remuneration system
The remainder of the remuneration system, in particular the
composition of the remuneration of the Board of Management
from the non-performance-related base salary, the annual
bonus as a short-term and medium-term variable component
with deferral and the long-term variable component PPSP
also remain unchanged, as does the relationship between the
individual components of the remuneration. The current
design of the PPSP, with the four-year duration of the plan, the
measurement of the success targets compared to a defined
and regularly monitored group of competitors that face the same
strategic challenges, and the linkage with the absolute devel-
opment of the share price, is already oriented toward the long-
term success of the company.
128
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.55
Annual bonus
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
Maximum 235% of the base salary
+10% of the base salary
+25% of the base salary
235
200
This criteria-based consideration of the future-oriented CASE
fields will be based on assessments of the success of product-
related, technical and economic activities/progress. Further-
more, it should be possible to assess the progress of sustain-
ability/Environment Social Governance (ESG) aspects and the
success of strategic M&A activities. The defined key perfor-
mance indicators are used for measuring the degree to which
the transformation targets have been achieved. They also sup-
port the corresponding activities, corrections or implementation
steps of the Group's sustainability strategy (for example, invest-
ment volume, growth of revenue from digital services, activation
and connectivity rates of digital services, proportion of alterna-
tive drive systems, emission targets, development discipline,
development progress of products and digital services, number
of online contracts, proportion of digital self-services, revenue
from mobility services).
2.5%
Excellent
Addition or
deduction
3,447 1,570
3,375
3,121 1,244 5,950
3,155
Total remuneration
244
244
244
238
248
248
122 248
Retirement pension expense (service costs)
4,706
0
1,855 1,877
4,706
0
1,877
1,855
Total
2,750
0
1,045
1,043
2,750
0
6,276
Total limit¹ for components of remuneration
granted in the reporting year
Excluding
1,130
1,054
164
164
164
107
Taxable non-cash benefits and other fringe benefits
Total
966
966
966
947
Base salary
max.
1,045
Jan. 1 Dec. 31
min.
2017
Jan. 1 Dec. 31
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
5,252
5,176
5,252
5,176
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
2018
1,043
(plan period of 4 years)
126
≥60%
Average
Low
1.0%
-2.5%
Target achieved¹
Underperformed¹
Target not achieved¹
1 The amount to which the addition or deduction deviates from the
respective target value is defined according to the specific division
and product.
Non-financial targets
The non-financial targets, which are oriented toward sustain-
ability and are for the first time uniform at all management
levels, are divided into four categories. Each category is weighted
equally and receives an addition or a deduction of up to 2.5
percentage points to or from the degree of achievement of the
financial target. After the end of the financial year, the degree of
target achievement is calculated by comparing the target value
and the actual value. On this basis, an addition to or a deduc-
tion from the degree of financial target achievement of up to a
total amount of 10 percentage points is possible.
Specifically:
Achievement of the Group-level targets regarding the further
development and permanent establishment of integrity is
measured on the basis of certain standardized questions in
our global employee survey. This measurement is based on
the achieved approval rate of any question and the average
approval rate achieved across all questions (integrity indica-
tor). The relevant degree of target achievement at the Group
level (in %) is derived from these figures. 7 B.51
Quality and/or customer satisfaction targets (quality KPIs of
all divisions) are defined by the individual divisions for each
financial year. With regard to vehicles, a comparison of the target
number and the actual number of claims during a predefined
period of time (MIS xx) is carried out. With regard to services,
this comparison is carried out by means of a customer satis-
faction index. The relevant degree of target achievement (in %)
at the Group level is derived as a weighted average of the indi-
vidual divisional degrees of target achievement (in %). 7 B.52
61-70
≤60
The degree of the employees' commitment to the company
(engaged employees) is calculated on the basis of their answers
to certain standardized questions in our global employee
survey. These answers, together with the response rate achieved
in the employee survey, are used to derive the degree of achieve-
ment (in %) of the targets defined at the Group level for the
maintenance and enhancement of a high degree of satisfaction
and motivation among the employees. 7 B.53
A higher degree of transparency will be achieved in the future,
thanks to the increased quantification of the non-financial tar-
gets and the publication of the degree of target achievement in
the Remuneration Report.
B.53
Employee engagement
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
B.54
Diversity
Degree of target
Addition or
achievement
deduction
Engaged
employees
Response
rate
Degree of target
achievement
A target for the proportion of women in executive positions
(Aspirational Guidelines) was defined at the Group level for a
period of several years on the basis of Daimler's in-house
guidelines for the proportion of women in management posi-
tions (Gender Diversity Aspirational Guidelines), which go
beyond the legally obligatory targets. A comparison of the tar-
get figures with the actual figures at the end of a financial
year is used to derive the degree of target achievement (in %).
71 B.54
- Retirement pension expense (service costs)
-2.5%
1.0%
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.51
Integrity
B.52
Quality
Degree of target
Addition or
achievement
deduction
Integrity Approval rate
indicator of any question
Degree of target
achievement
Addition or
deduction
Quality KPIs
Low
of all divisions
2.5%
81-100
≥75%
Excellent
2.5%
Target overachieved¹
Good
2.0%
71-80
≥65%
Good
2.0%
Average
Excellent
3,936 4,231 2,016 7,576
Average
6,171
Dividend equivalent PPSP 2018
144
128
Dividend equivalent PPSP 2017
149
133
Dividend equivalent PPSP 2016
138
121
Dividend equivalent PPSP 2015
138
152
3,463
Payment of PPSP 2014
2,472
6,181
Payment of PPSP 2013
Long-term variable remuneration
892
1,349
2,175
Deferral (50% of annual bonus, medium-term)
Dividend equivalent PPSP 2014
90
Total
6,021
134
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Benefits granted
In thousands of euros
Britta Seeger
Mercedes-Benz Cars Marketing & Sales
Hubertus Troska
Greater China
Jan. 1 Dec. 31
2017
10,868
2018
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
2017
6,095
9
3,601
8,264
13,043
Total remuneration
3,454
46
Retirement pension expense (service costs)
min.
640
Dr. Wolfgang Bernhard'
(50% of annual bonus, short-term)
In thousands of euros
B.61
Payments made
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for reporting year 2018 are
implemented with the payout of PPSP 2018, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2018. For financial year 2018,
therefore, the possible cap would take place in 2022, the year
that PPSP 2018 is paid out.
the retirement pension expense in 2018 (service costs in
2018).
the dividend equivalent of the current PPSP (2015, 2016,
2017 and 2018) paid in 2018, and
the value of the long-term share-based remuneration (PPSP
2014) paid in 2018,
the half of the share-based annual bonus paid in 2018 for
2016 (deferral),
the half of the annual bonus payable in 2019 for 2018 at
the value as of the end of the reporting period,
- the base salary in 2017,
the taxable non-cash benefits and other fringe benefits
in 2017,
the half of the annual bonus paid in 2018 for 2017 at the
value as of the end of the reporting period in financial year
2017,
the half of the share-based annual bonus paid in 2017 for
2015 (deferral),
the taxable non-cash benefits and other fringe benefits
in 2018,
the dividend equivalent of the current PPSP (2014, 2015,
2016 and 2017) paid in 2017, and
the retirement pension expense in 2017 (service costs in
2017).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for financial year 2017 are
implemented with the payout of PPSP 2017, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2017. For financial year 2017,
therefore, the possible cap would take place in 2021, the year
that PPSP 2017 is paid out.
The total of "payments made" for financial year 2018
is calculated from
1,978
- the base salary in 2018,
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
the value of the long-term share-based remuneration (PPSP
2013) paid in 2017,
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
101
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Annual variable remuneration
2,243
Total
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
135
The total of "payments made" for financial year 2017
is calculated from
2,175
195
167
Taxable non-cash benefits and other fringe benefits
92
2,048
2,008
2018
9
Base salary
Jan. 1 Feb. 10 Jan. 1 Dec. 31
2017
2018
Ola Källenius¹
Group Research &
Mercedes-Benz Cars Development
In thousands of euros
Payments made
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
2,348
2,119
1,789
1,172
251
245
244
Wilfried Porth
2,572
HR and Labor Relations Director &
Mercedes-Benz Vans
95
2018
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
2018
Base salary
812
832
812
832
Taxable non-cash benefits and other fringe benefits
161
146
88
Total
907
993
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
102
208
922
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
488
510
958
22
9
17
20
7
9
19
22
53
60
50
56
50
56
54
54
775
1,407
920
1,054
(50% of annual bonus, short-term)
3,965
5,850
1,679
2,282
Total remuneration
244
238
248
122
Retirement pension expense (service costs)
2,395
4,330
435
982
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Total
54
Dividend equivalent PPSP 2018
56
50
56
50
Dividend equivalent PPSP 2017
60
53
6
5
Dividend equivalent PPSP 2016
55
48
54
Annual variable remuneration
Payments made
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Deferral (50% of annual bonus, medium-term)
800
260
800
260
846
525
846
525
Long-term variable remuneration
Payment of PPSP 2013
457
2,472
Payment of PPSP 2014
In thousands of euros
402
(50% of annual bonus, short-term)
Annual variable remuneration
1,131
525
Total
164
107
Taxable non-cash benefits and other fringe benefits
967
947
Base salary
2018
2017
Jan. 1 Dec. 31 Jan. 1 Dec. 31
1,448
260
108
260
812
Base salary
2
Greater China
Jan. 1 Dec. 31
2018
Jan. 1 Dec. 31
2017
2018
832
2017
Mercedes-Benz Cars Marketing & Sales
Hubertus Troska
Britta Seeger¹
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
In thousands of euros
Payments made
Jan. 1 Dec. 31 Jan. 1 Dec. 31
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
812
Taxable non-cash benefits and other fringe benefits
800
260
800
(50% of annual bonus, short-term)
Annual variable remuneration
1,326
832
1,282
1,178
Total
494
470
164
366
996
2,469
292
3,681
5,580
4,340
282
Dividend equivalent PPSP 2016
58
50
55
48
Dividend equivalent PPSP 2015
53
64
Dividend equivalent PPSP 2014
3
2
Dividend equivalent PPSP 2015
61
-
18
60
56
62
257
2,662
248
3,427
Total remuneration
Retirement pension expense (service costs)
1,412
2,272
Total
57
54
Dividend equivalent PPSP 2018
59
52
56
50
Dividend equivalent PPSP 2017
260
Deferral (50% of annual bonus, medium-term)
846
525
Base salary
2018
Jan. 1 Dec. 31
Jan. 1 Dec. 31
2017
Renata Jungo Brüngger¹
Integrity & Legal Affairs
Daimler Trucks & Buses
Jan. 1 Dec. 31
2018
677
March 1 Dec. 31
2017
In thousands of euros
Payments made
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
136
Deferral (50% of annual bonus, medium-term)
932
Martin Daum¹
832
812
832
667
Payment of PPSP 2013
Long-term variable remuneration
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
925
920
953
912
Total
93
121
235
Taxable non-cash benefits and other fringe benefits
302
800
1,005
Long-term variable remuneration
Retirement pension expense (service costs)
690
886
Total remuneration
6,891
4,868
2,851
137
56
Payment of PPSP 2014
2,472
123
Payment of PPSP 2013
Long-term variable remuneration
1,385
5,147
Total
65
2,956
Payment of PPSP 2014
1,656
Dividend equivalent PPSP 2014
73
Dividend equivalent PPSP 2015
58
66
Dividend equivalent PPSP 2016
63
71
Dividend equivalent PPSP 2017
60
67
Dividend equivalent PPSP 2018
624
Payment of PPSP 2013
Dividend equivalent PPSP 2014
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
€0 <
€500 million ≤
Possible impact
Level
Low
Medium
High
< €500 million
< €1 billion
0% Probability of occurrence ≤ 33%
33% Probability of occurrence ≤ 66%
66% Probability of occurrence < 100%
Probability of occurrence
Level
Low
Medium
High
Assessment of probability of occurrence/possible impact
B.63
The Daimler Group is exposed to a large number of risks that are
directly linked with the business activities of its divisions or
which result from external influences. A risk is understood as
the danger that events, developments or actions will prevent
the Group or one of its divisions from achieving its targets. At
the same time, it is important for the Daimler Group to identify
opportunities so that they can be utilized in the course of its
business activities, thus safeguarding and enhancing the
Group's competitiveness. An opportunity is understood as the
possibility to safeguard or to surpass the planned targets of
the Group or a division as a result of events, developments or
actions. The divisions have direct responsibility for recogniz-
ing and managing business risks and opportunities at an early
stage. As part of the strategy process, risks related to the
planned long-term development and opportunities for further
profitable growth are identified and integrated into the deci-
sion-making process. In order to identify business risks and
opportunities at an early stage, to assess and manage them
consequently, effective management and control systems, which
are clustered into a risk and opportunity management system,
are applied. Risks and opportunities are not offset. The system
is described below.
Risk and Opportunity Report
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
An agreement between Daimler AG and BMW AG, which con-
tains basic provisions for six joint ventures between Daimler
Mobility Services GmbH and group companies of BMW AG in
the field of mobility services (car sharing, ride hailing, park-
ing, charging, multimodal and a joint venture holding the com-
mon brand). A change of control is defined as the acquisition
by a third party of more than 50% of the voting rights or shares,
or the conclusion of a control agreement over Daimler AG
by a third party. As a result of a change of control, the other
party may initiate a shoot-out process, which is more pre-
cisely defined in the agreement.
An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V.
In the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question
to offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). A change of control of Daimler
AG occurs if one person gains control over Daimler AG, whereby
control is defined as (i) having control of more than 50% of
the voting rights, (ii) being able to control more than 50% of the
voting rights eligible to vote at the shareholders' meetings
on all or nearly all matters, or (iii) the right to determine the
majority of the members of the Board of Management or
of the Supervisory Board. A change of control also occurs if
competitors of the HERE Group or certain possible com-
petitors of the HERE Group in the technology industry acquire
a shareholding of at least 25% of Daimler AG. If none of the
other parties acquire these shares, the agreement gives them
the right to dissolve There Holding B.V.
- An agreement between Daimler and Robert Bosch GmbH
related to the joint establishment and operation of EM-
motive GmbH for the development and production of electric
motors for automotive applications, which gave the Robert
Bosch Group the right to terminate the agreement and to
acquire the shares of the Daimler Group if Daimler should
become controlled by a competitor of Robert Bosch GmbH,
was terminated in January 2019. Robert Bosch GmbH is to
acquire the shares in the joint venture held by Daimler. The
conclusion of the transaction requires the approval of the
competition authorities, which is expected to be granted in
March 2019.
-
- An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competi-
tors acquires more than 25% of the equity or assets of Daimler
AG or becomes able to influence the decisions of its Board of
Management.
Impact
Impact
Impact
≥ €1 billion
Risk and opportunity management system
The risk management system with regard to existence-
threatening and other material risks is integrated into the
value-based management and planning system of the Daimler
Group. It is an integral part of the overall planning, manage-
ment and reporting process in the legal entities, divisions and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control,
monitor and report risks threatening Daimler's existence and
other material risks, in order to support the achievement of
corporate targets and to enhance risk awareness at the Group.
145
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and a definition of control
with the objective of identifying significant risks relating to the
processes of corporate accounting and financial reporting in the
main legal entities and corporate functions. The controls
required are then defined and documented in accordance with
Group-wide guidelines. Random samples are regularly tested
to assess the effectiveness of the controls. Those tests consti-
tute the basis for self-assessment of the appropriate magni-
tude and effectiveness of the controls. The results of this self-
assessment are documented and reported in a Group-wide
IT system. Identified weaknesses are eliminated with consider-
ation of their potential effects. At the end of the annual cycle,
the selected legal entities and corporate functions confirm the
effectiveness of the internal control and risk management
system with regard to the corporate accounting process. The
Board of Management and the Audit Committee of the Super-
visory Board are regularly informed about the main control
weaknesses and the effectiveness of the control mechanisms
installed. However, the internal control and risk management
system for the accounting process cannot ensure with abso-
lute certainty that material false statements in accounting are
avoided.
processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the con-
text of preparing financial statements, and authorization and
access rules exist for relevant IT accounting systems.
processes are established to guarantee the completeness of
financial reporting;
issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
transactions within the Group are accounted for and properly
eliminated;
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. In the case of a change of control of one of
the parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a third
party or several third parties acting jointly acquire, legally or
economically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to
appoint a majority of the members of its managing board.
Under the master cooperation agreement, several cooperation
agreements were concluded between Daimler AG on the one
side and Renault and/or Nissan on the other, which provide for
the right of termination for a party to the agreement in the
case of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the
shared use and development of fuel-efficient diesel and gaso-
line engines and transmissions, the development and supply
of a small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for
compact cars, and the joint production of Infiniti/Nissan and
Mercedes-Benz compact vehicles by a 50-50 joint venture
in Mexico. A change of control is deemed to occur at a thresh-
old of 50% of the voting rights of the company in question
or upon authorization to appoint a majority of the members of
its managing board. In the case of termination of cooperation
in the area of the development of small cars due to a change
of control in the early phase of the cooperation, the party
affected by the change of control would be obliged to bear its
share of the costs of the development of shared components
even if the development were terminated for that party.
- An agreement with BAIC Motor Co., Ltd. related to a jointly held
company for the production and distribution of cars of the
Mercedes-Benz brand in China, by which BAIC Motor Co., Ltd.
is given the right to terminate the agreement or exercise a
put or call option in the case that a third party acquires one
third or more of the voting rights in Daimler AG.
The internal control system with regard to the accounting
process has the objective of ensuring the correctness and
effectiveness of accounting and financial reporting. It is
designed in line with the internationally recognized framework
for internal control systems of the Committee of Sponsoring
Organizations of the Treadway Commission (COSO Internal
Control - Integrated Framework), is continually developed fur-
ther, and is an integral part of the accounting and financial
reporting processes in the relevant legal entities and corporate
functions. The system includes principles and procedures as
well as preventive and detective controls. Among other things,
it is regularly checked, if
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all identi-
fied risks enter the risk management process. The internal
control system (ICS) is responsible for the monitoring of gen-
eral uncertainties without any clear indication of a possible
effect on earnings.
At Group level, risks and opportunities below €500 million are
classified as "Low", between €500 million and €1 billion as
"Medium", and above €1 billion as "High". For the quantification
of each risk and opportunity category in the Management
Report, the individual risks and opportunities are summarized
for each category. The assessment of the dimensions proba-
bility of occurrence and possible impact is based on the levels
shown in table 7 B.63 and is conducted before measures are
implemented. In addition to the quantifiable risks and opportu-
nities, risk management also considers qualitative risks and
opportunities, which primarily comprise those risks connected
with aspects presented in the non-financial report. In the con-
text of describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels "Low",
"Medium" and "High". These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of
a risk or opportunity, its effect on EBIT is generally considered.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
144
In the context of operative planning, risks and opportunities -
with consideration of appropriate risk and opportunity catego-
ries are identified and assessed for a two-year planning period.
Furthermore, the discussions for the derivation of mid-term
and strategic targets in the context of strategic planning include
the identification and assessment of risks and opportunities
relating to a longer period. The reporting of risks and opportu-
nities in the Management Report generally relates to a period
of one year. Besides the reporting at specific times, risk and
opportunity management is established as a continuous task
within the Group. In addition to the regular reporting, there is
also an internal reporting obligation within the Group for mate-
rial risks arising unexpectedly. The central Group Risk Manage-
ment regularly reports the identified risks and opportunities to
the Board of Management and the Supervisory Board.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportu-
nities arising in business activities as a result of positive
developments at an early stage, and to use in the best possible
way for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be secured
or overachieved. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
The tasks of the employees responsible for risk and opportunity
management include, besides the identification and assess-
ment of risks and opportunities, the definition of measures and
the initiation of such measures, if necessary. The objective of
such measures is to avoid, reduce or transfer risks. The utiliza-
tion or enhancement of an opportunity, and its partial or full
implementation, also require measures to be taken. The cost-
effectiveness of a measure is assessed before its implementa-
tion. The possible impact and probability of occurrence of all
identified risks and opportunities of the individual entities and
the related measures that have been initiated are continually
monitored. The management activities take place at the level
of the divisions based on individual risks and opportunities.
- A non-utilized syndicated credit line for a total amount of €11
billion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
- Credit agreements with lenders for a total amount of €1.7 bil-
lion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €15 million, which the
lenders are entitled to terminate if Daimler AG becomes a
subsidiary of another company or comes under the control of
one person or several persons acting jointly.
Daimler AG has concluded various material agreements, as listed
below, that include clauses regulating the possible event of a
change of control, as can occur as a result of a takeover bid:
Material agreements taking effect in the event
of a change of control
Provisions of applicable law and of the Articles of Incorpo-
Shares acquired by employees within the context of the employee
share program may not be disposed of until the end of the fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans (PPSPs) of Executive Level 1 and eligible members
of the Board of Management are obliged by the Plans' terms and
conditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income up to a defined
target volume and to hold them for the duration of their employ-
ment at the Daimler Group. For the other persons eligible for
PPSPs, this obligation no longer applies since payment of PPSP
2013 in February/March 2017.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares are
nullified by law.
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2018. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section
67 Subsection 2 of the German Stock Corporation Act (AktG),
only those persons registered as shareholders in the register
of shareholders are considered to be shareholders of the Com-
pany. With the exception of treasury shares, from which the
Company does not have any rights, all shares confer equal rights
to their holders. Each share confers the right to one vote and,
with the possible exception of any new shares that are not yet
entitled to a dividend, to an equal share of the profits in accor-
dance with the dividend payout approved by the Annual Share-
holders' Meeting. The rights and obligations arising from the
shares are derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff, 118 ff and 186 of the German Stock
Corporation Act. There were no treasury shares at December
31, 2018.
Composition of share capital
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Takeover-Relevant Information and Explanation
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
140
3 Mr. Sanches has directed that he receive no fixed component of remuneration and that his corresponding
board remuneration is to be paid to the Hans-Böckler Foundation.
1 The employee representatives have stated that their board remuneration is to be transferred to the
Hans-Böckler Foundation, in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Curry has directed that he receive no remuneration whatsoever and that his corresponding board
remuneration is to be paid to the Hans-Böckler Foundation.
Member of the Supervisory Board and the Presidential Committee
Member of the Supervisory Board
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board and the Audit Committee
213,700
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk man-
agement organization established at the Group. In this context,
the divisions, corporate functions and legal entities are
requested to report on concrete risks and opportunities at reg-
ular intervals. This information is passed on to Group Risk
Management, which processes the information and provides it
to the Board of Management and the Supervisory Board as
well as to the Group Risk Management Committee (GRMC). The
GRMC is composed of representatives of Accounting & Financial
Reporting, the Legal Department, Compliance, Technical
Compliance and Group Security, and is chaired by the Board of
Management Member for Finance & Controlling/Daimler
Financial Services. The internal auditing department contributes
material findings on the internal control and risk management
system.
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section
84 of the German Stock Corporation Act, the members of the
Board of Management are appointed by the Supervisory
Board for a maximum period of office of five years. However,
the Supervisory Board of Daimler AG has decided generally
to limit the initial appointment of members of the Board of Man-
agement to three years. Reappointment or the extension of
a period of office is permissible, in each case for a maximum
of five years.
In accordance with Article 5 of the Articles of Incorporation, the
Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation
Act (AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required mem-
ber of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3
of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so.
Member of the Supervisory Board (since April 5, 2018)
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board and the Audit Committee
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
142
No use has yet been made of this authorization to issue con-
vertible bonds and/or bonds with warrants.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015 also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board, to exclude shareholders'
subscription rights to the bonds. Subscription rights can,
under these defined conditions, be excluded when bonds are
issued in exchange for non-cash contributions, particularly
within the framework of a merger or acquisition, and when bonds
are issued in exchange for cash contributions, if the issue
price is not significantly below the theoretical market price of
the bonds at the time of the issue.
Pursuant to Section 31 Subsection 2 of the German Codetermi-
nation Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority compris-
ing at least two thirds of its members' votes. If no such majority
is obtained, the Mediation Committee of the Supervisory
Board has to make a suggestion for the appointment within one
month of the vote by the Supervisory Board in which the
required majority was not reached. The Supervisory Board then
appoints the members of the Board of Management with a
majority of its members' votes. If no such majority is obtained,
voting is repeated and the Chairperson of the Supervisory
Board then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
By resolution of the Annual Shareholders' Meeting held on April
1, 2015, the Board of Management, with the consent of the
Supervisory Board, is authorized to issue during the period until
March 31, 2020 convertible bonds and/or bonds with warrants
or a combination of those instruments (commercial paper) in
a total nominal amount of up to €10 billion with a maximum
term of ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no par
value in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms and
conditions of those convertible bonds or bonds with warrants.
The bonds may be issued in exchange for consideration in cash,
but also for consideration in kind, in particular for interests in
other companies. The respective terms and conditions may also
provide for mandatory conversion or an obligation to exercise
the option rights. The bonds can be issued once or several times,
wholly or in installments, or simultaneously in various tranches.
They can also be issued by companies affiliated with Daimler AG
pursuant to Section 15 ff of the German Stock Corporation Act
(AktG).
within defined limits to exclude shareholders' subscription rights
(Approved Capital 2014). That Approved Capital 2014, of
which no use was made, was canceled by resolution of the Annual
Shareholders' Meeting of April 5, 2018. Also by resolution of
that Annual Shareholders' Meeting, the Board of Management
was authorized with the consent of the Supervisory Board to
increase the share capital of Daimler AG in the period until April
4, 2023, wholly or in partial amounts, on one or several occa-
sions, by up to €1 billion by issuing new registered shares of no
par value in exchange for cash or non-cash contributions, and
with the consent of the Supervisory Board under certain condi-
tions and within defined limits to exclude shareholders' sub-
scription rights (Approved Capital 2018). Subscription rights can,
under these defined conditions, be excluded in the event of a
capital increase through non-cash contributions for the purpose
of an acquisition, and in the case of a capital increase through
cash contributions, if the issue price of new shares is not signif-
icantly below the market price at the time of the issue.
By resolution of the Annual Shareholders' Meeting held on April
9, 2014, the Board of Management was authorized with the
consent of the Supervisory Board to increase the share capital
of Daimler AG in the period until April 8, 2019 by up to €1 bil-
lion by issuing new registered shares of no par value in exchange
for cash or non-cash contributions, and with the consent of the
Supervisory Board under certain conditions and
No use was made of this authorization to acquire the Company's
own shares during the reporting period.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Supervisory
Board to exclude shareholders' subscription rights for shares
they acquire. The Company's own shares in a volume of up to
5% of the share capital existing at the time of the resolution
of the Annual Shareholders' Meeting can also be acquired with
the application of derivative financial instruments (put or call
options, forwards or a combination of these financial instru-
ments), whereby the terms of the derivatives may not exceed
18 months and must be terminated on March 31, 2020, at the
latest.
By resolution of the Annual Shareholders' Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes in
a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders' Meeting. The shares can
be used, under the exclusion of shareholders' subscription
rights, for, among other things, corporate mergers and acquisi-
tions or else can be sold for cash to third parties at a price
that is not significantly below the market price at the time of the
sale. The shares can also be used to service debt on con-
vertible bonds and/or bonds with warrants, or can be issued
to employees of the Company and employees and members
of executive bodies of affiliated companies pursuant to Section
15 ff of the German Stock Corporation Act (AktG). The Compa-
ny's own shares can also be canceled.
Authorization of the Board of Management to issue or buy
back shares
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by
a resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corpo-
ration Act (AktG) and Article 16 Subsection 1 of the Articles of
Incorporation with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. In accordance with Article 7
Subsection 2 of the Articles of Incorporation, amendments to
the Articles of Incorporation that only affect the wording can
be decided upon by the Supervisory Board. Pursuant to Section
181 Subsection 3 of the German Stock Corporation Act (AktG),
amendments to the Articles of Incorporation take effect upon
being entered in the Commercial Register.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION 141
No use has yet been made of Approved Capital 2018.
Responsibility for operational risk management and for the risk
management processes lies directly with the divisions, corpo-
rate functions and legal entities.
113,515
The Audit Committee of the Supervisory Board is responsible for
monitoring the internal control and risk management sys-
tem. The internal auditing department monitors whether the
statutory conditions and the Group's internal guidelines con-
cerning the internal control and risk management system of the
Group are adhered to. If required, measures are initiated in
cooperation with the respective management. External auditors
audit the system for the early identification of risks which is
integrated in the risk management system for its general suit-
ability to identify risks threatening the existence of the Group;
in addition, they report to the Supervisory Board on any signifi-
cant weaknesses that have been recognized in the internal
control and risk management system.
Bader M. Al Saad
Sari Baldauf
Michael Bettag¹
Dr. Clemens Börsig
Raymond Curry²
Dr. Jürgen Hambrecht
Petraea Heynike
Andrea Jung
Joe Kaeser
Ergun Lümali¹
Dr. Paul Achleitner
Wolfgang Nieke¹
Valter Sanches³
Jörg Spies¹
Elke Tönjes-Werner¹
Sibylle Wankel¹
Dr. Frank Weber
Marie Wieck
Dr. Sabine Zimmer¹
Roman Zitzelsberger¹
Dr. Bernd Pischetsrieder
Member of the Supervisory Board
Dr. Manfred Bischoff
139
Remuneration of the Supervisory Board
Reports regarding the current risk situation and the effectiveness,
functionality and appropriateness of the internal control and
risk management system are regularly presented to the Board
of Management and to the Audit Committee of the Supervisory
Board of Daimler AG. Furthermore, the responsible managers
regularly discuss risks and opportunities out of business oper-
ations with the Board of Management.
Supervisory Board remuneration in 2018
The remuneration of the Supervisory Board is determined by the
Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in March 2017 and effective for the finan-
cial year beginning on January 1, 2017 specify that the mem-
bers of the Supervisory Board receive, in addition to the refund
of their expenses and the cost of any value-added tax incurred
by them in performance of their office, fixed remuneration of
€144,000 after the conclusion of the financial year. The Chair-
man of the Supervisory Board receives an additional €288,000
and the Deputy Chairman of the Supervisory Board receives
an additional €144,000. The members of the Audit Committee
are paid an additional €72,000, the members of the Presiden-
tial Committee are paid an additional €57,600 and the members
of the other committees of the Supervisory Board are paid an
additional €28,800; an exception is the Chairman of the Audit
Committee, who is paid an additional €144,000. Additional
payments are made for activities in a maximum of three com-
mittees; any persons who are members of more than three
such committees receive additional payments for the three most
highly paid functions. Members of a Supervisory Board com-
mittee are only entitled to remuneration for such membership
in a financial year if the committee has actually convened to
fulfill its duties in this period.
In connection with the remuneration adjustment, all members
of the Supervisory Board have made a self-commitment to
purchase Company shares in the amount of 20% of their gross
annual salary (excluding committee remuneration and the
meeting fee) every year and to hold these shares until the end
of one year after they have left the Company's Supervisory
Board (voluntary obligation in accordance with the "comply or
explain" principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory or
voluntary manner to the guidelines of the German Trade Union
Confederation on the transfer of supervisory board remunera-
tion to the Hans Böckler Foundation, or to the same extent is
subject to a transfer to the employer or claim to payment due
to a service or employment contract. In the event that a lower
amount of the Supervisory Board remuneration is transferred
or credited, the voluntary commitment applies to 20% of the
amount not transferred or credited. With this voluntary commit-
ment, the members of the Supervisory Board are expressing
their focus on and commitment to the long-term, sustainable
success of the Company.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
The individual remuneration of the members of the Supervisory
Board is shown in the following table. 7 B.62
Total in 2018
In financial year 2018, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency ser-
vices, except for the remuneration paid to the members of
the Supervisory Board representing the employees in accor-
dance with their contracts of employment.
Loans to members of the Supervisory Board
No advances or loans were made or abated to members of the
Supervisory Board of Daimler AG in 2018.
B.62
Supervisory Board remuneration
Name
Function(s) remunerated
In euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The remuneration of all the activities of the members of the
Supervisory Board of Daimler AG in the year 2018 was thus
€4.2 million (2017: €4.2 million).
Chairman of the Supervisory Board, the Presidential Committee and the
Nomination Committee
Michael Brecht¹
533,800
40,779
153,900
153,900
Member of the Supervisory Board
Member of the Supervisory Board (since April 5, 2018)
153,900
113,515
pages 79 ff and 158 ff.
Economic risks and opportunities are linked with assumptions
and forecasts concerning general developments. The relation-
ship between risks and opportunities at the beginning of the year
2019 seems to be somewhat less favorable than in the previ-
ous year.
The escalation of the trade conflict between the United States
and China continues to be one of the main risks. But the threat
of US tariffs on vehicles and parts imported from other markets,
including the European Union, could also affect existing global
value chains and have a negative impact on sales opportunities
and economic developments. Furthermore, there is a danger
that countries will implement increasingly protectionist measures
such as specific market-access barriers or industrial policy
instruments. Should these trade tensions spread and massively
affect global trade, there would be significant impacts on infla-
tion, business climate, consumer confidence and ultimately also
on global economic growth. On the other hand, unforeseen
trade facilitations could provide positive impulses and lead to
more trade and higher growth. In that case, the Daimler Group
could also benefit from preferential trade conditions.
138
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
Economic risks and opportunities
The following section describes industry and business risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 71 B.64.
Industry and business risks and opportunities
In addition, risks and opportunities that are not yet known or
classified as not material can influence profitability, cash flows
and financial position.
Deputy Chairman of the Supervisory Board, the Presidential Committee
and the Audit Committee
The following section describes risks and opportunities that can
have a significant influence on the profitability, cash flows and
financial position of the Daimler Group. In general, the reporting
of risks and opportunities takes place in relation to the individ-
ual segments. If no segment is explicitly mentioned, the risks and
opportunities described relate to all the automotive divisions.
Risks and opportunities
40,779
153,900
Like the majority of economic research institutes, Daimler
expects the upswing of the world economy to continue in 2019,
although with less dynamism than in the two previous years.
Economic developments in 2018 are described in detail in the
"Economic Conditions and Business Development" section of
this Management Report; growth assumptions for 2019 are
explained in the "Outlook” section on
153,900
435,200
183,800
152,800
Member of the Supervisory Board and the Nomination Committee
184,900
Member of the Supervisory Board
153,900
Member of the Supervisory Board and Chairman of the Audit Committee
302,300
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
230,300
113,515
Member of the Supervisory Board and the Presidential Committee
214,800
153,900
40,779
229,200
Member of the Supervisory Board (since April 5, 2018)
Low
Low
Credit risks
Commodity price risks
Commodity price opportunities
Low
Credit opportunities
Low
Low
Country risks
Risks of restricted access
Low
Country opportunities
Opportunities of restricted access
to capital-market
Opportunities of early credit
Low
Risks of early credit
High
to capital-market
Low
Low
The following section deals with financial risks and opportunities
of the Daimler Group. Risks and opportunities can have a
negative or positive effect on the profitability, cash flows and
financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportunities
is presented in table 7 B.66. The probability of occurrence
and impact of the financial risks and opportunities are essen-
tially unchanged from the previous year. Only the impact of
risks of limited access to the capital market have increased from
"Medium" to "High".
Low
The remeasurement of an associated company, joint venture
or joint operation in relation to its carrying value can lead to risks
and opportunities for the segment to which it is allocated.
Furthermore, the business activities of an associated company,
joint venture or joint operation, or the disposal or acquisition
of an interest in such an entity, can result in financial obligations
or an additional financing requirement, but can also result in
potential opportunities, in connection with mobility services for
example. Such risks are also generally connected with startups
whose further development is not yet foreseeable. Risks from
associated companies, joint ventures or joint operations exist
in the Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Financial Services segments, as well as from
the associated companies, joint ventures and joint operations
directly allocated to the Group. All associated companies,
joint ventures and joint operations are subject to a monitoring
process so that, if required, decisions can be made on whether
or not measures can be promptly taken to support or ensure
their profitability. The recoverable value of investments is also
regularly monitored.
repayment obligations
Risks and opportunities related to associated companies, joint
ventures and joint operations are unchanged compared with
the previous year.
Financial risks and opportunities
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market price
changes can have a negative or positive influence on the
Group's profitability, cash flows and financial position. Daimler
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financ-
ing activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
In addition, the Group is exposed to credit and country-related
risks, risks of restricted access to capital markets and risks
of early credit repayment requirements. As part of the risk man-
agement process, Daimler regularly assesses these risks by
considering changes in key economic indicators and market
information. Pension plan assets to cover retirement and
healthcare benefits (market-sensitive investments including
equities and interest-bearing securities) are not included in
the following analysis.
B.66
Financial risks and opportunities
Interest rate opportunities
Risk category
Impact
Exchange rate risks
Low
High
Opportunity category
Exchange rate opportunities
Impact
High
Interest rate risks
Low
Probability of occurrence
Low
Several federal and state authorities and other institutions world-
wide have inquired about and/or are conducting investigations
and/or proceedings, and/or have issued administrative orders.
These particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or Daimler's
interaction with the relevant federal and state authorities as
well as related legal issues and implications, including, but not
limited to, under applicable environmental, securities, criminal
and antitrust laws. These authorities include, amongst others,
the U.S. Department of Justice ("DOJ"), which has requested
that Daimler conduct an internal investigation, the U.S. Environ-
mental Protection Agency ("EPA"), the California Air Resources
Board ("CARB") and other US state authorities, the U.S. Securi-
ties and Exchange Commission ("SEC"), the European Commis-
sion, with which Daimler has filed a leniency application and
which meanwhile has opened a formal investigation into possi-
ble collusion on clean emission technology, as well as national
antitrust authorities and other authorities of various foreign
states as well as the German Federal Financial Supervisory
Authority ("BaFin"), the German Federal Ministry of Transport
and Digital Infrastructure (“BMVI") and the German Federal
Motor Transport Authority ("KBA”). The Stuttgart district attor-
ney's office is conducting criminal investigation proceedings
against Daimler employees on the suspicion of fraud and crimi-
nal advertising, and, in May 2017, searched the premises of
Daimler at several locations in Germany. Further, Daimler com-
prehensively responded to the diesel emissions committee of
inquiry of the German Parliament in the previous legislative
period. Daimler continues to fully cooperate with the authorities
and institutions. Irrespective of such cooperation, it is possible
that further regulatory, criminal and administrative investiga-
tive and enforcement actions and measures relating to Daimler
and/or its employees will be taken or administrative orders will
be issued, such as subpoenas, i.e. legal instructions issued
under penalty of law in the process of taking evidence, or other
requests for documentation, testimony or other information,
further search warrants, a notice of violation or an increased
formalization of the governmental investigations, coordination
or proceedings, including the resolution of proceedings by way
of a settlement. Additionally, further delays in obtaining regula-
tory approvals necessary to introduce new or recertify existing
vehicle models could occur.
repayment obligations
154
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risks of early credit repayment obligations
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongo-
ing legal proceedings. It is to be expected that the resulting
refinancing requirement will have to be concluded at a higher
cost.
Further information on financial risks, risk-limiting measures and
the management of these risks is provided in Note 33 of
the Notes to the Consolidated Financial Statements. Information
on the Group's financial instruments is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations
less plan assets constitutes the carrying amount or funded
status of those employee benefit plans. The measurement
of pension obligations and the calculation of net pension
expense are based on certain assumptions. Even small changes
in those assumptions particularly change in the discount
rate have a negative or positive effect on the funded status
and Group equity in the current financial year, and lead to
changes in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined to
a large degree by developments in the capital markets. Unfa-
vorable or favorable developments, especially relating to
equity prices and fixed-interest securities, reduce or increase
the carrying value of plan assets. A change in the composition
of plan assets can also have a positive or negative impact
on the fair value of plan assets. The broad diversification of
investments, the selection of asset managers on the basis of
quantitative and qualitative analyses, and the ongoing moni-
toring of returns and risks contribute to a reduction in the
investment risk. The structure of pension obligations is taken
into consideration with the determination of the investment
strategy for the plan assets in order to reduce fluctuations of
the funded status. Further information on the pension plans
and their risks is provided in Note 22 of the Notes to the
Consolidated Financial Statements.
Risks and opportunities from changes in credit ratings
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating agencies,
and thus to Daimler's creditworthiness. Downgrades could
have a negative impact on the Group's financing if such a down-
grade leads to an increase in the costs for external financing or
restricts the Group's ability to obtain financing. A credit rating
downgrade could also discourage investors from investing in
Daimler AG. A risk to the credit rating of the Daimler Group can
also arise if the earnings and cash flows from the anticipated
Group's growth cannot be realized.
Legal and tax risks
The Group continues to be exposed to legal and tax risks.
Provisions are recognized for those risks if and insofar as they
are likely to be utilized and the amounts of the obligations
can be reasonably estimated. No quantitative assessment of
these risks is carried out.
Risks of restricted access to capital markets
Daimler covers its refinancing needs, among other things, by
means of borrowing in the capital markets. Access to capital
markets in individual countries may be limited by government
regulations or by a temporary lack of absorption capacity. In
addition, pending legal proceedings as well as Daimler's own
business policy considerations may temporarily prevent the
company from covering any liquidity requirements by means of
borrowing in the capital markets. The increased planned
refinancing volume compared with 2018 has also increased the
possible impact of the risk of limited access to the capital
market in 2019.
Legal risks
Risks from legal proceedings in general. Daimler AG and its
subsidiaries are confronted with various legal proceedings,
claims as well as government investigations and orders (legal
proceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, warranty claims, environmental matters, antitrust matters
(including actions for damages) as well as shareholder litiga-
tion. Product-related litigation involves claims alleging faults in
vehicles, some of which have been made as class actions. If
the outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory
and punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Some
of these proceedings may have an impact on the Group's repu-
tation.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - Governmental proceedings. Cur-
rently, Daimler is subject to governmental information requests,
inquiries, investigations, administrative orders and proceed-
ings relating to environmental, securities, criminal, antitrust and
other laws and regulations in connection with diesel exhaust
emissions.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
155
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz Diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary by a court of law. In the
course of its regular market supervision, KBA routinely con-
ducts further reviews of Mercedes-Benz vehicles. It cannot
be ruled out that in the course of further investigations, KBA
will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration
stop in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meantime
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions.
In January 2019, another vehicle manufacturer reached civil
settlements with US and state authorities, as well as with vehi-
cle customers. Although the manufacturer did not admit liability,
the authorities maintain the position that the manufacturer
included undisclosed Auxiliary Emission Control Devices (AECDs)
in its diesel vehicles, apparently including functionalities that
are common in diesel vehicles, and that certain of these AECDs
are illegal defeat devices. As part of these settlements, the
manufacturer will, among other things, pay civil penalties, under-
take a recall of affected vehicles, provide extended warranties,
undertake a nationwide mitigation project and make other pay-
ments. The manufacturer will furthermore provide payments
to current and former diesel vehicle owners as part of a class
action settlement.
In light of these matters and in light of the ongoing governmen-
tal information requests, inquiries, investigations, administrative
orders and proceedings, as well as our own internal investiga-
tions and the technical Compliance Management System (tCMS),
which is and continues to be implemented to address the
specific risks associated with the product development process
throughout the group and is designed particularly to also pro-
vide guidance - taking into account technical and legal aspects -
with regard to the complex interpretation of regulations, it can-
not be ruled out that authorities will reach the conclusion that
other passenger cars and/or commercial vehicles with the brand
name Mercedes-Benz or other brand names of the group have
impermissible functionalities and/or calibrations. Furthermore,
the authorities have increased scrutiny of Daimler's processes
regarding running-change, field-fix and defect reporting as well
as other compliance issues. The inquiries, investigations, legal
actions and proceedings as well as the replies to the governmen-
tal information requests, the objection proceedings against
KBA's administrative orders and our internal investigations are
still ongoing and open; hence, Daimler cannot predict the out-
come at this time. If these or other information requests, inqui-
ries, investigations, administrative orders and proceedings
result in unfavorable findings, an unfavorable outcome or other-
wise develop unfavorably, Daimler could be subject to signifi-
cant monetary penalties, fines, remediation requirements, fur-
ther vehicle recalls, further registration and delivery stops,
process improvements, mitigation measures and the early
termination of promotional loans, and/or other sanctions,
measures and actions, including further investigations and/or
administrative orders by these or other authorities and additional
proceedings. The occurrence of the aforementioned events in
whole or in part could cause significant collateral damage
including reputational harm. Further, due to negative determi-
nations or findings with respect to technical or legal issues
by one of the various governmental agencies, other agencies
could also adopt such determinations or findings, even if such
determinations or findings are not within the scope of such
authority's responsibility or jurisdiction. Thus, a negative deter-
mination or finding in one proceeding carries the risk of being
able to have an adverse effect on other proceedings, also poten-
tially leading to new or expanded investigations or proceedings.
The Daimler Group generally participates in the risks and
opportunities of associated companies, joint ventures and joint
operations in line with its ownership interest.
Regulatory Risks. The automotive industry is subject to
extensive governmental regulations worldwide. Laws in various
jurisdictions regulate occupant safety and the environmental
impact of vehicles, including emissions levels, fuel economy and
noise, as well as the emissions of the plants where vehicles
or parts thereof are produced. In case regulations applicable in
the different regions are not complied with, this could result
in significant penalties and reputational harm or the inability to
certify vehicles in the relevant markets. The cost of compli-
ance with these regulations is significant, and in this context,
Daimler expects a significant increase in such costs.
Low
Daimler is exposed to country risks that primarily result from
cross-border financing or collateralization for Group compa-
nies or customers, from investments in subsidiaries, joint ven-
tures, and from cross-border trade receivables. Country risks
also arise from cross-border cash deposits with financial insti-
tutions. The Group addresses these risks by setting country
limits (e.g. for cross-border financing of customers and for hard-
currency portfolios from financial services companies) and
through investment-protection insurance against political risks
in high-risk countries. Daimler also has an internal rating
system that divides all countries in which it operates into risk
categories.
The Group is exposed to credit risks which result primarily
from its financial services activities and from the operations of
its vehicle business. Credit risks also arise from the Group's
liquid assets. The following statements pertain to risks arising
from the Group's liquid assets; risks related to leasing and
sales financing are addressed on page 148. Should defaults
occur, this would adversely affect the Group's financial posi-
tion, cash flows and profitability. The limit methodology for
liquid funds deposited with financial institutions has been con-
tinually further developed in recent years. In connection with
investment decisions, priority is placed on the borrowers' very
high creditworthiness and on balanced risk diversification.
Most liquid assets are held in investments with an external
rating of "A" or better.
Risks relating to pension plans
Low
High
Opportunities relating to pension plans
High
Risks from changes in credit ratings
Low
Low
Opportunities from changes in credit ratings Low
Country risks
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Exchange rate risks and opportunities
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations against the
euro of the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange
rate risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that
of the related costs (transaction risk). This applies in particular
to the Mercedes-Benz Cars division, as a major portion of its
revenue is generated in foreign currencies while most of its pro-
duction costs are denominated in euros. The Daimler Trucks
division is also exposed to such transaction risks, but to a lesser
degree because of its worldwide production network. Regularly
updated currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency for-
wards and options) in accordance with exchange rate expecta-
tions, which are continually reviewed, whereby both risks
and opportunities are limited. Any overcollateralization caused
by changes in exposure is generally reversed by suitable mea-
sures without delay. Exchange rate risks and opportunities also
exist in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the Group
outside the euro zone (translation risk); these risks are gener-
ally not hedged.
Interest rate risks and opportunities
Changes in interest rates can create risks and opportunities
for business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Financial Services. Term-congruent refi-
nancing is generally undertaken for the financial services busi-
ness. However, to a certain extent, the funding does not
match in terms of maturities and interest rates, which gives
rise to the risk of changes in interest rates. The funding activi-
ties of the industrial business and the financial services busi-
ness are coordinated centrally at Group level. Derivative inter-
est rate instruments such as interest rate swaps are used to
achieve the desired interest rate maturities and asset/liability
structures (asset and liability management).
Equity price risks and opportunities
The Group is subject to equity price risks in connection with its
listed associated companies and joint ventures. At December
31, 2018, the shares in listed companies that Daimler AG directly
holds are shares that are classified as long-term investments,
some of which are accounted for in the consolidated financial
statements using the equity method. The Group does not include
these investments in a market price risk analysis. The section
"Risks and opportunities related to associated companies, joint
ventures and joint operations” provides more information on
equity risks and opportunities.
Commodity price risks and opportunities
As already described in the section "Procurement market
risks and opportunities", the Group's business operations are
exposed to changes in the market prices of purchased parts
and raw materials. The Group addresses these procurement
risks by means of concerted commodity and supplier risk
management. Some of the derivative financial instruments are
used to reduce the Group's market price risks related to the
purchase of certain metals.
Credit risks
153
Cooperation with partners in associated companies, joint ven-
tures and joint operations and other types of partnership is of
key importance for Daimler. Along with ensuring better access
to growth markets and new technologies, these shareholdings
and partnerships help to utilize synergies and improve cost
structures in order to successfully respond to the competitive
situation in the automotive industry. Through investments in
startups, Daimler promotes innovative approaches in many
areas of the Group.
Note 33
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Medium
High
Opportunities relating to the legal
and political framework
Low
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Further risks are related to geopolitical tensions, terrorist
attacks or assassinations in Europe or other major economies,
which could adversely affect global trade and international
capital markets for a prolonged period.
General market risks and opportunities
The risks and opportunities for the economic development of
automotive markets are strongly affected by the cyclical situa-
tion of the global economy as described above. The assess-
ment of market risks and opportunities is linked to assump-
tions and forecasts about the overall development of markets
in the regions in which the Daimler Group is active. The possi-
bility of markets developing better or worse than assumed in
the planning, or of changing market conditions, generally exists
for all divisions of the Daimler Group.
Potential effects of the risks on the development of unit sales
are included in risk scenarios. The risks can cause changes in
the planned business activities, the related vehicle sales and
inventories, and the aftersales business. In particular, the par-
tially unstable macroeconomic environment as well as political
or economic uncertainty could be causes in this context. A ris-
ing oil price and volatile exchange rates can also lead to market
uncertainty and thus to falling demand. Differences between
the divisions exist due to the partly varying regional focus of
their activities. Discussions about the future of diesel technology
and the related uncertainties may result in a change in cus-
tomer demand which could negative affect on sales of diesel
vehicles and can lead to a possibly drop in earnings. The devel-
opment of markets, unit sales and inventories is continually
analyzed and monitored by the divisions; if necessary, specific
marketing and sales programs are implemented.
Volatilities with regard to market developments can also lead
to the overall market or regional conditions for the automotive
industry developing better than assumed in the internal fore-
casts and premises, and to business opportunities in the mar-
ket. Opportunities can also arise from an improvement in the
competitive situation or a positive development of demand for
the divisions. However, the existing market opportunities of the
divisions of the Daimler Group can only be utilized if production
can be aligned accordingly, and if this is enabled by regional
conditions. In addition, any gaps between demand and supply
have to be recognized and covered in good time. The measures
that could be initiated by the Daimler Group to utilize potential
opportunities include a combination of local sales and market-
ing activities, as well as central strategic product and capacity
planning.
As the target achievement of the Daimler Financial Services
division is closely connected with the business development in
the automotive divisions, the existing volume risks and
opportunities are reflected in the Daimler Financial Services
segment.
Due to the partly difficult financial situation of some dealer-
ships and vehicle importers, support actions might become
necessary to ensure the performance of the business partners.
The sources of these risks lie in the respective risk environment
as well as in the necessary infrastructure investments that
have been made for sales of new products. Supporting actions
can adversely affect the profitability, cash flows and financial
position of the automotive divisions. Further risks may result from
the dependency on certain dealerships. In certain circum-
stances, relationships with new business partners may have to
be developed. The financial situation of strategically relevant
dealerships and vehicle importers is continually monitored. If
required, payment conditions can be adjusted. Risks of this
kind exist for dealerships and vehicle importers of the divisions
Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans.
The successful product portfolio of the Daimler Group contrib-
utes to its advantageous positioning compared with the compet-
itors. Possibly rising competitive and price pressure above
all affect the segments Mercedes-Benz Cars and Daimler Trucks.
Aggressive pricing policies, the introduction of new products
by competitors, or pricing pressure in the aftersales business
can make it more difficult to achieve expected prices. This
might result in lower revenue, the failure to achieve the prod-
ucts' planned profitability, or lower market shares. The extent
of such risks is related to the magnitude of a division's sales
volume. Continuous monitoring of competitors is carried out in
order to recognize these risks at an early stage. Depending on
the situation, product-specific and possibly regionally different
measures are taken to support weaker markets. They include
the use of new sales channels, actions designed to strengthen
brand awareness and brand loyalty as well as sales and mar-
keting campaigns. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
Further risks at Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Financial Services relate to the development of used
vehicle markets and thus to the residual values of the vehicles
produced. In particular, the uncertainty existing in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evaluated.
If changing market developments lead to a negative deviation
from assumptions, there is a risk of lower residual values of
used cars. Depending on the region and the current market sit-
uation, the measures taken generally include continuous mar-
ket monitoring as well as, if required, price-setting strategies or
sales promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by periodic
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems. On
the other hand, opportunities can arise from a positive devel-
opment of residual values caused by a favorable market environ-
ment for used vehicles as well as reductions in discounts
granted on new vehicles.
148
Risks and opportunities related to associated companies,
joint ventures and joint operations
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Financial Services companies that oper-
ate commercial fleet management and leasing management,
because most of those vehicles are not covered by manufac-
turers' residual-value guarantees. Residual-value risk is taken
into account through a high level of diversification with regard
to brands, regions, customers and lease periods. Used-vehicle
prices are continually monitored both locally and centrally, so
that the residual-value risk from a drop in market prices can
be forecast in good time and suitable countermeasures may be
initiated.
Across all segments, the assessment of general market risks is
unchanged compared with the previous year. However, due
to increasing political and economic uncertainty, the impact of
market opportunities has decreased from "High" to "Low".
Risks and opportunities relating to the leasing and sales-
financing business
In connection with the sale of vehicles, Daimler offers its cus-
tomers a wide range of financing possibilities - primarily of
leasing and financing the Group's products. The resulting risks
for the Daimler Financial Services segment are mainly due to
borrowers' worsening creditworthiness, so receivables might
not be recoverable in whole or in part because of customers'
insolvency (default risk or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods and the collateral-
ization of receivables, as well as an effective risk management
with a firm focus on monitoring both internal and macroeco-
nomic leading indicators. Other risks associated with the leasing
and sales-financing business involve the possibility of increased
refinancing costs due to changes in interest rates (interest
rate risk).
An adjustment of credit conditions for customers in the leasing
and sales-financing business caused by higher refinancing
costs could reduce the new business and contract volume of
Daimler Financial Services, also reducing the unit sales of the
automotive divisions. Risks and opportunities also arise from a
lack of matching maturities with refinancing. The risk of mis-
matching maturities is minimized by coordinating refinancing
with the periods of financing agreements, from the perspective
of interest rates as well as liquidity. Any remaining risks from
changes in interest rates are managed by the use of derivative
financial instruments. Further information on credit risks and
the Group's risk-minimizing actions is provided in
of the Notes to the Consolidated Financial Statements.
Possible residual-value risks for the automotive divisions and
the companies in the Daimler Financial Services division that
operate commercial fleet management and leasing manage-
ment are described in the section "General Market Risks and
Opportunities".
The possible impact of the risks and opportunities and the
probability of occurrence of the risks relating to the leasing
and sales-financing business continue to be assessed as
"Low".
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppli-
ers and of capacity bottlenecks caused by supplier delivery
failures or by insufficient utilization of production capacities
at suppliers. Disagreements with suppliers regarding the agreed
pricing of supplies and the supplied quality can also lead to
procurement market risks. The risk situation relating to the
possible impact has not changed compared with the previous
year. However, the probability of occurrence has risen from
"Low" to "Medium" due to the threat of tariff increases on cer-
tain raw materials. Opportunities in the raw-material markets
continue to exist due to positive price developments for rele-
vant raw materials. Compared with the previous year, the impact
of those opportunities has increased from "Low" to "Medium"
as a result of more optimistic assumptions concerning the future
development of raw-material prices.
Raw-material prices continued to feature significant volatility
in 2018. Due to almost completely unchanged macroeconomic
conditions, price fluctuations are expected with uncertain and
uneven trends in the near future. On the one hand, raw-material
markets can be impacted by political crises and uncertainties -
combined with possible supply bottlenecks - as well as by vol-
atile demand for specific raw materials. Potential tariff increases
for certain raw materials as a result of increasing protectionist
tendencies worldwide can also have a negative impact on price
developments. Generally, the ability to pass on the higher costs
of commodities and other materials in the form of higher prices
for manufactured vehicles is limited because of strong compet-
itive pressure in the international automotive markets.
Supplier risk management aims to identify potential financial
bottlenecks for suppliers at an early stage and to initiate
suitable countermeasures. Although the crisis of recent years
is over, the situation of some of suppliers remains difficult due
to a high degree of competitive pressure. This has necessi-
tated individual or joint support actions by vehicle manufactur-
ers to safeguard their production and sales. In the context of
supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals and
made corresponding internal assessments. On those dates, the
suppliers report their key performance indicators to Daimler
and decisions can be made concerning any required support
actions.
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines, the
Mercedes-Benz Cars segment in particular is faced with the
risk that Daimler will require changed volumes of components
from suppliers. This could result in over- or underutilization
of production capacities for certain suppliers. If supplier can-
not cover their fixed costs, there is the risk that suppliers
could demand compensation payments. Necessary capacity
expansion at suppliers' plants could also require cost-effective
participation.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
and political framework
149
Risks relating to the legal
Procurement market opportunities
146
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In the United States, economic and fiscal policy could turn out
to be more expansive than previously assumed. As the Daimler
Group generates a substantial proportion of its revenue in the
United States, especially in the Mercedes-Benz Cars, Daimler
Trucks and Daimler Financial Services divisions, these develop-
ments would have considerable consequences for the Group's
success. Furthermore, stronger growth in the United States
would also have spillover effects on the rest of the world. The
disadvantages of such an expansionary fiscal policy are the
further worsening of the debt situation in the United States and
the risk that inflation will rise more significantly than currently
expected, due not least to rising wages and a labor market close
to full employment. This would force the Federal Reserve to
raise federal funds rates more sharply than expected by the
market, which would directly weaken domestic demand. As
a further consequence, increasing volatility in the financial
markets could adversely affect investor confidence, leading
to widespread sales of equities and thus triggering a chain
reaction on stock markets, with major market adjustments and
phases of exceptional volatility in global financial markets.
In Europe, the further development of relations between the
European Union and the United Kingdom represents a significant
risk. If the negotiated exit agreement is not approved by the
British parliament and as a result, there are neither further nego-
tiations nor a complete cancellation of Brexit, a disorderly
withdrawal in spring 2019 is at least possible. This would have a
massive impact on the UK economy and, probably to a lesser
extent, on the remaining EU member states, and would make
trading conditions more difficult. Furthermore, if financial-
market participants are not sufficiently prepared, noticeable
market distortions cannot be ruled out, which would have
significant negative effects on the real economy. Besides that,
increased political uncertainty in the euro zone, for example
as a result of developments in Italy, could adversely affect con-
sumption and investment decisions by households and compa-
nies. The European market continues to be very important for
Daimler across all divisions.
Due to China's enormous importance as a growth driver for the
world economy in recent years, a downturn in the Chinese
economy would represent a considerable risk to the global
economy. The enormous rise in debt that has been observed
since the global financial crisis, especially in the corporate
sector, represents a significant risk. If the government's
efforts to restrict credit growth in combination with the nega-
tive impact of US tariffs on imports from China lead to a more
significant growth slowdown than currently expected, this
would result in a perceptible cooling-off for the world economy.
Within China, a slowdown could result in a major increase in non-
performing loans, which would then lead to turbulences in,
the banking sector and financial markets. The aforementioned
risks could result in significant negative effects on units sales,
particularly for the Mercedes-Benz Cars division, for which China
is now the biggest individual sales market by a large margin.
On the other hand, triggered by the stimulus measures
announced by the Chinese government, growth in 2019 could
also turn out stronger than expected. The resulting higher
growth in overall economic consumption would offer additional
opportunities, especially for the Mercedes-Benz Cars division.
Pressure on the emerging markets could increase if more coun-
tries were affected by massive capital outflows and exchange-
rate losses, or if the currency crises in Argentina and Turkey turn
into significant banking crises. In such cases, global investors
would withdraw capital from emerging markets on a large scale,
which would probably force those countries with large foreign-
trade imbalances to make painful adjustments. Renewed finan-
cial-market turbulences and currency crises are possible con-
sequences and could have a massive impact on the economies
of affected countries. Lower growth in world trade and lower
raw-material prices (e.g. a drop in the oil price) than currently
forecast would also have a negative impact on growth for
exporters of raw materials. As Daimler is already very active in
those countries, or their markets play a strategic role, this
would have negative effects on the Group's prospective unit
sales. However, import-dependent economies such as India
would benefit from lower raw-material prices. An excessive and
sudden rise in oil prices, for example as a result of geopolitical
tension, would increase inflationary pressure and cause central
banks to raise interest rates more rapidly, with negative effects
on sentiment indicators and consumer behavior.
In view of the ongoing positive economic situation in many parts
of the world, the opportunity exists that the world economy
will actually grow at a higher rate than hitherto assumed in 2019.
A stronger increase in global demand would also support raw-
material prices and would have positive effects on raw-material
exporters in South America, the Middle East and Africa.
B.64
Industry and business risks and opportunities
Risk category
Probability of occurrence
Impact
Opportunity category
Impact
General market risks
Low
High
General market opportunities
Low
Risks relating to leasing
and sales financing
Low
Low
Opportunities relating to leasing
and sales financing
Low
Procurement market risks
Medium
High
Medium
Risks and opportunities relating to the legal
and political framework
147
a considerable impact on Daimler's future business success.
Regulations concerning vehicles' emissions, fuel consump-
tion and certification as well as tariff aspects play a partic-
ularly important role. Complying with these varied and often
diverging regulations all over the world requires strenuous efforts
on the part of the automotive industry. In the future, Daimler
expects to spend an even larger proportion of its research and
development budget to ensure compliance with these regula-
tions. The probability of occurrence of risks from the legal and
political framework has increased from "Low" to "Medium".
This is mainly due to risks from more difficult certification pro-
cesses and delays in certification, as well as the threat of
increased tariffs. The potential impact of these risks remains
unchanged at "High". The assessment of the possible impact
of the opportunities is also unchanged at "Low".
Information technology risks
Low
High
Information technology opportunities
Personnel risks
Medium
Low
Personnel opportunities
Risks related to associated companies,
joint ventures and joint operations
Opportunities related to associated companies,
Low
Medium
joint ventures and joint operations
Low
Low
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 151
Warranty and goodwill cases could arise in the Daimler Group
if the quality of the products does not meet the requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product
problems and product care. Quality problems with components
in vehicles from external suppliers can require technical
adjustments that can lead to considerable expenses. If such risks
occurred possible claims are examined and, if necessary, the
appropriate measures are initiated for the affected products. If
the high technical quality standards of purchased components
are not fulfilled, this can lead to Daimler asserting claims against
the respective supplier.
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared with the
previous year across all segments.
Information technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer bene-
fits and enterprise value. However, it also includes risks from
the increasing IT dependency of products and business and
production processes. In addition, specific risks exist due to
the use and availability of new technologies in connection with
digitization, which amongst others can affect the products,
their use, or business operations. In addition, risks from cyber-
crime and hacker attacks cannot be ruled out.
It is essential for the globally active group like Daimler that
information is available and can be exchanged in an up-to-date,
complete and correct form. Appropriately secured IT systems
and a reliable IT infrastructure must be used to protect informa-
tion. Risks must be identified and evaluated over the entire
lifecycle of applications and IT systems, and managed in line
with their criticality. Particular attention is paid to risks that
could result in the interruption of business processes due to the
failure of IT systems or which could cause the loss or corrup-
tion of data.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has defined various
preventive and corrective measures so that the related risks
are minimized and possible damage is limited. These measures
are continually adapted to changing circumstances. For exam-
ple, the Group minimizes potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and IT
systems designed for high availability. Emergency plans are
developed, employees are trained and sensitized, and further
technical and organizational precautions are taken in order
to maintain operating capability. Specific threats are analyzed
and countermeasures are coordinated at a central cyber secu-
rity center. The protection of products and services from dan-
ger caused by hacking and cybercrime is continually developed.
Despite all precautionary measures, disturbances in informa-
tion processing and therefore negative impacts on the busi-
ness processes and on IT-based services cannot be completely
ruled out.
Due in particular to the changed risk situation relating to
cybercrime and hacker attacks, the possible impact of infor-
mation-technology risks has increased compared with the pre-
vious year from "Medium" to "High".
Personnel risks and opportunities
The automotive industry is subject to extensive governmental
regulation worldwide. Legal and political framework have
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. Future success also depends on the extent to which
the Daimler Group succeeds over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise as well as
transparency with regard to the resources of the Daimler Group.
One focus of human resources management is the targeted
personnel development and further training of the workforce.
Employees benefit for example from the range of courses
offered by the Daimler Corporate Academy and from transpar-
ency in the context of performance management. In order to
remain successful as a company, management culture and
principles are being further developed in a Group-wide project.
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This issue is addressed by measures taken in
the area of generation management, which are intended to
counteract the effects of personnel bottlenecks by exerting an
influence on entrepreneurial activity and consequently on the
earnings of the Daimler Group.
Risks in the context of negotiations on collective bargaining
frameworks and the associated potential loss of production are
not to be expected to a large extent in Germany before 2020.
There is no segment-specific assessment of human-resources
risks because the described risks are not primarily related to
any specific business segment, but are valid for all segments in
the respective regions. Overall, the probability of occurrence
of personnel risks has increased compared to the previous year
from "Low" to "Medium". Their possible impact remains
unchanged.
152
of products are continuously monitored within the context of
managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of safeguard-
ing production by securing the quantitative and qualitative
ability to deliver of the suppliers. Furthermore, by sourcing
components from other plants, potential bottlenecks can be
reduced and can lead to opportunities at the Daimler Trucks
division due to rising demand for heavy commercial vehicles.
Production and technology opportunities
The success of the Daimler Group is highly dependent on its
employees and their expertise. They are involved in their
respective activities and working processes with their ideas
and suggestions, and thus make significant contributions to
improvements and innovations every day.
Low
High
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. They relate for
example to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by the production facilities. Non-
compliance with regulations applicable in the various regions
might result in significant penalties and reputational risks and
might even mean that vehicles could not be or could no longer
be registered in the relevant markets. The cost of compliance
with these regulations is significant, especially for conventional
engines, and Daimler expects a further increase in costs in this
context.
The Mercedes-Benz Cars segment faces risks with respect to
regulations concerning the average fleet fuel consumption
and CO2 emissions of new vehicles, especially in the markets
of China, Europe and the United States. Daimler gives these
targets due consideration in its product planning. The increas-
ingly ambitious targets require significant proportions of actual
unit sales of plug-in hybrids or cars with other types of electric
drive. The ambitious statutory requirements will be difficult
to fulfill in some countries. The market success of these drive
systems is greatly influenced not only by customer acceptance
but also by regional market conditions, for example the charging
infrastructure and state support.
The EU Commission is currently revising, amending or supple-
menting the framework conditions for the WLTP measurement
method, which was only introduced in September 2018. Some
of these changes are to come into force as early as 2019. This
will result in increased and additional WLTP testing and docu-
mentation costs. In the worst case, recertification could also
become necessary, which in turn could cause supply bottle-
necks.
Strict regulations for the reduction of vehicles' emissions and
fuel consumption create potential risks also for the Daimler
Trucks and Daimler Buses divisions, because it will be difficult
to fulfill the statutory requirements in some countries. This
applies above all to the markets of Japan, the United States,
China and Europe. The European Commission has developed
a method for determining the CO2 emissions of heavy commer-
cial vehicles, named VECTO, the application of which will
be mandatory for the most important vehicle categories as of
2019. The prescribed level of ambition cannot be achieved
with conventional technology alone. Daimler Trucks and Daimler
Buses will therefore have to apply the latest technologies in
order to fulfill these requirements.
Very demanding regulations for CO2 emissions are also planned
or have been approved for light commercial vehicles, which
will present a challenge for Mercedes-Benz Vans, especially in
the long term. This applies in particular to the markets of the
United States and Europe.
The position of the Daimler Group in key foreign markets could
also be affected by an increase in or changes to free-trade
agreements. If free-trade agreements are concluded without
the involvement of countries where Daimler produces or if
free-trade agreements are amended to make them substantially
stricter, the position of the Daimler Group could be signifi-
cantly impacted. At the same time, new free-trade agreements
could also result in opportunities for the Daimler Group
towards competitors in countries which are not parties to such
agreements or which do not produce in those countries.
The danger exists that individual countries will attempt to
defend or improve their competitiveness in the world's markets
by resorting to interventionist and protectionist actions.
Industrial policy measures are intended to attract investment
into a country and increase local value creation along the
entire value chain. In addition, attempts are being made to limit
growth in imports through barriers to market access such
as by making certification processes more difficult, delaying
certification and imposing other complicated customs
procedures. These measures generally exacerbate uncertain-
ties in the planning process.
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction
of traffic jams, noise and emissions are becoming increasingly
important in cities and urban areas worldwide. In China for
example, limited access to vehicle registration is continuing
and is actually worsening. This development can have a
dampening effect on the development of unit sales, especially
in growth markets. Pressure to reduce personal transport
is increasingly being applied in European cities through discus-
sions of bans on vehicles, especially those with diesel engines.
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Cities are becoming connected and are increasingly seeking
partnerships with industry in order to cooperate on new
mobility solutions. This can create a demand for vehicles with
alternative drive systems, as well as for new mobility services
including car-sharing services. In order to utilize the resulting
opportunities, Daimler is present in the market with the provi-
sion of innovative mobility services.
In April 2018, the US Department of the Treasury's Office of
Foreign Assets Control announced sanctions against various
individuals and companies. This may affect business activities
of the Daimler Group, in particular with sanctioned business
partners in Russia.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in
the process of product development. The great challenge of
the coming years will be to offer an appropriate range of
drive systems and the right product portfolio in each market.
Company-specific risks and opportunities
As the negative headlines on diesel engines and the implemen-
tation of driving bans on diesel vehicles unsettle customers,
this can result in lasting shifts in the drive-system portfolio
(fewer diesel and more gasoline engines). This would require
additional development and production measures in order to
meet the CO2 fleet limits applicable as of 2020.
-
The following section describes company-specific risks and
opportunities of the Daimler Group. A quantification of these
risks and opportunities is shown in table 7 B.65.
Impact
Impact
Probability of occurrence
Risk category
Opportunity category
B.65
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group - and hence for the
achievement of corporate targets are brand image, design
and quality, and thus the acceptance of products by custom-
ers, as well as technical features based on innovative research
and development. Convincing solutions, which for example
support accident-free driving or further improve the products'
fuel consumption and emissions, such as hybrid or electric
vehicles, are of key importance for safe and sustainable mobil-
ity. Innovations and technology opportunities for the progres-
sive and future-oriented design of the product range flow into
the strategic product planning of the automotive divisions.
However, due to increasing technical complexity, the continu-
ally rising extent of requirements in terms of emissions, fuel
consumption and safety, as well as meeting and steadily rais-
ing the Daimler Group's quality standards, product launches
and manufacturing in the automotive divisions are also subject
to production and technology risks.
Company-specific risks and opportunities
In the context of product launches, the required parts and equip-
ment components have to be available. To avoid restrictions
in this context, the related processes are continually evaluated
and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expansion,
construction and restructuring measures are carried out as
required. The execution of modernization activities and the
launch of new products are generally connected with high
investments. For example, stipulations, plant reconstruction
or delays in the ramp-up phase of an innovation or during a
product's lifecycle can lead to inefficiencies in the production
process and as a consequence to a short-term reduction in
production volumes. In addition, the planned increase in bat-
tery production due to the increasing electrification of the
vehicle fleet means that initial technical problems cannot be
ruled out during the production of the various battery types.
Those automotive segments are affected which are currently
launching a new product or have planned a related production
ramp-up. In this context, it is also necessary to consider
dependencies on contractual and cooperation partners, as
well as possible changes in regional conditions, which have
to be included in the local decision-making process.
Production and technology risks
In principle, there is a danger that infrastructure problems,
reduced plant availability or the failure of production equip-
ment or production plants may cause internal bottlenecks
that would consequently generate costs. With the parallel fail-
ure of several production plants, the resulting effects could
accumulate. These risks mainly exist for the Mercedes-Benz
Cars segment. The production equipment is continually
maintained and modernized. As a precaution, spare parts are
held available as well as, if required, redundant machines
are purchased for the production plants that might be at risk.
Insufficient availability of vehicle components at the right time,
capacity restrictions in the production of batteries, interrup-
tions in the supply chain and possible interruptions in supply by
energy providers can lead to bottlenecks, especially at the
Mercedes-Benz Cars division. At the Daimler Trucks division,
there are further risks due to high utilization of production
capacity in connection with potential bottlenecks for compo-
nents for heavy-duty trucks. As a result of the expansion of
production in the Mercedes-Benz Vans segment, a temporary
increase in the workforce and additional shifts in the produc-
tion plants could become necessary. In order to avoid such
bottleneck situations, importance is placed upon being able
to compensate for capacity constraints through forward plan-
ning. In addition, supply chains and the availability and quality
Significant growth in unit sales
Renewed growth in contract volume
Daimler Financial Services
First vehicles of the Mercedes-Benz eActros innovation fleet
handed over to customers
Significant increase in unit sales
Daimler Trucks
EBIT slightly below prior-year level at €265 million
(2017: €281 million)
Mercedes-Benz Citaro hybrid wins "Bus of the Year 2019"
Digital service OMNIplus ON
Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
Positive development of complete-bus business in Europe
New all-electric Mercedes-Benz eCitaro
180-182
Presentation of new electric truck for the North American
market
172 - 176
smart focuses on electric mobility
championships for the fifth time in succession
EBIT of €7.2 billion (2017: €8.8 billion)
Mercedes wins drivers' and constructors' Formula 1
Expansion of global production network
Deepened partnership in China
Presentation of new GLE sports utility vehicle
Extensive model upgrade for the C-Class
Mercedes-Benz Cars achieves record unit sales once again
A- and B-Class set new standards
166 - 171
Mercedes-Benz Cars
Announcement of cooperation with Californian company
Proterra Inc.
C | THE DIVISIONS | CONTENTS 165
Daimler Buses
- World premiere of new Actros with innovative safety systems
New DTB Tech & Data Hub founded in Lisbon
Mercedes-Benz Vans
tor
C | The Divisions
EBIT significantly below prior-year level at €0.3 billion
(2017: €1.1 billion)
177-179
-
Future initiative adVANce in full swing
-
New Sprinter plant in the United States
World premiere of Vision URBANETIC
Market launch of the new Sprinter
eDrive@Vans: eVito and eSprinter
Growth driven by V-Class and Sprinter
Unit sales at record level
EBIT significantly below prior-year level at €1.4 billion
(2017: €2.0 billion)
Toll Collect settlement
Top positions in employer rankings
Investment in artificial intelligence
Further expansion of fleet-management activities
Investment in used-car platform heycar
Joint venture for premium ride hailing in China
Cooperation with BMW
Expanded offer of innovative mobility services
New name: Daimler Mobility AG
policies brokered
Further increase in number of automotive insurance
183-185
EBIT significantly above prior-year level at €2.8 billion
(2017: €2.4 billion)
Fleetboard pushes forward with digitization of logistics sec-
The divisions of the Daimler Group performed very well in their
markets in 2018, despite partially difficult conditions, thanks to
numerous new and innovative products and services. Overall, the
unit sales of our automotive divisions reached a record level, and
the Daimler Financial Services division was also able to increase
its contract volume significantly once again.
Investment
The Divisions
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B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Outlook
S.C 1181
For forecasting the profitability of our divisions, as of Annual
Report 2018, we have changed over to using return on
sales instead of EBIT for the automotive divisions and return on
equity for Daimler Financial Services. This creates a link
between our expectations for the current financial year and our
strategic targets. Divisional return on sales and return on
equity will be forecast with the use of bandwidths. Furthermore,
we have adjusted the sensitivities for forecasting the unit
sales and revenue of the divisions and the Group, and for fore-
casting Group EBIT.
Our assessments for the year 2019 are based on the assumption
of generally stable economic conditions and the expectation
that the upward development of the global economy will continue.
We also assume that worldwide demand for motor vehicles
will be roughly of the magnitude of the previous year. The devel-
opment we have outlined is subject to various opportunities
and risks, which are explained in detail in the Risk and Oppor-
tunity Report. O pages 143 ff
The world economy
At the beginning of 2019, the world economy is displaying rather
weaker growth than in the previous year, but is generally con-
tinuing its solid development. We assume that this moderate
slowdown will continue as the year progresses. Growth pros-
pects for the industrialized countries in particular are rather less
positive than in the previous year, while the economies of the
emerging markets should develop at a similar rate overall.
Most economic indicators suggest that the economy of the Euro-
pean Monetary Union will experience a further slowdown in
growth in the year 2019. If domestic demand remains robust, a
lower contribution from foreign trade should lead to a growth
rate of only about 1.5%. Under these conditions, the European
Central Bank will continue to follow its announced course and
is unlikely to raise key interest rates; if it does, then probably not
before the fall of 2019. The outlook for the German economy
is also rather less positive and also here, we expect a further
growth slowdown to less than 1.5%. Because the exact proce-
dure and economic effects of the United Kingdom's imminent
withdrawal from the European Union are still difficult to assess,
the British economy must also be expected to develop rather
moderately in 2019. But despite the high level of uncertainty, the
majority of analysts do not expect an economic slump.
In the United States, the leading indicators suggest that the
economy's solid upswing should continue. However, growth
is likely to be somewhat weaker than in the previous year, as
the positive impetus from the tax cuts is coming to an end.
Thanks to stable domestic demand, moderate inflation and low
unemployment, the US Federal Reserve will probably be able
to maintain its course of slightly restrictive monetary policy with
further moderate interest-rate increases. All in all, total eco-
nomic output should grow by just below 2.5%.
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continually monitored and further developed.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 159
In China, the gradual slowdown in growth of recent years is set
to continue this year. In particular, the uncertainties surround-
ing the trade conflict with the United States should continue
to have a negative impact. On the other hand, the announced
government stimuli should stabilize the economy. Overall, a
still solid increase in gross domestic product of just over 6% is
to be expected. While the economies of Central and Eastern
Europe are unlikely to match their robust growth of 2018, slight
acceleration of growth is anticipated for the South American
economic region. With GDP growth expected to be just below
2%, however, South America remains below its potential. The
ongoing comparatively low level of raw-material prices, espe-
cially of oil, is unlikely to deliver any support for the countries
of the Middle East; their growth rates will probably remain sig-
nificantly below average for this region at less than 2%. Overall,
the emerging markets should achieve economic growth in the
magnitude of 4 to 4.5% in 2019, as in the previous year, thus
developing along their long-term trend.
Overall, the world economy should grow in 2019 by rather less
than 3%. Although this is an ongoing solid rate of expansion, it
is significantly slower growth than in the previous year.
Automotive markets
In 2019, worldwide demand for cars should remain roughly at
the level of the previous year. The European market is likely
to be of the magnitude of 2018. In Western Europe, we expect
demand to remain more or less stable in view of the above-
average market level that has now returned, and Germany, the
region's largest single market, should also display a stable
development at the prior-year level. The car market of Eastern
Europe is also expected to maintain its prior-year volume.
The Russian market should continue to develop comparatively
favorably with a slight increase, while a sharp decline is
expected in Turkey.
The US market for cars and light trucks is likely to contract
slightly from a high level. Following the weaker level of the pre-
vious year, the Chinese car market should stabilize in 2019
and maintain its volume at close to the prior-year level. Demand
in India, however, should grow moderately. In Japan, we
expect the market volume to remain more or less unchanged.
Demand for medium- and heavy-duty trucks should vary in
the regions relevant to us, but we anticipate the continuation
of favorable market conditions.
In North America, we assume that the truck market in weight
classes 6 to 8 will maintain the high level of the previous year.
Despite a certain weakening of overall economic growth, we
expect demand in the EU30 region (European Union, Switzerland
and Norway) to remain at the high level of 2018. In Brazil, the
market is expected to continue its recovery with a significant
increase in truck sales. However, the Turkish market is likely
to shrink again significantly due to the country's economic
recession. We anticipate a slight increase in demand for trucks
in Russia.
The most important Asian markets from Daimler's perspective
are likely to present a varied picture in 2019. In the Japanese
market for light-, medium- and heavy-duty trucks, we anticipate
a slight market decrease at an ongoing solid level. We expect
a stable development of the Indonesian truck market. In India,
following strong growth in 2018, demand for medium- and
heavy-duty trucks should remain at the same level in 2019. In
the Chinese market, a significant correction is to be expected
following the extremely high volume of the previous year.
In the EU30 region in 2019, we expect a market volume at the
prior-year level in the combined segment of mid-size and large
vans, as well as in the market for small vans and in the segment
of mid-size pickups. In the United States, demand for large vans
should be slightly stronger than in the previous year. The mar-
ket for large vans in Latin America should continue its recovery
in 2019. In China, we expect slight growth in the market we
address there for mid-size vans.
The growth prospects of the Japanese economy also remain
stable at a low level. A solid outlook for domestic demand
should mitigate external risks, so that growth in gross domes-
tic product (GDP) of just under 1% can again be expected.
Compared with the previous year, IT risks have increased from
the changed situation in relation to cyber crime and hacker
attacks. In addition, increasing trade-restrictive and protection-
ist tendencies worldwide have led to a higher probability of
occurrence of risks from political and legal frameworks and,
among other things, to a reduction in market opportunities.
However, the overall view of the Daimler Group's risk and
opportunity situation remains essentially unchanged. No risks
are recognizable - neither on the balance sheet date nor at
the time of preparing the consolidated financial statements -
that either alone or in combination with other risks could
endanger the continued existence of the Group. As consider-
able economic and industry risks still exist, setbacks on the
way to sustainably achieving growth and profitability targets
cannot be ruled out. New competitors in the IT sector for
example and the Group's current strategy, among other things
in connection with electric mobility, pose further challenges
for the Daimler Group and are connected with risks and oppor-
tunities. By effectively and flexibly focusing production and
sales activities on changing conditions, the divisions of the
Daimler Group strive to utilize the opportunities offered so
that they can fulfill or surpass their respective targets and
plans. As far as can be influenced by the Daimler Group and
provided that the required measures are financially viable, the
Group takes appropriate action to realize those opportunities.
how it succeeds in offering up-to-date and technologically
leading products in the markets, and how business operations
are conducted under the given conditions. Furthermore, the
secure handling of sensitive data is a precondition for main-
taining business relationships with customers and suppliers in
a trusting and cooperative environment.
As well as the risk categories described above, unpredictable
events such as natural disasters, political instability or terrorist
attacks can disturb production and business processes. Emer-
gency plans are therefore prepared to allow the resumption
of business operations as soon as possible. As far as possible,
and commensurate to the level of individual risks, precaution-
ary measures are taken and insurance policies are arranged.
Disruptions of business processes can also occur in connec-
tion with projects as a result of system changes. Risks relating
to compliance are also included in the risk management pro-
cess and are continually monitored. Regular training courses
are carried out to prevent compliance violations. In addition to
the described risks, other risks can occur that adversely affect
the public perception and therefore the reputation of the
Daimler Group. Public interest is focused on Daimler's position
with regard to individual issues in the fields of sustainability,
integrity and social responsibility. Furthermore, customers,
business partners and capital markets are interested in how
the Group reacts to the technological challenges of the future,
156
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In addition, Daimler's ability to defend itself in proceedings
could be impaired by unfavorable findings, results or develop-
ments in any of the information requests, inquiries, investiga-
tions, administrative orders, legal actions and/or proceedings
discussed above.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - Court proceedings. A consumer
class-action lawsuit is pending in the United States in which
it is alleged that Daimler AG and MBUSA conspired with Robert
Bosch LLC and Robert Bosch GmbH (collectively, "Bosch")
to deceive US regulators and consumers. A separate lawsuit was
filed in January 2019 by the State of Arizona alleging that
Daimler AG and MBUSA deliberately deceived consumers in
connection with the advertising of Mercedes-Benz diesel
vehicles. Another consumer class-action lawsuit against Daimler
AG and other companies of the Group containing similar
allegations was filed in Canada in April 2016. A similar class
action was filed in the United States in July 2017, but in
December 2017, the parties stipulated to dismiss that lawsuit
without prejudice. It may be filed again under specific con-
ditions. Furthermore, class actions have been filed in the United
States and Canada alleging anticompetitive behavior relating
to vehicle technology, costs, suppliers, markets, and other com-
petitive attributes, including diesel emissions control technol-
ogy. A securities class action lawsuit is pending in the United
States on behalf of investors in Daimler AG American Deposi-
tary Receipts which alleges that the defendants made materially
false and misleading statements about diesel emissions in
Mercedes-Benz vehicles. Daimler AG and the respective other
affected companies of the Group regard these lawsuits as
being without merit and will defend against the claims. Further
details please see Note 30 of the Notes to the Consoli-
dated Financial Statements.
In Germany, lawsuits by customers alleging violations of war-
ranty and tort laws as well as lawsuits by investors alleging the
violation of disclosure requirements are pending. At the end
of December 2018, the regional court of Stuttgart published in
the claims register an investor's motion to initiate a model
proceeding in accordance with the Act on Model Proceedings
in Capital Markets Disputes (KapMuG) alleging the violation
of ad hoc disclosure requirements. Currently, no model pro-
ceeding is pending. Daimler AG also regards these lawsuits
as being without merit and will defend against the claims.
If court proceedings have an unfavorable outcome for Daimler,
this could result in significant damages and punitive damages
payments, remedial works or other cost-intensive measures.
Court proceedings can in part also have an adverse effect on
the reputation of the Group.
Furthermore, Daimler's ability to defend itself in the court pro-
ceedings could be impaired by unfavorable findings, results
or developments in any of the governmental proceedings dis-
cussed above.
Risks from other legal proceedings. Following the settlement
decision by the European Commission adopted on July 19, 2016
concluding the trucks antitrust proceedings, Daimler AG faces
customers' claims for damages to a considerable degree.
Respective legal actions, class actions and other forms of legal
redress have been initiated in various states in and outside
of Europe and should further be expected. Daimler takes appro-
priate legal remedies to defend itself.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
It cannot be ruled out that the regulatory risks and risks from
legal proceedings discussed above individually or in the
aggregate may materially adversely impact our profitability and
financial position.
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's financial position.
Further information on legal proceedings is provided in
Note 30 of the Notes to the Consolidated Financial State-
ments.
Tax risks
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities - especially in the field of cross-border
transactions - may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
Any changes or interventions by the fiscal authorities are con-
tinuously monitored by the tax department and measures are
taken if required.
Non-financial risks
As a company with worldwide activities, Daimler AG is at
the focus of public interest. In this context, the relevant stake-
holders' perception is of crucial importance and can affect
the reputation of the entire Daimler Group see page 202
>>Non-Financial Report«. A key role in the public's current
perception is played by the company's approach to environmen-
tal, employee and social matters, fighting corruption and
bribery, and respecting human rights.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
157
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement
of the NEDC (New European Driving Cycle) with the new
measuring method WLTP (Worldwide Harmonized Light Vehicles
Test Procedure), the fleet CO2 average has worsened. In light
of today's knowledge, this would make it more difficult to achieve
the CO2 targets as of 2020. Furthermore, there has been
some pressure in the past two years on diesel technology, which
is important for compliance with the challenging CO₂ targets
in the EU, because of NO x levels exceeding the limits at some
measuring stations in cities. The current public focus on
vehicle emissions as well as possible certifications stops and
recalls jeopardize the reputation of the automotive industry
and in particular of the diesel engine, and could result in dam-
age to Daimler's reputation. With the development of a new
generation of diesel engines, Daimler has developed a convinc-
ing technical solution for reducing NOx emissions in real
driving (real driving emissions (RDE)) and will successively intro-
duce this innovation throughout the product range. In general,
legal risks - for example in connection with antitrust investiga-
tions as well as possible legal and social violations by part-
ners and suppliers can have a negative impact on the reputation
of the entire Daimler Group. As one of the fundamental princi-
ples of business activity, Daimler places particular priority -
also in the selection of partners and suppliers - on adherence
to applicable laws and ethical standards.
Overall assessment of the risk
and opportunity situation
The overall view of the Group's risk and opportunity situation is
the sum of the described individual risks and opportunities of
all risk and opportunity categories for the divisions, the corpo-
rate functions and the legal entities.
We expect slight growth in the market volume for buses in the
EU30 region. In Latin America (excluding Mexico), we assume
that the situation will improve due to the slight market recovery
in Brazil. But growth in Latin America continues to be held back
by the economic crisis in Argentina.
160 B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board in December 2018.
That planning is based on the premises we set regarding the
economic situation and the development of automotive markets.
It involves assessments made by Daimler, which are based
on analyses by various renowned economic research institutes,
international organizations and industry associations, as well
as on the internal market analyses of our sales companies. The
prospects for our future business development as presented
here reflect the targets of our divisions as well as the opportuni-
ties and risks presented by the anticipated market conditions
and the competitive situation during the planning period. Against
this backdrop, we adjust our expectations for business devel-
opment to reflect updated forecasts for the development of the
various automotive markets. The statements made below are
based on the facts known to us at the beginning of 2019.
Mercedes-Benz Cars aims to continue along its growth path in
2019. We intend to slightly increase our total unit sales, thus
reaching a new record level. The basis for this, and for ongoing
sales success worldwide, is our attractive and innovative
model portfolio.
Dividend
At the Annual Shareholders' Meeting on May 22, 2019, the
Board of Management and the Supervisory Board will propose
the payment of a dividend of €3.25 per share for the year
2018 (prior year: €3.65). This represents a total distribution of
€3.5 billion (prior year: €3.9 billion). In line with a sustainable
dividend policy, Daimler sets the dividend based on a distribution
ratio of 40% of the net profit attributable to Daimler shareholders.
162
B | COMBINED MANAGEMENT REPORT | OUTLOOK
In order to achieve our ambitious growth targets, we will sys-
tematically expand our product range in the coming years.
At the same time, we want to be able to play a leading role in the
far-reaching technological transformation of the automotive
industry. This applies in particular to the increasing electrifica-
tion of our product portfolio and to the digital connectivity
of our products and processes along the entire value chain. By
intelligently connecting the constantly growing volumes of
data, we will create efficiency advantages, improve our product
quality and facilitate the ongoing flexibilization of the produc-
tion process. Against this background, we intend to maintain our
investment in property, plant and equipment at a very high
level, although there is likely to be a slight decrease in compar-
ison to the year 2018.
Investment in property, plant and equipment at Mercedes-
Benz Cars is likely to reach a similarly high level in 2019 as
in the previous year. This is primarily due to the ongoing prod-
uct offensive. The most important projects include the new
models of the compact class, the C-Class and the S-Class, the
new SUVs (GLE and GLS), and new engines and transmissions.
Substantial investment is planned also for the realignment of
our German production sites, for the expansion of our inter-
national production network, and for the worldwide production
network for electric mobility. Furthermore, the division is
making substantial investments in the technological CASE areas
of the future (Connected, Autonomous, Shared & Services,
Electric). Daimler Trucks will mainly invest in 2019 in new prod-
ucts and successor generations for existing products, global
component projects and the optimization of its worldwide pro-
duction network. At Mercedes-Benz Vans, the focus of
capital expenditure will be on production of the new Sprinter
in Düsseldorf, North Charleston and Argentina, and on the
further development of the V-Class and Vito. Key projects at
Daimler Buses are improvements in the production network
and advance expenditure for new models, in particular for an
electrically powered city bus.
Research and development
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against
the backdrop of upcoming technological challenges. With new
and attractive products, we want to inspire our customers
and utilize the growth opportunities offered by worldwide auto-
motive markets. We are increasingly focusing on the strategic
areas for the future of connectivity, automated and autonomous
driving, flexible use and services, and electric drive (CASE).
We aim to occupy a leading position in these areas, both indi-
vidually and by linking them up intelligently. In order to achieve
our goals, we will maintain our total expenditure for research
and development in 2019 at the very high level of the previous
year. At Mercedes-Benz Cars, a large part of that expenditure
will flow into the renewal of the product portfolio. The division's
most important projects are the successor models for the
C-Class, the S-Class and the new compact cars, as well as
the expansion of the model range of the EQ product and tech-
nology brand. We are also working hard on new, low-emission
combustion engines, electric mobility, the connectivity of
our vehicles, and innovative safety technologies for automated
and autonomous driving. The topics of electric mobility, con-
nectivity and automated driving will play an important role also
at Daimler Trucks. Other key areas are successor generations
for existing products, fuel efficiency and emission reductions, as
well as tailored products and technologies for important growth
markets. Key projects at Mercedes-Benz Vans are the successor
generation of the Sprinter and the further development of the
Vito and the V-Class. Furthermore, Mercedes-Benz Vans is push-
ing forward with the electrification of its commercial model
series. Another important topic is the connectivity of products
and processes, especially the innovative connectivity solution,
Mercedes PRO. The Daimler Buses division is focusing its
development activities on new products, compliance with future
emission standards and further reductions in fuel consump-
tion. An important role is also played by alternative drive systems,
especially electrification, and additional pioneering projects
relating to automation functions and autonomous driving.
The workforce
Due to the growth in unit sales and revenue we anticipate, pro-
duction volumes are likely to continue rising in 2019. At the
same time, the efficiency-enhancing measures we have imple-
mented in recent years at all divisions are now taking effect.
The medium- and long-term measures we have taken for struc-
tural improvements in our business processes should facilitate
further efficiency progress. Against this backdrop, we assume
that we will be able to achieve our growth targets with only
slight workforce growth. Additional jobs will be created in par-
ticular through the expansion of our international production
network, in the area of research and development, and in con-
nection with the technological areas of the future, especially
electric mobility and digitization. Companies that we operate
together with Chinese partners and whose employees are
not included in the figures for the Daimler Group are also likely
to recruit additional employees.
For the year 2019, we aim to have liquidity available in a volume
appropriate to the general risk situation in the financial mar-
kets and to Daimler's risk profile. When measuring the level of
liquidity, we give due consideration to possible refinancing
risks caused for example by temporary distortions in the finan-
cial markets. We continue to assume, however, that we will
have very good access to the capital markets and the bank mar-
ket also in the year 2019. We aim to cover our funding needs
in the planning period primarily by means of bonds, commercial
paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans from
globally and locally active banks. In view of our strong credit-
worthiness, we anticipate slightly less attractive conditions in
2019, despite the normalization of the liquidity situation on
international capital markets after the end of the central banks'
bond-buying programs in the United States and Europe. An
additional goal is to continue securing a high degree of financial
flexibility.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Overall statement on future development
Although the conditions for our business at the beginning of 2019
are less favorable than in the previous year, Daimler continues
to be on a stable growth path. In view of the challenging environ-
ment and the expected changes in mobility, we will continue
to implement our strategy consistently in the coming years. We
are focusing even more on our customers and thus creating
the basis for further growth.
-
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups, utilizing additional market
potential and strengthening our market position worldwide.
With the efficiency programs that have been implemented
in all divisions in recent years, we have improved our cost
structures on a sustained basis and thus laid the foundations
for a high level of profitability. We are currently taking fur-
ther measures in all divisions for the long-term and struc-
tural optimization of the business system. In this way, we are
strengthening our core business (CORE) and creating the
financial basis to invest in the future of the company.
We have therefore significantly increased our advance
expenditure for new products and technologies in recent
years, and we will maintain this high level in 2019. We there-
fore intend to play a leading role also in the future, especially
in the strategic, future-oriented areas of connectivity, auto-
mated and autonomous driving, flexible use and services,
and electric drive, and by intelligently linking up those areas
(CASE).
- Together with the workforce, we are developing a new lead-
ership culture under the heading of "Leadership 2020" that
will allow us to successfully shape our future. In this way, we
are meeting the challenges of the digital world and creating
the basis for cultural changes at the Group (CULTURE).
Unit sales
-
Forward-looking statements
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe,"
"estimate," "expect," "intend," "may," "can,” “could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, acts of terrorism, political unrest, armed conflicts,
industrial accidents and their effects on our sales, purchasing, production
or financial services activities; changes in currency exchange rates and tariff
regulations; a shift in consumer preferences towards smaller, lower-margin
vehicles; a possible lack of acceptance of our products or services which lim-
its our ability to achieve prices and adequately utilize our production capaci-
ties; price increases for fuel or raw materials; disruption of production due to
shortages of materials, labor strikes or supplier insolvencies; a decline in
resale prices of used vehicles; the effective implementation of cost-reduction
and efficiency-optimization measures; the business outlook for companies
in which we hold a significant equity interest; the successful implementation
of strategic cooperation and joint ventures; changes in laws, regulations
and government policies, particularly those relating to vehicle emissions, fuel
economy and safety; the resolution of pending government investigations
or of investigations requested by governments and the conclusion of pending
or threatened future legal proceedings; and other risks and uncertainties,
some of which we describe under the heading "Risk and Opportunity Report"
in this Annual Report. If any of these risks and uncertainties materialize or
if the assumptions underlying any of our forward-looking statements prove to
be incorrect, the actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obliga-
tion to update these forward-looking statements since they are based solely
on the circumstances at the date of publication.
15
163
The generally moderate development of earnings in the auto-
motive divisions will affect the free cash flow of the industrial
business. There will be a negative effect from the continuing
high advance expenditure for new products and technologies.
In addition, there will be costs for Project Future for the imple-
mentation of the new Group structure. Under these conditions,
we assume that the free cash flow of the industrial business
should be slightly higher than in the previous year.
To enable us to react flexibly to the high dynamism of the
environment, markets, new competitors and technologies, we
need a structure that facilitates rapid and agile action. In the
context of Project Future, we aim to further focus Daimler's
divisional structure, thus strengthening the future viability
of the various businesses (COMPANY). With Project Future,
we want to make Daimler even more agile and faster, so
that we can make even better use of market opportunities.
The shareholders' approval for the implementation of the
new structure is to be obtained at the Annual Shareholders'
Meeting on May 22, 2019. With the four strategic areas for
action CORE, CASE, CULTURE and COMPANY - we have
created the right conditions to focus even more consistently
on our customers' requirements. Our goal is to continue to
be one of the leading vehicle manufacturers while evolving into
one of the leading providers of connected mobility. Along
this path, we once again reached some pioneering milestones
also in 2018. We therefore look to the year 2019 with confi-
dence. We expect both unit sales and revenue to be higher
than in the previous year, and should be able to achieve a
slight increase in earnings despite the high volume of expen-
diture to safeguard our future.
The return on equity expected at Daimler Financial Services on
the one hand takes into consideration significant positive effects
on assets and earnings from the planned merger of the mobil-
ity services of Daimler and BMW. On the other hand, we expect
the division's earnings to be reduced by the normalization of
credit-risk costs and further investment in advancing digitization
and mobility services. Further growth in contract volume
should have a positive impact on earnings.
Free cash flow and liquidity
Mercedes-Benz intends to launch more than a dozen new and
upgraded automobiles in 2019. There should be a positive
impact on unit sales in particular from models such as the new
B-Class, the A-Class sedan and the eighth model in the com-
pact-car segment. We are also well positioned in 2019 in the
growing segment of sports utility vehicles. The new GLE and
the new GLS should make a contribution here, as well as the
popular and upgraded GLC. Mercedes-AMG should guarantee
our success in the high-performance segment once again in the
year 2019: More and more customers are fascinated by the
broad and appealing range of automobiles offered by our sports-
car and high-performance brand, which we are continuously
developing.
We are systematically expanding our worldwide production
network for electric mobility. Under the product and technol-
ogy brand EQ, which stands for "Electric Intelligence," we
will offer not only vehicles but also services in connection with
electric mobility. By the year 2022, we want to electrify the
entire portfolio of Mercedes-Benz Cars. Our goal is to offer our
customers various electrified alternatives in each segment -
from the smart to the compact cars to the large SUVs. We plan
to have a total of more than 130 electrified models in our
portfolio by the year 2022. This will include all-electric vehicles,
plug-in hybrids and models with 48-volt technology. By the
year 2025, depending on the development of the public infra-
structure and on customer preferences, 15 to 25% of the
cars we sell are to be purely electric. To achieve that, we plan
to launch more than ten all-electric cars on the market.
Daimler Trucks anticipates further growth in total unit sales in
2019, with a slight increase compared with the previous year.
In the NAFTA region, we expect to be able to increase our sales
again slightly compared with the previous year. In Brazil, we
expect our sales volumes to significantly exceed the previous
year's low level. In the EU30 region, our sales should be
slightly above the prior-year level. In India, we once again antici-
pate a significant increase in unit sales for 2019. In Japan
and Indonesia, we expect to achieve approximately the same
sales volumes as in the previous year. After the considerable
economic uncertainty of the past year, we anticipate a slight
decrease in unit sales in Turkey.
Mercedes-Benz Vans plans to significantly increase its unit
sales in the year 2019. Growth is expected to be strong in the
United States. We anticipate slight growth in the EU30 region.
Sales growth in the year 2019 should be helped in particular by
the new Sprinter, which was launched in mid-2018.
Daimler Buses assumes it will be able to defend its market
leadership in its most important traditional core markets for
buses above 8 tons. We anticipate significant growth in total
unit sales in 2019. We assume that unit sales will increase
slightly in the EU30 region and significantly in India. Unit sales
in Latin America (excluding Mexico) are expected to be at the
prior-year level.
Daimler Financial Services aims to achieve ongoing growth
in the coming years. In 2019, we expect further growth in contract
volume and a slight increase in new business. We are opening
up new market potential through more flexible leasing and rental
products with the option of moving to new vehicles at shorter
intervals. We intend to generate additional growth by expanding
our online sales channels and with telematics-based products
for insurance and fleet management. We continue to see good
growth opportunities also in the mobility segment.
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect the
Daimler Group to slightly increase its total unit sales in 2019.
Revenue and earnings
We assume that the revenue of the Daimler Group will also
increase slightly in 2019, as a result of the overall positive
development of unit sales in the automotive divisions. Exchange-
rate effects are likely to have a rather negative impact on the
development of revenue in the year 2019. This applies above all
to our business in China, as well as in various emerging mar-
kets and in the United Kingdom.
Our divisions have very attractive product ranges, which have
been expanded and systematically renewed in recent years. We
assume that Daimler will profit from this fact also under par-
tially difficult market conditions, and will be able to strengthen
or defend its position in major markets. At Mercedes-Benz
Cars, additional revenue growth should be ensured in 2019 above
all by the new A-Class and B-Class, and by the G-Class and
the GLE. On the other hand, expected exchange-rate develop-
ments and lifecycle effects for some car models as well
as a changed sales structure will have a dampening effect on
revenue. Overall, Mercedes-Benz Cars anticipates a slight
increase in revenue in 2019. Due to generally favorable market
conditions and positive sales expectations, the Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses divisions plan to
achieve significant revenue growth. Daimler Financial Services
anticipates a slight increase.
The growth in unit sales and revenue that we anticipate should
have a generally positive impact on earnings in 2018. We have
laid the foundations for a lasting high level of earnings with
various programs for improved profitability, which we already
implemented in the years 2013 to 2015. Since then, we have
continuously been taking further measures in all divisions for
Following the changeover in the United States and Canada, the
smart brand will be based solely on electric drive by the year
2020. The battery-electric smart models are making the entry
into electric mobility more attractive than ever. They combine
the agility of a smart with locally emission-free driving - the ideal
combination for urban mobility.
the long-term and structural optimization of our business sys-
tem. At Mercedes-Benz Cars, for example, we aim to achieve
efficiency improvements in the context of the F4L (Fit for Lead-
ership) program in an amount of €4 billion by 2025. Daimler
Trucks is also working continuously on efficiency improvements.
In combination with the cost optimizations we have so far
planned and partially already implemented, we have achieved
profit-effective improvements for Daimler Trucks in an amount
of €1.4 billion, which will become fully effective in the year
2019.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK 161
At Mercedes-Benz Cars, positive effects will result from the
anticipated growth in unit sales. There will be negative effects,
however, from currency exchange rates and the continuation
of very high expenditure for new technologies and vehicles. In
addition, rising raw-material prices will lead to a significant
increase in material costs.
Mercedes-Benz Cars: return on sales of 6% to 8%
Daimler Trucks: return on sales of 7% to 9%
Mercedes-Benz Vans: return on sales of 5% to 7%
Daimler Buses: return on sales of 5% to 7%
The individual divisions have the following expectations for
returns in 2019:
Daimler Financial Services: return on equity of 17% to 19%
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions,
we assume, however, that Group EBIT in 2019 will be slightly
above the level of the previous year. It will also include signifi-
cant positive effects on assets and earnings that we expect
at the Daimler Financial Services division from the merger of
its mobility services with those of the BMW Group.
page 71
However, earnings will be reduced by the continuation of very
high expenditure: for our model offensive, for innovative
technologies (especially for reducing fuel consumption and for
electrification), for the digitization of our products and pro-
cesses, and for the expansion and modernization of our world-
wide production capacities. Furthermore, rising raw-material
prices are leading to a significant increase in material costs,
and exchange-rate effects are also likely to be negative overall.
Another factor is that for the year 2019, a mid-three-digit
million amount is planned at Group level for the implementation
of the new corporate structure “Project Future".
We are standardizing and modularizing our production pro-
cesses throughout the Group. In this context, we are making
intelligent use of vehicle platforms, allowing us to achieve
further cost advantages. In parallel, we are pushing forward
with digital connectivity in all divisions and at all stages of
the value chain - from development to production to sales and
service. In this way, we are opening up additional scope to
become even faster, more flexible and more efficient - to the
benefit of our customers.
Daimler Trucks, Mercedes-Benz Vans and Daimler Buses should
profit from rising unit sales and the efficiency-enhancing
measures. A negative impact is likely also in these divisions from
the development of prices in the raw-material markets. Fur-
thermore, earnings at Daimler Trucks are likely to be impacted
by higher expenditure for new technologies and future Products.
6,962
2,398,270 2,411,378
6,642
thereof capitalized
2,269
2,388
+5
-5
Production
expenditure
+0
Unit sales
2,382,791
Employees (December 31)
145,436
142,666
+2
Research and development
1 The prior-year figures have been adjusted due to the effects of
first-time adoption of IFRS 15 and IFRS 9.
-1
+17
€ amounts in millions
5,684
C.02
166
C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-Benz Cars
After setting new records in the prior year, Mercedes-Benz Cars performed well overall during
the year under review, despite significantly less favorable conditions. Unit sales reached a record
level once again, revenue was at the high level of the previous year, and EBIT also reached a high
level, despite high advance expenditure for our product offensive and new technologies, as well as
extraordinary expenses. During the year under review, we systematically forged ahead with our
model offensive. Important new models in 2018 were the new A-Class, the G-Class, the CLS and
the upgraded C-Class. We also presented the first production vehicle from our new EQ electric
mobility brand. In order to be able to continue meeting demand for our vehicles quickly and flexibly
in the future, we are systematically further developing our global production network with more
than 30 locations on four continents. The most recent example of that is the pioneering Factory 56
at our site in Sindelfingen.
C.01
Mercedes-Benz Cars
2018
2017
18/17
% change
Revenue
EBIT
93,103
7,216
Return on sales (in %)
7.8
94,3511
8,843¹
9.41
-18
Investment in property, plant
and equipment
4,843
Unit sales Mercedes-Benz Cars
2,373,527
2018
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
C.04
Unit sales Daimler Trucks
In thousands
2018
2017
18/17
Change in %
Total
517
471
+10
EU30
85
+4
in thousands
thereof Germany
33
32
+4
United Kingdom
8
9
-11
France
9
8
+13
NAFTA region
+4
190
79,483
Employees (December 31)
2017
€ amounts in millions
18/17
Change in %
Revenue
EBIT
38,273
2,753
Return on sales (in %)
7.2
35,7551
2,3831
6.7
+7
+16
Investment in property,
plant, and equipment
1,105
82,953
1,028
Research and development
expenditure
1,295
thereof capitalized
40
1,322
45
-2
Production
524,846
Unit sales
517,335
476,325
470,705
-11
+10
+10
+7
2018
165
thereof United States
New records for unit sales, revenue and EBIT
Daimler Trucks posted unit sales of 517,300 trucks in 2018,
a new record (2017: 470,700). The markets relevant for Daimler
Trucks generally developed positively. Economic uncertainty
in regions such as the Middle East, Turkey and Argentina had
a negative impact on unit sales. Revenue of €38.3 billion
was also significantly higher than in the previous year (2017:
€35.8 billion). Furthermore, the successful implementation
of our efficiency program helped us to achieve a new EBIT
record of €2.8 billion (2017: €2.4 billion).
Unit sales at new high
Daimler Trucks increased its total sales by 10% to 517,300
units. In the EU30 region (European Union, Switzerland and
Norway), our truck sales increased slightly to 85,400 units.
Our Mercedes-Benz brand maintained its market leadership in
the medium- and heavy-duty segment with a share of 20.6%
(2017: 21.0%). In early September, we presented the new Actros
with a number of new features. In addition to numerous
other innovations, the flagship from Mercedes-Benz puts par-
tially automated driving into series production with Active
Drive Assist, as well as the mirror-cam system, which replaces
the previous exterior mirrors. Sales in Germany also
developed positively with growth of 4% to 32,900 units.
Our sales in Turkey were substantially affected by considerable
economic uncertainty and at 5,000 trucks were 57% lower
than the previous year's level. In Latin America, however, we
once again significantly increased our sales to 38,200 units
(2017: 30,500). There was a significant contribution from growth
in unit sales in Brazil, our main market in the region. With
sales there of 21,400 vehicles, we achieved an increase of 60%,
although from a low level. With our Mercedes-Benz brand
trucks, we increased our market share in the medium- and
heavy-duty segment to 27.9% (2017: 27.6%) and were thus
the market leader in Brazil. Sales in Argentina decreased in
the year under review to 3,500 units (2017: 5,600).
C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Trucks: Well positioned worldwide with six brands - Freightliner, Western Star, Mercedes-Benz, FUSO, BharatBenz
and Thomas Built Buses (from left to right).
173
SCHOOL B
The ongoing very positive development of unit sales in the
NAFTA region made a substantial contribution to our growth.
We once again significantly increased our unit sales to a total
of 189,700 trucks (2017:165,000). In classes 6-8, we continued
to be the market leader with a share of 38.4% (2017: 39.8%).
We have already delivered more than 83,200 units of the new
Freightliner Cascadia, our flagship in the North American
market. The medium-duty DD8 engine has been produced in
Detroit since the beginning of 2018, and with the introduction
of this engine, we are systematically continuing our global plat-
form strategy for the powertrain. The engine is also used in
the new Freightliner Econic SD. This special truck for municipal
applications, which in Europe is mainly used by waste dis-
posal companies, has been available also in the North American
market since April 2018.
In Asia, we increased our truck sales by 11% to 164,700 units.
In Japan, our total sales were approximately 44,000 units
(2017: 44,800). Our FUSO brand achieved a share of the over-
all Japanese truck market of 19.3% (2017: 19.6%). In Indonesia,
we increased our unit sales to 64,200 trucks, which is 50% more
than in 2017. Our sales of 9,700 trucks in the Middle East
were significantly lower than the high level of the previous year
(2017: 23,600). In India, our sales benefited from a significant
recovery of demand for medium- and heavy-duty trucks. With
sales of 22,500 units, we sold significantly more trucks
than in the year before (2017: 16,700). Our market share with
the BharatBenz brand was 7.0% (2017: 9.1%). In September
2018, we reached a major milestone with production of the
100,000th truck at the plant in Chennai. Since the start of
production in 2013, we have exported vehicles from Chennai
to more than 60 markets worldwide.
Active in the Chinese truck market
In China, the world's biggest truck market, Daimler AG holds a
50% equity interest in Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA). The joint venture with Beiqi Foton Motor Co. Ltd.
has been producing medium- and heavy-duty trucks of the
Auman brand since the year 2012. Sales of 103,400 Auman
trucks were below the high prior-year level (2017: 112,400),
which, apart from the favorable economic development, was
influenced above all by regulatory measures for vehicle
replacement. Since the start of the cooperation, 596,700
Auman trucks have been sold.
+6
174
Electrifying: The Freightliner eCascadia is in use with the first customers in North America as of 2019.
CASCADIA
Expansion of our wide-ranging electric portfolio
At the Capital Market & Technology Days in Portland, we pre-
sented two new electric trucks for the North American market:
the Freightliner eCascadia as a heavy-duty all-electric truck
for long-distance applications and the Freightliner eM2 106 as
an all-electric version for the medium-duty segment. The
eCascadia is based on our Cascadia for heavy-duty haulage,
which is already successful in North America. The Freightliner
eM2 106 is used for the local distribution of foodstuffs as well
as for deliveries. In December 2018, the first Freightliner
eM2 was handed over to the customer Penske Truck Leasing
Corp. This means that Daimler Trucks is now testing electric
trucks with the first customers in all three segments: light-,
medium- and heavy duty. Together with the Saf-T-Liner C2
electric school bus from Thomas Built Buses, we have there-
fore presented an extensive range of electric commercial
vehicles in North America.
Mercedes-Benz already presented an all-electric heavy-duty
distribution truck in 2016. In 2018, the first vehicles of the
Mercedes-Benz eActros innovation fleet were handed over to
customers. The first customers - Hermes, EDEKA, Transport-
beton and Meyer-Logistik - operate in various segments and
each of them is using an 18- or 25-ton truck based on the
series version in daily operations for test purposes. The German
Federal Ministry for the Environment (BMU) and Federal
Ministry for Economic Affairs and Energy (BMW) are sponsoring
the development and testing of the heavy-duty trucks in
short-radius distribution operations as part of the project Con-
cept ELV² (Concept Electric Truck in Heavy Distribution Trans-
portation). As an alternative to electric trucks, Mercedes-Benz
Trucks also offers trucks powered by natural gas. In addition
to the Econic waste-disposal and delivery truck, the new Actros
NGT with natural-gas drive and automatic transmission has
also been available to order since 2018. Our first all-electric
light-duty truck, the FUSO eCanter, was launched in Tokyo,
New York and Berlin in 2017. Since the year 2018, more of the
FUSO eCanter trucks have been handed over to logistics
and municipalities in Berlin, London, Amsterdam and Lisbon,
so this model is now operating in six metropolises around
the world. The locally emission-free and nearly silent truck is in
series production in Tramagal, Portugal, for markets in Europe
and the United States. The trucks for the Japanese market are
produced at the Mitsubishi FUSO plant in Kawasaki. Our
FUSO brand already presented the all-electric FUSO Vision
One for the heavy-duty segment in 2017.
C | THE DIVISIONS | DAIMLER TRUCKS
175
In June 2018, the global E-Mobility Group Daimler Trucks &
Buses was founded. It defines the future strategy for our
electric components across brands and divisions, as well as
complete electric vehicles, and is working on a worldwide
uniform architecture. At the IAA Commercial Vehicles trade
fair, we announced our cooperation with the Californian
company, Proterra Inc. Proterra is a leader in the United States
in the business with electric buses for local transportation.
In connection with our equity interest in Proterra, it has been
agreed together to examine the electrification of selected
heavy-duty commercial vehicles from Daimler. As the first coop-
eration project, we are working on possible synergies with the
electrification of school buses from the Daimler brand Thomas
Built Buses, and the option to transfer Proterra's proven bat-
tery technology and drivetrain to the North American school-bus
market.
New Actros with innovative safety systems
The world premiere of the new Actros took place in Berlin in
early September. The new Mercedes-Benz flagship features
many innovations. With Active Drive Assist, we are putting par-
tially automated driving into series production. The system
can support the driver with braking, accelerating and steering.
While the driver continues to be responsible for monitoring
the traffic situation, the system makes his or her work signifi-
cantly easier and delivers an important contribution to enhanc-
ing safety on the roads. The improved Active Brake Assist
helps to monitor the space in front of the vehicle and to react
to pedestrians and cyclists even better. The fifth-generation
brake assistant supports the driver with a combination of radar
and camera system if there is a danger of a front-end crash or
a collision with a pedestrian or cyclist, and initiates emergency
braking if necessary. Sideguard Assist, which has been avail-
able for heavy-duty trucks from Mercedes-Benz since 2016,
monitors not only the tractor unit but also the trailer or semi-
trailer and helps to avoid accidents. When there is a person or
object in the area monitored, the driver is warned visually
and also acoustically if there is a danger of a collision. The new
Actros differs from its predecessor also externally. The main
mirrors and wide-angle mirrors have been replaced by the mirror-
cam system as standard equipment in the new Actros. Two
cameras installed on the truck's exterior and two monitors in
the cab not only improve aerodynamics, they also offer a
greatly improved view around the vehicle. The new Actros has
a digital driver's workplace with high levels of operating and
display comfort. Two interactive monitors are standard equip-
ment and serve as central information sources. In addition to
driver-relevant basic information, assistance systems are also
visualized. It goes without saying that smartphones are fully
integrated. The Truck Data Center permanently connects the
vehicle with the Cloud and is the basis for all connectivity
solutions that help with the provision of transport services. Real-
time control of the truck via Fleetboard connected services
and the preventive service product Mercedes-Benz Uptime offer
the truck's operator additional added value, through predictive
maintenance and low down times for example.
A good view: In the new Mercedes-Benz Actros, the driver benefits from the cab's new, intuitively operated multimedia cockpit.
C | THE DIVISIONS | DAIMLER TRUCKS
+15
583
Total (including BFDA)
161
140
+15
Latin America (excluding Mexico)
38
31
+25
thereof Brazil
21
13
+60
Asia
165
621
149
thereof Japan
44
45
-2
Indonesia
64
43
+50
For information purposes:
BFDA (Auman Trucks)
103
112
-8
+11
Daimler Trucks
82
2018 was a successful year for Daimler Trucks. In a mainly positive market environment, we
succeeded in significantly increasing unit sales, revenue and earnings to new record levels. We
increased our unit sales by double-digit rates in the NAFTA region, Indonesia, India and Brazil.
At the IAA Commercial Vehicles trade fair, we presented part of our broad portfolio of vehicles
with alternative drive systems: the all-electric eActros, the FUSO eCanter, the electric school
bus from Thomas Built Buses and the Actros NGT powered by natural gas. The newly launched
Actros is a pioneer for safety with Active Drive Assist, Active Brake Assist 5 and the
mirror-cam system.
136
-4
Mercedes-Benz Cars
2,383
2,374
+0
thereof Europe
983
1,014
-3
thereof Germany
324
320
+1
NAFTA
393
403
-3
thereof United States
327
338
-3
Asia
921
859
+7
thereof China
130
smart
-22
25
2017
18/17
% change
Mercedes-Benz
2,253
2,238
+1
thereof A-/B-Class
409
420
-3
C-Class
478
493
678
C.03
434
398
+9
S-Class
84
79
+6
SUVs¹
829
823
+1
Sports cars
19
E-Class
619
-3
1 Including the GLA
GLC F-CELL vehicles were delivered to selected customers in
November 2018.
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-Benz
S-Class with the exclusivity of a Maybach. The Mercedes-
Maybach brand's first convertible was launched in the spring
of 2017 in a limited edition of 300 units. A preview of the form
the luxury brand might take in the future is offered by the con-
cept cars Vision Mercedes-Maybach 6 and Vision Mercedes-
Maybach 6 Cabriolet - a sensational coupe and a luxurious
convertible.
1 Figures for electricity consumption and CO2 emissions are provisional,
non-binding figures calculated by an external technical service. Figures for
vehicle range are also provisional and non-binding. An EU type-approval
certificate and a certificate of conformity with official figures are not yet
available. The figures given above may deviate from the official figures.
2 Figures for fuel consumption, electricity consumption and CO2 emissions
are provisional and non-binding. They were determined by an external
technical service for the certification process according to the provisions
of the WLTP test procedure and correlated with the NEDC values. An
EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from
the official figures.
170
C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-AMG: the sports-car and performance brand
The brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. The Mercedes-
AMG sports-car brand now enhances the fascination of
Mercedes-Benz with 70 models. The brand's dynamic vehicles
especially attract young and sporty customers to the brand
with the three-pointed star. Mercedes-AMG models differ exten-
sively from their series-produced cousins in terms of both
engineering and appearance, thus strengthening the authentic-
ity and distinctive identity of the Mercedes-AMG brand. The
new AMG GT four-door coupe is the third vehicle developed by
Mercedes-AMG on its own. The model combines the impres-
sive racetrack dynamics of the two-door AMG GT sports car with
maximum suitability for everyday use and enough space to
accommodate up to five people.
20 years of smart - electric, urban, unconventional
The smart brand celebrated its 20th birthday in 2018. "Reduce
to the max" was the motto of the smart brand when it began
its mission of radically changing the nature of urban mobility
back in 1998. Today, the brand is well on its way to making
the founders' original vision a reality with all-electric drive sys-
tems. This fact is also demonstrated by Daimler's announce-
ment at the Geneva Motor Show in March 2018 that all smart
electric drive models will be sold under the EQ product and
technology brand name in the future. The "smart forease" con-
cept car was presented at the Paris Motor Show in October
2018. This extroverted design without a roof and the systematic
focus on electric mobility clearly show that the electric future
of the smart brand will be extremely attractive.
The range of services offered for the smart brand is being
continuously expanded through the launch of “ready to" digital
services. One example here is “smart ready to drop." This
service, which is linked to various cooperation partners in the
logistics industry, enables parcels to be delivered to the trunk
of a customer's car and also allows for the pick-up of returns
using the same system. “smart ready to share" enables private
car sharing in closed groups - e.g. within a family, between
friends or at small companies - in an extremely user-friendly
manner with the help of an app that eliminates the need to
hand over keys to the next user. A new service here is "smart
ready to pack," which employs a sophisticated algorithm to
tell shoppers while they're still making their purchases whether
and how everything will fit into the smart's trunk. The new
smart EQ control app has been available since August 2018. It
contains a large amount of information on the car, such as
the current charge level, and can control vehicle functions such
as the auxiliary climate control system.
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018.
Global production network - digital, flexible, green
Within the framework of its growth and modernization strategy,
the Mercedes-Benz Cars division is continuously developing
its flexible and efficient production network of more than 30
locations on four continents - all in line with the philosophy of
"digital," "flexible” and “green." "Factory 56" at the Mercedes-
Benz plant in Sindelfingen is an impressive example of this. A
key feature of Factory 56 involves all-round connectivity along
the entire value chain - from development and design to
suppliers, production and customers. The assembly hall stands
out through a particularly flexible production system that
utilizes state-of-the-art Industry 4.0 technologies. Factory 56
also creates a new modern world of work that focuses on
employees and takes their individual requirements more strongly
into account. Factory 56 will serve as a blueprint for all future
vehicle assembly operations at Mercedes-Benz Cars worldwide.
It obtains its energy from CO2-neutral sources that include a
photovoltaic system installed on the roof.
The global production network is also being systematically
aligned with electric mobility requirements. For example, elec-
tric vehicles from the EQ product and technology brand will
be manufactured in the future within the framework of normal
series production on the same lines used to produce vehicles
with conventional combustion or hybrid drive systems. At the
same time, we are expanding our global battery production
network, which currently extends across three continents.
Within the framework of its electric offensive, Mercedes-Benz
Cars is not only focusing on locally emission-free vehicles,
it is also consistently applying the emission-free approach to
production: Mercedes-Benz Cars plants in Germany are to
be supplied with CO2-neutral energy by 2022.
The Mercedes-Benz electric vehicle offensive also includes the
GLC F-CELL (hydrogen consumption combined: 0.34 kg/100 km,
CO2 emissions combined: 0 g/km, electricity consumption
combined: 13.7 kWh/100 km)2. This SUV can run on electricity
as well as hydrogen because it is equipped with a lithium-ion
battery with plug-in hybrid technology in addition to its fuel cell.
Intelligent interplay between the battery and the fuel cell, as
well as short refueling times, make the GLC F-CELL a dynamic
and practical vehicle for long-distance travel. The first
Expansion of activities in China
Best Customer Experience
"Best Customer Experience" (BCE) is a global sales and
marketing initiative that was launched by the Mercedes-Benz
Cars division in 2014. The initiative focuses on expansion
into new markets and market segments and the development of
innovative products and services. Our goal here is to make the
Mercedes-Benz brand more attractive to new and also younger
target groups while also strengthening the brand loyalty of
established customers. To this end, the sales organization and
marketing activities are to be aligned more closely with cus-
tomer requirements, which are changing at an ever-faster pace
as a result of digitalization. Our “Customer Centricity" philoso-
phy puts the customer at the center of everything. The idea is to
ensure personal communication with the customer for every-
thing from the initial contact to advice, test drives, purchases
and aftersales services. Here, Mercedes-Benz is using the
omnichannel approach to offer customers various possibilities
to establish contact with the brand and flexibly utilize different
sales channels - all in line with customers' personal preferences.
To this end, a variety of sales formats, new digital elements
and job profiles in the retail sector are now being linked. This
approach supplements the physical experience offered by
traditional Mercedes-Benz showrooms.
S.MB 5006
C | THE DIVISIONS | MERCEDES-BENZ CARS 171
The new Mercedes-Benz CLA Coupe features outstanding design and great automotive intelligence thanks to MBUX and augmented reality.
With the "She's Mercedes" initiative, we are working to make the
brand with the star more appealing to women in particular
and to increase the proportion of female customers. Along with
community and inspiration platforms, the initiative also offers
training for sales staff and seeks to increase the number of
women in sales positions. She's Mercedes was launched in 2015
and has since been implemented in more than 60 countries.
Mercedes me services are also available for our EQ models -
or in some cases were developed especially for them. They
include Mercedes me Charge for access to public charging
stations in Europe. In addition, the EQ Ready app helps drivers
decide whether it makes sense for them to switch to an
electric car or a hybrid model.
#HIGHFIVE: a year for the history books
The year 2018 was the most successful motorsports year in the
history of Daimler AG. Mercedes-AMG Petronas Motorsport
captured both the World Drivers' Championship and the World
Constructors' Championship in the Formula 1 racing series
for the fifth consecutive year. The team thus once again under-
scored its exceptional status and technical expertise, culmi-
nating in the hybrid drive system used in the Mercedes F1 W09
EQ Power. After announcing that it would pull out of the DTM
series after 30 years, Mercedes-AMG went on to take all three
DTM titles in 2018. With 11 Driver's Championships, seven
Manufacturers' Championships, 14 Team Championships and
190 first-place finishes, Mercedes-AMG is the most success-
ful brand in the history of DTM. Mercedes-AMG Customer Racing
can also look back on a very successful season in 2018, as
customer teams participated in more than 1,100 races and were
able to capture numerous victories and titles. Mercedes will
begin a new chapter in its motorsports history in December
2019, when the brand will join the Formula E electric motor-
sport series with the new Mercedes EQ Formula E team. Partici-
pation in the Formula E series will enable us to demonstrate
the performance capability of our intelligent battery-electric
drive systems in a motorsports setting as well, and it will also
add an emotive component to the EQ brand.
172
C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Trucks
+10
Sales of Mercedes-Benz brand cars in China totaled more than
658,300 units in the year under review (+11%), which means
China was the brand's largest single market for the fourth con-
secutive year in 2018. More than 70% of the vehicles we sell
there were manufactured locally at facilities operated by Beijing
Benz Automotive Co., Ltd. (BBAC), the joint venture with
our local partner BAIC. In view of the further growth potential
offered by the Chinese market, Daimler and BAIC have
announced plans to jointly invest more than RMB 11.9 billion
(approx. €1.5 billion) in a second BBAC production facility
in Beijing. The expansion of localization will enable Daimler to
respond more effectively to increasing market demand by
offering local models especially tailored to Chinese customers'
needs, including electric vehicles from the Mercedes-Benz
EQ brand. The local presence of the Mercedes-Benz brand in
China is being continuously expanded with the help of a broad
range of products that currently encompasses seven locally
manufactured cars and vans. The all-electric EQC sport-utility
vehicle is to follow in 2019.
Market launch of the world's first electric vehicle with a
fuel cell and plug-in hybrid technology
Mercedes me - digital premium services
Mercedes me is playing an important role in the further
development of the Mercedes-Benz brand, as this digital eco-
system has a direct impact on key factors that ensure success.
Mercedes me is meanwhile live in 44 countries, which means
it covers most of the world's major automotive markets.
Mercedes me connect enables customers generally to connect
to their vehicles from anywhere and at any time. The average
activation rate of the Mercedes me connect service for new
Mercedes-Benz vehicles is over 90%, which shows how impor-
tant it is to Mercedes-Benz drivers that their cars are con-
nected and that drivers expect to enjoy all the digital services
and offerings that such a connection makes possible. High-
lights from the Mercedes me connect range of services include
the Live Traffic Information real-time traffic service (including
car-to-x communication), digital keys stored on smartphones,
and "Hey Mercedes" natural speech recognition with support
from artificial intelligence systems.
The new Mercedes-Benz CLS combines unique design with a luxurious interior and a comprehensive level of standard equipment.
Ongoing high levels of unit sales, revenue and earnings
The Mercedes-Benz Cars division consists of the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands, as well as the smart brand and
the EQ product and technology brand for electric mobility. The
division performed well in a highly competitive environment
in the year under review, with unit sales totaling 2,382,800
vehicles (2017: 2,373,500). Mercedes-Benz Cars thus set a
new sales record, despite operating under difficult conditions.
Revenue of €93.1 billion was close to the previous year's
high level. C.01 This development was in large part due to
the continued market success of our attractive sport-utility
vehicles, as well as the success of the E-Class. After reaching
a new record level in 2017, EBIT decreased to €7.2 billion in
the year under review (2017: €8,8 billion). This was the result
of various factors, which are described in detail in the Profit-
ability chapter.
pages 85f
The model is part of a comprehensive electric offensive, as
Daimler plans to offer more than ten all-electric models in
the car segment. In addition, the EQ brand offers a comprehen-
sive electric mobility ecosystem of products, services, tech-
nologies and innovations.
pages 14 ff
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Sales increases were recorded
in the volume markets Germany (+1%) and Spain (+3%), and the
high level of the prior year was maintained in France, while
unit sales decreased in the United Kingdom (-7%) and Italy (-5%).
The Mercedes-Benz Cars division remained very successful
in China during the year under review, with unit sales rising by
10% to 677,700 vehicles. We set new records for unit sales
also in other Asian markets, for example in India (+1%), South
Korea (+1%) and Thailand (+5%). At 392,600 units, total sales
in the NAFTA region were lower than the high level of the prior
year. Sales decreased in the United States (-3%) and Canada
(-2%), while sales in Mexico increased by 7%.
Mercedes-Benz posts record unit sales for the eighth
consecutive year
At 2,252,800 vehicles (+1%), unit sales by the Mercedes-Benz
brand were once again slightly higher than the record level
of the previous year. C.02 Mercedes-Benz is thus once again
the premium brand with the strongest unit sales in the auto-
motive industry. Mercedes-Benz is number one in the premium
segment in Germany and several other key European markets,
as well as in the United States, South Korea, Canada and Japan.
Furthermore, we significantly improved our position in China
once again in the year under review. Demand for Mercedes-Benz
S MB 2471
167
As a sport tourer, the new Mercedes-Benz B-Class places emphasis on sport: With more agile handling, it also offers more comfort and space.
brand cars remained high in 2018. The development of unit
sales of certain model series was significantly influenced by
lifecycle effects, however. That includes the model changes in
the compact class and the model upgrade for the high-volume
C-Class. The division also faced higher import duties on
vehicles sold in China but manufactured in the United States,
as well as suspensions of deliveries that were imposed on
some diesel models. Vehicle certification processes also took
longer than usual in some cases, and this had an impact on
availability.
Our E-Class models were particularly successful in 2018: At
433,600 units (+9%), E-Class sales once again reached a new
record level. Our attractive range of sport-utility vehicles also
performed well in the market again, with sales in this segment
increasing by 1% to 829,200 units. As was the case in the prior
year, this positive development was primarily due to the GLC
models, as well as high demand for our SUVs in China. Due to
the model change, sales of C-Class vehicles decreased by 3%
to 477,700 sedans, wagons, coupes and convertibles. Sales of
A- and B-Class models were also affected by a model change
in the year under review, although the success of the new
A-Class led to total deliveries - including the CLA and CLA
Shooting Brake - of 409,300 units (-3%). The S-Class was
very successful in the market, with sales in this segment increas-
ing by 6% to 83,800 units in 2018. Our Mercedes-Maybach
luxury brand played a major role in this positive development.
With sales of 77,700 units (+7%), the S-Class Sedan continues
to be the world's the bestselling luxury sedan.
A- and B-Class set new standards
The new Mercedes-Benz A-Class, which has been available for
delivery to customers since May 2018, is as young and
dynamic as ever, but also more grown-up and comfortable than
ever before. The vehicle completely redefines modern luxury
in the compact class and revolutionizes interior design. The new
A-Class was the first Mercedes-Benz model to be equipped
with the all-new multimedia system MBUX (Mercedes-Benz User
Experience), which marks the dawn of a new era in Mercedes
me connectivity, featuring natural speech recognition ("Hey
Mercedes") and artificial intelligence, both of which enable
the system to adapt itself to the habits and preferences of the
vehicle's owner. The new A-Class also offers a number of
features and driving assistance systems that were previously
only available in luxury-class vehicles. For example, the car
can, for the first time, drive in partially automated mode in cer-
tain situations.
The new Mercedes-Benz B-Class was presented in Paris in
October 2018. The model has a more dynamic appearance
than its predecessor and displays greater agility on the road,
while offering more comfort. Its avant-garde interior, which
includes a distinctively designed instrument panel, makes for
a unique feeling of space. The MBUX multimedia system in
the B-Class is also a trailblazing feature - and thanks to state-
of-the-art driving assistance systems, the B-Class boasts
one of the highest levels of active safety in its segment.
C | THE DIVISIONS | MERCEDES-BENZ CARS
Relaunch of a bestseller: model update for the C-Class
The bestselling Mercedes-Benz model series, the C-Class,
was optimized extensively for its fifth year of production. The
exterior and interior were given a stylish makeover, and the
onboard network is completely new, as are several other fea-
tures and systems. The customer notices this directly with
the User Experience feature, which includes as an option a
fully digital instrument display and multimedia systems that
offer customized information and music. The assistance sys-
tems in the C-Class are also now on par with those featured
in the S-Class. The new C-Class series was launched with a
new generation of four-cylinder gasoline engines. Some of
the models come with an additional 48-volt system that includes
a belt-driven starter motor/generator (EQ Boost). This system
enables the implementation of additional functions that help to
further reduce fuel consumption while also enhancing agility
and comfort.
Thanks in part to an additional underfloor SCR catalytic con-
verter, A- and B-Class models equipped with the OM 654 q
two-liter diesel engine are already certified in accordance with
the Euro 6d standard, which will not become mandatory
until 2020.
The new Mercedes-Benz GLE is not only dynamic and comfortable on the road, but is also more competent than ever before off the road.
The Mercedes-Benz among electric vehicles
Mercedes-Benz first presented its new product and technology
brand for electric mobility at the Paris Motor Show in 2016. A
milestone is set to be achieved in mid-2019, when the EQC (elec-
tricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures)¹ will become the first
Mercedes-Benz vehicle to be launched under the EQ brand name.
With its seamless and clear design and color highlights typical
of the brand, the EQC is a trailblazer when it comes to an
avant-garde electric appearance, even as it embodies the design
idiom of progressive luxury. In terms of quality, safety and
comfort, the EQC is the Mercedes-Benz among electric vehicles
and a car that makes a convincing impression in terms of
the sum of its attributes. The model also boasts highly dynamic
performance, thanks to two electric motors at the front and
the rear axle with a combined output of 300 kW. The sophisti-
cated operation strategy utilized for the ECQ enables an electric
range of up to 450 km according to the NEDC (provisional
figure). With Mercedes me, the EQ brand offers comprehensive
services that make electric mobility comfortable and practical
for everyone. To sum up, the EQC symbolizes the start of a new
mobility era at Daimler. Series production of the EQC will begin
in 2019 at the Mercedes-Benz plant in Bremen. Preparations
are already in full swing. The new EQC will be integrated into the
current production operations as an all-electric vehicle.
Mercedes-Benz GLE: an SUV trendsetter reconceived
The new Mercedes-Benz GLE, which was presented in Septem-
ber 2018, features numerous innovations. The E-ACTIVE BODY
CONTROL active suspension system on a 48-volt basis, for
example, is a world first, and the model's driving assistance
systems take another step forward with Active Stop-and-Go
Assist. The interior offers even more space and comfort, and a
third seat row is available as an option. The infotainment
system has larger screens, a full-color head-up display with a
C❘ THE DIVISIONS | MERCEDES-BENZ CARS 169
The G-Class, the luxury off-road vehicle from Mercedes-Benz,
has long been considered a design icon. Its external appearance
has not changed significantly since 1979. Then as now, iconic
elements have very specific functions - and also lend a unique
appearance to the new G-Class, which has been available for
delivery to customers since mid-2018. The new G-Class raises
the bar in all relevant areas, including on- and off-road per-
formance, comfort and telematics. The main goal of the devel-
opment engineers was to redefine handling attributes in both
on- and off-road driving. This goal was achieved, as the new
G-Class displays even better performance off-road, while
on-road it is significantly more agile, dynamic and comfortable
than its predecessor.
resolution of 720 x 240 pixels and the MBUX Interior Assistant,
which can recognize individual hand and arm movements
and support personal operating intentions. The exterior design
not only exudes presence and power, but also sets a new
benchmark for aerodynamics in the SUV segment. The models
equipped with the six-cylinder diesel engine are also already
certified in accordance with the Euro 6d standard, which will
not become mandatory until 2020. This was made possible
by, among other things, the use of an additional underfloor SCR
catalytic converter.
The G-Class: an icon reinvents itself
In 2003, the Mercedes-Benz CLS created a new vehicle cate-
gory that for the first time combined the elegance and dynamism
of a coupe with the comfort and functionality of a sedan. With
the third generation of the CLS, which has been available for
delivery to customers since March 2018, Mercedes-Benz
is now building more strongly than ever on the trendsetting
model's charisma and unique character. Like its predecessors,
the third-generation CLS stands for self-assured sportiness
in a highly emotive vehicle that offers impressive long-distance
comfort and thrills customers with its technology.
The new CLS: the third generation of the original
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
168
481551
NAFTA
2018
+2
+5
421,401 401,025
278,269 273,297
107,267 105,781
thereof Germany
18/17
% change
2017
+1
25,255
Unit sales Mercedes-Benz Vans
C.06
1 The amounts have been adjusted due to the effects of first-time
adoption of IFRS 15 and IFRS 9.
+4
26,210
+5
401,025
50,851
421,401
+9
Total
EU30
44,815
thereof China
thereof United States
405,129
C | THE DIVISIONS | MERCEDES-BENZ VANS
178
+6
32,894
34,767
Other markets
+22
23,801
29,068
+15
33,641
38,779
Asia
+14
16,378
18,735
Latin America
(excluding Mexico)
+13
34,158
38,741
+13
440,314
C.05
310
2017
2018
Mercedes-Benz Vans
The new Mercedes-Benz Sprinter had its world premiere in
February 2018; the model then went into production at the
Düsseldorf and Ludwigsfelde plants at the beginning of March.
The new Sprinter was launched in Europe in June and then
World premiere of the new Sprinter
At 206,300 units, global sales of Sprinter models were slightly
higher than in the previous year (2017: 200,500). Sales of
vans in the mid-size segment remained at the prior-year level,
totaling 172,200 units in 2018, whereas sales of Vito models
decreased slightly to 108,300 in the year under review (2017:
111,800). Sales of the V-Class full size MPV rose by 8% to
63,900 units. Meanwhile, sales of the Mercedes-Benz Citan
reached 26,300 units (2017: 26,100). Sales of the X-Class,
which we launched at the end of 2017, totaled 16,700 units
in the year under review (2017: 3,300).
Sales of 278,300 units in the EU30 region, our core market,
were slightly higher than in the previous year (273,300). We
set a new record in Germany, with 107,300 units sold
(2017: 105,800). Mercedes-Benz Vans continued to grow in
the NAFTA region, where sales rose by a significant 13% to
50,900 units. This included a new record of 38,700 units sold
in the United States (2017: 34,200). Mercedes-Benz Vans'
products were also very much in demand in Latin America. Unit
sales in Argentina increased by 14% to 18,700 units, despite
the difficult economic situation in that country. The Mercedes-
Benz Vans division continued its successful development in
China in 2018. Unit sales in China increased significantly, by
22% to the new record of 29,100 vans. This development
was largely due to the success of the Vito and the V-Class.
Mercedes-Benz Vans' products continued to be very successful
in 2018. Our Sprinter, Vito and Citan vans are tailored mainly
to commercial customers, while the V-Class is designed primarily
for private use. The X-Class is targeted at a variety of private
and commercial customers.
Continued growth
Mercedes-Benz Vans set a new sales record once again in finan-
cial year 2018, with an increase of 5% to 421,400 units. At
€13.6 billion, revenue was also higher than in the previous year
(2017: €13.2 billion). EBIT reached €312 million and was thus, as
expected, significantly lower than the high level achieved in 2017.
New record for unit sales
Mercedes-Benz Vans continued along its course of growth during the year under review, achieving
a small increase in revenue and setting a new record for unit sales. Growth was mainly driven
by positive developments in the United States, China and Latin America. We also set a new sales
record in Germany. The launch of the new Sprinter and the first full year of availability of the
X-Class in the pickup segment enabled us to consistently forge ahead with our “Mercedes-Benz Vans
goes global" growth strategy. In addition, our future-oriented “adVANce" initiative has allowed
us to systematically move ahead with the transformation of Mercedes-Benz Vans from a vehicle
manufacturer into a supplier of holistic transportation and mobility solutions for cargo and
passengers. EBIT in 2018 was significantly lower than the previous year's high level.
Mercedes-Benz Vans
C | THE DIVISIONS | MERCEDES-BENZ VANS 177
SHE 5855
Since it was launched in 2000, Fleetboard has been ensuring that people and trucks are well connected.
Fleetboard pushes forward with digitization of logistics
At the IAA Commercial Vehicles trade fair in Hannover,
Fleetboard presented its new Fleetboard customer interface.
For trucking companies, the new, intuitive, web-based inter-
face combines all data from the booked Fleetboard services in
a clear format. Fleet managers and dispatchers can summarize
complex information in a tailored manner and while doing so are
helped to identify improvement potential. The system uses
push messages to proactively indicate when there is a need for
action, such as a route adjustment. The digital interface in
trucks has also been further developed. Vehicles with the new
interactive multimedia cockpit can be connected with the
Mercedes-Benz Truck App Portal and thus equipped with effi-
ciency-enhancing apps. The Mercedes-Benz Truck App Portal
offers an open platform on which customers and partners can
install their own apps. One app that will be available in the
portal is Fleetboard Driver. It is also available for smartphone
use in the Apple App Store and the Google Play Store. Fleet-
board Driver informs the truck driver in real time of relevant
vehicle data such as mileage and fuel level. In addition, it
provides a direct insight into driving and rest times as well
as information on optimization potential in relation to the
current driving style.
Close to customers with automated and connected driving
We have further expanded our activities with automated trucks
and buses and established a research and development center
for automated driving in Portland, Oregon. The innovation site
cooperates closely with existing development centers in Stutt-
gart and India. In Brazil, as part of a development partnership
with a local manufacturer of agricultural machinery, Mercedes-
Benz do Brasil configured 18 Mercedes-Benz Axor trucks
specifically for automated use in sugar-cane harvesting. In order
to support the growth of expertise in new technologies as
well as global tech initiatives, a new "Daimler Trucks and Buses
Tech & Data Hub" has been established in Lisbon. The Tech &
Data Hub aims to acquire talented employees in various tech-
nology fields and to focus on new technologies and digital
services for the commercial-vehicle sector. At the plant in São
Bernardo do Campo, Brazil, a completely new type of truck
assembly line for Daimler Trucks for light- to heavy-duty trucks
and the related parts logistics went into operation in 2018.
And at the plant site in Iracemápolis, Brazil, we opened a new
truck and bus test center covering approximately 1.3 million
square meters, where vehicles will be tested on a wide variety
of road profiles.
C | THE DIVISIONS | DAIMLER TRUCKS
176
successively in additional markets. We also expanded our pro-
duction network in September 2018 with the opening of our
new plant in North Charleston and the start of production of
the new Sprinter there. In recent years, we have invested a
total of approximately €2.5 billion worldwide in Sprinter devel-
opment, the global production network for the model, and
sales and aftersales services.
18/17
-43
€ amounts in millions
Revenue
176
+18
565
666
Employees (December 31)
Unit sales
Production
thereof capitalized
expenditure
Research and development
-34
710
468
and equipment
Investment in property, plant
+4
-73
13,1611
1,1471
8.71
2.3
Return on sales (in %)
13,626
312
EBIT
% change
As the first integrated connectivity system solution offered
by Mercedes-Benz Vans, the third generation of the Sprinter
represents the division's development from a pure vehicle
manufacturer into a provider of holistic transport and mobility
solutions. With new connectivity services, an electric drive
system and customized hardware solutions for the cargo space,
the large van will make customers' business much more effi-
cient in the connected world of the future. The first Mercedes
PRO fleet solutions were made available to commercial
Sprinter customers when the new model was launched in June
2018. Mercedes PRO is Mercedes-Benz Vans' service brand
that offers services and digital solutions in a total of eight added-
value packages with 18 services. The technical basis for
Mercedes PRO services is a communication module that is
installed as standard in all Sprinter variants.
In preparation for the new generation of the Sprinter, Mercedes
Benz Vans made significant investments in its production
network; the division focused here on manufacturing operations
in the United States and Germany. After a construction period
of approximately two years, our new plant in North Charleston,
South Carolina, opened in September 2018. In view of the
anticipated high market potential for the new Sprinter in North
America, Mercedes-Benz Vans invested roughly $500 million
in the new plant in North Charleston, which includes a body shop,
a paint shop and a final assembly area. With the new ultra-
modern production site, we will be
moovel
184
1 This amount has been adjusted due to first-time adoption of
IFRS 15 and IFRS 9. The Group's internal revenue and cost of sales
have been adjusted by the same amount at the Daimler Financial
Services segment. These adjustments have been fully eliminated in
the reconciliation.
+8
Investment in the Sprinter production network
13,012
+49
43
14,070
64
Employees (December 31)
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
plant and equipment
+10
+2
70,721
139,907
17.7
-30
1,970
+7
24,530¹
26,269
1,384
11.1
71,927
154,072
Contract volume
Investment in property,
Whether for leasing, financing, insurance or mobility services: The focus is always on the customer at Daimler Financial Services.
New name: Daimler Mobility AG
Daimler Financial Services AG plans to change its name to
Daimler Mobility AG in the second half of 2019. The Daimler
Financial Services division, which has approximately 14,070
employees, is already well known as the Daimler Group's pro-
vider of mobility services, which include car2go, moovel
and the ride-hailing group with its mytaxi, Beat, Clever Taxi and
Chauffeur Privé brands. The renaming underscores the divi-
sion's transformation into a provider of mobility services and is
one of the components of "Project Future", which is designed
to strengthen the divisional structure of the Daimler Group.
Approximately 31.0 million customers currently make use of the
range of mobility services the division offers. Experts believe
the market for mobility services will generate hundreds of bil-
lions in revenue over the next decade, and Daimler Mobility AG
wants to play a key role in this development.
Xmy taxi
NU 50-532
In May 2018, Daimler Financial Services reached an agreement
with Deutsche Telekom AG (consortium partner) and the
German government on ending the arbitration proceedings
regarding Toll Collect. page 76
Toll Collect agreement
Outstanding results in employer rankings
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2018, independent surveys once again
showed that the company is a leader in numerous countries
around the world with regard to automobile customers' and
dealers' assessments of our service quality. The Great Place to
Work Institute recognizes global employers for their excep-
tional corporate culture. Last year, Daimler Financial Services
was one of two German companies to rank among the top 10
employers in the world in that survey. A total of approximately
7,000 companies with more than 5,000 employees partici-
pated. In the German survey, Daimler Financial Services finished
first out of about 800 companies, thus earning itself the title
of "Best employer in Germany in 2018” in the category of 2,001
to 5,000 employees.
Daimler Financial Services has invested in the New Zealand
company Soul Machines in order to implement artificial and
emotional intelligence systems in future sales processes. The
start-up is a pioneer in the field of emotional intelligence
for use in machines and digital avatars. Daimler is the first
premium automobile manufacturer to invest in the develop-
ment of emotional intelligence application scenarios.
Investment in artificial intelligence
source.
In September 2018, Daimler Financial Services announced it
had signed an agreement on the planned acquisition of an
interest in the heycar used-vehicle platform. This strategic
investment will allow Daimler Financial Services to further
expand a cross-brand platform for manufacturers, dealers,
automotive banks and customers that offers everything
from purchasing to financing and insurance - all from a single
heycar: Daimler invests in a used-vehicle platform
Daimler Financial Services once again expanded its fleet
management activities in 2018. A total of 395,000 contracts
were on the books at Athlon and Daimler Fleet Management
in Europe at the end of 2018, which represents an increase of
3% compared with the prior year. The total fleet management
contract volume amounted to €6.5 billion. Plans now call for all
fleet management activities to eventually be consolidated
under the Athlon brand name. Athlon gained new interna-
tional customers in 2018 and strengthened its market posi-
tion as a provider of comprehensive fleet management
and mobility solutions for commercial customers. This devel-
opment also had a positive impact on sales of Mercedes-Benz
cars and vans. With "connect business," Mercedes-Benz Con-
nectivity Services also offers cross-brand connectivity ser-
vices for telematics-based car fleet management in several
European countries.
Expansion of fleet management operations
Joint venture for premium ride-hailing services in China
Daimler Mobility Services and Geely Group Company will
establish a premium ride-hailing service in China, subject to the
approval of the regulatory authorities. The new company plans
to begin offering a ride-hailing service with premium vehicles in
several Chinese cities in 2019. The initial fleet will include
Mercedes-Benz S-Class, E-Class, V-Class and Maybach vehicles,
as well as premium models from the Geely electric fleet. The
50-50 joint venture will be headquartered in Hangzhou; each
partner will have an equal number of seats on the company's
board of management.
mobility services company, Daimler AG and the BMW Group
will make a joint announcement in the first quarter of 2019
regarding the next steps to be taken. The headquarters of the
new joint mobility-services company will be located in Berlin.
Our goal is to jointly create a major global player for seamless
and intelligent connected mobility services. As a hub for
creativity and innovation, Berlin is exactly the right location for
our plans. The 50-50 joint venture will bring together the fol-
lowing services: an on-demand mobility and multimodal mobil-
ity platform, car sharing, ride hailing, parking, and charging
for electric vehicles.
185
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Daimler AG and the BMW Group are joining forces to offer their
customers sustainable urban mobility services from a single
source in the future. The authorities have now approved the
companies' plan to establish the joint venture. After comple-
tion of the complex transaction on January 31, 2019, the new
Cooperation with BMW
The ride-hailing group behind mytaxi further strengthened
its position as one of the leading providers of taxi apps in
Europe in 2018, among other things, by acquiring a majority
stake in Chauffeur Privé. Ride-hailing group services which
were already available in the United Kingdom, Ireland, Greece,
Romania and France have now been extended to cover a
total of 12 European countries - and have also been launched
in fast-growing markets in Central and South America (Peru,
Columbia and Chile). A total of 390,000 drivers in more than
110 cities have now registered with the ride-hailing group's
companies. The number of registered users of the ride-hailing
group's services increased by 92% to 21.3 million in 2018.
mytaxi has also created its own scooter brand with the "hive"
e-scooter pilot project: Several hundred e-scooters are
available in Portugal's capital, Lisbon, where they offer a genuine
alternative for local transport.
and directly pay for services provided by companies such as
car2go, mytaxi and local public transport operators. In
June 2018, moovel and the SSB transport company in Stuttgart
established the "SSB Flex" service, and in November 2018,
moovel and Rheinbahn teamed up to create the "Mobil in Düssel-
dorf" app. moovel is also one of the leading providers of
mobile ticketing solutions for public transport companies in the
United States. All in all, moovel North America offers 19 ser-
vices in 15 US cities. In October 2018, FASTLink DTLA - a non-
profit transportation management initiative - and moovel
North America announced plans to launch a new on-demand
ride-sharing pilot project in Los Angeles. The project, which
has been given the name FlexLA, will supplement the services
offered by the city's public transit network. The number of
registered moovel app users in Germany and the United States
had risen to 6.2 million by the end of 2018 (2017: 3.7 million).
The moovel app also underwent further development. moovel
enables customers in Germany to compare various mobility
and transport-system options and then choose the best way to
get from point A to point B. The app can also be used to book
Daimler Financial Services once again expanded its range of
innovative mobility services in 2018. The number of registered
users of the car2go car-sharing service increased to 3.6 million,
enabling car2go to consolidate its position as a leading com-
pany for flexible car sharing. car2go also continuously further
developed its services during the year under review. For exam-
ple, the company introduced a new pricing model that enables
customers to rent cars at a lower rate on the outskirts of a
city, which also serves to further increase vehicle availability in
cities. In addition, car2go now offers customers greater flexibil-
ity by allowing them to extend their vehicle reservation period if
they need to keep a car longer than planned. car2go opened
its tenth North American location in Chicago in July 2018. During
the same month, the first smart convertibles were added to
the car2go fleet in Rome. At the beginning of 2019, a new Euro-
pean location was opened in Paris, which is served by a fleet
of 400 all-electric smart models.
Mobility services remain on course for success
New business
Return on equity (in %)
Revenue
EBIT
18/17
% change
1,515
1,461
+4
C | THE DIVISIONS | DAIMLER BUSES 181
eCITARO
eCITARO
CITARO
5959
ELYS
E-mobility in series maturity: The Mercedes-Benz eCitaro is not only a city bus, it is part of a complete e-mobility system from Daimler Buses.
New all-electric Mercedes-Benz eCitaro is an important
component of locally emission-free transport in cities
With the new all-electric Mercedes-Benz eCitaro, which had its
world premiere at the IAA Commercial Vehicles trade fair, we
now have in our portfolio a key component of environmentally
friendly local public transport with low-emission and locally
emission-free buses. The bus gets its energy from lithium-ion
batteries, and the charging technology it uses allows it to
adjust to the individual requirements of transport companies.
An innovative thermal management system ensures the
efficient use of energy and provides the basis for a practical
range. The bus can cover about one third of transport
operators' relevant routes without intermediate recharging.
The first models have already been delivered to customers.
The Mercedes-Benz eCitaro also marks the launch of an inno-
vation offensive whose objective is the rapid and practical
electrification of local public transport with buses in cities and
large metropolitan areas. Because battery technology is
developing at a rapid pace, the eCitaro is already designed to
accommodate a transition to future battery technologies such
as more powerful lithium-ion batteries or the optional use of
solid-state batteries. Plans also call for the eCitaro's range
to be increased through the use of a range extender in the form
of a fuel cell that generates electricity.
Holistic eMobility Consulting set to redefine urban bus
transportation
The new all-electric eCitaro city bus is part of Daimler
Buses' overall eMobility system. In order to support our custom-
ers with the transition to electric bus fleets, our eMobility
Consulting team offers advice on request about different use
scenarios, taking into account bus route lengths, passenger
numbers, energy requirements, range calculations, charging
management and other aspects. In addition, our OMNIplus
service brand offers a tailored electric mobility service package
that includes onsite services at customers' maintenance and
repair shops.
Redefining safety with innovative safety and driver assis-
tance systems
With new safety and assistance systems, we are demonstrating
that safety has top priority for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns the driver of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist - the first active emergency
braking assistance system for city buses - will be available
as an option for the entire Mercedes-Benz Citaro model
family and the Mercedes-Benz Conecto starting in 2019. The
new assistance system warns of a potential collision with
pedestrians or stationary or moving objects, and automatically
initiates braking if there is an imminent risk of collision.
Sideguard Assist, which is a radar-based turning assistant with
pedestrian detection for buses, supports bus drivers during
right turns, which can be dangerous in certain situations. Side-
guard Assist is available for all variants of the Mercedes-Benz
Citaro and Tourismo and all Setra ComfortClass 500 and Setra
TopClass 500 touring coaches.
182
C | THE DIVISIONS | DAIMLER BUSES
SETOR
Efficiency, variability, comfort and safety, exciting design: The new Setra S 531 DT double-decker bus.
S 531 DT
SETRA
Other markets
Some 31 million customers worldwide use mobility services from Daimler Financial Services, with products such as car2go, moovel and mytaxi.
+35
3,172
2017
2018
Daimler Financial Services
€ amounts in millions
C.09
Further growth in the insurance business
Daimler Financial Services brokered approximately 2.3 million
insurance policies in 2018 - an increase of 8% compared to the
prior year. Business developments were particularly positive in
China, Spain and Russia. More customized insurance solutions
are now needed in view of the trend toward greater flexibility in
vehicle use, for example in the areas of connectivity, telematics,
mobility services and flat rates for leasing contracts.
New business in the Africa & Asia-Pacific region (excluding
China) decreased slightly compared with the previous year, by
3% to €8.2 billion. Business growth was especially strong in
Thailand (+24%). New business decreased significantly in India
(-10%) and South Africa (-13%). At the end of 2018, contract
volume in the Africa & Asia-Pacific region (excluding China)
totaled €18.3 billion, representing a 6% increase over the previ-
ous year. New business increased moderately in China, how-
ever, where 319,000 new leasing and financing contracts worth
€9.6 billion were concluded in 2018 (+2%). At the end of
2018, contract volume in China amounted to €15.4 billion – an
increase of 26% compared with the end of 2017.
Africa & Asia-Pacific region and China:
new business at prior-year level
Daimler Financial Services brokered 483,000 new financing
and leasing contracts worth €22.5 billion in the Americas
region in 2018 (+3%). The volume of new business developed
very well in Brazil (+25%). Contract volume in the Americas
region of €56.1 billion at December 31, 2018 was clearly higher
than at the end of 2017 (+11%). Adjusted for exchange-rate
effects, contract volume increased by 8%.
Slight growth in the Americas
Moderate increase in new business in Europe
Daimler Financial Services concluded 970,000 new financing
and leasing contracts worth €31.7 billion in the Europe region
(+2%). Especially high rates of growth were recorded in Poland
(+28%) and France (+21%). In Turkey, new business decreased
sharply (-37%) due to the tense political and economic envi-
ronment in that country. In Germany, Mercedes-Benz Bank's
new business increased by 3% to €13.2 billion. Daimler Finan-
cial Services' total contract volume in Europe rose by 8% to
€64.2 billion.
Daimler Financial Services concluded 2.0 million new financing
and leasing contracts worth a total of €71.9 billion in 2018.
The total value of all new contracts was thus slightly above the
prior-year level (+2%). About half of all new-vehicle sales by our
automotive divisions in 2018 were supported by sales financing
from Daimler Financial Services. In total, more than 5.2 million
financed or leased vehicles were on the books at the end of
2018 with a total contract volume of €154.1 billion; this repre-
sents a 10% increase compared with the end of 2017. EBIT
amounted to €1,384 million (2017: €1,970 million). 7 C.09
Half of all Daimler vehicles delivered to customers are
financed or leased
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 5.2 million at the end of financial year 2018. Contract
volume developed positively, while EBIT was significantly lower than in the prior year, mainly as a
result of the agreement reached to end the Toll Collect arbitration proceedings. The combination
of sales financing with brokered automotive insurance policies continues to gain importance. The
division's range of innovative mobility services was further expanded. Today, services such as
car2go, moovel and the ride-hailing group with its mytaxi, Beat, Clever Taxi and Chauffeur Privé
brands are used by 31.0 million customers all over the world. In 2018, we also announced plans
to establish a new joint venture for mobility services with BMW.
Daimler Financial Services
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 183
BusStore pre-owned bus brand celebrates fifth anniversary
Launched in 2013, the BusStore brand combines and further
professionalizes all Mercedes-Benz and Setra activities in the
area of used buses. BusStore currently sells approximately
2,000 buses each year. During the year under review, we opened
new BusStore locations in Croatia, Hungary, Latvia and
Slovakia, which means that BusStore now operates a total of
19 outlets in Europe. We have also launched a pilot project
with BusStore Mexico in order to expand our international pre-
owned bus sales operations. In addition, plans now call for
BusStore locations to be established in other countries as well.
REV Coach LLC became the new sales partner for the Setra
brand in North America at the beginning of 2018. The company
took over from Motor Coach Industries International Inc.
(MCI) as the general sales agent for Daimler Buses in the North
American market. REV has also been responsible for Setra
customer service since July 2018.
New sales partner in North America
The Mercedes-Benz Citaro hybrid, which is available with either
a diesel or a natural gas engine, was named "Bus of the Year
2019" by an independent jury. The selection criteria for the award
included profitability, innovation, quality and user-friendliness.
The Citaro Ü hybrid intercity variant made a big impression in
terms of sustainability and was presented with the "Sustain-
able Bus Award 2019" for inter-city buses. Four of our buses also
captured first place in the 2018 readers' survey conducted
by the EuroTransportMedia (ETM) publishing company. The
awards here were in the categories City Bus (Mercedes-Benz
Citaro K), Inter-City Bus (Mercedes-Benz Citaro LE), Minibus
(Sprinter Minibus) and High-Deck Touring Coach (Setra Top-
Class HDH/DT).
Award-winning products from Daimler Buses
Numerous major orders for Daimler Buses - including the
first large orders for the all-electric eCitaro
Daimler Buses received a large number of major orders in
the year under review. The cities of Hamburg and Berlin ordered
20 and 15 Mercedes-Benz eCitaro models respectively in 2018.
The order from Berlin also included an option to purchase as
many as 950 Mercedes-Benz city buses. The framework
agreement for the option, which runs for several years, covers
the delivery of up to 600 articulated buses and a maximum
of 350 solo buses. During the year under review, we were also
able to gain major European orders in Poland (150 vehicles
for Kraków, Gdańsk and Bialystok), Spain (EMT Madrid: 270
Citaro buses with natural gas drive to be delivered between
2019 and 2020) and Austria (framework agreement with
Blaguss: 250 Setra touring coaches to be delivered between
2019 and 2022). We also received orders in Brazil, including
one for 121 city buses that will be used to renew the fleets
operated by various bus companies in Curitiba.
Daimler Buses now also offers digital services with its new
OMNIplus ON portal, which integrates existing and new services
into four pillars. OMNIplus On advance ensures maximum
fleet availability for bus operators, and its Uptime feature helps
increase vehicle operating times, for example. OmniPlus On
monitor combines telematics services that ensure efficient fleet
management operations. OMNIplus On drive supports bus
drivers with their departure checks, for example, and OMNIplus
On commerce allows bus companies to buy spare parts
quickly and directly around the clock in an online shop.
2,348
Asia
Digital service with OMNIplus ON
thereof capitalized
+7
-5
Latin America
(excluding Mexico)
13,681
12,740
+7
thereof Brazil
8,778
7,201
3,057
+22
3,236
3,440
Unit sales
+10
28,518
31,233
Production
+37
30
Mexico
41
2,902
+8
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a complete range of city buses, intercity buses
and touring coaches, as well as bus chassis. Due to continued
high demand for our complete buses, sales in this region
amounted to 9,300 units, which was significantly above the high
number recorded in the prior year (2017: 8,700). Daimler Buses
maintained its leading market position in the EU30 region with
a market share of 29.0% (2017: 28.4%). At 2,900 units, sales
in Germany were 5% lower than in the previous year. Sales of
300 units in Turkey were significantly lower than in the prior
year (2017: 400) due to the country's situation, which remains
difficult. The market situation in Latin America (excluding
Mexico) improved on account of the gradually recovering market
in Brazil, although growth in the region was negatively affected
by the sharp market contraction in Argentina. Sales of Mercedes-
Benz bus chassis in Brazil rose by 22% to 8,800 units. We
were able to maintain our leading market position in Brazil with
a market share of 51.6% (2017: 52.5%). In India, we continued
along our growth path and increased our sales volume to 1,600
units (2017: 900). At 3,200 units, sales in Mexico were
significantly lower than in the previous year (2017: 3,400).
Varied business developments in the core regions
Daimler Buses sold 30,900 buses and bus chassis worldwide in
financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
was able to maintain its market leadership in its most important
traditional core markets (EU30, Brazil, Argentina and Mexico).
At €4.5 billion, revenue was at the prior-year level (€4.5 billion),
while EBIT decreased slightly to €265 million (2017: €281 million).
Sales significantly above the prior-year level
-6
18/17
% change
+3
18,292
thereof Germany
18,770
+8
28,676
30,888
2017
Total
30,888
EU30
9,284
28,676
8,687
Employees (December 31)
2018
+3
194
Daimler Buses
C | THE DIVISIONS | DAIMLER BUSES
180
In 2017, the American startup Via and Mercedes-Benz Vans
established a joint venture known as ViaVan, whose ride-sharing
services are a part of sharing@Vans. The company's innovative
technology uses an intelligent algorithm to combine the same or
similar routes and destinations requested by various passen-
gers into a single trip with one vehicle, which makes it possible
to avoid detours and delays for everyone. The app-based,
on-demand ride-sharing service was launched in Amsterdam in
March 2018. It was subsequently introduced successfully in
London, and then later in Berlin in September in cooperation with
the Berliner Verkehrsbetriebe (BVG) transportation company.
The new service is now also being used for the first time to help
optimize individual passenger transport at a company - ViaVan
was launched at the BASF site in Ludwigshafen, Germany, in
the year under review.
With its Vision URBANETIC, Mercedes-Benz Vans has presented
a revolutionary mobility concept under the label autonomous@
Vans that goes far beyond previous ideas of autonomous vehi-
cles. Vision URBANETIC removes the separation between
passenger and goods transport and is set to enable the needs-
based, sustainable and efficient movement of people and
goods. As part of a holistic system solution, Vision URBANETIC
addresses future urban challenges and offers innovative
solutions. This visionary concept is based on an autonomously
driving, electrically powered chassis that can carry various
swap bodies for transporting either passengers or goods.
Daimler, with Mercedes-Benz Vans, is part of the ZUKUNFT.DE
federal model project for electric mobility in Germany.
ZUKUNFT.DE is a German acronym that stands for customer-
friendly delivery operations, sustainability, flexibility and trans-
parency - all brought about by emission-free vehicle operation.
Among other things, the project includes the electrification
of last-mile parcel deliveries in urban environments. We are one
of 11 project partners that are cooperating closely with five
associated partners in this major joint project, which is receiv-
ing assistance from researchers and scientists and support
from the German Federal Ministry of Transport and Digital Infra-
structure. The project is scheduled to be completed by the
end of 2020.
Full speed ahead for the future-oriented "adVANce" initiative
With its future-oriented “adVANce" initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for the trans-
portation of goods and passengers. The division is thus playing
a pioneering role in its sector. adVANce combines activities
in various areas and currently comprises six innovation fields:
digital@Vans, solutions@Vans, rental@Vans, sharing@Vans,
eDrive@Vans and autonomous@Vans. We are employing a cus-
tomer-oriented co-creation approach to incorporate our cus-
tomers into the development process at an early stage. Here, we
are combining our six innovation fields in order to develop
new business models and tailored solutions that are adapted to
our customers' respective sectors. Mercedes-Benz Vans is
also adopting a new approach with eDrive@Vans, which utilizes
the way a van is used in each specific case as the key factor
for evaluating various drive system options. More specifically,
with eDrive@Vans, the choice of battery-electric drive or a
conventional combustion engine depends solely on which rep-
resents the best solution for a particular application. Fuel
cells will be added to the drive system portfolio over the medium
term. In order to meet as many transport needs as possible
while allowing many different sectors to enter the world of locally
emission-free electric mobility, the eSprinter is now ready to
join the eVito as the second model with battery-electric drive.
The eSprinter will be launched on the market sometime
in 2019. In the future, Mercedes-Benz Vans will expand its
eDrive@VANs strategy to include fuel cells. Based on the
example of a semi-integrated travel van, the Concept Sprinter
F-CELL showcases the full spectrum of typical advantages
of a fuel cell, from long range to locally emission-free mobility.
The Concept Sprinter F-CELL unites fuel cell and battery tech-
nology in a plug-in hybrid. The eDrive@VANs strategy involves
not only the electrification of the vehicle fleet but also a cus-
tomized overall system solution for each individual fleet. This
includes advice on vehicle selection, assistance with tools
such as the eVAN Ready app, and an overview of the total cost
of ownership.
More than 1,700 different variants and comprehensive connectivity make the new Mercedes-Benz Sprinter the perfect vehicle for
diverse transport requirements and sectors.
C | THE DIVISIONS | MERCEDES-BENZ VANS 179
In 2018, business developments at Daimler Buses were strongly influenced by the economic crises
in normally profitable key markets and the associated decrease in demand for buses. This situation
led to a downward adjustment of anticipated earnings during the year under review, with the division's
full-year EBIT decreasing significantly compared with the previous year. At the same time, the
gradual recovery of the Brazilian economy, strong demand in the EU30 region and growth in India
led to a significant increase in global unit sales at Daimler Buses in 2018. As the market leader in
its most important traditional core markets, Daimler Buses focuses on innovative and pioneering city
buses and touring coaches. In 2018, Daimler Buses once again presented itself as a future-oriented
manufacturer with new products such as the eCitaro, digital services, a “future package" for our
production network and the implementation of the CASE strategy.
S.SP 9026
The new electric Vito
Energined datory
Driving the electric future
SPV 1257E
During the opening ceremony for the plant in South Carolina,
Mercedes-Benz Vans also announced that it will manufacture
Sprinter vans in North Charleston for Amazon's Delivery Ser-
vice Partner program. The program makes it possible for small
business owners to obtain customized delivery vehicles with
special leasing contracts at attractive conditions. The first
Sprinter built in North Charleston was delivered to a participant
in the Delivery Service Partner program. Amazon plans to
add 20,000 Sprinter vans from Mercedes-Benz to its delivery
fleet in the United States within the framework of the new
partnership. The online retailer will thus place the largest single
order ever received by Mercedes-Benz Vans.
In the first quarter of 2018, Mercedes-Benz Vans and the motor
home and travel van manufacturer Hymer announced plans
to establish a new comprehensive supply relationship. To this
end, an agreement was concluded for deliveries of more than
one thousand Sprinters each year, which will eventually make
Hymer the largest single customer for the new Sprinter in the
motor home and travel van sector.
Numerous major contracts
In addition to the investment in North Charleston, Mercedes-
Benz Vans invested approximately €450 million in the
lead plant of the global Sprinter production network, which
is located in Düsseldorf, Germany, as well as in the Sprinter
facility in Ludwigsfelde, Germany. Mercedes Benz Vans also
invested roughly US$150 million in Sprinter production
operations at the González Catán plant near Buenos Aires in
Argentina.
able to supply our customers in North America even faster and
more flexibly in the future, thus better utilizing the dynamic
potential of the North American market. The new plant in North
Charleston is therefore a central component of the "Mercedes-
Benz Vans goes global" growth strategy.
The Mercedes-Benz eVito, the first model of the holistic electrification strategy eDrive@VANS, has been available since November 2018.
C.07
Daimler Buses
2018
199
expenditure
Research and development
+53
94
144
plant and equipment
Investment in property,
6.21
5.9
Return on sales (in %)
-6
+0
4,5241
2811
265
EBIT
4,529
Revenue
18/17
% change
€ amounts in millions
2017
C.08
Unit sales Daimler Buses
#swichto EQ
GD-CT 207
A-Class 2
Sport Sedan
Emotive.
MBUX.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
TROS
ACTROS
D
=>
daimler.com/products/trucks/mercedes-benz/eactros.html
An innovation fleet for pilot customers. Mercedes-Benz presented its first
all-electric heavy-duty distribution truck back in 2016. Now it's taking the
logical next step by putting the Mercedes-Benz eActros through a practical
use test on the road. Ten near-series-production vehicles are being tested
by a total of twenty customers under real-life conditions to check out their
suitability for daily use and their economy. The initial focus is on intra-urban
goods transport and delivery; the eActros can generally cover the necessary
ranges with ease. The long-term goal is to make quiet and locally emission-
free driving possible in cities with series-produced trucks.
Clean, quiet and sustainable.
100% electric.
14555-
110000
9
11111
145000
Efficient.
Electric.
daimler.com/case/connectivity/en
A unique customer experience for drivers and passengers. The new A-Class
from Mercedes-Benz is the first production model series to offer the MBUX
multimedia system (Mercedes-Benz User Experience), which heralds a new era
of Mercedes me connectivity. The system's special feature is its ability to learn
by means of artificial intelligence. MBUX can be customized and adapts itself to
its user. Thanks to its intuitive operating concept, it creates an emotional bond
between the vehicle, the driver and the passengers. MBUX is standard equipment
also in the A-Class L Sedan, the model variant with a long wheelbase that was
developed exclusively for the Chinese market.
7
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
15
Flipping the switch to meet new customer wishes. Intelligent electric
mobility combined with attractive design, outstanding driving pleasure,
great suitability for daily use and exemplary safety - that's what the young
product and technology brand EQ stands for. It represents the Mercedes-Benz
brand's values - emotion and intelligence - and offers all the essential aspects
of customer-oriented electric mobility. Above and beyond the electric vehicles
themselves, EQ offers a comprehensive electric mobility ecosystem of products,
services, technologies and innovations such as wallboxes and charging services.
The EQ brand will start its electric product offensive in mid-2019. By the year
2022, the entire portfolio of Mercedes-Benz Cars will include more than 130
electric variants.
mercedes-benz.com/en/eq/about-eq
EQ
@
eActros.
ENA
#1
ACTROS
EQ.
Electric.
Intelligent.
daimler.com/products/vans
Fit for many different customers and uses. The new Sprinter is the first
customized complete system solution from Mercedes-Benz Vans to hit the road
for a wide variety of sectors. This large van also rings in the digital age in its
category and epitomizes Mercedes-Benz Vans' evolution from a pure vehicle
manufacturer to a provider of holistic transportation and mobility solutions. Thanks
to its extensive connectivity, the Sprinter enables customers to take full advantage
of the connectivity services of Mercedes PRO as a platform for present and future
services, solutions, and digital services related to daily business. It also offers the
all-new MBUX (Mercedes-Benz User Experience) multimedia system. Thanks to its
more than 1,700 different variants, the third generation of this bestseller in the
van portfolio is equal to just about every transportation task.
C
S.MB 3042
13
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
GN
Digital.
Connected.
Sprinter.
Hol
Keep
D
FOOD
FEEL
Touch TALK
FutureLab
HEAR
SEE
11
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
SZE 1284E
In cooperation with pilot customers, the near-series-production Mercedes-Benz
eActros is being developed further so that its technology and economics are optimally
adapted to daily use in the logistics sector. These heavy-duty electric trucks are being
tested in urban traffic by an innovation fleet consisting of vehicles ranging in weight
from 18 to 25 tons that are used for the distribution of various categories of goods by
companies in diverse sectors. The first ten pilot customers are testing the vehicles for
one year each in real-life operation. After that, the eActros fleet will be handed over to
ten other customers for further testing in daily use. With this project, Daimler Trucks is
responding to its customers' tremendous interest and gaining comprehensive information.
The goal is to bring cost-efficient electric trucks for heavy-duty inner-city distribution
to series production and market maturity starting in 2021.
eActros - fine tuning in fleet testing
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
LAWIN
Intuitive.
Presidential Committee
Declaration on Corporate Governance,
The Audit Committee met six times in financial year 2018. All
of these meetings were also attended by the Chairman of
the Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The other permanent participants at the meetings
were the Chairman of the Board of Management, the members
of the Board of Management responsible for Finance and
Controlling and for Integrity and Legal Affairs, and the external
auditors. The heads of specialist departments such as
Accounting, Internal Auditing, Group Compliance and Legal were
also present to report on individual items of the agenda.
Meetings and participants
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit
Committee in financial year 2018. Both are independent and
have expertise in the field of financial reporting, as well as
special knowledge of and experience in the auditing of financial
statements and the application of methods of internal control.
During financial year 2018, the employees were represented on
the Audit Committee by Michael Brecht as the Deputy Chairman
of the Committee and by Ergun Lümali.
Equal representation
On the basis of applicable law, the German Corporate
Governance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals
primarily with questions of accounting, financial reporting and
non-financial reporting. In addition, it deals with the annual
audit and reviews the qualifications and independence of the
external auditors. Furthermore, it discusses the effectiveness
and functional capabilities of the risk management system, the
internal control system, the internal auditing system and
the compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the annual
audit and the auditors' review of interim financial statements,
determines the important audit issues and negotiates the audit
fees with the external auditors. The Audit Committee also
commissions the external auditors to carry out a voluntary review
of the non-financial report within the framework of a limited
assurance engagement.
Responsibility
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that body
in financial year 2018.
Dear Shareholders,
Report of the Audit Committee
D❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
188
187
D | CORPORATE GOVERNANCE | CONTENTS
Shareholders and the Shareholders' Meeting
Supervisory Board
Board of Management
Board of Management and the Supervisory Board
Overall requirements for the composition of the
Composition and mode of operation of the
Supervisory Board and its Committees
Law for the equal participation of woman and men
Mediation Committee
Audit Committee
Nomination Committee
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the aforementioned
members of the Board of Management, the external auditors
and, if required, the heads of the relevant specialist depart-
ments. Such individual discussions were mainly held to prepare
for the next committee meetings.
Reporting to the Supervisory Board
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following
Supervisory Board meetings.
Topics in 2018
Corporate Governance Report
Declaration of compliance with the German
Corporate Governance Code
D & O insurance deductible for the
Supervisory Board
Corporate government in practice
German Corporate Governance Code
Principles of our actions
Guidelines for behaving with integrity
What we expect of our business partners
Risk management at the Group
Accounting principles
Supervisory Board
Composition and mode of operation of the
Board of Management
CASE Steering Committee
In its meeting in June 2018, the Audit Committee was informed
about recent measures taken in connection with the admin-
istrative order issued by the German Federal Motor Transport
Authority for the recall of the Vito OM622 and about the
discussions held in May and June 2018 at the German Federal
Ministry of Transport and Digital Infrastructure. The Audit
Committee then discussed aspects of the Group's risk manage-
ment system and dealt in particular with its changes and
The meeting of the Audit Committee in April 2018 took place
within the framework of the Supervisory Board meeting that
was held abroad in Budapest. Along with the interim financial
report for the first quarter of 2018, the Audit Committee also
dealt with the quarterly reports from the Group Compliance,
Legal and Internal Auditing departments. In addition, as a
result of changes made to the scope of responsibility of the BPO,
the Audit Committee dealt with amendments to be made to
its rules of procedure with regard to the regular report that must
be submitted to it. The Audit Committee also approved the
fees agreed upon with the external auditors for financial year
2018 after the Annual Shareholders' Meeting made its
decision on April 5, 2018 regarding the election of the proposed
external auditors for the annual financial statements and the
consolidated financial statements.
Diversity
In this meeting, the Audit Committee also discussed the report
on the total fees paid to the external auditors in financial
year 2017 for auditing and non-auditing services and defined
the framework of approval for engaging the external auditors
to provide non-audit services during the period January 1, 2018
to February 15, 2019. In this context, the Audit Committee
also reviewed the authorized external auditor services in accor-
dance with the appendix to the Audit Committee's rules of
procedure and adopted a resolution to update the appendix.
The Audit Committee also decided to recommend to the
Supervisory Board, and subsequently to the Annual Shareholders'
Meeting, that KPMG AG Wirtschaftsprüfungsgesellschaft be
engaged to conduct the annual external audit and the external
auditors' review of interim financial reports for financial year
2018 and also to conduct the external auditor's review of interim
financial reports for financial year 2019 in the period leading
up to the Annual Shareholders' Meeting in 2019. The Audit
Committee based this recommendation on the quality of
the annual audit and the results of the independence review,
for which no indications of partiality or a threat to indepen-
dence were found. Subject to the election of the proposed
external auditors by the Annual Shareholders' Meeting,
the Audit Committee also discussed the proposal to be made
regarding the fees to be agreed upon with the external
auditors for financial year 2018. Finally, within the framework of
its responsibility, the Audit Committee dealt with the draft
agenda for the 2018 Annual Shareholders' Meeting and the
annual audit plan for 2018 of the Internal Auditing department.
and important issues related to accounting were discussed with
the external auditors. In addition, the Audit Committee also
discussed the risk management system (RMS). Following an
in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the non-
financial report, the proposal on the appropriation of profits, and
the recommendation of the Board of Management to pay a
dividend of €3.65 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit
Committee for the financial year 2017.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE 189
Dr. Clemens Börsig, Chairman of the Audit Committee
In another meeting held on February 9, 2018, the Audit
Committee dealt with the annual financial statements, the
consolidated financial statements and the combined man-
agement report for Daimler AG and the Daimler Group for the
financial year 2017, each of which had been issued with an
unqualified auditor's opinion by the external auditors, as well
as with the proposal on the appropriation of profits. During
the meeting, the Audit Committee focused in particular on the
key audit matters described in each audit opinion and on the
audit approach applied in each case, including the conclusions
drawn. The Audit Committee also reviewed and discussed
the non-financial report, which was prepared for the first time.
The external auditors reported on the results of their audit
and on the voluntary review of the non-financial report within
the framework of a limited assurance engagement, and
were also available to answer supplementary questions and to
provide additional information. The audit reports on the
annual company and consolidated financial statements (including
the combined management report) and the internal control
system (ICS), the report concerning the non-financial report,
In the meeting held on January 31, 2018, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2017, as well as with the proposal on the
appropriation of profits made by the Board of Management.
Following an in-depth review, the Audit Committee took
positive note of the presented figures and determined that no
objections were to be made to their proposed publication.
The Committee further recommended that the Supervisory
Board, which met immediately thereafter, adopt the same
view. The preliminary key figures and the proposal on the appro-
priation of profits were announced at the Annual Press
Conference on February 1, 2018.
Board of Management
in executive positions
approval, as well as the areas of responsibility of individual
Board members, remain unchanged despite the creation of the
Committee.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
For certain types of transactions defined by the Supervisory
Board, the Board of Management requires the prior consent of
the Supervisory Board. At regular intervals, the Board of
Management reports to the Supervisory Board on the strategy
of the business units, corporate planning, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system and the
compliance management system. The Supervisory Board has
specified the information and reporting duties of the Board of
Management.
pages 217 ff of the Annual Report 2018. Such features
include the Company's whistleblower system, the BPO
(Business Practices Office), which enables Daimler employees
and external whistleblowers to report misconduct anywhere
in the world. The tasks of the Board of Management also include
establishing and monitoring an appropriate and efficient risk
management system.
on
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler
AG, the annual consolidated financial statements, and the
combined management report of the Company and the Group,
as well as the separate combined non-financial report produced
for Daimler AG and the Group. Together with the Supervisory
Board, the Board of Management issues the declaration of
compliance with the German Corporate Governance Code each
year. It ensures that the provisions of applicable law, official
regulations and the Group's internal guidelines are adhered to,
and works to make sure that the companies of the Group
comply with those rules and regulations. The Board of Man-
agement has also established an adequate compliance
management system that takes into account the Company's
risk situation. The main features of this system are described
Irrespective of this overall responsibility, the individual members
of the Board of Management manage their allocated areas
on their own responsibility and within the framework of the
instructions approved by the entire Board of Management.
Specific issues defined by the Board of Management as a whole
are dealt with by the Board as a whole, which must approve all
related decisions. The Chairman of the Board of Management
coordinates the work of the Board of Management.
The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board, the
Board of Management determines the Group's strategic focus,
defines the corporate goals, and makes decisions concerning
operational planning matters. The members of the Board of
Management must represent the interests of the Company
and share responsibility for managing the Group's entire
business.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
194
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2018. In accordance with German
law on the equal participation of women and men in executive
positions, the Supervisory Board has set a target for the propor-
tion of women on the Board of Management and a deadline
for achieving this target. The details are described in a separate
section: page 197. With regard to the composition of the
Board of Management, the Supervisory Board has also adopted
a diversity concept that is embedded in an overall require-
ments profile. The details of this concept are also described in
a separate section: page 198.
Board of Management
Daimler AG is obliged by the German Stock Corporation Act (AktG)
to apply a dual management system featuring strict personal
and functional separation between the Board of Management
and the Supervisory Board (two-tier board). Accordingly, the
Board of Management manages the company while the Super-
visory Board monitors and advises the Board of Management.
Composition and mode of operation of the
Board of Management > D.01
ratifies
the actions of
8 members
Board of Management
appoints,
advises and
monitors
reports
20 members
Supervisory Board
elects members
representing the
shareholders,
ratifies the
actions of
reports
The Board of Management has also given itself a set of rules of
procedure, which can be seen on our website at daimler.
com/dai/rop. Those rules describe, for example, the procedure
to be observed when passing resolutions and ways to avoid
conflicts of interest.
CASE Steering Committee
The Board of Management has formed a Steering Committee
consisting of Board of Management members to address the
future-oriented CASE topics of connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use
(Shared & Services) and electric drive systems (Electric). The
responsibilities of the Board of Management as a whole, in
particular those regarding the catalog of issues that require its
191-201
In 2018, the Supervisory Board once again commissioned an
external review of the separate combined Non-Financial
Report of Daimler AG and the Group within the framework of a
limited assurance engagement. The external auditors issued
a report concerning their limited assurance engagement on the
Non-Financial Report in accordance with ISAE 3000, which
the Supervisory Board then approved after reviewing the Non-
Financial Report and discussing it with the external auditors.
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distrib-
utable profits. Following discussions with the external auditors
and taking into consideration the audit reports of the external
auditors and the results of the review by the Audit Committee,
the Supervisory Board states whether, after the final results of
its own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Annual Shareholders' Meeting on the
results of its own review and on the manner and scope of its
supervision of the Board of Management during the previous
financial year. The Report of the Supervisory Board for the year
2018 is available on pages 46 ff of the Annual Report 2018
and on the Internet at ④daimler.com/dai/sb.
on
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly, and
determines the total individual remuneration of each member
of the Board of Management with consideration of the ratio
of Board of Management remuneration to the remuneration of
the senior executives and the workforce as a whole, also with
regard to development over time. For this comparison, the Super-
visory Board has defined the senior executives by applying
Daimler's internal terminology for the hierarchical levels and has
defined the workforce of Daimler AG in Germany as the relevant
workforce. Variable components of remuneration are generally
based on an assessment period that lasts several years and
is essentially future-oriented. Multi-year variable remuneration
components are not paid out until they become due. The
Supervisory Board has set upper limits for individual Board of
Management remuneration in total and with regard to its
variable components. Further information on Board of Manage-
ment remuneration can be found in the Remuneration Report
pages 120 ff of the Annual Report 2018.
page 197 of the Annual Report 2018. With regard to the
composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded
in an overall requirements profile. The details of this concept
are also described in a separate section:
page 198 of the
Annual Report 2018.
The Supervisory Board's duties include appointing and, if
necessary, recalling the members of the Board of Management.
Initial appointments are usually made for a period of three
years. In accordance with German legislation on equal partici-
pation by women and men in executive positions, the Super-
visory Board has defined a target for the proportion of women
on the Board of Management and a deadline for achieving this
target. The details are described in a separate section:
between the meetings of the Supervisory Board - to the
Chairman of the Supervisory Board.
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Group. At
regular intervals, the Board of Management reports to the
Supervisory Board on the strategy of the business units, corpo-
rate planning, revenue development, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system, and the
compliance management system. The Supervisory Board has
retained the right of approval for transactions of fundamental
importance. Furthermore, the Supervisory Board has specified
the information and reporting duties of the Board of Manage-
ment to the Supervisory Board, to the Audit Committee and -
The members of the Supervisory Board attend on their own
responsibility courses of training and further training that
might be necessary for the performance of their tasks, and are
supported by the Company in doing so. Such courses may
address corporate governance, changes brought about by new
legislation, or the launch of new products and pioneering tech-
nologies, for example. New members of the Supervisory Board
are offered an “onboarding” program that gives them the
opportunity to exchange views with members of the Board of
Management and other executives on current issues related to
the various areas of responsibility of the Board of Management,
and thus to obtain an overview of important topics at the Group.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal
participation of women and men in executive positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
described in a separate section: O page 197 of the Annual
Report 2018. With regard to its composition, the Supervisory
Board has also created an overall requirements profile
consisting of a skills profile and a diversity concept to be applied
to the entire Supervisory Board. Details of the overall
requirements profile are also described in a separate section:
page 199 ff of the Annual Report 2018. Proposals by
the Supervisory Board of candidates for election by the Share-
holders' Meeting as members representing the shareholders
of Daimler AG, for which the Nomination Committee makes
recommendations, aim to fulfill the overall requirements
profile of the Supervisory Board as a whole.
reports
Information on the curricula vitae of the members of the
Supervisory Board are posted on our website at daimler.
com/dai/sb. Information on other mandates held by the
members of the Supervisory Board can also be found on
pages 54 f of the Annual Report 2018.
Supervisory Board
Composition and mode of operation of the
Supervisory Board and its committees
195
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Targeted support for women on the basis of the best-mix principle
was a central component of our diversity management activities
even before the legislation on the equal participation of women
and men in executive positions went into effect. Such support
has also included and continues to include flexible working-time
arrangements, company nurseries and special mentoring
programs for women. In order to meet legal requirements, the
Board of Management has defined targets for the proportion
of women at the two management levels below the Board of
Management and a deadline for achieving those targets. The
details are described in a separate section. Independently of the
legal requirements, Daimler continues to affirm the goal it
already set itself in 2006 of increasing the proportion of women
in executive positions at the Group to 20% by 2020. At the end
of 2018, this proportion was 18.8% (2017: 17.6%).
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employ-
ees and the differences between them because such differ-
ences form the foundation for an effective and successful com-
pany. The aim of our activities is to bring together the right
people to tackle our challenges, create a work culture that pro-
motes the performance, motivation and satisfaction of our
employees and managers, and help attract new target groups to
our products and services. Our activities for shaping diversity
at Daimler focus on three areas: best mix, work culture and cus-
tomer interaction. With our specific measures, activities and
initiatives for everything from training formats for employees
and managers to workshops, conferences, guidelines and target
group-specific communication and awareness-raising measures,
our diversity management system makes a major contribution
to the further development of our corporate culture.
Diversity
Along with the composition of the Steering Committee, the
responsibilities of its Chairman, the responsibility for the rules
of procedure and the options available for establishing other
CASE bodies below the Steering Committee, the rules of proce-
dure of the Steering Committee also define the structure and
format of Committee meetings and the adoption of resolutions,
as well as the rules on reporting to the Board of Management
of Daimler AG.
Within the framework of the strategic approach adopted by the
Board of Management, the Steering Committee defines the
management model and the strategic guidelines for CASE. The
Board of Management has defined rules of procedure for the
Steering Committee. The Committee can make changes to these
rules on its own authority, provided such changes do not
affect the steering model.
The Steering Committee consists of the Chairman of the Board
of Management, who is also responsible for Mercedes-Benz
Cars, as well as the members of the Board of Management
responsible for Finance & Controlling/Daimler Financial
Services, Mercedes-Benz Cars Marketing & Sales, and Group
Research & Mercedes-Benz Cars Development. The Chairman
of the Board of Management is also the Chairman of the Steering
Committee. In line with the Committee's structure as described
above, the members of the Steering Committee at December
31, 2018 were Dr. Dieter Zetsche (Chairman), Bodo Uebber,
Britta Seeger and Ola Källenius.
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Shareholders'
Meeting. The other half comprises members who are elected
by the Group's employees who work in Germany. The members
representing the shareholders and the members representing
the employees are equally obliged by law to act in the Company's
best interests.
Annual Shareholders' Meeting
Governance structure
D.01
Stuttgart, December 2018
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible for
the members of the Supervisory Board, which is appropriate in
the view of Daimler AG. However, this deductible does not
correspond to the legally required deductible for members of the
Board of Management in the amount of at least 10% of the
damage up to at least one and a half times the fixed annual
remuneration. Since the remuneration structure of the Super-
visory Board is limited to function-related fixed remuneration
without performance bonus components, setting a deductible
for Supervisory Board members in the amount of 1.5 times
the fixed annual remuneration would have a disproportionate
economic impact when compared with the members of the
Board of Management, whose compensation consists of fixed
and performance bonus components.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section of
the German Federal Gazette on April 24, 2017 in the Code
version dated February 7, 2017, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board), and will continue to observe the recommendations with
the aforesaid deviation. Since the issuance of the last
compliance declaration in December 2017, Daimler AG has
observed the recommendations of the German Corporate
Governance Code, with the aforementioned exception.
Declaration by the Board of Management and the
Supervisory Board of Daimler AG pursuant to
Section 161 of the German Stock Corporation Act
(AktG) regarding the German Corporate Gover-
nance Code
The Declaration on Corporate Governance pursuant to Section 289f and Section 315d of the German
Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well as
with the Corporate Governance Report. The following statements thus apply to Daimler AG and
the Daimler Group insofar as not otherwise stated. The Declaration on Corporate Governance,
which is combined with the Corporate Governance Report, can also be viewed on the Internet at
daimler.com/dai/gcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB is limited to determining whether such statements
have actually been provided.
Corporate Governance Report
Declaration on Corporate Governance,
191
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
Dr. Clemens Börsig
Chairman
The Audit Committee
Stuttgart, February 2019
As in previous years, the Audit Committee conducted a self-
evaluation of its own activities also in 2018 on the basis of
an extensive company-specific questionnaire. The results of
this efficiency review were once again very positive and were
presented and discussed in the meeting on February 13, 2019.
This did not result in any need for action with regard to the
Committee's tasks, or with regard to the content, frequency or
procedure of its meetings.
Efficiency review
In another meeting on February 13, 2019, the Audit Committee
reviewed and discussed in detail the annual financial statements,
the consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group for
financial year 2018, each of which had been issued with an
unqualified auditor's opinion by the external auditors, as well
as the proposal on the appropriation of profits and the non-
financial report, which was issued with a report in accordance
with ISAE 3000. At the meeting, the external auditors
reported on the results of their audit and focused in particular
on the key audit matters and on the audit approach applied in
each case, including the conclusions drawn. They also reported
on the voluntary review of the non-financial report within the
framework of a limited assurance engagement and were available
to answer supplementary questions and to provide additional
information. The audit reports on the annual financial statements
and consolidated financial statements (including the key
audit matters in the audit opinions) and on the internal control
system (ICS), the report concerning the non-financial report
for 2018 and important issues related to financial reporting were
discussed with the external auditors. The Audit Committee
also discussed the risk management system (RMS). Following
an in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the declaration
on corporate governance included in the corporate governance
report, the non-financial report and the recommendation of
the Board of Management to pay a dividend of €3.25 per share
entitled to a dividend. Furthermore, the Audit Committee
approved the Report of the Audit Committee for financial year
2018.
Company and consolidated financial statements 2018
In the meeting held on February 5, 2019, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2018, as well as with the proposal on the appro-
priation of profits made by the Board of Management. Following
an in-depth review, the Audit Committee took positive note of
the presented figures and determined that no objections were
to be made to their proposed publication. The Committee
further recommended that the Supervisory Board, which met
immediately thereafter, adopt the same view. The preliminary
key figures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 6,
2019.
In the meeting held in October 2018, the Audit Committee
dealt with the interim financial report for the third quarter of
2018 and the quarterly reports from the Group Compliance
and Legal departments. In addition, the Committee conducted
its annual review of the authorized external auditor services
in accordance with the appendix to the Audit Committee's rules
of procedure and also adopted a resolution to retain for
financial year 2019 the catalog updated at the beginning of 2018.
Finally, the Audit Committee agreed to raise the framework
of approval for engaging the external auditors to provide non-
audit services during the period January 1, 2018 to February
15, 2019.
In the meeting held in July 2018, the Audit Committee dealt
mainly with the second-quarter results, the risk report and
the quarterly reports from the Group Compliance, Legal and
Internal Auditing departments.
In the same meeting in June 2018, the Audit Committee
addressed current financial accounting issues in detail, in
particular new regulations for financial reporting in accor-
dance with IFRS 16 (Leases), the draft paper from the European
Securities and Markets Authority (ESMA) regarding central
electronic reporting and its implications for Daimler AG and
accounting procedures for research and development costs.
The Committee also discussed the approach to be taken for the
creation and examination of the non-financial report for 2018.
Finally, the Audit Committee took note of a report on pension-,
refinancing- and tax-risk management and also discussed
with the Board of Management the annual report produced by
the Group's Data Protection Officer.
further development. It also discussed the methods and
processes of, and possible changes to, the internal control
system, which along with accounting also includes the
internal auditing function and the compliance management
system. In addition, the Committee was informed about
the Group's legal system and the Group's legal risk reporting. In
this meeting, the Committee also defined planning measures
and the key audit issues for the external audit of financial year
2018. The meeting was also used to discuss the results of
the internal quality analysis of the external audit for financial
year 2017.
Милена
190
For the Board of Management
Dr. Dieter Zetsche
Chairman
192
Information on the areas of responsibility and the curricula
vitae of the Board of Management members is posted on the
Daimler AG website at ④ daimler.com/dai/bom. The mem-
bers of the Board of Management and their areas of responsi-
bility are also listed on
pages 44f of the Annual Report
2018.
The Audit Committee instructed the external auditors to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit or
the auditors' review of interim financial statements, and of all
key findings and events relevant to the tasks of the Supervisory
Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditors stipulating that the
external auditors would inform the Audit Committee, and make
a note in the audit report, of any facts uncovered during the
annual audit that would reveal inaccuracies in the Board of
Management's and the Supervisory Board's declaration of
compliance with the German Corporate Governance Code.
Prior to issuing its recommendation to the Annual Shareholders'
Meeting, the Audit Committee of the Supervisory Board
obtained a declaration from the external auditors under consid-
eration. The external auditors were requested to state whether
any business, financial, personal or other relationships existed
between the external auditors and their bodies and audit
managers on the one hand, and the Company and the members
of its bodies on the other, which could justify concerns
regarding a conflict of interest. This statement also describes
the extent to which other services were performed for the
Daimler Group in the previous year or had been contractually
agreed upon for the following year.
was elected to conduct the audit of the annual company financial
statements and consolidated financial statements, and the
external auditors' review of interim financial reports, for financial
year 2018, as well as the external auditors' review of interim
financial reports for financial year 2019 in the period leading
up to the Shareholders' Meeting in 2019. Since 2014, the
responsible auditor commissioned to carry out the external audit
has been Dr. Axel Thümler. KPMG AG Wirtschaftsprüfungsgesell-
schaft has been conducting the audit of the annual company
financial statements and consolidated financial statements of
Daimler AG since the 1998 financial year.
193
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders' Meeting for the election of the external auditors for
the annual company financial statements, for the consolidated
financial statements and for the auditors' review of interim
financial reports. At the Annual Shareholders' Meeting on April
5, 2018, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of
the German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual company
financial statements and consolidated financial statements of
Daimler AG are audited by external auditors; interim financial
reports are reviewed by external auditors. The consolidated
financial statements and the Group management reports are
made publicly accessible via the Company's website within 90
days from the end of the reporting year; the interim financial
reports are made publicly accessible in the same manner within
45 days from the end of the reporting period.
Accounting and the external audit
pages 143ff of the Annual Report 2018. The risk manage-
ment system is one component of the overall planning,
controlling and reporting process. Its goal is to enable the
company's management to recognize significant risks at
an early stage and to initiate appropriate countermeasures in a
timely manner. At least once a year, the Audit Committee
discusses the effectiveness and functionality of the risk manage-
ment system with the Board of Management. The Chairman
of the Audit Committee reports to the Supervisory Board on the
committee's work at the latest in the meeting of the Super-
visory Board following each committee meeting. The Supervisory
Board also deals with the risk management system on the
occasion of the approval of the operational planning and the
audit of the annual company and consolidated financial
statements. In addition, the Board of Management regularly
informs the Audit Committee and the Supervisory Board of
the most important risks facing the Company and the Group as
a whole. The Chairman of the Supervisory Board has regular
contacts between Supervisory Board meetings with the Board
of Management, and in particular with the Chairman of the
Board of Management, to discuss not only the Group's strategy
and business development but also the issue of risk man-
agement. The Internal Auditing department monitors adherence
to the legal framework and to Group standards by means of
targeted audits and initiates appropriate actions as required.
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
on our website at ④daimler.com/dai/gcgc.
Risk management at the Group
Daimler has a risk management system commensurate with
its size and position as a company with global operations,
Expectations for our business partners
We have also reached agreement on "Principles of Social
Responsibility" with the World Employee Committee. These
principles apply at Daimler AG and throughout the Group. In
the Principles of Social Responsibility, Daimler commits itself
to the principles of the UN Global Compact and thus to
internationally recognized human and workers' rights, freedom
of association, sustainable protection of the environment
and the proscription of child labor and forced labor. Daimler
also commits itself to guaranteeing equal opportunities and
adhering to the principle of “equal pay for equal work."
Our Integrity Code is based on a shared understanding of
values, which we developed together in a dialogue with Daimler
employees. The Code defines our principles of behavior in
daily business. This applies to interpersonal conduct within the
company as well as conduct toward customers and business
partners. These central principles include compliance with laws,
as well as fairness and responsibility, for example. In addition
to general principles of behavior, the Code includes requirements
and regulations concerning respect for and the protection of
human rights and dealing with conflicts of interest. It also pro-
hibits all forms of corruption. The Integrity Code applies to
all companies and employees at the Daimler Group worldwide.
The Integrity Code is available on the Internet at daimler.
com/dai/caag.
Integrity Code
Our business conduct is based on Group-wide standards that
go beyond the requirements of relevant legislation and the
German Corporate Governance Code. These standards are
based on our four corporate values integrity, respect, passion
and discipline. In order to achieve viable and thus sustainable
business success on this basis, our goal is to ensure that
our activities are in harmony with the environment and society.
This is due to the fact that we, as one of the world's leading
automakers, also strive to be a leader in sustainability. We have
defined the most important principles in our Integrity Code,
which serves as a frame of reference for compliant and ethical
conduct in everyday activities for all employees at Daimler AG
and the Group.
The principles guiding our conduct
Beyond the legal requirements of German stock corporations,
codetermination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Governance Code ("Code") with the exception
disclosed and justified in the declaration of compliance.
Daimler AG has also followed and continues to follow the sug-
gestions of the Code with just one exception: Deviating
from the suggestion in Clause 2.3.3, which stipulates that
companies should enable shareholders to view the Shareholders'
Meeting with modern communications media such as the
Internet, the Shareholders' Meeting is not transmitted in its
entirety on the Internet, but only until the end of the report
by the Board of Management, in order to protect the character
of the Shareholders' Meeting as a meeting attended by our
shareholders in person. An additional factor is that continuing
the broadcast after that point, in particular broadcasting
comments made by individual shareholders, could impair the
discussion between shareholders and management.
German Corporate Governance Code
The main principles applied in our corporate
governance
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
We also require our business partners to adhere to compliance
stipulations because we regard our business partners' integrity
and behavior in conformity with regulations as an indispensable
prerequisite for trusting cooperation. When selecting our
direct business partners, we therefore pay close attention that
they comply with the law and follow ethical principles, and
that they pay the same attention themselves towards other
partners in the supply chain. For the expectations we place
on our business partners, see also ④ daimler.com/sus/obr.
- Topics dealt with
In the meetings during 2018 related to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditor's
review of interim financial statements. In addition, the Committee
received reports from the Internal Auditing, Group Compliance
and Legal departments. The Board of Management reported
regularly to the Audit Committee on the current status of the
main legal proceedings, including the inquiries, investigations,
proceedings and administrative orders in connection with
diesel exhaust emissions. In addition, the Audit Committee
regularly dealt with notifications concerning possible
violations of rules submitted by employees and third parties
to the Group's own whistleblower system BPO (Business
Practices Office).
Responsibilities and composition
188-190
Report of the Audit Committee
D | Corporate Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance.
Our actions take place within the framework of responsible, trans-
parent and sustainable corporate governance.
S.MB 1851
CICABR
Corporate
Governance
Meetings and participants
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor relations
activities. All of the important information disclosed in 2018,
including annual and interim reports, press releases, voting
rights notifications from major shareholders, presentations,
and audio recordings of analyst and investor events and confer-
ence calls, as well as the financial calendar, can be found at
daimler.com/investors. All the dates of important disclosures
such as annual reports and interim reports and the dates of
the Annual Shareholders' Meeting, the annual press conference
and the analyst conferences are announced in advance in
the financial calendar. The financial calendar can also be found
inside the rear cover of the Annual Report.
Non-
Financial
Report
Citaro hybrid
E | NON-FINANCIAL REPORT | CONTENTS
On the following pages, we publish the non-financial report in accordance with
Sections 289b- 289e, 315b and c of the German Commercial Code (HGB).
This report applies to Daimler AG and to the Daimler Group. It contains the main
information on the aspects of environmental, employee and social matters,
combating corruption and bribery, and respect for human rights.
E| Non-Financial Report
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the
media and the interested public about the situation of the Group,
and inform them without delay about any significant changes
in its business. Within reasonable limits, the Chairman of the
Supervisory Board is also prepared to talk to investors about
specific Supervisory Board issues.
203
eCITARO
The Company facilitates the personal exercise of the share-
holders' rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders' voting instructions and who are available during
the Shareholders' Meeting. Absentee voting is also possible.
It is possible to authorize the Daimler-appointed proxies and
give them voting instructions or to cast absentee votes by
using the e-service for shareholders.
In the case of Supervisory Board members who are not also
members of the board of management of a listed company,
the legal limit of membership of ten statutorily constituted
supervisory boards applies firstly, whereby chairmanship
of a supervisory board counts double. In order to ensure that
members of the Supervisory Board have sufficient time to
fulfill their mandate, members of the Supervisory Board of
Daimler AG who are not also members of the board of
management of a listed company shall, however, generally be
permitted membership of a maximum of eight supervisory
boards (including that of Daimler AG), whereby chairmanship
of a supervisory board counts double. This maximum
number was not exceeded by any member of the Supervisory
Board during the reporting year.
Shareholders and the Shareholders' Meeting
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall take
into consideration the aspects described above and aim to
fulfill the overall requirements profile for the Supervisory Board
as a whole. On the basis of a target profile that takes into
account specific qualification requirements and the aforemen-
tioned criteria, the Nomination Committee creates a shortlist
of available candidates with whom it conducts structured dis-
cussions in which it also determines whether the candidate
in question will have sufficient time available to perform his or
her duties on the Supervisory Board with due care. The
Nomination Committee then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. The foundation for Supervisory Board
decisions regarding election proposals to the Shareholders'
Meeting is always the Company's interests under consideration
of all circumstances in each individual case.
Sustainability at Daimler
In order to ensure compliance with a current recommendation
in the German Corporate Governance Code, the rules of
procedure stipulate that no member of the Supervisory Board
who is also a member of the board of management of a
listed company may hold more than three memberships of
supervisory boards of listed companies (including his or
her membership of the Supervisory Board of Daimler AG) or
of bodies of other companies with similar requirements
outside of the group of his or her Board of Management
membership. One member of the Supervisory Board, Joe
Kaeser, is a member of the board of management of a listed
company, but has not exceeded the maximum number of
memberships.
201
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and to partici-
pate in all courses of training and further training that might
be necessary for the performance of their tasks. Prior to
issuing its election proposals, the Supervisory Board deter-
mines whether the candidates in question will have sufficient
time available to perform their duties on the Supervisory
Board.
The rules of procedure of the Supervisory Board also define
a general time limit for Supervisory Board membership.
As a result, only candidates who have not yet been members
of the Supervisory Board for three full terms of office at
the time of their election should generally be nominated for
membership of the Supervisory Board for a full term of
office. This general length of service on the Supervisory Board
has not been exceeded by any current member, and the
candidates Joe Kaeser and Dr. Bernd Pischetsrieder, who
are nominated for reelection at the Annual Shareholders'
Meeting in 2019, also meet this requirement.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, is a former member of the Board of Management.
Under the premise described above, there are, in the view of
the Supervisory Board, no indications at present for any of
the members of the Supervisory Board that relevant relation-
ships or circumstances exist, in particular with the Company,
members of the Board of Management or other Supervisory
Board members, that could be construed as a substantial
and permanent conflict of interest that would compromise
their independence. No member of the Supervisory Board
is a member of a board of, or advises, a significant competitor.
With regard to Supervisory Board member Bader Al Saad,
the Supervisory Board takes the view that his membership
of the Executive Committee of the Board of Directors of
Kuwait Investment Authority does not compromise his inde-
pendence within the meaning of the German Corporate
Governance Code. The German Corporate Governance Code
does not contain a conclusive definition of independence,
but instead presents examples of circumstances that would
call the independence of a Supervisory Board member into
question. Within the meaning of the German Corporate Gov-
ernance Code, a Supervisory Board member is to be
considered non-independent if he or she has a personal or
business relationship with the Company, its governing
bodies, a controlling shareholder or a company affiliated
with a controlling shareholder that may cause a substantial
and not merely temporary conflict of interest. It is the
responsibility of the Supervisory Board to evaluate the
independence of its members on the basis of such criteria.
The Kuwait Investment Authority is not a controlling share-
holder of Daimler AG that could attain an effective majority
at an Annual Shareholders' Meeting. No other discernible
circumstances exist that might call into question the inde-
pendence of Bader Al Saad.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not in itself
call into question the independence of such an employee
representative as defined by the German Corporate Gover-
nance Code, at least 15 members of the Supervisory Board
are also deemed to be independent.
In order to ensure the independent advice to, and supervision
of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate that
more than half of the members of the Supervisory Board
representing the shareholders are to be independent as
defined by the German Corporate Governance Code.
The Supervisory Board may not include more than two former
members of the Board of Management of Daimler AG or
anyone who is a member of a board of, or advises, a significant
competitor of the Daimler Group.
The shareholders exercise their membership rights, in particular
their information and voting rights, at the Shareholders'
Meeting. Each share in Daimler AG entitles its owner to one vote.
There are no multiple voting rights, preferred voting rights,
or maximum voting rights at Daimler AG. Documents and infor-
mation related to the Shareholders' Meeting can be found on
our website at daimler.com/ir/am. The Annual Shareholders'
Meeting is generally held within four months of the end of a
financial year. The Shareholders' Meeting to be held on May 22,
2019 therefore constitutes an exception, which is necessitated
by the magnitude and complexity of "Project Future", which is to
be presented at the meeting.
204
204
215
208
Conservation of resources
220
Antitrust compliance
207
Clean air
220
Anti-corruption compliance
206
Climate protection
217
Our Compliance Management System
Social Issues
206
217
Compliance
205
Sustainability management in the supply chain
216
Political dialogue and representation of interests
205
Sustainable corporate governance
215
Stakeholder engagement
As a result, in the case of at least half of the shareholder
representatives on the Supervisory Board and at least 15
members of the entire Supervisory Board, there were no
indications of a potential conflict of interest during the
reporting period based on the premise described above.
There were no indications for actual conflicts of interest
in the financial year 2018.
Our strategy
Environmental Issues
page 51 of the Annual Report 2018, there were individual
cases concerning two Supervisory Board members in
particular situations during the reporting period where there
might have been the appearance of a potential conflict of
interest at the time when Board of Management reports were
submitted to the Supervisory Board. The Supervisory Board
members in question in these cases refrained from being pres-
ent during the presentation of the Board of Management
report regarding the issue that might have been affected by
a potential conflict of interest.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not by
itself constitute a potential conflict of interest as defined by
the German Corporate Governance Code, the requirements
described here are deemed to be met by at least 15 members
of the Supervisory Board.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
At December 31, 2018, 30% of the shareholder representatives in
the Supervisory Board of Daimler AG were women (Sari Baldauf,
Petraea Heynike and Marie Wieck), while 70% were men. On that
date, 30% of the employee representatives on the Supervisory
Board were women (Elke Tönjes-Werner, Sibylle Wankel and Dr.
Sabine Zimmer), while 70% were men. In its meeting on
December 12, 2018, the Supervisory Board considered its
nominations for the election at the 2019 Shareholders'
Meeting and decided, upon the recommendation of the Nomi-
nation Committee, to propose at the 2019 Annual Share-
holders' Meeting that Joe Kaeser and Dr. Bernd Pischetsrieder
be elected once again to the Supervisory Board. The legally
required gender ratio will be met both on the shareholder rep-
resentatives' side and for the Supervisory Board as a whole
if these persons are elected to the Supervisory Board, provided
that no other changes occur.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to a have proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Super-
visory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the
employees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels below the Board of Manage-
ment, with a deadline of December 31, 2020. At the time of the
resolution, the proportion of women in the first and second
management levels below the Board of Management was 8.0%
and 12.4%, respectively. At December 31, 2018, the proportion
of women at the first management level below the Board of Man-
agement was 11.8%; at the second level it was 14.4%.
On December 8, 2016, the Supervisory Board passed a resolu-
tion stipulating that the target figure for the proportion of
women on the Board of Management of Daimler AG would
be 12.5%, while the deadline would be December 31, 2020.
At December 31, 2018, the eight-member Board of Management
included two women, Renata Jungo Brüngger and Britta
Seeger. This means that women account for 25% of the Board
of Management members.
In accordance with German legislation on equal participation
by women and men in executive positions in both the private
and the public sector, the supervisory boards of listed companies
or companies subject to Germany's system of codetermination
have to set a target for the proportion of women on their board
of management. The board of management of such a company
has to set a target for the proportion of women at the two man-
agement levels below that of the board of management. If
the proportions of women at the time when these targets are
set by the board of management and the supervisory board
are below 30%, the targets may not be lower than the proportions
already reached. At the same time that the targets are set,
the boards have to set periods for their achievement, which may
not be longer than five years.
Germany's law on the equal participation of
women and men in executive positions
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member
of the Supervisory Board representing the employees and one
member of the Supervisory Board representing the share-
holders, each elected with a majority of the votes cast of the
shareholders' and employees' representatives, respectively.
It is formed solely to perform the functions laid down in Section
31 Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved. As in
previous years, the Mediation Committee did not have to take
any action in 2018.
Mediation Committee
Finally, the Audit Committee approves permitted services
that are not directly related to the annual audit and which are
provided by the firm of external auditors or its affiliates to
Daimler AG or to companies of the Daimler Group.
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the man-
agement report of the Company and the Group, and discusses
them with the external auditors. The Audit Committee makes a
proposal to the Supervisory Board on the adoption of the
annual company financial statements of Daimler AG, on the
approval of the annual consolidated financial statements,
and on the appropriation of profits. The Committee also makes
recommendations for the Supervisory Board's proposal on
the election of external auditors, assesses those auditors'
suitability, qualifications and independence, and, after
the external auditors are elected by the Annual Shareholders'
Meeting, it engages them to conduct the audit of the annual
company and consolidated financial statements and to review
the interim reports, negotiates an audit fee, and determines
the focus of the annual audit. The external auditors report to
the Audit Committee on all accounting matters that might
be regarded as critical and on any material weaknesses of the
internal control and risk management system with regard to
accounting that might be discovered during the audit.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 197
The Audit Committee deals with the supervision of the
accounting and its process as well as with the annual external
audit. At least once a year, it discusses with the Board of
Management the effectiveness and functionality of the internal
control and risk management system, the internal auditing
system and the compliance management system. It regularly
receives reports on the work of the Internal Auditing depart-
ment and the Compliance Organization. At least four times a
year, the Audit Committee receives a report from the whistle-
blower system BPO (Business Practices Office) on complaints
and information about any breaches of regulations or guide-
lines by high-level executives, as well as violations by other
employees of the regulations in a defined catalog of legal
provisions. It regularly receives information about the handling
of these complaints and notifications.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their super-
visory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. All relevant information
here has been published in accordance with applicable law.
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence and
have expertise in the field of financial reporting, as well as
special knowledge and experience with regard to auditing and
methods of internal control. Furthermore, due to his earlier
work at Robert Bosch GmbH and his long-standing membership
of the Supervisory Board of Daimler AG, Dr. Clemens Börsig
is also very familiar with the automotive industry.
Audit Committee
The Nomination Committee is composed of at least three mem-
bers, who are elected by a majority of the votes cast by the
members of the Supervisory Board representing the shareholders.
It consists solely of members representing the shareholders
and makes recommendations to the Supervisory Board concern-
ing persons to be proposed for election as members of the
Supervisory Board representing the shareholders at the Share-
holders' Meeting. In doing so, the Nomination Committee
takes into consideration the requirements of German law on
equal participation of women and men in executive positions,
as well as the recommendations of the German Corporate Gov-
ernance Code. It also strives to ensure the fulfillment of the
overall requirements profile, including the skills profile, for the
entire Supervisory Board.
Nomination Committee
In addition, the Presidential Committee consults and decides
on questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. It supports and
advises the Chairman of the Supervisory Board and his Deputy,
and prepares the meetings of the Supervisory Board within the
limits of its responsibilities.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, whereby it takes into account the over-
all requirements profile it has defined to be filled, including
the diversity concept, as well as the Supervisory Board's target
for the proportion of women on the Board of Management.
It submits proposals to the Supervisory Board on the design of
the remuneration system for the Board of Management and
on the appropriate total individual remuneration of its members.
In this context, it follows the relevant recommendations of
the German Corporate Governance Code. The Presidential
Committee is also responsible for the Board of Management
members' contractual affairs. In addition, it decides on the
granting of approval for sideline activities of the members
of the Board of Management, reports to the Supervisory Board
regularly and without delay on consents it has issued, and
once a year submits to the Supervisory Board for its approval a
complete list of the sideline activities of each member of the
Board of Management.
The Presidential Committee is composed of the Chairman of the
Supervisory Board, his Deputy, and two other members, who
are elected by a majority of the votes cast by the members of
the Supervisory Board.
Presidential Committee
The Supervisory Board has formed four committees, which per-
form to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board. The committee chairpersons report to the entire
Supervisory Board on the committees' work at the latest in the
meeting of the Supervisory Board following each committee
meeting. The Supervisory Board has issued rules of procedure
for each of its committees. Those rules of procedure can be
viewed on our website at daimler.com/dai/rop. Information
on the current composition of these committees can be
viewed at daimler.com/dai/sbc and is also available on
page 55 of the Annual Report 2018.
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the
employees and of the members representing the shareholders
with the members of the Board of Management. The Supervisory
Board meetings during the reporting year once again included
so-called executive sessions on a regular basis for discussions
of the Supervisory Board in the absence of the members of
the Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls
or video conferences. However, this is not the rule.
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities and
the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
daimler.com/dai/rop.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
196
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast by the members of the
Supervisory Board. The Chairman of the Supervisory Board is
not simultaneously the Chairman or a member of the Audit
Committee. The Chairman of the Supervisory Board attends
the meetings of the Audit Committee as a guest.
As described in the report of the Supervisory Board on
198
Overall requirements profiles for the
composition of the Board of Management
and the Supervisory Board
200
Technical compliance
whose specific form could cause a conflict of interest.
⚫ nor a business or personal relationship to the Company
or its boards
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
At least half of the members of the Supervisory Board
representing the shareholders should have
In order to ensure sufficient internationality, for example
by means of many years of international experience, the
Supervisory Board has set a target of a proportion of at least
30% of international members representing the shareholders,
and the resulting proportion of at least 15% of the entire Super-
visory Board. Irrespective of the many years of international
experience of a large majority of the shareholder represen-
tatives on the Supervisory Board, this target is currently
significantly overachieved with 30% for the entire Supervisory
Board due to the international origins of Bader Al Saad,
Sari Baldauf, Petraea Heynike, Marie Wieck and Dr. Paul
Achleitner on the shareholders' side (50%) and Raymond
Curry on the employees' side.
A sufficient generational mix among Supervisory Board
members is also to be taken into account in appointment
decisions. At least eight members of the Supervisory
Board should be 62 years of age or younger at the time of
their election or reelection. Among the current members
of the Supervisory Board, all except Sari Baldauf, Petraea
Heynike, Dr. Manfred Bischoff, Dr. Clemens Börsig,
Dr. Jürgen Hambrecht and Dr. Bernd Pischetsrieder (i.e. 14
members) were 62 or younger when they were elected
for their current term of office.
The rules of procedure of the Supervisory Board stipulate that
candidates for election who are to hold the position for a
full term of office should generally not be over the age of 72
at the time of election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulating
a strict upper age limit and instead decided in favor of a
flexible general limit that leaves scope to appropriately assess
each individual case, keeps the range of potential Supervisory
Board candidates sufficiently broad, and allows reelection. In
deciding to propose Dr. Manfred Bischoff for reelection as
a shareholder representative on the Supervisory Board at the
Shareholders' Meeting in 2016, it made use of this scope
after careful consideration and proper assessment. All other
members of the Supervisory Board and the candidates Joe
Kaeser and Dr. Bernd Pischetsrieder, who are to be proposed
for reelection at the 2019 Annual Shareholders' Meeting,
will not have reached the age limit at the time of their election.
The gender composition of the Supervisory Board meets
the legal requirement stipulating that at least 30% of the
members of the Supervisory Board must be women and
at least 30% must be men. The Supervisory Board currently
has three women who represent shareholders and three
women who represent employees. The proportion of women
is thus 30% among the shareholder representatives, the
employee representatives and the Supervisory Board as a
whole.
The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical training
or education program or possess specific technological
knowledge in fields such as information technology (including
digitization), chemistry, mechanical engineering or electrical
engineering. Decisions related to the composition of the
Supervisory Board should also take into account the fact that
it may be necessary for members to obtain new skills and
knowledge in order to be able to address product and market
developments. Irrespective of the specific knowledge in the
above-mentioned areas acquired by many members of the
Supervisory Board in other functions, Dr. Jürgen Hambrecht,
Dr. Bernd Pischetsrieder, Marie Wieck, Dr. Frank Weber and
Roman Zitzelsberger (three shareholder representatives
and two employee representatives) have relevant university
degrees, while another three employee representatives
have completed vocational training in the above-mentioned
fields or similar areas.
The requirements profile for the Supervisory Board currently
includes the following aspects in particular:
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The requirements profile for the Supervisory Board of Daimler
AG also aims for a Supervisory Board as diverse and mutually
complementary as possible. The Supervisory Board as a whole
shall understand the Company's business model and also
possess the knowledge, skills and experience needed to properly
execute its task of supervising and advising the Board of
Management, in particular, specialized knowledge in the areas
of finance, accounting, annual audits, risk management,
methods of internal control and compliance. In general, the
members of the Supervisory Board should complement
one another with regard to their specialist knowledge and
professional experience in such a manner as to ensure that
the Supervisory Board can utilize the most broadly based wealth
of experience and expertise possible when making decisions.
The Supervisory Board also views the diversity of its members
in terms of age, gender, internationality and other personal
attributes as an important foundation for effective cooperation.
The foundation for Supervisory Board decisions regarding
proposals on candidates for election at the Shareholders'
Meeting is always the Company's interests under consideration
of all circumstances in each individual case.
Supervisory Board
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 199
The aspects described above are to be taken into consideration
when making Board of Management appointments. On the
basis of a target profile that takes into account specific qualifi-
cation requirements and the aforementioned criteria, the
Presidential Committee creates a shortlist of available candidates
whom it interviews. It then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. Decisions regarding appointments
to the Board of Management are always governed by the Com-
pany's interests under consideration of all circumstances
in each individual case.
The rules of procedure of the Board of Management stipulate
that no member of the Board of Management may be a
member of more than three supervisory boards of listed
companies outside the Daimler Group or of similar boards
or committees at companies outside the Daimler Group that
have comparable requirements. This stipulation has been
met. The only listed company in which Hubertus Troska is a
member of a supervisory board or similar board outside
the Daimler Group is BAIC Motor Corporation Ltd. His other
board memberships are at joint ventures that fall within
his areas of responsibility.
Decisions related to the composition of the Board of Man-
agement should also take into account internationality
in terms of varied cultural backgrounds or international
experience through assignments abroad lasting several
years, whereby if possible, at least one member of the Board
of Management should come from a country other than
Germany. Irrespective of the many years of international
experience of a large majority of members of the Board
of Management, this target is currently overachieved due to
the international origins of Renata Jungo Brüngger and Ola
Källenius.
In addition, a sufficient generational mix among Board of
Management members is to be taken into account in
appointment decisions, whereby if possible at least three
members of the Board of Management should be 57
years of age or younger at the beginning of their respective
term of office. Five members of the Board of Management -
Renata Jungo Brüngger, Ola Källenius, Britta Seeger, Hubertus
Troska and Bodo Uebber - met this requirement as of
December 31, 2018.
In accordance with the recommendations contained in the
current version of the German Corporate Governance Code,
the Supervisory Board has set an age limit for members of
the Board of Management. As a rule, 62 years of age serves
as orientation for age-related retirement. When it set this
age limit, the Supervisory Board deliberately decided in favor
of a flexible rule allowing the required scope for the appro-
priate assessment of the circumstances of each individual
case. Seven of the eight Board of Management members
are younger than the age limit. Dr. Dieter Zetsche was older
than the age limit when he began his current term of office
in January 2017. The Supervisory Board nevertheless reap-
pointed Dr. Zetsche as Chairman of the Board of Man-
agement. This decision was taken in the best interest of the
Group in that it enabled the continuation of leadership at
the top executive level that is needed to ensure the sustained
success of the Group.
In order to meet legal requirements on the equal representa-
tion of women and men in executive positions, the Super-
visory Board defined on December 8, 2016 a target of 12.5%
for the proportion of women on the Board of Management,
with a deadline of December 31, 2020. This means that of the
eight current members of the Board of Management, at least
one member must be a woman. The Board of Management
currently has two female members, Renata Jungo Brüngger
and Britta Seeger. This means the proportion of women on the
Board of Management is currently 25%.
The members of the Board of Management should have
different educational and professional backgrounds, whereby
at least two members should have a technical background.
With Dr. Dieter Zetsche and Wilfried Porth, the Board of Man-
agement currently has two members who are engineers.
Bodo Uebber is an industrial engineer. Since taking over as
Head of Group Research & Mercedes-Benz Cars Development
on January 1, 2017, Ola Källenius has sustainably displayed the
expertise he acquired in various technical management
positions within the Group.
The requirements profile for the Board of Management currently
includes in particular the following aspects, which are to be
taken into account to the greatest extent possible when making
decisions on appointments to the Board of Management:
The requirements profile for the Board of Management of
Daimler AG aims for a Board of Management with excellent
leadership skills that is as diverse and mutually supportive
as possible. The Board of Management as a whole should
possess the knowledge, skills and experience required for the
proper execution of its tasks and be composed of members
whose varied personal backgrounds and experiences ensure that
the Board as a whole also embodies the desired management
philosophy. Decisions regarding appointments to specific posi-
tions on the Board of Management are always governed by
the Company's interests under consideration of all circumstances
in each individual case.
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. For this reason, the Company is required
to describe these concepts in its declaration on corporate gov-
ernance, and to also explain the aims of the diversity
concepts, the manner in which they are implemented and the
results achieved with them in the financial year. The Super-
visory Board has combined the diversity concepts with the
requirements of German legislation on equal participation
of women and men in executive positions and the specific
targets for the composition of executive management bodies
as defined by the recommendations in the current version of the
German Corporate Governance Code. These combined
requirements are presented in the overall requirements profiles
for the composition of the Board of Management and the
Supervisory Board described below. The requirements profiles
also serve as the basis for long-term succession planning.
They are reviewed each year, also taking into account changes
that may have been made to the German Corporate Gover-
nance Code.
In accordance with applicable law, the Supervisory Board is to
be composed so that its members together are knowledgeable
about the business sector in which the Company operates.
221
Board of Management
208
205
Sustainable corporate governance
Our sustainability objectives and their management are part
of our corporate governance system and are also included in
the targets of our executives.
The Corporate Sustainability Board (CSB) is our central man-
agement body for all sustainability issues. The CSB is headed by
Renata Jungo Brüngger (the Board of Management member
responsible for Integrity and Legal Affairs) and Ola Källenius
(the Board of Management member responsible for Group
Research & Mercedes-Benz Cars Development). The opera-
tional work is done by the Corporate Sustainability Office
(CSO), which consists of representatives from the specialist
departments and the divisions.
Integrity, compliance and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions. We view integrity and values-based
compliance as firm elements of our corporate culture and our
daily business activities - elements that contribute to our com-
pany's lasting success. The basis for this is our Integrity Code,
which defines guidelines for our everyday business conduct,
offers our employees orientation and helps them make the right
decisions even in difficult business situations. The Integrity
Code is supplemented by other in-house principles and guide-
lines.
The ten principles of the UN Global Compact provide a
fundamental guideline for our business operations. As a found-
ing member and part of the LEAD group, we are strongly
committed to the Global Compact. Our internal principles and
guidelines are founded on this international frame of reference
and other international principles, including the Core Labor
Standards of the International Labour Association (ILO), the
OECD Guidelines for Multinational Enterprises and the UN
Guiding Principles on Business and Human Rights.
Sustainability management in the supply chain
Our standards and requirements
Our Supplier Sustainability Standards, which are an integral
part of our conditions of business, define our requirements for
working conditions, human rights, environmental protection,
safety, business ethics and compliance. We urgently require our
direct suppliers of goods and services all over the world to
comply with these standards.
We expect our suppliers of production materials to operate
with an environmental management system that is certified
according to ISO 14001, EMAS or other comparable standards.
We also expect this of our suppliers of non-production mate-
rials on the basis of our risk assessments. With regard to animal
protection, we require our suppliers to comply with applicable
laws and regulations. We do not tolerate or support the unethi-
cal treatment of animals.
We demand that our direct suppliers commit themselves to
observing our sustainability standards, communicating them
to their employees and to their upstream value chains, and
then checking to ensure that the standards are complied with.
We support them in these activities by providing them with
targeted information and training and qualification measures.
The central information platform for suppliers is our Daimler
Supplier Portal.
Further information is available at: ④supplier.daimler.com
Supplier review
Our employees review new suppliers of production materials
to Global Procurement Trucks & Buses in high-risk countries
by means of sustainability-related on-site assessments. At
Mercedes-Benz Cars, new suppliers in less risk-prone countries
are also investigated by our procurement and quality employ-
ees, with a specific focus on their sustainability performance.
We also conduct a more thorough assessment where this
is necessary. The results of the assessment are discussed in
management committees and flow into decisions on whether
to award a contract.
To ensure that our direct suppliers comply with the sustain-
ability standards, we regularly conduct risk analyses. We
use regular database research and other measures to discover
any violations of our sustainability and compliance rules by
our current suppliers. We systematically follow up all reports of
violations. With the help of an online survey, we also question
our main suppliers about their sustainability management and
their communication of these requirements to their upstream
value chains. On the basis of the results, we define measures
to improve their sustainability performance.
E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
Through our initiative “The Road to Emission-free Driving"
and the reduction targets it sets for our fleet emissions,
we are helping to protect the planet from the effects of climate
change.
- SDG 13 - Climate Change
SDG 12 - Responsible Consumption and Production
By significantly reducing the use of primary raw materials
for electric drive systems and reinforcing the material cycles
of primary raw materials that are needed for our e-drive
system, we are setting the course for sustainable production
models in line with this SDG.
Environmental protection in production
We believe that a long-term sustainability strategy and effective
sustainability management are the preconditions for ensuring
that we continue to be one of the world's leading automobile
manufacturers in the future. Sustainability is therefore firmly
established as a fundamental principle of our corporate strategy
at the implementation level.
In order to identify and prioritize the sustainability aspects
that are relevant to our strategy, we regularly conduct a multi-
stage materiality analysis. This analysis combines our own
assessments with those of our stakeholders, who include our
shareholders and creditors, employees, customers and
suppliers, as well as governments, environmental and human
rights organizations and other stakeholders from civil society.
Their opinions are also always requested whenever we decide
on measures for expanding and adjusting the sustainability
aspects of our strategy.
In the year under review, we conducted a regular internal
assessment of current developments, which confirmed the
prioritization of key areas of action that we had established
in 2017.
In 2018, we continued to define the concrete details of the
Sustainability Strategy 2030 that we had formulated in the
previous year. As a result, the areas of action that had been
defined in 2017 were even more sharply focused with regard
to comprehensibility and clarity. Our activities related to
sustainability concentrate on the following focal topics:
Climate protection and air quality
Resource conservation
Livable cities
Traffic safety
We have established a complaint-management process that
enables individuals to draw attention to possible human rights
violations at suppliers. In this context, we work together
closely with the world employee committee. We bring together
all the available information and take action if the reports
are well-founded. The suppliers are requested to respond to the
accusations; after that, we assess the facts of the case and
take the necessary measures. This can lead to the termination
of a business relationship. However, it is not always productive
to end cooperation with a supplier immediately after a case of
misconduct. It often makes more sense to work together with
the supplier to improve the situation. This approach also bene-
fits the people at the location. In addition to the complaint-
management process, information on misconduct can always
be submitted to the BPO whistleblower system
established by Daimler.
Data responsibility
- Integrity, people and partnerships
With our strategy, we would like to help achieve the Sustain-
able Development Goals (SDGs) that were approved by the
United Nations in September 2015. Our areas of action and the
sustainability-related activities that underlie them support
the following SDGs in particular:
SDG 8 Decent Work and Economic Growth
By developing and implementing a risk-based management
approach to respecting and upholding human rights in
our own units and our supply chain, we support the imple-
mentation of decent work as defined by SDG 8.
-
SDG 9 Industry, Innovation and Infrastructure
Through the advanced development of automated and
autonomous driving and the expected benefits for safety and
climate protection, we demonstrate the long-term potential
of digital innovations.
SDG 11
Sustainable Cities and Communities
Daimler promotes sustainable mobility in urban areas
through its offerings in the areas of car sharing, ride hailing
and the multimodal linking of mobility services (Mobility as a
Service).
Human rights
page 217)
These focal points determine the structure of our sustainability
management activities and our annual sustainability reporting.
In addition, when we identified the material aspects to be
addressed by this non-financial report, we took the focal topics
of our sustainability strategy as our starting point. However,
in some cases, we emphasize different aspects because of the
divergent requirements set by the standards and laws that
are relevant to this report.
E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
222
Human-rights compliance
222
Employee Issues
210
Partnership with the employees
210
Statement on the Review of the
Non-Financial Report
224
High attractiveness as an employer
Anti-financial-crime compliance
210
212
Health management and safety at work
214
The information provided in this report is presented in conformity with the GRI
Standards of the Global Reporting Initiative, insofar as this complies with applicable
law. Some aspects are presented in accordance with internal guidelines and
definitions.
Information on our business model ( page 74 ff of Annual Report 2018) and on
non-financial risks connected with the aspects presented in this report (Risk
and Opportunity Report pages 156, 157 of Annual Report 2018) is provided in
the Combined Management Report in the Annual Report 2018.
Our strategy
Sustainability is one of the basic principles of our corporate strategy as well as a benchmark
for our success as a company. This approach means that we take advantage of the opportunities
associated with sustainability to enhance our business success, while including environmental
and social effects into our considerations.
Sustainability at Daimler
Further information on our sustainability activities can be found online at
A competitive workforce
204
209
daimler.com/sustainability and in our annual Sustainability Report, which can
be downloaded there as a PDF data file.
221
Data compliance
Mobility services
Programs such as "Skilled Worker in Focus" and the team
leader development program ensure that employees are exten-
sively qualified according to uniform standards. The partici-
pants are given the opportunity to obtain good career prospects
and plan concrete development goals. Our company's sus-
tained success is closely linked to the high quality of our man-
agers. That's why we focus especially on the development
of talented young managers. We validate the young talents'
leadership potential at our PV44 in-house assessment center
and in the team leader development program, both of which
use a uniform standard for all of our locations. The Board of
Management member responsible for human resources regu-
larly receives reports about the measures and results of our
training activities and the development paths of our trainees.
We had 8,061 trainees throughout the Group at the end of 2018
(2017: 8,097). Of this number, 4,009 were in a training program
at Daimler AG (2017: 4,409). During the year under review,
1,265 (2017: 1,278) young people began an apprenticeship at
Daimler AG; 1,191 (2017: 1,197) were hired after completing
their apprenticeships. The costs for vocational training for
Daimler AG totaled €124 million in 2018 (2017: €114 million).
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
214
2 Tragically, an employee suffered a fatal work-related accident in
Germany in 2018.
1 Reporting rate of Daimler production locations (Mercedes-Benz
Cars, Daimler Trucks, Daimler Buses, Mercedes-Benz Vans)
worldwide: > 99%.
1
0
as a result of work-related accidents
Number of deaths of third-party employees
7.7
Number of employee deaths as a result of
work-related accidents²
1
1
accidents that resulted in at least one lost
day per 1 million hours of attendance)
Rate
106
113
Number of deaths as a result of
work-related accidents
Accident downtime
(worldwide, number of lost days per 1 million.
hours of attendance)
7.5
0
1
We encourage all employees who take parental leave to sub-
sequently return to their jobs at the company because we
value their knowledge and experience. In Germany, we offer
about 705 places in daycare centers in close proximity to
our company locations as well as about 200 reserved places
at cooperating facilities. In addition, we cooperate with a
third party that assists employees in finding childcare providers.
(worldwide, number of work-related
Climate protection
Target
The Paris accord on climate protection aims to limit global
warming to significantly less than two degrees Celsius compared
with the preindustrial level. It requires a significant intensifi-
cation of measures, in particular more stringent CO2 targets for
all countries and sectors. We are in the process of deriving
specific targets for all of our business divisions regarding the
reduction of our products' CO2 emissions. These targets
refer to the period until 2030 and will be binding on the Daimler
Group worldwide.
Our current reduction target for driving operation (tank-to-wheel)
is -44% (2007 - 2021) for cars in the new-vehicle fleet in Europe.
We are steadily continuing our efforts to reach this target.
Measures
Our goal is to also safeguard mobility for the generations to
come. That is why we strive to offer our customers safe, efficient
and low-emission vehicles and services. A core element of our
approach here is to achieve a drive-system mix that is tailored
to the market requirements. Our "Road to Emission-free Driv-
ing" initiative defines the primary focal points for developing new,
extremely fuel-efficient and environmentally friendly drive-
system technologies at all of our automotive divisions:
-
further development of our vehicles equipped with state-
of-the-art combustion engines in order to achieve significant
reductions in consumption and emissions,
further efficiency increase through hybridization, and
electric vehicles with battery and fuel-cell drive.
Protecting the environment is a primary corporate objective of our Group. Environmental protection
is not separate from other objectives at Daimler, but is an integral component of a corporate strategy
aimed at long-term value creation. The environmental and energy-related guidelines approved by
the Board of Management define the environmental and energy-related policy of the Daimler Group.
They also express our commitment to integrated environmental protection that addresses the
underlying factors with an impact on the environment, assesses the environmental effects of pro-
duction processes and products in advance, and takes these findings into account in corporate
decision-making.
Due diligence processes
In a committee situated directly below the Board of Manage-
ment level, the managers responsible for each vehicle model
series evaluate the results of this monitoring process and
decide on any necessary corrective measures. If corrections are
needed, the managing body of the respective division is included
in the decision-making. If the situation continues to escalate,
the responsible member of the Board of Management is also
included.
The CO2 process in vehicle development
All of the divisions integrate all vehicle-related goals, including
those that are relevant to the environment, into their vehicle
development process according to a similar pattern. The chart
7 E.01 shows the Mercedes-Benz Development System (MDS)
as an example. In many markets there are fleet targets for the
fuel consumption and CO2 emissions of cars and light commer-
cial vehicles - in other words, overall targets for all the new
vehicles sold in a given market. The corresponding controlling
process for reaching the CO2 fleet consumption target for
Cars Europe (EU 28) is shown as an example.
The key factors for determining the target values for fuel con-
sumption and CO2 emissions are the technological possibilities,
the legal requirements including the fleet targets for fuel
consumption, and customer wishes. The body responsible for
complying with these goals and for transparency regarding
the target attainment level is the CO2 steering committee, which
is headed by the Board of Management member responsible
for Group Research and Mercedes-Benz Cars Development.
The fleet values for CO2 emissions are calculated on the basis
of the fuel economy numbers of the vehicles available on the
market and the fuel economy specifications and prognoses for
vehicles that are still in the development phase. These values
are combined with the sales forecasts in order to arrive at the
projected fleet values for CO2 emissions.
The actual values may deviate from the projected target values
because of various external factors such as alterations in the
sales structure, changes in the political framework conditions
or changes in the fuel consumption target values of the vehicles
that are still in the development phase. In case of a deviation,
the CO2 steering committee organizes an assessment of various
options and then decides on the measures to be initiated.
If the need for adjustment is especially urgent, the process is
escalated to the responsible managing body. From a strategic
standpoint, this process takes place over a period of approxi-
mately ten years.
E.01
Vehicle product creation process for individual vehicles
Architecture Project
An environmental protection guideline passed by the Board
of Management formulates our approach: We develop products
that are especially environmentally friendly and energy-efficient
in their respective market segments. A vehicle's environmental
impact is largely decided during the first stages of its devel-
opment. The earlier we integrate environmentally responsible
product development (Design for Environment, DfE) into the
development process, the more efficiently we can minimize the
impact on the environment. That is why continuous improve-
ments in environmental compatibility are a major requirement
in the creation of the product performance specifications. For
every vehicle model and every engine variant, we have require-
ment specifications that define the characteristics and target
values that must be achieved. These specifications include
requirements concerning fuel consumption and emissions limit
values for CO2 and nitrogen oxides. During the development pro-
cess we regularly monitor compliance with these specifications.
Environmental Issues
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
206
Incidence of accidents
Number of accidents (worldwide)
Incidence of accidents
3,152 2,766
2017
2018
25.0
30.0
25.0
25.0
8.7
11.8
Accident figures¹
E.05
Share of women on the Supervisory Board
Share of women on the Board of
Management
Share of women at the first management
level below that of the Board of
Management (Daimler AG)
11.9
14.4
Board of Management (Daimler AG)
management level below that of the
Qualifications
We provide our staff with training and continuing education
opportunities for their professional and personal development
throughout their careers. At least once a year, employees
discuss qualification topics with their managers and agree on
appropriate measures. The company agreement on qualification
regulates continuing education at Daimler AG. This agreement
also stipulates that employees can leave the company for up
to five years in order to learn additional skills and guarantees
that they can return to the company. In 2018, around 430
employees availed themselves of this opportunity.
As a global automotive company, we operate in an environment that is subject to a variety of
societal, social and political influencing factors. In order to ensure we can continue operating effec-
tively in the future, we need to make our company's interests understandable to governments
and society, and must also address the concerns of groups within society. We therefore regularly
share information with our stakeholders and communicate our interests in an open and fair dialog
with governments and political representatives.
The Daimler Corporate Academy program helps the Group
develop a new management culture and world of work. In
2018, the Corporate Academy enabled a total of 65,800 spe-
cialized employees and managers worldwide to continue
their personal and professional development. At Daimler AG,
we spent €123 million on the training and qualification of
our employees in the year under review (2017: €121 million).
On average, every employee spent 3.2 days on qualification
courses in 2018 (2017: three days).
Along with technical and commercial apprenticeships and
courses of study at the Cooperative University, we also conduct
various activities that address young talents. We offer
extensive possibilities to personally interact with the company
via social media, hackathons, competitions and internships.
After completing their college degrees, graduates can directly
join our company or launch their careers at Daimler by taking
part in INspire, a series of varied international talent training
programs. Each one of our talent training programs offers
cross-unit insights, first-class training and personal coaching.
For example, "INspire - the Leaders' Lab” is designed for
young professionals with initial practical experience who would
like to specifically prepare for management positions at the
company.
Daimler has offered an in-house trainee program called CAReer
since 2007. The talent training program "INspire - the Leaders'
Lab", which replaced CAReer in 2018, is directed at participants
who are more focused on careers in management. In 2018 we
hired 23 trainees through our INspire program. About 48% of the
trainees were women and 40% were international participants.
In addition, 40 participants, including 24 women and 17 inter-
national candidates, began their CAReer program during the
transition period.
In Germany, we recruit most of the young talent we need
through our industrial-technical and commercial apprentice-
ships and the courses of study at the Cooperative State
University, which had more than 180 students in 2018.
E.04
Share of women
Daimler takes a holistic approach to securing young talent. Our
STEM educational initiative, “Genius", offers many activities
that get children and young people enthusiastic about technol-
ogy topics. Genius also helps teachers make their classes
varied and future-oriented by offering them practice-related
instructional materials, interactive technology workshops
and advanced training courses.
In percent
2018
2017
19.1
18.5
Share of women (Daimler AG)
16.6
Share of women (worldwide)
Securing young talent
Once every quarter, the Board of Management discusses our
diversity management activities and the associated results.
We also hold discussions with external stakeholders as part of
our involvement in the Diversity Charter, of which we are a
founding member.
The age differences at the company will rise in the future due
to the increase in the retirement age and the extension of
people's working lives. The average age of our global workforce
in 2018 was 42.7 years (2017: 42.8). Our employees at Daimler
AG were 44.8 years old on average (2017: 44.7). Demographic
development will cause the average age to continue to rise
in the years ahead. However, the proportion of older employees
will decrease again over the long term because many baby
boomers will retire from the company. We consider this trans-
formation to be an opportunity, and we are adjusting the
framework conditions accordingly. Our generation management
system focuses on measures for maintaining the performance
and health of younger and older employees as well as for pro-
moting cooperation between people of different ages.
In 2018, around 3,800 employees at Daimler AG availed
themselves of the opportunity to take parental leave. Moreover,
around 400 employees took advantage of the opportunity to
take off work for a prolonged period. At the end of 2018, more
than 250 employees were working in job-sharing positions at
the team, sub-department and departmental levels.
Leadership 2020 - further development of the
management culture
Our business is changing at a rapid pace. In order to remain
successful in the future, we are changing our management cul-
ture and the way we cooperate. This is why we launched the
Leadership 2020 initiative in 2016. Employees from more than
23 countries and all levels of management are currently
working on Daimler's future management culture. Guidance is
provided by new management principles that, among other
things, make the company faster and more flexible and boost
its innovative potential. Procedures, processes and struc-
tures are being called into question and changed in eight "game
changers." In its meetings, the Board of Management of
Daimler AG regularly discusses the initiative's progress and
decides which measures need to be taken.
Successful employee survey
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees,
and what we need to do to improve the company in the future.
The survey conducted in 2018 was based on a completely
new concept. In September 2018, nearly 300,000 employees
in more than 50 countries were invited to participate in the
survey and send us their feedback. The Group-wide participation
rate of 80 percent was the highest rate posted to date for a
Group-wide employee survey at Daimler. This outstanding par-
ticipation rate underscores our employees' interest and their
willingness to actively help shape the company's further devel-
opment. 75% of our employees who participated in the survey
reported that they are satisfied or very satisfied with Daimler
as an employer and that they are proud to work at Daimler.
Our employees' great loyalty to the company is also expressed
by the amount of time they have worked for Daimler. During
the year under review the average number of years our employ-
ees have worked for Daimler decreased slightly to 15.8 years
(2017: 16.1 years). In Germany, employees had worked for the
Group for an average of 19.4 years at the end of 2018
(2017: 19.5 years). The comparative figure for Daimler AG was
20.2 years (2017: 20.3 years). Daimler employees outside
Germany had worked for the Group for an average of 10.6 years
(2017: 11.0 years). In 2018, our labor turnover rate amounted
to 4.9% worldwide (2017: 5.1%).
A competitive workforce
We can only be successful if we have a skilled and high-per-
forming workforce. We therefore aim to continuously develop
our employees and make sure they stay competitive. We are
pursuing this goal by implementing measures in four overarch-
ing areas of action: diversity management, the securing of
young talent, qualification, and health management and occu-
pational safety.
Diversity management
Daimler promotes the diversity and heterogeneity of its
employees, because they serve as the basis of a high-perform-
ing company. As a result, diversity management is included
in our corporate strategy. The various skills and talents of our
workforce enable us as a global company to effectively
reflect the diversity of our customers, suppliers and investors
around the world.
Daimler's more than 298,000 employees from over 160 coun-
tries provide the Group with a vibrant mixture of cultures and
ways of life. We utilize this diversity to put together optimized
teams. Most of our managers abroad come from the respective
regions. We promote the cultural diversity of our employees
with worldwide staff assignments, mentoring, intercultural skills
training and targeted recruiting measures. International candi-
dates account for more than one third of the people recruited
through our previous CAReer trainee program.
Our aim is to increase the share of women in management
positions to at least 20% by the year 2020. Currently more than
18% of our executives in middle and upper management are
women. For Daimler AG, we signed a company-wide agreement
for the advancement of women. It stipulates a target corridor
for the proportion of women in the total workforce, in vocational
training and in Level 4 and 5 management positions. In order
to achieve our goals, we have installed an ongoing internal
reporting and planning system.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
213
16.1
Share of women in Level 4 management
positions (Daimler AG)
19.2
Dialog at the Group level
We consider it important to engage in a continuous dialog with
all of our interest groups so that we can bring together various
perspectives on our involvement with sustainability issues,
address future trends early on and share experiences. We also
want to engage in constructive discussions of controversial
themes at a very early stage. We always focus on conducting a
dialog that is successful and productive for both sides. In order to
conduct this kind of dialog, we need to identify our stakehold-
ers. We define our stakeholders as individuals and organizations
that have legal, financial, ethical or ecological expectations
regarding Daimler. One of the criteria for identifying and weight-
ing stakeholders is the extent to which a person or group is
affected by our company's decisions or, conversely, is taken
into accout in such decisions. Our primary stakeholders are
our shareholders, creditors, employees, customers and suppli-
ers. However, we also communicate regularly with civil groups
such as NGOs, as well as associations, trade unions, the
media, analysts, municipalities, residents and neighbors in
the communities where we operate and representatives
of science and government. 7 E.06
Stakeholder involvement
Furthermore, company agreements at Daimler AG enable
employees to suspend their careers for several years for
a qualification program or a sabbatical or to provide home
care with the promise that they can return to Daimler AG
afterwards.
Social Issues
215
E | NON-FINANCIAL REPORT | SOCIAL ISSUES
The Board of Management receives a Health & Safety report at
regular intervals and is, among other things, given monthly
updates about the frequency of accidents. A Group crisis unit,
in which the Board of Management is also involved, enables
Daimler to respond quickly to various incidents such as serious
accidents and pandemics.
Every organizational unit within the Daimler Group has to
approve and pursue occupational safety objectives on a regular
basis in accordance with our globally valid occupational health
and safety guidelines and occupational safety strategy and the
results of internal audits and reviews. The content and criteria
of our internal occupational safety management system corre-
spond to the standards of ISO 45001 and are regularly
updated.
Occupational safety is firmly embedded at all levels of Daimler
and is addressed by an extensive portfolio of measures for
the prevention of work accidents, work-related illnesses and
occupational diseases. Our Center of Competence Safety
creates the associated Group-wide guidelines. We have stan-
dardized key occupational health and safety processes in
order to enable the creation and advancement of integrated
processes and systems. Every manager at Daimler is respon-
sible for ensuring that all internal guidelines and legal require-
ments for occupational health and safety are complied with.
Our Health & Safety unit is responsible for occupational health
and safety, company health-promotion efforts, ergonomics,
counseling service and integration management. Health man-
agement and occupational safety are also governed by our
risk management systems. Our company health promotion is
aimed at motivating employees to develop healthy lifestyles
and reinforcing their sense of personal responsibility regarding
health issues. This objective is promoted worldwide with
the help of campaigns, counseling and qualification offerings, as
well as therapeutic and rehabilitation measures. All of our
plants in Germany have health centers on their premises or
cooperate with health centers located near the plants.
As part of Daimler AG's health management approach, we
develop and implement anticipatory solutions that range from the
job-related "Daimler GesundheitsCheck" and the ergonomic
design of workstations to the IT system that makes it easier to
permanently reintegrate employees suffering from limitations
imposed by their health.
We want to maintain our employees' health and physical
well-being for the long term. To this end, the Daimler Group has
uniform preventive healthcare standards in place worldwide.
the workplace
Health management and safety at
In order to implement the dialog with our stakeholders through-
out the Group, we have defined clear areas of responsibility,
communication channels and specific dialog formats. The pro-
active dialog with our stakeholders is initiated by experts
from the Integrity and Legal Affairs department and coordinated
by our corporate sustainability bodies.
Our production locations are responsible for the qualification
of managers and specialized employees in manufacturing.
The Global Training unit safeguards and increases the skills of
our employees at the Mercedes-Benz sales organization. In
2018, more than 800 Mercedes-Benz trainers in over 80 coun-
tries instructed approximately 210,000 participants. A total
of 1.3 million training courses are held each year.
One essential tool of the dialog with our stakeholders is the
Daimler Sustainability Dialogue, which has been held annually
in Stuttgart since 2008 and brings various stakeholder groups
together with members of our Board of Management and exec-
utive management. The participants attend a range of work-
shops, where they discuss issues related to sustainability and
work together to address them. The Daimler representatives
responsible for specific themes take up the impulses from the
discussions and work together with the stakeholders to incor-
porate these ideas into their work throughout the year. They
then report at the event in the following year on the progress
made in the interim. We held our eleventh Daimler Sustain-
ability Dialogue in Stuttgart during the year under review. The
evening before the event was devoted to sustainability issues
related to electric mobility. In a creative ideation workshop
called "Smart Cities," experts from various units worked out
sustainable solutions to everyday urban problems. On the
main day of the event, about 200 stakeholders split up into eight
working groups to discuss themes such as data ethics, the
market penetration of electric vehicles and digitalization in the
work environment.
The Advisory Board for Integrity and Corporate Responsi-
bility has been an important source of input for sustainability
activities at Daimler since 2012. The board's members - exter-
nal experts from the fields of science and business, as well
as from civic organizations - utilize an external point of view to
offer critical and constructive support for the integrity and
corporate responsibility process at Daimler. The board meets
at regular intervals and holds discussions with members of
the Board of Management and other Daimler executives. Its
members have extensive experience and possess a variety
of specialized knowledge regarding environmental and social
policy, various human rights and ethical issues, and the devel-
opment of transport, traffic and mobility. During the year under
review, the Advisory Board addressed, among other things,
the further development of our culture of integrity, electric mobil-
ity, mechanisms for dealing with complaints, mobility services
and data responsibility.
18.0
Women in senior management positions
Levels 1-3 (worldwide)
We also promote job sharing, in which two employees share
the same task or position and work together up to 60 hours per
week. This provides managers in particular with a means of
reconciling the needs of work and family.
We also boost employees' flexibility and self-determination by
giving them the opportunity for mobile working. An associated
company agreement has been in force at Daimler AG since
December 2016. The agreement gives employees the right to
mobile working if the task permits.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve
top performance and support their efforts to do so, rather than
focus on their mere presence at work. For this reason, we
also seek to improve performance by helping employees and
managers reconcile their professional and personal respon-
sibilities.
Flexible working arrangements
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212
Working conditions are being increasingly influenced by
working hours, workplaces, the work environment, the level of
employee empowerment and a state-of-the-art management
culture. The length of our employees' workweek is generally
regulated by the company or by a collective bargaining
agreement. In Germany, overtime is only performed within the
framework of a requirements planning forecast and has to
be approved by the employee representatives. In general, we
allocate working times in such a way that remuneration
remains stable even if the amount of work sometimes fluctuates.
This is made possible by a time-account system.
18.8
decision
In addition to the formally structured dialog, we receive inquiries
from stakeholders concerning various sustainability-related
topics. These inquiries are addressed directly by specific spe-
cialist departments and units in a decentralized manner. This
approach brings our stakeholders closer to our business oper-
ations and enables specialized knowledge to be directly incor-
porated into the dialog. Individual inquiries from stakeholders
are also reported on in the meetings of our sustainability
bodies and committees and are thus taken into consideration in
the strategic decisions made by our sustainability management
organization. Our sustainability bodies also coordinate dialog
with our stakeholders on interdisciplinary issues.
We also utilize online and print media, discussions with
experts, workshops and local and regional dialog events for
our dialog with stakeholders.
We also maintain contact with representatives from civic
organizations and other companies, and we participate in various
associations, committees and sustainability initiatives. The
most important initiatives here are the UN Global Compact and
Econsense a German business forum for sustainable develop-
ment.
As a global company, we have set ourselves the goal of imple-
menting sustainability standards at our business units and
specialist departments around the world. To this end, we orga-
nize Daimler Sustainability Dialogue events in other countries
as well. Such dialog events have been held in China, Japan, the
United States and Argentina. During the year under review,
more than 200 stakeholders attended the sixth Daimler Sus-
tainability Dialogue in Beijing, where they discussed topics
relating to sustainable production, innovation, artificial intelli-
gence and integrity and legal affairs.
start
Basic development of the overall
Concept Initial
specifica- specifica-
0 010
001 101
0
01
110 10
011 01
1001 101
0010 1101
11000010.
Digitalization
Operational Excellence in HR
And we act as one team
100
0101
10100
01111
00011
1000001
001111001
HR
Profitability
1 111
...ensure continuous
10
100
General figures regarding the development of our workforce
numbers can be found in the Workforce section of the Manage-
ment Report.
pages 113f
In order to recruit, develop and retain highly qualified staff, we
are continuously striving to further improve our attractiveness
as an employer. Because our executives and managers should
motivate their employees to achieve top performance, it is
crucial that we equip them with outstanding leadership skills.
In addition, we want to take on social responsibility and let
diversity flourish in our global company.
A professional HR organization and efficient operating
processes form the basis for the implementation of these over-
arching goals, from which we have derived key areas of
action. The main control tool we use is our HR Scorecard, which
uses key performance indicators concerning demographic
development, diversity and sick rates to provide information
about the sustainability of human resources measures and pro-
cesses in the individual areas of action.
E.03
HR Strategy 2025
Daimler-Best Team
Competitive
workforce
...attract, develop and retain
the right people
We provide innovative & efficient HR solutions to...
Forward-looking,
skilled leadership
...enable our management to
shape the framework of the future
Employer of choice
...foster a diverse, empowering
and inspiring culture
00
01
10
011
110
0100
competitiveness
0
11
Basis
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
211
Partnership with the employees
We want to work together with our employees as partners,
respect their interests and get them involved in the company by
continuously providing them with information and enabling
them to participate in decision-making processes. To achieve
these goals, we are guided not only by the International Labour
Organization's (ILO) work and social standards but also by our
Principles of Social Responsibility. In these principles, we com-
mit ourselves, among other things, to respecting key employee
rights - from the provision of equal opportunities to the right
to receive equal pay for equal work. Violations of these princi-
ples can be reported to the whistleblower system BPO, which
addresses further investigations to the pertinent units.
Our employees also have the right to organize themselves
in labor unions. We also ensure this right in countries in which
freedom of association is not legally protected. We work
together constructively with the employee representatives and
the trade unions. Important partners here include the local
works councils, the European Works Council and the World
Employee Committee (WEC). We have signed collective bar-
gaining agreements for all of the employees at Daimler AG, and
this also applies to the majority of our employees throughout
the Group.
In a variety of committees, we regularly inform the employee
representatives about the economic situation and all of the
key changes at Daimler AG and the Group. We conclude agree-
ments with the respective workers' representative bodies
concerning the effects of our decisions on the employees. In
Germany, comprehensive regulations to this effect are
contained in the Works Council Constitution Act. We notify our
employees about far-reaching changes early on.
One result of the ongoing dialogue between the corporate
management and the employees' association was the renewal
of the company-wide "Safeguarding the Future of Daimler"
agreement in 2015. This accord, which is valid until 2020, en-
ables the company to respond to the "future plan" agreements
that have been reached at many of the locations of Daimler AG
with concrete investment commitments, flexible personnel
assignment models and the possibility of selectively increasing
staffing requirements. As a result, we can make use of market
opportunities and better absorb fluctuations in demand. The
company-wide agreement essentially protects all of the employ-
ees of Daimler AG in Germany from being laid off until the
end of 2020.
The expansion of this Safeguarding the Future agreement is
also an integral part of “Project Future" for restructuring
our Group, and it is being implemented in close cooperation
with the employee representatives. If Project Future is imple-
mented, Daimler AG's Safeguarding the Future agreement will
be extended until 2029. As a result, terminations for opera-
tional reasons would be excluded on principle until December
31, 2029 for all employees who are affected by a transition
of operations resulting from the new Group structure and who
do not contest their transfer to the new organization.
High attractiveness as an employer
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that enables
outstanding performance and a high level of motivation and
satisfaction among our employees and managers.
Attractive and fair remuneration
We remunerate work in accordance with the same principles
at all our affiliates around the world. Our Corporate Compensa-
tion Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum requirements for
the design of the remuneration systems. Internal audits are
conducted on a random basis to make sure these conditions and
requirements are met. In our desire to offer salaries and
benefits that are customary in the industry and the respective
markets, we also give consideration to local market conditions
within the specified framework. The salaries are determined on
the basis of the employees' tasks and performance, and
in line with their qualifications and experience. In setting the
remuneration of the employees we are not guided by gender
or place of origin, but exclusively by the employee's job and
responsibility.
In cases where Daimler AG and its Group companies have
signed collective bargaining agreements, they often also offer
voluntary benefits that are agreed upon with the respective
employees' associations. These benefits primarily consist of
employer-funded retirement contributions as well as profit-
sharing agreements for the respective company. For example,
the eligible employees of Daimler AG will receive a profit
participation of €4,965 for 2018 (2017: €5,700). In addition,
our employees can avail themselves of a wide variety of sports
facilities and social amenities, ranging from daycare centers to
the counseling service for people in extreme situations.
In 2018 the Group spent:
€18,329 billion on wages and salaries (thereof Daimler AG:
€11,569 billion),
€3,332 billion on social welfare services (thereof Daimler AG:
€1,849 billion), and
€0.8 billion on retirement benefits for a workforce
numbering 298,465 on average (thereof Daimler AG:
151,879 employees).
Modern working conditions
Mission
pillars
Strategic
Mission
01
00
11
11
01 10
11 00
010
101
1011 011
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment
of our employees. More than 298,000 people promote our company's success worldwide by
contributing their concepts and ideas to their tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore
more than just an ethical and legal requirement for us - without them, we would not be able to
conduct our business successfully.
€ 1010
1101
0001
10110
001001
111110
110100
101000101
0101111010
Vision
10100 01010
Employee Issues
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210
207
Result
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 +Iceland)
increased to 132 (2017: 125) g/km (NEDC).
The transition from the NEDC to the WLTP as the legally stipu-
lated CO2 emission measurement cycle for individual vehicles
has led to a significant increase in our fleet emission values. At
the same time, the shift of sales from vehicles with diesel
engines to cars powered by gasoline engines, as well as a further
increase in sales of large SUVs and all-wheel-drive vehicles,
have contributed to a higher CO2 value for our fleet.
Because all vehicle models will have been certified in accor-
dance with the WLTP by September 2019, we expect only a
slightly lower CO2 value for our fleet in 2019, in spite of further
progress in reducing our vehicles' fuel consumption. Our vehi-
cle electrification measures are expected to lead to a signifi-
cant decrease in our fleet's CO2 emissions in 2020.
The new WLTP test cycle. Since September 2017, all of our
new car types in Europe have been certified according to the
Worldwide Harmonized Light Vehicles Test Procedure (WLTP).
This test procedure includes numerous changes compared to
the previous New European Driving Cycle (NEDC). The changes
include higher average and maximum speeds, more dynamic
handling, gliding inertial masses instead of inertia classes, a
smaller standstill share of total fuel consumption, and con-
sideration of special equipment and the quiescent current re-
quirement. Overall, these changes are leading to more real-
istic, but also higher, fuel economy values.
According to the legal requirements, until 2021 automakers
must calculate the CO2 emissions of their vehicle fleets in
Europe by using a predefined formula to convert the vehicles'
WLTP values back into NEDC values. This explains why every
new vehicle is certified according to the WLTP although the
European CO2 emission value of the automaker's fleet is
still indicated as the NEDC value. The legislators want to ensure
the comparability of the automakers' fleet values in the
period until 2022, when a new limit value will come into force.
We continue to work hard to meet all statutory CO2 require-
ments, including the very challenging EU limits for 2021.
However, reaching these fleet targets will depend not only on
offering appealing and highly efficient vehicles with electric
drives, but also on our customers' actually deciding to buy those
models. In order to optimally position ourselves in this respect,
we are systematically changing over our product range to the
latest engine generations, and are also systematically electrify-
ing our portfolio with plug-in hybrids and all-electric vehicles.
Clean air
Target
In addition to climate protection, the improvement of inner-city
air quality will continue to be an important environmental con-
sideration in the future. Traffic still accounts for a considerable
share of nitrogen oxide pollution near roads. Our fundamental
goal is to fulfill emission requirements as far in advance as
possible and to reduce potential risks for human beings and the
environment.
Measures
Cutting-edge technologies are enabling us to steadily reduce
the pollutant emissions of our cars and commercial vehicles. In
doing so, we have set our sights not only on conventional
gasoline and diesel engines but also on hybrid vehicles that
combine conventional and electric drive technologies.
The introduction of the new diesel engine families consisting
of the OM654, the OM656 and the OM608, as well as the
increasing electrification of drive systems, will greatly help us
to reach the emission targets.
Our plan for the future of diesel engines also includes the
development of software updates for a total of more than three
million vehicles owned by customers - significantly more than
one million of which are in Germany. With the updates, we are
improving the NOx emission performance of our vehicles
under real driving conditions by an average of 25 to 30%. Verifi-
cation is with the use of the measuring cycles approved by
the authorities (WLTC 1, 2, 3).
208
E❘ NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018 and by order of the
German Federal Motor Transport Authority (KBA), Daimler
is carrying out a mandatory recall of approximately 690,000
vehicles in Europe (including approximately 280,000 in
Germany). The great majority of these vehicles were already
covered by Daimler's program of voluntary service measures
announced in July 2017. These measures are being imple-
mented in close cooperation with Germany's vehicle regis-
tration agencies.
Daimler supports the German federal government's concept
for clean air and the safeguarding of individual mobility. By
means of an attractive incentive program in the defined priority
regions, we are accelerating the renewal of the vehicle fleet.
In this way, Daimler is making a significant contribution to the
German government's concept in order to avoid any dis-
advantages for drivers of diesel-powered cars.
= Quality gate
Customer appeal
Series support
measures
Principle suitability
tions
tions
Approval of
specifications
Launch of
body-in-white production
production test
Launch of
Job
No. 1
H
G
F
Following the coalition decision, in early October 2018, Daimler
also announced its intention to participate in a hardware retro-
fit program for diesel vehicles in the defined priority regions as
part of the German government's concept for clean air and the
safeguading of individual mobility. Within this context, Daimler
is prepared to cover the cost of a hardware retrofitting up to
a maximum value of €3,000 for Mercedes-Benz customers with
Euro 5 diesel vehicles in the defined priority regions. The
retrofitting must be developed and offered by a third-party
supplier and approved by the German Federal Motor Transport
Authority (KBA). In addition, it must demonstrably authorize
entry into certain cities, including driving on roads affected by
the driving ban. Daimler's aim is to promote the interests of
its customers by creating transparency as to which hardware
solutions third-party suppliers can offer, and when.
E
C
B
A
vehicle, validation modules
Vehicle-specific integration and validation
Functionality
Testworthiness
Series production
suitability
Concept suitability
D
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Increasing the mobility fund. We have significantly increased
our planned contribution to the "Immediate Action Program
for Clean Air," which was agreed on at the National Forum Diesel
in August 2017. Together with BMW and Volkswagen, we
are now providing the automobile industry's entire share of the
funding.
In order to assess the effects of modern diesel engines in the
fleet and to factor in possible future driving bans, we have
commissioned a calculation of future air quality scenarios at
Neckartor in Stuttgart, together with the Robert Bosch com-
pany and in close cooperation with the Stuttgart city govern-
ment and the responsible federal state ministries. An advisory
committee of recognized experts and university professors
supported the study, which was conducted by the Aviso com-
pany. According to the scenarios of the study, the limits will
probably not be reached at Neckartor by 2020. But - depending
on the package of measures implemented – the limit of 40
micrograms per cubic meter of ambient air is expected to be
permanently met between 2020 and 2025.
Environmental management
Emissions into the atmosphere
Discharge into bodies of water
Waste management
Soil/groundwater contamination
Implementing
measures at the
plants
Measures
The environmental and energy-related guidelines approved by
the Board of Management define our environmental and
energy-related policy at the Daimler Group. The guidelines also
express our commitment to integrated environmental protec-
tion. That begins with the assessment of the causes of environ-
ment problems and takes into account the environmental
effects of production processes and products as early as the
planning and development phases.
Environmental protection measures at our production locations
are coordinated across business units by three regional com-
mittees (Germany/Europe, North and South America and Asia)
that are centrally managed. These measures are regulated
in line with a corporate policy and organizational and technical
standards.
The environmental measures are monitored by external audi-
tors (ISO 14001 certification, EMAS validation) and by internal
environmental risk assessments (the due diligence process).
We conduct training sessions through the respective local
organizations. The important content of our training sessions
includes water pollution control, wastewater treatment,
emergency management in case of environmentally relevant
malfunctions and the planning of plants and workplaces in
accordance with environmental protection principles.
Due diligence processes
In 1999, we developed a methodology for assessing environmen-
tal risks (environmental due diligence) as a tool for preventing
risks to the environment and complying with statutory require-
ments. We have applied this methodology throughout the
Group since 2000, both internally and also externally in connec-
tion with our acquisition plans. During this period we have
conducted three complete risk assessments at the Daimler
production plants of Mercedes-Benz Cars, Mercedes-Benz
Vans, Daimler Trucks and Daimler Buses.
The fourth round of environmental risk assessments began in
2014. A number of new risk aspects have been integrated
into the topic areas. Nonetheless, we have not changed the
methods or the tools, because we want these results to
be comparable with the results of the assessments that have
already been carried out. 7 E.02
Result
In this way, all the production locations are being visited and
assessed in five-year cycles according to well-established and
standardized procedures. The results are reported to the plant
and divisional managements, and the Group annually assesses
the implementation of the recommendations for minimizing
risks at the locations. In this way, we are striving to enforce the
high environmental standards to which we have committed
ourselves at all of our production locations around the world.
In 2018, we evaluated the production locations of the Detroit
Diesel Remanufacturing business area and a number of CKD
plants of MBC. The most important results were in the areas of
explosion protection and the proper storage of hazardous
substances.
Mobility services
In addition to our products' high level of environmental com-
patibility and our environmentally friendly and efficient produc-
tion processes, we also strive to provide innovative mobility
services on the road to emission-free driving. That is why we
have developed a range of pioneering mobility concepts and
are forging ahead with innovative approaches - from the car-
sharing provider car2go and the mobility platform moovel to
the taxi app mytaxi and our participation in the coach company
FlixBus and the Bus Rapid Transit (BRT) system. Recent addi-
tions to this list in 2018 were ViaVan, an on-demand ride-sharing
service with two locations in the UK; a partnership with
the Chinese ride-hailing service CaoCao, which has more than
17 million registered users; and the acquisition of an interest
in Turo, the US market leader for car sharing with private vehi-
cles, which already has five million users. The merger of
the German peer-to-peer car-sharing platform Croove, in which
Daimler already holds an interest, should ease the US com-
pany's entry into the German market.
The joint venture for mobility services planned by Daimler and
BMW is moving forward step by step. The authorities have now
approved the companies' plan to establish the joint venture.
The merger of our on-demand mobility services in the areas of
car sharing, ride hailing, parking, charging and multi-modality
with the mobility services of BMW is intended to give additional
impetus to our activities for the expansion and improvement
of mobility services.
Feedback to plant management and divisional management
209
E❘ NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Topic areas
Result
Mercedes-Benz vehicles powered by the new diesel engines
(OM 654, OM 656 and OM 608) emit between 40 and 60 milli-
grams of nitrogen oxide (NOx) on average - during thousands
of kilometers of driving on the road and under the conditions
specified by the Real Driving Emissions (RDE) test. These figures
are significantly lower than the current RDE emissions limit of
80 milligrams per kilometer multiplied by the correlation factor
2.1 (Level 1). The correlation factor was determined by an EU
regulation to cover the usually higher nitrogen-oxide emissions
in real operation for new vehicle types until the end of 2019.
The lower values are made possible by an innovative overall
package consisting of the engine and the exhaust aftertreatment
system. This package was launched with the new engine
generation in 2016 and is being continually enhanced. The very
good results have been repeatedly confirmed in road tests
by organizations such as DEKRA and TÜV, as well as by various
trade magazines.
Conservation of resources
Target
Evaluating the environmental compatibility of a vehicle
requires an analysis of the emissions and use of resources
throughout the entire lifecycle.
Measures and result
During the development process of a vehicle, we prepare a
recycling concept for each vehicle model in which all of its
components and materials are examined with a view to their
suitability for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable, pursuant to ISO 22 628. The key
aspects of our activities in this area are:
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
Local measures. With regard to the local measures, Daimler
is focusing in particular on Stuttgart. For example, we are sub-
sidizing our employees' use of public transport, such as the
commuter train, streetcar and bus networks, to get to work.
Thanks to Daimler's coverage of the costs, since January 2018
the Group's employees have been able to use local public
transportation free of charge to travel between their homes and
workplaces in the Stuttgart region on particulate alert days.
the remanufacturing of used parts, and
Production-related environmental protection
Target
Our commitment to the environment is an integral component
of our corporate strategy. For this reason, we have established
environmental management systems at our manufacturing
locations with the goal of providing safe, efficient, environmen-
tally friendly services of guaranteed high quality that comply
with all legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group
has a majority interest in the ownership structure. Supported
by the use of Daimler Group standards, we strive to maintain
a high level of air quality control, climate protection and
resource conservation (in terms of water consumption, waste
management and soil conservation).
E.02
Methodology for assessing environmental risks
Inspection of
documents
Interviews
Tours
the workshop waste disposal system MeRSy (Mercedes-
Benz Recycling System).
Dealing with hazardous materials
Share of women at the second
17.6
Our Compliance Management System
Money laundering and the financing of terrorism pose con-
siderable sociopolitical risks. For this reason, the prevention
of money laundering and the implementation of anti-money
laundering measures have been defined as central compliance
goals in our Integrity Code. With our core business and our
global production and sale of vehicles, we and companies con-
trolled by the Group are subject to the provisions of the
German Money Laundering Act (GwG), which applies to "com-
mercial sellers of goods." As a result, we are required to
implement Group-wide and thus worldwide measures to prevent
and combat money laundering and the financing of terrorism
(anti-money laundering - AML - and counter terrorist financing -
CTF - policies).
An integrated Group-wide compliance approach has been
implemented in the Anti-Financial Crime (AFC) department in
order to link prevention of the circumvention of supranational
and national sanctions with measures to prevent and combat
money laundering, organized crime and other criminal economic
activity and the financing of terrorism. This is important, as
these risks can not only have a negative impact on society; they
can also cause long-term damage to our reputation, as well as
financial damage that can negatively affect our companies and
our shareholders and stakeholders.
The organizational structure of the AFC specialist unit serves as
the central Group organization for promoting compliance
with the GWG across all divisions. This structure also brings
together under one roof our two Centers of Competence for
Preventing and Combating Money Laundering and the Financing
of Terrorism (CoC AML) and the Center of Competence for
Checks against Sanctions Lists (CoC CSL). The objective of the
sanctions compliance process is to ensure the performance of
systematic reviews to determine whether the names of affected
natural or juridical persons or organizations can be found on
any sanctions list around the globe (checks against sanctions
lists CSL). The review thus involves checking supranational
sanctions lists such as those published by the United Nations
(UN) and the European Union (EU), as well as national sanc-
tions lists, in particular those published by the United States,
that may be applicable in certain situations.
As required by law, such reviews are conducted for customers
and business partners, for example in sales and procurement,
as well as for employees and strategic cooperation partners.
The provisions of data protection law are taken into account
when such checks against sanctions lists are performed.
Our integrated compliance approach aims to ensure that we
can effectively prevent and combat money laundering and
the financing of terrorism.
Human rights compliance
For Daimler, respect for human rights is a fundamental compo-
nent of responsible corporate governance. Respect for human
rights is therefore a key component of our Group-wide sustain-
ability strategy. We are committed to ensuring that human
rights are respected and upheld throughout our organization
and by our suppliers.
The following standards and guidelines in particular serve as a
frame of reference for our conduct and are of central impor-
tance for our due diligence obligations as defined by the HRRS:
the UN Global Compact,
the UN Guiding Principles on Business and Human Rights,
the Universal Declaration of Human Rights,
Germany's National Action Plan on Business and Human
Rights, and
the Core Labor Standards of the International Labour
Organization.
Our expectations, which are based on these standards
and guidelines, are clearly defined and described in our Integ-
rity Code and the Daimler Supplier Sustainability Standards.
The latter define our requirements with regard to working con-
ditions, human rights, environmental protection, safety,
business ethics and compliance, and are also part of our general
terms and conditions. We demand that our direct suppliers
worldwide commit themselves to observing our sustainability
standards, communicating them to their employees and to
upstream value chains, and checking to ensure that the stan-
dards are complied with. As a risk-based measure, we our-
selves perform checks in critical supply chains in order to ver-
ify compliance with our standards by further members of the
supply chain. These audits begin with the tier one supplier and
extend to the critical points in the supply chain, and even
down to the mines if necessary.
E❘ NON-FINANCIAL REPORT | COMPLIANCE 223
We are gradually expanding our Human Rights Respect System
(HRRS) in a process that also includes regular consultations
with external stakeholders. The HRRS, which orientates itself
on our Group-wide Compliance Management System (CMS),
utilizes a risk-based approach in its focus on Daimler majority
holdings (including our production locations) and our supply
chain.
Due diligence with the Human Rights Respect System
As a proactive risk management system, the HRRS is designed
to identify and avoid systemic risks and possible negative
effects of our business activities on human rights early on. The
HRRS thus primarily protects third parties and is aimed at
exerting its effect along our supply chain as well. It consists of
four steps that are to be applied to Daimler majority-owned
companies and the supply chain:
1. identification of potential human rights risks (risk
assessment),
2. definition, implementation and management of preventive
measures and countermeasures (program implementation),
3. monitoring of the effectiveness of the measures, in parti-
cular at higher-risk units and in supply chains that are at a
high risk of human rights violations (monitoring), and
4. periodic internal reporting on relevant issues, compliance
with external reporting requirements (reporting).
The HRRS also involves consultation and exchange with rights
holders (for example our employees and their representatives)
and external third parties such as civil society organizations
and local populations.
Identification of human rights risks at Daimler
majority holdings
The risk assessment is a two-step process. The first step
involves a categorization of the majority holdings on the basis
of predefined criteria, such as the risk situation in specific
countries and risks associated with specific business operations.
In the second step, units that display a heightened human
rights risk are subject to an on-site assessment. The modular
approach we employ here takes into account fundamental
human rights standards such as those defined in the Universal
Declaration of Human Rights and the Core Labour Standards
of the International Labour Organization (ILO).
During the reporting year, we made adjustments to our risk
assessment methods and also had external stakeholders verify
our risk assessment process. The feedback we receive from
stakeholders is used to further develop and improve the risk
assessment system. We are also currently developing an
effective approach to program implementation, monitoring and
reporting.
Anti-financial crime compliance
A monitoring plan is used to assess the effectiveness and
efficiency of the implementation of the various measures at the
business units. These reviews are used to define improvement
measures, which are implemented by the responsible units and
departments and then monitored on a regular basis.
The results of the annual Data Compliance Risk Assessment
serve as the basis for the formulation of measures that address
possible data protection risks. The elements of our data
compliance program include the provisions of the General Data
Protection Regulation (relating, for example, to information
obligations, the rights of data subjects and concepts for data
erasure), the stipulations of local data protection laws, commu-
nication and training measures and various data protection
consulting services. The responsibility for designing and imple-
menting measures lies with each company's management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides support with implementation.
A key component of the Data Compliance Management System
is the Data Compliance Risk Assessment, which involves a
systematic analysis and evaluation of data protection risks at
all business units. These analyses are based on centrally
compiled information on all business units; specific additional
details are taken into account in line with the given risk assess-
ment. The results of the analyses form the basis of our risk
management and risk minimization activities. The analyses
enable us to adopt a risk-based approach for the further devel-
opment of our Data Compliance Management System.
Free and unfettered competition is one of the foundations of
our social and economic system. Such competition creates
growth and jobs and ensures that all of us as consumers have
access to modern products at fair prices. Our Group-wide
Antitrust Compliance Program is oriented to national and inter-
national standards. The program establishes a binding, globally
valid Daimler standard that defines how matters of competi-
tion law are to be assessed. The Daimler standard is based on
the standards of the European antitrust authorities and
courts. The objective of the Daimler standard is a uniform level
of compliance and advice in all countries and thus compliance
with all local and international antitrust laws.
By means of an advisory hotline set up by our Legal department,
as well as guidelines and practical support, we help our
employees around the world recognize situations that might be
critical from an antitrust perspective, and also act in compli-
ance with regulations in their daily work, especially when deal-
ing with competitors, cooperating with dealers and general
agencies around the world, and participating in business asso-
ciation committees.
In addition to Daimler's Legal department and its specialist
advisers, the Group's global units and their employees can turn
to legal advisers in local units, who also ensure that our
standards are consistently upheld. We also utilize a variety of
communication measures to make our employees aware of
the importance of competition and antitrust laws and issues.
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing, implementing and moni-
toring measures lies with each company's management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides information on how to implement
the measures effectively. Units that face a higher potential risk
in particular must also systematically assess the adequacy
and effectiveness of locally implemented antitrust compliance
measures at regular intervals. In addition, our Legal and Cor-
porate Audit departments conduct additional monitoring activi-
ties at our company's units, as well as random audits on the
basis of a predefined audit plan in order to ensure that antitrust
laws are complied with and internal processes are carried out
properly. This helps us continuously improve the effectiveness
of our Antitrust Compliance Program and adapt it to global
developments and new legal requirements. The associated
methods and processes are being constantly refined and
improved.
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with the 980 standard
of the Institute of Public Auditors in Germany. This audit, which
was based on the principles of appropriateness and effective
implementation, was successfully completed at the end of 2016.
E | NON-FINANCIAL REPORT | COMPLIANCE
221
Technical compliance
For us, technical compliance means adhering to technical
regulations, standards and laws while taking into account the
fundamental aims of these laws and regulations. In order to
address the specific risks associated with the product develop-
ment process, we combined the existing systems and addi-
tional measures and processes at all divisions of Daimler AG
into a technical Compliance Management System (CMS).
The purpose of the tCMS is to ensure legal and regulatory con-
formity within the product development process and to provide
our employees with orientation and guidance through values,
structures and processes.
Identification of human rights risks in our supply chain
Since 2008 we have defined our expectations towards our
suppliers regarding sustainability in our Supplier Sustainability
Standards. Upholding human rights and in particular stipula-
tions concerning working conditions are key components of
these requirements. In order to meet our human rights due
diligence obligations even more systematically, we have devel-
oped risk classifications tailored to various product areas
(such as production materials and services). This enables us to
identify services and raw materials that may pose risks to
human rights, including minerals that are potentially associated
with conflicts. During the year under review, we started using
our analyses here as a basis for defining and implementing
measures that can also be applied beyond the level of our direct
suppliers if necessary.
The technical Compliance Management System is managed
Group-wide by a unit independent of all divisions that consists
of employees with expertise in various fields, such as devel-
opment, legal affairs, integrity and compliance. The head of this
unit - the Vice President Legal Product & Technical Compli-
ance reports directly to the member of the Daimler AG Board
of Management responsible for Integrity and Legal Affairs. Our
divisional structure enables us to optimally support and advise
our divisions. The unit's tasks include the organization of the
technical Compliance Management System and its associated
governance elements and providing legal advice to the divisions.
The Technical Integrity initiative, as part of the tCMS, aims
to ensure responsible behavior during the product development
process, particularly in situations where legal provisions may
be unclear. Together with the relevant development departments,
so-called commitment statements have been formulated in
order to support the employees in this process. These principles
have been discussed with employees at dialog sessions held
around the world. Various communications measures regarding
the commitment statements have been conveyed to all employ-
ees and anchored in selected training courses.
Development employees at all divisions have been sensitized
to issues relating to integrity, compliance and legal regulations
in the product development process through various commu-
nications measures such as "Tone from the Top" mailings and
posters, as well as through special training courses and dialog
sessions. Dialog sessions have also been held worldwide with
more than 750 managers from development and development-
related departments at the various divisions in order to ensure
that technical compliance and integrity are anchored in the
organization. In addition, more than 19,500 employees from the
development departments of all divisions worldwide took
part in classroom training courses on technical compliance in
the year under review.
The effectiveness of our tCMS is monitored annually in a
process that also results in the development of measures to
improve the system wherever necessary.
Data compliance
As a consequence of the European Union's new General Data
Protection Regulation (GDPR), which went into effect on
May 25, 2018, we are consolidating all existing data protection
measures, processes and systems throughout the Group into
a single Data Compliance Management System. This system is
based on the Daimler Compliance Management System (CMS),
whose approach helps us meet the company's accountability
requirement and the data controller's obligation to demonstrate
the basis of the processing of personal data as described in
the GDPR.
The establishment of the Data Compliance Management System
was accompanied by the creation of a new Data Compliance
unit within the compliance organization. This unit defines the
program elements and controls their implementation through-
out the Group. At the same time, the Chief Officer Corporate
Data Protection and his team continue to perform the tasks
required by law to ensure compliance with data protection rules.
The Chief Officer Corporate Data Protection is independent
and reports directly to the Board of Management member for
Integrity and Legal Affairs. The Chief Officer Corporate Data
Protection informs and advises the data controllers and the
specialist departments, serves as a contact partner for com-
plaints regarding data protection, monitors compliance with
data protection rules, provides advice on the implementation
of data protection impact assessments and cooperates with
the regulatory authorities. We are currently realigning the exist-
ing network of local data protection coordinators and merging
this network into our compliance network.
Our Corporate Data Protection Policy creates Group-wide
standards for handling the data of employees, customers and
business partners. The internal processes necessitated by
the GDPR and the requirements of the Compliance Management
System are reflected in a new version of the Corporate Data
Protection Policy.
222
E | NON-FINANCIAL REPORT | COMPLIANCE
In order to further strengthen the tCMS, dedicated units with
experts for technical compliance have been created in the
development departments at the Cars, Vans, Trucks and Buses
divisions. In addition, there is a network of technical compli-
ance contact partners within the development departments who
serve as a link between operating units and the compliance
organization. These partners support the development depart-
ments in matters of technical compliance. Complex questions
regarding technical compliance are evaluated and then decided
unanimously in an interdisciplinary process that takes into
account technical and legal criteria. Our "Infopoint Integrity" is
also available as a contact and advice center for topics related
to technical compliance, while our BPO whistleblower system is
available for reporting on technical compliance violations.
Further Group-wide measures
Within our sales organization, we conduct individual audits of
potentially critical transactions in cooperation with the units
that are involved. During our ongoing training sessions, we also
inform our employees and make them aware of their obligation
to respect and safeguard human rights as described in our
Integrity Code. Employees and external parties can use various
channels, such as the BPO (Business Practices Office) whistle-
blower system and the World Employment Committee, to report
suspected human rights violations and obtain "access to rem-
edy" as defined by the third pillar of the UN Guiding Principles
on Business and Human Rights. ④ daimler.com/company/
corporate-governance/compliance/principles.html
page 217
· Evaluation of the design and implementation of systems and
processes for the collection, processing and monitoring of
information on environmental, employee and social matters,
respect for human rights, and combating corruption and
bribery, including data consolida-tion
- Inquiries of personnel on group level who are responsible for
the collection of the infor-mation to concepts, due diligence
processes, results and risks, the conduction of internal con-
trols and the information consolidation
-
-
Evaluation of selected internal and external documents
- Analytical evaluation of data and trends of quantitative
information which are reported by all sites on group level
Evaluation of local data collection and reporting processes
and reliability of reported data via a sampling survey
in Kawasaki (Japan), Sindelfingen and Düsseldorf (both
Germany).
- Assessment of the overall presentation of the information
Conclusion
Based on the procedures performed and the evidence obtained,
nothing has come to our attention that causes us to believe
that the Report of Daimler for the business year from January 1
to December 31, 2018 is not prepared, in all material respects,
in accordance with §§ 315b and 315c in conjunction with 289b
to 289e HGB.
Restriction of use/AAB clause
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Engagement Terms for Wirtschaftsprüfer and Wirtschafts-
prüfungsgesellschaften (Allgemeine Auftragsbedingungen für
Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in
the version dated January 1, 2017 https://www.kpmg.de/
bescheinigungen/lib/aab_english.pdf. By reading and using
the information contained in this report, each recipient confirms
notice of provisions of the General Engagement Terms (includ-
ing the limitation of our liability for negligence to EUR 4 Mio as
stipulated in No. 9) and accepts the validity of the attached
General Engagement Terms with respect to us.
Stuttgart, February 13, 2019
KPMG AG
Wirtschaftsprüfungsgesellschaft
(Original German version signed by:)
Dr. Thümler
Wirtschaftsprüfer
(German Public Auditor)
Mokler
Wirtschaftsprüfer
(German Public Auditor)
-
- A risk analysis, including a media search, of relevant informa-
tion about the sustainability performance of Daimler in the
reporting period
Inquiries of personnel on group level who are responsible
for the materiality analysis to get an understanding of the
process for identifying material topics and respective report
boundaries for Daimler
Within the scope of our engagement, we performed amongst
others the following procedures:
Involvement at the executive level
The responsibility for human rights issues lies with the Integ-
rity and Legal Affairs Board of Management function. The
member of the Board of Management responsible for Integrity
and Legal Affairs is regularly informed about human rights
activities. This is supplemented by regular reports submitted
to the Board of Management and the Corporate Sustainability
Board (CSB), as well as to the Procurement Council (PC) within
the framework of our sustainability strategy.
224
E❘ NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Independent Auditor's Report
Concerning a Limited Assurance Engagement
on the Non-Financial Group Reporting¹
To the Supervisory Board of Daimler AG,
Stuttgart
We have performed an independent limited assurance
engagement on the separate combined non-financial Report
of Daimler AG, Stuttgart and the Group (further "Daimler")
as well as the by reference qualified parts "Business model",
"The workforce", "Legal risks" and "Non-Financial risks"
(further "Report") according to §§ 315b and 315c in conjunc-
tion with 289b to 289e German Commercial Code (HGB)
for the business year from January 1 to December 31, 2018.
Management's Responsibility
Antitrust compliance
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and 315c
in conjunction with 289b to 289e HGB.
Independence and quality assurance on the part of the
auditing firm
We are independent from the company in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and have
fulfilled our additional professional obligations in accordance
with these requirements.
Our audit firm applies the national statutory provisions and
professional pronouncements for quality assurance, in particu-
lar the professional code for German Public Auditors and
Chartered Accountants (in Germany) and the quality assurance
standard of the German Institute of Public Auditors (Institut
der Wirtschaftsprüfer, IDW) regarding quality assurance require-
ments in audit practice (IDW QS 1).
Practitioner's Responsibility
Our responsibility is to express a conclusion on the Report based
on our work performed within a limited assurance engagement.
We conducted our work in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised):
"Assurance Engagements other than Audits or Reviews of
Historical Financial Information" published by IAASB. This
Standard requires that we plan and perform the assurance
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
225
engagement to obtain limited assurance whether any matters
have come to our attention that cause us to believe that the
Report for the period from January 1 to December 31, 2018, has
not been prepared, in all material respects in accordance
with §§ 315b and 315c in conjunction with 289b to 289e HGB.
We do not, however, provide a separate conclusion for each
disclosure. In a limited assurance engagement the evidence
gathering procedures are more limited than in a reasonable
assurance engagement and therefore significantly less assur-
ance is obtained than in a reasonable assurance engagement.
The choice of audit procedures is subject to the auditor's own
judgement.
This responsibility of the legal representatives includes the selec-
tion and application of appropriate methods to prepare the
Report and the use of assumptions and estimates for individual
sustainability disclosures which are reasonable under the
given circumstances. Furthermore, the responsibility includes
designing, implementing and maintaining systems and pro-
cesses relevant for the preparation of the Report in a way that
is free of intended or unintended - material misstatements.
page 218
Daimler places the same strict requirements on all of its activ-
ities around the world. In addition, we continuously improve
our methods and processes and use a variety of communication
and training measures to make our employees around the
world more aware of the importance of fighting corruption.
Further information on communication and training:
The responsibility for implementing and monitoring measures
lies with each company's management, which cooperates
closely with the specialist units within Integrity and Legal Affairs.
& Improvement
VII. Monitoring
Daimler Compliance Management System (CMS)
E.07
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail, or by filling out a special form. An external toll-
free hotline is also available in Brazil, the United States and
South Africa. Reports can be submitted anonymously if local
laws permit this. In Germany, reports to the BPO can also
be submitted via a neutral intermediary, who in this case is an
independent external attorney. The information provided to
the BPO enables us to learn about potential risks and specific
violations that pose a high risk to the company and its employ-
ees, and this in turn allows us to prevent damage to the company
and its reputation. A globally valid corporate policy aims to
ensure a fair and transparent approach that takes into account
the principle of proportionality for the affected parties,
while also giving protection to whistleblowers. In an effort to
increase trust in our whistleblower system and make it even
better known within the Group, we have established a continuous
communication process that includes the periodic provision
of information to employees about the type and number of
Our compliance program comprises principles and measures
designed to reduce compliance risks and prevent violations
of regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance analyses, focus on the following aspects:
Compliance program
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of
all our business units every year. These analyses are based on
centrally compiled information on all business units and take
specific additional details into account as needed. The results
of the analyses form the basis of our risk control.
Compliance risks
Our compliance and legal organizations have set themselves
the goal of ensuring Group-wide conformance with laws
and regulations. Our compliance organization is structured in a
divisional and regional manner, while our legal organization
is structured regionally and along the value chain. These struc-
tures enable us to provide optimal support and advice to our
divisions. A contact person is made available to each function,
division and region. In addition, a global network of local con-
tact persons makes sure that our standards are met throughout
the Group and also helps local management at Daimler facili-
ties and sales companies implement our compliance program.
Our compliance organization
Our Compliance Management System (CMS) is designed
to help Daimler and its employees avoid inappropriate or illegal
behavior, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined by
our compliance and legal organizations in a process that
also takes the company's business requirements into account.
page 116
Our compliance values and goals
Our Compliance Management System (CMS) consists of
basic principles and measures intended to promote rule-based
behavior throughout the company. The CMS is based on
national and international standards and applies on a global
scale at all Daimler AG units and majority holdings. The
CMS consists of seven elements that build on one another.
71 E.07
Monitoring and improvements
Values-based compliance is an indispensable part of day-to-day business at Daimler, and for us,
means acting in conformance with laws and regulations. Our objective is to ensure that all Daimler
employees worldwide are always able to carry out their work in conformance with applicable
laws, regulations, voluntary commitments and our values, as set out in binding form in our Integrity
Code. Our compliance activities focus on complying with all applicable anti-corruption regulations,
the maintenance and promotion of fair competition, adherence to legal and regulatory stipulations
regarding product development, respect for and the protection of human rights, adherence to
data protection laws, compliance with sanctions lists and the prevention of money laundering.
Compliance
217
E❘ NON-FINANCIAL REPORT | COMPLIANCE
I. Compliance Values
II. Compliance
Targets
VI. Communication
& Training
219
E❘ NON-FINANCIAL REPORT | COMPLIANCE
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the company
and also help our employees deal with specific issues that
can occur at work. The same is true of the Daimler app for integ-
rity, compliance and legal affairs. The app can be downloaded
and used by all employees with an iOS company-owned device.
Among other things, the app enables mobile access to informa-
tion on corruption prevention and antitrust law, and additional
topics will be added in the coming financial year.
We also offer our employees in the compliance and legal
organizations target group-specific qualification measures. In
addition, all new employees at these organizations receive a
comprehensive introduction in an onboarding program.
The web-based training courses are supplemented by class-
room training sessions that are conducted by central or local
trainers. We provide our internal trainer network with modular
training documents and materials for methodical implementa-
tion, such as trainer guideline and explanatory videos that can
be used in a target group-specific manner in accordance with
the risks associated with the participants' jobs. In 2018, a
total of approximately 220,000 employees from various levels
of the hierarchy participated in classroom and web-based
training programs.
Office employees are required to complete modules relevant to
their role and function. The associated modules are assigned
to them automatically or in a centralized process. These training
modules are assigned when an employee is hired, promoted
or transferred to a position that involves an increased risk. This
approach ensures that personnel changes are properly
addressed. In general, the program must be repeated approxi-
mately every three years. Factory employees can complete
the web-based training program voluntarily.
Every employee who works at a majority-owned Daimler-
controlled company can participate in a web-based and target-
group oriented training program consisting of several mod-
ules a basic module, a module specifically for managers, and
expert modules on antitrust law, data protection, technical
compliance, non-cash rewards for employees and function-
specific topics such as procurement and sales. This program
is being continuously expanded in line with the requirements of
specific target groups.
Our extensive training courses are based on our Integrity Code.
The training program is planned on the basis of an annual
planning cycle that includes everything from a needs analysis
to the evaluation of the entire training process. Among other
things, the program covers the topics of integrity, compliance
(including corruption prevention and technical compliance),
data protection and antitrust law. Depending on the risk and
the target group, we use classroom training or digital learning
techniques such as web-based training courses.
Communication and training
Peer review within the framework of
sustainability initiatives such as the UN
Global Compact
Compliance on the part of our business partners
We also require our business partners to adhere to clear com-
pliance requirements because we regard our business partners'
integrity and behavior in conformity with regulations as a pre-
condition for trusting cooperation. In the selection of our direct
business partners, we therefore ensure that they comply with
the law and observe ethical principles. In financial year 2018,
we completed the implementation of our globally standardized
process for the effective and efficient examination of all new
and existing business partners (Business Partner Due Diligence
Process). Our continuous monitoring here is designed to
ensure we can identify possible integrity violations by our busi-
ness partners. We also reserve the right to terminate cooper-
ation with, or terminate the selection process for, any business
partner who fails to comply with our standards. In addition,
we work with our procurement units to continuously improve our
processes for selecting and cooperating with suppliers; our
global Daimler Supplier Sustainability Standards apply here. On
the basis of these standards and our Integrity Code, a specific
Supplier Compliance Awareness Module was developed. This
module is distributed to our suppliers. It contains provisions
similar to those that can be found in the general Compliance
Awareness Module for sales partners, which was introduced
in 2016 and is designed to increase their awareness of com-
pliance requirements. See also daimler.com/sus/obr.
With regard to those cases that are closed "with merit,"
appropriate response measures are decided in line with the
principles of proportionality and fairness. Fairness, which is
the key principle in the overall process, applies to both whistle-
blowers and affected parties. In other words, affected parties
are not judged in advance and the assumption of innocence
applies until it has been proven that a violation has occurred.
Whistleblowers who contact the BPO are also protected.
They do not need to worry that their report might result in
negative consequences for themselves.
The BPO process was developed further during the year under
review. A risk-based initial assessment and standardized pro-
cesses enable more rapid identification and effective processing
of high-risk reports submitted to the BPO. The case categories
used by the BPO have been updated and new categories have
been added in order to incorporate the latest social and legal
developments into the BPO process. In the year under review,
89 new BPO cases were opened. A total of 101 cases were
closed, 60 of them "with merit," which means the initial suspicion
was confirmed. Of these latter cases, five were categorized
as "corruption" and seven as “theft, breach of trust and enrich-
ment offenses of a significant magnitude or value." Seven
cases fell under the category "damage exceeding €100,000."
One case was in the category "physical injury."
reported violations. We also supply information materials
such as country-specific information cards. In addition, we have
produced an instructional video in ten languages and we
repeatedly stage informational and dialog events at our locations
as well.
E | NON-FINANCIAL REPORT | COMPLIANCE
218
Risks
IV. Compliance
III. Compliance
Organization
V. Compliance
Program
Personnel measures taken in 2018 included the issuing of
verbal and written warnings and final warnings, as well
as separation agreements and ordinary and extraordinary
terminations.
1 Our engagement applied to the German version of the Report 2018. This
text is a translation of the Independent Assurance Report issued in the
German language, whereas the German text is authoritative.
Advisory Board for Integrity and Corporate
Responsibility
Participation
Our management policy on Lobbying and Political Donations
governs, among other things, the use of lobbying instruments
and other methods for making our interests known in the politi-
cal realm. We represent the company's interests through
dialog with decision-makers, including elected officials or poli-
ticians who have been nominated for office, government
officials, and representatives of political interest groups, trade
organizations, business associations and government agen-
cies. Participation in specialized government committees and
product sales to ministries, government agencies and diplo-
matic missions are part of our business operations and there-
fore not considered a component of lobbying.
change. We focus here on issues such as vehicle safety, emis-
sion regulations, new mobility concepts and electric mobility.
Other important issues include trade policy, location-specific
matters and education and human resources policy.
Our principles for political dialog and communicating our inter-
ests form the basis of responsible, reliable and open action
with the aim of harmonizing the company's interests with the
interests of society at large. This also includes the idea of
maintaining neutrality when dealing with political parties and
representatives of interest groups. The aim of our discussions
with political decision-makers is to achieve greater planning
security and contribute our ideas to processes of social
As a company with global operations, we have to deal with a
wide
range of political changes and decisions that impact our
business activities. In order to safeguard the future of the
Daimler Group, it is therefore important that we represent the
interests of our company in an open and trusting dialog with
governments, associations, organizations and various groups
in society. In line with this philosophy, such a dialog also
allows us to hear their concerns and consider their point of
view in our actions.
Political dialog and representation of interests
We also engage in a dialog with the stakeholders at our loca-
tions. In connection with specific occasions and projects,
we address questions, concerns, criticism and suggestions made
by stakeholders and conduct an open-ended dialog with
them. We also stage proactive dialog and information events
on current topics. The results of all of our dialog measures
are incorporated into decision-making and decision-implemen-
tation processes at the company. A current example of this
approach involves the sustainable further development of the
Rastatt plant. The transformation process here focuses on
electric mobility and the associated need for additional factory
space. Together with officials of the city of Rastatt, we
searched for potential locations for a plant extension in the
vicinity of the current plant and took into account the sugges-
tions and recommendations made by stakeholder groups,
including nature preservation and environmental organizations,
property owners, tenants and leaseholders, neighboring com-
munities and municipal agencies. We also continue to keep the
public up to date with various dialog and information events,
including civic dialogs, meetings with affected individuals and
organizations, and plant tours.
Dialog at the local and regional levels
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
216
Every year, we review the adequacy and effectiveness of our
Compliance Management System and adapt it to global devel-
opments, changed risks and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process
duration and quality. To determine these indicators, we check,
among other things, whether formal requirements are met
and all information is complete. In addition, we analyze the
knowledge gained through independent internal and external
assessments and participate in selected benchmark studies.
These activities are used to define any required improvement
measures, which are implemented by the responsible units
and departments and then monitored on a regular basis. The
relevant management bodies continuously receive reports
on these monitoring activities.
Involvement of company management
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers' independence from the business divisions. The
Chief Compliance Officer, the Group General Counsel and the
Vice President Legal Product & Technical Compliance report
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Audit Committee of the Super-
visory Board. They also report regularly to the Board of Manage-
ment of Daimler AG on matters such as the status of the
Compliance Management System and its further development,
the status of the whistleblower system and, if necessary, on
other topics. In addition, the Group General Counsel regularly
reports to the Antitrust Steering Committee and the Group
Risk Management Committee, to which the Chief Compliance
Officer and the Vice President Legal Product & Technical
Compliance also report.
Important non-financial reporting topics
Eliminating corruption, preventing cartel arrangements, ensuring
compliance with technical regulations, preventing money
laundering and the financing of terrorism, and complying with
sanctions we introduced our Compliance Management Sys-
tem (CMS) in order to address exactly these issues, which are
extremely important to us. The Data Compliance Management
System that we are currently setting up is also based on the
Daimler CMS, as is our Group-wide approach to respecting and
upholding human rights.
220
E | NON-FINANCIAL REPORT | COMPLIANCE
Anti-corruption compliance
Daimler has committed itself to fighting corruption in its
own business activities. Along with complying with all applicable
laws, this also involves adhering to the rules of the OECD
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997) and the United
Nations Convention against Corruption (2003). As a founding
member of the UN Global Compact, Daimler also seeks to
ensure that not only the company itself but also its business
partners act in accordance with the principles of the compact.
The most important goals here are to fight corruption around
the world in order to enable fair competition, eliminate the
damage corruption does to society and thus improve conditions
for everyone. Our anti-corruption compliance program is
based on our comprehensive Compliance Management System.
The program is globally valid and primarily consists of an
integrated risk assessment process that takes into account
internal information such as a unit's business model and
external information such as the Corruption Perceptions Index
from Transparency International, for example. Other program
components include risk-based measures for avoiding corrup-
tion in all business activities (e.g. reviews of business partners
and transactions) and measures to ensure that special care is
taken in contacts with authorities and public officials. Our
risk-minimization measures focus in particular on sales compa-
nies in high-risk countries and business relationships with
wholesalers and general agencies worldwide.
Our central coordinating body for political dialog at the national
and international levels is the External Affairs and Public Policy
department, which falls under the responsibility of the Chairman
of the Board of Management. This department operates a
global network with offices in Berlin, Brussels, Beijing, Singapore,
Stuttgart and Washington and also has corporate represen-
tations in other key markets. In order to ensure that political
lobbying activities are coordinated, and also to avoid political
target groups being addressed in an uncoordinated manner,
employees in the External Affairs and Public Policy department
must be registered.
Also through the Group-wide Lobbyists Register, we want
to ensure that our political lobbying is carried out in accordance
with applicable regulations and ethical standards. The
register also helps us meet the registration requirements of
public institutions.
We regard donations to political parties as an element of our
social responsibility and as a contribution to the democratic
process. We make these donations in strict conformity with
applicable law. All donations to political parties require a Board
of Management resolution. As in previous years, Daimler AG
made donations totaling €320,000 to political parties in 2018.
Of this total, the CDU and SPD each received €100,000,
and the FDP, CSU and Alliance 90/Green Party €40,000 each.
E.06
- Topic- and project-related discussions
New dialog formats on future questions:
think tanks, hackathons, ideation challenge
- Specialist conferences on societal topics
and debates
-Collaboration in the BDI workgroup on
artificial intelligence
- Membership of sustainability initiatives and
networks
- Daimler Supplier Portal
- Internal dialog sessions on integrity and
compliance
- Local dialog with residents and
municipalities
- Annual "Daimler Sustainability Dialogue"
(Germany/regions)
Dialogue
Stakeholder consultation in topic-related
workgroups
Museum
- Social intranet and internal communication
Blogs and social media
Corporate website
-
- Press and public-relations work
- Environmental declarations by the plants
- Daimler Sustainability Report as well as
regional reports (such as the Daimler
China Sustainability Report)
Sustainability newsletters and magazines
Information
Examples of instruments of stakeholder dialog
- Plant tours, receptions, Mercedes-Benz
Information and qualification measures are also offered to
individuals who perform supervisory and management func-
tions. Within the framework of the onboarding program for
new members of the Supervisory Board of Daimler AG, such
members were provided with information about the antitrust
compliance program and technical compliance management
during the year under review. In addition, the Group's Chief
Compliance Officer reported to the Audit Committee of the
Supervisory Board on the status of the compliance manage-
ment system. In 2018, new members of the supervisory boards
of Daimler holdings were provided with information on various
issues relating to compliance, data protection and integrity. They
also participated in a "Know Your Responsibilities❞ onboarding
program to make them more aware of compliance-related
topics (for example anti-corruption policies) and the importance
of integrity at their companies. New members of executive
bodies at companies in which Daimler is the majority share-
holder are given a compact overview of key aspects of cor-
porate governance via the Corporate Governance Navigator,
which is a target group-focused module that supports them
in their new role by providing information on their tasks and
responsibilities, contact partners and units that deal with
central issues addressed by the Integrity and Legal Affairs
division and adjacent units.
In addition to our internal training measures, our training
program also includes special courses on integrity and compli-
ance (including corruption prevention) that are offered to our
business partners in line with their specific risks. The courses
are offered as web-based training or classroom training ses-
sions. Daimler informs its business partners about the courses
and invites them to participate.
-560
Changes in ownership interests
9
1,171
Issue and disposal of treasury shares
Acquisition of treasury shares
42
42
42
-42
-42
5
-42
-
56
56
Changes in the consolidated group
-35
-35
Total comprehensive income/loss
Dividends
Deferred taxes on other comprehensive
income
Other comprehensive income/loss
before taxes
-3,727
Capital increase/Issue of new shares
24
29
in subsidiaries
333
7,249
-
1,282
63,843
9
1,171
-8
-26
65,159
1,290
63,869
9
1,171
Balance at January 1, 2018
Balance at December 31, 2017
65,159
1,290
63,869
Other
3
10
-7
-250
-3,477
-
9,605
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
10,595
13,967
6,305
5,676
-872
-1,507
-178
-453
-3,850
-1,455
-884
-1,597
1,694
1,259
-10,257
-11,412
-1,609
-3,304
877
210
Trade payables
-34
65,125
7,582
Trade receivables
1,183
267
9,338
-757
1
-758
25
1,731
-736
-255
-73
-182
25
2,467
Balance at January 1, 2017 (adjusted)³
Net profit
10,617
339
10,278
59,228
1,183
58,045
Balance at January 1, 2017
First-time adoption of IFRS 15
First-time adoption of IFRS 9
95
59,133
Inventories
First-time adoption of IFRS 9
Balance at January 1, 2018 (adjusted)³
Net profit
-1,803
Sale of vehicles with a residual-value guarantee. Under IFRS 15,
arrangements such as when an entity provides its customer
with a guaranteed minimum resale value that he receives on
resale do not constraint the customer in its ability to direct
the use of, and obtain substantially all of the benefits from the
asset. At contract inception of a sale with a residual-value
guarantee an entity therefore has to recognize revenue. However,
a potential compensation payment to the customer has to
be considered (revenue deferral). Such transactions have so far
been reported as operating leases.
Sale of vehicles for which the Group enters into a repurchase
obligation. IFRS 15 differentiates between three forms of
repurchase agreements: a forward (an entity's obligation to
repurchase the asset), a call option (an entity's right to
repurchase the asset) and a put option (an entity's obligation
to repurchase the asset at the customer's request). The
latter can lead to accounting changes since under IFRS 15,
such vehicle sales might necessitate the reporting of a sale
with the right of return. Such transactions have so far been
reported as operating leases.
sales with a right of return and residual-value guarantees.
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
Refund liabilities occur at Daimler especially in the following
circumstances:
This guidance led to reclassifications in the Statement of
Financial Position from provisions for other risks and other
financial liabilities into refund liabilities.
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some or
all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not
included in the transaction price.
advance payments received on contracts in the scope of
IFRS 15.
deferred revenue for service and maintenance contracts
and for extended warranties, and
Contract liabilities occur at Daimler especially in the following
circumstances:
The guidance led to reclassifications in the Statement of
Financial Position from deferred income and other liabilities
into contract liabilities.
Contract liabilities. IFRS 15 includes guidance on the presentation
of contract fulfillment and contract obligations. These are
assets and liabilities from contracts with customers which arise
dependent on the relationship between the entity's perfor-
mance and the customer's payment. Therefore, a contract liability
is an entity's obligation to transfer goods or services to a
customer for which the entity has received consideration (or
the amount is due) from the customer.
First-time adoption of IFRS 15 particularly affects Daimler in
the following areas:
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
At December 31, 2017, the amount of the transaction price
allocated to the remaining performance obligations is
not disclosed and an explanation of when that amount is
expected to be recognized as revenue is not given.
Contracts that were modified before January 1, 2017 have
not been reassessed pursuant to the provisions of IFRS 15
for contract modifications. The application of this practical
expedient did not have any major impact on the Group's
profitability, liquidity and capital resources or financial posi-
tion.
Contracts concluded until December 31, 2016 (in application
of previously relevant accounting standards) were not
reassessed under IFRS 15. Due to the application of this prac-
tical expedient, profit decreased especially in Q1 2017 in
comparison to full retrospective adoption. The impact on the
Group's profitability, liquidity and capital resources or
financial position is assessed to be not material.
Daimler uses the following practical expedients available under
IFRS 15 for retrospective first-time adoption:
Daimler applies IFRS 15 for the first time for the financial year
beginning on January 1, 2018. First-time adoption has been
conducted retrospectively. The figures reported for the previous
year have been adjusted by the effects arising from the adop-
tion of IFRS 15.
Application of IFRS 15 Revenue from Contracts with Cus-
tomers. In May 2014, the IASB published the standard IFRS 15.
It replaces existing guidance for revenue recognition, including
IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalty Programmes. The new standard lays down
a comprehensive framework for determining in which amount
and at which date revenue is recognized. The new standard
specifies a uniform, five-step model for revenue recognition,
which is generally to be applied to all contracts with customers.
IFRSS issued, EU endorsed and initially adopted in the
reporting period
The accounting policies applied in the Consolidated Financial
Statements comply with the IFRSS required to be applied in the
EU as of December 31, 2018.
Applied IFRSS
Accounting of contract manufacturing. Under a contract manu-
facturing agreement, Daimler sells assets to a third-party
manufacturer from which Daimler buys back the manufactured
products after completion of the commissioned work. If the
sale of the assets is not accompanied by the transfer of control
to the third-party manufacturer, no revenue is recognized
under IFRS 15.
Basis of preparation
Date of recognition of sales incentives. Under IFRS 15,
obligations from sales transactions are presented by Daimler
as refund liabilities. Obligations from sales transactions
which have previously been accounted for as a provision might
necessitate earlier recognition as refund liabilities under
IFRS 15 due to different recognition principles.
Table 7 F.06 shows the effects of the application of IFRS 15
and IFRS 9 (as far as the effects relate to non-designated com-
ponents of derivatives) on the Consolidated Statement of
Income for the year 2017.
1 Exclusively from the first-time adoption of IFRS 9. Resulting from
the deferral of profits and losses relating to non-designated
components of derivatives in other comprehensive income.
-247
87
20
-1
-565
1
14
373
-176
2017
Net profit
Income taxes
Other financial income/expense, net¹
Other operating expense
Other operating income
General administrative expenses
Selling expenses
Cost of sales
Revenue
In millions of euros
Effects from the application of IFRS 15 and IFRS 9
on the Consolidated Statement of Income
F.06
Due to clarifications of IFRS 15 regarding the scope of application
and the accounting of licenses, income from licenses has
been reclassified from other operating income to revenue.
Dividends received from equity-method investments
The Board of Management authorized the Consolidated Financial
Statements for publication on February 13, 2019.
Daimler AG is a stock corporation organized under the laws of
the Federal Republic of Germany. The Company is entered in
the Commercial Register of the Stuttgart District Court under No.
HRB 19360 and its registered office is located at Mercedes-
straße 137, 70327 Stuttgart, Germany.
-50
-50
-50
80
80
5,066
-4,220
-315
-3,905
351
4,715
728
728
5
-95
-
-4
-1,266
-1
537
-3,244
18
-3,262
-3
50
The Consolidated Financial Statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
50
50
The Consolidated Financial Statements of Daimler AG and its
subsidiaries ("Daimler” or “the Group") have been prepared in
accordance with Section 315e of the German Commercial Code
(HGB) and comply with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
General information
1. Significant accounting policies
Notes to the Consolidated Financial Statements
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
234
Balance at December 31, 2018
66,053
Other
47
in subsidiaries
-45
Changes in ownership interests
Issue and disposal of treasury shares
Capital increase/Issue of new shares
Acquisition of treasury shares
Total comprehensive income/loss
Dividends
Deferred taxes on other comprehensive
income
Other comprehensive income/loss
before taxes
1,386
64,667
1
-13
-32
46
-
1,380
843
Income taxes paid
11,742
47,553
258
66
Balance at January 1, 2018
3,070
11,742
47,553
258
66
First-time adoption of IFRS 9
2
-28
Balance at January 1, 2018 (adjusted)³
3,070
11,742
47,555
258
38
Net profit
7,249
Other comprehensive income/loss
before taxes
3,070
-1,626
Balance at December 31, 2017
Other
Other comprehensive income/loss
before taxes
Deferred taxes on other comprehensive
income
Total comprehensive income/loss
Dividends
Changes in the consolidated group
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
-106
-2,584
16
-19
10,153
-2,584
13
33
-3
-3,477
-35
Changes in ownership interests
in subsidiaries
5
-7
10,278
214
Deferred taxes on other comprehensive
income
items that
may be reclassified
in profit/loss
Share of
investments
accounted
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
233
Derivative
Equity
attributable to
Non-
financial
for using the
instruments equity method
Treasury
share
shareholders
of Daimler AG
controlling
interests
Total
equity
In millions of euros
-537
-16
-23
-
Other reserves
-44
The accompanying notes are an integral part of these Consolidated Financial Statements.
15
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests
in subsidiaries
Other
Balance at December 31, 2018
1 See Note 20 for other information on changes in equity.
3,070
-32
11,710
171
5,794
214
-23
-3,905
ויויויוי|3|
21
46
49,490
472
2 Retained earnings also include items that will not be reclassified to the Consolidated Statement of Income.
Actuarial losses from pensions and similar obligations amount to 9,017 net of tax in 2018 (2017: €7,562 million net of tax).
3 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
-16
Net profit
2,842
82
-22
Cash used for investing activities
-9,921
-9,518
Change in short-term financing liabilities
2,637
751
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
Dividends paid to non-controlling interests
Proceeds from the issue of share capital
Acquisition of treasury shares
Acquisition of non-controlling interests in subsidiaries
Cash provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
71,137
63,116
-56,318
-47,073
Other
-3,905
7,266
Proceeds from sales of marketable debt securities and similar investments
-2,858
-3,879
Cash used for/provided by operating activities
343
-1,652
Additions to property, plant and equipment
-7,534
-6,744
Additions to intangible assets
-3,167
-3,414
Proceeds from disposals of property, plant and equipment and intangible assets
644
812
Investments in shareholdings
-780
-1,105
Proceeds from disposals of shareholdings
363
418
Acquisition of marketable debt securities and similar investments
-5,739
-6,729
6,210
53
-3,477
-250
Share
Capital
capital
reserves
Retained
earnings²
Currency
debt
translation
instruments
Balance at January 1, 2017
3,070
57,950
95
40,794
2,842
53
First-time adoption of IFRS 15
95
First-time adoption of IFRS 9
23
Balance at January 1, 2017 (adjusted)³
3,070
11,744
40,912
Equity
instruments/
-315
In millions of euros
Consolidated Statement of Changes in Equity¹
118
114
-50
-42
-78
-10
13,226
13,129
133
-868
3,781
1,091
12,072
10,981
Cash and cash equivalents at end of period
15,853
12,072
1 See Note 29 for other information on Consolidated Statements of Cash Flows.
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
232
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
F.05
11,744
15
Change in operating assets and liabilities
Net profit
(adjusted)²
2017
2017
2017
(adjusted)²
2018
2018
2018
Non-
controlling
interests
of Daimler AG
Group
Shareholders
Daimler
Non-
controlling
interests
of Daimler AG
Group
Shareholders
Daimler
In millions of euros
F.02
Consolidated Statement of Comprehensive
Income/Loss¹
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
The accompanying notes are an integral part of these Consolidated Financial Statements.
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 The reconciliation of Group EBIT to profit before income taxes is presented in Note 34.
9.61
6.78
9.61
6.78
36
Currency translation adjustments
7,582
234
7,249
333
14
-1
-23
-24
debt instruments (after tax)
Equity instruments and
-3
-3
21
21
and on reclassifications
Taxes on unrealized gains/losses
-1
-1
Diluted
Reclassifications to profit and loss (pre-tax)
17
18
-1
-44
-45
Unrealized gains/losses (pre-tax)
Equity instruments and debt instruments
-68
339
10,278
-2,584
-2,652
20
214
10,617
1
13
for profit attributable to shareholders of Daimler AG
Basic
7,249
-13,067
5
34,528
33,067
-129,626
-134,295
5
164,154
167,362
4
(adjusted)1
2017
2018
Note
Earnings per share (in euros)
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
Net profit
Income taxes
Profit before income taxes²
Interest expense
Interest income
Other financial income/expense, net
Profit on equity-method investments, net
Other operating expense
Other operating income
Research and non-capitalized development costs
General administrative expenses
Selling expenses
Gross profit
-12,951
5
-4,036
-3,808
339
333
10,617
7,582
-3,350
-3,013
9
13,967
10,595
-582
-793
8
214
271
10,278
8
210
7
1,498
656
13
-1,043
-1,462
6
2,259
2,330
6
-5,938
-6,581
5
-210
1
Derivative financial instruments
Unrealized gains/losses (pre-tax)
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
1 See Note 20 for other information on comprehensive income/loss.
267
9,338
9,605
351
4,715
5,066
Total comprehensive income
-72
-940
-1,012
18
-2,534
-2,516
Other comprehensive income/loss, net of taxes
-2
-125
-127
-2
-1,455
-1,457
Items that will not be reclassified to profit/loss
-2
-125
-127
-2
-1,454
-1,456
The accompanying notes are an integral part of these Consolidated Financial Statements.
229
230
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
46,600
51,300
14
Other financial assets
Marketable debt securities and similar investments
Receivables from financial services
4,818
4,860
13
47,074
49,476
12
Equity-method investments
Equipment on operating leases
from pensions and similar obligations (after tax)
27,981
11
13,735
14,801
10
Property, plant and equipment
Intangible assets
Assets
2017
(adjusted)1
At December 31,
2018
Note
In millions of euros
F.03
Consolidated Statement of Financial Position
30,948
Actuarial gains/losses
-19
-19
and on reclassifications
Taxes on unrealized gains/losses
25
25
-3
-3
Unrealized gains/losses (pre-tax)
Equity-method investments
1,731
1,728
1
-736
-735
-1,266
-1
-1,265
537
990
and on reclassifications
Taxes on unrealized gains/losses
-4
2,423
44
44
-722
-722
Reclassifications to profit and loss (pre-tax)
2,419
1
-1,081
-1,080
Derivative financial instruments (after tax)
Cost of sales
-1
-4
171
171
and similar obligations
Taxes on actuarial gains/losses from pensions
-2
-106
-108
-2
-1,625
-1,627
from pensions and similar obligations (pre-tax)
Actuarial gains/losses
-1
-1
Equity-method investments (after tax)
on equity-method investments (after tax)
-1
-1
on equity-method investments (pre-tax)
Actuarial gains/losses
-70
-815
-885
20
-1,079
-1,059
Items that may be reclassified to profit/loss
25
25
-4
Actuarial gains/losses
Revenue
In millions of euros
F.01
1,504
Equity attributable to shareholders of Daimler AG
64,667
63,869
Non-controlling interests
Total equity
Provisions for pensions and similar obligations
1,386
1,290
20
66,053
65,159
22
7,393
5,767
Provisions for income taxes
Provisions for other risks
Financing liabilities
Other financial liabilities
Deferred tax liabilities
Deferred income
628
1,046
23
7,734
7,143
24
88,662
78,378
397
47,553
49,490
11,742
15,853
12,072
Marketable debt securities and similar investments
15
8,855
9,073
Other financial assets
16
2,970
3,602
17
Other assets
5,889
5,014
25
Assets held for sale
Total assets
Equity and liabilities
531
121,613
106,896
281,619
255,345
Share capital
Capital reserves
Retained earnings
Other reserves
3,070
3,070
11,710
Total current assets
2,375
2,370
9
7,657
6,905
26
1,580
1,528
27
7,081
7,375
28
2,346
2,439
Liabilities held for sale
Total current liabilities
212
97,952
25
87,624
281,619
255,345
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
231
Consolidated Statement of Cash Flows¹
F.04
In millions of euros
2018
2017
(adjusted)²
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income
Gains (-)/losses (+) on disposals of assets
Total equity and liabilities
Cash and cash equivalents
48,746
24
3,762
2,347
26
1,612
1,668
Contract and refund liabilities
Other liabilities
27
5,438
3,833
28
10
10
Total non-current liabilities
56,240
Trade payables
102,562
12,451
Provisions for income taxes
Provisions for other risks
Financing liabilities
Other financial liabilities
Deferred income
Contract and refund liabilities
Other liabilities
823
560
23
7,828
7,620
117,614
14,185
722
39,454
14
265
13. Equity-method investments
292
32. Financial instruments
264
12. Equipment on operating leases
291
financial obligations
263
11. Property, plant and equipment
31. Contingent liabilities and other
262
10. Intangible assets
288
30. Legal proceedings
259
9. Income taxes
287
29. Consolidated statement of cash flows
258
8. Interest income and interest expense
286
28. Other liabilities
258
7. Other financial income/expense, net
286
27. Contract and refund liabilities
258
6. Other operating income and expense
33. Management of financial risks
304
14. Receivables from financial services
268
Consolidated Statement of Income
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
228
318
40. Additional information
274
318
317
of Management and the Supervisory Board
39. Auditor fees
273
272
38. Remuneration of the members of the Board
271
316
285
37. Related party relationships
315
36. Earnings per share
270
20. Equity
19. Trade receivables
18. Inventories
17. Other assets
16. Other financial assets
similar deposits
315
35. Capital management
15. Marketable debt securities and
311
34. Segment reporting
270
26. Deferred income
257
5. Functional costs
Consolidated Statement of Income
F| Consolidated Financial Statements
227
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
The Consolidated Financial Statements presented as follows have been
prepared in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU). They also
comply with additional requirements set forth in Section 315e Sub-
section 1 of the German Commercial Code (HGB).
84761
Consolidated
Financial
Statements
16
2,763
3,204
Deferred tax assets
9
4,021
2,844
228
17
Total non-current assets
Inventories
Trade receivables
1,115
1,203
160,006
148,449
18
29,489
25,686
19
12,586
11,995
Receivables from financial services
Other assets
45,440
Consolidated Statement of
229
285
25. Other financial liabilities
256
4. Revenue
284
24. Financing liabilities
254
3. Consolidated Group
283
23. Provisions for other risks
252
management judgments
277
22. Pensions and similar obligations
Comprehensive Income/Loss
2. Accounting estimates and
21. Share-based payment
234
1. Significant accounting policies
234
Statements
Notes to the Consolidated Financial
232
Changes in Equity
Consolidated Statement of
231
Consolidated Statement of Cash Flows
230
Financial Position
Consolidated Statement of
275
537
Principles of consolidation
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized on
a straight-line basis over the expected product life cycle (a maxi-
mum of ten years). Amortization of capitalized development
costs is an element of manufacturing costs and is allocated to
those vehicles and components by which they were generated
and is included in cost of sales when the inventory (vehicles) is
sold.
Initial application of IFRS 9 leads to the following major
changes:
Financial assets. IFRS 9 introduces a comprehensive classification
model for financial assets that classifies financial assets into
three categories: financial assets at amortized cost, financial
assets at fair value through other comprehensive income and
financial assets at fair value through profit or loss. Under IAS
39, financial assets were classified as loans and receivables,
available-for-sale financial assets and financial assets at fair
value through profit or loss.
F.07
Effects from the application of IFRS 15 on the Consolidated
Statement of Financial Position
In millions of euros
Dec. 31,
2017
Jan. 1,
2017
Assets
Equipment on operating leases
-640
Trade receivables
5
Application of IFRS 9 Financial Instruments. Daimler applies
IFRS 9 initially for reporting periods beginning on and after
January 1, 2018. Initial application is made retrospectively. In
accordance with the transition requirements, Daimler chose
to present prior periods in accordance with IAS 39. As an excep-
tion, the transition for recognition of fair-value changes of
certain non-designated components of derivatives through other
comprehensive income is to be applied retrospectively to the
comparative figures.
-264
2
267
Other financial assets
5
14
Deferred tax assets
-9
-35
Other assets
112
63
-260
-220
Receivables from financial services
Total assets
Basic and diluted earnings per share decrease by €0.23 in 2017.
The effects on the line items of the Consolidated Statement
Dealers may finance their vehicle inventory by dealer inventory
financing provided by Daimler Financial Services. Furthermore
end-customers may be credit financed by Daimler Financial
Services. Receivables from sales financing with end-customers
and dealers are presented in receivables from financial services.
Further information is provided in Note 14.
Generally, payment from sales of vehicles, service parts
and other related product is made when the customer obtains
control of these products.
Revenue from sales of vehicles, service parts and other related
products is recognized when control of the goods is trans-
ferred to the customer. This generally occurs at the time the
customer takes possession of the products.
Revenue recognition
Accounting policies
As a consequence of the assessment that Argentina is in
hyperinflation, we apply IAS 29 to our Argentinian business since
January 1, 2018. This application does not have a material
impact on the Group's profitability, liquidity and capital resources
and financial position.
To determine whether a country is to be considered as in
hyperinflation, the Daimler Group refers to the list published by
the International Practices Task Force (IPTF) of the Center
of the Audit Quality or other relevant international publications.
If a country is in hyperinflation, IAS 29 Financial Reporting in
Hyperinflationary Economies has to be applied from the beginning
of the respective reporting period, i.e. from January 1 of the
respective reporting year.
Hyperinflation
The exchange rates of the US dollar, the British pound, the
Japanese yen and the Chinese renminbi - the most significant
foreign currencies for Daimler - are as shown in table 7 F.11.
Assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The com-
ponents of equity are translated using historical rates. The
statements of income and cash flows are translated into euros
using average exchange rates during the respective periods.
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated using period-end exchange
rates; gains and losses from this measurement are recognized
in profit and loss (except for gains and losses resulting from
the translation of equity instruments measured at fair value
through other comprehensive income, which are recognized
in other comprehensive income/loss).
Foreign currency translation
of Financial Position at January 1, 2017 as well as at December 31,
2017 are presented in table 7 F.07.
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group
and the fair presentation of financial position, liquidity and
capital resources, and profitability are generally measured
at amortized cost in the Consolidated Financial Statements.
Joint operations that have no significant impact on the
Consolidated Financial Statements are generally accounted for
using the equity method.
For entities over which Daimler has joint control together
with a partner (joint arrangements), it is necessary to
differentiate whether a joint operation or a joint venture exists.
In a joint venture, the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
For joint ventures, the equity method has to be applied. A
joint operation exists when the jointly controlling parties have
direct rights to the assets and obligations for the liabilities.
In this case, the prorated assets and liabilities and the prorated
income and expenses are generally to be recognized
(proportionate consolidation).
An associated company is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee. Associated companies are generally accounted for
using the equity method.
Investments in associated companies, joint ventures or
joint operations
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without change of
control are accounted for as an equity transaction between
owners.
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which are
included in the Consolidated Financial Statements are
generally prepared as of the reporting date of the Consolidated
Financial Statements. The financial statements of Daimler AG
and its subsidiaries included in the Consolidated Financial
Statements are prepared using uniform recognition and
measurement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from
transactions between consolidated entities are entirely eliminated
in the course of the consolidation process.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
242
Structured entities which are controlled also have to be
con-solidated. Accordingly, the assets and liabilities remain in
the Consolidated Statement of Financial Position. Structured
entities are entities which have been designed so that voting or
similar rights are not relevant in deciding who controls the
entity. This is the case for example if voting rights relate to
administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
236
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's Consolidated
Financial Statements with a one to three-month time lag.
Significant events or transactions are accounted for
without a time lag, however (see Note 13).
F.11
Equity and liabilities
-155
Stage 1: expected credit losses within the next twelve months
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
Stage 2: expected credit losses over the lifetime - not credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved to
stage 2 and measured at lifetime expected credit loss, which is
defined as the expected credit loss that results from all possible
default events over the expected life of a financial instrument.
Stage 3: expected credit losses over the lifetime - credit
impaired
If a financial asset is defined as credit-impaired or in default, it
is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information.
A financial asset is migrated to stage 2 if the asset's credit
risk has increased significantly compared to its credit risk at
initial recognition. The credit risk is assessed based on the
probability of default. For trade receivables, the simplified
approach is applied whereby expected credit losses for all
trade receivables are initially measured over the lifetime of
the instrument.
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
Impairment model based on expected credit losses. IFRS 9 intro-
duces the expected credit loss impairment approach to be
applied on all financial assets (debt instruments) at amortized
cost or at fair value through other comprehensive income.
Under IAS 39, these instruments were assessed to determine
whether there has been objective evidence of impairment.
Objective evidence may exist for example if a debtor is facing
serious financial difficulties or there is a substantial change
in the debtor's technological, economic, legal or market environ-
ment. For quoted equity instruments, a significant or prolonged
decline in fair value was additional objective evidence of possible
impairment. Incurred losses were recognized as an impairment
of financial assets. Under IFRS 9 the new approach takes projec-
tions of the future into consideration. The expected credit-loss
approach uses three stages for allocating impairment losses:
b) the time value of money; and
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the expected
life of each financial asset. For receivables from financial
services, expected credit losses are mainly calculated with
a statistical model using three major risk parameters:
probability of default, loss given default and exposure at default.
Under IAS 39, the amount of the loss on loans and receivables
was the difference between the asset's carrying amount and
the present value of estimated future cash flows (excluding
expected future credit losses not yet incurred), discounted at
the financial asset's original effective interest rate. For
available-for-sale financial assets, an amount previously recog-
nized in other comprehensive income equal to the difference
between cost of acquisition (net of any principal repayments and
amortization) and the current fair value less any impairment
loss on that financial asset previously recognized in profit or loss
was recognized in the statement of income.
The estimation of these risk parameters incorporates all available
relevant information, not only historical and current loss data,
but also reasonable and supportable forward-looking information
reflected by the future expectation factors. This information
includes macroeconomic factors (e.g., gross domestic product
growth, unemployment rate, cost performance index) and
forecasts of future economic conditions. For receivables from
financial services, these forecasts are performed using a
scenario analysis (base case, adverse and optimistic scenarios).
238
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.08
First-time adoption effects of IFRS 9 on equity
In millions of euros
Retained earnings
Balance at December 31, 2017 according to IAS 39
Change in credit risk for financial instruments
47,553
-52
Reclassification of impairments of equity
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Total equity
237
Marketable debt securities are non-derivative financial
assets that were not classified in any of the other categories
and therefore were categorized as available for sale under
IAS 39 and measured at fair value through other comprehensive
income. Within marketable debt securities and similar invest-
ments, except for interests in money-market funds, marketable
debt securities are categorized as measured at fair value
through other comprehensive income under IFRS 9, while
similar investments are measured at amortized cost.
95
Trade payables
-23
-1
Provisions for other risks
Other financial liabilities
-2,247
-2,663
-1,955
Deferred tax liabilities
-55
4
Deferred income
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-6,274
Contract and refund liabilities
11,208
10,328
Other liabilities
-233
-208
Total equity and liabilities
-260
-220
Financial assets that give rise to cash flows consisting only of
payments of principal and interest are classified in accordance
with Daimler's business model for holding these instruments.
Financial assets that are held in a business model with the
objective to hold them until maturity and collect the contractual
cash flows are measured at amortized cost. These business
models are managed principally based on interest-rate structure
and credit risk. If the business model comprises the intention
to hold the financial assets to collect the contractual cash flows
but expects to sell these financial assets if this is necessary,
e.g. to fulfill a specific need for liquidity, then these instruments
are measured at fair value through other comprehensive
income. Financial assets that have only cash flows of principal
and interest but are not held within one of the business
models described above are measured at fair value through
profit or loss.
Financial assets that contain cash flows other than those of
principal and interest, such as interests in money-market
funds or derivatives including separated embedded derivatives,
are measured at fair value through profit or loss. For equity
instruments, IFRS 9 optionally allows measurement at fair value
through other comprehensive income. Daimler elects to
measure equity instruments at fair value through other compre-
hensive income on an instrument by instrument basis. When
these equity instruments are sold or written off, any unrealized
gains and losses on these equity instruments are reclassified
to retained earnings and not presented within profit or loss.
Under IAS 39 equity instruments were classified as available for
sale. Unrealized gains and losses and impairments were
shown in the statement of income when the instruments were
derecognized. These equity instruments are shown within
other financial assets.
Trade receivables and receivables from financial services are
non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They were
categorized as loans and receivables under IAS 39 and
therefore measured at amortized cost. All of these instruments
are categorized as measured at amortized cost using the
effective interest rate method.
-5,820
instruments recognized through profit
Exchange rates
243
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of
interest on provisions for other risks is recorded in this line item.
Other financial income/expense, net
This item includes all income and expenses in connection
with investments accounted for using the equity method. In
addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting from
the sale of equity interests or the remeasurement of equity
interests following a loss of significant influence. Daimler's share
of dilution gains and losses occurring if the Group or other
owners do not participate in capital increases of companies in
which shares are held and accounted for using the equity
method are also included in profit/loss on equity-method
investments. This item also includes losses on the impair-
ment of an investment's carrying amount and/or gains on the
reversal of such impairments.
Profit/loss on equity-method investments
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in earnings
over the life of a depreciable asset as a reduced depreciation
expense. Government grants which compensate the Group for
expenses are recognized as other operating income in the
same period as the expenses themselves.
Government grants
Borrowing costs are expensed as incurred unless they are
directly attributable to the acquisition, construction or production
of a qualifying asset and are therefore part of the cost of
that asset. Depreciation of the capitalized borrowing costs is
presented within cost of sales.
Borrowing costs
Research and non-capitalized development costs
Expenditure for research and development that does not
meet the conditions for capitalization according to IAS 38
Intangible Assets is expensed as incurred.
If subsidized leasing fees are agreed upon in connection
with finance leases, revenue from the sale of a vehicle is
reduced by the amount of the interest incentive granted.
When loans are issued below market rates, related receivables
are recognized at present value (using market rates) and
revenue is reduced for the interest incentive granted.
Revenue is recognized net of sales reductions such as
cash discounts and sales incentives granted.
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates which are
reported as follows:
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
244
Daimler does not adjust the promised amount of consideration
for the effects of a significant financing component if at
contract inception it is expected that the period between the
transfer of a promised good or service to a customer and
payment by the customer is no longer than one year.
The incremental cost of obtaining contracts is recognized
as an expense when incurred if the amortization period would
be no longer than one year.
Vehicles may be initially sold to non-Group dealers. Subsequently
a customer decides to enter into a leasing contract with
Daimler Financial Services regarding such a vehicle. The vehicle
is therefore sold by the non-Group dealer to Daimler Financial
Services and a leasing contract is entered into with the customer.
When control of the vehicle is transferred to the non-Group
dealer Daimler recognizes revenue from the sale of the vehicle.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group allocates revenue to
the various elements based on their estimated relative stand-
alone selling prices. To determine stand-alone selling prices,
Daimler primarily uses price lists with consideration of average
price reductions granted to its customers.
The Group offers extended, separately priced warranties for
certain products as well as service and maintenance
contracts. Revenue from these contracts is deferred insofar as
a customer has made an advance payment and is generally
recognized over the contract period in proportion to the costs
expected to be incurred based on historical information. A
loss on these contracts is recognized in the current period if the
sum of the expected costs for services under the contract
exceeds unearned revenue. Usually those contracts are paid in
advance or in equal instalments over the contract term.
Under a contract manufacturing agreement, Daimler sells
assets to a third-party manufacturer from which Daimler buys
back the manufactured products after completion of the
commissioned work. If the sale of the assets is not accompanied
by the transfer of control to the third-party manufacturer,
no revenue will be recognized under IFRS 15.
Arrangements such as when Daimler provides customers with
a guaranteed minimum resale value that they receive on resale
(residual-value guarantee) do not constraint the customers in
their ability to direct the use of, and obtain substantially all
of the benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has to be
recognized. However, a potential compensation payment to the
customer has to be considered (revenue deferral).
Sales of vehicles including a put option (an entity's obligation
to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether the customer has a
significant economic incentive to exercise his right. Amongst
others, these are the relation between repurchase price and
the expected future market value (at the time of repurchase)
of the asset, or historical return rates.
Sales of vehicles in the form of a forward (an entity's
obligation to repurchase the asset) and a call option (an
entity's right to repurchase the asset) are reported as
operating leases.
Revenue recognition from the sale of vehicles for which the
Group enters into a repurchase obligation is dependent on the
form of the repurchase agreement:
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services busi-
ness at Daimler Financial Services. The revenue from the
rental and leasing business results from operating leases and
is recognized on a straight-line basis over the periods of the
contracts. In addition, sales revenue is generated at the end of
lease contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is recognized
using the effective interest method.
7.7899
Interest income and interest expense
For the segment Daimler Financial Services interest income
and expense and gains or losses from derivative financial
instruments from financial services business are disclosed
under revenue and cost of sales respectively.
3 to 30 years
6 to 25 years
10 to 50 years
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
Useful lives of property, plant and equipment
F.12
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 F.12.
The costs of internally produced equipment and facilities include
all direct costs and allocable overheads. Acquisition or
manufacturing costs include the estimated costs, if any, of
dismantling and removing the item and restoring the site.
Property, plant and equipment are measured at acquisition or
manufacturing costs less accumulated depreciation. If
necessary, accumulated impairment losses are recognized.
Property, plant and equipment
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
For acquisitions, goodwill represents the excess of the con-
sideration transferred over the fair values assigned to the iden-
tifiable assets proportionally acquired and liabilities assumed.
Goodwill is accounted for at the subsidiaries in the functional
currency of those subsidiaries.
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents
as well as interest expense from liabilities. Furthermore,
interest and changes in fair values related to interest rate
hedging activities as well as income and expense resulting
from the allocation of premiums and discounts are included.
The interest components of defined benefit pension obligations
and other similar obligations as well as of the plan assets
available to cover these obligations and interest on supple-
mentary income tax payments or reimbursements are also
presented in this line item.
Goodwill
Intangible assets with indefinite useful lives are reviewed annu-
ally to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years © 2018 and 2017 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
Deferred tax assets or liabilities are calculated on the basis of
temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a cor-
responding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and
interests in joint arrangements are not recognized if the Group
is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
Consolidated Statement of Income, except for changes
recognized in other comprehensive income/loss or directly
in equity.
245
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In
addition, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for
periods not yet finally assessed, however, excluding interest
expenses and interest refunds and penalties on the under-
payment of taxes. For the case it is probable that amounts
declared as expenses in the tax returns might not be
recognized (uncertain tax positions), a provision for income
taxes is recognized. The amount is based on the best
estimate of the expected tax payment (expected value or
most likely amount). Tax refund claims from uncertain
tax positions are recognized when it is predominantly likely
and thus reasonably expected that they can be realized.
Only in the case of tax loss carryforwards or unused tax credits,
no provision for taxes or tax claim is recognized for these
uncertain tax positions. Instead, the deferred tax assets for the
unused tax loss carryforwards or tax credits are to be
adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Income taxes
Intangible assets other than development costs with finite use-
ful lives are generally amortized on a straight-line basis over
their useful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed at
least at each year-end. Changes in expected useful lives are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is recorded
in functional costs.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
132.9100
1.1776
First quarter
during the respective period
Average exchange rates
7.8044
135.0100
0.8872
1.1993
7.8751
125.8500
0.8945
1.1450
on December 31
1.2292
Average exchange rate
2017
CNY
JPY
1 € =
1€ =
GBP
USD
1€ =
1 € =
1 € =
2018
CNY
JPY
GBP
1€ =
1 € =
USD
1 € =
0.8875
0.8834
7.8154
7.8953
7.8340
130.3500
0.8978
1.1746
7.9151
129.6100
128.8200
0.8867
1.1414
Fourth quarter
0.8924
1.1629
133.1700
Third quarter
122.5800
0.8611
1.1021
7.6035
130.0900
0.8762
1.1918
Second quarter
7.3353
121.0100
0.8601
1.0648
7.5597
or loss under IAS 39
-2,481
Adjustments from measurement of equity instruments
recognized through profit or loss
Reclassification
effects
Remeasurement
effects
Carrying amount
according to IFRS 9
at Jan. 1, 2018
Financial instruments measured at cost
Receivables from financial services
Trade receivables
86,054
-56
85,998
11,995
at Dec. 31, 2017
4
Cash and cash equivalents
12,072
12,072
Marketable debt securities and similar investments
200
200
38
3,172
-4
3,168
113,293
200
11,999
-56
Carrying amount
according to IAS 39
Reconciliation of carrying amounts (IAS 39 to IFRS 9)
Measured at cost
Measured at cost
127,124
127,121
12,451
12,451
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
111
111
Measured at cost
Measured at cost
In millions of euros
8,468
148,154
148,154
forecast transaction results in the recognition of a non-financial
asset or non-financial liability. No respective adjustment of
initial cost of acquisition was made under IAS 39.
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from the
reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects profit
or loss. The ineffective portions of fair value changes are
recognized directly in profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the fair value of options or cross currency basis
spread. It was possible to separate the time value of the
options also under IAS 39, but was subject to the recognition
of changes in fair value through profit or loss.
Table 71 F.08 shows the effects on the components of equity
from first-time adoption of IFRS 9.
The original measurement categories and carrying amounts
of financial instruments according to IAS 39 as well as the new
measurement categories and carrying amounts of financial
instruments according to IFRS 9 are summarized in table 71 F.09.
Table 71 F.10 shows the reconciliation of the carrying amounts
of financial instruments according to IAS 39 at December 31,
2017 to the carrying amounts according to IFRS 9 at January 1,
2018.
240
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.10
8,471
Measured at cost
113,437
Marketable debt securities and similar investments
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement
Contains a Lease and other interpretations. IFRS 16 abolishes
for lessees the previous classification of leasing agreements as
either operating or finance leases. Instead, IFRS 16 introduces
a single lessee accounting model, requiring lessees to recognize
assets for the right to use as well as leasing liabilities for the
outstanding lease payments. This means that leases that were
previously not reported in the Statement of Financial Position
will have to be reported in the future - very similar to the current
accounting of finance leases.
According to IFRS 16 a lessee may elect, for leases with a lease
term of 12 months or less (short-term leases) and for leases
for which the underlying asset is of low value, not to recognize a
right-of-use asset and a lease liability. Daimler will apply both
recognition exemptions. The lease payments associated with
those leases are recognized as an expense on either a straight-
line basis over the lease term or another systematic basis.
Right-of-use assets are measured at cost less any accumulated
depreciation and if necessary any accumulated impairment.
The cost of a right-of-use asset comprise the present value of
the outstanding lease payments, any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying asset. In
this context, Daimler also applies the practical expedient that
the payments for non-lease components are generally recognized
as lease payments. If the lease transfers ownership of the
underlying asset to the lessee at the end of the lease term or if
the cost of the right-of-use asset reflects that the lessee will
exercise a purchase option, the right-of-use asset is depreciated
to the end of the useful life of the underlying asset. Otherwise
the right-of-use asset is depreciated to the end of the lease term.
Lease liabilities, which are assigned to financing liabilities are
measured initially at the present value of the lease payments
less any lease payments made before that date. Subsequent
measurement of a lease liability includes the increase of the
carrying amount to reflect interest on the lease liability and
reducing (by not affecting net income) the carrying amount
to reflect the lease payments made.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
241
According to IFRS 16 the depreciation of the right-of-use is
recognized within functional costs. The interest due on the lease
liability is a component of interest expense. The lease expenses
of leases classified according to IAS 17 as operating leases are
fully recognized within functional costs.
Lease accounting for lessors has been taken over almost
identically from IAS 17 into IFRS 16.
IFRS 16 is to be applied to annual reporting periods beginning
on or after January 1, 2019; early adoption is permitted if
IFRS 15 is already applied. Daimler will apply IFRS 16 for the
first time for the financial year beginning on January 1, 2019.
In compliance with the transition regulations, Daimler will not
adjust the prior-year figures and will present the accumulated
transitional effects in retained earnings.
Daimler as lessee will use following practical expedients of
IFRS 16 at the date of initial application:
With leases previously classified as operating leases according
to IAS 17 the lease liability will be measured at the present
value of the outstanding lease payments, discounted by the
incremental borrowing rate at January 1, 2019. The respective
right-of-use asset is generally recognized at an amount equal
to the lease liability;
IFRSS issued, EU endorsed and not yet adopted
An impairment review is not performed. Instead, a right-of-use
asset is adjusted by the amount of any provision for onerous
leases recognized in the Statement of Financial Position at
December 31, 2018;
At the date of initial application, the measurement of a
right-of-use asset excludes the initial direct costs; and
Hindsight is considered when determining the lease term
if the contract contains options to extend or terminate the
lease.
Based on the Group-wide preparations for implementation of
IFRS 16, the effect of the first-time application of IFRS 16 will
be that right-of-use assets and lease liabilities will probably be
recognized at an amount of €3.5 billion in the Consolidated
Statement of Financial Position. At the date of initial application,
retained earnings will be adjusted only insignificantly. In
the year 2019, we do not expect the effect on Group EBIT to be
material.
IFRSS issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on or after
January 1, 2021. Early adoption is permitted. Daimler currently
does not expect any material impacts on the Group's profitability,
liquidity and capital resources or financial position due to the
application of IFRS 17. Early adoption is not currently planned.
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the Consolidated Financial Statements.
Presentation
Presentation in the Consolidated Statement of Financial Position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The Consolidated Statement of Income is presented using the
cost-of-sales method.
Measurement
The Consolidated Financial Statements have been prepared on
the historical-cost basis with the exception of certain items
such as financial assets measured at fair value through profit
or loss, derivative financial instruments, hedged items, and
pensions and similar obligations. The measurement models
applied to those exceptions are described below.
Regardless of their original lease term, leases for which the
lease term ends latest on December 31, 2019 are recognized
as short-term leases;
Available-for-sale financial assets
Application of IFRIC 23 Uncertainty over Income Tax
Treatments. In October 2018, IFRIC 23 Uncertainty over Income
Tax Treatments was endorsed by the EU. IFRIC 23 has to be
applied to annual reporting periods beginning on or after Janu-
ary 1, 2019. Early adoption is permitted. Daimler has chosen
to apply IFRIC 23 at December 31, 2018. The application does
not have any material impact on the Group's profitability,
liquidity and capital resources and financial position as the
former Daimler accounting policy was very close to IFRIC 23.
16
10,063
-10,063
Equity instruments recognized at fair value
384
-384
10,447
-10,447
Financial assets recognized at fair value
through other comprehensive income
Marketable debt securities and similar investments
Equity instruments
Financial assets recognized at fair value
3,357
through profit or loss
6,733
173
6,906
6,733
173
6,906
3,130
3,130
211
16
227
3,341
Marketable debt securities and similar investments
Equity instruments and debt instruments
Measured at cost
Other receivables and financial assets
profit or loss
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be
rare and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this does
not result in derecognition of the contract, then the gross car-
rying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Derivative financial instruments and hedge accounting. Embedded
derivatives are principally separated from the host contract
and recognized separately. However, embedded derivatives are
not separated from the host contract, if that host contract is a
financial asset, if Daimler chooses to measure a hybrid contract
at fair value through profit or loss or if an analysis shows
that the economic characteristics and risks of embedded
derivatives are closely related to those of the host contract.
Under IAS 39, embedded derivatives were also separated if the
host contract was a financial asset which was not measured
at fair value through profit or loss, or the economic character-
istics and risks of the embedded derivative were not closely
related to those of the host contract.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. The documentation of the
hedging relationship includes the objectives and strategy of risk
management, the type of hedging relationship, the nature of
the risk being hedged, the identification of the eligible hedging
instrument and the eligible hedged item, as well as an
assessment of the effectiveness requirements comprising the
risk mitigating economic relationship, the absence of deterio-
rating effects from credit risk and the appropriate hedge ratio.
Under IAS 39, the documentation of the hedging relationship
also included a description of the method used to assess hedge
effectiveness. Furthermore, IAS 39 included requirements
for the retrospective and prospective an assessment of hedge
effectiveness with appropriate compliance with a corridor
for offsetting risks from changes in the fair value or cash flows
with regard to the hedged risk. Hedges were assessed as
highly effective and were regularly assessed as to determine
whether they were highly effective during the entire period
for which they were designated.
Under IFRS 9, for cash flow hedges of volatile prices in highly
probable forecast procurement transactions, designation can
be made for separable risk components of these non-financial
hedged items. Daimler can apply this possibility to facilitate
future hedge accounting and thereby reduce ineffectiveness of
hedge relationships for commodities. The option to separate
risk components for these transactions was not available under
IAS 39.
Under IFRS 9, amounts recognized in other comprehensive
income as effective hedging gains or losses from hedging
instruments are removed from the reserves for derivative
financial instruments and directly included in the initial
cost or carrying amount of the hedged item at initial recognition
if a hedged
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
239
F.09
Measurement categories of financial instruments
In millions of euros
Measurement categories
according to IAS 39
Measurement categories
according to IFRS 9
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
Carrying
amount
according
at Dec. 31,
2017
Carrying
amount
according
to IFRS 9
at Jan. 1,
2018
Financial assets
Receivables from financial services
Loans and receivables
Measured at cost
86,054
85,998
to IAS 39
Trade receivables
1,282
1,290
-11
16
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
1
-1
47,555
Reserves for available-for-sale financial assets
Balance at December 31, 2017 according to IAS 39
Reclassification in reserve for equity instruments
Other financial liabilities
Reclassification in reserve for debt instruments
recognized at fair value through other
comprehensive income (after deferred taxes)
Balance at January 1, 2018 according to IFRS 9
Reserves for equity instruments recognized at
fair value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Reclassification of impairments of equity instruments
recognized through profit or loss under IAS 39
66
-44
-22
3
44
6
12
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
Reserves for debt instruments recognized at fair
value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Change in credit risk for debt instruments
22
4
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
2
-2
26
Non-controlling interests after taxes
Balance at December 31, 2017 according to IAS 39
Change in credit risk for financial instruments
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
-38
Loans and receivables
recognized at fair value through other
comprehensive income (after deferred taxes)
11,995
3,130
3,130
Measured at cost
200
200
Recognized at fair value through
other comprehensive income
173
173
Recognized at fair value through
profit or loss
211
227
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
82
Measured at cost
3,172
3,168
123,822
123,782
Loans and receivables
Financing liabilities
Trade payables
Financial liabilities
recognized at fair value through
Measured at cost
82
6,733
Financial liabilities
Recognized at fair value through
other comprehensive income
6,733
Loans and receivables
Measured at cost
12,072
Cash and cash equivalents
Marketable debt securities and
similar investments
Marketable debt securities
recognized at fair value through
other comprehensive income
Marketable debt securities
recognized at fair value through
profit or loss
Similar investments
measured at cost
Other financial assets
Equity instruments and
debt instruments
Equity instruments recognized
12,072
Equity instruments and
Classified as available-for-sale
instruments
at fair value through other
comprehensive income
Classified as available-for-sale
instruments
Classified as available-for-sale
instruments
Classified as available-for-sale
instruments
Classified as available-for-sale
instruments
11,999
at fair value through profit or loss
The Consolidated Financial Statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities which are directly or
indirectly controlled by Daimler AG. Control exists if the parent
company has the power of decision over a subsidiary based on
voting rights or other rights, if it participates in positive and
negative variable returns from a subsidiary, and if it can affect
these returns by its power of decision.
Financial assets recognized
at fair value through profit or loss
debt instruments recognized
Other receivables and financial assets
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
At the reporting date, the Group has business relationships with
18 (2017: 24) controlled structured entities, of which 18 (2017:
22) are fully consolidated. In addition, the Group has relationships
with 7 (2017: 6) non-controlled structured entities. The uncon-
solidated structured entities are not material for the Group's
profitability, liquidity and capital resources and financial
position.
The structured entities of the Group are rental companies,
asset-backed-securities (ABS) companies and special funds. The
purpose of the rental companies primarily is the acquisition,
renting and management of assets. The ABS companies are
primarily used for the Group's refinancing. The assets trans-
ferred to structured entities usually result from the Group's
leasing and sales financing business. Those entities refinance
the purchase price by issuing securities. The special funds are
set up in particular in order to diversify the capital investment
strategy.
Structured entities
The aggregate balance sheet totals of the subsidiaries,
associated companies, joint ventures and joint operations
accounted for at amortized cost whose business is non-
active or of low volume and which are not material for the Group
and the fair presentation of its profitability, liquidity and
capital resources and financial position would amount to approxi-
mately 1% of the Group's balance sheet total; the aggregate
revenues and the aggregate net profit would amount to approxi-
mately 1% of the Group's revenue and net profit.
Table 7 F.13 shows the composition of the Group.
Composition of the Group
3. Consolidated Group
The calculation of income taxes of Daimler AG and its subsidiar-
ies is based on the legislation and regulations applicable in
the various countries. Due to their complexity, the tax items
presented in the Consolidated Financial Statements are
possibly subject to different interpretation by taxpayers on the
one hand and local tax authorities on the other hand. For
the calculation of deferred tax assets, assumptions have to
be made regarding future taxable income and the time of
realization of the deferred tax assets. In this context, Daimler
takes into consideration, among other things, the projected
earnings from business operations, the effects on earnings of
the reversal of taxable temporary differences, and realizable
tax strategies. As future business developments are uncertain
and are sometimes beyond Daimler's control, the assumptions
to be made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On
each balance sheet date, Daimler carries out impairment tests
on deferred tax assets on the basis of the planned taxable
income in future financial years; if Daimler assesses that the
probability of future tax advantages being partially or
fully unrealized is more than 50%, the deferred tax assets are
impaired. Further information is provided in Note 9.
A detailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in Note 40.
Equity-method investments
In January 2017, There Holding B.V. sold an equity interest
of 15% in HERE International B.V. to Intel Holdings B.V. and
recognized a gain of €183 million in connection with the
sale. Information on further transactions is explained in
Note 13.
In May 2017, Daimler acquired for a purchase price of €0.3 billion
an interest of 15% in LSH Auto International Limited (LSHAI),
which is responsible for the Mercedes-Benz retail business of
Lei Shing Hong Group. LSHAI, a subsidiary of Lei Shing Hong
Group, is one of the biggest Mercedes-Benz dealers worldwide.
Assets and liabilities held for sale
In March 2018, the Daimler Group and the BMW Group signed
an agreement to merge their business units for mobility
services. The partners intend to offer their customers a holistic
ecosystem of intelligent, seamlessly connected mobility
services, available at the tap of a finger. To this end, the partners
will combine and strategically expand their existing on-
demand mobility offering in the areas of car sharing, ride hailing,
parking, charging and multimodality in joint ventures. At
December 31, 2018, the assets and liabilities held for sale are
presented separately in the Consolidated Statement of
Financial Position. The disposal group's assets amounted to
€531 million and its liabilities amounted to €212 million.
Following approval by the relevant competition authorities, the
transaction was completed in January 2019. In the first quarter
of 2019, the transaction will produce a significant positive
earnings effect (approximately €0.7 billion) and a cash outflow
(approximately €0.7 billion) at the segment Daimler Financial
Services.
Composition of the Group
2018
At December 31,
2017
Consolidated subsidiaries
Germany
Income taxes
376
363
70
F.13
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are deter-
mined either by qualified estimates or by publications provided
by expert third parties; qualified estimates are based, as
far as publicly available, on external data with consideration of
internally available additional information such as historical
experience of price developments and recent sale prices.
The residual values thus determined serve as a basis for
depreciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to impairment. If depreciation
is prospectively adjusted, changes in estimates of residual
values do not have a direct effect but are equally distributed
over the remaining periods of the lease contracts.
Pensions and similar obligations
sales with the right of return and residual-value guarantees.
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
64
Share-based payment
Share-based payment comprises cash-settled liability awards.
Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and the
dividend equivalent paid during the period, and is included in
the functional costs.
Presentation in the Consolidated Statement of Cash Flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activi-
ties.
2. Accounting estimates and
management judgments
In the Consolidated Financial Statements, to a certain degree,
estimates and management judgments have to be made which
can affect the amounts and reporting of assets and liabilities,
the reporting of contingent assets and liabilities on the balance
sheet date, and the amounts of income and expense reported
for the period. The major items affected by such estimates and
management judgments are described as follows. Actual
amounts may differ from the estimates. Changes in the estimates
and management judgments can have a material impact on
the Consolidated Financial Statements.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
Recoverable amounts of cash-generating units and
equity-method investments
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods. The
estimates include assumptions regarding future market
share and the growth of the respective markets as well as regard-
ing the products' profitability. On the basis of the impairment
tests carried out in 2018, the recoverable amounts are substan-
tially larger than the net assets of the Group's cash-generating
units.
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity method
financial investment. The determination of the recoverable
amount is based on assumptions regarding future business
developments for the determination of the expected future
cash flows of that financial investment. See ①Note 13 for
the presentation of carrying amounts and fair values of
equity-method financial investments in listed companies.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into
consideration in this context, including historical loss experience,
the size and composition of certain portfolios, current eco-
nomic events and conditions and the estimated fair values and
adequacy of collaterals. In addition to historical and current
information on losses, appropriate and reliable forward-looking
information on factors is also included. This information
includes macroeconomic factors (e.g. GDP growth, unemploy-
ment rate, cost-performance index) and forecasts of future
economic conditions. For receivables from financial services,
these forecasts are determined using a scenario analysis
(baseline scenario, optimistic and pessimistic scenario). Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also O Notes 14 and 33 for further
information.
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold or when new warranty programs are
initiated. Based on historical warranty claim experience,
assumptions have to be made on the type and extent of
future warranty claims and customer goodwill, as well as
on possible recall campaigns for each model series. These
assessments are based on experience of the frequency
and extent of vehicle faults and defects in the past. In addition,
the estimates also include assumptions on the amounts
of potential repair costs per vehicle and the effects of possible
time or mileage limits. The provisions are regularly adjusted
to reflect new information.
Further information on provisions for other risks is provided
in Note 23.
Legal proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on a
wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date
as a result of an event in the past, and whether a future cash
outflow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings,
also with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or
potential litigation will have to be adjusted due to future devel-
opments. Changes in estimates and premises can have a
material effect on the Group's future profitability. It is also
possible that provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could have a
material effect on Daimler's operating results and cash flows
for a particular reporting period, Daimler believes that it
should not materially affect the Group's financial position.
Further information on liability and litigation risks is provided
Note 30.
254
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The calculation of provisions for pensions and similar obligations
and the related pension cost are based on various actuarial
valuations. The calculations are subject to various assumptions
on matters such as current actuarially developed probabilities
(e.g. discount factors and cost-of-living increases), future fluc-
tuations with regard to age and period of service, and expe-
rience with the probability of occurrence of pension payments,
annuities or lump sums. As a result of changed market or
economic conditions, the probabilities on which the influencing
factors are based, may differ from current developments. The
financial effects of deviations of the main factors are calculated
with the use of sensitivity analyses. See ①Note 22 for
further information.
International
Germany
299
International
12
11
Associated companies accounted for
using the equity method
16
14
4
3
12
11
Germany
International
Joint operations, joint ventures,
associated companies and
material other investments accounted
for at (amortized) cost
Germany
International
32
32
13
16
19
16
570
548
circumstances:
5
4
16
16
Unconsolidated subsidiaries
126
119
Germany
International
36
41
90
78
Joint operations accounted for
using proportionate consolidation
1
1
306
Germany
International
1
Joint operations accounted for
using the equity method
3
3
Germany
1
1
International
2
2
Joint ventures accounted for
using the equity method
1
Refund liabilities occur at Daimler especially in the following
in
advance payments received on contracts in the scope of
IFRS 15.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
This reversal is restricted to the impairment loss previously
recognized for the assets or disposal group concerned. The
Group generally discloses these assets or disposal groups
separately in the Consolidated Statement of Financial Position.
Inventories
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable value
is the estimated selling price less estimated costs of comple-
tion and estimated costs to sell. The acquisition or manufacturing
costs of inventories are generally based on the specific
identification method and include costs incurred in acquiring
the inventories and bringing them to their existing location
and condition. Costs for large numbers of inventories that are
interchangeable are allocated under the average cost formula.
In the case of manufactured inventories and work in progress,
acquisition or manufacturing cost also includes production
overheads based on normal capacity.
Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments in the form of financial
assets and financial liabilities are generally presented sepa-
rately. Financial instruments are recognized as soon as Daimler
becomes a party to the contractual provisions of the financial
instrument. In the case of purchases or sales of financial assets
through the regular market, Daimler uses the transaction date
as the date of initial recognition or derecognition.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IFRS 9 Financial Instruments (financial assets
measured at amortized cost, financial assets measured at fair
value through other comprehensive income and financial
assets measured at fair value through profit or loss). Transaction
costs directly attributable to acquisition or issuance are
considered by determining the carrying amount if the financial
instruments are not measured at fair value through profit or
loss.
Financial assets
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets, financial investments and
marketable securities and similar investments and financial
investments. The classification of financial instruments is based
on the business model in which these instruments are held
and on their contractual cash flows.
The determination of the business model is made at the
portfolio level and is based on management's intention and
past transaction patterns. Assessments of the contractual
cash flows are made on an instrument by instrument basis.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include financial
assets with cash flows other than those of principal and interest
on the nominal amount outstanding. Further financial assets
that are held in a business model other "hold to collect" or "hold
to collect and sell" are included here.
In addition, derivatives, including embedded derivatives sepa-
rated from the host contract, which are not classified as
hedging instruments in hedge accounting, as well as financial
assets acquired for the purpose of selling in the near term
that are classified as held for trading, are included here. Gains
or losses on these financial assets are recognized in profit
or loss.
Financial assets at amortized cost. Financial assets at amortized
cost are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding and which are held with
the aim of collecting the contractual cash flows, such as receiv-
ables from financial services, trade receivables or cash and
cash equivalents (business model "hold to collect"). Cash and
cash equivalents consist primarily of cash on hand, checks
and demand deposits at banks, as well as debt instruments and
certificates of deposits with a remaining term when acquired
of up to three months, which are not subject to any material
value fluctuations. Cash and cash equivalents correspond with
the classification in the Consolidated Statement of Cash Flows.
After initial recognition, financial assets at amortized cost are
subsequently carried at amortized cost using the effective
interest method less any loss allowances. Gains and losses are
recognized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or derecog-
nized. Interest effects on the application of the effective
interest method are also recognized in profit or loss as well as
effects from foreign currency translation.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
249
Financial assets at fair value through other comprehensive income.
Financial assets at fair value through other comprehensive
income are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding which are held to collect the
contractual cash flows as well as sell the financial, e.g. to
achieve a defined liquidity target (business model "hold to collect
and sell"). This category also includes equity instruments not
held for trading for which the option to present changes in the
fair value of the instrument within other comprehensive
income has been applied.
After initial measurement, financial assets at fair value through
other comprehensive income are measured at fair value,
with unrealized gains or losses being recognized in other com-
prehensive income/loss. Except for equity instruments a
loss allowance is recognized for expected losses in profit or loss.
Upon disposal of financial assets, the accumulated gains
and losses recognized in other comprehensive income/loss
resulting from measurement at fair value are recognized in
profit or loss. Interest earned on financial assets at fair value
through other comprehensive income is generally reported
as interest income using the effective interest method. Changes
in the fair value of equity instruments measured at fair value
through other comprehensive income are not recycled to profit
or loss. Dividends are recognized in profit or loss when the
right of payment has been established.
Impairment of financial assets
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guarantees
other than those to be measured at fair value through profit
or loss reflecting expected losses for these instruments. The
same method is used for the impairment of non-revocable
loan commitments and financial guarantees. Expected credit
losses are allocated using three stages:
Stage 1: expected credit losses within the next twelve months
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
248
Stage 2: expected credit losses over the lifetime - not credit
impaired
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depre-
ciation) had no impairment loss been recognized in prior years.
Impairment of non-current non-financial assets
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is an
indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset generates
cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). Good-
will and other intangible assets with indefinite useful lives
are tested at least annually for impairment; this takes place at
the level of the cash-generating units. If the carrying amount
of an asset or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the difference.
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some
or all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not included
in the transaction price.
246 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Leasing
Leasing includes all arrangements that transfer the right to
use a specified asset for a stated period of time in return for a
payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of property,
plant and equipment and a lessor of its products. It is evaluated
on the basis of the risks and rewards of a leased asset whether
the ownership of the leased asset is attributed to the lessee
(finance lease) or to the lessor (operating lease).
Daimler as lessee
In the case of an operating lease, the lease payments or
rental payments are expensed on a straight-line basis in the
Consolidated Statement of Income.
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated
depreciation and other accumulated impairment losses.
Depreciation is on a straight-line basis; residual values
of the assets are given due consideration. Payment obligations
resulting from future lease payments are discounted and
disclosed under financing liabilities.
Sale and lease back
The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
Daimler as lessor
Operating leases relate to vehicles that the Group produces
itself and leases to third parties. Additionally an operating
lease may have to be reported with sales of vehicles for which
the Group enters into a repurchase obligation:
Sales of vehicles in the form of a forward (an entity's obligation
to repurchase the asset) and a call option (an entity's right
to repurchase the asset) are reported as operating leases.
Sales of vehicles including a put option (an entity's obligation
to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether a customer has a significant
economic incentive to exercise his right at contract inception.
Amongst others these are the relation between repurchase
price and the expected future market value (at the time of
repurchase) of the asset or historical return rates.
In case of accounting as an operating lease these vehicles are
capitalized at (depreciated) cost of production under leased
equipment in the vehicle segments and are depreciated over
the contract term on a straight-line basis with consideration
of the expected residual values. Changes in the expected residual
values lead either to prospective adjustments of the scheduled
depreciation or to an impairment loss if necessary.
Operating leases also relate to vehicles, primarily Group
products that Daimler Financial Services acquires from non-
Group dealers or other third parties and leases to end
customers. These vehicles are presented at (amortized) cost
of acquisition under leased equipment in the Daimler
Financial Services segment. If these vehicles are Group
products and are subsidized, the subsidies are deducted
from the cost of acquisition. After revenue is received from
the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent resale
on the basis of the separate leasing contracts. The revenue
received from the sale of Group products to the dealers is
estimated by the Group as being of the magnitude of the
respective addition to leased equipment at Daimler Financial
Services. In 2018, additions to leased equipment from
these vehicles at Daimler Financial Services amounted to
approximately €13 billion (2017: approximately €13 billion).
In the case of finance leases, the Group presents the
receivables under receivables from financial services in an
amount corresponding to the net investment of the lease
agreements. The net investment of a lease agreement is the
gross investment (future minimum lease payments and non-
guaranteed residual value) discounted at the rate upon which
the lease agreement is based.
Equity-method investments
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company or
joint venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying amount of the
equity-method investment. If an equity interest in an existing
associated company is increased without change in significant
influence, goodwill is determined only for the additionally
acquired interest; the previous investment is not remeasured
at fair value.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
247
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals of
equity-method investments. If such indications exist, the
Group determines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable amount
of an investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater
of fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an
impairment reversal. If such an assessment is made, the recover-
able amount is remeasured. The amount of an impairment
reversal is limited to the amount by which an asset has been
impaired.
Gains or losses (to be eliminated) from transactions with
companies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments' carrying amounts. Deconsolidation effects from
the contribution of interests in subsidiaries to investments
which are measured using the equity method are also subject
to elimination adjustments to the carrying amount of the
investment.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments. At Daimler Financial
Services, impairment tests are carried out below the segment
level. There is a differentiation between the two cash-generating
units Daimler Financial Services Classic (typical financial
services business) and Daimler Financial Services Mobility
(innovative mobility services). The material assets of the
cash-generating unit Daimler Financial Services Mobility have
been classified as assets held for sale due their intended
contribution into a joint venture. Therefore, no separate testing
for impairment was necessary.
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved
to stage 2 and measured at lifetime expected credit loss, which
is defined as the expected credit loss that results from all
possible default events over the expected life of a financial
instrument.
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by management and which is valid at the date when
the impairment test is conducted. This planning is based
on expectations regarding future market share, the general
development of respective markets as well as the products'
profitability. The multi-year planning comprises a planning
horizon until 2025 and therefore mainly covers the product
life cycles of our automotive business. The rounded risk-adjusted
interest rates used to discount cash flows, which are calculated
for each cash-generating unit, are unchanged from the previous
year at 8% after taxes for the cash-generating units of the
automotive business. For the cash-generating unit Daimler
Financial Services Classic, a risk-adjusted interest rate of
9% after taxes is applied (unchanged from the previous year).
Whereas the discount rate for the cash-generating unit
Daimler Financial Services Classic represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the automotive business is based on the weighted average
cost of capital (WACC). These are calculated based on the
capital asset pricing model (CAPM) taking into account current
market expectations. In calculating the risk-adjusted interest
rate for impairment test purposes, specific peer group informa-
tion is used for beta factors, capital-structure data and
cost of debt. Periods not covered by the forecast are taken into
account by recognizing a residual value (terminal value),
which does not consider any growth rates. In addition, several
sensitivity analyses are conducted. These show that even
in the case of more unfavorable premises for main influencing
factors with respect to the original planning, no need for
impairment exists. If value in use is lower than the carrying
amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
If a financial asset is defined as credit-impaired or in default,
it is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
Changes in the fair value of derivative financial instruments that
are designated in a hedge relationship are recognized peri-
odically in either profit or loss or other comprehensive income,
depending on whether the derivative is designated as a hedge
of changes in fair value or cash flows. Changes in fair value of
non-designated derivatives are recognized in profit or loss.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For
cash flow hedges, fair value changes in the effective portion of
the hedging instrument are recognized after tax in other
comprehensive income.
Under IFRS 9, for cash flow hedges of volatile prices in procure-
ment transactions expected with a high degree of probability,
designation can be made for separable risk components of these
non-financial hedged items. Daimler can apply this possibility
to facilitate future hedge accounting and thereby reduce the inef-
fectiveness of hedge relationships for commodities.
Under IFRS 9, with cash flow hedges, amounts recognized in
other comprehensive income as effective hedging gains
or losses from hedging instruments are removed from the
reserves for derivative financial instruments and directly
included in the initial cost or carrying amount of the hedged
item at initial recognition if a hedged forecast transaction
results in the recognition of a non-financial asset or non-finan-
cial liability.
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from
the reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects
profit or loss.
The ineffective portions of fair value changes are recognized
directly in profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the time value of options or cross currency basis
spreads.
Hedge relationships are to be discontinued prospectively if a
particular hedge relationship ceases to meet the qualifying
criteria for hedge accounting under IFRS 9. Instances that require
discontinuation of hedge accounting are, among others, loss
of the economic relationship between the hedged item and the
hedging instrument, disposal or termination of the hedging
instrument, or a revision of the documented risk management
objective of a particular hedge relationship. Accumulated
hedging gains and losses from cash flow hedges are retained
and are reclassified from equity as described at maturity if
the hedged future cash flows are still expected to occur. Other-
wise, accumulated hedging gains and losses are immediately
reclassified to profit or loss.
If derivative financial instruments do not or no longer qualify for
hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative financial
instruments are classified as held for trading and are measured
at fair value through profit or loss.
Pensions and similar obligations
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest
expense or income is recognized in profit and loss under
interest expense or interest income in the Consolidated
Statement of Income. The other expenses resulting from pension
obligations and other post-employment benefit obligations
(medical care), which mainly result from entitlements acquired
during the year under review, are taken into consideration in
the functional costs in the Consolidated Statement of Income.
252
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The discount factors used to calculate the present values of
defined benefit pension obligations are to be determined -
with maturities and currencies matching the pension payments.
by reference to market yields at the end of the reporting
period on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount factors
are estimated by extrapolating current market rates along the
yield curve.
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when the
curtailment or settlement occurs.
Provisions for other risks
A provision is recognized when a liability to third parties has
been incurred, an outflow of resources is probable and the
amount of the obligation can be reasonably estimated. The
amount recognized as a provision represents the best
estimate of the obligation at the reporting date. Provisions
with an original maturity of more than one year are dis-
counted to the present value of the expenditures expected to
settle the obligation at the end of the reporting period. If
the criteria of the regulations on recognition and measurement
of provisions are not fulfilled and the possibility of a cash
outflow upon settlement is not unlikely, the item is to be pre-
sented as a contingent liability, insofar as it is adequately
measurable. The amount disclosed as a contingent liability
represents the best estimate of the possible obligation at
the reporting date. Provisions and contingent liabilities are
regularly reviewed and adjusted as further information
becomes available or circumstances change.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based on
historical experience.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group has
a detailed formal plan that has either commenced imple-
mentation or been announced.
Contract and refund liabilities
Contract liabilities. A contract liability is an entity's obligation
to transfer goods or services to a customer for which the entity
has received consideration (or the amount is due) from the
customer.
Contract liabilities occur at Daimler especially in the following
circumstances:
Stage 3: expected credit losses over the lifetime – credit
impaired
deferred revenue for service and maintenance contracts
and for extended warranties, and
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment are hedged. In a cash flow
hedge, the variability of cash flows to be received or paid from
expected transactions related to a recognized asset or
liability or a highly probable forecast transaction is hedged. The
documentation of the hedging relationship includes the
objectives and strategy of risk management, the type of hedging
relationship, the nature of the risk being hedged, the identi-
fication of the eligible hedging instrument and the eligible hedged
item, as well as an assessment of the effectiveness require-
ments comprising the risk mitigating economic relationship, the
absence of deteriorating effects from credit risk and the
appropriate hedge ratio. Hedging transactions are regularly
assessed to determine whether the effectiveness require-
ments are met while they are designated.
251
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valu-
ation of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the Consolidated Statement of
Financial Position or on the Consolidated Statement of
Comprehensive Income/Loss.
b) the time value of money; and
A financial asset is migrated to stage 2 if the asset's credit risk
has increased significantly compared to its credit risk at initial
recognition. The credit risk is assessed based on the probability
of default. For trade receivables, the simplified approach is
applied whereby all trade receivables are allocated to stage 2
initially. Hence, no determination of significant increases in
credit risk is necessary.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
250
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Expected credit losses are measured as the probability-weighted
present value of all cash shortfalls over the expected life
of each financial asset. For receivables from financial services,
expected credit losses are mainly calculated with a statistical
model using three major risk parameters: probability of default,
loss given default and exposure at default.
The estimation of these risk parameters incorporates all
available relevant information, not only historical and current
loss data, but also reasonable and supportable forward-
looking information reflected by the future expectation factors.
This information includes macroeconomic factors (e.g.,
gross domestic product growth, unemployment rate, cost
performance index) and forecasts of future economic
conditions. For receivables from financial services, these fore-
casts are performed using a scenario analysis (base case,
adverse and optimistic scenarios). The impairment amount for
trade receivables is predominantly determined on a collective
basis.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be rare
and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this
does not result in derecognition of the contract, then the gross
carrying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is presented in the Consolidated Statement of
Financial Position provided that an enforceable right currently
exists to offset the amounts involved, and there is an intention
either to carry out the offsetting on a net basis or to settle a
liability when the related asset is sold.
Financial liabilities
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities and
other liabilities.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured at
amortized cost using the effective interest method.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting are classified
as held for trading. Gains or losses on liabilities held for trading
are recognized in profit or loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or refi-
nancing activities. These are mainly interest rate risks, currency
risks and commodity price risks.
Embedded derivatives are principally separated from the host
contract and recognized separately. However, embedded
derivatives are not separated from the host contract if that host
contract is a financial asset, if Daimler chooses to measure
a hybrid contract at fair value through profit or loss, or if an
analysis shows that the economic characteristics and risks
of embedded derivatives are closely related to those of the host
contract.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information or the probability of default.
Other revenue primarily comprises revenue from the rental and
leasing business (IAS 17), interest from the financial services
business at Daimler Financial Services in an amount of €5,188
million (2017: €4,613 million) and effects from currency
hedging.
Revenue that is expected to be recognized within three years
related to performance obligations that are unsatisfied (or
partially unsatisfied) amounted to €7,642 million at December 31,
2018. This revenue is mainly derived from long-term service
and maintenance contracts and extended warranties. It does
not include performance obligations from customer contracts
that have original expected durations of one year or less. Long-
term performance obligations of minor importance to the
overall contract value of a bundled contract are not considered
in assessing the original duration of that bundled contract.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue according to IFRS 15 includes revenue that was
included in the contract liabilities at December 31, 2017 in an
amount of €3,583 million (2017: €2,481 million) and revenue
from performance obligations fully (or partially) satisfied in previ-
ous periods in an amount of €434 million (2017: €458 million).
Revenue by segment > F.100 and region 7 F.102 is presented
in Note 34.
F.15
Cost of sales
Revenue disclosed in the Consolidated Statement of Income
includes revenue from contracts with customers and other
revenue not in the scope of IFRS 15.
4. Revenue
257
1 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal revenue
has been adjusted. This adjustment has been fully eliminated in the reconciliation.
164,154
Revenue from contracts with customers (revenue according
to IFRS 15) is disaggregated by the two categories - type of
products and services and geographical region - and presented
in table 7 F.14. The category type of products and services
corresponds to the reportable segments.
5. Functional costs
Personnel expenses and average number of employees
Personnel expenses included in the Consolidated Statement of
Income amounted to €22,432 million in 2018 (2017: €22,186
million). The personnel expenses are composed of wages and
salaries in the amount of €18,329 million (2017: €18,188 mil-
lion), social contributions in the amount of €3,332 million (2017:
€3,292 million) and expenses from pension obligations in the
amount of €771 million (2017: €706 million). The average num-
bers of people employed are shown in table F.16.
Items included in cost of sales are shown in table F.15.
Amortization expense of capitalized development costs in the
amount of €1,538 million (2017: €1,310 million) is presented in
expense of goods sold.
Selling expenses
In 2018, selling expenses amounted to €13,067 million (2017:
€12,951 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
General administrative expenses
General administrative expenses amounted to €4,036 million in
2018 (2017: €3,808 million). They consist of expenses which
are not attributable to production, sales or research and devel-
opment functions, and comprise personnel expenses, deprecia-
tion and amortization of fixed and intangible assets, and other
administrative costs.
Research and non-capitalized development costs
Research and non-capitalized development costs were €6,581
million in 2018 (2017: €5,938 million) and primarily comprise
personnel expenses and material costs.
Optimization programs
In the year 2018, optimization programs did not result in any
material expenses. In the year 2017, at the Daimler Trucks seg-
ment, expenses of €172 million were incurred in connection
with the optimization of fixed costs, especially at the Mercedes-
Benz brand. The cash outflows occurred mainly in 2018.
-8,167
Information on the total remuneration of the current and former
members of the Board of Management and the current
members of the Supervisory Board is provided in Note 38.
Cost of sales
172,321
176
4,524
In millions of euros
3,323
1,010
835
9,708
-192
9,516
Revenue according to IFRS 15
91,941
34,928
12,052
4,154
24,530
9,450
-4,665
147,860
Other revenue
Total revenue
2,410
94,351
827
35,755
1,109
13,161
370
15,080
19,796
-3,502
16,294
152,525
2018
107
Expense of goods sold
Depreciation of equipment
on operating leases
17,978
13,739
12,621
10,852
10,367
298,465 289,530
1 Including proportionally 1,856 employees from proportionately
consolidated companies in 2018 (2017: 1,203).
258
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.17
Other operating income
2018
18,506
2017
Income from costs recharged to third parties
821
761
Government grants and subsidies
102
4,364
Gains on sales of property,
plant and equipment
140
385
Rental income not relating to sales financing
159
In millions of euros
24,823
26,223
80,155
-117,508
-113,707
-8,567
-7,936
Refinancing costs at
Daimler Financial Services
-2,747
-2,187
Impairment losses on receivables
from financial services
Other cost of sales
-382
-500
-5,091
-134,295
-5,296
-129,626
F.16
Average number of employees
2018
2017
Mercedes-Benz Cars¹
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Other
146,240
143,586
82,905
2017
Other markets
712
-20
18,488
16,622
1,666
255
5,366
42,397
-903
41,494
Asia
30,859
6,503
844
NAFTA
227
38,663
-19
38,644
Other markets
3,950
3,661
1,130
777
203
9,721
-187
9,534
230
Revenue according to IFRS 15
59,924
63,734
265
149
256
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.14
Revenue
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Daimler
Financial
Total
-3,810
Recon-
Buses
Services segments
ciliation
Group
In millions of euros
2018
Europe
36,902
10,775
8,937
2,851
4,269
Daimler
90,199
37,561
12,577
2017
Europe
37,607
10,727
8,684
2,861
3,827
63,706
-3,582
60,124
NAFTA
19,721
In millions of euros
14,767
299
5,229
41,514
-871
40,643
Asia
30,249
6,111
860
159
218
37,597
1,498
Daimler
Group
Recon-
ciliation1
Total
segments
4,110
10,068
154,515
-4,919
149,596
Other revenue
2,904
1,049
Total revenue
93,103
38,273
13,626
419
4,529
16,201
26,269 175,800
21,285
-3,519
17,766
-8,438
167,362
Daimler
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Financial
Services¹
37,577
Income associated with
5 The dividend from BBAC of €1,134 million was partly paid out in the year 2017 with an amount of €768 million.
The remaining amount of €346 million was paid out in the year 2018.
Other miscellaneous income
2 Including capitalized borrowing costs on development costs of €41 million (2017: €47 million).
Amortization amounted to €15 million (2017: €13 million).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 263
11. Property, plant and equipment
Property, plant and equipment developed as shown in table
71 F.31.
In 2018, government grants of €51 million (2017: €50 million)
were deducted from property, plant and equipment.
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a car-
rying amount at December 31, 2018 of €335 million (2017:
€320 million). In 2018, additions to and depreciation expense
on assets under finance lease arrangements amounted to
€17 million (2017: €204 million) and €33 million (2017: €34 mil-
lion), respectively.
F.30
Amortization expense for intangible assets
in the Consolidated Statement of Income
In millions of euros
1 Primarily changes from currency translation.
Cost of sales
2017
1,820
1,585
Selling expenses
85
89
General administrative expenses
57
45
2018
Research and non-capitalized
14,801
11,257
later than five years
62
71
18,336
16,600
12. Equipment on operating leases
The development of equipment on operating leases is shown in
table F.32.
At December 31, 2018, equipment on operating leases with a
carrying amount of €9,804 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2017: €8,684 million) (see also
Minimum lease payments
2,462
Note 24).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Equity-method investments
Carrying amount at December 31, 2017
1,115
10,280
2,340
13,735
Carrying amount at December 31, 2018
1,082
Non-cancelable future lease payments to Daimler for equipment
on operating leases are due as presented in table 71 F.33.
development costs
Other operating expense
66
48
1,752
3,603
6,949
559
985
803
-2,347
-415
-1,173
1,032
-796
-2,507
Other changes¹
-475
-504
-709
-152
-1,840
Balance at December 31, 2017
16,987
-123
562
Disposals
Reclassifications
1
1
2,029
1,768
F.31
Property, plant and equipment
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business acquisitions
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Technical
equipment
and machinery
Other
equipment,
factory and
office
equipment
Advance payments
relating to plant
and equipment
and construction
in progress
Total
16,756
25,624
26,348
3,489
72,217
Other additions
8,607
25,964
9,898
7,922
Disposals
Other changes¹
-277
-373
-650
3
6
40
49
Reclassifications
Balance at December 31, 2018
7,194
2,422
1,134
Additions due to business acquisitions
Other additions
24,856
Reclassifications
Disposals
-19,643
274
Other changes¹
2,029
1,553
7,730
1,323
445
1,768
Reclassifications
Disposals
-521
-368
-889
476
Other changes¹
-26
-99
-147
Balance at December 31, 2017
271
5,912
2,279
8,462
Additions
-22
-3,445
Balance at December 31, 2017
58,798
Disposals
-6,431
Other changes¹
195
Balance at December 31, 2018
14,055
Carrying amount at December 31, 2017
Carrying amount at December 31, 2018
47,074
49,476
Reclassifications
1 Primarily changes from currency translation.
2 Comprises impairments of €133 million.
Maturity of minimum lease payments
for equipment on operating leases
In millions of euros
At December 31,
2018
2017
Maturity
within one year
8,376
F.33
8,567
Additions²
11,724
Additions due to business acquisitions
Other additions
24,854
Reclassifications
Disposals
-21,101
Other changes¹
980
Balance at December 31, 2018
63,531
Depreciation/impairment
Balance at January 1, 2017
10,353
Additions
7,936
Reclassifications
Disposals
-5,902
Other changes¹
-663
Balance at December 31, 2017
between one and five years
27,398
4,470
74,819
604
optimization programs
26
4,860
1,050
-397
3
656
4,282
4,230
500
4,818
-42
-1
1,498
1,541
Key figures on interests in associated companies accounted for using the equity method
In millions of euros
BBAC
BAIC Motor³
36
THBV (HERE)
Total
Joint
ventures
F.32
Equipment on operating leases
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
57,030
Table 71 F.34 shows the carrying amounts and profits/losses
from equity-method investments.
Table 71 F.35 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's Consolidated Financial Statements.
F.34
Joint
operations
Summarized carrying amounts and profits/losses from equity-method investments
At December 31, 2018
Equity investment¹
Equity result¹
At December 31, 2017
Equity investment¹
Equity result¹
1 Including investor-level adjustments.
F.35
Associated
companies
In millions of euros
Others
Total
At December 31, 2018
Equity result²
Dividend payment to Daimler5
1 Proportionate stock market prices.
2 Including investor-level adjustments.
49.0
10.1
33.3
832
2,130
Equity investment²
777
643
4,282
1,143
290
121
-13
4 The dividend from BBAC of €1,024 million was partly paid out in the year 2018. The payment was €930 million.
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's Consolidated Financial Statements
with a three-month time lag.
29
732
Stock market price¹
Equity interest (in %)
At December 31, 2017
Equity interest (in %)
49.0
9.6
29.6
Stock market price¹
353
Equity investment²
2,353
650
522
705
4,230
Equity result²
1,247
-107
-101
11
1,050
Dividend payment to Daimler4
1,024
10
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
264
1 Primarily changes from currency translation.
30,948
17,656
27,176
30,377
5,667
80,876
Depreciation/impairment
Balance at January 1, 2017
8,749
16,469
Balance at December 31, 2018
20,618
352
1,534
2,035
45,836
3,921
Reclassifications
-1
1
Disposals
Additions
322
96
172
Additions due to business acquisitions
Other additions
309
888
1,932
4,341
7,470
Reclassifications
612
988
1,536
-3,136
Disposals
-336
-634
-661
-104
-1,735
Other changes¹
84
-30
-201
2,301
-1,084
-1,925
-18
129
Balance at December 31, 2018
8,915
17,675
23,338
-1,273
72
49,928
-39
Carrying amount at December 31, 2017
9,334
5,933
4,470
27,981
Carrying amount at December 31, 2018
8,741
9,501
7,039
5,667
8,244
Other changes¹
-540
-558
Other changes¹
-156
-289
-549
-994
Balance at December 31, 2017
8,743
16,630
21,465
46,838
Additions
385
1,633
2,273
4,291
Reclassifications
1
-12
11
Disposals
-175
-640
5,136
9,890
Additions
Tax-free income and
non-deductible expenses
14
-632
Other
-140
36
Actual income tax expense
-3,013
-3,350
260
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.25
Deferred tax assets and liabilities
In millions of euros
2018
At December 31,
2017
Deferred tax assets
4,021
Deferred tax liabilities
-3,762
2,844
-2,347
Deferred tax assets, net
259
497
-171
F.26
-101
Change of valuation allowance on
2018
2017
In millions of euros
Deferred taxes
-770
659
due to temporary differences
due to tax loss carryforwards
and tax credits
-510
1,059
-260
-400
F.24
Reconciliation of expected income tax expense
to actual income tax expense
In millions of euros
2018
2017
Expected income tax expense
-3,160
Foreign tax rate differential
Trade tax rate differential
Tax law changes
326
-4,166
-54
37
52
11
1,585
deferred tax assets
Split of tax assets and liabilities before offset
In millions of euros
At December 31,
2018
unused tax credits
1,538
1,813
Provisions for pensions and similar
obligations
592
671
Other provisions
1,692
1,875
Liabilities
2,092
1,621
Deferred income
1,084
878
Miscellaneous liabilities
2
15,187
Valuation allowances
-1,299
15,634
-1,291
thereof on temporary differences
-213
thereof on tax loss carryforwards and
Tax loss carryforwards and
5,549
4,837
financial assets
2017
2
-194
497
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority and if there is the right to set
off current tax assets against current tax liabilities. In the pre-
sentation of deferred tax assets and liabilities in the Consoli-
dated Statement of Financial Position, no difference is made
between current and non-current. In the Consolidated State-
ment of Financial Position, deferred tax assets and liabilities
are presented as shown in table 7 F.25.
In respect of each type of temporary difference and in respect of
each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table 1 F.26.
The development of deferred tax assets, net, is shown in table
71 F.27.
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments),
the expense for income taxes is comprised as shown in table
71 F.28.
In the Consolidated Statement of Financial Position, the
valuation allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €8 million
compared to December 31, 2017. This is primarily a result of the
additional valuation allowances of €101 million recognized
in net profit. Furthermore, a decrease in the valuation allowance
was recognized in equity, amongst others due to currency
translation.
At December 31, 2018, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€904 million). €35 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carryfor-
wards which expire at various dates from 2019 through 2020,
€160 million relates to tax loss carryforwards which expire at
various dates from 2021 through 2023, €50 million relates to
tax loss carryforwards which expire at various dates from 2024
through 2028 and €659 million relates to tax loss carryfor-
wards which can be carried forward indefinitely. Furthermore,
the valuation allowance primarily relates to temporary differ-
ences at non-German companies as well as net operating
losses for state and local taxes at the US-companies. Daimler
believes that it is more likely than not that those deferred
tax assets cannot be utilized. In 2018 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €127 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
Intangible assets
Property, plant and equipment
Components of deferred tax expense
Equipment on operating leases
Receivables from financial services
30
47
154
134
1,808
1,662
1,017
977
341
405
Miscellaneous assets, mainly other
Inventories
F.23
-3,350
-3,013
-61
7. Other financial income/expense, net
Table 71 F.19 shows the components of other financial income/
expense, net.
In 2018, the measurement at fair value of the minority interest
in Aston Martin Lagonda Global Holdings plc in other financial
assets resulted in a gain of € 111 million, which has been
assigned to the segment earnings of Mercedes-Benz Cars. The
measurement was carried out in connection with the initial
public offering, which took place at the beginning of October
2018.
Income and expense from compounding
and effects from changes in discount rates of
provisions for other risks
-31
Miscellaneous other financial
income/expense, net
241
-149
210
-210
F.20
Interest income and interest expense
In millions of euros
2018
2017
Interest income
Net interest income on the net assets of
defined benefit pension plans
3
2
Interest and similar income
Other miscellaneous expense primarily comprises changes in
other provisions. Compared with the prior year, it includes
higher expenses related to legal proceedings.
The composition of other operating expense is shown in table
7 F.18.
In the year 2017, gains on sales of property, plant and equipment
included gains of €267 million from the sale of real estate
by Mitsubishi Fuso Truck and Bus Corporation at the Kawasaki
site in Japan.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems. In the year 2018,
other miscellaneous income contains insurance compensation
of €219 million.
133
1,108
724
2,330
2,259
F.18
Other operating expense
In millions of euros
2018
2017
Losses on sales of property,
plant and equipment
268
-106
-1,356
-117
-926
-1,462
-1,043
F.19
Other financial income/expense, net
In millions of euros
2018
2017
6. Other operating income and expense
The composition of other operating income is shown in table
7 F.17.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
Other miscellaneous expense
tax credits
212
214
2,932
6,483
7,663
7,484
10,595
13,967
F.22
Components of income taxes
2018
2017
In millions of euros
Current taxes
German companies
-1,116
-2,024
Non-German companies
-1,127
-1,985
Deferred taxes
German companies
125
-425
Non-German companies
-895
1,084
German companies
Non-German companies
In millions of euros
2017
2018
Interest expense
Net interest expense on the net obligation
from defined benefit pension plans
-133
-211
Interest and similar expense
-660
-371
-793
-582
8. Interest income and interest expense
Table 1 F.20 shows the components of interest income and
interest expense.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 259
271
9. Income taxes
Profit before income taxes in Germany includes profit/loss
on equity-method investments if the equity interests in those
companies are held by German companies.
Table 71 F.22 shows the components of income taxes.
The current tax expense includes tax benefits at German and
foreign companies of €529 million (2017: tax expenses of €268
million) recognized for prior periods.
The deferred tax expense/benefit is comprised of the compo-
nents shown in table 7 F.23.
For German companies, in 2018 and 2017, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes in
both years amounted to 29.825%.
For non-German companies, the deferred taxes at period-end
were calculated using the tax rates of the respective countries.
Table 71 F.24 shows a reconciliation of expected income tax
expense to actual income tax expense determined using the
unchanged applicable German combined statutory tax rate of
29.825%.
The law signed in 2017 by the President of the United States of
America for a comprehensive tax reform ("H.R. 1/Tax Cuts
and Jobs Act"), includes the reduction of the nationwide federal
corporate income tax rate for US-companies from 35% to 21%,
starting on January 1, 2018. At year-end 2017, the reduction of
the federal corporate income tax rate required the remeasure-
ment of the deferred tax liabilities and deferred tax assets of the
US-subsidiaries of Daimler. The resulting tax benefit of €1,626
million is included in the line item tax law changes.
In 2018 and 2017, the Group impaired deferred tax assets of
foreign subsidiaries. The resulting tax expenses are included in
the line item change of valuation allowance on deferred tax
assets.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German compa-
nies and tax-free results of our equity-method investments.
Furthermore, in 2017, the line item also includes tax expenses
in connection with the interpretation of tax laws.
F.21
Profit before income taxes
Profit before income taxes is comprised as shown in table
71 F.21.
293
-1,086
13,888
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2018
Amortization/impairment
Development
Goodwill
(acquired)
costs
(internally
generated)²
Other
intangible
assets
(acquired)
Total
1,481
13,963
4,384
Deferred tax assets, gross
Other additions
Additions due to business combinations
Balance at December 31, 2017
Other changes¹
262
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Intangible assets
Intangible assets developed as shown in table 71 F.29.
At December 31, 2018, goodwill of €433 million (2017: €455
million) relates to the Daimler Financial Services segment,
goodwill of €418 million (2017: €418 million) relates to the
Daimler Trucks segment and goodwill of €168 million (2017:
€180 million) relates to the Mercedes-Benz Cars segment.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2018: €4,029
million; 2017: €5,086 million). In addition, other intangible
assets with a carrying amount of €270 million (2017: €255 mil-
lion) are not amortizable. These non-amortizable intangible
assets are distribution rights in the vehicle segments with
indefinite useful lives as well as trademarks in the Daimler
Trucks segment with indefinite useful lives. The Group plans to
continue to use these assets unchanged.
Table 1 F.30 shows the line items of the Consolidated Statement
of Income in which total amortization expense for intangible
assets is included.
19,828
F.29
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business combinations
Other additions
Reclassifications
Disposals
Intangible assets
-4,107
9
25
3,176
-
-
-282
-432
-714
-31
6
57
32
1,356
18,451
4,884
24,691
Balance at January 1, 2017
640
2,535
1
22, 197
1
2,779
755
3,535
-
-34
-524
16
-396
-71
-26
-140
-237
1,386
16,192
4,619
-954
-2,285
1,541
728
-55
-721
-382
-321
Miscellaneous assets
-793
Receivables from financial services
-78
Inventories
-4,387
Equipment on operating leases
-1,575
-1,757
Property, plant and equipment
-127
-115
Other intangible assets
Provisions for pensions and
-3,060
similar obligations
Miscellaneous liabilities
-757
as of January 1
In millions of euros
Change of deferred tax assets, net
F.27
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of juris-
dictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed for all
open tax
years.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group
did not recognize deferred tax liabilities on retained earnings
of non-German subsidiaries of €28,514 million (2017: €28,692
million) which are intended to be reinvested. If those earnings
were paid out as dividends, an amount of 5% would be taxed
under German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences might
arise if the dividends first have to be distributed by a non-German
subsidiary to a non-German holding company. Normally, the
distribution would lead to an additional income tax expense. It
is not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
259
Deferred tax assets, net
-3,082
-150
-307
-13,846
-13,629
Deferred tax liabilities, gross
-1,572
-233
-316
Other provisions
2018
-5,092
Development costs
232
Deferred tax assets, net
as of December 31
259
497
1 The other changes primarily relate to effects from
currency translation.
Other changes¹
-197
-3,352
2018
2017
In millions of euros
Income tax expense in the consolidated
financial statement of income
-3,013
-3,350
Income tax expense/benefit recorded
in other reserves
Tax expense in equity
-19
F.28
on actuarial gains/losses from defined
benefit pension plans
-1,097
14,343
171
2017
Deferred tax assets, net
497
Deferred tax expense/benefit in the
financial statement of income
-770
659
363
Change in deferred tax expense/benefit
on equity instruments/debt instruments
included in other comprehensive
income/loss
21
-3
Change in deferred tax expense/benefit
on derivative financial instruments
included in other comprehensive
income/loss
537
-735
Change in deferred tax expense/benefit
237
197
59
130
386
-25
148
926
360
-160
-17
-116
-166
-160
-122
-442
-
413
-33
152
(Stage 3)
56
7,298
-152
-132
-354
26,660
-2
409
-212
17,415
-140
8,836
22,800
295
15,075
7,430
27,014
14,923
411
8,976
Net carrying amount
Loss allowances
Gross carrying amount
-2,489
-38
-1,500
-951
25,289
321
12
333
16,575
14,050
2,525
17,627
-2
293
-286
22,514
870
Total
Balance at December 31 according to IFRS 9
Currency translation and other changes
Transfer to stage 3
Transfer to stage 2
Transfer to stage 1
Change in models/risk parameters
Reversals
Utilization
Change in remeasurement
Additions
Balance at January 1 according to IFRS 9
Effect of initial application of IFRS 9
Balance at December 31 according to IAS 39
In millions of euros
(Stage 2)
(Stage 1)
credit
impaired
not credit
impaired
Lifetime expected
credit loss
12-month expected
credit loss
Development of loss allowances for receivables from financial services due to expected credit losses (according to IFRS 9)
F.40
At December 31, 2018
269
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
361
22,150
3,139
Equity (excluding non-controlling interests) attributable to the Group
26,409
3,434
29,843
-2,829
F.37
Summarized aggregated financial information on minor equity-method investments
In millions of euros
Associated companies
Joint ventures
2018
2017
2018
2017
Summarized aggregated financial information (pro rata)
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
33
61
1
-28
-
-
Other comprehensive income/loss
-6
-1
-1
Total comprehensive income/loss
27
60
0
-28
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
Revenue at THBV relates to HERE; revenue for the year 2017 is solely for the month of January until the change in the consolidation of HERE at THBV.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Daimler recognizes its proportionate share of profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
522
732
Unrealized profit (-)/loss (+) on sales to/purchases from
-107
-93
-8
-9
Equity-method goodwill
-
-
-
70
268
Other
-1
-80
4
Carrying amount of equity-method investment
2,353
2,130
650
777
522
732
1 BBAC:
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
-1
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Receivables from financial services
Table 71 F.38 shows the components of receivables from finan-
cial services.
3,061
19,126
7,430
15,370
22,800
39,858
47,066
86,924
Loss allowances
Net carrying amount
-537
45,440
16,065
-549
51,300
-404
39,454
-466
-870
46,600
86,054
F.39
Maturities of the finance lease contracts
In millions of euros
At December 31, 2018
< 1 year
1 year up
to 5 years
> 5 years
-1,086
96,740
712
44,998
16,363
Types of receivables
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily, used vehicles traded
in by dealers' customers or real estate such as dealers' show-
rooms.
Receivables from finance-lease contracts consist of receivables
from leasing contracts for which all substantial risks and
rewards incidental to the leasing objects are transferred to the
lessee.
Maturities of the finance-lease contracts are shown in table
71 F.39.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for operat-
ing activities in the Consolidated Statement of Cash Flows.
Loss allowances
The development of loss allowances for receivables from finan-
cial services due to expected credit losses at December 31,
2018 under IFRS 9 is shown in table 7 F.40. Changes in the
loss allowances for receivables from financial services at
December 31, 2017 under IAS 39 are shown in table > F.41.
The carrying amounts of receivables from financial services
based on modified contracts that are shown in stage 2 and 3,
amounted to €184 million at December 31, 2018. In addition,
carrying amounts of €127 million in connection with contractual
modifications were reclassified from stage 2 and 3 into stage 1.
F.38
Receivables from financial services
28,635
In millions of euros
Current Non-current
Total
Current Non-current
At December 31, 2017
Total
Sales financing with customers
18,452
Sales financing with dealers
Finance-lease contracts
18,549
8,976
Gross carrying amount
45,977
30,029 48,481
3,782 22,331
18,038 27,014
51,849 97,826
At December 31, 2018
7,779
602
8,381
738
2,461
In the first quarter of 2018, the shareholders of THBV decided
on a payback from the capital reserve. The amount of €96
million attributable to Daimler was paid out and decreased the
carrying amount of the investment accordingly.
THBV carried out capital increases in the second and fourth
quarter of 2018. Daimler participated in the capital increases
with in total €62 million, whereby the equity interest attributable
to Daimler gradually increased by 0.2% to 29.6%. The capital
contributions increased the carrying amount of the investment
accordingly.
Table 1 F.36 shows summarized IFRS financial information after
purchase price allocation for the significant associated com-
panies which were the basis for equity-method accounting in
the Group's Consolidated Financial Statements.
Other minor equity-method investments
In the second quarter of 2018, the result of joint ventures
accounted for using the equity method includes an expense of
€418 million for Toll Collect, primarily related to the settle-
ment of the arbitration proceedings. The result is allocated to
the Daimler Financial Services segment. Further information
is provided in Note 30.
The equity-method result of joint ventures in 2017 includes
impairments of investments of €125 million.
Table 71 F.37 shows summarized aggregated financial informa-
tion for the other minor equity-method investments after pur-
chase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in Notes 3 and 37.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
267
F.36
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
In millions of euros
BBAC1
2018
2017
2018
BAIC Motor²
2017
THBV³ (HERE)
2018
2017
Information on the statement of income
Revenue
17,433
15,373
In December 2017, the former THBV shareholders Daimler,
Audi and BMW signed agreements on the sale of shares in
THBV to Robert Bosch Investment Nederland B.V. and to Conti-
nental Automotive Holding Netherlands B.V. Those transac-
tions were concluded on February 28, 2018. Each of the two
buyers acquired a share of 5.9% of THBV. The sale of shares
was carried out in equal parts by Daimler, Audi and BMW. As a
result, Daimler's equity interest decreased from 33.3% to
29.4%. The effect on earnings was not material for Daimler.
On January 31, 2017, the sale of a 15% shareholding in HERE
between THBV and Intel Holdings B.V. (Intel) has been com-
pleted. As a result, THBV now only has a significant influence
on its former 100% subsidiary HERE. Therefore, as of Febru-
ary 1, 2017, HERE is no longer fully consolidated in the financial
statements of THBV, but is presented as an associated com-
pany using the equity method. The change in the consolidation
method led to the remeasurement of the HERE shares at fair
value in the first quarter of 2017. The income of €183 million
from this transaction that is attributable to Daimler is included
in profit/loss on equity-method investments in the first quarter
of 2017.
There Holding B.V. (THBV) holds an interest in HERE Interna-
tional B.V. (HERE). HERE is one of the biggest manufacturers of
digital roadmaps for navigation systems worldwide. Future
expected high resolution maps will be one of the fundamentals
for future autonomous driving. THBV is accounted for in the
Consolidated Financial Statements of Daimler AG as an associ-
ated company using the equity method, and is allocated to the
Mercedes-Benz Cars segment.
THBV (HERE)
-40
-1,672
-1,117
Unearned finance income
451
437
14
16,583
2,716
19,299
10,093
Gross investment
704
Unguaranteed residual values
9,389
20,085
Contractual future lease payments
> 5 years
1 year up
to 5 years
< 1 year
266 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BBAC
Beijing Benz Automotive Co., Ltd. (BBAC) produces and distri-
butes Mercedes-Benz passenger cars and spare parts in China.
The investment and the proportionate share in the results of
BBAC are allocated to the Mercedes-Benz Cars segment.
The remainder of the dividend which was approved by the
shareholders of Beijing Benz Automotive Co., Ltd. (BBAC) in the
second quarter of 2017 was paid out in the first quarter of
2018 and led to a cash inflow of €346 million.
In the second quarter of 2018, the shareholders of BBAC
approved the payout of a dividend for the 2017 financial year.
The amount of €1,024 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The first
part of the dividend was paid in the third quarter and led to a
cash inflow of €495 million. A further portion of the dividend
was paid in the fourth quarter of 2018 and led to a cash inflow
of €435 million. Daimler plans to contribute additional equity
of in total €0.4 billion in accordance with its shareholding ratio
in the years 2019 to 2020.
BAIC Motor
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger car
division of BAIC Group, one of the leading automotive companies
in China. Directly or via subsidiaries, BAIC Motor is engaged
in the business of researching, developing, manufacturing, sell-
ing, marketing and servicing automotive vehicles and related
parts and components and all related services. Due to Daimler's
representation on the board of directors of BAIC Motor and
other contractual arrangements, Daimler classifies this invest-
ment as an investment in an associate, to be accounted for
using the equity method; in the segment reporting, the invest-
ment's carrying amount and its proportionate share of profit or
loss are presented in the reconciliation of total segment's
assets to Group assets and total segments' EBIT to Group EBIT,
respectively.
On May 3, 2018, BAIC Motor issued new shares at the Hong
Kong Stock Exchange. As a result, Daimler's interest in BAIC
Motor was diluted from 10.08% to 9.55%. The dilution did not
lead to any material earnings effects at Daimler. Daimler con-
tinues to exercise significant influence on BAIC Motor.
As a result of the significantly reduced stock-exchange price
of BAIC Motor in 2018, Daimler assessed if there is any objective
indication of an impairment of its investment in BAIC Motor.
This assessment did indicate a need for an impairment in the
amount of €150 million in the fourth quarter of 2018. In the
first quarter of 2017, a gain of €240 million was included due to
the reversal of an impairment. The gain in 2017 was a result
of the increased stock-exchange price. Both the gain and the loss
are included in the line item profit/loss on equity-method
investments, net.
Total
18,510
Profit/loss from continuing operations after taxes
2,570
7,156
7,058
10,753
10,140
2
1,906
289
Non-current liabilities
967
741
3,545
3,077
Current liabilities
Current assets
6,625
10,663
10,954
1
5,022
4,540
10,370
9,198
1,764
2,195
Equity (including
non-controlling interest)
-
6,335
2,224
1,763
13,825
2,350
1,802
1,649
-337
71
-151
Profit/loss from discontinued operations after taxes
Other comprehensive income/loss
Total comprehensive income/loss
-
513
7
13,089
23
-7
2
2,577
2,373
1,802
1,752
-344
364
Information on the statement of financial position and
reconciliation to equity-method carrying amounts
Non-current assets
5,458
4,558
103
-
-93
-47
122
204
19. Trade receivables
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
240
115
125
Balance at December 31 according to IFRS 9
-37
-23
-14
Currency translation and other changes
-105
1
Transfer to stage 3
-2
2
Transfer to stage 2
-
-
Change in models/risk parameters
-36
-57
-37
-18
-19
-1
6
-15
10
At December 31, 2018, the Group has the 2015-2018 Perfor-
mance Phantom Share Plans (PPSP) outstanding. The PPSP
are cash-settled share-based payment instruments and are
measured at their respective fair values at the balance sheet
date. The PPSP are paid out at the end of the stipulated hold-
ing period; earlier, pro-rated payoff is possible in the case of
benefits leaving the Group only if certain defined conditions
are met. PPSP 2014 was paid out as planned in the first quarter
of 2018.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period of one
year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual
bonus, which depends on this development, is measured by
using the intrinsic value at the reporting date.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the Consolidated
Statement of Income and Consolidated Statement of Financial
Position are shown in table 71 F.53.
Table 71 F.54 shows expenses in the Consolidated Statement
of Income resulting from the rights of current members of the
Board of Management.
The details shown in table 7 F.54 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2018 can be found in the
Remuneration Report. Management Report from page 120
F.53
Effects of share-based payment
In millions of euros
PPSP
Medium-term
component of
Provision
13
2018
2018
At December 31,
2017
-13
-98
112
191
annual bonus of
the members
of the Board
of Management
-2
-7
Expense
2017
21. Share-based payment
5
105
12,586
Net carrying amount
-240
Loss allowances
12,295
12,826
Gross carrying amount
At December 31,
2018
2017
In millions of euros
Trade receivables
F.48
19,361
297
25,686
-300
11,995
29,489
Advance payments to suppliers
21,351
products held for resale
Finished goods, parts and
2,655
3,373
4,674
Work in progress
3,130
manufacturing supplies
At December 31,
2018
2017
Raw materials and
In millions of euros
334
1
18. Inventories
The amount of write-down of inventories to net realizable value
recognized as an expense in cost of sales was €333 million in
2018 (2017: €328 million). Inventories that are expected to be
recovered or settled after more than twelve months amounted
to €1,047 million at December 31, 2018 (December 31, 2017:
€954 million) and are primarily spare parts.
60
45
296
128
168
-4
300
(Stage 3)
(Stage 2)
credit
impaired
not credit
impaired
Total
Inventories are comprised as shown in table 7 F.47.
Lifetime expected credit loss
Reversals
Utilization
Change in remeasurement
Balance at January 1 according to IFRS 9
Additions
Effect of initial application of IFRS 9
Balance at December 31 according to IAS 39
In millions of euros
Development of loss allowances for trade receivables
due to expected credit losses (according to IFRS 9)
F.49
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €21 million at December 31, 2018 (December 31, 2017: €51
million). Those assets are utilized in the context of normal
business operations.
In addition, inventories with a carrying amount of €367 million
at December 31, 2018 (December 31, 2017: €419 million)
were pledged as collateral for liabilities from ABS transactions
(see also
Note 24).
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars at Mercedes-
Benz Cars and Mercedes-Benz Vans included in inventories at
Daimler AG were pledged as collateral to the Daimler Pension
Trust e.V. in an amount of €952 million at December 31, 2018
(December 31, 2017: €1,033 million).
At December 31, 2018
Table 71 F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on financial assets, derivative financial instru-
ments and equity-method investments.
Other reserves
Utilization
-107
Currency translation and other changes
Balance at December 31
4
300
At December 31, 2018
Lifetime expected credit loss
Total
not credit
impaired
credit
impaired
(Stage 2)
(Stage 3)
63
12,463
12,826
10,456
112
10,568
1,315
36
1,351
190
3
193
115
1
363
116
Charged to costs and expenses
Balance at January 1
Total
Trade receivables are comprised as shown in table 7 F.48.
At December 31, 2018, €29 million of the trade receivables
mature after more than one year (December 31, 2017:
€38 million).
Trade receivables are receivables from contracts with custom-
ers in scope of IFRS 15.
Loss allowances
The development of loss allowances due to expected credit
losses for trade receivables at December 31, 2018 under IFRS 9
is shown in table 7 F.49. Changes in the loss allowances
for trade receivables at December 31, 2017 under IAS 39 are
shown in table 7 F.50.
Credit risks
Information on credit risks included in trade receivables
at December 31, 2018 under IFRS 9 is shown in table > F.51
and at December 31, 2017 under IAS 39 in table 7 F.52.
Further information on financial risk and types of risk is
provided in O Note 33.
F.50
Development of loss allowances
340
for trade receivables (according to IAS 39)
2017
F.51
Credit risks included in trade receivables (according to IFRS 9)
In millions of euros
Gross carrying amount
thereof
not past due
past due 30 days and less.
past due 31 to 60 days
past due 61 to 90 days
past due 91 to 180 days
past due more than 180 days
In millions of euros
142
73
215
See also the Consolidated Statement of Changes in Equity
7 F.05.
Share capital
The share capital (authorized capital) is divided into no-par-value
shares. All shares are fully paid up. Each share confers the
right to one vote at the Annual Shareholders' Meeting of Daimler
AG and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal portion of the
profits as defined by the dividend distribution decided upon
at the Annual Shareholders' Meeting. Each share represents a
proportionate amount of approximately €2.87 of the share
capital.
Since January 1, 2017, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2018 is 1,070 million, unchanged from December 31, 2017.
Approved capital
The Annual Shareholders' Meeting held on April 5, 2018
authorized the Board of Management, with the consent of the
Supervisory Board, to increase the share capital of Daimler AG
in the period until April 4, 2023 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2018).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of Man-
agement was authorized with the consent of the Supervisory
Board to exclude shareholders' subscription rights under certain
conditions and within defined limits.
Approved Capital 2014, which had not been utilized, was can-
celled when the resolution for a new Approved Capital 2018
took effect. Approved Capital 2018 has not yet been utilized.
Conditional capital
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to
issue convertible and/or warrant bonds or a combination
of these instruments ("bonds") with a total face value of up to
€10.0 billion and a maturity of no more than ten years. The
Board of Management is allowed to grant the holders of these
bonds conversion or warrant rights for new registered no-
par-value shares in Daimler AG with an allocable portion of the
share capital of up to €500 million in accordance with the
details defined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-cash
contributions, in particular for shares in other companies. The
terms and conditions of the bonds can include warranty
obligations or conversion obligations. The bonds can be issued
once or several times, wholly or in installments, or simultane-
ously in various tranches as well by affiliates of the Company
within the meaning of Sections 15 et seq. of the German
Stock Corporation Act (AktG). Among other things, the Board
of Management was authorized to exclude shareholders' sub-
scription rights for the bonds under certain conditions and
within defined constraints with the consent of the Supervisory
Board.
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
This authorization to issue convertible and/or warrant bonds
has not yet been utilized.
Treasury shares
20. Equity
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to
acquire treasury shares in a volume up to 10% of the share
capital issued as of the day of the resolution to be used
for all legal purposes. The shares can be used, amongst other
things excluding shareholders' subscription rights, for
business combinations or to acquire companies or to be sold
to third parties for cash at a price that is not significantly
lower than the stock-exchange price of the Company's shares.
The acquired shares can also be used to fulfill obligations
from issued convertible bonds and/or bonds with warrants and
to be issued to employees of the Company and employees
and board members of the Company's affiliates pursuant to
Sections 15 et seq. of the German Stock Corporation Act (AktG).
The treasury shares can also be canceled.
The authorization to acquire treasury shares was not exercised
in the reporting period.
As was the case at December 31, 2017, no treasury shares are
held by Daimler AG at December 31, 2018.
Employee share purchase plan
In 2018, 0.7 million Daimler shares representing €2.1 million
or 0.07% of the share capital were purchased for a price of €50
million and reissued to employees (2017: 0.6 million Daimler
shares representing €1.7 million or 0.06% of the share capital
were purchased for a price of €42 million).
Capital reserves
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise of
the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership inter-
ests in consolidated entities and directly attributable related
transaction costs.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
275
Retained earnings
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's Consolidated
Financial Statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earn-
ings. Within the reporting period effects of first time adoption
for hyperinflation in Argentina were included in the line item
"Other" of Consolidated Statement of Changes in Equity.
Dividend
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2018, the Daimler management
will propose to the shareholders at the Annual Shareholders'
Meeting to pay out €3,477 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€3.25 per no-par-value share entitled to a dividend (2017:
€3,905 million and €3.65 per no-par-value share entitled to a
dividend respectively).
The Board of Management is further authorized, with the con-
sent of the Supervisory Board, to exclude shareholders' sub-
scription rights in other defined cases. In a volume up to 5% of
the share capital issued as of the day of the resolution of the
Annual Shareholders' Meeting, the Company was also autho-
rized to acquire treasury shares also by using derivatives (put
options, call options, forward purchases or a combination of
these instruments), whereby the term of a derivative must not
exceed 18 months and must not end later than March 31, 2020.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
274
11,995
245
138
383
F.52
Credit risks included in trade receivables
(according to IAS 39)
In millions of euros
At December 31,
2017
Receivables, neither past due
nor impaired individually
7,725
Receivables past due, not impaired individually
less than 30 days
1,228
30 to 59 days
164
60 to 89 days
61
90 to 119 days
70
120 days or more
103
Total
1,626
Receivables impaired individually
2,644
Net carrying amount
Inventories
73
F.47
272
3
past due more than 180 days
216
209
4
3
past due 91 to 180 days
319
84
232
3
past due 61 to 90 days
411
577
448
8
past due 31 to 60 days
1,633
44
819
770
past due 30 days and less
94,667
405
4,295
89,967
121
not past due
414
Credit risks included in receivables from
financial services (according to IAS 39)
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as current
assets.
The marketable debt securities and similar investments with a
carrying amount of €9,577 million (2017: €10,063 million) are
part of the Group's liquidity management and comprise financial
instruments recognized at fair value through other comprehen-
sive income, fair value through profit and loss or recognized at
amortized cost.
15. Marketable debt securities and
similar investments
86,054
Net carrying amount
1,935
Receivables impaired individually
2,645
Total
105
120 days or more
43
F.43
90 to 119 days
60 to 89 days
315
30 to 59 days
2,046
less than 30 days
individually
Receivables past due, not impaired
81,474
nor impaired individually
Receivables, neither past due
In millions of euros
2017
136
Further information on marketable debt securities and similar
investments is provided in Note 32.
97,826
5,798
Note 24).
a carrying amount of €8,106 million (December 31, 2017:
€6,049 million) were pledged as collateral for liabilities from
ABS transactions (see also
At December 31, 2018, receivables from financial services with
Further information on financial risks and nature of risks is pro-
vided in Note 33.
At the beginning of the contracts, collaterals of usually at least
100% of the carrying amounts were agreed, which are backed by
the vehicles based on the underlying contracts. Over the con-
tract terms, the value of the collaterals is comprised in the
calculation of the risk provisioning, so the carrying amounts of
the credit impaired contracts are primarily backed by the
underlying vehicles.
Longer overdue periods regularly lead to higher allowances.
In millions of euros
Development of the loss allowances for receivables
from financial services (according to IAS 39)
F.41
Information on credit risks included in receivables from finan-
cial services at December 31, 2018 under IFRS 9 is shown in
table 7 F.42 and at December 31, 2017 under IAS 39 in table
7 F.43.
Credit risks
1,086
2017
502
389
22
13
1
8
34
-30
-4
-23
51
-28
-26
195
1,274
Balance at January 1
Additions
480
90,754
Gross carrying amount
thereof
Total
(Stage 3)
(Stage 2)
(Stage 1)
credit
impaired
impaired
not credit
credit loss
Lifetime expected
12-month expected
credit loss
1,054
At December 31, 2018
Credit risks included in receivables from financial services (according to IFRS 9)
F.42
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
270
870
Balance at December 31
-100
Currency translation and other changes
-299
Reversals
-265
Utilization
In millions of euros
16. Other financial assets
The line item other financial assets presented in the Consoli-
dated Statement of Financial Position at December 31, 2018
according to IFRS 9 is comprised as shown in table 7 F.44.
Table 71 F.45 shows the corresponding amounts at December
31, 2017 according to IAS 39.
Financial assets measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
27
3,095
263
2,832
3,288
136
3,152
Reimbursements due to other tax refunds
Reimbursements due to the Medicare Act (USA)
759
249
510
1,235
27
254
Reimbursements due to income tax refunds
Total
At December 31, 2017
Non-current
Current
Total
At December 31, 2018
Non-current
Current
In millions of euros
Other assets
F.46
6,806
3,204
981
3,602
68
Other expected reimbursements
6,217
1,203
5,014
7,004
1,115
5,889
1,066
300
766
1,133
318
815
68
Others
112
632
838
126
712
Prepaid expenses
485
211
274
483
254
229
744
3,172
859
2,313
1,033
509
524
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
384
384
Recognized at fair value through profit or loss
364
364
Recognized at fair value through other comprehensive income
748
748
91
Equity instruments and debt instruments
At December 31, 2018
Non-current
Current
In millions of euros
Other financial assets (according to IFRS 9)
F.44
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
Non-financial other assets are comprised as shown in table
7 F.46.
17. Other assets
271
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Further information on other financial assets is provided in
> Note 32.
At December 31, 2018, receivables with a carrying amount of
€511 million (2017: €511 million) were pledged as collateral for
liabilities (see also
Note 24).
Total
18
109
2,355
82
28
54
2,379
1,144
1,235
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
1,002
1,002
thereof equity instruments carried at cost
171
171
thereof equity instruments recognized at fair value
1,173
1,173
Available-for-sale financial assets
Total
At December 31, 2017
Non-current
Current
In millions of euros
Other financial assets (according to IAS 39)
F.45
5,733
2,763
2,970
3,843
1,488
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2017
276
Further information on other provisions for other risks is
provided in Notes 5 and 30.
F.62
Key data for other post-employment benefits
In millions of euros
2018
2017
Present value of defined benefit
obligations
1,095
1,142
Fair value of
reimbursement rights
27
Funded status
-1,068
68
-1,074
Net periodic cost for other
post-employment benefits
-66
-71
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
283
23. Provisions for other risks
The development of provisions for other risks is summarized in
table 7 F.63.
Product warranties
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The
provision for these product warranties covers expected costs
for legal and contractual warranty claims as well as expected
costs for goodwill concessions and recall campaigns. The
utilization date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties is principally expected within a period until 2021.
17
Personnel and social costs
16
16
-107
-89
-18
Sensitivity for life expectancy
Sensitivity for life expectancy
+1 year
464
393
71
487
417
70
-1 year
-417
-345
-72
-437
-366
-71
F.61
Weighted average duration of
the defined benefit obligations
2018
2017
In years
German plans
16
Non-German plans
-13
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans.
The additions recorded to the provisions for profit sharing and
management bonuses in the reporting year usually result
in cash outflows in the following year. The cash outflow for
non-current provisions for personnel and social costs is
primarily expected within a period until 2029.
Provisions for other risks include in particular expected costs
in connection with liability and litigation risks as well as risks
from legal proceedings. Provisions for other risks also include
expected costs for other taxes, provisions for environmental
protection as well as obligations from outstanding commission,
for example to trade representatives, under the prerequisite
that no revenue has been realized with the recipient of the com-
mission under IFRS 15. They also include provisions for antici-
pated losses on contracts and various other risks which cannot
be allocated to any other class of provision.
7,143
3,665
2,113
2,141
7,919
-2,931
-2,049
-1,196
-6,176
-420
-113
-362
-895
20
-8
19
31
-7
-107
34
-80
7,043
4,261
4,258
15,562
1,365
Other
2,216
7,620
F.63
Provisions for other risks
In millions of euros
Balance at December 31, 2017
thereof current
thereof non-current
Additions
Utilizations
Reversals
Compounding and effects from changes in discount rates
Currency translation and other changes
Balance at December 31, 2018
thereof current
thereof non-current
Product
warranties
Personnel and
social costs
Other
Total
6,716
4,425
3,622
14,763
3,154
2,209
2,257
3,562
3,080
-82
- 0.10%
-127
-729
-709
-20
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 281
Pension cost
The components of pension cost included in the Consolidated
Statement of Income are shown in table 7 F.58.
Measurement assumptions
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost is
generally January 1. The assumptions used to calculate the
defined benefit obligations vary according to the economic con-
ditions of the countries in which the pension plans are situated.
Calculation of the defined benefit obligation uses life expec-
tancy for the German plans based first on the 2018 G mortality
tables of K. Heubeck as of December 31, 2018. The tables
reflect the latest statistics of the statutory pension insurance
system and of the Federal Statistical Office. The effect
resulting from the change of the mortality tables amounts to
€202 million at December 31, 2018 and is disclosed in the
valuation losses from changes in demographic assumptions.
Comparable country-specific calculation methods are used
for non-German plans.
Table 71 F.59 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 71 F.60.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed due to
correlation effects. With a change in the parameters, the
sensitivities shown cannot be used to derive a linear develop-
ment of the defined benefit obligation.
For the calculation of the sensitivity of life expectancy,
by means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is achieved.
Effect on future cash flows
Daimler currently plans to make contributions of €0.7 billion
to its pension plans for the year 2019; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€0.9 billion in 2019.
The weighted average duration of the defined benefit
obligations is shown in table 71 F.61.
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2018, the total cost from defined contri-
bution plans amounted to €1.6 billion (2017: €1.6 billion). Of
those payments €1.5 billion (2017: €1.5 billion) were related to
governmental pension plans.
Multi-employer plans
Multi-employer pension plans are classified at the Daimler
Group as not material at December 31, 2018.
Until October 2017, a pension plan in the NAFTA region was
included therein, for which the information required to use
accounting for defined benefit plans was available for the first
time in 2017. The company withdrew from the plan at the
end of November 2017. The settlement of the plan resulted in
a gain for Daimler Trucks of €117 million. The EBIT effect
was presented in cost of sales in the Consolidated Statement of
Income. The present value of future financial obligations was
presented in provisions for other risks at December 31, 2017.
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment
health care benefits with defined entitlements, which have to
be accounted for as defined benefit plans. Table 71 F.62
shows key data for other post-employment benefits.
-584
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
-711
2
German
Plans
Non-German
Plans
Current service cost
-700
-600
-100
-687
-591
-96
Past service cost,
curtailments and settlements
76
71
5
117
117
Net interest expense
-90
-55
-35
-161
-43
Net interest income
3
3
2
-95
282
F.59
-1,047
-127
-1,184
-1,045
-139
Sensitivity for discount rates
- 0.25%
1,252
1,115
137
1,308
1,113
195
Sensitivity for expected increases
in cost of living
+ 0.10%
98
83
15
109
20
90
19
Sensitivity for expected increases
in cost of living
-1,174
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+ 0.25%
Plans
Significant factors for the calculation of pension benefit obligations
German plans
At December 31,
Non-German plans
At December 31,
2018
2017
2018
2017
In percent
Discount rates
Expected increase in cost of living¹
1.8
1.8
1.8
1.7
4.4
1 For German plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation to the Group's
active employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living do not have a material
impact on the amount of the obligation.
F.60
Sensitivity analysis for the present value of defined benefit pension obligation
In millions of euros
3.7
Total
December 31, 2018
German Non-German
Plans
Plans
Total
December 31, 2017
German Non-German
Plans
Sensitivity for discount rates
1,971
2,777
7,828
111
Liabilities from residual value guarantees
1,149
943
2,092
1,091
998
2,089
Liabilities from wages and salaries
1,267
25
1,292
1,292
25
1,317
Accrued interest expenses
1,105
1,105
905
905
Deposits received
504
542
1,046
495
49
539
62
5
Financial liabilities measured at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
Further information on other financial liabilities is provided
in Note 32.
26. Deferred income
The composition of deferred income is shown in table 7 F.67.
F.66
Other financial liabilities
In millions of euros
Current
At December 31, 2018
Non-current
At December 31, 2017
Total
Current
Non-current
Total
Derivative financial instruments
used in hedge accounting
633
461
1,094
168
528
696
Financial liabilities recognized at fair
value through profit or loss
51
56
The composition of other financial liabilities is shown in
table 7 F.66.
1,034
2,948
584
975
462
671
1,133
Deferral of advance rental payments received
from operating lease arrangements
890
929
1,819
824
900
1,724
Other deferred income
299
99
398
242
97
339
1,580
1,612
3,192
1,528
1,668
3,196
391
Other
Deferral of sales revenue received from sales
with residual-value guarantees
At December 31, 2017
Non-current
399
3,347
2,892
231
3,123
Miscellaneous other financial liabilities
6,973
1,909
8,882
6,675
1,793
8,468
7,657
2,375
10,032
6,905
2,370
9,275
F.67
Deferred income
In millions of euros
Current
At December 31, 2018
Non-current
Total
Current
Total
25. Other financial liabilities
285
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,045
1,045
Liabilities to financial institutions
21,068
18,332
39,400
17,583
16,972
34,555
Deposits in the direct banking business
9,677
2,097
11,774
9,450
2,010
11,460
Liabilities from ABS transactions
6,782
5,670
12,452
6,214
4,823
11,037
Liabilities from finance leases
27
2,835
Loans, other financing liabilities
2,835
67,073
3,963
2,290
1,481
7,734
284
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Financing liabilities
The composition of financing liabilities is shown in
table 71 F.64.
Liabilities from finance leases relate to leases of property, plant
and equipment which transfer substantially all risks and
rewards to the Group as lessee. Future minimum lease payments
under finance leases amounted to €477 million at December 31,
2018 (2017: €496 million). The reconciliation of future mini-
mum lease payments from finance lease arrangements to the
corresponding liabilities is shown in table 71 F.65.
F.64
Financing liabilities
In millions of euros
Current
Non-current
At December 31, 2018
Total
Current
At December 31, 2017
Non-current
Total
Notes/bonds
15,090
61,400
76,490
13,785
53,288
Commercial paper
761
56,240
320
843
347
39
11
12
27
27
between one and five years
162
150
56
61
106
89
later than five years
277
307
63
71
214
236
477
496
130
144
347
352
38
within one year
Maturity
2017
27
325
352
88,662
1,604
144,902
642
960
1,602
48,746
78,378
127,124
F.65
Total
Reconciliation of minimum lease payments to liabilities from finance lease arrangements
Liabilities from finance
lease arrangements
at December 31,
Future minimum
lease payments
Interest included in future
minimum lease payments
at December 31,
at December 31,
2018
2017
2018
2017
2018
In millions of euros
Non-German
Plans
-118
Total
616
481
135
648
495
153
Contributions by plan participants
60
55
5
58
54
4
Actuarial gains (-)/losses from changes in
demographic assumptions
175
202
-27
-23
-13
-10
Actuarial gains (-)/losses from changes in
financial assumptions
-228
75
Interest cost
-303
4,191
96
687
Plan assets and income from plan assets are used solely to pay
pension benefits and to administer the plans. The composition
of the Group's pension plan assets is shown in table > F.57.
Market prices are available for equities and bonds due to their
listing in active markets. Most of the bonds have investment
grade ratings. They include government bonds of very good
creditworthiness.
The investment strategy is reviewed regularly and adjusted if
deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed of
representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
279
F.56
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
German
Total
Plans
December 31, 2018
Non-German
Plans
Total
German
Plans
December 31, 2017
Non-German
Plans
Present value of the defined benefit obligation
at January 1
31,744
27,746
3,998
31,173
26,982
Current service cost
700
600
100
591
1,076
419
657
-229
71
-8
German
Plans
-787
17
-804
Present value of the defined benefit obligation
at December 31
31,645
27,852
3,793
31,744
27,746
3,998
Fair value of plan assets
at January 1
Interest income from plan assets
27,215
529
24,197
3,018
23,384
20,315
3,069
426
103
-744
-973
-174
-1,211
Actuarial gains (-)/losses from
experience adjustments
Actuarial gains (-)/losses
-32
-17
-15
2
-55
57
-85
260
-345
Composition of plan assets
1,055
704
Past service cost, curtailments
and settlements
Pension benefits paid
Currency exchange-rate changes and
other changes¹
-76
-71
-5
-117
-117
-1,385
351
489
The development of the relevant factors is shown in table
71 F.56.
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
2018
Wilfried Porth
2017
Britta Seeger²
2018
2017
-0.1
-1.2
-0.1
-1.6
-0.3
-0.4
PPSP
Medium-term component
-0.2
-0.7
-0.2
-0.7
-0.2
-0.8
of the annual bonus
In millions of euros
Hubertus Troska
Bodo Uebber
2018
2017
2017
2018
2018
-0.7
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.54
Expenses in the Consolidated Statement of Income resulting from share-based payments of current members of the Board of Management
Dr. Dieter Zetsche
2018
2017
2018
Martin Daum¹
2017
Renata Jungo Brüngger
2018
2017
In millions of euros
PPSP
Medium-term component
of the annual bonus
In millions of euros
-0.4
-3.9
-0.2
-0.8
-0.2
-0.8
-0.5
-1.8
-0.2
-0.7
-0.2
Ola Källenius
2017
Dr. Wolfgang Bernhard³
2018
2017
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by funds assets. Contractual
trust arrangements (CTA) exist between Daimler AG as well
as some subsidiaries in Germany and the Daimler Pension Trust
e.V. The Daimler Pension Trust e.V. acts as a collateral trust
fund.
Effective December 13, 2018, Daimler AG transferred certain
defined benefit obligations and plan assets of retired employees
to Daimler Pensionsfonds AG (pension fund), which was estab-
lished in June 2018. The transfer has no impact on the Group's
profitability, liquidity and capital resources or financial posi-
tion. In the future, these benefits will be administrated by that
non-insurance-like pension fund, which falls under the scope
of the Act on the Supervision of Insurance Undertakings and is
therefore subject to the oversight of the Federal Financial
Supervisory Agency (BaFin). Insofar as in the future, BaFin rules
that a deficit has occurred in the pension fund, a supplemen-
tary contribution will be required from Daimler AG.
In Germany, there are normally no statutory or regulatory
minimum funding requirements.
Non-German pension plans and pension plan assets
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets funds.
Risks from defined benefit pension plans and pension
plan assets
The general requirements with regard to retirement benefit
models are laid down in the Pension Plan Design Policy, which
has Group-wide validity. Accordingly, the committed benefits
are intended to contribute to additional financial security
during retirement and in the case of death or invalidity, to be
capable of being planned and fulfilled by the respective
company of the Group and to have a low-risk structure. In
addition, a committee exists that approves new pension
plans and amendments to existing pension plans as well as
guidelines relating to company retirement benefits.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most of
the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
F.55
Composition of provisions for pensions
and similar obligations
In millions of euros
December 31,
2018
2017
Provision for pension benefits
6,298
4,625
Provision for other post-employment
benefits
1,095
1,142
7,393
5,767
278
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and quali-
tative analyses, and the continual monitoring of performance
and risk help to reduce associated investment risk. The
Group regularly makes additional contributions to the plan
assets in order to cover future obligations from defined
benefit pension plans. Furthermore, in 2017, the Group made
an extraordinary contribution of €3.0 billion into the German
pension plan assets, in order to sustainably strengthen them.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee a
life annuity.
German pension plans and pension plan assets
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year or on their respective income, and for executives
it depends on their respective income. For the commitments
to retirement benefits made until 2011, the contributions
continue to be converted into capital components and credited
to the individual pension account with the application of
fixed factors related to each employee's age. The conversion
factors include a fixed value increase. The pension plans
were newly structured for new entrants in 2011 to reduce the
risks associated with defined benefit plans. New entrants
now benefit from value increases of the contributions through
an investment fund with a special lifecycle model. The Com-
pany guarantees at a minimum the value of the contributions
paid in. Pension payments are made either as a life annuity,
twelve annual installments, or a single lump sum.
The Group's main German and non-German pension plans are
described below.
PPSP
-0.1
-1.6
-0.2
-1.9
Medium-term component
of the annual bonus
-0.2
-0.7
-0.2
-0.9
1 Appointed to the Board of Management as of March 1, 2017.
Reconciliation of the net obligation from defined benefit
pension plans
2 Appointed to the Board of Management as of January 1, 2017.
3 Appointment to the Board of Management ended on February 10, 2017. Amounts are included pro rata for 2017.
Performance Phantom Share Plans
In 2018, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used in previous years, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During
the four-year period between the allocation of the preliminary
phantom shares and the payout of the plan at the end of
the term, the phantom shares earn a dividend equivalent in
the amount of the actual dividend paid on ordinary Daimler
shares. The amount of cash paid to eligible employees at the
end of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler's ordinary
shares (calculated as an average price over a specified period
at the end of the four-year plan period). The vesting period is
therefore four years. For the existing plans, the quoted price of
Daimler's ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. Fur-
thermore, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares. The limi-
tation of the payout for the members of the Board of Manage-
ment also includes the dividend.
The number of phantom shares that vest of the PPSPs granted
in 2014 to 2018 is based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
return on sales (ROS) compared with the average RoS of a
competitor group. In addition, beginning with plan PPSP 2018,
the average RoS of the competitor group is revenue-weighted.
Special rules apply for the members of the Board of Manage-
ment: Daimler's RoS must be not equal to but higher than
that of the competitors in order to achieve the same target
achievement as the other plan participants. For the PPSP
granted in 2015 and until 2018, an additional limit on target
achievement was agreed upon for the reference parameter
RoS for the members of the Board of Management. In the case
of target achievement between 195% and 200%, an additional
comparison is made on the basis of the RoS achieved in abso-
lute terms. If the actual RoS for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.
The Group recognizes a provisi, on for awarding the PPSP in the
Consolidated Statement of Financial Position. Since payment per
vested phantom share depends on the quoted price of Daimler's
ordinary shares, that quoted price essentially represents the fair
value of each phantom share. The proportionate remuneration
expenses from the PPSP recognized in the individual years are
measured based on the price of Daimler ordinary shares and the
estimated target achievement.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
277
22. Pensions and similar obligations
Table 71 F.55 shows the composition of provisions for pension
benefit plans and similar obligations.
At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution
pension obligations, specific to the various countries.
In addition, healthcare benefit obligations are recognized
outside Germany.
Defined benefit pension plans
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension plans
provided by Daimler generally vary according to the economic,
tax and legal circumstances of the country concerned. Most
of the defined benefit pension plans also provide benefits in
the case of invalidity and death.
-0.2
377
79
Actuarial gains / losses (-)
9,485
8,556
929
Securitized bonds
49
29
20
46
30
16
Bonds
14,971
13,261
1,710
14,189
12,430
1,759
Other exchange-traded instruments
19
16
3
5
1
4
Total exchange-traded instruments
822
21,756
8,924
Corporate bonds
1,082
924
158
1,127
932
195
Others
52
52
46
46
Equities
6,766
5,945
821
7,556
6,612
944
Government bonds
5,176
4,308
112
4,658
3,844
814
9,746
Technology and telecommunication
19,222
21,750
46
Total non-exchange-traded instruments
3,706
3,310
396
5,465
5,154
311
Fair value of plan assets
25,462
22,532
2,930
27,215
24,197
3,018
thereof fair value of own transferable financial
instruments
thereof fair value of self-used plan assets
50
50
1 Including the shares in Renault and Nissan in the amount of €1,528 (in 2017: €2,010) million.
2 Alternative investments mainly comprise private equity.
F.58
Pension cost
In millions of euros
2018
2017
3,952
2,534
3,998
2,322
19,043
2,707
Alternative investments²
498
340
158
512
388
124
Real estate
486
388
98
537
436
101
Other non-exchange-traded instruments
351
260
91
418
378
40
Cash and cash equivalents
2,371
49
207
868
1,149
-1,171
-152
-910
942
-208
Currency exchange-rate changes and
other changes'
66
-9
75
-494
16
-510
Fair value of plan assets
at December 31
25,462
22,532
2,930
27,215
24,197
3,018
Funded status
thereof recognized in other assets
-6,183
115
-5,320
-1,323
-863
115
Pension benefits paid
54
-1,781
-1,551
-230
996
541
455
Actual result on plan assets
-1,252
-1,125
-127
1,485
918
567
Contributions by the employer
696
585
111
3,692
3,596
96
Contributions by plan participants
60
55
5
58
4
-4,529
-702
-980
Financials
1,054
896
158
1,193
1,027
166
Healthcare
542
442
100
547
440
107
Industrials¹
1,983
1,902
81
2,535
2,440
-3,549
Consumer goods
1,018
855
163
128
831
95
109
959
96
96
and similar obligations
-6,298
-5,320
-978
-4,625
-3,549
-1,076
1 Including reclassifications to provisions for other risks in 2017.
280
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
thereof recognized in provisions for pensions
Composition of plan assets
F.57
1,035
At December 31, 2017
German Non-German
Plans
Plans
Energy, commodities and utilities
Plans
At December 31, 2018
German Non-German
Plans
Total
In millions of euros
Total
926
MA EV 1063
«CITARO
moovel-group.com/en
Inventive.
Intermodal.
moovel lab.
C
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
WHAT THE
STREET
A trendsetter for people and urban mobility. The moovel lab promotes
the innovation culture of the moovel Group. This Daimler Group company
aims to partner with cities and transportation operators to simplify mobility
and offer customers access to the right mobility options. The moovel lab
is the professional creative space for this process. The lab's interdisciplinary
team addresses future-oriented issues of mobility in urban environments. It
generates new ideas, product prototypes, and approaches to dialogue among
professionals and the public. What do urban traffic areas look like around the
world? The moovel lab is working to answer this question in its project "The
Mobility Space Report: What the Street!?". The project visualizes driving and
parking areas in 23 major cities on an interactive online platform and shows
how autonomous driving can redistribute these spaces.
lab.moovel.com
freightliner.com/trucks/new-cascadia
23
Automated.
Trailblazing.
Cascadia.
Pioneering work for the logistics sector. Daimler Trucks is taking
truck automation to the next level with the new Freightliner Cascadia.
It's a world premiere, because this is the first partially automated
series-production truck on North American roads. It's also the next step
toward highly automated trucks, which will allow even better safety and
performance. In addition, they will offer huge advantages for transport
companies and a sustainable future for the logistics sector. In the years
ahead, Daimler Trucks will invest €500 million in the development of
highly automated trucks in order to make them market-ready within a
decade. The centerpieces of partial automation are Active Drive Assist
(Mercedes-Benz Actros, FUSO Super Great) and Detroit Assurance 5.0
(Freightliner Cascadia). These systems already allow partially automated
driving in all speed ranges.
FREIGHTLINER
C
CHARY
YAIX 757
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
21
25
whatthestreet.moovellab.com
21
Diverse.
Discerning.
Customers.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
25
of mobility
Its time has come: The all-electric EQC (electricity consumption
combined: 22.2 kWh/100 km; CO2 emissions combined: 0 g/km,
preliminary figures)' will hit the road in mid-2019. The first
series-produced EQ model is an all-round winner in terms of
comfort, quality, and everyday utility - it's the Mercedes-Benz
of electric vehicles. This progressive crossover SUV is considered
the pioneer of an avant-garde electro-aesthetic, thanks to its
unique combination of design, functionality, and service. That's
in addition to its impressive driving dynamics and an electric
operating range of up to 450 kilometers according to NEDC'.
mercedes-benz.com/en
SN 2931E
1 The figures for electricity consumption and CO2 emissions, which were
calculated by an external technical service, are provisional and non-binding.
The figures for the vehicle's range are also provisional and non-binding.
An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the
official figures.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
17
Concept EQA - Electrifying the
compact class
The electric offensive at Mercedes-Benz is accelerating. That's
demonstrated by the Concept EQA, the first all-electric EQ concept
car of the Mercedes-Benz brand in the compact segment. It
combines state-of-the-art electro-aesthetics with strong dynamics
and general long-distance capability in everyday use, based on an
architecture that has been exclusively developed for battery-electric
models. This electro-athlete has two electric motors with a system
capacity of more than 200 kW. It can be charged by means of induc-
tion or a wall box and is also prepared for fast-charging systems.
@CITARO
mercedes-benz.com/en
We focus on our customers, worldwide. Daimler operates all over the
globe, with a broad range of products and services covering all aspects
of mobility. Its portfolio thrills discerning Mercedes-Benz S-Class drivers,
urban owners of a smart fortwo, and Mercedes-AMG customers with
sporty ambitions, as well as the leisure-oriented drivers of a Mercedes-Benz
V-Class Marco Polo. The same goes for commercial customers such as
forwarding agents, bus companies, taxi operators and, last but not least,
the approximately 31 million well-connected users all over the world of our
innovative mobility services such as car2go, mytaxi and moovel. All of our
customers have a wide variety of requirements and opportunities, and Daimler
has the right products for each one of them. To make sure things stay that
way, Daimler aims not only to continue to be a leading automaker, but also
to develop into a leading provider of mobility services. In everything we do,
we focus on our customers' wishes - that's the basis of our future success.
S.N 2931E
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
19
Urban.
Electric.
eCitaro
2
On course for the future
-
for our customers and society.
The all-electric Mercedes-Benz eCitaro is locally emission-free and
almost silent. This electric bus combines the platform of the bestselling
Mercedes-Benz city bus with innovative technologies. It is raising
electric mobility in city buses to a whole new level and captivating
customers with pioneering thermal management, energy efficiency,
and very practice-oriented operating ranges. Mercedes-Benz delivered
the first series-production models to customers in late 2018. Orders
for 20 and 15 eCitaros came from Hamburg and Berlin respectively in
2018. Thanks to its outstanding performance, the eCitaro already
complies with many requirements of transportation companies - and
its complete eMobility system is launching an innovation offensive
for electrifying local public transportation.
mercedes-benz.com/en/mercedes-benz/vehicles/buses
C
CASCADA
EQC Starting the future
-
Miscellaneous other assets and liabilities
11,995
86,543
86,054
At December 31, 2017
Fair value
Carrying amount
Available-for-sale financial assets
Marketable debt securities
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
In millions of euros
Carrying amounts and fair values of financial instruments (according to IAS 39)
F.75
Other financial receivables and assets are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
11,995
12,072
12,072
10,063
Derivative financial instruments used in hedge accounting
82
82
Financial assets recognized at fair value through profit or loss
1,002
1,002
thereof equity instruments measured at cost
171
171
thereof equity instruments measured at fair value
1,173
1,173
Available-for-sale financial assets
Other financial assets
10,063
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices with
consideration of forward premiums and discounts.
derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms of
the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using option pricing models using
market data.
Other financial assets measured at fair value through profit or
loss include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
Marketable debt securities and equity instruments measured
at fair value were measured using quoted market prices at
December 31, 2018. If quoted market prices were not available
for these debt and equity instruments, the fair value measure-
ment is based on inputs that are either directly or indirectly
observable in active markets.
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Other financial liabilities
Trade payables
Financing liabilities
Financial liabilities
140,227
139,823
3,177
3,177
Other receivables and financial assets
1,033
1,033
Derivative financial instruments used in hedge accounting
109
144,902
2,379
144,933
14,185
Equity Instruments are measured at fair value through other
comprehensive income or at fair value through profit or loss.
The fair values of the equity instruments measured through
other comprehensive income are included in table 7 F.74 and
comprise BAIC BluePark New Energy Technology Co., Ltd as
well as further investments not material on an individual basis.
Daimler does not generally intend to sell its equity instruments
which are presented at December 31, 2018.
At December 31, 2018, marketable debt securities are measured
at fair value through other comprehensive income or at fair
value through profit or loss. Similar investments are measured
at amortized cost and are not included in the measurement
hierarchy, as their carrying amount is a reasonable approxima-
tion of fair value.
Marketable debt securities and similar investments,
other financial assets
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
Trade receivables and cash and cash equivalents
293
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
169,150
169,119
8,882
8,882
1,094
1,094
56
56
14,185
2,379
Other receivables and financial assets
3,172
1
169
Miscellaneous other liabilities
1,872
1
1,871
1,906
1
1,905
Other tax liabilities
422
9
413
280
8
170
272
155
2,346
Table 71 F.72 includes changes in liabilities arising from financ-
ing activities, divided into cash and non-cash components.
Cash provided by financing activities includes cash flows from
hedging the currency risks of financial liabilities. In 2018, cash
provided by financing activities included payments for the
reduction of outstanding finance lease liabilities of €37 million
(2017: €39 million).
Cash provided by financing activities
The line item other non-cash expense and income within the
reconciliation of profit before income taxes to cash used
for/provided by operating activities in the reporting year and
in the prior year primarily comprised the Group's share in
the profit/loss of companies accounted for using the equity
method (see Note 13).
Table 7 F.71 shows cash flows included in cash used
for/provided by operating activities.
The change of provisions in comparison to the prior year pri-
marily resulted from provisions for pensions and similar
obligations in the prior year in connection with an extraordinary
contribution to the German pension plan assets. Opposing
effects were related to provisions for warranties and customer
goodwill obligations as well as provisions for personnel and
welfare expenses. The change of miscellaneous other assets
and liabilities in comparison to the prior year was strongly
influenced by a lower increase in liabilities from service and
maintenance contracts as well as a lower increase in liabilities
from price reductions. An additional decreasing effect was
caused by liabilities from advance payments received. Further-
more, the reporting year was affected by the payment of the
first tranche in connection with the agreement reached to con-
clude the Toll Collect arbitration proceedings.
Cash used for/provided by operating activities
Changes in other operating assets and liabilities are shown in
table 71 F.70.
29. Consolidated Statement of Cash Flows
287
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2,449
10
2,439
2,356
10
155
Income tax liabilities
Total
Non-current
111
111
12,451
12,451
128,437
127,124
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Other financial liabilities
Trade payables
Financing liabilities
Financial liabilities
127,479
126,990
3,172
696
696
8,468
8,468
F.70
Changes in other operating assets and liabilities
2018
2017
In millions of euros
Provisions
Financial instruments
109
742
-36
Trade payables
Financing liabilities
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
294
150,163
148,850
-1,425
-128
Other financial assets recognized at fair value through profit or loss
384
opened a formal investigation into possible collusion on clean
emission technology. At present, Daimler does not expect this
unquantifiable contingent liability to have any material impact
on its profitability, cash flow and financial situation.
In this context, Daimler AG may disclose that it filed an applica-
tion for immunity from fines (leniency application) with the
European Commission some time ago. In late October 2017, the
European Commission conducted preannounced inspections
with Daimler in Stuttgart (as well as further inspections with
other manufacturers) in order to further clarify the facts of
the case. In the third quarter of 2018, the European Commission
Antitrust law proceedings (including actions for damages)
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anti-
competitive behavior relating to vehicle technology, costs, sup-
pliers, markets, and other competitive attributes, including
diesel emissions control technology, since the 1990s. On Octo-
ber 4, 2017, all pending US class actions were centralized in
one proceeding by the Judicial Panel on Multidistrict Litigation
and transferred to the U.S. District Court for the Northern
District of California. On March 15, 2018, plaintiffs in the US
class action amended and consolidated their complaints
into two pleadings, one on behalf of consumers and the other
on behalf of dealers. On June 1, 2018, the court dismissed
Mercedes-Benz U.S. International, Inc., Mercedes-Benz Vans,
LLC, and Daimler North America Corp., pursuant to the
parties' stipulation. Daimler AG and MBUSA remain parties in
the case, regard the US and Canadian lawsuits as being
without merit, and will defend against the claims.
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary, also by a court of law.
In the course of its regular market supervision, KBA routinely
conducts further reviews of Mercedes-Benz vehicles. It
cannot be ruled out that in the course of further investigations
KBA will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration stop
in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meanwhile
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions. As the aforementioned inquiries, investigations,
administrative proceedings and the replies to these related
information requests, the objection proceedings against the
administrative orders as well as Daimler's internal investiga-
tions are ongoing, we rely on IAS 37.92 in not disclosing any
further information on whether or not, or to what extent,
provisions have been recognized and/or contingent liabilities
have been disclosed.
289
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Diesel emission behavior: Governmental proceedings
Furthermore, several state and federal authorities and other
institutions worldwide have inquired about and/or are conduct-
ing investigations and/or administrative proceedings and/or
have issued administrative orders. These particularly relate to
test results, the emission control systems used in Mercedes-
Benz diesel vehicles and/or Daimler's interaction with the rele-
vant state and federal authorities as well as related legal
issues and implications, including, but not limited to, under
applicable environmental, securities, criminal and antitrust
laws. These authorities and institutions include, among others,
the U.S. Department of Justice (DOJ), which in April 2016
requested that Daimler AG review its certification and admis-
sions processes related to exhaust emissions of diesel
vehicles in the United States by way of an internal investigation
in cooperation with the DOJ, the U.S. Environmental Protection
Agency (EPA), the California Air Resources Board (CARB)
and other US state authorities, the U.S. Securities and Exchange
Commission (SEC), the European Commission, with which
Daimler AG has filed a leniency application and which meanwhile
has opened a formal investigation into possible collusion on
clean emission technology, as well as national antitrust author-
ities and other authorities of various foreign states as well
as the German Federal Financial Supervisory Authority (BaFin),
the German Federal Ministry of Transport and Digital Infra-
structure (BMVI) and the German Federal Motor Transport
Authority (KBA), the diesel emissions committee of inquiry of
the German Parliament of the previous legislative period
and the Stuttgart district attorney's office. The Stuttgart district
attorney's office is conducting criminal investigation proceed-
ings against Daimler employees concerning the suspicion of
fraud and criminal advertising, and, in May 2017, searched the
premises of Daimler at several locations in Germany.
On July 14, 2017, an additional class action was filed in the
Superior Court of California, Los Angeles County, against
Daimler AG and other companies of the Group, alleging claims
similar to the existing US class action. That action was
removed to federal court and, on October 31, 2017, was trans-
ferred to the District of New Jersey. On December 21, 2017
the parties stipulated to dismiss, without prejudice, that lawsuit.
It may be filed again under specific conditions, but Daimler
also regards this lawsuit as being without merit.
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations
was filed in Canada in April 2016. On June 29, 2017, the court
granted a procedural motion to certify certain issues for
class treatment, and on March 12, 2018 the court ordered the
parties to send a notice to the class by May 18, 2018, inform-
ing class members that the litigation is ongoing and they will
be bound by the outcome. That notice was sent, and class
members had until July 20, 2018 to opt out of the class to avoid
being bound by subsequent rulings in the case. Daimler
also regards this lawsuit as being without merit and will defend
against the claims.
On January 8, 2019, the Arizona State Attorney General filed
a civil complaint in Arizona state court against Daimler AG and
MBUSA making similar allegations that Arizona consumers
were deliberately deceived in connection with the advertising of
Mercedes-Benz diesel vehicles. The state seeks monetary
penalties for violation of Arizona's consumer protection laws.
Daimler AG and MBUSA view this lawsuit as being without
merit.
As already reported, several consumer class-action lawsuits
were filed against Mercedes-Benz USA, LLC (MBUSA) in federal
courts in the United States in early 2016. The main allegation
was the use of devices that impermissibly impair the effective-
ness of emission control systems in reducing nitrogen-oxide
(NOx) emissions and which cause excessive emissions from
vehicles with diesel engines. In addition, plaintiffs alleged
that consumers were deliberately deceived in connection with
the advertising of Mercedes-Benz diesel vehicles. Those
consumer class actions were consolidated into one class action
pending against both Daimler AG and MBUSA in the US Dis-
trict Court for the District of New Jersey, in which the plaintiffs
asserted various grounds for monetary relief on behalf of a
nation-wide class of persons or entities who owned or leased
certain models of Mercedes-Benz diesel vehicles as of
February 18, 2016. Daimler AG and MBUSA moved to dismiss
the lawsuit in its entirety. By order dated December 6, 2016,
the court granted Daimler AG's and MBUSA's motion to dismiss
and dismissed the lawsuit without prejudice, based on plain-
tiffs' failure to allege with sufficient specificity the advertising
that they contended had misled them. Plaintiffs subsequently
filed an amended class action complaint in the same court
making similar allegations. The amended complaint also adds
as defendants Robert Bosch LLC and Robert Bosch GmbH
(collectively; "Bosch"), and alleges that Daimler AG and MBUSA
conspired with Bosch to deceive US regulators and consum-
ers. On February 1, 2019, the Court granted in part and denied in
part Daimler AG and MBUSA's subsequent motion to dismiss.
The case is ongoing as the Court's decision merely addressed
certain legal aspects of plaintiffs' claims and did not decide
whether the plaintiffs can ultimately prove their claims, whether
the plaintiffs' allegations are true, or whether their claims
have merit. Daimler AG and MBUSA view the lawsuit as being
without merit and will defend against the claims.
Diesel emission behavior: Class action and other lawsuits
in the United States and Canada
Daimler AG and its subsidiaries are confronted with various
legal proceedings, claims as well as governmental investigations
and orders (legal proceedings) on a large number of topics,
including vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, environmental
matters, antitrust matters (including actions for damages)
and shareholder matters. Legal proceedings relating to products
deal with claims on account of alleged vehicle defects. Some
of these claims are asserted by way of class action suits. If the
outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory and
punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Legal
proceedings may have an impact on the Group's reputation.
30. Legal proceedings
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust pro-
ceedings, Daimler AG faces customers' claims for damages to
a considerable degree. Respective legal actions, class actions
and other forms of legal redress have been initiated in various
states in and outside of Europe and should further be expected.
Daimler is taking appropriate legal remedies to defend itself. In
accordance with IAS 37.92, no further information is disclosed
with respect to whether, or to what extent, provisions have been
recognized and/or contingent liabilities have been disclosed,
so as not to prejudice Daimler AG's position.
288
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Class-action lawsuits Takata airbag inflators
Failure to comply with various obligations under the operating
agreement during the period from April 1, 2018 until the end
of the operating agreement on August 31, 2018 may result in
contract penalties, additional revenue reductions and damage
claims. However, contract penalties and revenue reductions
are capped at €100 million per operating year (increasing by
3% per financial year). At present, no respective facts are
known.
All known and unknown claims from the toll agreement that
arose until March 31, 2018 are settled under the settlement
provided that the related damage occurred before March 31,
2018.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 291
In the second quarter of 2018, the profit/loss on equity-method
investments includes expenses of €418 million in connection
with Toll Collect. The EBIT of the Daimler Financial Services seg-
ment is reduced in particular due to the existing 50% obligation
of Daimler Financial Services AG to pay €550 million to Toll
Collect GbR, which is partially offset by provisions recognized
in previous years.
The settlement agreement is composed of different elements.
One material element is a cash payment (hereinafter: settle-
ment payment) by Toll Collect GbR of €1.1 billion that has to be
transferred in three tranches until 2020 and equally divided
between Daimler Financial Services AG and Deutsche Telekom
AG. The first tranche in the amount of €400 million was paid
to the Federal Republic of Germany on August 1, 2018, equally
divided between Daimler Financial Services AG and Deutsche
Telekom. The settlement takes into account claims of Toll Collect
GmbH with regard to the remuneration pursuant to the oper-
ating agreement withheld monthly by the Federal Republic of
Germany since June 2006. It also takes into account penalty
payments for delays already settled by the shareholders of Toll
Collect GbR and related interest. Further elements of the settle-
ment agreement relate to the determination of the purchase
price for the shares in Toll Collect GmbH on August 31, 2018
as well as the obligation to achieve a certain quality regarding
the collection of tolls. Should this quality parameter not be
achieved, the settlement payment to the Federal Republic of
Germany will be increased by €50 million. On November 15,
2018, Daimler Financial Services AG and Deutsche Telekom AG
have received the written confirmation from the Federal Repub-
lic of Germany that the quality parameters have been reached.
Overall, the total settlement payments to the Federal Republic
of Germany amount to €3.2 billion.
On July 6, 2018, the arbitral tribunal issued an award on agreed
terms terminating the arbitration proceedings on the basis of
the settlement.
On July 4, 2018, through its subsidiary Daimler Financial
Services AG, Daimler AG together with Deutsche Telekom AG
notarized a settlement agreement (hereinafter: settlement)
with the Federal Republic of Germany which settles all arbitra-
tion proceedings in connection with the involvement in the
Toll Collect consortium, which have been ongoing since 2004.
The Federal Republic of Germany declared its acceptance of the
offer to take over all shares in Toll Collect GmbH on August 31,
2018 and acquired the company as scheduled on September 1,
2018. According to the operating agreement, the toll collection
system had to be operational not later than August 31, 2003.
After a delay of the launch date, the system was largely
introduced on January 1, 2005. The final operating permit was
granted on July 4, 2018, in connection with the settlement
of the pending arbitration proceedings. The Federal Republic of
Germany had initiated arbitration proceedings against Daimler
Financial Services AG, Deutsche Telekom AG and Toll Collect
GbR in September 2004. In the first half of 2017, the share-
holders Deutsche Telekom AG and Daimler Financial Services
AG asserted counterclaims relating to breaches of duty by
the Federal Republic of Germany with regard to the delay in the
start of the toll system. Toll Collect GmbH had also initiated
an arbitration proceeding against the Federal Republic of Ger-
many in order to recover the advance payments withheld by
the Federal Republic of Germany of €8 million per month since
June 2006, as well as other remuneration in dispute.
In 2002, our subsidiary Daimler Financial Services AG, together
with Deutsche Telekom AG and Compagnie Financière et
Industrielle des Autoroutes S.A. (Cofiroute) entered into a con-
sortium agreement for the purpose of jointly operating a
system for the electronic collection of tolls for commercial
vehicles using German highways under a contract with the
Federal Republic of Germany (operating agreement) through
the project company Toll Collect GmbH. Until August 31,
2018, Daimler Financial Services AG and Deutsche Telekom AG
each held a 45% equity interest in the project company Toll
Collect GmbH, and Cofiroute S.A. held the remaining 10%. The
consortium continues to hold the equity interest in Toll
Collect GbR.
Toll Collect
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive new type approvals if their air-condition-
ing units are filled with a refrigerant that meets certain criteria
with regard to climate friendliness. For vehicles produced
on the basis of type approvals granted previously, the directive
allowed a period of transition until December 31, 2016.
Mercedes-Benz vehicles fully comply with the legal requirements
in force since January 1, 2017 through the application of CO2
air-conditioning and the refrigerant R1234yf in combination with
safety devices that are used as necessary depending on each
vehicle's configuration. In December 2016, the EU Commission
initiated infringement proceedings against the Federal Republic
of Germany in the European Court of Justice (ECJ). The Com-
mission saw a contravention by the German authorities of the
European type-approval frame directive and of the directive
on emissions from air-conditioning systems in motor vehicles.
In March 2017, Germany's Federal Motor Transport Authority
issued Daimler AG with an injunction requiring to retrofit such
vehicles in which, in the first half of 2013 and for reasons of
safety, the previously used refrigerant R134a had been used.
Daimler AG considered the request to be unfounded and had
filed an objection to the injunction. On October 4, 2018, the ECJ
ruled in the infringement proceedings that the Federal Republic
of Germany had contravened European Union law, inter alia, by
not ordering the changeover of the relevant vehicles within the
period specified by the Commission. Subsequently, Daimler AG
has withdrawn the objection, and will carry out the requested
retrofit of the affected vehicles. A provision was already recog-
nized in the third quarter of 2018 for the retrofitting of the
vehicles still operating with the previously used refrigerant
R134a. No other significant risks are expected in this respect.
Refrigerant
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
290
As already reported, in August 2016, Mercedes-Benz Canada
(MB Canada) was added as a defendant to a putative nation-
wide class action pending in Ontario Superior Court. The main
allegation in the matter is that MB Canada, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, was allegedly negligent in selling
such vehicles, purportedly not recalling them quickly enough,
and failing to provide an allegedly adequate replacement
airbag inflator. In addition, on June 28, 2017, Takata entities along
with Daimler AG and MBUSA were named as defendants in
a U.S. nation-wide class action, which was filed in New Jersey
federal court and includes allegations that are similar to the
Canadian action. In the third quarter of 2017, the New Jersey
lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multi-district
litigation proceedings. Then, on March 14, 2018, Daimler AG
and MBUSA were named as defendants in two additional US
nation-wide class action complaints, one filed in Georgia
federal court, and the other filed into the multi-district litigation
proceedings pending in Florida. The allegations in these new
complaints are similar to those in the Canadian and New Jersey
actions. The U.S. cases have been centralized in one proceed-
ing by the Judicial Panel on Multidistrict Litigation and transferred
to the U.S. District Court for the Southern District of Florida,
which is overseeing litigation against Takata and other manufac-
turers of automobiles. The previously reported lawsuit filed
by the State of New Mexico, which also made similar claims
against MBUSA and many other companies that sold vehicles
equipped with Takata airbag inflators, was dismissed without
prejudice on June 22, 2017. It may, however, be filed again
under specific conditions. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz
vehicles as being without merit, and the Daimler Group affili-
ates respectively affected will further defend themselves
against the claims.
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
is cooperating in full with the authority. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler AG's position.
Fair value changes
Other changes
-325
16
187
257
-304
-678
Interest received
2017
2018
Interest paid
In millions of euros
Cash flows included in cash used for/
provided by operating activities
F.71
210
877
1,763
171
Dividends received from
equity-method investments
1,380
843
-119
-256
-7,135
411
Obtaining or losing control of subsidiaries
Changes in foreign exchange rates
16,794
17,456
Irrespective of the settlement, the guarantees relating to the
completion and operation of the toll collection system as
stated in the operating agreement or other additional agree-
ments and the responsibility to fulfill all relevant obligations
from April 1, 2018 until the end of the operating agreement on
August 31, 2018 remain unchanged. At present, no respective
facts are known.
Cash flows
2017
2018
Changes in liabilities arising from financing activities
F.72
52
49
Dividends received from other
shareholdings
In millions of euros
384
Guarantees, which are subject to specific triggering events are
described below:
Equity capitalization. The consortium members have agreed
within the settlement to ensure that Toll Collect GmbH
disposes of a minimum equity of €50 million and a minimum
liquidity of €10 million as of August 31, 2018. The minimum
equity and the minimum liquidity have been confirmed
on December 17, 2018, with the authorization of Toll Collect
GmbH financial statements as of August 31, 2018. Should
damage claims, reductions of compensation or other events
that take place after March 31, 2018 lead subsequently to
a decrease of Toll Collect GmbH's equity below the minimum
contractually agreed, the members of the consortium are
obliged to financially ensure that the minimum equity of Toll
Collect GmbH is achieved anew.
Marketable debt securities and similar investments
15,853
15,853
12,586
12,586
97,144
96,740
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
Fair value
Carrying amount
At December 31, 2018
In millions of euros
9,577
Carrying amounts and fair values of financial instruments (according to IFRS 9)
9,577
5,855
Recognized at fair value through profit or loss
364
364
Recognized at fair value through other comprehensive income
748
748
Equity instruments and debt instruments
Other financial assets
663
663
Measured at cost
3,059
3,059
Recognized at fair value through profit or loss
5,855
Recognized at fair value through other comprehensive income
F.74
The discounting is based on the current interest rates at which
similar loans with identical terms could have been obtained
at December 31, 2018 and December 31, 2017.
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respec-
tive carrying amounts, because the agreed upon interest rates
and those available in the market do not significantly differ.
The fair values of receivables from financial services with fixed
interest rates are determined on the basis of discounted
expected future cash flows.
Maturity
In millions of euros
Future minimum lease payments under non-cancelable
long-term rental and lease agreements (nominal amounts)
F.73
In addition, the Group had issued irrevocable loan commit-
ments at December 31, 2018. These loan commitments
had not been utilized as of that date. Further information with
respect to these commitments is disclosed in Note 33.
Furthermore, other financial obligations exist from the acqui-
sition of intangible assets, property, plant and equipment
and lease property of €5,048 million (2017: €4,876 million).
The Group has other financial obligations resulting from
non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts par-
tially include renewal or purchase options and price-escalation
clauses. In 2018, Daimler recognized as expenses payments
from operating leases of €621 million (2017: €563 million). Table
7 F.73 provides an overview of when future minimum lease
payments under non-cancelable long-term rental and lease
agreements fall due (nominal amounts).
Note 30.
Information about the settlement contract of Daimler Financial
Services AG and Deutsche Telekom AG with the Federal
Republic of Germany about the termination of legal disputes in
connection with the involvement in the Toll Collect toll con-
sortium and the guarantees involved is provided in
Other financial obligations
At December 31, 2018, the best estimate for obligations from
contingent liabilities was €761 million (2017: €589 million).
Some contingent liabilities are not quantifiable. This applies in
particular to the assessment of the legal risks arising from
the class-action lawsuits mentioned in Note 30.
Contingent liabilities
31. Contingent liabilities and other
financial obligations
cash outflows. Although the final result of any such proceedings
could materially affect Daimler's operating results and cash
flows for a particular reporting period, Daimler believes that it
should not exert a sustained influence on the Group's financial
position.
Accounting estimates and management judgments
The Group recognizes provisions in connection with pending or
threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized in
the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connection
with legal proceedings are disclosed in the Group's consoli-
dated financial statements. Risks resulting from legal proceed-
ings sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such proceed-
ings have ended. The Group may also become liable for pay-
ments in legal proceedings for which no provisions were recog-
nized and/or contingent liabilities were disclosed. Uncertainty
exists with regard to the amounts or due dates of possible
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG are
jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
December 31,
2018
2017
780
Receivables from financial services
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. Given the varying influencing factors,
the reported fair values can only be viewed as indicators of
the prices that may actually be achieved on the market.
Table 71 F.74 and table > F.75 show the carrying amounts and
fair values of the respective classes of the Group's financial
instruments at December 31, 2018 according to IFRS 9 and at
December 31, 2017 according to IAS 39.
Carrying amounts and fair values of financial instruments
32. Financial instruments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH. In
September 2018 Daimler AG was released of this guarantee
obligation.
292
3,800
890
1,375
1,421
1,645
not later than one year
later than one year and
not later than five years
later than five years
698
3,009
286
3,448
Current
128
28
Recognized at fair value through profit or loss
384
130
176
78
Other financial assets recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
208
109
1,033
1,033
10,804
6,150
4,548
106
Financial liabilities recognized at fair value
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
109
56
364
106
At December 31, 2018
Level 11 Level 22
Level 33
Financial assets recognized at fair value
Marketable debt securities
8,914
5,812
3,102
Recognized at fair value through other comprehensive income
Recognized at fair value through other comprehensive income
5,855
3,102
Recognized at fair value through profit or loss
3,059
3,059
Equity instruments and debt instruments
748
338
304
2,753
1,094
1,150
56
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
807
696
Derivative financial instruments used in hedge accounting
111
Financial liabilities measured at fair value through profit or loss
Liabilities measured at fair value
5,974
111
6,721
2,379
82
82
65
106
171
F.68
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS trans-
actions are calculated as present values of the estimated
future cash flows. Market interest rates for the appropriate
terms are used for discounting.
12,695
696
807
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
1,094
1,150
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
F.78
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IAS 39)
In millions of euros
Financial assets measured at fair value
Financial assets available-for-sale
thereof marketable debt securities
thereof equity instruments measured at fair value
Financial assets measured at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Total
Level 11
At December, 31 2017
Level 22 Level 33
10,234
6,721
3,513
10,063
6,615
Total
In millions of euros
2,379
F.77
4,903
5,484
Refund liabilities
414
553
liabilities
Other refund
4,489
Contract and
4,931
Obligations from
6,305
7,035
Contract liabilities
1,002
1,167
Other contract liabilities
5,303
sales transactions
refund liabilities
12,519
11,208
Total
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IFRS 9)
At December 31, 2017
At December 31, 2018
Non-current
Current
28. Other liabilities
these financial instruments, it is assumed that their fair values
are equal to the carrying amounts.
Obligations from sales transactions should, in principle, be
regarded as short-term. Due to the short maturities of
Table 71 F.68 shows the composition of contract and refund
liabilities.
27. Contract and refund liabilities
In millions of euros
Other liabilities
F.69
7,375
7,081
thereof short-term
3,833
5,438
thereof long-term
5,868
and extended warranties
Table 71 F.69 shows the composition of other liabilities.
In millions of euros
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
Net amounts
Gross and net
amounts of
financial instru-
ments in the
balance sheet
At December 31, 2017 (IAS 39)
Amounts
subject to a
master netting
arrangement
Net amounts
Other financial assets¹
amounts of
financial instru-
Other financial liabilities²
-574
-574
568
576
2,461
807
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,895
241
295
Service and maintenance contracts
1,142
1,150
Gross and net
-566
-566
In millions of euros
At December 31, 2018 (IFRS 9)
At December 31,
2018
Contract and refund liabilities
Due to the short maturities of these financial instruments, it is
assumed that their fair values are equal to the carrying
amounts.
Refund liabilities (IFRS 15)
Refund liabilities include obligations from sales transactions
that qualify as financial instruments. Further information is
provided in Note 27.
Other financial liabilities
Financial liabilities measured at fair value through profit or
loss comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instru-
ments as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt secu-
rities and similar investments, other financial assets.
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
2017
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement) of
the International Swaps and Derivatives Association (ISDA)
and other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in
the Consolidated Statement of Financial Position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Offsetting of financial instruments
F.76
For the determination of the credit risk from derivative financial
instruments, which are allocated to Level 2 measurement
hierarchy, portfolios managed on basis of net exposure are
applied.
The increase in equity and debt instruments recognized at fair
value through profit or loss included in Level 1 relates primarily
to the fair value measurement of the minority interest in Aston
Martin Lagonda Global Holdings plc. Further information is
provided in Note 7.
At the end of each reporting period, Daimler reviews the
necessity of reclassification between the measurement
hierarchies.
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
Table 71 F.77 and table 7 F.78 provide an overview of the
classification into measurement hierarchies of financial assets
and liabilities measured at fair value (according to IFRS 13)
at December 31, 2018 according to IFRS 9 and at December 31,
2017 according to IAS 39.
Measurement hierarchy
Table 71 F.76 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements as
well as the possible financial effects of netting in accordance
with the master netting arrangements.
Net gains/losses from
349
-329
Cash flow hedges and hedges of net investments
in foreign operations
underlying transactions
Net gains and losses on these hedging instruments and
the changes in the value of the underlying transactions at
December 31, 2017 according to IAS 39 are shown in
table 71 F.89.
The amounts relating to hedge ineffectiveness for
items designated as fair value hedges at December 31, 2018
according to IFRS 9 are shown in table 7 F.88.
Interest rate risk
hedging instruments
Net gains/losses from
In millions of euros
2017
2018
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
F.89
Interest expense
2
Net gains/losses from fair value hedges (according to IAS 39)
In millions of euros
The amounts related to items designated as cash flow
hedges and as hedges of net investments in foreign operations
at December 31, 2018 according to IFRS 9 are shown in
table 71 F.90.
Thereof hedges of net investments in foreign operations
39
83
1,024
Fair value changes of the hedged items¹
risk
Commodity
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
Interest
rate risk
2018
Cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
F.90
301
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Net profit at December 31, 2017 according to IAS 39 includes
net losses (before income taxes) of €11 million attributable to
the ineffectiveness of derivative financial instruments entered
into for hedging purposes (hedge ineffectiveness).
The gains and losses on items designated as cash flow
hedges at December 31, 2018 according to IFRS 9 as well as
the amounts relating to hedge ineffectiveness are included
in table F.91.
Foreign
currency
risk
Cost of sales
measured at cost
Ineffectiveness of fair value hedges (according to IFRS 9)
97,144
Receivables from financial services
measured at cost
Fair values of financial assets
Level 33
Level 22
Level 11
97,144
Total
Total
At December 31, 2017
(IAS 39)
At December 31, 2018
(IFRS 9)
In millions of euros
Measurement hierarchy of financial assets and liabilities not measured at fair value
-1
F.79
Level 11 Level 22 Level 33
86,543
86,543
Fair values of financial liabilities
F.88
12,375
99
12,474
55,991
thereof other financing liabilities
thereof liabilities from ABS transactions
10,707
68,422 57,715
13,606
69,941
58,496
128,437
81,972
62,961
76,468 62,862
thereof bonds
144,933
Financing liabilities
In millions of euros
Balance of the reserves for derivative financial instruments (before taxes)
from other comprehensive income to the
Statement of Income
-91
-63
55
-91
Other
financial
income/
expense, net
Cost of sales
72
-605
1
-73
Revenues
in which the reclassification
Statement of Income
Line item in the
item has affected profit or loss²
transferred because the hedged
For hedges that have been
-8
is included
Cost of sales
Interest
Cost of sales
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-18
Interest rate risk
-1,023
Foreign currency risk
-1,081
1,171
Changes in fair values (before taxes)
Balance at January 1, 2018
2018
In millions of euros
Reconciliation of reserves for derivative financial instruments
(according to IFRS 9)
F.92
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
302
1 The amount in other financial income/expense, net includes €1 million for hedges of net investments in foreign operations.
2 The amount in other financial income/expense, net includes minus €10 million for hedges of net investments in foreign operations.
expense
For hedges for which the hedged future cash
flows are no longer expected to occur
Continuing hedges
Reclassification of hedge effectiveness
Interest
expense
Interest
rate risk
2018
risk
Foreign
currency
In millions of euros
Gains and losses on cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
F.91
Commodity
1 Fair value changes of the hedged items used for recognizing hedge ineffectiveness.
Thereof hedges of net investments in foreign operations
-4
-311
Discontinued/terminated hedges
4
Thereof hedges of net investments in foreign operations
-4
-270
risk
-31
82
Cost of sales
Other
financial
income/
expense, net
Cost of sales
Revenues
ineffectiveness is included
in which the hedge
Statement of Income
Line item in the
Statement of Income
Hedge ineffectiveness recognized in the
-1,072
Gains and losses recognized in other
comprehensive income¹
1
1
-40
53
-70
Cost of sales
296
Amounts for the transactions designated as hedging instruments (according to IFRS 9)
Financial liabilities
57
43
86
59
364
425
15
58
163
161
41
237
22
25
-1,021
1
30
366
Cash flow
hedges¹
Fair Value
hedges²
299
F.85
Commodity price risk - inventory purchases
In millions of euros
Carrying amount of the hedging instrument
Other financial assets current
Other financial assets non-current
Other financial liabilities current
Other financial liabilities non-current
Financial liabilities current
Fair value changes³
Cash flow
hedges¹
Foreign
currency risk
Hedges of net
investments
in foreign
operations
December 31, 2018
Commodity
Interest
rate risk
risk
Cash flow
hedges'
-18
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
122
1 Includes the following instrument types: currency forwards, currency options, currency swaps, commodity forwards.
2 Includes the following instrument types: interest rate swaps, cross currency interest rate swaps.
Carrying amounts of the hedged items
Financing liabilities current
Financing liabilities non-current
thereof hedge adjustments
Financing liabilities current
Financing liabilities non-current
Fair value changes of the hedged items¹
Accumulated amount of hedge adjustments
from inactive hedges remaining in the statement
of financial position
-68
1.751
In millions of euros
-180
Interest rate risk
14,217
29,086
-72
100
-121
23
1 Fair value changes of the hedged items used for recognizing hedge
ineffectiveness.
2018
Fair value hedges (according to IFRS 9)
F.87
Hedges of net investments
in foreign operations
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
Information on derivative financial instruments
Use of derivatives
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities. These are mainly interest rate risks, currency risks
and commodity price risks, which were defined as risk catego-
ries according to IFRS 9. For these hedging purposes, the
Group mainly uses currency forward transactions, cross cur-
rency interest rate swaps, interest rate swaps, options and
commodity forwards.
Table 7 F.85 shows the amounts for the transactions
designated as hedging instruments at December 31, 2018
according to IFRS 9.
Table 71 F.86 shows the fair values of hedging instruments at
December 31, 2017 according to IAS 39.
Fair value hedges
The Group uses fair value hedges primarily for hedging interest
rate risks.
The amounts of the items hedged with fair value hedges
at December 31, 2018 according to IFRS 9 are included in
table
F.87.
F.86
Fair values of hedging instruments (according to IAS 39)
At December 31, 2017
In millions of euros
Fair value hedges
Cash flow hedges
-41
See Note 1 for qualitative descriptions of accounting
for and presentation of financial instruments (including
derivative financial instruments).
Total interest income and total interest expense for financial
assets or financial liabilities that were not measured at
fair value through profit or loss amounted €4,572 million and
€2,415 million respectively at December 31, 2017 according
to IAS 39.
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair
value through profit or loss at December 31, 2018 according
to IFRS 9 are shown in table 7 F.84.
Equity and debt instruments recognized
at fair value through profit or loss
Other financial assets and financial
liabilities recognized at fair value
through profit or loss¹
Equity instruments recognized at fair value
through other comprehensive income
Other financial assets recognized at fair value
through other comprehensive income
-17
In millions of euros
Financial assets measured at (amortized) cost
Financial liabilities measured at (amortized) cost
105
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
F.83
Net gains/losses (according to IAS 39)
In millions of euros
Financial assets and liabilities recognized
-469
Net gains/losses (according to IFRS 9)
F.82
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
measured at (amortized) cost
Financial liabilities measured at
14,185
144,555
8,758
167,498
fair value through profit or loss²
1 This does not include lease receivables of €26,660 million
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
56
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
3 This does not include liabilities from finance leases of €347 million
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
4 This does not include liabilities from financial guarantees of
€124 million as of December 31, 2018 as these are not assigned to
an IFRS 9 measurement category.
1 This does not include lease receivables of €22,514 million as of
December 31, 2017 as these are not assigned to an IAS 39 mea-
surement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
3 This does not include liabilities from finance leases of €352 million
as of December 31, 2017 as these are not assigned to an IAS 39
measurement category.
4 This does not include liabilities from financial guarantees of €141
million as of December 31, 2017 as these are not assigned to an
IAS 39 measurement category.
298
at fair value through profit or loss¹
Available-for-sale financial assets
Loans and receivables
Financial liabilities measured at (amortized) cost
Table 7 F.83 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2017 according to IAS 39.
Total interest income
5,189
Total interest income and total interest expense
thereof from financial assets and liabilities
measured at (amortized) costs
5,100
thereof from financial assets measured at fair value
through other comprehensive income
89
Total interest expense
-3,171
thereof from financial assets and liabilities
measured at (amortized) costs
-3,171
thereof from financial assets measured at fair value
through other comprehensive income
Net gains/losses on financial liabilities measured at
(amortized) cost primarily comprise the effects of currency
translation.
Other financial liabilities4
Net gains/losses on financial assets measured at (amortized)
cost primarily comprise impairment losses (including reversals
of impairment losses) of €407 million that are charged to cost
of sales, selling expenses and other financial income/expense,
net. Foreign currency gains and losses are also included. On
the other hand impairment losses (excluding reversals of
impairment losses) amounted to €630 million at December 31,
2017 according to IAS 39.
Net gains/losses on equity instruments measured at fair
value through other comprehensive income primarily comprise
dividend payments.
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
F.84
Total interest income and total interest expense
(according to IFRS 9)
In millions of euros
Net gains or losses
2018
136
240
2
2017
152
27
-542
-50
2018
Table 71 F.82 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2018 according to IFRS 9.
Net gains/losses on equity and debt instruments recognized
at fair value through profit or loss primarily comprise gains
and losses attributable to changes in the fair values of these
instruments, among others the fair value change of our
equity interest in Aston Martin Lagonda Global Holdings plc.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss primarily
comprise gains and losses attributable to changes in their
fair values.
Net gains/losses on other financial assets measured at
fair value through other comprehensive income are primarily
attributable to the effects of currency translation.
-40
6,173
-641
3,177
16
financial assets
Other receivables and
82
109
16
3,172
instruments not used in
hedge accounting
(assets only)
2,379
1,033
16
instruments used in
hedge accounting
(assets only)
Derivative financial
11,995
12,586
Derivative financial
Irrevocable loan
commitments
2,051
1,894
Table 7 F.79 shows into which measurement hierarchies
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
48,934
48,934
55,991
10,300
781
11,081
Note 14.
Further details of receivables from financial services and the
balance of the recorded impairments are provided in
The allowance ratio slightly increased compared to the low
level of the previous year.
If, in connection with contracts, a worsening of payment behav-
ior or other causes of a credit risk are recognized, collection
procedures are initiated by claims management to obtain the
overdue payments of the customer, to take possession of
the asset financed or leased or, alternatively, to renegotiate the
impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment of
local management, indicate that repayment will probably con-
tinue and that the total proceeds expected to be derived from
the renegotiated contract exceed the expected proceeds to
be derived from repossession and remarketing. For receivables
from financial services, significant modifications of financial
assets only occurred in rare cases and immaterial volume.
In determining expected credit losses, existing collateral is
generally given due consideration. The actual credit risk is
limited by the fair value of collateral (e.g. financed vehicles).
Financial guarantees
667
672
19
(according to IFRS 13) the fair values of the financial assets and
liabilities are classified which are not measured at fair value
in the Consolidated Statement of Financial Position.
86,054
14
The maximum risk positions of financial assets which are gen-
erally subject to credit risk are equal to their carrying amounts
(without consideration of collateral, if available). There is also
a risk of default from irrevocable loan commitments which had
not been utilized as of that date, as well as from financial guar-
antees. The maximum risk position in these cases is equal to the
expected future cash outflows. Table 71 F.97 shows the maxi-
mum risk positions.
Credit risk is the risk of economic loss arising from counter-
party's failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthiness
as well as concentration risks.
Credit risk
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and
other post-employment healthcare benefits are not included
in the following quantitative and qualitative analysis. See
Note 22 for additional information on Daimler's pension
and other post-employment benefits.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its operating business or refinancing activi-
ties. Without these derivative financial instruments, the Group
would be exposed to higher financial risks (additional information
on financial instruments and especially on the volumes of the
derivative financial instruments used is included in Note 32).
Daimler regularly evaluates its financial risks with due consider-
ation of changes in key economic indicators and up-to-date
market information.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An
equity price risk results from investments in listed companies.
In addition, the Group is exposed to credit risks from its
leasing and financing activities and from its operating business
(trade receivables). Furthermore, the Group is exposed to
liquidity and country risks relating to its credit and market risks
or a deterioration of its operating business or financial
market disturbances. If these financial risks materialize, they
could adversely affect Daimler's profitability, liquidity and
capital resources and financial position.
Liquid assets
688
819
-0.07%
-0.59%
-0.82%
0.46%
0.88
8.37
1.18
1,606
Liquid assets consist of cash and cash equivalents and market-
able debt securities and similar investments. With the invest-
ment of liquid assets, banks and issuers of securities are selected
very carefully and diversified in accordance with a limit system.
Liquid assets are mainly held at financial institutions within and
outside Europe with high creditworthiness, as bonds issued
by German federal states and as money market funds. In con-
nection with investment decisions, priority is placed on the
borrower's very high creditworthiness and on balanced risk
diversification. The limits and their utilizations are reassessed
continuously. In this assessment, Daimler also considers the
credit risk assessment of its counterparties by the capital mar-
kets. In line with the Group's risk policy, most liquid assets
are held in investments with an external rating of "A" or better.
Liquid assets are thus not subject to a material credit
risk and are allocated to stage 1 of the impairment model
(see Note 1).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22,135
25,430
Liquid assets
Receivables from
financial services
Trade receivables
2017
Maximum Maximum
see also risk position risk position
Note
2018
In millions of euros
irrevocable loan commitments and financial guarantees
Maximum risk positions of financial assets,
F.97
Following the impairment model expected credit losses from
receivables from financial services (see ①Note 1) are calcu-
lated with a statistical model using three major risk parame-
ters: probability of default, loss given default and exposure at
default.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate custom-
ers are evaluated using internal rating instruments. Both evalu-
ation processes use external credit bureau data if available.
The scoring and rating results as well as the availability of secu-
rity and other risk mitigation instruments, such as advance
payments, guarantees and, to a lower extent, residual debt
insurances, are essential elements for credit decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of collat-
eral generally depends on the amount of the financed assets.
The financed vehicles usually serve as collateral. Furthermore,
Daimler Financial Services mitigates the credit risk from
financing and lease activities, for example through advance
payments from customers.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes, the
definition of financing products offered, the evaluation of cus-
tomer quality, requests for collateral as well as the treatment
of unsecured loans and non-performing claims. The limitation
of concentration risks is implemented primarily by means of
global limits, which refer to single customer exposures. As of
December 31, 2018, exposure to the biggest 15 customers did
not exceed 3.8% (2017: 4.0%) of the total portfolio.
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases in
the Group's Consolidated Financial Statements. Overdue lease
payments from operating lease contracts are recognized in
receivables from financial services.
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its credit
risk irrespective of whether it is related to a financing contract
or to an operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Daimler Finan-
cial Services refer to the entire financing and leasing business,
unless specified otherwise.
Receivables from financial services
305
96,740
General information on financial risks
Measurement categories
The table 71 F.80 and table 7 F.81 do not include the carrying
amounts of derivative financial instruments used in hedge
accounting as these financial instruments are not assigned to
an IFRS 9 or IAS 39 measurement category. In addition table
7 F.81 does not include cash and cash equivalents as these
financial instruments are not assigned to an IAS 39 measure-
ment category.
and similar investments
Other financial liabilities4
Marketable debt securities
Financing liabilities³
6,219
through other comprehensive income
Trade payables
3,059
Financial assets measured at fair value
Liabilities
Equity and debt instruments
5,855
and similar investments
Marketable debt securities
82
Financial assets measured at
fair value through profit or loss²
364
Financial liabilities measured at (amortized) cost
Equity and debt instruments
384
300
Financing liabilities³
Trade payables
Liabilities
3,552
at fair value through profit or loss²
Financial assets measured
109
at fair value through profit or loss
111
147,550
8,327
126,772
12,451
fair value through profit or loss²
Other financial assets measured
Financial liabilities measured at
102,359
The carrying amounts of financial instruments presented at
December 31, 2018 according to IFRS 9 measurement
categories and at December 31, 2017 according to IAS 39
measurement categories are shown in table 7 F.80 and
7 F.81.
11,236
3,177
Receivables from financial services¹
70,080
Receivables from financial services¹
Assets
Assets
297
At December 31,
2017
63,540
In millions of euros
At December 31,
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
F.81
In millions of euros
Carrying amounts of financial instruments presented
according to IFRS 9 measurement categories
F.80
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2018
Trade receivables
12,586
Trade receivables
1,173
Other financial assets
10,063
Marketable debt securities
663
78,707
Loans and receivables
at (amortized) cost
Financial assets measured
Other receivables and
financial assets
and similar investments
Marketable debt securities
3,172
Other receivables and financial assets
15,853
Cash and cash equivalents
11,995
Available-for-sale financial assets
33. Management of financial risks
At December 31, 2018
Palladium (in € per troy ounce)
thereof cash flow hedges
Cross currency interest rate swaps
thereof cash flow hedges
Forward exchange contracts
Hedging of currency risks from receivables/liabilities
In millions of euros
Nominal values of derivative financial instruments (according to IAS 39)
thereof fair value hedges
F.95
Fair value hedges
Interest rate risk
Foreign currency risk
In millions of euros
Nominal values of derivative financial instruments (according to IFRS 9)
F.94
303
Cash flow hedges
Commodity risk
Hedging of currency risks from forecasted transactions
Forward exchange contracts and currency options
thereof cash flow hedges
Total
1 year up to
5 years
<1 year
At December 31, 2018
Maturity of nominal amounts
thereof fair value hedges
thereof cash flow hedges
Total nominal values of derivative financial instruments
thereof cash flow hedges
Forward commodity contracts
Hedging of commodity price risks from forecasted transactions
thereof fair value hedges
thereof cash flow hedges
Interest rate swaps
Hedging of interest rate risks from receivables/liabilities
thereof hedging of net investments in foreign operations
Currency swaps
Hedging of currency risks of net investments in foreign operations
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
>5 years
interest rate risks and commodity price risks can be found in
Note 33 in the sub-item finance market risk.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
F.93
537
-95
Balance at December 31, 2018
and reclassifications
Taxes on changes in fair values
Other
-18
Reclassifications of pre-tax gains/losses from equity
to the Statement of Income (according to IAS 39)
Commodity price risk - inventory purchases
Foreign currency risk - procurement
of non-financial assets (before taxes)
Reclassification to cost of acquisition
-7
Interest rate risk
-634
Foreign currency risk
-81
-63
In millions of euros
Revenue
Cost of sales
Hedging transactions for which the effects from the measure-
ment of the hedging instrument and the underlying transaction
to a large extent offset each other in the Consolidated State-
ment of Income mostly do not classify for hedge accounting.
F.96.
The average prices for derivative financial instruments classified
by risk categories for the main risks at December 31, 2018
according to IFRS 9 are included in table
Nominal values of derivative financial instruments
Table 7F.94 and table 7 F.95 show the nominal values of
derivative financial instruments at December 31, 2018 according
to IFRS 9 and at December 31, 2017 according to IAS 39
entered into for the purpose of hedging currency risks, interest
rate risks and commodity price risks that arise from the
Group's operating and/or financing activities.
At December 31, 2018, Daimler utilized derivative instruments
with a maximum maturity of 34 months (2017: 39 months)
as hedges for currency risks arising from future transactions.
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 7 F.94 at December 31, 2018
according to IFRS 9 and in table 71 F.95 at December 31, 2017
according to IAS 39.
Table 71 F.93 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the Consolidated State-
ment of Income in 2017 according to IAS 39.
Unrealized pre-tax gains/losses on the measurement
of derivatives, which are recognized in other comprehensive
income, amounted to €2,525 million at December 31, 2017
according to IAS 39.
The reserves for derivative instruments include reserves
for hedge costs of minus €11 million at December 31, 2018
(minus €34 million at January 1, 2018).
Table F.92 shows the reconciliation of the reserves for
derivative instruments in 2018 according to IFRS 9.
27
-1
34
-6
2017
Interest expense
Interest income
Explanations of the hedging of exchange rate risks,
29,063
9,935
38,998
25,615
36,888
62,503
66,942
41,808
108,750
246
37,407
403
247
495
742
35,159
572
35,731
8,209
649
933
36,474
304
Aluminum (in € per ton)
Platinum (in € per troy ounce)
Commodity risk
Average rate - USD
Average rate - €
Cash flow hedges
Average rate - USD
Average rate - €
Fair value hedges
Interest rate risk
GBP per €
CNY per €
USD per €
Foreign currency risk
Average prices of hedging instruments for the major risks
(according to IFRS 9)
F.96
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,485
9,694
47,539
2,395
>1 year
Maturity
≤1 year
At December 31, 2017
Maturity
Nominal values
500
215
285
21,592
11,839
9,753
42,991
12,055
24,763
64,583
12,055
36,602
15,926
6,267
Reclassification to profit and loss (before taxes)
6,259
3,380
49,934
15,481
30,061
45,542
15,490
30,506
45,996
1,315
361
1,676
1,679
1,559
3,238
3,658
2,153
5,811
3,380
8
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4,843
36. Earnings per share
8,438
175,800
167,362
24,176 167,362
2,093
26,269
4,421
108
4,529
12,842
784
13,626
36,456
1,817
38,273
89,467
3,636
93,103
Total revenue
Intersegment revenue
External revenue
2018
In millions of euros
Daimler
Group
Recon-
ciliation
Services Segments
Buses
Total
-8,438
-8,438
Daimler
Financial
167,362
7,216
656
-88
744
-452
1
44
43
1,108
equity-method investments
thereof profit/loss on
11,132
-798
11,930
1,384
265
312
2,753
Segment profit/loss (EBIT)
Daimler
Mercedes-
Benz Vans
Daimler
Trucks
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, some of
which are accounted for using the equity method, such as BAIC
Motor. These investments are not included in a market risk
assessment of the Group.
Equity price risk
- Changes in the timing of the hedged transactions.
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged commodity price risk.
Hedge accounting. When designating currency derivative finan-
cial instruments, Daimler generally applies a hedge ratio of 1.
The respective volumes and parameters relevant for the valua-
tion of the hedged item and the hedging instrument as well as
maturity dates are matched. The Group ensures an economic
relationship between the hedged item and the hedging instru-
ment by ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. Effectiveness is assessed at
initial designation and during the hedge term. Possible sources
of ineffectiveness of the hedge relationship are:
In 2018, the value at risk of commodity derivatives was close
to the previous year's level due to offsetting developments of
volatilities and hedge volume.
Table 71 F.99 shows the period-end, high, low and average value
at risk figures of the commodity price risk for the 2018 and
2017 portfolio of derivative financial instruments used to hedge
raw material price risk. Average exposure has been computed
on an end-of-quarter basis. The transactions underlying the
derivative financial instruments are not included in the value at
risk presentation. See also table 71 F.94 at December 31, 2018
according to IFRS 9 and table 7 F.95 at December 31, 2017
according to IAS 39 for the nominal values of derivative com-
modity price hedges at the balance sheet date.
For precious metals, central commodity management shows
an unhedged position of 39% of the forecasted commodity
purchases at year-end 2018 for calendar year 2019. The corre-
sponding figure at year-end 2017 was 38% for calendar year
2018.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw mate-
rial price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
Commodity price risk
311
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Changes in the parameters of the underlying hedged trans-
actions.
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged interest rate risk.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is generally applied. The respective
volumes, interest curves and currencies of the hedged item and
the hedging instrument as well as maturity dates are matched.
In the case of combined derivative financial instruments
for interest currency hedges, the cross currency basis spread is
not designated into the hedge relationship, but deferred as a
hedging cost in other comprehensive income and recognized in
profit or loss pro rata over the hedge term. The Group ensures
an economic relationship between the underlying transaction
and the hedging instrument by ensuring consistency of interest
rates, maturity terms and nominal amounts. The effectiveness of
the hedge is assessed at the beginning and during the econo-
mic relationship using the hypothetical derivative method. Pos-
sible sources of ineffectiveness of the hedge relationship are:
In the course of 2018, changes on the value at risk of interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Table 71 F.99 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2018 and 2017
portfolios of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
In this respect, the table shows the interest rate risk regard-
ing the unhedged position of interest rate sensitive financial
instruments. The average values have been computed on an
end-of-quarter basis.
34. Segment reporting
Reportable segments
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately, according to nature of products and
services provided, brands, distribution channels and profile
of customers.
The vehicle segments develop and manufacture passenger cars,
trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products will be marketed under the EQ
brand. Daimler Trucks distributes its trucks under the brand
names Mercedes-Benz, Freightliner, Western Star, FUSO and
BharatBenz. Furthermore, buses under the brands Thomas
Built Buses and FUSO are included in the Daimler Trucks range
of products. The vans of the Mercedes-Benz Vans segment
are primarily sold under the brand name Mercedes-Benz and
also under the Freightliner brand. Daimler Buses sells com-
pletely built-up buses under the brand names Mercedes-Benz
and Setra. In addition, Daimler Buses produces and sells bus
chassis. The vehicle segments also sell related spare parts and
accessories.
Mercedes-
Benz Cars
Segment information
F.100
Reconciliation includes corporate items for which headquar-
ters are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
Reconciliation
Amortization of capitalized borrowing costs is not included in
the amortization of intangible assets or depreciation of prop-
erty, plant and equipment since it is not considered as part of
EBIT.
Depreciation and amortization may also include impairments
insofar as they do not relate to goodwill impairment according
to IAS 36.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs, goodwill or
finance leases.
thereof profit/loss from compounding
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Daimler Financial Services' performance is measured on the
basis of return on equity, which is the usual procedure in the
banking business.
Segment assets principally comprise all assets. The vehicle
segments' assets exclude income tax assets, assets from
defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The
vehicle segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other post-
employment benefit plans, and certain financial liabilities
(including financing liabilities).
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
312
The Group's management reporting and controlling systems
measure of segment profit or loss is referred to as "EBIT."
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
on equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized bor-
rowing costs is included in cost of sales, it is not included
in EBIT.
The Group's management reporting and controlling systems
principally use accounting policies that are the same as those
described in Note 1 in the summary of significant account-
ing policies according to IFRS.
The Daimler Financial Services segment supports the sales of
the Group's vehicle segments worldwide. Its product portfolio
primarily comprises tailored financing and leasing packages for
end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services such
as fleet management in Europe, which primarily takes place
through the Athlon brand. Furthermore, Daimler Financial Ser-
vices is active in the area of innovative mobility services.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms
vary by vehicle segment and geographic region.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments.
Daimler coordinates the funding activities of the automotive
and financial services businesses at the Group level.
and effects from changes in discount rates
of provisions for other risks
-9
Depreciation and amortization of
7,534
69
7,465
64
144
468
1,105
5,684
plant and equipment
thereof investments in property,
3,167
1
3,166
103
56
368
non-current assets
86
6,105
599
3,138
plant and equipment
thereof depreciation of property,
2,014
1
2,013
104
20
185
267
1,437
thereof amortization of intangible assets
14,887
90
14,797
6,236
235
1,622
2,553
intangible assets
thereof investments in
512
2,928
of equity-method investments.
thereof carrying amounts
2,745 281,619
165,316 278,874
3,780
9,868
23,558
76,352
Segment assets
-31
1
-32
-3
-2
-11
241
8
209
3,898
35,500
51
35,449
14,431
431
1,633
2,460
16,494
-7
Additions to non-current assets
152,506 224,454
2,502
6,330
15,069
48,047
Segment liabilities
4,860
962
-8,888 215,566
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate Treasury
department manages the interest rate risk relating to Daimler's
leasing and financing activities by setting targets for the interest
rate risk position. The Treasury Risk Management department
and the local Daimler Financial Services companies are jointly
responsible for achieving these targets. As separate functions,
the Treasury Controlling and the Daimler Financial Services
Controlling & Reporting department monitors target achieve-
ment on a monthly basis. In order to achieve the targeted inter-
est rate risk positions in terms of maturities and interest rate
fixing periods, Daimler also uses derivative financial instru-
ments such as interest rate swaps. Daimler assesses its inter-
est rate risk position by comparing assets and liabilities for
corresponding maturities, including the impact of the relevant
derivative financial instruments.
Daimler uses a variety of interest rate sensitive financial instru-
ments to manage the liquidity needs of its day-to-day opera-
tions. A substantial volume of interest rate sensitive assets and
liabilities results from the leasing and sales financing business
operated by the Daimler Financial Services segment. The
Daimler Financial Services companies enter into transactions
with customers that primarily result in fixed-rate receivables.
Daimler's general policy is to match funding in terms of maturi-
ties and interest rates wherever economically feasible. How-
ever, for a limited portion of the receivables portfolio in selected
and developed markets, the Group does not match funding
in terms of maturities in order to take advantage of market
opportunities. As a result, Daimler is exposed to risks due to
changes in interest rates.
Interest rate risk
19,934
61
9
-50
5,578
8,585
The calculation of basic and diluted earnings per share is based
on net profit attributable to shareholders of Daimler AG. Fol-
lowing the expiration of the stock option plan in 2014, dilutive
effects no longer exist. The profit attributable to shareholders
of Daimler AG (basic and diluted) amounts to €7,249 million
(2017: €10,278 million). The weighted average number of shares
outstanding (basic and diluted) amounts to 1,069.8 million
(2017: 1,069.8 million).
24,616
-47
35,991
62
14
59,451
540
14,169
14,185
154, 155
575
Trade payables4
Derivative financial instruments³
Financing liabilities²
In millions of euros
≥ 2024
2023
1
2022
1
excluding accrued interest and
24,964
36,990
82,627
2,051
672
672
179,291
Financial guarantees
2,051
Services segment and of Daimler AG5
Irrevocable loan commitments of the Daimler Financial
228
122
242
394
923
5,744
7,653
liabilities from financial guarantees
Miscellaneous other financial liabilities
2021
2020
2019
Irrevocable loan commitments
With respect to other receivables and financial assets included
in other financial assets in 2018 and 2017, Daimler is exposed
to credit risk only to a small extent.
Other receivables and financial assets
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its operational busi-
ness or refinancing activities. Daimler manages its credit risk
exposure in connection with derivative financial instruments
through a limit system, which is based on the review of each
counterparty's financial strength. This system limits and diver-
sifies the credit risk. As a result, Daimler is exposed to credit
risk only to a small extent with respect to its derivative finan-
cial instruments. In accordance with the Group's risk policy,
most derivatives are contracted with counterparties which
have an external rating of "A" or better.
Derivative financial instruments
Further information on trade receivables and the status of
impairments recognized is provided in Note 19.
In line with the impairment model (see Note 1), the simpli-
fied approach is applied for impairments of trade receivables,
whereby expected credit losses until maturity for these trade
receivables are recognized with the initial recognition.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
letters of credit.
first-class bank guarantees and
credit insurances,
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
For trade receivables from export business, Daimler also evalu-
ates each general distribution company's creditworthiness by
means of an internal rating process and its country risk. In this
context, the year-end financial statements and other relevant
information on the general distribution companies such as pay-
ment history are used and assessed.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific types
of collateral. This collateral includes conditional sales, guaran-
tees and sureties as well as mortgages and advance payments
from customers.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. In order to identify credit
risks, Daimler assesses the creditworthiness of the custom-
ers. Daimler manages its credit risk from trade receivables using
appropriate IT applications and databases on the basis of
internal guidelines which have to be followed globally.
Trade receivables
306 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Daimler Financial Services segment in particular is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2018, irrevocable loan
commitments amounted to €2,051 million (2017: €1,894 mil-
lion). These loan commitments had a maturity of less than one
year and are not subject to a material credit risk.
Financial guarantees
The maximum potential obligation resulting from financial
guarantees amounts to €672 million at December 31, 2018
(2017: €667 million) and includes liabilities recognized
at December 31, 2018 in the amount of €124 million (2017:
€141 million). Financial guarantees principally represent
contractual arrangements. These guarantees generally pro-
vide that in the event of default or non-payment by the
primary debtor, the Group will be required to settle such finan-
cial obligations.
Liquidity risk
Total
Liquidity runoff for liabilities and financial guarantees¹
F.98
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management; it
assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
Daimler is exposed to country risk mainly resulting from cross-
border funding or collateralization of Group companies and
customers, from investments in subsidiaries, associated com-
panies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise from
cross-border cash deposits at financial institutions.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respec-
tive country, e.g. resulting from sovereign measures such
as expropriation or interdiction of foreign currency transfers.
Country risk
Information on the Group's financing liabilities is also provided
in Note 24.
8,778
Table 71 F.98 provides an overview of how the future liquidity
situation of the Group can be affected by the cash flows from
liabilities, financial guarantees and irrevocable loan commit-
ments as of December 31, 2018.
At December 31, 2018, liquidity amounted to €25.4 billion
(2017: €22.1 billion). In 2018, significant cash inflows resulted
from the operations of the industrial business. One cash
inflow of €1.3 billion resulted from the dividend distributed by
Beijing Benz Automotive Co. Ltd. Cash outflows resulted in
particular from the portfolio growth of the leasing and sales
finance activities at Daimler Financial Services, from the
intensified investment offensive as well as from income taxes
paid. Cash inflows and outflows in connection with the cash
flow of the financing activities were also effective.
The funds raised are used to finance working capital and capi-
tal expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease
and financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
307
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, customer deposits at Mercedes-Benz Bank are
used as a further source of refinancing.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. Bank credit facilities are
also used to cover financing requirements. Potential down-
grades of Daimler's credit ratings could have a negative impact
on the Group's financing. In July 2018, Daimler successfully
concluded negotiations with a consortium of international banks
for a new syndicated credit facility with a volume raised from
€9 billion to €11 billion. With a term of five years, it grants Daim-
ler additional financial flexibility until 2023. The term can be
extended to 2025. Daimler does not intend to utilize the credit
facility.
Daimler manages its liquidity by holding adequate volumes of
liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating busi-
ness. Additionally, the possibility to securitize receivables of
financial services business (ABS transactions) also reduces the
Group's liquidity risk. Liquid assets comprise cash and cash
equivalents and marketable debt securities and similar invest-
ments. The Group can dispose of these liquid assets at short
notice.
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling
process. This process enables Daimler to manage its liquidity
surplus and liquidity requirements according to the actual
needs of the Group and each subsidiary. The Group's short-term
and mid-term liquidity management takes into account the
maturities of financial assets and financial liabilities and esti-
mates of cash flows from the operating business.
5,709
20,223
1 The amounts were calculated as follows:
Commodity price risk
46
43
48
43
36
26
45
26
Interest rate risk
815
779
877
779
633
568
695
(from derivative financial instruments)
14
23
14
Effects of currency translation. For purposes of Daimler's Con-
solidated Financial Statements, the income and expenses
and the assets and liabilities of subsidiaries located outside the
euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause transla-
tion effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities of
the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book
values caused by exchange rates. In general, Daimler does not
hedge against exchange rate translation risk.
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
The Group's investments in liquid assets or refinancing activities
generally are not allowed to result in currency risk. Transaction
risks arising from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing on
money and capital markets are generally hedged against cur-
rency risks at the time of investing or refinancing in accor-
dance with Daimler's internal guidelines. The Group uses
appropriate derivative financial instruments (e.g. cross cur-
rency interest rate swaps) to hedge against currency risk.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
310
In 2018, the development of the value at risk from foreign
currency hedging was mainly driven by decreases in foreign
currency rate volatilities and hedge volumes.
In the course of focusing on the divisional perspective the
designation of hedge relationships primarily for foreign currency
risk from future vehicle sales will be subject to a further
differentiation by Mercedes-Benz Cars/Mercedes-Benz Vans
as well as Daimler Trucks/Daimler Buses starting with 2019.
Until year-end 2018, the designation of these hedge relationships
for a specific currency and maturity has no further differentia-
tion in respect of the entire volume of expected vehicle sales by
segments. Accordingly, as of January 1, 2019, the documentation
required under IFRS with regards to this further differentiation
of expected cash flows (i.e. the risk management objectives)
will also be revised for the major part of the already designated
hedge relationships for foreign currency risk although there is
no change in the overall Group risk management strategy. This
results in a formal discontinuation of existing hedge relation-
ships as described in the methods applied in preparation of the
financial statements and immediate redesignation of new hedge
relationships according to the revised differentiation. The accu-
mulated hedging gains/losses in equity as of December 31,
2018, subject to redesignation remain in the other reserves for
derivative financial instruments because the hedged future
cash flows are still expected to occur. Daimler does not expect
any material impacts on the Group's profitability, liquidity and
capital resources or financial position.
Changes in the timing of the hedged transactions.
568
Effects of the credit risk on the fair value of the used deriva-
tive instrument which is not reflected in the change of the
hedged currency risk.
Table 71 F.99 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2018 and
2017 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included in
the following value at risk presentation. See also table 7 F.94
at December 31, 2018 according to IFRS 9 and table 7 F.95
at December 31, 2017 according to IAS 39 for the nominal vol-
umes on the balance sheet date of derivative currency instru-
ments entered into to hedge the currency risk from forecasted
transactions.
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts held.
The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange con-
tracts and currency options. Daimler's guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the exchange
rate risk inherent in these derivative financial instruments.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to limit risks for the Group from unfavorable move-
ments in exchange rates while preserving some flexibility to
participate in favorable developments. Based on this reference
model and depending on the market outlook, the FXCo deter-
mines the hedging horizon, which usually varies from one to five
years, as well as the average hedge ratios. Reflecting the
character of the underlying risks, the hedge ratios decrease with
increasing maturities. At year-end 2018, foreign exchange
management showed an unhedged position in the automotive
business for the underlying forecasted cash flows in US dollars
in calendar year 2019 of 29%, for the underlying forecasted
cash flows in Chinese renminbi in calendar year 2019 of 30%, as
well as for the underlying forecasted cash flows in British
pounds in calendar year 2019 of 33%.
17
14
25
14
18
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is applied. In addition, the respective
volume and currency of the hedge and the underlying transaction
as well as maturity dates are matched. The Group ensures an
economic relationship between the underlying transaction and
the hedging transaction by ensuring consistency of currency,
volume and maturity. In the case of options for currency hedg-
ing, the option premium is not designated into the hedge
relationship, but the hedging costs are deferred in other com-
prehensive income and recognized in profit or loss at the due
date of the underlying transaction. The effectiveness of the hedge
is assessed at the beginning and during the economic relation-
ship. Possible sources of ineffectiveness of the hedge relation-
ship are:
798
(from derivative financial instruments)
2017
Average
assume a 99% confidence level and a holding period of five
days.
express potential losses in fair values, and
-
The value at risk calculations employed:
As part of its risk management system, Daimler employs value
at risk analyses. In performing these analyses, Daimler quantifies
its market risk due to changes in foreign currency exchange
rates and interest rates and certain commodity prices on a
regular basis by predicting the potential loss over a target time
horizon (holding period) and confidence level.
Daimler manages market risks to minimize the impact of fluc-
tuations in foreign exchange rates, interest rates and commod-
ity prices on the results of the Group and its segments. The
Group calculates its overall exposure to these market risks to
provide the basis for hedging decisions, which include the
selection of hedging instruments and the determination of hedg-
ing volumes and the corresponding periods. Starting in 2019,
exposure to currency risks will be determined for each segment.
The hedging strategy is specified at the Group level and uni-
formly implemented in the segments. Decisions regarding the
management of market risks resulting from fluctuations in
foreign exchange rates, interest rates (asset-/liability manage-
ment) and commodity prices are regularly made by the rele-
vant Daimler risk management committees. Exposures are the
basis of the hedging strategies and are updated regularly.
The global nature of its businesses exposes Daimler to signifi-
cant market risks resulting from fluctuations in foreign currency
exchange rates and interest rates. In addition, the Group is
exposed to market risks in terms of commodity price risk asso-
ciated with its business operations, which the Group hedges
for certain metals partially through derivative financial instru-
ments. The Group is also exposed to equity price risk in con-
nection with its investments in listed companies.
Finance market risks
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
308
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods, this
may also include negative cash flows from derivatives with an overall positive fair value.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can be
required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
Daimler calculates the value at risk for exchange rate and inter-
est rate risk according to the variance-covariance approach.
The value at risk calculation method for commodity hedging
instruments is based on a Monte Carlo simulation.
When calculating the value at risk by using the variance-covari-
ance approach, Daimler first computes the current market
value of the Group's financial instruments portfolio. Then the
sensitivity of the portfolio value to changes in the relevant
market risk factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on volatilities and correlations of these market risk fac-
tors, which are obtained from the Risk MetricsTM dataset, a
statistical distribution of potential changes in the portfolio value
at the end of the holding period is computed. The loss which is
reached or exceeded with a probability of only 1% can be
derived from this calculation and represents the value at risk.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over the
holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
risk can be determined based on this distribution as the port-
folio value loss which is reached or exceeded with a probability
of 1%.
Low
High
Period-end
2018
Average
Low
High
Period-end
In millions of euros
Exchange rate risk
Value at risk for exchange rate risk, interest rate risk and commodity price risk
309
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Risk Controlling regularly informs the Board of Management of
the actions taken by Corporate Treasury based on the FXCo's
decisions.
In order to mitigate the impact of currency exchange rate fluc-
tuations for the operating business (future transactions), Daimler
continually assesses its exposure to exchange rate risks and
hedges a portion of those risks by using derivative financial
instruments. Daimler's Foreign Exchange Committee (FXCO)
manages the Group's exchange rate risk and its hedging trans-
actions through currency derivatives. The FXCo consists of rep-
resentatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign currency
exposures from Daimler's subsidiaries and operative units and
implements the FXCo's decisions concerning foreign currency
hedging through transactions with international financial insti-
tutions. Any over-hedge caused by changes in exposure is gen-
erally reversed by taking suitable measures without delay.
The Group's currency exposure is reduced by natural hedging
to the extent that currency exposures of the operating busi-
nesses of individual segments offset each other partially at
Group level, thereby reducing overall currency exposure. These
natural hedges eliminate the need for hedging to the extent of
the matched exposures. To provide an additional natural hedge
against any remaining transaction risk exposure, Daimler gen-
erally strives to increase cash outflows in the same currencies
in which the Group has a net excess inflow.
Transaction risk and currency risk management. The global nature
of Daimler's businesses exposes cash flows and earnings to
risks arising from fluctuations in exchange rates. These risks
primarily relate to fluctuations between the euro and the US
dollar, the Chinese renminbi, the British pound and other cur-
rencies such as currencies of growth markets. In the operating
vehicle business, the Group's exchange rate risk primarily
arises when revenue is generated in a currency that is different
from the currency in which the costs of generating the revenue
are incurred (transaction risk). When the revenue is converted
into the currency in which the costs are incurred, it may be
inadequate to cover the costs if the value of the currency in
which the revenue is generated declined in the interim relative
to the value of the currency in which the costs were incurred.
This risk exposure primarily affects the Mercedes-Benz Cars
segment, which generates a major portion of its revenue in for-
eign currencies and incurs manufacturing costs primarily in
euros. The Daimler Trucks segment is also subject to transac-
tion risk, but to a lesser extent because of its global production
network. The Mercedes-Benz Vans and Daimler Buses seg-
ments are also directly exposed to transaction risk, but also
only to a minor degree compared to the Mercedes-Benz Cars
segment. In addition, the Group is indirectly exposed to trans-
action risk from its equity-method investments.
Exchange rate risk
Oriented towards the risk management standards of the inter-
national banking industry, Daimler maintains its financial con-
trolling unit independent of operating Corporate Treasury and
with a separate reporting line.
F.99
255
Management and reporting system
24
In the reporting year, there were no significant non-cash issues
at the Daimler Buses segment.
Daimler Buses
-21,793
Other corporate items and
6,556
12,041
and similar obligations5
and liabilities from pensions
Unallocated financial liabilities
891
2,556
Income tax liabilities
204,532
224,454
Total of segments' liabilities
255,345
281,619
Daimler Financial Services
Group assets
In the year 2018, the agreement reached to conclude the Toll
Collect arbitration proceedings reduced earnings at the
Daimler Financial Services segment by €418 million. The inter-
est income and interest expense of Daimler Financial Services
are included in revenue and cost of sales, and are presented in
Notes 4 and 5.
Reconciliation of the segment amounts to the respective items
included in the Consolidated Financial Statements is shown in
table F.101.
NAFTA region
thereof Germany
Europe
In millions of euros
Revenue and non-current assets by region
F.102
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 315
5 Unless allocated to Daimler Financial Services.
4 This mainly comprises the carrying amount of the investments in
BAIC Motor and LSHAI.
3 Amortization of capitalized borrowing costs is not considered
in the internal performance measure "EBIT” but is included in
cost of sales.
2 In the year 2018, this mainly comprises the impairment of
Daimler's equity investment in BAIC Motor of €150 million.
In the year 2017, the reversal of the impairment of Daimler's
equity investment in BAIC Motor of €240 million is included.
1 Information on adjustments to prior-year figures is disclosed in
Note 1 of the Notes to the Consolidated Financial Statements.
Group liabilities
eliminations
Revenue from external customers and non-current assets by
region are shown in table 7 F.102.
Revenue and non-current assets by region
In 2018, the line item Other corporate items includes, amongst
other things, higher expenses in connection with "Project
Future".
Reconciliation
-22,537
-24,007
eliminations
Interest expense
214
271
Interest income
-13
-15
borrowing costs³
Amortization of capitalized
14,348
11,132
Group EBIT
-44
-41
Eliminations
-488
-669
Other corporate items
-793
-582
Profit before income taxes
10,595
Other corporate items and
20,133
21,563
obligations5
from pensions and similar
(including liquidity) and assets
Unallocated financial assets
2,657
thereof United States
4,227
1,060
962
investments4
Carrying amount of equity-method
254,032
278,874
Total of segments' assets
13,967
Income tax assets5
Asia
thereof China
Other markets
2,358
3,355
Mercedes-Benz Vans
8,417
8,240
Daimler Trucks
23,705
26,289
Mercedes-Benz Cars
Daimler Financial Services¹
Daimler Buses
In millions of euros
2017
2018
F.103
Average net assets
The objective of capital management is to increase value added,
among other things, by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the cost
of capital, are derived from the minimum rates of return that
investors expect on their invested capital. The Group's cost of
capital comprises the cost of equity as well as the costs of
debt and pension obligations unless these are allocated to
Daimler Financial Services; in addition, the expected returns
on liquidity and on the plan assets of the pension funds which
are not allocated to Daimler Financial Services are considered
with the opposite sign. In the reporting period, the cost of
capital used for our internal capital management amounted to
8% after taxes.
1,233
1,105
12,466
11,165
for instance by optimizing working capital which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between
equity and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
3 Unless allocated to Daimler Financial Services.
2 Unless allocated to the segments.
1 Equity.
Net assets of the segments
48,446
53,809
-1,435
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 7 F.103.
-547
2,190
1,707
Assets and liabilities from income taxes³
941
1,066
Equity-method investments²
46,750
51,583
Other corporate items and eliminations³
Net assets Daimler Group
-88
"Net assets" and "value added" represent the basis for capital
management at Daimler. The assets and liabilities of the seg-
ments in accordance with IFRS provide the basis for the deter-
mination of net assets at Group level. The vehicle segments
are accountable for the operational net assets; all assets, lia-
bilities and provisions which they are responsible for in day-to-
day operations are therefore allocated to them. Performance
measurement at Daimler Financial Services is on an equity basis,
in line with the usual practice in the banking business. Net
assets at Group level additionally include assets and liabilities
from income taxes as well as other corporate items and
eliminations.
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
27,095
46,528
47,952
42,547
45,281
24,311
24,802
58,943
63,559
68,309
68,496
2017
(adjusted)1
2018
2017
(adjusted)¹
2018
Non-current assets
Revenue
25,510
41,152
40,076
24,239
88,790
95,225
164,154
167,362
1,828
1,764
10,227
10,287
35. Capital management
166
18,774
75
19,790
2,509
2,807
39,090
40,627
22,623
219
investments²
-23,485
215,566 190,186
14,624
1,242
1
3
43
4,290
1
4,291
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
313
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of the
segments if such items are not indicative of the segments' per-
formance, since the related results of operations may be dis-
torted by the amount and the irregular nature of such events.
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
-3
Information related to geographic areas
With respect to information about geographical regions, reve-
nue is allocated to countries based on the location of the
customer; non-current assets are presented according to the
physical location of these assets.
Table
F.100 presents segment information as of and for the
years ended December 31, 2018 and 2017.
Mercedes-Benz Cars
256
1,498
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
of equity-method investments
thereof carrying amounts
255,345
1,313
254,032
149,989
3,563
8,744
In the year 2018, the Mercedes-Benz Cars segment's earnings
include positive effects from the remeasurement at fair value
of €111 million of the investment in Aston Martin Lagonda Global
Holdings plc (Aston Martin). On the other hand,
21,758
Segment assets
-61
-61
-4
-2
-5
-17
-33
69,978
equity-method investments
expenses in connection with ongoing governmental proceed-
ings and measures relating to diesel vehicles affected EBIT
negatively. In addition, impairments of €133 million impacted
EBIT negatively. In the year 2017, EBIT was boosted by income
of €183 million in connection with a new investor in HERE. On
the other hand, EBIT was reduced by expenses totaling €425
million for voluntary service activities for diesel vehicles and a
specific vehicle recall. The optimization programs led to a cash
inflow of €203 million in the year 2017.
In the reporting year, there were in sum no significant non-
cash issues at the Daimler Trucks segment. In 2017, the sale
of real estate by Mitsubishi Fuso Truck and Bus Corporation in
Japan increased earnings by €267 million. On the other hand,
expenses of €172 million for fixed-cost optimizations affected
EBIT negatively. The optimization programs led to a cash out-
flow of €120 million (2017: €17 million).
4,412
112
4,524
profit/loss on equity-method
22,310 164,154
2,220
24,530
164,154
8,167
172,321
-8,167
-8,167
164,154
Segment profit/loss (EBIT)
8,843
2,383
1,147
281
1,970
14,624
-276
14,348
thereof profit/loss on
566
13,161
12,595
34,196
1,559
35,755
90,641
3,710
94,351
Mercedes-Benz Vans
In the reporting year, EBIT at the Mercedes-Benz Vans segment
was reduced by expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles
and by remeasurement of assets in connection with production
capacities.
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Daimler Trucks
Total
Services Segments ciliation²
Daimler
Group
1,198
In millions of euros
2017 (adjusted)¹
External revenue
Intersegment revenue
Total revenue
Recon-
491
2,930
9
1,755
1
13,625
86
13,539
1,754
131
18
84
thereof depreciation of property,
291
thereof amortization of intangible assets
5,979
247
447
1,540
5,326
non-current assets
Depreciation and amortization of
1,230
180
plant and equipment
791
11,930
Total of segments' profit (EBIT)
256
(adjusted)1
2017
2018
In millions of euros
Reconciliation to Group figures
2,832
F.101
314
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal revenue
and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
3,921
1
3,920
24
75
198
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26
6,744
43
14,896
299
2,000
2,308
15,815
Additions to non-current assets
190,186
-14,346
6,718
137,610 204,532
5,804
13,897
44,761
Segment liabilities
4,818
1,060
3,758
148
2,460
23
35,318
3,413
plant and equipment
thereof investments in property,
3,414
1
35,341
90
33
94
525
97
2,668
intangible assets
thereof investments in
710
1,028
100.00
Affalterbach, Germany
Mercedes-Benz (China) Ltd.
5
Mem Martins, Portugal
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
100.00
Mercedes-AMG GmbH
Luxembourg, Luxembourg
Luxembourg, Luxembourg
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
LEONIE TB DVB GmbH
LEONIE PV DVB GmbH
LEONIE FSM DVB GmbH
5
100.00
Stuttgart, Germany
5
100.00
5
Stuttgart, Germany
0.00
Stuttgart, Germany
3
0.00
Mercedes-Benz (Thailand) Limited
100.00
Zwartkop, South Africa
LEONIE FS DVB GmbH
LEONIE CORP DVB GmbH
LBBW AM-MBVEXW
LBBW AM - Daimler Re Insurance
Koppieview Property (Pty) Ltd
100.00
3
100.00
Stuttgart, Germany
5
100.00
Zug, Switzerland
Mercedes pay S.A.
Mercedes pay AG
100.00
Brixworth, United Kingdom
Mercedes AMG High Performance Powertrains Ltd
5
100.00
Arnstadt, Germany
MDC Technology GmbH
5
100.00
100.00
Kölleda, Germany
Mississauga, Canada
MDC Power GmbH
MBarc Credit Canada Inc.
100.00
Wilmington, USA
100.00
Mississauga, Canada
5
100.00
Kamenz, Germany
Mascot Truck Parts USA LLC
Mascot Truck Parts Canada Ltd (2017)
Li-Tec Battery GmbH
100.00
Beijing, China
Beijing, China
Bangkok, Thailand
Wilmington, USA
3
0.00
Wilmington, USA
3
0.00
0.00
Wilmington, USA
0.00
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Lease Trust 2018-A
Mercedes-Benz Auto Lease Trust 2018-B
Mercedes-Benz Auto Receivables Trust 2015-1
Footnote
Capital share
in %1
Domicile, Country
3
3
Mercedes-Benz Auto Receivables Trust 2016-1
Wilmington, USA
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Bordeaux S.A.S.
São Bernardo do Campo, Brazil
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank AG
3
0.00
Wilmington, USA
Mercedes-Benz Auto Retail Trust 2018-1
3
0.00
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
75.00
Name of the Company
0.00
Antwerp, Belgium
Mercedes-Benz Antwerpen N.V.
5
100.00
Stuttgart, Germany
Mercedes-Benz AG
100.00
5
Stuttgart, Germany
Mercedes-Benz Accessories GmbH
100.00
Yangzhou, China
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
100.00
100.00
Mercedes-Benz Argentina S.A.
Mercedes-Benz Asia GmbH
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2016-2
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2016-B
3
0.00
Wilmington, USA
100.00
100.00
Melbourne, Australia
100.00
Utrecht, Netherlands
5
100.00
Stuttgart, Germany
100.00
Buenos Aires, Argentina
3
Invema Assessoria Empresarial Eireli
Sarcelles, France
Windhof, Luxembourg
100.00
Gaffney, USA
Freightliner Custom Chassis Corporation
100.00
Vetlanda, Sweden
100.00
Friesland Lease B.V.
Mem Martins, Portugal
Wolica, Poland
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
100.00
Drachten, Netherlands
51.11
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 2 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 1 OHG
5,7
100.00
Schönefeld, Germany
Sámano, Spain
Schönefeld, Germany
5
Stuttgart, Germany
100.00
San Juan Ixtacala, Mexico
100.00
Toluca, Mexico
100.00
Detroit, USA
Kirchheim unter Teck, Germany
100.00
100.00
Mexico City, Mexico
5
100.00
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Berlin, Germany
Detroit, USA
100.00
5
Stuttgart, Germany
100.00
100.00
Koege, Denmark
100.00
Prague, Czech Republic
100.00
Kobbegem-Asse, Belgium
100.00
Wiener Neudorf, Austria
100.00
Coventry, United Kingdom
100.00
Kloten, Switzerland
5
100.00
100.00
100.00
5,7
Alpha 4 OHG
Gamma 3 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5,7
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 1 OHG
5,7
100.00
Schönefeld, Germany
100.00
Schönefeld, Germany
100.00
5,7
79.35
Hamburg, Germany
100.00
London, United Kingdom
100.00
Madrid, Spain
5,7
100.00
Schönefeld, Germany
Interleasing Luxembourg S.A.
Intelligent Apps GmbH
Hailo Network IP Limited
Hailo Network Iberia S.L.
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
Gamma 4 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Epsilon OHG
5,7
100.00
Alpha 7 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 6 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
322
100.00
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Delta OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Beta OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
in %1
Footnote
Capital share
Name of the Company
Mercedes-Benz Brooklands Limited
Mercedes-Benz Retail, S.A.
Mercedes-Benz Capital Rus O00
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Kft.
100.00
Bucharest, Romania
Mercedes-Benz Leasing IFN S.A.
100.00
Mercedes-Benz Leasing Taiwan Ltd.
Zagreb, Croatia
5
100.00
Stuttgart, Germany
Mercedes-Benz Leasing GmbH
100.00
Barueri, Brazil
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing Treuhand GmbH
Budapest, Hungary
100.00
Mercedes-Benz Manhattan, Inc.
51.00
Puchong, Malaysia
Mercedes-Benz Malaysia Sdn. Bhd.
5
100.00
Ludwigsfelde, Germany
Mercedes-Benz Ludwigsfelde GmbH
5
100.00
Stuttgart, Germany
100.00
Taipei, Taiwan
100.00
Warsaw, Poland
Mercedes-Benz Leasing do Brasil Arrendamento Mercantil S.A.
Wilmington, USA
65.00
Mercedes-Benz Leasing Co., Ltd.
100.00
Voluntari, Romania
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Broker S.R.L.
100.00
Utrecht, Netherlands
Pune, India
Hong Kong, China
100.00
Kifissia, Greece
60.00
Brackley, United Kingdom
Mercedes-Benz India Private Limited
100.00
100.00
Taipei, Taiwan
100.00
100.00
Bangkok, Thailand
Mercedes-Benz Leasing (Thailand) Co., Ltd.
51.00
Seoul, South Korea
Mercedes-Benz Korea Limited
100.00
Tokyo, Japan
Mercedes-Benz Japan Co., Ltd.
100.00
Rome, Italy
Mercedes-Benz Italia S.p.A.
100.00
Wilmington, USA
Mercedes-Benz Investment Company LLC
Beijing, China
Mercedes-Benz Hong Kong Limited
100.00
Bangkok, Thailand
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Portugal, S.A.
100.00
100.00
Prague, Czech Republic
100.00
100.00
100.00
Port-Marly, France
Azuqueca de Henares, Spain
Mercedes-Benz PRAHA s.r.o.
Mem Martins, Portugal
100.00
5
Milton Keynes, United Kingdom
100.00
Wilmington, USA
100.00
Alcobendas, Spain
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, Unipessoal Lda.
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Renting, S.A.
100.00
Prague, Czech Republic
Salzburg, Austria
Mercedes-Benz Manufacturing (Thailand) Limited
Auckland, New Zealand
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mexico City, Mexico
Mercedes-Benz Mexico, S. de R.L. de C.V.
100.00
Mechelen, Belgium
Mercedes-Benz Mechelen N.V.
3
100.00
0.00
100.00
Liegnitz, Poland
100.00
Kecskemét, Hungary
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Manufacturing Poland Sp. z o.o.
100.00
Mercedes-Benz Master Owner Trust
Mercedes-Benz Minibus GmbH
Dortmund, Germany
100.00
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Mercedes-Benz Paris SAS
Mercedes-Benz Österreich GmbH
Mercedes-Benz New Zealand Ltd
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
5
100.00
Stuttgart, Germany
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
5
Mercedes-Benz Polska Sp. z o.O.
Mercedes-Benz Hellas S.A.
Mercedes-Benz Grand Prix Ltd.
100.00
Horsholm, Denmark
São Paulo, Brazil
Stuttgart, Germany
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz Dealer Bedrijven B.V.
Budapest, Hungary
Copenhagen, Denmark
Mercedes-Benz Danmark A/S
Mercedes-Benz CPH A/S
Mercedes-Benz Corretora de Seguros Ltda
Mercedes-Benz Connectivity Services GmbH
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz CharterWay S.r.l.
100.00
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Trent, Italy
100.00
Buenos Aires, Argentina
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Drogenbos N.V.
100.00
São Bernardo do Campo, Brazil
100.00
São Paulo, Brazil
100.00
The Hague, Netherlands
100.00
100.00
100.00
99.98
5
100.00
100.00
Montigny-le-Bretonneux, France
Drogenbos, Belgium
100.00
Mercedes-Benz CharterWay S.A.S.
Saarbrücken, Germany
5
100.00
Berlin, Germany
100.00
Moscow, Russian Federation
100.00
100.00
100.00
Salzburg, Austria
100.00
Stuttgart, Germany
Mercedes-Benz Cars Nederland B.V.
Mercedes-Benz Cars Ceská republika s.r.o.
Warsaw, Poland
5
Brussels, Belgium
100.00
Mercedes-Benz Cars UK Limited
100.00
Utrecht, Netherlands
100.00
Prague, Czech Republic
100.00
Moscow, Russian Federation
100.00
Toronto, Canada
100.00
Milton Keynes, United Kingdom
100.00
Budapest, Hungary
100.00
Begles, France
Milton Keynes, United Kingdom
100.00
Alcobendas, Spain
100.00
100.00
Wilmington, USA
100.00
Milton Keynes, United Kingdom
100.00
Taipei, Taiwan
Copenhagen, Denmark
100.00
75.00
Bratislava, Slovakia
100.00
Schlieren, Switzerland
100.00
Moscow, Russian Federation
Centurion, South Africa
100.00
Mercedes-Benz Finans Sverige AB
Malmö, Sweden
Kirchheim unter Teck, Germany
Mercedes-Benz Fuel Cell GmbH
100.00
Montigny-le-Bretonneux, France
Mercedes-Benz France S.A.S.
100.00
Malmö, Sweden
Mercedes-Benz Försäljnings AB
100.00
Istanbul, Turkey
Mercedes-Benz Finansman Türk A.S.
100.00
Istanbul, Turkey
Mercedes-Benz Finansal Kiralama Türk A.S.
100.00
100.00
Mem Martins, Portugal
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
100.00
Prague, Czech Republic
100.00
100.00
100.00
100.00
95.01
Mississauga, Canada
Melbourne, Australia
Salzburg, Austria
Brussels, Belgium
Tokyo, Japan
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Finance Co., Ltd.
100.00
Mercedes-Benz Canada Inc.
Hong Kong, China
Mercedes-Benz Financial Services Nederland B.V.
in %1
Footnote
Capital share
Domicile, Country
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
324
323
100.00
Auckland, New Zealand
Mercedes-Benz Financial Services New Zealand Ltd
100.00
80.00
100.00
Rome, Italy
Seoul, South Korea
Utrecht, Netherlands
80.00
100.00
Wilmington, USA
100.00
22.1
4.2
4.2
38.6
17.9
Remuneration of the Supervisory Board
Termination benefits
2.0
2.4
(service cost)
12.4
1.6
a long-term incentive effect (PPSP)
Post-employment benefits
Mid-term variable remuneration
(50% of annual bonus, "deferral")
Variable remuneration with
7.0
42.8
1 Including the Board of Management remuneration paid to
Dr. Wolfgang Bernhard until February 10, 2017.
318
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
9
10
Other attestation services
21
23
1.9
Wirtschaftsprüfungsgesellschaft
46
Audit services
In millions of euros
2017
2018
Auditor fees
F.106
thereof KPMG AG
8
7.7
(50% of annual bonus)
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Including liabilities from default risks from guarantees for related parties.
1 Since the equity interest in LSHAI was acquired in May 2017, business relations with LSHAI are reported from June 2017 onward.
2 After write-downs totaling €53 million (2017: €52 million).
115
444
183
208
75
100
946
997
65
85
1,673
1,571
317
38. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board of Man-
agement and the Supervisory Board who were active as of
December 31, 2018, affected net profit for the year ended
December 31 as shown in table F.105.
Expenses for variable remuneration of the Board of Manage-
ment with a long-term incentive effect, as shown in table
71 F.105, result from the ongoing measurement at fair value
at each balance sheet date of all rights granted and not yet
due under the Performance Phantom Share Plans (PPSP), i.e.
for the plans of the years 2015-2018. In 2018, the active
members of the Board of Management were granted 145,775
(2017: 151,157) phantom shares in connection with the PPSP;
the fair value of these phantom shares at the grant date was
€10.2 million (2017: €10.2 million). See Note 21 for addi-
tional information on share-based payment of the members of
the Board of Management.
Short-term variable
remuneration
(base salary)
9.5
9.5
Fixed remuneration
Remuneration of the Board of
Management
20171
2.5
2018
Remuneration of the members of the Board of Management
and the Supervisory Board
F.105
Information regarding the remuneration of the members of the
Board of Management and of the Supervisory Board is disclosed
on an individual basis in the Remuneration Report, which is
part of the combined Management Report. Management
Report from page 120
The payments made in 2018 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €16.2 million (2017: €19.0 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €270.2 million as of December 31, 2018
(2017: €270.5 million).
No advance payments or loans were made or abated to
members of the Board of Management or to the members of
the Supervisory Board of Daimler AG in 2018.
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activities, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accor-
dance with their contracts of employment, no remuneration
was paid in 2018 for services provided personally beyond
board and committee activities, in particular for advisory or
agency services.
According to Section 314 Subsection 1 Number 6a of the Ger-
man Commercial Code (HGB), the overall remuneration
granted to the members of the Board of Management, exclud-
ing service cost resulting from entitlements to post-employ-
ment benefits, amounted to €24.7 million (2017: €35.0 million).
In millions of euros
7
Tax services
2
Oeiras, Portugal
100.00
Warsaw, Poland
100.00
Almere, Netherlands
100.00
Rome, Italy
100.00
Almere, Netherlands
100.00
Machelen, Belgium
100.00
Almere, Netherlands
Athlon Car Lease Portugal, Ida
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.o.
100.00
Athlon Car Lease Rental Services B.V.
Almere, Netherlands
100.00
Athlon Mobility Consultancy N.V.
Athlon Mobility Consultancy B.V.
Athlon Germany GmbH
Athlon France S.A.S.
100.00
Almere, Netherlands
Athlon Dealerlease B.V.
Athlon Car Lease Italy S.R.L.
100.00
Athlon Car Lease Spain, S.A.
100.00
Le Bourget, France
Athlon Car Lease S.A.S.
100.00
Machelen, Belgium
Athlon Car Lease Rental Services Belgium N.V.
Alcobendas, Spain
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
100.00
Almere, Netherlands
Tax services primarily relate to value-added tax advisory.
Other attestation services comprise attestation services required
by law or by contractual agreement, or voluntarily assigned
services. In addition to reviews of non-accounting-related IT
systems and processes, they also include audits in connection
with compliance management systems, issuance of comfort
letters, and non-financial disclosures and reports.
Audit services relate to the audit of Daimler Group's Consolidated
Financial Statements and the year-end financial statements,
as well as to all services required for the audit including the
reviews of interim financial statements, the accounting-related
audit of the internal control system, and accounting-related
reviews of the introduction of IT systems and processes.
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders' Meeting held on April 5, 2018. Table 71 F.106
shows the fees for services provided by KPMG AG Wirtschafts-
prüfungsgesellschaft and the companies of the worldwide
KPMG network to Daimler AG and all subsidiaries as well as
joint operations that are included in the Group's Consolidated
Financial Statements for the respective reporting period.
44
39. Auditor fees
Wirtschaftsprüfungsgesellschaft
Other services were performed mainly for non-accounting-
relevant processes and M&A activities.
thereof KPMG AG
8
Other services
1
1
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
1
6
80
6
66
Athlon Beheer International B.V.
I. Consolidated subsidiaries
319
Footnote
Capital share
in %1
Domicile, Country
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5
Name of the Company
The statement of investments of the Daimler Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Commercial
Code (HGB) is presented in table 7 F.107 In general coopera-
tions without an equity interest are not reported. Information
on equity and earnings and information on investments pursu-
ant to Section 313 Subsection 2 No. 4 of the German Commer-
cial Code is omitted insofar as, pursuant to Section 313 Sub-
section 3 Sentence 4 of the HGB, such information is of minor
relevance for a fair presentation of the profitability, liquidity
and capital resources or financial position of the Daimler Group.
In addition, the statement of investments indicates which
consolidated companies make use of the exemption pursuant to
Section 264 Subsection 3 of the HGB and/or Section 264b of
the HGB. The Consolidated Financial Statements of Daimler AG
release those subsidiaries from the requirements that would
otherwise apply.
Information on investments
12-2018.pdf.
The Board of Management and the Supervisory Board of Daimler
AG have issued a declaration pursuant to Section 161 of the
German Stock Corporation Act (AktG) and have made it perma-
nently available to their shareholders on Daimler's website at
https://www.daimler.com/documents/company/
corporate-governance/declarations/daimler-declaration-en-
German Corporate Governance Code
40. Additional information
60
F.107
64
3,933
4,850
Mercedes-Benz Trucks Molsheim
Molsheim, France
100.00
Mercedes-Benz Trucks Nederland B.V.
Utrecht, Netherlands
100.00
Mercedes-Benz Trucks UK Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Türk A.S.
Istanbul, Turkey
66.91
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz USA, LLC
Mercedes-Benz V.I. Lyon SAS
100.00
Alcobendas, Spain
Mercedes-Benz Trucks España S.L.U.
100.00
100.00
Istanbul, Turkey
100.00
Sosnowiec, Poland
100.00
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sverige AB
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz Vans Australia Pacific Pty. Ltd.
Pretoria, South Africa
Malmö, Sweden
100.00
Mercedes-Benz Taiwan Ltd.
Taipei, Taiwan
51.00
Mercedes-Benz Trucks Ceská republika s.r.o.
Prague, Czech Republic
100.00
Mercedes-Benz Vans Ceská republika s.r.o
Mercedes-Benz Vans España, S.L.U.
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Utrecht, Netherlands
100.00
Mercedes-Benz Vans UK Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Vans, LLC
Mercedes-Benz Versicherung AG
Wilmington, USA
Mercedes-Benz Vans Nederland B.V.
100.00
100.00
5
Mercedes-Benz Vertrieb NFZ GmbH
Stuttgart, Germany
100.00
5
325
Stuttgart, Germany
Petaling Jaya, Malaysia
5
Berlin, Germany
Vance, USA
Warsaw, Poland
Wilmington, USA
Genas, France
100.00
100.00
100.00
100.00
100.00
Wissous, France
Mulgrave, Australia
100.00
Prague, Czech Republic
100.00
Madrid, Spain
100.00
Mercedes-Benz Vans Mobility GmbH
100.00
Athlon Rental Germany GmbH
Mercedes-Benz Sosnowiec Sp. z o.o.
100.00
and other expense
2018
and other income
2018
2017
and services
and services
Purchase of goods
Sales of goods
Joint ventures
thereof BBAC
Schönefeld, Germany
Associated companies
In millions of euros
Transactions with related parties
F.104
See
members.
Note 38 for information on the remuneration of board
2017
Receivables
At December 31,2
2018
2017
Payables
At December 31,3
2018
2017
127
30
1,075
981
298
647
5,177
Board of Management and Supervisory Board members and
close family members of those board members may also pur-
chase goods and services from Daimler AG or its subsidiaries as
customers. When such business relationships exist, transactions
are concluded on the basis of customary market conditions.
8,011
131
2,827
2,679
703
855
9,507
13,475
253
Throughout the world, the Group has business relationships with
numerous entities that are customers and/or suppliers of the
Group. Those customers and/or suppliers include companies
that have a connection with some of the members of the Board
of Management or of the Supervisory Board and close family
members of those board members of Daimler AG or of its sub-
sidiaries.
Board members
In 2018 and 2017, the Group made contributions of €696 mil-
lion and €3,692 million to its external funds to cover pension
and other post-employment benefits. See also Note 22 for
further information.
100.00
Rome, Italy
100.00
Bucharest, Romania
100.00
Mercedes-Benz Russia AO
Moscow, Russian Federation
Centurion, South Africa
100.00
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Services Correduria de Seguros, S.A.
Schlieren, Switzerland
100.00
Bucharest, Romania
100.00
Alcobendas, Spain
Mercedes-Benz Schweiz AG
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
100.00
100.00
Contributions to plan assets
© Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as well as
significant transactions in the years 2018 and 2017.
Shenzhen DENZA New Energy Automotive Co. Ltd. (DENZA)
is allocated to the Mercedes-Benz Cars segment. Daimler has
provided guarantees in a total amount of RMB 1,115 million
(approximately €142 million) to external banks which provided
two loans to DENZA. At December 31, 2018, loans amounting
to RMB 615 million (approximately €78 million) were utilized.
In addition, Daimler has provided a shareholder loan of RMB
250 million (approximately €32 million) to DENZA, which is
fully utilized. In the second half of 2018, Daimler contributed
capital of RMB 400 million (approximately €50 million) in
accordance with its shareholding ratio. In 2017, there was
already a capital increase of RMB 500 million (approximately
€63 million).
In business relationships with joint ventures, significant sales
of goods and services took place with Fujian Benz Automotive
Co., Ltd. (FBAC), which is allocated to Mercedes-Benz Vans,
and with DAIMLER KAMAZ RUS 000, a company established
with the associated company Kamaz PAO, and allocated to
Daimler Trucks.
Joint ventures
In September 2018, Daimler sold the remaining 35% stake in
MBtech to the technology company AKKA Technologies SA.
The purchases of goods and services shown in table 7 F.104
were primarily from LSHAI as well as from MBtech Group
GmbH & Co. KGaA (MBtech), which is allocated to Mercedes-
Benz Cars. MBtech provides engineering and services for
research and development, production of components, mod-
ules, components systems as well as consulting and planning
along the development process in the automotive sector.
Mem Martins, Portugal
A large proportion of the Group's sales of goods and services
with associated companies as well as of its receivables relates
to business relations with LSH Auto International Limited
(LSHAI) and with Beijing Benz Automotive Co., Ltd. (BBAC),
both allocated to Mercedes-Benz Cars. In 2017, Daimler had
acquired a 15% stake in LSHAI.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies and joint
ventures and are shown in table F.104.
Related parties are deemed to be associated companies, joint
ventures and unconsolidated subsidiaries, as well as persons
who exercise a significant influence on the financial and busi-
ness policy of the Daimler Group. The latter category includes
all persons in key positions and their close family members.
At the Daimler Group, those persons are the members of the
Board of Management and of the Supervisory Board.
37. Related party relationships
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
316
100.00
Madrid, Spain
Associated companies
Le Bourget, France
thereof LSHAI¹
Düsseldorf, Germany
Stuttgart, Germany
100.00
5
Tokyo, Japan
100.00
Milton Keynes, United Kingdom
100.00
Utrecht, Netherlands
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
Leinfelden-Echterdingen, Germany
100.00
5
Daimler Motors Investments LLC
100.00
Wilmington, USA
Wilmington, USA
Chennai, India
100.00
Daimler Fleet Services A.S.
Istanbul, Turkey
100.00
Daimler FleetBoard GmbH
Stuttgart, Germany
100.00
5
Daimler Greater China Ltd.
Daimler Grund Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Daimler Insurance Services GmbH
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services UK Limited
Daimler International Finance B.V.
Daimler International Nederland B.V.
Daimler Investments US Corporation
Daimler Manufactura, S. de R.L. de C.V.
Daimler Mexico, S.A. de C.V.
Daimler Mobility Services GmbH
Beijing, China
100.00
Schönefeld, Germany
100.00
5
100.00
Milton Keynes, United Kingdom
100.00
Utrecht, Netherlands
Berlin, Germany
100.00
5
Daimler Retail Receivables LLC
DAIMLER SERVICIOS CORPORATIVOS MEXICO S. DE R.L. DE C.V.
Daimler South East Asia Pte. Ltd.
Daimler Truck AG
Daimler Truck and Bus Australia Pacific Pty. Ltd.
Daimler Trucks & Buses US Holding Inc.
Farmington Hills, USA
100.00
Mexico City, Mexico
100.00
Singapore, Singapore
100.00
Stuttgart, Germany
100.00
5
Mulgrave, Australia
100.00
Wilmington, USA
Daimler Real Estate GmbH
Daimler Nederland B.V.
100.00
Daimler Re Insurance S.A. Luxembourg
100.00
Daimler Nederland Holding B.V.
Daimler North America Corporation
Daimler North America Finance Corporation
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Parts Brand GmbH
Utrecht, Netherlands
Wilmington, USA
Newark, USA
Beijing, China
100.00
100.00
100.00
100.00
Stuttgart, Germany
100.00
5
Daimler Re Brokers GmbH
Bremen, Germany
74.90
5
Luxembourg, Luxembourg
100.00
Daimler Fleet Management UK Limited
65.00
Melbourne, Australia
100.00
Daimler Brand & IP Management GmbH & Co. KG
Stuttgart, Germany
100.00
5,7
Daimler Brand & IP Management Verwaltung GmbH
Stuttgart, Germany
100.00
5
Daimler Buses North America Inc.
Oriskany, USA
100.00
Daimler Canada Finance Inc.
Montreal, Canada
100.00
Daimler Canada Investments Company
Halifax, Canada
100.00
320
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler Australia/Pacific Pty. Ltd.
Name of the Company
100.00
DAF Investments, Ltd.
100.00
Wilmington, USA
100.00
car2go Österreich GmbH
Utrecht, Netherlands
Vienna, Austria
100.00
100.00
CARS Technik & Logistik GmbH
CLIDET NO 1048 (Proprietary) Limited
Conemaugh Hydroelectric Projects, Inc.
DA Investments Co. LLC
Wiedemar, Germany
100.00
5
Centurion, South Africa
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Wilmington, USA
4
Domicile, Country
Footnote
100.00
5
Daimler Financial Services India Private Limited
Daimler Financial Services Investment Company LLC
Daimler Financial Services México, S. de R.L. de C.V.
Chennai, India
100.00
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Mexico City, Mexico
100.00
Daimler Fleet Management GmbH
Stuttgart, Germany
100.00
5
Daimler Fleet Management Singapore Pte. Ltd.
Singapore, Singapore
100.00
Daimler Fleet Management South Africa (Pty.) Ltd.
Centurion, South Africa
Stuttgart, Germany
Capital share
100.00
Daimler Financial Services Africa & Asia Pacific Ltd.
Daimler Financial Services AG
in %1
Daimler Capital Services LLC
Daimler Ceská republika Holding s.r.o.
Daimler Colombia S. A.
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
Daimler Export and Trade Finance GmbH
Wilmington, USA
100.00
Prague, Czech Republic
100.00
Bogota D.C., Colombia
100.00
Singapore, Singapore
100.00
Mexico City, Mexico
100.00
Berlin, Germany
100.00
5
Daimler Finance North America LLC
Wilmington, USA
100.00
Singapore, Singapore
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
100.00
Beijing, China
100.00
Leinfelden-Echterdingen, Germany
100.00
Leinfelden-Echterdingen, Germany
100.00
car2go Group GmbH
car2go Iberia S.L.U.
Leinfelden-Echterdingen, Germany
100.00
Madrid, Spain
100.00
car2go Italia S.R.L.
car2go N.A. Holding Inc.
car2go N.A. LLC
car2go Nederland B.V.
Milan, Italy
100.00
100.00
Mexico City, Mexico
100.00
Wilmington, USA
67.55
Hong Kong, China
Vancouver, Canada
100.00
Campinas, Brazil
100.00
100.00
Amsterdam, Netherlands
100.00
Machelen, Belgium
100.00
Düsseldorf, Germany
100.00
Athlon Sweden AB
Athlon Switzerland AG
AutoGravity Corporation
Malmö, Sweden
100.00
100.00
Schlieren, Switzerland
Irvine, USA
80.00
Banco Mercedes-Benz do Brasil S.A.
Brooklands Estates Management Limited
Campo Largo Comercio de Veículos e Peças Ltda.
car2go Canada Ltd.
car2go China Co., Ltd.
car2go Deutschland GmbH
car2go Europe GmbH
São Paulo, Brazil
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
Wilmington, USA
Farmington Hills, USA
EvoBus Austria GmbH
EvoBus Belgium N.V.
EvoBus Ceská republika s.r.o.
100.00
100.00
EvoBus Danmark A/S
EvoBus France S.A.S.U.
EvoBus GmbH
100.00
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus (Schweiz) AG
EvoBus Nederland B.V.
EvoBus Portugal, S.A.
EvoBus Sverige AB
Seoul, South Korea
Wilmington, USA
Portland, USA
Wilmington, USA
Farmington Hills, USA
Beijing, China
100.00
Mississauga, Canada
100.00
EvoBus Polska Sp. z o.o.
EHG Elektroholding GmbH
EvoBus (U.K.) Ltd.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
100.00
Wilmington, USA
100.00
3
0.00
100.00
Capital share
in %1
Footnote
321
Daimler Trucks and Buses (China) Ltd.
Daimler Trucks Canada Ltd.
Deutsche Accumotive GmbH & Co. KG
Daimler Trucks North America LLC
Daimler Trucks Korea Ltd.
Daimler Trust Leasing Conduit LLC
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Detroit Diesel Remanufacturing LLC
Daimler Trucks Remarketing Corporation
Daimler Trucks Retail Trust 2018-1
Daimler Trust Holdings LLC
Daiprodco Mexico S. de R.L. de C.V.
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Detroit Diesel Corporation
Daimler Vans USA, LLC
Daimler Vans Hong Kong Limited
Daimler UK Limited
Daimler Trust Leasing LLC
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
New Cairo, Egypt
Mauá, Brazil
3
0.00
Clinton, USA
100.00
100.00
McDonough, USA
100.00
Chur, Switzerland
100.00
Cunac, France
100.00
Manhattan Beach, USA
99.50
50.00
Houston, USA
Stuttgart, Germany
Cugir, Romania
Schlieren, Switzerland
Maribor, Slovenia
Domicile, Country
Capital share
Footnote
in %1
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Daimler Kamaz Trucks Holding GmbH
Beijing, China
50.00
Vienna, Austria
50.00
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
Munich, Germany
25.10
Fuzhou, China
50.00
IONITY Holding GmbH & Co. KG
MB Service Japan Co., Ltd.
Polomex, S.A. de C.V.
SelecTrucks of Atlanta LLC
SelecTrucks of Houston LLC
SelecTrucks of Houston Wholesale LLC
SelecTrucks of Omaha LLC
Munich, Germany
25.00
Hitachi, Japan
33.40
Garcia, Mexico
26.00
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
330
329
100.00
51.00
London, United Kingdom
100.00
Lima, Peru
100.00
Istanbul, Turkey
100.00
Zug, Switzerland
100.00
Lisbon, Portugal
100.00
London, United Kingdom
100.00
100.00
Chemnitz, Germany
Stuttgart, Germany
100.00
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
EM-motive GmbH
North America Fuel Systems Remanufacturing LLC
Aguascalientes, Mexico
54.01
Burnaby, Canada
50.10
Hildesheim, Germany
50.00
Kentwood, USA
100.00
50.00
15.00
Houston, USA
Bodo Uebber
Bodo Cecco
Britta Seeger
Brita Roger
Hubertus Troska
Huberten Diz
Wilfried Porth
Wilfried Past
Ola Källenius
Au Paro
Martin Daum
cle +
Renata Jungo Brüngger
кризи ватру
Dieter Zetsche
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
335
Independent Auditor's Report
To: Daimler AG, Stuttgart
SelecTrucks of Toronto, Inc.
Mississauga, Canada
100.00
Setra of North America, Inc.
Silver Arrow Australia Trust 2017-1
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2018. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our opinion thereon, we do not provide
a separate opinion on these matters.
Key Audit Matters in the Audit of the
Consolidated Financial Statements
Die A
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accordance
with Section 317 HGB and the EU Audit Regulation No.
537/2014 (referred to subsequently as "EU Audit Regulation")
and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut
der Wirtschaftsprüfer (Institute of Public Auditors in Germany;
IDW). We performed the audit of the consolidated financial
statements in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under
those requirements, principles and standards are further
described in the "Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined
Management Report" section of our auditor's report. We are
independent of the group entities in accordance with the
requirements of European law and German commercial and
professional law, and we have fulfilled our other German
professional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 paragraph
2 letter f) of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under Article 5
paragraph 1 of the EU Audit Regulation. We believe that the
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions on the consolidated financial
statements and on the combined management report.
Pursuant to Section 322 paragraph 3 sentence 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated financial
statements and of the combined management report.
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development.
the accompanying consolidated financial statements comply,
in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB (Handels-
gesetzbuch: German Commercial Code) and, in compliance
with these requirements, give a true and fair view of the
assets, liabilities, and financial position of the Group as of
December 31, 2018, and of its financial performance for
the financial year from January 1 to December 31, 2018, and
In our opinion, on the basis of the knowledge obtained in the
audit
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position
as of December 31, 2018, and the consolidated statement of
income, consolidated statement of comprehensive income/
loss, consolidated statement of changes in equity and consoli-
dated statement of cashflows for the financial year from
January 1 to December 31, 2018, as well as notes to the con-
solidated financial statements, including a summary of
significant accounting policies. In addition, we have audited
the combined management report of Daimler AG for the
financial year from January 1 to December 31, 2018.
Audit opinions
Report on the Audit of the Consolidated
Financial Statements and of the Combined
Management Report
Basis for the Opinions
Для
Stuttgart, February 13, 2019
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the Group
management report, which has been combined with the
management report for Daimler AG, includes a fair review of
the development and performance of the business and
the position of the Group, together with a description of the
principal opportunities and risks associated with the
expected development of the Group.
Furthermore, Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability in MOST Cooperation GbR,
Karlsruhe (Germany).
7 Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability.
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
4 In liquidation.
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances.
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
331
Hinxworth, United Kingdom
Seattle, USA
what3words Ltd.
19.42
12.23
10.17
Bruchsal, Germany
11.75
Stuttgart, Germany
Zonar Systems, Inc.
100.00
Further
Information
G| Further information
Responsibility Statement
G❘ FURTHER INFORMATION | RESPONSIBILITY STATEMENT
334
G | FURTHER INFORMATION | CONTENTS 333
340
Daimler Worldwide
339
C-Class Sedan
Index
Glossary
336
Ten-Year Summary
335
Independent Auditor's Report
334
Responsibility Statement
338
5.17
Portland, USA
Bryanston, South Africa
Wavre, Belgium
100.00
Mercedes-Benz Wemmel N.V.
Wemmel, Belgium
100.00
Mercedes-Benz Wholesale Receivables LLC
Wilmington, USA
100.00
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
Toronto, Canada
100.00
Kawasaki, Japan
89.29
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
100.00
Braine-l'Alleud, Belgium
100.00
Warsaw, Poland
326
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Vertrieb PKW GmbH
Tramagal, Portugal
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Stuttgart, Germany
100.00
5
Ho Chi Minh City, Vietnam
70.00
Mercedes-Benz Warszawa Sp. z o.o.
100.00
Mitsubishi Fuso Truck of America, Inc.
Logan Township, USA
Le Bourget, France
50.10
7
Barcelona, Spain
100.00
Dublin, Ireland
100.00
100.00
London, United Kingdom
100.00
Jakarta, Indonesia
100.00
Jakarta, Indonesia
100.00
Lima, Peru
100.00
Bogor, Indonesia
62.62
Wilmington, USA
Wilmington, USA
100.00
moovel Group GmbH
moovel North America Inc.
moovel North America, LLC
Multifleet G.I.E
myTaxi Iberia SL
mytaxi Network Ireland Ltd.
100.00
mytaxi Network Ltd.
PT Daimler Commercial Vehicles Indonesia
PT Mercedes-Benz Distribution Indonesia
Renting del Pacífico S.A.C.
Sandown Motor Holdings (Pty) Ltd
SelecTrucks of America LLC
Stuttgart, Germany
100.00
P.T. Mercedes-Benz Indonesia
50.00
San Francisco, USA
Sannoseki, Japan
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
LSH Auto International Limited
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
KAMAZ PAO
FUSO LAND TRANSPORT & Co. Ltd.
FlixMobility GmbH
12.28
15.15
Frankfurt am Main, Germany
New York, USA
15.00
29.56
9.69
32.28
30.00
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
Taxify OÜ
There Holding B.V.
Okayamashi, Japan
Jakarta, Indonesia
Jakarta, Indonesia
33.00
Beijing, China
Burnaby, Canada
4,7
25.00
Weissach, Germany
Beijing Mercedes-Benz Sales Service Co., Ltd.
50.00
BDF IP Holdings Ltd.
VII. Joint operations, joint ventures, associated companies and substantial other investments accounted
for at (amortized) cost²
Via Transportation Inc.
Verimi GmbH
Toll4Europe GmbH
Berlin, Germany
Rijswijk, Netherlands
Tallinn, Estonia
Abgaszentrum der Automobilindustrie GbR
88.89
Hong Kong, China
43.83
50.00
Amsterdam, Netherlands
ViaVan Technologies B.V.
7
45.00
Berlin, Germany
60.00
Wagenplan B.V.
Stuttgart, Germany
TASIAP GmbH
50.00
Shenzhen, China
Shenzhen DENZA New Energy Automotive Co. Ltd.
50.00
Council Bluffs, USA
50.00
Toll Collect GbR
51.00
Almere, Netherlands
VI. Associated companies accounted for using the equity method
Yokohama, Japan
15.00
Naberezhnye Chelny, Russian Federation
21.67
Kawasaki, Japan
5.62
Munich, Germany
50.00
29.64
Berlin, Germany
Beijing, China
9.55
Beijing, China
BlackLane GmbH
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
49.00
28.20
ChargePoint Inc.
Campbell, USA
Taipei, Taiwan
51.00
Kleinostheim, Germany
50.00
London, United Kingdom
20.00
34.59
2.90
Berlin, Germany
Pontcharra, France
Berlin, Germany
Footnote
Capital share
in %1
Ingolstadt, Germany
Burlingame, USA
Volocopter GmbH
33.40
Grand Cayman, Cayman Islands
5.10
Jeddah, Saudi Arabia
20.84
Munich, Germany
51.00
Most, Czech Republic
50.00
Bottrop, Germany
20.00
VfB Stuttgart 1893 AG
Wilmington, USA
New York, USA
5.12
7
20.00
33.51
Ohmuta, Japan
26.00
12.33
Turo Inc.
Toyo Kotsu Co., Ltd.
tiramizoo GmbH
Berlin, Germany
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
18.09
San Francisco, USA
Gottapark, Inc.
33.33
Budapest, Hungary
18.37
EvoBus Hungária Kereskedelmi Kft.
European Center for Information and Communication Technologies - Berlin, Germany
EICT GmbH
26.57
Esslingen am Neckar, Germany
Esslinger Wohnungsbau GmbH
40.82
Wiesbaden, Germany
5.55
25.00
COBUS Industries GmbH
7
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STARCAM s.r.o.
smart-BRABUS GmbH
REV Coach LLC
Rally Bus Corp.
Proterra Inc.
PDB Partnership for Dummy Technology and Biomechanics GbR
Omuta Unso Co., Ltd.
Name of the Company
National Automobile Industry Company Ltd.
MFTB Taiwan Co., Ltd.
MercedesService Card GmbH & Co. KG
Laureus World Sports Awards Limited
inpro Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
hap2U SAS
H2 Mobility Deutschland GmbH & Co. KG
Domicile, Country
Momenta Global Limited
Banbury, United Kingdom
7
Ebina, Japan
100.00
DAIMLER FINANCIAL SERVICES AUSTRALIA PTY LTD
Melbourne, Australia
100.00
Daimler Financial Services UK Trustees Ltd.
Milton Keynes, United Kingdom
100.00
Daimler Gastronomie GmbH
Esslingen am Neckar, Germany
100.00
Daimler Group Services Berlin GmbH
Berlin, Germany
100.00
Daimler Group Services Madrid, S.A.U.
Daimler Innovation Technology (China) Co., Ltd.
Daimler International Assignment Services USA, LLC
Daimler Ladungsträger GmbH
Daimler Mitarbeiter Wohnfinanz GmbH
San Sebastián de los Reyes, Spain
100.00
Beijing, China
100.00
Wilmington, USA
Dubai, United Arab Emirates
100.00
Nairobi, Kenya
100.00
100.00
car2go Sverige AB
Stockholm, Sweden
100.00
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Buenos Aires, Argentina
72.85
Clever Tech S.R.L.
Bucharest, Romania
100.00
Clever Tech Sud S.R.L.
Sindelfingen, Germany
Bucharest, Romania
Cúspide GmbH
Stuttgart, Germany
100.00
Daimler AG & Co. Anlagenverwaltung OHG
Schönefeld, Germany
100.00
7
Daimler Automotive de Venezuela C.A.
Daimler Commercial Vehicles (Thailand) Ltd.
Daimler Commercial Vehicles Africa Ltd.
Daimler Commercial Vehicles MENA FZE
Valencia, Venezuela
100.00
Bangkok, Thailand
100.00
Copenhagen, Denmark
Stuttgart, Germany
100.00
Daimler Unterstützungskasse GmbH
Deutsche Accumotive Verwaltungs-GmbH
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
Kirchheim unter Teck, Germany
100.00
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
DTB Tech & Data Hub, Unipessoal Lda
Tramagal, Portugal
100.00
328
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
Footnote
in %1
Daimler UK Trustees Limited
Daimler UK Share Trustee Ltd.
100.00
Ulm, Germany
100.00
Daimler Parts Logistics Australia Pty. Ltd.
Daimler Pensionsfonds AG
Mulgrave, Australia
100.00
Stuttgart, Germany
100.00
6
Daimler Protics GmbH
Leinfelden-Echterdingen, Germany
100.00
100.00
Daimler Purchasing Coordination Corp.
100.00
DAIMLER TRUCK AND BUS HOLDING AUSTRALIA PACIFIC PTY LTD
Daimler Trucks and Buses Southern Africa (Pty) Ltd
Daimler Trucks Asia Taiwan Ltd.
Melbourne, Australia
100.00
Zwartkop, South Africa
100.00
Taipei, Taiwan
51.00
Daimler TSS GmbH
Wilmington, USA
EvoBus Reunion S. A.
car2go Danmark A/S
Brussels, Belgium
Luxembourg, Luxembourg
0.00
3
Hambach, France
100.00
Berlin, Germany
100.00
5
Almere, Netherlands
Sebes, Romania
100.00
100.00
São Bernardo do Campo, Brazil
100.00
Portland, USA
100.00
Prague, Czech Republic
100.00
7
100.00
100.00
66.84
100.00
smart France S.A.S.
3
0.00
Wilmington, USA
Silver Arrow S.A.
Silver Arrow Canada GP Inc.
Oriskany, USA
100.00
Melbourne, Australia
0.00
3
Mississauga, Canada
100.00
Silver Arrow Canada LP
Mississauga, Canada
100.00
smart Vertriebs gmbh
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o CITIC TRUST CO., LTD.
SILVER ARROW CHINA 2018-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
Beijing, China
0.00
3
Beijing, China
0.00
3
Beijing, China
0.00
3
Silver Arrow Lease Facility Trust
SILVER ARROW CHINA 2018-1 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
100.00
Special Lease Systems (SLS) B.V
Starexport Trading S.A.
100.00
Sittard, Netherlands
51.00
327
II. Unconsolidated subsidiaries²
Achtzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
AEG Olympia Office GmbH
Stuttgart, Germany
100.00
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Beat Chile SpA
Berlin, Germany
100.00
Santiago, Chile
100.00
Beat Ride App Colombia Ltda.
Beat Ride App S.A.
Schönefeld, Germany
Bogota D. C., Colombia
100.00
Mexico City, Mexico
100.00
Portland, USA
Zuidlease B.V.
Western Star Trucks Sales, Inc
5
Sterling Truck Corporation
Sumperská správa majetku k.s.
Thomas Built Buses of Canada Limited
Thomas Built Buses, Inc.
Transcovo SAS
Transopco France SAS
Calgary, Canada
High Point, USA
Paris, France
Paris, France
Name of the Company
Star Assembly SRL
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Capital share
in %1
Footnote
Trona Cogeneration Corporation
Ucafleet S.A.S
Wilmington, USA
100.00
Le Bourget, France
65.00
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
Domicile, Country
EvoBus Russland 000
car2go Belgium SPRL
FLINC GmbH
100.00
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Venezuela S.A.
Mercedes-Benz.io GmbH
Mercedes-Benz.io Portugal Unipessoal Lda.
MercedesService Card Beteiligungsgesellschaft mbH
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Monarch Cars (Tamworth) Ltd.
Montajes y Estampaciones Metálicas, S.L.
mytaxi Austria GmbH
MYTAXI ITALIA S.R.L.
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
mytaxi Portugal Unipessoal LDA
mytaxi Sweden AB
myTaxi UG
myTaxi UK Ltd.
myTaxi USA Inc.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
ogotrac S.A.S.
PABCO Co., Ltd.
Buenos Aires, Argentina
Mercedes-Benz Vehículos Comerciales Argentina SAU
100.00
Alcobendas, Spain
100.00
4
Wilmington, USA
100.00
Brussels, Belgium
100.00
Sint-Peters-Leeuw, Belgium
100.00
Montigny-le-Bretonneux, France
100.00
Mercedes-Benz Trucks Italia S.r.l.
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
Rome, Italy
Mercedes-Benz Trucks MENA Holding GmbH
MERCEDES-BENZ TRUCKS POLSKA SPÓŁKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
Mercedes-Benz Trucks Schweiz AG
Stuttgart, Germany
100.00
Warsaw, Poland
100.00
Schlieren, Switzerland
Familonet GmbH
100.00
Mercedes-Benz Vans Mobility S.L.
100.00
Novi Beograd, Serbia
Valencia, Venezuela
Lisbon, Portugal
100.00
100.00
100.00
Paris, France
R.T.C. Management Company Limited
RepairSmith, Inc.
Reva SAS
Ring Garage AG Chur
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
SelecTrucks Comércio de Veículos Ltda
SportChassis LLC
Star Egypt For Import LLC
Star Transmission srl
STARKOM d.o.o.
T.O.C (Schweiz) AG
Taxibeat Ltd. UK
Taxibeat Peru S.A.
Taxibeat Teknoloji Hizmetleri A.S.
Transopco GmbH
Transopco Portugal Unipessoal Lda.
Transopco UK Ltd.
trapoFit GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
100.00
Stuttgart, Germany
100.00
New York, USA
100.00
100.00
100.00
Kleinostheim, Germany
51.00
Toyama, Japan
100.00
Milton Keynes, United Kingdom
100.00
Esparraguera, Spain
51.00
Stuttgart, Germany
Vienna, Austria
100.00
100.00
Milan, Italy
Warsaw, Poland
Lisbon, Portugal
100.00
Stockholm, Sweden
100.00
Hamburg, Germany
100.00
London, United Kingdom
100.00
100.00
100.00
100.00
100.00
Mercedes-Benz Europa NV/SA
100.00
Kamenz, Germany
Mercedes-Benz Energy GmbH
100.00
Wilmington, USA
100.00
New Cairo, Egypt
100.00
Maastricht, Netherlands
100.00
Leinfelden-Echterdingen, Germany
100.00
Dubai, United Arab Emirates
Mercedes-Benz Energy Americas LLC
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Extra LLC
Mercedes-Benz Formula E Limited
Mercedes-Benz G GmbH
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Museum GmbH
Milton Keynes, United Kingdom
100.00
Valbonne, France
100.00
Budapest, Hungary
100.00
Cebu City, Philippines
Mercedes-Benz Consulting GmbH
100.00
100.00
Brackley, United Kingdom
100.00
Wilmington, USA
100.00
Woluwe-Saint-Lambert, Belgium
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Hungária Kft.
Raaba, Austria
Mercedes-Benz Cars Middle East FZE
Indústria e Comércio De Veículos Ltda.
100.00
Lapland Car Test Aktiebolag
100.00
100.00
100.00
Stuttgart, Germany
100.00
Darmstadt, Germany
100.00
Arvidsjaur, Sweden
Hamburg, Germany
Moscow, Russian Federation
96.00
Le Port, France
Wilmington, USA
Stuttgart, Germany
Lab1886 USA LLC
LAB1886 GmbH
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
100.00
Mercedes-Benz Project Consult GmbH
100.00
LEONIE DMS DVB GmbH
São Bernardo do Campo, Brazil
Mercedes-Benz Cars & Vans Brasil -
100.00
Berlin, Germany
100.00
São Bernardo do Campo, Brazil
100.00
Berlin, Germany
Legend Investments Ltd.
100.00
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
Mercedes-Benz CarMesh GmbH
Mercedes-Benz Adm. Consorcios Ltda.
MBition GmbH
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Neuhausen auf den Fildern, Germany
Moscow, Russian Federation
Mercedes-Benz Manufacturing Rus Ltd
100.00
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Retail Belgium NV/SA
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Solihull Ltd.
Mercedes-Benz Srbija i Crna Gora d.o.o.u likvidaciji
Mercedes-Benz Subscription Services USA LLC
Mercedes-Benz Trucks Belgium Luxembourg NV/SA
Mercedes-Benz Trucks Center Sint-Pieters-Leeuw NV/SA
Mercedes-Benz Trucks France S.A.S.U
Tel Aviv, Israel
Bangalore, India
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Bratislava, Slovakia
100.00
Stuttgart, Germany
Mercedes-Benz Research & Development Tel Aviv Ltd.
Stuttgart, Germany
80.00
100.00
evaluate the consistency of the combined management
report with the consolidated financial statements, its confor-
mity with (German) law, and the view of the Group's
position it provides.
obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely respon-
sible for our opinions.
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated Financial
Statements and the Combined Management Report
The legal representatives are responsible for the preparation
of the consolidated financial statements that comply, in all mate-
rial respects, with IFRSS as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
Section 315e paragraph 1 HGB and that the consolidated
financial statements, in compliance with these requirements,
give a true and fair view of the assets, liabilities, financial
position, and financial performance of the Group. In addition,
the legal representatives are responsible for such internal
control as they have determined necessary to enable the prepa-
ration of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the legal
representatives are responsible for assessing the Group's
ability to continue as a going concern. They are also responsible
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is
an intention to liquidate the Group or to cease operations, or
there is no realistic alternative but to do so.
Furthermore, the legal representatives are responsible for the
preparation of the combined management report that, as a
whole, provides an appropriate view of the Group's position and
is, in all material respects, consistent with the consolidated
financial statements, complies with German legal requirements,
and appropriately presents the opportunities and risks of
future development. In addition, the legal representatives are
responsible for such arrangements and measures (systems)
as they have considered necessary to enable the preparation
of a combined management report that is in accordance with
the applicable German legal requirements, and to be able to
provide sufficient appropriate evidence for the assertions in
the combined management report.
The supervisory board is responsible for overseeing the
Group's financial reporting process for the preparation of
the consolidated financial statements and the combined
management report.
340
evaluate the overall presentation, structure and content of
the consolidated financial statements, including the dis-
closures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSS as
adopted by the EU and the additional requirements of German
commercial law pursuant to Section 315e paragraph 1 HGB.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or
error, and whether the combined management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated finan-
cial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropriately
presents the opportunities and risks of future development,
as well as to issue an auditor's report that includes our opinions
on the consolidated financial statements and on the combined
management report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Section
317 HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
(IDW) and supplementary compliance with the ISAs will always
detect a material misstatement. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this combined
management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also
- identify and assess the risks of material misstatement of
the consolidated financial statements and of the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the combined management report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the
effectiveness of these systems.
evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made
by management and related disclosures.
conclude on the appropriateness of the use by the legal
representatives of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as
a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the consolidated financial
statements and in the combined management report or,
if such disclosures are inadequate, to modify our respective
opinions. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
- perform audit procedures on the prospective information
presented by the legal representatives in the combined
management report. On the basis of sufficient appropriate
audit evidence, we evaluate, in particular, the significant
assumptions used by the legal representatives as a basis for
the prospective information, and evaluate the proper deri-
vation of the prospective information from these assumptions.
We do not express a separate opinion on the prospective
information and on the assumptions used as a basis. There
is a substantial unavoidable risk that future events will
differ materially from the prospective information.
G| FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 341
Inventories
We also provide those charged with governance with a statement
that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on
our independence, and where applicable, the related safeguards.
Cash provided by (used for) operating activities
Cash provided by (used for) investing activities
Cash provided by (used for) financing activities
Free cash flow of the industrial business
10,961
-8,950
1,057
2,706
-313
-7,551
5,432
2,423 3,653 4,158 4,827 4,975 4,844 5,075 5,889 6,744 7,534
3,264 3,364 3,575 4,067 4,368 4,999 5,384 5,478 5,676 6,305
8,544 -696 -1,100 3,285 -1,274 222 3,711 -1,652 343
-6,537 -8,864 -6,829 -2,709 -9,722 -14,666 -9,518 -9,921
5,842 11,506 3,855 2,274 9,631 12,009 13,129 13,226
989 1,452 4,842 5,479 3,960 3,874 2,005 2,898
From the stock exchanges
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit.
Share price at year-end (€)
Average diluted shares outstanding
(in millions)
37.23 50.73 33.92 41.32 62.90 68.97 77.58
70.72
1,003.8 1,050.8 1,066.0 1,066.8 1,068.8 1,069.8 1,069.8 1,069.8
70.80 45.91
1,069.8 1,069.8
1,003.8 1,051.5 1,067.1
As instructed, we have performed a separate business
management review of the separate non-financial statement.
Please refer with regard to the nature, scope and results of
this business management review to our audit opinion dated
February 13, 2019.
Further Information pursuant to Article 10 of the EU Audit
Regulation
Other Legal and Regulatory Requirements
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor's
report unless laws or other legal regulations preclude
public disclosure of the matter.
Average shares outstanding (in millions)
From the statements of cash flows
Investments in property, plant and equipment
Depreciation and amortization
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.
- is materially inconsistent with the consolidated financial
statements, with the combined management report or our
knowledge obtained in the audit, or
Daimler faces various claims under product guarantees, or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature and
volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
The Risk for the Consolidated Financial Statements
The provision for product warranties amounts to €7,043 million
and is included in the provisions for other risks.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the guarantees and product
warranties can be found in the notes to the consolidated finan-
cial statements Note 23 "Provisions for other risks" and
in the comments in the combined management report in the
section entitled "Company-specific risks and opportunities -
Warranty and goodwill cases".
Product Warranties
Measurement of the Provision for
The methodical approach, the procedures and the processes
to calculate the impairment losses and the assumptions and
risk parameters flowing into the measurement are appropriate
to identify the credit risks in good time and to determine the
recognition of adequate impairment losses.
Our Observations
We audited the appropriateness and effectiveness of the
internal control system with regard to the risk classification
process and risk models and the identification of the factors
determining the value and the loss allowances, also by
rechecking the calculations. To this end, we also evaluated the
relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the IT systems
affected and related interfaces to ensure the completeness
and correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing. The
main focus of our audit was the evaluation of the methodical
approach in the determination of risk categories, default prob-
abilities and loss rates that are derived from historical data.
We obtained an understanding of this based on a risk-oriented
selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler
Financial Services and evaluated the adjustments of the param-
eters to the current market situation. In this connection, we
furthermore audited the data supporting the validations on the
basis of samples. In addition, we satisfied ourselves in con-
junction with a conscious sample of audits of individual cases
that the risk classification is correct and that the amount of
the calculated specific allowance is appropriate.
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the ‘associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, interrogations, review of guidelines and working instruc-
tions, checking the defined methods and their implementation
and checking and walking through the validation process and
the validation reports based on samples.
Our Audit Approach
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 337
The risk for the financial statements is that the credit-
worthiness of customers and future cashflows is misjudged
or that the calculation of the risk provision parameter
is incorrect so that allowances are not recognized or are
insufficient.
The calculation of the loss allowances is based since the finan-
cial year 2018 on expected credit losses and therefore also
includes expectations regarding the future. Recognition of the
expected credit losses is carried out by means of a three-
parameter procedure for the determination of loss allowances.
Hereby, the following is among other things taken into
account: various factors determining the value, such as the
determination of statistical default probabilities and loss
rates, the possible receivable amount on default, the parameter
transfer criteria that are related to a significant change in
the default risk of borrowers, and the calculation of future cash-
flows. Furthermore, macroeconomic scenarios flow into
the calculation, the identification of which to a high degree
includes discretionary judgments and uncertainties.
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for the
consolidated financial statements is that the provision is
not properly measured.
The Risk for the Consolidated Financial Statements
The receivables from financial services (€96,740 million)
resulting from the financing and leasing activities of the Group
include receivables from sales financing with customers,
receivables from sales financing with dealers and receivables
from finance lease contracts. The allowances on these receiv-
ables amounted at the balance sheet date to € 1,086 million.
Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables from
financial services can be found in the notes to the consolidated
financial statements in ①Note 1 “Significant Accounting Poli-
cies", in Note 14 "Receivables from financial services",
Note 33 "Management of financial risks" and in the
comments in the combined management report in the section
entitled "Industry and business risks and opportunities".
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Loss Allowances on Receivables from Financial
Services
The assumptions and assessments providing the basis for
the assessment of the recoverability of the statement of
financial position caption “equipment on operating leases"
and the recorded impairment losses are appropriate.
Our Observations
We audited the recoverability of the balance sheet caption
"Equipment on operating leases" based on Daimler's internal
portfolio allocation. The main focus of our risk-oriented audit
approach was addressed to those vehicles with an enhanced
impairment risk. We investigated and assessed the indications
assumed by the group for a possible requirement for the
recognition of an impairment loss and checked the calculation
of the write-downs determined by Daimler. We appraised
Daimler's assessment with regard to the residual values that
can be achieved at the end of the term of the leases. We
also included vehicles with diesel technology in this appraisal.
In this connection, we in particular critically reviewed the
main influencing factors, such as the expected number of
returns from leasing, the current marketing results in order
to assess the accuracy of the estimates and future vehicle
model changes. For significant markets we furthermore
also audited the consistency of the assumptions made by
Daimler with residual value forecasts by independent
expect third parties.
Our Audit Approach
The Risk for the Consolidated Financial Statements
The balance sheet caption "Equipment on operating leases"
(€49,476 million) comprises motor vehicles on operating
leases. The impairment risk with regard to these vehicles is
primarily dependent on the residual value achievable at
the end of the lease. These future residual values depend on
the situation in the used-vehicle markets prevailing when
the vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The risk
for the financial statements is that any impairment losses will
not be recognized or that the amounts recognized will be
inadequate.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 1 "Significant accounting policies” and Note 2
"Accounting estimates and management judgments". Further
information on the operating leases can be found in the notes
to the consolidated financial statements in Note 12
"Equipment on operating leases" and in the comments in the
combined management report in the section entitled
"Industry and business risks and opportunities".
Impairment Risk on Operating Leases
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
336
1,069.8 1,069.8 1,069.8
in
otherwise appears to be materially misstated.
Our Audit Approach
Our Observations
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider whether the
other information
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other
information, and consequently we do not express an opinion or
any other form of assurance conclusion thereon.
the remaining parts of the annual report, with the exception
of the audited consolidated financial statements and
combined management report and our auditor's report.
- the separate non-financial report included in the annual
report and the corporate governance statement, and
The legal representatives are responsible for the other
information. The other information comprises:
Other Information
The discretionary assessments and assumptions are appro-
priate.
Our Observations
339
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Finally, we evaluated the appropriateness of the description
of the aforementioned legal proceedings in the notes to the
consolidated financial statements.
Our audit procedures comprised firstly an evaluation of the
process established by the Company to ensure the recording,
the estimation of the outcome of the proceedings and the
reflection in the annual financial statements of the legal pro-
ceedings. Secondly, we held discussions with the internal
legal department and with further departments familiar with the
matters under dispute and the Company's external advisors
and attorneys, in order to obtain explanations on the develop-
ments and the reasons that had led to the respective estima-
tions. In addition, we reviewed the underlying documents and
minutes. As of the reporting date, assessments were available
from external attorneys, which support the assessment of the
risks by the legal representatives.
Our Audit Approach
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provision. These
include primarily assumptions on expected susceptibility to and
the course of damage, and in addition the monetary value
of the damage per vehicle based on actual warranty, guarantee
and goodwill losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guarantee and
goodwill costs. We also checked that updated assessments of
the future repair costs and procedures were taken into account.
We obtained an understanding for the underlying numbers of
vehicles through the actual unit sales.
The risk for the consolidated financial statements is that provi-
sions for legal proceedings are not set up or are inadequate.
Daimler AG already filed an application for immunity ("leniency
application") some time ago with the European Commission
in this connection. In the third quarter of 2018, the European
Commission instituted a formal investigation into possible
collusion regarding emission reduction systems.
Since July 25, 2017, several class action suits have been filed
in the USA and in Canada against Daimler AG and other auto-
mobile manufacturers and several of their North American sub-
sidiaries. The plaintiffs claim to have suffered losses because
it is alleged that the defendants have engaged since the nine-
teen-nineties in anticompetitive behavior with regard to motor
vehicle technology, costs, suppliers, markets and other anti-
competitive matters, including diesel exhaust cleansing tech-
nology. On October 4, 2017, all pending U.S. class actions were
centralized in one proceeding. On March 15, 2018, the plain-
tiffs in the U.S. class action suits expanded and consolidated
their claims in two briefs, one of which was in the name
of the consumers and the other in the name of the dealers.
c) Antitrust proceedings (including damage suits)
Following the imposition of a fine by the European Commission
against Daimler AG and other truck manufacturers in July 2016,
truck customers have raised damage claims against Daimler AG.
The use of devices that impermissibly impair the effectiveness
of emission control systems in reducing nitrogen-oxide (NOx)
emissions and which are supposed to cause excessive emissions
from vehicles with diesel engines is alleged in consumer class
action suits in the USA and Canada and in a suit of the State of
Arizona. In addition, the plaintiffs claim that consumers
were deliberately misled in connection with the advertising for
Mercedes-Benz diesel vehicles. Furthermore, it is alleged in
one of these class action suits that Daimler had conspired with
a component supplier in order to deceive U.S. supervisory
authorities and consumers.
b) Diesel emission behavior - class action and other suits in
USA and Canada
a) Diesel emission behavior - administrative proceedings
Several state and federal authorities and further institutions
worldwide have made inquiries and/or have carried out
investigations and/or proceedings and/or have issued direc-
tives. The inquiries and investigations cover test results,
the emission control systems in Mercedes-Benz diesel vehicles
and/or the interaction of the Company with the relevant
state and federal authorities as well as related legal issues and
implications, including, but not limited to, those under appli-
cable environmental, securities and criminal and antitrust laws.
Whether the recognition of a provision and, if so, in what amount
it is necessary on account of legal proceedings is dependent
to a high degree on discretionary estimates and assumptions by
the legal representatives. In view of this and the monetary
amounts involved with regard to the risks, the following legal
proceedings of Daimler are in our opinion of particular impor-
tance.
The Risk for the Consolidated Financial Statements
Daimler is confronted by various legal proceedings, claims and
governmental investigations and directives (legal proceedings)
on a wide range of topics, including for example vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
product warranties, environmental matters, antitrust matters
(including actions for damages) and shareholder matters. Legal
proceedings relating to products deal with claims on account
of alleged vehicle defects. Some of these claims are asserted by
way of class action suits. If the outcome of such legal proceed-
ings is detrimental to Daimler AG, the Company may be required
to pay substantial compensatory and punitive damages or to
undertake service actions, recall campaigns, monetary penal-
ties or other costly actions.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the legal proceedings can
be found in the notes to the consolidated financial statements
Note 23 "Provision for other risks" and O Note 30
"Legal proceedings" and in the comments in the combined
management report in the section entitled "Risks from
guarantees, legal and tax risks - legal risks"
Accounting Treatment of Legal Proceedings
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
338
The calculation methods and the assumptions made are
appropriate.
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
and assumptions by the legal representatives.
Liquid assets
2018
2016
6.40
6.02
5.32
4.28
-2.63
Net profit (loss) per share (€)1
78,924 97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,154 167,362
13,928 16,454 17,424 18,002 18,753 19,607 20,949 21,141 22,186 22,432
4,181 4,849 5,634 5,644 5,489 5,680 6,564 7,572 8,711 9,107
1,285 1,373 1,460 1,465 1,284 1,148 1,804 2,315 2,773 2,526
-1,513 7,274 8,755 8,820 10,815 10,752 13,186 12,902 14,348 11,132
7.4
8.2
7.7
9.2
8.3
8.8
8.4
8.7
6.7
6,628 8,449 8,116 10,139 10,173 12,744 12,574 13,967 10,595
5,120 6,240 7,302 9,173 7,678 9,007 9,007 10,880 7,963
19.9
19.6 22.6
18.8
20.1
6,830 8,720 7,290 8,711
4,674 6,029
-2,644
Net profit (loss)¹
17.5
-6.6
as % of net assets (RONA) 1, 3
6.51
-2,102
-2,298
Profit (loss) before income taxes¹
-1.9
Operating margin (%) 1
EBIT¹
thereof capitalized
Research and development expenditure²
Personnel expenses¹
Revenue
From the statements of income
2018
2016 20174
2015
Net operating profit (loss)1
2014
7.87
22.5
14.8
10,617 7,582
Other non-current assets¹
Leased equipment
Property, plant and equipment
From the statements of financial position
3,905 3,477
3.65
3.25
3.25
3.25
2.45
2.25
2.20
2.20
2,346 2,349 2,407 2,621 3,477 3,477
6.78
19.1
8,784
7.97
9.61
7.87
6.51
6.40
6.02
5.31
4.28
1,971
1.85
0
0.00
Dividend per share (€)
Total dividend
-2.63
Diluted net profit (loss) per share (€)1
6.78
Other current assets
7.97
2017
2013
2011
22.1
23.6
22.9
24.0
22.2
43.4
40.8
44.2
44.7
46.4
42.8
Non-current liabilities¹
Current liabilities¹
24.3
Net liquidity industrial business
Net assets (average) 1, 3
31,778 29,338 31,426
49,456 44,738 51,940 65,016 66,047 78,077 85,461 99,398 102,562 117,614
47,538 53,139 54,855 58,716 59,108 66,974 77,081 84,457 87,624 97,952
11,508 13,834 16,953 18,580 19,737 16,597 16,288
37,521 40,648 40,779 44,796 47,054 48,446 53,809
€ amounts in millions
G❘ FURTHER INFORMATION | TEN YEAR-SUMMARY
343
2009
2010
2011
2012
2013
2014
2015
7,285 11,938 11,981
2012
22.7
39.8
45.8
2010
2009
€ amounts in millions
G.01
Ten-Year Summary
G | FURTHER INFORMATION | TEN-YEAR SUMMARY
342
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfer
Becker
Wirtschaftsprüfungsgesellschaft
KPMG AG
Stuttgart, February 13, 2019
46.4
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
We were elected as group auditor by the annual general meet-
ing on April 5, 2018. We were engaged by the supervisory
board on April 26, 2018. We have been the group auditor of the
Daimler AG without interruption since the financial year 1998.
Total assets¹
Shareholders' equity'
thereof share capital
Equity ratio Group (%)¹
27,981 30,948
15,965 17,593 19,180 20,599 21,779 23,182 24,322 26,381
18,532 19,925 22,811 26,058 28,160 33,050 38,942 46,942 47,074 49,476
40,044 41,309 45,023 48,947 48,138 56,258 62,055 67,613 73,394 79,582
12,845 14,544 17,081 17,720 17,349 20,864 23,760 25,384 25,686 29,489
9,800 10,903 9,576 10,996 11,053 9,667 9,936 10,981 12,072 15,853
31,635 31,556 34,461
42,039 46,614 58,151 65,687 69,138 76,271
128,821 135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,345 281,619
31,827 37,953 41,337 39,330 43,363 44,584 54,624 59,133 65,159 66,053
3,045 3,058 3,060 3,063 3,069 3,070 3,070 3,070 3,070 3,070
38,742
24.7
26.5
26.3
Equity ratio industrial business (%) 1
42.6
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).
9.61
1,067.1 1,069.1
Hybrid drive
Net assets
Net profit
Pension obligations
Portfolio changes
Production
Profitability
Ratings
Remuneration system
Revenue
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
Strategy
Sustainability
Unit sales
Value added
Workforce
65
30f, 184f
90
88, 228
91, 277ff
76f
74 ff
85ff, 228
98
120 ff
84,256f
86
Mobility services
78, 118, 166, 172, 177, 180
Investor Relations
WLTP - Worldwide Harmonized Light Vehicles Test
Procedure
8ff, 14 ff, 66, 70, 108
88, 258
88, 259 ff
335 ff
22f, 32f, 66 ff
116ff, 217
116
Truck weight classes
Europe: up to 6 tons (light-duty)
over 6 tons (medium- and heavy-duty)
NAFTA: classes 6 and 7; 8.9-15 tons (medium-duty)
class 8; over 15 tons (heavy-duty)
Value added
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 89 f
Value at risk
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
A test method which, compared to the previous NEDC, considers
additional factors such as higher average and top speed,
more dynamic driving behavior etc. Overall, this method leads
to more realistic but also higher figures for fuel consumption.
311 ff
99 ff, 232
62ff, 140f
66ff
A (low)
A (low)
A (low)
A (low)
A (low)
A
A
Scope
A
A
Average annual number of employees
258,628 258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530 298,465
1 The figures for the year 2012 have been adjusted, primarily due to effects arising from application of the amended version of IAS 19.
2 The figure for the year 2013 has been adjusted due to reclassifications within functional costs.
3 In the context of fine tuning the performance measurement system, the definition of net assets has been adjusted with retroactive effect as of 2015.
A (low) A (low)
A (low)
DBRS
A-
105 ff, 202ff
81ff, 166, 172, 177, 180
77f, 89f
113ff, 215
A2
A2
Fitch
63,89
62ff, 315
85 ff
BBB+
A-
A-
A-
A-
A-
A-
A-
BBB+
4 Several figures for the year 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9.
12 f, 26f, 34f, 66
241f
EU30
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
Fair value
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable
and willing parties who are independent of each other.
Goodwill
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately or
together depending on the type of vehicle and driving situation.
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for every-
day conduct that are applicable at Daimler. Fairness, responsi-
bility and compliance with legislation are key principles in
this context.
INTELLIGENT DRIVE
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
Lithium-ion batteries
They are at the heart of the current gneration of electric
vehicles.Compared with conventional batteries, lithium-ion
batteries are considerably smaller and feature significantly
higher power density, short charging times and long lives.
NEDC - New European Driving Cycle
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption, which is gradually
being replaced by WLTP since September 2017.
pages 85 ff
Earnings before interest and taxes are the measure
of operating profit before taxes.
Glossary
G | FURTHER INFORMATION | GLOSSARY
344
Compliance
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as
the related internal guidelines and policies in connection with
all activities of the Daimler Group.
Consolidated Group
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate of
return. page 78
CSR
corporate social responsibility
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
EBIT
Equity method
Rating
An assessment of a company's creditworthiness issued
by a rating agency.
G | FURTHER INFORMATION | INDEX
Dividend
Earnings per share (EPS)
EBIT
Electric mobility
Financial income
Income taxes
Independent auditor's report
Innovations
Integrity
Integrity Code
64
65,96f
96 ff, 162
68, 107ff
93ff, 119, 161f, 231
206 ff
12f, 68
116 ff, 217 ff
Consolidated Group
Corporate governance
Digitization
Compliance
CO2 reductions
Connectivity
Cash flows
345
Index
RDE
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
page 207
Ride hailing
The app-based provision of rides in cars driven by taxi drivers,
licensed rental car drivers or private drivers.
ROE - return on equity
46ff, 186ff
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT and
shareholders' equity.
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT and
revenue.
Annual Shareholders' Meeting
Bonds
Capital expenditure
CASE
ROS - return on sales
CASE
Four strategic fields for the future of mobility: connectivity
(Connected), automated and autonomous driving (Autonomous),
flexible use and services (Shared & Services), and electric
drive systems (Electric).
A3
A3
A3
A3
A3
A3
A3
Moody's
A
A
A
A3
A-
A-
A-
BBB+
BBB+
BBB+
S&P
Credit rating, long-term
1,069.8 1,069.8
Ratings
A-
Mercedesstraße 137
Daimler AG
+49 711 17 92261
+49 711 17 95256
+49 711 17 94075
ir.dai@daimler.com
Fax
Production locations
Investor Relations
Phone +49 711 17 95277
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
Germany
518
Latin America (excluding Mexico)
11,548
2,099
1,527
23,588
10,293
256
www.daimler.com
www.daimler.com
Phone +49 711 17 0
Fax +49 711 17 22244
daimler.com/ir/reports
daimler.com/downloads/en
FSC® C016368
Annual Report
(German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
The aforementioned publications can be requested from:
Daimler AG,
Investor Relations, HPC F343
70546 Stuttgart, Germany
Phone +49 711 17 92285
Fax +49 711 17 92287
order.print@daimler.com
1,711
As changes to the above dates cannot
be ruled out, it is advisable to check on our
website a short time in advance.
daimler.com/ir/calendar
Picture credits
Pages 32/33: Copyright Volocopter GmbH
All other pictures: Copyright Daimler AG
FSC
www.fsc.org
MIX
Paper from
responsible sources
Daimler AG
70546 Stuttgart
16,634
11,595
9,365
Employees
Financial
Services
Businesses
Buses
Vans
Automotive
Daimler
Daimler Mercedes-Benz
Trucks
Cars
Mercedes-Benz
Daimler
Organization
Sales
Europe
G.02
Daimler Worldwide
G | FURTHER INFORMATION | DAIMLER WORLDWIDE
346
Production locations
19,014
Sales outlets
Revenue (in millions of euros)
Revenue (in millions of euros)
4
? 14 1 1 1,433
Sales outlets
Production locations
NAFTA region
Employees
Publications for our shareholders:
51
3,830
16,028
22,312
36,020
3,268
9,922
11,435
39,239
126,488
_16 8 3 7 -
October 24, 2019
70327 Stuttgart
July 24, 2019
Sales outlets
Revenue (in millions of euros)
1,358
984
272
71
Employees
3,948
1
392
57
1
-
354
1
367
162
Asia
124
Production locations
Production locations
333
1
2
1
3
661
2
Sales outlets
Revenue (in millions of euros)
Africa
917
514
652
256
Employees
792
8,234
2,091
1,644
1,964
Interim Report Q3 2019
2
2
746
355
58
292
Employees
251
321
109
1,593
35
Note: Unconsolidated revenue of each division (segment revenue).
Information on the Internet
Specific information on our shares and earnings development can
be found on our website daimler.com in the "Investors" section.
The Group's annual and interim reports and the company financial
statements of Daimler AG can be accessed there. You can also find
topical reports, presentations, an overview of various key figures,
information on our share price and other services.
daimler.com/investors
Financial Calendar 2019:
Interim Report Q1 2019
April 26, 2019
Annual Shareholders' Meeting 2019
May 22, 2019
Interim Report Q2 2019
227
4
Revenue (in millions of euros)
252
Sales outlets
2,444
10
Revenue (in millions of euros)
30,845
6,522
845
227
2
2,211
3,664
14,398
47
488
1,884
Australia/Oceania
Production locations
Sales outlets
Employees
Internet, Information, Financial Calendar
vision-urbanetic-the-mobility-of-the-future
Flexible vehicle production, a modern work environment, and Industry 4.0
under one roof. Mercedes-Benz Cars is building the automobile production line
of the future at the Sindelfingen plant. A completely new infrastructure will be
used in Factory 56. The hall will be fully provided with Wi-Fi, it will communicate
with its surroundings, and it will use digital tools. The 360-degree connectivity
will extend far beyond the production halls. It will include the suppliers, the teams
for development, design, and production, and the customers, who can already
use the Mercedes me app to gain insights into the production of their vehicles.
A new type of work organization will take the employees' individual needs into
account. Sustainability and energy efficiency will also play a huge role, for example
through the use of renewable energy sources. At the beginning of the next decade,
Factory 56 will launch its series production of upper-range and luxury-class cars
and electric vehicles, as well as fully automated driverless vehicles.
CAR2GO
2GO
CRA
BERLIN
CHONDOMS
Services.
Trailblazing.
Worldwide.
29
BACK
youtu.be/mlqYAEnqptQ
THEATER
mercedes-benz.com/en/mercedes-benz/vehicles/transporter/
Innovation for cities, companies and commuters. Vision URBANETIC
from Mercedes-Benz Vans aims to abolish the distinction between
passenger transportation and goods transport. This autonomously driving
platform with battery-electric drive can be flexibly equipped with a cargo
module or the people-mover module. As a result, this revolutionary
concept can fulfill growing mobility demands and varied customer wishes -
sustainably, efficiently, and in line with demand. The fully connected Vision
URBANETIC is also meant to be part of an ecosystem in which logistics
companies, local public transportation operators and private customers
can communicate their mobility wishes digitally. This is how we intend to
reduce traffic flows, relieve the pressure on city centers and help to create
a better quality of life for city dwellers.
Autonomous.
Modular.
URBANETIC
daimler-financialservices.com/en/future-mobility/innovations/artificial-intelligence
Fulfilling and surpassing customers' wishes. In early 2018,
Daimler Financial Services and its partner Soul Machines presented
the digital avatar "Sarah”. This machine will be able to support
customers just like a personal concierge in many situations. Through
a combination of artificial and emotional intelligence, Sarah will
respond to a variety of customer wishes by providing the right
information at the right time. This digital avatar is voice-controlled,
multilingual, and available everywhere at any time. It thus provides
an answer to the growing volume of online business, with more
and more purchasing decisions being made on digital platforms.
Sarah has already been used successfully in a pilot project
to answer customers' frequently asked questions at a call center.
27
27
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
LELL
C
Sarah.
Digital.
Interactive.
mytaxi
mytaxi
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
31
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
VERBUNDEN
Connected.
Sustainable.
Factory 56.
110 L Z-2 RO F10
90 LX+100 Y+100 RO FMAX
100 L 270 RO FMAX
LOKALISIERT + VE
W-LAN
33
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
COPTER
C
35
mercedes-benz.com/en/mercedes-benz/next/lab1886
Getting ideas quickly to customers and the market. Lab1886 is the global
innovation machine from Daimler. Since 2007, this "company builder" has been
successfully working like a startup to develop and commercialize new business
models. For example, it has created the flexible car-sharing service car2go,
the mobility app moovel, and Mercedes me, the digital entry into the world of
Mercedes-Benz. And it has demonstrated what it's like to leave familiar paths
behind through its involvement with the unconventional idea of vertical mobility.
With its strategic investment in the Volocopter startup, Lab1886 has joined its
partner to open up the new market segment of the third mobility dimension.
In the future, the innovative urban air taxis from Volocopter may help to relieve
the pressure on inner-city traffic.
JRNER
Innovative.
Creative.
Lab1886.
mytaxi.com/uk
moovel.com/en
car2go.com/DE/en
daimler.com/sustainability/mobility-services
Thrilling more and more users in a future-oriented market. About 31 million
customers are already using Daimler's mobility services, which include car2go, the
pioneer of free-floating car sharing, as well as the multimodal app-based mobility
platform moovel, the taxi-hailing app mytaxi, the on-demand ride-sharing service
ViaVan, and numerous other services. The ability of these innovative mobility services
to attract new customers all over the world is proven by the significant increase in
user figures in 2018 compared with the prior year. In 2018, our mobility services
were used by customers in more than 130 cities in Europe, China, and North and
South America. Daimler has forged ahead with its transformation into a provider of
integrated mobility services and will continue to systematically expand its portfolio
to create the urban mobility of the future.
VIAVAN
VIA VAN
413ft
CUSTOMER
COMPANY
37
40
Mercedes-Benz EQC: electricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures¹
the customers. We aim to fully meet
their dynamic requirements."
Mercedes-Benz EQC
Combined power consumption: 22.2 kWh/100 km; combined CO₂ emissions: 0 g/km,
CULTURE
"Daimler is shaping a new era
of mobility that is all about
C
Bescherm
CASE
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
Besuchennelding
Valtor Registration
Vaitor Reg
daimler.com/company/project-future.html
Focused, flexible, and even closer to customers. The mobility sector is
changing rapidly, and that's why Daimler is restructuring itself with Project
Future, which is part of its 5C strategy. Three legally independent entities will be
created under the roof of Daimler AG. Mercedes-Benz AG and Daimler Truck AG
will take over the business operations of Mercedes-Benz Cars & Vans and of
Daimler Trucks & Buses respectively. Daimler Financial Services AG, which is
already a legally independent company, will be renamed Daimler Mobility AG.
This structure will sharpen our focus for the business success of the future
by strengthening our entrepreneurial operations and safeguarding synergies.
At the center of all of these changes are our customers' needs. In its new
structure, Daimler will be able to offer its customers individualized mobility
solutions even more effectively all over the world.
DAIMLER
Mercedes-Jellinek-Str.
Shaping.
Future.
Daimler.
1 Figures for electricity consumption and CO2 emissions are provisional, non-binding figures calculated by an external technical service.
Figures for vehicle range are also provisional and non-binding. An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the official figures.
CORE
Stuttgart, February 2019
Human Resources and Director
Dear Thane holders,
Dieter Zetsche | 65
Daimler is on the right track and
we are rapidly progressing towards
the future. As one of the leading
vehicle manufacturers, we focus
consistently on our customers.
In order to completely fulfill their
requirements all over the world,
we are utilizing our four strategic
components: CORE, CASE, CULTURE
and COMPANY. In this way, we are
shaping the mobility of tomorrow -
to the benefit of our customers,
employees, partners and investors.
The Board of Management
66
62
56
46
54
46
44
Chairman of the Board
Daimler and the Capital Market
Objectives and Strategy
Report of the Supervisory Board
The Board of Management
The automotive industry is undergoing profound
change. We are meeting this challenge -
strategically and structurally. Our goal is clear-
ly defined: We plan to continue to be a leading
vehicle manufacturer while developing into a
leading mobility provider. We are supporting
this transformation with a cultural and organi-
zational realignment. In everything we do,
we focus on the wishes of our customers - this
is the basis of our future success, and in this
way, we also offer excellent prospects for our
investors, partners and employees.
Shareholders
DAIMLER
To Our
ALTO OUR SHAREHOLDERS CONTENTS 43
Dieter Zetsche
Die t
Sincerely yours
2019 is a year of change for Daimler: With your approval, we will restructure
our company. We are accelerating into the era of electric mobility. At the same
time, we are entering new dimensions in connectivity, autonomous driving and
mobility services. Each of these fields offers enormous opportunities for Daimler
in the future. Our team has the will and the skills to use them. We will be
delighted if you, our shareholders, continue accompanying us along this path.
The Supervisory Board
Highlights of 2018
We want to offer our customers the best overall package also in an electric world.
In the commercial-vehicle segment, our electric portfolio is already unique in
its breadth. The first model series of our vans, trucks and buses with electric drive
are already in production and in use with customers. We have set our roadmap
to deliver electric mobility on a large scale. For example, we will purchase battery
cells worth 20 billion euros in the coming years. We are also expanding our
own global network for the production of batteries.
of Management,
Head of Mercedes-Benz Cars,
Appointed until December 2019
Group Research & Mercedes-Benz
of Labor Relations,
Mercedes-Benz Vans,
Appointed until April 2022
CASE CORE
CUSTOMER
COMPANY
Britta Seeger | 49
Mercedes-Benz Cars
Marketing & Sales,
Appointed until December 2024
CULTURE
Hubertus Troska | 58
Ola Källenius | 49
Greater China,
45
CHAIRMAN'S LETTER 39
Finance & Controlling,
Daimler Financial Services,
Appointed until December 2019
BI TO OUR SHAREHOLDERS THE BOARD OF MANAGEMENT
Renata Jungo Brüngger | 57
Integrity and Legal Affairs,
Appointed until December 2023
Martin Daum | 59
Daimler Trucks and Buses,
Appointed until February 2022
Appointed until December 2022
Cars Development,
Appointed until December 2020
CHAIRMAN'S LETTER
Bodo Uebber | 59
In the area of connectivity, we are continuously developing our MBUX
infotainment system for example. Most recently, we have optimized voice control
and introduced gesture control. New features can be directly experienced
by our customers via over-the-air updates. Connectivity offers enormous future
potential. And with MBUX, we have an excellent basis to utilize it.
CHAIRMAN'S LETTER 41
-
-
What we achieved in Daimler's core business last year – despite the difficult
environment – also gives cause for optimism for this year. The business
environment remains extremely challenging. That's why we are continuing to
work hard on our efficiency. At the same time, we will continue to drive
forward the four key future fields of our industry: connectivity, autonomous
driving, sharing and electric mobility. What are our next steps here?
Most of the major commercial-vehicle markets were on the upturn in 2018 -
Daimler Trucks made good use of that. We clearly passed the mark of 500,000
trucks sold and thus posted the best year in our history. Total unit sales rose
by ten percent. In Europe, we recorded a slight increase, and we grew significantly
in North America, Latin America and Asia. The highlight on the product side
was the presentation of the new Mercedes-Benz Actros. Our flagship heavy-duty
truck sets new standards for safety, efficiency and connectivity.
We can build on a strong technological base also with autonomous driving.
We will launch a driverless shuttle service this year in San José, California. The
technology will make urban mobility even more convenient and road traffic
safer overall. Automated driving functions also offer enormous economic advan-
tages for our commercial-vehicle customers. We plan to put highly automated
trucks on the road within the next decade. With the new Actros, we are already
the world's first manufacturer with a semi-automated truck in series production.
In the field of sharing, we will make further progress through the merger of our
mobility services with those of BMW. The new Berlin-based company will start
work this year. We are also expanding our portfolio at Daimler to include a pre-
mium ride-hailing service in China, which we are developing jointly with Geely.
At Daimler, we have gone all-out on the offensive with electric mobility.
This year, the EQC will be in the dealerships. This car is the start of a new electric
era at Mercedes-Benz. By 2022, we will electrify the entire product range:
A total of 130 electrified passenger car variants are planned. Our goal is clear:
42
Mercedes-Benz Vans also achieved record unit sales, delivering a total of
421,000 vehicles, which is five percent more than in the prior year. We expect
the new Sprinter in particular to stimulate further growth. This is backed up
by major orders: The response to the Sprinter is extremely good. In the future,
we will deliver several thousand vehicles to Hymer each year. And Amazon
has placed an order for 20,000 of our vans.
had its world premiere. smart will focus entirely on electric drive by 2020,
following the changeover in the United States and Canada. Demand is there:
Sales of our smart electric smart doubled last year.
CHAIRMAN'S LETTER
40
Mercedes-Benz Cars sold 2.4 million cars, setting its eighth consecutive record
for unit sales. Mercedes-Benz maintained its position as the leading premium
brand. Business was particularly good in China: With an increase of eleven
percent, we were able to achieve strong growth there once again, although the
overall market contracted. We strengthened our entire portfolio – from the
compact cars to the SUVs. Our EQC, the first all-electric Mercedes-Benz, also
How did the individual divisions contribute to these results?
Daimler Financial Services finances or leases 50 percent of all the vehicles
we sell. The division increased its new business slightly and its contract volume
significantly. For the first time, it had more than five million vehicles on its
books. Our mobility services also developed positively. They are already used by
31 million people worldwide - 13 million more than a year ago.
The eCitaro was the dominant topic at Daimler Buses last year. With this new
model, we are offering an effective solution for improving air quality in cities.
Series production started soon after its world premiere and the first of these buses
are already in use with customers. Overall, our buses' sales curve showed a
clear upward trend last year.
2018 was a year of strong headwinds for the entire automotive industry and
thus also for Daimler. They included the discussion about diesel engines,
the changeover to the new WLTP test method and the global trade dispute.
All of this is reflected in our financial results and our share price.
Wilfried Porth | 60
But especially in difficult times, it can be seen how good a team is. And we have
proven it: Daimler has a unique team. Together, we faced those headwinds,
while making substantial progress in key areas for the future. On behalf of the
entire Board of Management, I would like to thank each of our nearly 300,000
colleagues for their hard work and dedication last year.
Daimler sold more vehicles than ever before in 2018: a total of 3.4 million.
Revenue reached €167.4 billion, which is two percent more than in the previous
year. However, at 11.1 billion euros, EBIT was significantly lower than in 2017.
Net profit amounted to 7.6 billion euros. At the Annual Shareholders' Meeting,
the Board of Management and the Supervisory Board will propose the distribu-
tion of a dividend of 3 euros and 25 cents per share.
(since April 5, 2018)
elected until 2023
Stuttgart
Michael Häberle*
Elected as substitute member for Wolfgang Nieke,
moved up on January 1, 2019:
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG (until July 25, 2018)
MTU Friedrichshafen GmbH (since March 23, 2018)
Rolls-Royce Power Systems AG (since March 23, 2018)
Baden-Württemberg
German Metalworkers' Union (IG Metall), District Manager
elected until 2023
Stuttgart
Roman Zitzelsberger*
elected until 2023
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Marie Wieck
Cold Spring/New York
(since April 5, 2018)
Manager Vocational Training Policies,
Germany, Daimler AG
General Manager IBM Blockchain
Dr. Sabine Zimmer*
Stuttgart
elected until 2023
elected until 2023
In the meeting in late March 2018, the Supervisory Board dealt
with the merger of the mobility services of Daimler with those
of BMW into a joint venture with equal shareholdings in the areas
of carsharing, ride hailing, parking, charging and multimodality,
and approved the plan.
Sindelfingen
NXP Semiconductors N.V.
Ergun Lümali*
Sindelfingen
elected until 2023
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
Wolfgang Nieke*
Stuttgart
until December 31, 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (until December 31, 2018)
Dr. Bernd Pischetsrieder
Munich
elected until 2019
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in München
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
in München - Chairman
Tetra Laval Group
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 55
Elke Tönjes-Werner*
Bremen
elected until 2023
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
Sibylle Wankel*
Frankfurt am Main
elected until 2023
General Counsel of the German Metalworkers' Union
(IG Metall)
Other supervisory board memberships/directorships:
Siemens AG (until January 31, 2018)
Dr. Frank Weber*
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (since January 1, 2019)
Retired from the Supervisory Board:
Chairman of the Works Council, Untertürkheim Plant,
Andrea Jung
Sari Baldauf
Dr. Manfred Bischoff - Chairman
Dr. Paul Achleitner
Nomination Committee
Joe Kaeser
Ergun Lümali*
Dr. Clemens Börsig - Chairman
Michael Brecht*
Audit Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
The Supervisory Board of Daimler AG fully performed its tasks as
defined by the law, the Company's Articles of Incorporation
and its own rules of procedure once again in the year 2018.
The Supervisory Board continually advised and supervised
the Board of Management in the management of the Company
and provided support with strategically important issues
relating to the Group's further development.
The Supervisory Board examined whether the annual company
and consolidated financial statements, the combined
management report and other financial reporting, as well as
the non-financial report for Daimler AG and the Daimler
Group, which was prepared for the first time for financial year
2017, were in conformance with the applicable requirements.
In addition, it approved numerous business matters for which
its consent was required following careful reviews and
consultations. As well as approving the implementation of the
divisional structure with the creation of legally independent
entities in the context of "Project Future", this also included
finance and investment planning, major equity measures
at companies of the Group, associated companies and joint
ventures, and the conclusion of contracts with particular
importance for the Group. The Board of Management informed
the Supervisory Board about a large number of further
measures and business transactions, and discussed them with
it intensively and in detail, including the measures in con-
nection with the administrative order of the German Federal
Motor Transport Authority to recall certain Mercedes-Benz
diesel vehicles and the ongoing talks held with the Federal
Ministry of Transport and Digital Infrastructure.
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the Group
and the divisions. It continually provided information to it on all
fundamental questions of corporate planning, including finance,
investment, sales and personnel planning, current developments
at the companies of the Group, the development of revenue,
the situation of the Company and the divisions, as well as on the
current status and the assessment of significant legal proceed-
ings. Furthermore, the Board of Management reported to the
Supervisory Board continually on return on equity and the
Group's liquidity situation, the development of sales and procure-
ment markets, the overall economic situation, and develop-
ments in the capital markets and the area of financial services.
Additional topics included the further development of the prod-
uct portfolio, securing the Group's long-term competitiveness
and the ongoing implementation of measures for safeguarding
sustainable and future-oriented mobility. The Supervisory Board
also dealt in detail with the shareholder structure, the develop-
ment of the share price and the related background, and the
expected impact of strategic projects on the share price.
* Representative of the employees
Daimler's success is based on a profound and integrative auto-
motive expertise and strategic foresight. The 5C strategy con-
sisting of CORE, CASE, CULTURE, COMPANY and CUSTOMER,
which is explained on pages 67 ff of this Annual Report,
is in the implementation phase. It sets the course for a locally
emission-free and electric future and focuses on employees
and customers. Daimler is making enormous investments in the
transformation of the radically changing automotive industry.
This, as well as global trade disputes, and emission and antitrust
issues, are adversely affecting the Group's results of opera-
tions. The latter issues also affect the credibility of the entire
industry. Daimler feels an obligation to its customers and
shareholders to reshape future mobility with sustainable prod-
ucts and innovative services.
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47
To achieve this, the Supervisory Board emphatically supports the
reorganization of the Group, the so-called Project Future.
Daimler is acting proactively with this reorganization for five
main reasons: A sharper focus. The legally independent
business entities that we aim to create with their own decision-
making boards will have greater customer proximity and allow
more precise work in the markets. Strengthening entrepre-
neurial action. The new business entities will have greater
freedom and more scope to manoeuver. Gaining innovation/
cooperation partners. The legally separate business entities
will be attractive cooperation partners. Furthermore, the new
structure will offer greater scope to remain capable of action
in a dynamic competitive environment. There are no plans for
Daimler AG to divest individual business units. Enhancing
attractiveness in the capital market. The realignment will
enhance transparency of the individual parts of the Group and
thus the attractiveness of Daimler AG in the capital market.
Securing synergies. The realignment will preserve economies
of scale in purchasing and financing, for example. The shared
use of intellectual property rights, including the brands, will also
continue to be secured under the new structure.
Working culture and areas of Supervisory Board activity
In the year 2018, the Supervisory Board convened for nine
meetings. Participation in the meetings by the members of
the Supervisory Board was at a high level once again. During
the year under review, all members of the Supervisory Board
participated in significantly more than half of the meetings
of the Supervisory Board and of its committees of which they
are members. The work of the Supervisory Board featured
open and intensive exchanges of information and opinions. The
members of the Supervisory Board regularly prepared for
upcoming resolutions with the use of documentation provided
in advance by the Board of Management. Furthermore, the
members representing the employees and the members repre-
senting the shareholders regularly prepared the Supervisory
Board meetings in separate discussions, which were also attend-
ed by members of the Board of Management. The Supervisory
Board was intensively supported by its committees and the
members of the Supervisory Board discussed the measures and
business matters to be decided upon in detail with the Board
of Management. For the meetings, executive sessions were
regularly arranged so that topics could be discussed also in the
absence of the Board of Management.
The members of the Supervisory Board and of the Board of
Management came together for bilateral exchanges of opinions
also outside the regular meetings. The Board of Management
informed the Supervisory Board also with written reports about
the most important indicators of business development and
existing risks, and submitted the interim financial reports to the
Supervisory Board. The Supervisory Board was informed of
special occurrences also between the meetings.
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The members of the Supervisory Board independently attend
such courses of training and further training regarded as
necessary for the performance of their tasks, relating for exam-
ple to changes in the legal framework and new, future-
oriented technologies, in which they are supported by the Com-
pany. In a special onboarding program, new members of the
Supervisory Board have the opportunity to meet the members
of the Board of Management and senior executives with spe-
cialist responsibility for a bilateral exchange of opinions and
information on fundamental and current topics of the various
Board of Management areas, allowing them to gain an overview
of the topics relevant to the Daimler Group and of its gover-
nance structure.
In its meeting on January 31, 2018, which was attended by the
external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the annual
company and consolidated financial statements for 2017
and the dividend proposal to be made at the 2018 Annual Share-
holders' Meeting. The Supervisory Board determined that
no objections were to be raised to their publication. The pre-
liminary key figures for the year 2017 and the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 1, 2018.
In the Supervisory Board meeting held on February 9, 2018,
the Supervisory Board decided to reappoint Renata Jungo
Brüngger as a member of the Board of Management of Daimler
AG with responsibility for “Integrity and Legal Affairs" for
further five years effective as of January 1, 2019. Subsequently,
it dealt with the annual company financial statements, the
annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group
for the year 2017, each of which had been issued with an unquali-
fied audit opinion by the external auditors, as well as with the
reports of the Audit Committee and the Supervisory Board, the
declaration on corporate governance combined with the
corporate governance report, the remuneration report, the non-
financial report, which was issued with the independent
auditor's limited assurance in accordance with ISAE 3000, and
the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with
comprehensive documentation.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 49
Dr. Manfred Bischoff, Chairman of the Supervisory Board
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Supervisory and advisory activities of the
Supervisory Board
Dear Shareholders, Daimler's 2018 financial year reflects our customers' continuing interest in
our vehicles, as well as the upheaval and global challenges of the automotive industry. Digitization,
connectivity, electrification, automated and autonomous driving, changes in customer behavior,
mobility services, but also new regulatory requirements, are all changing the industry fast. Further-
more, burdens from the past, emissions issues and the current global trade disputes adversely
affected our earnings last year. Despite various challenges, Daimler's success is unbroken and it
will pay out an adequate dividend to its shareholders. The technologies of the future and new
mobility models require extremely high investment. Daimler invests, researches and develops a lot,
and is therefore ideally prepared to play an important and leading role in the mobility of the future,
and in shaping it successfully.
New York
retired on April 5, 2018
President and Chief Executive Officer of Grameen America, Inc.
Wolfgang Nieke*
Stuttgart
retired on December 31, 2018
In its meeting on February 9, 2018, the Supervisory Board
approved a number of measures for which its consent was
required, in particular for the expansion of capacities at Beijing
Benz Automotive Co. Ltd for the further development of local
production of Mercedes-Benz vehicles. Furthermore, the Super-
visory Board dealt with matters pertaining to the remuneration
of the members of the Board of Management and, in connection
with the item of the agenda on corporate governance, approved
the memberships in other boards and further external second-
ary employments of the members of the Board of Management
that were presented in the meeting. Finally, the Supervisory
Board addressed current legal issues, in particular including
the question of whether, in connection with the antitrust inves-
tigations of truck manufacturers by the European Commission,
claims for compensation were to be made against former or
current members of the Board of Management. On the basis of
the reviews carried out so far and repeatedly updated by an
independent law firm, a further review by an independent legal
academic, as well as detailed discussions in the Supervisory
Board taking into account the welfare of the Company, the Super-
visory Board maintained its previous resolution, based on the
information available, that no such claims were to be made at
the present time. The Supervisory Board arranged for further
clarification of the facts of the case in order to secure the current
state of knowledge and obtained the expertise of an indepen-
dent legal academic, who came to the conclusion that the Super-
visory Board was fully complying with its obligations under
stock corporation law in this respect. At the end of July 2018, it
also discussed in this context the question of setting up an
independent special committee (①page 49). At the meeting
in December 2018, the Supervisory Board dealt once again
with the matter on the basis of new knowledge gained from fur-
ther clarification of the facts of the case (① page 50).
Daimler AG (until December 31, 2018)
Valter Sanches*
Geneva
retired on April 5, 2018
General Secretary IndustriALL Global Union
Jörg Spies*
Stuttgart
retired on April 5, 2018
Chairman of the Works Council, Headquarters, Daimler AG
Committees of the Supervisory Board:
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Presidential Committee
46
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Report of the Supervisory Board
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors. The independent auditors
reported on the results of their audit and on the key audit
matters and the respective audit procedure including the con-
clusions drawn, as well as on the voluntary review of the
non-financial report within the framework of a limited assurance
engagement, and were available to answer questions and to
provide further information. Following the final results of the
review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the audit
carried out by the external auditors. It determined that no
objections were to be raised, approved the financial statements
and the combined management report as presented by the
Board of Management, and thus adopted the financial statements
of Daimler AG for the year 2017. On this basis, the Supervisory
Board consented to the proposal made by the Board of Manage-
ment on the appropriation of distributable profit. In addition,
the Supervisory Board approved the non-financial report, the
report of the Supervisory Board, the corporate government
statement combined with the corporate governance report, and
the remuneration report, as well as its proposed decisions
on the items of the agenda for the 2018 Annual Shareholders'
Meeting.
elected until 2022
Law for the equal participation of women and men in
management positions
There was no occasion to convene the Mediation Committee
during the reporting period.
Personnel changes in the Supervisory Board and the
Board of Management
Following the proposal of the Supervisory Board, the Annual
Shareholders' Meeting on April 5, 2018 elected Sari Baldauf
and Dr. Jürgen Hambrecht once again and Marie Wieck for the
first time as members of the Supervisory Board representing
the shareholders, for the period until the end of the Annual Share-
holders' Meeting that decides on ratification of board mem-
bers' actions for financial year 2022. Effective at the end of the
Annual Shareholders' Meeting on April 5, 2018, Andrea Jung
on the shareholders' side and Valter Sanches and Jörg Spies on
the employees' side stepped down from the Supervisory
Board. In the elections of the employee representatives held
before the Annual Shareholders' Meeting, Raymond Curry
and Dr. Sabine Zimmer were elected as members of the Super-
visory Board for the first time in addition to the reelected
employee representatives. At the end of 2018, Wolfgang Nieke
stepped down from the Supervisory Board on the employees'
side and was replaced by Michael Häberle, a replacement mem-
ber elected for him.
In the Supervisory Board meeting on February 9, 2018, Renata
Jungo Brüngger was reappointed as a member of the Board
of Management Member with responsibility for "Integrity and
Legal Affairs," effective as of January 1, 2019 for a period of
further five years.
In the Supervisory Board meeting in September 2018, the Super-
visory Board approved the resignation of Dr. Dieter Zetsche,
in consultation with the Supervisory Board, as a member of the
Board of Management of Daimler AG and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders' Meet-
ing in 2019, as well as the appointment of Ola Källenius as
Chairman of the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars for a new term of office of five
years starting at the end of the Annual Shareholders' Meeting
in 2019. It was also decided that Markus Schäfer would suc-
ceed Ola Källenius as Head of Group Research and Mercedes-
Benz Cars Development on the Board of Management of Daimler
AG with effect from that date.
In October 2018, Bodo Uebber, responsible for "Finance &
Controlling/Daimler Financial Services", stated that he did not
wish to extend his current appointment, which expires in
December 2019.
In its meeting in December 2018, the members of the Super-
visory Board representing the shareholders decided, on the
basis of a recommendation by the Nomination Committee, to
propose the reelection to the Supervisory Board of Joe Kaeser
and Dr. Bernd Pischetsrieder at the Annual Shareholders'
Meeting in 2019.
In the Supervisory Board meeting on February 13, 2019, Harald
Wilhelm was appointed to the Board of Management of Daimler
AG for a period of 3 years with effect as of April 1, 2019. Bodo
Uebber will resign from the Board of Management of Daimler
AG with effect as of the end of the Annual Meeting 2019 and
with effect as of the same time, Harald Wilhelm will take over
the responsibility for "Finance & Controlling/Daimler Financial
Services".
Furthermore, Britta Seeger was reappointed to the Board of
Management of Daimler AG as the member responsible for
"Mercedes-Benz Cars Marketing and Sales" for a further five
years effective as of January 1, 2020.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 53
Audit of the company and consolidated financial
statements
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2018
were duly audited by KPMG AG, Wirtschaftsprüfungsgesell-
schaft, Berlin, and were given an unqualified audit opinion. The
same applies to the consolidated financial statements for 2018
prepared according to IFRS. On the basis of a voluntary review
of the contents of the non-financial report decided upon by
the Supervisory Board, the non-financial report for financial year
2018 was reviewed by KPMG AG Wirtschaftsprüfungsgesell-
schaft, Berlin, within the framework of a limited assurance
engagement and was issued with a limited assurance in accor-
dance with ISAE 3000.
In a meeting held on February 5, 2019 attended by the external
auditors, the Supervisory Board discussed, took note of and
approved the preliminary key figures of the annual company and
consolidated financial statements for 2018 and the proposal
on the appropriation of profit to be made at the 2019 Annual
Shareholders' Meeting. The Supervisory Board determined
that no objections were to be made to their publication. The pre-
liminary key figures for the year 2018 as well as the proposal
on the appropriation of profit were announced at the Annual
Press Conference on February 6, 2019.
In the meeting held on February 13, 2019, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined management
report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the inde-
pendent auditors, as well as with the reports of the Audit Com-
Imittee and the Supervisory Board, the corporate government
statement combined with the corporate governance report,
the remuneration report, the non-financial report issued with a
limited assurance in accordance with ISAE 3000, and the pro-
posal on the appropriation of profit. In preparation, the members
of the Supervisory Board had been provided with comprehen-
sive documentation including the Annual Report with the con-
solidated financial statements according to IFRS, the combined
management report for Daimler AG and the Daimler Group,
the declaration on corporate governance combined with the
corporate governance report, the remuneration report, the
non-financial report, the annual company financial statements
of Daimler AG, the proposal of the Board of Management on
the appropriation of profit, the audit reports of KPMG AG
Wirtschaftsprüfungsgesellschaft on the annual company finan-
cial statements of Daimler AG and the consolidated financial
statements, each including the combined management report,
and the Internal Control System (ICS), as well as drafts of the
reports of the Supervisory Board and of the Audit Committee.
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors, who reported on the
results of their audit and in particular on the key audit matters
and the respective audit procedure including the conclusions
drawn and the voluntary review of the non-financial statement
within the framework of a limited assurance engagement, and
who were available to answer supplementary questions and to
provide additional information. Following the final results of
the review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the
audit by the external auditors. It determined that no objections
were to be raised and approved the financial statements and
the combined management report as presented by the Board
of Management. The company financial statements of Daimler
AG for the year 2018 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the
Board of Management on the appropriation of distributable profit.
Furthermore, the Supervisory Board approved the non-finan-
cial report and the report of the Supervisory Board, the decla-
ration on corporate governance combined with the corporate
governance report, and the remuneration report. Due to the post-
ponement of the Annual Shareholders' Meeting until May 22,
2019 in connection with Project Future, no proposed decisions
were approved for the items of the agenda of the 2019 Annual
Shareholders' Meeting, apart from the proposal on the appro-
priation of profit.
Appreciation
The Supervisory Board thanks all the employees and the man-
agement of the Daimler Group for their committed contributions
in the challenging environment of the year 2018.
The Supervisory Board also thanks Andrea Jung, Valter Sanches,
Jörg Spies and Wolfgang Nieke, who closely supported the
Daimler Group through their committed work in the Supervisory
Board and who last year stepped down from the Supervisory
Board.
Stuttgart, February 2019
The Supervisory Board
Мира как
Dr. Manfred Bischoff
Chairman
The Nomination Committee convened for two meetings in 2018.
In particular, the Committee prepared recommendations for
the Supervisory Board's proposals to be made at the Annual
Shareholders' Meeting in 2019 on the candidates for election
to the Supervisory Board. Among other things, and taking into
consideration all circumstances of each individual case, the
proposals are oriented towards the Daimler Group's interests
and aim to fulfill the overall qualifications profile, including
expertise profile and diversity concept, for the entire Supervi-
sory Board.
Other supervisory board memberships/directorships:
Kuwait Investment Authority
The Audit Committee met six times in 2018. Details of those
meetings are provided in a separate report of that committee
on pages 188 ff.
The work of the committees
50
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
In this meeting, the Supervisory Board also approved the
participation in the package of measures to improve air quality
in Germany. The Supervisory Board also discussed, among
other things, the current status of considerations regarding a
new remuneration model for the Board of Management to
take effect on January 1, 2019
page 125 ff).
In addition to introductory discussions on the Daimler 5C strategy
and the Mercedes-Benz Cars strategy, the focus of the strat-
egy workshop was on three of the four areas of CASE: "Autono-
mous", "Shared & Services” and “Electric." The Supervisory
Board dealt with the electrification of the vehicle fleets and,
among other things, with battery and cell technology. Further-
more, it was informed about the portfolio of mobility services,
particularly in view of growing mobility requirements in urban
areas. In addition, the Supervisory Board was shown current
developments and solutions relating to the automated and
autonomous transportation of people and goods. Various vehicle
exhibits were also presented. In a constructive and open dia-
logue, the members of the Supervisory Board and the Board of
Management discussed with the executives responsible for
the topics presented how Daimler will prepare for new challenges
and what further developments are imminent. The changing
competitive environment was also discussed. In addition, the
Supervisory Board discussed the key financial indicators and
the targets for the Group and the divisions. At the same meet-
ing, the Supervisory Board was informed in detail about cur-
rent legal issues, such as the initiation by the European Com-
mission of a formal investigation into possible collusion on
emission reduction systems. In this respect, the Supervisory
Board dealt with Daimler's internal processing of the matters
and, in consultation with an independent law firm, also with the
consequences for the further clarification and examination of
any Board of Management responsibilities that are closely related
to the progress of the proceedings.
Meeting on operational planning 2019/2020
On the day before the meeting in December 2018, the members
of the Supervisory Board had the opportunity to participate in
a product presentation. In the context of the actual meeting on
December 12, 2018, the Supervisory Board dealt with the
proposals to be made at the Annual Shareholders' Meeting in
2019 for the election to the Supervisory Board of two mem-
bers representing the shareholders described on page 52.
In addition, the Supervisory Board discussed key individual
topics of Project Future. During the further course of the meet-
ing, on the basis of comprehensive documentation, the Super-
visory Board discussed in detail and approved the operational
planning for the years 2019 and 2020, and, in this context,
discussed existing opportunities and risks as well as the Group's
risk management.
The meeting also focused on information on current legal issues,
including inquiries, investigations, proceedings and adminis-
trative orders in connection with diesel exhaust emissions. The
question of possible claims for damages against former or
current members of the Board of Management in connection with
the European Commission's antitrust proceedings against
truck manufacturers was also dealt with once again. The Super-
visory Board decided, after careful discussion of new knowl-
edge gained from the further clarification of the facts of the case
and after renewed consideration of the reasons for and against
the assertion of a claim and taking into account the welfare of the
Company, to maintain its current position that no claims for
compensation are to be made at the present time.
In addition, the Supervisory Board dealt with software documen-
tation, the technical compliance organization and the approval
process in vehicle development, and was provided with informa-
tion on the topic of sales of the future. The Supervisory Board
was also informed about the topic of personnel development and
the implementation of Leadership 2020. Other subjects dis-
cussed at the meeting were matters of corporate governance,
in particular the declaration of compliance with the German
Corporate Governance Code, and the review of the overall
requirement profiles for the Board of Management and the
Supervisory Board, including their fulfilment. Furthermore, the
Supervisory Board looked ahead to the main topics for the
2019 financial year. Finally in this meeting, it dealt with the fur-
ther development of the remuneration system, on the basis
of preparations by the Presidential Committee, and, against the
background of fundamental technological changes in the
automotive industry, decided on changes to the annual bonus
effective as of January 1, 2019. Details of the system of
Board of Management remuneration and changes to the annual
bonus are presented in the Remuneration Report.
pages 120 ff
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 51
Corporate governance and declaration of compliance
During the year 2018, the Supervisory Board was continually
occupied with standards of good corporate governance.
In its meeting in December 2018, the Supervisory Board
approved the 2018 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of
the German Stock Corporation Act (AktG). With the exception
explained there, all the recommendations of the Code have
been complied with and continue to be complied with.
In accordance with good corporate governance, the members
of the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to
an advisory or board function for a customer, supplier or creditor
of Daimler, or for other third parties - to the entire Supervisory
Board.
There were no indications of any actual conflicts of interest in
the year 2018. In order to avoid individual potential conflicts
of interest, some members of the Supervisory Board did not
participate in discussions of certain items of the agendas in
the
year 2018: Dr. Jürgen Hambrecht and Dr. Bernd Pischets-
rieder left the room during the Supervisory Board meetings for
the legal status reports in particular, when legal proceedings
in connection with diesel exhaust emissions were discussed. As
a result, in compliance with the goals of the Supervisory Board,
there were no potential conflicts of interest during the year
under review for at least half of the members representing the
shareholders and for at least 15 members of the entire Super-
visory Board.
In financial year 2018, as scheduled, the Supervisory Board once
again had an externally moderated efficiency review con-
ducted, thus complying with the requirements of its rules of
procedure and the German Corporate Governance Code for
the regular execution of an efficiency review. The results of the
efficiency review, which the Supervisory Board dealt with
intensively at its meeting on February 13, 2019, confirm the pro-
fessional, very good and very trusting cooperation within the
Supervisory Board and with the Board of Management. There
was no fundamental need for change, but individual sugges-
tions were made and are implemented.
Deutsche Telekom AG (until May 17, 2018)
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
As of December 31, 2018, the shareholders' side of the Super-
visory Board of Daimler AG is composed of 30% women (the
members Sari Baldauf, Petraea Heynike and Marie Wieck) and
70% men. On the employees' side, the proportions as of that
date are 30% women (the members Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer) and 70% men. The Supervisory
Board as a whole therefore also fulfills the statutory quota.
In its meeting on December 12, 2018, the Supervisory Board dis-
cussed the specific proposals for candidates to be elected at
the 2019 Annual Shareholders' Meeting and decided, upon the
recommendation of the Nomination Committee, to propose
at the 2019 Annual Shareholders' Meeting that Joe Kaeser and
Dr. Bernd Pischetsrieder be once again elected to the Super-
visory Board. If the proposed candidates are elected, the
statutory quota for women will remain fulfilled both on the
shareholder side and for the Supervisory Board as a whole,
provided there are no other changes.
For the composition of the Board of Management, the Supervi-
sory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020.
Corporate governance at Daimler is described in detail in
the declaration on corporate governance combined with the
corporate governance report on pages 191 ff and in the
remuneration report on pages 120 ff of this Annual Report.
52
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
The Presidential Committee convened five times last year. It
dealt primarily with personnel matters of the Board of Manage-
ment, remuneration questions and corporate governance issues.
As in previous years, compliance targets constituted part of
the individual target agreements of the members of the Board
of Management. Once again, additional non-financial targets
were also included as criteria in the target agreements. For the
past financial year, they were the further development and
permanent establishment and consideration of the corporate
values integrity and diversity with regard to increasing the pro-
portion of women in management positions, the maintenance
and enhancement of a high level of employee satisfaction and
of high product quality. Details of the changes to the remuner-
ation system for the Board of Management, which apply as of
January 1, 2019, are presented on
pages 125 ff.
Kuwait Fund for Economic Development (since March 5, 2018)
Sari Baldauf
Helsinki
elected until 2021
Vevey
Petraea Heynike
Trumpf GmbH + Co. KG - Chairman
Fuchs Petrolub SE - Chairman
Other supervisory board memberships/directorships:
BASF SE - Chairman
Chairman of the Supervisory Board of BASF SE
elected until 2023
Dr. Jürgen Hambrecht
Ludwigshafen
Secretary-Treasurer United Auto Workers (UAW)
(since April 5, 2018)
elected until 2023
Detroit
Raymond Curry*
Linde Intermediate Holding AG (since September 25, 2018)
Linde plc (since October 22, 2018)
Emerson Electric Co.
Former Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Linde AG
elected until 2022
Frankfurt am Main
Dr. Clemens Börsig
Daimler AG
Chairman of the Works Council of the Nuremberg Dealership,
elected until 2023
Nuremberg
Michael Bettag*
Former Executive Vice President of the Executive Board of
Nestlé S.A.
Joe Kaeser
Munich
elected until 2019
elected until 2023
Former Executive Vice President and General Manager of the
Networks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
Vexve Holding Oy - Chairwoman
Nokia Oyj (since May 30, 2018)
54
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
The Supervisory Board
Dr. Manfred Bischoff
Munich
elected until 2021
At the beginning of the two-day strategy workshop in Böblingen
and Filderstadt in late September, the Supervisory Board dealt
with succession planning and decided on personnel changes.
Since the term of office of the Chairman of the Supervisory
Board is due to expire at the end of the Annual Shareholders'
Meeting in 2021, the Supervisory Board wanted to set the
course for a suitable succession at an early stage, in view of the
challenges of the transformation in the automotive industry,
and therefore passed a resolution announcing its intention to pro-
pose the election of Dr. Dieter Zetsche to the Supervisory
Board at the Annual Shareholders' Meeting in 2021. In the event
of Dr. Dieter Zetsche's election by the 2021 Annual Share-
holders' Meeting, the Chairman of the Supervisory Board,
Dr. Manfred Bischoff, intends to recommend Dr. Dieter Zetsche
as his successor as Chairman of the Supervisory Board. In order
to comply with the two-year cooling-off period, Dr. Dieter
Zetsche will therefore resign from his position on the Board of
Management of Daimler AG and as Head of Mercedes-Benz
Cars at the end of the Annual Shareholders' Meeting in 2019.
As a result, the Supervisory Board decided to appoint Ola Käl-
lenius as Chairman of the Board of Management of Daimler AG
for a new period of office of five years and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders'
Meeting in 2019. Starting at the same time, as successor to
Ola Källenius, Markus Schäfer will assume responsibility for
"Group Research and Mercedes-Benz Cars Development" on
the Board of Management of Daimler AG.
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
SMS Holding GmbH
Gaggenau
elected until 2023
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council Daimler Group;
Chairman of the General Works Council Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
Dr. Paul Achleitner
Munich
elected until 2020
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Bader M. Al Saad
Kuwait
Other supervisory board memberships/directorships:
Allianz Deutschland AG
Chairman of the Board of Management of Siemens AG
Michael Brecht*
Strategy meeting of the Supervisory Board
Fortum Oyj Chairwoman (until March 28, 2018)
In a further meeting in early July 2018, the Supervisory Board
discussed in detail the settlement of the Toll Collect arbitration
proceedings and approved the conclusion of a settlement
agreement between the Federal Republic of Germany, Daimler
Financial Services AG, the other consortium partners (Deutsche
Telekom AG and Cofiroute S. A.), Toll Collect GbR and Toll Collect
GmbH to settle those arbitration proceedings.
In late April 2018, the Supervisory Board convened for a two-day
meeting abroad in Hungary. In addition to discussing current
political conditions in Eastern Europe, the main focus was on
visiting the plant in Kecskemét. A regular meeting of the
Supervisory Board was also held as part of the meeting abroad.
Among other things, the Supervisory Board decided on the
future production of electric Mercedes-Benz vehicles at the
French plant in Hambach. Furthermore, the Supervisory Board
approved the transfer of pension obligations to pensioners
of Daimler AG to Daimler Pensionsfonds AG. On the recommen-
dation of the Audit Committee, the Supervisory Board also
resolved to make adjustments to the rules of procedure of the
Audit Committee with regard to the regular report to the
Audit Committee, which were prompted by the changed respon-
sibilities of the BPO (Business Practices Office) whistleblower
system. In addition, the Supervisory Board was informed about
the status of the review and the initiation of the first prepara-
tory measures to strengthen the divisional structure within the
framework of Project Future. Finally, the Supervisory Board
received detailed reports on current legal issues, also with regard
to inquiries, investigations, proceedings and administrative
orders in connection with diesel exhaust emissions.
Supervisory Board meeting held abroad
In the Annual Shareholders' Meeting on April 5, 2018, the can-
didates nominated by the Supervisory Board, Sari Baldauf and
Dr. Jürgen Hambrecht once again and Marie Wieck for the first
time, were elected to the Supervisory Board as representatives
of the shareholders. In the subsequent meeting of the Supervi-
sory Board, the representatives of the shareholders elected
Sari Baldauf once again as a member of the Nomination Com-
mittee and Dr. Jürgen Hambrecht once again as a member of
the Mediation Committee. Furthermore, the Supervisory Board
elected Dr. Jürgen Hambrecht once again as a member of the
Presidential Committee. Also in this meeting, the Supervisory
Board passed resolutions with regard to the employee repre-
sentatives elected with effect as of April 5, 2018: Michael Brecht
was elected Deputy Chairman of the Supervisory Board, Michael
Brecht and Ergun Lümali were elected as members of the Audit
Committee and Roman Zitzelsberger was elected as a member
of the Presidential Committee. In addition, the employee repre-
sentatives elected Roman Zitzelsberger as a member of the
Mediation Committee and the members of the Audit Committee
elected Michael Brecht as the Deputy Chairman of this
Committee.
In its meeting in late July 2018, following detailed prior discussion,
including preliminary discussions with shareholders and
employees, the Supervisory Board approved the implementation
of Project Future and thus a new divisional structure for the
Group with legally independent entities. In this meeting, the
Supervisory Board also discussed the course of business and
the results of the first half of the year in detail with the Board of
Management and obtained information on current legal issues.
In addition, the Supervisory Board also dealt with the question
of whether an independent special committee of the Supervi-
sory Board of Daimler AG should be set up to clarify any Board
of Management responsibility in connection with the European
Commission's antitrust proceedings against truck manufacturers.
As the facts of the matter were to be assessed and decisions
were to be made by the Supervisory Board in its entirety, and in
view of the fact that all independent members of the Super-
visory Board had a special role in these discussions and that
advice on this matter was provided by an independent law
firm and another independent legal academic, it saw no reason
to form a special committee. Furthermore, in the opinion of
the Supervisory Board, no member of the Supervisory Board has
concrete indications of relevant circumstances or relationships
that could give rise to a material and not merely temporary
conflict of interest and that would therefore speak against
independence.
23,327
Dow Jones Industrial Average
3,504
3,001
Euro STOXX 50
12,918
-35
DAX 30
70.80
45.91
Daimler share price (in euros)
% change
18/17
10,559
24,719
20,015
439
STOXX Europe Auto Index
GGO
70
65
60
12/31/17
6/30/18
Nikkei
12/31/18
STOXX Europe Auto Index
DAX
64
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
-18
-14
-6
-12
22,765
Daimler AG
End of 2018 End of 2017
A.01
Global stock markets displayed considerably weaker performance in many regions in 2018. The
Daimler share price also decreased throughout 2018 and closed the year significantly lower than at
the end of 2017. In 2018, we continued to inform institutional investors, analysts, rating agencies
and private investors with a wide range of investor relations activities and comprehensive reporting
on the Group's business development and prospects. Our refinancing benefited from a high level
of capital market liquidity and good ratings. The Board of Management and the Supervisory Board
will propose to the Annual Shareholders' Meeting that a dividend of €3.25 (2017: €3.65) per share
be paid for the year 2018.
PAEV 1063
World premiere of the all-electric eCitaro
It operates free of local emissions and almost noiselessly. It
combines the tried-and-tested platform of the bestselling
Mercedes-Benz city bus of all time with new technological
solutions and an independent design. The all-electric
Mercedes-Benz eCitaro raises electric mobility with city buses
to a new level and impresses with its innovative thermal
management with outstanding energy efficiency and range
security.
Vision URBANETIC: needs-oriented,
efficient and sustainable
With its Vision URBANETIC, Mercedes-Benz Vans presents a
revolutionary mobility concept that goes far beyond previous
ideas of automated and autonomous vehicles. It removes the
distinction between passenger and goods transport and is
intended to facilitate the sustainable and efficient transport
of persons and goods in line with differing requirements.
Milestone for new corporate structure
The Board of Management and the Supervisory Board approve
the structural further development of the company. Daimler
thus reaches an important milestone along the way to a new
Group structure. Three independent entities under the
umbrella of Daimler AG are to meet future challenges and sys-
tematically utilize the opportunities offered by the mobility
of the future. The shareholders will decide on the new structure
at the Annual Shareholders' Meeting on May 22, 2019. The
separation can then take place in the fall of 2019.
Mercedes-Benz starts in the era of electric mobility
Mercedes-Benz celebrates the world premiere of the new
all-electric EQC in Stockholm (combined power consumption:
22.2 kWh/100 km; combined CO2 emissions: 0 g/km, pre-
liminary figures*). As a purely battery-powered vehicle, the EQC
stands for a convincing combination of comfort, quality and
suitability for everyday use. Visually, the crossover SUV is a
pioneer of avant-garde electric aesthetics.
Figures for electricity consumption and CO2 emissions are provisional and
non-binding and have been determined by an external technical institution.
The range figures are also provisional and non-binding. EC type approval
and a certificate of conformity with official figures are not yet available.
Deviations are possible between the stated figures and the official figures.
Daimler Supervisory Board sets the course for the future
Manfred Bischoff's appointment as Chairman of the Supervisory
Board will terminate at the end of the 2021 Annual Sharehold-
ers' Meeting. The Supervisory Board intends to propose to the
Annual Shareholders' Meeting that Dieter Zetsche be elected
to the Supervisory Board at that time. Manfred Bischoff will
recommend the election of Dieter Zetsche as his successor as
Chairman of the Supervisory Board. In order to comply with
the two-year cooling off period, Dieter Zetsche will resign from
the Board of Management at the end of the 2019 Annual
Shareholders' Meeting. As a result, the Supervisory Board
decides to appoint Ola Källenius as Chairman of the Board
of Management and Head of the Mercedes-Benz Cars division
following the 2019 Annual Shareholders Meeting.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
61
Q4
Daimler DigitalLife Day @IL for lawyers, data-protection
specialists and integrity and compliance managers
How do lawyers, data-protection specialists and integrity and
compliance managers approach digitization? More than 400
participants deal with this question at the Daimler DigitalLife
Day @IL (Integrity and Legal) in Ludwigsburg near Stuttgart.
Experts discuss with the audience issues such as big data, new
working methods, current developments in legal tech, artificial
intelligence and block chains. On three stages, under the
motto "#empower #shape - #protect," Integrity and Legal
Affairs continues its dialogue on the subject of digitization.
-
#HiFive: Mercedes-AMG Petronas Motorsport wins the
Constructors' Championship in Formula 1
Daimler and the Capital Market
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
62
Daimler AG establishes a pension fund for its retirees. As
of January 2019, approximately 80,000 pensioners will receive
their benefits out of the company pension scheme directly
from Daimler Pensionsfonds AG. For this purpose, Daimler AG
has allocated assets of approximately €8.2 billion to the
pension fund. The pension fund is subject to the German Insur-
ance Supervision Act (Versicherungsaufsichtsgesetz) and is
regulated by the German Federal Financial Supervisory Author-
ity (Bundesanstalt für Finanzdienstleistungsaufsicht).
Daimler establishes Germany's biggest corporate
pension fund
Daimler buys battery cells in a total volume of €20 billion
With extensive contracts for battery cells until the year 2030,
Daimler sets another important milestone for the electrification
of the future electric cars of the EQ product and technology
brand, as well as for electric vans, buses and trucks. Together
with the supply partners, this aims to ensure that the global
battery production network is supplied with the latest technol-
ogies today and in the future.
Development of Daimler's share price and of major indices
קמח
Daimler und Bosch: San José is to be a pilot city for
automated ride sharing
Mercedes-Benz delivers the first series-produced model of
the all-electric eCitaro city bus to Hamburg. It is the first bus of
a major order for 20 vehicles from a German transportation
company. The Mercedes-Benz eCitaro is the first fully electric
city bus developed and manufactured in Germany. With its
quiet and locally emission-free operation, it is an important
factor for reducing emissions, especially in urban areas.
Mercedes-Benz delivers the first all-electric eCitaro city
bus to Hamburg
As a result of current developments, Daimler AG reassesses
its earnings potential for the year 2018. This is mainly due to
an increase in expected expenses in connection with ongoing
governmental proceedings and measures in various regions
relating to Mercedes-Benz diesel vehicles. In addition, Mercedes-
Benz Vans has posted lower unit sales due to delivery delays.
Furthermore, a recent ruling by the European Court of Justice
has led to provisions for risks being recognized for the
possible need to retrofit certain vehicles that are still equipped
with the previously used refrigerant R134a.
Daimler adjusts its earnings guidance
For the fifth time in succession, Mercedes-AMG Petronas
Motorsport secures the Constructors' World Championship in
FIA Formula 1 racing. In addition, they are delighted about
a fifth consecutive title double, as Lewis Hamilton wins the
Drivers' Championship. The team has once again proven its
competitiveness and technical expertise, culminating in the
hybrid drive engine used in the Mercedes F1 W09 EQ Power.
Daimler and Bosch announce an app-based, fully automated
and driverless (SAE level 4/5) ride-hailing service. In order
to test this service, it is planned that the metropolis of San José,
California, will become a pilot city during the second half of
2019. Daimler and Bosch plan to make the service available to
selected customers with automated Mercedes-Benz S-Class
vehicles. The pilot project will provide valuable insights for
optimally connecting fully automated vehicles with the users of
future mobility services.
75
85
90
9.61
Dividend
3.25
3.65
-29
-11
Equity (December 31)
60.45
59.70
Xetra price at year end¹
45.91
70.80
+1
-35
Highest¹
75.69
73.25
Lowest¹
45.27
A.03
Institutional investors hold a total of 60% of our equity capital
while private investors own 21%. Approximately 62% of our
capital is in the hands of European investors and around 16%
is held by US investors.
The aforementioned and all other voting-rights notifications
are published on the Internet at ④ daimler.com/investors/
share/voting-rights.
2018, Bank of America Corporation notified us that its pro-
portion of the voting rights of Daimler shares rose above the
3.0% reporting limit to 3.30% on May 9, 2018.
Daimler continues to have a broad shareholder base of approx-
imately 1.0 million shareholders (2017: 0.9 million). Shareholder
numbers increased slightly during the reporting year, parti-
cularly as a larger number of private investors purchased our
shares. Tenaciou3 Prospect Investment Limited, a company
controlled by the Chinese entrepreneur Li Shufu, who is also
the founder and CEO of Geely, became Daimler AG's largest
individual shareholder in February 2018. Tenaciou3 Prospect
Investment Limited currently owns 9.7% of the company's
shares. The Kuwait Investment Authority (KIA) currently owns
6.8% of the company's stock, making it Daimler AG's second-
largest single shareholder. The Renault-Nissan Alliance continues
to hold 3.1% of Daimler's shares. BlackRock Inc., Wilmington,
continues to holds a stake above the 5% reporting limit pursuant
to Germany's Securities Trading Act (WpHG). In December
2018, BlackRock notified us that its proportion of the voting
rights was 5.12% at December 17, 2018. In October 2018,
Harris Associates L. P., Wilmington, notified us that its proportion
of the voting rights was 4.93% on October 16, 2018. In May
A broad shareholder structure and a new major
shareholder
6.78
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €3.25 per share for
financial year 2018 (2017: €3.65) at the Annual Shareholders'
Meeting on May 22, 2019. The total dividend will thus amount
to €3,477 million (2017: €3,905 million), which in relation to
the current share price, represents a very attractive dividend
yield.
At the end of the year, Daimler had a market capitalization of
€49.1 billion (2017: €75.7 billion). With a fall of 35% during
the year 2018, the development of Daimler's share price was
thus significantly weaker than that of the DAX (-18%) and
the STOXX Europe Auto Index (-29%). In the first few weeks of
2019, increases in share prices were again to be observed
on the world's stock exchanges. Daimler's shares were listed
at €51.66 at the end of January, which is 13% above the
closing price at the end of 2018.
ongoing discussions concerning a ban on diesel vehicles
in several German cities, the growing trade conflict and the
possibility of punitive tariffs and retaliatory measures. One
major concern here was the tariffs placed on automobile imports
into the United States and China, which obviously have a
negative impact on earnings in the automotive industry, partic-
ularly in view of the global supplier and production networks
operated by automotive companies. Not even the sustained
positive development of new orders for trucks in the US could
help Daimler shares to gain lasting momentum in this environ-
ment. The temporary decrease in unit sales at Mercedes-Benz
Cars in connection with the certification process for the new
WLTP standard and higher tariffs imposed by the Chinese
government on automobile imports from the US also had a
negative effect on Daimler's shares as the year proceeded.
The downward adjustment of anticipated earnings for 2018 put
further pressure on the Daimler share price during the year
under review. In a very weak stock-market environment, our
shares reached their lowest point of the year 2018 at €45.27
on December 27, and closed the year 2018 at €45.91. Although
investors recognize the long-term opportunities offered by
the industry's high levels of investment in forward-looking
technologies, automotive stocks still remain low compared
with share prices in other sectors.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 63
1 Closing prices
+3
-24
59.29
Dividend of €3.25
80
Net profit
Daimler share price falls by 35%
95
100
105
110
115
120
Share price index
A.04
1/18 2/18 3/18 4/18 5/18 6/18 7/18 8/18 9/18 10/1811/1812/18
40
45
50
55
60
65
70
75
The index of the most important equities in the euro zone, the
Euro STOXX 50, fell by 14% in 2018. The development of the
leading German share index, the DAX, was even weaker, with
a decrease of 18%. In Japan, the Nikkei index closed the year
at 20,015, which is 12% lower than a year earlier. In the United
States, the Dow Jones reached an all-time high of 26,774
in October, but was 6% below the prior-year level at the end
of 2018.
The positive sentiment on global stock markets at the beginning
of the year, which was largely a result of the tax reform in the
United States, led to all-time highs being recorded on several
important share indices in January 2018. As the year pro-
gressed, however, stock-market sentiment deteriorated notice-
ably. In particular, the US government's announcement of
possible increases in import tariffs led to a great deal of uncer-
tainty on global markets. Most stock markets did make gains
once again between the end of March and mid-May, as the
expectation of good results for the first quarter of 2018
caused investors to regain confidence. After that, however,
sentiment was once again affected by unrest. In particular,
the worsening trade conflict and the possibility of punitive tar-
iffs led investors to adopt a more reserved position and to
sell off stocks. Investors also continued to monitor the political
situation in Italy. Additional strain was put on the markets
by an interest-rate increase implemented in the United States
by the Federal Reserve in June. Market volatility increased
from the beginning of July until the end of August, in part due
to tension between the United States and Turkey. Financial
markets also suffered further as a result of ongoing discussions
on the possible introduction of punitive tariffs, the high level
of structural government debt in Italy, and the faltering Brexit
negotiations. Concern about the global economy grew again
at the beginning of the fourth quarter, after which global stock
markets came under increasing pressure once again and
share prices decreased substantially across many sectors. Cycli-
cal stocks and not least shares in the automotive and supplier
industries were especially impacted by these developments.
Most global stock markets significantly weaker
% change
18/17
Amounts in euros
On January 23, 2018, the Daimler share price reached €75.69,
which was its highest level for the year. Automotive stocks
were able to carry over their momentum from the previous year
at the beginning of 2018, but this changed in early February
in the wake of price corrections on the German stock market.
The Daimler share was significantly impacted by this develop-
ment. Investors were made to feel even more uneasy by the
2017
Key figures per share
A.02
-29
615
Daimler share price (high/low), 2018
In euros
80
2018
75.7
Daimler adjusts its earnings guidance
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
Stock exchange symbol
German Securities Identification Number
DE0007100000
ISIN
A
A
Reuters ticker symbol
A
A-
A-
A2
A2
A
A
A
Bloomberg ticker symbol
A.07
Shareholder structure as of December 31, 2018
Germany
Shareholder structure as of December 31, 2018
By region
A.08
20.7%
Retail investors
59.7%
Institutional investors
3.1%
Renault-Nissan
6.8%
Kuwait Investment Authority
9.7%
Investment Limited
Tenaciou3 Prospect
By type of shareholder
Stock-exchange data for Daimler shares
32.4%
A.06
Scope
1.0
0.9
+11
(in millions of euros)
3,070
3,070
% change
0
1,069.8
1,069.8
0
Market capitalization
(in billions of euros)
49.1
Number of shares (in millions)
End of 2018 End of 2017
18/17
Share capital
Fitch
Moody's
S&P
Long-term credit ratings
2.92%
1.93%
Euro STOXX 50
6.79%
4.67%
DAX 30
Weighting in share indices
(in millions)
Number of shareholders
A.05
Key figures for Daimler shares
DBRS
Q3
Europe, excluding Germany
USA
World premiere of the new A-Class in Amsterdam
Daimler Trucks revolutionizes truck production in Brazil
A type of truck assembly line that is completely new for the
Brazilian market is put into operation at the São Bernardo
do Campo plant. Hyper connectivity (real-time networking of
individuals, things and devices) and digital technologies for
systems and tools ensure a future-oriented production system.
Mercedes-Benz do Brasil has brought together the assembly
of light to heavy trucks and the associated parts logistics in a
completely new building.
SAK 4058
The Chinese entrepreneur Li Shufu acquires a 9.7% equity
interest in Daimler AG. Daimler is pleased to have gained Li
Shufu as another long-term investor who is convinced of
Daimler's innovative strength, strategy and future potential.
Daimler has a new major shareholder
Mobility is changing. In order to actively shape this change,
outstanding talent is needed. "INspire - the Leaders' Lab" is
Daimler's new trainee program for university graduates and
young professionals with their first practical experience. In 24
months, the participants go through at least four - mainly
international-project assignments and numerous training units,
optimally preparing them for later management tasks.
The A-Class is more mature and comfortable than ever before.
Technologically, it sets itself apart from the competition, and
not only with the new MBUX infotainment system. At the same
time, it offers a range of safety and driver-assistance systems
that were previously reserved for the luxury class. This applies
also to its appearance: the purist design with clear surfaces is
the next step in the design philosophy of sensual clarity.
New Daimler trainee program secures tomorrow's
executives
World premiere of the new Sprinter
Q1
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
58
57
E
Mercedes-Benz Vans announces the digital age for our large
vans with the new edition of the bestseller. The third genera-
tion of the Sprinter represents the division's development from
a pure vehicle manufacturer into a provider of integrated
transport and mobility solutions. With new connectivity services,
electric drive and individual hardware solutions for the load
compartment, the large van will make customers' business much
more efficient in the future.
Factory 56 - laying the foundation stone for one of the
world's most advanced car production facilities
Mercedes-Benz Cars is building the car production of the
future at its Sindelfingen plant - digital, flexible and green: A
completely new infrastructure is to be used in Factory 56.
The hall is equipped with Wi-Fi throughout, communicates with
its surroundings and uses digital tools. A new form of work
organization takes employees' individual needs into account.
Factory 56 also features sustainability and energy efficiency,
for example through the use of energy from renewable sources.
Series production in Factory 56 is to start at the beginning
of the next decade with cars and electric vehicles in the upper
and luxury classes, as well as self-driving cars.
Daimler and BMW Group agree to combine their
mobility services
Daimler AG and BMW Group plan to merge their existing
offerings for on-demand mobility in the areas of car sharing,
ride hailing, parking, charging and multimodality, and to
strategically expand them with the aim of becoming one of
the leading providers of mobility services. Each of the two
companies will hold 50% of the shares in the joint venture for
their combined mobility services. After all the involved anti-
trust authorities approve the transaction by December 2018,
it will be completed in January 2019.
60
Daimler AG reassesses its earnings potential for the year 2018.
At Mercedes-Benz Cars, lower SUV sales and higher costs
are to be expected due to higher tariffs on vehicles imported
into the Chinese market from the United States. In addition,
the certification process according to the new WLTP (Worldwide
Harmonized Light Vehicles Test Procedure) standard will lead
to expenses in the second half of the year.
-35
Daimler Financial Services AG reaches an agreement with
Deutsche Telekom AG (consortium partner) and the German
Government on terminating the arbitration proceedings
regarding Toll Collect. This will allow a dispute lasting more
than 14 years to be settled. At the same time, Toll Collect
can make a new start without any burdens.
Settlement on Toll Collect
The Mercedes-Benz plant in Mannheim and Detroit Diesel
Corporation, a subsidiary of Daimler Trucks North America
(DTNA), together reach a special milestone in the international
powertrain network: Together, the two plants have produced
a total of 1,000,000 heavy-duty engines, underscoring the suc-
cess of the common platform strategy for the drivetrains of
Daimler Trucks.
One million world engines for Daimler Trucks
Daimler has developed a systematic approach to respecting
human rights, the Human Rights Respect System. With its
risk-oriented and systematic approach, it increases the effec-
tiveness of previous measures also along complex supply
chains. The company is thus taking another important step
towards making mobility sustainable, which also includes
the responsible procurement of raw materials.
Daimler strengthens its activities for the respect of
human rights
Annual Shareholders' Meeting approves dividend increase
to €3.65 per share (previous year: €3.25)
Approximately 6,000 shareholders attend the meeting at the
CityCube in Berlin on April 5, 2018. The resolutions proposed
by the management are all adopted by large majorities. The
total dividend payout reaches a new high of €3.9 billion and is
the highest dividend ever paid by a DAX 30 company.
Mercedes-Benz Cars starts the construction of its first fully
flexible plant in Kecskemét, Hungary. The company is investing
a total of €1 billion in the new car plant and creating more
than 2,500 jobs. In this full-flex plant, widely differing vehicle
architectures can be produced flexibly on one assembly line,
from compact models to rear-wheel-drive sedans and with dif-
fering drive systems including electric drive. The plant in
Kecskemét comprises press shop, body shop, surface process-
ing and assembly. It is highly efficient and has CO2-neutral
energy supply.
Foundation stone for first "full-flex plant"
DAIM LR
Q2
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018 59
SOULLY
29.2%
S.MB 1863
EDITION
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 65
In the exhibition areas of the CityCube, Daimler presented
its technological expertise and a broad range of products and
services under the motto “CORE, CASE, CULTURE, COMPANY."
The exhibition highlights showcased future mobility. Along with
the two-seat super sports show car Mercedes-AMG Project
ONE Vision and the elegant Vision Mercedes-Maybach 6 Cabriolet
show car, the presentation also featured electric commercial
The Annual Shareholders' Meeting also reelected Sari Baldauf,
the former Chairwoman of the Board of Directors of Fortum
Oyj, Finland, as a shareholder representative in the Supervisory
Board of Daimler AG. Dr. Jürgen Hambrecht, Chairman of the
Supervisory Board of BASF SE, was also reelected as a member
of the Supervisory Board of Daimler AG representing the
shareholders. Sari Baldauf and Jürgen Hambrecht were first
elected to the Supervisory Board of Daimler AG as represen-
tatives of the shareholders in 2008. Marie Wieck, General
Manager of IBM Blockchain, was elected by a large majority
to the Daimler AG Supervisory Board as a shareholder represen-
tative. The terms for the three elected Supervisory Board
members began after the conclusion of the Annual Shareholders'
Meeting in 2018 and will expire at the end of the Annual
Shareholders' Meeting held in 2023. Important documents and
information related to the Annual Shareholders' Meeting can
be found on the Internet at daimler.com/investors/events/
annual-meetings/2018.
Annual Shareholders' Meeting in the CityCube in Berlin
Our Annual Shareholders' Meeting was held on April 5, 2018,
in the CityCube in Berlin. Some 6,000 shareholders (2018:
6,200) attended the meeting. A total of 55.71% (2017: 49.18%)
of equity capital was represented at the meeting (actual
attendees and shareholders who voted by absentee ballot).
A large majority of the shareholders approved each of the
items of the agenda proposed by the company's management.
For example, the Annual Shareholders' Meeting approved
the highest dividend payout to date, €3.65 per share (2018:
€3.25), which means the total dividend amounted to €3.9
billion. This was the highest total dividend payout of any DAX
30 company in 2018.
Employee stock purchase plan implemented once again
Staff members entitled to purchase employee stock were able
to do so once again in March 2018. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 23.5%, the participation rate in the year
under review was once again significantly higher than in the
previous years (2017: 19.8%). A total of 41,900 employees
took part in the program (2017: 36,200), which is the highest
number since 2008. The total number of shares purchased
by employees also increased substantially once again, from
604,000 in 2017 to approximately 717,000 (of which just
under 64,700 were bonus shares) in the year under review. In
connection with the attendance bonus program, approximately
15,000 shares were additionally issued.
With a weighting of 4.67% (2017: 6.79%), Daimler was ranked
eighth in the German share index DAX 30 at the end of 2018.
In the Euro STOXX 50 index, our shares had a weighting of
1.93% (2017: 2.92%), which put Daimler in 19th place. Daimler
shares are listed on the stock exchanges in Frankfurt and
Stuttgart. A total volume of 1,093 million shares were traded
in Germany in 2018 (2017: 942 million). A substantial number of
Daimler shares are also traded on multilateral trading platforms
and in the over-the-counter market.
vehicles such as the MB New Electric Truck, the MB Citaro
Hybrid city bus, the FUSO eCanter van, and the Vision Van. Also
on display were several car models featuring alternative
drive system concepts. A 1:2-scale model of the Volocopter
attracted a great deal of attention as well. The Volocopter
is an all-electric air taxi that is locally emission-free and very
quiet. It is equipped with 18 rotors, and plans also call for
automated operation in the medium term. The Volocopter can
be used to transport passengers as required through air
space in cities as an attractive supplement to public transport
services and has already been tested successfully in Dubai.
710000
DAI
DAIGN.DE
DAI:GR
Rest of the world
11.8%
Asia
6.8%
Kuwait
16.4%
3.4%
Daimler Financial Services presented its mobility services at
the Annual Shareholders' Meeting. The presentation of our pro-
gram for the further development of our corporate culture,
Leadership 2020, showed how Daimler is responding to the
changes occurring with regard to products, customer expec-
tations and the working world. Some of our trainees were also
once again at the meeting to provide an insight into their work.
Continuation of comprehensive investor relations
activities
In 2018, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development. We organized
road shows for institutional investors and analysts in the
finance capitals of Europe, North America, Asia and Australia.
We also held many one-on-one meetings at investor confer-
ences. This was especially the case at the international motor
shows in Geneva and Paris. We reported on our quarterly
results in conference calls and webcasts. The presentations are
available on our website at ☺ daimler.com/investors/events/
presentations. The talks with analysts and investors focused on
the latest earnings expectations for 2018, business devel-
opments and profitability in individual divisions and regions,
and our "Project Future." Investors are also now focusing
more strongly on the transformation of the automotive industry
and the development of the technologies which Daimler
embraces in its CASE approach. In June, the top management
team at Daimler Trucks held a capital market event at the
headquarters of Daimler Trucks North America in Portland,
Oregon. During this event, the executives discussed the
strategies and objectives of global truck operations and
also presented two electric trucks for the US market - the
Freightliner eCascadia and the eM2 - at Portland International
Raceway. The audio/video recordings and charts and illustra-
tions from the event are available at daimler.com/investors/
events/capital-market-days.
EDITION
AI TO OUR SHAREHOLDERS | HIGHLIGHTS 2018
10
At the IAA Commercial Vehicles Show in Hanover in September 2018,
Daimler Trucks celebrates the launch of its new Mercedes-Benz Actros
flagship, with the special model “Edition 1” limited to 400 units, whose
numerous extras provide the driver with a very high level of comfort and
safety. Furthermore, selected design elements give the vehicle high
recognition value. The new Actros brings groundbreaking innovations that
pay off immediately. Operators and drivers alike benefit from extremely
levels of efficiency and comfort.
Highlights of 2018
World premiere of the new Actros in Berlin
Shortly before the 2018 IAA Commercial Vehicles trade fair,
Daimler Trucks presents the new flagship of the Mercedes-Benz
brand in Berlin. The new Actros raises safety for all road users,
efficiency for the operator and comfort for the driver to very
high levels. The most important and spectacular innovation is
Active Drive Assist. With Active Drive Assist, Daimler Trucks
is putting partially automated driving into series production.
During the year under review, Daimler issued asset-backed
securities (ABS) in the United States, Canada, China, Germany
and the United Kingdom. In the United States, the company
generated a refinancing volume of $7.6 billion through six trans-
actions in 2018; in Canada, a volume of CAD 1.0 billion was
generated in two transactions. In addition, Mercedes-Benz Bank
used the Silver Arrow Platform to sell ABS bonds to European
investors in an amount of €0.75 billion. In the United Kingdom,
a volume of GBP 0.4 billion was successfully placed with
investors, while in China, two ABS transactions were conducted
successfully with a total volume of CNY 16 billion.
At the end of 2018, Daimler Group companies had issued
bonds that were still outstanding in a volume of €76.5 billion
(2017: €67.1 billion). Besides raising funds through the
issuance of bonds, Daimler also issued a small volume of
commercial paper in 2018.
In 2018, the Daimler Group primarily covered its refinancing
needs by issuing bonds. A large proportion of those bonds
were sold as benchmark bond issuances (bonds with high
nominal volumes) in euro and US-dollar markets. In the
US capital market, for example, Daimler Finance North America
LLC issued bonds worth a total of $8.75 billion. In addition,
Daimler International Finance B. V. issued euro bonds in bench-
mark format with a total volume of €6.50 billion. In 2018,
Daimler AG also issued bonds in China (so-called Panda bonds)
worth a total of CNY 16.0 billion. Furthermore, many smaller
bonds were issued by the Daimler Group in a variety of curren-
cies and markets.
The central banks' monetary policy had a major effect on bond
markets in 2018. As a result of the high level of liquidity,
companies with investment-grade ratings saw their risk premiums
remain at a moderate level for the most part.
Refinancing benefits from a high level of capital-market
liquidity and good ratings
Number of online shareholders reaches 100,000
Our shareholders continue to make good use of our range of
personalized electronic information and communication.
The increase in online shareholders was particularly high in
2018, as a total of 100,000 (2017: 95,000) shareholders
received the invitation to and agenda for the Daimler Annual
Shareholders' Meeting by e-mail rather than by post. We
would like to thank those shareholders for helping to protect
the environment and cut costs. As was the case in the past,
those shareholders once again had the opportunity to win
attractive prizes in a lottery. Access to the e-service for
shareholders and additional information can be found at
https://register.daimler.com.
Website: easier to navigate, now with more service modules
We continued to develop our Investor Relations site at
④daimler.com/investors in 2018. Navigation pages for the
various site sections, information charts and download
modules all ensure more intuitive operation or get users to
their destination page more quickly. Visitors to the site
also no longer need to download several documents in order
to compare figures from different years, as interactive
diagrams now offer an overview directly at the website.
We have also optimized our content for search engines in
order to make it easier to find in web searches. In addition,
brief summaries in the search results make it easier for
users to decide which site they need or want to visit next.
The Annual Report received a Platinum Vision Award from the
League of American Communications Professionals LLC
(LACP). In addition, we were given a Silver Stevie Award for the
online version of the 2017 Annual Report, which also captured
Silver at the 2017 LACP Professionals Vision Awards.
Awards once again for the Daimler Annual Report
Our 2017 Annual Report and its online version with numerous
additional features won prestigious international awards once
again in 2018 annual report2017.daimler.com.
www
eCITARO
130
CAR
2GO
0.1
0.0
0.1
0.3
A.11
Research and development expenditure
2017
2018 2019 2020
0.06
Amounts in billions of euros
8.7
9.1
18.3
Mercedes-Benz Cars
6.6
7.0
14.0
Daimler Trucks
Daimler Group
0.04
Daimler Financial Services
Corporate
0.2
Daimler Group
6.7
7.5
14.5
Mercedes-Benz Cars
4.8
5.7
11.3
Daimler Trucks
1.0
1.1
2.2
Mercedes-Benz Vans
0.7
0.5
0.4
Daimler Buses
0.1
0.1
1.3
1.3
2.9
Mercedes-Benz Vans
74
Sustainability at Daimler
105
Portfolio changes and strategic partnerships
76
Research and development
105
Important events
77
Innovation, safety and environmental protection
107
Performance measurement system
77
The workforce
113
Financial performance measures
78
Social responsibility
114
Business model
With our strategic focus areas of CORE, CASE, CULTURE and
COMPANY, we have established the conditions needed to
ensure we can focus more consistently on the requirements of
the CUSTOMER. The goal of Daimler's 5C strategy is to
prepare the company for the challenges and opportunities
associated with the new age of mobility, and to continue
to be a leading vehicle manufacturer while becoming a leading
provider of mobility services.
105
74
0.6
0.7
0.9
Daimler Buses
0.2
0.2
0.4
Extensive investment in the Group's future
In the coming years, we will continue to forge ahead with our
innovation offensive in order to implement our growth strategy
through the introduction of new products, innovative tech-
nologies and modern manufacturing capacities. The future-
oriented CASE fields (Connected, Autonomous, Shared &
Services and Electric) will play a key role here. We will invest
almost €15 billion in property, plant and equipment in 2019
and 2020, as well as more than €18 billion in research and
development projects. With this plan, we continue to
maintain a high level of investment in order to safeguard the
future of the Daimler Group. 71 A.10 and A.11
Investment in property, plant and equipment will mainly be
applied to prepare for the production of our new models.
We will also use our investment to realign our manufacturing
facilities in Germany, to increase local production in the
growth markets and to expand our global production network
for electric vehicles and batteries.
Most of our expenses for research and development flow into
new products. Key projects include the successor generations
of the C-Class and the S-Class and new models in the compact
segment. Other focus areas at all of our automotive divisions
include innovative drive-system and safety technologies, vehicle
connectivity systems and the further development of auto-
mated and autonomous driving technologies. Our plans also call
for substantial funds to be invested in our comprehensive
electric mobility offensive at all of our automotive divisions.
Management
Report
S UV 1672
二4501號
Daimler once again achieved record unit sales and revenue in 2018,
and the Group's EBIT also reached a high level of €11.1 billion despite
difficult economic conditions. On the basis of sound finances and a
strong core business, we are positioning our businesses for the future:
with outstanding vehicles and services, with forward-looking technol-
ogies and business models, with an innovative and flexible corporate
culture, and with an organization appropriate to the markets' growing
dynamics.
B | COMBINED MANAGEMENT REPORT | CONTENTS 73
B | Combined Management Report
Corporate Profile
Sustainability and Integrity
With legally independent business entities resulting from Project
Future, we are creating greater proximity to the customers
and facilitating more targeted work in the markets. This will
enable the individual divisions to react faster and more
precisely to new trends, technological leaps and unforeseen
market developments. By assigning greater responsibility
to the management in the new legal entities below Daimler AG,
we are also increasing the scope for entrepreneurial action
and our pace of innovation. At the same time, we want to ease
cooperation in specific areas in order to take account of ever
faster technological change. In addition, the new structure will
enhance transparency on the individual parts of the Group
and thus the attractiveness of Daimler AG in the capital market.
Within the Daimler Group, synergies will continue to be
systematically maintained and utilized.
In order to continue keeping pace with the highly dynamic
development of our business environment, we want to create
an organization and structure that will strengthen our focus
on markets and customers, boost our entrepreneurial activities,
and generate and safeguard synergies (COMPANY). With
Project Future, the Mercedes-Benz Cars and Mercedes-Benz
Vans divisions will be placed into Mercedes-Benz AG, and the
Daimler Trucks and Daimler Buses divisions will be placed into
Daimler Truck AG, making them more independent. Daimler
Financial Services AG, which is already a legally independent
company, is to be renamed as Daimler Mobility AG, probably
in July 2019. The division is already well known as the Group's
provider of mobility services. Daimler AG will remain the
parent company and retain responsibility for governance, strat-
egy and control functions, as well as offering Group-wide
services. Responsibility for Group-wide financing will be retained
by Daimler AG as the Group's management holding company,
which will be the only publicly listed company in the Group. The
next step is to obtain approval to implement the new structure
at the Annual Shareholders' Meeting on May 22, 2019.
Strengthening our divisional structure
(COMPANY)
- Strengthening our customer- and market-focused structure
(COMPANY).
At the center of all our activities is our fifth and most important
C: the customer (CUSTOMER). Our processes and organization
focus on our customers - we work with and for our customers
to ensure we provide them with the best products for their
needs and the best solutions for their mobility requirements.
Strengthening our global core business (CORE)
Mercedes-Benz Cars will continue to implement its growth
strategy with the goal of further safeguarding its leading
position in the global premium segment. We seek to build trust
with our high quality and safety standards, and our innovative
and outstanding products and services are designed to inspire
our customers. We are pursuing three different technological
approaches as we move ahead on the road to emission-free
driving: the further improvement of ultra-modern combustion
engines, expanded hybridization, and locally emission-free
vehicles with batteries and fuel cells. The most important
lever for improving combustion engines is the full electrification
of the drivetrain with the belt-driven starter-generator or the
integrated starter-generator (ISG) combined with a 48-volt
electrical system. Systematic hybridization is an important
interim solution on the road to emission-free mobility. Our
global development network, technology centers and digital
hubs keep us close to our customers, our markets and new
technologies. Within the framework of our growth strategy,
we have expanded our production network in all regions and
improved our global competitiveness. With our lead plants,
which assume global manufacturing responsibility for specific
product groups, we ensure that we implement uniform
standards and consistently deliver the high quality of "Made by
Mercedes" worldwide. Our goal is to make our production
operations modular, flexible and digital, and greener. These
efforts focus on Factory 56, which is an ultramodern, flexible,
fully digitized and CO2-neutral assembly plant in Sindelfingen.
Plans call for the plant to go into operation early in the next
decade. With regard to sales, we focus on the utilization of direct
interfaces to our customers, as well as offering them the
best possible experience over our entire relationship. Depending
on our customers' needs, we make use of physical and digital
channels for customer contact and communication, and also
combine these channels wherever appropriate. Our market
position in China plays a key role in safeguarding our market
leadership. We have already transformed China into the
biggest market for Mercedes-Benz cars, thanks to products that
are aligned with Chinese customers' requirements and our fur-
ther expansion of local development and manufacturing activities.
Safeguarding the earnings performance of Mercedes-Benz
Cars is an ongoing task. That is why we have refined our "Fit
for Leadership" efficiency program and integrated it into
our organizational structure."Fit for Leadership" is expected to
result in an additional €4 billion in earnings by 2025.
Daimler Trucks continues to pursue its proven strategy, which
focuses on leadership in innovation, a global market presence
and global platforms. Here, everything always revolves around
the customer. In the important North American market, we
plan to further safeguard our market leadership in the segment
for heavy-duty Class 6 to 8 trucks, whereby the Freightliner
Cascadia has played a major role in the success we have
achieved so far. With its new Actros, Daimler Trucks is also
underscoring its strong position in the areas of safety, digital
cockpits, connectivity and efficiency, particularly in Europe.
Fuel efficiency is a key selling argument, and we work continu-
ously to improve it. With the new Mercedes-Benz Actros for
example, we have been able to reduce fuel consumption once
again compared with the predecessor model. Since 2017,
Daimler Trucks has been investing in its product program in
Brazil, as well as in vehicle connectivity and the modernization
of the two plants in São Bernardo do Campo and Juiz de Fora.
We are now well established in India with BharatBenz, and
we continue to expand our presence with products that feature
cutting-edge technologies, as well as with the production of
vehicles that are exported from India to more than 60 markets.
Investment in our development and manufacturing operations
in Turkey is geared toward the long term and is proceeding as
planned. Daimler Trucks has succeeded in standardizing major
assemblies and modules in many applications and regions. The
continuous renewal of the product portfolio across all regions
makes it all the more important for us to constantly refine our
platform strategy.
The full effect of the cost optimizations at Daimler Trucks
with the target of permanent savings of €1.4 billion is to be
achieved as of the year 2019. The continuous improvement of
efficiency will, however, remain an important lever for ensuring
that Daimler Trucks continues to be financially successful.
Mercedes-Benz Vans plans to keep growing in the future and
to develop from a vehicle manufacturer into a provider of
holistic transport and mobility services. Mercedes-Benz Vans
is utilizing three strategic components here: market strategies
for global growth, product strategies for the further expansion
of its product portfolio, and the adVANce future initiative
focusing on the development and commercialization of customer-
oriented, holistic transport and mobility solutions. Our new
Sprinter plant in North Charleston, South Carolina, now allows
us to serve the local market even faster and more flexibly.
Market potential in China and the increase in online retail sales
of goods are enabling further growth. Our product pipeline
is in outstanding shape with the new Mercedes-Benz X-Class -
the first premium pickup from Mercedes-Benz Vans - and the
new Sprinter. In order to make production even more efficient
and flexible, Mercedes-Benz Vans plans to completely digitize
its global manufacturing operations by 2025. With its adVANce
initiative, Mercedes-Benz Vans is looking far beyond vehicles
themselves and developing from a vehicle manufacturer into
a provider of holistic transport and mobility solutions for
passenger and goods transport applications. adVANce consists
of six components which in combination with the right van
offer a tailored solution for every sector. Here, Mercedes-Benz
Vans works closely with customers as early as the develop-
ment stage, analyses sector-specific requirements, and delivers
holistic solutions that increase the efficiency of customers'
value chains.
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Daimler Buses plans to continue its global growth with the help
of its regional strategies and state-of-the-art products in the
city-bus and touring-coach segments. The new Citaro hybrid city
bus makes a convincing impression with an economical and
practical concept for operation in cities. Our new driver assis-
tance systems underscore our strength in the area of active
safety. Daimler Buses' European production network, which has
manufacturing locations in Germany, France, Spain and the
Czech Republic, is being reorganized to make it more efficient
and more competitive. The Mannheim plant is being trans-
formed into the center of competence for city buses and electric
mobility, while the facility in Neu-Ulm will become the center
of competence for touring coaches and autonomous driving.
Innovations in the coming years will be shaped more by
additional technologies than by the launch of new model series.
For this reason, we are strengthening our development
expertise in the fields of electric mobility, connectivity and
autonomous driving. Through our own regional centers, the
production of school buses and touring coaches in India, and
the use of the Brazilian production facility as a hub for exports
to other countries in South America, Africa and Asia, Daimler
Buses continues to expand its international business operations,
particularly in emerging markets.
Occupying an outstanding position in the area of safety
technology and with highly efficient products, Daimler Buses
aims to offer a convincing holistic package of new and used
vehicles, service and maintenance contracts, financing plans
and new mobility services.
Daimler Financial Services plans to use its balancedSTRATEGY
to strengthen the foundation of its current success - the
financing of mobility - while also continuing to expand its opera-
tions as a provider of mobility services. The future importance
of mobility services will also be underscored when Daimler
Financial Services AG is renamed as Daimler Mobility AG in July
2019. Daimler Financial Services will continue to grow around
the world in its core business areas of financing, leasing and
insurance by offering customized services and by utilizing the
developments associated with increased vehicle connectivity.
About half of all the vehicles delivered by Daimler around the
globe today are either financed or leased by Daimler Financial
Services. At the end of 2018, the division was financing or
leasing more than 5.2 million cars and commercial vehicles
worldwide, and it plans to increase this figure in the future.
Daimler Financial Services supports the sales of Daimler vehicles
in approximately 40 countries. The division also aims to
achieve the highest possible degree of customer satisfaction
and to enhance customer loyalty in line with the motto
"Engaging customers for life." To this end, we have created a
new divisional board of management position for customer
experience. Daimler Financial Services also plans to completely
digitize its business processes in order to become an even
faster and more efficient organization.
Leading in new future fields (CASE)
As a pioneer of automotive engineering, we seek to be the leader
in all CASE fields (Connected, Autonomous, Shared & Services,
Electric) and to generate additional potential by linking these
four fields. The individual divisions benefit here from develop-
ments throughout the Group in the areas of electric mobility,
driving and safety systems for automated and autonomous
driving, and digitization and connectivity. More detailed infor-
mation on CASE can be found in the "Innovation, Safety and
Environmental Protection" section in the Management Report.
pages 107 ff
Connected
Mercedes-Benz Cars is forging ahead with the intelligent
connectivity of products, services and customers. Our cars are
part of the Internet of things and therefore offer customers
a broad range of services that simplify life and make vehicle
operation more intuitive and convenient. Our outstanding
and intuitive Mercedes-Benz User Experience (MBUX) control
system concept points the way forward in this respect. With
"smart ready to ..." the smart brand is being expanded in order
to offer a range of digital services for urban mobility.
Connectivity will also be a crucial factor for success in the
logistics sector in the future. At Daimler Trucks as well,
connectivity is creating substantial added value and leading to
efficiency gains in the transport chain. Our goal is to create a
seamless transport logistics system with connected trucks and
technologies that ensure that all vehicles are ideally always
fully loaded, with no downtimes or waiting periods. With the
digital cockpit in the new Actros, we are combining our
extensive range of digital services with a convenient and intui-
tive operating concept.
Connectivity is an important component of the adVANce stra-
tegic initiative at Mercedes-Benz Vans. The digital@Vans
program brings together new digital solutions, thus underscoring
the transformation of Mercedes-Benz Vans into a provider
of holistic customer-focused transport and mobility services.
Adapting our corporate culture (CULTURE)
Connectivity at Daimler Buses also offers benefits for everyone
involved - for example, bus operators in terms of fleet
management and maintenance costs, bus drivers on their routes,
and passengers using the e-ticketing service. Daimler Buses
now brings together all of its current and future digital services
for buses on its OMNIplus ON digital portal.
- Leading in new future fields (CASE)
to shape the biggest transformation in our company's history.
Our 5C strategy focuses on
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Objectives and Strategy
The automotive industry is undergoing far-reaching changes at a highly dynamic pace. Four future-
oriented fields are set to radically change the nature of mobility: greater vehicle connectivity,
advances in automated and autonomous driving, the development of digital mobility and transport
services, and electric mobility. We are addressing this challenge - both strategically and structurally.
Our objective is clear: We intend to continue to be a leading vehicle manufacturer while developing
into a leading provider of mobility services. We are supporting this transformation by implementing
a cultural and organizational realignment. The measure of our success is always the satisfaction of
our customers, as we seek to inspire them with our products and services and to ensure that we
remain a partner they can trust.
Our objectives
Sustainable profitable growth
The foundation for profitable growth is formed by a forward-
looking product portfolio, strong brands and a global
presence. We want all of our businesses to be the leaders in
their respective segments. Our goal at Mercedes-Benz Cars
is to ensure that we play the leading role in the worldwide pre-
mium segment over the long term. We also aim to enhance
the smart brand's role in urban and electric mobility. Daimler
Trucks seeks to further strengthen its leading position in the
global truck business. Mercedes-Benz Vans is striving to be the
number one brand in the premium van segment. Daimler Buses
plans to further strengthen its leading position in the segment
for buses above eight metric tons gross vehicle weight.
Daimler Financial Services seeks to maintain its position as
one of the leading captive providers of financial and mobility
services; it will continue to expand its mobility services and
continue growing, in part by means of cooperative ventures.
The success of our business operations today creates the finan-
cial foundation for investments in the future of our company.
We intend to achieve a 8 to 9% return on sales (EBIT in relation
to revenue) for the automotive business on a sustained basis.
This overall figure is based on the long-term return targets for
the individual divisions: 8 to 10% for Mercedes-Benz Cars, 8%
for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for
Daimler Buses. For Daimler Financial Services, we have set
a target of 17% for return on equity. We also want to be a leader
in sustainability, and we will accomplish this by incorporating
the environmental and social effects of our operations into our
business strategy. For us, sustainability means combining
business success with social responsibility, environmentally
compatible products and environmentally compatible
production.
A leader in innovation
We are setting the standards for the future-oriented fields of
Connected, Autonomous, Shared & Services and Electric
(CASE). We want to expand vehicle connectivity even further
and thus create added value for our customers. We also
seek to be a leader in the use of digital technologies, both in our
products and services and along the entire value chain. The
digitization of our core processes and the utilization of forward-
looking technologies are creating new business opportunities
that revolve around the mobility requirements of our customers.
We seek to play a leading role in automated and autonomous
driving at all our divisions. This will result in the creation of new
and attractive business models for private car customers,
fleet customers, and the public transport and commercial goods
transport sectors.
We are further expanding our strong portfolio in the field of
mobility services. With our broad customer base and presence
in all of the relevant mobility segments, we have already
established a strong foundation for future success. We remain
on course for growth through innovative mobility services
and strong cooperation partners. We want to offer our customers
the best drive system for their needs - everything from high-
tech combustion engines to hybrid and electric drive systems.
In the field of electric mobility, we are establishing an
ecosystem of products and services in order to make electric
vehicles at least as convenient and pleasant to use as those
with combustion engines. We also plan to become a leader in
the area of electric commercial vehicles. In addition, we con-
tinue to expand our strong position in relation to vehicle safety,
the security of our services and our use of customer data.
Inspiring our customers
We gain and maintain our customers' trust with outstanding
products and services that inspire them. We create added value
with our strong brands, unique range of products and
customized services. Our innovative services and new service-
based business models set us apart from our competitors.
We handle customer data responsibly and we use this data to
anticipate new customer expectations.
The best team
Our goal is to further develop the Group and make it even more
successful. We seek to recruit the most talented individuals
by further promoting a passion for innovation and encouraging
our employees to take on additional responsibility. We have
adopted an employee-focused culture in order to ensure we
remain an attractive employer that can rely on the best team
in the automotive industry. We improve our employees' skills
and qualifications and offer them opportunities for lifelong
learning. We promote and support diversity and inclusion. Integ-
rity is extremely important for our company, especially as
we are undergoing a phase of fundamental transformation.
Integrity guides our dealings with respect to the Group, its
employees, business partners and customers, and society as a
whole. We are convinced that conducting business responsibly
provides us with orientation, especially in times of major trans-
formation; it makes us more successful over the long term,
and it also benefits our society. pages 116 ff
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
67
Five strategic components
We are utilizing five closely linked strategic components
Strengthening our global core business (CORE)
Corporate governance statement
Daimler Financial Services also aims to expand digital business
models in the area of financing and mobility services in the
context of its balanced STRATEGY, and is using connectivity to
further develop its digital services. The financing business is
becoming more flexible with regard to how vehicles are used,
the application of use-based billing and the utilization of
flat rates for leasing (including insurance and maintenance).
Our approach to autonomous driving is based on the use of
comprehensive driving and safety systems, vehicle connectivity
and real-time digital maps. As we continue to develop auto-
mated and autonomous driving, we are relying on the one hand
on technical assistance systems and on the other on auto-
mated systems for transporting customers from A to B without
a driver. With the S-Class, we have underscored the excellent
position Mercedes-Benz Cars occupies in the area of technical
assistance systems. On the other hand, we are developing
automated systems to be used without a driver exclusively or
to be shared with others. Fully automated and driverless
systems give back to people the time they now need to spend
steering and operating the vehicle. In addition, autonomous
driving technology offers people without a driver's license new
opportunities to enjoy mobility. In order to accelerate the
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Via are now offering flexible shuttle services and pooling
concepts in several European cities to complement local public-
transport systems. The ViaVan service, which was initially
launched in Amsterdam and then in London and Berlin as well,
generates real-time matches of passengers headed in the
same direction and then offers them transport in a single van.
This sustainably reduces traffic volumes in cities while
increasing mobility capacities.
We plan to continue growing in the business customer segment
as well. Our Mercedes-Benz Vans Mobility GmbH subsidiary is
expanding and fully digitizing its van rental services in Germany
and around the world. With CharterWay, Daimler Trucks has
been offering customized mobility and services for more than
two decades now. And the Mercedes me app allows Mercedes-
Benz Cars customers to share their A-Class with a predefined
group of users.
Electric
Mercedes-Benz Cars plans to significantly expand its range of
electric vehicles over the coming years. Daimler assumes that
by the year 2025, electric models will account for between 15
and 25% of Mercedes-Benz Cars' unit sales. To that end, we
plan to launch more than 10 all-electric cars in all segments, from
the smart to the large SUV. We are investing approximately
€10 billion in the expansion of our electric fleet and more than
€1 billion in the development of battery production. We are
developing an independent modular and scalable electric-vehicle
platform that will enable us to offer a high degree of flexibility
in terms of variants and models. All of the electric vehicles and
electric mobility services offered to Mercedes-Benz Cars
customers have been consolidated under our new EQ brand,
which stands for "Electric Intelligence." Together with partners,
we are investing in the establishment of a charging infrastructure,
especially on major highways in Europe. We have designed our
production network in a manner that allows us to manufacture
our electric vehicles alongside the corresponding vehicles
equipped with combustion engines on the same production lines
at all of our key plants worldwide. This ensures that we can
react with sufficient flexibility to any changes in demand for
electric vehicles. In line with producing electric vehicles, we
are also expanding the production of batteries.
Daimler Trucks is also focusing more strongly on vehicle
electrification. Increasing restrictions on vehicles with com-
bustion engines in cities, as well as more stringent emission
limits, are promoting the development of alternative drive sys-
tems for commercial vehicles as well. We are a leading truck
manufacturer and we also want to be a leader in truck electrifi-
cation. With the eCanter from FUSO, the FUSO Vision One,
two electric trucks from Freightliner, the Mercedes-Benz eActros
and the Saf-T Liner C2 school bus from Thomas Built Buses,
Daimler Trucks already has a very extensive portfolio of electric
commercial vehicles. The establishment of the E-Mobility
Group maximizes the effectiveness of our investments in this
strategically important technology. We plan to introduce
a globally standardized electric architecture and develop the
best solutions for truck batteries and charging and energy
management systems.
Mercedes-Benz Vans plans to electrify its commercial model
series over the coming years. The eVito has been available
to customers since November 2018 and the eSprinter is to
expand the electric product range starting in 2019. The use
of a standardized "off the rack" electric model for the tradesmen,
parcel delivery companies or passenger transport operators
will not work out over the long term. That is why Mercedes-
Benz Vans is setting its sights on customized holistic system
solutions created on the basis of expert consultations. In a dia-
logue between the customer and experts from Mercedes-
Benz Vans, the operating concepts are individually adapted to
the customer's sector-related needs, vehicle fleet sizes and
driving profiles - or to the architectural requirements for creating
the customer's own charging infrastructure on company
premises.
Daimler Buses is also focusing on the development of electric
drive systems. Its buses CO2 balance can be further improved
with battery operation and the use of other alternative drive
systems. The Citaro hybrid was followed in 2018 by the
eCitaro electric city bus. Plans now call for the production
facility in Mannheim to be expanded into the Daimler Buses
center for electric mobility. In addition, Daimler Buses operates
an eConsulting program that offers customers holistic advice
on converting public transport bus fleets to electric vehicles, and
also provides follow-up services for bus operating companies.
With car2go, Daimler Financial Services has been operating
a system for flexible car sharing with electric vehicles for about
seven years now. With 2,100 vehicles distributed across four
all-electric fleets in Stuttgart, Amsterdam, Madrid and Paris,
we are a leading provider of flexible car-sharing services with
electric vehicles. In this way, car2go offers millions of urban
residents a simple way to become acquainted with electrically
operated vehicles. Daimler Financial Services also supports easy
access to electric mobility through leasing plans and overall
packages for electric vehicles and accessories.
Adapting our corporate culture (CULTURE)
We are also addressing the cultural challenge associated with
the transformation of the automotive industry by adapting
our corporate culture accordingly. Together with our employees,
we have developed a new management culture within the
framework of the Leadership 2020 program. It builds on a value-
support interdisciplinary work that is independent of hier-
archical structures. To this end, we enable new teams to be put
together for limited periods of time in order to work on
specific projects (swarming). We also promote the development
of innovations through the use of modern techniques such as
scrumming and design thinking. We use co-creation approaches
to develop the best solutions together with our customers.
With our Incubator, which is an internal startup concept for
employee ideas, as well as our STARTUP AUTOBAHN initiative,
we are supporting the development and implementation of new
business ideas and innovations from employees and external
partners. We develop digital solutions at the digital units of our
divisions and at our digital hubs. We teach digital skills in order
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 71
Investment in property, plant and equipment
2017
2018 2019-2020
Amounts in billions of euros
to promote our employees' enthusiasm for digital technologies
and to enable them to use such technologies effectively. We
also promote knowledge sharing through new event formats
and platforms such as our Social Intranet, blogs and com-
munities. In addition, we offer hands-on experience with digital
technologies during our DigitalLife Days and roadshows at our
locations. This is how we have cooperated with our employees
to create the foundation for the Daimler Group's cultural
transformation.
A.10
Daimler Financial Services finances and develops shared
mobility. Customers should be able to enjoy mobility instantly
and at all times with mobility services tailored to their needs.
At the same time, mobility systems need to be sustainable in
order to ensure a good quality of life in cities. We continuously
invest in the expansion of a comprehensive mobility ecosystem
and the further development of our mobility services car
sharing, ride hailing and mobility-as-a-service. At the same time,
we are working both independently and with partners to
develop the core expertise for the business with fleets of
automated and autonomous vehicles. car2go is a leading
company for flexible car-sharing services. With regard to ride
hailing, the Daimler subsidiary mytaxi is one of the leading
providers in the app-based taxi service market in Europe, while
moovel offers our customers a platform that enables them to
optimally compare, combine, book and pay for various mobility
services. In order to enable the rapid scaling of on-demand
mobility, all car-sharing, ride-hailing, parking, charging and
multimodal services currently offered by Daimler Mobility
Services and the BMW Group will be merged and strategically
further expanded. Within the framework of a joint venture
known as ViaVan, Mercedes-Benz Vans and its strategic partner
Autonomous
Shared & Services
With its Mercedes-Benz Future Bus with CityPilot, Daimler
Buses has demonstrated the highly advanced stage its
research has reached in the area of partially automated driving
on a BRT (bus rapid transit) route near Amsterdam. BRT
systems are an important element of future urban mobility and
already enable efficient, fast and cost-effective public
transport in many cities around the world.
A.09
The five components of the strategy
Strengthening our global
core business
Financial foundation for
investments in CASE
Innovative
corporate culture
CORE
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 69
CUSTOMER
CULTURE
CASE
COMPANY
Leading position in
new future-oriented fields
Connected, Autonomous,
Shared & Services, Electric
Forward-looking
structure
development of autonomous driving, we have launched a number
of partnerships, for example with HERE for high-resolution
digital maps and with Bosch for the joint development of tech-
nology for fully automated driving and driverless vehicles.
Daimler Trucks is underscoring its leading position in the area
of safety through the further development of tried-and-tested
safety technologies such as the fifth-generation Active Brake
Assist system and Sideguard Assist, which Mercedes-Benz
offers as a fully integrated system. With the new Actros and
the new Freightliner Cascadia, Daimler Trucks is the first
manufacturer to offer partially automated driving in series-
produced trucks.
Mercedes-Benz Vans is also actively positioning itself in the
area of automated and autonomous driving. With Vision
URBANETIC, Mercedes-Benz Vans has presented a mobility
concept that goes far beyond previous ideas regarding auto-
mated and autonomous vehicles. Vision URBANETIC eliminates
the separation between passenger and goods transport by
offering an autonomous driving platform that enables flexible
use for cargo or passenger transport as needed.
Daimler Financial Services plans to use the experience it has
gained as a vehicle fleet operator and a global provider of
mobility services as it moves ahead with the establishment of
automated and autonomous systems. The division will also
continue to play an important role in the design of the customer
interface and business model.
mytaxi
78
116
Daimler can look back on a tradition covering more than 130
years - a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an unpar-
alleled range of premium automobiles, trucks, vans and buses.
Its product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler's goal is to
continue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we
intend to play a major role in promoting and shaping that change.
With our strong core business we are creating the financial
foundation for our investments in the future-oriented fields of
Connected (connectivity), Autonomous (automated and auton-
omous driving), Shared & Services (flexible use) and Electric
(electric drive systems) - "CASE" for short. Innovations
from the future-oriented CASE fields enable us to safeguard
the attractiveness and profitability of our core business.
Daimler AG is the parent company of the Daimler Group and
its headquarters are in Stuttgart. The main business of Daimler
AG is the development, production and distribution of cars,
trucks and vans in Germany and the management of the Daimler
Group. The management reports for Daimler AG and for
the Daimler Group are combined in this management report.
B.01
Consolidated revenue by division
Mercedes-Benz Cars
53.5%
Daimler Trucks
21.8%
Business model
Mercedes-Benz Vans
Daimler Buses
2.6%
Daimler Financial Services
14.4%
With its strong brands, Daimler is active in nearly all the coun-
tries of the world. The company has production facilities in
Europe, North and South America, Asia and Africa. The global
networking of its research and development activities as well
as its production and sales locations gives Daimler considerable
advantages in the international competitive field and also
offers additional growth opportunities.
In 2018, Daimler increased its revenue by 2% to €167.4 billion.
The Group's five divisions contributed to this total as follows:
Mercedes-Benz Cars 53%, Daimler Trucks 22%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Financial Services
14%. At the end of 2018, Daimler employed a total workforce of
more than 298,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These vehi-
cles range from compact models to a highly varied portfolio of
off-road vehicles, roadsters, coupes and convertibles, and
to the S-Class luxury sedans. The product range is rounded out
by the Mercedes me brand and the high-quality small cars
of the smart brand. In 2016, we introduced the new brand EQ
("Electric Intelligence"), which consolidates all of our activities
related to electric mobility. The most important markets
for Mercedes-Benz Cars in 2018 were China with 28% of unit
sales, the United States (14%), Germany (14%), the other
European markets (28%), Japan (3%) and South Korea (3%). The
Mercedes-Benz Cars division is continuously refining its flexible
production network consisting of more than 30 locations on
four continents. In particular, we are preparing our worldwide
production network to meet the requirements of electric
mobility. We will manufacture our electric vehicles of the EQ
product and technology brand within the framework of normal
series production operations, on the same lines used to pro-
duce vehicles with conventional or hybrid drive systems. In the
future, our sites for the production of electric vehicles will
be our plants in Bremen, Sindelfingen and Rastatt, Germany;
Hambach, France; Tuscaloosa, Alabama, United States and
Beijing, China. In parallel, we will expand our global battery
network to nine plants at seven sites on three continents.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 75
7.7%
Corporate Profile
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
74
158
Automotive markets
159
Unit sales
160
Revenue and earnings
160
Free cash flow and liquidity
161
Dividend
162
Investment
162
Research and development
162
The workforce
162
Overall statement on future development
163
As the world's largest manufacturer of trucks above 6 metric
tons gross vehicle weight, Daimler Trucks develops and pro-
duces vehicles in a global network under the brands Mercedes-
Benz, Freightliner, Western Star, FUSO and BharatBenz.
The division's 26 production facilities are located in the NAFTA
region (14), Europe (7), Asia (3) and South America (2). In
China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a
joint venture with our Chinese partner Beiqi Foton Motor Co.,
Ltd., has been producing trucks under the Auman brand name
since 2012. Daimler Trucks' product range includes light,
medium and heavy-duty trucks for long-distance, distribution
and construction-site haulage, as well as special vehicles
that are used mainly in municipal applications. Due to close
links in terms of production technology, the division's
product range also includes buses of the Thomas Built Buses
and FUSO brands. Daimler Trucks sells and is testing locally
emission-free electric drive systems across the entire product
portfolio. Daimler Trucks' most important sales markets in
2018 were the NAFTA region with 37% of unit sales, Asia with
32% and the EU 30 region (European Union, Switzerland and
Norway) with 17%.
Mercedes-Benz Vans is a global supplier of a complete range of
vans and related services. The division's products range from
the Citan small van with a gross vehicle weight of 1.8 metric tons
to the Sprinter large van with a gross vehicle weight of up to
5 metric tons. The portfolio of Mercedes-Benz vans in the com-
mercial segment comprises the Sprinter large van, the Vito
mid-size van (marketed as the “Metris” in the United States)
and the Citan urban delivery van. In the segment for
private customers, Mercedes-Benz Vans offers the V-Class
full-size MPV and the Marco Polo travel vans and recreational
vehicles. With the launch of the Mercedes-Benz X-Class in
2017, we now also have a model series in the segment for mid-
size pickups. The eVito, eSprinter and Concept Sprinter
F-CELL demonstrate how systematically we are progressing with
the development of alternative drive systems. The Mercedes-
Benz Vans division has manufacturing facilities in Germany,
Spain, the United States, Argentina, China and Russia. The divi-
sion is active in the Chinese market through the Fujian Benz
Automotive Ltd. joint venture. The production of the Citan and
the Mercedes-Benz X-Class is part of the strategic alliance
with Renault-Nissan. The most important markets for vans at
present are in the EU 30 region, which accounts for 66% of
unit sales, the NAFTA region (12% of unit sales in the year under
review) and Asia (9%).
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the industry leader for buses above 8 metric tons
in its most important traditional core markets: the EU 30 region,
Brazil, Argentina and Mexico. The division's product range
comprises city and inter-city buses, touring coaches and bus
chassis. The largest of the division's 14 production plants
are located in Germany, France, Spain, Turkey, Argentina, Brazil,
Mexico and, since 2015, in India as well. In 2018, Daimler
Buses generated 70% of its revenue in the EU 30 region and
14% in Latin America (excluding Mexico). Whereas we mainly
sell fully equipped buses in Europe, our business in Latin
America, Mexico, Africa and Asia focuses on the production
and distribution of bus chassis.
AMG
FREIGHTLINER
FREIGHTLINER
SETRA
MAYBACH
FUSO
smart
W
WESTERN STAR
Mercedes me
hams
BUILT BUSES
EQ
BHARATBENZ
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
Daimler Truck Financial
moovel
Brands
The world economy
14,070
26,210
B.02
Daimler Group structure 2018
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler
Cars
Vans
Financial Services
Revenue
€93.1 billion
€38.3 billion
€13.6 billion
€4.5 billion
€26.3 billion
Employees
145,436
82,953
18,770
104
Outlook
158
Principles of Board of Management remuneration
120
Net operating profit
Value added
80 80 80% 89
85
Further development of the remuneration system
effective as of January 1, 2019
125
95
87
89
financial year 2018
128
89
Commitments upon termination of service
89
Remuneration of the Supervisory Board
138
Board of Management remuneration in
85
120
Remuneration Report
Economic Conditions and Business
Overall Assessment of the
Development
79
Economic Situation
118
The world economy
Automotive markets
Business development
Profitability
EBIT
Statement of income
Dividend
28
79
80
Events after the Reporting Period
119
81
91
Integrity, compliance and legal responsibility
Liquidity and Capital Resources
91
Financial risks and opportunities
152
Daimler AG
Legal and tax risks
154
(condensed version according to HGB)
102
Non-financial risks
156
Overall assessment of the risk
and opportunity situation
157
Profitability
102
Financial position, liquidity and capital resources
103
Risks and opportunities
104
Outlook
150
Company-specific risks and opportunities
99
145
Takeover-Relevant Information
and Explanation
140
Cash flows
93
Contingent liabilities and other financial obligations
95
Investment
96
Principles and objectives of financial management
Risk and Opportunity Report
96
Credit ratings
98
Risk and opportunity management system
143
Risks and opportunities
145
Financial Position
Industry and business risks and opportunities
143
Refinancing
+3
Asia
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit that is used at Group level is net operating
profit. It comprises EBIT as well as profit and loss effects for
which the divisions are not held responsible. The latter include
income taxes and other reconciliation items. 7 B.19 page 89
Demand for vans continued to develop positively in the EU30
region in 2018. The market volume for mid-size and large vans
increased by 5% and demand for mid-size pickups rose by 7%.
The market for small vans was at the prior-year level. Also in
Germany, sales in the combined segment for mid-size and
large vans increased by 6%. The market for large vans in the
United States expanded slightly in the year under review.
Demand in the mid-size segment of the van market that we
serve in China increased slightly. Market volume for large vans
in Latin America rose significantly from the low level of the
prior year.
Market volume for buses in the EU30 region was slightly above
the high level of the previous year. The situation in Latin Amer-
ica (excluding Mexico) improved due to the market recovery in
Brazil, although growth in the region was slowed by a sharp
market contraction in Argentina. As a result of the ongoing dif-
ficult economic situation in Turkey, the market volume for
buses there once again decreased significantly compared with
the previous year.
Business development
Unit sales
Daimler increased its total unit sales in the year 2018 by 2%
to 3.4 million vehicles, thus achieving its growth target. The
Daimler Trucks (+10%), Mercedes-Benz Vans (+5%) and Daimler
Buses (+8%) divisions confirmed the forecasts made at the
beginning of the year. With an increase of 0.4%, unit sales at
Mercedes-Benz Cars were slightly higher than in the previous
year. The division therefore did not fully achieve the target
it had set at the beginning of the year.
The Mercedes-Benz Cars division sold a total of 2,382,800
vehicles in 2018 despite difficult overall conditions, thus setting
a new record (2017: 2,373,500). With unit sales of 2,252,800
(2017: 2,238,000) vehicles, the Mercedes-Benz brand was the
strongest-selling premium brand in the automobile industry
for the third year in succession. We are number one in the pre-
mium segment in Germany and several other key European
markets, as well as in the United States, South Korea, Canada
and Japan. In addition, we once again significantly improved
our position in China with a new sales record.
Our E-Class models were particularly successful. At 433,600
units (+9%), E-Class sales once again reached a new record
level. Our attractive range of sport-utility vehicles also per-
formed well on the market once again, with sales increasing
by 1% to 829,200 units. Due to the model change, sales of
C-Class vehicles decreased by 3% to 477,700. Sales of A- and
B-Class models were also affected by a model change in the
year under review, although the success of the new A-Class led
to total deliveries of 409,300 units (-3%). The S-Class was very
successful on the market in 2018. Our total sales in this seg-
ment increased by 6% to 83,800 units. With sales of 77,700
units (+7%), the S-Class Sedan remains the best-selling luxury
sedan in the world. 7 B.07
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Unit sales increased in the volume
markets of Germany (+1%) and Spain (+3%), remained constant
in France, but decreased in the United Kingdom (-7%) and Italy
(-5%). The Mercedes-Benz Cars division continued its success
in China during the year under review. The division's unit sales
in the country rose by 10% to 677,700 vehicles. We set new
records for unit sales also in other Asian markets - for example
in India (+1%), South Korea (+1%) and Thailand (+5%). At
392,600 units, total sales in the NAFTA region were lower than
the high level of the prior year. Sales decreased in the United
States (-3%) and Canada (-2%), while sales in Mexico increased
by 7%.
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018 (2017: 135,500).
B.07
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 81
pages 166 ff
A-/B-Class
C-Class
17%
20%
E-Class
18%
S-Class
4%
SUVS*
35%
Sports Cars
Unit sales structure of Mercedes-Benz Cars
Developments in Daimler's most important Asian markets
were varied. The Japanese market for light-, medium- and heavy-
duty trucks remained solid, with sales only slightly below
the previous year's level. Demand for trucks in India recovered
from the negative effects of regulatory measures introduced
in the prior year, and the Indian market for medium-duty and
heavy-duty trucks recorded a significant double-digit increase
in sales as a result. The truck market in China developed better
than expected and roughly maintained the extraordinarily
high sales volume of 2017.
Despite the somewhat less dynamic overall economic develop-
ment in the EU30 region (European Union, Switzerland and
Norway), the truck market there remained robust, with sales
increasing moderately. Developments varied among the indi-
vidual markets. Demand for trucks rose slightly in Germany and
substantially in France, for example. However, sales in the
United Kingdom decreased relative to the previous year, as had
been expected. Total truck sales in the EU countries of Central
and Eastern Europe increased significantly. Despite disappoint-
ingly weak economic growth in Brazil, truck sales in that
country increased by nearly 50% from the low level of the pre-
vious year. The Turkish truck market recorded a significant
double-digit decrease in sales, primarily due to the country's
economic difficulties. The Russian truck market lost most
of its momentum as the year progressed; the latest estimates
indicate that sales were only slightly above the prior-year level.
Demand for medium-duty and heavy-duty trucks developed
positively overall in markets relevant to our operations. The
North American market benefited from the strong growth of
the US economy and the vibrant development of corporate
investment. Sales of Class 6 to 8 trucks increased by just over
20%.
Thanks to a favorable overall economic environment, the market
volume for cars and light trucks in the United States remained
more or less unchanged at a very high level, with unit sales
totaling more than 17 million vehicles. The SUV trend continued
unabated, with sales of such vehicles rising significantly in
the year under review. Sales of traditional sedans, on the other
hand, once again decreased significantly.
B.06
Global automotive markets
Unit sales growth rates 2018 in %
(some numbers are preliminary)
30
25
Passenger cars
Commercial vehicles²
20
15
10
5
0
-5
Total
Europe
NAFTA¹
Asia
South
America¹
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
Source: German Association of the
Automotive Industry (VDA),
various institutions
Car sales in China fell slightly for the first time in decades.
This was due on the one hand to the discontinuation of the
government tax incentives that had supported car sales in pre-
vious years. On the other hand, the growing trade dispute
with the United States led to uncertainty among consumers,
causing them to postpone vehicle purchases in some cases.
The second half of the year was particularly weak, and full-year
sales ended up decreasing by approximately 4%.
Demand for cars in Japan remained more or less at the same
solid level as in the prior year. Sales in India increased slightly,
as the Indian car market continued its expansion of recent
years. The Brazilian car market continued to recover in the year
under review. The initial market volume was low in Brazil,
but the country recorded a double-digit increase in unit sales.
1%
smart
5%
* including GLA
in %
18/17
Change in % points
Mercedes-Benz Cars
European Union
6.2
6.3
thereof Germany
10.5
10.5
-0.1
0.0
United States
1.8
2.0
-0.2
China
2.9
2.6
+0.3
Japan
1.6
1.7
-0.1
Daimler Trucks
2017
Passenger car sales in the whole of Europe were at about the
prior-year level. Demand in Western Europe also remained at
the level of 2017. This easing up can be attributed in part to the
fact that the market volume had meanwhile regained a high
level. In addition, supply bottlenecks caused by the conversion
to the new test procedure for vehicle certification (Worldwide
Harmonized Light Vehicles Test Procedure - WLTP) had a nega-
tive impact on passenger car sales during the last four months
of the year. Demand in the German car market was no higher
than in the previous year, while demand in France increased by
approximately 3%. The UK car market, however, contracted at
a rate of about 7%. Total car sales in Eastern Europe remained
at about the prior-year level, thanks to a significant increase
in demand in the EU countries of Central and Eastern Europe,
as well as in Russia. Sales in Turkey were down sharply,
however, by more than 30%.
2018
B.09
Europe
41%
NAFTA
16%
Asia
39%
Other markets
4%
0
82
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
B.08
Unit sales structure of Daimler Trucks
EU30
17%
Latin America
7%
NAFTA
37%
Asia
32%
Other markets
7%
Market share¹
Medium- and heavy-duty
Global demand for cars remained at a very high level in the
year under review, but actually decreased slightly by about 1%
compared with the previous year. The traditional sales markets
in Western Europe and the United States have now fully recov-
ered from the considerable volume losses suffered as a result
of the financial crisis and have recently been moving only side-
ways. The Chinese car market weakened noticeably as the year
progressed, with full-year demand declining slightly. The mar-
kets of the other emerging economies as a whole were close to
their prior-year level. 71 B.06
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
The performance measurement system used at Daimler is
designed to ensure that our investors' interests and expectations
are taken into account within the framework of a value-based
management system. Value added shows the extent to which
the Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional value.
Calculation of value added
Value
added
Profit
measure
Net assets
×
Cost of
capital (%)
Cost of capital
Value
added
Value-based management
Return
on sales
Cost of
capital (%)
Net
assets
78
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Financial performance measures
Profit measure
Return on sales
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the industrial
divisions' profitability. Return on sales is the quotient of EBIT
and revenue, whereby unit sales are the primary source of
revenue. The measure of profitability for Daimler Financial
Services is not return on sales but return on equity (quotient
of EBIT and equity).
Net assets
All assets, liabilities and provisions for which the industrial
divisions are responsible in day-to-day operations are allo-
cated to those divisions. Performance measurement at Daimler
Financial Services is implemented on an equity basis. Net
assets at Group level include the net operating assets of the
industrial divisions and the equity of Daimler Financial Ser-
vices, as well as assets and liabilities from income taxes and
other reconciliation items which cannot be allocated to
the divisions. Average annual net assets are calculated on the
basis of average quarterly net assets.
page 90
Net assets
productivity
Performance measurement system
pages 89 f
B.03
The Daimler Financial Services division supports the sales
of the Daimler Group's automotive brands in approximately 40
countries. Its product portfolio primarily consists of tailored
financing and leasing packages for customers and dealers. It
also includes the brokering of insurance and credit cards,
the provision of fleet management services and investment
products, as well as various mobility services such as car2go -
a leading provider of flexible car-sharing services, the moovel
mobility platform and the ride-hailing group with the mytaxi,
Beat, Clever Taxi and Chauffeur Privé brands. The total number
of users of our mobility services increased to 31.0 million in
2018. During the year under review, Daimler Financial Services
financed or leased approximately 50% of the vehicles sold by
Daimler. The division's contract volume of €154.1 billion covers
more than 5.2 million vehicles.
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries,
holdings and partnerships. The statement of investments of
Daimler AG in accordance with Section 313 of the German
Commercial Code (HGB) can be found in Note 40 of the
Notes to the Consolidated Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2018. We also focused on contin-
uously developing our business portfolio and improving our
competitiveness in our core business areas. Our activities
revolve around the strategic dimensions of Connected, Autono-
mous, Shared & Services and Electric (CASE), all of which
will play a major role in shaping the future of mobility. In order
to strengthen our position in these areas, we forged ahead
with our partnerships and made various investments during the
year under review. The most important projects are briefly
described below.
Daimler AG and the BMW Group combine their
mobility services
The BMW Group and Daimler AG intend to offer their custom-
ers a single source for sustainable urban mobility services
in the future. To this end, the two companies signed an agree-
ment in March 2018 to merge their mobility services business
units. The companies plan to combine and strategically expand
their existing on-demand mobility services in the areas of
ca sharing, ride hailing, parking, charging and multimodality.
Daimler AG and the BMW Group will each hold a 50% stake in
a joint venture comprising both companies' mobility services.
The headquarters of the new, joint mobility services company
will be in Berlin. After the complex transaction has been com-
pleted on January 31, 2019, the new mobility services company
together with Daimler AG and the BMW Group will make a
joint announcement in the first quarter of 2019 regarding the
next steps to be taken. The partners plan to grow the new
business model sustainably and to enable the rapid scaling of
services. At the same time, the two companies will remain
competitors in their respective core businesses.
Electric mobility in China
Daimler and its long-standing partner BAIC Group expanded
their strategic cooperation in the new energy vehicle (NEV)
sector in March 2018. Through its acquisition of a 3.93% stake,
Daimler has become a shareholder in Beijing Electric Vehicle
Co., Ltd., (BJEV), which is a subsidiary of BAIC Group. The
closer cooperation with both BAIC and BJEV will enable Daimler
to gain an even better understanding of the needs of Chinese
customers in the NEV sector. The investment in BJEV marks a
further milestone in the close cooperation between Daimler
and BAIC in China and underscores Daimler's commitment to
the further development of electric mobility in the country.
Settlement reached with the German federal government
to end Toll Collect arbitration proceedings
In 2002, Daimler Financial Services acquired a 45% interest
in the Toll Collect consortium, which operates an electronic
truck-toll system on highways in Germany. Daimler's partners
in the consortium were Deutsche Telekom AG (45%) and
Cofiroute (10%). From the launch of the system to the end of
2017, Toll Collect generated more than €53 billion in revenue
for the German federal government, which used the money to
improve and expand Germany's road infrastructure. A long-
standing arbitration proceeding between the Federal Republic
of Germany, Daimler Financial Services AG and Deutsche
Telekom AG in connection with delays to the system's launch
was concluded through the conclusion of a settlement agree-
ment in July 2018. This settlement will now enable Toll Collect
to make a fresh start. Daimler has announced that it will not
participate in the new bidding process for truck-toll collection
in Germany. The current operating agreement ended on
August 31, 2018 and the Federal Republic of Germany acquired
the shares in Toll Collect GmbH as planned on September 1,
2018.
Acquisition of a stake in electric bus
manufacturer Proterra
Daimler Trucks is investing in the US company Proterra Inc.
The companies agreed to form a strategic partnership in
September 2018. Proterra is a leader in the segment for elec-
tric local-transport buses in the United States. Initial joint
projects will focus on the electrification of commercial vehicles
in general and the exploitation of synergies in the electrifica-
tion of school buses manufactured by Thomas Built Buses. The
cooperation gives both companies the opportunity to offer
reliable and economical new transport options with locally
emission-free electric drive technology in this growing seg-
ment. School buses are also an ideal application for electric
drive technology, since, like public-transit vehicles, most
school buses travel the same route or a similar route every day.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 77
Important events
Board of Management and Supervisory Board of
Daimler AG approve further development of the divisional
structure of the Group
On July 26, 2018, the Board of Management and the Supervisory
Board granted their approval for the implementation of the
new corporate structure for Daimler AG. The related worldwide
audits of the organizational and tax implications have been
successfully completed. With the new structure, Daimler aims
to give its divisions greater entrepreneurial freedom, to
become even more market and customer-focused, and to make
it possible to enter into partnerships more easily and quickly.
Now that approval has been granted by the Board of Manage-
ment and the Supervisory Board, "Project Future" can now
be implemented. As the next step, the measures decided upon
require the approval of the shareholders. A draft proposal
for approval is to be presented to the Annual Shareholders'
Meeting of Daimler AG on May 22, 2019.
Daimler sets the course for the future
The regular term of office for the Chairman of the Supervisory
Board, Dr. Manfred Bischoff, is scheduled to end after the
conclusion of the Annual Shareholders' Meeting in 2021. In
view of the challenges presented by the transformation of
the automotive industry, the Supervisory Board aims to prepare
a suitable process of succession at an early stage. The Super-
visory Board has therefore announced its intention to propose
to the shareholders at the Annual Shareholders' Meeting in
2021 that Dieter Zetsche be elected as a member of the Super-
visory Board. Manfred Bischoff intends to recommend the
election of Dieter Zetsche as his successor as Chairman of the
Supervisory Board at the end of the Annual Shareholders'
Meeting in 2021. In order to ensure compliance with the two-
year cooling-off period, Dieter Zetsche will step down from
his position on the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars at the conclusion of the Annual
Shareholders' Meeting in 2019. In view of this development,
the Supervisory Board of Daimler AG decided in its meeting on
September 26, 2018, to appoint Ola Källenius as Chairman
of the Board of Management of Daimler AG, effective at the con-
clusion of the 2019 Annual Shareholders' Meeting, and also
to appoint Ola Källenius as the Head of the Mercedes-Benz Cars
division for a new term of five years.
Bodo Uebber, the member of the Board of Management of
Daimler AG with responsibility for Finance & Controlling and
Daimler Financial Services, informed the Chairman of the
Supervisory Board, Manfred Bischoff, on October 7 that he
will not seek an extension to his current term of office,
which expires in December 2019.
Value added is derived from the financial value drivers which,
due to their direct relationship to ongoing business operations,
are utilized as financial performance indicators for the periodic
assessment of the performance of the Group and its divisions.
In this sense, value added can be calculated as the difference
between operating profit and the cost of capital of the average
net assets. Alternatively, the value added of the industrial divi-
sions can be determined using the main value drivers of return
on sales (quotient of EBIT and revenue) and net assets' produc-
tivity (quotient of revenue and net assets). 7 B.03
The combination of return on sales and net assets' productivity
results in the return on net assets (RONA). If RONA exceeds
the cost of capital, value is created for our shareholders. In the
case of Daimler Financial Services, return on equity rather
than return on sales is used to evaluate profitability. Using a
combination of return on sales and net assets' productivity
within the context of a strategy of profitable revenue growth
provides a basis for the positive development of value added.
The required rate of return on net assets, and hence the cost
of capital, is derived from the minimum rates of return that
investors expect on their invested capital. The cost of capital
of the Group and of the industrial divisions comprises the
cost of equity as well as the costs of debt and net pension obli-
gations of the industrial business. The expected returns
on liquidity of the industrial business are considered with the
opposite sign. The cost of equity is calculated according to
the capital asset pricing model (CAPM), using the interest rate
for long-term risk-free securities (such as German government
bonds) plus a risk premium reflecting the specific risk of
an investment in Daimler shares. Whereas the cost of debt is
derived from the required rate of return for obligations the
Group enters into with external lenders, the cost of capital for
net pension obligations is calculated on the basis of discount
rates used in accordance with IFRS. The expected return on
liquidity is based on money market interest rates. The Group's
cost of capital is the weighted average of the individually
required or expected rates of return. During the year under
review, the cost of capital amounted to 8% after taxes. For
the industrial divisions, the cost of capital amounted to 12%
before taxes; for Daimler Financial Services, a cost of equity
of 13% before taxes was applied. 7 B.04
The quantitative development of value added and the
associated financial performance measures is explained in
the "Profitability" chapter.
A change to net assets - for example as a result of invest-
ments - generally leads to the commitment or release of liquid
funds. Along with earnings, net assets thus also have a
direct effect on cash flows and therefore on the Group's finan-
cial strength as well. Of particular importance for the financial
strength of the Daimler Group is the free cash flow of the
industrial business, which comprises the cash flows at the auto-
motive divisions and the cash flows from taxes and other
reconciliation items that cannot be allocated to the divisions.
Key performance indicators
The most important financial indicators for measuring the
operating financial performance of the Daimler Group, in
addition to EBIT and revenue, are the free cash flow of the
industrial business, investment and expenditure for
research and development.
The most important performance indicator for the profitability
of the automotive divisions is return on sales; the most impor-
tant profitability performance indicator for Daimler Financial
Services is return on equity. The other most important perfor-
mance indicators for the divisions are revenue, investment
and expenditure for research and development.
Currency exchange rates remained volatile in this heterogeneous
growth environment. Against the US dollar, the euro moved
between $1.25 and $1.12 during the year. At the end of the year,
the euro was approximately 5% weaker than at the end of 2017.
The range of fluctuation of the Japanese yen against the euro
was 137 to 125. By the end of the year, the euro had depreci-
ated against the yen by about 7%. The value of the British pound
against the euro was almost unchanged compared with a year
earlier. The euro appreciated against other key currencies such
as the Russian ruble, the Brazilian real and the Turkish lira
with double-digit increases compared with the end of 2017.
B.05
Economic growth
Gross domestic product, growth rates in %
2017
2018
6
5
4
3
2
1
0
-1
-2
Total
Europe
NAFTA
Asia
South
America
1
Source: IHS Global Insight, own calculations
80
for several periodes during the year, which led to slightly higher
rates of economic growth in the Middle East. Despite all the
regional differences, the emerging markets as a whole recorded
real economic growth of just under 4.5%, thereby almost keep-
ing pace with the growth recorded in the prior year.
Automotive markets
Economic growth in China slowed somewhat due to lower credit
growth, a sluggish real estate market and the negative effects
of the trade dispute with the United States. Nevertheless, the
Chinese economy achieved the government's growth target
with a rate of 6.6%. Taken together, the economies of all emerg-
ing markets in Asia grew at a rate similar to that of the previ-
ous year. Growth was particularly strong in India. Hopes for
accelerated growth in South America were not fulfilled. Although
the economies of South America began to recover in 2017, the
crisis in Argentina and disappointing developments in Brazil
have since slowed down the region's economic growth. Growth
in Central and Eastern Europe was also weaker than in the
prior year, although this was primarily due to a cooling down of
the Turkish economy in the wake of the crisis in that country.
In aggregate, the large economies of Central Europe lost only a
little of their momentum, and growth of the Russian economy
actually accelerated a little. Oilprices were significantly higher
With real growth of more than 3% in the year under review, the
world economy displayed growth performance similar to 2017.
7 B.05 However, regional economic developments were more
heterogeneous compared to the synchronous upturn in 2017.
In addition, growth in global trade slowed noticeably at the
beginning of the year, a development that particularly impacted
export-dependent economies.
With the 2018 Annual Report, we began using return on sales
rather than EBIT to forecast the profitability of the automotive
divisions, and return on equity rather than EBIT to forecast the
profitability of Daimler Financial Services. In this way, we have
established a connection between expectations for the current
financial year and the strategic return targets.
Along with the indicators of financial performance, we also use
various non-financial indicators to help us manage the Group.
Of particular importance in this respect are the unit sales of our
automotive divisions, which we use as the basis for our capac-
ity and human resources planning and workforce numbers.
Performance indicators that evaluate the implementation status
of future-oriented measures associated with the sustainable
and technological realignment of the Group, as well as other
non-financial performance indicators, are also used to deter-
mine the remuneration of our Board of Management members.
Important criteria for non-financial performance indicators
in the annual target achievement include integrity and compli-
ance, employee satisfaction and the high quality of our
products.
Details of the development of non-financial performance
indicators can be found in the chapters "Economic Conditions
and Business Development" and "Non-Financial Report."
pages 79 ff and 202 ff
B.04
Cost of capital
In percent
2018
2017
Corporate governance statement
The Declaration on Corporate Governance pursuant to Section
289f and Section 315d of the German Commercial Code (HGB),
combined with the Corporate Governance Report, can be
found in this Annual Report on pages 191ff and can also
be viewed on the Internet at daimler.com/corpgov/de.
Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
Group, after taxes
8
8
Industrial business, before taxes
12
12
Daimler Financial Services, before taxes
13
13
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 79
Economic Conditions and Business Development
The world economy
The industrialized countries as a whole were able to maintain
their dynamic rate of growth. The US economy played a major
role, as fiscal policies helped generate growth of nearly 3%,
which was once again higher than in the previous year. Signifi-
cantly increased investment by companies served as a key
driver of growth, while private consumption remained stable.
The economy of the European Monetary Union, in contrast,
was unable to continue the dynamic development of the previ-
ous year, and grew by just under 2%. This slowdown in growth
was mainly due to decreased foreign trade. Domestic demand,
on the other hand, was robust and continued to be supported
by the expansionary monetary policy of the European Central
Bank. According to preliminary estimates the German econ-
omy recorded growth of only 1.5%. Here as well, a slowdown in
exports and a weak period in the manufacturing sector pre-
vented stronger expansion of the economy. Against the back-
ground of the Brexit negotiations, the economy of the United
Kingdom grew only moderately by about 1.4%. Slower export
growth led to significantly lower growth rates than in the
previous year also in Japan.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
trucks EU30
21.0
thereof United States
41,152
40,076
1 The prior-year figures have been adjusted due to the effects of the
first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Fi-nancial Statements.
2018
20171
2016
2015
2014
0
+3
2
6
8
10
12
14
16
Net profit (loss)
EBIT
Development of earnings
In billions of euros
B.13
4
46,528
47,952
NAFTA
13,626
13,161
+4
Daimler Buses
4,529
4,524
+0
Daimler Financial Services
26,269
24,530²
+7
Regions
Germany
Europe
(without
Germany)
'NAFTA region Asia
Europe
68,496
68,309
+0
thereof Germany
24,802
24,311
+2
2 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes.
The reconciliation of the Daimler Group's EBIT to earnings before
income taxes is included in Note 34 of the Notes to the Con-
solidated Financial Statements.
-22
1 The prior-year figures have been adjusted due to the effects
of the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes of the Consolidated Fi-nancial Statements.
14,348
2018
In millions of euros
B.12
EBIT by segment
In the Management Report for 2017, EBIT at the Mercedes-
Benz Cars division was forecasted to be at the prior-year level.
As the year 2018 progressed, in the context of our capital
market reporting, we adjusted that assessment gradually down-
wards to a forecast of EBIT significantly below the prior-year.
That was mainly caused by expenses in connection with ongoing
governmental proceedings and measures taken in various
regions with regard to Mercedes-Benz diesel vehicles. The
Daimler Trucks division met the forecast made in the Manage-
ment Report for 2017 of EBIT significantly above the prior-
year figure. At the beginning of the year 2018, we anticipated a
slight decrease in earnings for Mercedes-Benz Vans compared
with the previous year. As the year 2018 progressed, we
adjusted that assessment to significantly below the prior-year
level in the context of our capital market reporting. That was
mainly caused by higher expenses in connection with ongoing
governmental proceedings and measures taken with regard
to diesel vehicles and delivery delays. Daimler Buses posted
EBIT slightly below the prior-year level. It therefore did not
meet the forecast made in the Management Report for 2017 of
EBIT significantly above the prior-year level, due in particular
to decreasing demand in several markets. Daimler Financial
The reconciliation of segment earnings to Group EBIT also
resulted in a significantly higher expense than in the previous
year.
The significant increase in EBIT at the Daimler Trucks division
was not able to offset the decreases in earnings at the other
divisions. In particular, the Mercedes-Benz Cars division posted
earnings significantly below its prior-year figure. The main
reasons were expenses in connection with ongoing governmen-
tal proceedings and measures relating to diesel vehicles
and advance expenditure for new technologies and vehicles.
At Daimler Trucks, increased unit sales in the NAFTA region
had a positive effect on earnings. Due in particular to the nega-
tive impact on earnings of the agreement to conclude the
Toll Collect arbitration proceedings, EBIT at Daimler Financial
Services was also significantly below the prior-year level.
Exchange-rate effects had an overall negative impact on oper-
ating profit.
The Daimler Group achieved EBIT of €11.1 billion in 2018
(2017: €14.3 billion) despite difficult general conditions. How-
ever, this did not meet the forecast made in the Management
Report for 2017 of EBIT at the prior-year level. 7 B.12 71 B.13
EBIT
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 85
Profitability
2 The Group's internal revenue and cost of sales have been adjusted
by the same amount at the Daimler Financial Services segment.
These adjustments have been fully eliminated in the reconciliation.
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
+1
10,227
10,287
Other markets
+5
18,774
19,790
thereof China
+4
39,090
40,627
20171
Mercedes-Benz Vans
18/17
% change
7,216
11,132
Daimler Group²
-189
-276
-798
-30
1,970
1,384
Daimler Financial Services
Reconciliation
-6
281
265
Daimler Buses
-73
1,147
312
Mercedes-Benz Vans
+16
2,383
2,753
Daimler Trucks
-18
8,843
Mercedes-Benz Cars
20.6
+7
38,273
-2.1
Mercedes-Benz Vans
Mid-size and large vans EU30
15.3
16.7
-1.4
thereof Germany
25.2
27.3
-2.1
9.1
Small vans EU30
3.1
0.0
Large vans United States
8.3
7.5
+0.8
Daimler Buses
Buses over 8 tons EU30
29.0
28.4
3.1
7.0
trucks India
Medium- and heavy-duty
thereof Germany
36.5
36.4
-0.4
+0.1
Heavy-duty trucks NAFTA
region (Class 8)
38.8
40.0
-1.2
Medium-duty trucks NAFTA
region (Classes 6 and 7)
37.8
39.3
-1.5
Medium- and heavy-duty
trucks Brazil
27.9
27.6
+0.3
Trucks Japan
19.3
19.6
-0.3
+0.6
35,755
thereof Germany
51.6
10
54233225050
B.11
Revenue by division and region
2014
2015
2016
2018
2017
In millions of euros
Daimler Group
2018
20171
18/17
% change
167,362
164,154
+2
Divisions
Mercedes-Benz Cars
93,103
94,351
-1
Daimler Trucks
15
In billions of euros
Consolidated revenue by region
B.10
-2.3
Buses over 8 tons Brazil
51.6
52.5
-0.9
1 Based on estimates in certain markets.
Unit sales by Daimler Trucks in 2018 were significantly higher
than in the previous year. In total, we delivered 517,300 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
Built Buses and FUSO brands in the year under review (2017:
470,700). Daimler Trucks continues to be the world's biggest
manufacturer of trucks above 6 tons. 7 B.08 At 85,400 units,
our sales in the EU30 region increased slightly. Our Mercedes-
Benz brand remained the market leader in the medium-duty
and heavy-duty segments, with a share of 20.6% (2017: 21.0%).
Our sales in Turkey were very adversely affected by the con-
siderable economic uncertainty in the country. Unit sales in
Turkey totaled 5,000 trucks, a decrease of 57% from the
prior year. B.09
In Latin America, however, we were able to significantly
increase our sales once again, to 38,200 units in the year under
review (2017: 30,500). The increase in sales in our main
Latin American market, Brazil, made a major contribution to
our improved performance in the region. Truck sales in Brazil
totaled 21,400 units, an increase of 60% from the low level of
the prior year. We were able to expand our market share
to 27.9% (2017: 27.6%) and achieved market leadership in the
medium- and heavy-duty segments with our Mercedes-Benz
trucks. Sales in Argentina decreased to 3,500 units in the year
under review (2017: 5,600).
The ongoing positive development of sales in the NAFTA
region played a major role in our overall sales growth in 2018.
We once again recorded a significant increase in sales in
the NAFTA region, to 189,700 units (2017: 165,000). We also
remained the market leader in Classes 6-8 with a market
share of 38.4% (2017: 39.8%).
We increased our sales in Asia by 11% to 164,700 trucks. Sales
in Japan totaled 44,000 units (2017: 44,800). Our FUSO brand
achieved a market share of 19.3% in Japan (2017: 19.6%). Unit
sales in Indonesia increased by 50% compared with the previous
year to 64,200 trucks (2017: 42,700). At 9,700 units, our sales
in the Middle East were substantially lower than the high figure
recorded in the previous year (2017: 23,600). In India, a signif-
icant increase in demand for medium- and heavy-duty trucks
had a positive impact on our sales and we sold 22,500 trucks
in that market in the year under review, an increase of 35%
from the previous year. Our market share with the BharatBenz
brand amounted to 7.0% (2017: 9.1%).
49.3
In China, the world's biggest truck market, Daimler AG holds
a 50% interest in Beijing Foton Daimler Automotive Co. Ltd.
(BFDA), a joint venture with Beiqi Foton Motor Co. Ltd. Medium-
and heavy-duty trucks of the Auman brand have been pro-
duced there since 2012. At 103,400 units, sales of Auman trucks
were lower than the high figure recorded in the prior year
(2017: 112,400), which had been influenced by the favorable
economic development and in particular the implementation of
regulatory measures relating to truck fleet renewal. 596,700
Auman trucks have been sold since the joint venture was
launched.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 83
Mercedes-Benz Vans achieved record sales once again in 2018.
Unit sales of 421,400 vehicles surpassed the prior-year figure
by 5%. Whereas we mainly focus on commercial customers with
the Sprinter, Vito and Citan models, the V-Class is primarily
designed for private use. With the X-Class, our new mid-size
pickup, we are addressing diverse customers for both private
and commercial applications. In the EU30 countries, which com-
prise our core region, our unit sales of 278,300 vehicles were
slightly above the prior-year level (2017: 273,300), while our
market share in the region in the combined segment for mid-size
and large vans amounted to 15.3% (2017: 16.7%). We set a new
record in Germany with sales of 107,300 units (2017: 105,800).
Sales in the NAFTA region increased substantially, leading to
a new sales record of 38,700 units in the United States (2017:
34,200), where our market share for large vans also increased
to 8.3% (2017: 7.5%). Business development was very favorable
also in Latin America, where sales rose by 14% to 18,700 units
despite the difficult situation in Argentina. Unit sales in China
also increased significantly, by 22% to the new record of
29,100 vans. This development was largely due to the success
of the Vito and the V-Class. At 206,300 units, global sales
of Sprinter models were slightly higher than in the prior year
(2017: 200,500). Vito sales were slightly down from the previ-
ous year at 108,300 units (2017: 111,800). The V-Class full-size
MPV performed successfully on the market; its total sales of
63,900 units exceeded the previous year's figure by 8%. Sales
of the Mercedes-Benz Citan reached 26,300 units (2017:
26,100), while X-Class sales totaled 16,700 units in the year
under review (2017: 3,300).
pages 177 ff
Daimler Buses sold 30,900 buses and bus chassis worldwide
in financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market, and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
maintained its market leadership in its most important
traditional markets (EU30, Brazil, Argentina and Mexico). Due
to continued high demand for our fully equipped buses, sales
in the EU30 region amounted to 9,300 units, which was signifi-
cantly above the high figure recorded in the previous year
(8,700). Daimler Buses expanded its leading position in the EU30
region with a market share of 29.0% (2017: 28.4%). At 2,900
units, sales in Germany were 5% lower than in the prior year. At
300 units, sales in Turkey decreased significantly (2017: 400)
due to the ongoing difficult situation in the country. The situation
in Latin America (excluding Mexico) improved due to the
gradual market recovery in Brazil, although growth in the region
was negatively affected by the sharp market contraction in
Argentina. Sales of Mercedes-Benz chassis in Brazil rose by
22% to 8,800 units. We were able to maintain our leading
market position in Brazil with a market share of 51.6% (2017:
52.5%). In India, we continued along our growth path and
increased our sales volume to 1,600 units (2017: 900). In
Mexico, sales of 3,200 units (2017: 3,400) were significantly
lower than in the previous year.
pages 180 ff
Business at Daimler Financial Services continued to develop
positively in the year under review. As we had forecast in
Annual Report 2017, worldwide contract volume continued to
grow, reaching the new record level of €154.1 billion in 2018
(+10%). At €71.9 billion, new business remained slightly above
the level of the previous year, which is what we had antici-
pated at the beginning of 2018. Moderate growth was achieved
in Europe (+2%) and in the Americas region (+3%). However,
new business in the Africa and Asia-Pacific region (excluding
China) decreased by 3%, while a slight increase of 2% was
achieved in China. In the insurance business, we brokered
approximately 2.3 million policies in the year under review,
which corresponds to an increase of 8% compared with the
previous year. The total number of registered users of our
mobility services rose to approximately 31.0 million in the year
under review. car2go increased its number of registered
users to around 3.6 million and thus strengthened its position
as a leading company for flexible car sharing. The ride-hailing
group, which manages mytaxi, further expanded its position as
one of Europe's leading provider of taxi apps in 2018, among
other things, by acquiring a majority stake in Chauffeur Privé.
The number of registered users of the ride-hailing group's
services rose to 21.3 million, an increase of 92% from 2017. We
have also further developed the moovel app, with which cus-
tomers can find the best way of traveling using various modes
of transport, and can also directly book and pay for their jour-
neys. The number of registered moovel users in Germany and
the United States had risen to 6.2 million by the end of 2018
(2017: 3.7 million). At the end of 2018, Daimler Financial Services
had 395,000 contracts on the books with its Athlon and
Daimler Fleet Management brands (+3%). Total contract volume
amounted to €6.5 billion in 2018.
pages 183ff
84
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Order situation
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Buses divisions produce vehicles predomi-
nantly to order, in accordance with customers' specifications.
While doing so, we flexibly adjust the production capacities for
the individual models to changing levels of demand. Due in
particular to continued strong demand in China and the Euro-
pean markets, the number of orders placed with Mercedes-
Benz Cars during the year under review was once again at the
high level of orders received in the previous year. This was
driven on the product side primarily by the new E-Class, as
well as the continued strong success of our SUVs. Production
volume in 2018 and our order backlog at the end of the
year were of the prior-year magnitude. At Daimler Trucks, both
orders received and the order backlog at year-end were sig-
nificantly higher than a year earlier. This was primarily due to
strong demand in North America, growth in demand in
the EU30 region, and the market revival in Latin America. We
increased production volumes in response to the higher
demand.
Revenue
In the year 2018, Daimler increased its total revenue by 2% to
€167.4 billion; adjusted for currency-translation effects, revenue
grew by 4%. Our expectations from the beginning of the
year were thus fulfilled. The divisions Daimler Trucks (+7%) and
Daimler Financial Services (+7%) increased their business
volumes by significant margins. In the case of Daimler Trucks,
we had only expected a slight increase in business volume.
The Mercedes-Benz Vans division recorded a slight increase of
4%, whereas we had originally anticipated a significant increase
for this division. Revenue at Mercedes-Benz Cars almost reached
the expected magnitude of the prior year (-1%). Revenue at
Daimler Buses was at the level of the previous year, despite
higher unit sales and our expectation of significant growth.
This was partially due to the European touring coach segment.
In regional terms, Daimler achieved revenue growth as
follows: Europe (+0% to €68.5 billion), NAFTA region (+3% to
€48.0 billion) and Asia (+4% to €40.6 billion).
pages 172ff
76
The members of the Supervisory Board assume respon-
sibility for their training and further education measures
in areas such as changes in the legal framework and
new, forward-looking technologies that are required for
the performance of their tasks and are supported in this
by the company. In the reporting period, for example,
the company held information events on sustainable
corporate governance and sustainability reporting as
well as on the Mercedes-Benz operating system MB.OS.
Both internal and external experts were involved in
these events. In addition, new members of the Supervi-
sory Board have the opportunity to meet the members
of the Board of Management and senior executives with
specialist responsibility in a specifically designated
onboarding programme for a bilateral exchange on fun-
damental and current topics in respect of the relevant
areas of the Board of Management, thus gaining an
overview of the topics relevant to the company and of
the governance structure. ESG (environmental, social
and governance) and sustainability-related thematic
blocks are also an integral part of this programme. Fur-
thermore, the members of the Supervisory Board are
regularly informed about the regulatory environment
relevant to their work on the Supervisory Board and
other legal developments affecting them.
Management held bilateral meetings to exchange views.
The Board of Management also informed the Super-
visory Board of the key indicators of the business
development and of existing risks by means of written
reports.
Combined Management Report
Combined Management Report
7
To Our Shareholders
Letter from the CEO
Contents
Annual Report 2023 | Mercedes-Benz Group
We want to take our customers' brand experience to
the next level. To this end, we are redesigning our
showrooms all over the world. We are also expanding
our global network of exclusive locations, through
which we want to make our brands even more tangible.
To ensure maximum convenience and full transparency
for car purchasing, we are continuing to roll out our
direct sales model. For an outstanding product
Looking ahead, what topics are on our agenda?
These figures are the result of the exceptional commit-
ment of our employees. Without their dedication and
ability the successes of the year 2023 would not have
been possible. The thanks of the entire Board of Man-
agement goes to all of our colleagues.
These successful developments are also reflected in our
annual results. Our revenue amounted to €153 billion.
However, EBIT fell by 4% to €19.7 billion. Our net
liquidity in the industrial business was €31.7 billion.
The bottom line was a net profit of €14.5 billion.
The Board of Management and the Supervisory Board
will recommend a dividend of €5.30 per share to the
Annual General Meeting.
Corporate Governance
Our company has shown that we can achieve solid
financial results even under difficult conditions. In 2023
sales of all-electric cars of the Mercedes-Benz brand
increased by 73%. The proportion of electrified vehicles
in total car sales was 20%. Mercedes-Benz Group AG
has also initiated important projects to expand the
charging infrastructure in our core markets. The direct
sales model was rolled out in additional markets. Fol-
lowing the introduction of our conditionally automated
driver assistance system in the United States, we also
received approval to test the technology for motorway
use in Beijing. Moreover, we were able to achieve
another significant part of our targeted reduction in
fixed costs.
Dear Shareholders,
Chairman of the Board of Management
of Mercedes-Benz Group AG
Ola Källenius
Letter from the CEO
Further Information
Consolidated Financial Statements
Corporate Governance
Letter from the CEO
To Our Shareholders
the year 2023 was characterized by challenging geo-
political developments and volatile markets. We were
able to assert ourselves strongly in this environment.
This is also reflected in our balance sheet. We also
continued to make progress in the implementation of
our strategy.
Consolidated Financial Statements
Further Information
experience with electric vehicles, the charging infra-
structure is crucial. That's why we are building our own
fast-charging network. We want to install more than
10,000 charging points in our core markets by the end
of the decade. The aim of all these measures is to fulfil
our brand promise at all points of contact with our
customers and create special Mercedes moments.
Supply Chain Management
Appointed until November 2029
Production, Quality &
Dr Jörg Burzer
Chairman of the Board of Management
Appointed until May 2029
Ola Källenius
The Board of Management
Further Information
Corporate Governance
Combined Management Report
8
The Board of Management
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Ola Källenius
Sincerely yours,
The Supervisory Board was informed of special events
outside the regular meetings. In addition, some
members of the Supervisory Board and the Board of
In 2023 we made our company even more resilient and
achieved significant strategic progress. In addition,
we can build on an outstanding brand and a powerful
team. All of these are excellent prerequisites for our
ongoing promotion of the profitable, all-electric and
software-driven future of Mercedes-Benz. We would be
delighted to have you accompany us on this journey.
We have laid the foundations for this course. The devel-
opment of multiple new vehicle platforms is in full
swing. This will take our electric cars and vans to the
next level. We will start in the entry-level segment in
2025 with the new electric CLA. This will set new stand-
ards in terms of range, efficiency and charging speed.
At the same time, our own operating system MB.OS will
celebrate its première. Thus we will also reach an
important milestone in terms of software. Our custom-
ers can now look forward to an even more natural, more
personal and more extensive interaction with their
Mercedes-Benz.
The pace of the transformation to electric mobility is
determined by market conditions and our customers'
requirements. We will be prepared for every kind of
market scenario. The motto for the production of our
vehicles with combustion engines is "tactical flexibility".
When it comes to electric mobility, our strategic course
is to create the preconditions for becoming all-electric.
In our view, our most important task is to build the
world's most desirable vehicles. The focus is on the
upper end of the segments in which we are represented.
That's why we are taking targeted steps to strengthen
our portfolio in 2024. The première of our electric
G-Class will be a highlight. We are also launching the
Maybach version of the EQS SUV in key markets. At
AMG, we are presenting further variants of our new top-
of-the-line AMG GT model. And at Mercedes-Benz, we
are further enhancing the substance of our electric cars
in the luxury segment in areas ranging from efficiency
and comfort to design.
Contents
Annual Report 2023 | Mercedes-Benz Group
24 Mercedes-Benz Vans Strategy
26 Mercedes-Benz Mobility Strategy
Mercedes-Benz Cars Strategy
饅
饅
8
FURTHER INFORMATION
336
194 CONSOLIDATED FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
162
30 COMBINED MANAGEMENT REPORT
TO OUR SHAREHOLDERS
5
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
2
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Group
Annual Report 2023
人人
Markus Schäfer
YYY
YY
21
20 Objectives and Strategy
The Supervisory Board
18
9 Report of the Supervisory Board
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
5
The Board of Management
8
6 Letter from the CEO
TO OUR SHAREHOLDERS
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
SHAREHOLDERS
TO OUR
444
Y
YYY
Chief Technology Officer,
Development & Procurement
Consolidated Financial Statements
Renata Jungo Brüngger
In 2024, the company will continue to drive the trans-
formation in line with its sustainable business strategy.
Whether equipped with a all-electric drivetrain or a
combustion engine - Mercedes-Benz Group is commit-
ted to offering its customers the most desirable cars
in the world. And I am convinced that such cars will
continue to be recognized by the Mercedes star in the
future.
Supervisory and advisory activities
of the Supervisory Board
In the 2023 financial year, the Supervisory Board of
Mercedes-Benz Group AG again performed, in full, the
duties incumbent upon it by law, the articles of associa-
tion and the rules of procedure.
In this context, the Supervisory Board continuously
advised and monitored the Board of Management in
the management of the company and provided support
on strategically important issues for the further devel-
opment of the company.
The Supervisory Board reviewed whether the individual
company and Consolidated Financial Statements,
the Combined Management Report including the Non-
Financial Declaration and the other financial reporting
complied with the applicable requirements.
Furthermore, after careful review and consultation, it
approved numerous business transactions subject to its
consent. This related in particular to the approval of
the establishment of a Europe-wide high-performance
charging network under the Mercedes-Benz brand. It
also included financial and investment planning, product
Annual Report 2023 | Mercedes-Benz Group
Contents
10
Against this backdrop, the past year has clearly proven
that the true strength of a team only becomes apparent
when the headwinds increase. The team at Mercedes-
Benz Group has once again proven that it is one of the
best and I would like to take this opportunity to express
my sincere gratitude to all employees for their out-
standing commitment and dedication.
To Our Shareholders
Report of the Supervisory Board
Corporate Governance
Consolidated Financial Statements
Further Information
measures.
The Board of Management regularly informed the
Supervisory Board about all significant business devel-
opments of the Group and the divisions. During the
reporting period, it kept the Supervisory Board continu-
ously informed about all fundamental issues regarding
corporate planning, including financial, investment,
sales and personnel planning; current developments at
Group companies; the development of revenue; the sit-
uation of the company and the divisions; the economic
and political environment; and the current status and
assessment of significant legal proceedings. In addition,
the Board of Management continuously reported to the
Supervisory Board on the profitability and liquidity situ-
ation of the company, the development of sales and
procurement markets, the overall economic situation
and developments on the capital markets and in the
financial services sector. Other topics included the fur-
ther development of the product portfolio, securing
the long-term competitiveness of the company and the
further implementation of measures to ensure sustaina-
ble, future-oriented mobility. The Supervisory Board
also dealt in detail with the political developments and
conflicts in the main sales markets and the reaction to
them in terms of business policy, the shareholder struc-
ture, the share-price development and its background,
as well as the expected effects of the strategic projects
on the share-price development.
Working culture and areas of
Supervisory Board activity
In the 2023 financial year, the Supervisory Board held
seven meetings. Six meetings were held in person, with
the option of participation in virtual form or via tele-
phone, and one meeting was held as a video confer-
ence. Meeting attendance by the members was at a
very high level, as can be seen in the detailed overview
at the end of this report. The work of the Supervisory
Board was characterized by open and intensive dia-
logue. The members of the Supervisory Board regularly
prepared for upcoming resolutions using documents
provided in advance by the Board of Management. The
employee and shareholder representatives also regu-
larly prepared the meetings in separate discussions,
which were also attended by members of the Board of
Management. In addition, the Supervisory Board was
supported in depth by its Committees. At the meetings
of the Supervisory Board, its members discussed the
measures and transactions to be resolved in detail with
the Board of Management. Executive sessions were
regularly scheduled for the meetings so that topics
could be discussed also in the absence of the Board of
Management.
Appointed until May 2026
Combined Management Report
2023 was a year full of challenges for Mercedes-Benz
Group and the entire automotive industry. The market
environment was demanding, and a large number of
external factors influenced the economy, presenting
employees with complex tasks.
projects, cooperation projects and the conclusion of
contracts of particular importance to the company.
The Board of Management informed the Supervisory
Board about a large number of other measures and
business transactions and discussed them intensively
and in detail with the Supervisory Board; for example,
the effects on the company of supply bottlenecks for
certain battery systems as well as the initiated counter-
Dear Shareholders,
Sabine Kohleisen
Dr Ing. e.h. Dipl.-Ing. Bernd Pischetsrieder
Chairman of the Supervisory Board
of Mercedes-Benz Group AG
Integrity, Governance & Sustainability
Appointed until December 2025
Human Relations & Labour Director
Appointed until November 2025
Hubertus Troska
Greater China
Appointed until December 2025
Harald Wilhelm
Finance & Controlling/
Mercedes-Benz Mobility
Appointed until March 2027
→ Further information on the members of the Board of Management of Mercedes-Benz Group AG
Britta Seeger
Marketing & Sales
Appointed until December 2029
Contents
9
To Our Shareholders
Report of the Supervisory Board
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Annual Report 2023 | Mercedes-Benz Group
Report of the Supervisory Board
Every accident is analysed in order to determine the
sequence of events and initiate preventative measures.
Data on accidents from which other sites can learn and
derive measures is sent to all occupational safety
experts at all sites worldwide. The Mercedes-Benz
Group uses the information provided by the system
to produce monthly reports on Group-wide accident
statistics.
A reporting procedure helps the Mercedes-Benz Group
achieve its occupational health and safety targets.
Since 2023, a uniform accident documentation system
has been available to the Group worldwide, from which
standardized key figures can be derived in compliance
with applicable data protection regulations.
In 2023, the Group provided its employees with inten-
sive training on six principles of safe working practices
and on how to deal with significant hazards. The focus
was initially on sites in Germany. As part of the initiative,
the Mercedes-Benz Group also assesses risks in coop-
eration with external companies. To further increase
safety in this context, it has stepped up checks on con-
struction sites and introduced a consequences man-
agement system for any incorrect behaviour detected.
Further Information
Consolidated Financial Statements
Corporate Governance
Contents
97
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The Group also raises its employees' awareness of ergo-
nomics and occupational safety. In order to create a
sustainable "safety-first culture" and permanently
reduce the number of accidents at work, the Mercedes-
Benz Group launched the "We work SAFE!" initiative in
2022 and continued it in the reporting year.
During the reporting year, the Mercedes-Benz Group's
production sites had an accident frequency of 3.81,2
At various sites, the Mercedes-Benz Group has its man-
agement systems for occupational health and safety
(OHS) voluntarily certified in accordance with the ISO
45001 standard. In 2023, the Jawor site (Poland)
received voluntary certification of its management sys-
tem in accordance with ISO 45001 for the first time.
Every five years, officers from Corporate Safety use the
previously mentioned safety due diligence process to
check the safety standards at the Group-owned pro-
duction sites to ensure they comply with those of the
binding Group policy concerning occupational health
and safety and determine whether a functioning occu-
pational health and safety management system is in
place. The international Mercedes-Benz CKD sites in
India, Vietnam, Thailand and Malaysia as well as the
AMG production plants in the UK and Germany were
evaluated as planned in 2023. The results were com-
municated to and followed up in the relevant commit-
tees.
Management of occupational safety
Combined Management Report
Non-Financial Declaration
1 Mercedes-Benz Group, consolidated and controlled production sites including
selected high-risk development areas and the Global Logistics Center (Scope
corresponds to that of previous years): number of occupational accidents registered
in the system with at least one day of absence per 1 million hours of attendance.
Diversity and inclusion.
To Our Shareholders
Qualification and learning programmes
for employees
Mercedes-Benz Group focuses on medical care, preven-
tion strategies and the ergonomic design of workplaces.
In 2022, the Group launched the Turn2Learn initiative
worldwide for the qualification of employees. It com-
bines a wide range of learning opportunities via external
learning platforms with customized training and strate-
gic learning paths. This allows employees to combine
different options to suit their needs - digitally and in
person.
The Group's own specialized Tech Academies, also
organized under the umbrella of Turn2Learn, provide
targeted and needs-oriented training for employees in
research and development and in production-related
areas. For example, the TechAcademy Production and
Supply Chain Management at Mercedes-Benz AG analy-
ses current and future personnel requirements for pro-
duction areas and cross divisional functions
for
example, in quality assurance. The TechAcademy uses
the analyses to develop future-oriented qualification as
well as retraining measures in line with the needs of
specific target groups.
A Tech Academy that offers needs-based future-ori-
ented training components has also been established
for employees in the development units at the
Mercedes-Benz AG in Germany. These training compo-
nents are specifically tailored to the requirements of
the development units.
In order to actively promote the digital transformation
in production, the D.SHIFT part-time qualification pro-
gramme was launched in 2021. D.SHIFT is a retraining
programme specifically for production employees at
German sites that focuses on acquiring digital skills and
ultimately involves employees switching to a future-ori-
ented job profile. The programme was continued in
November 2023 and the number of available slots was
expanded.
Within the sales organization of Mercedes-Benz
Group AG, the Mercedes-Benz Global Training business
unit serves as the central pillar for the development and
qualification of employees of the German and interna-
tional sales organization. The focus is on the training
and certification of sales and service personnel as well
as dealer management. In addition, comprehensive fur-
ther training and various product training courses are
offered. The unit also focuses on training content on
electrics/electronics (E/E) and high-voltage, especially
for employees in the repair and service sector.
In 2023, the emphasis continued to be on qualifications
that are crucial for the successful implementation of
the Group's sustainable business strategy and digitali-
zation.
The Mercedes-Benz Group is committed to tolerance,
openness and fairness, and promotes diversity and
inclusion. With appropriate measures and activities,
it wants to foster a working environment in which
employees, regardless of their age, ethnic origins and
nationality, gender and gender identity, physical or
intellectual capacity, religion and worldview, sexual
orientation and social origins, can freely develop their
talents.
This approach is embedded in the Mercedes-Benz
Group's Integrity Code and in the Principles of Social
Responsibility and Human Rights, among other things.
Strategic areas of action
Diversity and inclusion are part of the sustainable busi-
ness strategy of the Mercedes-Benz Group. The strate-
gic areas of action for promoting diversity and inclusion
involve the advancement of women, internationality
and inclusion.
The advancement of women: the Mercedes-Benz
Group would like to fill more senior management
positions (Level 3 and up) with women. The target
here is to increase the share of women in such posi-
tions to 30% by 2030.
Annual Report 2023 | Mercedes-Benz Group
Contents
95
The Mercedes-Benz Group offers its employees in Ger-
many occupational health advice and screening as well
as measures and services from the company's own
health programme and social counselling service. The
company health management system in Germany aims
to promote the mental and physical health and well-be-
ing of the employees. Internationally, the
Mercedes-Benz Group employees who have been vic-
tims of discrimination, bullying or sexual harassment, or
who observe improper behaviour by colleagues, can
report such violations of policy to their supervisors, the
HR department, the counselling service, their plant
medical services organization, the Works Council or the
Management Representatives Committee. Additional
points of contact include the Group's Business & People
Protection Office (BPO) whistleblower system and the
Infopoint Integrity.
Risk management follows the Group policy on occupa-
tional health and safety and defines instruments and
risk assessment processes that are to be implemented
locally. The Mercedes-Benz Group's Health & Safety unit
takes a preventative approach so that employees do
not have accidents or suffer from impaired health. In
order to identify significant risks at an early stage, an
evaluation (safety due diligence) is carried out every
five years at all consolidated and controlled production
sites with more than 500 employees. Risk assessment
is an important tool for evaluating potential risks and
defining measures. At the Mercedes-Benz Group, this is
done with the help of standardized and globally availa-
ble software, for example. The Mercedes-Benz Group
also assesses the mental and ergonomic stress caused
by workplaces and the working environment.
In addition to these internal contact points, there has
been an external online information and advice plat-
form for Mercedes-Benz Group employees in Germany
since 2022. It provides information on the topics of
sexual harassment, discrimination and bullying and
includes the option of anonymous counselling.
The diversity and inclusion management system is
grounded in the principle of inclusion for all employees.
The idea here is to always attract highly qualified spe-
cialists and managers to the Group and support their
professional development.
The framework and processes here are designed by the
Group-wide Integrity function and the Diversity & Inclu-
sion Management function. The latter is part of Human
Relations. It defined the three strategic areas of action
in cooperation with the members of the Board of Man-
agement of Mercedes-Benz Group AG and initiates
overarching projects, training programmes and aware-
ness-raising measures.
special responsibility for ensuring a corporate culture
marked by appreciation. The Mercedes-Benz Group pre-
sented its understanding of diversity and inclusion in its
"Uniqueness makes us strong" mission statement, which
was signed by all members of the Board of Manage-
ment.
The Mercedes-Benz Group expects its employees to
treat one another in a respectful, open and fair manner.
Managers serve as role models here and thus have a
Management of diversity and inclusion at the Group
Awareness-raising and qualification measures
for employees
Inclusion: the Mercedes-Benz Group welcomes and
values the uniqueness of each team member and pro-
motes equal opportunities and an inclusive working
environment.
As early as 2006, the Mercedes-Benz Group set itself
the target of continuously and sustainably increasing
the proportion of women in executive positions. As of
31 December 2023, women occupied 25.7%¹ of the
senior management positions at the Mercedes-Benz
Group worldwide. The Mercedes-Benz Group uses rel-
evant data from its human resources reporting sys-
tems to review the progress made in increasing the
proportion of women in top management positions.
The results are reported to the Board of Management
of the Mercedes-Benz Group AG in a standardized
form on a regular basis.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
Further Information
Internationality: the Mercedes-Benz Group also
seeks to promote internationality, a global way of
thinking and the cultural diversity of its workforce in
order to continue its success as a global company.
Among other things, the Mercedes-Benz Group does
this by encouraging its employees to take on interna-
tional assignments.
The Mercedes-Benz Group utilizes various measures to
make employees around the world more aware of issues
relating to diversity and inclusion. These include, among
other things, qualification programmes, information
events and special mentorship programmes for women.
At the Mercedes-Benz Group's annual Diversity Day,
employees can consciously experience diversity, take in
new perspectives and understand how all employees
can profit from diversity and equal opportunity.
For Diversity Day 2023, employees were able to
go through four diversity online training courses in
the Global Diversity Community on the employee
portal, which offer specific content for employees
and managers.
1 Headcounts, fully consolidated companies
Risk management
Occupational health and safety issues throughout the
Group are managed by the Health & Safety unit, which
is part of Human Relations. The topics are regularly dis-
cussed and decided on in various committees.
The international Group Occupational Health and Safety
Policy specifies binding tasks, duties, necessary bodies
and communication requirements for all controlled and
consolidated companies. This policy is based on the
ISO 45001 standard. The policy is valid for all employ-
ees as well as temporary workers whose work and/or
workplace is controlled by the organization.
The Mercedes-Benz Group's occupational safety strat-
egy includes standards for the design of workplaces
and work processes in order to systematically reduce
occupational and health-related risks. There are inter-
national Group policies on occupational health and
safety as well as uniform principles that must be
adhered to. The internal guidelines are based on inter-
national standards and require compliance with
national laws. They emphasize the responsibility of
managers and the personal responsibility of employees.
Requirements, policies, organization and
responsibilities
The Group utilises a holistic occupational health and
safety management system. It aims to prevent work
accidents, work-related illnesses and occupational dis-
eases to the greatest extent possible and also counter-
act health risks. The Group also wants to maintain the
health and performance of its employees in the long
term and promote their well-being. The focus here is
mainly on preventative measures that the Group contin-
uously reviews and develops further.
Occupational health and safety
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
96
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Company health management and mental health
Consolidated Financial Statements
Combined Management Report
Non-Financial Declaration
Combined Management Report
Non-Financial Declaration
Leadership culture
The Mercedes-Benz Group in Germany has also made
agreements that will enable it to react flexibly to market
fluctuations and to retain the core workforce and jobs
within the Group. The provisions of the general works
agreement "DMove" have been extended until the end
of 2024 for the Mercedes-Benz Group AG and
Mercedes-Benz AG sites (plants and headquater) in
Germany². At the Mercedes-Benz Group, temporary
workers supplement the core workforce; they do not
replace it.
guarantee for the period until the end of 2029. This
works agreement generally excludes the possibility of
business-related layoffs until 31 December 2029.
2 without logistic center
engines, transmissions, axles and components (major assemblies plants). These include
the Untertürkheim, Hamburg and Berlin locations.
The internal auditing department conducts random
annual internal audits to determine whether selected
aspects of the Corporate Compensation Policy are
being complied with. As part of these audits, no mate-
rial breach of the guideline was identified in 2023.
Managers have a special role and responsibility in the
transformation process. At the Mercedes-Benz Group,
the leadership culture and the way people work
together are therefore constantly evolving. The various
units and departments use the shared basis of the
Group-wide People Principles to focus on their own
specific areas and develop appropriate measures. The
principles serve as a basis for leadership and coopera-
tion at the Mercedes-Benz Group. Current offers and
suggestions support managers in their sustainable fur-
ther development and help them engage in lifelong
learning. Because learning and cultural development
take place at all levels, the Group introduced a format
tailored to top management in the reporting year in the
1 The Powertrain Network stands for sites that are responsible for the production of
One focus of HR work at the Mercedes-Benz Group is to
win over, motivate and empower employees for change.
For example, the TransformatiON initiative was
launched in the "Powertrain Network"¹ in 2022. With
this initiative, the company wants to explore new com-
munication channels in order to better inform, involve
and support employees during the transition. Transfor-
matiON focuses increasingly on information, interaction,
dialogue and feedback as central components.
A successful and responsible transformation process
requires goals as well as measures that are geared
towards them. To this end, various sites - primarily the
Powertrain and manufacturing plants, but also the sales
department developed goals for their transformation
process. On the basis of these goals, the sites identified
key topics with corresponding measures. These meas-
ures primarily include training and retraining opportuni-
ties for employees. The company also makes it possible
for employees to move between different sites in order
to take on new jobs or continue to work at the corre-
sponding level of qualification.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
In addition to courage, commitment and a willingness
to change, successful transformation requires security
above all. That's why the company signed an agreement
in 2017 that gives the employees at Mercedes-Benz
Group AG, Mercedes-Benz AG and Mercedes-Benz
Intellectual Property GmbH & Co. KG a job-security
form of Executive Inspiration Talks. It combines exter-
nal suggestions on the topic of leadership culture with
networking and cross-functional exchange.
The hybrid working environment has changed the
demands placed on managers within the Group. In
order to support managers as much as possible in their
roles and their tasks, the Mercedes-Benz Group offers
them training courses that focus on the opportunities
and the framework of leadership. In these courses,
managers learn in a targeted manner about the new
challenges relating to leadership with regard to innova-
tion, cooperation, sustainable development and per-
sonal resilience.
In order to continually improve its leadership and cor-
porate culture and further develop its work culture
within the framework of the transformation process, the
Mercedes-Benz Group conducts an extensive survey of
its employees worldwide every two years. This was
most recently done in 2023. The survey is a key indica-
tor of where the Group stands with regard to various
issues from the point of view of its employees, and
where there is still potential for improvement. Other
channels are also open for employees and managers to
provide feedback.
The variable remuneration for activities in management
positions at levels one to three comprises both a short-
term and, as a rule, a long-term component. The short-
term component is based not only on financial targets
€409 million on retirement benefits
€2,376 million on social welfare services
€13,848 million on wages and salaries
In 2023 the expenses for employees in the company
worldwide for a workforce numbering 168,336 on aver-
age (including temporary workers during holidays)
amounted to:
The Mercedes-Benz Group remunerates work in accord-
ance with the same principles at all of its companies
around the world. The global Corporate Compensation
Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum require-
ments for the design of the remuneration systems.
Among other things, it stipulates that the amount of the
remuneration is determined on the basis of the require-
ments of the job profile in question (taking into account,
for example, the person's knowledge, expertise, respon-
sibilities and decision-making authority) and, where
appropriate, performance. However, it does not take
account of gender, origin or other personal characteris-
tics. In doing so, the Group also takes into considera-
tion local market conditions and benchmarks.
Attractive and transparent remuneration
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
92
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
91
Corporate Governance
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The interests of trainees and young employees at the
various German sites are looked after specifically by the
local youth and trainee representatives, who in turn
organize themselves across all sites as part of a General
Youth and Trainee Representation (GJAV).
Training and further qualification
The Mercedes-Benz Group employs a sustainable per-
sonnel development and planning approach, because in
times of mobility transition and digitalization it needs
highly qualified employees with the right skills, be it for
electric mobility or for various key digital topics. It
therefore continuously invests in training and profes-
sional development programmes for its employees and
continues to adjust its qualification and HR develop-
ment programmes. The range of training professions
offered by the Mercedes-Benz Group and the courses
of study offered in dual work-study programmes in Ger-
many are also changing as a result, as are the qualifica-
tion and personnel development programmes.
Organization and agreements
Various company and collective-bargaining regulations
form the basis of the Germany-wide training and quali-
fication processes at Mercedes-Benz Group.
Personal and company-related qualification at
Mercedes-Benz Group AG, Mercedes-Benz AG and its
subsidiaries in Germany is regulated, among other
things, by the Voluntary General Works Agreement on
the Qualification of Employees and the General Works
Agreement on the Use of External eLearning Platforms
for Qualification Measures as well as comparable com-
pany and collectively agreed policies. They serve to
standardize the qualification process, structure it more
efficiently and integrate external training elements into
the learning portfolio.
In Germany, the company and employee representative
bodies also maintain an ongoing and structured dia-
logue. The parties make every effort to take into
account both the economic interests of the Group and
the interests of its employees. The results of the ongo-
ing dialogues, and thus the rights of employees as well,
are defined, among other things, in a number of plant
and company-wide agreements. In the reporting year,
company and employee representative bodies reached
various agreements and arrangements. These include
the policy on remote work abroad for personal reasons
and the general works agreement on the Germany-wide
job ticket for public transportation. The parties also
concluded a Group-works agreement on employee par-
ticipation in digitalization. In particular, this includes a
business e-mail address for all employees in the pro-
duction environment of the Mercedes-Benz Group in
Germany.
Trainees and students
The Mercedes-Benz Group has established a Mercedes-
Benz Training System for Germany that standardizes
company-related training content across all sites and
divisions. The goal here is to create high-quality and
efficient training programmes that are attractive to train-
ees and participants of dual work-study programmes.
The Mercedes-Benz Group provides future-oriented
training as needed and continuously reviews its portfo-
lio of training professions and courses of study in Ger-
many. In this review process it not only reacts to cur-
rent developments but also anticipates future
requirements and technological innovations. Since 2021,
Mercedes-Benz AG has been increasing the number of
IT trainees, and in autumn of 2022 it also integrated the
additional qualification Artificial Intelligence from the
Chamber of Commerce and Industry. Since the report-
ing year, internally designed qualification modules such
as Data-based action, Programming and Cyber security
have also been taught as part of technical vocational
training. The new dual study programme "Sustainable
Management" will start in 2024.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
94
In Germany, the Mercedes-Benz Group offers profes-
sional training and a dual work-study programme for
internationally recognized bachelor courses of study at
various company sites. The courses are supplemented
by practical assignments, both in Germany and abroad.
Group AG, Mercedes-Benz AG and other units at the
Group.
Further Information
2 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
Flexible working-time models
-
The Mercedes-Benz Group continuously further devel-
ops its working culture and thus its working-time
arrangements as well. It is increasingly relying on hybrid
forms of work, a mix of on-site and mobile working
depending on tasks and work processes. The “Remote
Working" general works agreement, valid since 2016,
was converted into a group works agreement at the
beginning of 2023. Thereby, and through the ongoing
exchange with the works council, the Group is creating
the necessary framework conditions for hybrid working
models in Germany and developing them further. For
example, employees of the Mercedes-Benz Group in
Germany have also been able to temporarily work
remotely from abroad for private reasons since March
2023.
Depending on local conditions, Mercedes-Benz
Group AG, Mercedes-Benz AG, Mercedes-Benz Mobil-
ity AG and Mercedes-Benz Bank AG offer different
working-time arrangements. These include e.g. part-
time work and job sharing.
In addition, employees at Mercedes-Benz Group AG,
Mercedes-Benz AG, Mercedes-Benz Mobility AG,
Mercedes-Benz Bank AG and other subsidiaries can
agree to take a sabbatical ranging from three months to
one year. Employees who wish to obtain additional
qualifications including pursuing a course of study at
a university can also make arrangements to take a
three to five-year leave with a reinstatement guarantee.
Dialogue with employee representatives
The Mercedes-Benz Group acknowledges its employees'
right to form employee representative bodies and con-
duct collective bargaining in order to regulate working
conditions. It also recognizes their right to strike in
accordance with the applicable laws. Important part-
ners here include the local works councils, the General
Works Council, the Group Works Council, the European
Works Council and the World Employee Committee
(WEC). Collective bargaining agreements exist for the
majority of employees throughout the Group. Such
agreements apply to all employees who are subject to
collective bargaining agreements at Mercedes-Benz
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
93
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Contents
Annual Report 2023 | Mercedes-Benz Group
Advantages and risks of the new systems
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz AG plans to deliver the first vehicles
with DRIVE PILOT at the beginning of 2024. The special
2024 model year EQS sedans and S-Classes will be
available through participating authorized Mercedes-
Benz dealerships in California and Nevada. DRIVE PILOT
takes over the driving task in heavy traffic or in traffic
jam situations on suitable motorway sections at speeds
of up to 40 mph (up to 60 km/h in Germany).
The DRIVE PILOT³ has been available to order in Ger-
many since May 2022. Under certain conditions, the
system enables conditional driving automation on
motorways (SAE Level 3).
Assistance and automation functions
In addition, the Mercedes EQE received top Euro NCAP2
ratings twice: the maximum rating of five stars in the
Euro NCAP safety ratings and the overall rating of "very
good" for the optional driving assistance package in the
special rating for assistance systems. The E-Class also
received an overall rating of "very good" in the special
assessment for assistance systems.
The Mercedes-Benz C-Class, GLC-Class and GLE-Class
received the IIHS 2023 TOP SAFETY PICK+ award for
the 2023 model year.
Models from Mercedes-Benz Cars repeatedly earn top
marks in safety tests conducted by independent insti-
tutes, such as the holistic testing program NCAP and
the holistic ratings of the U.S. Insurance Institute for
Highway Safety (IIHS) ¹. The latter assesses not only
crash safety but also accident-prevention and lighting
systems.
Ratings and awards
Driving assistance systems can react differently to the
danger of a collision, depending on the situation. The
Active Brake Assist system, which comes as standard
equipment in Mercedes-Benz cars, is a good example of
this. Active Brake Assist can help reduce the severity
of - or entirely prevent accidents involving vehicles
ahead or pedestrians crossing the carriageway. Speed
Limit Assist, for example, notifies the driver of the cur-
rent speed limit. It has been standard equipment in the
Mercedes-Benz A-Class since 2018. Since then, it has
also been integrated into further models and its fea-
tures have been expanded.
assistance systems that can help to prevent accidents
or reduce their severity. For example, Mercedes-Benz
vehicles equipped with driving assistance systems can
support drivers when they steer, brake and accelerate
(SAE Level 2).
3 Availability and use of the DRIVE PILOT functions on motorways depend on equipment,
countries and applicable laws.
Special assessment for assistance systems ④https://www.euroncap.com/en/ratings-re-
wards/assisted-driving-gradings
https://www.euroncap.com/en/results/mercedes-benz/eqe+suv/50192,
EQE SUV
2 Further information: Euro NCAP test results:
https://www.iihs.org/ratings/vehicle/mercedes-benz/gle-class-4-door-
https://www.iihs.org/ratings/vehicle/mercedes-benz/glc-4-door-suv/2023,
https://www.iihs.org/ratings/vehicle/mercedes-benz/c-class-4-door-sedan/2023,
suv/2024
Contents
To Our Shareholders
100
Corporate Governance
Contents
At the beginning of their employment, employees out-
side External Affairs whose positions also require them
to represent the Mercedes-Benz Group in the political
environment of their market (e.g. plant management
positions) generally participate in a special onboarding
process that prepares them for their tasks and makes
them aware of relevant policies.
The Mercedes-Benz Group conducts mandatory training
courses on a regular basis to ensure that employees
comply with statutory requirements and internal guide-
lines and policies. The executive division Integrity,
Governance & Sustainability is responsible for the con-
tent of the training courses. EA supports the courses
when needed by contributing its political expertise.
The Mercedes-Benz Group uses Group-wide established
compliance processes to address risks in connection
with the political representation of its interests. The
Business & People Protection Office (BPO) whistle-
blower system accepts complaints and reports relating
to compliance issues.
The Head of External Affairs is a permanent member of
the Group Sustainability Committee (GSC) and supports
the committee's work on political issues. In addition,
External Affairs cooperates closely with the members of
the Board of Management and the specialist depart-
ments on questions related to the representation of our
interests in the political arena. To this end, the unit
organizes the meetings of the Governmental Affairs
Committee for various Board of Management divisions
and specialist departments.
The External Affairs (EA) unit is the central coordinating
body for political dialogue at the national and interna-
tional levels as well as for other politically relevant
interest groups along the value chain. It is located in
Stuttgart (Germany) and falls under the responsibility
of the Chairman of the Board of Management. The EA
unit shapes the Mercedes-Benz Group's relations via a
global network with offices in Berlin (Germany), Brus-
sels (Belgium), Beijing (China) and Washington (USA), as
well as corporate representations in respective markets.
Governance
The Mercedes-Benz Group bases its political advocacy
on principles of transparency and responsibility and is
guided by the Integrity Code, which is valid throughout
the Group (further information on this can be found on
the Group website ④group.mercedes-benz.com/inves-
tors/share/esg).
The Group also uses its own Mercedes-Benz Group
Climate Policy Report to inform about its political
positions. In addition, the Mercedes-Benz Group pub-
lishes further information regarding its stance on rele-
vant and strategic issues as well as issues affecting
its stakeholders on the corporate website (④ group.
mercedes-benz.com/responsibility/advocacy).
GLE-Class
being considered and may be made in the near future.
By accrediting its political representatives in the Euro-
pean Parliament's Transparency Register, Mercedes-
Benz Group AG fulfils the transparency requirements
at the EU level.
As an actor in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement and is
convinced of its goals. That's why the sustainable
business strategy of the Mercedes-Benz Group also
defines the representation of the Group's interests in
the political arena.
There are many challenges associated with the sustain-
able development of the transport sector as well as
climate change mitigation and the conservation of
resources. To overcome these challenges, the
Mercedes-Benz Group attaches great importance to a
partnership-based dialogue between politics, business
and society. This is exactly what the External Affairs unit
at the Mercedes-Benz Group seeks to accomplish.
Ongoing
Target horizon
Responsible political advocacy regarding the key issues
for achieving sustainable business goals
Target
Responsible and transparent
representation of interests.
Further Information
Consolidated Financial Statements
The legally required registration in the German Lobby
Register, as well as the Group's own lobbying principles,
commit Mercedes-Benz Group AG to comply with the
Code of Conduct for Interest Representatives under the
Lobby Register Act. Mercedes-Benz Group AG is also
entered in the transparency register of the Baden-Würt-
temberg state parliament. Entries in other transparency
registers at the level of German states are currently
GLC-Class
To measure the company's success, sustainability
aspects are also be taken into account. Depending on
the results, employees who are covered by collective
wage agreements at Mercedes-Benz Group AG,
Mercedes-Benz AG and Mercedes-Benz Intellectual
Property GmbH & Co. KG and managers at management
level four (Executive) receive a success and profit-shar-
ing bonus since 2023.
1 Further information: IIHS test results:
Continue the integration of social and ethical aspects
into SAE Level 2-4 automated driving systems
Ongoing
Expand the automation of driving functions for SAE Lev-
els 2-4
Ongoing
Increase overall safety in road traffic by means of safety
initiatives
Ongoing
Make vehicles even safer for other road users, such as
pedestrians
Ongoing
Make vehicles even safer for occupants during an acci-
dent and afterwards
Ongoing
Further improve accident-prevention systems
Ongoing
Traffic safety
Social issues
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
C-Class
98
Target horizon
Safety is part of the brand essence of Mercedes-Benz.
Accident-free driving this vision drives the Mercedes-
Benz Group and is a fixed component of its sustainable
business strategy. The Group's driver assistance sys-
tems are intended to offer drivers and other occupants
a high level of safety. These systems can help drivers
avoid or safely manage critical situations on the road in
order to protect both vehicle occupants and other road
Target
Further Information
-
Assistance and safety systems
The Group uses an integrated approach to answer the
technical, legal, ethical and certification and safety-rel-
evant questions relating to automated driving at
Mercedes-Benz Cars. This approach is part of the tech-
nical Compliance Management System. To this end, an
interdisciplinary committee structure has been set up
to deal with issues such as the responsible use of data
and taking into account the needs of all road users who
encounter automated vehicles on the road. The objec-
tive of this approach is to increase both the safety and
the acceptance of the Group's products.
systems through the use of its “ethics by design" princi-
ple and continuously further develops these systems.
Innovations in assistance and safety systems are evalu-
ated on the basis of the contribution they make to road
safety, both at the vehicle level and for road safety in
general. The Mercedes-Benz Group's specialists are
continuously working on increasing road safety and
equipping vehicles across several SAE levels right up
to automated driving — with ever more powerful
Consolidated Financial Statements
Corporate Governance
99
To Our Shareholders
Combined Management Report
Non-Financial Declaration
Annual Report 2023 | Mercedes-Benz Group
Fewer accidents, greater road safety: this is one of the
objectives associated with the utilization of automated
and autonomous vehicle systems. In pursuing these
goals, the Mercedes-Benz Group also considers ethical
and legal risks associated with automated systems.
Thus they are already taken into account in product
development. The company is implementing data pro-
tection principles and standards along the entire value
chain in accordance with the "privacy by design" maxim.
The Group is also integrating ethical considerations into
conditionally automated and highly automated driving
but also on transformation goals and non-financial
targets. Since 2023, the long-term component has also
been based on ESG targets.
The Mercedes-Benz Group also uses educational pro-
grammes to raise public awareness of vehicle safety
and road safety.
The goal of increasing safety on the road can only be
achieved though collaboration, and that is why the
Mercedes-Benz Group establishes partnerships and
participates in research projects. The Mercedes-Benz
Group has been involved in the "Tech Center i-protect"
strategic cooperation project since 2016. The project
includes partners from business, government and sci-
entific institutes. Within this cooperation the Mercedes-
Benz Group is working on projects such as new restraint
systems for future vehicle interiors. It is also utilizing
digital accident research methods and trying out new
approaches, such as the use of accident simulations
involving digital models of human beings.
Cooperation to further improve vehicle safety
The Mercedes-Benz Group utilizes its holistic Integral
Safety concept in its vehicle development activities.
This concept describes how Mercedes-Benz divides the
utilization of safety systems into four phases: assis-
tance during driving, preparation for a possible acci-
dent, protection during an accident and help after an
accident. The Group's safety measures establish a
bridge between active and passive safety within these
four phases i.e. between accident prevention (phases
1 and 2) and protection when an accident occurs
(phases 3 and 4). The objectives and decisions in the
area of road safety are assured by the Steering Commit-
tee Integral Safety (LK IS) and implemented in conjunc-
tion with the participants of the product projects. The
LK IS reports directly to the Research & Development
Executive Committee of Mercedes-Benz AG.
Real-life safety is the safety philosophy at the
Mercedes-Benz Group. For decades, the Mercedes-Benz
Group's own systematic accident research, which is
integrated into vehicle development, has formed the
basis for new safety systems. This research also analy-
ses real accidents and uses the knowledge gained from
such analyses to assess new technologies from a vehi-
cle safety perspective.
Holistic safety concept
Contents
users.
Ensuring compliance with product requirements
For the Mercedes-Benz Group, technical Compliance
means adhering to technical and regulatory require-
ments, laws and standards. The objective here is to
identify risks within the product creation process (prod-
uct development and certification) at an early stage and
to implement preventive measures. For this purpose,
the Group established a technical Compliance Manage-
ment System (tCMS) in its automotive divisions. Its
objective is to ensure that Mercedes-Benz Cars and
Mercedes-Benz Vans comply with all legal and regula-
tory requirements throughout the entire product devel-
opment and certification process. The tCMS defines
values, principles, structures and processes in order to
provide employees with guidance and orientation,
especially with regard to challenging questions on how
to interpret technical regulations.
The Mercedes-Benz Group has committed itself to fight-
ing corruption because corruption undermines fair
competition and thereby harms all of society. The
Group's corruption prevention measures extend beyond
compliance with national laws and also encompass the
guidelines from the OECD Convention on Combating
Bribery of Foreign Public Officials in International Busi-
ness Transactions (1997) and the United Nations Con-
vention against Corruption (2003).
The Corruption Prevention Compliance Programme at
the Mercedes-Benz Group is based on its CMS.
Promoting fair competition
The Group-wide Antitrust Compliance Programme is ori-
ented to national and international standards for ensur-
ing fair competition. The programme establishes a bind-
ing, globally valid Group standard that defines how
matters of antitrust law are to be assessed. In addition
to Mercedes-Benz Group AG's central Legal and Com-
pliance department, the Group's global divisions can
turn to local legal and compliance advisers. Employees
receive further support through advice hotlines, guide-
lines and practical support.
Compliance organization
Responsible handling of data
Ensuring the protection of personal data (data privacy)
and information security is a top priority at the
Mercedes-Benz Group. The Mercedes-Benz Group
regards the protection of personal data and the security
of IT systems as essential components of comprehen-
sive data governance. The key aims are the sustainable
design of data-based business models and the respon-
sible, ethical and legally compliant use of data in the
interests of customers, employees and other stakehold-
ers. To achieve these strategic goals, the Mercedes-
Benz Group is pursuing a systematic approach. Key ele-
ments are the data governance structure, the data
vision, the data culture and the aforementioned Data
CMS.
-
Combating corruption
As part of External Affairs' Regional Political Dialogue
discussion series in Stuttgart (Germany), Mercedes-
Benz Group Board of Management members came
together with representatives of state and local gov-
ernments to discuss the steps needed to transform
the automotive industry.
The "Speak up" and "Judgement calls" commitment
statements provide all employees in the development
and certification units with a basis for a common
understanding of responsible behaviour in the product
creation process. They were drawn up jointly by Integ-
rity Management and R&D departments and are further
embedded by internal departmental measures.
Main objectives for compliance management
In addition, the CCO reports to the Group Risk Manage-
ment Committee. From the Mercedes-Benz Group's per-
spective, the structure of the reporting lines safeguards
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
106
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The CCO reports directly to the member of the Board of
Management responsible for Integrity, Governance &
Sustainability as well as to the Audit Committee of the
Supervisory Board. He or she also reports regularly to
the Board of Management at regular intervals and as
needed on matters such as the status of the CMS and
its further development, as well as the Business & Peo-
ple Protection Office (BPO) whistleblower system. The
CCO is also the Vice President Legal Product & Technol-
ogy and the Human Rights Officer.
The Compliance Board provides guidance regarding
overarching compliance topics and monitors whether
the associated Group measures are effective. The
Board's mission is to react promptly to changes in busi-
ness models and the business environment, deal with
regulatory developments and continuously enhance the
CMS. The Compliance Board consists of representatives
of the compliance, integrity and legal affairs area. It
meets regularly and as needed, and is chaired by the
Chief Compliance Officer (CCO).
advice. Contact persons are available to each function
and region. In addition, a global network of local
officers makes sure that the Group's compliance stand-
ards are met. The contact persons help the manage-
ment at the Group companies implement the compli-
ance programme at their respective sites.
-
The compliance organization at the Mercedes-Benz
Group is structured functionally, regionally and along
the value chain. As a result, it can provide effective
support for example, by means of guidelines and
At the seventh annual event of the Strategiedialog
Automobilwirtschaft Baden-Württemberg in Berlin
(Germany), politicians and the leaders of Baden-Würt-
temberg's automotive sector discussed the necessary
framework conditions for a successful transformation
of the automotive industry to future-oriented mobility
solutions.
the independence of the compliance organization from
the business divisions'
In the reporting year, representatives of the Group
took part in the Urban Future Global Conference in
Stuttgart (Germany). The Conference's agenda
included, among other topics, resource-conserving
consumption, heat-resilient urban districts, cli-
mate-neutral energy supply and social participation.
Combined Management Report
Non-Financial Declaration
The China Development Forum (CDF) is an annual
international forum organized by the State Council of
China. At the CDF, the CEO of the Mercedes-Benz
Group emphasized the importance of further imple-
menting China's open-door policy and of maintaining
- Enhancing the culture of integrity in a targeted manner
through feedback from integrity measurements
- Defining integrity-related priorities and challenges and
provide employees with guidance
- Employees and managers behave and act in an ethical
and responsible manner
- Promoting ethical conduct - within the mandatory
rules and frameworks and beyond
- Minimizing risks through knowledge of and compliance
with the Integrity Code
With its integrity activities, the Mercedes-Benz Group
pursues the following central goals:
Target
Integrity and compliance
Further Information
Consolidated Financial Statements
Corporate Governance
Whenever new legal requirements or findings from risk
analyses call for adjustments, the Mercedes-Benz
Group adapts the CMS accordingly. The Group compa-
nies are required to implement the improvement meas-
ures derived from this process. In addition, the respon-
sible management committees are informed about the
results of their monitoring process.
103
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the work in associations can be
found in the Mercedes-Benz Group Climate Policy Report.
group.mercedes-benz.com/investors/share/esg)
a balanced data regulation in order to ensure eco-
nomic growth and technological innovation.
During the Sustainability Dialogue in Stuttgart (Ger-
many) in 2023, representatives from the Advisory Board
for Integrity and Sustainability and representatives from
government, business and NGOs took part in a work-
shop where they drew up criteria for the development
of partnerships. Partnerships that have a more global
degree of application may be more effective.
The Mercedes-Benz Group engages in a targeted dia-
logue with local stakeholders from government and
society when planning new projects or when the need
arises to address issues relating to its sites. Board
members are also involved in the local dialogue. The
aim here is to reconcile the interests of the sites in
question with the wishes and concerns of local resi-
dents and establish conditions that benefit all of the
parties involved.
The External Affairs unit is responsible for direct discus-
sions with people from the political arena and members
of interest groups and associations that are committed
to sustainable development. Together with the ESG
Stakeholder Management unit, External Affairs is also
involved in various sustainability initiatives and net-
works. Some of the most important initiatives here are
the UN Global Compact (UNGC), econsense - German
Business Forum for Sustainable Development, and the
World Business Council for Sustainable Development.
Among the associations, the memberships in the Euro-
pean Automobile Manufacturers' Association (ACEA),
Annual Report 2023 | Mercedes-Benz Group
Contents
The Mercedes-Benz Group took part in the European
Round Table of Industry (ERT) in the reporting year.
The aim of the forum is to develop long-term busi-
ness-friendly strategies in cooperation with the Euro-
pean Commission.
To Our Shareholders
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
the Alliance for Automotive Innovation and the German
Association of the Automotive Industry (VDA) are par-
ticularly notable.
102
assessments.
In addition, the Annual Integrity Meeting was held in
May 2023 with members of the Board of Management,
members of the Integrity Network and an external
expert. Under the motto "Integrity meets... TRANSFOR-
MATION", the participants discussed how integrity can
be implemented in one's day-to-day professional life in
times of change.
elements that build on one another: Compliance Val-
ues; Compliance Targets; Compliance Organization;
Compliance Risks; Compliance Programme; Training;
and Monitoring and Improvement.
the Board of Management responsible for Integrity,
Governance & Sustainability.
"Integrity Management & Corporate Responsibility" is
part of this Board of Management division. Among other
things, it works to promote and enhance integrity within
the Mercedes-Benz Group and create a shared under-
standing of integrity. The aim is to assist the business
units in embedding integrity into their day-to-day work
on their own responsibility. The goal is to avoid possible
risks that can arise due to unethical behaviour and thus
to contribute to the long-term success of the Mercedes-
Benz Group. The Head of Integrity Management & Cor-
porate Responsibility reports directly to the member of
At the Mercedes-Benz Group, integrity, compliance and
legal affairs are combined into the executive division
Integrity, Governance & Sustainability. It supports all
corporate units in their efforts to embed these topics in
daily business activities.
Organization and areas of responsibility
Putting integrity into practice contributes to the suc-
cess of the Mercedes-Benz Group. That's why integrity
is a central element of the Mercedes-Benz Group's cor-
porate culture and an enabler that is an integral part of
the company's sustainable business strategy. For the
Group, this involves more than just obeying laws and
regulations. The Mercedes-Benz Group also aligns all its
actions with its corporate principles, which in particular
include fairness, diversity, responsibility, respect, open-
ness and transparency.
A corporate culture of integrity
The Mercedes-Benz Group is convinced that only those
whose actions are ethical and legally responsible
remain successful in the long term. This is especially
the case during times of upheaval and transformation.
Hence, integrity and compliance are very important to
the Mercedes-Benz Group.
Ongoing
Target horizon
- Comply with all applicable embargoes and sanctions
- Prevent money laundering and terrorist financing
- Complying with data protection laws and strengthen-
ing customer trust by handling data responsibly
- Ensure compliance with product requirements
- Preserve and promote fair competition
Integrity Code and corporate principles
-
Together with stakeholders, the Mercedes-Benz Group
supports the opinion-forming process at both the
national and international level in order to promote the
sustainable business goals and the transformation of
the automotive industry. The Group also addresses rel-
evant future-oriented questions that go beyond the
issues that are important to the automotive industry
and incorporates the results into its strategy.
Stakeholder dialogue
Mercedes-Benz Group AG did not make any financial or
non-financial donations to political parties during the
reporting period. This decision was not based on cur-
rent political or economic events.
The Mercedes-Benz Group's Lobbying, Political Contri-
butions and Party Donations policy defines responsible
approaches to be used in connection with grants, dona-
tions to political parties, and other instruments for rep-
resenting the company's interests in the political realm.
The company also has a Donations and Sponsorships
Policy in place.
Donations to political parties and other political
organizations
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
101
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
- Comply with anti-corruption regulations
In order to ensure political discussions with a broad
range of interest groups, representatives from the
Mercedes-Benz Group take part in key events at the
regional, national and international level. Here are a few
examples:
The Mercedes-Benz Group requires and empowers its
employees to consistently uphold its corporate princi-
ples. The Integrity Code, which is valid throughout the
Group, provides them with guidance because it serves
as the shared standard of values, defines the guidelines
for all conduct and helps the company make the right
decisions.
The Integrity Code is binding on all employees of
Mercedes-Benz Group AG and all the Group companies
worldwide. It includes, among other things, regulations
concerning corruption prevention measures, respect for
human rights, data management and compliance with
technical product requirements. The Integrity Code that
was revised in 2022 was communicated to employees
at the beginning of the reporting year; it is available on
the employee portal in eleven languages along with all
the key information on its application.
The Mercedes-Benz Group has also formulated a special
set of requirements for managers in the Integrity Code.
In particular, it expects managers to serve as role mod-
els through their ethical behaviour.
Value-based compliance is an indispensable part of the
Mercedes-Benz Group's daily business activities and is
firmly embedded in its corporate culture. The Group is
strongly committed to responsible conduct. It expects
its employees to comply with laws, regulations and vol-
untary self-commitments, and helps them do so. The
Mercedes-Benz Group has laid down these expecta-
tions in a binding form in its Integrity Code. Through its
Compliance Management System (CMS), the Mercedes-
Benz Group aims to promote compliance with laws and
policies. The necessary measures are defined by the
compliance organization in a process that also takes
the company's business requirements into account in
an appropriate manner. The CMS consists of basic prin-
ciples and measures that promote compliant behaviour.
It is applied worldwide. The CMS encompasses seven
Value-based compliance
management
various specialist units meet with the Advisory Board
members to discuss the areas of action and enablers
identified in the sustainable business strategy and also
to talk about targets, strategies, measures and the
results achieved with these. The Advisory Board also
holds regular meetings with managers and other
employees to discuss specific topics. In 2023, the Advi-
sory Board dealt with topics such as human rights, data
responsibility, the responsible use of artificial intelli-
gence and the further development of the sustainable
business strategy.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
105
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Another driving force for the Group's sustainability work
is the Advisory Board for Integrity and Sustainability.
The board's members are independent external special-
ists from the fields of science and business as well as
from civic organizations, and include experts who pos-
sess specialized knowledge regarding environmental
and social policy, the development of traffic and mobil-
ity, and human rights and ethical issues. The members
of the Advisory Board support the Mercedes-Benz
Group with constructive criticism on questions related
to integrity, sustainability and corporate responsibility.
The Advisory Board convenes several times a year in
meetings that are chaired by the member of the Board
of Management responsible for Integrity, Governance &
Sustainability. One of these annual meetings specifically
serves to exchange information with other members of
the Board of Management and members of the Supervi-
sory Board. During the Sustainability Dialogue in Stutt-
gart (Germany), the responsible managers from the
The Advisory Board as an important driving force
Plans call for the culture of integrity within the
Mercedes-Benz Group to be reassessed as part of the
next employee survey, among other things.
All managers and employees can access the Integrity
Toolkit via the employee portal. It includes tools for
possible follow-up activities based on the respective
results of the employee survey.
The survey results have a direct influence on the remu-
neration of the management.
The results of the PULSE23 employee survey showed
that the perception of the culture of integrity among
employees has improved since the last employee sur-
vey. The basis for this is an environment of trust in
which managers are also open to criticism, and unethi-
cal behaviour and mistakes in the working environment
can be openly and constructively addressed. The
results are used in the follow-up process to derive
measures and thus further strengthen the culture of
integrity.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
104
Combined Management Report
Non-Financial Declaration
Corporate Governance
Each year, the Mercedes-Benz Group checks the pro-
cesses and measures of the CMS and conducts analy-
ses to find out whether the measures are appropriate
and effective. For these activities, it relies on informa-
tion from the Group companies as well as additional
locally gathered information. The Group also monitors
their processes on the basis of key performance indica-
tors. To determine these indicators, the Mercedes-Benz
Group checks, among other things, whether formal
requirements are being met and whether the content is
complete. It also takes into account the knowledge
gained through both internal and independent external
Consolidated Financial Statements
Information, dialogue and training
The Mercedes-Benz Group established its Infopoint
Integrity in order to promote a culture of integrity at the
Company. The Infopoint works with experts for legal
and human resources topics, data protection, compli-
ance as well as diversity and sustainability, among
others, and serves as the central point of contact for
questions concerning ethical behaviour for all of the
Group's employees. It either provides direct support or
connects employees with the appropriate contacts.
The Integrity Network, which is made up of representa-
tives from the business units, aims to embed integrity
in day-to-day business and make it tangible for employ-
ees. The semi-annual member reports also provide
insights into the integrity activities of the business
units. The Integrity Network implemented the package
of measures of the “Integrity Experience”. This was
based on individually combinable modules on various
integrity topics, which were provided by the Integrity
Management department. With the help of these meas-
ures, employees were able to consciously reflect on
their own actions in their day-to-day work.
In addition, the employees in administrative areas at
Mercedes-Benz Group AG and in the consolidated
Group companies regularly have to complete a manda-
tory online training course about integrity that is based
on the Integrity Code. Because managers serve as role
models, they perform an especially important task with
regard to compliance, integrity, legal matters and sus-
tainability. In order to help them as much as possible to
carry out this role, the online training programme also
includes a special mandatory management module.
Employee survey
The Mercedes-Benz Group consistently works on its
understanding of integrity, continually refines it further
and repeatedly reviews itself. In addition to the feed-
back from the Integrity Network, the employee survey
is an important measure for these activities.
Further Information
Ongoing
The implementation of data governance in the divisions
of the Mercedes-Benz Group is the responsibility of
the various bodies for data and data analytics. Within
the Mercedes-Benz Group there is also a Digital Gov-
ernance Board that includes members of the Board of
Management. This body defines the framework for
Group-wide core topics of digital governance and thus
supports the digital transformation of the Group. The
Chief Officer Corporate Data Protection at the
Mercedes-Benz Group is responsible for the perfor-
mance of the tasks required by law to ensure compli-
ance with data protection rules.
The Mercedes-Benz Group's commitment to the respon-
sible use of data is anchored in its data vision. In the
period from November 2022 to May 2023, the
Mercedes-Benz Group focused on revising this guide-
line, which is known as the Mercedes-Benz Data Vision,
and deriving and launching measures to increase cus-
tomer confidence. The key message of the guideline is:
"For the Mercedes-Benz Group, customer trust and the
responsible use of customer data are the basis for sus-
tainable digital products and services."
Combined Management Report
Non-Financial Declaration
110
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The contents and topics of the training courses are tai-
lored to the roles and functions of the respective target
group. The Mercedes-Benz Group regularly analyses the
need for its training programme, expands or adapts it as
necessary and conducts evaluations.
The Mercedes-Benz Group offers an extensive range of
compliance training courses that are based on its Integ-
rity Code for example, courses for employees in
administrative areas and for members of the Supervi-
sory Board and the executive management of Group
companies.
Communication and training
Corporate Governance
On the basis of the BPS and RSS standards and the
Integrity Code, the Mercedes-Benz Group makes web-
based Compliance Awareness Modules (CAMs) avail-
able to both for sales business partners and suppliers.
These modules are intended to sensitize them to rele-
vant integrity and compliance requirements such as
those related to anti-corruption measures and technical
Compliance. Through these measures, the Mercedes-
Benz Group also offers its sales business partners and
suppliers extensive assistance for dealing with possible
relevant compliance risks.
In the selection of direct sales partners and in existing
sales partnerships, the Mercedes-Benz Group ensures
that its business partners comply with laws and
observe ethical principles. For this purpose, we use a
globally standardized, risk-based Sales Business Partner
Due Diligence Process. All new sales partners are sub-
jected to a due diligence process. A partnership is only
possible if this process is successfully completed. The
risk-based review takes into account, among other
things, the planned business model, the country risk
and the involvement of third parties and government
contacts. The concrete risks are determined using
The Mercedes-Benz Group expects not only its employ-
ees to comply with laws and regulations. The Group
also places clear compliance requirements on its sales
partners and suppliers, because it regards integrity and
conformity with regulations as a precondition for trust-
based cooperation. The Mercedes-Benz Group formu-
lates in detail what it expects from its business partners
in the Business Partner Standards (BPS) and specifically
for its suppliers in the Responsible Sourcing Standards
(RSS); both documents are publicly available on the
Group website.
Sales partners and suppliers
notice.
With regard to the confirmed violations, the Mercedes-
Benz Group decides on appropriate response measures
in line with the principles of proportionality and fair-
ness. The personnel measures in 2023 included
admonishments, warnings and terminations without
Further Information
Consolidated Financial Statements
Corporate Governance
additional specific questionnaires. During the ongoing
cooperation with the sales partners, the existing due
diligence processes are reviewed on an ad hoc or cycli-
cal basis depending on the risks identified. Another
component of the due diligence process is permanent
monitoring, in which the Group continuously checks
existing sales partners in relevant databases and valid
sanctions lists in order to identify potential breaches of
integrity. If a partner fails to comply with the Group
standards or if there are breaches of integrity that can-
not be resolved, the Mercedes-Benz Group reserves the
right to terminate the selection process or the coopera-
tion. In conjunction with the procurement departments,
the Group is constantly enhancing the existing pro-
cesses for the selection of and cooperation with its
suppliers.
Consolidated Financial Statements
Further Information
Social compliance
With its compliance activities, the Mercedes-Benz Group
particularly pursues the following central goals:
The Chief Compliance Officer of the Mercedes-Benz
Group is also the Group's Human Rights Officer. He is a
member of the Group Sustainability Committee and
reports to the Board of Management member responsi-
ble for Integrity, Governance & Sustainability. The
Human Rights Officer is responsible for monitoring
compliance with the Principles of Social Responsibility
and Human Rights and the HRRS. He reports annually
and as needed to the Mercedes-Benz Group AG Board
of Management and other bodies on particularly rele-
vant human rights issues and the status of implementa-
tion of the Principles of Social Responsibility and
Human Rights.
Overarching activities relating to human rights issues
are managed by the Mercedes-Benz Group AG execu-
tive division Integrity, Governance & Sustainability. This
division is responsible for the Principles of Social
Responsibility and Human Rights as well as for enhanc-
ing the human rights due diligence obligations within
the Mercedes-Benz Group via the Group's Human Rights
Respect System (HRRS). The responsible member of the
Board of Management continues to develop the topic in
line with the targets set by the Board of Management
and the Supervisory Board. To this end, this member
regularly obtains information and corresponding reports
about the Company's human rights activities.
Organizational embedding
The Mercedes-Benz Group is committed to ensuring
that human rights are respected and upheld along the
entire value chain in all Group companies and by part-
ners, particularly suppliers. The Principles of Social
Responsibility and Human Rights reflect this self-com-
mitment. They supplement and specify the Integrity
Code with respect to the principles of human rights and
good working conditions and are binding for all manag-
ers and employees of the Mercedes-Benz Group AG as
well as the consolidated Group companies worldwide.
Policy commitment
Respect for human rights has key importance for the
Mercedes-Benz Group and is an obligation as well as a
mission for the Group. For this reason, upholding
human rights is an area of action of its sustainable busi-
ness strategy. The Mercedes-Benz Group also intro-
duced a corresponding risk-based system to uphold
ongoing human rights due diligence obligation. The
measurable targets and key figures for the system are
defined in the sustainable business strategy.
In addition to its own commitment to respecting
human rights, the Mercedes-Benz Group is observing
growing interest in the topic of human rights among
consumers, civil society organizations, investors and
rating agencies.
The expansion of electric mobility in particular is also
putting a spotlight on the respect for human rights
within the automotive supply chain, because the pro-
duction of battery cells requires the use of raw materi-
als such as lithium and cobalt. These raw materials
often come from countries where there is a risk that
they are mined under conditions that could be critical
from a human rights standpoint.
2026
The goal of the Mercedes-Benz Group is to combine
achieving business success with acting responsibly
toward the environment, people and society - and
doing so along the entire value chain.
Target achieved
2025
2028
Target horizon
Review of 100% of product groups sourced from service
supply chains posing an increased risk of human rights
violations
Milestone: Assessment of 50% of all production raw
materials used by the Mercedes-Benz Group with an
increased risk of human rights violations and definition
of necessary improvement measures
Define and implement protective measures for 100% of
the Mercedes-Benz Group's production raw materials
which pose an increased risk of human rights violations
Milestone: Assessment of 70% of all production raw
materials used by the Mercedes-Benz Group with an
increased risk of human rights violations and definition
of necessary improvement measures
Target
Combined Management Report
Non-Financial Declaration
109
- Respect and uphold human rights
Contents
The Mercedes-Benz Group evaluates its companies and
corporate departments systematically each year in
order to reduce compliance risks. In this process, the
Mercedes-Benz Group uses, for example, centrally
available information about its companies, such as rev-
enue, business models and relations with business
partners. If necessary, other locally sourced information
is supplemented. The results of the compliance risk
analysis form the basis of compliance risk management
and are therefore also the basis for defining measures.
Compliance risks
The integrated compliance approach also checks appli-
cable sanction lists and restrictions on certain goods
and implements measures for the prevention of money
laundering and the financing of terrorism. On the one
hand, these measures aim to prevent supranational and
national sanctions and goods-related embargoes from
being violated or evaded. On the other, it seeks to com-
bat third-party activities that are suspected of involving
money laundering, the financing of terrorism, organized
crime and other types of corporate crime.
For this reason, the Mercedes-Benz Group established a
two-pillar model (trade in goods and mobility services)
which takes into account the different regulatory
requirements in the area of goods trading on the one
hand and the area of financial services on the other.
Moreover, the Mercedes-Benz Group defines prevention
and combating of money laundering and the financing
of terrorism as central compliance goals in the Group's
Integrity Code.
Money laundering and the financing of terrorism cause
tremendous damage to the economy and society. Even
an accusation of money laundering can compromise a
company's reputation and could have financial conse-
quences for the Mercedes-Benz Group, as well as for its
stakeholders.
Prevention of money laundering and terrorist
financing
among others, in the product design process right from
the start.
The Mercedes-Benz Group is also working on the further
development and implementation of data sharing solu-
tions. In cooperation with partners such as cities,
municipalities and insurers, it tries to make data availa-
ble in a way that benefits the general public while pro-
tecting privacy for example, by sharing vehicle data
with cities in order to increase road safety. In addition,
the Mercedes-Benz Group is continuously working on
technologies to promote privacy, and it made new
developments available internally in the reporting year.
The aim is to include privacy-enhancing technologies,
-
The Mercedes-Benz Group's Data CMS supports the
Group in the systematic and risk-based implementation
of measures to ensure compliance with the data pro-
tection requirements. It takes into account the existing
applicable data-protection regulations.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
107
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Compliance programme
The compliance programme comprises principles and
measures that are designed to reduce compliance risks
and counteract violations of laws and regulations. The
individual measures are based on the knowledge
gained through the Group's systematic compliance risk
analysis. The Mercedes-Benz Group focuses, among
other things, on the following aspects: the continuous
raising of awareness of compliance issues, preventative
training measures, the systematic tracking of informa-
tion received regarding misconduct, and the formula-
tion of clear standards for the behaviour of business
partners.
The Mercedes-Benz Group wants to further strengthen
its customers' trust in Mercedes-Benz's data processing.
To this end, the Mercedes me Privacy Center is con-
stantly being enhanced, with the aim of making the pri-
vacy settings as clear and intuitive as possible. Custom-
ers use the Mercedes me Privacy Center to obtain an
overview of what personal data of theirs is processed
for which purpose. They should be able to easily decide
and set the purposes for which Mercedes-Benz and
certain third parties may use this data. The Privacy
Center already covers various such processing activi-
ties, and more are planned. The portal can be accessed
on the web and via the new version of the Mercedes me
App launched in the year under review.
Annual Report 2023 | Mercedes-Benz Group
-
Annual Report 2023 | Mercedes-Benz Group
In order to ensure an independent external assessment
of the Compliance Programme, Mercedes-Benz
Group AG commissioned KPMG AG Wirtschaftsprü-
fungsgesellschaft to audit the Group's CMS for Corrup-
tion Prevention, Antitrust and technical Compliance in
In the reporting year, 55 new cases were opened with
75 persons affected by the allegation (previous year:
58 cases/72 persons). In total, 54 persons were proven
to have committed violations with a high risk for the
company, its employees or other persons. Of these, six
violations belonged in the category of passive corrup-
tion. Six violations fell into the category of undue
enrichment or theft in excess of €100,000, seven into
the category of damage over €100,000. 12 violations fell
into the category of reputational damage. In 15 cases of
violations, accusations of inappropriate behaviour of
employees toward other employees were confirmed
e.g. violation of psychological/physical integrity, sexual
harassment or racism. Eight confirmed violations with
high risk referred to other categories.
Reported violations
In an effort to constantly increase trust in the BPO
whistleblower system and make it even better known to
employees, the Mercedes-Benz Group uses various
communication measures to provide extensive informa-
tion materials in a variety of languages. In addition, the
company regularly informs employees about the type
and number of reported violations and makes case
studies available in an anonymous form on a quarterly
basis.
The BPO refers information on all other breaches involv-
ing risk to the responsible department - such as HR,
Corporate Security or Data Privacy. The relevant depart-
ments follow up the information and clarify the cases
on their own responsibility. Examples include theft,
If, following a risk-based initial assessment, the BPO
classifies an incident as a breach of regulations with a
high risk for the Mercedes-Benz Group, its employees or
other persons, it refers the case to an investigation unit.
The BPO accompanies the subsequent investigation
until the case is closed. Examples of high-risk rule vio-
lations include offences related to corruption, breaches
of antitrust law and violations of anti-money laundering
regulations, as well as infringements of binding techni-
cal provisions or environmental protection regulations.
Personal matters, such as incidents of sexual harass-
ment or human rights violations, are also considered
high-risk rule violations.
The information provided to the BPO whistleblower sys-
tem enables the Mercedes-Benz Group to learn about
potential risks and thus to prevent damage to the Group
and its employees or to third parties, as well as to pro-
tect individuals who might be harmed by misconduct. A
globally valid Group policy defines BPO procedures and
the corresponding responsibilities. It aims to ensure a
fair and transparent procedure that takes into account
both the protection of the whistleblower and the princi-
ple of proportionality for the persons affected by the
allegation. The policy also defines the standard by
which the Mercedes-Benz Group assesses breaches of
the rules and decides on the consequences.
The Business & People Protection Office (BPO) whistle-
blower system enables all employees worldwide, as
well as external informants, to report violations of the
rules. The BPO is available around the clock to receive
information, which can be sent by e-mail or normal mail
or by filling out a special online form. External toll-free
hotlines are also available in Brazil, Japan, South Africa
and the United States. Reports can also be submitted
anonymously if local laws permit this. In Germany,
whistleblowers have access to additional contact points
such as an external neutral intermediary and other
external reporting channels (e.g. the federal govern-
ment's external reporting office at the Federal Office of
Justice, the Federal Financial Supervisory Authority's
(BaFin's) whistleblower office, and the whistleblower
system of the Bundeskartellamt (federal competition
authority).
breach of trust, and undue enrichment valued at less
than €100,000 - if the violation does not fall into the
category of corruption.
The whistleblower system BPO
accordance with Standard 980 of the Institute of Public
Auditors in Germany. These audits, which were based
on the principles of appropriateness, implementation
and effectiveness, were successfully completed for our
CMS Corruption Prevention in late 2019, for our tCMS
(focus on emissions) in late 2020 and for our CMS Anti-
trust in late 2021. The latter was the second such audit,
the first having been conducted in 2016.
Further Information
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108
To Our Shareholders
EL; N/EL4
Manufacture of low-carbon technologies for transport
CCM 3.3
70%
N/EL
EL
N/EL
EL; N/EL4
107,045
EL; N/EL4
E
EL; N/EL4
EL; N/EL4
T
0%
0%
0%
0
10%
Y
Y
N/EL
EL; N/EL4
N/EL
N/EL
72%
Sale of second-hand goods
1%
N/EL
N/EL
N/EL
0%
N/EL
EL
1%
1,683
CCM 6.6
Freight transport services by road
15%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
14%
21,561
CCM 6.5
Transport by motorbikes, passenger cars and light commercial
vehicles
N/EL
0%
E
0%
0%
CCM 6.15
0%
Y
Y
N/EL
N/EL
N/EL
N/EL
N/EL
Y
Y
319
CCM 6.5
Infrastructure enabling low-carbon road transport and public transport
Transport by motorbikes, passenger cars and light commercial
vehicles
E
10%
Y
Y
N/EL
N/EL
0%
N/EL
N/EL
N/EL
0%
100%
14%
10%
Y
Y
0%
0%
0%
0%
0%
100%
14%
21,023
20,704
A.2 Taxonomy-eligible activities that are not environmentally sustain-
able (not Taxonomy-aligned activities)
of which transitional activity
of which enabling activity
Revenue from environmentally sustainable activities (Taxono-
my-aligned) (A.1)
CE 5.4
Y
Y
N/EL
N/EL
0%
448
0%
N/EL
revenue
Total Taxonomy-aligned
revenue¹
in %
2022
Proportion of
The revenues shown below are included as an
aggregation across the various economic activities.
For the major proportion of the revenue, in particular
from the new and used vehicle business and leasing
and sales financing activities, a direct attribution was
made of the revenue accounted for by low-carbon
vehicles. With regard to other revenue components,
especially revenue from the spare parts business and
service and maintenance contracts, or attribution of
discounts granted for large procurement volumes, it is
not possible to directly assign revenue to low-carbon
vehicles. In these cases, suitable allocations were
therefore used for the various revenue components.
These classifications are based on current or historical
vehicle sales data for the fleet that is currently on the
market and data on production volumes. In the reporting
year, the share of Taxonomy-aligned revenue increased
to 14%¹. The main reasons for this were an increase in
unit sales of all-electric vehicles and the expansion of
the product portfolio for low-carbon vehicles.
Revenue
In order to calculate the Taxonomy-aligned proportion
of economic activities (under A.1 in the table Revenue),
revenues were examined to determine whether they
were generated with low-carbon vehicles in order to
assess whether a substantial contribution had been
made to climate change mitigation. Compliance with
the DNSH criteria was also monitored.
Taxonomy-alignment of revenue
charging stations; or the sale of second hand-goods
which were purchased from third parties by the
Mercedes-Benz Group. This applies to almost all of
the revenue generated by the Mercedes-Benz Group.
In the previous year, the revenues from the sale of
second-hand goods, which Mercedes-Benz Group
purchased from third parties, were assigned to the
revenue from Taxonomy non-eligible activities. Since
the reporting year, this revenue has been assigned to
the economic activity 5.4.
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
The numerator was calculated by examining this reve-
nue to determine how much of it was generated in con-
nection with the manufacturing, the leasing or the
financing of vehicles; the operation of high-power
For the share of Taxonomy-eligible revenue (under A. in
the table Revenue), the Taxonomy-eligible revenue is
considered in relation to the total revenue of the Group.
In this process, the denominator takes into account the
consolidated revenue generated by Group companies
that are to be included in the calculations. The revenue,
as disclosed in the consolidated statement of income,
amounted to €153,218 million in the reporting year
(2022: €150,017 million) (see Note 5 in the Notes to the
Consolidated Financial Statements).
Taxonomy-eligibility of revenue
0%
0%
Biodiversity and ecosystems (BIO)
0%
0%
Pollution prevention and control (PPC)
0%
0%
Circular economy (CE)
in % in millions of euros in millions of euros
0%
2023
Proportion of
Total Taxonomy-aligned Taxonomy-aligned
15
10%
150,017
14,994
14%
153,218
21,023
4%
14,009
11%
136,008
14,419
575
5%
16,231
15%
136,987
20,223
800
Revenue according to IFRS
in millions of euros in millions of euros
revenue¹
revenue¹
revenue
revenue¹
Taxonomy-aligned
0%
Water and marine resources (WTR)
0%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Revenue of Taxonomy non-eligible activities
98%
0%
0%
N/EL
0%
0%
88%
0%
0%
0%
0%
0%
100%
100%
85%
99%
130,737
151,760
A. Turnover of Taxonomy-eligible activities (A.1 + A.2)
Revenue from Taxonomy-eligible activities that are not
environmentally sustainable (not Taxonomy-aligned) (A.2)
N/EL
N/EL
EL
N/EL
N/EL
Total (A + B)
1,458
153,218
1%
100%
0%
Climate change adaptation (CCA)
85%
14%
Climate change mitigation (CCM)
per objective
Taxonomy-
eligibility
per objective
Taxonomy-
alignment
Revenue proportion/total revenue¹
The following table shows the scope of the Taxonomy-
eligibility and the Taxonomy-alignment for the revenue
by environmental objective:
Further Information
0%
Consolidated Financial Statements
Combined Management Report
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Contents
Annual Report 2023 | Mercedes-Benz Group
5 A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total (total A + B), which was audited with reasonable assurance as a Group key figure.
1 The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC,
biodiversity and ecosystems: BIO.
100%
2%
Corporate Governance
N/EL
Pollution Biodiversity
Y
Sustainable use and protection of water and marine
resources
Climate change adaptation
Climate change mitigation
One of the important goals of the Commission Action
Plan on Financing Sustainable Growth in the context of
the European Green Deal is to divert capital flows to
sustainable investments. This is also the logic behind
the EU Taxonomy Regulation (EU 2020/852) that came
into force in mid-2020. This regulation governs the
establishment of a standardized and legally binding
classification system that defines the types of eco-
nomic activity in the EU that are considered to be Tax-
onomy-aligned - and thus environmentally sustainable
with regard to six environmental objectives established
by the regulation:
EU Taxonomy
-
-
Further Information
Consolidated Financial Statements
Corporate Governance
Transition to a circular economy
Combined Management Report
Non-Financial Declaration
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Contents
Annual Report 2023 | Mercedes-Benz Group
With regard to supply chains, suspected violations of
the Responsible Sourcing Standards can be reported
via the BPO. If the misconduct or problem falls within
the supplier's area of responsibility, the supplier must
take measures to immediately correct or eliminate the
problem.
The BPO whistleblower system enables employees and
external whistleblowers worldwide to report rules viola-
tions. The Mercedes-Benz Group can thus become
aware of potential human rights risks, can prevent dam-
age to the Group and its employees or to third parties,
and protects individuals who might be harmed by mis-
conduct.
Complaints management
Since 2018, Mercedes-Benz AG has been cooperating
with the Drive Sustainability initiative on the implemen-
tation of measures to make production material suppli-
ers in various focus countries more aware of the impor-
tance of sustainability and provide them with
information on this issue. The Group selected the
respective countries jointly with the initiative.
worldwide to familiarize them with the requirements of
human rights due diligence in accordance with their
respective function.
Further Information
Consolidated Financial Statements
114
- Pollution prevention and control
-
Protection and restoration of biodiversity and
ecosystems
Economic activity 6.6 essentially covers the remaining
commercial vehicle portfolio of Mercedes-Benz Mobility
after the spin-off and hive-down of the Daimler com-
mercial vehicle business (see Note 3 of the Notes to the
Consolidated Financial Statements).
Economic activity 6.5 relates to leasing and sales
financing of all cars and vans purchased from third
parties.
Further Information
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Annual Report 2023 | Mercedes-Benz Group
In a Commission Notice (2022/C 385/01) published
by the European Commission on 6 October 2022, the
Commission stated that the term "low-carbon" only
relates to the assessment of Taxonomy-alignment
within the framework of the technical screening crite-
ria and is not relevant for reporting on the Taxono-
my-eligible economic activity 3.3. With regard to car
manufacturer in particular and as an example, the
document shows that the activity "manufacture of
low-carbon vehicles" also includes vehicles with com-
bustion engines. For the Mercedes-Benz Group, this
clarification by the European Commission means that
the manufacture of all Group vehicles is to be classi-
fied as Taxonomy-eligible.
Economic activity 6.15 encompasses infrastructure
enabling low-carbon road transport and public trans-
port (charging infrastructure)
Economic activity 6.6 encompasses leasing and
financing of low-carbon commercial vehicles
financing of low-carbon cars and vans
Economic activity 6.5 encompasses leasing and
Economic activity 3.3 encompasses manufacture of
low-carbon technologies for transport in connection
with the production of cars and vans
On the basis of the descriptions contained in the dele-
gated acts relating to climate change mitigation, the
following Taxonomy-eligible economic activities have
been identified for the Group:
-
-
The economic activities relevant to the Mercedes-Benz
Group in this context are to be found under the envi-
ronmental objectives climate change mitigation, climate
change adaptation and transition to a circular economy.
Taxonomy-eligibility is assessed in an initial step. For an
economic activity to be Taxonomy-eligible, that activity
must be mentioned and explained in further detail in
the delegated acts for the Taxonomy Regulation. The EU
delegated acts (Commission Delegated Regulation (EU)
2021/2139 and its supplement, Commission Delegated
Regulation (EU) 2023/2485), which was adopted by the
European Commission in June 2023, contain descrip-
tions of relevant economic activities and technical
screening criteria for the environmental objectives cli-
mate change mitigation and climate change adaptation.
The supplement to the delegated regulation includes
new technical screening criteria that refer to both the
existing economic activities and to new economic activ-
ities. Furthermore, a new EU delegated act (Commis-
sion Delegated Regulation (EU) 2023/2486) containing
economic activities and technical screening criteria rel-
evant for the remaining environmental objectives, was
published in 2023.
Taxonomy-eligibility
Companies that are required to publish a Non-Financial
Declaration must also comply with the Taxonomy Regu-
lation. According to Article 8 of the Taxonomy Regula-
tion, the Taxonomy-aligned proportions of revenue,
capital expenditure and operating expenditure
accounted for by environmentally sustainable economic
activities are to be reported on an annual basis.
Corporate Governance
Combined Management Report
Non-Financial Declaration
113
To Our Shareholders
2. Identification of risk hotspots in the raw material sup-
ply chains, e.g. on the basis of the specific risks in the
individual mining countries.
1. Increasing transparency along the raw material supply
chains especially with regard to certain compo-
nents in a Mercedes-Benz, such as battery cells. To
this end, Mercedes-Benz AG contacts, among others,
the suppliers of the relevant components and asks
them to disclose their supplier structure.
The Group plans to gradually examine these 24 critical
raw materials in more detail between now and 2028
and to define corresponding measures. This review
consists of three steps:
In order to examine the risks associated with raw mate-
rials, the Mercedes-Benz Group first analysed the raw
materials present in a vehicle and prioritized them on
the basis of various factors. It has identified 24 critical
raw materials. The list is reviewed annually on the basis
of certain criteria, such as the country risk of the main
mining countries, and updated if necessary.
Identification of risk raw materials and services
As part of Supplier Compliance Risk Management
(SCRM), the Mercedes-Benz Group conducts a risk
assessment of its Tier 1 suppliers of its procurement
departments for production materials, non-production
materials and services at least once a year. Following
an initial overarching risk assessment, the specific risks
are determined using specific questionnaires. Should
there be any indication revealed, the responsible pro-
curement department initiates an extensive examina-
tion of the situation.
Supplier compliance risk management
Through the Social CMS, the Mercedes-Benz Group
identifies and addresses in particular those human
rights risks that may arise in the workforces of its own
Group companies. Employee rights are also addressed
systematically and on a risk basis as part of the Social
CMS. With the Social CMS, the Mercedes-Benz Group
has integrated the issue of human rights into the
Group-wide, systematic compliance risk management
process for the Group companies.
Social Compliance Management System
representatives, as well as local residents. For example,
the Mercedes-Benz Group also holds talks with interna-
tional NGOs and other organizations concerning the
human rights risks arising from the extraction of certain
raw materials.
The Mercedes-Benz Group continues to expand the
HRRS step by step and also involves external stake-
holders and experts in this process. The stakeholders
include rights holders such as employees and their
The HRRS should be understood as a due diligence
cycle that basically consists of four steps: 1. Risk
assessment, 2. Programme implementation, 3. Monitor-
ing, and 4. Reporting. It is designed to systematically
identify risks and potential and actual negative impacts
of business activities on the respect for human rights
early on, avoid such effects and, if necessary, to initiate
countermeasures.
The HRRS is the Mercedes-Benz Group's approach to
fulfilling its human rights due diligence obligations. It
encompasses the protection of our own employees
through the Group-wide Social Compliance Manage-
ment System (Social CMS) in Group companies as well
as processes for human rights due diligence in supply
chains as part of Supplier Compliance Risk Manage-
ment (SCRM) for direct suppliers (Tier 1) and, risk-based,
indirect suppliers (beyond Tier 1).
Human Rights Respect System (HRRS)
The Social Compliance department helps with the defi-
nition of human rights due diligence requirements
within the Mercedes-Benz Group and towards suppliers.
Moreover, it works closely with the specialist units
responsible for operational implementation of the com-
pany's human rights due diligence obligations, and with
the procurement units in particular.
Further Information
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Corporate Governance
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Contents
Annual Report 2023 | Mercedes-Benz Group
3. Definition and implementation of measures for the
risk hotspots and review of whether they are effective
over the long term.
Economic activity 6.15 relates to the establishment
and operation of company-owned charging infrastruc-
ture by means of high-power charging stations, which
are a prerequisite for zero tailpipe CO2 operation of
zero-emissions road transport.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Integrity Code and the Principles of Social Respon-
sibility and Human Rights are binding for all employees
of the Mercedes-Benz Group as well as the consoli-
dated Group companies. Both are the subject of the
mandatory basic online module Integrity@Work, which
also covers topics related to integrity and compliance
and must be completed every three years by all
employees of the administration of Mercedes-Benz
Group AG as well as the consolidated Group companies.
In 2023, human rights compliance training was also
introduced for all managers of Mercedes-Benz
Group AG and consolidated Group companies
Raising awareness of human rights issues
If on-site inspections reveal deficiencies at a supplier,
the Mercedes-Benz Group calls on the supplier to
improve the relevant processes. If the supplier does
not sufficiently remedy the criticised processes, the
Group makes individual decisions regarding the next
steps. In especially severe cases, these decisions can
be made by management bodies. As a last resort, this
can also lead to the discontinuation of the Mercedes-
Benz Group's business relationship with a supplier.
The Mercedes-Benz Group also continued to conduct
audits at Tier 1 suppliers in 2023, when it made 744
on-site inspections. Among other things, anomalies were
detected with regard to working hours, the communica-
tion of our sustainability standards and business ethics.
department initiates an extensive examination of the
situation.
In addition, Tier 1 suppliers were continuously screened
for human rights violations and breaches of environ-
mental standards in the reporting year. The objective is
to identify possible violations at an early stage on the
basis of the latest supplier data. Should there be any
indication revealed, the responsible procurement
The Mercedes-Benz Group uses a variety of measures
and concepts to ensure the fulfilment of its due dili-
gence obligations in the supply chain. This includes
training, preventive and corrective measures, risk analy-
ses, documentation for tracking and reporting purposes
and effectiveness checks. With these instruments, the
Mercedes-Benz Group intends to increase transparency
in the supply chain and to ensure that internationally
recognized human rights are upheld by business part-
ners as well, and that other social standards and envi-
ronmental requirements are met. The procurement
units for production materials, non-production materi-
als and services play a key role here.
Measures in the supply chain
The goal here is to prevent, minimize or, if possible,
bring to an end any negative impacts on human rights
worldwide. The RSS are an integral part of all new
orders for Tier 1 suppliers and the key contractual docu-
ment for minimum and sustainability requirements.
They are applied worldwide.
upstream stages of the value chain and to monitor com-
pliance with them in their business processes and
sphere of influence.
The Group has incorporated the guidelines for sustaina-
ble supply chain management into the Responsible
Sourcing Standards (RSS). They define minimum
requirements and expectations for direct suppliers and
contractually oblige them to comply with these require-
ments, to communicate them to their employees and
The Mercedes-Benz Group is committed to the respon-
sible procurement of production materials, non-produc-
tion materials and services.
Requirements for suppliers
We regularly conduct such risk mapping in order to
address current developments and adapt our risk clas-
sification if necessary. The main human rights risks for
the identified services are then determined on a step-
by-step and supply chain-specific basis and appropri-
ate measures are defined.
The Mercedes-Benz Group also carefully checks the
services it uses. Services that are particularly critical
from a human rights perspective were identified as part
of an impact assessment. The analysis resulted in a list
of 27 services that are potentially critical in terms of
human rights.
In the reporting year, the Mercedes-Benz Group was
able to complete 57% of the process of reviewing all 24
raw materials, thus achieving its target for 2023. The
achievement describes the progress in the overall pro-
cess of assessing all 24 raw materials, which includes
fully complete and partially complete assessments.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
112
Contents
The economic activities in specific energy sectors con-
tained in the supplement to the delegated act relating
to the climate goals are only present to an immaterial
extent at the Mercedes-Benz Group and are per-
formed exclusively in support of carrying out eco-
nomic activity 3.3.
The economic activities contained in the delegated acts
relating to climate change adaptation are only present
to an immaterial extent at the Mercedes-Benz Group
and are reported exclusively under the environmental
objective climate change mitigation.
The Taxonomy-eligible economic activity 5.4 that
encompasses the sale of second-hand goods, which
are purchased by the Mercedes-Benz Group from third
parties, was identified on the basis of the descriptions
Criteria for a substantial contribution
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
119
A. TAXONOMY-ELIGIBLE ACTIVITIES
To Our Shareholders
Economic activities
Revenue
Contents
Annual Report 2023 | Mercedes-Benz Group
The individual figures for revenue, capital expenditure
and operating expenditure are precisely allocated to a
specific economic activity and environmental objective.
The sections below present information on the propor-
tion of revenue, capital expenditure and operating
expenditure accounted for by environmentally sustaina-
ble economic activities at the Mercedes-Benz Group.
Reporting on the Taxonomy-aligned
proportions of environmentally
sustainable economic activities
Mercedes-Benz Group. Key issue areas here are human
rights and labour rights (see the chapters Social compli-
ance and Occupational health and safety), the preven-
tion of corruption and the promotion of fair competition
(see the chapters Compliance management system,
Combating corruption and Promoting fair competition),
and responsible tax practices (see the chapter Tax obli-
gation). The verification of compliance here basically
involves demonstrating compliance with the existence of
corresponding due diligence processes at the Group
level and the fact that no judicial rulings relating to seri-
ous violations in the aforementioned areas have been
made in the final instance.
The report published by the Platform on Sustainable
Finance in October 2022 (Final Report on Minimum
Safeguards) assists companies with the interpretation
of the scope and application of the minimum standards.
This report forms the foundation for the application of
minimum standards and the associated reporting at the
An economic activity can only be classified as environ-
mentally sustainable within the meaning of the Taxon-
omy if it is also conducted in accordance with certain
minimum standards that are based on international
frameworks. Here, Article 18 of the Taxonomy Regula-
tion references the OECD Guidelines for Multinational
Enterprises, the United Nations Guiding Principles on
Business and Human Rights (including the basic princi-
ples and rights from the eight core conventions defined
in the International Labour Organization's Declaration
on Fundamental Principles and Rights at Work), and the
International Bill of Human Rights. The Taxonomy Regu-
lation itself does not further specify the standards.
Fulfilment of minimum safeguards
The analysis of the DNSH requirements for economic
activities 3.3 and 6.15 forms the basis for considering
the taxonomy-compliant shares. With regard to eco-
nomic activity 6.5, the reductions due to the DNSH
requirements of the environmental objective pollution
prevention and control were taken into account in the
Taxonomy-alignment of revenues and investments.
requirements in the construction and approval process
according to the DNSH requirements were taken as a
basis.
Further Information
2022
Consolidated Financial Statements
Proportion
Proportion
Revenue² of revenue²
14%
20,704
CCM 3.3
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low-carbon technologies for transport
T
E
in %
Y/N
Y/N
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
Y; N; N/EL³
in %
euros
in millions of
activity
Category:
enabling transitional
activity
revenue
Category:
of Taxono-
my-aligned
(A.1) or
Taxonomy-
("do no signifi- Minimum eligible (A.2)
cant harm") 5 safeguards
Circular
Water economy
DNSH criteria
Climate
change
adaptation
Climate
change
mitigation
Code¹
N/EL
Corporate Governance
118
With regard to economic activity 6.15, potential climate
risks according to Appendix A (Annex I) of the delegated
act of the EU (Delegated Regulation (EU) 2021/2139)
were assessed by relevance for the implementation of
the economic activity and manufacturer's specifications
for the charging stations were taken into account.
In addition, the verificiation of the DNSH criteria for
economic activity 6.5 is essentially based on the con-
sideration of use and environmental conditions, such
as heat and cold requirements in the context of vehicle
development and testing.
With regard to economic activity 3.3, the EU Taxonomy
requires a climate risk analysis to be carried out. In
accordance with the DNSH requirements, this analysis
was carried out for taxonomy-relevant production sites
in connection with economic activity 3.3, in order to
assess potential physical climate-related risk factors on
the basis of material climate risks in line with Appendix
A (Annex I) of the delegated act of the EU (Delegated
Regulation (EU) 2021/2139). The analysis took into
account climate scenarios from the Intergovernmental
Panel on Climate Change (IPCC) and different time hori-
zons, including 2040. Adaptation measures were ana-
lysed on the basis of the results.
Climate change adaptation
With regard to economic activity 6.15, the fulfilment of
the DNSH criteria was reviewed at the level of the oper-
ational high-power charging stations.
With regard to economic activity 6.5, the analysis of the
criteria is to be performed on the basis of the low-car-
bon vehicles in the leasing and financing portfolio. In
addition to Group-brand vehicles, the vehicle portfolio
also includes vehicles from other manufacturers. The
latter are reported as Taxonomy-eligible but not Taxon-
omy-aligned, as it is not currently possible to carry out
an adequate DNSH analysis due to the current data
availability.
With regard to economic activity 3.3, the fulfilment of
these criteria was basically assessed at the level of
those consolidated production sites where low-carbon
vehicles or associated components are currently being
manufactured or plans call for them to be manufac-
tured in the future.
In a second step, compliance with the DNSH criteria for
the further environmental objectives for the respective
economic activities was analysed on the basis of the
defined criteria in the reporting year.
Exclusion of the possibility of significant
interference on the basis of the "do no significant
harm" criteria
Furthermore, according to the delegated act, high-
power charging stations that are intended for the oper-
ation of vehicles with zero tailpipe CO2-emissions make
a substantial contribution to the environmental objec-
tive climate change mitigation.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
116
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Fulfilment of a substantial contribution to the
environmental objective climate change mitigation
According to the delegated act, all vehicles below the
current limit value of 50g CO2/km per vehicle (in
accordance with the WLTP) as defined in the technical
screening criteria make a substantial contribution to the
climate change mitigation environmental objective. At
Mercedes-Benz Group all-electric vehicles as well as
the majority of plug-in hybrid vehicles are below this
threshold. These vehicles are hereafter referred to as
"low-carbon vehicles".
In a further step, Taxonomy-alignment must be
assessed for Taxonomy-eligible economic activities.
Only Taxonomy-eligible activities can be considered as
environmentally sustainable activities, or as being Tax-
onomy-aligned, provided they meet certain technical
screening criteria. Here, the fulfilment of certain techni-
cal screening criteria with regard to the relevant eco-
nomic activities must make a substantial contribution
to an environmental objective defined by the Taxonomy
Regulation and, on the basis of defined “do no signifi-
cant harm" criteria (DNSH criteria), also exclude the
possibility of significant interference with another envi-
ronmental objective. It must also be ensured that mini-
mum standards are met with regard to issues such as
upholding human rights or combating corruption (mini-
mum safeguards).
Taxonomy-alignment
The individual economic activities are additionally to be
classified according to enabling activities and transi-
tional activities. An enabling activity is an economic
activity that makes a substantial contribution to one or
more environmental objectives by directly enabling fur-
ther activities to also make a substantial contribution.
At the Mercedes-Benz Group this mostly applies to the
economic activities 3.3 and 6.15. A transitional activity,
in contrast, is an economic activity for which there is no
technological and economically feasible low-carbon
alternative but which makes a substantial contribution
to climate change mitigation by supporting the transi-
tion to a climate-neutral economy.
in the delegated act relating to the transition to a cir-
cular economy. For the 2023 reporting year, simplified
reporting obligations apply for economic activities
newly introduced by the delegated acts. These stipulate
that only reporting in relation to Taxonomy-eligibility is
required. The Mercedes-Benz Group reports economic
activity 5.4 as Taxonomy-eligible but not environmen-
tally sustainable. An assessment of Taxonomy-align-
ment has not been carried out.
Sustainable use and protection of water
and marine resources
Combined Management Report
Non-Financial Declaration
With regard to economic activity 3.3, fulfilment of the
DNSH criteria according to the Taxonomy Regulation is
intended to be ensured mainly on the basis of estab-
lished environmental management systems and the
internal environmental risk assessment (environmental
due diligence process). The company has established
environmental management systems at its own produc-
tion sites around the world in accordance with ISO
14001. In addition, all German and the two European
manufacturing locations in Kecskemet (Hungary) and
Vitoria (Spain) have also been validated in accordance
with EMAS. As part of the internal environmental risk
assessment, consolidated production sites are evalu-
ated according to a number of factors, including those
relating to water quality, in a five-year cycle. Recom-
mendations for minimizing risks are then drawn up, pri-
oritized and tracked. The Group also uses external data
sources to identify sites that harbour potential risks
relating to water scarcity.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
During the reporting year, an environmental impact
assessment was not required for the charging infra-
structure (economic activity 6.15) that was put into
operation. Furthermore, the locally applicable
To demonstrate the requirements for economic activity
3.3, ecologically sensitive or protected areas in the
neighbourhood of sites are documented and taken into
account as part of the internal environmental risk
assessment (environmental due diligence process). Fur-
thermore, environmental impact assessments or com-
parable audits outside the EU are carried out in the
context of a new site or the extension of an existing site,
if legally required. In addition, the Group has estab-
lished environmental management systems in accord-
ance with ISO 14001 at its production sites.
Protection and restoration of biodiversity and
ecosystems
For economic activity 6.15, the applicable requirements
from the Taxonomy Regulation on noise, vibration, dust
and pollutants must be complied with.
on the market, the data of the European Product Data-
base for Energy Labelling (EPREL) shall be used. The
time of market placement of the vehicles in the leasing
and financing portfolio was used for the analysis, and a
percentage share of the vehicles with the respective
highest tyre classes according to EPREL was deter-
mined on the basis of a representative time period. This
proportion is applied to the leasing and financing port-
folio of all-electric vehicles worldwide wherever the
corresponding data is available.
In due consideration of the applicable legislation and of
a Notice (C/2023/267) published by the EU Commission
on 20 October 2023, only tyres corresponding to the
two highest classes for rolling resistance coefficients
available on the market and at the same time the high-
est class for external rolling noise available on the mar-
ket fulfil DNSH requirements for the respective vehicles.
For the assessment of the respective classes available
With regard to economic activity 6.5, the DNSH criteria
refer to compliance with various product-related Euro-
pean regulations and directives. As a result, all-electric
vehicles are currently considered in the Taxono-
my-aligned scopes of economic activity 6.5.
With regard to the DNSH criteria, for economic activity
3.3 under Appendix C (Annex I) of the delegated act of
the EU (Delegated Regulation (EU) 2021/2139), the Tax-
onomy Regulation refers to the concept of avoiding the
manufacturing, placing on the market or use of
restricted and reportable substances subject to current
European legislation on chemicals. The implementation
of internal processes for specification, approval and
control is intended to ensure compliance with European
regulations (according to Appendix C) and respective
national legislations. The Global Automotive Declarable
Substance List (GADSL) forms the basis for the prohibi-
tion and declaration requirement of substances in
Mercedes-Benz products. The Mercedes-Benz Group
also defines specifications for substitution analyses,
and thus for the use of less critical hazardous sub-
stances.
Pollution prevention and control
For economic activity 6.15, the applicable DNSH criteria
were analysed and checked for adherence. This
includes the verification of the recycling or disposal of
waste generated during construction and demolition.
The Mercedes-Benz Group is intensifying its efforts to
use lower volumes of raw materials and other materials
in its production operations. In accordance with the
waste hierarchy, the company's primary goal is to avoid
waste. For its own production sites worldwide, the
Mercedes-Benz Group has set reduction targets for fac-
tors such as total waste volume and waste volume for
disposal per vehicle. Waste management is also a com-
ponent of the Group's internal environmental risk
assessment.
With regard to economic activity 3.3, the EU Taxonomy
Regulation requires an assessment and, if possible, the
application of measures that promote the transition to a
circular economy, including the use of secondary mate-
rials, high durability of products and waste manage-
ment in production. When developing products, the
Mercedes-Benz Group considers the concept of circular
economy from the very start and has set itself the over-
arching goal of increasing its use of secondary materials
in vehicles. In addition, the DNSH criteria for economic
activity 6.5 are taken into account through the imple-
mentation of the legal requirements on recyclability and
reusability for passenger car models and light commer-
cial vehicles.
Transition to a circular economy
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To Our Shareholders
Contents
With regard to economic activity 6.15, the analysis shall
assess that the use of the charging infrastructure does
not give rise to any significant risk to the water quality
and the water scarcity corresponding to the DNSH cri-
teria.
The calculations for the key figures are based on the
Consolidated Financial Statements in accordance
with IFRS. The provision of comparative information,
except where concerning the economic activities
newly introduced by the delegated acts supplement-
ing the Taxonomy Regulation, was legally required in
the reporting year.
Total
Other revenue
Annual Report 2023 | Mercedes-Benz Group
Climate
change
mitigation
Code¹ expenditure²expenditure²
Proportion
Operating of operating
2022
Criteria for a substantial contribution
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
124
Economic activities
Operating expenditure
To Our Shareholders
Climate
change
adaptation
DNSH criteria
Water
Circular
economy
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
in %
euros
in millions of
activity
enabling transitional
activity
Contents
Category:
Taxono-
my-aligned
(A.1) or Tax-
onomy-eligi-
ble (A.2)
Proportion of
operating
expenditure
Minimum
("do no signifi-
cant harm") 5 safeguards
Pollution Biodiversity
Category:
Annual Report 2023 | Mercedes-Benz Group
22%
18,369
44%
3,421
1,507
48%
3,718
1,768
54%
in %
3,480
1,874
61%
in % in millions of euros in millions of euros
4,513
2,764
in millions of euros in millions of euros
130
Y/N
469
391
4,057
24%
21,471
5,220
Total
3%
10,545
285
4%
12,771
558
leases
Equipment on operating
42%
923
28%
Y/N
in %
E
68%
4,970
CCM 3.3
Manufacture of low-carbon technologies for transport
EL; N/EL4
A.2 Taxonomy-eligible activities that are not environmentally sus-
tainable (not Taxonomy-aligned activities)
T
0%
0%
0%
0
E
35%
Y
Y
EL
0%
EL; N/EL4
N/EL
EL; N/EL4
N/EL
0%
0%
0%
0%
0%
100%
100%
100%
7,306
68%
4,970
A. Operating expenditure of Taxonomy-eligible activities (A.1 + A.2)
Operating expenditure of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
N/EL
EL; N/EL4
EL; N/EL4
N/EL
EL; N/EL4
N/EL
Right-of-use assets
0%
0%
Y
Y
N/EL
N/EL
N/EL
N/EL
N/EL
Y
32%
2,336
CCM 3.3
Manufacture of low-carbon technologies for transport
A.1 Environmentally sustainable activities (Taxonomy-aligned)
A. TAXONOMY-ELIGIBLE ACTIVITIES
T
35%
0%
E
of which enabling activity
0%
100%
32%
35%
Y
Y
0%
0%
0%
0%
0%
100%
32%
2,336
2,336
of which transitional activity
Operating expenditure of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
Property, plant and equip-
ment
Intangible assets
Total Taxonomy-aligned Taxonomy-aligned
capital expenditure¹ capital expenditure capital expenditure¹ capital expenditure¹ capital expenditure capital expenditure¹
N/EL
N/EL
N/EL
N/EL
EL
57%
N/EL
12,186
Transport by motorbikes, passenger cars and light commercial
vehicles
22%
N/EL
N/EL
N/EL
N/EL
CCM 6.5
56%
Capital expenditure of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
A. Capital expenditure of Taxonomy-eligible activities (A.1 + A.2)
100%
0%
0%
0%
0%
0%
78%
0%
0%
0%
0%
0%
100%
100%
76%
100%
16,251
21,471
EL
EL
19%
4,065
0%
0%
0%
0%
100%
22%
22%
Y
Y
0%
0%
0%
0%
0%
100%
0%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Y
20%
CCM 3.3
EL; N/EL4
EL; N/EL4
EL; N/EL4
EL; N/EL4
EL; N/EL4
EL; N/EL4
Manufacture of low-carbon technologies for transport
A.2 Taxonomy-eligible activities that are not environmentally sustain-
able (not Taxonomy-aligned activities)
T
0%
0%
0%
0
E
Y
0%
Capital expenditure of Taxonomy non-eligible activities
0
All of the capital expenditure of the Mercedes-Benz
Group during the reporting year included in the numer-
ator of the economic activities 3.3 and 6.5 relates to
assets or processes in the context of already existing
technologies which are connected to already existing
Taxonomy-aligned economic activities 3.3 and 6.5. For
most of the capital expenditure relating to the industrial
business, a direct attribution was made to all-electric
vehicle projects. In the case of capital expenditure in
low-carbon plug-in hybrids and assets that are used to
produce both vehicles with combustion engines and
low-carbon vehicles, suitable allocations based on
planned vehicle sales figures for the respective model
series or vehicle platforms were used. Capital expendi-
ture that is not directly related to the manufacturing
process was allocated on the basis of the planned unit
When looking at Taxonomy-aligned investments in
intangible assets (mainly in capitalized development
costs) and property, plant and equipment of the
Mercedes-Benz Group shows much higher shares of
Taxonomy-aligned capital expenditure (table Capital
expenditure).
The size of the share of Taxonomy-aligned expenditure
of total capital expenditure is mainly due to the dispro-
portionately low share of Taxonomy-aligned vehicles
in the additions to the equipment on operating leases.
As a result, this share only partially reflects our invest-
ments in sustainable products for the future.
ties. Compliance with the DNSH criteria was
also monitored.
To calculate the Taxonomy-aligned proportion of eco-
nomic activities (under A.1 in the table Capital expendi-
ture), capital expenditure was examined to determine
the extent to which it was associated with low-carbon
vehicles (economic activities 3.3 and 6.5) and with
high-power charging stations (economic activity 6.15) in
order to assess whether a substantial contribution had
been made to climate change mitigation. Table Capital
expenditure (p. 121) shows the Taxonomy-aligned capi-
tal expenditure, aggregated across all economic activi-
Taxonomy-alignment of capital expenditure
Annual Report 2023 | Mercedes-Benz Group
According to the Commission Notice (2022/C 385/01)
that the European Commission published on 6 October
2022, the definition of an economic activity is charac-
terized by the achievement of an output. In line with
the Mercedes-Benz Group's business model, the
numerator was therefore determined by examining
whether capital expenditure is made in connection with
the manufacturing of vehicles, the establishment of the
charging infrastructure or the implementation of trans-
port solutions for people and goods. This applies to
nearly all of our investments.
All additions to intangible assets, property, plant and
equipment and right-of-use assets as defined in IFRS 16
in accordance with the statements of changes in
non-current assets as well as additions to equipment on
operating leases, including the additions to the named
assets as part of company acquisitions are taken into
account in the denominator. Equipment on operating
leases only takes into account vehicles acquired by deal-
ers from outside the Group. Goodwill acquired is not
taken into account here. If a divestment is planned, capi-
tal expenditure on non-current assets is only taken into
For the share of Taxonomy-eligible capital expenditure
(under A. in the table Capital expenditure), the Taxono-
my-eligible capital expenditure is considered in relation
to the total relevant capital expenditure of the Group.
Taxonomy-eligibility of capital expenditure
1 The key figures were audited in order to obtain limited assurance as part of a separate assurance engage-
ment of the sustainability report.
0%
Biodiversity and ecosystems (BIO)
account until the point in time at which they were first
classified as held for sale in accordance with IFRS 5.
The relevant additions to the assets to be taken into
account amounted to €21,471 million in the reporting
year (2022: €18,369 million) (see Notes 11, 12 and 13 in
the notes to the consolidated financial statements).
Additions that result from a purchase in the context of
a company acquisition are of secondary importance in
the reporting year.
Contents
To Our Shareholders
123
Proportion of
Taxonomy-aligned
Total
Proportion of
Taxonomy-aligned
2022
2023
Capital expenditure
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
A capital expenditure (CapEx) plan that has been
adopted by management must exist for capital expendi-
ture that leads to an expansion of Taxonomy-aligned
economic activities or enables the conversion of Taxon-
omy-eligible economic activities into Taxonomy-aligned
economic activities. At the Mercedes-Benz Group this
affects capital expenditure for economic activity 6.15
Infrastructure enabling low-carbon road transport and
public transport (charging infrastructure) that is
expected to fall under the environmental objective cli-
mate change mitigation. The Board of Management of
Mercedes-Benz Group AG has adopted the planned
capital expenditure for the construction of Mercedes-
Benz own high-power charging stations as part of the
corporate planning covering the period 2024 to 2028.
The CapEx plan contains total capital expenditure in the
amount of around €1.4 billion (whereof €30 million are
accounted for in the reporting year).
CapEx plan for economic activity 6.15
sales figures for low-carbon vehicles. With regard to
financial services, it is possible to match the additions
to equipment on operating leases directly to low-car-
bon vehicles. At 24%¹, the percentage of Taxono-
my-aligned capital expenditure was at the prior-year
level. There was a sharp addition to capitalized devel-
opment costs, the effect of which was offset by the
higher total capital expenditure compared to the previ-
ous year.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
Pollution prevention and control (PPC)
Circular economy (CE)
0%
0%
Combined Management Report
Non-Financial Declaration
122
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
5
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total (total A + B), which was audited with reasonable assurance as a Group key figure.
1 The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC,
biodiversity and ecosystems: BIO.
100%
0%
100%
21,471
0%
Corporate Governance
Total (A+B)
Consolidated Financial Statements
The following table shows the scope of the Taxonomy-
eligibility and the Taxonomy-alignment for the capital
expenditure by environmental objective:
0%
0%
0%
0%
0%
Water and marine resources (WTR)
0%
0%
Climate change adaptation (CCA)
Taxonomy-
eligibility
per objective
76%
24%
Climate change mitigation (CCM)
per objective
Taxonomy-
alignment
Proportion of capital expenditure/total capital expenditure¹
Further Information
0%
0%
0%
Combined Management Report
Takeover-Relevant Information and
Explanation
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
€26,718 million (-1%) At the prior-year level
12.3%
€62,014 million (+7%) Slightly above the prior-year level
€135,027 million (+2%) Slightly above the prior-year level
130
1 The internally calculated value for 2022 did not include vehicles of the joint venture smart Automobile Co., Ltd. (smart vehicles).
Q1: At the prior-year level
Significantly below the prior-year level
12%-14%
Slightly above the prior-year level
Slightly below the prior-year level
Revenue
€351 million (+76%) Significantly above the prior-year level
€873 million (+58%) Significantly above the prior-year level
1.0
Q1: Slightly below the prior-year level
Q3: At the prior-year level
Corporate Governance
Consolidated Financial Statements
Further Information
Y
E
Capital expenditure of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
of which enabling activity
of which transitional activity
Provisions of applicable law and of the articles of
association concerning the appointment and
dismissal of members of the Board of Management
and amendments to the articles of association
Members of the Board of Management are appointed
and dismissed on the basis of Sections 84 and 85 of
the German Stock Corporation Act (AktG) and Sec-
tion 31 of the German Codetermination Act (MitbestG).
In accordance with Section 84 of the German Stock
Corporation Act (AktG), the members of the Board of
Management are appointed by the Supervisory Board
for a maximum period of office of five years. The rules
of procedure of the Supervisory Board stipulate that the
initial appointment of members of the Board of Man-
agement is generally limited to three years. Reappoint-
ment or the extension of a period of office is permissi-
ble, in each case for a maximum of five years. In 2022,
the Supervisory Board also adopted a flexibly struc-
tured further shortening of the appointment period in
the case of appointments and reappointments of indi-
viduals 58 years of age and older at the time their term
of office begins.
Shares in Mercedes-Benz Group AG acquired by
employees within the context of the employee share
programme may not be disposed of until the end of the
following year. Eligible participants in the Performance
Phantom Share Plans (PPSPs) of Executive Level 1 and
eligible members of the Board of Management are
obliged by the Plans' terms and conditions and by the
Stock Ownership Guidelines to acquire the Company's
shares with a part of their Plan income or out of their
own funds up to a defined target volume. Eligible par-
ticipants from Executive Level 1 are obligated to hold
these shares for the duration of their employment
at the Group. For eligible members of the Board of
Management, the required retention period has been
extended to two years after the end of their contract
(with effect from 1 January 2023).
The Company does not have any voting rights or other
rights from treasury shares. In the cases described in
Section 136 of the German Stock Corporation Act (AktG),
the voting rights are excluded by law.
Restrictions on voting rights and on the transfer
of shares
The rights and obligations arising from the shares are
derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff., 118ff. and 186 of the German
Stock Corporation Act (AktG). Each share of Mercedes-
Benz Group AG confers the right to one vote and, if
applicable, with the exception of any new shares poten-
tially not entitled to dividends, to an equal portion of
the profits in accordance with the dividend payout
approved by the Annual General Meeting. The only
exceptions here are the treasury shares held by the
Company. There were 28.9 mill. treasury shares held by
the company at 31 December 2023.
31 December 2023. It is divided into 1,069,837,447 reg-
istered no-par-value shares, each of which accounts for
approximately €2.87 of the share capital. Pursuant to
Section 67 Subsection 2 of the German Stock Corpora-
tion Act (AktG), rights and duties relating to the Com-
pany exist from the shares only for those persons and
entities entered in the register of shareholders. With
the exception of treasury shares, from which the Com-
pany does not have any rights, all shares confer equal
rights to their holders.
The issued share capital of Mercedes-Benz Group AG
amounted to approximately €3,070 million as of
Composition of share capital
Report pursuant to Section 315a and Section 289a of the German Commercial Code (HGB)
Takeover-Relevant Information and Explanation
15.1%
Q2: 0.7-0.9
Q1: 0.6-0.8
Q2: 13%-15%
2,044,051 vehicles (+0%) At the prior-year level
Q1: Significantly above the prior-year level
Significantly above the prior-year level
Slightly above the prior-year level
0.8-1.0
At the prior-year level
12%-14%
At the prior-year level
Investments in property, plant and equipment
Research and development expenditure
Adjusted cash conversion rate
Adjusted return on sales
Revenue
Unit sales
Mercedes-Benz Cars
111 g/km (-3%) excluding smart vehicles¹ slightly below the prior-year level
109 g/km (-5%) including smart vehicles¹ significantly below the prior-year level
€11,316 million (+39%) Significantly above the prior-year level
€19,660 million (-4%) At the prior-year level
€112,756 million (+1%) At the prior-year level
Y
12.6%
€3,345 million (+2%) At the prior-year level
€9,099 million (+14%) Significantly above the prior-year level
Significantly above the prior-year level
Significantly above the prior-year level
0.5-0.7
Contract volume
New business
Mercedes-Benz Mobility
Investments in property, plant and equipment
Research and development expenditure
Adjusted cash conversion rate
Adjusted return on sales
447,790 vehicles (+8%) Significantly above the prior-year level
€20,288 million (+18%) Significantly above the prior-year level
Q1: Slightly above the prior-year level
Q2: Significantly above the prior-year level
Q1: Significantly above the prior-year level
Q1: 11%-13%
9%-11%
At the prior-year level
Slightly above the prior-year level
Revenue
Unit sales
Mercedes-Benz Vans
0.9
€153,218 million (+2%) Slightly above the prior-year level
N/EL
N/EL
change
mitigation
Climate
change
adaptation
Water
Circular
economy
Pollution Biodiversity
DNSH criteria
("do no signifi- Minimum
cant harm")5 safeguards
Climate
Taxono-
my-aligned
(A.1) or Taxon-
omy-eligible
(A.2) Capital
expenditure
Category:
enabling transitional
activity
activity
in millions of
euros
in %
Category:
Proportion
Capital ex- of capital
penditure²expenditure²
Code¹
Proportion of
Contents
To Our Shareholders
Capital expenditure
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low-carbon technologies for transport
Transport by motorbikes, passenger cars and light commercial
vehicles
121
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
2023
Criteria for a substantial contribution
2022
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
Y/N
Y/N
in %
N/EL
N/EL
N/EL
N/EL
N/EL
Y
Y
2%
Infrastructure enabling low-carbon road transport and public transport
CCM 6.15
30
0%
Y
N/EL
N/EL
Y
N/EL
3%
CCM 6.5
E
T
CCM 3.3
4,605
21%
Y
N
N/EL
N/EL
N/EL
N/EL
Y
Y
20%
E
585
Q2: At the prior-year level
Q2: Slightly above the prior-year level
Actual development in 2023
In-year adjustments
The operating expenditure shown below is included as
an aggregation across the various economic activities:
Taxonomy-alignment of operating expenditure
In order to calculate the Taxonomy-aligned proportion
of economic activities (under A.1 in the table Operating
expenditure), operating expenditure was examined to
determine the extent to which it was associated with
low-carbon vehicles in order to assess whether a sub-
stantial contribution had been made to climate change
mitigation. Compliance with the DNSH criteria was also
monitored.
Operating expenditure
In a manner similar to the approach taken for capital
expenditure, the relevant operating expenditures were
also examined here for the determination of the numer-
ator on the basis of the materiality considerations men-
tioned above to determine whether they are related to
the manufacture of vehicles. This applies to the operat-
ing expenditure described.
building renovation measures and certain maintenance
and repair expenses (basically labour and material
costs as well as purchased services) relating to prop-
erty, plant and equipment are included. These compo-
nents of the relevant operating expenditures were col-
lected exclusively from the manufacturing companies
on the basis of materiality considerations.
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
2023
The operating expenditures to be taken into account in
the denominator correspond to a figure that was exclu-
sively calculated within the framework of taxonomy
reporting, as they are elements of the individual func-
tional costs. These operating expenditures include
non-capitalized research and development costs and
costs arising from short-term leasing agreements. In
addition, according to the delegated act relating to Arti-
cle 8 of the Taxonomy Regulation, expenditure from
0%
0%
0%
0%
0%
Pollution prevention and control (PPC)
Biodiversity and ecosystems (BIO)
0%
Circular economy (CE)
Taxonomy-eligibility of operating expenditure
For the share of Taxonomy-eligible operating expendi-
ture (under A. in the table Operating expenditure), the
Taxonomy-eligible operating expenditure is considered
in relation to the relevant operating expenditure of the
Group.
Proportion of Taxon- Taxonomy-aligned
Total operating omy-aligned operat- operating expendi-
expenditure ing expenditure¹
ture¹
2022
247
38%
5,602
2,149
34%
6,230
2,089
Non-capitalized research
and development costs
Other operating expenditure
Total
in millions of euros in millions of euros
Taxonomy-aligned
operating expendi-
ture¹
in %
in % in millions of euros in millions of euros
ing expenditure¹
Total operating omy-aligned operat-
expenditure
Proportion of Taxon-
0%
0%
Water and marine resources (WTR)
0%
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report.
The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC, biodiversity and eco-
systems: BIO.
1
100%
0%
100%
65%
65%
100%
7,306
0%
0
Operating expenditure of Taxonomy non-eligible activities
Total (A + B)
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
0%
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL- Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective; N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
1,076
5 A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
Contents
0%
Climate change adaptation (CCA)
68%
32%
Climate change mitigation (CCM)
Taxonomy-
eligibility
per objective per objective
Taxonomy-
alignment
Proportion of operating expenditure/total operating expenditure¹
The following table shows the scope of the Taxono-
my-eligibility and the Taxonomy-alignment for the
operating expenditure by environmental objective:
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
125
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
23%
191
1,062
128
With an adjusted return on equity of 12.3%, the forecast
range was achieved.
Revenue at Mercedes-Benz Mobility was on a par with
the previous year. The original forecast of a level signifi-
cantly below the previous year was exceeded due to
higher customer income as a result of passing on
increased interest rates and a higher average financing
and leasing volume for new contracts.
Contract volume was slightly above the prior-year level.
At the beginning of the reporting year, Mercedes-Benz
Mobility had expected contract volume to decline
slightly. The main reasons for the deviation from the
forecast were the growth in the area of dealer financing
and higher average financing and leasing volumes for
new contracts.
Mercedes-Benz Mobility closed 2023 within the
expected range despite a declining interest margin due
to higher interest rates and increased competition in
the financial services sector. Furthermore, the business
activities in Russia were sold as planned, but nonethe-
less negatively impacted results. The opening of the
first Mercedes-Benz Charging Hubs in the fourth quarter
laid the foundation for the Group's own global high-
power charging network.
As expected, investments in property, plant and equip-
ment and research and development expenditure were
significantly higher than in the previous year.
The adjusted cash conversion rate also increased to 1.0
as a result of the business performance being signifi-
cantly better than expected at the beginning of the year.
Thanks to a compelling level of product quality and util-
ity, a significant improvement in pricing, a very favoura-
ble product mix, comprehensive initiatives to reduce
costs on the product, production and company levels
and an increase in productivity, an adjusted return on
sales of 15.1% was achieved. This figure was thus
slightly above the range of between 13% and 15%,
which had already been raised significantly during the
year.
Mercedes-Benz Vans can look back on an extraordi-
narily successful year. A continued very high demand for
Mercedes-Benz vans resulted in unit sales and revenue
significantly above those of the previous year. This
underlines the strategy of focussing on profitable
growth in the premium segment. At the beginning of the
year, unit sales were expected to be at the previous
year's level; revenue was expected to be slightly above
the previous year's level.
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Overall Assessment of the Financial Year
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
the joint venture smart Automobile Co., Ltd. (smart vehicles). The average CO2 emissions
are determined using the WLTP type test procedure.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Significantly below the prior-year level
Slightly below the prior-year level
At the prior-year level
At the prior-year level
Forecast for 2023
CO2 emissions of the new car fleet in Europe
Free cash flow of the industrial business
EBIT
Revenue
Mercedes-Benz Group
Comparison between the figures forecast for 2023 and their actual development
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Overall Assessment of the Financial Year
129
Contents
5,220
4,635
1 The Mercedes-Benz CO₂ pool not only includes newly registered Mercedes-Benz cars,
but also vans that were registered as passenger cars and, since 2023, vehicles from
At 0.9, the adjusted cash conversion rate was also
within the forecast range.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
126
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
35%
6,664
2,340
32%
7,306
2,336
18%
The non-capitalized research and development costs
can mostly be directly incorporated into the calculation
of the numerator on the basis of their allocation to
all-electric vehicle projects. Appropriate allocations
based on anticipated future unit sales figures of the
low-carbon share of the model series or the vehicle
platform were used for research and development
costs that cannot be directly allocated (model series or
vehicle platforms that include plug-in hybrids as well as
purely combustion engine vehicles). It was also not
possible to directly match the other components of rel-
evant operating expenditure to low-carbon vehicles.
The inclusion in the numerator was based on suitable
allocations of current production volumes. The share of
Taxonomy-aligned operating expenditure was 32%¹ in
the reporting year. The reason for the lower proportion
of Taxonomy-aligned operating expenditure is essen-
tially the decrease in non-capitalized research and
development costs attributable to low-carbon vehicles
with a simultaneous increase in the total non-capital-
ized research and development costs.
Sustained cost discipline enabled investments in prop-
erty, plant and equipment, which at the start of the year
had been expected to be significantly above the pri-
or-year level, to be held at the same level. Research and
development expenditure was also significantly higher
than in the previous year, because the new, electromo-
bility-oriented platform generation and the associated
drive concept, as well as the focus on digitalization and
automated driving, led to a higher-than-expected
increase. The company had expected research and
development expenditure to be slightly above the pri-
or-year level.
1 The key figures were audited in order to obtain limited assurance as part of a separate
Annual Report 2023 | Mercedes-Benz Group
12.6%. This confirmed the assessment made at the
beginning of the year.
The segment had expected an adjusted return on sales
of between 12 and 14%. Improved pricing, particularly in
the first half of the year, combined with continued high
cost discipline led to an adjusted return on sales of
Robust demand for Top-End and all-electric vehicles
from Mercedes-Benz Cars supported the development
in unit sales and revenue, which, as expected, remained
at the previous year's level.
According to internal calculations, the average CO₂
emissions of the Mercedes-Benz CO2 pool¹ in Europe
(European Union, Norway and Iceland) amounted to
109 g/km in the reporting year. The emissions were thus
significantly below the prior-year value of 115 g/km.
It should be noted that the internal calculation of the
value of 109 g/km was the first time that vehicles from
the joint venture smart Automobile Co., Ltd. were
included in the Mercedes-Benz CO2 pool. Excluding
these smart vehicles, the value of 111 g/km was only
slightly below the previous year's figure. This is due to
a more difficult than expected market environment for
electrified vehicles in Europe.
The free cash flow of the industrial business even sig-
nificantly exceeded the previous year's figure as a result
of lower working capital than expected. At the begin-
ning of the reporting year, the figure had been expected
to remain at the previous year's level. The forecast was
already raised during the year to a figure slightly above
the previous year's level.
In the past year, the Group achieved EBIT on a par with
the previous year. At the beginning of the year, it had
expected EBIT to be slightly below the prior-year figure.
The Group's EBIT forecast was already raised during the
year, primarily due to the positive results performance
in the Mercedes-Benz Vans segment.
The Mercedes-Benz Group successfully held its ground
in a challenging and volatile market environment,
thanks to the normalization of global automobile pro-
duction and the remaining order backlog from the pan-
demic period. As a result, revenue was slightly above
the prior-year figure. This was primarily due to improved
pricing at the automotive segments.
Overall Assessment of the Financial Year
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Overall Assessment of the Financial Year
127
To Our Shareholders
Contents
assurance engagement of the sustainability report.
24%
Adjusted return on equity
1.0
Revenue¹
EBIT¹
Free cash flow of the industrial business¹
Mercedes-Benz Cars
Unit sales¹
Share of electrified vehicles (xEV)1, 2
Revenue
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment¹
Research and development expenditure¹
€153,218 million
€19,660 million
€11,316 million
At the prior-year level
Slightly below the prior-year level
Slightly below the prior-year level
2,044,051 vehicles
Mercedes-Benz Group
20%
0.9
€3,345 million
At the prior-year level
19-21%
At the prior-year level
10-12%
0.8-1.0
Significantly above the prior-year level
€9,099 million
At the prior-year level
Mercedes-Benz Vans
Unit sales¹
€112,756 million
12.6%
At the Annual General Meeting to take place on 8 May
2024, the Board of Management and the Supervisory
Board will propose the payment of a dividend of €5.30
per share entitled to a dividend for the year 2023 (2022:
€5.20). Subject to further share buybacks prior to the
Annual General Meeting 2024, this represents a total
distribution of €5.5 billion (2022: €5.6 billion).
In line with a sustainable dividend policy, the
Mercedes-Benz Group sets the dividend based on a
distribution ratio of 40% of the net profit attributable to
Mercedes-Benz Group shareholders. The free cash flow
from the industrial business is also taken into consider-
ation when setting the dividend.
2023 reporting year
The development of revenue at Mercedes-Benz Cars is
in line with the sales forecast and is expected to be at
the previous year's level.
With stable pricing and declining raw material prices,
but also inflation- and demand-related additional costs
in the supply chain and a slight decline in the used car
business, Mercedes-Benz Cars anticipates an adjusted
return on sales of between 10% and 12% based on the
expected sales development.
The adjusted cash conversion rate for Mercedes-Benz
Cars is expected to be within a range of between 0.8
and 1.0 for the year 2024.
Mercedes-Benz Cars anticipates a significant increase
in investments in property, plant and equipment in
2024. The key drivers here are primarily investments in
new vehicle architectures, the electrification of the
product portfolio, and the expansion of digitalization.
The transformation towards a sustainable business
strategy means that research and development costs
in 2024 are expected to be at the previous year's level.
Mercedes-Benz Vans
Due to macroeconomic uncertainties, Mercedes-Benz
Vans expects unit sales in 2024 to be slightly below
the prior-year level. The share of electrified vehicles
(XEV) in total unit sales is expected to be increased to
between 6% and 8% by the all-electric models eCitan
and EQT (WLTP: combined energy consumption 100
kWh/km: 20,7-19,3; combined CO2 emissions: 0 g/km;
CO2 class: A) and the new eSprinter.
Due to its focus on profitable growth, Mercedes-Benz
Vans expects revenue in 2024 to be at the prior-year
level.
The continued high level of cost discipline is having
positive effects, while opposing advance expenditure
for the new all-electric van architecture VAN.EA is hav-
ing a negative impact. In total, this results in a planned
adjusted return on sales of between 12% and 14%.
The adjusted cash conversion rate for the Mercedes-
Benz Vans division is expected to be within a range of
0.6 to 0.8.
The Mercedes-Benz Vans division anticipates a signifi-
cant increase in investments in property, plant and
equipment in 2024. This increase will be primarily
driven by the further transition to an all-electric
Mercedes-Benz Vans fleet of the next generation.
Mercedes-Benz Vans also expects a significant
increase in the area of research and development
expenditure in 2024. The focus of research and
development is on electric drive systems, automated
driving and digitalization.
Mercedes-Benz Mobility
Mercedes-Benz Mobility expects a slight increase in
new business in 2024, while contract volume and
revenue will remain at the prior-year level.
Adjusted return on equity is expected to be within a
range of between 10% and 12% in 2024. The forecast
decrease compared to the previous year is mainly due
to an expected drop in interest result and expenses for
the further expansion of charging activities.
Annual Report 2023 | Mercedes-Benz Group
Contents
Dividend
To Our Shareholders
138
Combined Management Report
Outlook
Corporate Governance
Consolidated Financial Statements
Further Information
Outlook for key figures for 2024
447,790 vehicles
Share of electrified vehicles (EV) 1, 2
Revenue
5%
Adjusted return on sales
Consolidated Financial Statements
Further Information
The Mercedes-Benz Group will continue to concentrate
on achieving profitable growth in the coming years in
the market for luxury cars and premium vans, as well as
for sales financing. The Group believes that the focus
on vehicles in the Top-End and Core product categories
will make it possible to achieve sustainable solid
results, even in a challenging market environment.
The Mercedes-Benz Group is consistently moving
ahead with its efficiency measures in order to ensure
it can cover the high level of advance expenditure that
is required for the necessary transformation towards
an all-electric future. Furthermore, the Group believes
that the gradual and sustainable improvement of price
and product positioning, especially with regard to the
electrified vehicle portfolio, will enable it to overcome
the challenges it will face as part of the transformation
towards an all-electric future.
Against this backdrop and supported by the Group's
brand strengths and innovative capabilities, the
Mercedes-Benz Group looks forward with confidence
to the
year 2024.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
140
Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Further Information
Annual Report 2023 | Mercedes-Benz Group
Risk and Opportunity Report
The Mercedes-Benz Group is exposed to a large number
of risks that are directly linked with the business activi-
ties of Mercedes-Benz Group AG and its subsidiaries or
that result from external influences. The Group under-
stands a risk as the danger that events, developments
or actions will prevent the Group or one of its segments
from achieving its targets. The risks include both mone-
tary and non-monetary risks.
At the same time, it is important to identify opportuni-
ties in order to safeguard and enhance the competitive-
ness of the Mercedes-Benz Group. The Group defines
an opportunity as the possibility, due to events, devel-
opments or actions, of safeguarding or surpassing the
planned targets of the Group or of a segment.
In order to identify business risks and opportunities at
an early stage and to assess and manage them actively,
the Board of Management applies appropriate and
effective management and control systems, which have
been brought together in an overall risk and opportunity
management system. Risks and opportunities are not
offset.
Risk and opportunity
management system and
internal control system
Overview of the Mercedes-Benz
Group's control and monitoring
system
The Mercedes-Benz Group as a whole pursues the
three-line model to ensure an integrated control and
monitoring system.
The operating units in the form of the individual seg-
ments, Group functions, organizational units and Group
companies form the first line. Their task is to ensure the
implementation of internal and external guidelines, and
they are responsible for the implementation of controls,
operational risk management and risk management
processes in their respective units.
In the second line, the risk management system, the
accounting-related internal control system, the compli-
ance management system, Group Security and Global
Cyber & Information Security act as governance func-
tions.
They define the corresponding minimum requirements
and standards for methods, processes and systems for
use in the first line and set the framework for coopera-
tion. Their tasks also include regular reporting to the
Board of Management and the Supervisory Board. They
also support the first line in the corresponding imple-
mentation.
In the third line, Corporate Audit monitors the appro-
priateness and effectiveness of the implemented
processes and the governance functions of the first
and second lines through independent and risk-ori-
ented audits. It monitors whether the statutory condi-
tions and the Group's internal policies concerning the
control and risk management system of the Group are
adhered to and the associated processes are appro-
priately designed. If required, measures are initiated in
cooperation with the respective management.
Corporate Governance
Mercedes-Benz Cars expects unit sales in 2024 to be
at the level of the previous year. The share of electri-
fied vehicles (XEV) in total unit sales is expected to
range between 19% and 21%.
Combined Management Report
Outlook
Overall statement on future
development
Adjusted cash conversion rate
Investments in property, plant and equipment¹
Research and development expenditure¹
€20,288 million
15.1%
€351 million
€873 million
Mercedes-Benz Mobility
New business¹
Contract volume
Revenue
Adjusted return on equity¹
€62,014 million
€135,027 million
€26,718 million
12.3%
1 Key performance indicator.
2 Replaces the previous key performance indicator, CO2 emissions of the new car fleet in Europe, from 2024.
Slightly below the prior-year level
6-8%
At the prior-year level
12-14%
0.6-0.8
Significantly above the prior-year level
Significantly above the prior-year level
Slightly above the prior-year level
At the prior-year level
At the prior-year level
10-12%
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
139
Mercedes-Benz Cars
Forecast for 2024
Consolidated Financial Statements
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management was authorized, with
the consent of the Supervisory Board, to issue during
the period until 7 July 2025 convertible bonds and/or
bonds with warrants or a combination of those instru-
ments (commercial paper) in a total nominal amount of
up to €10 billion with a maximum term of ten years, and
to grant the owners/lenders of those bonds conversion
or option rights to new, registered shares of no par
value in the Company with a corresponding amount of
the share capital of up to €500 million, in accordance
with the terms and conditions of those convertible
bonds or bonds with warrants. The bonds may be
issued in exchange for consideration in cash, but also
for consideration in kind, in particular for interests in
other companies. The respective terms and conditions
may also provide for mandatory conversion or an obli-
gation to exercise the option rights. The bonds can be
issued once or several times, wholly or in instalments,
or simultaneously in various tranches. They can also be
issued by subsidiaries of the Company pursuant to Sec-
tion 15ff. of the German Stock Corporation Act (AktG).
Among other things, the Board of Management was also
authorized under certain circumstances, within certain
limits and with the consent of the Supervisory Board, to
exclude shareholders' subscription rights to the bonds.
Subscription rights can, under these defined conditions,
be excluded when bonds are issued in exchange for
non-cash contributions, particularly within the frame-
work of a merger or acquisition and when bonds are
issued in exchange for cash contributions if the issue
price is not significantly below the theoretical market
price of the bonds at the time of the issuance.
Any issuance of bonds with the exclusion of subscrip-
tion rights may only be carried out under the authoriza-
tion if the arithmetical proportion of the share capital
attributable to the total of the new shares to be issued
on the basis of such a bond does not exceed 10% of the
share capital at the time when this authorization takes
effect or - if this value is lower at the time when it is
exercised. If, during the period of the authorization until
it is exercised, use is made of other authorizations to
issue or sell shares in the Company or to issue rights
enabling or requiring subscription to shares in the Com-
pany and subscription rights are excluded, this is to be
counted towards the aforementioned 10% limit.
-
In order to service the debt of the convertible bonds
and/or bonds with warrants issued as a result of the
authorization, the Annual General Meeting of 8 July
2020 also approved a conditional increase in the share
capital of up to €500 million (Conditional Capital 2020).
No use was made of this authorization to issue convert-
ible and/or warrant bonds during the reporting period.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Takeover-Relevant Information and
Explanation
133
Corporate Governance
Consolidated Financial Statements
Further Information
By a further resolution of the Annual General Meeting
on 8 July 2020, the Board of Management was author-
ized, with the consent of the Supervisory Board, to
acquire the Company's own shares until 7 July 2025 for
all legal purposes in a volume of up to 10% of the share
capital at the time of the resolution of the Annual Gen-
eral Meeting or - if this amount is lower - at the time
when the authorization is exercised. With the consent
of the Supervisory Board, the shares can be used, with
the exclusion of shareholders' subscription rights, for,
among other things, corporate mergers and acquisi-
tions, or can be sold for cash to third parties at a price
that is not significantly below the market price at the
time of the sale. The acquired shares can also be used
to service debt on convertible bonds and/or bonds with
warrants, or can be issued to employees of the Com-
pany and employees and members of executive bodies
of subsidiaries pursuant to Section 15 ff. of the German
Stock Corporation Act (AktG). The Company's own
shares can also be cancelled.
During the period of the authorization, the total of the
Company's own shares used with the exclusion of
shareholders' subscription rights may not exceed 10%
of the share capital at the time when the authorization
takes effect or - if this amount is lower at the time
when it is exercised. If, during the period of the authori-
zation until it is exercised, use is made of other authori-
zations to issue or sell shares in the Company or to
issue rights enabling or requiring subscription to shares
in the Company and subscription rights are excluded,
this is to be counted towards the aforementioned 10%
limit.
In a volume of up to 5% of the share capital existing at
the time of the resolution of the Annual General Meet-
ing, the Board of Management was authorized, with the
consent of the Supervisory Board, to acquire the Com-
pany's own shares also with the application of deriva-
tive financial instruments (put or call options, forwards
or a combination of these financial instruments). The
terms of the derivatives may not exceed 18 months and
must be terminated at the latest on 7 July 2025.
This authorization was made use of to acquire the Com-
pany's own shares during the reporting period. With the
approval of the Supervisory Board, the Board of Man-
agement resolved a share buyback programme on
16 February 2023. The acquisition of treasury shares
worth up to €4 billion (not including incidental costs)
on the stock exchange over a period of up to two years
began on 3 March 2023. The repurchased shares are to
be cancelled at a later date. From March to December
2023, as part of the share buyback programme,
28.9 million of the Company's own shares were repur-
chased, representing 2.7% of the share capital.
Material agreements subject to change of control
Mercedes-Benz Group AG has concluded various mate-
rial agreements, as listed below, that include clauses
regulating the possible event of a change of control, as
can occur, amoung others, as a result of a takeover bid:
A non-utilized syndicated credit line for a total
amount of €11 billion, which the lenders are entitled
to terminate if (i) Mercedes-Benz Group AG becomes
a subsidiary of another company, or (ii) Mercedes-
Benz Group AG becomes controlled either individually
or jointly by one or more persons acting together. For
the purposes of the syndicated credit line, subsidiary
in relation to a company means another company (i)
that is controlled directly or indirectly by the
first-mentioned company, (ii) of which more than 50%
of the subscribed share capital (or other equity) is
held directly or indirectly by the first-mentioned com-
pany, or (iii) which is a subsidiary of another subsidi-
ary of the first-mentioned company. Control for the
purposes of the syndicated credit line means (i) the
right to determine the affairs of a company, (ii) the
right to control the composition of the managing
board or similar bodies, or (iii) the right to control the
composition of the supervisory board (if elected by
the shareholders).
A master cooperation agreement on wide-ranging
strategic cooperation with Renault S.A., Renault-Nis-
san B.V. and Nissan Motor Co., Ltd., as well as with
Mitsubishi Motors Corporation. In the case of a
change of control of one of the parties to the agree-
ment, each of the other parties has the right to
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Further Information
Combined Management Report
Takeover-Relevant Information and
Explanation
This limit is to include shares which (i) are issued or
sold during the period of this authorization with the
exclusion of subscription rights in direct or analogous
application of Section 186 Subsection 3 Sentence 4 of
the German Stock Corporation Act (AktG) and which (ii)
are or can or must be issued to service bonds with con-
version or option rights or conversion or option obliga-
tions, provided that the bonds are issued after this
authorization takes effect with the exclusion of share-
holders' subscription rights with analogous application
of Section 186 Subsection 3 Sentence 4 of the German
Stock Corporation Act (AktG).
purpose of an acquisition, and in the case of a capital
increase against cash contributions if the issue price of
new shares is not significantly below the market price
at the time of issue.
Contents
To Our Shareholders
Combined Management Report
Takeover-Relevant Information and
Explanation
131
Corporate Governance
Consolidated Financial Statements
Further Information
Pursuant to Section 31 of the German Codetermination
Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority
comprising at least two thirds of its members' votes. If
no such majority is obtained, the Mediation Committee
of the Supervisory Board has to make a suggestion for
the appointment within one month of the vote by the
Supervisory Board in which the required majority was
not reached. The Supervisory Board then appoints the
members of the Board of Management with a majority
of its own members' votes. If no such majority is
obtained, voting is repeated and the Chair of the Super-
visory Board then has two votes. The same procedure
applies for dismissals of members of the Board of Man-
agement.
In accordance with Article 5 of the articles of associa-
tion, the Board of Management has at least two mem-
bers. The number of members is decided by the Super-
visory Board. Pursuant to Section 84 Subsection 2 of
the German Stock Corporation Act (AktG), the Supervi-
sory Board can appoint a member of the Board of Man-
agement as the Chairperson of the Board of Manage-
ment. If a required member of the Board of
Management is lacking, an affected party can apply in
urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the Ger-
man Stock Corporation Act (AktG). Pursuant to Sec-
tion 84 Subsection 3 of the German Stock Corporation
Act (AktG), the Supervisory Board can revoke the
appointment of a member of the Board of Management
as the Chairperson of the Board of Management if there
is an important reason to do so.
Pursuant to Section 179 of the German Stock Corpora-
tion Act (AktG), amendments to the articles of associa-
tion require a resolution of the General Meeting and, in
accordance with Section 181 Subsection 3 of the Ger-
man Stock Corporation Act (AktG), such changes take
effect upon being entered in the commercial register.
Amendments to the articles of association that only
affect the wording can be decided upon by the Supervi-
sory Board in accordance with Article 7 Subsection 2 of
the articles of association. The General Meeting has
also passed resolutions expressly authorizing the
Supervisory Board to amend the wording of the articles
of association in accordance with the use of the
Approved Capital 2023 and the Conditional Capital
2020, as well as subsequent to the expiration of the
authorization, use, and conversion/option periods in
each case.
Unless otherwise required by applicable law or the arti-
cles of association, resolutions of the General Meeting
are passed pursuant to Section 133 of the German
Stock Corporation Act (AktG) and pursuant to Article 16
Sentences 1 and 2 of the articles of association with a
simple majority of the votes cast and, if required, with a
simple majority of the share capital represented. Pursu-
ant to Article 16 Sentence 3 of the articles of associa-
tion, the dismissal of a shareholder-elected member of
the Supervisory Board requires a majority of at least
three quarters of the votes cast. Pursuant to Section 179
Subsection 2 of the German Stock Corporation Act
(AktG), any amendment to the purpose of the Company
requires a three-quarters majority of the share capital
represented at the General Meeting; no use is made in
the articles of association of the possibility to stipulate
a larger majority of the share capital.
Authorization of the Board of Management to issue
or buy back shares
By resolution of the Annual General Meeting of 5 April
2018, the Board of Management was authorized, with
the consent of the Supervisory Board, to increase the
share capital of the Company in the period until 4 April
2023, wholly or in partial amounts, on one or several
occasions, by up to a total of €1 billion by issuing new
registered shares of no par value in exchange for cash
or non-cash contributions, and, with the consent of the
Supervisory Board under certain conditions and within
defined limits, to exclude shareholders' subscription
rights (Approved Capital 2018). No use was made of the
Approved Capital 2018 up to the time the authorization
period ended on 4 April 2023.
The Annual General Meeting held on 3 May 2023 again
authorized the Board of Management to increase the
share capital by up to a total of €1.0 billion in the period
until 2 May 2028 with the approval of the Supervisory
Board against cash and/or non-cash contributions
(Approved Capital 2023). The authorization enables the
exclusion of shareholders' subscription rights under
certain conditions and within defined limits subject to
the consent of the Supervisory Board.
Under these defined conditions, subscription rights can,
among others, be excluded in the event of a capital
increase against non-cash contributions for the
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Takeover-Relevant Information and
Explanation
132
Corporate Governance
Consolidated Financial Statements
Further Information
The total number of shares issued against cash and/or
non-cash contributions under this authorization with
the exclusion of shareholders' subscription rights may
not exceed 10% of the share capital at the time when
this authorization takes effect.
134
Approved Capital 2023 was not utilized within the
reporting period.
Consolidated Financial Statements
136
Combined Management Report
Outlook
Corporate Governance
Consolidated Financial Statements
Further Information
The dampening effects of the previous interest rate
hikes in the United States will likely become more
apparent, since they will no longer be cushioned by
positive fiscal measures as had been the case in 2023.
For the year as a whole, the Mercedes-Benz Group
therefore expects the US economy to grow by less than
in 2023.
The Chinese economy is likely to be weighed down
again in 2024 by the continued consolidation of the
country's real estate sector and by less dynamic
demand from abroad. China can therefore be expected
to record lower overall growth this year than in 2023.
-
In the light of these developments, the growth of the
world economy is expected to be 2 to 2.5% in the cur-
rent year significantly below the long-term average.
This is all the more likely in light of the fact that no posi-
tive effects to speak of can be expected in 2024 as a
result of government stimulus measures or a further fall
in prices for energy and raw materials.
These restrained macroeconomic conditions are likely
to have an increasingly negative effect on the growth of
automotive markets around the world. Last year, the
normalization of global vehicle production and the
reduction of order backlogs that had accumulated dur-
ing the COVID-19 pandemic had a favourable effect on
sales development in various markets. This year, how-
ever, the impact of weaker consumer demand will likely
become increasingly noticeable on the world's automo-
tive markets.
We can therefore expect to see only slight growth in the
global car market compared with the previous year.
Following a double-digit increase in 2023, a market vol-
ume only slightly above the prior year's level is now
expected for Europe in the current year. Unit sales for
the US light vehicle market are also likely to slightly
exceed the level recorded in the previous year. A slight
increase in market volume is also expected for China.
Growth in key van markets is expected to slow notice-
ably in 2024. In Europe, the market segment for mid-
size and large vans is likely to remain at the previous
year's level. The segment for small vans in Europe is
expected to expand slightly. The US market for large
vans will likely remain at the same level as in the prior
year. On the other hand, significant growth can be
expected for the mid-size van segment in China.
Outlook for the
Corporate Governance
key performance indicators
Mercedes-Benz Group
The Mercedes-Benz Group expects to generate revenue
in 2024 that is on the level of the previous year.
Based on the development of the different segments,
the Group expects EBIT to be slightly lower than in the
previous year in what will remain a challenging market
environment.
The free cash flow of the industrial business reached
a very high level in 2023. The automotive segments are
also planning significantly higher investments in prop-
erty, plant and equipment than in the previous year.
As a result, the Mercedes-Benz Group expects the free
cash flow of the industrial business in 2024 to be
slightly below the prior-year level.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
137
Combined Management Report
Outlook
Corporate Governance
To Our Shareholders
Contents
Automotive markets
Corporate Governance
An agreement with BAIC Motor Co., Ltd. related to a
jointly held company for the production and distribu-
tion of cars of the Mercedes-Benz brand in China, by
which BAIC Motor Co., Ltd. is given the right to termi-
nate the agreement or exercise a put or call option in
the case that a third party acquires one third or more
of the voting rights in Mercedes-Benz Group AG.
terminate the agreement. A change of control as
defined by the master cooperation agreement occurs
if a third party or several third parties acting jointly
acquire, legally or economically, directly or indirectly,
at least 50% of the voting rights in the company in
question or are authorized to appoint a majority of
the members of its managing board. Under the master
cooperation agreement, several cooperation agree-
ments were concluded between Mercedes-Benz
Group AG on the one side and Renault and/or Nissan
on the other, which provide for the right of termina-
tion for a party to the agreement in the case of a
change of control of another party. With the excep-
tion of the master cooperation agreement, the afore-
mentioned cooperation agreements were transferred
from the former Daimler AG to Mercedes-Benz AG in
2019.
-
-
Further Information
An agreement between Mercedes-Benz Group AG,
BMW AG and Audi AG related to the acquisition of the
companies of the HERE Group and the associated
establishment of There Holding B.V. In the event of a
change of control of one of the parties to the agree-
ment, the agreement obliges the party in question to
offer its shares in There Holding B.V. to the other
parties to the agreement (shareholders). A change of
control of Mercedes-Benz Group AG occurs if one
person gains control over Mercedes-Benz Group AG,
whereby control is defined as (i) having control of
more than 50% of the voting rights, (ii) being able to
control more than 50% of the voting rights eligible to
vote at the General Meetings on all or nearly all mat-
ters, or (iii) the right to determine the majority of the
members of the Board of Management or of the
Supervisory Board. A change of control also occurs if
competitors of the HERE Group or certain possible
competitors of the HERE Group in the technology
industry acquire a shareholding of at least 25% of
Mercedes-Benz Group AG. If none of the other parties
acquire these shares, the agreement gives them the
right to dissolve There Holding B.V.
An agreement between Mercedes-Benz Group AG and
BMW AG which contains basic provisions for joint
ventures between Mercedes-Benz Mobility Ser-
vices GmbH and group companies of BMW AG in the
field of mobility services (one joint venture each in
the areas of ride hailing and charging as well as a joint
venture that is structured as a holding for the afore-
mentioned joint ventures). A change of control is
defined as the acquisition by a third party of more
than 50% of the voting rights or shares, or the conclu-
sion of a control agreement over Mercedes-Benz
Group AG by a third party. In the event of a change of
control, the contract includes mechanisms that can
lead to sole ownership by one of the shareholders
(shoot-out process).
Contents
Outlook
135
Combined Management Report
Outlook
Annual Report 2023 | Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
Further Information
The statements made in the Outlook chapter are based
on the plans of the Mercedes-Benz Group for 2024 as
approved by the Board of Management with the agree-
ment of the Supervisory Board. These plans are based
on the premises the company sets regarding the eco-
nomic situation and the development of automotive
markets. It involves assessments made by the Group,
which are based on analyses by various renowned eco-
nomic research institutes, international organizations
and industry associations, as well as on the internal
market analyses of the Group sales companies.
The premises regarding the economic situation and the
development of automotive markets continue to be
characterized by an exceptional degree of uncertainty.
In addition to unexpected macroeconomic develop-
ments, uncertainties for the global economy and the
business development of the Mercedes-Benz Group
may arise in particular from geopolitical events and
trade policy. Among them are the current Middle East
conflict, the Russia-Ukraine war and other potential
regional crises. Other uncertainties that are particularly
worth mentioning include an exacerbation of tensions
between the United States and China and a further
deterioration of political relations between the Euro-
pean Union and China.
Further supply chain disruptions and, in particular,
availability bottlenecks for critical components remain
significant risk factors. Sharp rises in energy and com-
modity prices, higher-than-expected inflation rates and
interest rates, potential disruptions of the financial
market and an even more pronounced slowdown in
economic growth in individual regions or worldwide
may also have an impact on the development of the
world economy and the automotive markets.
The risks and opportunities that can arise as a result of
deviations from the forecasts of the development of the
world economy and automotive markets that are pre-
sented below are described in the Risk and Opportunity
Report.
The continuous planning process makes it possible for
the Group to ensure that available opportunities can be
exploited and that the organization can respond appro-
priately to unexpected risks. This in turn means that
expectations regarding anticipated business develop-
ment can be adjusted in line with the latest forecasts of
the development of automotive markets.
The world economy
and automotive markets
The world economy
The Group expects the world economy to continue to
grow at a slower pace in 2024. This slowdown will mainly
be driven by the major industrial countries, whose eco-
nomic development, at least in the first half of the
year, will likely be affected by persistently high inter-
est rates. In contrast, the monetary easing cycle that
started in numerous emerging markets in 2023, should
serve to support economic growth in those countries.
With regard to the euro zone, the absence of monetary
and fiscal policy stimuli can be expected to lead to
continued economic weakness in the first half of the
year at least. Given the insufficient order situation and
persistently high interest rates, no real recovery to
speak of can be expected for industrial sectors in par-
ticular. Similarly to the situation in 2023, economic out-
put for the year as a whole is expected to increase only
slightly in 2024.
To Our Shareholders
Possible production interruptions that were still associ-
ated with the Covid-19 pandemic and the related uncer-
tainties have become less likely in the meantime. As a
result, the production risks are reduced from "medium"
to "low".
Medium
Due to growing requirements concerning the confiden-
tiality, integrity and availability of data, the Mercedes-
Benz Group has implemented various preventive and
corrective measures so that the related risks, such as
possible reputational damage, are minimized. For exam-
ple, the Group reduces potential disruptions to opera-
tional processes in computer centres by mirroring data,
decentralizing data storage, maintaining off-site data
backups and configuring IT systems for high availability.
Emergency plans are drawn up and employees are
trained and regularly made aware in order to remain
capable of action. Specific threats are analysed and
countermeasures are coordinated at a globally active
Cyber Intelligence and Response Centre. The protection
of products and services against the danger of hacking
and cybercrime is continually further developed.
The information technology risks are increasing from
"low" to "medium". The level of digitalization at the
Mercedes-Benz Group and its suppliers is constantly
increasing and is facing an ever greater external threat
situation worldwide. Despite the stringent implementa-
tion of proactive and reactive measures, this leads to
an increased assessment of IT risk.
Low
Warranty and goodwill cases could arise if the quality
of the products or the parts installed in the products
does not meet requirements despite appropriate qual-
ity assurance processes, if regulations are not fully
complied with, or if support cannot be provided in the
required form in the event of problems and product
maintenance. The Mercedes-Benz Group recognizes
appropriate provisions for warranty and goodwill cases.
Nevertheless, it cannot be ruled out that recalls and
field measures will lead to expenses. Possible claims in
connection with such risks are examined and, if neces-
sary, the appropriate measures are initiated for the
affected products.
It is essential for the globally active Mercedes-Benz
Group and its wide-ranging business and production
processes that information is available and can be
exchanged in an up-to-date, complete and correct form.
The internal IT security framework is oriented according
to international standards and also draws on industry
standards and good practices for its protective meas-
ures. New regulatory requirements for cyber security
and cyber security management systems are taken into
account in the further development of processes and
policies. Appropriately secure IT systems and a reliable
IT infrastructure must be used to protect information.
Cyber threats must be identified and dealt with as
appropriate for their criticality over the entire life cycle
of the applications and the IT systems. Special atten-
tion is paid to risks that in the event of their occurrence
give rise to an interruption of business processes due
to IT system failures and to the loss and the falsification
of data. The advancing digitalization and networking of
the means of production is accompanied by coordi-
nated technical and organizational security measures.
Combined Management Report
Risk and Opportunity Report
The ever-growing threat from cybercrime and the
spread of aggressive malicious code brings risks that
can affect the availability, integrity and confidentiality
of information and IT-supported operating resources.
Despite extensive precautions, in the worst-case sce-
nario this can lead to a temporary interruption of
IT-supported business processes with severe negative
effects on the Group's earnings. In addition, the loss or
the misuse of sensitive data may under certain circum-
stances lead to a loss of reputation. In particular,
stricter regulatory requirements such as the EU General
Data Protection Regulation and related legislation may,
among other things, give rise to claims by third parties
Low
Risks and opportunities from purchasing and
logistics
Interruptions in global supply chains, bottlenecks in the
supply of intermediate goods, and production stop-
pages or underutilization of suppliers' production
capacities can have a negative impact on business
activities in the automotive divisions. Opportunities
may arise, for example, through the implementation of
efficiency-enhancing measures in internal logistics pro-
cesses.
Possible interruptions in global supply chains, espe-
cially those caused by bottlenecks for electronic com-
ponents and other important intermediate goods, can
cause bottlenecks at Mercedes-Benz Cars and
Mercedes-Benz Vans. To avoid such bottleneck situa-
tions for intermediate goods, scarce capacities are
countered by planning ahead. Lack of availability and
quality problems with certain vehicle parts can lead to
production downtimes and cause costs that result in
negative effects on profitability. As a globally operating
company with an international production and sales
network, the Mercedes-Benz Group is dependent on
functioning and efficient logistics processes. In particu-
lar, capacity restrictions or surcharges for the transpor-
tation of vehicles can disrupt logistics processes,
increase their costs and have a negative impact on the
company's results. Mercedes-Benz Cars and Mercedes-
Benz Vans analyse these risks on an ongoing basis.
Supplier management is undertaken for the prevention
of risks with the aim of ensuring the quantity and qual-
ity of the components required to produce the vehicles.
The financial situation of some suppliers remains diffi-
cult. The reasons for this are continuing uncertainties in
connection with high commodity, raw-material and
energy prices, as well as the lack of availability of com-
ponents. As a result, production stoppages are possi-
ble along the entire supply chain and could prevent
vehicles from being completed and delivered to cus-
tomers on time. Supplier risk management aims to
identify potential financial bottlenecks at suppliers at
an early stage and to initiate suitable countermeasures.
Specifically, depending on the warning signals recorded
and the internal classification, regular reporting dates
on which key performance indicators are reported to
the Mercedes-Benz Group and any support measures
can be determined if necessary, are agreed upon with
suppliers.
and result in costly regulatory requirements and penal-
ties with an impact on earnings.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
150
Corporate Governance
Consolidated Financial Statements
Further Information
Due to the transformation to electric mobility and
the outsourcing of important components, there is also
a risk that these will not be available on time in the
planned quantity and required quality; this could delay
the start of production of new series. Risks may also
arise from uncertainties in the planned quantities. This
could have negative effects on profitability.
Information technology risks and opportunities
The systematically pursued digitalization strategy ena-
bles the Mercedes-Benz Group to utilize new opportu-
nities to increase customer utility and the value of the
company. Nonetheless, the high degree of penetration
of all business units by information technology (IT) also
harbours risks for our business and production pro-
cesses and the units' products and services. Extensive
changes in the existing system landscape, for example
the focus on strategic partnerships for the transforma-
tion of the IT infrastructure, can also lead to risks.
Contents
Low
Low
Low
Medium
The launch of new products involves risks with regard
to the availability of required components, the scope of
equipment and the necessary production capacities.
especially in the course of the transformation toward
electric mobility and the integration of new technology.
To reduce the attendant risks, the related processes are
continuously evaluated and improved.
Low
Low
Low
Low
Low
Low
Low
Medium
Low
Medium
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Medium
High
Low
Low
Due to the increasing technical complexity and the goal
of maintaining and constantly enhancing quality stand-
ards for the luxury vehicles of the Mercedes-Benz
Group, both risks and opportunities can arise in the
automotive segments in connection with the launch
and manufacture of products.
142
Further Information
The risks and opportunities for the economic develop-
ment of automotive markets are strongly affected by
the cyclical situation of the global economy. The
assessment of market risks and opportunities is linked
to forecasts about the overall economic conditions and
the development of the automotive markets in which
the Mercedes-Benz Group is active. These assumptions
are described in detail in the "Outlook" section. The
possibility of markets developing better or worse than
in the internal forecasts and assumptions, or of chang-
ing market conditions, generally exists for all segments
of the Group.
Possible declines in vehicle sales may be caused in
particular by an unfavourable macroeconomic environ-
ment for the Mercedes-Benz Group and in the context
of political or economic uncertainties. In addition to
weaker economic growth overall, factors such as high
energy prices, high inflation and interest rates, and vol-
atile exchange rates may lead to market uncertainty or
a loss of purchasing power and have a negative impact
on demand in the automotive sector. A lower-than-ex-
pected market acceptance of electric vehicles can also
lead to risks in the development of unit sales and have
a negative impact on earnings. This could also endanger
the achievement of specific CO2 targets. Industrial pol-
icy measures to strengthen local value creation in vari-
ous countries, as well as government purchase
incentives for locally produced electric vehicles, can
result in competitive disadvantages and declining vehi-
cle sales in the respective markets. The development of
markets, unit sales and inventories is continually ana-
lysed and monitored by the automotive segments; if
necessary, specific marketing and sales programmes
are implemented.
Volatilities with regard to market developments can
also lead to the overall market or regional conditions for
the automotive industry developing better than
assumed in the internal forecasts and premises, result-
ing in business opportunities in the market. Opportuni-
ties may also arise from an improvement in the compet-
itive situation or a more positive development of
demand. The utilization of opportunities is supported
by sales and marketing campaigns.
The launch of new products by competitors, more
aggressive pricing policies and less effective pricing for
products such as electric vehicles can lead to increas-
ing competitive and price pressure in the automotive
segments and have a negative impact on profitability.
The discontinuation or reduction of government subsi-
dies for electric vehicles can also negatively affect their
pricing and cut profit margins. There is also a risk of
delayed market introduction of new technologies in
vehicles. Continuous monitoring is carried out in order
to recognize risks at an early stage. Depending on the
situation, product-specific and possibly regionally dif-
ferent measures are taken to support weaker markets.
Opportunities exist in particular in the Mercedes-Benz
Cars segment due to better-than-planned effective
pricing of vehicles.
General market risks and opportunities
In connection with the sale of vehicles, the Mercedes-
Benz Group offers customers a wide range of financ-
ing and leasing options. The resulting risks for the
Mercedes-Benz Mobility segment are mainly due to
borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because
of customers' insolvency (default or credit risk).
The Mercedes-Benz Group counteracts credit risks by
means of creditworthiness checks on the basis of
standardized scoring and rating methods, the collater-
alization of receivables, and effective risk manage-
ment with a firm focus on monitoring both internal
and macroeconomic leading indicators.
Annual Report 2023 | Mercedes-Benz Group
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Combined Management Report
Risk and Opportunity Report
Corporate Governance
In connection with leasing agreements, risks and
opportunities also arise due to the development of the
used vehicle markets. These result when the market
value of a leased vehicle at the end of the agreement
term differs from the residual value that was originally
calculated and forecast on the basis of specific
assumptions at the time the agreement was concluded
and used as a basis for the leasing instalments. Residu-
al-value management processes have been defined to
counteract these risks relating to vehicles' residual
values. Depending on the region and the current mar-
ket situation, the measures taken generally include con-
tinuous market monitoring as well as, if required,
price-setting strategies or sales promotion measures
designed to regulate vehicle inventories. The quality of
market forecasts is verified by comparisons of internal
Consolidated Financial Statements
Industry and business risks
and opportunities
Consolidated Financial Statements
Low
High
High
Medium
High
Low
Medium
Further Information
Low
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Combined Management Report
Risk and Opportunity Report
Corporate Governance
1 Commodity-price risks and opportunities were reported in the Procurement market risks and opportunities category as of 31 December 2023.
2 The classification of legal risks and tax risks and opportunities is shown in the table for the first time as of 31 December 2023.
Production risks and opportunities
Further Information
Risks and opportunities relating to the legal and
political framework
Company-specific
risks and opportunities
Risks and opportunities from research
and development
Technical developments and innovations are of key
importance for the safe and sustainable mobility of the
future. The transformation towards electric mobility and
the comprehensive digitalization of vehicles has
resulted in ambitious development targets and the mar-
ket launch of new technologies. In addition to the
resulting opportunities, decisions in favour of certain
technologies and the continuously growing scope of
emission, consumption and safety requirements to be
met are associated with risks.
There are risks that vehicles cannot be developed
within the planned time frame, in the appropriate qual-
ity or at the specified costs. This is particularly the case
with regard to electric mobility and increasing digitali-
zation as well as software in the vehicle architecture.
There is also a risk that certain digital functions could
be launched on the market later than planned. Supply
chain disruptions can also lead to delays in vehicle
development processes and postpone the launch of
individual model series. The Mercedes-Benz Group
counters these risks by continuously and systematically
monitoring all vehicle projects.
In 2020, Mercedes-Benz Group AG and Mercedes-Benz
USA, LLC (MBUSA) reached agreements with various
US authorities to settle civil and environmental claims
regarding emission control systems of certain diesel
vehicles, which have taken legal effect. If the obliga-
tions from the settlements are not complied with, there
will be the risk that cost-intensive measures will have
to be taken and/or significant stipulated penalties will
become due.
possible supply bottlenecks - as well as by volatile
demand for specific raw materials. The ability to pass
on the higher costs of commodities and other materials
in the form of higher prices for manufactured vehicles is
limited because of strong competitive pressure in the
international automotive markets. Rising raw-material
prices may therefore have a negative impact on the
profit margins of the vehicles sold and thus lead to
lower earnings in the respective segment. In order to
counteract possible loss of revenue, the Mercedes-
Benz Group continuously monitors the development of
raw-material and energy prices and is in close touch
with suppliers.
The risks from research and development have risen
from "low" to "medium" due to the increasing electrifi-
cation and digitalization of the vehicle portfolio.
Contents
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Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Annual Report 2023 | Mercedes-Benz Group
and external sources, and, if required, the determina-
tion of residual values is adjusted and further devel-
oped with regard to methods, processes and systems.
-
For 2024, there are still risks from inflation-related
increases in raw material and energy prices, which
could lead to higher procurement costs. Furthermore,
intense competition for specific raw materials in the
course of the introduction of new technologies can lead
to increasing costs or possible shortages in the supply
chain. Raw-material markets can always be impacted
by uncertainties and political crises · combined with
Risks and opportunities from the legal and political
framework have a considerable influence on the
Mercedes-Benz Group's future business success. Regu-
lations concerning vehicles' emissions, fuel consump-
tion, safety and certification, as well as tariff aspects
and taxes in connection with the sale or purchase of
vehicles or vehicle parts, play an important role. Geo-
political tensions can also have a significant impact on
the business activities of an international company
such as the Mercedes-Benz Group.
The Mercedes-Benz Group constantly monitors the
development of the legal and political framework and
attempts to anticipate foreseeable requirements and
long-term objectives at an early stage in the product
development process. In particular, changes in the legal
and political framework at short notice can be associ-
ated with additional costs or higher investments.
Legal limits on the fuel consumption and/or CO2 emis-
sions of car fleets exist in many markets, although the
target values differ from market to market. Non-compli-
ance with regulations applicable in the various markets
might result in significant penalties and reputational
harm, and might even mean that vehicles with conven-
tional drive systems could not or could no longer be
registered in the relevant markets. The Mercedes-Benz
Group counteracts this risk through the transformation
towards electric mobility and the associated realign-
ment of its product portfolio. Mercedes-Benz Cars and
Mercedes-Benz Vans face the described risks with
respect to regulations concerning mandatory targets for
the average fleet fuel consumption and CO2 emissions
of new vehicles especially in the markets of China,
Europe and the United States. The Mercedes-Benz
Group gives these targets due consideration in its prod-
uct and sales planning. The market success of alterna-
tive drive systems is greatly influenced not only by cus-
tomer acceptance but also by regional market
conditions such as the battery-charging infrastructure,
state support and tax conditions.
Political tensions and the associated danger of geopo-
litical conflicts continue to be high and are associ-
ated with far-reaching risks for the business develop-
ment of the Mercedes-Benz Group. A further
escalation of tensions between China and the United
States and between China and the EU, the possible
further escalation of the war between Russia and
Ukraine and, above all, the conflict in the Middle East,
the flare-up of further regional conflicts and a possible
military or non-military escalation in the entire South
China Sea could lead to renewed tensions in supply
chains, even higher energy prices, renewed pressure
on inflation rates and a further deterioration in the
growth outlook. A further escalation and possible geo-
graphical expansion of the Russia-Ukraine war could
especially have a negative impact on purchasing and
logistics processes and on the production and sales
programme. A possible bottleneck in energy supply in
the EU could also lead to potential production losses
at the Mercedes-Benz Cars and Mercedes-Benz Vans
plants. The above-mentioned risks are monitored on
an ongoing basis and mitigation measures, such as
substituting other energy sources for gas or imple-
menting energy-saving measures, are initiated accord-
ingly; possible scenarios are continuously adjusted to
the current geopolitical situation and analysed.
Annual Report 2023 | Mercedes-Benz Group
Contents
-
To Our Shareholders
Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Further Information
Individual countries may attempt to defend and
improve their competitiveness in the world's markets by
increasingly resorting to interventionist and protec-
tionist measures. For example, setting up or expanding
production facilities, increasing local purchasing or
introducing a requirement to carry out local research
and development can result in significantly increased
investment or higher running costs. In addition, barriers
to market access such as more difficult or delayed cer-
tification processes or very complicated tariff proce-
dures can make it more difficult to import into those
countries. Investing in those countries can limit the
impact of protectionist measures.
Procurement market risks and opportunities
Risks and opportunities relating to procurement arise
for the automotive segments in particular from fluctua-
tions in prices of commodities, raw materials and
energy. Certain raw materials and components are
required for the manufacture of vehicles and parts and
are purchased on the world market. The level of costs
depends on the price development of commodities,
raw materials and energy, and can result in both oppor-
tunities and risks for the Mercedes-Benz Group.
148
High
Medium
High
Further Information
External auditors audit the system for the early identi-
fication of risks, which is integrated in the risk manage-
ment system, for its general suitability to identify risks
threatening the existence of the Group. In addition, in
the context of the audit of the consolidated financial
statements, they report to the Audit Committee and the
Supervisory Board on any significant weaknesses that
have been recognized in the accounting-related internal
control and risk management system.
Risk and opportunity
management system
The risk management system is intended to systemati-
cally and continually identify, assess, control, monitor
and report on risks threatening the Mercedes-Benz
Group's existence and other material risks jeopardizing
the Group's success, in order to support the achieve-
ment of corporate targets and to enhance risk aware-
ness at the Group. This also includes risks and opportu-
nities related to environmental and employee issues as
well as social factors (environmental, social and gov-
ernance ESG).
The opportunity management system at the
Mercedes-Benz Group is based on the risk management
system. The objective of opportunity management is to
recognize the possible opportunities arising in business
activities resulting from positive developments at an
early stage, and to use them in the best possible way
for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be
met or exceeded.
The risk and opportunity management system is inte-
grated into the value-based management and planning
system of the Mercedes-Benz Group and is a fixed com-
ponent of the overall planning, management and
reporting process in the companies, segments and cor-
porate functions.
The responsibility for operational risk management and
for the risk management processes is borne by the first
line and thus by the segments, corporate functions,
organizational units and companies. They report on the
specific risks and opportunities to the next-higher level
unit on a regular basis. Significant unexpected risks
must be reported immediately. Risks and opportunities
are managed within the Group by means of measures
taken by the units responsible. The profitability of a
measure is assessed before its implementation.
The possible impact and probability of occurrence of all
risks and opportunities and the related measures that
have been initiated are continually monitored. This
information is passed on to Group Risk Management for
reporting to the Board of Management, the Audit Com-
mittee and the Supervisory Board. Mercedes-Benz
Group AG monitors implementation by the segments as
part of its legal, regulatory and compliance functions.
As part of the planning process, risks and opportunities
are recorded within an observation horizon of up to five
years. Matters that have already been fully taken into
account in planning or for which a provision has been
recognized are not considered in connection with the
risk management process. In addition, strategic risks
and opportunities are also taken into account in the risk
management process.
The Risk and Opportunity Report relates to 2024. The
assessment of individual risks and opportunities takes
place on the basis of their probability of occurrence and
possible impact on the Mercedes-Benz Group. Multiply-
ing the probability of occurrence by the possible impact
results in the expected value, which forms the basis for
the classification in risk and opportunity categories. In
principle, the quantification of risks and opportunities in
this report is carried out by summarizing the expected
values of the individual risks and opportunities in cate-
gories. The assessment of the level of risks and oppor-
tunities takes into account both planned and already
effective risk-reducing measures (net view) and is con-
sidered in relation to EBIT, unless otherwise indicated.
Risk and opportunity management is based on the prin-
ciple of completeness. This means that all identified
risks and opportunities are incorporated into the risk
management process via the operating units of the seg-
ments, the significant associated companies, joint ven-
tures and joint operations as well as the corporate
departments. The scope of consolidation for risk and
opportunity management generally corresponds to the
scope of the Consolidated Financial Statements.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
143
Combined Management Report
Risk and Opportunity Report
The compliance management system, which has an
interface to the risk management system, is aligned
with the risk situation of the Mercedes-Benz Group and
aims to promote rule-compliant behaviour within the
company. The compliance management system makes
a significant contribution to the integration of compli-
ance into our operating business units and their pro-
cesses. Further information on the compliance manage-
ment system of the Mercedes-Benz Group can be found
in the Non-Financial Declaration chapter.
The Mercedes-Benz Group operates an Information
Security Management System (ISMS) with the aim of
adequately protecting important information and criti-
cal IT services. The ISMS is based on internationally
recognized standards and is continuously developed
further. Operationally, the ISMS is supported by proac-
tive and reactive operational measures. Proactive oper-
ational measures include, in particular, training and
measures to inform and raise awareness among
employees and functionaries, a comprehensive set of
information security rules and technical and organiza-
tional measures to secure critical IT infrastructures, IT
systems and applications. One focus of the reactive
operational measures is the Cyber Intelligence &
Response Center, which is staffed around the clock to
defend against cyber attacks and deal with cyber secu-
rity incidents.
The security risk management of Corporate Security is
integrated into the risk management system of the
Mercedes-Benz Group. The aim is to identify and evalu-
ate security-relevant risks at the company's global loca-
tions on the basis of a risk-oriented view and to control
them by means of mitigating measures. To this end,
Corporate Security implemented internal controls for
various security-related issues. These include the areas
of property security, fire protection and crisis manage-
ment and serve to protect the lives and physical integ-
rity of people and to protect company assets, business
processes and company knowledge.
The Mercedes-Benz Group's internal control system
encompasses, in addition to the accounting-related
internal control system, controls for further business
processes. There are also internal controls for Group-
wide processes of Corporate Security, Global Cyber &
Information Security, and the Group-wide compliance
management system. Sustainability-related aspects are
also part of the internal control system. Moreover, the
structure and processes of the internal control system
are independently checked by Corporate Audit.
Internal control system
cess.
Consolidated Financial Statements
Climate-related risks and opportunities in connec-
tion with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) are associ-
ated with environmental issues and are thus also iden-
tified and assessed as part of the risk management pro-
ance
In identifying sustainability-related risks and oppor-
tunities, Mercedes-Benz Group AG is guided by the
topics identified by the materiality assessment and thus
includes the areas of action of the sustainable business
strategy, for which concrete goals have been assigned.
Sustainability-related risks and opportunities are
understood to be conditions, events or developments
related to environmental and employee issues as well
as social factors (environmental, social and govern-
ESG), the occurrence of which may have an
actual or potential impact on the Mercedes-Benz
Group's profitability, cash flows and financial position,
as well as on its reputation. ESG-related risks associ-
ated with business activities, business relationships
and products and services, and which are very likely to
have a serious negative impact on non-financial
aspects in accordance with Section 289c of the German
Commercial Code (HGB), are not currently apparent.
In order to assess the Group's risk-bearing capacity,
the potential effects of the risks on earnings, with con-
sideration of correlation effects, are analysed using a
Monte Carlo simulation (confidence level: 99%). The
risks are compared with the reported equity of the
Mercedes-Benz Group as a risk cover.
Further Information
Consolidated Financial Statements
Corporate Governance
-
Corporate Governance
Combined Management Report
Risk and Opportunity Report
High
Group Risk Management Committee (GRMC)
Board of Management
Supervisory Board/Audit Committee
The Board of Management, Audit Committee and
Supervisory Board are informed regularly and as
needed about potential significant control weaknesses,
the appropriateness and effectiveness of the imple-
mented controls and the risk situation. The Audit Com-
mittee and the Supervisory Board of Mercedes-Benz
Group AG and the Supervisory Boards of Mercedes-
Benz AG and Mercedes-Benz Mobility AG are responsi-
ble for monitoring the internal control and risk manage-
ment system, including its appropriateness and
effectiveness.
The Group Risk Management Committee (GRMC) is
responsible for ensuring the continuous improvement
of the risk management system and the internal control
system (including the compliance management system)
and for assessing their appropriateness and effective-
ness with regard to the Group's risk situation and the
scope of the business activities. It is chaired by the
members of the Board of Management of Mercedes-
Benz Group AG responsible for Finance & Controlling/
Mercedes-Benz Mobility and Integrity, Governance &
Sustainability. In addition, the GRMC was composed as
of 31 December 2023 of representatives from
Mercedes-Benz Group Finance, the Legal Affairs depart-
ment, the Compliance unit, Corporate Security, Global
Cyber & Information Security and the member respon-
sible for finance of the Board of Management at
Mercedes-Benz Mobility AG. The Corporate Audit
department contributes material findings on the inter-
nal control and risk management system.
Annual Audit
1st line:
Operational units
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
141
Annual Report 2023 | Mercedes-Benz Group
Segments,
Ensuring compliance with external and
internal requirements by
performance of controls
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Performance of
independent audits
Definition of requirements
and support of the 1st line
during implementation
* Internal control system with regard to the accounting process (ICS).
HQ functions,
Organizational units
and entities
Global Cyber & Information Security
Corporate Audit
Compliance management system
3rd line:
Independent audit
Internal control system (ICS)*
Risk management system
2nd line:
Governance functions
Corporate Security
Contents
To Our Shareholders
144
High
High
Opportunity
Risk
Opportunity
Risk
High
Classification of the expected
value for the year 2023
Tax risks and opportunities
Legal and tax risks and opportunities²
Legal risks
Risks and opportunities from changes in credit ratings
Risks and opportunities relating to pension plans
Risks of restricted access to capital markets
The following table shows the specific classification of
the aggregated risks and opportunities in the respective
categories based on the above-mentioned interval lim-
its. In addition to the risks and opportunities described
below, risks and opportunities that are not yet known or
classified as not material can also influence profitability,
cash flows and financial position in the future.
Country risks
Classification of the expected
value for the year 2024
Interest-rate risks and opportunities
Commodity-price risks and opportunities¹
Credit risks
High
Low
Low
Medium
Low
Low
Low
Low
High
Low
Low
High
Low
High
Low
High
Medium
Low
> €500 million to €1 billion
> €1 billion
Financial risks and opportunities
Exchange-rate risks and opportunities
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The effectiveness of any risk management and control
system is subject to inherent limitations. No system
even if it has been assessed as appropriate and effec-
tive ― can guarantee that all risks that actually occur
will be detected in advance or that all process viola-
tions will be excluded under all circumstances.
Continuous monitoring of the processes and systems of
the internal control and the risk management system is
in effect to resolve identified weaknesses in the finan-
cial year and ensure continuous improvement of the
processes and systems. As a result of the complex pro-
cess landscape and the high rate of change of the legal
requirements concerning non-financial information, the
maturity of the internal control system with regard to
the sustainability-relevant aspects in particular is not
yet on the level of the accounting-related internal con-
trol system. As of the reporting date, taking into
account the scope of the business operations and the
risk situation of the company, in all material respects
there are no indications of an overall inappropriateness
or ineffectiveness of the internal control and risk man-
agement system.
and risk management system
Risks and opportunities
Appropriateness and effectiveness
of the internal control
The effectiveness of the internal control system with
regard to the accounting process is systematically eval-
uated. It begins with a risk analysis and a control defini-
tion with the aim of identifying significant risks for the
accounting and financial reporting processes in the
main legal entities and corporate functions. The neces-
sary controls are then defined and documented in
accordance with Group-wide guidelines. In order to
assess the effectiveness of the controls, tests are car-
ried out regularly on the basis of random samples.
These form the basis for a self-assessment of whether
the controls are appropriately designed and effective.
The results of this self-assessment are documented and
reported in a Group-wide IT system. Identified control
weaknesses are eliminated, taking into account their
potential impact. The selected legal entities and corpo-
rate functions confirm the effectiveness of the internal
control system with regard to the accounting process at
the end of the annual cycle. The Board of Management
The internal control system with regard to the
accounting process has the objective of ensuring the
appropriateness and effectiveness of accounting and
financial reporting. It is designed in line with the inter-
nationally recognized framework for internal control
systems of the Committee of Sponsoring Organizations
of the Treadway Commission (COSO Internal Control -
Integrated Framework), is continually developed further,
and is an integral part of the accounting and financial
reporting processes in the segments, corporate func-
tions, organizational units and companies. The system
includes principles and procedures as well as preven-
tive and detective controls.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
and the Audit Committee of the Supervisory Board are
regularly informed about significant control weaknesses
and the effectiveness of the control mechanisms.
Expected value
<€500 million
145
Corporate Governance
Risks and opportunities related to equity investments and cooperations
with partnerships
Risks and opportunities from purchasing and logistics
Information technology risks and opportunities
Personnel risks and opportunities
Risks and opportunities from research and development
Production risks and opportunities
Company-specific risks and opportunities
Risks and opportunities relating to the legal and political framework
Procurement market risks and opportunities
Industry and business risks and opportunities
General market risks and opportunities
Combined Management Report
Risk and Opportunity Report
Medium
High
Level
Quantification of the risks and opportunities based on the expected
value for each category
The following section describes risks and opportunities
that could have a significant influence on the profitabil-
ity, cash flows and financial position of the Mercedes-
Benz Group in the year 2024. In general, the reporting
of risks and opportunities not covered in the Outlook
takes place in relation to the individual segments
Mercedes-Benz Cars, Mercedes-Benz Vans and
Mercedes-Benz Mobility. If no segment is explicitly
mentioned, the risks and opportunities described relate
to all the segments. Based on the expected value, the
reported risks and opportunities per category are
aggregated into the levels “low”, “medium” and "high"
for the Mercedes-Benz Group.
Risk and opportunities Mercedes-Benz Group
Category
Further Information
Consolidated Financial Statements
Low
Annual Report 2023 | Mercedes-Benz Group
The disclosures on the appropriateness and effectiveness of the internal control and risk
management system in the Risk and Opportunity Report chapter, which are not part of the
Management Report, were also not included in the audit of the financial statements.
Risks and opportunities exist in connection with poten-
tial downgrades or upgrades to credit ratings by the rat-
ing agencies, and thus to the Mercedes-Benz Group's
creditworthiness. Downgrades could have a negative
impact on the Group's financing if such a downgrade
leads to an increase in the costs for external financing
or restricts the Group's ability to obtain financing. A
credit rating downgrade could also discourage inves-
tors from investing in Mercedes-Benz Group AG or from
purchasing bonds issued by Mercedes-Benz Group AG
or another company of the Group.
The Group continues to be exposed to legal and tax
risks. Provisions are recognized for those risks if and
insofar as they are likely to be utilized and the amounts
of the obligations can be reasonably estimated.
Legal and tax risks and opportunities
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
154
To Our Shareholders
Legal risks
Contents
certain assumptions. Even small changes in those
assumptions such as a change in the discount rates or
changed inflation assumptions have a negative or posi-
tive effect on funded status and Group equity in the
current year, and lead to a change in the periodic net
pension expense in the following year. The fair value of
plan assets is determined to a large degree by develop-
ments in the capital markets. Unfavourable or favoura-
ble developments, especially relating to share prices
and fixed-interest securities, reduce or increase the
carrying value of plan assets. Risk management for the
plan assets takes place through broad diversification of
investments, the selection of various asset managers
on the basis of quantitative and qualitative analyses,
and the ongoing monitoring of returns and risks. The
structure of pension obligations is taken into considera-
tion during the determination of the investment strat-
egy for the plan assets in order to reduce fluctuations of
the funded status. Risks and opportunities relating to
pension plans have declined, due mainly to lower vola-
tility levels on the capital market.
Risks and opportunities relating to pension plans
The companies of the Mercedes-Benz Group grant
defined-benefit pension commitments, which are
largely covered by plan assets, as well as healthcare
commitments to a small extent. The balance of pension
obligations less plan assets constitutes the carrying
amount or funded status of those employee benefit
plans. The measurement of pension obligations and the
calculation of net pension expense are based on
Risks and opportunities from changes in
credit ratings
business. Access to capital markets in individual coun-
tries may be limited by government regulations or by a
temporary lack of absorption capacity. In addition,
pending legal proceedings as well as the Group's own
business policy considerations and developments may
temporarily prevent the Group from covering any liquid-
ity requirements by means of borrowing in the capital
markets. Contractually agreed credit lines are available
as refinancing instruments.
Risks of restricted access to capital markets
Liquidity risks arise when a company is unable to fully
meet its financial obligations. In the normal course of
business, the Mercedes-Benz Group uses bonds, com-
mercial paper and securitized transactions, as well as
bank loans in various currencies, primarily with the aim
of refinancing its leasing and sales-financing business.
An increase in the cost of refinancing would have a neg-
ative impact on the competitiveness and profitability of
the financial services business to the extent that the
higher refinancing costs cannot be passed on to cus-
tomers; a limitation of the financial services business
would also have negative consequences for the vehicle
Country risk describes the risk of financial loss resulting
from changes in political, economic, legal or social con-
ditions in the respective country, for example due to
sovereign measures such as expropriation or a ban on
currency transfers. The Mercedes-Benz Group is
exposed to country risks that primarily result from
cross-border financing or collateralization for subsidiar-
ies or customers, from investments in subsidiaries and
joint ventures, and from cross-border trade receivables.
Country risks also arise from cross-border cash depos-
its at financial institutions. The Group addresses these
risks by setting country limits (e.g. for hard-currency
portfolios of Mercedes-Benz Mobility companies). The
Mercedes-Benz Group also has an internal rating sys-
tem that divides all countries in which it operates into
risk categories. Compared to the previous year, the
country risk has fallen from "high" to "medium" due to
the discontinuation of business activities in Russia.
Country risks
Further Information
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
Regulatory risks
Risks from legal proceedings in general
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings and claims as
well as governmental investigations and orders (legal
proceedings) on a large number of topics, including
vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relation-
ships, intellectual property rights (especially patent
infringement lawsuits), warranty claims, environmental
matters, antitrust matters (including actions for dam-
ages) as well as investor litigation. Product-related liti-
gation involves among other things claims alleging
faults in vehicles. Some of these claims are asserted by
way of class actions. If the outcome of such legal pro-
ceedings is detrimental to the Mercedes-Benz Group or
such proceedings are settled, the Group may encounter
substantial financial burdens, e.g. from damages pay-
ments or service actions, recall campaigns, monetary
penalties or other costly actions. Some of these pro-
ceedings and related settlements may also have an
impact on the company's reputation.
decision from December 2023, developments, exami-
nations and approvals of the remidial measures are still
pending. It cannot be ruled out that under certain cir-
cumstances, software updates may have to be
reworked, or further delivery and registration stops may
be ordered or resolved by the company as a precau-
tionary measure, also with regard to the used-car, leas-
ing and financing businesses. In the course of its regular
market supervision, the KBA routinely conducts further
reviews of Mercedes-Benz vehicles and asks questions
about technical elements of the vehicles. In addition,
the Group continues to be in a dialogue with the Ger-
man Federal Ministry for Digital and Transport (BMDV)
to conclude the analysis of the diesel-related emissions
matter and to further the update of affected customer
vehicles. In light of the aforementioned administrative
orders issued by the KBA, and continued discussions
with the KBA and the BMDV, it cannot be ruled out
completely that additional administrative orders may be
issued in the course of the ongoing and/or further
investigations. Since 1 September 2020, this also
applies to responsible authorities of other member
states and the European Commission, which conduct
market surveillance under the new European Type
Approval Regulation and can take measures upon
assumed non-compliance, irrespective of the place of
the original type approval, and also to the British mar-
ket surveillance authority DVSA (Driver and Vehicle
Standards Agency).
Between 2018 and 2020, the German Federal Motor
Transport Authority (KBA) issued subsequent auxiliary
provisions for the EC type approvals of certain
Mercedes-Benz diesel vehicles, and ordered mandatory
recalls as well as, in some cases, stops of the first regis-
tration. In autumn 2022 and in December 2023, the KBA
issued further decisions regarding vehicles equipped
with various EU6 or EU5 diesel engines. In each of
those cases, it held that certain calibrations of speci-
fied functionalities are to be qualified as impermissible
defeat devices. Mercedes-Benz has a contrary legal
opinion on this question and has filed timely objections
against the KBA's administrative orders and determina-
tions mentioned above. Insofar as the KBA has not rem-
edied the objections, Mercedes-Benz has filed lawsuits
with the competent administrative court to have the
controversial questions at issue clarified in a court of
law. Irrespective of such objections and the lawsuits
that are now pending, the Mercedes-Benz Group con-
tinues to cooperate fully with the KBA. To a large extent,
the remidial actions requested by the KBA were devel-
oped by the Mercedes-Benz Group and assessed and
approved by the KBA; the necessary recalls were initi-
ated. For some of the vehicles affected by the KBA's
offense proceedings against Mercedes-Benz. In July
2021, the local court of Böblingen issued penal orders
against three Mercedes-Benz employees based on,
amongst others, fraud, which have become final. The
criminal investigation proceedings of the Stuttgart pub-
lic prosecutor's office against further Mercedes-Benz
employees on the suspicion of, amongst others, fraud
have meanwhile been discontinued.
In Germany, the Stuttgart public prosecutor's office
issued a fine notice against Mercedes-Benz in Septem-
ber 2019 based on a negligent violation of supervisory
duties, thereby concluding the related administrative
In Canada, the environmental regulator Environment
and Climate Change Canada (ECCC) is conducting an
investigation in connection with Diesel exhaust emis-
sions based on the suspicion of potential violations of,
amongst others, the Canadian Environmental Protection
Act as well as potential undisclosed AECDs and defeat
devices. The Mercedes-Benz Group continues to coop-
erate with the investigating authorities.
As already reported, in April 2016, the U.S. Department
of Justice (DOJ) requested that the Mercedes-Benz
Group conduct an internal investigation. The Mercedes-
Benz Group conducted such an internal investigation in
cooperation with the DOJ's investigation; the DOJ's
investigation remains open. In addition, further US state
authorities have opened investigations pursuant to
both local environmental and consumer protection laws
and have requested documents and information.
As part of these settlements, the Mercedes-Benz Group
has denied the allegations by the authorities and has
not admitted liability, but has agreed to, among other
things, pay civil penalties, conduct an emission modifi-
cation programme for the affected vehicles and take
certain other measures. The failure to meet certain of
those obligations may trigger additional stipulated pen-
alties. In the first quarter of 2021, the Mercedes-Benz
Group paid the civil penalties.
Further Information
The automotive industry is subject to extensive govern-
mental regulations worldwide. Laws in various jurisdic-
tions govern occupant safety and the environmental
impact of vehicles, including emissions levels, fuel
economy and noise, as well as the emissions of the
plants where vehicles or parts thereof are produced.
Furthermore, regulation, particularly in the European
Union, governs the external reporting on ESG topics
(environmental, social or governance topics), whereby
the complexity of such regulation is continuously
increasing. The introduction of certain new regulations
may initially be associated with uncertainties relating to
their interpretation. In case regulations applicable in
the different regions are not complied with, this could
result in significant penalties, damages claims and rep-
utational harm
or,
in case of regulations applicable to
vehicles, the inability to certify vehicles in the relevant
markets. The cost of compliance with these regulations
is considerable, and in this context, Mercedes-Benz
continues to expect a significant level of costs.
Consolidated Financial Statements
Combined Management Report
Risk and Opportunity Report
155
Contents
Annual Report 2023 | Mercedes-Benz Group
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These agree-
ments have become final and effective. The authorities
took the position that the Mercedes-Benz Group had
failed to disclose Auxiliary Emission Control Devices
(AECDs) in certain of its US diesel vehicles and that
several of these AECDs were illegal defeat devices.
The corresponding activities of various authorities
world-wide, which were already reported in the past,
are partly ongoing, as described below. These activities
particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or
the interactions of the Mercedes-Benz Group with the
relevant authorities as well as related legal issues and
implications, including, but not limited to, under appli-
cable environmental, criminal, consumer protection and
antitrust laws.
The Mercedes-Benz Group is continuously subject to
governmental information requests, inquiries, investiga-
tions, administrative orders and proceedings relating to
various laws and regulations in connection with diesel
exhaust emissions.
Risks from legal proceedings in connection with
diesel exhaust-gas emissions - governmental
proceedings
Corporate Governance
In addition to the aforementioned authorities, authori-
ties of various foreign states, particularly the South
Korean Ministry of Environment and the South Korean
Corporate Governance
153
In principle, the Group's operating and financial risk
exposures underlying its financial risks and opportuni-
ties can be divided into symmetrical and asymmetrical
risk and opportunity profiles. With the symmetrical
risk and opportunity profiles (e.g. currency exposures),
risks and opportunities exist equally, while with the
asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the oppor-
tunities.
The following section deals with the financial risks and
opportunities of the Mercedes-Benz Group. These risks
and opportunities can have negative or positive effects
on the profitability, cash flows and financial position of
the Group.
Financial risks and
opportunities
ensure profitability. The recoverable value of invest-
ments in shareholdings is also regularly monitored.
The remeasurement of a holding can lead to risks and
opportunities for the segment to which it is allocated.
Furthermore, ongoing business activities, especially the
integration of employees, technologies and products,
can result in risks. In addition, further financial obliga-
tions or an additional financing requirement can arise.
The shareholdings are subject to a monitoring process
so that, if required, decisions can be promptly made on
whether or not measures can be taken to support or
The Mercedes-Benz Group generally participates in the
risks and opportunities of shareholdings in line with its
equity interest, and is also subject to share-price risks
and opportunities if such companies are listed on a
stock exchange. After the spin-off and hive-down of the
Daimler commercial vehicle business, this also applies
to the Group's remaining minority shareholding in
Daimler Truck Holding AG.
Risks and opportunities related to equity
investments and cooperations with partnerships
Cooperation with partners in shareholdings and part-
nerships is of key importance to the Mercedes-Benz
Group among other things, in the transformation
towards electric mobility, the associated charging infra-
structure and comprehensive digitalization. Coopera-
tion and investments also make up an important pillar
in connection with the provision of mobility solutions.
Especially with new technologies, these shareholdings
help us utilize synergies and improve cost structures in
order to respond successfully to the competitive situa-
tion in the automotive industry.
-
The Mercedes-Benz Group is generally exposed to risks
and opportunities from changes in market prices such
as currency exchange rates, interest rates and com-
modity prices. Market price changes can have a nega-
tive or positive influence on the Group's profitability,
cash flows and financial position. The Mercedes-Benz
Group systematically manages and monitors market
price risks and opportunities, primarily directly in the
context of its business operations and financing
Risks exist in particular due to upcoming negotiations
on collective bargaining conditions and the associated
potential loss of production. Besides the demographic
development, the digital transformation also requires
that the company continues to adapt to changes and
derives measures such as securing a qualified next
generation of specialists and managers, especially with
regard to technical developments. This requirement is
addressed through various measures, including tar-
geted qualification. The Mercedes-Benz Group counters
economic, market and competitive fluctuations by
means of established time and flexibility instruments in
order to react appropriately to the situation.
Personnel risks and opportunities
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
151
To Our Shareholders
Contents
Competition for highly qualified staff and management
is still very intense in the industry and the regions in
which the Mercedes-Benz Group operates. The Group's
future success also depends on the extent to which it
succeeds over the long term in recruiting, integrating
and retaining specialist employees. The established
human resources instruments take such personnel risks
into consideration. One focus of human resources man-
agement is the targeted personnel development and
further training of the workforce. Among other things,
employees benefit from a wide range of training oppor-
tunities and the transparency created within the frame-
work of performance management. In order to remain
successful as a company, the way we work together and
our leadership culture undergo continuous develop-
ment.
Combined Management Report
Risk and Opportunity Report
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Credit risks also arise from the Group's liquid assets.
Should defaults occur, this would adversely affect the
Group's profitability, liquidity and capital resources,
and financial position. The limit methodology for liquid
funds deposited with financial institutions has been
continuously further developed in recent years. In con-
nection with investment decisions, priority is placed on
the borrower's very high creditworthiness and on bal-
anced risk diversification. Most liquid assets are held in
investments with an external rating of A or better.
The Group is exposed to credit risks which result primar-
ily from its financial services activities and from the
operations of its vehicle business. The risks from leasing
and sales financing are dealt with in the General market
risks and opportunities section.
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual pay-
ment obligations. Credit risk encompasses both the
direct risk of default and the risk of a deterioration of
creditworthiness as well as concentration risks.
Credit risks
Interest-rate risks and opportunities
Changes in interest rates can create risks and opportu-
nities for business operations as well as for financial
transactions. The Mercedes-Benz Group employs a vari-
ety of interest rate-sensitive financial instruments to
manage the cash requirements of its business opera-
tions on a day-to-day basis. Most of these financial
instruments are held in connection with the financial
services business of Mercedes-Benz Mobility. Inter-
est-rate risks and opportunities arise when fixed-inter-
est periods are not congruent between the asset and
liability sides of the balance sheet. By means of refi-
nancing coordinated with the terms of the financing
agreements, the risk of maturity mismatch is minimized
from both an interest-rate and a liquidity perspective.
Remaining interest-rate risks are managed with the use
of derivative financial instruments. The funding activi-
ties of the industrial business and the financial services
business are coordinated at the Group level. Derivative
interest-rate instruments such as interest-rate swaps
are used to achieve the desired interest-rate maturities
and asset/liability structures (asset and liability man-
agement).
Contents
reviewed, whereby both risks and opportunities are lim-
ited. Any over-collateralization caused by changes in
exposure is reversed by suitable measures without
delay. Exchange-rate risks and opportunities also exist
in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the
Group outside the euro zone (currency translation risk);
these risks are not generally hedged.
Exchange-rate risks and opportunities
In addition, the Group is exposed to credit-, country-
and liquidity-related risks, risks of restricted access to
capital markets and risks from changes in credit ratings.
As part of the risk management process, the Mercedes-
Benz Group regularly assesses these risks by consider-
ing changes in key economic indicators and market
information. Consideration of the pension plan assets
to cover retirement and healthcare benefits is included
in the section "Risks and opportunities relating to pen-
sion plans".
activities, and applies derivative financial instruments
for hedging purposes where needed, thus limiting both
market price risks and opportunities. Risks and oppor-
tunities arising from a change in commodity prices are
reported in the "Procurement market risks and opportu-
nities" category since 31 December 2023.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
152
The Mercedes-Benz Group's global orientation means
that its business operations and financial transactions
are connected with risks and opportunities related to
fluctuations in currency exchange rates. This applies in
particular to fluctuations of the euro against the US dol-
lar, Chinese renminbi, British pound and other curren-
cies such as those of growth markets. An exchange-rate
risk or opportunity arises in business operations pri-
marily when revenue is generated in a currency differ-
ent from that of the related costs (transaction risk).
Regularly updated currency risk exposures are succes-
sively hedged with suitable financial instruments (pre-
dominantly currency forwards) in accordance with
exchange-rate expectations, which are continually
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
To Our Shareholders
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Any changes or interventions by the fiscal authorities
are continuously monitored by the tax department and
measures are taken if required. The monitoring, man-
agement and avoidance of tax risks is supported by a
tax-compliance management system (tax CMS).
Positive effects on the Group's net profit and cash flows
are also possible as a result of retroactive legislation,
future court rulings or changes in the opinions of the
tax authorities.
Any changes in legislation and jurisdiction, as well as
different interpretations of the law by the fiscal authori-
ties, especially in the field of cross-border transactions,
may be subject to considerable uncertainty. It is there-
fore possible that the provisions recognized will not be
sufficient, which could have negative effects on the
Group's net profit and cash flows.
Mercedes-Benz Group AG and its subsidiaries operate
in many countries worldwide and are therefore subject
to numerous different statutory provisions and tax
audits. Tax risks and opportunities can affect the profit-
ability, cash flows and financial position of the Group.
As of 31 December 2023, the quantification of tax risks
and opportunities affecting the net profit will be dis-
closed for the first time in this Risk and Opportunity
Report. Additionally, there are minor tax risks to the
operating result.
159
Tax risks and opportunities
Although the final result of any such litigation may influ-
ence the Group's earnings and cash flows in any par-
ticular period, the Mercedes-Benz Group believes that
any resulting obligations are unlikely to have a sus-
tained effect on the Group's financial position.
It cannot be ruled out that the regulatory risks and risks
from legal proceedings discussed above, individually or
in the aggregate, may materially adversely impact the
profitability, cash flows and financial position of the
Group or any of its segments.
As legal proceedings are fraught with a large degree of
uncertainty, it is possible that after their final resolution,
some of the provisions we have recognized for them
could prove to be insufficient. As a result, substantial
additional expenditures may arise. This also applies to
legal proceedings for which the Group has seen no
requirement to recognize a provision.
In September 2021, individual persons associated with
Deutsche Umwelthilfe e. V. (DUH) filed a lawsuit before
the Stuttgart Regional Court against Mercedes-Benz AG.
They claim injunctive relief, demanding that Mercedes-
Benz AG refrain from distributing passenger cars with
combustion engines after November 2030 and reduce
its respective sales prior to this point in time. In the
third quarter of 2022, the Regional Court of Stuttgart
dismissed the claim in its entirety. The plaintiffs have
appealed the decision. In the fourth quarter of 2023,
the Higher Regional Court of Stuttgart upheld the deci-
sion and dismissed the plaintiffs' appeal as manifestly
unfounded. The plaintiffs have lodged an appeal to the
German Federal Court of Justice against the denial of
leave to appeal. Mercedes-Benz AG will continue to
defend itself against the plaintiffs' allegations.
Risks from other legal proceedings
Furthermore, the ability of the Mercedes-Benz Group to
defend itself in the court proceedings could be
impaired by the settlements of the diesel-related law-
suits in the United States and in Canada, as well as by
unfavourable allegations, findings, results or develop-
ments in any of the governmental or other court pro-
ceedings discussed above.
If court proceedings have an unfavourable outcome for
the Mercedes-Benz Group, the Group may encounter
substantial financial burdens, e.g. from damages pay-
ments, remedial works or other cost-intensive meas-
ures. Court proceedings can also have an adverse
effect on the reputation of the Group.
Further information on legal proceedings is provided in
Note 30 of the Notes to the Consolidated Financial
Statements.
Further Information
Contents
Consolidated Financial Statements
S. MM 2961E
105
0
0
Key figures that were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report are indicated by a footnote.
external audit.
Components of the Combined Management Report not audited for content
Insofar as the references made in the Management Report relate to parts of the Annual
Report that were not included in the external audit (components outside the company and
Consolidated Financial Statements and the Combined Management Report), or to the
Mercedes-Benz Group website or other reports or documents, these were not part of the
Corporate Governance
The EU Taxonomy Regulation and the adopted delegated acts along with the supplemen-
tary interpretation documents of the European Commission contain formulations and
terms that are still subject to considerable uncertainties and for which clarifications have
not yet been published in all cases. Among others, this refers to the interpretation of the
classification of economic activities, the do-no-significant-harm criteria and the assess-
ment of the economic substance of financial investments. On account of the immanent risk
that certain abstract legal terms can be interpreted in various ways, the conformity of the
interpretation with the law is subject to uncertainty.
No risks are recognizable - neither on the reporting
date nor at the time of preparing the Consolidated
Financial Statements that either alone or in combina-
tion with other risks could endanger the continued
existence of the Group.
-
In addition to the risks described, unforeseeable events
Ican have a negative impact on the business activities
and thus on the Mercedes-Benz Group's profitability,
liquidity and capital resources, financial position and
reputation, and non-financial key figures as well as on
society and the environment.
The overall view of the Group's risk and opportunity sit-
uation is the sum of the described individual risks and
opportunities in all risk and opportunity categories.
Overall assessment of the risk
and opportunity situation
In addition, if future taxable income is not earned or is
too low, there is a risk that the tax benefit from loss car-
ryforwards and tax-deductible temporary differences
may not be recognized or may no longer be recognized
in full; this could have a negative impact on net profit.
However, there is an accounting opportunity that tax
benefits currently not recognized in full may be utilized
or recognized in future years and could thus also have a
positive impact on the Group's net profit.
Further Information
EU taxonomy
Consolidated Financial Statements
Combined Management Report
Risk and Opportunity Report
or
Combined Management Report
Risk and Opportunity Report
157
Contents
Annual Report 2023 | Mercedes-Benz Group
In addition, the ability of the Mercedes-Benz Group to
defend itself in proceedings could be impaired by con-
cluded proceedings and their underlying allegations as
well as by unfavourable results or developments in any
of the information requests, inquiries, investigations,
administrative or criminal orders, legal actions and/or
proceedings discussed above.
-
Regarding the proceedings and processes still in pro-
gress, the Mercedes-Benz Group cannot at this time
make any statement to their outcome. In light of the
legal positions taken by U.S. regulatory authorities and
the KBA as well as the South Korean Ministry of Envi-
ronment, amongst others, it cannot be ruled out that,
besides these authorities, one or more authorities
worldwide will reach the conclusion that other passen-
ger cars and/or vans with the brand name Mercedes-
Benz or other brand names of the Mercedes-Benz
Group are equipped with impermissible defeat devices.
Likewise, such authorities could take the view that cer-
tain functionalities and/or calibrations are not proper
and/or were not properly disclosed. It cannot be ruled
out that the Mercedes-Benz Group will become subject
to, as the case may be, significant additional fines and
other sanctions, measures and actions. The occurrence
of the aforementioned events in whole or in part could
cause significant collateral damage including reputa-
tional harm. Further, due to negative allegations or find-
ings with respect to technical or legal issues by one of
the various governmental agencies, other agencies
also plaintiffs could also adopt such allegations or
findings. Thus, a negative allegation or finding in one
proceeding carries the risk of being able to have an
adverse effect on other proceedings, also potentially
leading to new or expanded investigations or proceed-
ings, including lawsuits.
The Mercedes-Benz Group continues to fully cooperate
with the authorities and institutions. Irrespective of
such cooperation and in light of the past developments,
it is possible that further regulatory, criminal and
administrative investigative and enforcement actions
and measures relating to the Mercedes-Benz Group
and/or its employees will be taken or administrative
orders will be issued. Additionally, further delays in
obtaining regulatory approvals necessary to introduce
new or recertify existing vehicle models could occur.
competition authority (Korea Fair Trade Commission)
are conducting various investigations and/or proce-
dures in connection with diesel exhaust emissions. In
this context, these South Korean authorities have made
determinations and imposed sanctions against
Mercedes-Benz which Mercedes-Benz has appealed. In
the same context, national antitrust authorities of vari-
ous countries are also conducting investigations,
including the South Korean antitrust authority, which
has made certain findings and imposed fines on some
car manufacturers. In February 2024, the criminal pro-
ceeding in South Korea was concluded.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
156
Corporate Governance
Corporate Governance
Consolidated Financial Statements
To Our Shareholders
civil court
Combined Management Report
Risk and Opportunity Report
158
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. Mercedes-Benz Group AG regards these
lawsuits and out-of-court claims as being without merit
and will defend itself against them. In December 2021,
the Stuttgart Higher Regional Court initiated model case
proceedings under the German Act on Model Case Pro-
ceedings in Disputes under Capital Markets Law (Kap-
MuG) (model case proceedings). Multiple investors
have used the possibility to register claims in a consid-
erable amount with the model case proceedings in
order to suspend the period of limitation. Mercedes-
Benz Group AG remains of the view to have duly ful-
filled its disclosure obligations under capital markets
law and defends itself against the investors' allegations
also in these model case proceedings.
Further Information
plaintiffs discontinued their claims. The Mercedes-Benz
Group also expects the last lawsuit pending in Canada
to be discontinued and it will continue to defend itself
against it until the discontinuance is final. This develop-
ment leads to a material reduction of the risk associ-
ated with the class actions. They therefore no longer
qualify for separate reporting, which is why the
Mercedes-Benz Group will no longer report on them in
the future.
Furthermore, class actions have been filed in Canada
alleging anticompetitive behaviour relating to vehicle
technology, costs, suppliers, markets and other com-
petitive attributes, including diesel emissions control
technology. In 2022, the proceedings in the United
States were concluded in favour of Mercedes-Benz
Group AG and MBUSA. In addition, in 2023, several
class actions in Canada were finally dismissed as the
Mercedes-Benz Group AG and the respective other
affected companies of the Group regard the pending
lawsuits set out above as being without merit and con-
tinue to defend themselves against them.
enforcement of claims (opt-in). The plaintiffs in the con-
sumer class action in England and Wales also allege,
amongst others, anti-competitive behaviour relating to
technology for the treatment of diesel exhaust emis-
sions.
Consumer class actions were filed against Mercedes-
Benz Group AG in Israel in February 2019 as well as
against Mercedes-Benz Group AG and further Group
companies in the United Kingdom since May 2020, in
the Netherlands, in Portugal as well as since November
2022 in Australia. The plaintiffs inter alia assert that the
Mercedes-Benz Group had used devices that impermis-
sibly impair the effectiveness of emission control sys-
tems in reducing nitrogen oxide (NOx) emissions and
which cause excessive emissions from vehicles with
diesel engines. Furthermore, they claim that Mercedes-
Benz Group AG deceived consumers in connection with
advertising in relation of Mercedes-Benz diesel vehicles.
The proceedings in England and Wales consist of sev-
eral individual lawsuits that have been consolidated
into one class action. A class action lawsuit is also
pending in Scotland. In these proceedings, allegedly
injured parties must actively register for the
In a lawsuit filed by the Environmental Protection Com-
mission of Hillsborough County, Florida in September
2020, the plaintiff claimed that, amongst others,
Mercedes-Benz Group AG and MBUSA had violated
municipal regulations prohibiting vehicle tampering and
other conduct by using alleged devices claimed to
impair the effectiveness of emission control systems.
The lawsuit was dismissed in the third quarter of 2022.
The plaintiff's appeal to this decision was dismissed in
the third quarter of 2023. The decision is final, and the
proceedings are concluded.
-
Risks from legal proceedings in connection with
diesel exhaust gas emissions
proceedings
In Germany, a large number of customers of diesel vehi-
cles have filed lawsuits for damages or rescission of
sales contracts based on similar allegations. They refer
in particular to the KBA's recall orders mentioned above.
Although the number of pending lawsuits is declining, a
future increase cannot be ruled out. Based on similar
allegations, the Federation of German Consumer Organ-
izations (Verbraucherzentrale Bundesverband e. V.) filed
a model declaratory action (Musterfeststellungsklage)
against Mercedes-Benz Group AG with the Stuttgart
Higher Regional Court in July 2021. Such an action seeks
a ruling that certain preconditions of alleged consumer
claims are met. Following a decision of the European
Court of Justice in the first quarter of 2023, the German
Federal Court of Justice ruled in the second quarter of
2023 that vehicle purchasers are entitled to claim dam-
ages against the manufacturer if it intentionally or negli-
gently used an inadmissible defeat device.'
In this meeting, the Audit Committee also resolved to
recommend to the Supervisory Board, and subse-
quently to the Annual General Meeting, that KPMG AG
Wirtschaftsprüfungsgesellschaft be appointed to audit
the financial statements and the Consolidated Financial
Statements, and to serve as the auditor for the review
of interim financial reports for the 2023 financial year.
The discussion of the quality of the audit and the results
of the independence review, which did not reveal any
indications of bias or threats to independence, were
taken into account.
After intensive review and discussion, the Audit Com-
mittee recommended that the Supervisory Board adopt
the prepared financial statements, the Combined Man-
agement Report including the Non-Financial Declara-
tion, the Remuneration report, the Declaration on Cor-
porate Governance and the proposal of the Board of
Management for the payment of a dividend of €5.20 per
dividend-bearing no-par-value share. The Audit Com-
mittee also adopted the Report of the Audit Committee
on the 2022 financial year.
During 2023, the Audit Committee discussed the
interim financial reports and the results of the audit
review with the Board of Management and the auditor
in the quarterly meetings prior to their publication.
In addition, the Committee received reports from the
Internal Audit, Compliance and Legal departments.
The Board of Management also regularly reported to
the Committee on the current status of material legal
proceedings, including antitrust and diesel emis-
sions-related proceedings. In addition, the Audit Com-
mittee received regular reports on possible violations
of rules, which employees and external parties reported
to the BPO (Business & People Protection Office) whis-
tle-blowing system.
Consolidated Financial Statements
In its meeting on 13 March 2023, the Committee
reviewed and discussed in detail the Annual Financial
Statements, the Consolidated Financial Statements
and the Combined Management Report, including the
Non-Financial Declaration for Mercedes-Benz
Group AG and the Group for the 2022 financial year,
the Remuneration report, the Declaration on Corporate
Governance and the proposal for the appropriation of
profits, all of which were issued with an unqualified
audit opinion by the auditor. The representatives of the
auditor reported on the results of the audit and in par-
ticular addressed the key audit matters and the rele-
vant audit procedures, including the conclusions
drawn, and were available to answer additional ques-
tions and provide information. The audit opinions on
the company and Consolidated Financial Statements
(including the key audit matters in the audit opinions)
and on the accounting-related internal control system,
as well as significant accounting matters, were dis-
cussed together with the auditor. Furthermore, the
Audit Committee discussed the effectiveness of the
internal control and risk management system.
In the meeting on 16 February 2023, the Audit Commit-
tee discussed the preliminary key figures of the 2022
Annual Financial Statements, the Consolidated Finan-
cial Statements and the preliminary proposal of the
Board of Management on the appropriation of profits.
After careful review, the Committee took note of and
approved the figures presented, determined that there
were no objections to the proposed publication and
recommended that the Supervisory Board, which met
afterwards, endorse this view. The preliminary key fig-
ures and the preliminary proposal for the appropriation
of profits were published at the annual press confer-
ence on 17 February 2023. During the aforementioned
meeting, the Committee also discussed the results of
the internally conducted quality analysis of the audit of
the financial statements. In addition, the Committee
dealt with the report on the total fees paid to the audi-
tor for audit and non-audit services in the 2022 finan-
cial year (including the non-audit fee cap) and set the
approval framework for the engagement of the auditor
for non-audit services for the period from 1 February
2023 to 31 December 2023. Subject to the election res-
olution of the Annual General Meeting, the Committee
also discussed the proposal for the fee agreement to be
made with the auditor for the 2023 financial year. In
addition, the Audit Committee discussed the 2023
annual audit plan of the Internal Audit Department and
the reports issued by the Compliance and Legal depart-
ments. Finally, the Committee was informed about the
current financial status, volumes and prices of the vehi-
cle clusters in the current and future Mercedes-Benz
Cars portfolio.
Topics in the year 2023
Further Information
Corporate Governance
Report of the Audit Committee
In October 2023, the Committee dealt with the interim
financial report for the third quarter of 2023 and the
risk report. Furthermore, the Committee carried out the
annual review of the approved non-audit services of the
auditor and dealt with the quarterly reports from the
Compliance, Internal Audit and Legal departments.
Here, the Audit Committee received extensive informa-
tion on social compliance activities, and in particular on
human rights due diligence processes, in connection
with the Act on Corporate Due Diligence Obligations in
Supply Chains (German Supply Chain Act - LkSG). It
also once again received reports on the status of the
transition in connection with the upcoming rotation of
the auditor.
164
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Self-assessment
The Chairman of the Audit Committee informed the
Supervisory Board in each of its subsequent meetings
of the activities of the Committee as well as the content
of the meetings and discussions.
In April 2023, the Committee initially considered the
interim financial report for the first quarter of 2023.
The Audit Committee then also received reports from
the Internal Audit and Legal departments and from the
Compliance unit. The report submitted by the Internal
Audit department also included an update on
Information for the Supervisory Board
Combined Management Report
Annual Report 2023 | Mercedes-Benz Group
In its meeting on 21 February 2024, the Audit Commit-
tee discussed the preliminary key figures of the com-
pany and the Consolidated Financial Statements for
2023 as well as the preliminary proposal of the Board of
Management on the appropriation of profits. After care-
ful review, the Committee took note of and approved
the figures presented, determined that there were no
objections to the proposed publication and recom-
mended that the Supervisory Board, which met after-
wards, endorse this view. The preliminary key figures
and the preliminary proposal for the appropriation of
profits were published at the annual press conference
on 22 February 2024.
To Our Shareholders
Particularly in preparation for upcoming meetings, the
Chairman of the Audit Committee held regular discus-
sions with the auditor as well as individual discus-
sions, for example with the aforementioned members
of the Board of Management, the Head of Internal
Auditing, the Head of Compliance, the Head of Legal
Affairs and, if required, with the heads of other spe-
cialist departments.
Company and Consolidated Financial Statements
for 2023
In March 2024, the Committee reviewed and discussed
in detail the Annual Financial Statements, the Consoli-
dated Financial Statements and the Combined Manage-
ment Report, including the Non-Financial Declaration
for Mercedes-Benz Group AG and the Group for the
2023 financial year, the Remuneration report, the Dec-
laration on Corporate Governance and the proposal for
the appropriation of profits. The representatives of the
auditor reported on the results of the audit and in par-
ticular addressed the key audit matters and the relevant
audit procedures, including the conclusions drawn, and
were available to answer additional questions and pro-
vide information. The audit opinions on the company
and Consolidated Financial Statements (including the
key audit matters) and on the accounting-related inter-
nal control system, as well as significant accounting
matters, were discussed together with the auditor.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Report of the Audit Committee
Contents
Consolidated Financial Statements
At its meeting in July 2023, the Committee dealt with
the results of the second quarter of 2023 and the risk
report. Furthermore, the Committee received the quar-
terly reports from the Compliance, Internal Audit and
Legal departments. These reports contained informa-
tion on, among other things, an external quality assess-
ment that had been performed in accordance with the
standards of the Institute of Internal Auditors and in
which Internal Audit was able to achieve an outstanding
result. In addition, the Audit Committee discussed the
annual report of the Group Data Protection Officer with
the Board of Management. The Committee also used
audit quality indicators to analyse the quality of the
audits. The agenda also included the discussion of a
report on the management of currency risks.
In its meeting in June 2023, the Audit Committee dis-
cussed aspects of the risk management system and
considered in particular the methods, processes and
derivations relating to ESG risks and opportunities as
well as digitalization measures. In addition, it received
reporting on the further development of the internal
control system. Subjects presented with respect to the
Compliance Management System included digitalization
initiatives with the possible future use of artificial intel-
ligence. The report on the further measures implement-
ing the new ESG and sustainability reporting require-
ments and the establishment of a uniform business
performance management system for sustainability and
ESG were a focal point of the meeting. In addition, the
Audit Committee received an exhaustive report from
the tax department. Information was provided on the
further development of the tax compliance manage-
ment system and new regulatory requirements related
to ESG and sustainability. Another topic of the meeting
was a discussion of the planning of the audit of the
financial statements, including the main audit areas for
the 2023 financial year. In this context, the committee
also considered the quality of the audit of the financial
statements and the status of the transition in connec-
tion with the upcoming rotation of the auditor. Finally,
the Audit Committee received reporting on current
accounting topics.
examinations and assessments relating to ESG (envi-
ronmental, social and governance) issues.
Further Information
Consolidated Financial Statements
Corporate Governance
Report of the Audit Committee
Combined Management Report
165
Furthermore, the Audit Committee discussed the effec-
tiveness of the internal control and risk management
system. After intensive review and discussion, the Audit
Committee recommended that the Supervisory Board
adopt the prepared financial statements, the Combined
Management Report including the Non-Financial Decla-
ration, the Remuneration report, the Declaration on
Corporate Governance and the proposal of the Board of
Management for the payment of a dividend of €5.30 per
dividend-bearing no-par-value share.
representatives of the auditor. The heads of specialist
departments such as Accounting, Internal Audit, Com-
pliance and Legal also provided information on individ-
ual items on the agenda. Regular executive sessions
also took place with the auditor without the presence
of the Board of Management.
Further Information
Meetings and participants
171 Composition and working method of
the Board of Management
corporate governance
168 Essential principles and practices of
system
168 Remuneration report, remuneration
167 Declaration of Compliance with the
German Corporate Governance Code
167 Declaration on Corporate
Governance
163 Report of the Audit Committee
The Audit Committee also conducted a self-evaluation
of its activities on the basis of a comprehensive compa-
ny-specific questionnaire in 2023. The positive results
of this self-assessment were presented and discussed
in the meeting on 21 February 2024. There was no fun-
damental need for change. Some individual suggestions
will be taken up.
CORPORATE
GOVERNANCE
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
CORPORATE GOVERNANCE
162
Combined Management Report
Corporate Governance
Consolidated Financial Statements
174 Composition and working method
of the Supervisory Board and its
committees
The Audit Committee met six times in the 2023 finan-
cial year. The Chairman of the Supervisory Board
attended all meetings as a permanent guest. Other
permanent participants, in compliance with the statu-
tory requirements, were the Chairman of the Board of
Management, the members of the Board of Manage-
ment responsible for Finance and Controlling and for
Integrity, Governance & Sustainability, and the
179 German Act on the Equal
180 Overall profiles of requirements for
the composition of the Board of
Management and the Supervisory
In the 2023 financial year, Olaf Koch (Chairman of the
Audit Committee) and Timotheus Höttges served as
members of the Supervisory Board on the shareholder
side. The persons mentioned are independent of the
company and the Board of Management and have
expertise in the field of accounting and the auditing of
financial statements, including sustainability reporting
and the auditing of such reporting. In the past financial
year, the employees were represented by Ergun Lümali
and also by Michael Brecht until his departure from the
Supervisory Board. Roman Romanowski was elected to
succeed Michael Brecht on the Audit Committee and
Ergun Lümali was elected Deputy Chairman of the Audit
Committee.
Equal representation
On the basis of the statutory provisions, the German
Corporate Governance Code and the rules of procedure
of the Supervisory Board and its committees, the Audit
Committee deals in particular with issues of accounting,
financial reporting and non-financial reporting. In addi-
tion, it is concerned with the audit of the financial
statements and it reviews the quality, qualifications and
independence of the auditor. It also discusses the
appropriateness, effectiveness and operation of the risk
management system, the internal control system, the
internal audit system and the compliance management
system. After the election of the auditor by the Annual
General Meeting, the Audit Committee engages the
auditor to conduct the annual audit and the auditor's
review of interim financial statements. In addition, the
Audit Committee agrees on the important audit issues
and negotiates the audit fees with the auditor. The
Audit Committee also engages the auditor to conduct
the voluntary audit of the Non-Financial Declaration as
part of the management report.
Accountability
as Chairman of the Audit Committee, I am pleased to
report to you on the tasks and activities of this Commit-
tee in the 2023 financial year.
Dear Shareholders,
Report of the Audit Committee
Report of the Audit Committee
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
163
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Meeting
187 Shareholders and Annual General
Board
Participation of Women and Men in
Leadership Positions
Stuttgart, March 2024
Beyond the statutory requirements of German stock
corporation, co-determination and capital market legis-
lation, Mercedes-Benz Group AG has complied and con-
tinues to comply with the recommendations of the Ger-
man Corporate Governance Code ("Code") subject to
the exceptions stated and justified in the Declaration of
Compliance (pursuant to Section 161 of the German
Stock Corporation Act).
Olaf Koch
group.
Principles of Social Responsibility and Human Rights
The Principles of Social Responsibility and Human
Rights supplement and specify the principles of human
rights and good working conditions in the Integrity
Code. They apply to all managers and employees of
Mercedes-Benz Group AG and also the consolidated
Group companies worldwide. Through the Principles,
the Mercedes-Benz Group also commits itself to pre-
venting negative effects on human rights within its own
business operations worldwide and at its partner and
supplier companies and to minimizing these negative
effects and, as far as possible, putting an end to them.
The Principles of Social Responsibility and Human
Rights can be viewed in various languages at
mercedes-benz.com/human-rights/principles.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
169
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Code of Conduct is binding on all managers and
employees of Mercedes-Benz Group AG and also the
consolidated Group companies worldwide. The Code of
Conduct was revised in 2022 and the new version was
communicated to employees in early 2023. The policy
sets out the core corporate principles for conduct in
day-to-day business and the way people deal with each
other within the company and with business partners
and customers. In addition to respect for the law and
the legal system, these corporate principles also
include, for example, fairness, transparency, practical
diversity, and responsibility. In addition to the corpo-
rate principles, the Code of Conduct contains, inter alia,
regulations regarding the respect and safeguarding of
human rights as well as the handling of conflicts of
interest, and prohibits corruption in any form whatso-
ever. It is available on the internet at group.
mercedes-benz.com/compliance/integrity-code.
The Code of Conduct
also wants to be at the forefront when it comes to sus-
tainability. The company defines the most important
principles in its Code of Conduct, which provides orien-
tation for all employees of Mercedes-Benz Group AG
and the Group and assists them in making the right
decisions, even in difficult business situations.
The Mercedes-Benz Group conducts its business in
accordance with Group-wide standards that go beyond
the requirements of the law and the German Corporate
Governance Code. Mercedes-Benz is convinced that
only those who act in an ethically and legally responsi-
ble manner remain successful in the long term - this is
especially true in times of upheaval and change. Hence,
integrity and compliance are very important to the
Mercedes-Benz Group. In order to achieve long-term
and sustainable corporate success on this foundation,
it is the goal of the Mercedes-Benz Group to ensure that
its business operations are in harmony with the inter-
ests of the environment and society. As one of the
world's leading automakers, the Mercedes-Benz Group
Principles of our business activity
Expectations regarding business partners
The Mercedes-Benz Group also formulates clear
requirements for its business partners, because con-
duct with integrity and in compliance with the rules is a
prerequisite for any trust-based cooperative venture.
Therefore, when selecting its business partners, the
company makes sure that they comply with the law, fol-
low ethical principles, communicate the associated
requirements to their own suppliers, and work to ensure
compliance with these requirements. For the Mercedes-
Benz Group's expectations of its business partners,
please also see group.mercedes-benz.com/com-
pany/compliance/business-partners.html.
Advisory Board for Integrity and Sustainability
The Mercedes-Benz Group established an Advisory
Board for Integrity and Sustainability. The board's mem-
bers are independent external experts in the fields of
environmental and social policy, transport and mobility
development, and human rights and ethics and provide
the Mercedes-Benz Group with constructive and critical
support with issues relating to integrity, sustainability
and corporate responsibility. The Advisory Board con-
venes several times a year in meetings that are chaired
by the member of the Board of Management responsi-
ble for Integrity, Governance & Sustainability. One of
these annual meetings specifically serves to exchange
information with other members of the Board of Man-
agement and members of the Supervisory Board. Addi-
tionally, a regular exchange of information and opinions
between the Advisory Board and company managers
and employees takes place in other meetings devoted
to specific topics. Such meetings also include working
groups that focus on integrity and employees, climate
change mitigation and resource conservation. Discus-
sions were also held with employees on Employee Day
as part of the 2023 Sustainability Dialogue. In 2023, the
Advisory Board also addressed the topics of human
rights, data responsibility, the responsible use of artifi-
cial intelligence and the further development of the
sustainable business strategy.
Internal risk management system and internal
control and compliance management system within
the Group
The Audit Committee
On the basis of the recommendation of the Audit Com-
mittee, the Supervisory Board submits a proposal to the
Annual General Meeting for the appointment of the
auditor of the financial statements, the Group auditor of
the Consolidated Financial Statements, and the auditor
for the review of the interim financial reports.
The Mercedes-Benz Group compiles its Consolidated
Financial Statements and interim financial reports in
accordance with the principles of International Finan-
cial Reporting Standards (IFRS) as applicable in the
European Union. The Annual Financial Statements of
Mercedes-Benz Group AG are compiled in accordance
with the accounting provisions of the German Commer-
cial Code (HGB). In addition to the half-yearly financial
report, the Mercedes-Benz Group also compiles quar-
terly financial reports. The Consolidated Financial
Statements and the Annual Financial Statements of
Mercedes-Benz Group AG are audited by an auditor,
and interim financial reports are subject to review by an
auditor. The Consolidated Financial Statements and the
consolidated management reports are publicly accessi-
ble on the website of the company within 90 days; the
interim financial reports are publicly accessible within
45 days after the end of the respective reporting period.
Accounting and auditing
At least once a year, the Audit Committee of the Super-
visory Board of Mercedes-Benz Group AG discusses the
effectiveness and functionality of the internal control
and risk management system, the internal auditing sys-
tem, and the Compliance Management System with the
Board of Management. In each case, these systems and
processes or similar ones are also examined with regard
to the sustainability risks and opportunities they
address, taking into account the areas of action of the
sustainable business strategy as well as the ecological
and social impact of the business activities conducted
by Mercedes-Benz Group AG and the Group. The chair-
man of the Audit Committee shall report back to the
Supervisory Board about the work of the committee at
the latest at the next meeting of the Supervisory Board.
The Supervisory Board also deals with the risk manage-
ment system on the occasion of the audit of the com-
pany and Consolidated Financial Statements. The
Chairman of the Supervisory Board maintains contact
with the Board of Management between meetings of
the Supervisory Board, in particular with the Chairman
of the Board of Management, in order to discuss issues
of risk management and compliance, in addition to the
strategy and business development of the Group. In
addition, the Board of Management regularly informs
the Audit Committee and the Supervisory Board about
significant risks to the company and the Group. The
Legal Affairs Committee of the Supervisory Board sup-
ports the Supervisory Board in the performance of its
duties with regard to the complex proceedings relating
to antitrust matters and questions with respect to emis-
sions with which Mercedes-Benz Group AG and its sub-
sidiaries are confronted.
The aim of the Compliance Management System (CMS)
is to promote compliance with legislation and policies
within the company and among its employees, to pre-
vent misconduct and to systematically minimize com-
pliance risks on the basis of the culture of integrity.
Detailed information on the Mercedes-Benz Compli-
ance Management System can be found in the Non-
Financial Declaration chapter of the 2023 Annual
Report.
In addition to the accounting-related internal control
system, the internal control system also includes in
particular the Compliance Management System and
other similar systems or frameworks such as the Human
Rights Respect System, as well as an independent
assessment of the structure and processes of the inter-
nal control system by Internal Auditing. Further expla-
nations of the internal control system are available in
the Risk and Opportunity Report in the Combined Man-
agement Report 2023.
Mercedes-Benz Group AG has fully complied and con-
tinues to comply with the suggestions of the Code.
The risk management system is part of the overall plan-
ning, control and reporting process. This is to ensure
that the executive management recognizes significant
risks at an early stage and can initiate countermeasures
in a timely fashion. Internal Audit monitors compliance
with legal framework conditions and corporate stand-
ards by means of targeted audits and initiates appropri-
ate measures where necessary. Further information on
risk management can be found in the Risk and Opportu-
nity Report in the Combined Management Report 2023.
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
170
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
German Corporate Governance Code
The Mercedes-Benz Group has internal control, risk and
compliance management systems in place that are
commensurate with the size and global presence of the
company, the scope of its business operations, and its
risk situation, and are geared towards the continuous
and systematic management of entrepreneurial risks
and opportunities. These processes and systems are
subject to continual monitoring in order to remedy the
identified weaknesses and continuously improve the
processes and systems. Risks and opportunities associ-
ated with social and environmental factors are also
taken into account. In identifying sustainability-related
risks and opportunities, Mercedes-Benz Group AG is
guided by the topics identified by the materiality
assessment and thus includes the areas of action of the
sustainable business strategy, for which concrete goals
have been assigned. The materiality assessment was
concluded in summer 2022 and after a review of the
areas of action remains valid for the year 2023. Sustain-
ability-related data are also systematically recorded
and social and environmental impacts of the company's
activities are identified and assessed as part of the
materiality assessment and thematic risk assessments,
for example in life cycle assessments along the entire
life cycle of vehicles or in the Human Rights Respect
System.
The 2023 remuneration report and the opinion of the
auditor pursuant to Section 162 of the German Stock
Corporation Act (AktG) are available at group.
mercedes-benz.com/remuneration-bom. The applicable
remuneration system for the members of the Board of
Management for 2023 pursuant to Section 87a Subsec-
tions 1 and 2 Sentence 1 of the German Stock Corpora-
tion Act (AktG), which was approved by the Annual Gen-
eral Meeting on 3 May 2023, is also available there. The
resolution also adopted by the Annual General Meeting
on 3 May 2023 pursuant to Section 113 Subsection 3 of
the German Stock Corporation Act (AktG) on the remu-
neration of the members of the Supervisory Board is
available at group.mercedes-benz.com/remunera-
tion-sb.
This Declaration on Corporate Governance, as well as
the most recent version of the Declaration of Compli-
ance pursuant to Section 161 of the German Stock Cor-
poration Act on the German Corporate Governance
Code, is, in addition to the no longer current declara-
tions of the past five years, available on the website of
the company group.mercedes-benz.com/dcg.
In the Declaration on Corporate Governance pursuant
to Sections 289 f, 315d of the German Commercial Code
(HGB), the Board of Management and the Supervisory
Board explain the corporate governance of the com-
pany in the 2023 reporting year. The statements are
applicable to Mercedes-Benz Group AG and the Group,
unless indicated otherwise below. Pursuant to Sec-
tion 317 Subsection 2 Sentence 6 HGB, the review of
the Declaration on Corporate Governance by the auditor
is to be limited to whether the legally required state-
ments were made.
Declaration on Corporate Governance
Corporate Governance
Further Information
Consolidated Financial Statements
Combined Management Report
167
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
166
Essential principles and practices
of corporate governance
Chairman
Declaration of the Board of
Management and Supervisory
Board of Mercedes-Benz Group AG
on the Compliance with the
German Corporate Governance
Code according to Section 161 of
the German Stock Corporation Act
Corporate Governance
Declaration on
Maximum number of Supervisory Board mandates
(C. 4 and C. 5)
Further Information
Mercedes-Benz Group AG maintains compliance with
the recommendations of the German Corporate Gov-
ernance Code in the Code version, dated April 28, 2022
("Code"), published by the Federal Ministry of Justice
and Consumer Protection in the official section of the
German Federal Gazette on June 27, 2022, with the
exception of Recommendations C.4 and C.5 (Maximum
number of Supervisory Board mandates) and will also
continue to observe the recommendations with the
aforesaid deviations in the future. Since the submission
of the last Compliance Declaration in December 2022,
Mercedes-Benz Group AG has maintained compliance
with the recommendations of the German Corporate
Governance Code also with the aforesaid deviations.
Remuneration report,
remuneration system
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
168
Ola Källenius
Chairman
For the Board of Management
Dr Bernd Pischetsrieder
Chairman
For the Supervisory Board
Stuttgart, December 2023
board of a listed company shall not accept more than a
total of five Supervisory Board mandates in non-group
listed companies or comparable functions, whereby a
mandate as Supervisory Board Chair counts twice.
According to Recommendation C.5, members of the
Management Board of listed companies shall not have a
total of more than two Supervisory Board mandates in
non-group listed companies or comparable functions,
and shall not accept the Chair of a Supervisory Board in
a non-group listed company. Rather than setting a strict
amount limit, it is more appropriate to assess on a
case-by-case basis whether the number of mandates
held by members of the Management Boards and
Supervisory Boards at non-group listed companies or
comparable functions appears to be appropriate, in
particular because it is not always possible to clearly
define the mandates that should be taken into consid-
eration. Moreover, the individual workload expected as
a result of the total number of mandates held does not
necessarily increase in proportion to their number.
According to Recommendation C.4, Supervisory Board
members who are not members of any management
Composition and working method
of the Supervisory Board and its
committees
corporate-governance/supervisory-board. This informa-
tion is also updated every year.
group.mercedes-benz.com/company/
In addition, the Supervisory Board has developed an
overall profile of requirements for its own composition,
which includes a competence profile and a diversity
concept for the Board as a whole, including an age limit.
The specific details of the overall profile of require-
ments are also summarized in a separate section of this
Declaration on Corporate Governance. The proposals of
the Supervisory Board for the election of shareholder
representatives by the General Meeting, for which the
Nomination Committee submits recommendations, aim
to fulfil the overall profile of requirements for the
Supervisory Board as a whole.
Curricula vitae of the individual members of the Super-
visory Board and their other mandates are published on
the Internet at
In accordance with the German Co-Determination Act
(MitbestG), the Supervisory Board of Mercedes-Benz
Group AG consists of 20 members. Half of them are
elected by the shareholders at the General Meeting and
half by the employees of the German companies of the
Group. Shareholder representatives and employee rep-
resentatives are by law equally bound to serve the
interests of the company.
Supervisory Board
The Supervisory Board shall be composed in such man-
ner that its members as a whole are familiar with the
industry in which the company operates and have the
knowledge, skills and professional experience neces-
sary for the proper performance of their duties. In
accordance with applicable law, the Supervisory Board
of Mercedes-Benz Group AG must be composed of at
least 30% women and at least 30% men. The specific
details are presented in a separate section of this Dec-
laration on Corporate Governance.
Further Information
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
174
To Our Shareholders
Contents
Independently of the statutory requirements, in 2006
the company had already set itself the goal of increas-
ing the proportion of women in senior management
positions within the Group to at least 20% by 2020.
This goal was achieved, and in 2022 the company set
itself the new goal of appointing women to fill at least
30% of its senior management positions by 2030. As of
31 December 2023, the proportion of women in senior
management positions at the Mercedes-Benz Group
worldwide was 25.7% (active workforce of the fully con-
solidated Group companies without holiday workers).
has set targets for the proportion of women at the two
management levels of the Mercedes-Benz Group AG
below the Board of Management and a deadline for
attaining these targets. The specific details are pre-
sented in a separate section of this Declaration on Cor-
porate Governance.
The members of the Supervisory Board assume respon-
sibility for the training and further education measures
required for their tasks, e.g. on topics relating to
changes in the legal framework and new, forward-look-
ing technologies, and are supported in this by the com-
pany. The key components of this programme include
ESG (environmental, social and governance) and sus-
tainability-related thematic blocks. In the reporting
period, for example, the company held information
events on sustainable corporate governance and sus-
tainability reporting as well as on the Mercedes-Benz
operating system MB.OS. Both internal and external
experts were involved in these events. In addition, new
members of the Supervisory Board have the opportu-
nity to meet the members of the Board of Management
and senior executives with specialist responsibility in a
specifically designated onboarding programme for a
bilateral exchange on fundamental and current topics in
respect of the relevant areas of the Board of Manage-
ment, thus gaining an overview of the topics relevant to
the company and of the governance structure.
The targeted promotion of women had already been a
central focus of attention in diversity management
before the German Act on the Equal Participation of
Women and Men in Leadership Positions came into
force. In compliance with the statutory requirements,
the Board of Management of Mercedes-Benz Group AG
Consolidated Financial Statements
The Supervisory Board supervises and advises the
Board of Management in the management of the busi-
ness. Monitoring and advisory activities also relate to
sustainability issues. At regular intervals, the Supervi-
sory Board discusses business development, the situa-
tion of the company, and planning and strategy, includ-
ing the sustainability strategy and its implementation.
The Supervisory Board also reviews and discusses the
internal control and risk management system and moni-
tors compliance with statutory provisions, official regu-
lations and internal policies within the company.
ernance/supervisory-board.
-
With respective conditions and measures, the
Mercedes-Benz Group promotes a working environment
in which employees, regardless of their age, ethnic ori-
gins and nationality, gender and gender identity, physi-
cal or intellectual capacity, religion and worldview, sex-
ual orientation and social origins, can freely develop
their talents. Along with the establishment of a frame-
work and processes for ensuring equal opportunities,
and measures to reduce and eliminate subconscious
prejudices, this also includes measures to promote a
work culture marked by appreciation in which individual
lifestyles are respected, as well as the organization of
programmes for employees and managers that provide
information, raise awareness and improve personal
skills in this regard. In this way, diversity and inclusion
management contribute significantly to the further
development of the corporate culture at the Mercedes-
Benz Group.
Every member of the Supervisory Board must disclose
any conflicts of interest they may have without delay to
For the meetings of the Supervisory Board during the
reporting period, regular Executive Sessions were again
scheduled in order to be able to discuss topics in the
absence of the Board of Management. Pursuant to the
German Act on Strengthening Financial Market Integrity
(FISG), which entered into force on 1 July 2021, the
Board of Management does not participate in meetings
of the Supervisory Board and its committees to which
the auditor is called in as an expert, unless the Supervi-
sory Board or the committee deems its participation
necessary. Meetings of the Supervisory Board and its
committees should as a rule take place in person. In
justified exceptional cases the meetings can be held in
the form of a video conference or a conference call or
with the use of other comparable means of telecommu-
nication or individual members can participate in a
meeting using such means.
ernance.
The Supervisory Board has adopted Rules of Procedure
that, in addition to its duties and responsibilities, spe-
cifically regulate the convening and preparation of its
meetings as well as the procedure for the adoption of
resolutions and contain provisions that are intended to
avoid conflicts of interest. The Rules of Procedure of
the Supervisory Board are available on the internet at
group.mercedes-benz.com/company/corporate-gov-
group.mercedes-benz.com/company/corporate-gov-
The Supervisory Board examines the Annual Financial
Statements, the Consolidated Financial Statements,
and the Combined Management Report with Non-Fi-
nancial Declaration of the company and the Group, as
well as the proposal for the appropriation of the distrib-
utable profits. After discussions with the auditor and in
consideration of the audit opinions of the auditor and
the audit results of the Audit Committee, the Supervi-
sory Board shall declare whether any objections are to
be raised after the final result of its own review. If this
is not the case, the Supervisory Board approves the
Annual Financial Statements and the Combined Man-
agement Report; the financial statements are deemed
to have been adopted with the approval of the Supervi-
sory Board. The Supervisory Board shall report to the
Annual General Meeting on the results of its own review
as well as on the nature and scope of the supervision of
the Board of Management during the past financial year.
The Report of the Supervisory Board on the 2023
reporting year is available in the Annual Report and at
remuneration system and the total individual remunera-
tion of the individual members of the Board of Manage-
ment in order to ensure that these remain appropriate.
The adjusted remuneration system for the members of
the Board of Management, which was approved by a
majority of 91% at the Annual General Meeting in 2023,
can be viewed at group.mercedes-benz.com/remu-
neration-bom. The Remuneration report that was pre-
pared jointly by the Board of Management and the
Supervisory Board (including the opinion of the auditor
pursuant to Section 162 of the German Stock Corpora-
tion Act) is also available there.
On the basis of a proposal issued by the Presidential
Committee, the Supervisory Board determines the sys-
tem of remuneration for the Board of Management and
on the basis of this system also determines the total
individual remuneration of the individual members of
the Board of Management. It also defines the targets for
variable remuneration components, including non-fi-
nancial and sustainability-oriented parameters. Further-
more,
the Supervisory Board regularly reviews both the
With regard to the composition of the Board of Manage-
ment, the Supervisory Board observes the statutory
requirements for the equal participation of women and
men. The specific details are presented in a separate
section of this Declaration on Corporate Governance.
Furthermore, with regard to the composition of the
Board of Management, the Supervisory Board adopted
a diversity concept embedded in an overall profile of
requirements. Its specific details are also summarized
in a separate section of this Declaration on Corporate
Governance.
The duties of the Supervisory Board include the
appointment and, if necessary, the dismissal of the
members of the Board of Management. Prior to 2021,
initial appointments were generally made for a maxi-
mum of three years. Since then, they have always
been made subject to this maximum. In 2022, the
Supervisory Board also adopted a more flexibly struc-
tured further reduction of the appointment period in
the case of appointments and reappointments of indi-
viduals 58 years of age and older at the time their
term of office begins.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
175
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The Supervisory Board's monitoring and advisory activi-
ties also relate to sustainability issues associated with
the ESG dimensions (environmental, social and govern-
ance factors). At regular intervals, the Supervisory
Board obtains reports from the Board of Management
on the status of implementation of the sustainable cor-
porate strategy and also examines the risks and oppor-
tunities for the company that result from social and
environmental factors and, increasingly, the ecological
and social effects of the company's business activities.
The Supervisory Board also addresses sustainability
reporting in the form of the Non-Financial Declaration
in the Combined Management Report.
The Supervisory Board has also specified in more detail
the information and reporting duties of the Board of
Management vis-à-vis the Supervisory Board, the Audit
Committee and — between meetings of the Supervisory
Board vis-à-vis the Chairman of the Supervisory
Board. The Supervisory Board has reserved the right of
approval for transactions of fundamental importance.
equal opportunity because these values form the basis
of an efficient and successful company. Diversity is a
firm component of the business strategy of the
Mercedes-Benz Group; activities to promote diversity
focus on the overarching strategic areas of action for
the advancement of women, internationality and equal
opportunities.
In accordance with the articles of association of
Mercedes-Benz Group AG, the Board of Management
consists of at least two members. The Supervisory
Board shall determine the exact number. As of
31 December 2023, the Board of Management consisted
of eight members.
Diversity and equal opportunity
minimum proportion requirement no longer have to set
a target quota for the proportion of women on the
board of management. Nevertheless, the Supervisory
Board has decided that the target quota set in 2020
should remain in place as one aspect of the overall pro-
file of requirements for appointments to the Board of
Management.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
172
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In December 2020, the Supervisory Board set a target
for the proportion of women on the Board of Manage-
ment and a deadline for achieving this target. In August
2021, the German Second Leadership Positions Act
(FÜPOG II) came into force. According to the said Act, at
least one woman and at least one man must be a mem-
ber of the Board of Management in listed companies
that are subject to co-determination and equal rep-
resentation and more than three members on the Board
of Management. Companies that are subject to the
Annual Report 2023 | Mercedes-Benz Group
Board of Management
Under the German Stock Corporation Act (AktG),
Mercedes-Benz Group AG has a dual management sys-
tem that provides for a strict personnel and functional
separation between the Board of Management as
the management body and the Supervisory Board as
the supervisory body (two-tier board). The Board of
Management manages the company, whilst the Super-
visory Board supervises and advises the Board of
Management.
Composition and working method
of the Board of Management
To ensure compliance with the duty to appoint a differ-
ent audit firm, a selection and proposal process for
audits of the 2024 reporting year was conducted in
2022 in accordance with the EU Statutory Audit Regula-
tion. In accordance with the proposal made by the
Supervisory Board on the basis of the recommendation
and preference of the Audit Committee, the Annual
General Meeting on 3 May 2023 resolved that Pricewa-
terhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, with headquarters in Frankfurt am Main,
be appointed as auditor and Group auditor of the finan-
cial statements and Consolidated Financial Statements
for the 2024 financial year, as well as auditor for the
review of interim financial reports for the 2024 financial
year.
Consolidated Financial Statements of Mercedes-Benz
Group AG since 1998; Alexander Bock has been the
responsible auditor since the 2021 reporting year.
At the Annual General Meeting on 3 May 2023,
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, was
appointed as auditor of the financial statements, Group
auditor of the Consolidated Financial Statements, and
auditor for the review of interim financial reports for the
2023 financial year. KPMG AG Wirtschaftsprüfungs-
gesellschaft has audited the company and
The auditor informs the Supervisory Board without
delay of any and all findings and occurrences of signifi-
cance for the duties of the Supervisory Board that come
to the attention of the auditor during the performance
of the audit. The auditor also informs the Supervisory
Board and annotates in the audit report if, during the
performance of the audit, the auditor discovers facts
that reveal an inaccuracy in the declarations of compli-
ance with the German Corporate Governance Code
issued by the Board of Management and/or the Super-
visory Board.
Before submitting its recommendation for the election
proposal to the Annual General Meeting, the Audit
Committee of the Supervisory Board obtains a declara-
tion from the proposed auditor as to whether and, if so,
which business, financial or personal relationships exist
between the auditor and its boards and committees
and audit managers on the one hand and the company
and members of its boards and committees on the
other hand that could give rise to concerns of partiality.
The declaration also specifies which other services
were provided to the Group in the previous year and to
what extent and which ones have contractually been
stipulated for the following year.
Details on the overall profile of requirements and the
participation of women on the Board of Management
are presented in separate sections in this Declaration
on Corporate Governance.
Without prejudice to the overall responsibility of the
Board of Management, the individual members of the
Board of Management shall manage their divisions on
their own responsibility within the framework of the
guidelines adopted by the Board of Management as a
whole. Certain matters defined by the Board of Man-
agement as a whole shall nevertheless be discussed by
the Board of Management as a whole and shall require
its approval. In addition, each member of the Board of
Management has the right to demand that any matter
he or she deems important be discussed by the Board
of Management as a whole or that a decision be made
on that matter by the Board as a whole. The work of the
Board of Management is coordinated by the chairman
of the Board of Management. No committees of the
Board of Management were established during the
reporting period.
Information about the areas of responsibility and the
curricula vitae of the members of the Board of
Management is available on the website of Mercedes-
Benz Group AG at group.mercedes-benz.com/com-
group.mercedes-benz.com/company/corporate-gov-
ernance, which among other things govern the proce-
dure to be followed when adopting resolutions and con-
tain provisions designed to avoid conflicts of interest.
The Board of Management has adopted rules of proce-
dure, available on the website of the company at
Members of the Board of Management may only per-
form external ancillary activities if these are approved
by the Supervisory Board's Presidential Committee.
Each member of the Board of Management is bound to
serve the interests of the company and is subject to a
comprehensive restraint of competition throughout the
entire term of their contract. When making decisions,
they may not pursue personal interests and they may
not exploit the company's business opportunities for
their own benefit. Members of the Board of Manage-
ment must disclose without delay to the Chairman of
the Supervisory Board and the Chairman of the Board of
Management any personal interest they may have in a
particular business activity conducted by the company,
as well as any and all other conflicts of interest, and
they must also report such information to all other
members of the Board of Management.
For certain types of transactions defined by the Super-
visory Board, the Board of Management requires the
prior approval of the Supervisory Board.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
The Mercedes-Benz Group is committed to tolerance,
openness and fairness, and promotes diversity and
173
Contents
Annual Report 2023 | Mercedes-Benz Group
The Board of Management and the Supervisory Board
work to ensure the well-being of the company in a rela-
tionship based on trust. The Board of Management
informs the Supervisory Board regularly, comprehen-
sively and in a timely manner about all strategic issues
of relevance to the company as a whole, including
issues relating to the sustainability strategy, planning,
profitability, business development, the situation of the
company, the internal control system, the risk manage-
ment system and compliance. The Supervisory Board
has defined the information and reporting duties of the
Board of Management in more detail.
The Board of Management compiles the interim finan-
cial reports of the company, the Annual Financial State-
ments of Mercedes-Benz Group AG, the Consolidated
Financial Statements and the Combined Management
Report with Non-Financial Declaration of the company
and the Group. Together with the Supervisory Board, it
prepares the Remuneration report and issues an annual
Declaration of Compliance with the German Corporate
Governance Code.
Management System geared to the risk situation of the
company, the basic features of which are presented in
the Non-Financial Declaration chapter of the 2023
Annual Report. The components of the Compliance
Management System also include the BPO (Business &
People Protection Office) whistleblowing system, which
gives employees and external whistleblowers world-
wide the opportunity to report violations of the rules.
The Board of Management is responsible for ensuring
compliance with statutory provisions and internal poli-
cies within the company, and works to ensure that they
are also observed by the Group companies (compli-
ance). It has established a comprehensive Compliance
The internal control and risk management system
established by the Board of Management also
addresses sustainability-related targets. Further infor-
mation on sustainability can be found on the company's
website at group.mercedes-benz.com/sustainability.
The Board of Management manages Mercedes-Benz
Group AG and the Group, in consideration of the inter-
ests of the shareholders, the employees and the other
stakeholders, with the goal of sustainable added value.
With the approval of the Supervisory Board, it deter-
mines the strategic orientation of the company, which
also takes into account long-term economic targets and
environmental and social targets and objectives. The
use of this approach has led to the definition of the
strategic areas of action climate change mitigation and
air quality, resource conservation, sustainable urban
mobility, traffic safety, data responsibility and human
rights as components of the sustainable business strat-
egy. Along with financial targets, the corporate planning
decided on by the Board of Management with the
approval of the Supervisory Board also includes corre-
sponding sustainability-related targets.
pany/corporate-governance/board-of-management.
To Our Shareholders
Contents
Contents
176
between 25 November 2020 and 31 December 2023 is
mainly due to the spin-off and hive-down of the Daimler
commercial vehicles business that has meanwhile been
carried out and the associated transfers to Daimler
Truck.
The change in the total number of executives at the var-
ious management levels of Mercedes-Benz Group AG
By a resolution dated 25 November 2020, the Board of
Management set a 11.8% share of women at the first
(two women of a total of 17 executives) and 22.5% at
the second level of management of Mercedes-Benz
Group AG (16 women of a total of 71 executives) below
the Board of Management at the time of the resolution
and a target for the proportion of women of at least
20% for the first and of at least 25% for the second
level of the Mercedes-Benz Group AG below the Board
of Management by 31 December 2025. As of
31 December 2023, the first level of management of
Mercedes-Benz Group AG below the Board of Manage-
ment consists of 13 executives, of whom 3 are women,
corresponding to a percentage of women of 23%. At the
second level of management of Mercedes-Benz
Group AG below the Board of Management, as of
31 December 2023, 17 out of a total of 50 executives are
women, corresponding to 34%.
overall requirements profile for appointments to the
Board of Management, the Supervisory Board has
decided to go beyond the stipulations of the minimum
proportion requirement and maintain the target quota
for the proportion of women on the Board of Manage-
ment that was set in 2020. As at 31 December 2023,
three of the eight members of the Board of Manage-
ment are women: Renata Jungo Brüngger, Sabine
Kohleisen and Britta Seeger. The proportion of women
on the Board of Management is now 37.5%, which
means it exceeds the target that was set.
By resolution of 3 December 2020, the Supervisory
Board of Mercedes-Benz Group AG set a target for the
proportion of women on the Board of Management of at
least 25% by 31 December 2025. Since August 2022, a
legally mandated minimum participation requirement
must be complied with when appointing members of
the board of management. This requirement stipulates
that at least one woman and at least one man must be
a member of the board of management in a listed com-
pany with co-determination and equal representation
and more than three members on the board of manage-
ment. Companies that are subject to the minimum pro-
portion requirement are no longer obliged to set a tar-
get quota for the proportion of women on the board of
management. Nevertheless, within the framework of the
The requirements of the German Equal Participation of
Women and Men in Leadership Positions Act are to be
fulfilled at the company level. The following information
therefore relates to the Board of Management of
Mercedes-Benz Group AG, two management levels of
Mercedes-Benz Group AG below its Board of Manage-
ment, and the Supervisory Board of Mercedes-Benz
Group AG.
German Act on the Equal
Participation of Women and
Men in Leadership Positions, as
amended by the German Second
Act on Leadership Positions
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
179
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
By law, the Mediation Committee consists of the Chair-
man of the Supervisory Board, Dr Bernd Pischetsrieder;
the Deputy Chairman of the Supervisory Board, Ergun
Lümali; and two members elected by a majority of the
votes cast, one by the employee representatives and
one by the shareholder representatives on the Supervi-
sory Board. As of 31 December 2023, they are Ben van
Beurden for the shareholder side and Roman Zitzels-
berger for the employee side. The Committee was
established for the sole purpose of performing the task
set out in Section 31 Subsection 3 of the German
Co-Determination Act (MitbestG). As in previous years,
the Mediation Committee had no reason to take action
in 2023.
Mediation Committee
against the company and Group companies. It prepares
resolutions of the Supervisory Board in this regard and
makes corresponding resolution recommendations. As
part of the agreement in principle reached in 2020 with
various US authorities to terminate civil and environ-
mental proceedings in connection with emission con-
trol systems of certain diesel vehicles, the Committee
was assigned further tasks and decision-making com-
petences with regard to the fulfilment of the obligations
assumed in the agreement in principle. The said other
tasks include, inter alia, the steering and monitoring of
the Post Settlement Audit Teams that were set up in the
context of the agreement in principle.
The Legal Affairs Committee is composed of six mem-
bers elected by the Supervisory Board by a majority of
the votes cast. As of 31 December 2023, the members
of the Committee are the shareholder representatives
Olaf Koch (Chairman), Liz Centoni and Dame Polly Cour-
tice as well as the employee representatives Ergun
Lümali, Michael Häberle and Roman Romanowski. The
Committee coordinates the exercising of the rights and
obligations of the Supervisory Board with regard to the
ongoing emission and cartel-related proceedings
Based on the assumption of a total of 13 executives at
management level 1 of Mercedes-Benz Group AG as of
31 December 2025, the set target quota of at least 20%
results in a target of 3 women for this level. Based on
the assumption of a total of 50 executives at manage-
ment level 2 of Mercedes-Benz Group AG as of
31 December 2025, the set target quota of 25% results
in a target of 13 women for this level.
The supervisory boards of listed companies subject to
co-determination and equal representation of share-
holders and employees on the supervisory board must
be composed of at least 30% women and at least 30%
men. The quota is to be met by the Supervisory Board
as a whole. If the representatives of the shareholders or
the representatives of the employees object to the
Chairman of the Supervisory Board prior to the election,
then the minimum share for this election shall be ful-
filled separately by the shareholders and the employ-
ees. At the Supervisory Board meeting on 27 April 2022,
the shareholder representatives objected to the overall
fulfilment with regard to the election to the Supervisory
Board of employee representatives whose term of
office began at the end of the Annual General Meeting
on 3 May 2023. There was no objection to the overall
fulfilment with regard to the election of a shareholder
Annual Report 2023 | Mercedes-Benz Group
Contents
31 December 2023, three of the eight members of the
Board of Management are women: Renata Jungo
On 3 December 2020, the Supervisory Board set a
target for the proportion of women on the Board
of Management of at least 25% by 31 December 2025.
In August 2022, the previous statutory obligation to
set a target quota for the proportion of women was
replaced by a statutory minimum participation
requirement of one woman (and one man) for boards
of management consisting of more than three per-
sons at listed companies with co-determination and
equal representation. Nevertheless, within the frame-
work of the overall requirements profile for appoint-
ments to the Board of Management, the Supervisory
Board has decided to go beyond the stipulations of
the minimum proportion requirement and maintain
the target quota for the proportion of women on the
Board of Management that was set in 2020. As of
The members of the Board of Management shall have
diverse educational and professional backgrounds,
preferably with at least two members with a technical
background. As of 31 December 2023, the Board of
Management includes two graduate engineers,
Markus Schäfer and Dr Jörg Burzer. Ola Källenius has
demonstrated his technical expertise on a sustained
basis since taking over the Group Research &
Mercedes-Benz Cars Development department on
1 January 2017.
-
The profile of requirements for the Board of Manage-
ment remained the same in the reporting period as in
the previous year and included the following aspects:
The objective of the profile of requirements for the
Board of Management is to ensure that the Board of
Management has excellent leadership skills and that its
composition is as diverse and complementary as possi-
ble. The Board of Management as a whole shall possess
the knowledge, skills and experience necessary for the
proper performance of its duties and at the same time
embody the company's management philosophy on the
basis of the various personal backgrounds and skills of
its members. The key factor for the decision on filling a
specific board position is always the interest of the
company, taking any and all circumstances of the indi-
vidual case into account.
Board of Management
With regard to the composition of the Board of Manage-
ment and the Supervisory Board, Mercedes-Benz
Group AG considers competence profiles and diversity
concepts with regard to aspects such as age and gen-
der. The Supervisory Board has combined these profiles
and concepts in the overall profiles of requirements for
the Board of Management and the Supervisory Board
described below. The profiles of requirements are
reviewed annually and also serve as a basis for long-
term succession planning.
Overall profiles of requirements
for the composition of the
Board of Management and the
Supervisory Board
Legal Affairs Committee
In addition to Mercedes-Benz Group AG itself, other
Group companies are subject to co-determination and
have set their own targets for the proportion of women
on their respective Supervisory Boards and Boards of
Management, and at the two levels below the Board of
Management, as well as a deadline for achieving these
targets, and have published them in accordance with
the statutory requirements.
As at 31 December 2023, women make up 30% of the
shareholder side of the Supervisory Board of Mercedes-
Benz Group AG (Liz Centoni, Dame Polly Courtice and
Professor Dr Helene Svahn), while the remaining 70%
are men. At that point of time, on the employee side,
Nadine Boguslawski, Gabriela Neher and Monika Tielsch
also make up 30% women and the remaining 70% are
men. If she is elected as a shareholder representative
by the Annual General Meeting 2024, the membership
of Dr. Doris Höpke on the Supervisory Board will
increase the proportion of women on the shareholder
side to 40%.
representative by the Annual General Meeting
on 3 May 2023.
Corporate Governance
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Combined Management Report
180
To Our Shareholders
The statutory quota for women for the Supervisory
Board thus remains fulfilled.
Transactions between the company and related parties
within the meaning of Section 111 b of the German Stock
Corporation Act (AktG) require the prior approval of the
Audit Committee, unless the law or the Supervisory
Board stipulates that the approval of the plenary Super-
visory Board or another committee is required.
Finally, the Audit Committee approves in advance per-
missible services that the auditors or their subsidiaries
perform for Mercedes-Benz Group AG or its Group com-
panies and that are not directly related to the audit of
the annual accounts (or the review of interim financial
statements).
The auditor shall report to the Audit Committee on any
and all accounting matters considered critical and on
any material weaknesses in the internal control and risk
management system relating to the accounting process
that are identified during the audit. The Audit Commit-
tee also addresses reporting on non-financial topics in
the Management Report.
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Audit Committee consists of four members elected
by the Supervisory Board by a majority of the votes
cast. As of 31 December 2023, they are the shareholder
representatives Olaf Koch (Chairman of the Audit Com-
mittee) and Timotheus Höttges as well as the employee
representatives Ergun Lümali and Roman Romanowski.
Audit Committee
The Nomination Committee consists of the Chairman of
the Supervisory Board and two other members elected
by the shareholder representatives in the Supervisory
Board by a majority of the votes cast. As of 31 December
2023, they are Dr Bernd Pischetsrieder (Chairman of the
Nomination Committee), Dr Martin Brudermüller and
Ben van Beurden. The Nomination Committee is the
only committee of the Supervisory Board composed
exclusively of shareholder representatives. It makes
recommendations to the Supervisory Board for propos-
als to the General Meeting for the election of share-
holder representatives on the Supervisory Board. In this
respect, it takes the statutory requirements for the par-
ticipation of women into account and strives to fulfil
the overall profile of requirements for the Supervisory
Board as a whole.
Nomination Committee
In addition, the Presidential Committee advises and
decides on corporate governance issues, on which it
also makes recommendations to the Supervisory Board.
It supports and advises the Chairman of the Supervi-
sory Board and his Deputy and prepares the meetings
of the Supervisory Board within the scope of its respon-
sibilities.
The Presidential Committee makes recommendations to
the Supervisory Board for the appointment of members
to the Board of Management, in consideration of the
overall profile of requirements defined by the Supervi-
sory Board with the diversity concept, including the
requirements for the proportion of women on the Board
of Management. It submits proposals to the Supervi-
sory Board for the structure of the remuneration system
for the Board of Management and for the appropriate
individual total remuneration of the individual members
of the Board of Management. The Presidential Commit-
tee is responsible for the contractual matters of the
members of the Board of Management and decides on
the granting of approval for ancillary activities of mem-
bers of the Board of Management outside the Group.
177
The Presidential Committee consists of the Chairman of
the Supervisory Board, the Deputy Chairman of the
Supervisory Board, and two other members elected by
the Supervisory Board. As of 31 December 2023, the
Presidential Committee consisted of Dr Bernd Pischets-
rieder (Chairman), Ergun Lümali (Deputy Chairman), Ben
van Beurden and Roman Zitzelsberger.
ernance.
chairpersons shall report on the work of the commit-
tees to the plenary meeting of the Supervisory Board at
the latest at the next meeting of the Supervisory Board
following the committee meeting. The Supervisory
Board has adopted separate rules of procedure for all
its committees. They are available on the internet at
group.mercedes-benz.com/company/corporate-gov-
As of 31 December 2023, in addition to the Mediation
Committee to be established by law, there are four
other committees of the Supervisory Board that per-
form the tasks assigned to them in the name of and on
behalf of the Supervisory Board as a whole, to the
extent permitted by law. The relevant committee
The Supervisory Board regularly evaluates how effec-
tively it and its committees fulfil their tasks. In the
reporting period, a comprehensive self-assessment of
the Supervisory Board and its committees took place
with the involvement of an external consultant on the
basis of an extensive questionnaire and additional
interviews carried out. The Board of Management's per-
spective was also included in this assessment. The
Supervisory Board addressed the results in detail in its
meeting on February 21st, 2024. The results confirm
very good, professional cooperation characterised by a
high degree of trust within the Supervisory Board and
its committees as well as with the Board of Manage-
ment. In addition, the results attest to the very efficient
organisation and holding of meetings as well as appro-
priate reporting by the Board of Management. There
was no fundamental need for change. Some individual
ideas and recommendations were discussed. Addition-
ally, a further internal and comprehensive evaluation
took place during the reporting period in the Audit
Committee. This was done on the basis of a compre-
hensive questionnaire without external support.
the Chairman of the Supervisory Board. Conflicts of
interest and the manner in which they are dealt with are
disclosed in the Report of the Supervisory Board.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
Presidential Committee
To Our Shareholders
Combined Management Report
Consolidated Financial Statements
The Chairman of the Audit Committee meets regularly
with the auditor to discuss the progress of the audit
and then reports to the Audit Committee on the results
of these discussions. The Audit Committee also dis-
cusses topics with the auditor in the absence of the
Board of Management.
The Audit Committee discusses the interim financial
reports and the information provided by the auditor
about the review of the interim financial reports with
the Board of Management and the auditor. On the basis
of the opinion of the auditor, the Audit Committee
reviews the annual company Financial Statements, the
annual Consolidated Financial Statements, and the
Management Report with Non-Financial Declaration of
the company and the Group and discusses them
together with the auditor. The Audit Committee submits
its recommendations regarding the adoption of the
Annual Financial Statements of Mercedes-Benz
Group AG, the approval of the Consolidated Financial
Statements, and the proposal for the appropriation of
profits to the Supervisory Board. The Committee also
makes recommendations concerning the proposal of
the Supervisory Board for the election of the auditor,
assesses the suitability, qualifications, and independ-
ence of the auditor, and, after appointment by the
Annual General Meeting, engages the auditor for the
audit of the Consolidated Financial Statements and the
Annual Financial Statements as well as for the review of
interim financial reports. In this respect, it also agrees
on the fee and coordinates the key areas of the audit
with the auditor.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
178
To Our Shareholders
Further Information
Corporate Governance
Declaration on
Corporate Governance
Annual Report 2023 | Mercedes-Benz Group
The Audit Committee is responsible for monitoring the
accounting and the accounting process, and for the
audit of the financial statements, in particular the
selection and independence of the auditor and the
quality of the audit. At least once a year, it discusses
the effectiveness and operation of the internal control
and risk management system, the internal auditing sys-
tem and the Compliance Management System with the
Board of Management. It receives regular reports on the
work of internal auditing and the compliance organiza-
tion. In addition, each member of the Audit Committee
may obtain information directly from the heads of those
corporate departments that are responsible within the
company for tasks relating to the Audit Committee in
accordance with its Rules of Procedure via the Chair-
man of the Committee. The Chairman of the Committee
shall communicate the information obtained to all
members of the Audit Committee. If such information is
obtained, the Board of Management shall be informed
accordingly without delay.
requirements for the composition of the Supervisory
Board in this Declaration on Corporate Governance.
Both Olaf Koch, the Chairman of the Audit Committee,
and Timotheus Höttges, in his capacity as the other
shareholder representative on the Audit Committee, are
independent of the company and its Board of Manage-
ment. Further information on the evaluation of the inde-
pendence of members of the Supervisory Board is sum-
marized in the section on the overall profile of
Due to the many years he has spent serving in execu-
tive positions in the field of finance, most recently as
Chief Financial Officer of Deutsche Telekom AG and as
CEO since 2014, Timotheus Höttges also has special-
ized knowledge and experience with regard to the use
of financial reporting principles and internal control and
risk management systems and the audit of financial
statements. This also includes extensive knowledge of
sustainability reporting and the audit of sustainability
reports, which he gained in his principal activity as CEO
of Deutsche Telekom AG. He also monitors and contrib-
utes to the development of sustainability reporting and
the audit of sustainability reports and he actively con-
tributes his expertise to the work conducted by the
Audit Committee.
reports. For example, Olaf Koch introduced a sustaina-
bility target system and sustainability reporting at
Metro AG, which led to the company maintaining a top
position in the Dow Jones Sustainability Index for many
years. He also monitors and contributes to the develop-
ment of sustainability reporting and the audit of sus-
tainability reports and he actively contributes his
expertise to the work conducted by the Audit Commit-
tee.
Throughout the course of his career, Olaf Koch has held
management positions in the field of finance and con-
trolling in his capacity as a chief financial officer, and he
later served for many years as the Chairman of the
Board of Management of Metro AG and Chairman of the
Audit Committee of Hugo Boss AG. He thus has special-
ized knowledge and experience with regard to the use
of financial reporting principles and internal control and
risk management systems and the audit of financial
statements. This also includes sound knowledge of sus-
tainability reporting and the audit of sustainability
Pursuant to the German Stock Corporation Act (AktG),
at least one member of the Audit Committee must have
expertise in the field of accounting and at least one
other member must have expertise in the audit of
financial statements. In accordance with the German
Corporate Governance Code, expertise in the field of
accounting shall involve specialized knowledge of and
experience with the use of accounting principles and
internal control and risk management systems, while
expertise in relation to the audit of financial statements
shall also involve specialized knowledge of and experi-
ence with the same. In addition, specialized knowledge
of and experience with financial reporting and financial
statement auditing shall include sustainability reporting
and the audit of sustainability reports. The Chairman of
the Audit Committee shall have expertise as described
in at least one of the aforementioned fields.
The members of the Audit Committee as a whole are
very familiar with the industry in which the company
operates.
Further Information
At least quarterly, the Audit Committee receives the
report of the BPO (Business & People Protection Office)
whistleblowing system on complaints and information
on possible violations of rules by top executives and
violations of a defined catalogue of statutory provisions
by other employees. It regularly obtains information on
the processing of the said complaints and information.
Consolidated Financial Statements
Contents
Combined Management Report
171
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
Declaration on
Corporate Governance
Integrated master's degree in
engineering -
✓
✓
Austrian
German
German
Italian
1956
1970
1962
Male
Male
2021
Male
Male
✓
2023
✓
2021
✓
2020
1958
Female
Business administration/MBA
Swedish
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
HR
(e.g. product, working models)
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
(e.g. accounting, controlling, risk management,
audit, M&A)
Finance
Competencies/experience
Age limit not breached
Independence²
Formal suitability
Educational and professional background International management/sales
Biotechnology/electrical engineering
business and energy management
Business management
Prof. Dr Helene Svahn
1974
Stefan Pierer
Corporate Governance
Timotheus Höttges
✓
Chemistry/MBA/ software engineering History/marketing/sustainability
British/South African
1952
Female
2022
✓
Chemistry
✓
✓
US
German
1964
1961
Female
2021
Male
2021
✓
✓
Chemical engineering
✓
✓
✓
✓
(e.g. production, procurement)
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Combined Management Report
189
International experience¹
Nationality
Year of birth
Gender
Olaf Koch
Diversity
Term limit not breached
2022
Joined board in
Tenure
Marco Gobbetti
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
✓
✓
✓
Innovation, research and development,
✓ 3
✓
Age limit not breached
Formal suitability
Educational and professional background
Nationality
Year of birth
Gender
Diversity
✓
Term limit not breached
Electronics engineer
Business management
Construction mechanics/
compensation and service policy
German
1969
Male
German
1977
Female
German
1961
German
Competencies/experience
Finance
(e.g. accounting, controlling, risk management,
audit, M&A)
>
> >
>
>
>
>
✓
Footnotes are at the bottom of the table
Capital market
Sales/brand
1962
Innovation, research and development,
technology
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
HR
(e.g. product, working models)
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
(e.g. production, procurement)
Male
Male
Production mechanic/
graphic designer
Contents
Annual Report 2023 | Mercedes-Benz Group
Footnotes are at the bottom of the table
✓
✓
✓
✓
✓
Capital market
✓
To Our Shareholders
✓
✓
Sales/brand
✓
✓
✓
>
✓
✓
✓ 3
✓
✓
technology
Tenure
190
German
1995
Mechanical engineering/
business administration
Female
✓
2023
✓
2018
✓
2021
Joined board in
✓
2014
Gabriela Neher
Michael Häberle
Nadine Boguslawski
Michael Bettag
Ergun Lümali
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
2015
Dutch
2021
Male
Roman Zitzelsberger due to the mandates
he has held in various supervisory boards and
Ergun Lümali due to the many years he has served
on the company's Supervisory Board.
In the area of digitalization/IT, Liz Centoni and
Timotheus Höttges, among others, are able to con-
tribute expertise and experience gained through
their professional activities at Cisco and Deutsche
Telekom, respectively. The same can be said for
Monika Tielsch due to her activity as a Works Coun-
cil member in the R&D unit, where the MB.OS oper-
ating system is being developed.
Dr Martin Brudermüller and Ben van Beurden in
particular have extensive expertise in the area of
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
186
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
transformation. Both push or pushed ahead with
the process of transformation at the companies
where they serve or served as chairman of the
board of management. In their capacity as works
council chairmen at key Mercedes-Benz production
plants, both Ergun Lümali and Michael Häberle use
their expertise to help manage the transformation
at the Mercedes-Benz Group.
Dr Martin Brudermüller in particular possesses
sound knowledge of human resources due to his
extensive previous professional experience in this
area, and he has contributed his knowledge as a
Board member, especially as a member of the Nom-
ination Committee of the Supervisory Board. Dr
Frank Weber also possesses expertise in the area of
human resources, as he has served for many years
as Chairman of the Management Representative
Committee at the Mercedes-Benz Group. The
knowledge and experience of the IG Metall (German
Metalworkers' Union) representatives Nadine
Boguslawski, Roman Romanowski and Roman Zit-
zelsberger in the area of human resources has also
proved valuable for the work conducted by the
Supervisory Board.
In the area of sustainability/ESG, Dame Polly
Courtice contributes the expertise she has gained
in ESG matters as a result of having served for many
years as Director of the University of Cambridge
Institute for Sustainability Leadership. Dr Martin
Brudermüller, Ben van Beurden and Timotheus
Höttges in particular contribute to the Supervisory
Board their knowledge of and experience with envi-
ronmental (E) issues. All of them deal or dealt
extensively with sustainability issues (in particular
those relating to climate change mitigation and
decarbonization) at the companies in which they
serve or served as chairman of the board of man-
agement. Dame Polly Courtice and in particular the
employee representatives on the Supervisory Board
possess expertise in the fields shown above that
relate to the social (S) component of ESG. With
regard to governance (G), Olaf Koch and Roman
Romanowski contribute to the Supervisory Board
the expertise they have gained throughout their
professional careers.
In the area of industry, Dr Bernd Pischetsrieder in
particular has extensive sector-specific knowledge
that he has gained as a member of the Supervisory
Board as well as through the many years he served
in executive positions at other companies in the
automotive industry. Dr Martin Brudermüller's many
years of experience in the chemical industry also
deserve special mention here. In addition, Ergun
Lümali possesses expertise relevant to the area of
industry due to the many years he has spent as
Chairman of the Works Council at the Mercedes-
Benz Sindelfingen plant.
With respect to innovation, research and devel-
opment, the proven expertise of Professor Dr
Helene Svahn deserves to be especially highlighted.
Liz Centoni also possesses specialized knowledge
in this area due to the many years she has spent in
executive positions at Cisco. Finally, Monika Tielsch
and Michael Häberle, among others, also contribute
to the Supervisory Board the expertise they have
gained in this area throughout their careers.
Dr Bernd Pischetsrieder possesses extensive sec-
tor-specific knowledge in the area of sales/brands,
and Marco Gobbetti contributes his extensive
brand expertise to the work conducted by the
Supervisory Board. Michael Bettag has many years
of experience in sales.
The area of capital markets is extremely well cov-
ered by Dr Bernd Pischetsrieder, Dr Martin Bruder-
müller, Ben van Beurden, Olaf Koch and Timotheus
Höttges in particular, as all of them serve or have
served as chairmen of listed companies.
Ergun Lümali and Roman Zitzelsberger, among oth-
ers, also possess expertise with regard to capital
markets after having served as members of the
Supervisory Board for many years.
-
With regard to strategy, Dr Bernd Pischetsrieder in
particular has proven sector-specific expertise as a
result of his previous professional experience. In
terms of the corporate strategy that is geared
towards sustainability and the luxury vehicle seg-
ment, the ESG expertise of Dame Polly Courtice, as
well as Marco Gobbetti's experience in the luxu-
ry-goods industry, deserve special mention. In
addition, Roman Zitzelsberger and Ergun Lümali in
particular have extensive experience with strategy
issues
In the area of finance, Ben van Beurden and Dr
Martin Brudermüller in particular possess special
expertise, as do the two finance experts Olaf Koch
and Timotheus Höttges and the other members of
the Audit Committee - Ergun Lümali and Roman
Romanowski.
On the basis of the table Qualification matrix of the
Supervisory Board members, the Supervisory Board
as a whole in its current composition meets the
defined requirements pertaining to its expertise/
experience. More than three members of the Super-
visory Board have relevant knowledge and/or expe-
rience in each of the areas of expertise shown
above. The explanations shown below regarding the
members of the Supervisory Board who are men-
tioned by name should therefore be viewed as
examples.
Combined Management Report
Corporate Governance
Declaration on
Consolidated Financial Statements
Further Information
Corporate Governance
-
experience with the same. In addition, specialized
knowledge of and experience with financial report-
ing and financial statement auditing shall include
sustainability reporting and the audit of sustainabil-
ity reports. On the shareholder side, the Audit Com-
mittee has two finance experts as members Olaf
Koch and Timotheus Höttges whose current or
past relevant duties at (listed) companies, as well
as continuing education activities, ensure they have
specialized knowledge of and experience with
accounting and the audit of financial statements.
The same applies to their specialized knowledge of
and experience with sustainability reporting and
the audit of sustainability reports. Further details
on the expertise of the two finance experts can be
found in the information on the composition and
working method of the Audit Committee in this
Declaration on Corporate Governance.
- Other special areas of expertise: The Supervisory
Board shall, as a whole, possess expertise and
experience in areas of particular relevance to the
company. At least three members of the Supervi-
sory Board shall bring knowledge and experience in
each of the following areas:
- Finance (e.g. accounting, controlling, risk manage-
ment, auditing, M&A)
- Strategy
Proposals by the Supervisory Board for the election of
shareholder representatives by the General Meeting, for
which the Nomination Committee makes recommenda-
tions, shall take the aspects outlined above into
account and aim to fulfil the profile of requirements for
the Board as a whole. The Nomination Committee shall
draw up a short-list of available candidates on the basis
of a target profile, taking the specific qualification
requirements and the aforementioned criteria into
account, hold structured discussions with them and,
- Digitalization/IT (e.g. software, processes, data
security)
Transformation (e.g. products, working models)
-
Human resources (e.g. human resources manage-
ment, employee issues, world of work)
ment
-
- Sustainability/ESG (in particular: the environ-
green production and logistics, climate
and decarbonization strategy; social - people
plan, sustainable supply chains; governance
sustainable corporate governance, sustainable
finance)
- Industry (e.g. production, procurement)
- Innovation, research and development,
technology
- Sales/brands
- Capital markets
The specification examples in the parentheses for
the areas shown above are not complete; in addi-
tion, expertise does not have to be demonstrated
for every specified item in the parentheses for each
area.
-
185
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Consolidated Financial Statements
Further Information
Dr Bernd Pischetsrieder
Ben van Beurden
Dr Martin Brudermüller
Liz Centoni
Dame Polly Courtice
2014
Male
1948
German
✓
Mechanical engineering
✓
International experience¹
Educational and professional background
Formal suitability
Independence²
Age limit not breached
Competencies/experience
Finance
188
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
Nationality
187
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
whilst doing so, also obtain assurances that the pro-
posed candidate has sufficient time to be able to exer-
cise the mandate with due diligence. Subsequently, the
Nomination Committee submits a candidate proposal
to the Supervisory Board together with the reasons for
its recommendation for decision-making. The decision
of the Supervisory Board on the election proposal to
the General Meeting shall always be based on the inter-
ests of the company, taking any and all circumstances
of the individual case into account.
The terms of office of the shareholder representatives
on the Supervisory Board of Mercedes-Benz Group AG
end at different times ("staggered board"). Every year,
on the General Meeting elects one or more shareholder
representatives. The staggered board opens up the
possibility of adapting the composition of the Supervi-
sory Board more flexibly to a changing environment. In
addition, it facilitates the search for suitable candidates,
because not all seats on the shareholder side have to
be filled at a single General Meeting. The Nomination
Committee of the Supervisory Board regularly reviews
which mandates end at which point in time and whether
the relevant mandate holders are eligible and willing to
serve a further term of office, taking the aforemen-
tioned criteria into account. In the search for new can-
didates, the Nomination Committee may rely on inde-
pendent external recruitment consultancy services if it
chooses to do so.
Shareholders and General Meeting
The shareholders exercise their membership rights, in
particular their voting rights, at the General Meeting.
Each share of Mercedes-Benz Group AG entitles the
holder to one vote. Documents and information about
the General Meeting are available at group.
mercedes-benz.com/am.
In the context of comprehensive investor and public
relations, the company is in close contact with its
shareholders. Shareholders, financial analysts, share-
holder associations, the media and interested members
of the public are regularly and comprehensively
informed about the company's situation and are
promptly informed about important business changes.
The Chairman of the Supervisory Board is also prepared,
within appropriate and reasonable limits, to discuss
topics specific to the Supervisory Board with investors,
including topics such as renumeration of the Board of
Management as well as work and the structure of the
Supervisory Board and its committees. Such discus-
sions took place in the run up to the shareholder meet-
ings in 2023 and 2024.
Contents
In addition to other channels of communication, the
company makes very good use of the company website
for investor relations. All key information published in
2023, including annual, quarterly and half-yearly finan-
cial reports, press releases, voting rights notifications
by major shareholders, presentations and audio record-
ings from analyst and investor events and conference
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Qualification matrix of the Supervisory Board members
Tenure
Joined board in
Term limit not breached
Diversity
Gender
Year of birth
calls, as well as the financial calendar, is available at
group.mercedes-benz.com/investors. The dates of
important publications, such as the annual report and
interim financial reports, as well as the dates of the
General Meeting, the annual press conference and ana-
lysts' conferences, are announced well in advance in
the financial calendar.
1958
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
-
-
Brüngger, Sabine Kohleisen and Britta Seeger. The
proportion of women on the Board of Management is
now 37.5%, which means it exceeds the target that
was set.
For the last possible age-related appointment or
reappointment of a member of the Board of Manage-
ment, the completion of the 62nd year of life at the
time of the beginning of a (new) term of office gener-
ally serves as a guideline. When determining this age
limit, the Supervisory Board deliberately opted for a
flexible benchmark in order to preserve the necessary
leeway for appropriate decisions in individual cases.
With the exception of Renata Jungo Brüngger, all
members of the Board of Management fall below this
standard age limit as of 31 December 2023.
In addition, attention shall be paid to a sufficient
generational mix among the members of the Board
of Management; if possible, at least three members of
the Board of Management shall be 57 years of age or
younger at the beginning of the relevant term of
office. As of 31 December 2023, this applies to,
among others, Ola Källenius, Britta Seeger and Dr Jörg
Burzer.
In the composition of the Board of Management,
attention shall also be paid to internationality in the
sense of different cultural backgrounds or interna-
tional experience through several years of stays
abroad; if possible, at least one member of the Board
of Management shall be of international origin. Not-
withstanding the many years of international
experience of the vast majority of the members of the
Board of Management, this goal had already been
achieved by 31 December 2023, simply because of
the international origins of Ola Källenius and Renata
Jungo Brüngger and the focus of Hubertus Troska's
activities in China.
As a rule, and subject to disclosure of a deviation in
the annual Declaration of Compliance with the Ger-
man Corporate Governance Code, members of the
Board of Management shall not hold more than two
mandates on supervisory boards in non-Group
listed companies or comparable functions and
shall not chair a supervisory board of a non-Group
listed company. For the purpose of the profile of
requirements, mandates on supervisory boards in
joint ventures, the performance of which is part of the
departmental responsibility of a member of the Board
of Management, are not considered to be comparable
functions.
Of the non-Group memberships of Supervisory
Boards and other supervisory bodies held by Huber-
tus Troska, only BAIC Motor Corporation Ltd. is listed
on the stock exchange. With the exception of the
mandate at Beijing Foton Daimler Automo-
tive Co., Ltd., his other mandates outside the Group
are mandates in non-listed joint ventures within his
departmental responsibility. In the opinion of the
Supervisory Board, these mandates, as well as the
mandate at Beijing Foton Daimler Automo-
tive Co., Ltd., which is part of the Daimler Truck Group,
do not pose any requirements comparable to
mandates on supervisory boards of listed companies
outside the Group in terms of the requirements pro-
file. The same applies to the non-Group mandates of
Markus Schäfer.
Of the non-Group memberships of supervisory
boards and other supervisory bodies held by Britta
Seeger, only Deutsche Lufthansa AG is listed on the
stock exchange. In the opinion of the Supervisory
Board, the other mandates outside the Group are
mandates within the scope of her departmental
responsibilities that, in terms of the profile of require-
ments, do not pose any demands comparable to a
mandate on the supervisory board of a listed com-
pany outside the Group.
Renata Jungo Brüngger is a member of the Supervi-
sory Board of the listed company Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft
and Harald Wilhelm is a member of the Supervisory
Board of BAIC Motor Corporation Ltd, which is also
listed on the stock exchange. In addition, both are
represented on the Supervisory Board of the non-
group listed Daimler Truck Holding AG as well as on
the Supervisory Board of the non-listed Daimler
Truck AG, a wholly owned subsidiary of Daimler Truck
Holding AG. The shareholder representatives on the
Supervisory Boards of Daimler Truck Holding AG and
Daimler Truck AG are identical. Against this back-
ground, in the opinion of the Supervisory Board,
membership of the Supervisory Board of Daimler
Truck AG does not impose any additional require-
ments comparable to the mandate at Daimler Truck
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
182
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
Footnotes are at the bottom of the table
Capital market
Sales/brand
technology
Innovation, research and development,
(e.g. production, procurement)
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
Holding AG in terms of the profile of requirements.
A deviation from the recommendation of the German
Corporate Governance Code that members of boards
of management of listed companies should not hold
more than two mandates on supervisory boards in
non-group listed companies or comparable functions
and should not chair a supervisory board is stated
and justified in the 2023 Declaration of Compliance,
notwithstanding the assessments of the Supervisory
Board for the purposes of the profile of requirements.
HR
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
audit, M&A)
(e.g. accounting, controlling, risk management,
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
181
(e.g. product, working models)
Contents
The criteria of the profile of requirements shall be taken
into account when filling positions on the Board of
Management. The Presidential Committee draws up a
short-list of available candidates on the basis of a tar-
get profile, taking into account the specific qualification
requirements and the requirements profile. It conducts
interviews with these candidates, and it then submits a
candidate proposal to the Supervisory Board together
with the reasons for its recommendation for the deci-
sion-making. The decisive factor is always the interest
of the company, in consideration of any and all circum-
stances of the individual case.
Together with the Board of Management, the Supervi-
sory Board also ensures long-term succession planning
for the Board of Management, with due consideration of
the profile of requirements and the circumstances of
the individual case. The Presidential Committee of the
Supervisory Board regularly discusses talents and
exceptional leaders of the company. The contract terms
and renewal options of current members of the Board
of Management are discussed, as well as possible suc-
cessors. On the basis of a potential analysis and in con-
sideration of the criteria of the profile of requirements,
executives from the management level below the Board
of Management as well as special high potentials are
assessed and the next development steps are dis-
cussed and determined together with the Board of
Management. The process of succession planning also
includes regular reporting by the Board of Management
on the proportion and development of female manag-
ers, especially at the first and second management lev-
els below the Board of Management. The Board of Man-
agement is responsible for proposing a sufficient
number of suitable candidates to the Supervisory Board.
Mercedes-Benz Group AG aims to predominantly fill
positions on the Board of Management with managers
developed within the company. Nevertheless, potential
external candidates are also evaluated and included in
the selection process on a case-by-case basis, with the
support of external recruitment consultancy firms.
Educational and professional background: The
members of the Supervisory Board should have dif-
ferent educational and professional backgrounds.
As of 31 December 2023, the members of the
Supervisory Board display a broad range of educa-
tional and professional backgrounds. Dr Bernd Pis-
chetsrieder, Ben van Beurden, Dr Martin Bruder-
müller, Liz Centoni, Stefan Pierer, Prof. Dr Helene
Svahn, Dr Frank Weber and Roman Zitzelsberger
have university degrees in mechanical engineering,
chemistry, business and energy management, bio-
technology and/or electrical engineering. Other
employee representatives have completed relevant
professional training. Several members of the
Supervisory Board have university degrees in eco-
nomics, including Timotheus Höttges and Olaf Koch
on the shareholder side and Michael Bettag on the
employee side. The diverse range of educational
and professional backgrounds is rounded out on
the shareholder side by Dame Polly Courtice and
Marco Gobbetti, who are proven experts in the
areas of sustainability and the luxury goods seg-
ment, respectively, while the employee side of the
Supervisory Board includes a lawyer, a social econ-
omist and a production mechanic.
Formal suitability
· Independence: In order to ensure independent
advice to and supervision of the Board of Manage-
ment by the Supervisory Board, more than half of
the shareholder representatives on the Supervisory
Board shall be independent of the company and the
Board of Management, subject to the disclosure of
a deviation from the corresponding recommenda-
tion of the German Corporate Governance Code in
the Declaration of Compliance pursuant to Sec-
tion 161 of the German Stock Corporation Act (AktG).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
184
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
A shareholder representative on the Supervisory
Board shall be independent of the company and its
Board of Management if he or she has no personal
or business relationship with the company or its
Board of Management that could give rise to a
material and not merely temporary conflict of inter-
ests. The assessment of independence is incum-
bent on the shareholder representatives on the
Supervisory Board themselves. In this respect, four
indicators must be taken into account that may
point to a lack of independence: membership of the
Board of Management within the last two years
prior to the appointment as a member of the Super-
visory Board; a significant business relationship
with the company or a company dependent on it,
e.g. as a customer, supplier, lender or consultant; a
close family relationship to a member of the Board
of Management; membership of the Supervisory
Board for more than twelve years (all criteria relate
to both the members of the Supervisory Board and
their close family members). However, the share-
holder side is expressly at liberty to regard the
member of the Supervisory Board in question as
independent if one or even several negative indica-
tors are fulfilled however, this assessment
should then be substantiated in the Declaration on
Corporate Governance.
On the basis of the information known to the
Supervisory Board, the shareholder representatives
are of the opinion that there are no specific indica-
tions of relevant personal or business relationships
or circumstances, in particular with regard to the
company, members of the Board of Management or
other members of the Supervisory Board, that could
constitute a material and not merely temporary
conflict of interests and therefore argue against the
independence of any member of the Supervisory
Board on the shareholder side. During the reporting
period, the shareholder representatives Dr Martin
Brudermüller, Liz Centoni, and Timotheus Höttges
in particular did not have any such material busi-
ness relationship with Mercedes-Benz Group AG or
any company dependent on Mercedes-Benz
Group AG (e.g. as a supplier, customer, lender or
consultant) in a responsible function of a company
outside the Group. The same applies - also in view
of the information provided in the chapter Consoli-
dated Financial Statements in the note Related
party disclosures - to Stefan Pierer in his role as a
shareholder and board member of companies in the
Pierer and Leoni Groups. No former member of the
Board of Management was a member of the Super-
visory Board during the reporting period. No mem-
ber of the Supervisory Board holds board functions
or performs advisory tasks for significant competi-
tors.
No other mandates formerly held by Dr Bernd Pis-
chetsrieder could be seen during the reporting
period as constituting a material and not merely
temporary conflict of interest.
As a result, according to the assessment of the
shareholders' side, at 31 December 2023, all share-
holder representatives on the Supervisory Board
were to be deemed independent, namely Dr Bernd
Pischetsrieder, Ben van Beurden, Dr Martin Bruder-
müller, Liz Centoni, Dame Polly Courtice, Marco
Gobbetti, Timotheus Höttges, Olaf Koch, Stefan
Pierer and Professor Dr Helene Svahn.
Standard age limit: As a rule, only candidates who
are not older than 72 years at the time of their (re-)
election shall be proposed for election to the
Supervisory Board for a full term of office. Upon the
establishment of this age limit, the Supervisory
Board deliberately decided against a rigid maximum
age limit and in favour of a flexible standard limit
that preserves the necessary leeway for an appro-
priate assessment of the circumstances of the indi-
vidual case, that defines the group of potential can-
didates in a sufficiently broad manner, and that also
allows for re-election. None of the members of the
Supervisory Board in office on 31 December 2023
exceeded the standard age limit at the time of their
election.
Expertise and experience
Two finance experts: At least one member of the
Audit Committee must have expertise in the field of
accounting and at least one other member must
have expertise in the audit of financial statements.
Expertise in the field of accounting should involve
specialized knowledge of and experience with the
use of accounting principles and internal control
and risk management systems, while expertise in
relation to the audit of financial statements must
also involve specialized knowledge of and
_
Internationality: At least 30% of shareholder rep-
resentatives shall be of international origin (interna-
tional citizenship) or have international experience.
All shareholder representatives in office on
31 December 2023 have international experience.
Moreover, the target has already been exceeded
simply because of the international background of
six shareholder representatives Ben van Beurden,
Liz Centoni, Dame Polly Courtice, Marco Gobbetti,
Stefan Pierer and Professor Dr Helene Svahn - who
together account for 60% of the shareholder repre-
sentatives.
Generational mix: In addition, attention shall be
paid to a sufficient generational mix amongst the
members of the Supervisory Board. At least 30% of
the members of the Supervisory Board shall be no
more than 62 years of age at the time of their elec-
tion or re-election. Except for Dr Bernd Pischets-
rieder, Dame Polly Courtice, Marco Gobbetti and
Stefan Pierer, all other members (16 members, or
more than 30%) of the Supervisory Board in office
on 31 December 2023 were aged 62 or younger at
the time of their election or re-election for the cur-
rent term of office.
the election of shareholder representatives by the
Annual General Meeting on May 8, 2024.
Supervisory Board
The Supervisory Board as a whole must be familiar with
the industry in which the company operates.
The aim of the profile of requirements for the Supervi-
sory Board in its entirety is also to ensure that the com-
position of the Supervisory Board is as diverse and
complementary as possible. The Supervisory Board
shall, as a whole, understand the business model of the
company and possess the knowledge, skills and experi-
- including expertise on the sustainability issues
that are important for the company - necessary to
properly provide qualified supervision and advice to the
Board of Management.
ence
-
Overall, the members of the Supervisory Board shall
complement one another in terms of their expertise and
professional experience in such a way that the Board as
a whole can draw on the broadest possible pool of
experience and diverse specialist knowledge. Further-
more, the Supervisory Board considers the diversity of
its members in terms of age, gender, internationality
and other personal characteristics as an important pre-
requisite for an effective working relationship. The deci-
sion of the Supervisory Board on an election proposal
to the General Meeting shall always be based on the
interests of the company, taking any and all circum-
stances of the individual case into account.
The profile of requirements for the Supervisory Board
includes the following aspects:
Standard limit of membership duration
As a rule, only candidates who have not already been
members of the Supervisory Board for 12 years at the
time of their (re-)election shall be proposed for elec-
tion to the Supervisory Board for a full term of office.
Annual Report 2023 | Mercedes-Benz Group
In the view of the Supervisory Board, fundamental indi-
vidual suitability criteria for a position on the Board of
Management are, in particular, personality, integrity,
convincing leadership qualities, professional qualifica-
tions for the division to be taken over, past perfor-
mance, knowledge of the company, and the ability to
adapt business models and processes in a changing
world.
Contents
183
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
On 31 December 2023, this requirement was fulfilled
for all members of the Supervisory Board in office.
Diversity
-
Gender ratio: By law, at least 30% of the members
of the Supervisory Board must be women and at
least 30% must be men. The quota is to be met by
the Supervisory Board as a whole, unless the repre-
sentatives of the shareholders or the representa-
tives of the employees object to the overall fulfil-
ment. If such an objection is made, then the
minimum proportion for the next election in the
given case is to be fulfilled separately by the share-
holder side and the employee side. As of
31 December 2023, there are three women on both
the side of the shareholders and the side of the
employees. This puts the proportion of women on
the shareholder side, the employee side and for the
Supervisory Board as a whole at 30% If she is
elected by the Annual General Meeting 2024, the
membership of Dr. Doris Höpke on the Supervisory
Board will increase the proportion of women on the
shareholder side to 40%. At the Supervisory Board
meeting on 27 April 2022, the shareholder repre-
sentatives objected to the overall fulfilment with
regard to the election to the Supervisory Board of
employee representatives whose term of office
began at the end of the Annual General Meeting on
3 May 2023. There was no objection to the overall
fulfilment with regard to the election of a share-
holder representative by the Annual General Meet-
ing on 3 May 2023. The same applies with regard to
To Our Shareholders
Further Information
7/7
11
Consolidated Financial Statements
Corporate Governance
Combined Management Report
18
The Supervisory Board
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
2 Chairman of the Audit Committee and the Legal Affairs Committee
100
4/4
71
5/7
Roman Zitzelsberger
100
7/7
Dr Frank Weber
1 Chairman of the Presidential Committee and the Nomination Committee
The Supervisory Board
Dr Bernd Pischetsrieder
Chairman of the Supervisory Board
Elected until 2028
Chairman of the Works Council of the Mercedes-Benz
Nuremberg Own Retail Branch
Michael Bettag*
of Mercedes-Benz Sindelfingen Plant
Elected until 2028
of Mercedes-Benz Group AG;
Chairman of the Works Council
Chairman of the General Works Council
of Mercedes-Benz Group AG;
Chairman of the Group Works Council
of Mercedes-Benz Group AG;
Deputy Chairman of the Supervisory Board
Ergun Lümali*
Elected until 2026
for Sustainability Leadership
Former Director of the University of Cambridge Institute
Dame Veronica Anne ("Polly") Courtice
Elected until 2025
Former Chief Executive Officer Shell plc
Ben van Beurden
of Mercedes-Benz Group AG
Elected until 2024
100
Nadine Boguslawski*
3/3
100
100
6/6
100
4/4
100
7/7
Ergun Lümali
100
4/4
4/4
6/6
100
7/7
Olaf Koch²
83
5/6
100
7/7
100
100
Gabriela Neher (from 3 May 2023)
4/4
7/7
Monika Tielsch
100
7/7
Prof. Dr Helene Svahn
100
4/4
100
3/3
86
6/7
Roman Romanowski
100
4/4
Stefan Pierer (from 3 May 2023)
100
4/4
Michael Peters (from 3 May 2023)
100
Elke Tönjes-Werner (until 3 May 2023)
Timotheus Höttges
Head Treasurer of IG Metall
Elected until 2028
Chairman of the Board of Executive Directors, BASF SE
Elected until 2025
Elected until 2027
Annual Report 2023 | Mercedes-Benz Group
Roman Zitzelsberger*
Pierer Industrie AG
Chairman of the Board of Management of
Stefan Pierer
Retired on 3 May 2023
Mercedes-Benz Bremen Plant
(since 3 May 2023)
Deputy Chairwoman of the Works Council of the
Center Manager BodyTEC, Mercedes-Benz AG;
Chairman of the Management Representatives
Committee, Mercedes-Benz Group
Elected until 2028
Dr Frank Weber*
Member of the Works Council at the
Mercedes-Benz Sindelfingen Plant (RD)
Elected until 2028
Monika Tielsch*
(since 3 May 2023)
Elected until 2028
Mercedes-Benz Bremen Plant
Chairman of the Works Council of
Elke Tönjes-Werner*
* Employee representatives
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
Annual Report 2023 | Mercedes-Benz Group
Diversity is the third foundation of our conduct at the
Mercedes-Benz Group. The Group is convinced that
sustained success can only be achieved with diverse
teams. Through the use of appropriate measures and
activities, the Mercedes-Benz Group seeks to foster a
work environment that offers equal opportunities to all
employees.
The Mercedes-Benz Group is convinced that long-term
success can only be achieved by acting in an ethically
and legally responsible manner. Integrity is therefore
very important to the company. For the Mercedes-Benz
Group, ethical behaviour means doing what is right,
complying with external and internal rules, following our
moral compass and aligning our activities with shared
values.
This holistic ESG approach is accompanied by social
and governance aspects such as the transformation of
the workplace and upholding human rights.
One of the company's goals here is to reduce CO2 emis-
sions per passenger car over the entire vehicle life cycle
by the end of this decade by up to 50% as compared to
2020 levels. In addition to the comprehensive use of
recycling materials and renewable energy in production,
the integration of renewable energy sources for charg-
ing the vehicles and electrification of the vehicle fleet is
an important tool for accomplishing this. This is why the
Mercedes-Benz Group is taking the necessary steps to
go all electric. Customers and market conditions will set
the pace of the transformation. The Mercedes-Benz
Group plans to be in a position to cater to different cus-
tomer needs, whether it's an all-electric drivetrain or a
combustion engine, until well into the 2030s. In addi-
tion, the company's factories are retooled to follow
demand and can capture the tipping point into an
all-electric era. The Mercedes-Benz Group expects its
high power charging network to ease the ramp-up of
electromobility. The Group will expand battery produc-
tion and open a battery recycling factory to close the
loop. The Mercedes-Benz Group's ambition is to make
the entire new vehicle fleet net carbon-neutral¹ across
all stages of the value chain by 2039.
Group utilizes a holistic ESG (environmental, social and
governance) concept throughout all of its divisions.
1 Net carbon-neutral means that no CO2 emissions are caused or that any CO2 emissions
arising are compensated for by certified offset projects.
Sustainability at the Mercedes-Benz Group means
creating permanent value for all of our stakeholders
for our customers, investors and employees and for our
business partners and society as a whole. In this pro-
cess, economic, environmental and social responsibility
belong together - along the entire value chain. In order
to live up to this responsibility, the Mercedes-Benz
_
Sustainability, integrity and diversity are the basis
of our conduct at the Mercedes-Benz Group
The Mercedes-Benz Group comprises the automotive
business units Mercedes-Benz Cars and Mercedes-Benz
Vans as well as Mercedes-Benz Mobility. Each business
unit pursues a strategy that is specifically targeted at
the market and customers it serves. The strategy in
question is based on the principles of sustainability,
integrity and diversity and is supported by a highly qual-
ified and motivated team.
As a pioneer in automobile manufacturing, the
Mercedes-Benz Group has set itself the objective of
shaping the future of mobility in a safe and sustainable
manner. In doing so, the company focuses on innovative
and forward-looking technologies and safe high-quality
vehicles that fascinate and excite.
Objectives and Strategy
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
20
To Our Shareholders
Objectives and Strategy
Contents
Michael Peters*
Dr Martin Brudermüller
(since 3 May 2023)
Mercedes-Benz Rastatt Plant
19
To Our Shareholders
The Supervisory Board
Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
* Employee representatives
at the Mercedes-Benz Untertürkheim Plant
Elected until 2028
Chairman of the Works Council
Combined Management Report
of Mercedes-Benz Group AG;
of Mercedes-Benz Group AG;
Deputy Chairman of the Group Works Council
Michael Häberle*
Chief Executive Officer of Salvatore Ferragamo S.p.A.
Elected until 2026
Marco Gobbetti
Chief Strategy Officer and GM,
Applications, Cisco, Inc.
Elected until 2025
Executive Vice President,
Liz Centoni
Deputy Chairman of the General Works Council
Corporate Governance
Consolidated Financial Statements
Further Information
Member of the Works Council at the
Retired on 3 May 2023
Chairman of the Works Council of the Mercedes-Benz
Gaggenau Plant
Michael Brecht*
Chair of the Board of Directors of Nokia Oyj
Retired on 3 May 2023
Sari Baldauf
Retired from the Supervisory Board
Professor in Nanobiotechnology at the
Royal Institute of Technology, Sweden
Elected until 2025
Prof. Dr Helene Svahn
to the Board of Management of IG Metall
Elected until 2028
In-house Legal Conunsel
Roman Romanowski*
Gabriela Neher*
Partner and Managing Director of Zintinus GmbH
Elected until 2025
Olaf Koch
Elected until 2025
of Deutsche Telekom AG
Chairman of the Board of Management
Timotheus Höttges
Elected until 2028
100
Former IG Metall District Manager Baden-Württemberg
Elected until 2028
100
The Presidential Committee held four meetings in the
past financial year. Two of the meetings were held in
person and two meetings were held as video confer-
ences. In particular, the Committee discussed person-
nel matters and succession planning for appointments
to the Board of Management. Furthermore, the Presi-
dential Committee discussed the acceptance by mem-
bers of the Board of Management of board positions at
other companies and institutions, corporate govern-
ance issues, D&O insurance and remuneration issues.
Work in the committees
ernance.
Corporate governance at the Mercedes-Benz Group is
explained in detail in the Declaration on Corporate Gov-
requirement and maintain the target quota for the pro-
portion of women on the Board of Management that
was set in 2020. As at 31 December 2023, three of the
eight members of the Board of Management are
women: Renata Jungo Brüngger, Sabine Kohleisen and
Britta Seeger. The proportion of women on the Board of
Management is now 37.5%, which means it exceeds the
target that was set.
Further Information
Consolidated Financial Statements
Corporate Governance
The Audit Committee held six meetings in the year
2023. Five meetings were held in person, with the
option of participation in virtual form or via telephone,
and one meeting was held as a video conference. Fur-
ther details of the Audit Committee's work can be found
in the Report of the Audit Committee.
Combined Management Report
14
Contents
Annual Report 2023 | Mercedes-Benz Group
On 3 December 2020, the Supervisory Board set a tar-
get for the proportion of women on the Board of Man-
agement of at least 25% by 31 December 2025. Since
August 2022, a legally mandated minimum participation
requirement must be complied with when appointing
members of the Board of Management. This require-
ment stipulates that at least one woman (and at least
one man) must be a member of the Board of Manage-
ment in listed companies with parity participation and
more than three members on the Board of Management.
Companies that are subject to the minimum proportion
requirement are no longer obliged to set a target quota
for the proportion of women on the board of manage-
ment. Nevertheless, within the framework of the overall
requirements profile for appointments to the Board of
Management, the Supervisory Board has decided to go
beyond the stipulations of the minimum proportion
At its meeting on 13 December 2023, the Supervisory
Board decided on the recommendation of the Nomina-
tion Committee, to propose to the 2024 Annual General
Meeting that Dr Doris Höpke be elected to the Supervi-
sory Board for the first time. If the proposed female
candidate is elected, the proportion of women on the
shareholder side will increase to 40%. The statutory
gender quota would remain fulfilled both on the share-
holder side and for the Supervisory Board as a whole.
are men. On the employee side, Nadine Boguslawski,
Gabriela Neher and Monika Tielsch make up 30%
women and the remaining 70% are men. Thus the
Supervisory Board as a whole also fulfils the statutory
quota.
As at 31 December 2023, women make up 30% of the
shareholder side of the Supervisory Board of Mercedes-
Benz Group AG (Liz Centoni, Dame Polly Courtice and
Professor Dr Helene Svahn), while the remaining 70%
For supervisory boards of listed companies subject to
codetermination and equal representation of share-
holders and employees on the supervisory board, such
as that of Mercedes-Benz Group AG, the German Stock
Corporation Act (AktG) prescribes a mandatory gender
quota of at least 30%. The quota is to be met by the
Supervisory Board as a whole.
To Our Shareholders
Report of the Supervisory Board
German Act on the Equal Participation of Women
and Men in Leadership Positions
The Legal Affairs Committee held four meetings in the
year 2023. One meeting was held in person, with the
option of participation in virtual form or via telephone,
and three meetings were held as video conferences. In
those meetings, the Committee was informed in detail
about legal matters relating to emissions and cartels
and discussed these matters in the presence of the
legal advisers of the Supervisory Board. It discussed
the continuing further development of the technical
compliance management system, also with respect to
future technologies. The Committee received reports on
the progress of the review of potential responsibilities
in connection with diesel emissions and anti-trust mat-
ters from the legal advisers engaged for this purpose by
the Supervisory Board. The Committee regularly
reported to the Supervisory Board on its work and, after
discussing and weighing the relevant aspects, made
recommendations for resolutions to the Supervisory
Board, taking the Group's best interests into account.
The Committee also discussed the risks of a limitation
of possible liability and took appropriate measures in
the cases in point. As part of the settlement reached
with the US authorities in connection with diesel emis-
sions, the Committee was assigned specific tasks and
decision-making competences with regard to the fulfil-
ment of the obligations assumed in the settlement. The
Committee also fulfilled these tasks in full and with
great care.
the Annual General Meeting regarding the election of
shareholder representatives to the Supervisory Board.
In this context, it was guided by the interests of the
company, taking all circumstances of the individual
case into account, and striving to fulfil the overall pro-
file of requirements, along with the diversity concept
and competence profile for the entire Supervisory
Board.
The Annual Financial Statements of Mercedes-Benz
Group AG and the Combined Management Report for
Mercedes-Benz Group AG and the Group for 2023 were
duly audited by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, and issued with an unqualified
audit opinion. This also applies to the 2023 Consoli-
dated Financial Statements compiled in accordance
with IFRS.
Audit of the individual company and Consolidated
Financial Statements
was appointed as a member of the Board of Manage-
ment with responsibility for Marketing & Sales with
effect from 1 January 2025 for a further five-year term
and Renata Jungo Brüngger as a member of the Board
of Management with responsibility for Integrity, Govern-
ance & Sustainability with effect from 1 January 2025 in
line with the Supervisory Board's guidelines on the
appointment and reappointment of members of the
Board of Management for a further one-year term.
At the Supervisory Board meeting on 27 July 2023, Ola
Källenius was reappointed as Chairman of the Board of
Management for a further five years with effect from
22 May 2024 and Markus Schäfer was reappointed as
Chief Technology Officer, Development & Procurement
in line with the Supervisory Board's guidelines on the
appointment and reappointment of members of the
Board of Management for another two years, also with
effect from 22 May 2024. In December 2023, the
Supervisory Board decided to appoint Sabine Kohleisen
as a member of the Board of Management responsible
for Human Resources and Labour Director in line with
the Supervisory Board's guidelines on the appointment
and reappointment of members of the Board of Man-
agement for a further year with effect from 1 December
2024 and Dr Jörg Burzer as a member of the Board of
Management responsible for Production, Quality & Sup-
ply Chain Management for a further five years, also with
effect from 1 December 2024. At the meeting of the
Supervisory Board on 21 February 2024, Britta Seeger
Meeting. In the elections of employee representatives
held prior to the Annual General Meeting, Gabriela
Neher and Michael Peters were elected as members of
the Supervisory Board for the first time, in addition to
the re-elected employee representatives, with effect
from the end of the Annual General Meeting. In the
Supervisory Board meeting that followed the Annual
General Meeting, Ergun Lümali was confirmed as Dep-
uty Chairman of the Supervisory Board and thus Deputy
Chairman of the Mediation and Presidential Commit-
tees. Elections were also held for other committee
appointments.
Further Information
Consolidated Financial Statements
Corporate Governance
The Nomination Committee held two meetings in the
2023 financial year, both of them as video conferences.
The Committee specifically considered the recommen-
dations for the proposals of the Supervisory Board to
Combined Management Report
Contents
15
Annual Report 2023 | Mercedes-Benz Group
At the virtual Annual General Meeting on 3 May 2023,
the candidate proposed by the Supervisory Board on
the recommendation of the Nomination Committee,
Stefan Pierer, was elected to the Supervisory Board.
Sari Baldauf on the shareholder side and Michael Brecht
and Elke Tönjes-Werner on the employee side left the
Supervisory Board at the end of the Annual General
At its meeting on 16 February 2023, the Supervisory
Board appointed Renata Jungo Brüngger as a member
of the Board of Management of Mercedes-Benz
Group AG with effect from 1 January 2024 for a further
one-year term.
Several members of the Board of Management were
reappointed in the course of the financial year. The
reappointment periods are in line with the Supervisory
Board's guidelines on the appointment and reappoint-
ment of members of the Board of Management.
Changes in the Supervisory Board and
the Board of Management
During the reporting period, there was no reason to
convene the Mediation Committee.
To Our Shareholders
Report of the Supervisory Board
The Audit Committee also conducted a self-evaluation
of its activities on the basis of a comprehensive compa-
ny-specific questionnaire in 2023. The positive results
of this self-assessment were presented and discussed
at the Audit Committee meeting on 21 February 2024.
perform their duties. In the reporting period, a compre-
hensive self-assessment of the Supervisory Board and
its committees took place with the involvement of an
external consultant on the basis of an extensive ques-
tionnaire and additional interviews carried out. The
Board of Management's perspective was also included
in this assessment. The results of the audit, which the
Supervisory Board dealt with extensively at its meeting
on 21 February 2024, confirm that the members of the
Supervisory Board cooperate very effectively and pro-
fessionally with one another and with the Board of
Management and do so on a basis of great trust.
The Supervisory Board regularly assesses how effec-
tively the Supervisory Board and its committees
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
12
Contents
At its meeting on 28 April 2023, the Supervisory Board
received reports on the supply situation for certain bat-
tery systems and the measures that were taken. The
Board of Management also provided information on the
positive reactions to the company's ESG conference for
investors and analysts, which was held on 30 March
2023. The Supervisory Board also received a status
update on vehicle IT security and discussed findings
from cyber incidents at other commercial enterprises.
The Chief Officer Corporate Data Protection also
reported on the Data Compliance Management System,
the opportunities and risks of using artificial intelli-
gence and dealing with digital risks. The Supervisory
Board then discussed ESG management within the
company in detail, in particular the further integration
of sustainability into the company's structures and core
processes. The Supervisory Board subsequently
approved the development of a wind farm project as
part of a power purchase agreement at the test site in
Papenburg in northern Germany. Finally, the Supervi-
sory Board also discussed current legal issues.
for the 2023 Annual General Meeting. In order to meet
the expectations of investors to improve shareholder
participation, it was decided, among other things,
to again publish a letter from the Supervisory Board
Chairman to shareholders concerning a number of gov-
ernance issues in the run-up to the Annual General
Meeting.
Further Information
The Audit Committee and the Supervisory Board
reviewed these documents in detail and discussed
them intensively in the presence of the auditors, who
reported on the results of their audit and also
addressed the key audit matters and the relevant audit
procedures, including the conclusions drawn, and were
available for additional questions and information.
Following the final result of the review by the Audit
Committee and its own review, the Supervisory Board
concurred with the result of the audit by the auditor.
It determined that there were no objections to be
raised and adopted the Annual Financial Statements
prepared by the Board of Management and the Com-
bined Management Report, including the Non-Financial
Declaration. The 2022 company financial statements of
Mercedes-Benz Group AG were thus adopted. On this
basis, the Supervisory Board endorsed the proposal of
the Board of Management for the appropriation of dis-
tributable profits. The Supervisory Board also adopted
the Report of the Supervisory Board, the Declaration on
Corporate Governance and the Remuneration Report,
as well as its proposed resolutions on the agenda items
At the meeting on 13 March 2023, the Supervisory
Board discussed the Annual Financial Statements, the
At its meeting on 16 February 2023, the Supervisory
Board was first informed about the current financial
status, volumes and prices of the vehicle clusters in the
current and future Mercedes-Benz Cars portfolio. In the
presence of representatives of the auditor, the Supervi-
sory Board then discussed the preliminary key figures of
the 2022 company and Consolidated Financial State-
ments as well as the preliminary proposal to the 2023
Annual General Meeting for the appropriation of profits
and noted them with approval. The Supervisory Board
determined that there were no objections to their publi-
cation. The preliminary key figures for the 2022 financial
year and the preliminary proposal for the appropriation
of profits were published at the annual press confer-
ence on 17 February 2023. The Supervisory Board also
passed resolutions relating to a number of other meas-
ures subject to its approval. To optimize the capital
structure, the Supervisory Board approved the Board of
Management's plan to buy back up to €4 billion worth
of the company's own shares via the stock exchange
over a period of up to two years and subsequently can-
cel them. This was done on the basis of the authoriza-
tion granted by the Annual General Meeting on 8 July
2020. In addition, the Board of Management provided
information on the status of the fulfilment of the settle-
ment in connection with diesel emissions agreed with
the US authorities. Moreover, the body dealt with the
remuneration of the Board of Management on the basis
of the remuneration system to be approved by the
Annual General Meeting.
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
4/4
Consolidated Financial Statements and the Combined
Management Report, including the Non-Financial Dec-
laration for the 2022 financial year of Mercedes-Benz
Group AG and the Group, each of which had been
issued with an unqualified audit opinion by the auditor,
as well as the Declaration on Corporate Governance,
the Remuneration report, and the proposal for the
appropriation of profits. The members of the Supervi-
sory Board were provided with extensive documenta-
tion for their preparation.
At the virtual Annual General Meeting on 3 May 2023,
the candidate proposed by the Supervisory Board, Ste-
fan Pierer, was elected to the Supervisory Board as a
shareholder representative. At the subsequent Supervi-
sory Board meeting, I proposed to the Supervisory
Board, in the interests of long-term, orderly succession
planning, that Dr Martin Brudermüller be elected Chair-
man of the Supervisory Board after my term of office
expires at the end of the Annual General Meeting in
2024. Ergun Lümali was confirmed as Deputy Chairman
of the Supervisory Board. This was done in view of the
election of employee representatives that was held
before the 2023 Annual General Meeting. In addition,
elections were held to fill vacancies on the committees
of the Supervisory Board.
The Supervisory Board held another meeting at the end
of July 2023. At this meeting, the Supervisory Board and
the Board of Management discussed in detail the
course of business and the results of the first half of
the year. In addition, the body decided to adjust the
remuneration of the Board of Management on the basis
of the remuneration system approved by the Annual
General Meeting. Moreover, the Supervisory Board was
informed about current legal issues and the status of
the fulfilment of the settlement in connection with die-
sel emissions agreed with the US authorities.
Strategy meeting of the Supervisory Board
At the start of the two-day strategy meeting on
27/28 September 2023, the Supervisory Board was
informed about the current situation of the company.
As part of the ESG reporting, the Board of Management
then reported on overarching topics, the latest devel-
opments, objectives and selected key topics related to
"E", "S" and "G". The Supervisory Board also decided on
product projects and an investment project subject to
its approval. The meeting focused on the company's
strategy and, in particular, its implementation. Topics
discussed included the product and innovation strategy,
offering a holistic customer experience along the entire
customer journey, transforming and empowering the
workforce for the future and securing industrial com-
petitiveness. With the involvement of the responsible
executives, the members of the Supervisory Board and
the Board of Management discussed in a constructive
and open dialogue how the Mercedes-Benz Group will
adapt to new challenges and which opportunities are to
be exploited. Sustainability-related aspects, such as
challenges in the implementation of human rights due
diligence in the supply chains for production materials,
were an integral part of the discussions. The capital
market perspective was also taken into account.
There were no indications of actual conflicts of interest
during the 2023 financial year.
In the interests of good corporate governance, the
members of the Supervisory Board of Mercedes-Benz
Group AG are required to disclose to the Supervisory
Board as a whole any conflicts of interest, in particular
those that could arise as a result of an advisory or
board function with customers, suppliers or lenders of
Mercedes-Benz Group AG or other third parties.
In December 2023, the Supervisory Board adopted the
regular 2023 declaration of compliance. With the
exceptions explained there, all recommendations of the
Code have been and are being complied with.
In my function as Chairman of the Supervisory Board,
I held discussions with investors and proxy advisors on
Supervisory Board-specific topics such as Board of
Management remuneration and the work and composi-
tion of the Supervisory Board and its committees as
part of the investor dialogue in the run-up to the Annual
General Meeting.
responsibility for this on 1 August 2023, and her division
has since been designated Integrity, Governance & Sus-
tainability (previously: Integrity & Legal). Responsibility
for the management of division-specific sustainability
issues remains with the respective Board of Manage-
ment divisions.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
13
Annual Report 2023 | Mercedes-Benz Group
In order to take account of the constantly growing com-
plexity and increasing legal relevance of sustainabili-
ty-related issues and to create a central point of con-
tact for all relevant stakeholders, the Supervisory Board
decided in July 2023 to establish a cross-divisional
steering and coordination function for sustainability
management in the company at the Board of Manage-
ment level. Renata Jungo Brüngger took over
During the 2023 financial year, the Supervisory Board
continuously addressed the standards of good corpo-
rate governance.
Corporate governance and declaration
of compliance
At the meeting on 13 December 2023, the Supervisory
Board discussed and approved the Mercedes-Benz
business planning on the basis of comprehensive docu-
mentation and discussed existing opportunities and
risks in connection therewith. The agenda also included
the Board of Management's report on the current finan-
cial status, volumes and prices of the vehicle clusters in
the current and future Mercedes-Benz Cars portfolio
and the Supervisory Board's resolution on several
measures subject to its approval. The body also dis-
cussed the Board of Management's report on the devel-
opment of current and completed acquisitions and
collaborations and was informed about the results of
the employee survey conducted in 2023. Other topics
discussed at the meeting included remuneration issues,
corporate governance matters and legal issues.
Corporate planning meeting
(Mercedes-Benz business planning)
By way of resolution with the aid of other customary
means of communication, on 23 October 2023 the
Supervisory Board approved the Board of Manage-
ment's plans to establish a Europe-wide high-perfor-
mance charging network under the Mercedes-Benz
brand.
In a meeting of the Supervisory Board on 21 February
2024, the preliminary key figures of the 2023 company
and Consolidated Financial Statements as well as the
preliminary proposal to the 2024 Annual General Meet-
ing for the appropriation of profits were discussed and
noted with approval in the presence of representatives
of the auditor. The Supervisory Board determined that
there were no objections to their publication. The pre-
liminary key figures for the 2023 financial year and the
preliminary proposal for the appropriation of profits
were published at the annual press conference on
22 February 2024. In the same meeting, the Supervisory
Board also approved the further share buyback pro-
gramme proposed by the Board of Management.
Annual Report 2023 | Mercedes-Benz Group
The members of the Supervisory Board were provided
with extensive documentation for their preparation,
including the Annual Report with the Consolidated
Financial Statements compiled in accordance with IFRS,
the Combined Management Report including the
Non-Financial Declaration for Mercedes-Benz Group AG
and the Group, as well as the Declaration on Corporate
Governance, the Remuneration report, the Annual
Financial Statements of Mercedes-Benz Group AG, the
proposal of the Board of Management for the appropri-
ation of profits, the audit opinions of KPMG AG
Wirtschaftsprüfungsgesellschaft for the Annual Finan-
cial Statements of Mercedes-Benz Group AG and the
consolidated financial statements, in each case includ-
ing the Combined Management Report and information
on the accounting-related internal control system, as
well as drafts of the reports of the Supervisory Board
and the Audit Committee.
3/3
Michael Brecht (until 3 May 2023)
86
6/7
Nadine Boguslawski
100
2/2
100
100
4/4
7/7
Ben van Beurden
100
7/7
Michael Bettag
100
3/3
100
100
2/2
Dr Martin Brudermüller
100
7/7
In March 2024, the Supervisory Board discussed the
Annual Financial Statements, the Consolidated Finan-
cial Statements and the Combined Management Report,
including the Non-Financial Declaration for Mercedes-
Benz Group AG and the Group as well as the Declara-
tion on Corporate Governance, the Remuneration
report, and the proposal for the appropriation of profits.
Michael Häberle
100
7/7
Marco Gobbetti
100
75
7/7
3/4
2/2
100
3/3
100
Dame Veronica Anne ("Polly") Courtice
86
6/7
Liz Centoni
100
100
4/4
100
Annual Report 2023 | Mercedes-Benz Group
Dr Bernd Pischetsrieder
Chairman
The Supervisory Board
Stuttgart, March 2024
The Supervisory Board would also like to thank Sari
Baldauf, Elke Tönjes-Werner and Michael Brecht, who
closely supported the company through their dedicated
work on the Supervisory Board and left the Supervisory
Board last year.
The Supervisory Board would like to thank the Board of
Management members and all employees of the
Mercedes-Benz Group for their dedicated contribution
to the results of the 2023 financial year.
Appreciation
Following the final result of the review by the Audit
Committee and its own review, the Supervisory Board
concurred with the result of the audit by the auditor. It
determined that there were no objections to be raised
and adopted the financial statements prepared by the
Board of Management and the Combined Management
Report, including the Non-Financial Declaration. The
2023 Annual Financial Statements of Mercedes-Benz
Group AG were thus adopted. On this basis, the Super-
visory Board endorsed the proposal of the Board of
Management for the appropriation of distributable prof-
its. The Supervisory Board also adopted the Report of
the Supervisory Board, the Declaration on Corporate
Governance and the Remuneration report, as well as its
proposed resolutions on the agenda items for the 2024
Annual General Meeting.
17
reported on the results of their audit and, in particular,
addressed the key audit matters and the relevant audit
procedures, including the conclusions drawn, and were
available for additional questions and information.
Consolidated Financial Statements
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
16
The Audit Committee and the Supervisory Board
reviewed these documents in detail and discussed
them intensively in the presence of the auditors, who
4/4
Annual Report 2023 | Mercedes-Benz Group
Further Information
Contents
Corporate Governance
Combined Management Report
To Our Shareholders
(in %)
Participation in Participation rate
meetings
Participation in Participation rate
meetings
(in %)
Participation in Participation rate
meetings
(in %)
(in %)
meetings
Legal Affairs
Committee
Nomination Committee
Participation in Participation rate
meetings
(in %)
Dr Bernd Pischetsrieder¹ (Chairman)
Sari Baldauf (until 3 May 2023)
Presidential Committee
Plenary Supervisory Board
Participation in Participation rate
7/7
Individualized disclosure of attendance at meetings by members of the Supervisory Board of Mercedes-Benz Group AG in the 2023 financial year
Report of the Supervisory Board
Further Information
Audit Committee
Consolidated Financial Statements
Corporate Governance
Trade payables
Provisions for other risks
Financing liabilities
Other financial liabilities
Deferred income
Contract and refund liabilities
2023
Liabilities held for sale
Total current liabilities
Consolidated Financial Statements
Consolidated Statement of Financial
Position
Total non-current liabilities
198
Further Information
At 31 December
Other liabilities
Total equity and liabilities
Total equity
Contract and refund liabilities
Corporate Governance
Equity and liabilities
Share capital
Capital reserves
2022
Retained earnings
Other reserves
Other liabilities
Treasury shares
Non-controlling interests
Provisions for pensions and similar obligations
Provisions for other risks
Financing liabilities
Other financial liabilities
Deferred tax liabilities
Deferred income
Equity attributable to shareholders of Mercedes-Benz Group AG
3,070
7,345
11,718
62,051
25
1,642
2,524
9
7,714
6,910
63,724
26
1,234
27
3,514
3,656
Combined Management Report
28
1,520
1,223
3,070
24
23
11,718
76,670
67,695
2,571
2,932
-2,256
91,773
6,438
85,415
1,125
20
92,816
86,540
22
1,090
1,021
1,043
To Our Shareholders
699
Contents
17,593
15,869
11
26,090
27,250
12
41,712
41,552
13
13,104
13,530
14
49,742
48,237
15
10
2022
2023
Note
Other assets
1,238
Total non-current assets
Inventories
Trade receivables
Receivables from financial services
Cash and cash equivalents
823
Marketable debt securities and similar investments
Other assets
Assets held for sale
Total current assets
Total assets
197
Further Information
At 31 December
Other financial assets
In millions of euros
16
4,478
6,159
6,237
16
3,599
3,453
17
4,473
4,472
3
795
104,032
102,874
263,022
260,015
Annual Report 2023 | Mercedes-Benz Group
15
17,679
15,962
37,312
9
4,127
3,725
17
1,583
1,677
158,990
4,340
157,141
27,294
25,621
19
7,281
8,100
14
38,469
18
87,772
-334
12,828
In millions of euros
To Our Shareholders
Combined Management Report
Corporate Governance
Change in short-term financing liabilities
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Mercedes-Benz Group AG
Dividends paid to non-controlling interests
Acquisition of treasury shares
Other cash flows
Cash flow from financing activities
Effect of foreign exchange-rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Contents
Annual Report 2023 | Mercedes-Benz Group
-3,453
-7,315
16,894
-3,745
-3,481
-4,468
-3,418
285
469
Less cash and cash equivalents classified as assets held for sale at beginning of year
-849
3,337
-4,714
-2,622
5,021
3,084
28
27
612
14,470
Cash and cash equivalents at beginning of year (Consolidated Statement of Financial Position)
Less cash and cash equivalents classified as assets held for sale at end of year
-8,391
-19,032
-471
88
-1,707
-5,503
17,679
23,182
62
17,679
23,120
15,972
17,679
10
Deferred tax assets
29
127
-48
-1,941
Cash and cash equivalents at end of year (Consolidated Statement of Financial Position)
Consolidated Financial Statements
Consolidated Statement of Cash Flows
200
Further Information
2023
2022
-512
Cash and cash equivalents at end of year
172
38,429
-39,473
-51,945
-5,556
-5,349
-324
-320
39,288
85,072
-5,009
1,605
82,434
263,022
88,403
260,015
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
In millions of euros
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income
Gains (-)/losses (+) from disposals of assets
Change in operating assets and liabilities
224
3
3,135
2,682
12,204
23
7,955
9,585
24
44,914
49,786
Inventories
5,476
26
1,478
1,391
27
6,877
6,898
28
5,404
-5,621
Trade receivables and trade payables
Vehicles on operating leases
-2,369
-1,296
-92
-990
-2,733
-4,111
1,310
1,029
-5,812
-5,327
-640
3,810
1,624
358
2,056
6,521
6,663
20,304
20,084
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash flow from operating activities
Additions to property, plant and equipment
Additions to intangible assets
Proceeds from disposals of property, plant and equipment and intangible assets
Receivables from financial services
Investments in shareholdings
Acquisition of marketable debt securities and similar investments
Proceeds from sales of marketable debt securities and similar investments
Other cash flows
Cash flow from investing activities
199
Further Information
2023
2022
Proceeds from disposals of shareholdings and other business operations
Other financial assets
25
Receivables from financial services
195 Consolidated Statement of Income
196 Consolidated Statement of
Comprehensive Income/Loss
197 Consolidated Statement of
Financial Position
199 Consolidated Statement of
Cash Flows
201 Consolidated Statement of
Changes in Equity
203 Notes to the Consolidated Financial
Statements
1. Material accounting policies
2. Accounting estimates and management
judgements
3. Consolidated Group
4.
Revenue
5.
Functional costs
6. Other operating income and expense
Other financial income/expense
7.
CONSOLIDATED FINANCIAL STATEMENTS
Further Information
Consolidated Financial Statements
Corporate Governance
2 Within the meaning of the German Corporate Governance Code; only relevant for shareholder representatives.
>
✓
✓
3 Finance expert in accordance with Section 100 Subsection 5 of the German Stock Corporation Act (AktG), Recommendation D.3 DCGK (German Corporate Governance Code).
4 Especially: environment - green production and logistics, climate and decarbonization strategy; social - people plan, sustainable supply chains; governance - sustainable corporate governance, sustainable finance.
> >
8. Interest income and interest expense
✓
CONSOLIDATED
FINANCIAL STATEMENTS
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
194
Combined Management Report
S&MA 9335
1 Only relevant for shareholder representatives.
9. Income taxes
11. Property, plant and equipment
12. Equipment on operating leases
13. Equity-method investments
34. Segment reporting
35. Capital management
36. Earnings per share
37. Related party disclosures
38. Remuneration of the members of the Board
of Management and the Supervisory Board
39. Auditor fees
40. Events after the reporting period
41. Additional information
Geschäftsbericht 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
195
Combined Management Report
Corporate Governance
33. Management of financial risks
32. Financial instruments
other financial obligations
31. Contingent liabilities and
14. Receivables from financial services
15. Marketable debt securities and similar
investments
16. Other financial assets
17. Other assets
18. Inventories
19. Trade receivables
20. Equity
10. Intangible assets
21. Share-based payment
23. Provisions for other risks
24. Financing liabilities
25. Other financial liabilities
26. Deferred income
27. Contract and refund liabilities
28. Other liabilities
29 Consolidated Statement of Cash Flows
30. Legal proceedings
22. Pensions and similar obligations
Consolidated Financial Statements
Consolidated Statement of Income
Capital market
technology
✓
Diversity
Gender
Year of birth
Male
1968
Nationality
German
Male
1974
German
Educational and professional background
Sheet metal processor
Lawyer
Formal suitability
2021
✓
2023
Roman Zitzelsberger
15,962
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Tenure
Joined board in
Term limit not breached
Age limit not breached
Combined Management Report
191
Consolidated Financial Statements
Further Information
Michael Peters
Roman Romanowski
Monika Tielsch
Dr Frank Weber
Corporate Governance
Declaration on
Corporate Governance
Sales/brand
Competencies/experience
(e.g. accounting, controlling, risk management,
Mechanical engineering/ manage-
Mechanical engineering/production ment
✓
✓
Digitalization/IT
(e.g. software, processes, data protection)
Transformation
(e.g. product, working models)
HR
(e.g. personnel management, employee
issues, working environment)
Sustainability/ESG4
Industry
(e.g. production, procurement)
Innovation, research and development,
German
1966
Male
✓
audit, M&A)
Strategy
✓
✓
2021
✓
Female
Finance
1967
Socioeconomics/mediation
2013
✓
Male
1961
German
2015
German
Marketable debt securities and similar investments
Further Information
In millions of euros
Gains/losses on equity-method investments
Items that will not be reclassified to profit/loss in the Statement of Income
Other comprehensive income/loss after taxes¹
thereof income/loss attributable to non-controlling interests after taxes
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG after taxes
Total comprehensive income/loss
thereof income/loss attributable to non-controlling interests
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG
1 For more information on income taxes and reclassifications to profit and loss included in the Consolidated Statement of Income, see notes 9 and 32.
14,531
14,809
-795
297
14
-33
Gains/losses on equity instruments
Actuarial gains/losses from pensions and similar obligations
Items that may be reclassified to profit/loss in the Statement of Income in the future
Gains/losses on equity-method investments
Geschäftsbericht 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Consolidated Statement of Comprehensive
Income/Loss
196
475
Further Information
In millions of euros
2023
2022
Net profit
Gains/losses on currency translation
Gains/losses on debt instruments
Gains/losses on derivative financial instruments
Consolidated Statement of Comprehensive Income/Loss
13.55
1,678
188
18,870
14,058
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Consolidated Statement of Financial
Position
Consolidated Statement of Financial Position
In millions of euros
Assets
Intangible assets
Property, plant and equipment
Equipment on operating leases
Equity-method investments.
276
183
19,146
14,241
-557
2,130
194
2,318
89
-397
-16
-251
286
2,207
-290
4,337
-87
-32
-203
4,369
267
Consolidated Statement of Income
13.46
13.46
Diluted
Note
2023
2022
4
153,218
150,017
5
-118,839
-115,997
34,379
34,020
5
-9,728
-9,482
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
Earnings per share (in euros)
thereof profit attributable to shareholders of Mercedes-Benz Group AG
thereof profit attributable to non-controlling interests
Revenue
Cost of sales
Gross profit
Selling expenses
General administrative expenses
Research and non-capitalized development costs
Other operating income
5
Other operating expense
Other financial income/expense
Earnings before interest and taxes (EBIT)
Interest income
Interest expense
Profit before taxes
Income taxes
Net profit
Gains/losses on equity-method investments
13.55
-2,688
5
8
-254
-427
20,084
20,304
9
-5,553
-5,495
14,531
14,809
270
308
14,261
14,501
36
273
678
8
20,458
-6,230
-5,602
6
2,206
3,323
6
-516
-2,584
-1,289
2,129
1,732
7
108
340
34
19,660
13
17,679
1,691
Further Information
7.3419
1.1217
7.1212
1.0887
7.6441
1.0647
7.0427
1.0884
7.8856
1.0070
6.8982
1.0751
7.7712
1.0205
7.2582
Hyperinflation
To determine whether a country is to be considered as
in hyperinflation, the Mercedes-Benz Group refers to
the list published by the International Practices Task
Force (IPTF), the Center for Audit Quality or other rele-
vant international publications. If a country is in hyper-
inflation, IAS 29 Financial Reporting in Hyperinflation-
ary Economies has to be applied from the beginning of
the respective reporting period, i.e., from 1 January of
the respective reporting year. Argentina and Turkey are
currently considered as in hyperinflation.
Revenue recognition
Accounting policies
Further Information
207
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
1.0730
Combined Management Report
Contents
Annual Report 2023 | Mercedes-Benz Group
For companies that use hyperinflation accounting, the
profit and loss statements and the cash flow state-
ments are converted into euros using the exchange-
rates at the end of the period.
Due to the close economic relationship, the effects
from the recognition of the inflation effect together
with the conversion effect from the translation are
presented as a currency effect in accordance with IAS
21. Both effects are presented on a net basis in other
comprehensive income or directly in retained earnings.
Statement of Income under other operating expenses
or other operating income.
The effects of taking into account the devaluation of
the monetary balance sheet items of subsidiaries in
countries in hyperinflation are therefore recognized in
profit or loss and are included in the Consolidated
To Our Shareholders
Revenue from sales of vehicles, spare parts and other
related products is recognized when control of the
goods is transferred to the customer. This generally
occurs at the time the customer takes possession of
the products.
7.3582
7.8509
Foreign currency translation
Transactions in foreign currency are translated at the
relevant foreign exchange-rates prevailing at the trans-
action date. In subsequent periods, assets and liabilities
denominated in foreign currency are translated using
period-end exchange-rates; gains and losses from this
measurement are recognized in profit and loss (except
for gains and losses resulting from the translation of
equity instruments measured at fair value through other
comprehensive income, which are recognized in other
comprehensive income/loss).
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into
euros using period-end exchange-rates. The translation
adjustments are presented in other comprehensive
income/loss. The components of equity are translated
using historical rates. The statements of income and
cash flows are translated into euros using the quarterly
average exchange-rates during the respective periods.
The exchange-rates providing the basis for the currency
translation of the US dollar and the Chinese renminbi -
the most significant foreign currencies for the Mer-
cedes-Benz Group - developed as shown in the follow-
ing table.
Annual Report 2023 | Mercedes-Benz Group
Contents
Exchange-rates
To Our Shareholders
Average exchange-rate on 31 December
Average exchange-rates during the respective period
First quarter
Second quarter
Third quarter
Fourth quarter
206
Combined Management Report
Corporate Governance
1.1050
€1 =
€1 =
€1 =
€1 =
CNY
1.0666
USD
USD
2022
2023
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
CNY
If a dealer is not classified as a principal but as an
agent and therefore control of vehicles is not trans-
ferred to him, sales revenue is only recorded when
the end customer obtains control. The brokerage com-
missions payable to the dealer are shown in selling
expenses.
Revenue recognition from the sale of vehicles for which
the Group enters into a repurchase obligation is de-
pendent on the form of the repurchase agreement.
- Sales of vehicles by which the Mercedes-Benz Group
is obliged to repurchase the vehicles in the future are
accounted for as operating leases. This also applies
to a call option that grants the Mercedes-Benz Group
the right to repurchase.
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Gains/losses on equity-method investments
Other financial income/expense
Other financial income/expense, includes all income
and expense from financial transactions which are
included neither in interest income nor in interest ex-
pense, and which for Mercedes-Benz Mobility are in-
cluded neither in revenue nor in cost of sales.
Furthermore, income and expenses from equity inter-
ests are included in other financial income/expense if
such income or expenses are not presented under
gains/losses on equity-method investments.
Interest income and interest expense
Interest income and interest expense include interest
income from investments in securities and from cash
and cash equivalents as well as interest expense from
liabilities. Furthermore, interest and changes in fair
values related to interest rate hedging activities as well
as income and expense resulting from the allocation of
premiums and discounts are included. The interest
components of defined benefit pension commitments
and similar obligations, as well as of the plan assets
available to cover these obligations and interest on
supplementary income tax payments or reimburse-
ments are also presented in this line item.
Interest income and expense and gains or losses from
derivative financial instruments related to the financial
services business are disclosed under revenue and
cost of sales respectively.
Expense from the compounding of interest on provi-
sions for other risks is presented in other financial
income/expense.
Income taxes
Income taxes are comprised of current income taxes
and deferred taxes.
Current income taxes are calculated based on the re-
spective local taxable income and local tax rules for the
period. The calculation of income taxes of
Mercedes-Benz Group AG and its subsidiaries is based
on the legislation and regulations applicable in the
various countries. In addition, current income taxes
presented for the reporting year include adjustments
for uncertain tax payments or tax refunds for periods
not yet finally assessed; however, excluding interest
expenses and interest refunds and penalties on the
underpayment of taxes. In cases for which it is proba-
ble that amounts declared as expenses in the tax re-
turns might not be recognized (uncertain tax positions),
a liability for income taxes is recognized. The amount is
based on the best estimate of the expected tax pay-
ment (expected amount or most likely amount). Tax-
refund claims from uncertain tax positions are recog-
nized when it is probable that they can be realized.
Only in the case of tax-loss carryforwards or unused
tax credits, no liability for taxes or tax claim is recog-
nized for these uncertain tax positions. Instead, the
deferred tax assets for the unused tax-loss carryfor-
wards or tax credits are adjusted.
Changes in deferred tax assets and liabilities are gen-
erally recognized through profit and loss in deferred
taxes in the Consolidated Statement of Income, except
Annual Report 2023 | Mercedes-Benz Group
Contents
Intangible assets are measured at acquisition or manu-
facturing cost less accumulated amortization. If neces-
sary, accumulated impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing
profit attributable to shareholders of Mercedes-Benz
Group AG by the weighted average number of shares
outstanding.
Earnings per share
tax strategies. On each balance sheet date, the
Mercedes-Benz Group carries out impairment tests on
deferred tax assets on the basis of the planned taxable
income in future years. Deferred tax assets are only
recognized if it is more likely than not that future tax
benefits can be realized.
For the calculation of deferred tax assets, assumptions
have to be made regarding future taxable income and
the time of realization of the deferred tax assets. In this
context, the Mercedes-Benz Group takes into consider-
ation, among other things, the projected earnings from
business activities, the effects on earnings of the re-
versal of taxable temporary differences, and realizable
Combined Management Report
Deferred tax assets or liabilities are calculated on the
basis of temporary differences between the tax basis
and the financial reporting of assets and liabilities in-
cluding differences from consolidation, on unused tax-
loss carryforwards and unused tax credits. Measure-
ment is based on the tax rates expected to be effective
in the period in which an asset is recognized or a liabil-
ity is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the report-
ing date or are soon to be enacted. Deferred tax assets
are recognized to the extent that it is probable that
there will be future taxable income available against
which the deductible temporary differences, tax-loss
carryforwards and tax credits can be utilized. Deferred
tax liabilities for taxable temporary differences in con-
nection with investments in subsidiaries, branches,
associated companies and interests in joint arrange-
ments are not recognized if the Group is able to control
the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
be reversed in the foreseeable future.
Further Information
210
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
for changes recognized in other comprehensive in-
come/loss or directly in equity.
209
To Our Shareholders
Contents
Corporate Governance
Combined Management Report
208
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Depending on the sales model, vehicles may be initially
sold to non-Group dealers. When control of the vehicle
is transferred to the non-Group dealer, the Mercedes-
Benz Group recognizes revenue from the sale of the
vehicle. Irrespective of this, an end customer can de-
cide to enter into a leasing contract with Mercedes-
Benz Mobility regarding such a vehicle. The vehicle is
then sold by the non-Group dealer to Mercedes-Benz
Mobility.
the term of the contract. If the customer has made an
advance payment, the revenue from these contracts is
deferred as a contract liability and recognized as reve-
nue over the term of the contract in proportion to the
costs expected to be incurred based on historical in-
formation. A future loss on these contracts is recog-
nized in the current reporting year if the expected
costs for outstanding services under the contract ex-
ceed unearned revenue.
For certain products sold by the Group, it offers ex-
tended, separately priced warranties that go beyond
the statutory period, as well as service and mainte-
nance contracts. Usual for such contracts is an advance
payment or the payment of constant instalments over
Under a contract manufacturing agreement, the Mer-
cedes-Benz Group sells assets to a third-party manu-
facturer from which the Mercedes-Benz Group buys
back the manufactured products after completion of
the commissioned work. If the provision of material is
not associated with the transfer of control to the ser-
vice provider, no revenue is recognized.
Arrangements such as when the Mercedes-Benz Group
provides customers with a guaranteed minimum resale
value that they receive on resale (residual-value guar-
antee) do not constrain the customers in their ability to
direct the use of and obtain substantially all of the
benefits from the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has
to be recognized, reduced by a potential compensation
payment to the customer (revenue deferral).
with a right of return is reported. The Mercedes-Benz
Group considers several factors when assessing
whether the customer has a significant economic in-
centive to exercise his or her right. Among others,
these are the relation between the agreed repur-
chase price and the expected future market value
(at the time of repurchase) of the asset, or historical
return rates.
- Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exer-
cise that right at contract inception. Otherwise, a sale
For multiple-element arrangements, such as when ve-
hicles are sold with free or reduced-in-price mainte-
nance contracts or with free online services, the Group
generally allocates revenue to the various elements
based on their estimated relative stand-alone selling
prices. To determine stand-alone selling prices, the
Mercedes-Benz Group primarily uses price lists with
consideration of average price reductions granted to its
customers.
Subsidiaries, associated companies, joint ventures and
joint operations whose business is non-active or of low
volume and that individually and in sum are not material
for the Group and the fair presentation of profitability,
liquidity and capital resources, and financial position
are generally measured at amortized cost in the Consol-
idated Financial Statements.
Further Information
The Mercedes-Benz Group does not adjust the prom-
ised amount of consideration for the effects of a signif-
icant financing component if at contract inception it is
expected that the period between the transfer of a
promised asset or service to a customer and payment
by the customer will be no longer than one year.
Annual Report 2023 | Mercedes-Benz Group
Government grants related to assets are deducted
from the carrying amount of the asset and are recog-
nized in earnings over the life of a depreciable asset as
a reduced depreciation expense. Government grants
which compensate the Group for expenses are recog-
nized as other operating income in the same period as
the expenses themselves.
Government grants
Borrowing costs are expensed as incurred, unless they
are directly attributable to the acquisition, construction
or production of a qualifying asset and are therefore
part of the acquisition or manufacturing costs of that
asset. Depreciation of the capitalized borrowing costs
is presented within cost of sales.
Borrowing costs
Expenditure for research and development that does
not meet the conditions for capitalization according to
IAS 38 Intangible Assets is expensed as incurred.
The incremental cost of obtaining contracts is recog-
nized as an expense when incurred if the amortization
period would be no longer than one year.
Research and non-capitalized development costs
When loans are issued below market rates, related
receivables are recognized at present value (using
market rates) and revenue is reduced for the interest
incentive granted.
Revenue is recognized net of sales reductions such
as cash discounts and sales incentives granted.
―
-
The Mercedes-Benz Group uses a variety of sales pro-
motion programmes dependent on various market
conditions in individual countries as well as the respec-
tive product life cycles and product-related factors
(such as amounts of discounts offered by competitors,
excess industry production capacity, the intensity of
market competition and consumer demand for the
products). These programmes comprise cash offers to
dealers and customers as well as lease subsidies or
loans at reduced interest rates which are reported as
follows:
Revenue also includes revenue from the rental and
leasing business as well as interest from the financial
services business at Mercedes-Benz Mobility. Revenue
generated from operating leases is recognized on a
straight-line basis over the periods of the contracts. In
addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is
recognized using the effective-interest method.
If subsidised leasing fees are agreed upon in connec-
tion with finance leases, revenue from the sale of a
vehicle is reduced by the amount of the interest in-
centive granted.
Intangible assets with indefinite useful lives are re-
viewed annually to determine whether indefinite-life
assessment continues to be appropriate. If not, the
change in the useful-life assessment from indefinite to
finite is made on a prospective basis.
Entities measured at amortized cost
For entities over which the Mercedes-Benz Group has
joint control together with a partner (joint arrange-
ments), it is necessary to differentiate between whether
a joint operation or a joint venture exists. In a joint ven-
ture, the parties that have joint control of the arrange-
ment have rights to the net assets of the arrangement.
For joint ventures, the equity method has to be applied.
A joint operation exists when the jointly controlling
parties have direct rights to the assets and obligations
for the liabilities. In this case, the prorated assets and
liabilities and the prorated income and expenses are
generally to be recognized (proportionate consolida-
tion).
98
476
14,446
-962
98
476
-5,556
85
1
3,070
11,718
76,670
1,199
-142
85,415
1,125
86,540
62
62
-5,883
-327
-5,556
14,241
-962
183
-290
-87
-203
14,531
270
14,261
14,058
-
185
-241
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Other
Balance at 31 December 2023
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Consolidated Statement of Changes
in Equity
Other reserves
Equity
attributable
to shareholders
202
Further Information
Difference of
Share
capital
Capital
2,161
67,695
14,261
11,718
3,070
Total
equity
Non-
controlling
interests
1,012
Benz Group AG
Treasury
shares
Derivative
financial
instruments
Equity/debt
instruments
currency
translation
Retained
earnings
reserves
of Mercedes-
-2,322
-2,322
-2,322
To Our Shareholders
204
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Taxation for Groups of Companies (Minimum Tax Act -
MinStG) and is applicable to the Mercedes-Benz Group
from 1 January 2024. As part of an analysis of possible
effects on the Group, no countries were identified as at
the reporting date from which significant effects are to
be expected with regard to the possible payment of a
minimum tax.
To introduce a mandatory temporary exemption from
the requirements in IAS 12 Income Taxes for the record-
ing and disclosure of information about deferred tax
assets and liabilities, the IASB published International
Tax Reform - Pillar 2 Model Rules (Amendments to
IAS 12) in May 2023. The Mercedes-Benz Group applies
the exception rule according to IAS 12, which stipulates
that no deferred tax assets and liabilities are accounted
for in connection with the income taxes of the second
pillar ("Pillar 2") of the OECD.
In May 2017, the IASB published the standard IFRS 17
Insurance Contracts. IFRS 17 establishes more trans-
parency and comparability with regard to the recogni-
tion, measurement, presentation and disclosure of in-
surance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on
or after 1 January 2023. The first-time application of
IFRS 17 had no impact on the profitability, liquidity and
capital resources and financial position of the Mer-
cedes-Benz Group.
In addition, other standards and interpretations were
published which are not expected to have any signifi-
cant impact on the Consolidated Financial Statements.
Presentation
Presentation in the Consolidated Statement of Financial
Position differentiates between current and non-current
assets and liabilities. Assets and liabilities are generally
classified as current if they are expected to be realized
or settled within one year. Deferred tax assets and lia-
bilities as well as assets and provisions for pensions
and similar obligations are presented as non-current
items.
The Consolidated Statement of Income is presented
using the cost-of-sales method.
Principles of consolidation
The Consolidated Financial Statements include the fi-
nancial statements of Mercedes-Benz Group AG and the
financial statements of all subsidiaries, including struc-
tured entities, which are directly or indirectly controlled
by Mercedes-Benz Group AG. Control exists if the par-
ent company has the power of decision over a subsidi-
ary based on voting rights or other rights, if it partici-
pates in positive and negative variable returns from a
subsidiary, and if it can affect these returns by its power
of decision.
Structured entities are entities which have been de-
signed so that voting or similar rights are not relevant in
deciding who controls the entity. This is the case for
example if voting rights relate to administrative tasks
only and the relevant activities are directed by means of
contractual arrangements.
The financial statements of consolidated subsidiaries
which are included in the Consolidated Financial State-
ments are generally prepared as of the reporting date
of the Consolidated Financial Statements. The financial
statements of Mercedes-Benz Group AG and its compa-
nies included in the Consolidated Financial Statements
are prepared using uniform recognition and measure-
ment principles. Intra-Group assets and liabilities, equi-
ty, income and expenses as well as cash flows from
transactions between consolidated entities are elimi-
nated in the course of the consolidation process.
An associated company is an entity over which the
Group has significant influence. Significant influence is
the power to participate in the financial and operating
policy decisions of the investee. Associated companies
are generally accounted for using the equity method.
Investments in associated companies, joint ventures
or joint operations
loses control of a subsidiary, the difference between
the carrying amounts of the transferred assets and lia-
bilities and the consideration received is generally re-
ported in other operating income or expense. Amounts
that were previously recognized in other comprehensive
income/loss are recognized in other operating income
or expense upon loss of control. If realization is not
permitted, they are reclassified to retained earnings.
Further Information
205
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Contents
Corporate Governance
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Changes in equity interests in subsidiaries that reduce
or increase the Mercedes-Benz Group's percentage
ownership without a change of control are accounted
for as equity transactions between owners. If the Group
Business combinations are accounted for using the
purchase method. In connection with obtaining control,
non-controlling interest in the acquiree is in principle
recognized at the proportionate share of the acquiree's
identifiable assets, which are measured at fair value.
Business combinations and changes in equity
interests
Combined Management Report
Annual Report 2023 | Mercedes-Benz Group
In December 2021, the OECD published guidelines for
a new global minimum tax framework aimed at curb-
ing base erosion and profit shifting (BEPS) by multina-
tional corporations. EU member states unanimously
agreed in December 2022 to implement these rules in
the form of a directive (BEPS Pillar 2 regulations). As at
the balance sheet date, this directive was transposed
into German law with the Act to Ensure Global Minimum
In May 2021, the IASB published Deferred taxes relat-
ing to assets and liabilities arising from a single
transaction (amendments to IAS 12). When assets and
liabilities are recorded for the first time, under certain
conditions deferred taxes previously did not have to be
recognized due to an exception. The amendment to IAS
12 has the effect of cancelling this exception, which was
important for the lessee's accounting of finance leases
among other things. The Mercedes-Benz Group applied
the changes for the first time in the financial year that
commenced on 1 January 2023. There were no effects
on the profitability, liquidity and capital resources, and
financial position.
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
92,816
1,043
91,773
203
-2,256
112
112
26
66
66
66
1,514
If the financial statements of associated companies,
joint ventures or joint operations should not be availa-
ble in good time, the Group's proportionate share of the
results of operations is included in the Mercedes-Benz
Group's Consolidated Financial Statements with up to
three-month time lag taking into account significant
events or transactions.
Combined Management Report
Consolidated Financial Statements
IFRS issued, EU endorsed and adopted in the
reporting period
The Consolidated Financial Statements of Mercedes-
Benz Group AG and its subsidiaries ("Mercedes-Benz
Group" or "the Group") as of 31 December 2023 have
been prepared in accordance with Section 315e of the
German Commercial Code (HGB) (Consolidated Finan-
cial Statements in accordance with International Finan-
cial Reporting Standards) and comply with the Interna-
tional Financial Reporting Standards (IFRS) in the form
in which they must be applied in the European Union
(EU) as of 31 December 2023.
Applied IFRS
Basis of preparation
The Board of Management of Mercedes-Benz Group AG
authorized the Consolidated Financial Statements for
publication on 15 March 2024.
The Consolidated Financial Statements of Mercedes-
Benz Group AG are presented in euros (€). Unless oth-
erwise stated, all amounts are stated in millions of eu-
ros. All figures shown are rounded.
Corporate Governance
Mercedes-Benz Group AG is a stock corporation orga-
nized under the laws of the Federal Republic of Germa-
ny. The Company is entered in the Commercial Register
of the Stuttgart District Court under No. HRB 19360 and
its registered office is located at Mercedesstraße 120,
70372 Stuttgart, Germany.
The Mercedes-Benz Group is a vehicle manufacturer
with a worldwide product range of premium cars. Its
product portfolio is rounded off by a range of financial
services, product-related mobility services and the
installation of a charging infrastructure. The Group
comprises the segments Mercedes-Benz Cars, Mer-
cedes-Benz Vans and Mercedes-Benz Mobility.
General information
1. Material accounting policies
Statements
Notes to the Consolidated Financial
Notes to the Consolidated Financial Statements
Mercedes-Benz Group AG is the parent company of the
Mercedes-Benz Group.
Development costs for vehicles and components are
capitalized if the recognition criteria according to IAS
38 are met. Subsequent to initial recognition, the asset
is carried at acquisition or manufacturing costs less
accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include
all direct costs and pro-rata allocable overheads. Capi-
talized development costs for vehicles and vehicle
components are amortized on a straight-line basis over
the expected product life cycle. The planned product
lifespan only exceeds ten years in individual cases.
The assessment also takes into account possible im-
pacts from the transformation of the automotive indus-
try, such as the transition to electric drive systems.
Amortization of capitalized development costs is an
element of manufacturing costs and is allocated to
those vehicles and components by which they were
generated and is included in cost of sales when the
inventory (vehicles) is sold.
This item includes all income and expenses in connec-
tion with investments accounted for using the equity
method. In addition to the prorated profits and losses
from financial investments, it also includes profits and
losses resulting from the sale of equity interests or the
remeasurement of equity interests following a loss of
significant influence or joint control. The Mercedes-
Benz Group's share of dilution gains and losses result-
ing from the Group's non-participation or subpropor-
tional participation in capital increases of companies in
which shares are held and are accounted for using the
equity method is also included in gains/losses on equi-
ty-method investments. Non-participation or subpro-
portional participation in capital reductions is recorded
as fictitious acquisition transactions. This item also
includes impairment losses and/or gains on the rever-
sal of such impairments of equity-method investments.
1,725
14,501
308
14,809
2,608
470
-434
1,725
17,109
470
-434
Total comprehensive income/loss
73,167
-5,349
-32
4,337
18,870
276
19,146
-5,349
-340
-5,689
-29
-29
-48
4,369
-48
1,216
14,501
Acquisition of treasury shares
Issue and disposal of treasury shares
Other
Balance at 31 December 2022
Other reserves
Difference of
Derivative
Share
capital
Capital
reserves
Retained
earnings
currency
translation
71,951
Equity/debt
instruments
Treasury
shares
Equity
attributable
to shareholders
of Mercedes-
Benz Group AG
Non-
controlling
interests
Total
equity
3,070
11,723
55,926
202
-661
financial
instruments
-48
48
48
Balance at 1 January 2023
Net profit
Other comprehensive income/loss after
taxes
Total comprehensive income/loss
Other comprehensive income/loss after
taxes
Changes in the consolidated group
Balance at 1 January 2022
In millions of euros
Consolidated Statement of Changes in Equity
Further Information
201
Consolidated Financial Statements
Consolidated Statement of Changes
in Equity
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Geschäftsbericht 2023 | Mercedes-Benz Group
To Our Shareholders
In millions of euros
Net profit
Annual Report 2023 | Mercedes-Benz Group
Contents
-5
3,070
11,718
9
-9
-52
-57
48
-55
2
86,540
1,125
85,415
Dividends
-241
2,161
67,695
1,012
Financial liabilities recognized at fair value through
profit or loss include financial liabilities held for trad-
ing. Derivatives (including embedded derivatives sepa-
rated from the host contract) which are not used as
hedging instruments in hedge accounting are classified
as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
Derivative financial instruments and hedge
accounting
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its
operating or financing activities or liquidity manage-
ment. These are mainly currency risks, interest rate
risks and commodity price risks.
Emission allowances (e.g. emission permits from the EU
emissions trading system or the vehicle-related emis-
sions regulations in the USA or China) to compensate
for CO2 emissions are also reported under intangible
assets. These certificates and rights are stated at ac-
quisition cost. Derecognition occurs at the time the
certificates or rights are returned or upon sale or expi-
ration. Obligations to surrender emission allowances
are recognized as provisions valued at the acquisition
costs of emission allowances that have already been
purchased. Any excess obligation that may exist is
valued at the market value of the emission allowances
still to be acquired.
With acquisitions of businesses, goodwill represents
the excess of the consideration transferred over the
fair values assigned to the identifiable assets propor-
tionally acquired and liabilities assumed. Goodwill is
accounted for at the subsidiaries in the functional cur-
rency of those subsidiaries.
Other intangible assets with finite useful lives are gen-
erally amortized on a straight-line basis over their use-
ful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed
at least at the end of each reporting year. Changes in
expected useful lives are treated as changes in ac-
counting estimates. The amortization expense on in-
tangible assets with finite useful lives is recorded in
functional costs.
211
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
To Our Shareholders
Mercedes-Benz Mobility Classic cash-generating unit is
close to the carrying amount. In addition, sensitivity
analyses are carried out (e.g. with regard to the dis-
count rate). The carrying amount of the Mercedes-Benz
Mobility Classic cash-generating unit would exceed the
recoverable amount if, in addition to a change in opera-
tional key assumptions, the cost of equity were to in-
crease slightly.
Annual Report 2023 | Mercedes-Benz Group
- Sales of vehicles by which the Mercedes-Benz Group
is obliged to repurchase the vehicles in the future are
accounted for as operating leases. This also applies
to a call option that only grants the Mercedes-Benz
Group the right to repurchase.
Further Information
Combined Management Report
- Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exer-
cise that right. Otherwise, a sale with a right of return
is reported. The Mercedes-Benz Group considers
several factors when assessing whether a customer
has a significant economic incentive to exercise his
or her right at contract inception. Among others,
these are the relation between the repurchase price
Mercedes-Benz Mobility continues the leasing and
sales-financing business for Daimler Truck's commer-
cial vehicles in some markets. To this end, Mercedes-
Benz Mobility acquires these vehicles from Daimler
Truck and leases them to the end customers. Insofar as
a mandatory vehicle return to Daimler Truck has been
agreed, a leasing contract (head lease) between Mer-
cedes-Benz Mobility and Daimler Truck is shown. The
Mobility Classic cash-generating unit. While the dis-
count rate for the Mercedes-Benz Mobility Classic
cash-generating unit represents the cost of equity, the
risk-adjusted interest rate for the Mercedes-Benz Cars
and Mercedes-Benz Vans cash-generating units is
based on the weighted average cost of capital (WACC).
This is calculated based on the capital asset pricing
model (CAPM), taking into account current market ex-
pectations. In calculating the risk-adjusted interest rate
for impairment-test purposes, specific peer group in-
formation is used for beta factors, capital-structure
data and cost of debt. Periods not covered by the fore-
cast are taken into account by recognizing a residual
value (terminal value), which does not include any
growth rates. When deriving the terminal value, as-
sumptions regarding the effects of the transformation
of the automotive industry are also taken into account,
analogous to the detailed planning period. When deriv-
ing the value in use, a risk assessment is also carried
out for both the detailed planning period and the ter-
minal value, which includes, for example, market risks
as well as risks resulting from legal and political
framework conditions (e.g. in connection with sustaina-
bility aspects). This risk assessment shows for the rele-
vant cash-generating units that even in the case of
reasonably possible changes in operational key as-
sumptions (e.g. profitability of the products, unit sales
and portfolio) compared to the original planning, no
need for impairment exists. While the recoverable
amount of the Mercedes-Benz Cars and Mercedes-
Benz Vans cash-generating units significantly exceeds
the carrying amount, the recoverable amount of the
Value in use is measured by discounting expected fu-
ture cash flows from the continuing use of the cash-
generating units using a risk-adjusted interest rate.
Future cash flows are determined on the basis of the
long-term planning, which is approved by management
and which is valid at the date when the impairment test
is conducted. This planning, which covers the period up
to and including 2028, is based on assumptions, in-
cluding those regarding future sales volumes, the gen-
eral development of the respective markets and the
profitability of the products, taking into account the
effects of the transformation of the automotive indus-
try and the expected macroeconomic developments.
In the detailed planning period, an overall moderate
increase in unit sales and revenue is assumed for the
cash-generating units Mercedes-Benz Cars and Mer-
cedes-Benz Vans, with a significant increase in the
proportion of electric vehicles. Based on the sales
planning of the cash-generating units Mercedes-Benz
Cars and Mercedes-Benz Vans, the planning of the
cash-generating unit Mercedes-Benz Mobility Classic
assumes an increase in the portfolio in the detailed
planning period. The assumptions used for planning are
checked for plausibility both against historical devel-
opments and against external sources of information
(e.g. market studies). The rounded, risk-adjusted inter-
est rates determined specifically for the respective
cash-generating unit and used to discount the cash
flows are 9.5% (2022: 9%) after taxes for the Mer-
cedes-Benz Cars and Mercedes-Benz Vans cash-
generating units. A risk-adjusted interest rate of 10%
(2022: 10%) after taxes is used for the Mercedes-Benz
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
215
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The recoverable amount is the higher of fair value less
costs of disposal and value in use. For cash-generating
units, the Mercedes-Benz Group in a first step deter-
mines the respective recoverable amount as value in
use and compares it with the respective carrying
amount (including goodwill). If value in use is lower
than the carrying amount, fair value less costs of dis-
posal is additionally calculated to determine the recov-
erable amount.
If it is determined that the carrying amount of an asset
or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the dif-
ference.
testing is carried out below segment level. A distinction
is made between the two cash-generating units Mer-
cedes-Benz Mobility Classic (traditional financial ser-
vices business) and Charging Solutions (development
of a high-power charging network). As the Charging
Solutions cash-generating unit had neither goodwill nor
other intangible assets with indefinite useful lives in
2023 and there was no indication of impairment in
2023, it was not necessary to calculate the recoverable
amount.
Goodwill and other intangible assets with indefinite
useful lives are tested at least annually for impairment.
This takes place at the level of the cash-generating
units. The cash-generating units Mercedes-Benz Cars
and Mercedes-Benz Vans basically correspond to the
segments. At Mercedes-Benz Mobility, impairment
An assessment is made at each reporting date as to
whether there is any indication that previously recog-
nized impairment losses may no longer exist or may be
reversed. If this is the case, the Mercedes-Benz Group
records a partial or entire reversal of the impairment;
the carrying amount is thereby increased to the recov-
erable amount. However, the increased carrying
amount may not exceed the carrying amount that
would have been determined (net of scheduled depre-
ciation) if no impairment loss had been recognized in
prior years.
The Mercedes-Benz Group assesses at each reporting
date whether there is an indication that an asset may
be impaired or whether there is an indication that a
previously recognized impairment loss may be re-
versed. If such indication exists, the Mercedes-Benz
Group estimates the recoverable amount of the asset.
The recoverable amount is determined for each indi-
vidual asset unless the asset generates cash inflows
that are not largely independent of those from other
assets or other groups of assets (cash-generating
units).
Impairment of non-current non-financial assets
Accounting for and classification of a sublease depend
on whether the contracts were concluded before or
after the legal spin-off and hive-down of Daimler's
commercial vehicle business. The leases that were
concluded before the legal spin-off and hive-down are
continued as operating leases. The head lease is pre-
sented under equipment on operating leases as a right
of use, which was recognized at fair value at the spin-
off date and subsequently depreciated on a straight-
line basis. In addition, a residual-value receivable from
the companies of the Daimler Truck Group is recog-
nized. However, the leasing contracts concluded after
the legal spin-off and hive-down are classified and
accounted for as finance leases. The net investment in
the lease corresponds to the right-of-use asset from
the head lease. In addition to the finance lease, Mer-
cedes-Benz Mobility recognizes a residual-value re-
ceivable from the Daimler Truck Group in the amount
of the guaranteed residual value. The head lease is not
recorded separately.
contract between Mercedes-Benz Mobility and the end
customer constitutes a sublease in this respect.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
214
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Financial liabilities at fair value through
profit or loss
Insofar as the Mercedes-Benz Group enters into re-
verse factoring agreements in which trade receivables
of a supplier are transferred to a financial intermediary,
changes in the presentation of the original trade paya-
bles may occur. That would be the case if these liabili-
ties differed in nature and function from other trade
payables. As a result, these liabilities would be pre-
sented separately.
Contents
Financial liabilities primarily include trade payables,
liabilities to financial institutions, bonds, derivative
financial liabilities and other liabilities.
there is objective evidence for an impairment reversal.
If such an assessment is made, the recoverable amount
is remeasured. An impairment reversal is recognized to
the extent that the recoverable amount has increased
subsequent to the impairment and is limited to the
amount by which an asset has been impaired.
The Mercedes-Benz Group reviews on each reporting
date whether there is any objective indication of im-
pairments or impairment reversals of equity-method
investments. If such indications exist, the Group de-
termines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable
amount of an investment, the carrying amount is writ-
ten down to the recoverable amount. The recoverable
amount is the greater of fair value less costs to sell and
value in use. An impairment reversal is carried out if
ue.
On the date of acquisition, a positive difference be-
tween cost of acquisition and the Mercedes-Benz
Group's share of the fair values of the identifiable as-
sets and liabilities of the associated company or joint
venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying
amount of the equity-method investment. If an equity
interest in an existing associated company is increased
without change in significant influence, goodwill is
determined only for the additionally acquired interest;
the previous investment is not remeasured at fair val-
The initial recognition of interests in investments ac-
counted for using the equity method is generally made
with their acquisition costs. If the Group loses control
of a subsidiary and subsequently presents it at equity,
the fair value of the retained shares represents the
acquisition cost.
Equity-method investments
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
216
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Property, plant and equipment
Property, plant and equipment are measured at acqui-
sition or manufacturing costs less accumulated depre-
ciation. If necessary, accumulated impairment losses
are recognized.
The costs of internally produced equipment and facili-
ties include all direct costs and allocable overheads.
Acquisition or manufacturing costs include the esti-
mated costs, if any, of dismantling and removing the
item and restoring the site as well as borrowing costs.
Gains or losses to be eliminated from transactions with
companies accounted for using the equity method are
recognized through profit and loss with corresponding
adjustments of the investments' carrying amounts.
Gains or losses from the contribution of interests in
subsidiaries to investments which are measured using
the equity method are also subject to elimination ad-
justments to the carrying amount of the investment.
Non-current assets and disposal groups
held for sale
The Group classifies non-current assets or disposal
groups as held for sale if the carrying amount will be
recovered principally through an extremely likely sale
transaction rather than through continuing use. In this
case, the assets or disposal groups are no longer de-
preciated as planned, but are measured at the lower of
carrying amount and fair value less costs to sell. Imme-
diately before classification as held for sale, it is as-
sessed if the assets are impaired based on the applica-
ble individual regulations. If fair value less costs to sell
subsequently increases, any impairment loss previously
recognized is reversed. This reversal is restricted to the
impairment loss previously recognized for the assets or
disposal group concerned.
Inventories
Financial assets at fair value through profit or loss
Financial assets recognized at fair value through profit
or loss include financial assets with cash flows other
than those of principal and interest on the nominal
amount outstanding. Furthermore, financial assets that
are held in a business model other than "hold to col-
lect" or "hold to collect and sell" are included here.
The determination of the business model is carried out
at the portfolio level and is based on management's
intention and past transaction patterns. Assessments
of the contractual cash flows are made on an instru-
ment-by-instrument basis.
The classification of financial instruments is based on
the business model in which these instruments are
held and on their contractual cash flows.
Financial assets primarily comprise receivables from
financial services, trade receivables, receivables from
banks, cash on hand, derivative financial assets, mar-
ketable securities and similar investments and financial
investments.
Financial assets
Upon initial recognition, financial instruments are
measured at fair value. For the purpose of subsequent
measurement, financial instruments are allocated to
one of the categories mentioned in IFRS 9 Financial
Instruments (financial assets measured at amortized
cost, financial assets measured at fair value through
other comprehensive income and financial assets
measured at fair value through profit or loss). Transac-
tion costs directly attributable to acquisition or issu-
ance are considered when determining the carrying
amount if the financial instruments are not measured at
fair value through profit or loss.
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instru-
ments in the form of financial assets and financial lia-
bilities are generally presented separately. Financial
instruments are recognized as soon as the Mercedes-
Benz Group becomes a party to the contractual provi-
sions of the financial instrument. In the case of pur-
chases or sales of financial assets through the regular
market, the Mercedes-Benz Group uses the transaction
date as the date of initial recognition or derecognition.
Financial instruments
Depreciable property, plant and equipment are written
down by scheduled depreciation over the correspond-
ing useful life, generally on a straight-line basis. The
useful lives of property, plant and equipment are
shown in the following table.
In the case of manufactured inventories and work in
progress, manufacturing cost also includes production
overheads based on normal capacity.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
217
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Inventories are measured at the lower of acquisition or
manufacturing cost and net realizable value. The net
realizable value is the expected sales price less esti-
mated costs of completion and estimated costs to sell.
The acquisition or manufacturing costs of inventories
are generally based on the specific identification meth-
od and include costs incurred in acquiring the invento-
ries and bringing them to their present location and
condition. Acquisition or manufacturing costs for large
numbers of inventories that are interchangeable are
allocated under the average-cost formula.
Further Information
In addition, derivatives, including embedded deriva-
tives separated from the host contract, which are not
classified as hedging instruments in hedge accounting,
as well as shares and marketable debt securities ac-
quired for the purpose of selling in the short term that
are classified as held for trading, are included here.
Gains or losses on these financial assets are recognized
in profit or loss.
Useful lives of property, plant and equipment
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
10 to 50 years
5 to 25 years
3 to 30 years
In the subsequent measurement of a lease liability, the
carrying amount is increased to reflect interest on the
lease liability and reduced to reflect the lease pay-
ments made. According to IFRS 16, the depreciation of
right-of-use assets is recognized within functional
costs. The interest due on the lease liability is a com-
ponent of interest expense. Extension and termination
options are part of a number of leases particularly of
real estate. In determining the lease term, those op-
tions are only considered if their exercise reasonably
certain. During the term, these options are regularly
checked with regard to their probability of being exer-
cised.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
213
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
The Mercedes-Benz Group as lessor (equipment on
operating leases)
Based on the risks and rewards associated with a
leased asset, it is assessed whether economic owner-
ship of the leased asset is transferred to the lessee
(finance leases) or remains with the lessor (operating
leases).
For operating leases the economic ownership of the
vehicle remains at the Mercedes-Benz Group. Addition-
ally, an operating lease may have to be reported with
sales of vehicles for which the Group enters into a
repurchase obligation.
In the case of finance leases, the Group presents the
receivables under receivables from financial services in
an amount corresponding to the net investment of the
lease agreements. The net investment of a lease
agreement is the gross investment (future lease pay-
ments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.
Operating leases also relate to vehicles, primarily
Group products that Mercedes-Benz Mobility acquires
from non-Group dealers or other third parties and
leases to end customers. These vehicles are presented
at (amortized) cost of acquisition under equipment on
operating leases in the Mercedes-Benz Mobility seg-
ment. If these vehicles are Group products and are
subsidized and these subsidies are passed on in the
lease agreement with the external customer, the subsi-
dies are deducted from the acquisition cost. After rev-
enue is received from the sale to independent dealers,
these Group products generate revenue from lease
payments and subsequent resale on the basis of the
separate leasing contracts.
In the case of accounting as an operating lease, these
vehicles are capitalized at the (amortized) cost of pro-
duction under equipment on operating leases and are
depreciated over the contract term on a straight-line
basis with consideration of the expected residual val-
ues. Changes in the expected residual values lead ei-
ther to prospective adjustments of the scheduled de-
preciation or, if necessary, to an impairment loss. The
vehicles are allocated to the segment which bears sub-
stantially all of the residual-value risk.
As part of the residual-value management process,
especially for operating lease contracts, certain as-
sumptions are regularly made regarding the expected
level of prices, based upon which the cars to be re-
turned in the leasing business are evaluated. If chang-
ing market developments at the balance sheet date
lead to a negative deviation from previously estimated
assumptions, the residual value must be adjusted or an
impairment carried out. Depending on the region and
the current market situation, the risk-mitigation
measures taken generally include continuous market
monitoring as well as, if required, price-setting strate-
gies or sales-promotion measures designed to regulate
vehicle inventories. Market forecasts are verified by
regular comparisons of internal and external sources,
and, if required, the determination of residual values is
adjusted and further developed with regard to meth-
ods, processes and systems.
and the expected future market value (at the time of
repurchase) of the asset, or historical return rates.
A right-of-use asset is subsequently measured at cost
less any accumulated depreciation and, if necessary,
any accumulated impairment. If the lease transfers
ownership of the underlying asset to the lessee at the
end of the lease term or if the cost of the right-of-use
asset reflects that the lessee will exercise a purchase
option, the right-of-use asset is depreciated to the end
of the useful life of the underlying asset. Otherwise, the
right-of-use asset is depreciated to the end of the
lease term.
Lease payments are discounted at the rate implicit in
the lease if that rate can readily be determined. Other-
wise, discounting is at the incremental borrowing rate.
This incremental borrowing rate as a risk-adjusted in-
terest rate is derived on a maturity- and currency spe-
cific basis. As the cash flow pattern of the reference
interest rates (bullet bonds) does not correspond to
the cash flow pattern of a lease contract (annuity), a
duration adjustment in order to account for that differ-
ence is used.
The Mercedes-Benz Group generally also applies the
option for contracts comprising lease components as
well as non-lease components not to split these com-
ponents.
– contractual penalties for the termination of a lease if
the lease term reflects the exercise of a termination
option.
Leases include all contracts that transfer the right to
use a specified asset for a stated period of time in
exchange for consideration, even if the transfer of the
right to use such asset is not explicitly described in the
contract. The Group is a lessee mainly of real estate
properties and a lessor of its products.
The Mercedes-Benz Group as lessee
The Mercedes-Benz Group as a lessee recognizes for
generally all lease contracts right-of-use assets as well
as leasing liabilities for the outstanding lease pay-
ments. Variable lease payments that are not included in
the initial recognition of the right-of-use asset are rec-
ognized as an expense for the period.
The Mercedes-Benz Group applies both recognition
exemptions for leases with a lease term of twelve
months or less (short-term leases) and for leases for
which the underlying asset is of low value, not to rec-
ognize a right-of-use asset and a lease liability. The
lease payments associated with those leases are gen-
erally recognized as an expense on a straight-line basis
over the lease term.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Leasing
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Right-of-use assets, which are included under property,
plant and equipment, are initially recognized at cost.
The cost of a right-of-use asset comprises the amount
of the initial measurement of the lease liability, any
lease payments made at or before the commencement
date, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying
asset. All leasing incentives already received from the
lessor are deducted.
Lease liabilities, which are assigned to financing liabili-
ties, are measured initially at the present value of the
lease payments still to be made. The lease liabilities
include the following lease payments:
- fixed payments including de facto fixed payments
less lease incentives receivables from the lessor;
- variable lease payments linked to an index or interest
rate;
- amounts expected to be payable under residual-
value guarantees;
– the exercise price of purchase options, when exer-
cise is estimated to be reasonably certain, and
212
Financial liabilities measured at amortized cost
After initial recognition, financial liabilities are subse-
quently measured at amortized cost using the effec-
tive-interest method.
Financial assets at fair value through other
comprehensive income
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group applies the low-credit-risk
exception to the stage allocation to quoted debt in-
struments with investment-grade ratings. These debt
instruments are always allocated to stage 1.
Measurement of expected credit losses
Expected credit losses are measured in a way that
reflects:
a)
the unbiased and probability-weighted amount;
b)
the time value of money;
reasonable and supportable information (if availa-
ble without undue cost or effort) at the reporting
date about past events, current conditions and
forecasts of future economic conditions.
Expected credit losses are measured as the probabil-
ity-weighted present value of all cash shortfalls over
the expected life of each financial asset. For receiva-
bles from financial services, expected credit losses are
calculated using a statistical model with three major
risk parameters: probability of default, loss given de-
fault and exposure at default.
Financial assets and financial liabilities are offset and
the net amount is presented in the Consolidated
Statement of Financial Position provided that an en-
forceable right currently exists to offset the amounts
involved, and there is an intention either to carry out
the offsetting on a net basis or to settle a liability when
the related asset is sold.
Offsetting of financial instruments
Significant modification of financial assets (e.g. with a
change in the present value of the contractual cash
flows of 10%) also leads to derecognition of the finan-
cial assets with a simultaneous recognition of new
financial assets. If the terms of a contract are renegoti-
ated or modified and this does not result in derecogni-
tion of the contract, then the gross carrying amount of
the contract is recalculated and a modification gain or
loss is recognized in profit or loss.
Financial assets at fair value through other comprehen-
sive income are non-derivative financial assets with
contractual cash flows that consist solely of payments
of principal and interest on the nominal amount out-
standing and which are held to collect the contractual
cash flows as well as to sell the financial assets, e.g. to
achieve a defined liquidity target (business model "hold
to collect and sell"). This category also includes equity
instruments not held for trading for which the option to
recognize changes in the fair value of the instrument
within other comprehensive income has been applied.
A financial instrument is written off when there is no
reasonable expectation of recovery in whole or in part,
for example, after the end of insolvency proceedings or
after a court decision of uncollectibility.
scenario and pessimistic scenario). The impairment
amount for trade receivables is predominantly deter-
mined on a collective basis.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
220
To Our Shareholders
The estimation of these risk parameters incorporates
all available relevant information, not only historical
and current loss data, but also reasonable and sup-
portable forward-looking information reflected by fu-
ture expectations. This information includes macroeco-
nomic factors (e.g. gross domestic product growth,
unemployment rate, cost performance index) and fore-
casts of future economic conditions. For receivables
from financial services, these forecasts are performed
using a scenario analysis (basic scenario, optimistic
Contents
Annual Report 2023 | Mercedes-Benz Group
Financial liabilities
A financial asset is migrated to stage 2 if the asset's
credit risk has increased significantly compared to its
credit risk at initial recognition. The credit risk is as-
sessed based on the probability of default. For trade
receivables, the simplified approach is applied whereby
all trade receivables are allocated to stage 2 initially.
Hence, no determination of significant increases in
credit risk is necessary.
In stages 1 and 2, the effective interest revenue is cal-
culated based on gross carrying amounts. If a financial
asset becomes credit impaired in stage 3, the effective
interest revenue is calculated based on its net carrying
amount (gross carrying amount adjusted for any loss
allowance).
If a financial asset is defined as credit-impaired or in
default, it is transferred to stage 3. The expected credit
loss is recognized as an impairment measured over the
expected lifetime of the financial asset. Objective evi-
dence for a credit-impaired financial asset includes 91
days past due date and other information about signifi-
cant financial difficulties of the debtor.
Contents
To Our Shareholders
218
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
After initial measurement, financial assets at fair value
through other comprehensive income are recognized at
fair value, with unrealized gains or losses being recog-
nized in other comprehensive income/loss. Upon the
disposal of debt instruments, the accumulated gains
and losses recognized in other comprehensive in-
come/loss resulting from measurement at fair value are
recognized in profit or loss. Interest earned on financial
assets at fair value through other comprehensive in-
come is generally reported as interest income using the
effective-interest method. Changes in the fair value of
equity instruments measured at fair value through oth-
er comprehensive income are not recycled to profit or
loss, but reclassified to retained earnings upon dispos-
al. Dividends are recognized in profit or loss when the
right to payment has been established.
Financial assets at amortized cost
Financial assets at amortized cost are non-derivative
financial assets with contractual cash flows that consist
solely of payments of principal and interest on the
nominal amount outstanding and which are held with
the aim of collecting the contractual cash flows, such
as receivables from financial services, trade receiva-
bles or cash and cash equivalents (business model
"hold to collect"). After initial recognition, these finan-
cial assets at amortized cost are subsequently carried
at amortized cost using the effective-interest method
less any loss allowances. Gains and losses are recog-
nized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or
derecognized. Interest effects from the application of
the effective-interest method are also recognized in
profit or loss as well as effects from foreign currency
translation.
Cash and cash equivalents consist primarily of cash on
hand, cheques and demand deposits at banks, as well
as debt instruments and certificates of deposits with a
remaining term when acquired of up to three months,
which are not subject to any material value fluctua-
tions. Cash and cash equivalents correspond with the
classification in the Consolidated Statement of Cash
Flows.
The determination of whether a financial asset has
experienced a significant increase in credit risk is
based on an assessment of the probability of default,
which is made at least quarterly, incorporating external
credit rating information as well as internal information
on the credit quality of the financial asset. For debt
instruments that are not receivables from financial
services, a significant increase in credit risk is assessed
mainly based on past-due information or the probabil-
ity of default.
At each reporting date, an impairment is recognized for
financial assets, loan commitments and financial guar-
antees other than those to be measured at fair value
through profit or loss reflecting expected credit losses
for these instruments. Impairments are allocated using
a three stage approach to expected credit losses:
Stage 1: expected credit losses within the next twelve
months
Impairment of financial assets
Stage 2: expected credit losses over the lifetime - not
credit impaired
Stage 3: expected credit losses over the lifetime -
credit impaired
Stage 1 includes all contracts with no significant in-
crease in credit risk since initial recognition and usually
includes new acquisitions and contracts with fewer
than 31 days past due date. The portion of the lifetime
expected credit losses resulting from default events
possible within the next 12 months is recognized.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Further Information
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
If a financial asset has a significant increase in credit
risk since initial recognition but is not yet credit im-
paired, it is moved to stage 2 and measured at lifetime
expected credit loss, which is defined as the expected
credit loss that results from all possible default events
over the expected life of a financial asset.
219
229
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Liability and litigation risks and governmental
proceedings
Annual Report 2023 | Mercedes-Benz Group
Collectability of receivables from financial services
The Group regularly estimates the risk of default on
receivables from financial services (carrying amount as
of 31 December 2023: €88,211 million; 31 December
2022: €85,549 million). Many factors are taken into
consideration in this context including historical loss
experience, the size and composition of certain portfo-
lios, current economic events and conditions and the
current fair values and adequacy of collaterals. In addi-
tion to historical and current information on losses,
appropriate and reliable forward-looking information
on factors is also included. This information includes
macroeconomic factors (e.g. gross domestic product
growth, unemployment rate, cost performance index)
and forecasts of future economic conditions. For re-
ceivables from financial services, these forecasts are
performed using a scenario analysis (basic scenario,
optimistic scenario and pessimistic scenario). Further
external information which cannot be depicted in the
scenarios, is - as far as necessary - included in the
assessment through subsequent adjustments. Changes
to the estimation and assessment of these factors in-
fluence the allowance for credit losses with a resulting
impact on the Group's net profit.
Product warranties
The Group provides various types of product warran-
ties, depending on the type of product and market
conditions. Provisions for product warranties (carrying
amount as of 31 December 2023: €6,399 million;
31 December 2022: €6,576 million) are generally recog-
nized at the time of vehicle sale. In order to determine
the extent of these provisions, assumptions have to be
made concerning the type and extent of future warran-
ty claims and goodwill cases, as well as on possible
recall campaigns for each model series. These assess-
ments are based on experience of the frequency and
extent of vehicle faults and defects in the past. In addi-
tion, the estimates also include assumptions on the
amounts of potential repair costs per vehicle and the
effects of possible time or mileage limits. The provi-
sions are regularly adjusted to reflect new information.
Various legal proceedings, claims and governmental
investigations are pending against Mercedes-Benz
Group AG and its subsidiaries on a wide range of top-
ics. If the outcome of such legal proceedings is detri-
mental to the Mercedes-Benz Group, the Group may be
required to pay substantial compensatory and punitive
damages, to undertake service actions or recall cam-
paigns, to pay fines or to carry out other costly actions.
Litigation and governmental investigations often in-
volve complex legal issues and are connected with a
high degree of uncertainty. Accordingly, the assess-
ment of whether an obligation exists on the balance
sheet date as a result of an event in the past, and
whether a future cash outflow is likely and the obliga-
tion can be reliably estimated, largely depends on es-
timations by the management. The Mercedes-Benz
Group regularly evaluates the current stage of legal
proceedings, also with the involvement of external
legal counsel. It is therefore possible that the amounts
of provisions for pending or threatened proceedings
will have to be regularly restated due to new expected
developments. As of 31 December 2023, the carrying
amounts of provisions for liability and litigation risks
are €2,104 million (31 December 2022: €2,755 million).
Changes in estimates and assumptions can have a ma-
terial effect on the Group's future profitability, liquidity
and capial resources and financial position. It is also
possible that provisions recognized for some legal
proceedings may turn out to be insufficient once such
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
228
Combined Management Report
3. Consolidated Group
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
proceedings have ended. The Mercedes-Benz Group
may also become liable for payments in legal proceed-
ings for which no provisions were established. Although
the final resolution of any such proceedings could have
a material effect on the Mercedes-Benz Group's earn-
ings and cash flows for a particular reporting period,
from the current assessment, the Mercedes-Benz
Group does not expect this to result in any sustained
impact on the Group's financial position.
Notes to the Consolidated Financial Statements
Pensions and similar obligations
The calculation of provisions for pensions and similar
obligations and the related pension cost are based on
various actuarial valuations. The calculations are sub-
ject to various assumptions on matters such as current
actuarially developed probabilities (e.g. discount fac-
tors and cost-of-living increases), future fluctuations
with regard to age and period of service, and experi-
ence with the probability of occurrence of pension
payments, annuities or lump sums. As a result of
changed market or economic conditions, the probabili-
ties caused by the influencing factors may differ from
current developments. The financial effects of devia-
tions of the main factors are calculated with the use of
sensitivity analyses. As of 31 December 2023 provisions
for pensions and similar obligations are €1,090 million
(31 December 2022: €1,021 million).
Income taxes
The calculation of income taxes of Mercedes-Benz
Group AG and its subsidiaries is based on the legisla-
tion and regulations applicable in the various countries.
Due to their complexity, the tax items presented in the
Consolidated Financial Statements are possibly subject
to different judgements by taxpayers on the one hand
and local tax authorities on the other hand. Different
judgements can occur especially in connection with the
recognition and measurement of balance sheet items
as well as in connection with the tax assessment of
expenses and income. Carrying amount of liabilities for
income taxes as of 31 December 2023 are €2,421 mil-
lion (31 December 2022: €2,648 million).
Contents
Further Information
226
Corporate Governance
Composition of the Group
227
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group regularly reviews the factors
determining the values of its leased vehicles (carrying
amount as of 31 December 2023: €41,712 milllion;
31 December 2022: €41,552 million). In particular, it is
necessary to estimate the residual values of vehicles,
which constitute a substantial part of the expected
future cash flows from equipment on operating leases.
In this context, assumptions are made regarding major
influencing factors, such as the expected number of
returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are
determined either by qualified estimates or by publica-
tions provided by expert third parties. Qualified esti-
mates are based, as far as publicly available, on exter-
nal data with consideration of internally available addi-
tional information such as historical experience of price
developments and sale prices. The residual values thus
determined serve as a basis for depreciation; changes
in residual values lead either to prospective adjust-
ments of the depreciation or, in the case of a signifi-
cant decline in expected residual values, to an impair-
ment. If depreciation is prospectively adjusted, chang-
es in estimates of residual values do not have a direct
effect but are equally distributed over the remaining
term of the lease contract.
Recoverable amount of equipment on
operating leases
When objective evidence of impairment or impairment
reversal is present, estimates and assessments also
have to be made to determine the recoverable amount
of an equity-method investment. The determination of
the recoverable amount is based on assumptions re-
garding future business developments for the determi-
nation of the expected future cash flows of that in-
vestment. On the balance sheet date, the carrying
amount of equity-method investments was €13,104
million (31 December 2022: €13,530 million).
deriving the value in use. On the basis of the impair-
ment tests carried out in 2023, the recoverable
amounts are larger than the net assets of the Group's
cash-generating units.
In the context of impairment tests for non-financial
assets, estimates have to be made to determine the
recoverable amounts of cash-generating units. As-
sumptions have to be made in particular with regard to
future cash inflows and outflows for the planning peri-
od and the following periods. The estimates mainly
refer to future unit sales, growth in the respective mar-
kets and the profitability of the products, which are
also highly dynamic and thus uncertain as a result of
the transition to electric mobility. Therefore, a risk as-
sessment and sensitivity analyses are performed when
Recoverable amounts of cash-generating units and
equity-method investments
In the Consolidated Financial Statements, it is to a
certain degree necessary to make estimates and man-
agement judgements which can affect the amounts and
reporting of assets and liabilities, the reporting of con-
tingent assets and liabilities on the balance sheet date,
and the income and expense reported for the period.
The major items affected by such estimates and man-
agement judgements are described as follows. Actual
amounts may differ from the estimates. Changes in the
estimates and management judgements can have a
material impact on the Consolidated Financial State-
ments.
2. Accounting estimates and
management judgements
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
3
Combined Management Report
Corporate Governance
The recoverability of leased vehicles classified as oper-
ating leases is reviewed regularly. When determining
recoverability, the expected residual value of the
leased vehicles is particularly relevant. Due to the
transformation to all-electric vehicles, residual values
can be influenced by changing customer behavior, new
regulatory requirements and further technological de-
velopments. Although the currently expected residual
values of all-electric vehicles were lower than originally
expected, no significant impairment losses were re-
quired for conventionally powered or all-electric vehi-
cles in the reporting year.
The expected proceeds from the disposal of vehicles
pledged as collateral were taken into account in the
determination of expected credit losses for receivables
from financial services. The expected proceeds from
the disposal were based on an estimate of the market
value at the expected time of a possible default. There
were no indications of a reduction of these estimated
market values that could be traced to effects of climate
change or of changing customer behaviour as of the
reporting date.
In addition to traditional energy supply contracts,
which are usually only recorded as pending transac-
tions upon delivery, the Group has concluded contracts
to secure purchase quantities and prices for renewable
energies (in particular electricity from wind and solar
energy). These are contracts that provide for a fixed
remuneration per unit of energy and are mainly recog-
nized either as derivatives or leases.
Consolidated Financial Statements
The impairment test on the level of the cash-generating
units is based on the corporate planning and strategy
of the Mercedes-Benz Group. This provides for a step
by step substitution of vehicles with combustion en-
gines by electric vehicles.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
225
Further Information
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
For the purposes of the impairment test, further risks
(e.g. sales risks, price risks and risks regarding the fu-
ture price of raw materials) were also taken into ac-
count. Additional corporate planning parameters in
connection with the transformation affect the invest-
ment requirements and the currently higher variable
costs of all-electric vehicles in comparison with vehi-
cles with conventional powertrains. The simultaneous
development, model refinement and production of
electric and conventionally powered vehicles results in
a high investment requirement, particularly in the detail
planning period until 2028. No growth was assumed in
the derivation of the terminal value, due in part to the
not yet completely predictable effects of the competi-
tive situation and customer behaviour in the course of
the transition to electric mobility. The impairment test
carried out taking into account the transformation ef-
fects described did not result in any impairment re-
quirement for the cash-generating units.
At 31 December
2023
2
1
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Contents
To Our Shareholders
223
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss
when the curtailment or settlement occurs.
Further Information
Provisions are recognized when a obligation to third
parties has been incurred, an outflow of resources is
probable and the amount of the obligation can be rea-
sonably estimated. The amount recognized as a provi-
sion represents the best estimate of the obligation at
the reporting date. Provisions with an original maturity
of more than one year are discounted to the present
value of the expenditures expected to settle the obli-
gation at the end of the reporting period.
If the recognition criteria of provisions are not fulfilled
and the possibility of a cash outflow upon settlement is
not unlikely, the item is to be presented as a contingent
liability, insofar as it is adequately measurable. The
amount disclosed as a contingent liability represents
the best estimate of the possible obligation at the re-
porting date. Provisions and contingent liabilities are
regularly reviewed and adjusted as further information
becomes available or circumstances change.
A provision for expected warranty costs is recognized
when a product is sold or when a new warranty pro-
gramme is initiated. Estimates for accrued warranty
costs are particularly based on historical experience.
Other assumptions include, but are not limited to, the
amount of potential repair costs. The provisions are
regularly adjusted to reflect new information.
Restructuring provisions are set up in connection with
programmes that materially change the scope of busi-
ness performed by a segment or business unit or the
manner in which business is conducted. In most cases,
restructuring expenses include termination benefits
and compensation payments due to the termination of
agreements with suppliers and dealers. Benefits on
termination of employment are recognized when the
Group has a detailed formal plan that has either com-
menced implementation or been announced.
Contract and refund liabilities
Contract liabilities
A contract liability is an entity's obligation to transfer
goods or services to a customer for which the entity
has received consideration (or the amount is due) from
the customer.
Provisions for other risks
The discount factors used to calculate the present
values of defined benefit pension obligations are to be
determined - with maturities and currencies matching
the pension payments - by reference to market yields
at the end of the reporting period on high-quality fixed-
rate corporate bonds in the respective markets. For
very long maturities, there are no high-quality corpo-
rate bonds available as a benchmark. The respective
discount factors are estimated by extrapolating current
market rates along the yield curve.
The balance of defined benefit commitments for pen-
sions and other post-employment benefit obligations
and plan assets (net pension obligation or net pension
assets) accrues interest at the discount rate used as a
basis for the measurement of the gross pension obliga-
tion. The resulting net interest expense or income is
recognized in profit and loss under interest expense or
interest income in the Consolidated Statement of In-
come. The other expenses resulting from pension
commitments and other post-employment benefit obli-
gations, which mainly result from entitlements acquired
during the year under review, are taken into considera-
tion in functional costs in the Consolidated Statement
of Income. Differences between the assumptions made
and actual developments as well as changes in actuari-
al assumptions for the measurement of defined benefit
plans and similar obligations result in actuarial gains
and losses, which are recognized in equity through
other comprehensive income.
The measurement of defined benefit commitments for
pensions and other similar post-employment benefits
(healthcare benefits) in accordance with IAS 19 Em-
ployee Benefits is based on the projected unit-credit
method. Plan assets invested to cover defined benefit
pension commitments and other post-employment
benefit obligations are measured at fair value and off-
set against the corresponding obligations.
Under IFRS 9, for cash flow hedges in procurement
transactions expected with a high degree of probabil-
ity, designation can be made for separable risk compo-
nents of these non-financial hedged items.
Under IFRS 9, with cash flow hedges, amounts recog-
nized in other comprehensive income as effective
hedging gains or losses from hedging instruments are
removed from the reserves for derivative financial in-
struments and directly included in the initial cost or
carrying amount of the hedged item at initial recogni-
tion if the hedged item, e.g. the forecast transaction,
results in the recognition of a non-financial asset or
non-financial liability.
For other cash flow hedges, the accumulated hedging
gains or losses from hedging instruments are reclassi-
fied from the reserves for derivative financial instru-
ments to the Consolidated Statement of Income when
the hedged item affects profit or loss. Insofar as cur-
rency translation effects recognized in profit or loss
due to trade receivables and payables are connected
with the underlying hedged transactions, simultaneous-
ly occurring hedging gains/losses are reclassified in the
Consolidated Statement of Income.
The ineffective portions of fair-value changes are rec-
ognized directly in profit or loss.
For derivative instruments designated in a hedge rela-
tionship, certain components can be excluded from
designation and the changes these components' fair
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
222
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
value are then deferred in other comprehensive income
under IFRS 9. This may apply for example to the time
value of options, the forward element of a forward
contract or cross-currency basis spreads.
Hedge relationships are to be discontinued prospec-
tively if a particular hedge relationship ceases to meet
the qualifying criteria for hedge accounting under IFRS
9. Instances that require discontinuation of hedge ac-
counting are, among others, changes to the designated
hedged item, loss of the economic relationship be-
tween the hedged item and the hedging instrument,
disposal or termination of the hedging instrument, or a
revision of the documented risk-management objective
of a particular hedge relationship. Accumulated hedg-
ing gains and losses from cash flow hedges are re-
tained and are reclassified from equity as described at
maturity if the hedged future cash flows are still ex-
pected to occur. Otherwise, accumulated hedging gains
and losses are immediately reclassified to profit or
loss.
If derivative financial instruments do not or no longer
qualify for hedge accounting because the qualifying
criteria for hedge accounting are not or are no longer
met, the derivative financial instruments are classified
as held for trading and are measured at fair value
through profit or loss.
Pensions and similar obligations
A refund liability occurs if the Mercedes-Benz Group
receives consideration from a customer and expects to
refund some or all of that consideration to the custom-
er. A refund liability is measured at the amount of con-
sideration received for which the Mercedes-Benz
Group does not expect to be entitled and is thus not
included in the transaction price.
Share-based payment
Share-based payment comprises cash-settled liability
awards.
Liability awards are measured at fair value at each
balance sheet date until settlement and are classified
as provisions under consideration of vesting condi-
tions. The profit or loss of the period equals the addi-
tion to and/or the reversal of the provision during the
reporting period and the dividend equivalent paid dur-
ing the period, and is included in functional costs.
To Our Shareholders
Combined Management Report
International
Germany
Joint operations, joint ventures,
associated companies accounted
for at (amortized) cost and
substantial other investments
recognized at fair value
Germany
International
7
7
4
3
11
10
Associated companies accounted for
using the equity method
5
5
2022
International
Contents
Effects from hedging are presented in the item of the
Statement of Income in which the underlying transac-
tion is effective.
Annual Report 2023 | Mercedes-Benz Group
In the context of production network management,
efforts are also being made to secure sites affected by
the transformation by enhancing them. No significant
obligations to dismantle or remove production facilities
and plants that would give rise to a provision existed
on the reporting date.
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Contents
To Our Shareholders
224
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Presentation in the Consolidated Statement
of Cash Flows
Cash-effective government grants are shown in cash
flow from operating activities. In addition, interest paid
as well as interest and dividends received are allocated
to cash flow from operating activities. To the extent
that the reverse factoring agreements entered into by
the Mercedes-Benz Group do not result in a change in
the presentation of the original trade payables, the
cash flows from these agreements are also presented
in cash flow from operating activities. Furthermore all
cash flows of receivables from financial services in the
Consolidated Statement of Cash Flows are also classi-
fied as cash flow from operating activities.
The cash flows from short-term marketable debt secu-
rities with high turnover rates and significant amounts
are offset and presented within cash flow from invest-
ing activities.
Consideration of sustainability related aspects in
connection with the recognition and measurement
of assets and liabilities
With "Ambition 2039" the Mercedes-Benz Group has
set itself the target of net carbon-neutrality¹ for the
new vehicle fleet by 2039 in its business strategy. The
Mercedes-Benz Group is aiming to shape the transfor-
mation into a software-driven and all-electric future.
The Group is creating the necessary conditions to be-
come all-electric. The pace of the transformation is
determined by market conditions and the wishes of
customers. Recognition and measurement of the
Group's assets and liabilities take into account climate-
related risks and developments associated with the
transformation, which also include the climate targets
set in the Paris Climate Agreement.
Accounting estimates and management judgements in
connection with sustainability-related aspects are tak-
en into consideration in particular in the accounting of
assets and liabilities described below:
The determination and review of the useful lives of the
capitalized development costs are based on the ex-
pected product life cycle. Changes in the originally
envisaged product life cycles can result from the trans-
formation to all-electric vehicles. Due to the resolu-
tions regarding the accelerated transformation new
developments in the area of conventional powertrains
are reduced and already capitalized development ex-
penditure will partly be used for longer.
In the same way, the useful lives of property, plant and
equipment assets are regularly reviewed in the light of
the transformation to all-electric vehicles. This did not
require any material adjustments of the useful lives up
to the reporting date as the production facilities of the
Group are basically flexible in use.
1 Net carbon-neutral means that no CO2 emissions are created or any resulting CO2
emissions are offset by certified compensation projects.
Changes in fair value of non-designated derivatives are
recognized in profit or loss. For fair-value hedges,
changes in the fair value of derivative financial instru-
ments and the hedged item are recognized in profit or
loss. For cash flow hedges, fair-value changes in the
effective portion of derivative financial instruments are
recognized after tax in other comprehensive income.
Refund liabilities
If the requirements for hedge accounting set out in
IFRS 9 are met, the Mercedes-Benz Group designates
37
Unconsolidated subsidiaries
Germany
International
Joint operations accounted for
using proportionate consolidation
Germany
International
1
-
1
1
Joint ventures accounted for
using the equity method
7
8
Germany
The valuation and sale and the transfer of the Mer-
cedes-Benz Mobility companies resulted in net ex-
penses of €184 million in 2022 (excluding transaction
The Group received €2,355 million from the (in the
prior year partially still preliminary) purchase prices in
2022, including the repayment of the existing intra-
Group financing liabilities of the companies and busi-
ness activities within the Mercedes-Benz Group.
In addition, in individual countries, investments in op-
erating entities or business operations of the former
commercial vehicle business were sold to external third
parties in 2022. Assets of €149 million and liabilities of
€106 million, mainly allocated to the Mercedes-Benz
Cars segment, were disposed of on or before 31 De-
cember 2022.
37
The initially remaining financial services of the Daimler
commercial vehicle business were sold to Daimler
Truck Holding AG or its subsidiaries in 2022. At the
Mercedes-Benz Mobility segment, assets of €3,191 mil-
lion and liabilities of €746 million were disposed of on
or before 31 December 2022.
27
64
The overall number of subsidiaries has decreased
slightly. Consolidated subsidiaries and an equity-
method associated company were established for the
charging activities of electric vehicles. The main dis-
posals are described in the following sections.
and documents the hedge relationship from the date a
derivative contract is entered into as a fair-value
hedge, a cash flow hedge or a hedge of a net invest-
ment in a foreign business operation. In a fair-value
hedge, the changes in the fair value of a recognized
asset or liability or an unrecognized firm commitment
are hedged. In a cash flow hedge, highly probable fu-
ture cash flows from expected transactions or variable
cash flows to be paid or received related to a recog-
nized asset or liability are hedged. The documentation
of the hedging relationship includes the objectives and
strategy of risk management, the type of hedging rela-
tionship, the nature of the risk being hedged, the iden-
tification of the eligible hedging instrument and the
eligible hedged item, as well as an assessment of the
effectiveness requirements comprising the risk mitigat-
ing economic relationship, the absence of deteriorating
effects from credit risk and the appropriate hedge ra-
tio. The effectiveness of the hedge is assessed at the
start of and during the hedging relationship.
The structured entities of the Group are mainly asset-
backed-securities (ABS) companies and special funds.
The ABS companies are primarily used for the Group's
refinancing. The receivables transferred to structured
entities usually result from the leasing and sales-
financing business. Those entities refinance the pur-
chase price by issuing securities. The special funds are
set up in particular in order to diversify the capital-
investment strategy.
At the reporting date, the Group has business relation-
ships with 34 (2022: 33) controlled structured entities,
of which all are fully consolidated. In addition, as in the
previous year the Group has relationships with one
non-controlled structured entity.
Composition of the Group
The following table shows the composition of the
Group. A detailed list of the companies included in the
Consolidated Financial Statements and of the equity
investments of the Mercedes-Benz Group pursuant to
Section 313 of the German Commercial Code (HGB) is
provided in the statement of investments. Further in-
formation is provided in Note 41.
The aggregate totals in the statement of financial posi-
tion of the subsidiaries, associated companies, joint
ventures and joint operations accounted for at amor-
tized cost whose business is non-active or of low vol-
ume and which are not material for the Group and the
fair presentation of its profitability, liquidity and capital
resources, and financial position would amount at most
1% of the Group's total assets; the aggregate revenue
and the aggregate net profit would amount at most 1%
of the Group's revenue and net profit.
Germany
International
Consolidated subsidiaries
251
262
50
48
201
214
63
26
With the completion of the spin-off and hive-down of
the Daimler commercial vehicle business substantial
parts of the former Daimler commercial vehicle busi-
ness including the associated financial services busi-
ness were deconsolidated on 9 December 2021.
Structured entities
Total
11
13
16
24
29
Sale of Daimler's commercial vehicle business
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Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
221
Further Information
Contracts for the purchase or sale of non-financial
items are regularly qualified as executory contracts and
thus treated as suspended transactions, although they
fulfil the definition of a derivative. If such contracts do
not meet the criteria for executory contracts they are
recorded as derivatives. These derivatives are meas-
ured at fair value through profit or loss. The valuation
effects are reported in the functional costs, in which
the consumption of the procured non-financial items
(e.g. energy) is reported.
Embedded derivatives are principally separated from
the host contract and recognized separately. However,
embedded derivatives are not separated from the host
contract if that host contract is a financial asset, if the
Mercedes-Benz Group chooses to measure a hybrid
contract at fair value through profit or loss, or if the
embedded derivative is closely related to the host
contract.
Derivative financial instruments are measured at fair
value upon initial recognition and at each subsequent
reporting date. The fair value of listed derivatives is
equal to their positive or negative market value. If a
market value is not available, fair value is calculated
using standard financial valuation models such as dis-
counted cash flow or option-pricing models. Deriva-
tives are recognized as assets if their fair value is posi-
tive and as liabilities if their fair value is negative.
361
370
13
Contents
The transaction costs amounted to €3 million. After
realizing the currency reserve of €291 million, a loss on
disposal of €205 million resulted. This was reported in
other operating expenses. Expenses of €276 million
were attributable to the Mercedes-Benz Mobility seg-
ment; the Mercedes-Benz Cars and Mercedes-Benz
Vans segments generated income of €66 million and
€5 million, respectively.
The assets of €976 million disposed of with the decon-
solidation essentially include property, plant and
equipment of €290 million and receivables from finan-
cial services of €280 million. In addition, cash and cash
equivalents of €91 million are included. The disposed
liabilities of €1,065 million include in particular provi-
sions of €636 million and financing liabilities of €347
million. The Group had issued a global guarantee for
the financing liabilities to financial institutions, which
ended when the transaction was completed. The con-
tingent liabilities reported as of 31 December 2022 in
connection with the cessation of business activities in
Russia were also derecognized upon completion of the
transaction.
The sale of the Russian subsidiaries resulted in no
significant cash inflow. This led to a cash outflow in the
amount of the disposed cash and cash equivalents of
€91 million, which is mainly attributable to the Mer-
cedes-Benz Mobility segment.
With the closing of the transaction on 19 April 2023, the
shares of Russian subsidiaries were deconsolidated.
As of 31 December 2022, completion of the transaction
was still subject to authorities' approval and the im-
plementation of the contractually agreed conditions.
Annual Report 2023 | Mercedes-Benz Group
A degree of discretion has been exercised in the con-
sideration and subsequent derivation of the effects of
the sanctions and counter-sanctions on the business
activities.
On 2 March 2022, the Mercedes-Benz Group decided
to stop exporting cars and vans to Russia and to cease
local production in Russia until further notice. At the
end of October 2022, the Mercedes-Benz Group signed
contracts with the Russian car dealer Avtodom AO for
the sale of the shares in the Russian subsidiaries.
The recognition and valuation of the assets and liabili-
ties due to the discontinuation of the business activi-
ties in Russia, in particular the processing of existing
transactions, resulted in expenses of around €0.7 bil-
lion in the automotive segments in 2022. Total expens-
es of around €0.2 billion resulted from the measure-
ment of credit default risks and increased refinancing
expenses in the segment Mercedes-Benz Mobility. The
bulk of the expenses were included in cost of sales.
Shares in subsidiaries
Further Information
230
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Sale of the shares in the Russian subsidiaries
40,879
1,744
44,214
Revenue according to IFRS 15
Other revenue
5,125
109,795
2,961
5,722
1,599
25,216
80
6,955
7,401
6,955
7,401
110,432
19,944
17,017
86
-9
3,594
44,223
4,281
11,242
5,252
6,361
35,554
35,171
-250
-82
35,304
35,089
39,759
42,996
985
1,091
142
136
40,886
-7
11,796
111,601
139,245
159,762
-6,544
-5,755
153,218
150,017
1 The reconciliation includes eliminations of intra-Group revenue between the segments.
Annual Report 2023 | Mercedes-Benz Group
26,954
Contents
234
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
5. Functional costs
Cost of sales
To Our Shareholders
26,718
17,217
20,288
-3,994
-3,237
136,987
136,008
1,169
344
200
15,476
15,158
18,781
16,527
-2,550
-2,518
16,231
14,009
Total revenue
112,756
140,981
26,021
Annual Report 2023 | Mercedes-Benz Group
Asia
232
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Shares in associated companies
Sale of interests in Mercedes-Benz Grand Prix Ltd.
To Our Shareholders
In the fourth quarter of 2021, the Mercedes-Benz
Group signed the contractual agreements with Motor-
sports Invest Ltd. and INEOS Industries Holdings Ltd.
on the sale of shares of Mercedes-Benz Grand Prix Ltd.
Some of the agreements concluded already took effect
in 2021. When the other agreements became effective
in January 2022, the Group lost control over Mercedes-
Benz Grand Prix Ltd. and included the remaining 33.3%
interest in the company in the Consolidated Financial
Statements using the equity method. The sale of the
shares resulted in other operating income of
4. Revenue
Revenue in 2023 was slightly above the previous year's
level. The increase in revenue was primarily due to
higher unit sales and improved pricing at the Mer-
cedes-Benz Vans segment. Revenue in the Mercedes-
Benz Cars segment was also higher, primarily due to a
further improvement in pricing. However, negative
exchange-rate effects had an opposing effect, causing
a reduction in revenue.
Revenue disclosed in the Consolidated Statement of
Income includes revenue from contracts with custom-
ers, which are in the scope of IFRS 15 (revenue accord-
ing to IFRS 15), and other revenue not in the scope of
IFRS 15. The composition of the revenue in the Consol-
idated Statement of Income is shown by region in Note
34.
Revenue according to IFRS 15 is disaggregated by the
two categories - type of products and services and
geographical regions. The category type of products
and services corresponds to the reported segments.
Revenue according to IFRS 15 includes revenue that
was included in contract liabilities at 31 December
2022 in an amount of €2,903 million (2022: €2,965
million) and revenue from performance obligations fully
(or partially) satisfied in previous periods in an amount
of €467 million (2022: €442 million). Revenue related
to performance obligations that were unsatisfied (or
partially unsatisfied) by the end of the reporting period
that is expected to be recognized within three years
amounted to €6,663 million at 31 December 2023
(2022: €6,437 million). This revenue is mainly derived
from long-term service and maintenance contracts and
extended warranties. It does not include performance
obligations from customer contracts that have initial
expected durations of one year or less. The number of
vehicles, for which the expected original delivery time
will exceed twelve months, was immaterial and is
therefore not part of the disclosed amount. Long-term
performance obligations of minor importance to the
overall contract value of a bundled contract are not
considered in assessing the initial duration of the bun-
dled contract.
Annual Report 2023 | Mercedes-Benz Group
Contents
€385 million in the Mercedes-Benz Cars segment in the
first quarter of 2022. The purchase price payment
agreed for 2023 resulted in a cash inflow of
€144 million.
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group sold its subsidiaries in In-
donesia to a local investor with effect from 29 Septem-
ber 2023. The sale of both companies resulted in an
income of €89 million and a cash inflow of €140 million
which are allocated to the Mercedes-Benz Cars seg-
ment. Assets decreased by €141 million and liabilities
by €88 million as a result of deconsolidation.
Cost of sales
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
231
Further Information
costs), which were reported in the reconciliation in the
segment reporting. Income of €32 million was realized
for the operating investments and business activities
disposed of in 2022, in particular in the Mercedes-Benz
Cars segment. In total, expenses from the realization of
the currency reserve of €58 million were recognized.
In 2023 there were no significant effects on the profit-
ability, liquidity and capital resources, and financial
position.
Sale of foreign retail activities and other
sales companies
Agreements on the sale of further sales activities in
other European countries were concluded in 2023. The
disposals are to take place successively over the
course of 2024. The criteria for classification as assets
and liabilities held for distribution or sale are met as of
31 December 2023. The assets of €0.8 billion and liabil-
ities of €0.2 billion are therefore reported as assets
and liabilities held for sale in the Consolidated State-
ment of Financial Position of 31 December 2023 in
accordance with IFRS 5. Of the assets, €0.7 billion is
attributable to the Mercedes-Benz Cars segment and
€0.1 billion to the Mercedes-Benz Vans segment. As-
sets mainly comprise inventories of €0.3 billion, prop-
erty, plant and equipment of €0.2 billion and trade
receivables of €0.1 billion. The liabilities, which are
almost entirely attributable to the Mercedes-Benz Cars
segment, mainly include financing liabilities to financial
institutions of €0.1 billion.
In January 2024, the Group divested its retail activities
in Italy. There were no significant effects on the profit-
ability, liquidity and capital resources, and financial
position.
The sales company in Greece and other dealers in
Europe were already sold in the course of 2023. The
disposals resulted in income of €186 million. The cash
inflow amounted to a total of €315 million. The effects
are mainly allocated to the Mercedes-Benz Cars seg-
ment.
In addition, further retail activities in various countries,
in particular those allocated to the Mercedes-Benz
Cars segment, were sold in 2022. The disposals result-
ed in income of €107 million and cash inflows of
€362 million.
In December 2021, the contractual arrangements on
the sale of the retail activities in Canada were conclud-
ed. The transaction became effective in February 2022
and the Group recognized other operating income of
€514 million, which was mainly allocated to the Mer-
cedes-Benz Cars segment. The cash inflow amounted
to €608 million and was also mainly allocated to the
Mercedes-Benz Cars segment. Parts of the purchase
price were financed by Mercedes-Benz Financial Ser-
vices in Canada and led to a cash outflow of
€393 million at the Mercedes-Benz Mobility segment.
Sale of Indonesian sales and production entities
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
2022
2023
2022
Europe
38,890
36,498
12,934
10,733
5,762
5,219
57,586
52,450
-3,737
-3,146
53,849
49,304
North America
2023
Other markets
2022
2022
Notes to the Consolidated Financial Statements
Other revenue primarily comprises revenue from the
rental and leasing business of €10,870 million (2022:
€10,973 million), interest from the financial services
business at Mercedes-Benz Mobility recognized using
the effective-interest method in an amount of €5,161
million (2022: €4,533 million) and effects from currency
hedging. Interest from the financial services business
includes financial income on the net investment in
leases of €1,027 million (2022: €783 million).
Revenue
In millions of euros
233
Further Information
Mercedes-Benz Cars
Mercedes-Benz Vans
Mercedes-Benz Mobility
Total segments
Reconciliation¹
Mercedes-Benz Group
2023
2022
2023
2022
2023
2023
In millions of euros
155,772
2022
1,326
-18
1,379
-3,413
2,368
-3,939
3,465
-2,533
2023
-29
201
431
-4,116
78
-4,709
175
Miscellaneous liabilities, mainly liabilities
Other Provisions
Provisions for pensions and similar obligations
Tax-loss carryforwards and unused tax credits
-2,591
795
-2,178
360
15,332
-201
Unrecognized deferred tax assets
-507
2,728
-407
3,267
-221
802
-461
886
-2,940
178
-2,832
152
368
386
-687
4,615
-1,583
4,396
-1,549
Miscellaneous assets, mainly other financial assets
Receivables from financial services
Inventories
Equipment on operating leases
The following table shows a reconciliation of expected
income tax expense to actual income tax expense in
the financial year. In order to determine the expected
income tax expense, the German combined statutory
tax rate of 29.825% applicable in the financial year is
multiplied by the profit before taxes.
The current tax expense includes tax benefits recog-
nized for prior periods at German and foreign compa-
nies of €341 million (2022: €504 million).
-262
-5,495
-5,553
18
carryforwards and tax credits
Deferred taxes due to tax-loss
287
-227
Deferred taxes due to temporary differences
-5,495
-5,553
Actual income tax expense
25
-5,520
-5,344
-209
Deferred taxes
Current taxes
-211
-446
Other
Tax-free income and non-deductible expenses include
all reconciling items of German and foreign companies
relating to tax-free income and non-deductible ex-
penses, e.g. tax-free results of the equity-method in-
vestments. The increase compared to the previous year
is due, among other things, to the increase in tax-free
equity-method earnings in 2023.
-18,718
The other items include, among other things, effects
from withholding taxes on dividends, patents and li-
censes which increased compared to the prior year.
In respect of each type of temporary difference and in
respect of each type of unutilized tax-loss carryfor-
wards and unutilized tax credits at 31 December, the
deferred tax assets and liabilities presented in the
Consolidated Statement of Financial Position before
offset are summarized in the following table.
Property, plant and equipment
Intangible assets, mainly development costs
Deferred tax Deferred tax Deferred tax Deferred tax
assets liabilities
assets liabilities
2022
At 31 December
2023
At 31 December
In millions of euros
Split of deferred tax assets and liabilities
The Mercedes-Benz Group believes that it is more like-
ly than not that it will be unable to utilize those de-
ferred tax assets.
A large proportion of the unrecognized deferred tax
assets relates to tax-loss carryforwards for state and
local taxes at the US companies as well as temporary
differences.
Thereof, €67 million relates to tax-loss carryforwards
which can be carried forward indefinitely, €12 million
relates to tax-loss carryforwards which expire by the
year 2028 and €4 million relates to tax-loss carry-
forwards and tax credits which can be carried forward
by the year 2043.
Further Information
238
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
At 31 December 2023, unrecognized deferred tax as-
sets in the Consolidated Statement of Financial Posi-
tion relate, among other things, to corporate income
tax-loss carryforwards and tax credits of €83 million.
Deferred tax assets and deferred tax liabilities are off-
set if the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority and
if there is the right to set off current tax assets against
current tax liabilities. In the presentation of deferred
tax assets and liabilities in the Consolidated Statement
of Financial Position, no difference is made between
current and non-current.
393
13,024
-214
Intangible assets developed as shown on the following
page.
10. Intangible assets
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
As a result of future adjudications or changes in the
opinions of the fiscal authorities, it cannot be ruled out
that the Mercedes-Benz Group might receive tax re-
funds for previous years. In particular, from 2012 to
2021, Mercedes-Benz Group AG incurred currency ex-
change-rate related losses from the financing of Group
companies based abroad totalling €2.1 billion, which
were compensated by corresponding hedging instru-
ments. For the years until 2021, the German tax author-
ities consider that exchange-rate related losses from
the financing of Group companies are generally not to
be recognized, while the compensating profits from the
hedging activities remain taxable. In 2021, the German
Modernization of Corporate Income Tax Act stipulated
that such exchange-rate losses are generally deducti-
ble. However, this only applies from 2022 onwards. The
Company does not share the legal opinion represented
by the tax authorities for the years up to 2021. In the
meantime, a lawsuit has also been filed with the Fi-
nance Court.
The Group has various unresolved issues concerning
open tax years. The Mercedes-Benz Group believes
that it has recognized adequate liabilities for any future
income taxes that may be owed for all open tax years.
Nevertheless, it cannot be ruled out that tax payments
might exceed the liabilities recognized in the financial
statements.
At 31 December 2023, goodwill of €389 million (2022:
€389 million) relates to the Mercedes-Benz Mobility
segment, goodwill of €335 million (2022: €337 million)
relates to the Mercedes-Benz Cars segment and good-
will of €21 million (2022: €23 million) relates to the
Mercedes-Benz Vans segment.
From the current perspective, the retained earnings of
non-German subsidiaries are largely intended to be
reinvested in those operations. The Group did not rec-
ognize deferred tax liabilities on retained earnings
which are intended to be reinvested at non-German
subsidiaries of €27,529 million (2022: €27,469 million).
If those earnings were paid out as dividends, an
amount of 5% would be taxed under German taxation
rules and, if applicable, with non-German withholding
tax. Additionally, other income tax consequences might
arise if the dividends first have to be distributed by a
non-German subsidiary to a non-German holding com-
pany. Normally, the distribution would lead to an addi-
tional income tax expense. Estimating the amount of
taxable temporary differences for these undistributed
foreign earnings would require a disproportionate ef-
fort.
1 The other changes primarily relate to changes due to the effects of currency transla-
tion.
-3,185
-3,587
net as of 31 December
Deferred tax assets/deferred tax liabilities,
-167
Other changes¹
201
benefit pension plans included in other
comprehensive income/loss
-1,240
-285
Non-amortizable intangible assets primarily relate to
goodwill and development costs for projects which
have not yet been completed (carrying amount at 31
December 2023: €6,131 million; 2022: €4,496 million).
The increase in capitalized development costs is mainly
due to development services for the new platform
generations geared to electromobility. In addition, oth-
er intangible assets with a carrying amount of €262
million (2022: €190 million) are not amortizable. These
non-amortizable intangible assets are distribution
rights in the vehicle segments with indefinite useful
lives. The Group plans to continue to use these assets
unchanged.
The following table shows the line items of the Consol-
idated Statement of Income in which total amortization
expense for intangible assets is included.
Amortisation expense for intangible assets
in the Consolidated Statement of Income
Further Information
240
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
2,409
2,471
21
16
development costs
Research and non-capitalized
69
67
General administrative expenses
54
49
Selling expenses
2,265
2,339
2022
2023
Cost of sales
In millions of euros
Change in deferred tax assets/liabilities on
actuarial gains/losses from defined
-688
-218
Change in deferred tax assets/liabilities on
derivative financial instruments included in
other comprehensive income/loss
Contents
Annual Report 2023 | Mercedes-Benz Group
-3,185
-3,587
Deferred tax assets/deferred tax liabilities, net
-6,910
3,725
-7,714
4,127
Balance sheet amounts of deferred tax assets and liabilities (balanced)
-15,995
12,810
-18,718
15,131
Deferred tax assets and liabilities (unbalanced)
-191
-172
thereof on tax-loss carryforwards and tax credits
-23
-29
thereof on temporary differences
To Our Shareholders
-15,995
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
44
-6
other comprehensive income/loss
Change in deferred tax assets/liabilities on
debt instruments included in
13
-3
Change in deferred tax assets/liabilities on
equity instruments included in other
comprehensive income/loss
25
-209
Consolidated Statement of Income
Deferred tax expense/benefit in the
-1,054
-3,185
Deferred tax assets/deferred tax liabilities,
net as of 1 January
2022
In millions of euros
2023
Changes in deferred tax assets/deferred tax liabilities, net
The development of deferred tax assets and deferred
tax liabilities, net, is shown in the following table.
Further Information
239
Corporate Governance
622
-367
-16
Other miscellaneous expense
576
285
Income from company transactions
-214
-207
Loss from deconsolidation
-138
-60
plant and equipment
83
139
not relating to sales financing
-249
Rental income
771
29
plant and equipment
Gains on sales of property,
In millions of euros
63
59
Government grants
2022
2023
1,258
1,131
Income from costs recharged
Losses on sales of property,
Other operating expense
-937
563
In millions of euros
2022
2023
In millions of euros
Interest income and interest expense
2022
2023
Other financial income/expense, net
The following table shows the components of interest
income and interest expense.
The following table shows the components of other
financial income/expense, net.
8. Interest income and
interest expense
7. Other financial income/expense
Notes to the Consolidated Financial Statements
Other miscellaneous income
Further Information
Corporate Governance
Combined Management Report
236
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The decrease in other operating expense was primarily
due to lower expenses in connection with ongoing
official and legal proceedings and measures relating to
Mercedes-Benz diesel vehicles. They are included in
other miscellaneous expense.
Income from costs recharged to third parties includes
IT and logistics costs as well as other costs recharged
to third parties, with related expenses primarily within
functional costs.
3,323
2,206
-1,289
-516
572
Consolidated Financial Statements
In 2022, the valuation and disposal of operating invest-
ments and business activities of the Mercedes-Benz
Mobility segment's commercial vehicle business
included net expense of €184 million (excluding
transaction costs), which was reported in the
reconciliation.
The loss of €205 million from the deconsolidation of
the shares in the Russian subsidiaries booked in other
operating expense in 2023 is mainly attributable to the
Mercedes-Benz Mobility segment.
Other miscellaneous expense also includes expenses
from hyperinflation accounting and other operating ex-
pense charged to third parties.
Personnel expenses included in the Consolidated
Statement of Income for 2023 amounted to
€16,633 million (2022: €16,501 million). Personnel ex-
penses comprise wages and salaries in the amount of
€13,848 million (2022: €13,684 million), social-security
contributions in the amount of €2,376 million (2022:
€2,239 million) and expenses from pension obligations
in the amount of €409 million (2022: €578 million).
Personnel expenses and average
number of employees
Research and non-capitalized development costs were
€6,230 million in 2023 (2022: €5,602 million) and pri-
marily comprise personnel expenses and material
costs.
Research and non-capitalized
development costs
General administrative expenses amounted to €2,688
million in 2023 (2022: €2,584 million). They consist of
expenses which are not attributable to production,
sales or research and development functions, and in-
clude personnel expenses, depreciation and amortiza-
tion of fixed and intangible assets, and other adminis-
trative costs.
General administrative expenses
In 2023, selling expenses amounted to €9,728 million
(2022: €9,482 million). Selling expenses consist of di-
rect selling costs as well as selling overhead expenses
and comprise personnel expenses, material costs and
other selling costs.
Selling expenses
The amortization expense of capitalized development
costs in the amount of €2,139 million (2022: €2,052
million) is presented in expense of goods sold.
In 2023, the cost of sales were primarily affected by
expenses paid to suppliers due to additional costs
relating to inflation and supply chains. In contrast,
lower raw material prices had a positive impact on the
cost of sales. Refinancing costs at Mercedes-Benz Mo-
bility are rising due to higher interest rates compared
to the previous year. In the prior year, cost of sales
were impacted by expenses in connection with the
discontinuation of the business activities in Russia.
-536
-5,853
-115,997
-118,839
-5,793
The average number of people employed in the report-
ing year are shown in the following table.
Other cost of sales
from financial services
Impairment losses on receivables
-1,863
-3,226
Mercedes-Benz Mobility
Refinancing costs at
on operating leases
Depreciation of equipment
-100,385
-102,416
Expense of goods sold
-7,360
-7,022
-382
Average number of employees 1,2
2023
2022
The composition of other operating expense is shown
as follows.
The decrease in other operating income in 2023 was
mainly due to the income from the sale of the retail
activities in Canada (€514 million) reported in the com-
parative period. It is included in gains on sales of prop-
erty, plant and equipment. In addition, income from
corporate transactions in connection with the sale of
the shares in Mercedes-Benz Grand Prix Ltd. was in-
cluded in 2022 (€385 million).
2022
2023
In millions of euros
Other operating income
The composition of other operating income is shown
in the following table.
6. Other operating income
and expense
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
235
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Average number for the active workforce including holiday workers.
2 With the implementation of the European Sustainability Reporting Standards as of
2024, the number of employees becomes a further criterion for the inclusion of an
entity within the scope of consolidation. The average number of employees of non-
consolidated subsidiaries is 15,448 employees. They will therefore be included within
the scope of consolidation from the year 2024, but are not included in the above figure.
3 Proportionally including 2,345 (2022: 2,107) employees from a proportionately consoli-
dated company.
171,382
168,336
4,469
4,539
9,724
9,945
19,247
19,179
137,942
134,673
3
Mercedes-Benz Cars³
Income and expense from
compounding and effects from
Mercedes-Benz Vans
Mercedes-Benz Mobility
Central Functions & Services
Interest income
Annual Report 2023 | Mercedes-Benz Group
Miscellaneous other financial income/expense mainly
includes net income (previous year: net expenses) from
the measurement of financial assets and liabilities.
-427
-254
-212
Interest and similar expense
-60
-42
Net interest expense on the net obligation
from defined benefit pension plans
Interest expense
340
108
-142
368
income/expense, net
273
678
Miscellaneous other financial
261
646
Interest and similar income
-255
-106
Expense from equity instruments
12
32
Net interest income on the net assets of
defined benefit pension plans
Contents
To Our Shareholders
237
Combined Management Report
changes in discount rates of
Change of unrecognized deferred tax assets
including write-down of deferred tax assets
Tax-free income and non-deductible expenses
2022
2023
87
27
Tax-law changes
Components of income tax expense
-22
12
Trade tax-rate differential
311
238
192
Foreign tax-rate differential
-5,990
Expected income tax expense
2022
2023
In millions of euros
Reconciliation of expected income tax expense to actual income tax
expense
In millions of euros
tax expense.
The following table shows the components of income
9. Income taxes
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
-6,056
283
Due to the global increase in interest rates, net interest
income/expense improved in 2023.
provisions for other risks
Income from equity instruments
545
-437
Annual Report 2023 | Mercedes-Benz Group
2022
2023
2022
12,378
2,271
12,539
726
991
1,934
-142
-202
13,104
2,129
13,530
2023
1,732
BBAC
2023
2022
2023
2022
2023
Other
2022
Total
2023
2022
30.7
30.0
Daimler Truck³
41,712
2022
2023
Contents
To Our Shareholders
245
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
13. Equity-method investments
Summarized carrying amounts and gains/losses on equity-method investments
In millions of euros
Equity-method carrying amount¹
Equity-method gains/losses¹
1 Including investor-level adjustments.
Key figures on interests in associated companies accounted for using the equity method
In millions of euros
Equity interest (in %)
Stock-market price¹
Equity-method carrying amount²
Equity-method gains/losses²
1 Proportionate stock-market prices.
2 Including investor-level adjustments.
3 The information on the amount of the share (in %) in the year 2023 represents the share relevant for accounting purposes as of the reporting date.
Associated
companies
Joint
ventures
Total
1 Primarily changes from currency translation and in 2023 reclassifications to Assets held
for sale.
2 The additions include €8,353 million that were not acquired from external dealers.
7,149
Non-current liabilities
Current assets
Associated companies
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
246
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1,934
2,271
-3
17
1,711
1,457
226
797
12,539
12,378
1,367
1,375
2,973
2,578
8,199
49.0
8,401
Daimler Truck
The Daimler Truck Group is one of the world's largest
commercial vehicle manufacturers. Its product portfo-
lio comprises light-, medium- and heavy-duty trucks,
city buses and intercity buses, coaches and bus chas-
sis. In addition financial services aligned to the product
portfolio are offered. The investment is reported in the
reconciliation of the reportable segments of the Group.
The result in financial year 2023 amounted to
€797 million (2022: €226 million). In 2022, the earnings
included income of €59 million from the contribution of
approximately 5% of the shares in Daimler Truck to the
Mercedes-Benz Pension Trust.
41,552
Information on the statement of financial position and reconciliation to the equity-method carrying amounts
Non-current assets
Total comprehensive income/loss
Other comprehensive income/loss
Profit after taxes
Revenue
Information on the statement of income
In millions of euros
Summarized IFRS financial information on significant associated companies accounted for using the equity method
The following table shows summarized aggregated
financial information according to IFRS for the signifi-
cant associated companies accounted for using the
equity method after purchase price allocation, which
was the basis for equity-method accounting in the
Group's Consolidated Financial Statements.
Notes to the Consolidated Financial Statements
Further Information
49.0
Consolidated Financial Statements
8,425
Corporate Governance
247
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The strategic repositioning led to a reassessment of the
business development of HERE in the second quarter
of 2023. Due to this THBV recognized an impairment on
the carrying amount of HERE. The proportionate ex-
penses attributable to the Group from the impairment
of €92 million are included in the line item gains/losses
on equity-method investments and reported in the
Mercedes-Benz Cars segment.
As part of a strategic realignment and refinancing of
HERE, the Mercedes-Benz Group, along with other
shareholders of the associated company THBV, con-
tributed additional equity of €118 million into THBV
through Mercedes-Benz AG in the first half of 2023.
The capital increases led to a corresponding increase in
the equity-method carrying amount. The funds from
the capital injection were transferred by THBV to HERE
in order to increase HERE's liquidity.
There Holding B.V. (THBV) owns shares of HERE Inter-
national B.V. (HERE). HERE is one of the world's largest
manufacturers of digital road maps for navigation sys-
tems. The high-resolution maps provide one of the
foundations for autonomous driving. THBV is account-
ed for as an associated company in the Consolidated
Financial Statements of Mercedes-Benz Group AG
using the equity method and is assigned to the
Mercedes-Benz Cars segment.
There Holding B.V.
The Mercedes-Benz Group plans to contribute addi-
tional equity of approximately €0.2 billion in accord-
ance with the shareholding ratio at BBAC.
In the second quarter of 2023, the shareholders of
BBAC resolved the distribution of a dividend of €903
million. A further distribution of €767 million was re-
solved in the fourth quarter of 2023. The distributions
reduced the shareholding's carrying amount and
caused a cash inflow of €1,595 million.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz cars and spare parts in
China. The investment and the proportionate share in
the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
Beijing Benz Automotive Co., Ltd.
With the approval of the Supervisory Board, the Board
of Management of Daimler Truck resolved a share buy-
back programme on 10 July 2023. The acquisition of the
treasury shares on the stock exchange began on 2 Au-
gust 2023. During the share buyback programme, the
Mercedes-Benz Group did not sell any of its Daimler
Truck shares. The shareholding remains unchanged
30.00%, while a shareholding of 30.66% is assumed for
the development of the equity-method carrying
amount as of 31 December 2023. In June 2023, the
Annual General Meeting of Daimler Truck resolved a
dividend of €1.30 per share. The distribution led to a
cash inflow of €321 million and reduced the carrying
amount of the investment accordingly.
Combined Management Report
Carrying amount at 31 December 2022
Carrying amount at 31 December 2023
5,390
Other changes¹
27,250
2,726
7,898
343
6,594
31
2,169
26,090
2,318
1 Mainly relates to changes due to currency translations, changes in the scope of consolidation and reclassification to the balance sheet item Assets held for sale.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
244
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
12. Equipment on operating
leases
The development of equipment on operating leases is
shown in the table Equipment on operating leases.
The carrying amount of the equipment on operating
leases includes leased right-of-use assets from recog-
nized head leases with the Daimler Truck Group of
€0.3 billion (2022: €0.5 billion).
The revenue received from the sale of Group products
to external dealers is estimated by the Group as being
of the magnitude of the respective addition to leased
equipment at Mercedes-Benz Mobility. These vehicles
generate revenue from lease payments and subse-
quent resale on the basis of the separate leasing con-
tracts. In 2023, additions to leased equipment from
these vehicles at Mercedes-Benz Mobility amounted
to approximately €10 billion (2022: approximately
€9 billion).
At 31 December 2023, equipment on operating leases
with a carrying amount of €8,187 million was pledged
as security for liabilities from ABS transactions (2022:
€9,663 million). These liabilities related to a securitiza-
tion transaction of future lease payments on leased
vehicles (see also Note 24).
Equipment on operating leases
In millions of euros
Disposals
1,500
34
6,901
451
-722
-2,336
-180
Other changes¹
Balance at 31 December 2023
-258
-77
-117
-269
-2
41
-603
-79
Acquisition/manufacturing costs
8,965
15,536
484
23,691
54
58
48,250
2,199
Carrying amount at 31 December 2022
10,228
Carrying amount at 31 December 2023
9,429
2,241
1,944
8,621
1,661
Balance at 31 December 2023
Balance at 1 January 2022
Lease payments
13,136
Between three and four years
1,116
861
7,360
Between four and five years
284
222
Disposals
-6,341
Later than five years
146
122
Other changes¹
319
Total lease payments
17,092
16,072
Balance at 31 December 2022
14,474
Additions
7,022
Disposals
-8,006
-382
13,108
Other changes¹
2,170
2,547
Between two and three years
Depreciation/impairment
Balance at 1 January 2022
Additions
Maturities of lease payments under operating lease
agreements to be paid by lessees to the Mercedes-
Benz Group in the future, are as follows:
Additions
17,263
Disposals
-20,200
Other changes¹
Maturity of undiscounted lease payments for
1,356
equipment on operating leases
Balance at 31 December 2022
Additions2
56,026
21,124
57,607
At 31 December
2023
Reclassifications
-1
In millions of euros
-21,766
-563
Maturing
Balance at 31 December 2023
54,820
Within one year
7,565
7,307
Between one and two years
5,434
2022
-13
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
-1,289
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
243
Further Information
Land, land rights
and buildings,
including buildings
thereof
right-of-use
assets
Combined Management Report
thereof
from leasing
Technical
equipment
and machinery
right-of-use Other equipment,
assets
from leasing
factory and
office equipment
thereof
right-of-use Advance payments
on land owned by others
assets and construction
In millions of euros
To Our Shareholders
24
27
Cash outflows related to lessee accounting
2023
2022
In millions of euros
Total cash outflow
for lease contracts
Property, plant and equipment
765
Future cash outflows that are not
reflected in the lease liabilities
4,144
1,985
Further information on lessee accounting is provided in
Notes 24 and 33.
Annual Report 2023 | Mercedes-Benz Group
Contents
625
lease payments
from leasing
Total
Other changes¹
-550
-186
-360
-4
3,480
497
2,983
-14
23,924
19,155
894
Disposals
Additions
Balance at 1 January 2022
Acquisition/manufacturing costs
Total
Other intangible assets
(acquired)
3,875
in progress
-45
-49
thereof
right-of-use
assets
from leasing
Acquisition/manufacturing costs
Balance at 1 January 2022
-1,109
-331
-776
10
-2
4,513
701
3,812
26,805
4,196
21,733
876
Balance at 31 December 2022
Additions
Expenses from variable
11
11
2,061
348
2,409
-1
-317
-68
-386
-2
8,919
-6
-6
127
8,196
2,613
10,936
2,152
319
2,471
2
-727
2,331
130
-10
-142
-152
Balance at 31 December 2023
864
24,769
4,424
30,057
6,458
Depreciation/impairment
Additions
Disposals
Other changes¹
Balance at 31 December 2022
Additions
Disposals
Other changes¹
Balance at 31 December 2023
Balance at 1 January 2022
-173
-900
-8
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
Expenses related to lessee accounting
2023
2022
11. Property, plant and equipment
Combined Management Report
In millions of euros
In 2023, government grants of €69 (2022: €96) million
were deducted from the carrying amount of property,
plant and equipment.
The following tables show additional disclosures relat-
ed to lessee accounting.
Interest expense from
lease transactions
Expenses from
short-term leases
57
54
17
20
Expenses from leases of
low-value assets
Property, plant and equipment as shown in the Consol-
idated Statement of Financial Position with a carrying
amount of € 26,090 (2022: €27,250) million also in-
cludes right-of-use assets, that the Group received as
lessee. Property, plant and equipment, including right-
of-use assets, developed as shown on the following
page.
242
To Our Shareholders
Contents
-1
-34
-43
119
9,620
2,725
12,464
Carrying amount at 31 December 2022
749
13,537
1,583
15,869
Carrying amount at 31 December 2023
745
15,149
1,699
17,593
1 Mainly relates to changes due to currency translations, changes in the scope of consolidation, reclassifications and reclassification to the balance sheet item Assets held for sale.
2 Including capitalized borrowing costs on development costs of €113 million (2022: €79 million). Amortization amounted to €12 million (2022: €9 million).
Annual Report 2023 | Mercedes-Benz Group
Development costs
(internally generated)²
Goodwill
(acquired)
Further Information
241
Depreciation/impairment
Balance at 1 January 2022
8,407
1,226
14,518
162
22,177
50
4,517
45,102
Additions
814
482
1,631
134
1,658
21
18
1,438
4,121
74,340
85
-2,808
-322
Other changes¹
-805
-234
-198
-4
-387
2,227
-2
-1,365
-240
Balance at 31 December 2023
18,394
3,605
23,434
827
30,285
25
637
Reclassifications
7
295
22,882
50
17
46,985
1,793
Additions
757
15,295
450
196
1,800
19
4,204
665
Disposals
-325
-160
1,647
1,448
8,791
Balance at 31 December 2022
-7
Disposals
-361
-244
-851
-3
-1,045
-21
-1
-2,258
-268
Other changes¹
-69
-16
-10
2
99
20
-14
-105
-7
-16
-7
695
228
1,394
20
1,467
4,344
923
Reclassifications
675
Disposals
893
972
-2,030
-879
-490
-988
-4
-1,186
165
-21
788
72,961
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
In millions of euros
Intangible assets
Contents
4,149
Annual Report 2023 | Mercedes-Benz Group
Additions
18,952
3,547
23,335
517
28,479
85
2,195
Current liabilities
-130
-3,183
-515
1
1,135
19
1,937
4,187
469
Reclassifications
138
570
549
551
-1,147
91
91
Disposals
-503
-299
-1,403
91
449
545
Additions
Other changes¹
-7
-43
-19
5
124
15
113
-38
Balance at 31 December 2022
19,019
3,689
23,916
746
29,783
84
1,517
74,235
4,519
-797
Equity (including non-controlling interests)
Disposals
Unrealized profit (-)/loss (+) on sales to/purchases from
12,296
19,305
302
836
1,138
439
890
1,329
38,885
-416
50,381
-639
38,469
49,742
89,266
-1,055
88,211
37,834
48,913
86,747
-522
-676
-1,198
37,312
48,237
85,549
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
7,009
250
19,525
6,744
Sales financing with dealers.
Finance lease contracts
Residual-value receivables
Gross carrying amount
Loss allowances
Net carrying amount
At 31 December
At 31 December
2023
2022
Current Non-current
Total
Current Non-current
Total
17,578
14,261
31,940
49,518
19,188
32,223
51,411
4,824
19,085
11,198
3,504
14,702
12,781
Sales financing with customers
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
between four and five years
949
1,044
later than five years
223
212
Unguaranteed residual values
3,922
3,663
Gross investment
21,638
Unearned finance income
-2,113
21,089
-1,784
Gross carrying amount
19,525
19,305
Loss allowances
Net carrying amount
-291
-454
19,234
18,851
Information on credit risks included in receivables from
financial services is shown in the table Credit risks
included in receivables from financial services.
Longer overdue periods regularly lead to higher loss
allowances.
1,776
Corporate Governance
1,925
2,699
Further Information
The following table shows the maturities of the future
contractual lease payments and the development of
lease payments to the carrying amounts of receivables
from finance lease contracts.
Development of the receivables from finance lease contracts
In millions of euros
At 31 December
2023
2022
Loss allowances
The loss allowances for receivables from financial ser-
vices due to expected credit losses are shown in the
table Development of loss allowances for receivables
from financial services due to expected credit losses.
The carrying amounts of receivables from financial
services based on modified contracts that are shown in
stages 2 and 3, amounted to €463 million at 31 Decem-
ber 2023 (2022: €223 million). In addition, carrying
amounts of €86 million in connection with contractual
modifications were reclassified at 31 December 2023
from stages 2 and 3 into stage 1 (2022: €135 million).
At the beginning of the contracts, collaterals of usually
at least 100% of the carrying amounts were agreed,
which are backed by the vehicles based on the under-
lying contracts. Over the contract terms, the amounts
of the collaterals are included in the calculation of the
risk provisioning, so the net carrying amounts of the
credit-impaired contracts are essentially backed by the
underlying vehicles.
Further information on loss allowances, financial risks
and types of risks is provided in Note 33.
Contractual future lease payments
17,716
17,426
thereof due
within one year
6,455
6,527
between one and two years
5,515
5,168
Credit risks
between two and three years
2,649
between three and four years
In millions of euros
Equity (excluding non-controlling interests) attributable to the Group
At 31 December 2023, receivables from financial ser-
vices with a carrying amount of €11,139 million (2022:
€11,931 million) were pledged mostly as collateral for
liabilities from ABS transactions (see also Note 24).
37,559
32,371
7,839
9,361
26,275
22,451
920
1,122
22,749
21,150
7,499
8,592
28,029
27,727
5,924
6,748
8,331
8,107
2,903
3,306
-321
-332
94
92
-4
7,101
-1
6,504
39,494
Receivables from financial services
Equity-method carrying amount
1 Figures for the statement of income relate to the period of 1 January to 31 December.
Figures for the statement of financial position and the reconciliation to the equity-method carrying amounts relate to the balance sheet date of 31 December and include investor level adjustments.
2023
Daimler Truck¹
2022
BBAC¹
2023
2022
55,890
50,945
22,484
24,820
3,971
2,763
2,999
3,649
-622
1,320
-2
52
3,349
4,083
2,997
3,701
38,957
8,425
Other reconciliation effects including equity-method goodwill and impairments on the investment
2,578
13
-213
-193
-60
-8
2
-47
-221
-193
-11
-55
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
249
Other changes¹
Further Information
14. Receivables from financial
services
Types of receivables
Receivables from sales financing with customers in-
clude receivables from credit financing for non-Group
third parties who purchased their vehicle either from a
dealer or directly from the Mercedes-Benz Group.
Receivables from sales financing with dealers repre-
sent loans for floor financing programmes for vehicles
purchased from the Mercedes-Benz Group. In addition,
these receivables also relate to the financing of other
assets that the dealers purchased from third parties, in
particular used vehicles or property.
Receivables from finance lease contracts consist of
receivables from leasing contracts for which all sub-
stantial risks and rewards incidental to the leasing ob-
jects are transferred to the lessee.
8,199
2
2022
In 2023, the Mercedes-Benz Group recognized a gain of
€538 million (2022: €177 million) from the difference
between the additions to receivables from finance
lease contracts and the carrying amounts of the under-
lying assets.
2022
2023
2,973
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
248
Combined Management Report
Corporate Governance
Further Information
Joint ventures
YOUR NOW Holding GmbH
YOUR NOW Holding GmbH (YOUR NOW) is a com-
pany based in Munich, Germany and is assigned to
the Mercedes-Benz Mobility segment. The purpose
of YOUR NOW Holding is to hold shares in mobility
service providers.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
€117 million (2022: €102 million).
Joint ventures
In 2023, YOUR NOW's gains/losses on equity-
method investments include impairments of
Unrecognized losses
Total comprehensive income/loss
Other comprehensive income/loss
Profit/loss after taxes
Associated companies
2023
In millions of euros
Summarized aggregated financial information on minor equity-method investments
Further information on equity-method investments
is provided in Note 37.
The following table shows summarized aggregated
financial information for the other minor equity-
method investments after purchase-price allocation
and on a pro-rata basis.
Summarized aggregated financial information (pro rata)
-54
-7
-11
4
-25
4
2
-4
-2
-
-77
6
-55
-16
-22
-25
-23
-21
-12
-4
-11
8
10
-38
-36
257
37
9
(Stage 3)
(Stage 2)
credit impaired
not credit impaired
Total
Lifetime expected credit loss
In millions of euros
Credit risks included in trade receivables
Information on credit risks included in trade receivables
is shown in the following table. Further information on
financial risk and types of risk is provided in Note 33.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Credit risks
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Including the part of the gross carrying amount that was reclassified to the Assets held for sale item of the Consolidated Statement of Financial Position.
190
141
120
104
70
-3
At 31 December
2023 1
1
credit
impaired
not
Total
Lifetime expected credit loss
In millions of euros
Development of loss allowances for trade receivables due to expected credit losses
credit losses for trade receivables is shown in the fol-
lowing table.
The development of loss allowances due to expected
Loss allowances
Notes to the Consolidated Financial Statements
Further Information
credit
impaired
Consolidated Financial Statements
Combined Management Report
256
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
bles mature after more than one year (2022: €48 mil-
lion).
At 31 December 2023, €33 million of the trade receiva-
8,100
7,281
Net carrying amount
At 31 December
Corporate Governance
(Stage 2)
(Stage 3)
2023 1
119
77
87
51
32
26
145
190
89
120
56
70
Balance at 31 December
Exchange-rate effects and other effects
Transfer to stage 3
Transfer to stage 2
Reversals
Utilisation
Remeasurement changes
Additions
Balance at 1 January
2022
2023 1
2022
2022
2
At 31 December
To Our Shareholders
20231
Treasury shares
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
259
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
No use was made of this authorization to issue con-
vertible and/or warrant bonds during the reporting
period.
In order to fulfil the conditions of the above-mentioned
authorization, the Annual General Meeting on 8 July
2020 also resolved to increase the share capital condi-
tionally by an amount of up to €500 million (Condition-
al Capital 2020).
-
and/or non-cash contributions, in particular for shares
in other companies. The terms and conditions of the
bonds can include warranty obligations or conversion
obligations. The bonds can be issued once or several
times, wholly or in instalments, or simultaneously in
various tranches as well as by subsidiaries of the Com-
pany within the meaning of Sections 15 et seq. of the
German Stock Corporation Act (AktG). Among other
things, the Board of Management was also authorized
to exclude shareholders' subscription rights for the
bonds under certain conditions and within defined
limits subject to the consent of the Supervisory Board.
Conditional capital
No use has been made of the Approved Capital 2018,
for which the authorization period ended on 4 April
2023, and no use has been made of the Approved Cap-
ital 2023 to date.
The Annual General Meeting held on 3 May 2023 au-
thorized the Board of Management again to increase
the share capital by up to a total of €1.0 billion by
2 May 2028 with the approval of the Supervisory Board
against cash and/or non-cash contributions (Approved
Capital 2023). The authorization enables the exclusion
of shareholders' subscription rights under certain con-
ditions and within defined limits subject to the consent
of the Supervisory Board.
Approved capital
The number of shares outstanding decreased by
29 million shares to 1,041 million shares as at 31 De-
cember 2023, compared to 31 December 2022 (1,070
million shares) due to the share buyback programme
that has been running since March 2023. The number
of shares outstanding had remained unchanged at
1,070 million between 1 January 2022 and 31 December
2022.
The number of shares issued on 31 December 2023
was 1,070 million, the same as on 31 December 2022
and unchanged since 1 January 2022.
The share capital (authorized capital) is €3,070 million
at 31 December 2023, unchanged compared to 31 De-
cember 2022. It is still divided into 1,070 million no-
par-value shares. All shares are fully paid up. Each no-
par-value share confers the right to one vote at the
Annual General Meeting of Mercedes-Benz Group AG
and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal por-
tion of the profits as defined by the dividend distribu-
tion decided upon at the Annual General Meeting. Each
share represents a proportionate amount of approxi-
mately €2.87 of the share capital.
Share capital
20. Equity
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
issue convertible and/or warrant bonds or a combina-
tion of these instruments ("bonds") with a total face
value of up to €10.0 billion and a maturity of no more
than ten years. The Board of Management is allowed to
grant the holders of these bonds conversion or warrant
rights for new registered no-par-value shares in Mer-
cedes-Benz Group AG with an allocable portion of the
share capital of up to €500 million in accordance with
the details defined in the terms and conditions of the
bonds. The bonds can be offered in exchange for cash
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
acquire treasury shares in a volume up to 10% of the
share capital issued as of the day of the resolution or
- if this is lower of the share capital existing at the
time of the authorization being exercised, to be used
for all permissible purposes. The shares can be used,
among other things, with the exclusion of shareholders'
subscription rights, for business combinations or to
acquire companies or to be sold to third parties for
cash at a price that is not significantly lower than the
stock-exchange price of the Company's shares. The
acquired shares can also be used to fulfil obligations
from issued convertible bonds and/or bonds with war-
rants and to be issued to employees of the Company
and employees and board members of the Company's
subsidiaries pursuant to Sections 15 et seq. of the
German Stock Corporation Act (AktG). The treasury
shares can also be cancelled.
In a volume up to 5% of the share capital issued as of
the day of the resolution of the Annual General Meet-
ing, the Board of Management is authorized, with the
consent of the Supervisory Board, to acquire treasury
shares also by using derivatives (put options, call op-
tions, forward purchases or a combination of these
instruments), whereby the term of a derivative must
not exceed 18 months and must not end later than 7
July 2025.
Share buyback programmes
For the 2022 financial year, in accordance with the
adjusted proposal for the appropriation of profits, the
Annual General Meeting resolved that €5,556 million
(€5.20 per no-par-value share entitled to a dividend)
be distributed to the shareholders from the distributa-
ble profit and the portion of €7 million from the distrib-
utable profit attributable to the 1.3 million treasury
shares not entitled to dividends held by Mercedes-
Benz Group AG at the time of the 2023 Annual General
Meeting be allocated to retained earnings.
posed for allocation to retained earnings is attributable
to 28.9 million treasury shares not entitled to dividends
held directly or indirectly by the company on 31 De-
cember 2023. As the number of treasury shares held
directly or indirectly by the Company will change be-
fore the Annual General Meeting due to the ongoing
share buyback programme, a proposal for a corre-
spondingly adjusted resolution will be submitted to the
Annual General Meeting. With an unchanged dividend
of €5.30 per no-par-value share entitled to a dividend
the portion of the distributable profit to be transferred
into retained earnings and the total distribution amount
will be adjusted accordingly.
Under the German Stock Corporation Act (AktG), the
dividend is paid out of the distributable profit reported
in the Annual Financial Statements of Mercedes-Benz
Group AG (parent company only) in accordance with
the German Commercial Code (HGB). The management
will propose to the shareholders at the Annual General
Meeting the payment of €5,517 million of the distribut-
able profit of Mercedes-Benz Group AG for the 2023
financial year as a dividend to the shareholders,
equivalent to €5.30 per no-par-value share entitled to
a dividend and the transfer of €532 million to retained
earnings. A portion of €153 million of the amount pro-
Dividend
In other comprehensive income/loss 2023,
gains/losses on equity-method investments that will
not be reclassified to profit/loss in the statement of
income includes a loss of €10 million (2022: gain of
€289 million) from effects of remeasuring of defined
benefit plans.
Retained earnings comprise the accumulated net prof-
its and losses of all companies included in Mercedes-
Benz Group's Consolidated Financial Statements, less
any profits distributed. In addition, the remeasuring of
defined benefit plans and the corresponding effects
arising from equity-method investments and the re-
spective related deferred taxes are presented within
retained earnings.
Retained earnings
Capital reserves primarily comprise premiums arising
on the issue of shares as well as expenses relating to
the exercise of the up to 2014 exercisable stock option
plans and the issue of employee shares, effects from
changes in ownership interests in consolidated entities
and directly attributable related transaction costs.
Capital reserves
In the first quarter of 2023, as in the previous year,
Mercedes-Benz Group AG purchased 0.9 million shares
of Mercedes-Benz Group AG for the employee share
purchase plan pursuant to Section 71 Subsection 1 No.
2, of the German Stock Corporation Act (AktG). The
purchase was carried out without utilizing the authori-
zation to acquire treasury shares granted by the Annual
General Meeting on 8 July 2020. The shares, which
were reissued to group employees, were purchased for
a price of €66 million and represented €2.7 million or
0.09% of the share capital (2022: 0.7 million shares of
Mercedes-Benz Group AG representing €1.9 million or
0.06% of the share capital were purchased for a price
of €48 million).
Employee share purchase plan
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
260
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Future share buyback programmes are subject to the
necessary resolutions of the company's corporate bod-
ies required in each individual case.
In this context, Mercedes-Benz Group AG moreover
has resolved to conduct a further share buyback pro-
gramme, through which it is intended to acquire own
shares worth up to €3 billion (not including incidental
costs) on the stock exchange and to then cancel them.
The further share buyback programme will be based on
the authorization by the Annual General Meeting of
Mercedes-Benz Group AG on 8 July 2020, authorizing
the Board of Management to acquire, with the approval
of the Supervisory Board, own shares up to a maximum
of 10% of the share capital until 7 July 2025. It is
scheduled to commence immediately after the conclu-
sion of the ongoing share buyback programme an-
nounced on 16 February 2023, and is expected to be
completed before the expiry of the Annual General
Meeting's above-mentioned authorization.
to fund share buybacks with the purpose of redeeming
shares.
On 21 February 2024, Mercedes-Benz Group AG has
resolved to implement a share buyback policy. Based
on such policy, the future Free Cash Flow from the
industrial business (as available post potential small-
scale M&A) generated beyond the approximately 40%
dividend payout ratio of Group net profit shall be used
From March to December 2023, as part of the share
buyback programme, 29 million of the Company's own
shares were repurchased at a purchase price of €1,887
million, representing €83 million or 2.70% of the share
capital. The purchase price was recorded under treas-
ury shares together with a liability of €369 million for
buyback obligations.
On the basis of the authorization to acquire the Com-
pany's own shares given by the Annual General Meeting
on 8 July 2020, the Board of Management, with the
approval of the Supervisory Board, resolved a share
buyback programme on 16 February 2023. The acquisi-
tion of treasury shares worth up to €4 billion (not in-
cluding incidental costs) on the stock exchange over a
period of up to two years began on 3 March 2023. The
repurchased shares are to be cancelled at a later date.
Mercedes-Benz Group AG has separately agreed with
Beijing Automotive Group Co., Ltd. and Geely Group
that they will each keep their share in all voting shares
of Mercedes-Benz Group AG below 10% by divesting
their shares on a pro-rata basis concurrently with the
share buyback programme.
Corporate Governance
Combined Management Report
258
-190
6,732
5,367
41
2
6,691
5,365
8,290
7,559
367
110
7,923
7,449
past due more than 180 days
past due 91 to 180 days.
past due 61 to 90 days
past due 31 to 60 days
past due 30 days and less
not past due
thereof
Gross carrying amount
2022
20231
2022
20231
2022
1,108
At 31 December At 31 December At 31 December
659
1,108
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Including the part of allowances that was reclassified to the Assets held for sale item of the Consolidated Statement of Financial Position.
415
482
282
77
133
405
147
189
39
30
108
159
108
189
1
108
188
224
224
224
224
664
5
-138
425
8,290
1,507
Total
Current Non-current
Total
Current Non-current
2022
2023
At 31 December
At 31 December
Further Information
253
1,507
Other receivables and miscellaneous other financial assets
Other financial assets recognized
used in hedge accounting
Derivative financial instruments
recognized at fair value through other comprehensive income
recognized at fair value through profit or loss
Equity instruments and debt instruments
In millions of euros
Other financial assets
At 31 December 2023, other financial assets included
receivables with a carrying amount of €450 million
(2022: €461 million) that were pledged as collateral for
liabilities.
The line item other financial assets presented in the
Consolidated Statement of Financial Position is com-
prised as shown in the following table. Further infor-
mation on other financial assets is provided in Note 32.
The marketable debt securities and similar investments
amount to €6,858 million (2022: €7,060 million). When
a short-term liquidity requirement is covered with
quoted securities, those securities are presented as
current assets. Further information on marketable
debt securities and similar investments is provided in
Note 32.
at fair value through profit or loss
1,439
1,439
649
3,445
902
2,543
3,425
1,096
2,329
584
142
442
347
115
232
2,463
1,995
468
2,660
1,622
1,038
768
768
858
858
671
671
649
16. Other financial assets
3,599
15. Marketable debt securities and
similar investments
Corporate Governance
239
52
537
658
631
806
83,521
85,767
268
254
3,061
1,516
5,442
80,071
86,747
89,266
1,618
1,278
4,277
7,109
80,852
80,879
2022
2023
80,192
1,407
2
20
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
598
527
598
527
425
335
425
335
266
365
42
60
215
305
9
530
756
46
50
464
704
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Loss allowances
4,340
3,453
2022
At 31 December
2023
In millions of euros
Inventories
Inventories are comprised as shown in the following
table.
18. Inventories
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
255
ered or settled after more than twelve months amount-
ed to €812 million at 31 December 2023 (2022:
€724 million) and are related primarily to finished
goods.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
6,149
1,677
4,472
6,056
1,583
4,473
1,025
264
761
690
Contents
To secure obligations from partial retirement and long-
term working accounts, a number of company cars
and demonstration vehicles included in inventories of
Mercedes-Benz AG in the amount of €1,195 million is
pledged as collateral to Mercedes-Benz Pension Trust
e.V. as of 31 December 2023 (2022: €854 million). The
increase in carrying amount is due to the significantly
higher inventory levels as well as the on average more
expensive vehicle prices.
19. Trade receivables
Trade receivables are primarily receivables from con-
tracts with customers within the scope of IFRS 15 and
are shown in the following table.
7,419
Gross carrying amount
The amount of write-down of inventories to net realiza-
ble value recognized as an expense in cost of sales was
€620 million in 2023 (2022: €543 million). The carrying
amounts of inventories that are expected to be recov-
Inventories increased compared to 31 December 2022
due to the introduction of the direct sales model in
additional markets and ramp-ups in production due to
new model years. Additionally the finished goods in-
clude, on average, more expensive vehicles.
25,621
27,294
163
357
Advance payments to suppliers
19,058
21,216
products held for resale
Finished goods, spare parts and
3,491
3,070
Work in progress
2,909
2,651
manufacturing supplies
Raw materials and
In millions of euros
2022
2023
At 31 December
Trade receivables
265
2023
738
643
2022
2023
At 31 December
At 31 December
Other
Asset from defined benefit pension plans
Prepaid expenses
Other expected reimbursements
Reimbursements due to income tax refunds
Reimbursements due to other tax refunds
In millions of euros
Other assets
Current Non-current
Other expected reimbursements predominantly relate
to recovery claims against our suppliers in connection
with issued product warranties.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
254
17. Other assets
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
7,931
4,478
Non-financial other assets are comprised as shown in
the following table.
Total
Current Non-current
Total
643
534
83
451
614
169
445
327
153
174
335
151
184
2,546
37
2,509
2,658
37
2,621
979
402
577
1,116
318
798
738
7,939
(Stage 3)
2022
-23
credit loss
In millions of euros
Lifetime expected
Total
credit loss
Not credit impaired
Credit impaired
(Stage 1)
2023
2022
2023
(Stage 2)
2022
12-month expected
(Stage 3)
2022
2023
2022
Balance at 1 January
Additions
Remeasurement changes
Utilization
Reversals
Transfer to stage 1
364
339
170
2023
Development of loss allowances for receivables from financial services due to expected credit losses
Notes to the Consolidated Financial Statements
Further Information
past due 30 days and less
not past due
thereof
Gross carrying amount at 31 December
In millions of euros
Credit risks included in receivables from financial services
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1,198
1,055
664
486
170
240
364
329
Balance at 31 December
-107
-158
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
251
Combined Management Report
Corporate Governance
Consolidated Financial Statements
142
past due 31 to 60 days
664
1198
-250
-475
-482
56
61
-42
-41
-14
-20
Transfer to stage 2
-27
-25
-226
88
-61
-16
Transfer to stage 3
-3
-5
-33
-25
36
30
Exchange-rate effects and other changes
2
-27
41
-58
-72
-174
1,037
141
158
48
39
-77
123
215
312
412
-145
39
115
89
216
330
308
458
-4
-2
-19
-14
-107
-104
-130
-120
-177
556
-15
past due 61 to 90 days
past due more than 180 days
past due 91 to 180 days
(Stage 2)
2022
2023
2022
2023
(Stage 1)
Total
Lifetime expected credit loss
Credit impaired
-3
12-month expected credit loss
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Not credit impaired
252
Expected increase
discount rates
discount rates
+ 0.25%
-617
649
- 0.25%
5.3
597
-569
5.0
Sensitivity to
3.2
Discount rates
in cost of living¹
2022
At 31 December
2023
2.2
2.2
In millions of euros
2022
Inter-
national
Inter-
national
3.8
expected increases
58
+ 0.10%
Defined contribution pension plans
The weighted average duration of the defined benefit
obligations amounts to 13 years (2022: 13 years).
For the year 2024, the Group plans to make contribu-
tions of €0.1 billion to the plan assets; the final amount
is usually set in the fourth quarter of a year. The pen-
sions benefits paid are expected to amount to
€1.1 billion in 2024.
Effect on future cash flows
Calculation of the sensitivity of life expectancy by
means of fixed (non-age-dependent) factors for a ref-
erence person results in a life expectancy one year
higher or one year lower.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as
important. This means that if there is a simultaneous
change in several parameters, the individual results
cannot be summed due to correlation effects. With a
change in the parameters, the sensitivities shown can-
not be used to derive a linear development of the de-
fined benefit obligation.
Sensitivity analysis
1 For German plans - depending on the design of the specific plan - expected increases
in cost of living may affect the obligation to the Group's active employees as well as to
retirees and their survivors. For most international plans, expected increases in cost of
living do not have a material impact on the amount of the obligation.
-271
-320
- 1 year
life expectancy
304
359
+ 1 year
life expectancy
-53
-58
- 0.10%
in cost of living
expected increases
54
Germany
in cost of living
Germany
At 31 December
2022
-351
Current service cost
The components of pension costs included in the
Consolidated Statement of Income are shown in the
following table.
Pension costs
The investment strategy is reviewed regularly and ad-
justed if deemed necessary. The investment strategy is
determined by Investment-Committees, which are
generally composed of representatives of the Finance
and Human Resources departments. The investment
strategy for the pension plan assets is generally orient-
ed towards the structure of the pension obligations.
In millions of euros
2022
2023
Pension costs
(2022: €1,190 million) and in Nissan Motor Co., Ltd. in the amount of €526 million
(2022: €434 million).
-522
1 Including the shares in Daimler Truck in the amount of €1,398 million
21,890
Fair value of plan assets
2,390
2,119
Non-exchange-traded instruments
1,139
835
Cash and cash equivalents
642
642
20,526
Past service cost,
curtailments and settlements
1
2023
Sensitivity analysis for the present value of defined benefit obliga-
tions
An increase or decrease in the main actuarial assump-
tions would have the following effects on the present
value of the defined benefit pension obligations.
in %
Significant factors for the calculation of pension benefit obligations
Further Information
268
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Calculation of the pension obligations uses life expec-
tancy for the German plans based on the Heubeck 2018
G mortality tables. Comparable country-specific calcu-
lation methods are used for international plans.
The measurement date for the defined benefit pension
obligations and plan assets is generally 31 December.
The measurement date for the periodic pension cost is
generally 1 January. The assumptions used to calculate
the defined benefit obligations vary according to the
economic conditions of the countries in which the pen-
sion plans are situated.
Measurement assumptions
-554
-342
12
32
-45
-23
Net interest expense
Net interest income
At 31 December
2023
The following significant weighted average measure-
ment factors are used to calculate pension benefit
obligations.
Further Information
Real estate
2022
2023
Provision
Expense
Effects of share-based payment
The details shown in the table do not represent any
paid or committed remuneration, but refer to expenses
calculated according to IFRS.
At 31 December
2023
The pre-tax effects of share-based payment arrange-
ments for the executives of the Group and the mem-
bers of the Board of Management of Mercedes-Benz
Group AG on the Consolidated Statement of Income
and Consolidated Statement of Financial Position are
shown in the following table.
At 31 December 2023, the Group has the 2020-2023
Performance Phantom Share Plans (PPSP) outstanding.
As instruments of share-based payment with cash set-
tlement, the PPSP are measured at their fair values on
the balance sheet date. They are paid out at the end of
their contractually defined periods; an earlier, propor-
tionate payout is only possible under certain conditions
when a beneficiary leaves the company. PPSP 2019 was
paid out as planned in the first quarter of 2023.
21. Share-based payment
In other comprehensive income/loss 2023,
gains/losses on equity-method investments that may
be reclassified to profit/loss in the statement of in-
come in the future includes a loss of €247 million
(2022: gain of €141 million) from accumulated unreal-
ized gains/losses from currency translation.
The changes in other reserves are included in other
comprehensive income/loss and are presented in the
Consolidated Statement of Comprehensive In-
come/Loss.
Other reserves comprise accumulated unrealized
gains/losses from currency translation of the financial
statements of the consolidated foreign companies and
accumulated unrealized gains/losses on financial as-
sets, derivative financial instruments and equity-
method investments.
Other reserves
Moreover, 50% of the annual bonus of the members of
the Board of Management is paid out after a waiting
period of one year. The actual payout is determined by
the development of Mercedes-Benz Group shares
compared to an automobile-related index (Auto-
STOXX). The fair value of this medium-term annual
bonus, which depends on that development, is meas-
ured by using the intrinsic value at the reporting date.
Notes to the Consolidated Financial Statements
2022
PPSP
Past service cost, curtailments and settlements
8
8
component of annual
bonus of the members
of the Board
of Management
Medium-term
43
In millions of euros
36
16
thereof PPSP of the
members of the
Board of Manage-
ment
654
596
233
248
17
Further Information
Consolidated Financial Statements
Corporate Governance
-7,860
1,308
-7,910
-1
-937
-933
1,316
45
20,444
Present value of the defined benefit obligations at 1 January
Current service cost
Interest cost
Contributions by plan participants
Actuarial gains (-)/losses from changes in demographic assumptions
-103
-50
-8
41
Combined Management Report
261
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In millions of euros
2023
2022
20,444
28,504
351
522
742
324
39
Pension benefits paid
Under defined contribution pension plans, the
Mercedes-Benz Group makes defined contributions to
external insurance policies or investment funds. There
are fundamentally no further contractual obligations or
risks for the Mercedes-Benz Group in excess of the
defined contributions. The Group also pays contribu-
tions to governmental pension schemes. In 2023, the
total costs from defined contribution plans amounted
to €1.0 billion (2022: €1.0 billion). Of those payments,
€1.0 billion (2022: €1.0 billion) was related to state
pension plans.
Currency exchange-rate changes and other changes
21,992
Corporate bonds
2,569
3,174
6,733
7,611
Government bonds
8,729
Equity instruments¹
At 31 December
2023
In millions of euros
Composition of plan assets
ness.
Market prices are usually available for equity instru-
ments and bonds due to their listing in active markets.
Most of the bonds have investment grade ratings. They
include government bonds of very good creditworthi-
Plan assets are used solely to fulfil pension obligations
and to cover the administration costs of the plan as-
sets. The composition of the Group's pension plan
assets is shown in the following table.
2022
Composition of plan assets.
8,588
140
609
642
non-exchange-traded instruments
Alternative investments and other
18,136
19,771
Securitized bonds
Exchange-traded instruments
117
Other exchange-traded instruments
11,297
12,043
Bonds
140
106
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
1,280
291
751
24,212
20,526
Fair value of plan assets at 31 December
-4,507
Currency exchange-rate changes and other changes
Contributions by plan participants
Contributions by the employer
Actual profit/loss on plan assets
Actuarial gains/ losses (-)
Interest income from plan assets
Fair value of plan assets at 1 January
Pension benefits paid
2,031
-4,216
122
Reconciliation of the defined benefit
Combined Management Report
267
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
20,526
21,890
-68
70
-890
-898
40
39
1,448
Present value of the defined benefit obligations at 31 December
Annual Report 2023 | Mercedes-Benz Group
-3,377
To Our Shareholders
Most of the pension obligations in Germany relating to
defined benefit pension commitments are funded by
investment funds. Contractual trust arrangements
(CTA) exist between Mercedes-Benz Group AG as well
as some subsidiaries in Germany and the Mercedes-
Benz Pension Trust e. V. The Mercedes-Benz Pension
Trust e. V. acts as a collateral trust fund.
In 2018, Mercedes-Benz Group AG transferred certain
pension obligations and plan assets of retired employ-
ees and their survivors to Mercedes-Benz Pen-
sionsfonds AG (previously Daimler Pensionsfonds AG;
pension fund). These benefits are administrated by that
non-insurance-like pension fund, which falls under the
scope of the Act on the Supervision of Insurance Un-
dertakings and is therefore subject to the oversight of
the Federal Financial Supervisory Agency (BaFin).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
264
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Insofar as in the future, BaFin rules that a deficit has
occurred in the pension fund, a supplementary contri-
bution will be required from Mercedes-Benz Group AG.
In Germany, there are normally no statutory or regula-
tory minimum funding requirements.
Outside Germany, there are plans relating to final sala-
ries as well as plans relating to salary-based compo-
nents. Most of the international obligations from de-
fined benefit pension commitments are funded by
investment funds.
The funded status of pension obligations with the split
between German and international plans is shown in
the following table.
Development of funded status
In millions of euros
At 31 December
At 31 December
2023
2022
Total
Germany International
Total
Germany International
Present value of the defined benefit obligations
Fair value of plan assets
Funded status
As well as the employer-financed pension plans grant-
ed by German companies, the employees of some
companies are also offered various earnings-
conversion models.
Actuarial loss due to asset ceiling
In addition, previously concluded defined benefit plans
exist which primarily depend on employees' wage-tariff
classification upon transition into the benefit phase
and which foresee a life annuity.
Most employees in Germany have defined benefit pen-
sion commitments; most of the pension commitments
for the active workforce are based on individual retire-
ment benefit accounts, to which the Company makes
annual contributions. The amount of the contributions
for non-exempt employees depends on the tariff clas-
sification in the respective year or on their respective
income; for executives it depends on their respective
income. For the commitments to retirement benefits
made prior to 2011, the contributions continue to be
converted into capital components and credited to the
individual pension accounts with the application of
fixed factors related to each employee's age. The con-
version factors include a fixed value increase. For the
commitments to retirement benefits made as of 2011,
the Company guarantees at a minimum the value of the
contributions paid into a cash-balance plan. Pension
Contents
To Our Shareholders
263
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
22. Pensions and similar
obligations
Commitments specific to various countries for defined
benefit pension plans and defined contribution pension
plans exist at the Mercedes-Benz Group.
Furthermore, certain foreign subsidiaries, mainly in the
United States, provide their employees with post-
employment healthcare benefits with defined entitle-
ments, which have to be accounted for as defined ben-
efit plans.
The following table shows the composition of provi-
sions for pensions and similar obligations.
Composition of provisions for pensions and similar obligations
In millions of euros
At 31 December
20231
2022
Provisions for pension benefits
760
683
Provisions for post-employment
healthcare benefits
330
338
1,090
1,021
1 Including the part of pension obligations that was reclassified to the balance sheet
item liabilities held for sale.
Defined benefit pension plans
Provisions for pension obligations are made for defined
benefit pension commitments to active and former
employees of the Mercedes-Benz Group and their sur-
vivors. The defined benefit pension plans provided by
the Group generally vary according to the economic,
tax and legal circumstances of the country concerned.
Most of the defined benefit pension commitments also
provide benefits in the case of invalidity and death.
Pension plans and pension.
plan assets
payments are made either as a life annuity, twelve
annual instalments, or a single lump sum.
Net defined benefit asset
21,992
21,890
thereof recognised in provisions for pensions and similar obligations
-760
-527
-233
-683
-478
-205
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Risks from defined benefit pension
plans and pension plan assets
The general requirements with regard to retirement
benefit models are included in policies with Group-
wide validity. Accordingly, the committed benefits are
intended to contribute to additional financial security
during retirement, and in the case of death or invalidity
to be capable of being planned and fulfilled by the
respective company of the Group and to have a low-
risk structure. In addition, a committee exists that ap-
proves new pension plans and amendments to existing
pension plans as well as policies relating to company
retirement benefits.
The obligations from defined benefit pension commit-
ments and the pension plan assets can be subject to
fluctuations over time. This can have a negative or a
positive effect on the funded status. Fluctuations in the
defined benefit pension obligations result at the Mer-
cedes-Benz Group in particular from changes in finan-
cial assumptions such as discount rates and increases
in the cost of living, but also from changes in demo-
graphic assumptions such as adjusted life expectan-
cies. With most of the German plans, expected long-
term wage and salary increases do not have an impact
on the amount of the obligation.
The fair value of the plan assets is predominantly
determined by the situation on the capital markets.
Unfavourable developments, especially of equity prices
and fixed-interest securities, could reduce that fair
value. The diversification of investment funds, the en-
gagement of asset managers using quantitative and
qualitative analyses, and the continual monitoring of
performance and risk help to reduce the associated
investment risk. As long as the commitments of the
defined benefit pension plans remain overfunded by
the plan assets, the Mercedes-Benz Group will only
make additional pension contributions when legally and
economically necessary.
As a general principle, it is the Group's objective to
design new pension commitments as defined benefit
plans based on capital components or on contribu-
tions, or as defined contribution plans.
265
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
266
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
129
609
738
130
20,660
20,646
1,332
20,444
19,137
1,307
1,244
20,526
19,268
1,258
-102
-14
-88
82
Annual Report 2023 | Mercedes-Benz Group
131
-15
-15
-27
-27
-117
-14
-103
55
131
-76
thereof recognised in other assets
643
513
-49
Contents
The Group recognizes a provision for awarding the
PPSP in the Provisions for other risks in the Consoli-
dated Statement of Financial Position. Since payment
per vested phantom share depends on the quoted
price of Mercedes-Benz Group's share, that quoted
price essentially represents the fair value of each
phantom share at the balance sheet date. The propor-
tionate remuneration expenses from the PPSP recog-
nized in the individual years are measured based on
the price of Mercedes-Benz Group shares and the es-
timated target achievement.
In the case of plans PPSP 2020 to 2022, special rules
apply for the members of the Board of Management:
the Mercedes-Benz Group's RoS must be not only
equal to but higher than that of the competitors in
order to obtain the same target achievement as the
other plan participants. Furthermore, an additional limit
on target achievement was agreed upon for the refer-
ence parameter RoS for the members of the Board of
Management. In the case of target achievement be-
tween 195% and 200%, an additional comparison is
made on the basis of the RoS achieved in absolute
Additions
Utilizations
Reversals
Compounding and effects from changes in discount rates
Exchange-rate effects and other changes
Balance at 31 December 2023
thereof current
thereof non-current
Litigation
Personnel
Product
warranties
and social
risks and
regulatory
costs proceedings
Others
Total
6,576
4,613
2,755
2,079
16,023
3,204
2,422
2,217
1,742
9,585
3,372
thereof non-current
2,191
thereof current
In millions of euros
269
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
23. Provisions for other risks
Product warranties
The Mercedes-Benz Group issues various types of
product warranties, under which it generally guaran-
tees the performance of products delivered and ser-
vices rendered for a certain period. The provision
for these product warranties covers expected costs
for legal and contractual warranty claims as well as
expected costs for goodwill concessions and recall
campaigns. This also includes measures relating to
Mercedes-Benz diesel vehicles in various regions as
well as recalls, in particular for an extended recall of
Takata airbags. The utilization date of product warran-
ties depends on the incidence of the warranty claims
and can span the entire term of the product warranties
and the goodwill period. The cash outflows in relation
to non-current provisions are primarily expected within
a period until 2026.
Personnel and social costs
Provisions for personnel and social costs primarily
comprise expected expenses of the Group for employ-
ee anniversary bonuses, profit-sharing bonuses for
non-exempt employees and variable remuneration for
management as well as early-retirement and partial-
retirement plans. The additions recorded to the provi-
sions for profit-sharing bonuses and variable remuner-
ation in the reporting year usually result in cash out-
flows in the following year. The cash outflows for non-
current provisions for personnel and social costs are
primarily expected within a period until 2032.
Liability and litigation risks and
regulatory proceedings
Provisions for liability and litigation risks and regulatory
proceedings comprise costs for various legal proceed-
ings, claims and governmental investigations, which
can lead in particular to payments of compensation,
punitive damages or other costly actions. They primari-
ly include risks from litigation and regulatory proceed-
ings in relation to Mercedes-Benz diesel vehicles. The
cash outflows in relation to non-current provisions are
primarily expected within a period until 2026.
Further information on liability and litigation risks and
regulatory proceedings is provided in Note 30.
Other
Provisions for other risks primarily comprise expected
costs for provisions for environmental protection, other
taxes and charges related to income taxes as well as
obligations from outstanding commission. They also
include provisions for anticipated losses on pending
transactions and various other risks which cannot be
allocated to any other class of provision.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
270
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
The development of provisions for other risks is as
follows.
Provisions for other risks
Balance at 31 December 2022
538
337
6,438
2,580
675
1,720
7,955
3,419
2,092
1,429
405
7,345
obligations and the fair value of the
plan assets
15
15
256
241
611
669
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
262
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Performance Phantom Share Plans
In 2023, as in previous years, the Group issued a Per-
formance Phantom Share Plan (PPSP), under which
eligible board members and employees of the Mer-
cedes-Benz Group are granted phantom shares enti-
tling them to receive cash payments after four years.
During the four-year period between the allocation of
the preliminary phantom shares and the payout of the
plan after the end of the term, the phantom shares
earn a dividend equivalent to the amount of the actual
dividend paid on real Mercedes-Benz Group shares in
the respective year. The amount of cash paid after the
end of the holding period is based on the final number
of vested phantom shares (determined after three
years according to the degree of target achievement of
specific performance indicators) multiplied by the
quoted price of the Mercedes-Benz Group's ordinary
shares (calculated as an average price over a specified
period after the end of the four-year plan period). The
vesting period is therefore four years. For the existing
plans, the quoted price of the phantom shares to be
used for the payout is limited to 2.5 times the phantom
share price at the date of grant. Furthermore, in the
case of the plans PPSP 2020 to 2022, the payout for
the members of the Board of Management is also lim-
ited to 2.5 times the allotment value used to determine
the preliminary number of phantom shares. The limita-
tion of the payout for the members of the Board of
Management also includes the dividend equivalents.
For the issued PPSP 2020 to 2022, the degree of target
achievement is determined on the basis of the relative
share performance, which measures the performance
development of the Mercedes-Benz Group share com-
pared with the development of a performance index
based on a group of competitors including the Mer-
cedes-Benz Group, and the return on sales (ROS) of the
Mercedes-Benz Group compared with the average
revenue-weighted RoS of a group of competitors. PPSP
2023 includes environmental, social and governance
(ESG) targets in the achievement of objectives in order
to promote the sustainable realignment and long-term,
sustainable development of the Group. From PPSP
2023, overall target achievement will be determined
based on the weighted achievement of the financial
targets (relative share performance and RoS) and the
ESG targets over the three-year performance period.
The achievement of the financial targets accounts for
80% and the achievement of the ESG targets for 20%
of the overall target achievement of the PPSP.
2,980
15,300
2,125
Present value of the defined benefit obligations and fair value of the plan assets
3,483
2,308
567
1,454
7,812
Actuarial gains (-)/losses from changes in financial assumptions
-2,242
-206
-1,106
-6,931
-357
-78
-502
terms. If the actual RoS for the automotive business is
below the strategic target in the third year of the per-
formance period, target achievement is limited to 195%.
-286
217
142
68
10
437
-143
-71
-578
-26
-818
6,399
4,672
2,104
-1,223
Actuarial gains (-)/losses
10
Contents
3,135
4,202
1,520
2,682
157
2
155
208
39
169
1,238
1,568
1,564
1,573
8
1,565
2,648
1,232
1,416
2,421
1,473
948
4
4,373
Annual Report 2023 | Mercedes-Benz Group
Contents
2023
Interest paid
Changes in other operating assets and liabilities
In millions of euros
In the previous year, this item was affected in particu-
lar by the Group's share in the gains/losses on equity-
method investments, the result from the fair value
measurement of equity instruments and the result of
the remeasurement of the shares of Mercedes-Benz
Grand Prix Ltd., that the Mercedes-Benz Group contin-
ues to hold. In addition, the other non-cash expense
and income was impacted by the depreciation of the
remaining financial services volumes of the Daimler
commercial vehicle business, sold to Daimler Truck
Holding AG or its subsidiaries in 2022.
The other non-cash expense and income shown in the
reconciliation of profit before income taxes to cash
flow from operating activities in the reporting year
primarily comprised the Group's share of gains/losses
on equity-method investments and the result from the
fair value measurement of debt instruments.
2022
2023
Cash flows included in Cash flow from operating activities
The following cash flows are included in Cash flow from
operating activities.
In the prior year, significant positive effects resulted
from assets in connection with the securitization of
receivables and from contractual liabilities for price
discounts. This was partially offset by lower negative
effects in miscellaneous other financial liabilities and
the contract liabilities for service and maintenance
agreements.
The increase in miscellaneous other assets and liabili-
ties compared with the previous year was primarily
related to miscellaneous other financial assets, liabili-
ties from accrued interest and deferred income.
Other operating assets and liabilities changed as
follows.
Cash flow from operating activities
At 31 December 2023, cash and cash equivalents in-
cluded restricted funds of €91 million (2022: €187 mil-
lion). The restricted funds representing cash and cash
equivalents were related to subsidiaries where foreign
exchange controls apply, so that the Group has re-
stricted access to the funds.
Calculation of funds
29. Consolidated Statement
of Cash Flows
Further Information
276
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Total
2022
Current Non-current
Current Non-current
Contract and refund liabilities
4,721
4,566
Refund liabilities
240
330
Other refund liabilities
4,481
4,236
Obligations from sales transactions
10,391
5,833
Contract liabilities
1,672
1,678
Other contract liabilities
4,161
4,147
and extended warranties
Service and maintenance contracts
In millions of euros
2022
5,825
10,554
thereof non-current
3,514
2022
2023
At 31 December
At 31 December
Further Information
275
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Miscellaneous other liabilities
Other tax liabilities
Income tax liabilities
In millions of euros
Other liabilities
Other liabilities are composed as follows.
28. Other liabilities
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
6,898
6,877
thereof current
3,656
Total
At 31 December
2023
Interest received
-486
Combined Management Report
279
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
missible defeat devices. Mercedes-Benz has a contrary
legal opinion on this question and has filed timely ob-
jections against the KBA's administrative orders and
determinations mentioned above. Insofar as the KBA
has not remedied the objections, Mercedes-Benz has
filed lawsuits with the competent administrative court
to have the controversial questions at issue clarified in
a court of law. Irrespective of such objections and the
lawsuits that are now pending, the Mercedes-Benz
Group continues to cooperate fully with the KBA. To a
large extent, the remedial actions requested by the
KBA were developed by the Mercedes-Benz Group and
assessed and approved by the KBA; the necessary
recalls were initiated. For some of the vehicles affected
by the KBA's decision from December 2023, develop-
ments, examinations and approvals of the remedial
measures are still pending. It cannot be ruled out that
under certain circumstances, software updates may
have to be reworked, or further delivery and registra-
tion stops may be ordered or resolved by the company
as a precautionary measure, also with regard to the
used car, leasing and financing businesses. In the
course of its regular market supervision, the KBA rou-
tinely conducts further reviews of Mercedes-Benz ve-
hicles and asks questions about technical elements of
the vehicles. In addition, the Group continues to be in a
dialogue with the German Federal Ministry for Digital
and Transport (BMDV) to conclude the analysis of the
diesel-related emissions matter and to further the up-
date of affected customer vehicles. In light of the
aforementioned administrative orders issued by the
KBA, and continued discussions with the KBA and the
Between 2018 and 2020, the German Federal Motor
Transport Authority (KBA) issued subsequent auxiliary
provisions for the EC type approvals of certain Mer-
cedes-Benz diesel vehicles, and ordered mandatory
recalls as well as, in some cases, stops of the first reg-
istration. In autumn 2022 and in December 2023, the
KBA issued further decisions regarding vehicles
equipped with various EU6 or EU5 diesel engines. In
each of those cases, it held that certain calibrations of
specified functionalities are to be qualified as imper-
In Germany, the Stuttgart public prosecutor's office
issued a fine notice against Mercedes-Benz in Septem-
ber 2019 based on a negligent violation of supervisory
duties, thereby concluding the related administrative
offense proceedings against Mercedes-Benz. In July
2021, the local court of Böblingen issued penal orders
against three Mercedes-Benz employees based on,
amongst others, fraud, which have become final. The
criminal investigation proceedings of the Stuttgart pub-
lic prosecutor's office against further Mercedes-Benz
employees on the suspicion of, amongst others, fraud
have meanwhile been discontinued.
In Canada, the environmental regulator Environment
and Climate Change Canada (ECCC) is conducting an
investigation in connection with diesel exhaust emis-
sions based on the suspicion of potential violations of,
amongst others, the Canadian Environmental Protec-
tion Act, as well as undisclosed AECDs and defeat de-
vices. The Mercedes-Benz Group continues to cooper-
ate with the investigating authorities.
As already reported, in April 2016, the U.S. Department
of Justice (DOJ) requested that the Mercedes-Benz
Group conduct an internal investigation. The Mercedes-
Benz Group conducted such an internal investigation in
cooperation with the DOJ's investigation; the DOJ's
investigation remains open. In addition, further US
state authorities have opened investigations pursuant
to both local environmental and consumer protection
laws and have requested documents and information.
Corporate Governance
As part of these settlements, the Mercedes-Benz Group
has denied the allegations by the authorities and has
not admitted liability, but has agreed to, among other
things, pay civil penalties, conduct an emission modifi-
cation programme for the affected vehicles and take
certain other measures. The failure to meet certain of
those obligations may trigger additional stipulated
penalties. In the first quarter of 2021, the Mercedes-
Benz Group paid the civil penalties; provisions have
been recognized for the emission modification pro-
gramme and other measures.
278
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The corresponding activities of various authorities
worldwide, which were already reported in the past, are
partly ongoing, as described below. These activities
particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or
the interactions of the Mercedes-Benz Group with the
relevant authorities as well as related legal issues and
implications, including, but not limited to, under appli-
cable environmental, criminal, consumer protection
and antitrust laws.
The Mercedes-Benz Group is continuously subject to
governmental information requests, inquiries, investi-
gations, administrative orders and proceedings relating
to various laws and regulations in connection with die-
sel exhaust emissions.
Diesel emission behaviour:
governmental proceedings.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
BMDV, it cannot be ruled out completely that addition-
al administrative orders may be issued in the course of
the ongoing and/or further investigations. Since 1 Sep-
tember 2020, this also applies to other responsible
authorities of other member states and the European
Commission, which conduct market surveillance under
the new European Type Approval Regulation and can
take measures upon assumed non-compliance, irre-
spective of the place of the original type approval, and
also to the British market surveillance authority DVSA
(Driver and Vehicle Standards Agency).
Starting in July 2017, a number of class action suits
were filed in the United States and Canada against
Mercedes-Benz Group AG and other manufacturers of
automobiles as well as a number of their North Ameri-
can subsidiaries. Plaintiffs allege to have suffered dam-
ages because defendants engaged in anticompetitive
behaviour relating to vehicle technology, costs, suppli-
ers, markets, and other competitive attributes, includ-
ing diesel emissions control technology, since the
1990s. In June 2022, the proceedings in the United
States were dismissed with final effect in favour of the
concerned Mercedes-Benz Group companies. Further-
more, in 2023, several class actions in Canada were
finally dismissed as the plaintiffs discontinued their
claims. The Mercedes-Benz Group also expects the
Other legal proceedings
With respect to the legal proceedings described in the
two preceding chapters, in accordance with IAS 37.92
no further information is disclosed with respect to
whether, or to what extent, provisions have been rec-
ognized and/or contingent liabilities have been dis-
closed, so as not to prejudice the Mercedes-Benz
Group's position. For recognized provisions, this does
not apply to the extent that a settlement has been
reached or a proceeding has been concluded.
Accounting assessment of the
legal proceedings in connection with
diesel emission behaviour
in the model case proceedings. The decision in the
model case proceedings is binding for the suspended
main proceedings. Multiple investors have used the
possibility to register claims in a considerable amount
with the model case proceedings in order to suspend
the period of limitation. Mercedes-Benz Group AG re-
mains of the view to have duly fulfilled its disclosure
obligations under capital markets law and defends
itself against the investors' allegations also in these
model case proceedings.
a decision that is binding for the main proceedings
regarding common factual and legal questions. The
main proceedings before the Stuttgart Regional Court
will be suspended until a decision is reached on the
questions submitted, insofar as they cannot be dis-
missed independently of the questions to be decided
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. The investors allege that Mercedes-Benz
Group AG did not immediately disclose inside infor-
mation in connection with the emission behaviour of its
diesel vehicles and that it had made false and mislead-
ing public statements. They further claim that the pur-
chase price of the financial instruments acquired by
them (in particular Mercedes-Benz Group shares, for-
merly Daimler AG shares) would have been lower if
Mercedes-Benz Group AG had complied with its disclo-
sure obligations. Mercedes-Benz Group AG regards
these allegations and claims as being without merit and
will defend itself against them. In this context, the
Stuttgart Higher Regional Court initiated model case
proceedings under the German Act on Model Case
Proceedings in Disputes under Capital Markets Law
(KapMuG) in December 2021 (model case proceedings).
The purpose of the model case proceedings is to reach
Mercedes-Benz Group AG and the respective other
affected companies of the Group regard the pending
lawsuits set out above as being without merit and con-
tinue to defend themselves against the claims.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
280
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In Germany, a large number of customers of diesel
vehicles have filed lawsuits for damages or rescission
of sales contracts. They assert that the vehicles con-
tained illegal defeat devices and/or showed impermis-
sibly high emission or consumption values. They refer
in particular to the KBA's recall orders (see above).
Although the number of pending cases is declining, a
future increase cannot be ruled out. Based on similar
allegations, the Federation of German Consumer Or-
ganizations (Verbraucherzentrale Bundesverband e. V.)
filed a model declaratory action (Musterfeststellungs-
klage) against Mercedes-Benz Group AG with the
Stuttgart Higher Regional Court in July 2021. Such an
action seeks a ruling that certain preconditions of al-
leged consumer claims are met. Following a decision of
the European Court of Justice in the first quarter of
2023, the German Federal Court of Justice ruled in the
second quarter of 2023 that vehicle purchasers are
entitled to claim damages against the manufacturer if it
intentionally or negligently used an inadmissible defeat
device.
consist of several individual lawsuits that have been
consolidated into a class action. A class action lawsuit
is also pending in Scotland. In these proceedings, al-
legedly injured parties must actively register for the
enforcement of claims (opt-in). The plaintiffs in the
consumer class action in England and Wales also al-
lege, among other things, anti-competitive behaviour
relating to technology for the treatment of diesel ex-
haust emissions.
Consumer class actions were filed against Mercedes-
Benz Group AG in Israel in February 2019 as well as
against Mercedes-Benz Group AG and further Group
companies in the United Kingdom since May 2020, in
the Netherlands since June 2020, in Portugal as well as
since November 2022 in Australia. The plaintiffs inter
alia assert that the Mercedes-Benz Group had used
devices that impermissibly impair the effectiveness of
emission control systems in reducing nitrogen-oxide
(NOx) emissions and which cause excessive emissions
from vehicles with diesel engines. Furthermore, they
claim that Mercedes-Benz Group AG deceived consum-
ers in connection with advertising Mercedes-Benz die-
sel vehicles. The proceedings in England and Wales
In a lawsuit filed by the Environmental Protection
Commission of Hillsborough County, Florida in Sep-
tember 2020, the plaintiff claimed that, amongst oth-
ers, Mercedes-Benz Group AG and MBUSA had violated
municipal regulations prohibiting vehicle tampering and
other conduct by using alleged devices claimed to im-
pair the effectiveness of emission control systems. The
lawsuit was dismissed in the third quarter of 2022. The
plaintiff's appeal to this decision was dismissed in the
third quarter of 2023. The decision is final, and the
proceedings are concluded.
Diesel emission behaviour:
consumer actions and other lawsuits
in the United States, Germany and
other states
The Mercedes-Benz Group continues to fully cooperate
with the authorities and institutions.
In addition to the aforementioned authorities, authori-
ties of various foreign states, particularly the South
Korean Ministry of Environment and the South Korean
competition authority (Korea Fair Trade Commission)
are conducting various investigations and/or proce-
dures in connection with diesel exhaust emissions. In
this context, these South Korean authorities have made
determinations and imposed sanctions against Mer-
cedes-Benz which Mercedes-Benz has appealed. In the
same context, national antitrust authorities of various
countries are also conducting investigations, including
the South Korean antitrust authority, which has made
certain findings and imposed fines on some car manu-
facturers. In February 2024, the criminal proceeding in
South Korea was concluded.
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings, claims as well
as governmental investigations and orders (legal pro-
ceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships,
intellectual property rights (including but not limited to
patent infringement actions), warranty claims, envi-
ronmental matters, antitrust matters (including actions
for damages) as well as investor litigation. Product-
related litigation involves, among other things, claims
alleging faults in vehicles. Some of these claims are
asserted by way of class actions. If the outcome of
such legal proceedings is detrimental to the Mercedes-
Benz Group or such legal proceedings are settled, the
Group may encounter substantial financial burdens,
e.g. from damages payments or service actions, recall
campaigns, monetary penalties or other costly actions,
which would adversely affect the earnings of Mer-
cedes-Benz Group AG. Legal proceedings and related
settlements may also have an impact on the company's
reputation.
-306
30. Legal proceedings
-1,211
358
1,624
107
1,192
Miscellaneous other assets and liabilities
-104
-55
Financial instruments
130
307
Annual Report 2023 | Mercedes-Benz Group
shareholdings
355
487
Provisions
1,605
2,056
equity-method investments
Dividends received from
In millions of euros
231
630
Dividends received from other
Contents
To Our Shareholders
277
865
Other changes
145
46
Fair value changes
580
-2,787
-13,344
-596
-384
Change of control in subsidiaries
Changes in foreign exchange-rates
-697
Cash flows
2022
2023
In millions of euros
Changes in liabilities arising from financing activities
Liabilities arising from financing activities, divided into
cash and non-cash components, changed as follows.
Cash flow from financing activities includes cash flows
from hedging the currency risks of financing liabilities.
Cash flow from financing activities includes payments
for the reduction of outstanding leasing liabilities of
€640 million (2022: €565 million).
Cash flow from financing activities
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
The lower cash outflow relative to the same period of
the prior year is primarily due to the significantly higher
repayments of liabilities from financing activities in the
prior year.
Contract and refund liabilities
Following table shows the composition of contract and
refund liabilities.
27. Contract and refund liabilities
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
111,837
62,051
49,786
108,638
63,724
44,914
748
25. Other financial liabilities
288
741
210
531
2,645
2,047
598
2,166
1,713
453
16,885
460
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
317
Total
Current Non-current
Total
Current Non-current
2022
2023
At 31 December
At 31 December
Further Information
272
Miscellaneous other financial liabilities
Other
Deposits received
Accrued interest expenses
Liabilities from wages and salaries
Liabilities from residual value guarantees
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
In millions of euros
Other financial liabilities
Further information on other financial liabilities is pro-
Ivided in Note 32.
The composition of other financial liabilities is shown in
the following table.
9,452
798
7,433
8,497
2023
At 31 December
At 31 December
Further Information
271
31 December 2023 is provided in Note 33.
Information on the maturities of lease liabilities as of
Loans, other financing liabilities
Lease liabilities
Liabilities from ABS transactions
2022
Deposits in the direct banking business
Commercial paper
Bonds
In millions of euros
Financing liabilities
The composition of financing liabilities is as follows.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
24. Financing liabilities
To Our Shareholders
Liabilities to financial institutions
Current Non-current
Total
Current Non-current
7,172
10,538
1,009
9,529
5,759
134
5,625
24,738
7,250
17,488
25,317
9,698
15,619
2,184
54,099
41,995
12,104
2,174
3,470
18
55,516
43,454
12,062
3,452
Total
15,669
1,115
672
1,611
1,097
236
141
95
263
138
125
Deferred income resulting from repurchase agreements that are accounted for as operating leases
Deferral of advance rental payments received from operating lease arrangements
Total
Current Non-current
995
Total
2022
2023
At 31 December
At 31 December
Further Information
273
In millions of euros
Deferred income
The composition of deferred income is as follows.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Current Non-current
2,092
985
962
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
274
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
2,625
1,234
1,391
2,701
1,223
1,478
442
131
311
346
90
256
Other deferred income
1,947
Corporate Governance
Combined Management Report
26. Deferred income
To Our Shareholders
663
810
-
810
952
6
946
870
6
864
733
258
475
757
238
519
171
146
25
188
68
120
2,283
663
Annual Report 2023 | Mercedes-Benz Group
248
702
Contents
Annual Report 2023 | Mercedes-Benz Group
7,928
2,524
5,404
7,118
1,642
5,476
5,474
767
4,707
5,815
776
5,039
2,472
79
2,393
2,676
78
2,598
654
424
230
454
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These
agreements have become final and effective. The au-
thorities took the position that the Mercedes-Benz
Group had failed to disclose Auxiliary Emission Control
Devices (AECDs) in certain of its US diesel vehicles and
that several of these AECDs were illegal defeat devices.
70
Contents
thereof other financing liabilities
thereof liabilities from ABS transactions
thereof bonds
Financing liabilities
Fair values of financial liabilities measured at cost
Receivables from financial services
Fair values of financial assets measured at cost
In millions of euros
Measurement hierarchy of financial assets and liabilities not recognized at fair value
The following table shows into which measurement
hierarchies (according to IFRS 13) the fair values of the
financial assets and liabilities are classified, which are
not recognized at fair value in the Consolidated State-
ment of Financial Position.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
288
To Our Shareholders
171
Derivative financial instruments used in hedge accounting
1,115
1,115
2,283
2,283
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
Financial liabilities recognized at fair value
1,303
2,454
2,454
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs, that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs, for which no observable market data is available.
Annual Report 2023 | Mercedes-Benz Group
Contents
1,303
171
2 Fair value measurement is based on inputs that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
At 31 December
35,265
35,265
16,839
16,839
15,696
15,696
13,939
38,729
52,668
5,609
49,437
55,046
68,688
38,729
107,417
56,570
49,437
2023
Total
Level 11
Level 22
Level 33
Total
At 31 December
Level 11
2022
Level 33
89,847
89,847
86,343
86,343
106,007
Level 22
188
188
Financial liabilities recognized at fair value through profit or loss
457
1,439
684
406
417
1,507
249
1,392
1,641
50
1,105
1,155
3
4,457
4,460
4
5,607
Level 11
Level 22
2023
Level 33
Total
Level 11
Level 22
339
2022
Level 33
6,712
54
6,101
5,849
252
5,611
6,766
643
649
59
578
6
2,660
2,660
2,463
2,463
584
11,280
3,459
692
10,587
6,306
3,632
649
7,129
37,910
8
347
214
376
671
116
124
431
339
858
192
308
768
341
215
212
358
37,910
Annual Report 2023 | Mercedes-Benz Group
Contents
at (amortized) cost
Financial assets measured
through other comprehensive income
recognized at fair value
Other financial assets
4
4
through other comprehensive income
Equity instruments recognized at fair value
94
Annual Report 2023 | Mercedes-Benz Group
through profit or loss¹
recognized at fair value
-173
-21
2022
2023
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
290
Further Information
-7
Net gains or losses
Net gains/losses
In millions of euros
Equity and debt instruments recognized at fair
value through profit or loss
Other financial assets
and financial liabilities
The following table shows the net gains/losses on
financial instruments included in the Consolidated
Statement of Income (excluding derivative financial
instruments used in hedge accounting).
-760
-651
Financial liabilities measured
4,571
thereof from financial assets and liabilities
measured at (amortized) costs
5,458
4,550
thereof from financial assets
recognized at fair value through
other comprehensive income
21
5,528
Total interest expense
-1,980
thereof from financial assets and liabilities
measured at (amortized) costs
-2,936
-1,980
thereof from financial assets
recognized at fair value through
other comprehensive income
-2,936
Contents
Total interest income
2022
at (amortized) cost
109
-172
1 The amounts relate to derivative financial instruments that are not used in hedge
accounting.
Net gains/losses on equity and debt instruments rec-
ognized at fair value through profit or loss primarily
comprise gains and losses attributable to changes in
the fair values of these instruments.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss comprise
gains and losses attributable to changes in their fair
values.
In millions of euros
Net gains/losses on equity instruments recognized at
fair value through other comprehensive income com-
prise dividend payments.
Net gains/losses on financial assets measured at
(amortized) cost (excluding the interest in-
come/expense shown below) primarily comprise im-
pairment losses (including reversals of impairment
losses) of minus €406 million (2022: minus €610 mil-
lion) that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign cur-
rency gains and losses are also included.
Net gains/losses on financial liabilities measured at
(amortized) cost (excluding the interest income/
expense shown below) primarily comprise exchange-
rate effects.
Total interest income and total
interest expense
Total interest income and total interest expense
for financial assets or financial liabilities that are not
recognized at fair value through profit or loss are
shown in the following table.
Total interest income and total interest expense
2023
Net gains/losses on other financial assets recognized
at fair value through other comprehensive income are
primarily attributable to exchange-rate effects.
Total
Annual Report 2023 | Mercedes-Benz Group
188
289
5 This does not include financial guarantees of €4 million (2022: €7 million) as these are not assigned to a measurement category.
4 This does not include liabilities from lease transactions of €2,207 million (2022: €2,645 million) as these are not assigned to a measurement category.
3 These amounts relate to derivative financial instruments that are not included in hedge accounting.
1 The carrying amounts of derivative financial instruments used in hedge accounting are not included in the table as these financial instruments are not assigned to a measurement category.
2 This does not include lease receivables of €19,235 million (2022: €18,851 million) as these are not assigned to a measurement category.
Financial liabilities recognized at fair value through profit or loss³
Obligations from sales transactions
Miscellaneous other financial liabilities5
Financing liabilities4
Trade payables
Financial liabilities measured at (amortized) cost
Other financial assets recognized at fair value through profit or loss³
Equity instruments and debt instruments
Marketable debt securities and similar investments
Financial assets recognized at fair value through profit or loss
Equity instruments and debt instruments
Marketable debt securities and similar investments
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Measurement categories
Carrying amounts of financial instruments according to measurement categories¹
Further Information
In millions of euros
Receivables from financial services²
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
Other receivables and miscellaneous other financial assets
Financial assets recognized at fair value through other comprehensive income
Financial assets measured at (amortized) cost
At 31 December
2023
2022
95,472
5,715
5,611
4,460
649
671
347
6,607
584
131,324
12,204
5,848
5,447
4,236
4,481
129,451
12,850
106,517 109,192
171
768
1,641
96,549
68,976
66,698
7,419
8,100
15,972
858
17,679
959
3,013
3,113
2,013
2,409
1,155
92
At 31 December
-49
Financing liabilities
Recognized at fair value through profit or loss
1,439
1,439
1,507
1,507
Equity instruments and debt instruments
Other financial assets
959
959
92
92
Measured at cost
1,641
1,641
1,155
1,155
Recognized at fair value through other comprehensive income
4,460
4,460
649
649
671
671
125,987
3,113
3,113
3,013
3,013
2,463
2,463
2,660
2,660
5,611
Derivative financial instruments used in hedge accounting
Other receivables and miscellaneous other financial assets
Financial assets
584
347
347
Other financial assets recognized at fair value through profit or loss
768
768
858
858
Recognized at fair value through other comprehensive income
584
127,623
5,611
7,060
Fair value
2023
At 31 December
Carrying amount
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Combined Management Report
In millions of euros
Carrying amounts and fair values of financial instruments
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
See Note 1 for further qualitative descriptions of ac-
counting for and presentation of financial instruments
(including derivative financial instruments).
Miscellaneous other financial liabilities are carried at
amortized cost. Because of the predominantly short
maturities of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Financial liabilities recognized at fair value through
profit or loss comprise derivative financial instruments
not used in hedge accounting. For information regard-
ing these financial instruments as well as derivative
financial instruments used in hedge accounting, see the
notes above under Marketable debt securities and
similar investments, other financial assets.
Other financial liabilities
Contract and refund liabilities include obligations from
sales transactions that qualify as financial instruments.
Obligations from sales transactions should generally be
regarded as current. Due to the short maturities of
these financial instruments, it is assumed that their fair
values are equal to the carrying amounts.
Contract and refund liabilities
Reverse factoring agreements did not change the rele-
vant characteristics of a trade payable for the Group
for the liabilities concerned. As a result, there were no
reclassifications of these trade payables to financing
liabilities.
Carrying amount
285
Further Information
At 31 December
7,060
6,858
6,858
17,679
17,679
15,972
15,972
8,100
8,100
Recognized at fair value through profit or loss
7,419
86,343
85,549
89,847
88,211
Marketable debt securities and similar investments
Cash and cash equivalents
Trade receivables
Receivables from financial services
2022
Fair value
7,419
125,987
126,781
106,517
409
-2,045
-1,104
199
1,002
1,903
-2,045
2,454
1,303
3,047
3,007
-1,104
Net amounts
Gross and net amounts of financial instruments in the Consolidated Statement of Financial Position
Amounts subject to a master netting arrangement
Other financial liabilities²
2022
2023
2022
Other financial assets¹
2023
At 31 December
At 31 December
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial assets recognized at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial liabilities recognized at fair value through profit or loss (see Note 25).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
At 31 December
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value
Other financial assets recognized at fair value through profit or loss
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss.
Equity instruments and debt instruments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Marketable debt securities
In millions of euros
In millions of euros
Measurement hierarchy of financial assets and liabilities recognized at fair value
At the end of the reporting period, the Group reviews
whether reclassifications between the measurement
hierarchies are necessary compared to 31 December of
the previous year.
The following table provides an overview of the classi-
fication into measurement hierarchies of financial as-
sets and liabilities recognized at fair value (according to
IFRS 13).
Measurement hierarchy
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
287
For the determination of the credit risk from derivative
financial instruments which are allocated to the Level 2
measurement hierarchy, portfolios managed on the
basis of net exposure are applied.
Disclosure for recognized derivative financial instruments that are subject to an enforceable master netting arrangement or similar agreement
The following table shows the carrying amounts of the
derivative financial instruments subject to the de-
scribed arrangements as well as the possible financial
effects of netting in accordance with the master netting
arrangements.
The Group concludes derivative transactions in accord-
ance with the master netting arrangements (framework
agreement) of the International Swaps and Derivatives
Association (ISDA) and comparable national framework
agreements. However, these arrangements do not meet
the criteria for netting in the Consolidated Statement of
Financial Position, as they allow netting only in the case
of future events such as default or insolvency on the
part of the Group or the counterparties.
5,852
Miscellaneous other financial liabilities
2,283
2,283
1,115
1,115
Derivative financial instruments used in hedge accounting
171
171
5,852
188
Financial liabilities recognized at fair value through profit or loss
Other financial liabilities
Trade payables
107,417
12,204
12,204
12,850
12,850
109,192
106,007
188
Due to the short maturities of these financial instru-
ments, it is assumed that their fair values are equal to
the carrying amounts.
5,454
Contract and refund liabilities
Offsetting of financial instruments
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
286
To Our Shareholders
Contents
5,454
Annual Report 2023 | Mercedes-Benz Group
133,785
130,248
130,758
4,481
4,481
4,236
4,236
Financial liabilities
Obligations from sales transactions
132,010
Trade payables
Corporate Governance
Financing liabilities
Contents
Annual Report 2023 | Mercedes-Benz Group
In addition, the Mercedes-Benz Group issued irrevo-
cable loan commitments at 31 December 2023. These
loan commitments had not been utilized as of that
date. Further information with respect to these irrevo-
cable loan commitments is provided in Note 33.
At 31 December 2023, other financial obligations exist
from the acquisition of intangible assets, property,
plant and equipment and lease property of
€5,684 million (2022: €5,729 million).
Other financial obligations
At 31 December 2023, the best estimate for obligations
from contingent liabilities was €2,553 million (2022:
€4,122 million). The other contingent liabilities are
mainly related to the legal proceedings and product
warranties described in Note 30. Compared to the pre-
vious year, the decrease in contingent liabilities is a
result of discontinuing the business activities in Russia
and the disposal of contingent liabilities with the reali-
zation of the transaction.
Contingent liabilities
31. Contingent liabilities and
other financial obligations
Mercedes-Benz Group AG and its subsidiaries recog-
nize provisions in connection with pending or threat-
ened proceedings to the extent an obligation is proba-
ble and can be reasonably estimated. Such provisions
are recognized in the Group's Consolidated Financial
Statements and are based on estimates. If quantifiable,
contingent liabilities in connection with legal proceed-
ings are disclosed in the Group's Consolidated Finan-
cial Statements. Risks resulting from legal proceedings
sometimes cannot be assessed reliably or only to a
limited extent. Consequently, provisions recognized for
some legal proceedings may turn out to be insufficient
once such proceedings have ended. The Mercedes-
Benz Group may also become liable for payments in
legal proceedings for which no provisions were recog-
nized and/or contingent liabilities were disclosed. Un-
certainty exists with regard to the amounts or due
dates of possible cash outflows. Although the final
result of any such proceedings could materially affect
the Group's operating results and cash flows for a par-
ticular reporting period, the Mercedes-Benz Group
believes that it should not exert a sustained influence
on the Group's financial position.
Accounting estimates and manage-
ment judgements relating to all legal
proceedings
Further Information
282
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Contents
Annual Report 2023 | Mercedes-Benz Group
Since 2022, a class action has been pending in the
United States alleging claims based on a voluntary
recall of certain Mercedes-Benz ML-, GL- and R-Class
vehicles produced during the 2004-2015 model years
for potentially corroded brake boosters. Among other
things, the plaintiffs allege that the brake boosters in
such vehicles can corrode and lead to reduced braking
force. They allege failure to disclose the claimed defect
and assert various claims. A similar class action was
filed in Israel. The Mercedes-Benz Group considers the
lawsuits to be without merit and defends itself against
them.
In October 2021, a number of Australian Mercedes-
Benz dealers lodged a claim against Mercedes-Benz
Australia/Pacific Pty Ltd (MBAUP) with a Federal Court
in Australia. They allege that MBAUP forced the dealers
to accept a change in their business model from a
dealership model to an agency model and thus de-
prived them of the goodwill they created through their
investments in the Australian Mercedes-Benz dealer-
ship network. They seek reinstatement of the dealer-
ship model or, alternatively, compensation for the
damage they allegedly incurred. In August 2023, the
court dismissed the claims in their entirety. In January
2024, the plaintiffs appealed the decision. MBAuP con-
siders those claims to be without merit and continues
to defend itself against the claims.
Group AG continues to regard the pending claims as
being without merit, and the affected Group companies
will continue to defend themselves against the claims.
Contingent liabilities were disclosed to a low extent for
this topic.
As already reported, class actions in connection with
Takata airbags are pending in the United States, Cana-
da and Israel. The lawsuits are based on allegations
that, along with Takata entities and many other compa-
nies that sold vehicles equipped with Takata airbag
inflators, Mercedes-Benz Group companies and others
were allegedly negligent in selling such vehicles, pur-
portedly not recalling them quickly enough, and failing
to warn consumers about a potential defect and/or to
provide an adequate replacement airbag inflator. One
of the lawsuits in the United States also asserted
claims by automotive recyclers who alleged injury be-
cause they were not able to re-sell salvaged airbag
inflators that are subject to the Takata recall. This claim
has since then been finally dismissed. Also, the remain-
ing consumer class action in the United States was
dismissed against Mercedes-Benz Group AG in its en-
tirety, and against MBUSA in part. The plaintiffs have
appealed the dismissal of Mercedes-Benz Group AG
and the proceedings against MBUSA are still pending.
Since February 2023, the class actions in Canada were
discontinued by the plaintiffs; one of the class actions
was finally dismissed and the formal court dismissal for
the other class action is still pending. Mercedes-Benz
remaining lawsuit pending in Canada to be discontin-
ued and it will continue to defend itself against it until
the discontinuance is final. This development leads to a
material reduction of the risk associated with the class
actions. They therefore no longer qualify for separate
reporting, which is why the Mercedes-Benz Group will
no longer report on them in the future.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
281
To Our Shareholders
Financing liabilities are measured at amortized cost.
The fair values of bonds, loans, commercial paper,
deposits in the direct banking business and liabilities
from ABS transactions are calculated as present values
of the estimated future cash flows (taking account of
credit premiums and credit risks). Market interest rates
for the appropriate terms are used for discounting.
To Our Shareholders
283
To Our Shareholders
Corporate Governance
Other financial receivables and other financial assets
are carried at amortized cost. Because of the predomi-
nantly short maturities and the fundamentally lower
credit risk of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Combined Management Report
- derivative commodity hedging contracts; the fair
values of commodity hedging contracts (e.g. com-
modity forwards) are determined on the basis of cur-
rent reference prices with consideration of forward
premiums and discounts and default risks.
market interest rates appropriate to the remaining
terms of the financial instruments.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
284
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
derivative interest rate hedging contracts; the fair
values of interest rate hedging instruments (e.g. in-
terest rate swaps) are calculated on the basis of the
discounted estimated future cash flows (taking ac-
count of credit premiums and default risks) using the
– derivative currency hedging contracts; the fair values
of cross-currency interest rate swaps are determined
on the basis of the discounted estimated future cash
flows (taking account of credit premiums and default
risks) using the market interest rates appropriate to
the remaining terms of the financial instruments. The
measurement of currency forwards is based on mar-
ket quotes of forward curves. Currency options are
measured with option-pricing models using market
data.
Combined Management Report
Receivables from financial services
Other financial assets recognized at fair value through
profit or loss relate to derivative financial instruments
not used in hedge accounting. These financial instru-
ments as well as derivative financial instruments used
in hedge accounting comprise:
Marketable debt securities and equity instruments
recognized at fair value were measured using quoted
market prices at the end of the reporting period. If
quoted market prices are not available for these debt
and equity instruments, fair value measurement is
based on inputs that are either directly or indirectly
observable in active markets. Fair values are calculated
using recognized financial valuation models such as
discounted cash flow models or multiples.
Equity instruments are recognized at fair value through
other comprehensive income or at fair value through
profit or loss. Equity instruments recognized at fair
value through other comprehensive income are includ-
ed in the table Carrying amounts and fair values of
financial instruments and primarily comprise the shares
in Sila Nanotechnologies Inc., Momenta Global Limited
and Aston Martin Lagonda Global Holdings Plc. The
remaining investments recognized at fair value through
other comprehensive income comprise further invest-
ments not material on an individual basis.
Marketable debt securities are recognized at fair value
through other comprehensive income or at fair value
through profit or loss. Similar investments are meas-
ured at amortized cost and are not included in the
measurement hierarchy, as their carrying amounts are a
reasonable approximation of fair value due to the short
terms of these financial instruments and the funda-
mentally low credit risk.
Marketable debt securities and similar investments,
other financial assets
Due to the short terms and the fundamentally lower
credit risk of these financial instruments, it is assumed
that their fair values are equal to the carrying amounts.
Trade receivables and cash and cash equivalents
The fair values of receivables from financial services
with variable interest rates are estimated to be equal to
the respective carrying amounts, because the agreed
upon interest rates and those available in the market
do not significantly differ. The fair values of receivables
from financial services with fixed interest rates are
determined on the basis of discounted expected future
cash flows. Discounting is based on the current interest
rates at which similar loans with identical terms could
have been obtained at 31 December 2023 and 31 De-
cember 2022.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The table Carrying amounts and fair values of financial
instruments shows the carrying amounts and fair val-
ues of the respective classes of the Group's financial
instruments and contain the Group amounts, including
assets and liabilities held for sale. The fair values of
financial instruments were calculated on the basis of
market information available on the balance sheet
date. The following methods and assumptions were
used.
Carrying amounts and fair values of
financial instruments
32. Financial instruments
Further Information
Combined Management Report
Corporate Governance
Mercedes-Benz Cars is also striving to establish leader-
ship in assistance technologies and customer experi-
ence in conditional driving automation. Customers are
offered not only enhanced ride comfort and safety but
also an increasing reduction of driver stress and the
freedom to carry out certain activities while driving.
Today, with DRIVE PILOT, Mercedes-Benz Cars already
meets the demanding legal requirements for condi-
tional driving automation according to SAE Level 3 (pur-
suant to UN R157) - the first automotive company in
the world to do so. Mercedes-Benz Cars has even gone
one step further where parking is concerned: the
INTELLIGENT PARK PILOT preinstallation is a
series-production system that already enables com-
pletely automatic driverless parking (Automated Valet
Parking) according to SAE Level 4 in Germany.
Further Information
Mercedes-Benz Vans Strategy
The goal of Mercedes-Benz Vans is to offer the most
desirable vans and services worldwide. We want the
vans from Mercedes-Benz to represent far more than
a capital investment and to continue arousing enthusi-
asm. The strategy is based on four pillars:
Consolidated Financial Statements
24
The continued systematic pursuit of our profitability
and cash-flow objectives is a fundamental component
of the successful and sustained transformation of the
company. Mercedes-Benz Cars seeks to further opti-
mize its break-even point and take additional steps
towards reducing the cost base and improving the
industrial footprint. To this end, work is also proceeding
on further reducing fixed and variable costs as well as
on lowering the investments in property, plant and
equipment.
Contents
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Cars is also shifting its capital alloca-
tion with its sustainable business strategy. The imple-
mentation of further cost reductions by standardizing
battery platforms and creating scalable vehicle archi-
tectures is planned. Mercedes-Benz Cars also aims to
play a more active role along its supply chains in order
to safeguard and increase the resilience of these busi-
ness activities.
will be able to access a unique brand experience that
includes special new digital extras and product features
while control of the interface with customers can
remain in the Mercedes-Benz ecosystem. MB.OS will
create the basis for an even faster and more flexible
response to customer requirements in the future,
including during a product's life cycle. Another aim is to
establish smart connectivity between the vehicle, the
cloud and the IoT world (Internet of Things). Data secu-
rity and data protection play a key role for Mercedes-
Benz Cars here.
Lower cost base, improve industrial footprint and
increase supply chain resilience
Target premium segments and focus
on profitable growth
To Our Shareholders
Objectives and Strategy
Mercedes-Benz Vans has extensively shaped the van
market worldwide since the very beginning. As part of
the Mercedes-Benz brand family, the division continu-
ously sharpens its profile as a supplier of future-ori-
ented transport solutions for commercial and private
customers. Vans in the private segment are aligned with
the luxury positioning strategy of Mercedes-Benz Cars,
while commercial vans are marketed within the frame-
work of a premium strategy.
the total cost base
and improve the industrial
footprint
Embrace customers and grow lifetime revenues
Annual Report 2023 | Mercedes-Benz Group
In order to further underscore the claim to leadership
with regard to the digital experience, and to meet cus-
tomers' needs even better in future, Mercedes-Benz
Cars plans to introduce its own data-based and updata-
ble Mercedes-Benz Operating System (MB.OS) when it
launches the MMA platform. In this way, the customers
Driven by a highly qualified and motivated team
Accelerated by digitalization and data-driven business
Guided by economic, environmental and social sustainability
in electric drive and
digital experience
customers and grow
lifetime revenues
In both the commercial and the private segments,
Mercedes-Benz Vans stands for the highest levels of
quality, reliability and sustainability. A key element of
the strategy is the increased focus on high-sales and
high-margin markets and segments. In parallel with the
expansion of its activities in Europe, the division also
intends in future to further intensify its efforts in China
and North America. In addition, Mercedes-Benz Vans
plans to focus more strongly on the growing premium
segments in the most profitable sectors and to enter
into attractive segments at the upper end of the port-
folio through partnerships with body manufacturers.
Lower
Embrace
premium segments and
focus on profitable growth
Our Goal: we offer the world's most desirable vans and services
Embrace customers and grow lifetime revenues
use of online sales channels. This involves using the
existing Mercedes-Benz Cars Online Store platform and
expanding it to include van-specific features. One
measure here will make it possible for customers to
place follow-up orders quickly and easily directly online.
Another goal is to generate additional revenue poten-
tials at all points of customer contact: from advice to
sales and after-sales services.
Target
Mercedes-Benz Vans plans to ensure a high level of
profitability by means of a modified business model for
sales and a customer-focused service portfolio. The
focus here will be on pushing direct sales in order to
reduce selling expenses. With regard to the new-vehicle
business, Mercedes-Benz Vans is increasingly making
Lead
Mercedes-Benz Cars' expertise in the field of electric
mobility is to be extended, and the vertical integration
will also be increased by insourcing drive-system tech-
nologies for electric vehicles. To ensure efficient pro-
duction and promote the future development of battery
cells and modules, the division plans to work together
with partners to build various battery cell production
plants worldwide. Mercedes-Benz also purchases
battery cells from various partners on the world market
to supply its global production network. The company
thus has access to the latest technologies on the
market.
Integrity and compliance
EU Taxonomy
Lead in electric drive and digital experience
138 Dividend
139 Overall statement on future
development
90 Employee issues
98
Social issues
103
114
indicators
Contents
Risk and Opportunity Report
140
Risk and opportunity management
system and internal control system
127 Overall Assessment of
the Economic Situation
145
Risks and opportunities
140
136 Outlook for the key performance
135 The world economy and automotive
markets
135 Outlook
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
23
To Our Shareholders
Objectives and Strategy
Contents
Business model
35 Important events
40 Performance measurement system
42 Declaration on Corporate Governance
43 Economic Conditions and Business
Development
43 The world economy and automotive
markets
45 Business development
47 Investment and research activities
72 Mercedes-Benz Group AG
(Condensed version according
to HGB)
76 Non-Financial Declaration
76 Sustainability as a driver of change
83 Environmental issues
Mercedes-Benz Cars is endeavouring to become a
leader for electric mobility and the digital experience.
The division is creating the essential preconditions for
becoming all-electric, with ambitious product develop-
ment goals and the market launch of new locally emis-
sion-free and software-driven technologies. The,elec-
tric-first' platform MMA which will be launched next
year, marks the next step into the electric future of
Mercedes-Benz Cars. The platforms MB.EA and AMG.EA
will follow. Thus, Mercedes-Benz Cars will offer our
customers an all-electric alternative for each model.
To Our Shareholders
Objectives and Strategy
The basis for this success lies in the fact that Mercedes-
Benz Mobility is present in every phase of the customer
journey and puts customers at the centre of its strategy.
It all begins with the bundling of products such as
financing and leasing contracts including insurance and
extends to offering systems for seamless payment
methods, and the planned expansion of its charging
infrastructure to include more than 10,000 new charg-
ing points by 2030. The goal here is to offer customers
an extraordinary and luxurious brand experience and
to keep them in the Mercedes-Benz ecosystem by
offering customized follow-up contracts and solutions.
Combined Management Report
Power up our business: Mercedes-Benz Mobility is
automating and digitalizing internal processes in
order to increase efficiency
seamless and digital and includes rapid personal con-
sultation in those areas where digital solutions reach
their limits. The goal here is to not merely meet expec-
tations but to exceed them - both online and offline.
At Mercedes-Benz Mobility our customers are our focus.
Mercedes-Benz Mobility supports its customers by
helping them to simply choose their preferred product
and service options with seamlessly integrated prod-
ucts and services. Mercedes-Benz Mobility does all this
by providing an excellent service experience that is
Excite our customers: Mercedes-Benz Mobility is
seamlessly integrating itself into the Mercedes-Benz
ecosystem
Mercedes-Benz Mobility makes it as easy and conven-
ient as possible for customers to switch to electric
mobility. Various rental and subscription services make
it possible for people to use electric vehicles without
committing to long-term ownership. When a leasing
contract expires, Mercedes-Benz Mobility supports cus-
tomers who decide to switch to an electric vehicle.
Using the existing charging infrastructure as a basis,
Mercedes-Benz Mobility is setting up a high-power
charging network that will provide fast and easy charg-
ing. The high-power charging network will enable cus-
tomers to charge using green electricity. Wherever pos-
sible, the preference is to use power purchase
contracts for green electricity, or to use accredited pro-
viders' green power certificates for charging. Charging
in public areas, at home and for business purposes will
be transformed into a convenient, reliable and seam-
less experience.
Electrify our future: Mercedes-Benz Mobility is
supporting the transformation to electric mobility
with tailored products and services
Further Information
Mercedes-Benz Mobility is harmonizing internal pro-
cesses and system landscapes to deliver fast and relia-
ble contact with customers in a manner that focuses on
their specific requirements. Here Mercedes-Benz Mobil-
ity also relies on technology partnerships that enable it
to continuously develop its digital services and solu-
tions. Efficient processes and a highly motivated team
form the foundation of the excellent service that
Mercedes-Benz Mobility offers.
Consolidated Financial Statements
Combined Management Report
27
To Our Shareholders
Objectives and Strategy
Contents
Annual Report 2023 | Mercedes-Benz Group
31
We are strengthening
our high-perfor-
mance culture
Corporate Governance
Imagine it,
do it, live it
Go for data: Mercedes-Benz Mobility is evolving into
a data-driven company
that are needed to establish a data-driven way of think-
ing throughout the entire organization.
159
31 Corporate Profile
COMBINED MANAGEMENT REPORT
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Mobility is constantly optimizing its
own products and services with the aim of being able
to offer tailored customer solutions at all times.
Mercedes-Benz Mobility uses data analysis and artificial
intelligence to achieve this goal. The top-of-the-line
financial and mobility products and services the com-
pany offers are based on data, because data reflects
the lifestyles and preferences of its customers. Data
security and customer consent for the usage of the data
are paramount for Mercedes-Benz Mobility. Mercedes-
Benz Mobility develops and promotes teams and skills
30
Contents
Annual Report 2023 | Mercedes-Benz Group
MANAGEMENT REPORT
COMBINED
S EW 2141
The employees at the Mercedes-Benz Group achieve
success together as a highly qualified and motivated
team. Mercedes-Benz Mobility has a high-performance
culture in which the employees speak up, empower
each other, hold each other accountable and continu-
ally learn. All of these aspects are based on an impor-
tant foundation: trust. To enable all employees to iden-
tify with the company, Mercedes-Benz Mobility also
focuses on emotionalizing its strategy through targeted
communication measures.
Imagine it, do it, live it: Mercedes-Benz Mobility is
strengthening a high-performance culture
To Our Shareholders
25
We are developing
into a data-driven
company
Our services are
100% digital and
seamlessly inte-
grated into the world
of Mercedes-Benz
Mercedes-Benz Vans intends to use the comprehensive
digital strategy to exploit the potential of the digital
transformation as effectively as possible. Among other
things, this includes the optimal design of the digital
customer experience, the expansion of the digital prod-
uct and service portfolio as well as the digitalization of
internal business processes all while ensuring that
data is used responsibly. In all of its activities,
Mercedes-Benz Vans aims for the maximum networking
and synergy effects with Mercedes-Benz Cars.
data-driven business
Accelerated by digitalization and
Mercedes-Benz Vans has also made sustainability an
integral part of its strategy. One of the main goals for-
mulated in Ambition 2039 is to make the fleet of new
private and commercial vans net carbon-neutral over
the entire life cycle by 2039.
Guided by economic, environmental
and social sustainability
The strategic actions follow three principles:
Mercedes-Benz Vans is also reorganizing its production
network in order to become more efficient and flexible
and to prepare the network for an electric future. The
first manufacturing plant solely for all-electric vans in
Jawor, Poland, will set new standards worldwide for
productivity, lean processes and sustainability. The
reorganization of the production network will enable
Mercedes-Benz Vans to react quickly to changing mar-
ket conditions in the future while at the same time opti-
mizing its cost structure.
We are the key to our success
Mercedes-Benz Vans has launched a comprehensive
cost initiative at company, production and product level
in order to maintain profitability at a high level and to
improve competitiveness. The goals here include signif-
icantly optimizing production processes and lowering
production costs. This is to be achieved mainly by
reducing the complexity of the product portfolio and
focusing on efficiency in core production processes.
Mercedes-Benz is currently developing its own operat-
ing system MB.OS a flexible, modular and ser-
vice-based chip-to-cloud architecture that will enable
B2B-specific software solutions. Mercedes-Benz Vans
expects that MB.OS will also enable it to quickly expand
and optimize its digital extras and services. In addition,
the operating system will serve as the foundation for
the development of automated driving functions for
Society of Automotive Engineers (SAE) Level 2 and up.
On the basis of MB.OS and the technical possibilities it
offers, the division plans to achieve conditional driving
automation for private customers in accordance with
SAE Level 3 by the end of the decade. The objective is
to be able to offer partially automated driving in
accordance with SAE Level 2 with the introduction of
vehicles based on VAN.EA. With regard to the commer-
cial segment, Mercedes-Benz Vans is looking to achieve
highly automated driving in accordance with SAE Level
4 by the end of the decade in order to exploit the busi-
ness potential of fully automated (driverless) transport.
-
With the eCitan, EQT (WLTP: combined energy con-
sumption 100 kWh/km: 20,7-19,3; combined CO2 emis-
sions: 0 g/km; CO2 class: A), eVito, eVito Tourer, EQV
and eSprinter, Mercedes-Benz Vans offers each model
also as an all-electric version since 2023. Starting in
2026, the VAN.EA is a new, electric-only architecture
which is intended to provide the basis for all future
mid-size and large vans for both private and commer-
cial use.
Lead in electric drive and the digital experience
Further Information
Consolidated Financial Statements
Corporate Governance
Lower the total cost base and improve
the industrial footprint
We are digitalising
our processes end-
to-end, supported
by strategic partner-
ships in technology
and operations
The Mercedes-Benz Vans People Principles place peo-
ple and the team at the centre of our transformation.
These principles create the framework for communica-
tion, leadership and collaboration and require the com-
mitment and the innovative power of our employees. In
addition, Mercedes-Benz Vans offers its employees
qualification measures for future-oriented topics.
Contents
Go for data
Power up our
business
Excite our
customers
We support
the sustainable
transformation to
electric mobility
with tailored prod-
ucts and services
Electrify our
future
Our goal: by 2025, we will be the number one financial and mobility service provider
for luxurious driving in the electric era
Mercedes-Benz Mobility Strategy
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Mobility has defined five key areas
within its strategy. These make it possible for the com-
pany to continuously improve its products and services
and remain an attractive employer.
Mercedes-Benz Mobility Strategy
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
26
To Our Shareholders
Objectives and Strategy
Mercedes-Benz Mobility has a clear ambition: we are
the number one financial and mobility service provider
for luxurious driving in the all-electric era. The contri-
bution that Mercedes-Benz Mobility makes to the
success of the Mercedes-Benz Group is not only finan-
cial. Mercedes-Benz Mobility also helps to increase
brand loyalty, improve the customer experience, sup-
port the Group's strategic transformation and boost
sales figures.
Overall assessment of the risk
Mercedes-Benz Vans Strategy
48 Profitability, Liquidity and Capital
Resources, and Financial Position
48 Profitability
Annual Report 2023 | Mercedes-Benz Group
Embrace
customer base
by growing
Top-End Luxury
Expand
growth
on profitable
Focus
and act like
a luxury brand
Think
Our goal: we will build the world's most desirable cars
Mercedes-Benz Cars Strategy
Luxury has always been part of Mercedes-Benz' DNA,
and the company's thoughts and actions will focus even
more strongly on it in the future. Mercedes-Benz Cars'
claim is to offer the most desirable vehicles on the
basis of a combination of pioneering technologies,
exceptional aesthetics and integrated sustainability.
customers and
grow lifetime
Think and act like a luxury brand
Mercedes-Benz Cars Strategy
The commitment of the employees plays a key role in
the Mercedes-Benz Group's global success. Indeed, if
the transformation is to be successfully shaped, a team
that is ready and willing to embrace change and contin-
uously extend its knowledge and skills needs to be in
place. The company therefore puts lifelong learning and
the further education of employees at the centre of its
sustainable personnel development approach. As an
attractive employer, the company also offers flexible
working conditions, varied assignments and a variety of
development opportunities in the context of a culture
of cooperation based on trust. With its People Princi-
ples, the company defines how to communicate, lead
and collaborate.
Successful together with a highly qualified and
motivated team
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
21
To Our Shareholders
Objectives and Strategy
Contents
Annual Report 2023 | Mercedes-Benz Group
and opportunity situation
Mercedes-Benz Cars' goal is to build the world's most
desirable cars. The division aligns its actions in pursuit
of this goal with six strategic pillars.
revenues
In order to intensify and further boost customer loyalty,
the division is systematically creating unique customer
experiences along its entire customer journey and
addressing customers in an individualized and data-
driven manner within the Mercedes-Benz ecosystem.
One of the basic preconditions for this is comprehen-
sively digitalized sales and service processes that, for
example, are enabled by the stepwise transformation of
sales to the agency model. In this way, all channels
online and offline, and from consulting to service are
to be adapted to the dynamic customer requirements
and flexibly developed further. Moreover, customers
are to be provided with tailored and market-specific
offers that enthuse them about more than just the pur-
chase of vehicles. These offers include such things as
after-sales services and spare parts as well as over-the-
air (OTA) updates and digital extras. In this way,
Mercedes-Benz Cars intends to continuously enhance
the attractiveness of its products, safeguard their value
retention and increase the company's revenue through-
out the product life cycle.
in electric drive
and digital
experience
56 Liquidity and capital resources
66 Financial position
Lead
130 Takeover-Relevant Information
In the Top-End segment, Mercedes-Benz Cars boasts an
extraordinary brand portfolio that goes beyond the
Mercedes-Benz core brand. This portfolio also includes
the Mercedes-AMG and Mercedes-Maybach brands,
as well as the iconic G-Class product brand. The
Mercedes-Benz Cars Strategy will be used to unfold the
full potential of the Mercedes-Benz brand portfolio,
accelerate the development of the Top-End product
category and achieve additional EBIT growth.
Brand-specific formats and customer experiences are
also to be used to address new target groups. At the
same time, even stronger interrelationships are to be
established between the brands, in order to exploit
synergies in customer communications, for example.
Expand customer base by growing Top-End Luxury
and Top-End. Along with a clear focus on the customer,
the important ways in which this can be accomplished
are focusing and further developing the portfolio,
achieving strong pricing, and securing the margins.
These means will also be employed for the systematic
electrification of our models throughout the entire
Mercedes-Benz brand portfolio. Further profitable
growth is also being targeted in the highly profitable
product categories in particular. The consistent posi-
tioning as a luxury brand will also be used to achieve
Mercedes-Benz Cars' goal of sustainable high profitabil-
ity as a division that can rely on its resilient business
system, even in challenging times.
Mercedes-Benz Cars wants to make the transformation
towards an all-electric future profitable and to continue
its growth in the lucrative market segments. A clear
positioning as a luxury brand helps to maintain higher
profitability across all product categories - Entry, Core
Focus on profitable growth
Our goal for the future is a brand that embodies the
many facets of the lives of our customers from life-
style and technology to the digital realm, mobility and
culture and does this by working together with cul-
tural pioneers in a manner that is as inspired as it is
unexpected. We intend to achieve this goal by creating
an emotional bond with the Mercedes-Benz Cars
brands and getting people excited about them in con-
nection with every product and in every encounter we
have with customers and anyone who is interested in or
is a fan of the brand.
-
its strong roots
as an automaker that has created numerous style-de-
fining icons, and the pioneering spirit with which
Mercedes-Benz Car is driving the further development
of the automobile. Mercedes-Benz underscores its role
here through its standing as the world's most valuable
luxury automotive brand in the latest Best Global
Brands ranking from 2023. With the improvement from
eighth to seventh place in the rankings of the world's
most important brands, the company has once again
boosted the brand value by nine per cent as compared
to the previous year.
_
In this manner, the company also makes a connection
between two essential characteristics
and Explanation
Consolidated Financial Statements
Further Information
Lower
Sustainability, integrity and diversity as our foundation
footprint and
increase supply
chain resilience
Driven by a highly qualified and motivated team
Contents
Corporate Governance
Annual Report 2023 | Mercedes-Benz Group
cost base,
improve
industrial
22
To Our Shareholders
Objectives and Strategy
Combined Management Report
Combined Management Report
With respect to its financing and lease activities, the
Group holds collateral for customer transactions limit-
ing actual credit risk through its fair value. The value of
collateral generally depends on the amount of the fi-
nanced assets. The financed vehicles usually serve as
collateral. Furthermore, Mercedes-Benz Mobility limits
credit risk from financing and lease activities, for ex-
ample through deposits from customers.
The Mercedes-Benz Mobility segment has policies set-
ting the framework for effective risk management at a
global as well as a local level. In particular, these poli-
cies deal with minimum requirements for all risk-
relevant credit processes, the definition of financing
products offered, the evaluation of customer quality,
requests for collateral and the treatment of unsecured
loans and non-performing claims. The limitation of
concentration risks is implemented primarily by means
of global limits, which refer to customer exposures. To
comply with these limits, Mercedes-Benz Mobility ap-
plies approval standards and measures to avoid con-
centration risks. Only one customer was granted a
credit line in the form of a large loan. The Mercedes-
Benz Mobility portfolio consists of a large number of
small and medium-sized enterprises and private cus-
tomers from more than 30 countries. At 31 December
2023, this segment accounted for 72% of the portfolio.
Exposure to credit risk from financing and lease activi-
ties is monitored based on the portfolio subject to
credit risk. The portfolio subject to credit risk consists
of wholesale and retail receivables from financial ser-
vices and the portion of the operating lease portfolio
that is subject to credit risk. Receivables from financial
services comprise claims arising from finance lease
contracts and repayment claims from financing loans.
The operating lease portfolio is reported under equip-
ment on operating leases in the Group's Consolidated
Statement of Financial Position. Lease payments due
from operating lease contracts are recognized in re-
ceivables from financial services.
Receivables from financial services
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
299
Corporate Governance
The Mercedes-Benz Group's financing and leasing ac-
tivities are primarily focused on supporting the sales of
the Group's automotive products. As a consequence of
these activities, the Group is exposed to credit risk,
which is monitored and managed based on defined
standards, guidelines and procedures. The Mercedes-
Benz Group manages its credit risk irrespective of
whether it is related to a financing contract or to an
operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Mer-
cedes-Benz Mobility refer to the entire financing and
leasing business, unless otherwise specified.
Liquid assets consist of cash and cash equivalents and
marketable debt securities and similar investments.
With the investment of liquid assets, banks and issuers
of securities are selected very carefully and diversified
in accordance with a limit system. Liquid assets are
mainly held at financial institutions within and outside
Europe with high creditworthiness, as bonds issued by
German federal states and as money market funds. In
connection with investment decisions, priority is placed
on the borrower's very high creditworthiness and on
balanced risk diversification. The limits and their utili-
zation are reassessed continuously. In this assessment,
the Mercedes-Benz Group also considers the credit risk
assessment of its counterparties by the capital mar-
kets. In line with the Group's risk policy, most liquid
assets are held in investments with an external rating
of "A" or better. Liquid assets are thus not subject to a
material credit risk and are allocated to stage 1 of the
impairment model under IFRS, which is based on ex-
pected credit risk.
Contents
Annual Report 2023 | Mercedes-Benz Group
1 The maximum exposure information presented in the table refers to Group amounts,
including assets and liabilities held for sale.
Liquid assets
551
284
Financial guarantees
3,234
2,476
For the assessment of the default risk of retail and
small business customers, scoring systems are applied
to evaluate their creditworthiness. Corporate custom-
ers are evaluated using internal rating instruments.
Both evaluation processes use external credit bureau
data if available. The scoring and rating results as well
as the availability of security and other risk mitigation
instruments, such as deposits, guarantees and, to a
lesser extent, residual debt insurances, are essential
elements for credit decisions.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Trade receivables are mostly receivables from world-
wide sales of vehicles and spare parts. The credit risk
from trade receivables encompasses the default risk of
customers, e.g. dealers and general distribution com-
panies, as well as other corporate and private custom-
ers. In order to identify credit risks, the Mercedes-Benz
Group assesses the creditworthiness of customers. The
Mercedes-Benz Group manages its credit risk from
trade receivables using appropriate IT applications and
databases on the basis of internal policies which have
to be followed Group-wide.
To Our Shareholders
Note
Further information on trade receivables and the status
of loss allowances recognized is provided in Note 19.
For impairments of trade receivables, the simplified
approach is applied, according to which these receiva-
bles are allocated to stage 2. Credit losses until maturi-
ty for these trade receivables are recognized upon
initial recognition.
These procedures are defined in the export credit
guidelines, which have Group-wide validity.
- letters of credit.
first-class bank guarantees and
- credit insurances,
Depending on the creditworthiness of the customers,
the Mercedes-Benz Group establishes credit limits and
limits credit risks with the following types of collateral:
In this context, the Annual Financial Statements and
other relevant information on the general distribution
companies, such as payment history, are used and
assessed.
For trade receivables from the export business, the
Mercedes-Benz Group also evaluates its customers'
creditworthiness by means of an internal rating process
with consideration of the respective country risk.
Contents
A significant proportion of the trade receivables from
each country's domestic business is secured by various
country-specific types of collateral. This collateral in-
cludes conditional sales, guarantees and sureties, as
well as mortgages and deposits from customers.
Trade receivables
For information on credit risks included in receivables
from financial services, see Note 14. Information on the
measurement of expected credit losses is provided in
Note 1.
The allowance ratio decreased compared to the previ-
ous year due to the sale of the Russian Mercedes-Benz
Mobility companies for which very high provisions were
recorded in 2022. The default rate has increased com-
pared to the very low figures in the previous year,
mainly due to a challenging lending environment in the
United States.
cant extent.
If, in connection with contracts, a worsening of pay-
ment behaviour or other causes of a credit risk are
recognized, collection procedures are initiated by
claims management to obtain the overdue payments of
the customer, to take possession of the asset financed
or leased or, alternatively, to renegotiate the impaired
contract. Internal restructuring policies and practices
for loan and leasing contracts are based on the indica-
tors or criteria which, in the judgement of local man-
agement, indicate that repayment will probably contin-
ue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected
proceeds to be derived from immediate repossession
and remarketing. In the case of receivables from finan-
cial services, significant modifications of financial as-
sets were only made in rare cases and to an insignifi-
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
300
Irrevocable loan commitments
3,113
(assets only)
32
In millions of euros
Maximum risk position
2022
2023
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
291
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
22,830
Further Information
Use of derivatives
The Mercedes-Benz Group uses derivative financial
instruments exclusively for hedging financial risks that
arise from its operating or refinancing activities or from
its liquidity management. These are mainly currency
risks; interest rate risks and commodity price risks,
which have been defined as risk categories. For these
hedging purposes, the Group mainly uses currency
forward transactions, cross-currency interest rate
swaps, interest rate swaps, options and commodity
forwards.
The following table shows the amounts for the trans-
actions designated as hedging instruments.
Most of the transactions for which the effects from the
measurement of the hedging instrument and the un-
derlying transaction to a large extent offset each other
in the Consolidated Statement of Income were mostly
not included in the hedge accounting.
Even if derivative financial instruments do not or no
longer qualify for hedge accounting, these instruments
still serve to hedge financial risks from business opera-
tions. A hedging instrument is terminated when the
hedged transaction no longer exists or is no longer
expected to occur.
Explanations of the hedging of exchange-rate risks,
interest rate risks and commodity price risks can be
found in Note 33 in the sub-item Finance market risk.
Amounts for the transactions designated as hedging instruments
In millions of euros
Carrying amount of the hedging instruments
Other financial assets current
Information on derivative financial
instruments
3,013
24,739
14
financial assets
Other receivables and
584
347
32
(assets only)
hedge accounting
instruments not used in
Derivative financial
2,463
Receivables from
financial services
2,660
hedge accounting
instruments used in
Derivative financial
receivables
8,100
7,419
19
Trade
85,549
88,211
32
Liquid assets
Maximum risk positions of financial assets,
irrevocable loan commitments and financial guarantees¹
Other financial assets non-current
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
296
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
-1,048
-658
984
1,485
413
-166
-658
-227
-1
1
-1
-1
-
-9
Further Information
-2
Nominal values of derivative financial instruments
used in hedge accounting
The following table shows the nominal values of de-
rivative financial instruments used in hedge accounting
entered into for the purpose of hedging currency risks,
interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
18,297
24,200
Total
>5 years
5 years
<1 year
Total
>5 years
1 year up to
5 years
<1 year
1 year up to
Maturity of nominal amounts
2022
At 31 December
Maturity of nominal amounts
2023
At 31 December
Currency risk
In millions of euros
Nominal amounts of derivative financial instruments used in hedge accounting
The maturities of the derivative financial instruments
generally correspond with those of the underlying
transactions. The realization of the underlying transac-
tions is expected to correspond with the maturities of
the hedging transactions shown in the following table.
At 31 December 2023, the Mercedes-Benz Group uti-
lized derivative financial instruments with a maximum
maturity of 71 and 115 months, respectively, (2022: 57
and 127 months) as hedges for currency risks and inter-
est rate risks.
-42
-51
-74
1,168
-74
-1,048
-642
984
reserves for hedge costs
2022
2023
2022
Thereof
2023
Reserves for derivative financial
instruments
Balance at 31 December
Taxes on changes in unrealized gains/losses and reclassifications
Other changes
Commodity price risk - inventory purchases
Currency risk procurement
Reclassification to cost of acquisition of non-financial assets before taxes
Interest rate risk
Currency risk
Reclassification to profit and loss before taxes
Commodity price risk - inventory purchases
878
-82
-1,772
1,799
37
-42
-51
35
11
15
428
688
1,479
-489
50
428
1,490
-474
4
-5
-3
1,320
-631
-1,767
-79
-446
688
42,547
27,727
27,945
Average interest rate - €
Cash flow hedges
-1.46%
-2.99%
Average interest rate - USD
-0.95%
-2.95%
Average interest rate - €
Fair-value hedges
Interest rate risk
0.87
0.88
7.29
1.10
7.37
1.10
2022
At 31 December
2023
GBP per €
CNY per €
USD per €
3.72%
Average interest rate - USD
3.21%
Commodity price risk
The following table shows the maximum risk positions
at the balance sheet date.
The maximum risk positions of financial assets which
are generally subject to credit risk are equal to their
carrying amounts at the balance sheet date (without
consideration of collateral, if available). There is also a
risk of default from irrevocable loan commitments
which had not been utilized as of that date, as well as
from financial guarantees. The maximum risk position
in these cases is equal to the expected future cash
outflows.
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual
payment obligations. Credit risk encompasses both the
direct risk of default and the risk of a deterioration of
creditworthiness as well as concentration risks.
Credit risk
The market sensitive instruments, including equity and
debt securities, that the plan assets hold to finance
pension and other post-employment healthcare bene-
fits, are not included in the following quantitative and
qualitative analysis. See Note 22 for additional infor-
mation on the Mercedes-Benz Group's pension and
post-employment healthcare benefits.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
298
Currency risk
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The Group manages and monitors these risks primarily
through its operating and financing activities and, if
required, through the use of derivative financial in-
struments. The Mercedes-Benz Group uses derivative
financial instruments exclusively for hedging financial
risks that arise from its business operations or refi-
nancing activities or liquidity management. Without
these derivative financial instruments, the Group would
be exposed to higher financial risks. Additional infor-
mation on financial instruments and especially on the
volumes of the derivative financial instruments used is
included in Note 32. The Mercedes-Benz Group regu-
larly evaluates its financial risks with due consideration
of changes in key economic indicators and up-to-date
market information.
propriate risk limits and controls and to monitor the
risks by means of reliable and up-to-date administra-
tive and information systems. The guidelines and sys-
tems are regularly reviewed and adjusted to changes in
markets and products.
The Mercedes-Benz Group has established internal
policies for risk controlling procedures and for the use
of financial instruments, including a clear segregation
of duties with regard to financial activities, settlement,
accounting and the related controlling. The guidelines
upon which the Group's risk management processes for
financial risks are based are designed to identify and
analyse these risks throughout the Group, to set ap-
As a result of its businesses and the global nature of its
operations, the Mercedes-Benz Group is exposed to
market risks from changes in foreign currency ex-
change-rates and interest rates, while price risks arise
from the procurement of raw materials and energy, for
example. An equity price risk results from investments
in listed companies. In addition, the Group is exposed
to credit risks from its leasing and mainly financing
activities and from its business operations (trade re-
ceivables). Furthermore, the Group is exposed to coun-
try and liquidity risks relating to its credit and market
risks or a deterioration of its business operations or
financial market disturbances. If these financial risks
materialize, they could adversely affect the Group's
profitability, liquidity and capital resources and finan-
cial position.
General information on
financial risks
33. Management of financial risks
884
2.08%
1.87%
Platinum (in USD per troy ounce)
Contents
Interest rate risk
Average prices of hedging instruments for the major risks
Average prices of hedging instruments
1,336
2,813
1,195
thereof major hedging instruments affected by the reform of the interest rate benchmark
in the currency USD
22,924
3,521
15,229
4,174
19,140
43,588
6,857
30,967
5,764
39,391
2,795
1,593
27,961
13,144
4,403
Fair-value hedges
8,635
Interest rate risk
55,672
5,344
Cash flow hedges
thereof major hedging instruments affected by the reform of the interest rate benchmark¹
in the currency USD
4,232
Further Information
297
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 The volumes of risk exposure in cash flow hedges directly affected by the reform of the interest rate benchmark are generally in line with the reported nominal values of the hedging instruments because of the basic hedging ratio of 1. Further information on the reform of the
interest rate benchmark is provided in Note 33.
7
The following table shows the average prices of hedg-
ing instruments by risk category for the major risks.
7
3,914
1,336
2,578
20,664
3,336
15,738
1,590
20,251
1,202
14,817
Commodity price risk
Currency risk
-83
Balance at 1 January
2022
Interest
rate risk
Currency
risk
Commodity
price risk
rate risk
Interest
Currency
risk
2023
In millions of euros
Cash flow hedges and hedges of net investments in foreign operations
The Group also partially hedges the currency risk of
selected investments with the application of derivative
or non-derivative financial instruments. Neither in the
reporting year nor in the previous year were there any
active hedges of net investments in foreign operations.
The Mercedes-Benz Group uses cash flow hedges for
hedging currency risks, interest rate risks and commod-
ity price risks. The amounts related to items designated
as cash flow hedges are shown in the following table.
Cash flow hedges and hedges of net investments in
foreign operations
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
292
Unrealized gains/losses before taxes
Contents
Annual Report 2023 | Mercedes-Benz Group
Commodity
price risk
Fair-value changes of the hedged items¹
-1,879
628
293
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
-270
-270
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
thereof hedges of net investments in foreign operations
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
-4
42
Discontinued/terminated hedges
1,501
1,339
870
1,858
Balance of the reserves for derivative financial instruments (before taxes)
Continuing hedges
-5
-1,334
-1,319
-229
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1 Includes the following hedging instruments: currency forwards, currency options, currency swaps and commodity forwards.
2 Includes the following hedging instruments: interest rate swaps, cross-currency interest rate swaps.
-1,820
33
23
100
442
904
2022
2023
2022
Commodity price risk
Cash flow hedges¹
At 31 December
Interest rate risk
Fair-value hedges²
At 31 December
2023
2022
2023
2022
2023
At 31 December
At 31 December
Cash flow hedges²
Cash flow hedges¹
Currency risk
Other financial liabilities non-current
Other financial liabilities current
2
1
1
760
625
1,334
-628
1,321
1,877
Fair value changes³
1,191
573
44
44
5
376
36
45
7
7
629
265
4
1,539
858
456
181
Further Information
To Our Shareholders
Expenses of €2 million (2022: income of €2 million)
were attributable to the hedge ineffective portion of the
hedges.
-599
non-current
Financing liabilities
-33
-44
current
Financing liabilities
thereof hedge adjustments
17,943
14,177
non-current
Financing liabilities
3,395
4,203
current
Financing liabilities
2022
2023
Interest rate risk
Carrying amounts of the hedged items
In millions of euros
-1,192
Fair-value changes of the hedged items¹
-625
1,820
In millions of euros
Reconciliation of reserves for derivative financial instruments
The gains and losses on items designated as cash flow
hedges are shown in the following table.
The following table shows the reconciliation of the
reserves for derivative financial instruments (excluding
reserves for hedges of net investments in foreign oper-
ations).
Reserves for derivative financial instruments
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
295
Fair-value hedges
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Further Information
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
294
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
8
8
from inactive hedges remaining in the
statement of financial position
Accumulated amount of hedge adjustments
Contents
Neither in the current year nor in the previous year
were there any results attributable to the ineffective
portion of the hedge with fair-value hedges.
At 31 December 2023, the balance of reserves for
hedges of net investments in foreign operations
amounted to €189 million (2022: €189 million).
Fair-value hedges
Cost of
sales
Interest
expense
Cost of
sales
Cost of
sales
Revenues
Commodity
price risk
Interest rate risk
Currency risk
For hedges that have been transferred because the hedged item has affected profit or loss
Reclassification of gains and losses from reserves for derivative financial instruments to the statement of income
For hedges for which the hedged future cash flows are no longer expected to occur
1,979
Gains and losses recognized in other comprehensive income
For hedges that have been transferred because the hedged item has affected profit or loss
For hedges for which the hedged future cash flows are no longer expected to occur
Reclassification of gains and losses from reserves for derivative financial instruments to the statement of income
Gains and losses recognized in other comprehensive income
2023
Line item in the Statement of Income in which the reclassifications are included
In millions of euros
Gains and losses on cash flow hedges and hedges of net investments in foreign operations
During 2022, shifts in delivery dates and volumes oc-
curred in various markets, making some planned vehicle
sales in specific currencies unlikely, with the conse-
quence that hedge accounting for these sales had to be
terminated.
The Group uses fair-value hedges primarily for hedging
interest rate risks. The amounts of the items hedged
with fair-value hedges are included in the following
table.
2022
-100
This particularly affected the currency CNY as a conse-
quence of the Covid-19 pandemic. The reclassification
from the reserves for derivative financial instruments to
the Consolidated Statement of Income did not result in
any material effects.
-528
-100
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
31
-20
1,045
-2
6
Corporate Governance
1,183
152
6
1,313
29
-13
-1,111
-1
-70
3
5
Effects of currency (translation risk)
Because currency risks from liquidity investments or
liabilities in foreign currencies are generally fully offset
due to the Group's investment or refinancing and the
derivative financial instruments used in this regard,
these financial instruments were not included in the
value-at-risk calculation presented.
4
The development of the value at risk from foreign cur-
rency hedging in 2023 was primarily shaped by a de-
crease in the volume of hedging transactions and vola-
tilities.
2
For purposes of Mercedes-Benz Group's Consolidated
Financial Statements, the income and expenses and
the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore,
period-to-period changes in exchange-rates may cause
translation effects that have a significant impact on, for
example, revenue, segment profit/loss (EBIT) and as-
sets and liabilities of the Group. Unlike exchange-rate
transaction risk, currency translation risk does not nec-
essarily affect future cash flows. The Group's equity
position reflects changes in carrying amounts caused
by exchange-rates. In general, the Mercedes-Benz
Group does not hedge against currency translation risk.
351
The Group's investments in liquid assets or refinancing
activities are generally selected so that possible cur-
rency risks are minimized. Transaction risks arising
from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing
on money and capital markets are generally hedged
against currency risks at the time of investing or refi-
nancing in accordance with the Mercedes-Benz Group's
internal policies. The Group uses appropriate derivative
financial instruments (e.g. cross-currency interest rate
swaps) to hedge against currency risk.
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
To Our Shareholders
308
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Interest rate risk
The Mercedes-Benz Group uses a variety of interest
rate sensitive financial instruments to manage the li-
quidity needs of the Group. However, the majority of
interest rate sensitive assets and liabilities results from
the financial services business operated by Mercedes-
Benz Mobility. The Mercedes-Benz Mobility companies
enter into transactions with customers that primarily
result in fixed-rate receivables. The Mercedes-Benz
Group's general policy is to match the refinancing of
interest-bearing assets in terms of maturities and in-
terest rates wherever economically feasible. However,
for a narrowly limited portion of the receivables portfo-
lio in selected and developed markets, Mercedes-Benz
Mobility does not match refinancing in terms of maturi-
ties in order to take advantage of market opportunities.
This results in the Mercedes-Benz Group being ex-
posed to interest rate risks.
275
financial instruments such as interest rate swaps. The
interest rate risk position is assessed by comparing
assets and liabilities for corresponding maturities, in-
cluding the impact of the relevant derivative financial
instruments.
Contents
A committee consisting of representatives of the rele-
vant segments and the corporate functions manages
the interest rate risk by setting targets for the interest
rate risk position. The Corporate Treasury department
and the local Mercedes-Benz Group companies are
jointly responsible for achieving these targets. As sepa-
rate functions, the Treasury Controlling and the Mer-
cedes-Benz Mobility Controlling & Reporting depart-
ment monitor target achievement on a monthly basis.
In order to achieve the targeted interest rate risk posi-
tions in terms of maturities and interest rate fixing
periods, the Mercedes-Benz Group also uses derivative
1,109
295
275
2023
Derivative financial instruments are also used in con-
junction with the refinancing related to the automotive
segments and liquidity management. The Mercedes-
Benz Group steers the funding activities of the automo-
tive segments and the financial services business at
Group level.
2022
Year-end
High
Low
Average
Year-end
High
Low
Average
612
189
539
711
814
1,372
814
1,007
175
214
492
The table Value at risk for exchange risk, interest rate
risk and commodity price risk shows the period-end,
high, low and average value-at-risk figures of the inter-
est rate risk for the 2023 and 2022 portfolios of inter-
est rate sensitive primary financial instruments and
derivative financial instruments of the Group, including
the financial instruments of the financial services busi-
ness. Liabilities from leasing contracts for which the
Mercedes-Benz Group acts as a lessee are not included
in the value-at-risk of the interest rate risk. Average
exposure has been computed on an end-of-quarter
basis.
Annual Report 2023 | Mercedes-Benz Group
Hedge accounting
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
34. Segment reporting
Reported segments
The Group comprises the segments Mercedes-Benz
Cars, Mercedes-Benz Vans and Mercedes-Benz
Mobility.
The breakdown of the segments corresponds to the
internal organizational and reporting structure. The
vehicle segments develop and manufacture premium
and luxury cars as well as vans. In addition to the Mer-
cedes-Benz brand, the brand portfolio of the Mer-
cedes-Benz Cars segment encompasses the brands
Mercedes-AMG and Mercedes-Maybach, as well as the
G-Class product brand. Mercedes me provides access
to the digital services of Mercedes-Benz Cars. At Mer-
cedes-Benz Vans, the vans are sold under the Mer-
cedes-Benz brand. Corresponding spare parts and
accessories are also sold.
The Mercedes-Benz Mobility segment supports the
sales of the Mercedes-Benz Group's automotive brands
worldwide. The product range primarily includes cus-
tomized mobility and financial services: from leasing
and financing packages for end customers and dealers
to insurance solutions, flexible subscription and rental
models and fleet management services for business
customers, with the latter primarily offered via the
Athlon brand. Furthermore, Mercedes-Benz Mobility is
310
active in the area of innovative and digital mobility
services, seamless payment methods and the expan-
sion of the charging infrastructure.
The reconciliation includes functions and services pro-
vided by the Group's headquarters as well as by equity
investments not allocated to the segments (e.g. Daim-
ler Truck Holding AG). In addition, the reconciliation
includes items at the corporate level and the effects on
earnings of eliminating intra-Group transactions be-
tween the segments.
Internal management and
reporting structure
The internal management and reporting structure at
the Mercedes-Benz Group is principally based on the
accounting policies according to IFRS that are de-
scribed in Note 1.
The measure of the Group's net profit or loss used by
the Mercedes-Benz Group's management and reporting
structure is referred to as "EBIT". EBIT comprises gross
profit, selling and general administrative expenses,
research and non-capitalized development costs, other
operating income/expense, and the gains/losses on
equity-method investments, as well as other financial
income/expense.
In justified individual cases, effects on the Group's
Consolidated Statement of Income, Consolidated
Statement of Financial Position, and Consolidated
Statement of Cash Flows are not allocated to the cor-
responding segment based on a legal point of view,
but the segment report rather follows an economic
approach.
Intersegment revenue is principally recorded at prices
that approximate market terms.
Transactions between the segments are generally elim-
inated in the reconciliation. The elimination of effects
connected with intra-Group transfers of equity invest-
ments principally takes place in the segments involved.
The effects on earnings at the Group are normally rec-
ognized in the corresponding segment upon comple-
tion of the external transaction. Some simplifications
have been made in the segment reporting with regard
to accounting for leasing agreements in connection
with intra-Group transactions.
Segment assets principally comprise all assets. The
assets of the Mercedes-Benz Cars and Mercedes-Benz
Vans segments exclude income tax assets, assets
from defined benefit pension plans and other post-
employment benefit plans, and certain financial in-
struments (including liquidity).
Commodity price risk
Reconciliation
To Our Shareholders
Contents
The Mercedes-Benz Group predominantly holds in-
vestments in shares of companies which are classified
as long-term investments, some of which are account-
ed for in the Consolidated Financial Statements using
the equity method, such as the share in Daimler Truck
Holding AG and BBAC. These investments are not in-
cluded in a market risk assessment by the Group.
When designating derivative hedging instruments, the
Mercedes-Benz Group generally applies a hedge ratio
of 1. The respective volumes, interest curves, curren-
cies and maturity dates of the underlying transaction
and the hedging instrument are generally matched. In
the case of combined derivative financial instruments
for interest currency hedges, the cross-currency basis
spread is not designated into the hedge relationship,
but deferred as a hedging cost in other comprehensive
income and recognized in profit or loss over the hedge
term. The Group ensures an economic relationship
between the underlying transaction and the hedging
instrument by ensuring consistency of interest rates,
maturity terms and nominal amounts. In the case of
hedging for ABS transactions of private placements,
the risk of the market interest rate component is partly
protected, which historically covers on average more
than 70% of the change in value of the total interest
rate. The effectiveness of the hedge is assessed at the
beginning and during the hedging relationship using the
hypothetical derivative method. Possible sources of
ineffectiveness of the hedging relationship are:
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
309
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
- Effects of the credit risk on the fair value of the
hedging instruments in use which are not reflected in
the change in the hedged interest rate risk.
-
No perfect match for individual parameters of the
underlying hedged transactions and the hedging in-
struments used.
- Premiums on hedging instruments for hedging ABS
transactions.
There were no material effects on earnings in the years
2022 and 2023.
Commodity-price risk
The Mercedes-Benz Group is exposed to the risk of
changes in market prices (e.g. for raw materials and
energy) in connection with procuring manufacturing
supplies used in production. The Mercedes-Benz Group
usually counteracts the risk of short-term fluctuations
in market prices by means of short and medium-term
price escalation clauses or fixing of purchase prices in
the supply contracts. The Mercedes-Benz Group con-
cludes e.g. power purchase agreements for wind and
solar energy in order to protect itself from fluctuations
in energy prices and ensure long-term, sustainable
procurement of electricity.
A small portion of the raw-material price risk relating to
the forecast procurement of precious metals was
hedged with the use of derivative financial instruments.
The Mercedes-Benz Group has decided to suspend
these hedging strategies for precious metals until fur-
ther notice. The previously existing hedges expired in
2023.
The table Value at risk for exchange-rate risk, interest
rate risk and commodity price risk shows the period-
end, high, low and average value-at-risk figures for the
2022 portfolio of derivative financial instruments used
to hedge commodity price risk. Average exposure has
been computed on an end-of-quarter basis. The trans-
actions underlying the derivative financial instruments
are not included in the value-at-risk presentation.
Derivative financial instruments without
hedge accounting
In 2023, the nominal volumes of hedging instruments
not designated in a hedging relationship, amounted to
€9 billion (2022: €12 billion) for derivatives used to
hedge interest rate risks and €13 billion (2022: €15 bil-
lion) for derivatives used to hedge exchange-rate risks,
as well as €644 million (2022: €644 million) for deriva-
tives used to hedge commodity price risks (energy and
raw materials).
Equity-price risk
In the course of 2023, changes in the value at risk of
interest rate sensitive financial instruments were pri-
marily determined by the development of interest rate
volatilities.
Interest rate risk
630
In millions of euros
197
635
951
681
217
275
341
430
500
2,444
15,660
4,252
6,559
16,673
26,397
47,842
117,383
Cash outflows
thereof with gross settlement
Derivative financial instruments³
thereof lease liabilities (undiscounted)
Financing liabilities²
≥ 2029
78
45
-1
-3
246
406
thereof with net settlement
-51
-226
-614
-1,123
-2,802
-13,768
-18,584
Cash inflows
2028
48
1,161
2,913
14,157
19,129
-3
-6
16
38
111
389
545
220
2027
2026
2025
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group manages these risks via
country exposure limits (e.g. for hard currency portfoli-
os of financial services entities). An internal rating sys-
tem serves as a basis for the Mercedes-Benz Group's
risk-oriented country exposure management; it assigns
all countries to risk classes, with consideration of both
external ratings and capital market indications of coun-
try risks.
The Mercedes-Benz Group is exposed to country risk
mainly resulting from cross-border funding or collat-
eralization of Group companies and customers, from
investments in Group companies, associated compa-
nies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise
from cross-border cash deposits at financial institu-
tions.
Country risk is the risk of economic loss arising from
changes of political, economic, legal or social condi-
tions in the respective country, e.g. resulting from sov-
ereign measures such as expropriation or interdiction
of foreign currency transfers.
Country risk
The maximum potential obligations resulting from fi-
nancial guarantees amounted to €284 million at 31
December 2023 (2022: €551 million) and included lia-
bilities recognized at 31 December 2023 in the amount
of €4 million (2022: €7 million). Financial guarantees
represent contractual arrangements. These guarantees
generally provide that in the event of default or non-
payment by the primary debtor, the Group will be re-
quired to settle such financial obligations generally up
to a contractually agreed amount.
Financial guarantees
The Mercedes-Benz Mobility segment in particular is
exposed to credit risk from irrevocable loan commit-
ments to end customers and retailers. At 31 December
2023, irrevocable loan commitments amounted to
€2,476 million (2022: €3,234 million). These loan com-
mitments had a maturity of less than one year and are
not subject to a material credit risk based on the cur-
rent state of knowledge.
Irrevocable loan commitments
The Mercedes-Benz Group is exposed to credit risk
only to a small extent with respect to other receivables
and financial assets included in other financial assets in
2023 and 2022.
To Our Shareholders
Other receivables and financial assets
Derivative financial instruments
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
301
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Exchange-rate risk
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its
operational business, financing activities or liquidity
management. The Mercedes-Benz Group manages its
credit risk exposure in connection with derivative fi-
nancial instruments through a limit system, which is
based on the review of each counterparty's financial
strength. This system limits and diversifies the credit
risk. As a result, the Mercedes-Benz Group is exposed
to credit risk only to a small extent with respect to its
derivative financial instruments. In accordance with the
Group's risk policy, most derivatives are contracted
with counterparties which have an external rating of
"A" or better.
86
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
2024
Total
Further Information
303
In millions of euros
Liquidity runoff for liabilities and financial guarantees¹
The following liquidity runoff shows how the cash flows
in connection with liabilities, derivative financial in-
struments and irrevocable loan commitments and fi-
nancial guarantees as at 31 December 2023 may affect
the Group's future liquidity situation.
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Governance
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Information on the Group's financing liabilities is also
provided in Note 24.
From an operating point of view, the management of
the Group's liquidity exposures is centralized by a daily
cash-pooling process. This process enables the Mer-
cedes-Benz Group to manage its liquidity surplus and
liquidity requirements according to the actual needs of
the Group and of the companies of the Group. The
Group's short-term and mid-term liquidity management
takes into account the maturities of financial assets
and financial liabilities and estimates of cash flows
from business operations.
At 31 December 2023, the liquidity of the Mercedes-
Benz Group amounted to €22.8 billion (2022:
€24.7 billion). In 2023, significant cash inflows resulted
from the business of the Mercedes-Benz Cars and Mer-
cedes-Benz Vans segments. Furthermore, dividends
received from Daimler Truck Holding AG and Beijing
Benz Automotive Co., Ltd. in particular had a positive
effect on liquidity. Cash outflows resulted in particular
from investments in intangible assets and property,
plant and equipment, income taxes paid, the dividend
payment to the shareholders of Mercedes-Benz Group
AG and payments made as part of the share buyback
programme. Moreover, there were negative effects
from the leasing and sales financing business at Mer-
cedes-Benz Mobility.
The funds raised are used to finance working capital
and capital expenditure as well as the cash needs of
the leasing and sales-financing business and unex-
pected liquidity needs. In accordance with internal
policies, the refunding of the leasing and sales-
financing business is generally carried out with match-
ing maturities so that financing liabilities have the same
maturity profile as the equipment on operating leases
and the receivables from financial services.
Insofar as reverse factoring agreements are entered
into, they have no influence on the liquidity risk of the
Mercedes-Benz Group, as they relate to a large number
of investors and have no impact on the payment terms
of the trade payables concerned.
The Mercedes-Benz Group manages its liquidity by
holding adequate volumes of liquid assets and by
maintaining syndicated credit facilities in addition to
the cash inflows generated by its business operations.
Additionally, the possibility to securitize receivables of
the financial services business (ABS transactions) also
reduces the Group's liquidity risk. Liquid assets com-
prise cash and cash equivalents and marketable debt
securities and similar investments. The Group can dis-
pose of these liquid assets at short notice.
Liquidity risk comprises the risk that a company cannot
meet its financial obligations in full.
Liquidity risk
Further Information
302
Contents
40
In general, the Mercedes-Benz Group makes use of a
broad spectrum of financial instruments to cover its
funding requirements. Depending on funding require-
ments and market conditions, the Mercedes-Benz
Group issues commercial papers, bonds (including
green bonds), debt obligations and financial instru-
ments secured by receivables in various currencies.
Bank credit facilities are also used to cover financing
requirements. Potential downgrades of the Mercedes-
Benz Group's credit ratings could have a negative im-
pact on the Group's financing. Since July 2018, the
Mercedes-Benz Group has had at its disposal a syndi-
cated credit facility with a volume of €11 billion from a
consortium of international banks. It grants the Mer-
cedes-Benz Group additional financial flexibility until
2025. The credit line was unused as of 31 December
2023. In addition, customer deposits at Mercedes-Benz
Bank are used as a further source of refinancing.
5
In order to mitigate the impact of currency exchange-
rate fluctuations for the business operations (future
transactions), the Mercedes-Benz Group continually
assesses its exposure to exchange-rate risks and hedg-
es a portion of those risks by using derivative financial
instruments. A committee manages the Group's ex-
change-rate risk and its hedging transactions through
currency derivatives. The committee consists of repre-
sentatives of the relevant segments and corporate
functions. The Corporate Treasury department aggre-
gates foreign currency exposures from the companies
of the Group and the operational units and implements
the committee's decisions concerning foreign currency
hedging through transactions with international finan-
cial institutions. Suitable measures are generally taken
without delay to eliminate any over-hedging regarding
hedging transactions caused by changes in exposure.
Moreover, designated hedging relationships are re-
viewed with respect to any requirements to discon-
tinue hedge accounting.
The Group's overall currency exposure is reduced by
natural hedging, which consists of the currency expo-
sures of the business operations of different entities
and segments partially offsetting each other at Group
level. These natural hedges eliminate the need for
hedging to the extent of the matched exposures. To
provide an additional natural hedge against any re-
maining transaction risk exposure, the Mercedes-Benz
Group generally strives to increase cash outflows in the
same currencies in which the Group has a net excess
inflow.
The global nature of the Mercedes-Benz Group's busi-
nesses exposes cash flows to risks arising from fluctua-
tions in exchange-rates. These risks primarily relate to
fluctuations between the euro and the US dollar, the
Chinese renminbi, the British pound and other curren-
cies such as currencies of growth markets. In the oper-
ating vehicle business, the Group's exchange-rate risk
primarily arises when revenue is generated in a curren-
cy that is different from the currency in which the costs
of revenue are incurred (transaction risk). It may be
inadequate to cover the costs if the value of the cur-
rency in which the revenue is generated declined in the
interim relative to the value of the currency in which
the costs were incurred. The risk exposures serve as a
basis for analysing exchange-rate risks at Group level.
In addition, the Group is indirectly exposed to a trans-
action risk from its equity-method investments.
Transaction risk and currency risk management
Exchange-rate risk
The Monte Carlo simulation uses random numbers to
generate possible changes in market risk factors con-
sistent with current market volatilities. The changes in
market risk factors allow the calculation of a possible
change in the portfolio value over the holding period.
Running multiple iterations of this simulation leads to a
distribution of portfolio value changes. The value at risk
can be determined based on this distribution as the
portfolio value loss which is reached or exceeded with
a probability of 1%.
When calculating value at risk using the variance-
covariance approach, the Mercedes-Benz Group first
computes the current market value of the Group's fi-
nancial instruments portfolio. Then the sensitivity of
the portfolio value to changes in the relevant market
risk factors, such as particular foreign currency ex-
change-rates or interest rates of specific maturities, is
quantified. Based on volatilities and correlations of
these market risk factors, which are obtained from the
RiskMetricsTM dataset, a statistical distribution of po-
tential changes in the portfolio value at the end of the
holding period is computed. The loss which is reached
or exceeded with a probability of only 1% can be de-
rived from this calculation and represents the value at
risk.
At the Group level, the Mercedes-Benz Group calcu-
lates the value at risk for exchange-rate and interest
rate risk according to the variance-covariance ap-
proach. The value-at-risk calculation method for com-
modity hedging instruments is based on a Monte Carlo
simulation.
assume a 99% confidence level and a holding period
of five days.
- Express potential losses in fair values, and
The value-at-risk calculations employed:
Annual Report 2023 | Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
As part of its risk management system, the Mercedes-
Benz Group employs value-at-risk analyses. In per-
forming these analyses, the Mercedes-Benz Group
quantifies its market risk due to changes in foreign
currency exchange-rates and interest rates and certain
commodity prices on a regular basis by predicting the
potential loss over a target time horizon (holding peri-
od) and confidence level.
The effect of the application of the new interest rates
on the Consolidated Financial Statements is being re-
viewed on an ongoing basis. In order to conduct finan-
cial transactions based on the new indices, the Mer-
cedes-Benz Group is preparing its relevant IT-systems
accordingly. Uncertainty still exists about future market
standards with interest conventions for individual fi-
nancial products (cash products and interest deriva-
tives) that reference the new risk-free rates. Contracts
not yet converted as part of the IBOR reform in the
previous year (USD LIBOR) amounted to €4,790 million
in financial liabilities and €9,258 million in derivatives
as of 31 December 2022.
The nominal values of those hedging instruments that
were affected in the prior year and are included in a
hedging relationship can be found in table Nominal
amounts of derivative financial instruments used in
hedge accounting in Note 32.
The conversion of the outstanding reference rates of
hedging instruments and their underlying transactions
was identical and without any material delay. The Mer-
cedes-Benz Group considered the economic relation-
ship and thus the continuation of hedge accounting to
be still existing as of 31 December 2022.
ence.
305
As the reform for EURIBOR and USD, GBP, CHF and JPY
LIBOR has already been implemented, the contractual
adjustment of financial instruments has already been
made in line with a corresponding interest rate refer-
Contents
306
Value at risk for exchange-rate risk, interest rate risk and commodity price risk
29
a net investment in foreign operations in note 32. There
were no material effects on earnings in the years 2022
and 2023.
Please refer to table Cash Flow Hedges and hedges of
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
307
To Our Shareholders
To Our Shareholders
Contents
- Changes in the timing of the hedged transactions.
- Changes in the credit risk on the measurement of the
used hedging instrument which are not reflected in
the change of the hedged currency risk.
When designating derivative financial instruments, a
hedge ratio of 1 is applied. In addition, the respective
volume and currency of the hedge and the underlying
transaction as well as maturity dates are matched. The
Group ensures an economic relationship between the
underlying transaction and the hedging instrument by
ensuring consistency of currency, volume and maturity.
Option premiums and also forward components are not
designated into the hedging relationship, but the hedg-
ing costs are deferred in other comprehensive income
and recognized in profit or loss at the due date of the
underlying transaction or recognized as adjustment of
acquisition cost of non-financial assets. The effective-
ness of the hedge is assessed at the start of and during
the hedging relationship. Possible sources of ineffec-
tiveness of the hedging relationship are:
Hedge accounting
The following table shows the period-end, high, low
and average value-at-risk figures of the exchange-rate
risks for the 2023 and 2022 portfolios of derivative
financial instruments, which were entered into primari-
ly in connection with the vehicle business operations
and the trade receivables and payables existing at the
end of quarter. Average exposure has been computed
on an end-of-quarter basis. The other transactions
underlying the derivative financial instruments are not
included in the following value-at-risk presentation,
since they comprise forecast cash flows. See also table
Nominal amounts of derivative financial instruments
used in hedge accounting in Note 32.
measure the exchange-rate risk inherent in these de-
rivative financial instruments.
To cover foreign currency exposure risks of the vehicle
business operations forward foreign exchange con-
tracts and currency options are primarily used. The
Mercedes-Benz Group's policies call for a mixture of
these financial instruments depending on the assess-
ment of market conditions. Value at risk is used to
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Annual Report 2023 | Mercedes-Benz Group
Certain existing benchmark interest rates including
those of the London Interbank Offered Rate (for USD,
GBP, CHF and JPY) were comprehensively and interna-
tionally reformed. As a result, those interest rates were
gradually abolished and replaced with alternative risk-
free reference rates. Alternative interest rates were
developed on a national level in the context of the
respective legal systems and currencies; they can
therefore vary with regard to their structure, method-
ology and period of publication.
The Group's targeted hedge ratios for forecast operat-
ing cash flows in foreign currencies are generally de-
termined using a step-by-step method. Depending on
the nature of the underlying risks, the hedging rates
decrease the further the expected cash flows are in the
future. On the one hand, the hedging horizon is natural-
ly limited by uncertainty related to cash flows that lie
far in the future; on the other hand, it may also be lim-
ited by the fact that appropriate currency contracts are
not available. This step-by-step method aims to limit
risks for the Group from unfavourable movements in
exchange-rates while preserving sufficient flexibility to
participate in favourable developments. Based on this
step-by-step method and depending on the market
outlook, the committee determines the hedging hori-
zon, which usually varies from one to five years, as well
as the average hedge ratios. At the end of 2023, the
currency management for calendar year 2024 showed
an unhedged position in the automotive business of
35% of the underlying forecasted cash flows in US
dollars and an unhedged position of 29% of the under-
lying forecast cash flows in British pounds, while the
forecast cash flows in Chinese renminbi were almost
fully hedged with an unhedged position of 4%.
The global nature of its businesses exposes the Mer-
cedes-Benz Group to significant market risks resulting
from fluctuations in foreign currency exchange-rates
and interest rates as well as commodity and energy
prices. The Group is also exposed to equity price risk in
connection with its investments in listed companies.
2,476
Irrevocable loan commitments5
4,236
4,236
50
87
142
192
305
4,225
5,001
2,476
Miscellaneous other financial liabilities excluding accrued interest and liabilities from financial guarantees
Obligations from sales transactions
12,826
12,828
Trade payables4
5
29
40
86
246
The Mercedes-Benz Group manages market risks to
minimize the impact of fluctuations in foreign ex-
change-rates and interest rates on the earnings of the
Group and its segments. The Group calculates its over-
all net-exposure to these market risks to provide the
basis for hedging decisions, which include the selection
of hedging instruments and the determination of hedg-
ing volumes and the corresponding periods. The hedg-
ing strategy is specified at Group level and uniformly
implemented in the segments. Decisions regarding, for
example, currencies and asset-liability management
(interest rates) are made by a committee that meets
regularly. Net-exposures are the basis for the hedging
strategies and are updated regularly. The Mercedes-
Benz Group usually counteracts the risk of short-term
fluctuations in raw-material prices by means of price
escalation clauses in the supply contracts. Power pur-
chase agreements are also concluded to reduce elec-
tricity price risks. Power purchase agreements are pur-
chase agreements for energy needs, including fixed
purchase prices of the electricity generated by a spe-
cific plant for generating wind or solar power.
406
Cash outflows
1
Financial guarantees
1
284
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
284
304
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
6 The maximum potential obligations under the issued financial guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the cash flows of the derivative financial liabilities is shown for the respective year.
Annual Report 2023 | Mercedes-Benz Group
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which the Mercedes-Benz Group can be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature with-
in the first year.
(b) The cash flows of floating-interest financial instruments are estimated on the basis of forward rates.
1 The amounts were calculated as follows:
143,159
15,707
4,338
72,524
6,746
16,944
Finance-market risks
26,900
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
313
4,121
Contents
Annual Report 2023 | Mercedes-Benz Group
4,204
4,204
Reconciliation
4,122
-1
To Our Shareholders
The following table shows the reconciliation of EBIT
according to segment reporting to the Consolidated
Statement of Income.
233
In millions of euros
EBIT as shown in the Consolidated
Statement of Income/Loss
18
56
138
Eliminations
-458
55
803
Gains/losses on equity-method investments
Other reconciling items
20,665
18,664
Total of segments' profit/loss (EBIT)
2022
2023
Reconciliation of EBIT to Group figures
50
13,772
261
-72
-75
13,963
6,130
5,778
620
608
7,213
7,386
assets
Depreciation and amortization of non-current
3,481
-1
19,660
3,745
13,697
266
13,891
2,232
3,800
3,893
equipment
thereof depreciation of property, plant and
2,400
2,459
3
4
2,397
2,455
68
64
186
159
2,143
thereof amortization of intangible assets
20,458
Total equity and liabilities Group
The reconciliation of segment assets and liabilities to
relevant amounts for the Group is shown in the next
table.
260,015
263,022
86,540
92,816
Total equity Group
-4,172
-10,924
and similar obligations²
and liabilities from pensions
Unallocated financial instruments
177,647
181,130
Segment liabilities Group
-19,904
-20,039
1 This mainly comprises the equity-method carrying amount of BAIC Motor.
eliminations
2 Unless these are attributable to Mercedes-Benz Mobility.
Contents
North America
3,482
thereof Germany
Europe
In millions of euros
Revenue and non-current assets by region
Revenue from external customers and non-current
assets by region are shown in the following table.
With respect to information on geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented
according to the physical location of these assets.
Revenue and non-current assets
by region
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
314
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The line item Other reconciling items includes further
items at the corporate level. In the prior year, the line
item included expenses in connection with the sale of
individual investments and business activities to Daim-
ler Truck Holding AG or its subsidiaries.
Other reconciling items and
8,226
3,107
3,448
Income tax assets²
253
224
8,199
8,425
Equity-method investment in DTHAG
Other equity-method investments¹
244,468
248,978
Total of segment assets
In millions of euros
2022
2023
Reconciliation of segment assets and liabilities to Group figures
Other reconciling items and
eliminations
7,614
-20,249
Segment assets Group
189,937
192,943
Income tax liabilities²
Total of segment liabilities
(2022: €226 million) from Daimler Truck Holding AG.
The gains/losses on equity-method investments
includes the positive profit contribution of €797 million
263,022 260,015
Total assets Group
23,685
22,196
from pensions and similar
obligations²
(including liquidity) and assets
Unallocated financial instruments
236,330
240,826
-19,697
3,745
16,340
49
thereof gains/losses on equity-method
20,458
19,660
-207
996
20,665
investments
18,664
1,302
1,897
3,138
thereof United States
14,224
Segment profit/loss (EBIT)
2,428
1,355
1,586
126
457
-338
provisions for other risks
from changes in discount rates of
fects
thereof profit/loss from compounding and ef-
1,732
2,129
233
803
1,499
1,326
-209
-155
122
150,017
153,218
-5,755
-5,755
-6,544
-6,544
107,805
External revenue
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
Mercedes-Benz Group
107,067
-98
19,661
Intersegment revenue
5,755
155,772
150,017
153,218
150,017
153,218
6,544
159,762
26,231
723
26,954
26,718
17,217
20,288
25,752
966
498
627
4,534
111,601
4,951
112,756
Total revenue
16,719
86
2
-436
3,197
4,055
thereof investments in intangible assets
11,277
13,541
1,295
1,570
12,687
14,939
Additions to non-current assets
177,647
181,130
-12,290
-11,813
189,937
372
192,943
179
43
199
351
3,265
3,345
thereof investments in property, plant and
equipment
3,418
4,468
-1
-9
25,086
29,825
-173
-225
25,259
3,419
30,050
4,477
50
18
128,948
9,025
-8,138
-8,152
244,468
248,978
142,524
145,057
10,036
10,486
91,908
93,435
Segment assets
545
-437
-1
545
240,826
132,043
236,330
3,922
9,232
51,964
51,668
Segment liabilities
13,530
13,104
8,452
8,649
5,078
4,455
271
208
328
325
4,479
thereof carrying amounts of equity-method
investments
Asia
Companies controlled by related persons
Other markets
Mercedes-Benz Pension Trust e.V. manages the plan
assets on a fiduciary basis to cover pension obligations
in Germany and is therefore a related party of the Mer-
cedes-Benz Group. Another related party is Mercedes-
Benz Pensionsfonds AG. Mercedes-Benz Group AG
bears non-significant expenses and provides services
for both companies. See also Note 22 for further infor-
mation.
Contributions to plan assets
sons.
Mr. Stefan Pierer has been a member of the Superviso-
ry Board of Mercedes-Benz Group AG and Mercedes-
Benz AG since May 2023. The Mercedes-Benz Group
maintains supply and service relationships with some
companies in the Pierer Group. The Pierer Group in-
cludes the SHW Group, a global automotive supplier, as
well as other companies. In August 2023, Stefan Pierer
also acquired 100% of the shares of Leoni AG, an inter-
national automotive supplier. The table Transactions
with related parties shows the information on the vol-
ume of goods and services supplied by these compa-
nies in the line Companies controlled by related per-
Throughout the world, the Group has business relation-
ships with numerous entities that are customers and/or
suppliers of the Group. Those customers and/or sup-
pliers include companies that have a connection with
some of the members of the Board of Management or
of the Supervisory Board and close family members of
those board members of Mercedes-Benz Group AG or
of its subsidiaries. Board of Management and Supervi-
sory Board members and close family members of
those board members may also purchase goods and
services from Mercedes-Benz Group AG or its subsidi-
aries as customers.
Related persons
Annual Report 2023 | Mercedes-Benz Group
Note 13 provides further details of the business activi-
ties of the significant associated companies.
As of 31 December 2023, there are off-balance-sheet
obligations of €256 million (31 December 2022:
€157 million).
In January 2024, a loan of €110 million issued by the
Mercedes-Benz Group was converted into equity.
Moreover, in March 2024, ACC drew down €105 million
of the total contractually committed funds of €867
million. As a result, the carrying amount of ACC in-
creased accordingly.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
On 1 July 2022, an agreement became effective in fa-
vour of smart Automobile Co., Ltd. (smart), a joint
venture of Mercedes-Benz AG and Zhejiang Geely Hold-
ing Group Co., Ltd. This agreement obliges the share-
holders to provide financial support up to a maximum
amount of €573 million each in the event that smart is
not able to perform its payment obligations under a
syndicated loan agreement. smart is allocated to the
Mercedes-Benz Cars segment.
Contents
To Our Shareholders
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
319
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
According to the current appraisal, an actual claim with
respect to the subsequent liability relationship be-
tween the entities is considered to be unlikely.
The aforementioned period is ten years for pension
obligations based on the German Company Pensions
Act (BetrAVG) that existed before the hive-down took
effect. Mercedes-Benz Group AG and Mercedes-Benz
AG do not expect any outflow of liquidity from the re-
spective other legal entity due to the plan assets being
available in a sufficient volume.
The stipulations existing in this context, in particular on
the procedure for regulating the internal settlements
between the participating legal entities, are laid down
in the hive-down agreement of 25 March 2019.
In 2019, Mercedes-Benz Group AG hived down assets
and liabilities of the former Mercedes-Benz Cars &
Vans segment into Mercedes-Benz AG and of the for-
mer Daimler Trucks & Buses segment into Daimler
Truck AG. As legal entities involved in the hive-down,
Mercedes-Benz Group AG, Mercedes-Benz AG and
Daimler Truck AG are jointly and severally liable pursu-
ant to Section 133 Subsections 1 and 3 of the German
Transformation Act (UmwG) for the liabilities of Mer-
cedes-Benz Group AG incurred prior to the effective
date of the hive-down. Those of the aforementioned
legal entities to which the relevant liabilities are not
assigned under the hive-down agreement are, however,
only liable for those liabilities if they fall due within five
years of the announcement of the entry of the hive-
down in the commercial register of Mercedes-Benz
Group AG and claims therefrom are established in court
or in another manner as described in Section 133 of the
German Transformation Act (UmwG). The spin off and
hive-down of the Daimler commercial vehicle business
in 2021 resulted in a subsequent liability relationship
outside the Group.
Subsequent liability
Corporate Governance
318
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
65
185
1
17
93
223
32
31
639
469
195
221
1,646
1,396
300
Annual Report 2023 | Mercedes-Benz Group
320
Contents
317
In the third quarter of 2023, an additional contract with
PSA Automobiles SA, Opel Automobile GmbH, Saft EV
SAS, Saft Groupe and Automotive Cells Company SE
(ACC) was signed in which the Group committed to
providing further funds of up to €457 million to ACC in
addition to the commitments agreed in 2022. The other
shareholders also confirmed that they are obligated to
provide additional funds.
On 12 May 2022, Mercedes-Benz AG signed an agree-
ment with PSA Automobiles SA, Opel Automobile
GmbH, Saft EV SAS and Saft Groupe to acquire a
33.33% stake in Automotive Cells Company SE (ACC)
through a capital contribution of approximately
€390 million. The Group also committed itself to the
provision of further funds up to €410 million. The in-
vestment in the European battery cell manufacturer
ACC was made in order to promote the development
and production of high-performance battery cells and
modules in the course of the transformation to a sus-
tainable business strategy. The shares in the joint ven-
ture ACC are included in the Consolidated Financial
Statements using the equity method and are allocated
to the Mercedes-Benz Cars segment.
Joint ventures
At 31 December 2023, off-balance-sheet obligations to
the Daimler Truck Group amounted to €110 million
(31 December 2022: €310 million).
In addition, the Mercedes-Benz Group holds a minority
interest of €207 million (31 December 2022: €162 mil-
lion) in real estate companies controlled by Daimler
Truck Group, which is shown as debt instruments in
other financial assets.
from Daimler Truck and leases them to the end cus-
tomers. Insofar as a mandatory vehicle return to Daim-
ler Truck has been agreed, a leasing contract (head
lease) between Mercedes-Benz Mobility and Daimler
Truck is shown. The contract between Mercedes-Benz
Mobility and the end customer constitutes a sublease
in this respect. The receivables and right-of-use assets
shown in the table include demands for the repurchase
of vehicles of €1,121 million (31 December 2022:
€1,312 million) shown in receivables from financial ser-
vices and right-of-use assets of €268 million (31 De-
cember 2022: €548 million) vis-à-vis Daimler Truck
shown in equipment on operating leases. These right-
of-use assets were depreciated as planned by
€217 million in 2023 (2022: €399 million).
Additionally, the Mercedes-Benz Group will continue
the leasing and sales-financing business for Daimler
Truck's commercial vehicles in some markets. To this
end, Mercedes-Benz Mobility acquires these vehicles
The leased equipment of the Mercedes-Benz Mobility
segment includes commercial vehicles produced by
Daimler Truck which have been acquired from external
dealers or other third parties not related to the Mer-
cedes-Benz Group. Mercedes-Benz Mobility usually
receives a residual-value guarantee from Daimler Truck
for this leased equipment in connection with the obli-
gation to return the respective commercial vehicles to
Daimler Truck. At 31 December 2023 this guarantee
was €37 million (31 December 2022: €66 million).
There are numerous relationships in the scope of ordi-
nary business between the Mercedes-Benz Group and
Daimler Truck, for example, the purchase and sale of
goods and services and leasing agreements. In addi-
tion, there is an interim provision of services by corpo-
rate functions that are included under other operating
income.
The transactions with associated companies mainly
relate to Daimler Truck Holding AG (Daimler Truck),
which is allocated to the reconciliation, and to LSH
Auto International Limited (LSHAI) and Beijing Benz
Automotive Co., Ltd. (BBAC), which are allocated to the
Mercedes-Benz Cars segment.
Associated companies
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Further Information
38. Remuneration of the members
of the Board of Management and
the Supervisory Board
The table below shows the remuneration granted dur-
ing 2023 to the members of the Board of Management
and the Supervisory Board who were active in 2023.
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The present segment information for the years 2023
and 2022 is as follows.
Segment information
In millions of euros
312
Further Information
Mercedes-Benz Cars
Mercedes-Benz Vans Mercedes-Benz Mobility
Individualized information on the remuneration of the
members of the Board of Management and of the Su-
pervisory Board of Mercedes-Benz Group AG is dis-
closed in the Remuneration Report.
Payments made in 2023 to former members of the
Board of Management of Mercedes-Benz Group AG and
their survivors amounted to a total of €20 million
(2022: €21 million). The pension provisions for former
members of the Board of Management and their
survivors amounted to €265 million as of 31 December
2023 (2022: €246 million).
No advances or loans were made or abated to mem-
bers of the Board of Management or the Supervisory
Board of Mercedes-Benz Group AG in 2023.
The members of the Board of Management of Mer-
cedes-Benz Group AG do not receive any remuneration
for their board activities on the boards of the subsidiar-
ies. These activities are remunerated with the remuner-
ation at Mercedes-Benz Group AG.
Combined Management Report
With the exception of the remuneration paid to the
members of the Supervisory Board representing the
employees in accordance with their contracts of em-
ployment, no remuneration was paid to the members of
the Supervisory Board for services provided personally
beyond their board and committee activities in 2023, in
particular for advisory or agency services.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Total Segments
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Segment liabilities principally comprise all liabilities.
The Mercedes-Benz Cars and Mercedes-Benz Vans
reporting segments' liabilities exclude income tax liabil-
ities, liabilities from pensions and similar obligations
and certain financial instruments (including financing
liabilities).
The residual-value risks associated with the Group's
operating leases and receivables from financial ser-
vices are generally borne by the segments which manu-
factured the leased vehicles. Risk sharing is based on
agreements between Mercedes-Benz Cars, Mercedes-
Benz Vans and Mercedes-Benz Mobility; the terms vary
by segment and geographic region.
Non-current assets consist of intangible assets, prop-
erty, plant and equipment, and equipment on operating
leases.
Capital expenditures for intangible assets and property,
plant and equipment reflect the cash-effective addi-
tions to these intangible assets and property, plant and
equipment insofar as they do not relate to capitalized
borrowing costs or goodwill.
Depreciation and amortization may also include im-
pairments insofar as they do not relate to goodwill
impairment according to IAS 36.
Amortization of capitalized borrowing costs is not in-
cluded in the amortization of intangible assets or de-
preciation of property, plant and equipment.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
311
Further Information
Contents
298
The members of the Supervisory Board are solely
granted short-term fixed remuneration for their board
and committee activities amounted to €6 million (2022:
€7 million), the amounts of which depend on their func-
tions in the Supervisory Board.
Expenses for variable remuneration of the Board of
Management with a long-term incentive effect, as
shown in the following table, result from the ongoing
measurement at fair value at each balance sheet date
of all rights granted and not yet due under the stock-
based Performance Phantom Share Plans (PPSP), i.e.,
for the plans of the years 2020 to 2023 with the fair
value at the respective balance sheet date. In 2023, the
active members of the Board of Management were
granted 181,341 (2022: 137,655) phantom shares in
connection with the PPSP; the fair value of these phan-
tom shares at the grant date was €13 million (2022: €8
million). See Note 21 for additional information on
share-based payment of the members of the Board of
Management.
8
16
(2023: 100 (2022: 50)% of annual bonus)
Short-term variable remuneration
(base salary)
Fixed remuneration
8
9
2022
10
2023
Management
Remuneration of the Board of
In millions of euros
Remuneration of the members of the Board of Management and
the Supervisory Board in accordance with IAS 24.17
Mid-term variable remuneration
In accordance with Section 314 Subsection 1 No. 6a of
the German Commercial Code (HGB), the overall remu-
neration granted to the members of the Board of Man-
agement (excluding service cost resulting from entitle-
ments to post-employment benefits) amounted to €39
million (2022: €32 million), including the stock-based
remuneration with a fair value of €13 million (2022: €8
million).
(2022: 50% of annual bonus, "deferral")
a long-term incentive effect (PPSP)
15
16
49
50
Total
7
6
Remuneration of the Supervisory Board
42
44
Remuneration of the Board of Management
2
2
benefits (service cost)
Post-employment
Variable remuneration with
thereof China
7,821
23
Mercedes-Benz Cars
In millions of euros
2022
2023
Average net assets
35. Capital management
41,407
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
315
To Our Shareholders
Contents
Further Information
38,189
Mercedes-Benz Vans
1,253
Other corporate items
Assets and liabilities
from income taxes³
Other equity-method
investments²
Average annual net assets are calculated on the basis
of average quarterly net assets. The average quarterly
net assets are calculated as an average of the net as-
sets at the beginning and the end of the quarter.
The assets and liabilities of the segments in accord-
ance with IFRS provide the basis for the determination
of net assets at Group level. Mercedes-Benz Cars and
Mercedes-Benz Vans are accountable for the net oper-
ating assets; all assets, liabilities and provisions for
which they are responsible for in day-to-day operations
are therefore allocated to them. Performance meas-
urement at Mercedes-Benz Mobility is on an equity
basis, in line with the usual practice in the banking
business. Net assets at Group level additionally include
assets and liabilities from income taxes as well as other
corporate items and eliminations.
Net assets and value added represent the basis for
capital management at the Mercedes-Benz Group. Alt-
hough individual companies in the Mercedes-Benz
Mobility segment are subject to the capital require-
ments of the respective banking supervision, Mer-
cedes-Benz Group AG is not subject to external mini-
mum capital requirements.
8,078
8,221
Equity-method investment
in DTHAG
53,540
56,434
Net assets of the segments
885
14,466
13,774
Mercedes-Benz Mobility'
Annual Report 2023 | Mercedes-Benz Group
1,341
84,671
85,395
150,017
40,488
45,587
46,511
23,085
25,799
61,983
64,719
56,487
61,895
2022
2023
2022
2023
Non-current assets
Revenue
40,091
and eliminations³
18,430
36,041
153,218
749
7,881
7,453
537
507
27,324
25,284
1,625
1,497
45,558
43,382
17,883
16,526
35,829
19,722
Net assets of the Mercedes-Benz Group
1 Equity.
2 Unless allocated to the segments.
2,653
2,337
18,601
16,800
2022
2023
2022
2023
2022
At 31 December
At 31 December
Liabilities and provisions¹
right-of-use-assets
Receivables and
2023
4,351
2022
4,842
557
12
887
1,227
232
287
9,641
9,257
332
299
2,262
1,682
2,120
1,751
1,120
943
541
6,581
2023
of goods and services
and other income
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The objective of capital management is to increase
value added, among other things, by optimizing the
cost of capital. This is achieved on the one hand by
optimizing the net assets, e.g. working capital, which is
within the operational responsibility of the segments.
In addition, taking into account legal regulations, the
Mercedes-Benz Group strives to optimize the costs and
risks of its capital structure, and consequently, the cost
of capital rate. An example of this is an appropriate
level of liquidity, oriented towards the operational re-
quirements.
The cost of capital of the Group's average net assets is
reflected in value added. Value added shows the extent
to which the Group achieves or exceeds the minimum
return requirements of the shareholders, thus creating
additional value. The required rate of return on net
assets, and thus the cost of capital rate, is derived from
the minimum rates of return that equity investors and
lenders expect on their invested capital. In the report-
ing year, the cost of capital rate used for the internal
capital management amounted to 9% after taxes.
58,525
422
-3,818
59,843
94
-5,159
303
253
3 To the extent not allocated to Mercedes-Benz Mobility.
Corporate Governance
Expense from purchases
of goods and services
and other expense
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Income from sales
1 Including liabilities from default risks from guarantees for related parties.
Joint ventures
thereof BBAC
thereof LSHAI
thereof Daimler Truck
Associated companies
In millions of euros
Business transactions with related parties are generally
carried out at market terms.
At the Mercedes-Benz Group, those persons are the
members of the Board of Management and of the
Supervisory Board and their close family members.
Related parties (companies or persons) are deemed to
be associated companies, joint ventures and unconsol-
idated subsidiaries as well as persons who exercise
a significant influence on the financial and business
policy of the Mercedes-Benz Group. The latter category
includes all persons in key positions and their close
family members.
37. Related-party disclosures
Transactions with related parties
The calculation of basic and diluted earnings per share
is based on net profit attributable to shareholders of
Mercedes-Benz Group AG. The profit attributable to
shareholders of Mercedes-Benz Group AG (basic and
diluted) amounts to €14,261 million (2022: €14,501 mil-
lion). The weighted average number of shares out-
standing (basic and diluted) amounts to 1,059.6 million
issued shares (2022: 1,069.8 million issued shares).
The decrease in the weighted average number of
shares outstanding is due to the share buyback pro-
gramme resolved by the Board of Management on
16 February 2023.
36. Earnings per share
316
Reconciliation
Mercedes-Benz UK Trustees Limited
Notes to the Consolidated Financial Statements
Prague, Czech Republic
100.00
Milton Keynes, United Kingdom
100.00
São Paulo, Brazil
100.00
Utrecht, Netherlands
100.00
Mississauga, Canada
100.00
Milton Keynes, United Kingdom
Footnote
Equity interest in
percent¹
Domicile, country/region
Mercedes-Benz Financial Services India Private Limited
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Finance North America LLC
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz Finance Canada Inc.
Mercedes-Benz Filo Hizmetleri A.S.
Mercedes-Benz ExTra LLC
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Danmark A/S
Mercedes-Benz Customer Solutions GmbH
100.00
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Stuttgart, Germany
Wilmington, USA
Brussels, Belgium
100.00
Eugendorf, Austria
100.00
Melbourne, Australia
100.00
Wilmington, USA
95.11
Tokyo, Japan
100.00
100.00
100.00
Montreal, Canada
Istanbul, Turkey
Wilmington, USA
100.00
Alcobendas, Spain
100.00
The Hague, Netherlands
100.00
Copenhagen, Denmark
5
100.00
Stuttgart, Germany
100.00
Budapest, Hungary
100.00
Horsholm, Denmark
100.00
100.00
100.00
Mercedes-Benz Connectivity Services GmbH
Mercedes-Benz Corporate Investments, LLC
Mercedes-Benz CPH A/S
Mercedes-Benz Cars UK Limited
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
0.00
Wilmington, USA
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
0.00
Wilmington, USA
100.00
Beijing, China
100.00
Melbourne, Australia
100.00
Utrecht, Netherlands
100.00
Stuttgart, Germany
100.00
Buenos Aires, Argentina
5
100.00
Stuttgart, Germany
Wilmington, USA
Mercedes-Benz Česká republika s.r.o.
0.00
100.00
Mercedes-Benz Cars & Vans Brasil Ltda.
Mercedes-Benz Capital Investments B.V.
Mercedes-Benz Canada Inc.
Mercedes-Benz Brooklands Limited
Name of the company
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
325
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Budapest, Hungary
100.00
Brussels, Belgium
100.00
Saarbrücken, Germany
100.00
Berlin, Germany
100.00
100.00
100.00
Warsaw, Poland
Eugendorf, Austria
Stuttgart, Germany
5
Berlin, Germany
Mississauga, Canada
100.00
Prague, Czech Republic
100.00
Wilmington, USA
100.00
Milton Keynes, United Kingdom
51.00
Taipei, Taiwan, China
100.00
Warsaw, Poland
Footnote
Equity interest in
percent¹
Domicile, country/region
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing Deutschland GmbH
Mercedes-Benz Leasing Co., Ltd.
Mercedes-Benz Lease Italia S.r.l.
Mercedes-Benz Korea Limited
Mercedes-Benz Japan Co., Ltd.
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Investment Company LLC
Mercedes-Benz Intellectual Property GmbH & Co. KG
Mercedes-Benz International Finance B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services UK Limited
Mercedes-Benz Insurance Services Nederland B.V.
Wilmington, USA
Voluntari, Romania
Hong Kong, China
Wilmington, USA
Pune, India
Mercedes-Benz Insurance Services GmbH
Mercedes-Benz Insurance Broker S.R.L.
Copenhagen, Denmark
Mercedes-Benz Insurance Agency LLC
100.00
100.00
100.00
Utrecht, Netherlands
100.00
Stuttgart, Germany
100.00
100.00
100.00
80.00
100.00
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
Schönefeld, Germany
100.00
Beijing, China
100.00
Melbourne, Australia
100.00
Montigny-le-Bretonneux, France
100.00
Malmö, Sweden
100.00
Singapore, Singapore
100.00
Istanbul, Turkey
100.00
Istanbul, Turkey
Malmö, Sweden
Mercedes-Benz India Private Limited
Mercedes-Benz HPC North America LLC
Mercedes-Benz Hong Kong Limited
Schlieren, Switzerland
Mercedes-Benz Financial Services Schweiz AG
100.00
Mem Martins, Portugal
Mercedes-Benz Financial Services Portugal - Sociedade Financeira de Crédito S.A.
100.00
Auckland, New Zealand
Mercedes-Benz Financial Services New Zealand Ltd
100.00
Nieuwegein, Netherlands
Mercedes-Benz Financial Services Nederland B.V.
80.00
Seoul, South Korea
Mercedes-Benz Financial Services Korea Ltd.
100.00
100.00
Rome, Italy
Wilmington, USA
Mercedes-Benz Financial Services Italia S.p.A.
Mercedes-Benz Financial Services Investment Company LLC
100.00
Chennai, India
80.00
Hong Kong, China
100.00
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
100.00
100.00
Mercedes-Benz Financial Services Singapore Ltd.
Singapore, Singapore
100.00
Mercedes-Benz Holdings UK Limited
Mercedes-Benz High Power Charging Europe GmbH
Mercedes-Benz Vans Manufacturing Poland sp. z o.o.
Mercedes-Benz Grund Services GmbH
Mercedes-Benz Group China Ltd.
Mercedes-Benz Group Australia/Pacific Pty Ltd
Mercedes-Benz France S.A.S.
Mercedes-Benz Försäljnings AB
Mercedes-Benz Fleet Management Singapore Pte. Ltd.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finans Sverige AB
Notes to the Consolidated Financial Statements
Further Information
100.00
Consolidated Financial Statements
Combined Management Report
326
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Financial Services Sp. z o.o.
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Name of the company
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Pretoria, South Africa
Mercedes-Benz Financial Services South Africa (Pty) Ltd
75.00
Bratislava, Slovakia
Mercedes-Benz Financial Services Slovakia s.r.o.
Corporate Governance
Taipei, Taiwan, China
75.00
Bangkok, Thailand
100.00
Schönefeld, Germany
Alpha 6 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
5,7
100.00
Schönefeld, Germany
Alpha 5 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5
100.00
Kamenz, Germany
Footnote
Equity interest in
percent¹
Domicile, country/region
Alpha 1 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 2 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 3 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 4 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Accumotive GmbH & Co. KG
I. Consolidated subsidiaries
Name of the company
5,7
Further Information
Alpha 7 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
AssetCo, LLC
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
100.00
Schiphol, Netherlands
100.00
Machelen, Belgium
100.00
Schiphol, Netherlands
3
20.00
Wilmington, USA
5,7
100.00
Schönefeld, Germany
Daimler Fleet Management GmbH
DAF Investments, Ltd.
CARS Technik & Logistik GmbH
Athlon Sweden AB
Athlon Rental Germany GmbH
Athlon Mobility Services UK Limited
Athlon Mobility Consultancy N.V.
Athlon Germany GmbH
Athlon France S.A.S.
Athlon Car Lease Spain, S.A.
Athlon Car Lease S.A.S.
Athlon Car Lease Rental Services Belgium N.V.
Athlon Car Lease Rental Services B.V.
Athlon Car Lease Portugal, Ida
Athlon Car Lease Polska Sp. z o.o.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Italy S.R.L.
Athlon Beheer International B.V.
Rome, Italy
323
Consolidated Financial Statements
7
Other services
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
Tax services
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
6
8
Other attestation services
24
25
38
39
2022
2023
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Audit services
In millions of euros
Auditor fees
surance.
Other attestation services were particularly provided
for certifications and reviews of IT systems or in con-
nection with the issuance of comfort letters. Other
services were mainly commissioned for process con-
sulting not relevant to accounting and for quality as-
Audit services relate to the audit of the Mercedes-Benz
Group's Consolidated Financial Statements and the
Annual Financial Statements, as well as to all services
required for the audit including the reviews of interim
financial statements, the accounting-related audit of
the internal control system and accounting-related
audits of IT systems and processes.
The shareholders of Mercedes-Benz Group AG elected
KPMG AG Wirtschaftsprüfungsgesellschaft as the ex-
ternal auditor at the Annual General Meeting held on 3
May 2023. The following table shows the fees for ser-
vices provided by KPMG AG Wirtschaftsprüfungsgesell-
schaft and the companies of the worldwide KPMG net-
work to Mercedes-Benz Group AG, the consolidated
subsidiaries and the proportionately consolidated joint
operations.
39. Auditor fees
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
4
Notes to the Consolidated Financial Statements
3
thereof KPMG AG
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
322
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The statement of investments of the Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Com-
mercial Code (HGB) is presented in the following table.
In general, cooperations without an equity interest are
not reported. Information on equity and earnings and
information on investments pursuant to Section 313
Subsection 2 No. 4 of the German Commercial Code
(HGB) is omitted insofar as, pursuant to Section 313
Subsection 3 Sentence 4 of the HGB, such information
is of minor relevance for a fair presentation of the prof-
itability, liquidity and capital resources and financial
position of the Group. In addition, the statement of
investments indicates which consolidated companies
make use of the exemption pursuant to Section 264
Subsection 3 of the HGB and/or Section 264b of the
HGB. The Consolidated Financial Statements of Mer-
cedes-Benz Group AG release those subsidiaries from
the requirements that would otherwise apply.
Information on investments
The Board of Management and the Supervisory Board
of Mercedes-Benz Group AG have issued a declaration
pursuant to Section 161 of the German Stock Corpora-
tion Act (AktG) and have made it permanently available
to their shareholders on the Group's website.
German Corporate Governance Code
On 19 January 2024, the Mercedes-Benz Group an-
nounced a comprehensive review of the structures of
the Group's Own Retail in Germany. The review is open-
ended as regards its outcome and will be conducted
individually and step-by-step at each retail location.
The Company expects the transformation process to
take several years. Contract negotiations with potential
buyers had not yet taken place as of the balance sheet
date. At the present time, it is not possible to reliably
estimate the effects on the profitability, financial posi-
tion and liquidity and capital resources.
Review of future structure of Own Retail in Germany
41. Additional information
40. Events after the
reporting period
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
321
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
46
50
2
2
Wirtschaftsprüfungsgesellschaft
2
100.00
Schiphol, Netherlands
100.00
Equity interest in
percent¹
Domicile, country/region
Further Information
324
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Polska S.A. w likwidacji
Mercedes-Benz Bank GmbH
Mercedes-Benz Automotive Mobility GmbH
Mercedes-Benz Bank AG
Mercedes-Benz Auto Receivables Trust 2020-1
Mercedes-Benz Auto Receivables Trust 2021-1
Mercedes-Benz Auto Receivables Trust 2022-1
Mercedes-Benz Auto Receivables Trust 2023-1
Mercedes-Benz Auto Receivables Trust 2023-2
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2021-B
Mercedes-Benz Auto Lease Trust 2023-A
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Asia GmbH
Mercedes-Benz Argentina S.A.U.
Mercedes-Benz AG
Mercedes-Benz (Thailand) Limited
Mercedes-Benz (China) Ltd.
Mercedes-Benz - Aluguer de Veículos, Lda.
Mercedes-AMG GmbH
Mercedes pay GmbH
Mercedes AMG High Performance Powertrains Ltd
MDC Power GmbH
Footnote
MBarc Credit Canada Inc.
Beijing, China
Beijing, China
Mem Martins, Portugal
Beijing, China
100.00
Affalterbach, Germany
100.00
Stuttgart, Germany
100.00
Brixworth, United Kingdom
5
100.00
Kölleda, Germany
100.00
Mississauga, Canada
0.00
Stuttgart, Germany
0.00
Luxembourg, Luxembourg
100.00
Pretoria, South Africal
100.00
Windhof, Luxembourg
51.11
Drachten, Netherlands
3
0.00
0.00
0.00
0.00
Beijing, China
Beijing, China
3
LBBW AM - MBVEXW
LBBW AM - Daimler Re Insurance
Koppieview Property (Pty) Ltd
100.00
Stuttgart, Germany
100.00
Wilmington, USA
5
100.00
Wiedemar, Germany
100.00
Malmö, Sweden
100.00
Düsseldorf, Germany
100.00
Milton Keynes, United Kingdom
100.00
Machelen, Belgium
100.00
100.00
Le Bourget, France
Düsseldorf, Germany
100.00
100.00
Le Bourget, France
Alcobendas, Spain
100.00
Machelen, Belgium
100.00
Schiphol, Netherlands
100.00
Sintra, Portugal
100.00
Warsaw, Poland
Daimler Fleet Management South Africa (Pty.) Ltd. i. L.
Pretoria, South Africa
65.00
4
Interleasing Luxembourg S.A.
FOTIC - MB Leasing No. 3 Single Fund Trust
FOTIC - MB Leasing No. 4 Single Fund Trust
FOTIC - MB Leasing No. 5 Single Fund Trust
FOTIC - MB Leasing No. 6 Single Fund Trust
Friesland Lease B.V.
Name of the company
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
3
0.00
Beijing, China
5,7
100.00
Schönefeld, Germany
5
100.00
100.00
Stuttgart, Germany
100.00
Schönefeld, Germany
5
100.00
Stuttgart, Germany
100.00
Wilmington, USA
100.00
Beijing, China
Epsilon Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
FOTIC - MB Leasing No. 2 Single Fund Trust
Delta Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
EHG Elektroholding GmbH
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Vans USA, LLC
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
5,7
51.00
Milton Keynes, United Kingdom
100.00
3
0.00
Luxembourg, Luxembourg
0.00
Milan, Italy
0.00
Wilmington, USA
3
0.00
Tokyo, Japan
3
0.00
Beijing, China
3
0.00
Beijing, China
3
0.00
Beijing, China
3
0.00
Beijing, China
0.00
Beijing, China
0.00
Beijing, China
3
0.00
Beijing, China
Sebes, Romania
0.00
100.00
65.00
62.49
Buenos Aires, Argentina
100.00
Berlin, Germany
100.00
Stuttgart, Germany
100.00
Kamenz, Germany
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Li-Tec Battery GmbH
LICULAR GmbH
Stuttgart, Germany
Arvidsjaur, Sweden
LEONIE DMS DVB GmbH
Lapland Car Test Aktiebolag
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Daimler Unterstützungskasse GmbH
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
AEG Olympia Office GmbH
Accumotive Verwaltungs-GmbH
II. Unconsolidated subsidiaries²
51.00
Sittard, Netherlands
100.00
Kidlington, United Kingdom
60.00
Almere, Netherlands
5
100.00
Stuttgart, Germany
Le Bourget, France
Stuttgart, Germany
Beijing, China
0.00
Silver Arrow Canada LP
Silver Arrow Canada GP Inc.
Silver Arrow Australia Trust 2020-1
Silver Arrow Australia Trust 2019-1
Name of the company
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Utrecht, Netherlands
Melbourne, Australia
Stuttgart, Germany
3
0.00
0.00
50.10
Le Bourget, France
100.00
London, United Kingdom
100.00
Berlin, Germany
100.00
Schaumburg, USA
100.00
Wilmington, USA
100.00
Warsaw, Poland
SILVER ARROW CHINA 2021-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2022-1 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2022-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-1
3
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-2
SILVER ARROW CHINA 2023-1 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2023-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
Beijing, China
3
0.00
Beijing, China
7
100.00
Mississauga, Canada
100.00
Mississauga, Canada
3
0.00
Melbourne, Australia
0.00
Melbourne, Australia
Footnote
Equity interest in
percent¹
Domicile, country/region
Further Information
329
Zuidlease B.V.
YASA Limited
Wagenplan B.V.
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Ucafleet S.A.S.
Star Assembly SRL
Silver Arrow S.A.
Silver Arrow Merfina 2021-1 S.r.l.
Silver Arrow Lease Facility Trust
Silver Arrow Japan 2022-1
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-1 ASSET BACKED NOTES TRUST
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-2 ASSET BACKED NOTES TRUST
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2023-1
100.00
Stuttgart, Germany
100.00
100.00
New Cairo, Egypt
100.00
New Cairo, Egypt
100.00
Stuttgart, Germany
100.00
Montigny-le-Bretonneux, France
100.00
Budapest, Hungary
100.00
Cebu City, Philippines
100.00
San Sebastián de los Reyes, Spain
100.00
Berlin, Germany
100.00
Stuttgart, Germany
100.00
Raaba, Austria
100.00
Milton Keynes, United Kingdom
100.00
Kamenz, Germany
100.00
New Cairo, Egypt
100.00
Shanghai, China
100.00
Brackley, United Kingdom
Maastricht, Netherlands
100.00
100.00
Mercedes-Benz UK Share Trustee Ltd.
Mercedes-Benz Tech Motion GmbH
Mercedes-Benz Tech Innovation GmbH
Tel Aviv, Israel
Bangalore, India
Wilmington, USA
Bratislava, Slovakia
Stuttgart, Germany
Wilmington, USA
Puchong, Malaysia
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Second Life Solutions LLC
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Purchasing Coordination Corporation
Mercedes-Benz Pensionsfonds AG
Mercedes-Benz Parts Logistics Asia Pacific Sdn. Bhd.
100.00
Jawor, Poland
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Böblingen, Germany
100.00
Ulm, Germany
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Stuttgart, Germany
100.00
Leinfelden-Echterdingen, Germany
100.00
Mercedes-Benz G GmbH
Mercedes-Benz Financial Services UK (Trustees) Ltd
Mercedes-Benz Energy GmbH
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Digital Tech Ltd.
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Consulting GmbH
Mercedes-Benz Cars Middle East FZE
Mercedes-Benz Business Services Sdn Bhd
Mercedes-Benz Assignment Services Americas, LLC
Mercedes pay USA LLC
Mercedes pay S.A. - in liquidation
Mercedes pay AG
MBition Sofia EOOD
MBition GmbH
Name of the company
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Neuhausen auf den Fildern, Germany
100.00
Kamenz, Germany
100.00
Kuppenheim, Germany
100.00
Stuttgart, Germany
100.00
100.00
Mercedes-Benz Gastronomie GmbH
Mercedes-Benz Group Services Berlin GmbH
Mercedes-Benz Group Services Madrid, S.A.U.
Mercedes-Benz Group Services Phils., Inc.
Dubai, United Arab Emirates
100.00
Puchong, Malaysia
100.00
100.00
100.00
100.00
Wilmington, USA
Luxembourg, Luxembourg
Wilmington, USA
Zug, Switzerland
100.00
100.00
Sofia, Bulgaria
Berlin, Germany
70.00
Footnote
Domicile, country/region
Further Information
330
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Heritage GmbH
Mercedes-Benz Motorsport Limited
Mercedes-Benz Manufacturing and Import Egypt
Mercedes-Benz Logistics and Distribution Egypt LLC
Mercedes-Benz Intellectual Property Management GmbH
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Hungária Kft.
Equity interest in
percent¹
Ho Chi Minh City, Vietnam
5
100.00
100.00
Kecskemét, Hungary
100.00
Bangkok, Thailand
100.00
New York, USA
100.00
Puchong, Malaysia
5
100.00
Ludwigsfelde, Germany
5,7
100.00
Schönefeld, Germany
5
100.00
Böblingen, Germany
5
100.00
Stuttgart, Germany
Footnote
Equity interest in
percent¹
Domicile, country/region
Mercedes-Benz Reinsurance S.A. Luxembourg
Mercedes-Benz Renting, S.A.
Mercedes-Benz Real Estate GmbH
Mercedes-Benz Portugal, S.A.
Mercedes-Benz Polska Sp. z o.o.
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics UK Limited
Jawor, Poland
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
100.00
0.00
Wilmington, USA
100.00
Auckland, New Zealand
100.00
Utrecht, Netherlands
100.00
Utrecht, Netherlands
100.00
Beijing, China
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
100.00
Seoul, South Korea
100.00
Stuttgart, Germany
100.00
Melbourne, Australia
100.00
Stuttgart, Germany
100.00
Bangkok, Thailand
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
100.00
Mexico City, Mexico
Wilmington, USA
Mercedes-Benz Parts Brand GmbH
Mercedes-Benz Paris SAS
Mercedes-Benz Otomotiv Ticaret ve Hizmetler A.S.
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Warsaw, Poland
100.00
Budapest, Hungary
100.00
Bucharest, Romania
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
65.00
Beijing, China
100.00
Trent, Italy
51.00
Seoul, South Korea
100.00
Tokyo, Japan
100.00
Rome, Italy
100.00
Wilmington, USA
100.00
Utrecht, Netherlands
5
100.00
Stuttgart, Germany
To Our Shareholders
327
Combined Management Report
Corporate Governance
Mercedes-Benz Österreich GmbH
Mercedes-Benz North America Finance Corporation
Mercedes-Benz North America Corporation
Mercedes-Benz New Zealand Ltd
Mercedes-Benz Nederland Holding B.V.
Mercedes-Benz Nederland B.V.
Mercedes-Benz Mobility & Technology Service (Beijing) Co., Ltd.
Mercedes-Benz Mobility Services GmbH
MERCEDES-BENZ MOBILITY MEXICO, S. DE R.L. DE C.V.
Mercedes-Benz Mobility Korea Ltd.
Mercedes-Benz Mobility Beteiligungsgesellschaft mbH
MERCEDES-BENZ MOBILITY AUSTRALIA PTY LTD
Mercedes-Benz Mobility AG
Mercedes-Benz Mobility (Thailand) Co., Ltd.
100.00
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Mercedes-Benz México International, S. de R.L. de C.V.
Mercedes-Benz Master Owner Trust
Mercedes-Benz Manufacturing Poland sp. z O.O.
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Manufacturing (Thailand) Limited
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Ludwigsfelde Anlagenverwaltung GmbH & Co. OHG
Mercedes-Benz LT GmbH
Mercedes-Benz Leasing Treuhand GmbH
Name of the company
Further Information
Consolidated Financial Statements
Mercedes-Benz Mexico, S. de R.L. de C.V.
Annual Report 2023 | Mercedes-Benz Group
Newark, USA
Salzburg, Austria
100.00
100.00
100.00
Selangor, Malaysia
100.00
Alcobendas, Spain
100.00
Bucharest, Romania
100.00
Schlieren, Switzerland
100.00
100.00
100.00
100.00
100.00
100.00
Footnote
Equity interest in
percent¹
Istanbul, Turkey
Singapore, Singapore
Rome, Italy
Bucharest, Romania
Mem Martins, Portugal
Farmington Hills, USA
Milton Keynes, United Kingdom
Wilmington, USA
Domicile, country/region
Silver Arrow Australia 2019-1
Silver Arrow Athlon NL 2021-1
Multifleet G.I.E.
Sosnowiec, Poland
Movinx UK Ltd.
100.00
100.00
Schönefeld, Germany
100.00
Berlin, Germany
100.00
5
100.00
Stuttgart, Germany
100.00
Wilmington, USA
100.00
Milton Keynes, United Kingdom
67.55
Hong Kong, China
100.00
Wilmington, USA
100.00
Warsaw, Poland
100.00
Vance, USA
100.00
Farmington Hills, USA
100.00
Wilmington, USA
100.00
Farmington Hills, USA
51.00
Taipei, Taiwan, China
100.00
Malmö, Sweden
Pretoria, South Africa
Movinx GmbH
Movinx Americas Company, Inc.
Mercedes-Benz Wholesale Receivables LLC
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Alcobendas, Spain
100.00
Luxembourg, Luxembourg
100.00
Berlin, Germany
100.00
Sintra, Portugal
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
Milton Keynes, United Kingdom
100.00
Azuqueca de Henares, Spain
100.00
Stuttgart, Germany
100.00
66.91
100.00
Port-Marly, France
Istanbul, Turkey
Notes to the Consolidated Financial Statements
328
Further Information
Name of the company
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Verwaltungsgesellschaft für Grundbesitz mbH
Mercedes-Benz Versicherungsservice GmbH
Mercedes-Benz Versicherung AG
Mercedes-Benz Vermögens- und Beteiligungsgesellschaft mbH
Mercedes-Benz Vans, LLC
Mercedes-Benz Vans UK Limited
Mercedes-Benz Vans Hong Kong Limited
Mercedes-Benz USA, LLC
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Trust Leasing LLC
Mercedes-Benz Trust Leasing Conduit LLC
100.00
Mercedes-Benz Trust Holdings LLC
Mercedes-Benz Sverige AB
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz Singapore Pte. Ltd.
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Retail, Unipessoal Lda.
Mercedes-Benz Retail Receivables LLC
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Taiwan Ltd.
Annual Report 2023 | Mercedes-Benz Group
Contents
338
100.00
Bogor, Indonesia
Stuttgart, Germany
100.00
100.00
Cugir, Romania
100.00
Maribor, Slovenia
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Aguascalientes, Mexico
54.01
Bruges, France
Munich, Germany
Fuzhou, China
Schönefeld, Germany
100.00
Stuttgart, Germany
51.00
Daimler Truck Holding AG
IONITY Holding GmbH & Co. KG
Ionna LLC
LSH Auto International Limited
Mercedes-Benz Grand Prix Ltd.
There Holding B.V.
Domicile, country/region
Equity interest in
percent¹
33.33
Footnote
100.00
100.00
Stuttgart, Germany
100.00
Lisbon, Portugal
100.00
Esparraguera, Spain
Alcobendas, Spain
Valencia, Venezuela
25.10
50.00
Hitachi, Japan
Hong Kong, China
15.00
Brackley, United Kingdom
33.33
Rijswijk, Netherlands
30.59
Annual Report 2023 | Mercedes-Benz Group
16.67
Contents
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
Name of the company
Domicile, country/region
To Our Shareholders
Bolt Technology OÜ
Torrance, USA
Munich, Germany
33.40
Singapore, Singapore
50.00
Hangzhou, China
50.00
50.00
Munich, Germany
15.12
Beijing, China
Beijing, China
9.55
49.00
30.03
Tallinn, Estonia
7.41
Leinfelden-Echterdingen, Germany
30.00
Berlin, Germany
Equity interest in
percent¹
Blacklane GmbH
BAIC Motor Corporation Ltd.
Annual Report 2023 | Mercedes-Benz Group
The risk for the consolidated financial statements
The statement of financial position caption "Equipment
on operating leases” (€ 41,712 million) includes among
other things Mercedes-Benz passenger cars, which are
purchased by non-group dealers or other third parties
and are the subject of an operating lease with the
Mercedes-Benz Group. An impairment risk exists with
regard to these vehicles that is primarily dependent on
the residual value achievable at the end of the lease.
These future residual values are dependent on the situ-
ation in the used vehicle markets prevailing when the
vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The
risk for the financial statements is that any impairment
losses will not be recognised or that the amounts rec-
ognised will be inadequate.
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 "Significant accounting poli-
cies" and Note 2 "Accounting estimates and manage-
ment judgements". Further information on the operating
leases can be found in the notes to the consolidated
financial statements in Note 12 "Equipment on operat-
ing leases" and in the comments in the combined man-
agement report in the section entitled “Industry and
business risks and opportunities".
Impairment Risk on Operating Leases
Key audit matters are those matters that, in our profes-
sional judgement, were of most significance in our audit
of the consolidated financial statements for the finan-
cial year from January 1 to December 31, 2023. These
matters were addressed in the context of our audit
of the consolidated financial statements as a whole,
and, in forming our opinion thereon, we do not provide
a separate opinion on these matters.
Key audit matters in the audit of the consolidated
financial statements
Note on the emphasis of a particular matter
We refer to the comments of the legal representatives
in the section on "EU taxonomy" in the section entitled
"non-financial statement" that is included in the com-
bined management report in accordance with Sec-
tions 289b paragraph 1, 289c, 315b paragraph 1 and
315c HGB. There it is stated that the EU taxonomy Regu-
lation and the delegated acts promulgated for this
includes wording and terms that are subject to consid-
erable uncertainty with regard to their interpretation
and for which clarifications have not yet been pub-
lished in all cases. The legal representatives describe
how they have carried out the necessary interpretation
of the EU taxonomy Regulation and the delegated acts
promulgated for this. On account of the immanent risk
that certain abstract legal terms can be interpreted in
various ways, the conformity of the interpretation with
the law is subject to uncertainty. Our opinions on the
on the consolidated financial statements and on the
combined management report has not been modified in
this regard.
We conducted our audit of the consolidated financial
statements and of the combined management report in
accordance with Section 317 HGB and the EU Audit Reg-
ulation (No. 537/2014; referred to subsequently as the
"EU Audit Regulation") and in compliance with German
Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschafts-
prüfer [Institute of Public Auditors in Germany] (IDW).
We performed the audit of the consolidated financial
statements in supplementary compliance with the
International Standards on Auditing (ISAs). Our respon-
sibilities under those requirements, principles and
standards are further described in the "Auditor's
Responsibilities for the Audit of the Consolidated Finan-
cial Statements and of the Combined Management
Report" section of our auditor's report. We are inde-
pendent of the group entities in accordance with the
requirements of European law and German commercial
and professional law, and we have fulfilled our other
German professional responsibilities in accordance with
these requirements. In addition, in accordance with
Article 10 paragraph 2 letter f) of the EU Audit Regula-
tion, we declare that we have not provided non-audit
services prohibited under Article 5 paragraph 1 of the
EU Audit Regulation. We believe that the evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinions on the consolidated financial
statements and on the combined management report.
Basis for the opinions
Further Information
Independent Auditor's Report
339
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
We audited the appropriateness and effectiveness of
the internal control system in relation to the risk models
as well as the determination of the value-determining
factors and the valuation allowances, also in part
through recalculation. We also assessed the relevant IT
systems and internal processes. In addition to the cor-
rectness of the relevant IT systems and associated
interfaces to ensure the completeness and accuracy of
the data using our IT special lists, the audit also
We obtained a comprehensive understanding of the
development of the portfolios, the associated counter-
party default risks and the processes for identifying,
managing, monitoring and measuring credit risks by
inspecting analyses and risk reports, interrogations,
review of guidelines and working instructions, checking
the defined methods and their implementation and
checking and walking through the validation process
and the individual validation reports.
Our audit approach
possible amount receivable on default, the parameter
transfer criteria that are related to a significant change
in the default risk of borrowers, and the calculation of
future cash flows. Furthermore, macroeconomic sce-
narios (basis scenarios, optimistic and pessimistic sce-
narios) flow into the calculation, the identification of
which to a high degree includes discretionary judge-
ments and uncertainties. The risk for the financial state-
ments is that the creditworthiness of customers and
future cash flows is misjudged or that the calculation of
the risk provision parameters is incorrect so that loss
allowances are not recognised or are insufficient.
The calculation of the loss allowances is based on
expected credit losses and therefore also includes
expectations regarding the future. Recognition of the
expected credit losses is carried out by means of a
three-parameter procedure for the determination of
loss allowances. At the same time, various factors
determining the value, such as the determination of
statistical default probabilities and loss rates, the
The risk for the consolidated financial statements
Receivables from financial services (€ 88,211 million)
resulting from the Group's financing and leasing activi-
ties include receivables from sales financing with cus-
tomers, receivables from sales financing with dealers
and receivables from finance lease contracts. The loss
allowances on these receivables amounted at the
reporting date to € 1,055 million.
Contents
Please refer with regard to the accounting policies
applied to the notes to the consolidated financial state-
ments in Note 2 "Accounting estimates and manage-
ment judgements". Further information on allowances
on receivables from financial services can be found in
the notes to the consolidated financial statements in
Note 1 "Significant Accounting Policies", in Note 14
"Receivables from financial services", in Note 33 "Man-
agement of financial risks" and in the combined man-
agement report in the section entitled "Financial risks
and opportunities".
The assumptions and assessments providing the basis
for the assessment of the recoverability of the exter-
nally purchased Mercedes-Benz passenger cars in the
statement of financial position caption "Equipment on
operating leases" and the recorded impairment losses
are appropriate.
Our observations
We audited the recoverability of these externally pur-
chased Mercedes-Benz passenger cars in the statement
of financial position caption "Equipment on operating
leases". We investigated and appraised the indications
assumed by the Group for any need for an impairment
loss and where necessary obtained an understanding of
the write-downs calculated by the Mercedes-Benz
Group. We have assessed the Mercedes-Benz Group's
evaluation with regard to the residual values achievable
by the end of the terms of the leases. In this connec-
tion, we in particular critically reviewed the main influ-
encing factors, such as the expected number of returns
from leasing, the current marketing results in order to
assess the accuracy of the estimates and future vehicle
model changes. For the significant US-market we fur-
thermore also audited the consistency of the assump-
tions made by the Mercedes-Benz Group with residual
value forecasts by independent expert third parties.
Our audit approach
Further Information
Independent Auditor's Report
340
Consolidated Financial Statements
Valuation Allowances on Receivables
from Financial Services
Annual Report 2023 | Mercedes-Benz Group
Pursuant to Section 322 paragraph 3 sentence 1 HGB,
we declare that our audit has not led to any reserva-
tions relating to the legal compliance of the consoli-
dated financial statements and of the combined man-
agement report.
the accompanying combined management report as a
whole provides an appropriate view of the Group's
position. In all material respects, the combined man-
agement report is consistent with the consolidated
financial statements, complies with German legal
requirements and appropriately presents the oppor-
tunities and risks of future development. Our opinion
on the combined management report does not cover
the elements of the combined management report
referred to in the "Other information" section of our
auditor's report. The combined management report
includes cross-references not foreseen by law that
are marked as unaudited. Our opinion does not cover
these cross-references and the information to which
these cross-references relate.
Porcher & Meffert Grundstücksgesellschaft mbH & Co. Stuttgart OHG
PT Mercedes-Benz Consulting Services Indonesia
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Star Transmission srl
STARKOM, proizvodnja in trgovina d.o.o.
Zweite Vermögensverwaltung PV GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes, S.A.P.I de C.V.
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
MB Service Japan Co., Ltd.
SMART MOBILITY PTE. LTD.
Wei Xing Tech. Co., Ltd.
YOUR NOW Holding GmbH
V. Associated companies accounted for using the equity method
IV. Joint ventures accounted for using the equity method
Automotive Cells Company SE
Beijing Benz Automotive Co., Ltd.
Montajes y Estampaciones Metálicas, S.L.
Mercedes-Benz.io GmbH
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as
adopted by the EU, and the additional requirements
of German commercial law pursuant to Section 315e
paragraph 1 HGB and, in compliance with these
requirements, give a true and fair view of the assets,
liabilities and financial position of the Group as of
December 31, 2023, and of its financial performance
for the financial year from January 1 to December 31,
2023 and
In our opinion, on the basis of the knowledge obtained
in the audit
The combined management report includes cross-refer-
ences not foreseen by law that are marked as unau-
dited. In accordance with the German legal regulations,
we have not audited the content of these cross-refer-
ences and the information to which these cross-refer-
ences relate.
In accordance with the German legal regulations, we
have not audited the content of the elements of the
combined management report referred to in the "Other
information" section of our auditor's report.
We have audited the consolidated financial statements
of Mercedes-Benz Group AG, Stuttgart, and its subsidi-
aries (the Group), which comprise the consolidated
statement of financial position as of December 31, 2023,
and the consolidated statement of income, consoli-
dated statement of comprehensive income/loss, con-
solidated statement of changes in equity and consoli-
dated statement of cash flows for the financial year
from January 1 to December 31, 2023 as well as notes to
the consolidated financial statements, including a sum-
mary of significant accounting policies. In addition, we
have audited the report on the situation of the Com-
pany and the Group (hereinafter referred to as "the
combined management report”), of Mercedes-Benz
Group AG for the financial year from January 1 to
December 31, 2023.
Opinions
Report on the Audit of the Consoli-
dated Financial Statements and of
the Combined Management Report
Mercedes-Benz.io Portugal Unipessoal Lda.
To Mercedes-Benz Group AG,
Stuttgart
Further Information
Independent Auditor's Report
Notes to the Consolidated Financial Statements
331
Further Information
Name of the company
Mercedes-Benz Vans Mobility, S.L.U.
Mercedes-Benz Venezuela S.A.
Independent Auditor's Report
Footnote
332
ASOCIACIÓN VASCA PARA EL DESARROLLO DE TECNOLOGÍAS DE FABRICACIÓN AVANZADA EN AUTOMOCIÓN
The Board of Management
Stuttgart, 15 March 2024
Ola Källenius
Dr. Jörg Burzer
Renata Jungo Brüngger
Sabine Kohleisen
Markus Schäfer
Britta Seeger
Hubertus Troska
Harald Wilhelm
ONE ELEMEN
FURTHER
INFORMATION
Annual Report 2023 | Mercedes-Benz Group
Contents
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Cologne, Germany
24.17
Bottrop, Germany
50.00
Most, Czech Republic
51.00
VI. Joint operations, joint ventures, associated companies accounted for at (amortized) cost and substantial other investments
recognized at fair value²
To Our Shareholders
11.53
Bruchsal, Germany
11.61
5.40
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
333
Stuttgart, Germany
FURTHER INFORMATION
337 Responsibility Statement
of the Legal Representatives
Dr Jörg Burzer
Sabine Kohleisen
Britta Seeger
Hubertus Troska
Harald Wilhelm
337
Further Information
Responsibility Statement
of the Legal Representatives
Markus Schäfer
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
8.90
Renata Jungo Brüngger
Stuttgart, 15 March 2024
338 Independent Auditor's Report
349 Key Figures
352 Further Information
336
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Ola Källenius
Further Information
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Responsibility Statement
of the Legal Representatives
To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position, cash flows and
profit or loss of the Group, and the Group management
report, which has been combined with the management
report for Mercedes-Benz Group AG, includes a fair
review of the development and performance of the
business and the position of the Group, together with
a description of the principal opportunities and risks
associated with the expected development of the Group.
Annual Report 2023 | Mercedes-Benz Group
24.90
Zurich, Switzerland
Stuttgart, Germany
STARCAM s.r.o.
The Mobility House AG
VfB Stuttgart 1893 AG
Volocopter GmbH
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies, we refer to Note 1.
3 Control due to economic circumstances.
4 In liquidation.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
Dover, USA
7 Mercedes-Benz Group AG or one or several consolidated subsidiaries is/are the partner(s) with unlimited liability.
Vitoria, Spain
0.00
Gaydon, United Kingdom
8.90
Burnaby, Canada
smart-BRABUS GmbH i.L.
SK Gaming Beteiligungs GmbH
Sila Nanotechnologies Inc.
Power Supply Systems GmbH
Aston Martin Lagonda Global Holdings Plc
BDF IP Holdings Ltd.
Beijing Mercedes-Benz Sales Service Co., Ltd.
BTV technologies GmbH
ChargePoint Holdings Inc.
Earlybird DWES Fund VI GmbH & Co. KG
Esslinger Wohnungsbau GmbH
33.00
European Center for Information and Communication Technologies -EICT GmbH
Gamma 1 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 2 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 3 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 4 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
hap2U SAS
Kamaz PAO
Momenta Global Limited
Ondine Tech Fund 1 L.P.
PDB - Partnership for Dummy Technology and Biomechanics GbR
Factorial Inc.
Beijing, China
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
Unna, Germany
10.10
Berlin, Germany
18.37
Schönefeld, Germany
10.12
7
Pontcharra, France
Schönefeld, Germany
51.00
15.00
Grand Cayman, Cayman Islands
5.57
George Town, Cayman Islands
43.23
Ingolstadt, Germany
20.00
Naberezhnye Chelny, Russian Federation
7
34.59
Schönefeld, Germany
10.10
Campbell, USA
2.40
Munich, Germany
6.45
26.57
40.00
Berlin, Germany
Esslingen am Neckar, Germany
Woodbury, USA
9.44
Schönefeld, Germany
10.10
Schönefeld, Germany
10.10
7
25.00
9.5
1,302
2,428
-46
1,695
2,428
-30
16.8
2
16.8
62,014
58,031
7
135,027
132,379
- perform audit procedures on the prospective infor-
mation presented by the legal representatives in the
combined management report. On the basis of suffi-
cient appropriate audit evidence, we evaluate, in par-
ticular, the significant assumptions used by the legal
representatives as a basis for the prospective infor-
mation and evaluate the proper derivation of the pro-
spective information from these assumptions. We do
not express a separate opinion on the prospective
information and on the assumptions used as a basis.
There is a substantial unavoidable risk that future
events will differ materially from the prospective
information.
-1
12.3
26,954
9,099
Mercedes-Benz Mobility
Our observations
included the testing of automated controls for data
entry and data processing. Our audit focused on
assessing the methodology used to determine and to
calculate the probabilities of default and loss given
default, which are derived from historical data. We took
into account the current economic uncertainties in con-
nection with the effects of several geopolitical hotspots
when testing the macroeconomic scenarios and the
model assumptions made. Based on the results of a
validation performed by Mercedes-Benz Mobility, we
satisfied ourselves of the appropriateness of key risk
provisioning parameters and assessed the parameter
adjustments made to reflect current market conditions.
In this context, we examined the data underlying the
validations.
Further Information
Independent Auditor's Report
341
Consolidated Financial Statements
Corporate Governance
Combined Management Report
The methodical approach, the procedures and the pro-
cesses to calculate the loss allowances and the
assumptions and risk parameters flowing into the
measurement are appropriate to identify the credit risks
in good time and to determine the recognition of ade-
quate loss allowances.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
We also provide those charged with governance with a
statement that we have complied with the relevant
independence requirements and communicate with
them all relationships and other matters that may rea-
sonably be thought to bear on our independence, and
where applicable, the related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that were
of most significance in the audit of the consolidated
financial statements of the current period and are
therefore the key audit matters. We describe these
matters in our auditor's report unless laws or other legal
regulations preclude public disclosure of the matter.
Other legal and regulatory
requirements
Report on the Assurance on the Electronic
Rendering of the Consolidated Financial Statements
and the Combined Management Report Prepared for
Publication Purposes in Accordance with
Section 317 (3a) HGB
We have performed assurance work in accordance with
Section 317 paragraph 3a HGB to obtain reasonable
assurance about whether the rendering of the annual
financial statements and the combined management
report (hereinafter the "ESEF documents") contained in
the file that can be downloaded by the issuer from the
electronic client portal with access protection
,,mercedesbenzgroupag-2023-12-31-de.zip"
(SHA256-Hashwert: 0a45a843dc53847d4a97e63ad2c
Contents
Measurement of the Provision
for Product Warranties
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 “Significant accounting poli-
cies" and in Note 2 "Accounting estimates and manage-
ment judgements". Further information on the
guarantees and product warranties can be found in the
notes to the consolidated financial statements in
Note 23 "Provisions for other risks" and in the com-
ments in the combined management report in the sec-
tion entitled "Company-specific risks and opportuni-
ties - Warranty and goodwill cases".
The risk for the consolidated financial statements
The provision for product warranties amounts to
€ 6,399 million and is included in the provisions for
other risks.
The risk for the consolidated financial statements
Mercedes-Benz Group AG and its subsidiaries face vari-
ous legal proceedings, claims and governmental inves-
tigations and administrative orders (legal proceedings)
on a wide range of topics, including for example vehicle
safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, envi-
ronmental matters, antitrust matters (including actions
for damages) and shareholder matters. Product-related
proceedings involve, among other things, claims
asserted in part by way of a class action due to possi-
ble vehicle defects. If the outcome of such legal pro-
ceedings is detrimental to the Mercedes-Benz Group,
the Group may be required to pay substantial compen-
satory and punitive damages or fines. In addition, ser-
vice actions, recall campaigns or other costly actions
Imay have to be undertaken.
Please refer to Note 1 "Significant accounting policies"
and Note 2 "Accounting estimates and judgments made
by management" in the notes to the consolidated finan-
cial statements for information on the accounting poli-
cies applied. Further information on legal proceedings
can be found in Note 23 "Provisions for other risks", in
Note 30 "Legal proceedings" in the notes to the consol-
idated financial statements and in the combined man-
agement report in the section "Legal and tax risks and
opportunities - Legal risks".
The Accounting Treatment
of Legal Proceedings
Further Information
Independent Auditor's Report
342
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The calculation methods and the assumptions made are
appropriate.
Our observations
Our audit procedures included among other things the
evaluation of the process to calculate the provision for
product warranties and the evaluation of the relevant
assumptions and their derivation for the measurement
of the provision. These include primarily assumptions
on expected susceptibility to and the course of damage,
and in addition the monetary value of the damage per
vehicle based on actual warranty, guarantee and good-
will losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guaran-
tee and goodwill costs. We also checked that updated
assessments of the future repair costs and procedures
were taken into account. We obtained an understanding
for the underlying numbers of vehicles through the
actual unit sales.
Our audit approach
Significant uncertainty for the calculation of the provi-
sion arises with regard to the future loss event. The risk
for the consolidated financial statements is that the
provision is not properly measured.
Mercedes-Benz Group is exposed to claims arising from
various types of product warranty claims or grants vari-
ous types of product guarantees under which it
vouches for the defect-free functioning of a Mercedes-
Benz Group product sold or a service provided for a
certain period of time. In order to confirm or reassess
future warranty, guarantee and goodwill expenses, con-
tinuously updated information on the type and volume
of damage that has occurred and its rectification is
recorded and analysed at the level of division, model
series, damage code and sales year.
cf5b0abbf926a0de13ea0facc21bca504529b) made
available and prepared for publication purposes com-
plies in all material respects with the requirements of
Section 328 (1) HGB for the electronic reporting format
("ESEF format"). In accordance with German legal
requirements, this assurance work extends only to the
conversion of the information contained in the annual
financial statements and the combined management
report into the ESEF format and therefore relates nei-
ther to the information contained in these renderings
nor to any other information contained in the file identi-
fied above.
Whether the recognition of a provision and, if so, in
what amount it is necessary on account of legal pro-
ceedings is dependent to a high degree on discretion-
ary estimates and assumptions by the legal representa-
tives. In view of this and the monetary amounts
involved with regard to the risks, the following legal
proceedings of the Mercedes-Benz Group are in our
opinion of particular importance.
In our opinion, the rendering of the consolidated finan-
cial statements and the combined management report
Contents
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information pursuant to Article 10
of the EU Audit Regulation
We were elected as group auditor by the Annual Share-
holders' Meeting on May 3, 2023. We were engaged by
the Supervisory Board on June 21, 2023. We have been
the group auditor of Mercedes-Benz Group AG without
interruption since the financial year 1998.
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit
Regulation (longform audit report).
German Public Auditor responsible
To Our Shareholders
for the engagement
Stuttgart, March 15, 2024
KPMG AG
Wirtschaftsprüfungsgesellschaft
Original German version signed by:
Other matter -
Use of the Auditor's Report
Our auditor's report must always be read together with
the audited consolidated financial statements and the
audited combined management report as well as the
examined ESEF documents. The consolidated financial
statements and combined management report con-
verted to the ESEF format - including the versions to be
entered in the company register - are merely electronic
renderings of the audited consolidated financial state-
ments and the audited group management report and
do not take their place. In particular, the ESEF report
and our assurance opinion contained therein are to be
used solely together with the examined ESEF docu-
ments made available in electronic form.
The German Public Auditor responsible for the
engagement is Alexander Bock.
Contents
Annual Report 2023 | Mercedes-Benz Group
evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) in accordance
with the requirements of Articles 4 and 6 of the Dele-
gated Regulation (EU) 2019/815, as amended as at the
reporting date, enables an appropriate and complete
machine-readable XBRL copy of the XHTML rendering.
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
347
Further Information
Independent Auditor's Report
contained in the electronic file and made available for
publication purposes complies in all material respects
with the requirements of Section 328 paragraph 1 HGB
for the electronic reporting format. Beyond this assur-
ance opinion and our audit opinion on the accompany-
ing consolidated financial statements and the accom-
panying combined management report for the financial
year from January 1 to December 31, 2023 contained in
the "Report on the Audit of the Consolidated Financial
Statements and the Combined Management Report"
above, we do not express any assurance opinion on the
information contained within these renderings or on the
other information contained in the file identified above.
We conducted our assurance work on the rendering of
the consolidated financial statements and of the com-
bined management report contained in the file and
identified above in accordance with Section 317 para-
graph 3a HGB and the IDW Assurance Standard: Assur-
ance Work on the Electronic Rendering of Financial
Statements and Management Reports Prepared for
Publication Purposes in accordance with Section 317
paragraph 3a HGB (IDW ASS 410 (06.2022)) and the
International Standard on Assurance Engagements
3000 (Revised). Our responsibility in accordance there-
with is further described below. Our audit firm applies
IDW Standard on Quality Management 1: Requirements
for Quality Management in Audit Firms (IDW QMS 1
(09.2022)).
The Company's legal representatives are responsible for
the preparation of the ESEF documents including the
electronic rendering of the consolidated financial state-
ments and the combined management report in accord-
ance with Section 328 paragraph 1 sentence 4 item 1
HGB and for the tagging of the consolidated financial
statements in accordance with Section 328 paragraph 1
sentence 4 item 2 HGB.
In addition, the Company's representatives are respon-
sible for such internal control that they have considered
necessary to enable the preparation of ESEF documents
that are free from material intentional or unintentional
non-compliance with the requirements of Section 328
paragraph 1 HGB for the electronic reporting format.
The Supervisory Board is responsible for overseeing the
process of preparing the ESEF documents as part of the
financial reporting process.
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
intentional or unintentional non-compliance with the
requirements of Section 328 paragraph 1 HGB. We exer-
cise professional judgement and maintain professional
scepticism throughout the assurance work. We also
- identify and assess the risks of material intentional or
unintentional non-compliance with the requirements
of Section 328 paragraph 1 HGB, design and perform
assurance procedures responsive to those risks, and
obtain assurance evidence that is sufficient and appro-
priate to provide a basis for our assurance opinion.
-
obtain an understanding of internal control relevant
to the assurance on the ESEF documents in order to
design assurance procedures that are appropriate in
the circumstances, but not for the purpose of
expressing an assurance opinion on the effectiveness
of these controls.
evaluate the technical validity of the ESEF documents,
i.e. whether the file made available containing the
ESEF documents meets the requirements of the Dele-
gated Regulation (EU) 2019/815, as amended as at the
reporting date, on the technical specification for this
electronic file.
evaluate whether the ESEF documents provide an
XHTML rendering with content equivalent to the
audited consolidated financial statements and the
audited combined management report.
Annual Report 2023 | Mercedes-Benz Group
Sailer
a) Diesel emission behaviour: class action and other
lawsuits in Germany, United Kingdom and other coun-
tries in the Mercedes-Benz Cars and Mercedes-Benz
Vans segments
In Germany, a large number of customers of diesel
vehicles are suing for damages or cancellation of pur-
chase contracts. They claim that the diesel vehicles
were equipped with unauthorised defeat devices and/
or had unacceptably high emission or consumption
values.
345
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
Independent Auditor's Report
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation
of the consolidated financial statements and the com-
bined management report.
In preparing the consolidated financial statements, the
legal representatives are responsible for assessing the
Group's ability to continue as a going concern. They are
also responsible for disclosing, as applicable, matters
related to going concern. In addition, they are responsi-
ble for financial reporting based on the going concern
basis of accounting unless there is an intention to liqui-
date the Group or to cease operations, or there is no
realistic alternative but to do so.
The legal representatives are responsible for the prepa-
ration of the consolidated financial statements that
comply, in all material respects, with IFRSS as adopted
by the EU and the additional requirements of German
commercial law pursuant to Section 315e paragraph 1
HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group. In addition, the
legal representatives are responsible for such internal
control as they have determined necessary to enable
the preparation of consolidated financial statements
that are free from material misstatement, whether due
to fraud (i.e., fraudulent financial reporting and misap-
propriation of assets) or error.
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated
Financial Statements and the Combined
Management Report
If, based on the work we have performed, we conclude
that there is a material misstatement of this other infor-
mation, we are required to report that fact. We have
nothing to report in this regard.
otherwise appears to be materially misstated.
is materially inconsistent with the consolidated finan-
cial statements, with the combined management
report information audited for content or our knowl-
edge obtained in the audit, or
In connection with our audit, our responsibility is to
read the other information and, in so doing, to consider
whether the other information
Furthermore, the legal representatives are responsible
for the preparation of the combined management
report that, as a whole, provides an appropriate view of
the Group's position and is, in all material respects,
consistent with the consolidated financial statements,
complies with German legal requirements, and appro-
priately presents the opportunities and risks of future
development. In addition, the legal representatives are
responsible for such arrangements and measures (sys-
tems) as they have considered necessary to enable the
preparation of a combined management report that is
in accordance with the applicable German legal require-
ments, and to be able to provide sufficient appropriate
evidence for the assertions in the combined manage-
ment report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Combined Management Report
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as
a whole are free from material misstatement, whether
due to fraud or error, and whether the combined man-
agement report as a whole provides an appropriate
view of the Group's position and, in all material
respects, is consistent with the consolidated financial
statements and the knowledge obtained in the audit,
complies with the German legal requirements and
appropriately presents the opportunities and risks of
future development, as well as to issue an auditor's
report that includes our opinions on the consolidated
financial statements and on the combined management
report.
Reasonable assurance is a high level of assurance, but
is not a guarantee, that an audit conducted in accord-
ance with Section 317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) and supple-
mentary compliance with the ISAs will always detect a
material misstatement. Misstatements can arise from
fraud or error and are considered material if, individu-
ally or in the aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of these consolidated financial state-
ments and this combined management report.
evaluate the consistency of the combined manage-
ment report with the consolidated financial state-
ments, its conformity with [German] law, and the view
of the Group's position it provides.
Further Information
Independent Auditor's Report
346
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express opinions on the
consolidated financial statements and on the com-
bined management report. We are responsible for the
direction, supervision and performance of the group
audit. We remain solely responsible for our opinions.
evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, includ-
ing the disclosures, and whether the consolidated
financial statements present the underlying transac-
tions and events in a manner that the consolidated
financial statements give a true and fair view of the
assets, liabilities, financial position and financial per-
formance of the Group in compliance with IFRSs as
adopted by the EU and the additional requirements of
German commercial law pursuant to Section 315e
paragraph 1 HGB.
significant doubt on the Group's ability to continue as
a going concern. If we conclude that a material uncer-
tainty exists, we are required to draw attention in the
auditor's report to the related disclosures in the con-
solidated financial statements and in the combined
management report or, if such disclosures are inade-
quate, to modify our respective opinions. Our conclu-
sions are based on the audit evidence obtained up to
the date of our auditor's report. However, future
events or conditions may cause the Group to cease to
be able to continue as a going concern.
conclude on the appropriateness of the use by the
legal representatives of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
evaluate the appropriateness of accounting policies
used by management and the reasonableness of esti-
mates made by management and related disclosures.
obtain an understanding of internal control relevant
to the audit of the consolidated financial statements
and of arrangements and measures (systems) rele-
vant to the audit of the combined management report
in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of these
systems.
identify and assess the risks of material misstatement
of the consolidated financial statements and of the
combined management report, whether due to fraud
or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collu-
sion, forgery, intentional omissions, misrepresenta-
tions, or the override of internal control.
We exercise professional judgement and maintain pro-
fessional scepticism throughout the audit. We also
Our opinions on the consolidated financial statements
and on the combined management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance con-
clusion thereon.
Consumer lawsuits, some of which have been consol-
idated into a class action, and other lawsuits in vari-
ous jurisdictions, including the United Kingdom,
allege that Mercedes-Benz Group AG and/or individ-
ual subsidiaries have used devices that improperly
reduce the effectiveness of emission control systems
to reduce nitrogen oxide (NOx) emissions and cause
excessive emissions from diesel vehicles. In addition,
the plaintiffs allege that consumers were deceived in
connection with advertising claims for Mercedes-Benz
diesel vehicles.
-
In accordance with our engagement, we have per-
formed a separate financial audit of these disclosures.
With regard to the nature, scope and results of this
assurance engagement, we draw attention to our assur-
ance report dated March 14, 2024.
Where agreement has since been reached on individual
matters, we compared the amounts originally estimated
with the final obligations to obtain an understanding of
the quality of the estimates.
Our audit procedures included, on the one hand, an
assessment of the process established by the company
to ensure the identification of risks, the assessment of
the outcome of the proceedings and the presentation of
the legal proceedings in the financial statements. Sec-
ondly, we held discussions with the internal legal
department and other departments familiar with the
matters, external advisors and lawyers of the company
in order to obtain an explanation of the developments
and the reasons that led to the corresponding assess-
ments. In addition, we assessed the underlying docu-
ments and minutes as well as the calculations for the
respective provisions. We were provided with the legal
representatives' assessment of the developments in the
aforementioned areas in written form by the company.
We also interviewed the legal representatives of the
company. As at the balance sheet date, assessments by
external lawyers were available on the material pro-
ceedings, which support the risk assessment made by
the legal representatives.
Our audit approach
There is a risk for the financial statements that the pro-
visions for the legal proceedings are not recognized or
not recognized to a sufficient extent.
The Mercedes-Benz Group has recognized provisions for
legal proceedings as at December 31, 2023. The prereq-
uisite for the recognition of provisions for legal pro-
ceedings is that a current external obligation exists that
is likely to lead to an outflow of resources embodying
economic benefits and can be reliably estimated. The
amount of the provisions is determined on the basis of
the best possible estimate of the obligation by the legal
representatives as at the balance sheet date. The rec-
ognition and measurement of the recognized provisions
for the legal proceedings are based on discretionary
estimates and assumptions by the legal representatives.
Further Information
Independent Auditor's Report
343
Finally, we assessed the appropriateness of the disclo-
sures on the aforementioned legal proceedings in the
notes to the consolidated financial statements and in
the combined management report.
Consolidated Financial Statements
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group is subject to ongoing gov-
ernmental inquiries, investigations, examinations,
orders and proceedings relating to various laws and
regulations in connection with diesel exhaust emis-
sions. The activities of various authorities worldwide
relate in particular to test results and emission con-
trol systems in Mercedes-Benz diesel vehicles and/or
the Mercedes-Benz Group's interactions with the rele-
vant authorities as well as related legal issues and
implications, for example under applicable environ-
mental, criminal, consumer protection and antitrust
laws.
b)Diesel emissions behaviour: Regulatory proceedings
in the Mercedes-Benz Cars und Mercedes-Benz Vans
segments
In addition, investors have filed claims for damages in
Germany due to the alleged violation of capital market
disclosure regulations and have also claimed dam-
ages out of court. The investors allege that the
Mercedes-Benz Group did not immediately publish
insider information in connection with the emissions
behaviour of its Mercedes-Benz diesel vehicles and
also made false and misleading public statements.
They also claim that the purchase price of the finan-
cial instruments they acquired (in particular
Mercedes-Benz Group shares; formerly Daimler
shares) would have been lower if the Mercedes-Benz
Group had reported as required.
Corporate Governance
-
Our observations
The judgement-based estimates and assumptions of the
legal representatives are appropriate.
the key figures on the EU taxonomy in the body
text and in the tables in the "EU taxonomy" chapter.
-
Further Information
Independent Auditor's Report
344
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
accident frequency at production sites (chapter
"Employee matters"),
- Energy consumption, CO2 emissions, waste vol-
umes and water consumption in production (chap-
ter "Environmental concerns"),
the following disclosures in the combined manage-
ment report marked as extraneous to management
reports and unaudited with regard to the:
the disclosures in the combined management report
on the appropriateness and effectiveness of the over-
all internal control system and the risk management
system pursuant to the German Corporate Govern-
ance Codex marked as extraneous to management
reports and unaudited,
the combined declaration of the Company and the
Group on corporate management, which is referred to
in the combined management report, and
The legal representatives and the Supervisory Board are
responsible for the other information. The other infor-
mation comprises the following elements of the com-
bined management report, the content of which we
have not audited:
Other information
The other information also includes the remaining parts
of the annual report. The other information does not
include the annual financial statements, the combined
management report information audited for content
and our auditor's report thereon.
Wirtschaftsprüfer
Bock
Wirtschaftsprüfer
1,927
59
12.6
14.6
15.5
11.0
12.6
3,063
14.6
11.2
12,336
10,718
15
2,817
1,731
63
15.1
-12
16,245
14,252
Revenue
EBIT
Adjusted EBIT
Return on sales (in %)
Adjusted return on sales (in %)
CFBIT
112,756
14,224
111,601
1
20,288
17,217
18
16,340
-13
3,138
1,897
65
Adjusted CFBIT
23/22
% change
12,535
10
552
58
thereof capitalized development costs
3,417
2,802
22
349
873
137
Revenue
EBIT
Adjusted EBIT
Return on equity (in %)
Adjusted return on equity (in %)
New business
Contract volume (31 December)
155
14
7,986
Research and development expenditure
3,018
2,039
48
Adjusted cash conversion rate¹
0.9
0.7
29
1.0
1.1
-9
Investments in property, plant and equipment
3,345
3,265
2
351
199
76
11,413
2022
2023
Mercedes-Benz Vans
Dividend per share (in euros)
Free cash flow of the industrial business
Adjusted free cash flow of the industrial business
Net liquidity of the industrial business (31 December)
Investments in property, plant and equipment
Research and development expenditure
1 Based on net profit attributable to shareholders of Mercedes-Benz Group AG.
Earnings per share (in euros)1
2023
23/22
% change
153,218
150,017
2
19,660
20,458
2022
Net profit
Adjusted EBIT
EBIT
[German Public Auditor] [German Public Auditor]
348
Further Information
Independent Auditor's Report
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Key Figures
349
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Key Figures
Financial Key Figures for the Mercedes-Benz Group
In millions of euros
Revenue
-4
20,004
20,655
-3
9,996
8,541
17
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
350
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Key Figures
Financial Key Figures for the Segments
In millions of euros
2023
2022
Mercedes-Benz Cars
23/22
% change
8
26,718
3,481
19
14,531
14,809
-2
13.46
13.55
-1
5.30
5.20
2
11,316
8,128
39
11,720
9,294
26
31,659
26,637
3,745
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, includ-
ing any significant deficiencies in internal control that
we identify during our audit.
8 Number of active employees including holiday workers as of 31 December 2023. With the implementation of the European Sustainability Reporting Standards as of 2024, the number of employees becomes a further criterion for the inclusion of an entity in the scope of
consolidation. The number of active employees of non-consolidated subsidiaries, who will thus be included in the scope of consolidation from 2024, is not included in the above figure.
4,943
5,294
565
584
1,913
166,056
168,815
132,560
135,400
19,132
19,137
9,768
9,850
25.7
24.7
539
Share of women in management positions, Mercedes-Benz Group Level 1 - Level 3 (in %)
511
2593
2,040,719
19.7
11.8
16.3
7.3
447,790
415,344
5.1
3.6
109
1703
2414
8.53
8.24
204
209
2964
2,044,051
Social issues
1 This figure refers exclusively to all-electric vehicles.
group.mercedes-benz.com/investors
The Mercedes-Benz Group AG Annual and Interim
Reports and company financial statements are also
available there. In addition, you can find the latest
news, the financial calendar, presentations, various
overviews of key figures, information on the share price
and additional services.
The reports are published in German and English. The
German version is binding.
For sustainability reasons, the Annual and Interim
Reports are not printed in hard copy. We make all
Annual and Interim Reports available online and as PDF
files to download.
group.mercedes-benz.com/investors/reports-news
Forward-looking statements
This document contains forward-looking statements that reflect our current views about
future events. The words "anticipate", "assume", "believe", "estimate", "expect", "intend",
"may", "can", "could", "plan", "project", "should" and similar expressions are used to identify
forward-looking statements. These statements are subject to many risks and uncertainties,
including an adverse development of global economic conditions, in particular a negative
change in market conditions in our most important markets; a deterioration of our refi-
nancing possibilities on the credit and financial markets; events of force majeure including
natural disasters, pandemics, acts of terrorism, political unrest, armed conflicts, industrial
accidents and their effects on our sales, purchasing, production or financial services activ-
ities; changes in currency exchange rates, customs and foreign trade provisions; changes
in laws, regulations and government policies (or changes in their interpretation), particu-
larly those relating to vehicle emissions, fuel economy and safety or to ESG reporting
(environmental, social or governance topics); price increases for fuel, raw materials or
energy; disruption of production due to shortages of materials or energy, labour strikes
or supplier insolvencies; a shift in consumer preferences towards smaller, lower-margin
vehicles; a limited demand for all-electric vehicles; a possible lack of acceptance of our
products or services which limits our ability to achieve prices and adequately utilize our
production capacities; a decline in resale prices of used vehicles; the effective implemen-
tation of cost-reduction and efficiency-optimization measures; the business outlook for
companies in which we hold a significant equity interest; the successful implementation of
strategic cooperations and joint ventures; the resolution of pending governmental investi-
gations or of investigations requested by governments and the outcome of pending or
threatened future legal proceedings; and other risks and uncertainties, some of which are
described under the heading "Risk and Opportunity Report" in this Annual Report. If any of
these risks and uncertainties materializes or if the assumptions underlying any of our for-
ward-looking statements prove to be incorrect, the actual results may be materially differ-
ent from those we express or imply by such statements. We do not intend or assume any
obligation to update these forward-looking statements since they are based solely on the
circumstances at the date of publication.
Statements regarding electricity and fuel consumption and CO2 emissions
Further information on official fuel consumption and on the official specific CO2 emissions
of new cars can be taken from "Leitfaden über den Kraftstoffverbrauch, die CO2-Emis-
sionen und den Stromverbrauch neuer Personenkraftwagen" dat.de/fileadmin/media/
Leitfaden CO2/Guide CO2.pdf
Mercedes-Benz Group AG
70546 Stuttgart
Tel.: +49711 17 0
group.mercedes-benz.com/en
Mercedes-Benz Group AG, Mercedesstraße 120, 70372 Stuttgart, Germany
Mercedes-Benz Group-share can be found at
Review of critical raw materials (in %)⁹
Further information about the
Further Information
Further Information
57
2 Average CO2 emissions of the new car fleet (CO2 pool) of newly registered Mercedes-Benz cars in Europe (European Union, Norway and Iceland) in the reporting year as measured on the basis of the WLTP type approval procedure. The Mercedes-Benz CO₂ pool also includes vans
that were registered as passenger cars and, since 2023, vehicles from the joint venture smart Automobile Co., Ltd. based on internal data.
3 Internal values.
4 Value confirmed by authorities.
5 Calculation includes off-cycle technologies (technologies for real reductions in CO2 emissions, the effect of which cannot be measured in the standard cycle).
6 In addition to the production sites of the consolidated subsidiaries, the production sites of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM s.r.o. (Most,
Czech Republic).
7 This key figure is determined based on the standards of the Global Reporting Initiative and CDP starting from 2023. There is no corresponding figure for the year 2022.
9 The Mercedes-Benz Group has prioritized 24 high-risk materials that have been reviewed in a raw material assessment. The key figure shows the overall progress of the evaluation process across all 24 raw materials.
41
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
352
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
2022
115
Employees, Mercedes-Benz Mobility
2023
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Non-Financial Key Figures
351
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Key Figures
Environmental issues
Mercedes-Benz Cars unit sales
Share of electrified vehicles, Mercedes-Benz Cars (in %)
Share of all-electric vehicles, Mercedes-Benz Cars (in %)
Mercedes-Benz Vans unit sales
Share of electrified vehicles, Mercedes-Benz Vans (in %)¹
Further Information
CO2 emissions of the new car fleet in the United States (in g CO2/mi)
Employees, Mercedes-Benz Vans
CO2 emissions of the new car fleet in Europe in accordance with WLTP (in g/km)², 3
Employees, Mercedes-Benz Group
Employee issues
Water consumption in production (in 1,000 m³)6,7
Waste volume in production (in 1,000 t)6
Energy consumption in production (in GWh)6
Employees, Mercedes-Benz Cars
CO2 emissions of the light duty truck fleet in the United States (in g CO2/mi)
CO2 emissions of the light commercial vehicle fleet in Europe (in g/km)³
Fuel consumption of the new car fleet in China (in l/100km) 5
CO2 emissions in production (Scope 1 and Scope 2) (in 1,000 t)6
Consolidated Financial Statements
Corporate Governance
Vans plant
with EV-production with EV-production with EV-components
HD D.
grey:
planned
Annual Report 2023 | Mercedes-Benz Group
Contents
33
Combined Management Report
Corporate Profile
Corporate Governance
Further Information
Consolidated Financial Statements
Further Information
To Our Shareholders
Important events
As announced on 22 February 2023, the Mercedes-Benz
Group plans to integrate innovative vehicle-related geo-
spatial data and route planning capabilities from the
Google Maps platform into the Mercedes-Benz Operat-
ing System (MB.OS).
On 5 January 2023, the Mercedes-Benz Group
announced far-reaching plans to build its own global
high-power charging network in China, North America,
Europe and other core markets.
1 Society of Automotive Engineers (SAE).
The system is to be introduced in the middle of the dec-
ade. MB.OS was designed and developed in-house at
Mercedes-Benz. The company's objective here is to
retain complete control over the customer relationship
while also ensuring data privacy and the unparalleled
integration of all vehicle functions.
With this partnership, the Group plans to become the
first automaker to develop its own navigation experi-
ence based on a new concept that combines new in-ve-
hicle geospatial data and navigation features from the
Google Maps platform.
Mercedes-Benz Cars
Partnership for vehicle navigation between
Mercedes-Benz and Google
Further information on this is provided in Note 20 of the
Notes to the Consolidated Financial Statements.
worth up to €4 billion (excluding incidental costs) are to
be purchased over a period of up to two years and sub-
sequently cancelled.
On 16 February 2023, the Board of Management, with
the approval of the Supervisory Board, resolved a share
buyback programme on the basis of the authorization
given by the Annual Shareholders' Meeting on 8 July
2020. The acquisition of treasury shares on the stock
exchange began on 3 March 2023. Treasury shares
Share buyback programme at
Mercedes-Benz Group AG
DRIVE PILOT was released for sale in Germany in May
2022 after the German Federal Motor Transport Author-
ity issued the SAE Level 3 system a licence to operate
on the basis of the internationally valid regulation
UN-R157.
The Mercedes-Benz Group subsequently introduced the
production-ready version of DRIVE PILOT with a small
fleet of SAE Level 3¹ EQS Sedans in the states of Cali-
fornia and Nevada in late 2023.
On 26 January 2023, the Mercedes-Benz Group became
the world's first automaker to receive SAE Level 31
certification for conditionally automated driving on
US roads in the state of Nevada. In June 2023, it also
received the certification for the state of California.
Certification for the SAE Level 3 system and sales
approval for DRIVE PILOT
With its own charging network, the Mercedes-Benz
Group is seeking to establish new standards for the fast,
convenient and reliable charging of electric vehicles.
The first Mercedes-Benz charging hub was opened in
Chengdu, China, in October 2023. It was followed by
the opening of a further Mercedes-Benz charging hub at
the headquarters of Mercedes-Benz USA in Atlanta,
Georgia in November 2023. The first German charging
hub started operation at the Mercedes-Benz dealership
in Mannheim at the end of November 2023. Plans call
for more than 2,000 charging stations with over 10,000
high-power charging points to be built worldwide by
the end of the decade.
Launch of a Mercedes-Benz high-power
charging network
As a luxury automobile manufacturer, Mercedes-Benz
Cars seeks to produce the most desirable vehicles in
the world. Sustainability is a fundamental principle and
a firm component of the Mercedes-Benz Cars business
strategy a principle that characterizes all of our busi-
ness activities. The Mercedes-Benz Group believes that
the complete electrification of its product range is the
most important means of making its entire new vehicle
fleet net carbon-neutral¹ across all stages of the value
chain by 2039. Mercedes-Benz Cars is creating the
essential preconditions for complete electrification and
accelerating the transformation into a software-driven
and all-electric future.
To Our Shareholders
Mercedes-Benz Cars offers a broad range of products
that are spread out among the three product categories
of Top-End, Core and Entry. The Top-End² portfolio
Starting in 2026, all newly developed vans from
Mercedes-Benz will be based on just one all-electric
architecture: the innovative, modular and scalable Van
Electric Architecture (VAN.EA).
Like Mercedes-Benz Cars, Mercedes-Benz Vans also
uses the modular MB.OS architecture in order to further
develop and connect its digital services.
The Mercedes-Benz Vans business unit has manufactur-
ing facilities in Germany, Spain, the United States and
Argentina. Production in China is managed via the
Fujian Benz Automotive Co., Ltd joint venture. The Citan
and T-Class with the respective electric variants are
produced in France through an alliance with
Renault-Nissan-Mitsubishi. The planned facility in Jawor,
Poland, will be Mercedes-Benz Vans' first purely electric
vehicle plant in the world.
The most important markets for Mercedes-Benz Vans in
2023 were Germany with 25% of unit sales, the other
European markets (European Union, United Kingdom,
Switzerland and Norway) with 37%, the United States
with 17% and China with 7%.
Mercedes-Benz Mobility
The Mercedes-Benz Mobility division supports the sales
of the Mercedes-Benz Group's vehicle brands world-
wide with custom financial and mobility services.
20,7-19,3; combined CO2 emissions: 0 g/km; CO2 class:
A) are now available for the private segment.
These services range from leasing and financing con-
tracts for end customers and dealers to insurance
solutions and fleet management services for business
customers, with the latter primarily offered via the
Athlon brand. Mercedes-Benz Mobility has around
4.3 million leased and financed vehicles in 34 markets,
which is clear proof of its ability to offer outstanding
services that meet a wide range of requirements.
Mercedes-Benz Mobility is also integrating its
Mercedes pay digital electronic payment platform into
numerous applications at the Mercedes-Benz Group.
The product range is rounded out by flexible subscrip-
tion and rental models such as Mercedes-Benz Rent as
well as investments in companies that offer mobility
services, for example the premium chauffeur services
platform Blacklane.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
35
The automated driving system takes over certain driving tasks. Nevertheless, a driver is
still necessary. The driver must be ready to take control of the vehicle at any time when
prompted by the vehicle to intervene.
Mercedes-Benz Mobility also brings together all activi-
ties relating to electric vehicle charging. The Group's
own charging service Mercedes me Charge enables
easy and convenient access to more than 1.5 million
public charging points within the Mercedes me Charge
network. In addition, the Mercedes-Benz Group is
continuing to extend the existing range of charging pos-
sibilities by building its own global Mercedes-Benz
charging network and expanding high-power charging
networks that are operated jointly with different con-
tractual partners.
Further Information
Consolidated Financial Statements
Corporate Governance
1 Net carbon-neutral means that no CO2 emissions are caused or that any CO₂ emissions
arising are compensated for by certified offset projects.
2 The Top-End category comprises all AMG models, including the AMG models of the
various class model ranges and their derivatives in the Core and Entry segments.
encompasses Mercedes-AMG, Mercedes-Maybach, the
G-Class, the S-Class, the EQS Sedan, the GLS and the
EQS SUV. Core represents the heart of the brand and
comprises the Mercedes-Benz C-Class and E-Class
model ranges and their derivatives. The Entry A-Class
and B-Class models and their derivatives offer custom-
ers a point of entry into the compact vehicle portfolio.
In addition to the Mercedes-Benz brand, the brand
portfolio encompasses the brands Mercedes-AMG and
Mercedes-Maybach, as well as the G-Class product
brand. Mercedes me provides access to the digital ser-
vices of Mercedes-Benz Cars.
The division also continues to move ahead at a fast
pace with the intelligent networking of its vehicles and
the development of autonomous driving systems. In
order to further underscore the claim to leadership with
regard to the digital experience, Mercedes-Benz Cars
plans to introduce its own data-based and updatable
Mercedes-Benz Operating System (MB.OS) when it
launches the MMA platform.
Along with its production sites in Germany, Mercedes-
Benz Cars also operates major manufacturing facilities
in the United States, Hungary, Mexico and South Africa.
Production operations in China are carried out by the
associated company Beijing Benz Automotive Co., Ltd.
(BBAC).
The most important markets for Mercedes-Benz Cars in
2023 were China with 36% of unit sales, the United
States with 15%, Germany with 11% and the other Euro-
pean markets (European Union, United Kingdom, Swit-
zerland and Norway) with 21%.
Mercedes-Benz Vans
Mercedes-Benz Vans is a global manufacturer of a com-
prehensive van portfolio. The models offered in the
commercial segment comprise the large van Sprinter,
the mid-size van Vito and the small van Citan. The range
of Mercedes-Benz' vans in the private segment consists
of the V-Class full-size multi-purpose vehicle, the
V-Class Marco Polo camper and the T-Class. The small
vans are offered in Europe (European Union, the UK,
Switzerland, Norway), while the mid-size vans are
offered in Europe and China and the large vans are sold
in Europe and the United States. Vans are also offered
in specific segments in other markets.
Mercedes-Benz Vans has anchored its aim to lead in
electric drive in its strategy and has systematically elec-
trified the complete product portfolio. Mercedes-Benz
Vans already offers an electric version of each model
today i.e. the eSprinter, the eVito and the eCitan in
the commercial van segment. In addition, the EQV full-
size multi-purpose vehicle and the all-electric EQT
(WLTP: combined energy consumption 100 kWh/km:
Annual Report 2023 | Mercedes-Benz Group
Contents
Combined Management Report
Corporate Profile
34
Combined Management Report
Corporate Profile
To this end, the electric platform Electric Vehicle Archi-
tecture (EVA) was introduced in 2021. Beginning in the
middle of the decade, the Mercedes Modular Architec-
ture (MMA) platform, which is primarily focussed on
electric mobility with vehicles starting with the Entry
segment, is to follow. In 2026, Mercedes-Benz Cars
plans to introduce two more all-electric platforms (BEV
platform generations) in the Top-End and Core seg-
ments: the Mercedes-Benz Electronic Architecture
(MB.EA) and the AMG Electronic Architecture (AMG.EA).
Annual Report 2023 | Mercedes-Benz Group
12
To Our Shareholders
38
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The first stations are expected to open in the United
States in 2024 and in Canada at a later stage. In line
with the sustainability strategies of all seven automak-
ers, Ionna LLC has set itself the objective of powering
the charging network with renewable energy.
Creation of a joint high-power charging network
with several automakers in North America
On 19 October 2023, seven automakers the BMW
Group, General Motors, the Honda Motor, the Hyundai
Motor, Kia Motors, Mercedes-Benz Group and Stellantis
established a joint venture to accelerate the transition
to electric vehicles in North America. The new joint ven-
ture, which is known as Ionna LLC, is to establish a
charging network with at least 30,000 charging points.
Combined Management Report
Corporate Profile
-
Access to Tesla Superchargers in North America for
Mercedes-Benz customers
On 14 September 2023, the Mercedes-Benz Group
signed a supply contract with Steel Dynamics, Inc. for
delivery of CO2-reduced steel to the production plant in
Tuscaloosa, Alabama (USA). In this way, the company
wants to set another milestone on the path to decar-
bonizing the global steel supply chain.
Following the investment in H2GS in 2021, the new sup-
ply agreement will enable Mercedes-Benz to use virtu-
ally CO2-free steel in series production. The strategic
partner plans to start production in 2025.
The Mercedes-Benz Group announced on 7 June 2023
that it had signed a supply agreement with the Swedish
startup H2 Green Steel AB (H2GS) for approximately
50,000 metric tons of nearly CO2-free steel per year for
European stamping plants. At the same time, the two
companies are deepening their partnership with a
memorandum of understanding to jointly establish a
sustainable steel supply chain in North America.
CO₂ reduction in the steel supply chain
At the Strategy Update on 16 May 2023, Mercedes-Benz
Vans unveiled its strategy, which is geared towards
profitable growth in both the private and commercial
van segments. Key objectives include further strength-
ening the brand's position in the upper market seg-
ments, increasing competitiveness in terms of costs,
and leading the way in electric mobility and digital
experiences.
On 5 January 2023, the Mercedes-Benz Group had
already announced the development of its own global
high-power charging network with around 400 charging
stations and more than 2,500 charging points in North
America. In addition, the Mercedes-Benz Group
announced on 7 July 2023 that Mercedes-Benz custom-
ers will be able to use Tesla Superchargers in North
America starting in 2024.
Corporate Governance
Consolidated Financial Statements
Further Information
The quantitative development of value added and the
related financial performance measures are explained
in the chapter Profitability.
1 In accordance with China National Standard GB/T 40429-2021 "Taxonomy of driving
automation for vehicles", published in 2021 by the National Technical Committee of
Auto Standardization.
On 16 December 2023, the Mercedes-Benz Group
became one of the first automakers to receive approval
to test conditionally automated driving Level 31 in Bei-
jing. The Mercedes-Benz Group will begin testing condi-
tionally automated driving systems on designated high-
ways in Beijing. The company is working with the
responsible authorities on the development of Level 3
systems for the Chinese market in order to be able to
offer Chinese customers a safe and reliable automated
driving experience.
Approval to test conditionally automated
driving in Beijing
The joint venture plans to establish a charging network
of at least 1,000 stations with around 7,000 high-power
charging points between the year 2024 and the end of
2026.
Creation of a joint high-power charging network
with BMW Brilliance Automotive in China
On 30 November 2023, Mercedes-Benz Group
China Ltd. and BMW Brilliance Automotive Ltd. agreed
to set up a joint venture for the establishment and
operation of a joint high-power charging network in
China in order to provide Chinese customers with pre-
mium charging services. The joint venture aims to pro-
cure electricity directly from renewable sources wher-
ever this is possible.
At the meeting on 21 February 2024, the Supervisory
Board reappointed Renata Jungo Brüngger until the end
of 2025 and Britta Seeger until the end of 2029.
Renata Jungo Brüngger is responsible for Integrity, Gov-
ernance & Sustainability and Britta Seeger is responsi-
ble for Marketing & Sales on the Board of Management.
In the Supervisory Board meeting of 13 December
2023, the Supervisory Board decided to reappoint
Sabine Kohleisen as the member of the Board of Man-
agement responsible for Human Relations and Labour
Director until 30 November 2025 and Dr Jörg Burzer as
the member of the Board of Management responsible
for Production, Quality & Supply Chain Management
until 30 November 2029.
Sabine Kohleisen's division was renamed Human Rela-
tions (previously: Human Resources). This was done in
order to show that human resources work in the
Mercedes-Benz Group focuses on cooperation with and
between people.
division's comprehensive responsibility for quality as
well as this topic's great importance for the Mercedes-
Benz brand.
At its meeting, the Supervisory Board also resolved to
change the name of Dr Jörg Burzer's division to Produc-
tion, Quality & Supply Chain Management (previously:
Production & Supply Chain Management). As a result of
this change, the division's name will also express the
The Supervisory Board also resolved to establish a
cross-divisional steering and coordination function for
sustainability management in the company at the Board
of Management level. On 1 August 2023, Renata Jungo
Brüngger took over responsibility for this function as
part of the Integrity, Governance & Sustainability divi-
sion (previously: Integrity & Legal Affairs). With this
step, the Mercedes-Benz Group is taking into account
the steadily increasing complexity and growing legal
significance of this multi-faceted topic. Responsibility
for the management of division-specific sustainability
issues remains with the respective Board of Manage-
ment divisions.
At its meeting on 27 July 2023, the Supervisory Board
reappointed Ola Källenius as Chairman of the Board of
Management of Mercedes-Benz Group AG for the
period until 21 May 2029 and Markus Schäfer for the
period until 21 May 2026. As Chief Technology Officer,
Markus Schäfer is responsible for Development & Pro-
curement on the Board of Management.
of Mercedes-Benz Group AG
Decisions by the Supervisory Board
Mercedes-Benz Vans: Strategy Update
Contents
Following the completion of the successful test phase
for the low CO2-emission aluminium, the Mercedes-
Benz Group is now bringing sophisticated structural
castings for the body-in-white made from the more sus-
tainable material into series production.
CO2 reduction in the aluminium supply chain
The Mercedes-Benz Group is working with its partners
to decarbonize the aluminium supply chain. As pre-
sented in the Annual Report 2022, Mercedes-Benz AG
and the Norwegian aluminium producer Norsk Hydro
ASA (Hydro) signed a memorandum of understanding in
December 2022 for a low-CO₂ technology roadmap
between 2023 and 2030.
The Mercedes-Benz Group engaged CICERO Shades of
Green, now part of S&P Global, an assessor, to review
the Mercedes-Benz Group Green Finance Framework.
The Mercedes-Benz Group framework received the
highest rating of "Dark Green" from CICERO.
The participation of Supervisory Board member Dame
Veronica Anne ("Polly") Courtice reinforces the embed-
ding of sustainability in the company's strategy, busi-
ness processes and remuneration system.
Alongside other measures such as investments in social
commitment and the environment, the company has
added additional ESG metrics to the variable compo-
nent of executive compensation and indicated the gov-
ernance structures that were implemented.
The key measures are to accelerate electrification with
a growing portfolio and Mercedes-Benz' high-power
charging network, to promote supply chain decarboni-
zation and resource conservation through the use of
renewable energy sources and responsible sourcing of
raw materials, and to forge ahead with the creation of a
circular economy and the direct sourcing of raw materi-
als. The company also aims to reduce CO2 emissions in
production (scope 12 and 23) by 80% by 20304.
At the ESG (Environmental, Social and Governance)
Conference on 30 March 2023, the Board of Manage-
ment of the Mercedes-Benz Group emphasized to
investors and analysts its measures for reducing its
CO2 footprint and creating sustainable value for all
stakeholders.
Confirmation of the ESG commitment
at the ESG Conference
Sale of shares in the Russian subsidiaries
The Group's intention to withdraw from the Russian
market and sell its shares in the Russian subsidiaries to
the local investor Avtodom AO was reported in the
Annual Report 2022. In March 2022, the Mercedes-Benz
Group had already stopped exporting cars and vans to
Russia and ceased local production in Russia.
The Group plans to invest an eight-digit euro sum in the
construction of the net carbon-neutral¹ plant. Construc-
tion of the plant sections for mechanical dismantling
has already begun and preparations for commissioning
are under way. Once the sections for hydrometallurgical
processing have been completed, the entire recycling
facility will go into operation in mid-2024.
Foundation laid for sustainable battery
recycling factory
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
36
On 3 March 2023, the Mercedes-Benz Group laid the
symbolic foundation stone for a battery recycling fac-
tory at the Kuppenheim site. The company is thus
underpinning the goal of ensuring a sustainable closure
of the recycling loop for batteries and significantly
reducing resource consumption.
As of 31 December 2022, completion of the transaction
was still subject to authorities' approval and the imple-
mentation of the contractually agreed conditions. With
the closing of the transaction on 19 April 2023, the
shares of Russian subsidiaries were deconsolidated.
Further information on this is provided in Note 3 of the
Notes to the Consolidated Financial Statements.
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
At Mercedes-Benz Group AG, a position on the Supervi-
sory Board was also newly filled: Sari Baldauf stepped
down from the Board after 15 years at the end of the
Annual General Meeting of Mercedes-Benz Group AG on
3 May 2023. Stefan Pierer was elected as Baldauf's suc-
cessor on the Supervisory Board.
Annual General Meeting of Mercedes-Benz Group AG
At the Annual General Meeting of Mercedes-Benz
Group AG on 3 May 2023, the shareholders approved a
dividend of €5.20 per share for the 2022 year (2021:
€5.00). The total payout for 2022 was €5.6 billion (2021:
€5.3 billion).
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
37
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
(planned)
4 In comparison to 2018.
and district heating that are generated externally but consumed by the company.
3 Scope 2 emissions are indirect CO2 emissions from purchased energy such as electricity
2 Scope 1 emissions are direct CO2 emissions from sources for which the company is
directly responsible or that it directly controls.
As a next milestone, the Group announced on 9 May
2023 that Hydro is to supply even more CO2-reduced
aluminium to the foundry at the Mercedes-Benz plant in
Untertürkheim. With a minimum of 25% recycled mate-
rial in Hydro's tested aluminium, the CO2 footprint is to
be reduced.
O
Aguascalientes
Battery plant
31
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Contents
Combined Management Report
Corporate Profile
Battery-Recyclingplant
Combined Management Report
Corporate Profile
Corporate Governance
Consolidated Financial Statements
Further Information
Review of future structure of Own Retail in Germany
On 19 January 2024, the Mercedes-Benz Group
announced a comprehensive review of the structures
of the Group's Own Retail in Germany. The review is
open-ended as regards its outcome and will be con-
ducted individually and step-by-step at each retail
location. The company expects the transformation pro-
cess to take several years. Contract negotiations with
potential buyers had not yet taken place as of the bal-
ance sheet date. At the present time, it is not possible
to reliably estimate the effects on the profitability,
liquidity and capital resources, and financial position.
Share buyback policy and further share
buyback programme
39
On 21 February 2024, Mercedes-Benz Group AG has
resolved to implement a share buyback policy. Based
on such policy, the future Free Cash Flow from the
industrial business (as available post potential smalls-
cale M&A) generated beyond the approx. 40% dividend
payout ratio of Group net profi shall be used to fund
share buybacks with the purpose of redeeming shares.
Corporate Governance
Further Information
Mercedes-Benz
Vans
Mercedes-Benz
Cars
The brand world of the Mercedes-Benz Group
Mercedes-Benz Group
The Mercedes-Benz brand is one of the most valuable
brands in the world¹. The diagram below provides an
overview of the Group's brand world.
combined Non-Financial Declaration of Mercedes-Benz
Group AG and of the Group.
The management reports for Mercedes-Benz Group AG
and for the Group are combined within this annual
report. The Combined Management Report includes the
Consolidated Financial Statements
Mercedes-Benz Group AG is the parent company of the
Mercedes-Benz Group and has its headquarters in
Stuttgart. Along with Mercedes-Benz Group AG, the
Mercedes-Benz Group comprises all subsidiaries over
which Mercedes-Benz Group AG can exercise a con-
trolling influence either directly or indirectly. Detailed
information on this topic can be found in the statement
of investments pursuant to Section 313 of the German
Commercial Code (HGB) in the Notes to the Consoli-
dated Financial Statements. Mercedes-Benz Group AG
defines the Group strategy, manages the Group and, as
the Group parent company, ensures the effectiveness
of legal, organizational and compliance-related func-
tions throughout the Group.
The Mercedes-Benz Cars, Mercedes-Benz Vans and
Mercedes-Benz Mobility divisions manage the business
operations of the Mercedes-Benz Group.
The Mercedes-Benz Group can look back on a tradition
covering more than 135 years a tradition that goes
back to Gottlieb Daimler and Karl Benz, the inventors of
the automobile and features pioneering achieve-
ments in automotive engineering. Today, the company
is a car manufacturer that operates globally and is one
of the largest suppliers of luxury vehicles and commer-
cial vans in the premium segment. The Group's range of
products and services is supplemented by financing
and leasing products for end customers and dealers,
fleet management services, insurance brokerage, inno-
vative and digital mobility services, charging infrastruc-
ture and systems for seamless payment.
-
Overview
Business model
Corporate Profile
The reconciliation of the segments to the Group (recon-
ciliation) presents the functions and services provided
by the Group's headquarters. In addition, the reconcilia-
tion includes equity investments that are not allocated
to the segments, gains and/or losses at the corporate
level and the effects of eliminating intra-Group transac-
tions between the segments.
In this context, Mercedes-Benz Group AG moreover
has resolved to conduct a further share buyback
programme, through which it is intended to acquire own
shares worth up to €3 billion (not including incidental
costs) on the stock exchange and to then cancel them.
The further share buyback programme will be based on
the authorization by the Annual General Meeting of
Mercedes-Benz Group AG on 8 July 2020, authorizing
the Board of Management to acquire, with the approval
of the Supervisory Board, own shares up to a maximum
of 10% of the share capital until 7 July 2025. It is sched-
uled to commence immediately after the conclusion
of the ongoing share buyback programme announced
on 16 February 2023, and is expected to be completed
before the expiry of the Annual General Meeting's
above-mentioned authorization.
Future share buyback programmes are subject to the
necessary resolutions of the company's corporate
bodies required in each individual case.
Calculation of value added
Value
added
Profit
measure
Net assets
Cost of
capital (%)
Cost of capital
net assets.
The return on net assets (RONA) is calculated from the
ratio of EBIT to net assets. Value is created for our
shareholders when RONA exceeds the cost of capital.
The required rate of return on net assets, and thus the
cost of capital rate, is derived from the minimum rates
of return that equity investors and lenders expect on
their invested capital. In contrast to cost of capital rates
based on peer-group logic for purposes of the impair-
ment test at the level of the cash-generating units,
when determining the Group cost of capital rate for
deriving the value added, the focus is on the use of
company-specific data (in particular with respect to the
capital structure). For 2023, the Group's cost of capital
rate amounted to 9% after taxes. For the automotive
divisions, this cost of capital rate stood at 13% before
taxes; for Mercedes-Benz Mobility, a cost of equity of
13% before taxes was applied.
Automotive divisions, before taxes
Mercedes-Benz Mobility, before taxes
9
8
13
12
13
Group, after taxes
The financial performance measurement system used at
the Mercedes-Benz Group is designed to ensure that
our investors' interests and expectations are taken into
account within the framework of a value-based man-
agement system. The value added is based on this prin-
ciple. It shows the extent to which the Group and its
divisions achieve or exceed the return requirements of
the investors. Due to the only indirect relationship of
value added to ongoing business operations, the value
drivers of the value added are utilized as financial per-
formance indicators for the periodic controlling of the
Group and its divisions.
Objective
The information provided below primarily relates to the
Group's financial performance measurement system.
Information on the sustainability targets and the meas-
ures being taken to achieve them can be found in the
chapter Non-Financial Declaration.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
40
Combined Management Report
Corporate Profile
Corporate Governance
Consolidated Financial Statements
Further Information
Performance measurement system
Value added can be calculated as the difference
between the measure of operating profit (EBIT or net
operating profit) and the cost of capital of the average
Cost of capital rates
2023
2022
in %
Various targets are defined on the basis of the
Mercedes-Benz Group's corporate strategy and busi-
ness strategy. The Group's performance measurement
system is oriented towards the achievement of these
targets. Along with financial aspects, they include sus-
tainability-related targets in particular.
Mercedes-Benz
Mobility
Mercedes-Benz Bank
To Our Shareholders
Mercedes-Benz
SOUTH AFRICA
ARGENTINIA
*) including non-consolidated affiliated
companies, associated companies,
joint ventures and joint operations
身高
Charleston
Tuscaloosa
East London
USA/MEXICO
Vitoria
A
SPAIN
Maribor
Kecskemét
Most
Affalterbach
Buenos Aires
ROMANIA
Sebeş
Powertrain plant
Cars plant
Ho Chi Minh City
Pekan
Bangkok
Pune
Kairo
INDIA
EGYPT
Mercedes-Benz
THAILAND/VIETNAM/
Fuzhou
Beijing
CHINA
Cugir
Jawor
SLOVENIA
MALAYSIA
CZECH REP.
The Mercedes-Benz Group sells vehicles and provides
services in nearly every country in the world and has
over 30 production facilities in Europe, North America
and South America, Asia and Africa.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
32
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
ATHLON
Mercedes me
AMG
MAYBACH
HUNGARY
Mercedes-Benz
Financial Services
The Group is continuously further developing its global
production network on those continents and is aligning
it to manufacture the portfolio of all-electric vehicles.
A total of 12 electric vehicle models from Mercedes-
Benz have been rolling off the assembly lines on three
continents since 2023. The Group is also simultane-
ously building up a global battery production network
on three continents. The "Mercedes-Benz Group Global
Production Network" graphic shows the Mercedes-Benz
Cars and Mercedes-Benz Vans production sites around
the world as of 31 December 2023.
As part of the gradual realignment of sales operations
through the implementation of an agency model, the
Retail of the Future concept was launched in Germany
and the UK in 2023. The new system has already been
implemented in Sweden and Austria, which means that
the new sales model is now being used for approxi-
mately 50% of total unit sales generated in Europe.
Plans call for the agency model to be introduced in
other regions as well over the next few years. As of the
reporting date, six other countries, including Turkey,
India and Australia, had switched over to direct sales.
In addition, within the framework of the optimization
of the sales model, it was possible to sell off retail
activities in certain countries and regions during the
reporting year.
1 Study by the US brand consulting company Interbrand in November 2023.
Rastatt
GERMANY
POLAND
0
Kölleda/Arnstadt Kamenz
Berlin
Hamburg
Kuppenheim
Global production network of the Mercedes-Benz Group*
Untertürkheim
Ludwigsfelde
Düsseldorf
Sindelfingen
身高
Bremen
-5
12
19,660
20,458
-154
18,030
2,428
328
424
18,358
1,302
Profit before income taxes
340
108
Net profit
Income taxes
Interest income/expense
EBIT
Other financial income/expense
-209
-155
2,284
434
1,941
113
-150
14,809
-4
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
1,732
14,501
14,261
thereof attributable to shareholders of Mercedes-Benz Group AG
308
270
thereof profit attributable to non-controlling interests
1,797
714
13,012
13,817
14,531
-627
-578
-4,868
-4,975
-5,495
-5,553
2,424
1,292
17,880
18,792
20,304
20,084
-10
2,129
-9,482
109
4
% share of unit sales
30
29
Core
The Core category accounted for 54% of the overall
portfolio's unit sales. Unit sales of C-Class³ vehicles
rose by 10% to 334,400 saloons, estates, coupés and
cabriolets. E-Class³ sales reached 309,100 units - an
increase of 2% - despite the model change. Meanwhile,
thereof
Electrified vehicles (EV)
401,900 333,500
240,600 149,200
161,300 184,300
21
61
-12
BEVS
PHEVS
Share of electrified vehicles
in % of unit sales
20
16
Electrified vehicles (EV)
The share of electrified vehicles accounted for 20% of
Mercedes-Benz Cars' total unit sales (2022: 16%). This
corresponds to unit sales of 401,900 vehicles (2022:
333,500) and an increase of 21% on the previous year.
Sales of all-electric vehicles (BEVS) of the Mercedes-
Benz brand rose by 61% to 240,600 units in 2023 (2022:
149,200). All-electric vehicles thus accounted for a 12%
share of total unit sales (2022: 7%). The most important
sales drivers were the EQA, with sales of 52,500 units
and the EQB with 54,800 units. The EQE Saloon
achieved sales of 37,700 units and the newly introduced
EQE SUV 32,100 units. Sales of the EQS Saloon
amounted to 14,100 units, and of the EQS SUV4 18,500
units.
Sales of plug-in hybrid vehicles (PHEVS) totalled
161,300 units in the year under review (2022: 184,300),
which corresponds to an 8% share of total sales (2022:
9%).
595,900
Mercedes-Benz Cars unit sales by region
618,900
54
Entry
The Entry category represented 30% of the entire port-
folio. Sales of the A-Class³ totalled 245,100 units. Sales
of the B-Class amounted to 21,600 vehicles. The GLB3
reached 191,900 units sold, and the GLA³ 175,500 units.
A total of 18,100 smart vehicles were sold in the Euro-
pean market.
23/22
Mercedes-Benz Cars unit sales
2023
2022
% change
Top-End
Unit sales in the Top-End¹ category accounted for 16%
of total unit sales in 2023. In 2023, Mercedes-Maybach
was able to increase unit sales by 19% to 27,900 units.
At 143,200 units, Mercedes-AMG achieved a 4%
increase in unit sales. At 42,700 units, sales of the
G-Class² were 11% above the prior-year figure. GLS²
sales increased by 30% to 77,900 units. The S-Class²
maintained its leadership in the major sales markets
with 93,300 vehicles sold.
In units
Total unit sales
Top-End
2,044,100
328,300
2,040,700
328,200
% share of unit sales
Core
16
16
1,096,900
1,116,600
-2
% share of unit sales
Entry (incl. smart)
55
Compared to the prior year, unit sales of Mercedes-
Benz Cars increased in Europe (European Union, United
Kingdom, Switzerland and Norway) and remained stable
in the other major sales markets. In Europe, it sold
659,600 vehicles (2022: 618,900). Sales growth of 9%
to 234,300 units was recorded in Germany in the
reporting year (2022: 215,600).
1 The Top-End category includes all AMG models.
2 Including Mercedes-Maybach and Mercedes AMG derivatives.
The volume of incoming orders at Mercedes-Benz Vans
at the end of 2023 was lower than in the previous year;
this was due in particular to the overall economic situa-
tion. The order situation is thus at a normal level after
several previous years that were marked by positive
one-off effects.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
47
Combined Management Report
Economic Conditions
and Business Development
Corporate Governance
Consolidated Financial Statements
Further Information
Investment and research activities
Investments in property, plant and equipment
During the year under review, investments in property,
plant and equipment at the Mercedes-Benz Group
amounted to €3.7 billion and were thus higher than in
the previous year (2022: €3.5 billion).
Investments in property, plant
and equipment¹
In millions of euros
2023
2022
23/22
% change
The investments in property, plant and equipment at
Mercedes-Benz Vans amounted to €0.4 billion in 2023
(2022: €0.2 billion) and were thus significantly higher
than in the prior year. This was mainly driven by the
planned transition to an all-electric Mercedes-Benz van
fleet and investments for the transformation of produc-
tion operations.
Research and development
Research and development expenditure at the
Mercedes-Benz Group amounted to €10.0 billion in
2023 (2022: €8.5 billion), higher than in the previous
year. €3.8 billion (2022: €2.9 billion) of the research and
development costs were capitalized, representing a
capitalization rate of 38% (2022: 34%).
Incoming orders at Mercedes-Benz Cars at the end of
2023 were at the same level as in 2022. The new
E-Class in particular made a positive contribution to the
order situation.
Order situation
Contract volume amounted to €24.5 billion (-3%). The
US market benefited from a higher average financing
and leasing volume per contract and a significant
increase in the penetration rate. The penetration rate
indicates the proportion of leased and financed vehi-
cles in the Group's unit sales. At €16.2 billion (+25%),
the volume of new business at the end of 2023 was
considerably higher than the figure recorded in the prior
year. At €35.7 billion, contract volume at the end of
December 2023 was slightly higher than at the end of
2022 (+3%). In China, on the other hand, increased
competition in the financial services sector caused new
business to decrease by 18% compared to the prior year
to €9.8 billion. At €16.7 billion, contract volume was also
significantly lower than in the previous year (-15%). New
business in other markets totalled €25.6 billion (+11%),
while contract volume amounted to €58.1 billion (+10%).
In the German market, new business was roughly on a
par with the previous year at €10.4 billion (+2%).
3 Including Mercedes AMG derivatives.
4 Including Mercedes-Maybach.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
46
Combined Management Report
Economic Conditions
Corporate Governance
Consolidated Financial Statements
Further Information
due to supply bottlenecks, sales of the GLC3 amounted
to 297,400 units and of the GLE3 to 219,100 units.
and Business Development
tive Co., Ltd. (BBAC), which is an equity-method invest-
ment. A total of 339,500 vehicles were sold in North
America (2022: 344,200). Unit sales in the region's main
market, the United States, amounted to 298,000 vehi-
cles and were thus at the prior-year level (2022:
300,800).
Mercedes-Benz Vans
Mercedes-Benz Vans sold 447,800 vehicles worldwide
in 2023 (2022: 415,300), thus setting a new record.
All model series contributed to the growth in sales here.
The large vans (Sprinter/eSprinter) recorded a signifi-
cant increase in sales to 237,400 units (2022: 217,400).
Sales of mid-size vans (Vito/eVito, V-Class/EQV)
totalled 178,900 units (2022: 175,500). Sales of small
vans (Citan/eCitan, T-Class/EQT¹) amounted to 31,500
units (2022: 22,500).
Worldwide, it proved possible to significantly increase
unit sales of electrified vans to 22,700 units (2022:
15,000 units). These were exclusively all-electric mod-
els. The share of electrified vehicles thus accounted
for a 5% share of total unit sales (2022: 4%).
1 WLTP: combined energy consumption: 20.7-19.3 kWh/100 km; combined CO2 emissions:
0 g/km; CO2 class: A.
At 279,400 units, sales in Europe (European Union,
United Kingdom, Switzerland and Norway) were signifi-
cantly above the prior-year level (2022: 259,400). Unit
sales in Germany amounted to 114,000 vehicles (2022:
113,200). Mercedes-Benz Vans also set a new sales
record in the United States with unit sales of 75,100
vehicles (2022: 66,400). In China, unit sales totalled
33,400 vehicles (2022: 34,200).
Mercedes-Benz Mobility
The Mercedes-Benz Mobility division had a contract vol-
ume of €135.0 billion - slightly above the previous
year's figure at the end of 2023 (31 December 2022:
€132.4 billion, +2%; +4% after adjusting for exchange-
rate effects). The figure for contract volume shows the
total monetary amount of all leasing and financing con-
tracts on a certain date.
Mercedes-Benz Mobility concluded 1.4 million new
financing and leasing contracts worth a total of
€62.0 billion in the course of 2023. The total value of all
new contracts was thus slightly higher than in the prior
year (31 December 2022: €58.0 billion, +7%; +10% after
adjusting for exchange-rate effects). The main reason
for the positive development was the higher average
financing and leasing volume per contract, driven by
improved pricing on the sales side and a higher propor-
tion of electrified and Top-End vehicles in the new busi-
ness.
In China, sales amounted to 737,200 units (2022:
753,900). This figure includes the unit sales recorded by
the associated company Beijing Benz Automo-
Mercedes-Benz Group
Mercedes-Benz Cars
Mercedes-Benz Group
42
Combined Management Report
Corporate Profile
Corporate Governance
Consolidated Financial Statements
Further Information
-
-
Key performance indicators
Key financial performance indicators
The following indicators are the key financial perfor-
mance indicators used to measure the operating finan-
cial performance of the Mercedes-Benz Group:
Revenue
EBIT
Free cash flow of the industrial business
The following key financial performance indicators have
an emphasized relevance for the automotive divisions
Mercedes-Benz Cars and Mercedes-Benz Vans:
Investments in property, plant and equipment
Research and development expenditure
Adjusted return on equity and new business are the key
financial performance indicators for Mercedes-Benz
Mobility. New business here refers to the volume of
leasing and financing contracts capitalized during the
reporting year.
Key non-financial performance indicators
Unit sales at Mercedes-Benz Cars and Mercedes-Benz
Vans are used as an additional non-financial indicator
for measuring the performance of the automotive divi-
sions.
The figure for the CO2 emissions of the new car fleet in
Europe¹ represented a key performance indicator until
31 December 2023. As of the year 2024, the share of
electrified vehicles (EV) from Mercedes-Benz Cars and
from Mercedes-Benz Vans respectively, measured on
the basis of the unit vehicle sales of these divisions, will
be used as key non-financial performance indicators.
They are replacing the value of the CO2 emissions of the
new car fleet in Europe as a key non-financial perfor-
mance indicator because they provide a more compre-
hensive picture of the global activities of the Mercedes-
Benz Group in the area of electromobility.
Declaration on
Corporate Governance
To Our Shareholders
The Declaration on Corporate Governance, which is
combined for the company and the Group in accord-
ance with Section 289f and Section 315d of the German
Commercial Code, can be found in the chapter Declara-
tion on Corporate Governance of the Annual Report as
well as on the Internet at ④ group.mercedes-benz.
com/dcg.
Contents
In order to provide a more transparent presentation of
our ongoing business, the adjusted free cash flow of
the industrial business and the adjusted CFBIT of the
automotive divisions are also calculated and reported.
An adjusted cash conversion rate (adjusted CCR) on the
basis of adjusted CFBIT and adjusted EBIT is presented
for the automotive divisions. The adjustments include
individual items insofar as they lead to material effects
in a reporting year. These individual items can relate in
particular to legal proceedings and related measures,
restructuring measures and M&A transactions.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
41
Combined Management Report
Corporate Profile
Corporate Governance
Consolidated Financial Statements
Further Information
Financial performance measures
Profit measure
The measure of operating profit at the divisional level
is EBIT (earnings before interest and income taxes).
EBIT thus reflects the divisions' responsibility for profit
and loss. EBIT that is calculated at the Group level
takes into account centrally managed matters and elim-
inations.
In order to provide a more transparent presentation of
our ongoing business, adjusted EBIT is also calculated
and reported for both the Group and the divisions. The
adjustments include individual items insofar as they
lead to material effects in a reporting year. These indi-
vidual items can relate in particular to legal proceedings
and related measures, restructuring measures and M&A
transactions.
Group EBIT minus the centrally managed income taxes
equals net operating profit. The chapter Profitability
shows how net operating profit is calculated.
Return on sales
As one of the main factors influencing value added,
return on sales is of particular importance for assessing
the profitability of the automotive divisions. Return on
sales is the ratio of EBIT to revenue, and vehicle sales
are the primary source of revenue. The measure of prof-
itability for Mercedes-Benz Mobility is not return on
sales but return on equity (the ratio of EBIT to average
equity on a quarterly basis). On the basis of adjusted
EBIT, an adjusted return on sales is reported for the
automotive divisions and an adjusted return on equity
is reported for Mercedes-Benz Mobility.
Net assets
All assets, liabilities and provisions for which the auto-
motive divisions are responsible in day-to-day opera-
tions are allocated to them. Performance measurement
at Mercedes-Benz Mobility is implemented on an equity
basis. Net assets at the Group level include the net
operating assets of the automotive divisions and the
equity of Mercedes-Benz Mobility, as well as assets and
liabilities from income taxes and other reconciling items
which are not allocated to the divisions. The average
annual net assets are calculated on the basis of the
average quarterly net assets.
Cash flow
_
A change in net assets for example as a result of
investments - generally leads to the application or
release of liquid funds. Along with earnings, net assets
thus also have a direct effect on the cash flow. Of out-
standing importance for the financial strength of the
Mercedes-Benz Group is the free cash flow of the
industrial business, which comprises the cash flows at
the automotive divisions and the cash flows from inter-
est, taxes and other reconciling items that cannot be
allocated to the divisions. The operating cash flow
before interest and taxes (CFBIT) for the automotive
divisions is derived from EBIT and the change in net
assets. The cash conversion rate (CCR) is the ratio of
CFBIT to EBIT over a period of time and is an important
measure for cash-flow management at the automotive
divisions.
Annual Report 2023 | Mercedes-Benz Group
Pursuant to Section 317 Subsection 2 Sentence 6 of the
German Commercial Code (HGB), the purpose of the
audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB by the
auditors is limited to determining whether such state-
ments have actually been provided.
Annual Report 2023 | Mercedes-Benz Group
Contents
to government support measures and an easing in mon-
etary policy, China was able to achieve its growth target,
with GDP up by 5.2% on the year. Unlike the case in the
United States and Europe, the Chinese economy was
faced with slight deflationary tendencies.
prices rose by only 0.2% in the country for the year as a
whole.
Development of exchange rates
-
consumer
Exchange rates were volatile in this environment.
Against the US dollar, the euro moved between USD
1.05 and USD 1.13 in the course of the year. At the end of
2023, the euro was around 3% stronger than at the end
of 2022. The range of fluctuation of the Chinese ren-
minbi against the euro was 7.2 to 8.1. Year-on-year, the
value of the euro increased by around 6% against the
renminbi.
Energy and raw material prices
Prices for oil and gas declined significantly from their
record levels in 2022, but they remained very volatile
nevertheless. The oil price fell below USD 80 per barrel
at the end of the year, which was almost 9% lower than
at the end of 2022. The average price for the year as a
whole was about 17% lower than in the previous year.
Gas prices in Europe also fell noticeably. The price at
the end of the year approximately €32 - was almost
60% lower than the price at the end of 2022 but still
higher than the price before the pandemic. Prices for
industrial raw materials also tended to decrease further
over the year and at the end of the year were a little
less than 3% below the prices recorded at the end of
2022.
-
Automotive markets
The economic conditions described above also affected
the development of the global automotive market in the
year under review. Nevertheless, sales markets were
able to partially buck the trend of the overall economic
slowdown. In particular, the normalization of global
vehicle production, as well as the order backlog that
still existed in some cases in the aftermath of the pan-
demic, boosted the development of sales last year.
Customer demand, in contrast, weakened in many auto-
motive markets throughout the year.
Against this background, the global car market volume
overall was significantly higher than in the previous
year. Several different regions contributed to this global
increase in volume. The European market recovered
noticeably, with market volume increasing significantly
by 14% from the low level recorded in the prior year.
The US market for light vehicles also registered
significant growth of 12% compared to the previous
year, while the Chinese market recorded a slight
increase of approximately 6%.
The factors mentioned above also affected the develop-
ment of key van sales markets. In Europe, the com-
bined segment for mid-size and large vans, as well as
the segment for small vans, recorded a significant
increase. The US market for large vans also increased
significantly in volume compared to the previous year.
Sales figures for mid-size vans in China were also signif-
icantly higher than in the previous year, although
growth in that market was largely a result of the intro-
duction of new vehicle models by relevant competitors.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Economic Conditions
and Business Development
45
Corporate Governance
Consolidated Financial Statements
Further Information
Business development
and Business Development
Further Information
Consolidated Financial Statements
Corporate Governance
To Our Shareholders
43
Combined Management Report
Economic Conditions
and Business Development
Corporate Governance
Consolidated Financial Statements
Further Information
Economic Conditions
and Business Development
The world economy and
automotive markets
The world economy
General economic conditions
Despite bottlenecks in the supply chain, the Mercedes-
Benz Group increased unit sales by 1.5% to 2,491,600
vehicles in 2023.
The world economy performed better throughout the
reporting year than had been expected at the beginning
of the year and although global growth of 2.7% was
somewhat lower than in the previous year (3%), it was
only slightly below the long-term trend. The adverse
effects on growth that resulted from the steep and syn-
chronized tightening of monetary policy by many cen-
tral banks was offset to some degree by supportive fis-
cal policies and lower prices for energy and raw
materials. At the same time, major differences were
observed between regions, and even within regions in
some cases. The main reason for the positive develop-
ment of the world economy overall was the unexpected
resilience of the US economy in the face of an
extremely restrictive monetary policy, although major
emerging markets such as India and Brazil were also
able to exceed expectations in this regard. On the other
-
The US economy successfully defied recession risks
during the reporting year. Growth remained strong
despite the fact that the country's central bank
― the
Fed raised its policy rate throughout the course of
the year by a further 100 basis points to 5.5%. Private
consumption in particular developed dynamically and
was supported by generous fiscal programmes and
pandemic-era excess savings. Inflation also continued
to decline · at an average of 4.1%, it was significantly
lower than in the prior year, but it still remained above
the Fed's target. This development, along with substan-
tial wage increases, had a positive effect on disposable
income. Thanks to robust domestic demand, the US
economy recorded growth of 2.5% for the year as a
whole in 2023.
The economy in the euro zone developed much less
dynamically, although the burden caused by high
energy prices was noticeably less pronounced in 2023
than it was in the prior year. Still, the industrial sector
remained under extreme pressure and shrank signifi-
cantly over the year as a whole. Private consumption
stagnated across many sectors due to ongoing high,
albeit decreasing, inflation and rising interest rates.
Inflation in the euro zone averaged 5.4% for the year as
a whole, which was still much higher than the central
bank target of approximately 2%. The European Central
Bank thus continued its tight monetary policy, raising
the main refinancing rate throughout the course of the
year by a further 200 basis points to 4.5%. Economic
activity in the euro zone advanced slightly during the
first half of the year, due, among other things, to the
ongoing post-pandemic recovery and fewer supply
chain disruptions. However, output then declined mar-
ginally during the second half of the year, with the
result that the economy in the euro zone recorded
growth of only 0.5% for 2023 as a whole.
Following the end of the zero-COVID policy in China,
the Chinese economy started the year with a strong
recovery that it was unable to maintain. The recovery
was ultimately curbed by the pronounced weakness of
the Chinese real estate sector and the associated crisis
of confidence among consumers. Nevertheless, thanks
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
44
Combined Management Report
Economic Conditions
hand, the European and the Chinese economies dis-
played relatively weak development during the year
under review. Given these circumstances, global trade
volume not only slowed but also contracted by around
2% in 2023 as compared to the previous year.
Gains/losses on equity-method investments
3,745
8
In 2023, the gains/losses on equity-method invest-
ments amounted to €2.1 billion (2022: €1.7 billion) and
were thus above the prior-year level. The positive
development was mainly due to the higher proportion-
ate earning of the investment in Daimler Truck Hold-
ing AG. In financial year 2023, earnings totalled
€0.8 billion (2022: €0.2 billion). In addition to higher
current earnings, the increase compared to the previ-
ous year is partly due to lower negative adjustments at
the Group from an investor's perspective. In 2022, the
earnings included income of €59 million from the con-
tribution of approximately 5% of the shares in Daimler
Truck to the Mercedes-Benz Pension Trust. In contrast,
the result of Beijing Automotive Co., Ltd. decreased to
€1.5 billion (2022: €1.7 billion).
The other financial income/expense was below the
previous year's level at €0.1 billion (2022: €0.3 billion),
mainly due to higher expenses from the discounting of
non-current provisions.
Earnings before interest and taxes (EBIT) amounted
to €19.7 billion in 2023, which is slightly lower than in
the previous year (2022: €20.5 billion).
Due to the global increase in interest rates, net interest
income/expense improved to an income of €0.4 billion
(2022: expense of €0.2 billion) in 2023.
The tax expense of €5.6 billion (2022: €5.5 billion)
remained at the prior-year level. The effective tax rate
for the reporting year was 27.6% (2022: 27.1%).
Net profit was thus €14.5 billion (2022: €14.8 billion).
Net profit of €0.3 billion is attributable to non-con-
trolling interests (2022: €0.3 billion). The net profit
attributable to shareholders of Mercedes-Benz
Group AG amounted to €14.3 billion (2022: €14.5 bil-
lion), leading to a decrease in earnings per share to
€13.46 (2022: €13.55). The calculation of earnings per
share is based on an average number of 1,059.6 million
issued shares (2022: 1,069.8 million issued shares). The
decrease in the weighted average number of shares in
circulation is due to the share buyback programme
resolved by the Board of Management on 16 February
2023.
Further information on the individual items of the Con-
solidated Statement of Income is provided in Notes 4 ff.
of the Notes to the Consolidated Financial Statements.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
Condensed consolidated statement of income/loss
In millions of euros
50
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Group
2023
Industrial Business
Other operating income of €1.7 billion (2022: €2.0 bil-
lion) was below the level of the prior year. The figure
included expenses in the amount of €0.2 billion in con-
nection with the discontinuation of business activities
in Russia. The prior-year earnings included total income
of €0.9 billion in connection with the restructuring of
the sales activities in Canada and the change in the
shareholding structure of the motorsport business. By
contrast, other operating income in the prior year was
impaired by the result attributable to the spin-off and
hive-down of assets and liabilities of the Daimler com-
mercial vehicles business of the Mercedes-Benz Mobil-
ity segment. The resulting loss (before deduction of
transaction costs) amounted to €0.2 billion.
Mercedes-Benz Mobility
Research and non-capitalized development costs of
€6.2 billion in 2023 were above the prior-year level
(2022: €5.6 billion). The increase was mainly due to
higher expenses in connection with advance expendi-
ture for the renewal of existing models and the further
development of fuel-efficient and environmentally
friendly drive systems as well as the digital connectivity
of the products. As a proportion of revenue, research
and non-capitalized development costs increased from
3.7% to 4.1%. Further information on this topic is pro-
vided in the Investment and research activities chapter
of this Combined Management Report.
Selling expenses increased by €0.2 billion to €9.7 bil-
lion. As a proportion of revenue, selling expenses
remained unchanged at 6.3%.
45,558
-5
thereof China
25,284
27,324
-7
Other markets
7,453
7,881
-5
1 The reconciliation includes eliminations of intra-Group revenue between the segments.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
49
Corporate Governance
Consolidated Financial Statements
Further Information
By contrast, lower raw material prices had a positive
impact on the cost of sales. Moreover, refinancing costs
at Mercedes-Benz Mobility rose due to higher interest
rates. In the prior year, cost of sales was negatively
impacted by expenses in connection with the discon-
tinuation of the business activities in Russia.
Overall, gross profit in relation to revenue increased
from €34.0 billion to €34.4 billion.
In the past year, general administrative expenses
increased by €0.1 billion to €2.7 billion. As a proportion
of revenue, general administrative expenses increased
from 1.7% to 1.8%.
2022
2023
2022
-8,760
-685
-722
General administrative expenses
-2,688
-2,584
-1,895
-1,855
-793
-729
Research and non-capitalized development costs
-6,230
-5,602
-6,230
-5,602
Other operating income/expense
1,690
2,034
1,838
1,925
-148
-9,043
-9,728
Selling expenses
3,967
2023
2022
Revenue
Cost of sales
Gross profit
153,218
150,017
126,500
123,063
26,718
43,382
26,954
-115,997
-95,209
-93,010
-23,630
-22,987
34,379
34,020
31,291
30,053
3,088
-118,839
3,481
Asia
35,829
873
552
58
6,230
5,602
11
3,766
2,939
28
Capitalization rate in %
38
34
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
48
Corporate Governance
Consolidated Financial Statements
Further Information
14
Profitability, Liquidity and
7,986
thereof Mercedes-Benz Cars
thereof Mercedes-Benz Vans
Research and non-capitalized
development costs
Capitalized development costs
thereof Mercedes-Benz Cars
3,345
3,265
2
thereof Mercedes-Benz Vans
351
199
76
Research and development
Research and development expenditure at
Mercedes-Benz Cars amounted to €9.1 billion (2022:
€8.0 billion). Expenditure here focused mainly on the
development of the new platform generations, which
are designed for electromobility. In addition, the com-
pany intensified its research and development expendi-
ture on digitalization and automated driving.
Research and development expenditure at
Mercedes-Benz Vans amounted to €0.9 billion in 2023
(2022: €0.6 billion), which was significantly higher than
in the previous year. Activities relating to the planned
electrification of the van fleet played a major role in
2023. This was mostly due to the new eSprinter and
the all-electric, modular and scalable van architecture
(VAN.EA).
1 The investments in property, plant and equipment correspond to additions to property,
plant and equipment in the Consolidated Statement of Cash Flows in the Consolidated
Financial Statements.
In millions of euros
In 2023, investments in property, plant and equipment
at Mercedes-Benz Cars focused on production prepa-
rations and the initial introductions of the MMA and
MB.EA platforms. Considerable funds were also
invested in the expansion of our battery production
facilities. At €3.3 billion, investments in property, plant
and equipment in 2023 were at the previous year's
level.
2023
2022
23/22
% change
Research and development
expenditure
9,996
8,541
17
9,099
Capital Resources, and Financial Position
To provide a better insight into the Group's profitability,
liquidity and capital resources, and financial position, in
addition to the figures for the Mercedes-Benz Group, a
Condensed Consolidated Statement of Income, a Con-
densed Consolidated Statement of Cash Flows and a
Condensed Consolidated Statement of Financial Posi-
tion are shown for each of the industrial business and
the segment Mercedes-Benz Mobility. The industrial
business comprises the automotive segments
Mercedes-Benz Cars and Mercedes-Benz Vans. The
effects from intra-Group eliminations between the
industrial business and Mercedes-Benz Mobility, as well
as items at the corporate level, are generally allocated
to the industrial business. In justified individual cases,
effects on the profitability, liquidity and capital
resources, and financial position of the corresponding
segment are presented from an economic rather than a
legal perspective.
In order to provide a more transparent presentation of
the ongoing business, adjusted figures are also calcu-
lated and reported for both the Group and the seg-
ments. The adjustments generally include individual
items insofar as they lead to material effects in a
reporting year. These individual items can relate in
26,954
-1
Reconciliation¹
-6,544
-5,755
14
Regions
Europe
61,895
56,487
10
thereof Germany
25,799
23,085
12
North America
40,488
40,091
1
thereof United States
36,041
26,718
Mercedes-Benz Mobility
18
17,217
particular to legal proceedings and related measures,
restructuring measures and M&A transactions. Further
information on the performance measurement system
can be found in the Corporate Profile chapter.
Profitability
Consolidated Statement of Income
In 2023, the revenue amounted to €153.2 billion (2022:
€150.0 billion) and was thus slightly higher than in the
prior-year. The increase was primarily due to higher unit
sales and improved pricing at the Mercedes-Benz Vans
segment. Revenue in the Mercedes-Benz Cars segment
was also higher, primarily due to a further improvement
in pricing. Negative exchange-rate effects caused reve-
nue to decline.
Cost of sales amounted to €118.8 billion (2022:
€116.0 billion) in 2023, increased by 2.4% compared
with the previous year. The increase was mainly due
to expenses to suppliers because of additional costs
relating to inflation and supply chains.
Revenue by segment and region
2023
2022
23/22
% change
1
In millions of euros
153,218
150,017
2
Segments
Mercedes-Benz Cars
112,756
111,601
1
Mercedes-Benz Vans
20,288
Mercedes-Benz Group
1 Average CO2 emissions of the new car fleet (CO₂ pool) of newly registered Mercedes-
Benz cars in Europe (European Union, Norway and Iceland) in the reporting year as
measured on the basis of the WLTP type approval procedure. The Mercedes-Benz CO₂
pool also includes vans that were registered as passenger cars and, since 2023, vehicles
from the joint venture smart Automobile Co., Ltd.
Diluted
Earnings per share (in euros)
13.46
13.55
13.46
13.55
Equipment on operating leases¹
Equity-method investment in
+110
-5,540
-5,430
Income taxes¹
-2,001
20,665
18,664
-4
26,942
+5
Property, plant and equipment¹
14,445
53,540
56,434
of the segments
EBIT of the segments
Net assets
-1,126
2,428
1,302
Mercedes-Benz Mobility
25,797
14,038
DTHAG
+11
14,230
Mercedes-Benz Group
-17
303
253
investments²
Net operating profit
-10
7,328
6,585
Trade receivables¹
Other equity-method
+1,203
-207
996
Other reconciliation
+5
24,906
26,126
Inventories¹
+2
8,078
8,221
+3
15,275
-5
Intangible assets¹
Net assets of the Mercedes-Benz Group at year-end
23/22
2022
2023
Net assets (average)
The following table shows the derivation of net assets
on 31 December from the Consolidated Statement of
Financial Position.
The following table shows the average net assets.
Further Information
Consolidated Financial Statements
Corporate Governance
55
2023
In millions of euros
Reconciliation of the segments< EBIT to net operating profit
The following table shows the reconciliation of the seg-
ments' EBIT to net operating profit of the Mercedes-
Benz Group.
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
At the Mercedes-Benz Mobility segment, value added
amounted to minus €0.5 billion (2022: €0.7 billion). The
segment's return on equity was 9.5% (2022: 16.8%). The
development of the return on equity primarily reflects
the decrease in earnings. By contrast, the decrease in
average total equity had a slightly positive effect on the
return on equity.
The value added of the Mercedes-Benz Vans segment
increased significantly from €1.8 billion to €3.0 billion.
RONA amounted to 250.4% (2022: 214.4%). This was
mainly due to the very positive earnings development.
The average net assets showed an opposing increase to
€1.3 billion, which was primarily due to increased aver-
age inventories and decreasing average provisions for
other risks.
At the Mercedes-Benz Cars segment, value added of
€8.8 billion was below the prior-year amount of
€11.8 billion. RONA amounted to 34.4% (2022: 42.8%).
This was primarily due to the negative earnings devel-
opment. The segment's average net assets, which at
€3.2 billion, were higher than in the previous year,
increased the negative effect on the value added. This
was mainly due to higher average inventories and
decreasing average provisions for other risks.
The value added of the Mercedes-Benz Group in the
reporting year amounted to €8.8 billion (2022: €10.2 bil-
lion), representing a return on net assets of 23.8%
(2022: 25.5%). This was once again significantly higher
than the Group's required cost of capital rate of 9%
(2022: 8%). The value added of the Mercedes-Benz
Group decreased, mainly due to the negative develop-
ment of EBIT of the segments Mercedes-Benz Cars and
Mercedes-Benz Mobility. The €1.3 billion increase in
average net assets also had a slightly negative effect
on value added. This was partly offset by the positive
development of EBIT at Mercedes-Benz Vans.
2022
23/22
Change
In millions of euros
% change
14,918
14,466
13,774
Mercedes-Benz Mobility¹
+1,241
1,897
3,138
Mercedes-Benz Vans
+42
885
1,253
17,022
Mercedes-Benz Vans
16,340
14,224
Mercedes-Benz Cars
In millions of euros
+8
38,189
41,407
Mercedes-Benz Cars
23/22
% change
2022
At 31 December
2023
-2,116
-688
Assets and liabilities from income
taxes³
1 Adjusted for after-tax interest income.
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
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Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the management of market-price
risk, credit risk and liquidity risk is provided in Note 33
of the Notes to the Consolidated Financial Statements.
tries.
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and
joint ventures, the risk from the cross-border financing
of Group companies in high-risk countries and the risk
from direct sales to customers in those countries. The
Group has an internal rating system that assigns the
countries in which it operates to risk categories. Risks
from cross-border receivables are partially protected
with the use of letters of credit and bank guarantees in
favour of Mercedes-Benz Group AG and other Group
companies. In addition, an internal committee sets and
restricts the level of hard-currency credits granted to
Mercedes-Benz Mobility companies in high-risk coun-
The risk volume that is subject to credit risk manage-
ment includes the Mercedes-Benz Group's worldwide
creditor positions with financial institutions, issuers of
securities and customers in the financial services busi-
ness, as well as trade receivables. Credit risks with
financial institutions and issuers of securities arise pri-
marily from investments executed as part of our liquid-
ity management and from the application of derivative
financial instruments. The management of these credit
risks is mainly based on an internal limit system that
reflects the creditworthiness of the respective financial
institution or issuer. The credit risk with customers of
the automotive business results from relationships with
contracted dealerships and general agencies, other cor-
porate customers and retail customers. In connection
with the export business, general agencies that accord-
ing to the creditworthiness analyses are not sufficiently
creditworthy are generally required to provide collater-
als such as first-class bank guarantees. The credit risk
with end customers in the financial services business is
managed by Mercedes-Benz Mobility on the basis of a
standardized risk-management process. In this process,
minimum requirements are defined for the sales-financ-
ing and leasing business and standards are set for
credit processes, as well as for the identification, meas-
urement and management of risks. Key elements for the
management of credit risks are appropriate creditwor-
thiness assessments supported by statistical risk-clas-
sification methods, as well as structured portfolio anal-
ysis and portfolio monitoring.
Management of pension assets (plan assets) includes
the investment of the assets to cover the corresponding
pension obligations. The plan assets are legally sepa-
rated from the Group's assets and are invested primarily
in funds; they are not available for general business
purposes. The plan assets are spread across a broad
range of investment categories such as equities,
fixed-interest securities, alternative investments and
real estate, depending on the expected development of
pension obligations and with the help of risk-return
optimization. The performance of the asset manage-
ment is measured by comparison with defined bench-
mark indices. The investment risks are limited via a
Group-wide policy. In addition, there are local regula-
tions for risk management for the individual plan assets.
Additional information on pension plans and similar
obligations is provided in Note 22 of the Notes to the
Consolidated Financial Statements.
Further Information
Consolidated Financial Statements
Corporate Governance
57
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Management of market-price risks aims to limit the
impact of fluctuations in foreign exchange-rates and
interest rates on the earnings of the divisions and the
Group. The Group's overall exposure to these mar-
ket-price risks is initially determined in order to provide
a basis for hedging decisions. These include the volume
to be hedged, the period to be hedged and the choice
of hedging instruments. The hedging strategy is speci-
fied at Group level and uniformly implemented. The
decision-making body is the Treasury Risk Management
Committee, which meets regularly.
ment transactions.
Cash management centrally determines the cash
requirements and surpluses. By means of cash-pooling
procedures, liquidity is in general centrally concen-
trated on bank accounts of the Mercedes-Benz Group in
various currencies. Most of the payments between
companies of the Group are made through internal
clearing accounts so that the number of external cash
flows is reduced to a minimum. The Mercedes-Benz
Group has established standardized processes and sys-
tems to manage its bank accounts and internal
cash-clearing accounts, and to execute automated pay-
Liquidity management aims to ensure the Group can
meet its payment obligations at any time. For this pur-
pose, the Group records the cash flows from operating
and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appro-
priate instruments for liquidity management (e.g. bank
credit, commercial paper and notes); liquidity surpluses
are invested in the money market or the capital market
taking into account risk and return expectations. Our
goal is to ensure the level of liquidity regarded as nec-
essary at optimal costs. Besides operational liquidity,
the Mercedes-Benz Group maintains additional sources
of liquidity which are available in the short term. Those
additional financial resources include a pool of receiva-
bles from the financial services business which are
available for securitization in the capital market and a
contractually confirmed syndicated credit facility. Since
December 2021, the Group also has liquidity reserves in
the form of its shareholding in Daimler Truck Hold-
ing AG, which can only be sold with the consent of
Daimler Truck Holding AG until the end of 2024. Con-
sent to the sale is not required in the event of a crisis or
after December 2024.
resources.
Capital structure management designs the capital
structure of the Group and its subsidiaries. Decisions
regarding the capitalization of the Mercedes-Benz
Group companies are based on the principles of
cost-optimized and risk-optimized liquidity and capital
Condensed Consolidated Statement of Cash flows
In millions of euros
58
Corporate Governance
18,792
20,304
20,084
Profit before income taxes
5,148
62
62
thereof cash and cash equivalents classified as assets held for sale at beginning of year
3,585
18,034
14,094
23,182
Financial management at the Mercedes-Benz Group
consists of capital structure management, cash and
liquidity management, market-price risk management
(foreign exchange-rates and interest rates), as well as
pension-asset management and credit and country risk
management. Worldwide financial management is per-
formed within the framework of legal requirements con-
sistently for the Group entities by the Treasury depart-
ment of the Mercedes-Benz Group. Financial
management operates within a framework of guidelines,
limits and benchmarks, and on the operational level is
organizationally separate from other financial functions
such as settlement, financial controlling, reporting and
accounting.
17,679
2022
2023
2022
2023
2022
2023
Mercedes-Benz Mobility
Industrial Business
Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Cash and cash equivalents at beginning of year
Provisions
Principles and objectives of financial management
Further Information
Mercedes-Benz Group
-1
-12,595
-12,409
and liabilities¹
Net assets
Other assets
-78
422
94
Other reconciliation³
+5
-11,101
-11,625
Trade payables¹
+35
-3,818
-5,159
-5
-15,179
-14,481
A cash outflow of €8.4 billion (2022: €19.0 billion)
resulted from the cash flow from financing activities
(see condensed statement of cash flows) during the
reporting period. The lower cash outflow relative to
the same period of the prior year is primarily due to
the significantly lower net refinancing in the prior
year. This was offset during the reporting period by
the payments of €1.9 billion made in connection with
the share buyback programme. Taking account of
exchange-rate effects, cash and cash equivalents
decreased by €1.7 billion since 31 December 2022.
Total liquidity, which also includes marketable debt
securities and similar investments, decreased by
€1.9 billion to €22.8 billion.
-2,916
+1,184
-1,180
1 Equity.
2 To the extent not allocated to the segments.
3 To the extent not allocated to Mercedes-Benz Mobility.
59,843
Consolidated Financial Statements
Corporate Governance
56
Combined Management Report
Profitability, Liquidity and
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To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 To the extent not allocated to Mercedes-Benz Mobility.
+2
58,683
59,696
Liquidity and capital resources
Mercedes-Benz Group
13,576
13,014
of Mercedes-Benz Mobility
Total equity
+6
-4,507
-4,778
from income taxes¹
Assets and liabilities
+2
58,525
-4
1,791
692
Cash flow from financing activities of the
Mercedes-Benz Group
17,880
34,379
Gross profit
5,466
6,456
-22,987
-23,630
-13,549
-15,299
-84,927
-86,366
-115,997
-118,839
-5,755
-6,544
26,954
26,718
17,217
20,288
111,601
112,756
150,017
153,218
Cost of sales
34,020
Revenue
26,390
4,989
-252
-242
-1,460
-1,538
-2,584
-2,688
General administrative expenses
167
163
-722
-685
-1,359
-1,466
-7,568
-7,740
-9,482
-9,728
Selling expenses
-289
-88
3,967
3,088
3,668
26,674
2022
2023
Reconciliation
2
52
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The main reasons for the development of EBIT in 2023
were an decreased interest margin due to higher inter-
est rates and increased competition in the financial
services sector. Falling used car prices reduced Athlon's
remarketing result. Exchange-rate effects and expenses
for the expansion of the charging activities also reduced
EBIT. The equity-method gains of the mobility invest-
ments improved due to a better operating business
result and restructuring measures. Despite a challeng-
ing macroeconomic environment, credit risk costs were
slightly below the previous year's level.
In 2023, EBIT of the Mercedes-Benz Mobility segment
amounted to €1,302 million (2022: €2,428 million);
adjusted EBIT was €1,695 million (2022: €2,428 million).
Revenue amounted to €26,718 million (2022:
€26,954 million). Adjusted return on equity of 12.3% was
below the adjusted prior-year figure of 16.8%.
Adjusted EBIT was slightly lower than EBIT in the year
2023. Effects in connection with ongoing governmental
and court proceedings and measures taken relating
to Mercedes-Benz diesel vehicles led to an impact in
the amount of €70 million (2022: expense of €15 mil-
lion) on earnings. In addition, income in the amount of
€5 million (2022: expense of €51 million) resulted in
connection with the discontinuation of business activi-
ties in Russia. In the prior year, M&A transactions in
connection with the restructuring of the sales activities
in Canada contributed €36 million to earnings.
The substantial rise in unit sales as well as improved
pricing had a very positive impact on gross profit. How-
ever, the result was impacted by higher material costs
and expenses for higher transportation costs to global
sales markets. Furthermore, earnings reflected the
highly inflationary macroeconomic situation, particu-
larly the hyperinflation in Argentina. Overall, gross profit
in relation to revenue increased from 21.3% to 24.6%.
Other functional costs were slightly above the level of
the previous year.
The Mercedes-Benz Vans segment achieved an EBIT of
€3,138 million (2022: €1,897 million); adjusted EBIT was
€3,063 million (2022: €1,927 million). With a revenue
of €20,288 million (2022: €17,217 million), the adjusted
return on sales of 15.1% was higher than the adjusted
prior-year figure of 11.2%.
Adjusted EBIT was slightly higher than EBIT in the year
2023. Effects from ongoing regulatory and legal pro-
ceedings and measures relating to Mercedes-Benz die-
sel vehicles of €94 million (2022: €110 million) nega-
tively impacted the segment's earnings. Earnings in
connection with the discontinuation of the business
activities in Russia in the amount of €66 million (2022:
expense of €658 million) had a positive impact. In addi-
tion, in the prior year, M&A transactions in the amount
of €863 million had a positive effect on the profit due
to the €478 million from the restructuring of the sales
activities in Canada and the €385 million from the
change in the shareholding structure of the motorsport
business.
Improved pricing and lower raw material prices had a
positive impact on gross profit. On the other hand,
gross profit was impacted by expenses paid to suppli-
ers due to additional costs relating to inflation and sup-
ply chains over the course of the year. In addition,
exchange-rate effects had a negative impact on earn-
ings. Gross profit in relation to revenue decreased from
23.9% to 23.4% as a result. Other functional costs
increased in 2023. This was mainly due to advance
expenditure for the renewal of existing models and the
further development of fuel-efficient and environmen-
tally friendly drive systems as well as the digital con-
nectivity of the products. In addition, increased
expenses from the discounting of non-current provi-
sions as well as lower equity-method gains of the stake
in Beijing Benz Automotive Co., Ltd. contributed to a
decrease in earnings.
The EBIT of the Mercedes-Benz Cars segment
decreased to €14,224 million (2022: €16,340 million);
adjusted EBIT was €14,252 million (2022: €16,245 mil-
lion). With a revenue of €112,756 million (2022:
€111,601 million), the adjusted return on sales of 12.6%
was lower than the adjusted prior-year figure of 14.6%.
EBIT by segment
Further Information
Consolidated Financial Statements
Corporate Governance
51
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
Consolidated Financial Statements
Further Information
Adjusted EBIT in 2023 was above the reported EBIT.
Expenses of €276 million in connection with the discon-
tinuation of the business activities in Russia had a neg-
ative effect on earnings. In addition, the equity-method
gains/losses were negatively impacted by an impair-
ment (€117 million).
Mercedes-Benz Mobility
2023
2022
Mercedes-Benz Vans
2022
2023
2022
2023
2022
Mercedes-Benz Cars
2023
Mercedes-Benz Group
In millions of euros
EBIT of the Mercedes-Benz Group
-793
Capital Resources, Financial Position
Consolidated Financial Statements
Corporate Governance
53
53
Combined Management Report
Profitability, Liquidity and
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The elimination of intra-Group transactions resulted in
earnings of €138 million in 2023 (2022: €18 million).
In 2023, items at the corporate level resulted in earn-
ings of €858 million (2022: expense of €225 million).
This includes the positive effect on earnings of
€797 million (2022: €226 million) from the equi-
ty-method investments in Daimler Truck Holding AG.
On the other hand, in the previous year, earnings were
affected by adjustments in connection with the sale
of individual investments and business activities to
Daimler Truck (€268 million after subtracting transac-
tion costs). Further information on this is provided
in Note 3 of the Notes to the Consolidated Financial
Statements.
The reconciliation of the segments' EBIT to Group EBIT
comprises items at the corporate level and the effects
on earnings of eliminating intra-Group transactions
between the segments.
Further Information
-729
-115
-143
11.2%
15.1%
14.6%
12.6%
Adjusted return on sales/return on equity (in %)¹
16.8%
9.5%
11.0%
15.5%
14.6%
12.6%
Return on sales/return on equity (in %)
55
994
2,428
1,695
1,927
3,063
16,245
276
51
-5
658
12.3%
16.8%
1 Adjusted return on sales is calculated as the ratio of adjusted EBIT to revenue. The adjusted return on equity is determined as the ratio of adjusted EBIT to the average equity of the quarters.
Annual Report 2023 | Mercedes-Benz Group
2,975
11,757
8,841
Mercedes-Benz Cars
Mercedes-Benz Vans
Mercedes-Benz Mobility
-1,392
10,236
8,844
Mercedes-Benz Group
23/22
Change
In millions of euros
2022
-66
14,252
2023
The following table shows value added for the
Mercedes-Benz Group and for the individual segments.
The measure of earnings for the segments is EBIT and
for the Group is net operating profit, which in addition
to the EBIT of the segments also includes earnings
effects for which the segments are not accountable,
such as income taxes and other reconciling items.
As described in the section Performance measurement
system, value added is calculated as the difference
between the measure of earnings and the cost of capi-
tal. The cost of capital used in the calculation of value
added is based on average net assets multiplied by the
cost of capital rate. The ratio of earnings to net assets
results in the profitability of net assets, i.e. the return
on capital employed (return on net assets, RONA).
Value added and return on net assets
Further Information
Consolidated Financial Statements
Corporate Governance
54
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Value added
-488
20,655
Adjusted EBIT
20,458
19,660
EBIT
61
1,060
-88
-308
255
381
3,878
2,794
4,106
3,927
Other income/expense
-3
-24
-415
-524
-5,184
-5,682
-5,602
-6,230
Research and non-capitalized development costs
14,224
16,340
3,138
1,897
709
205
Income/expenses in connection with adjustments of the business
activities in Russia
268
117
-36
-863
-631
117
M&A transactions
Restructuring measures
20,004
-6
15
-70
110
94
119
22
Legal proceedings (and related measures)
-207
996
2,428
1,302
-2
1,292
for other risks¹
-119
462
307
Acquisitions and sales of marketable debt securities and similar investments
Other cash flows
2,172
-229
316
507
2,488
278
Investments in and disposals of shareholdings and other business operations
-61
-99
-6,838
-8,114
-6,899
-8,213
Additions to property, plant and equipment and intangible assets
1,995
-4,631
14,899
19,101
16,894
14,470
-872
-814
229
-4,137
490
-28
-4,234
-3,017
-9,110
2,320
-13,344
-697
2,101
-286
-5,554
-7,029
-3,453
-7,315
Cash flow from financing activities
Internal equity and financing transactions
Other cash flows
Acquisition of treasury shares
Dividends paid
Change in financing liabilities
Cash flow from investing activities
18
-36
478
349
496
313
78
-5,880
-4,807
-5,621
-143
-4,103
-2,590
-4,111
-2,733
Cash flow from operating activities
Income taxes paid
Dividends received from equity-method investments
Other operating assets and liabilities
Vehicles on operating leases
Receivables from financial services
Trade receivables and trade payables
Inventories
260
483
-2,944
-2,286
-2,461
Other non-cash expense and income and gains/losses from disposals of assets
Change in operating assets and liabilities
124
114
6,397
6,549
6,521
6,663
-8
-5,009
1,310
1,146
1,605
2,056
1,605
2,056
483
445
-125
1,179
358
1,624
4,805
-138
-995
-502
3,810
-640
-5,329
-6,034
2
222
-5,327
-5,812
108
164
921
1,029
Depreciation and amortization/impairments
-5,669
-5,550
Restructuring measures
-431
878
447
measures)
Legal proceedings (and related
+3,188
8,128
11,316
industrial business
Free cash flow of the
+261
+368
-168
-31
-199
Other adjustments
-696
-328
Right-of-use assets
-490
-229
similar investments
debt securities and
Change in marketable
-1,475
-5,554
101
-7,029
374
M&A transactions
In 2022, a cash inflow in the amount of €1.3 billion
which related to the payments received from the sale
of intercompany loans in connection with the sale of
units of the truck financing business and does not
legally relate to Mercedes-Benz Mobility, was economi-
cally allocated to the cash flow from investing activi-
ties of Mercedes-Benz Mobility. An opposing repay-
ment of the financing liabilities in the same amount
was recognized in the cash flow from financing activi-
ties of Mercedes-Benz Mobility. In 2023, there were no
reclassifications of cash flows between the cash flows
from investing activities of the industrial business and
Mercedes-Benz Mobility.
In 2023, the free cash flow of the Mercedes-Benz
Group resulted in a cash inflow of €6.7 billion (2022:
€12.8 billion). The decrease in the free cash flow of the
Mercedes-Benz Group was mainly due to the higher
leasing and sales-financing business of Mercedes-Benz
Mobility compared to the previous year. This was offset
by a year-on-year increase in the free cash flow of the
industrial business.
Free cash flow of the Mercedes-Benz Group
The adjustments from legal proceedings include pay-
ments by the industrial business in connection with
ongoing governmental and legal proceedings and
related measures taken with regard to Mercedes-Benz
diesel vehicles. The adjustments from restructuring
measures include payments made in connection with
the personnel-cost-optimization programmes in the
reporting period. The adjustments from M&A transac-
tions encompass the cash inflow from the purchase
price payment for the sale of shares in Mercedes-Benz
Grand Prix Ltd. (2022: cash inflows from the restructur-
ing of retail activities in Canada, opposing cash out-
flows from investment in Automotive Cells Company
SE). The adjusted free cash flow of the industrial
business amounted to a total of €11.7 billion (2022:
€9.3 billion).
Further Information
Consolidated Financial Statements
Corporate Governance
60
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To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
There was an increase in income taxes paid in compari-
son to the prior year, which resulted from the improve-
ment in earnings before taxes in the industrial business.
In addition to payments to the tax authorities, income
tax payments also include intra-Group payments and
refunds based on contractual arrangements within the
tax groups. A further negative effect on the free cash
flow of the industrial business resulted from the higher
investment in intangible assets and capital expenditure
on property, plant and equipment.
In the previous year,
the free cash flow was also
impacted by higher payments resulting from the settle-
ment of civil and environmental claims made by several
US authorities in 2020 in connection with emission
control systems used in certain diesel vehicles as well
as higher payments in connection with restructuring
measures. Another positive effect resulted from a lower
increase in the number of leased vehicles compared to
the previous year. Moreover, higher dividend payments
were received during the reporting period from equi-
ty-method investments, in particular Daimler Truck
Holding AG and Beijing Benz Automotive Co., Ltd.
Investments in and disposals of shareholdings and
other business operations resulted in slightly higher
cash inflows in the reporting period than in the previ-
ous year.
The increase in the free cash flow of the industrial busi-
ness by €3.2 billion to €11.3 billion compared to the pre-
vious year is characterized by an improvement in profit
before income taxes of the industrial business. During
the reporting period, a positive effect resulted from the
development of the working capital, mainly due to a
lower inventory build-up and a decrease in the trade
receivables compared to the previous year. A smaller
increase in trade payables compared to the previous
year had an opposing effect.
In 2023, the free cash flow of the industrial business
amounted to €11.3 billion and was thus higher than the
previous year's figure of €8.1 billion.
The cash flows from acquisitions and sales of marketa-
ble debt securities and similar investments included in
cash flows from investing activities are deducted, as
those securities are allocated to liquidity and changes
in them are thus not a part of the free cash flow of the
industrial business. On the other hand, effects in con-
nection with the recognition and measurement of right-
of-use assets, which result from lessee accounting and
are largely non-cash items, are included in the free cash
flow of the industrial business. Other adjustments
relate to effects from the financing of the Group's own
dealerships and effects from internal deposits within
the Group. In addition, the calculation of the free cash
flow of the industrial business includes the cash flows
to be shown under cash flow from financing activities in
connection with the acquisition or disposal of interests
in subsidiaries without loss of control.
+2,426
-58
9,294
11,720
industrial business
Adjusted free cash flow of the
-86
-144
-273
-5,758
investing activities
+4,202
-1
-76
89
-5,658
4,263
-13,374
-12,654
-395
88
-19,032
-8,391
-471
Effect of foreign exchange-rate changes on cash and cash equivalents
-1,305
7,340
1,305
-7,340
62
29
65
29
127
-48
-1,941
-48
-1,941
-122
Cash and cash equivalents at end of year
Cash flow from
15,972
13,117
14,899
19,101
operating activities
Cash flow from
23/22
Change
2022
2023
In millions of euros
Free cash flow of the industrial business
The free cash flow of the industrial business is regarded
as a key performance indicator for the Mercedes-Benz
Group. The free cash flow of the industrial business is
derived from the cash flows from operating and invest-
ing activities. The following table also shows the recon-
ciliation to the adjusted free cash flow of the industrial
business.
Free cash flow of the industrial business
Further Information
Consolidated Financial Statements
Corporate Governance
59
Combined Management Report
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Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
10
10
thereof cash and cash equivalents classified as assets held for sale at end of year
3,585
2,855
14,094
17,679
2,424
-2,546
117,965
280
5,970
5,879
6,237
6,159
thereof current
977
910
6,083
5,948
7,060
6,858
Marketable debt securities and similar investments
3,585
2,855
267
14,094
thereof non-current
823
1,005
795
795
9,874
10,183
Total assets
Assets held for sale.
Other assets
-5,680
7,931
7,939
Other financial assets
710
630
113
69
699
-5,140
772
13,107
15,962
13,530
13,104
Equity-method investments
85,615
88,292
-66
-81
85,549
88,211
27,514
27,267
14,038
14,445
41,552
41,712
12,896
17,679
13,259
271
Cash and cash equivalents
772
696
7,328
6,585
8,100
7,281
Trade receivables
715
1,168
24,906
26,126
25,621
27,294
Inventories
208
13,619
13,071
9,178
21
452
420
5,943
6,125
-364
-725
-6,715
-7,453
Net investments in
property, plant and
equipment and
intangible assets
Depreciation and
amortization/impair-
54
-29
208
514
M&A transactions
-2,122
measures
353
12,336
92
In millions of euros
2022
2023
335
198
549
251
industrial business
Reconciliation from CFBIT to the free cash flow of the
As well as being calculated on the basis of the dis-
closed cash flows from operating and investing activi-
ties, the free cash flow of the industrial business can
also be calculated on the basis of the cash flows before
interest and taxes (CFBIT) of the automotive segments.
The reconciliation from the CFBIT of the automotive
segments to the free cash flow of the industrial busi-
ness includes the sum of receipts and payments of
taxes and interest of the industrial business. The other
reconciling items primarily comprise eliminations
between the segments and items that are allocated to
the industrial business but for which the automotive
segments are not responsible. The year-on-year
increase was mainly due to the dividend of Daimler
Truck Holding AG, which was included in the other rec-
onciliation items in the reporting period.
Legal proceedings
(and related
1,731
2,817
10,718
-141
Restructuring
measures)
Other
CFBIT
2023
Mercedes-Benz
Mercedes-Benz
Reconciliation from EBIT to adjusted CFBIT
CFBIT and cash conversion rate of the automotive
segments
Further Information
Consolidated Financial Statements
Corporate Governance
61
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
263,022
9,102
Cars
2022
Vans
2023
2022
ments
Net financial
investments
Mercedes-Benz Cars achieved an adjusted cash conver-
sion rate of 0.9 (2022: 0.7) and Mercedes-Benz Vans an
adjusted cash conversion rate of 1.0 (2022: 1.1).
The following table shows the reconciliation from EBIT
for Mercedes-Benz Cars and Mercedes-Benz Vans to
the CFBIT of the corresponding segment. The reconcili-
ation from CFBIT to adjusted CFBIT and the adjusted
cash conversion rate are also shown.
The CFBIT of the automotive segments is derived
from the EBIT and the change in net assets, and also
includes additions to the right-of-use assets. The line
Other was primarily affected by dividend payments
from equity-method investments, payments for the set-
tlement of payables and provisions recognized in previ-
ous years through profit or loss, and, in particular in the
year 2022, by the elimination of non-cash income
included in EBIT in connection with the sale of shares
in Mercedes-Benz Grand Prix Ltd.
-167
-340
Receivables from financial services
-2,936
Change in working
capital
1,897
3,138
16,340
14,224
EBIT
In millions of euros
-1,095
Equipment on operating leases
308
293
2.19
the direct banking
business
Deposits in
24,738
25,317
3.03
4.57
70,984
71,185
2.53
3.46
In millions of euros
in %
31 Dec.
2022
31 Dec.
2023
0.91
31 Dec.
2022
5,759
Detailed information on the amounts and terms of the
main items of financing liabilities is provided in
Notes 24 and 33 of the Notes to the Consolidated
Financial Statements. Note 33 of the Notes to the Con-
solidated Financial Statements also provides informa-
tion on the maturities of the other financial liabilities.
S&P
Long-term credit rating
Credit ratings
Mercedes-Benz Group AG had long-term A ratings with
all five rating agencies at the end of the year 2023. In
the course of the year, all five agencies raised the long-
term credit ratings for the Group by one notch. Four of
them also raised their short-term credit ratings by one
notch at the same time.
Credit ratings
Further Information
Consolidated Financial Statements
Corporate Governance
65
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
64
10,538
Carrying amounts
Average interest rates
31 Dec.
2023
to financial
institutions
USD 1,000 million
USD 1,000 million
USD 1,000 million.
USD 1,100 million
USD 750 million
USD 900 million
USD 750 million
Maturity
Month of
issuance
Volume
Mercedes-Benz
International Finance B.V.
Mercedes-Benz Finance
North America LLC
Issuer
Benchmark issuances
In the reporting period, the Group covered its refinanc-
ing requirements through the issuance of bonds and
other means. As can be seen in the following table they
include so-called benchmark issuances (bonds with a
high nominal volume) by Mercedes-Benz Finance North
America LLC in the US-dollar area and Mercedes-Benz
International Finance B.V. in the euro area.
The situation in the bond markets in the reporting year
was significantly influenced by factors such as inflation
and the volatility of interest rates as well as decisions
by central bank.
260,015
Various issuance programmes are available for raising
longer-term funds in the capital market. They include
the Euro Medium Term Note programme (EMTN) with a
total volume of €70 billion, under which Mercedes-Benz
Group AG and several subsidiaries can issue bonds in
various currencies. Other local capital-market pro-
grammes exist, which are significantly smaller than the
EMTN programme. Capital-market programmes allow
flexible, repeated access to the capital markets.
The funds raised by the Mercedes-Benz Group in the
year 2023 primarily served to refinance the leasing and
sales-financing business. For that purpose, the
Mercedes-Benz Group made use of a broad spectrum of
various financing instruments in various currencies and
markets. They include bank loans, commercial paper in
the money market, bonds, promissory-note loans and
the securitization of receivables in the financial services
business (asset-backed securities).
Refinancing
Detailed information on contingent liabilities and other
financial obligations is provided in Note 31 of the Notes
to the Consolidated Financial Statements.
03/2023 03/2025
03/2023 03/2026
03/2023 03/2028
08/2023 08/2025
08/2023 08/2026
08/2023 08/2028
08/2023 08/2033
EUR 1,000 million
EUR 1,000 million
05/2023 05/2026
05/2023 05/2031
Annual Report 2023 | Mercedes-Benz Group
Liabilities
ABS transactions
Notes/bonds and
liabilities from
Refinancing instruments
At 31 December 2023, the total of financing liabilities
shown in the Consolidated Statement of Financial Posi-
tion amounted to €108.6 billion (2022: €111.8 billion).
At 31 December 2023, these carrying amounts are
mainly denominated in the following currencies: 42% in
euros, 28% in US dollars and 13% in Chinese renminbi.
The carrying amounts of the main refinancing instru-
ments and the volume-weighted average interest rates
are shown in the following table.
Moody's
The syndicated credit line in the amount of €11 billion
in existence since July 2018 had not been utilized as of
the balance sheet date.
In the reporting period, asset-backed securities (ABS)
transactions with a volume of €1.4 billion were carried
out successfully in Germany. ABS transactions with a
total volume of CNY 17.4 billion were carried out in
China. In the United States the asset-back securities
credit line with a volume of USD 4.0 billion was
extended and further ABS transactions of USD 3.5 bil-
lion were placed.
The Mercedes-Benz Group also issued commercial
paper in 2023.
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Bank credit was another important source of refinanc-
ing in 2023. These loans were provided by globally
active banks as well as by banks operating nationally.
321
Fitch
DBRS
At 31 December
At 31 December
At 31 December
Mercedes-Benz Mobility
Industrial Business
Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Corporate Governance
66
In millions of euros
Condensed Consolidated Statement of Financial Position
at the same level as in the previous year (2022:
€260.0 billion); the exchange-rate effects amounted to
minus €4.7 billion.
At €263.0 billion, the Group's balance sheet total was
Financial position
2023
Capital Resources, Financial Position
2022
2022
26,942
25,797
27,250
26,090
594
571
15,275
17,022
15,869
17,593
Property, plant and equipment
Intangible assets
Assets
2022
2023
2023
Combined Management Report
Profitability, Liquidity and
To Our Shareholders
At 31 December 2023, the best estimate for contingent
liabilities was €2.6 billion (2022: €4.1 billion). The
decrease is mainly a result of discontinuing the busi-
ness activities in Russia and the disposal of the contin-
gent liabilities upon completion of the transaction.
A-2
A-1
S&P
Short-term credit rating
A (low)
A
A
A+
A-
A
A3
A2
A
A-
End of 2023 End of 2022
Moody's
P-1
P-2
Fitch
Contents
Annual Report 2023 | Mercedes-Benz Group
On 23 December 2023, the European rating agency
Scope Ratings (Scope) upgraded the long-term issuer
rating of Mercedes-Benz Group AG and its financing
companies included in the rating from A to A+ with a
stable outlook and concurrently increased the short-
term rating from S-1 to S-1+. Scope justified this
upgrade with the Group's improved business risk profile,
which can be attributed to structurally higher operating
profitability through the strategic shift into the luxury
space and the continuous streamlining of the fixed cost
base.
On 16 November 2023, the Canadian agency DBRS
Morningstar (DBRS) raised the long-term rating of
Mercedes-Benz Group AG and its subsidiaries incorpo-
rated in the rating from A (low) to A with a stable out-
look. At the same time, the corresponding short-term
rating was confirmed as R-1 (low). DBRS explained this
assessment with the continuing solid development of
the company's earnings regardless of various significant
headwinds, including interest rate and inflationary pres-
sures, geopolitical uncertainty and continuing supply
chain bottlenecks.
comparison with the Fitch "A"-rating median and sup-
ported by the generation of free cash flow above the
historical average values.
On 27 July 2023, Fitch Ratings (Fitch) raised the long-
term issuer rating for Mercedes-Benz Group AG from A-
to A with a stable outlook. At the same time, the short-
term rating was raised from F1 to F1+. Fitch explained
this step with the structural improvement of the finan-
cial profile of the Mercedes-Benz Group, which was
underlined by a significantly higher return on sales in
S&P Global Ratings (S&P) raised the long-term corpo-
rate rating of Mercedes-Benz Group AG from A- to A
with stable outlook on 5 May 2023. The short-term rat-
ing was also raised, from A-2 to A-1. S&P considers the
Mercedes-Benz Group's cash flow generation to be the
best in its class among the traditional automakers. S&P
also considers that the Group will continue to success-
fully manage the pricing, the model mix, the costs and
the investments in the event of weaker conditions for
the sector. After the conclusion of the rating review, S&P
confirmed the long-term and short-term ratings for the
Mercedes-Benz Group according to the new criteria for
issuers with captive financial services businesses on
23 November 2023.
Scope
On 24 February 2023, Moody's Investors Service
(Moody's) raised the long-term credit rating of
Mercedes-Benz Group AG from A3 to A2 with a stable
outlook. At the same time, Moody's raised its short-
term rating from P-2 to P-1. With this upgrade, Moody's
recognized Mercedes-Benz Group's improved margins
over the past two years, the company's strategy of
focusing on higher margin premium and luxury vehicles
while transforming its product portfolio to all-electric
vehicles and its reduced financial indebtedness.
DBRS
R-1 (low)
S-1
S-1+
Scope
F1
F1+
R-1 (low)
3
In the context of its ordinary business activities, the
Group has also entered into other financial obliga-
tions in addition to the liabilities shown in the Consoli-
dated Statement of Financial Position at 31 December
2023. These financial obligations result from contrac-
tual commitments to acquire intangible assets; prop-
erty, plant and equipment; equipment on operating
leases and irrevocable loan commitments.
-144
145,057
142,524
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
68
Corporate Governance
Consolidated Financial Statements
Further Information
Current assets accounted for 40% of the balance sheet
total, which is at the prior-year level. Current liabilities
accounted for 31% of the balance sheet total, which is
below the prior-year level of 34%.
Balance sheet structure Mercedes-Benz Group
In billions of euros
Assets
Non-current assets
117,491
263 260
117,965
263,022
10,554
10,084
10,234
307
320
Other liabilities
Liabilities held for sale
Total equity and liabilities
14,617
13,908
10,094
9,402
4,523
4,506
224
224
260,015
Contract and refund liabilities
260 263
93
Property, plant and equipment decreased to
€26.1 billion (2022: €27.3 billion). In addition to nega-
tive exchange-rate effects, the deconsolidation
of the Russian companies in 2023 and the reclassifica-
tion of property, plant and equipment to assets held
for sale in connection with the planned divestment
of sales companies in European countries other than
Germany had a negative effect on the balance sheet
total.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
69
Corporate Governance
Consolidated Financial Statements
Further Information
Equipment on operating leases and receivables from
financial services rose to a total of €129.9 billion (2022:
€127.1 billion) due to the increase in sales financing,
mainly in North America. The increase adjusted for cur-
rency translation effects was €5.8 billion. At 49%, the
leasing and sales-financing business as a proportion of
total assets was at prior year level.
Equity-method investments decreased to €13.1 billion
(2022: €13.5 billion). Investments accounted for using
the equity method comprise in particular the carrying
amounts of our investments in Daimler Truck Hold-
ing AG and Beijing Benz Automotive Co., Ltd.
Inventories increased from €25.6 billion to €27.3 bil-
lion. As a result the share of total assets remains at the
prior year level of 10%. The increase relates in particular
to finished goods, spare parts and products held for
resale at €2.2 billion as a result of the introduction of
the direct sales model in additional markets and model
year-related production ramp-ups. Furthermore, the fin-
ished goods include higher-value vehicles on average.
At €7.3 billion, trade receivables were lower than the
prior-year-figure of €8.1 billion.
Compared to 31 December 2022, cash and cash equiv-
alents decreased by €1.7 billion to €16.0 billion.
Marketable debt securities and similar investments
decreased compared with 31 December 2022 from
€7.1 billion to €6.9 billion as part of the liquidity man-
agement. Those assets include the debt instruments
that are allocated to liquidity, most of which are traded
in active markets. They generally have an external rating
of A or better.
The intangible assets of €17.6 billion (2022: €15.9 bil-
lion) particularly include €15.1 billion of capitalized
development costs (2022: €13.5 billion). Of the devel-
opment costs, a share of €14.0 billion (2022: €12.6 bil-
lion) was attributable to the Mercedes-Benz Cars seg-
ment and €1.1 billion (2022: €0.8 billion) to the
Mercedes-Benz Vans segment. Development costs cap-
italized in the reporting year amounted to €3.8 billion
(2022: €2.9 billion) and represent 38% (2022: 34%) of
the Group's total research and development expendi-
ture. The increase in capitalized development costs is
mainly attributable to development work for the new
platform generations geared towards electric mobility.
159
Assets
2023
157
87
85
89
104 103
Current assets
88
82
thereof liquidity
23 25
2022
Equity and
liabilities
Equity
Non-current
liabilities
Current
liabilities
Before eliminations between segments, Mercedes-Benz
Mobility accounted for €145.1 billion (2022: €142.5 bil-
lion) of the balance sheet total. During the reporting
year, all intra-Group eliminations between the industrial
business and Mercedes-Benz Mobility regarding the
balance sheet were allocated to the industrial business.
The reported size of the industrial business is deter-
mined by generally subtracting the unconsolidated bal-
ance sheet total of Mercedes-Benz Mobility from the
consolidated balance sheet total of the Group. Conse-
quently, intra-Group matters relating to the relationship
between the industrial business and Mercedes-Benz
Mobility are generally allocated to Mercedes-Benz
Mobility and included in its balance sheet. This method
of presentation reduces the balance sheet total of the
industrial business. At the same time, this means that
the share of Mercedes-Benz Mobility's balance sheet
total in the Consolidated Statement of Financial Posi-
tion is shown as being higher than would be the case if
Mercedes-Benz Mobility were presented on a consoli-
dated basis.
2,800
2,972
5,128
At 31 December
2023
2022
2023
2022
2023
2022
Equity and liabilities
Equity
Provisions
Financing liabilities
thereof current
thereof non-current
Trade payables
Other financial liabilities
At 31 December
92,816
At 31 December
Industrial Business
17
Contents
Annual Report 2023 | Mercedes-Benz Group
142,524
145,057
117,491
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
In millions of euros
67
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Group
Mercedes-Benz Mobility
86,540
79,802
72,964
63,724
62,051
9,768
13,119
53,956
48,932
12,828
12,204
11,625
11,101
1,203
1,103
7,118
7,928
4,146
70,454
68,257
-20,668
-23,343
13,014
13,576
16,390
17,044
15,565
16,211
825
Other financial assets of €7.9 billion were at the pri-
or-year level. They consist primarily of derivative finan-
cial instruments, equity and debt instruments, shares in
non-consolidated subsidiaries, and loans and other
receivables from third parties.
833
111,837
-13,575
-7,549
122,213
119,386
44,914
49,786
108,638
The other assets of €10.2 billion (2022: €9.9 billion)
particularly include deferred taxes and tax refund
claims.
10,391
Equity and liabilities
In millions of euros
Net debt of the Mercedes-Benz Group
Net debt at Group level, which primarily results from
refinancing the leasing and sales-financing business,
decreased compared with 31 December 2022 by
€1.5 billion to €86.6 billion. The derivation of net debt is
shown in the following table.
Since 31 December 2022, the net liquidity of the indus-
trial business increased by €5.0 billion to €31.7 billion.
The increase is mainly due to the positive free cash flow
of the industrial business, which was partially offset by
the dividend payment made to the shareholders of
Mercedes-Benz Group AG.
To the extent that the Group's internal refinancing of the
financial services business is provided by the compa-
nies of the industrial business, this amount is deducted
by an elimination in the financing liabilities in the calcu-
lation of the net debt of the industrial business.
Net liquidity of the industrial business
As the following table shows, the net liquidity of the
industrial business is calculated as the total amount
as shown in the statement of financial position of cash,
cash equivalents and the marketable debt securities
and similar investments included in liquidity manage-
ment, less the nominal amounts of financing liabilities.
Net liquidity and net debt
Further Information
Consolidated Financial Statements
Corporate Governance
62
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
At 31 December
2023
8,128
2022
In millions of euros
20,177
19,065
Liquidity
-135
6,083
5,948
and similar investments
Marketable debt securities
-977
14,094
13,117
Cash and cash equivalents
23/22
Change
2022
At 31 December
2023
23/22
Change
11,316
Free cash flow of the industrial business
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
1,731
2,817
CFBIT Mercedes-Benz Vans
2,040
3,018
11,413
12,535
Adjusted CFBIT
10,718
12,336
CFBIT Mercedes-Benz Cars
-43
In connection with the planned disposal of sales com-
panies in other European countries, the Group is show-
ing assets held for sale of €0.8 billion and liabilities
held for sale of €0.2 billion as of 31 December 2023.
-175
-
Adjusted EBIT
14,252
16,245
3,063
71
646
Other reconciling items
-255
324
Interest paid/received
1.1
-1,112
1.0
0.9
conversion rate¹
Adjusted cash
-4,137
-4,807
Income taxes paid/refunded
1,927
0.7
Financing liabilities
Contents
7,549
Corporate Governance
63
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
+1,532
-88,146
-86,614
+3,441
-109,444 -112,885
+328
-1,048
-720
Net debt
Consolidated Financial Statements
Further Information
Contingent liabilities and other financial obligations
Further information on the assets presented in the
statement of financial position and on the Group's
equity and liabilities is provided in the Consolidated
Statement of Financial Position, the Consolidated State-
ment of Changes in Equity, and the related notes in the
Notes to the Consolidated Financial Statements.
Compared to 31 December 2022, the Group's equity
increased from €86.5 billion to €92.8 billion, mainly as a
result of the positive earnings development. Addition-
ally gains of €0.5 billion are recognized directly in equity
from the measurement of derivative financial instru-
ments after tax. An opposing effect arose from the divi-
dend of €5.6 billion paid to the shareholders of
Mercedes-Benz Group AG and the aquisition of treasury
shares of €2.3 billion as part of the share buyback pro-
gramme. Equity attributable to the shareholders of
Mercedes-Benz Group AG increased accordingly to
€91.8 billion (2022: €85.4 billion).
Whereas the balance sheet total remained at the pri-
or-year level, equity increased by 7% compared with the
previous year. The Group's equity ratio of 35.3% was
accordingly above the level at the end of 2022 (31.1%);
the equity ratio for the industrial business was 67.6%
(2022: 57.4%). It is necessary to take into account the
fact that the equity ratios at the end of 2022 and 2023
have been adjusted for the paid and proposed dividend
payments respectively.
13,489
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
70
for financing liabilities
Financing liabilities
(nominal)
Corporate Governance
Further Information
Provisions decreased to €16.4 billion from the previous
year (2022: €17.0 billion). At 6%, they were also below
the prior-year level of 7% of the balance sheet total. The
decrease is mainly due to lower provisions for liability
and litigation risks and regulatory proceedings.
Financing liabilities of €108.6 billion were below the
€111.8 billion of the previous year. The decrease was
due to the lower net refinancing as a result of the posi-
tive cash flow situation. The financing liabilities break
down to 51% bonds, 23% liabilities to financial institu-
tions, 14% liabilities from ABS transactions and 5%
deposits in the direct banking business. The decrease
in deposits from the direct banking business is related
to the planned discontinuation of the retail deposit
business by the end of 2024. The financing liabilities
available on 31 December 2023 relate primarily to the
refinancing requirements of the leasing and sales-fi-
nancing business.
Trade payables increased compared to 31 December
2022 from €12.2 billion to €12.8 billion.
Other financial liabilities amounted to €7.1 billion
(2022: €7.9 billion). They mainly comprise liabilities from
residual-value guarantees, from payroll accounting,
from derivative financial instruments, deposits received,
and liabilities from accrued interest on financing liabili-
ties. The decrease in other financial liabilities is mainly
attributable to lower liabilities from derivative financial
instruments, the carrying amount of which declined due
to interest and exchange-rate developments.
The contract and refund liabilities of €10.4 billion
were below the €10.6 billion of the previous year. They
include in particular deferred revenue from service
and maintenance contracts and extended warranties,
as well as obligations from sales transactions that are
within the scope of IFRS 15.
Other liabilities of €14.6 billion (2022: €13.9 billion)
primarily include deferred taxes, tax liabilities and pre-
paid expenses. The increase was primarily attributable
to higher deferred tax liabilities.
Consolidated Financial Statements
Market valuation and
currency hedges
Annual Report 2023 | Mercedes-Benz Group
-111,837
12,594
(nominal)
Financing liabilities
+321
-1,047
-726
for financing liabilities
currency hedges
Market valuation and
-127
-42
-169
nal dealerships
+5,940
-1,909
+3,113
6,460
+6,134
Liabilities from refinancing inter-
31,659
Net liquidity
-108,724
Financing liabilities
24,739
22,830
-202
7,060
Liquidity
Marketable debt securities
and similar investments
-1,707
17,679
15,972
Cash and cash equivalents
+5,022
26,637
6,858
44,162
Total equity and liabilities
13
7
Deferred income
36,150
3,114
222
43,940
35,904
246
Other liabilities
Trade
payables
Provisions
2,605
Liabilities
80,384
Consolidated Financial Statements
Annual Report 2023 | Mercedes-Benz Group
The business development of Mercedes-Benz Group AG
mainly depends on the development of its worldwide
subsidiaries and is therefore - through the profit and
loss contributions from subsidiaries and associated
companies fundamentally subject to the same risks
and opportunities as is the business development of
the Group.
401
2,713
-
Risks and opportunities
For the year 2024, Mercedes-Benz Group AG expects to
post a significantly higher net profit than for the year
2023, primarily as a result of significantly improved
financial income to be brought about by higher profit
transfers from major subsidiaries.
Due to the interrelations between Mercedes-Benz
Group AG and the companies of the Group, the state-
ments in the Outlook chapter therefore reflect our
expectations for the parent company as well.
The financial position, cash flows and profitability of
Mercedes-Benz Group AG depend on the business
developments and the performance of its operating
subsidiaries, in whose development it participates
through profit-and-loss transfer agreements and divi-
dend distributions.
84,256
Outlook
Cash flow from investing activities resulted in a cash
outflow of €0.1 billion in 2023 (2022: cash inflow of
€1.6 billion). On the one hand, the change was due to
lower net cash inflows from the acquisition and dis-
posal of securities within the context of liquidity man-
agement (2023: €0.1 billion; 2022: €1.1 billion). On the
other, capital repayments from subsidiaries resulted in
higher cash inflows in the previous year.
Further Information
Corporate Governance
Combined Management Report
Mercedes-Benz Group AG
75
To Our Shareholders
Contents
Cash flow from financing activities resulted in a cash
outflow of €0.1 billion in the reporting period (2022:
€1.3 billion). The decreasing cash outflow compared to
the previous year was mainly due to the lower repay-
ment of external financing liabilities. However, a lower
cash inflow compared to the previous year resulted
from the financing provided to subsidiaries in connec-
tion with central financial and liquidity management.
Alongside this, the cash outflows increased as a result
of the share buyback transactions in the reporting year
as well as the dividend payment to shareholders of
Mercedes-Benz Group AG.
2,275
84,256
330
32,945
Receivables, securities and other
assets
40,630
Non-current assets
Assets
In millions of euros
Condensed statement of financial position
of Mercedes-Benz Group AG
Liabilities decreased by €8.0 billion to €36.2 billion.
This change is primarily the result of the decrease in
liabilities to subsidiaries of €7.2 billion, which in turn
was caused by lower intra-Group financial liabilities.
In addition, bonds amounting to €0.5 billion were
redeemed.
Provisions decreased by €0.5 billion to €2.6 billion.
This was mainly due to lower provisions for taxes and
the decrease in provisions for contingent losses result-
ing from derivative financial instruments.
Equity increased by €4.6 billion to €41.6 billion in the
reporting year. This increase was a result of the net
profit amounting to €12.1 billion, of which €6.0 billion
was transferred to retained earnings pursuant to Sec-
tion 58 Subsection 2 of the German Stock Corporation
Act (AktG). Equity, in contrast, decreased due to the
dividend payment of €5.6 billion to the shareholders of
Mercedes-Benz Group AG and the ongoing share buy-
back programme. The equity ratio as of 31 December
2023 was 51.8% (31 December 2022: 43.9%). Mercedes-
Benz Group AG held treasury shares of €1.9 billion as of
31 December 2023. Disclosures pursuant to Section 160
Subsection 1 No. 2 of the German Stock Corporation Act
(AktG) are contained in the Annual Financial Statements
of Mercedes-Benz Group AG in accordance with the
statutory requirements.
Cash flow from operating activities resulted in a net
cash outflow of €0.7 billion in the reporting year (2022:
€1.9 billion). The cash outflow primarily resulted from
income tax payments, which increased by €0.9 billion
compared to the previous year. The lower cash outflow
relative to the preceding year can mainly be attributed
to the maturity of short-term time deposits and higher
distributions to subsidiaries and associated companies.
Liquidity and capital resources
Cash and cash equivalents decreased by €7.5 billion
to €6.6 billion. The decrease in cash and cash equiva-
lents of €0.9 billion was influenced by the following
developments:
The Statements of Cash Flows of Mercedes-Benz
Group AG according to HGB include the following
exceptions, which deviate from DRS 21: dividends from
subsidiaries as well as intra-Group offsetting of ser-
vices from corporate functions are presented in Cash
Flow from operating activities even when they are off-
set by means of cash pooling procedures. The same
applies to capital increases and capital repayments
from subsidiaries being presented in Cash Flow from
investing activities. An offsetting recognition of cash
pooling procedures takes place in Cash Flow from
financing activities.
Mercedes-Benz Group AG generally participates in the
risks of its subsidiaries and associated companies in
line with the percentage of its respective equity inter-
est. The risks and opportunities are described in the
Risk and Opportunity Report.
Cash and cash equivalents
Current assets
Other provisions
6,592
39,537
217
80,384
obligations
Provisions for pensions and similar
16,854
5,563
36,967
41,622
Equity
6,049
Distributable profit
21,106
Retained earnings
11,480
3,070
3,070
-83
Calculated value of treasury shares
Capital reserve
Equity and liabilities
Share capital
Prepaid expenses
Total assets
36,617
7,450
44,067
188
Risks may additionally arise from relations with subsidi-
aries and associated companies in connection with
statutory or contractual liability obligations (in particu-
lar with regard to financing), from impairments of finan-
cial assets and from financial receivables from subsidi-
aries and associated companies.
ESG topics as they relate to the environment
include, among other things, the effects of climate con-
ditions and changes. Risks can arise for the Group's
transformation process as a result of changed political
conditions, technological developments and changing
markets. Labour law standards, occupational and prod-
uct safety, product liability and suppliers' compliance
with labour law standards are examples of circum-
stances categorized as social issues that can harbour
risks. The area of governance is concerned with matters
Annual Report 2023 | Mercedes-Benz Group
The previous central management body for sustainabil-
ity the Group Sustainability Board (GSB) — was
replaced by the Group Sustainability Committee (GSC)
during the year under review. This new body meets on a
quarterly basis and is chaired by Renata Jungo Brüngger
in her capacity as Sustainability Coordinator. The com-
mittee, which is made up of representatives from top
management, is responsible for the holistic manage-
ment of ESG topics across all functions, divisions and
regions in line with goals and targets, KPIs and areas of
responsibility. The members of the GSC are also
responsible for addressing sustainability topics in the
functions they manage.
At the end of July 2023, the Supervisory Board decided
to establish at the Board of Management level a
cross-divisional steering and coordination function for
sustainability management throughout the Group.
Renata Jungo Brüngger then took over this function of
Sustainability Coordinator on 1 August 2023. Her execu-
tive division was renamed Integrity, Governance & Sus-
tainability (previously Integrity and Legal).
The Mercedes-Benz Group manages the work in the
strategic areas of action alongside other tasks -
by means of an internal reporting process that uses
detailed scorecards. This process shall be supported
by clear lines of responsibility in the management and
organizational structures used at all of the divisions.
-
Managing sustainability
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
78
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In addition, the sustainability issues resulting from the
analysis were reviewed with regard to their impact on
financial position, profitability and business develop-
ment. On this basis, the topics for the Non-financial
Declaration were defined. For this reason, not all strate-
gic areas of action are reflected in this Non-financial
Declaration.
The analysis consists of several components: a desk
analysis, an international online survey as well as inter-
views with internal and external experts, an assessment
of the impact of the Mercedes-Benz Group's business
activities on the environment and society (inside-out)
as well as an analysis of the external influences on the
Mercedes-Benz Group's business activities (out-
side-in-dimension).
1 Further information on sales of plug-in hybrids and all-electric vehicles can be found in
the chapter Environmental Issues, Electrified Product Range
This materiality assessment addressed the six strategic
areas of action as well as further potentially relevant
sustainability topics and trends. A total of 17 topics
were evaluated, and these were further divided into
sub-topics.
In addition, Sustainability Coordination Meetings
(SCMs) are held in which the GSC discusses sustainabil-
ity topics and issues with representatives from all rele-
vant divisions and specialist units. SCMs are conducted
regularly every 14 days and are chaired by the Sustaina-
bility Competence Office (SCO). The SCO itself provides
advice to the specialist units and helps them complete
the tasks assigned to them by the Board of Manage-
ment or the GSC. The SCO also monitors the progress
made in the six areas of action and the three enablers
defined in the sustainable business strategy. The
results of these analyses during the year are reported
to the GSC and the Board of Management of Mercedes-
Benz Group AG in the form of detailed scorecards at
least twice a year.
The Mercedes-Benz Group's internal principles and poli-
cies are founded on this international frame of refer-
ence and other international principles, including the
Core Labour Standards of the International Labour
Organization (ILO), the Organisation for Economic
Co-operation and Development (OECD) Guidelines for
Multinational Enterprises and the UN Guiding Principles
on Business and Human Rights.
11,480
such as stipulations arising from competition law and
measures to prevent corruption, for example, which can
lead to risks.
Sustainability-related risks and opportunities are an
integral component of the Group-wide risk and oppor-
tunity management system. In identifying these risks
and opportunities, the Mercedes-Benz Group is guided
by the topics identified by the materiality assessment
and thus includes the areas of action of the sustainable
business strategy, for which concrete goals have been
assigned. These risks and opportunities are understood
to be conditions, events or developments involving ESG
factors, the occurrence of which may have an actual or
potential impact on the Mercedes-Benz Group's profita-
bility, liquidity, capital resources, financial position and
reputation. This further includes any risks and opportu-
nities whose occurrence may have a positive or nega-
tive impact on the economy, the environment or society.
Detailed information on, among other things, the risk
and opportunity management system and the associ-
ated processes can be found in the Risk and Opportu-
nity Report chapter of this Annual Report.
Risk and opportunity management
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
79
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
benz.com/remuneration-bom)
Remuneration for the Board of Management and execu-
tives was adjusted in 2023. The changes were made in
order to reduce the complexity of the remuneration
system, create transparency and ensure an integrated
approach with regard to the incentives used to promote
sustainable business operations at the Group. In addi-
tion to financial targets, the variable remuneration for
members of the Board of Management and Level 1-3
executives, as well as for certain Level 4 managers,
contains short-term transformation targets relating to
CO2 emissions, safety innovations and ESG stakeholder
management. In 2023, the variable components also
included long-term sustainability targets relating to the
share of unit sales accounted for by plug-in hybrid elec-
tric vehicles (PHEVS) and all-electric vehicles (BEVS)¹,
the inspection of high-risk production materials and
measures for ensuring diversity and inclusion. The vari-
able remuneration components also continue to include
non-financial targets relating to customers, employees
and integrity. (Further information group.mercedes-
The Mercedes-Benz Group also uses the ten principles
of the UN Global Compact (UNGC) as a fundamental
guide for its business activities. As a founding member,
it is strongly committed to the UN Global Compact.
The Group conducted a comprehensive materiality
assessment in 2021 in order to determine which sus-
tainability topics are particularly relevant for the
Mercedes-Benz Group and its stakeholders. The analy-
sis was completed in summer 2022 and, following a
review of the areas of action, is applicable for the year
2023
Materiality assessment
The Mercedes-Benz Group has defined three principles,
or enablers, that are crucial for achieving success in the
six areas of action: integrity, people and partnerships.
-
The Mercedes-Benz Group aims to create value that is
sustainable economically, environmentally and
socially. This is one of the core principles of the Group.
It applies not only to the Group's own products and
production sites but also to its entire upstream and
downstream value chain. The Mercedes-Benz Group
translates this approach into its sustainable business
strategy and thus firmly embeds its sustainability issues
into its daily business. Among other things, the goal is
to fulfil the demands and expectations of the stake-
holders i.e. customers, investors, employees, busi-
ness partners, non-governmental organizations (NGOs)
and society as a whole.
-
Sustainability as a driver of change
The Mercedes-Benz Group integrates the Non-Financial
Declaration into the Combined Management Report of
this Annual Report. Each year, it examines whether and
how the integration of financial and non-financial key
figures should be further developed. For the year under
review, it was decided to continue to publish more
in-depth information about sustainability at the
Mercedes-Benz Group in a separate Sustainability
Report for the previous reporting year. It will be availa-
ble on the Group's website on the Internet (additional
information group.mercedes-benz.com/sustainabil-
ity). Further information on the business model of the
Mercedes-Benz Group can be found in the chapter Cor-
porate Profile.
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
As described in the Corporate Profile, the Combined
Management Report includes the combined Non-Finan-
cial Declarations of Mercedes-Benz Group AG and of
the Mercedes-Benz Group. The Mercedes-Benz Group
publishes the Non-Financial Declaration in accordance
with the provisions of Sections 315b, 315c in connection
with Sections 289b-289e of the German Commercial
Code (HGB). The Non-Financial Declaration contains the
main information on the aspects of environmental,
employee and social issues, combating corruption and
bribery, and respect for human rights. The information
provided in this declaration is presented in conformity
with the GRI Standards of the Global Reporting Initia-
tive, insofar as this complies with applicable law. Some
aspects are presented in accordance with internal
guidelines and definitions. Insofar as not otherwise
specified, all information concerning the Mercedes-
Benz Group refers to the Consolidated Group in the
context of the Consolidated Financial Statements.
Non-Financial Declaration
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
76
To Our Shareholders
Contents
One of the most important goals at the Mercedes-Benz
Group is decarbonization, which the Group has made a
firm component of its sustainable business strategy.
The Group's strategy includes the Ambition 2039 target,
which aims to make the entire Mercedes-Benz new
vehicle fleet net carbon-neutral¹ across all stages of the
value chain by 2039. Mercedes-Benz Cars and
Mercedes-Benz Vans are creating the necessary condi-
tions to become all-electric. The pace of transformation
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Human rights: The Mercedes-Benz Group assumes
responsibility and is committed to safeguarding
human rights along its own automotive value chain.
Data responsibility: Customer trust and the respon-
sible handling of customer data are the basis for sus-
tainable digital products and services.
Traffic safety: The Mercedes-Benz Group is working
to make its vision of accident-free driving a reality as
it develops automated driving systems while also tak-
ing social and ethical issues into account.
More sustainable urban mobility: The Mercedes-
Benz Group wants to contribute to the improvement
of the quality of life in cities through mobility and
transport solutions.
Resource conservation: The Mercedes-Benz Group
wants to decouple resource consumption from busi-
ness volume growth.
Climate Change mitigation and air quality: Plans
call for the Mercedes-Benz new vehicle fleet to be net
carbon-neutral across the entire value chain by 2039
and to no longer have any impact on NO2 levels in
urban areas by 2025.
The Mercedes-Benz Group's sustainable business strat-
egy takes into account the regulatory requirements that
are relevant to its business operations, as well as rec-
ognized international frameworks, the expectations of
external and internal stakeholders, and global trends.
The Mercedes-Benz Group also conducts materiality
assessments on a regular basis in order to identify stra-
tegic areas of action. Here the Mercedes-Benz Group
bases its activities on the United Nation's (UN) 17 Sus-
tainable Development Goals (SDGs) — especially SDGs
8 and 9 and 11 to 13 among other factors, and in the
process concentrates on the areas where it can create
value added. It discusses the material areas of action
with the involvement of relevant stakeholder groups.
During the year under review, the Group confirmed the
six strategic areas of action shown below and, where
necessary, further specified the strategic ambitions
associated with these areas of action.
Furthermore, pursuant to Section 133 Subsections 1 and
3 of the German Transformation Act (UmwG), Mercedes-
Benz Group AG is jointly and severally liable for liabili-
ties of €4.7 billion that were transferred to Mercedes-
Benz AG and Daimler Truck AG in 2019. According to the
current appraisal, due to the assessment of the credit
ratings of Mercedes-Benz AG and Daimler Truck AG, an
actual cash outflow for Mercedes-Benz Group AG is
considered to be unlikely.
The Mercedes-Benz Group acts in line with the sustain-
able business strategy adopted by the Board of
Management of Mercedes-Benz Group AG in 2019 with
the agreement of the Supervisory Board. Sustainability
issues are an integral part of the business strategy.
-
is determined by market conditions and customer
requirements. Mercedes-Benz Cars and Mercedes-Benz
Vans are getting ready to be able to meet the various
customer requirements, be it an all-electric drivetrain or
an combustion engine into the 2030s if necessary.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
77
Areas of action and the foundations of sustainability
40,001
To Our Shareholders
Further Information
91,908
93,435
3,022
3,012
24,408
25,274
1,244
1,080
6,083
5,504
2,558
3,011
22,419
23,226
1,936
10,486
1,907
10,036
0
102
9,025
9,232
51,964
51,668
7,766
7,853
42,126
41,421
1,259
1,379
9,838
10,247
0
98
657
25,010
23,894
1,276
thereof assets held for sale
Segment assets
Other segment assets
Trade receivables
Inventories
Property, plant and equipment
Intangible assets
In millions of euros
Derivation of net assets of the automotive segments
The following table shows the derivation of net
assets for the segments Mercedes-Benz Cars and
Mercedes-Benz Vans. They relate to the operating
assets and liabilities for which the automotive
segments are responsible.
Net assets
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
ESG-related risks and opportunities associated with the
Mercedes-Benz Group's own business activities, busi-
ness relationships and products and services, and
which are very likely to have a serious negative impact
on the non-financial aspects in accordance with Sec-
tions 315c and 289c of the German Commercial Code
(HGB), are not currently apparent. Risks and opportuni-
ties in connection with the recommendations of the
Task Force on Climate-Related Financial Disclosures
(TCFD) are environment factors and are thus also iden-
tified and assessed as part of the risk management pro-
cess. (Further information group.mercedes-benz.
com/investors/share/esg)
Contents
Annual Report 2023 | Mercedes-Benz Group
Trade payables
Other segment liabilities
Segment liabilities
thereof liabilities held for sale
1,476
13,988
15,537
2022
2023
2022
2023
0
At 31 December
Mercedes-Benz Vans
Mercedes-Benz Cars
Further Information
Consolidated Financial Statements
Corporate Governance
71
Net assets
At 31 December
18
41,767
39,944
-779
-1,407
-1,400
1,422
1,415
Net profit
General administrative expenses
Other operating income
Operating profit/loss
Financial income
Income taxes
Cost of sales
Revenue
In millions of euros
Condensed statement of income of
Mercedes-Benz Group AG
The income tax expense amounted to €2.8 billion
(2022: €2.5 billion). The rise despite a decrease in taxa-
ble operating profit within the tax group is mainly expli-
cable by the last use of tax-loss carryforwards in 2022.
Financial income increased by €3.8 billion to €15.6 bil-
lion. The increase in the financial income with respect
to the previous year is primarily due to higher income
from investments in subsidiaries and associated com-
panies. This was the result in particular of higher profit
transfers from subsidiaries, lower impairments of sub-
sidiaries and investments and higher income from asso-
ciated companies. Moreover, the rise in interest rates
led to an increase in financial income.
Other operating income totalled €0.02 billion (2022:
€0.3 billion). Other operating income from the previous
year included income from the sale of approximately 5%
of the shares of Daimler Truck Holding AG to Mercedes-
Benz AG and their subsequent transfer to the
Mercedes-Benz Pension Trust e. V.
Receivables, securities and other assets decreased
compared with 31 December 2022 by €3.7 billion to
€32.9 billion. This is the result of the decrease in receiv-
ables from subsidiaries of €2.7 billion, which in turn was
caused by lower intra-Group financial receivables. In
addition, the other assets decreased by €0.8 billion, in
particular due to the maturity of fixed-term deposits.
-752
20
-744
293
-444
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Group AG
74
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Non-current assets increased by €0.6 billion to
€40.6 billion in the course of the year. This was due to
the increase of €0.6 billion in financial assets.
6,049
-3,314
-6,049
Transfer to other retained earnings
12,098
-2,788
11,785
15,630
Distributable profit
31 Decem- 31 Decem-
ber 2023 ber 2022
Total assets of €80.4 billion were below the level of the
previous year (2022: €84.2 billion).
5,563
The Annual Financial Statements of Mercedes-Benz
Group AG are compiled in accordance with the provi-
sions of the German Commercial Code (HGB) and the
provisions of the German Stock Corporation Act (AktG).
The Consolidated Financial Statements are prepared in
accordance with the International Financial Reporting
Standards (IFRS), as adopted by the European Union
(EU). This results in some differences with regard to
recognition and measurement methods, primarily in
connection with provisions, financial instruments, the
leasing business and deferred taxes.
Mercedes-Benz Group AG is closely linked with
Mercedes-Benz AG and functions as an operating busi-
ness entity that defines the Group's strategy. It also
makes strategic decisions for business operations and,
as the Group's parent company, ensures the effective-
ness of organizational, legal and compliance-related
functions throughout the Group.
Mercedes-Benz Group AG is the parent company of
the Mercedes-Benz Group and has its headquarters in
Stuttgart. In addition to reporting on the Mercedes-
Benz Group, the development of Mercedes-Benz
Group AG in the year 2023 is also described in this
section.
Condensed version in accordance with the German Commercial Code (HGB)
Mercedes-Benz Group AG
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Group AG
72
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1,011
1,254
The financial statements of Mercedes-Benz Group AG,
for which KPMG AG Wirtschaftsprüfungsgesellschaft
has issued an unqualified audit opinion, are transmitted
electronically to the body responsible for managing the
company register so that the statements can be
entered into the company register. The financial state-
ments can be viewed on the website of the company
register as well as on the Mercedes-Benz Group web-
site at group.mercedes-benz.com/investors/reports-
news/annual-reports/2023.
The economic situation of Mercedes-Benz Group AG
mainly depends on the development of its subsidiaries.
Mercedes-Benz Group AG participates in the operating
profits and losses of its subsidiaries through dividend
distributions and profit-and-loss transfers. Its eco-
nomic situation therefore corresponds with that of the
Mercedes-Benz Group, which is described in the chap-
ter Overall Assessment of the Financial Year.
Net profit or loss is the key performance indicator for
Mercedes-Benz Group AG.
-2,464
8,877
2022
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Group AG
Financial position
73
Contents
Annual Report 2023 | Mercedes-Benz Group
General administrative expenses amounted to
€0.8 billion (2022: €0.8 billion).
Cost of sales amounted to €1.4 billion (2022: €1.4 bil-
lion) and primarily comprises expenses incurred for the
services provided to companies of the Group.
Mercedes-Benz Group AG generated revenue of
€1.4 billion, primarily from the provision of services to
companies of the Group (2022: €1.4 billion).
Net profit amounted to €12.1 billion, which was signifi-
cantly higher than the figure of €8.9 billion recorded in
the previous year and corresponds to the expected
range of the previous year's Outlook chapter. The earn-
ings of Mercedes-Benz Group AG in the year under
review were particularly affected by a higher level of
financial income.
Profitability
To Our Shareholders
Sustainable investment
-
analysts on the latest developments relating to its sus-
tainable business strategy.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
80
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
The framework is based on the Green Bond Principles
(the voluntary process guidelines of the International
Capital Market Association - ICMA) and the Green
Loan Principles, which are the joint voluntary process
guidelines of the Loan Market Association (LMA) and
the Asia Pacific Loan Market Association (APLMA). The
updated framework has also received certification with
the highest rating "Dark Green" - from the Centre for
International Climate and Environmental Research
(CICERO), which also issued an “Excellent” rating for the
governance structure defined in the framework.
-
The Mercedes-Benz Group operates as an investor itself
when it invests the company's pension assets. ESG
criteria are also playing an increasingly important role
in this area.
For German pension assets, the following objectives
have been defined for the consideration of ESG criteria:
creation of transparency in dealing with sustainability
aspects, utilization of opportunities from sustainable
developments and the appropriate consideration of
sustainability risks. For the majority of German pension
assets the investments are made by asset managers to
whom the Group issues individual mandates.
The implementation of the Mercedes-Benz Group's sus-
tainable business strategy requires massive amounts of
investment. For this reason, one of the Group's goals is
to ensure that its securities are viewed even more
strongly by the capital market as a sustainable invest-
ment. To this end, the Mercedes-Benz Group maintains
a continuous dialogue with players on the capital mar-
ket as representatives of investors in equity and debt.
Various platforms are used here. For example, the sec-
ond digital ESG Conference was one of the formats
used by the Mercedes-Benz Group in the 2023 report-
ing year to provide information to investors and
-
In coordination with the Investment Committees, the
Mercedes-Benz Group pays, as part of its sustainability
concept, increased attention to the consideration and
transparency of sustainability aspects in the investment
process. When the company makes sustainable invest-
ments, it also takes the associated risk and return
aspects into account. For liquid asset classes, the
With regard to ESG communication, the Investor Rela-
tions & Treasury unit at Mercedes-Benz Group AG
works closely together with the company's in-house
sustainability departments and is also integrated into
the relevant committees (e.g. the GSC). This is how
the company is responding to the fact that sustainable
investment has become a central investment strat-
egy in particular for institutional investors, who set
especially high standards of transparency for external
reporting according to ESG criteria.
During the year under review, the Group updated its
Green Finance Framework from 2020 in order to posi-
tion the Mercedes-Benz Group even more effectively as
a company worthy of sustainable investment and to
enable it to utilize ESG-based capital for its business
development. This framework makes it possible for the
Group to finance investment targeted at the develop-
ment, production and customer financing of all-electric
vehicles through bonds and loans, for example. It was
on this basis that the Mercedes-Benz Group once again
issued bonds with terms of three and eight years in May
2023.
By qualified and experienced experts and, if possible,
efficient and reliable processes, systems, methods
and controls the Mercedes-Benz Group wants to
ensure that the tax obligations by the Group compa-
nies are met and integrity standards are maintained.
The Group's tax strategy operates according to the
following principles in particular:
In line with the principle of being a good corporate
tax citizen (i.e. fulfilling its responsibility as a tax-
payer), the Mercedes-Benz Group conducts legal,
proactive and non-aggressive tax planning activities
on the basis of operational considerations ("tax
follows business"). The Mercedes-Benz Group also
strives to work even more cooperatively, transpar-
ently and constructively with the tax authorities.
In this process, it maintains its legal standpoints
and defends its interests wherever it believes such
actions are appropriate and legitimate.
Tax obligation
pension assets, country-specific requirements regard-
ing consideration of ESG criteria apply.
The measures we have implemented as part of our sus-
tainability concept are regularly assessed and adapted
to current developments. Mercedes-Benz Pensions-
fonds AG takes into account adverse effects on sustain-
ability factors within the framework of the Sustainable
Finance Disclosure Regulation. For investing foreign
Mercedes-Benz Group only works with investment man-
agers who have signed the UN Principles for Responsi-
ble Investment (PRI). The use of a negative list is
intended to exclude investing in companies and coun-
tries that do not fulfil the Group's core requirements. By
implementing ESG-themed investments, the Mercedes-
Benz Group utilizes the opportunities offered by sus-
tainable developments. Furthermore, the Mercedes-
Benz Group focuses on gradually integrating
sustainability aspects via benchmarks or sustainabil-
ity performance indicators, for example into its man-
dates. To this end, the Group included sustainability
targets in some of its mandates with external asset
managers in 2023 and also firmly incorporated these
goals and targets into its investment guidelines. Taking
into account the available data coverage, the Group
was thus able to achieve a lower carbon footprint for its
asset classes equities and corporate bonds of the
German pension assets compared to the aggregated
benchmark. Whereas the aggregated benchmark is
determined by the indices awarded to the asset manag-
ers, the carbon footprint is calculated based on exter-
nally bought ESG data. In addition, the Mercedes-Benz
Group also established an internal reporting system for
various sustainability metrics for its German pension
assets.
The Mercedes-Benz Group views itself as a responsible
company that endeavours to meet all of its global tax
obligations and use public funding responsibly. In this
way, the Group can also fulfil its social and ethical
responsibilities.
2030
The increasing demand for mobility is also leading to an
increase in the worldwide consumption of resources
with effects on the environment and society. That's why
the goal of the Mercedes-Benz Group is to increasingly
decouple its consumption of resources from the growth
of its production volume.
3 As compared to 2018.
2 As compared to the average for 2013/2014.
1 In addition to the production sites of the consolidated subsidiaries, the production sites
of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir,
Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM
s.r.o. (Most, Czech Republic).
2030
- Cars: -35%
2030
Target horizon
- Vans: -30%
The consumption of resources in production plays an
important role in the environmental compatibility of
vehicles. For this reason, the Mercedes-Benz Group is
working continuously to make production more efficient
and more environmentally compatible. In order to
improve its environmental footprint in production
Reduce total waste volume per vehicle³
2030
operations, the Group has set reduction targets for
energy, water and waste at all of its production sites
worldwide.
The Mercedes-Benz Group regularly measures and
assesses essential energy consumption in order to
identify and take advantage of savings potential in the
areas of production and infrastructure. An innovative
energy management software system has been intro-
duced at Mercedes-Benz Cars and Mercedes-Benz Vans
in order to create transparency with regard to energy
procurement and energy consumption.
In order to ensure efficient, high-quality, and environ-
mentally friendly manufacturing operations, the Group
has established an environmental management system
certified in accordance with ISO 14001 at its production
sites around the world. All German manufacturing loca-
tions and the two European production sites in
Kecskemét, Hungary, and Vitoria, Spain, have also been
validated in accordance with EMAS. In addition, the
German production sites have had energy management
systems conforming to DIN EN ISO 50001 in place since
2012, and the Group has these systems certified every
three years. The Mercedes-Benz Group is currently also
implementing ISO 50001 systems at a number of indi-
vidual sites outside Germany, for example in Kecskemét
in Hungary, Jawor in Poland and Vitoria in Spain. In
addition, during the year under review the Mercedes-
Benz Group also moved ahead with the introduction on
an international scale of energy management systems
certified in accordance with ISO 50001. New manage-
ment systems were implemented in Pune, India, and
Sebes, Romania, for example.
The effectiveness of the management systems is moni-
tored by external auditors as part of the certification
process (ISO 14001, EMAS, ISO 50001), as well as in the
environmental sector by internal environmental risk
assessments (environmental due diligence process).
The Group also has a standardized process in place for
reviewing and assessing its consolidated production
sites every five years. The results of this process are
reported to the respective plant and company manage-
ment so that any necessary optimizations can be car-
ried out.
Reduction of energy consumption
The optimization of energy efficiency enables the
Mercedes-Benz Group to decrease its energy consump-
tion and conserve resources, while reducing the CO2
emissions of its production processes.
- Vans: -85%
In its effort to save energy, the Mercedes-Benz Group
relies on the efficient management of energy supply
and building technology systems for example by
means of needs-based management of local lighting, air
volume flow regulation in ventilation and exhaust air
-
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In order to achieve its goals, the Group uses Group-
wide resource management with its environmental and
energy management systems to ensure that appropriate
measures are developed, adapted to challenges where
necessary, and monitored.
- Cars: -82%
- Cars: -43%
- Vans: -28%
1 In addition to the production sites of the consolidated subsidiaries, the production sites
of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir,
Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM
s.r.o. (Most, Czech Republic).
2 Scope 1 emissions are direct CO2 emissions from sources for which the company is
directly responsible or that it directly controls.
3 Scope 2 emissions are indirect CO2 emissions from purchased energy such as electricity
and district heating that are generated externally but consumed by the company.
4 Compared to 2018.
The Mercedes-Benz Group formulates the holistic goal
of making the mobility of the future more sustainable in
its sustainable business strategy. One of the most
important targets is the reduction of greenhouse gas
emissions. The Mercedes-Benz Group's goal is to
achieve carbon-neutral production at its own produc-
tion plants by 2039. This is to be achieved by covering
energy consumption with 100% renewable energies.
In this way, the Mercedes-Benz Group intends to act in
accordance with the Paris Agreement on climate
change.
As it moves towards achieving this goal, CO2 emissions
are to be consistently reduced or, wherever possible,
completely eliminated. In order to accomplish this, the
Mercedes-Benz Group is relying on the purchase of
green electricity, the expansion of renewable energy
sources at its locations and the implementation of a
sustainable heating supply system. The Mercedes-Benz
Group plans to reduce CO2 emissions at its own plants
(Scope 1 and Scope 2) by 80% by 2030 compared to
2018. Production at all manufacturing locations oper-
ated by the Mercedes-Benz Group has been net car-
bon-neutral regarding Scope 1 and Scope 2 since 20221.
Since 2022, all CO2 emissions (Scope 1 and Scope 2) at
these production facilities that have been as yet una-
voidable have been offset by means of carbon offsets
from qualified climate protection projects¹. Remaining
emissions are released in particular by the combined
heat and power facilities that use natural gas to pro-
duce electricity and heat.
For the procurement of green electricity, the Mercedes-
Benz Group in Germany currently relies on a mix of
solar, wind and hydroelectric power for external elec-
tricity purchases. The Mercedes-Benz Group is also tak-
ing measures to expand the use of energy from renewa-
ble sources at its locations.
In 2022, the Mercedes-Benz Group already achieved
the goal of reducing CO2 emissions at its own plants
(Scope 1 and 2) by 50% by 2030 compared to 2018 (tar-
get confirmed by the Science Based Targets initiative,
an initiative to set science-based climate targets)².
During the reporting year, Mercedes-Benz Cars and
Mercedes-Benz Vans employed various measures that
enabled them to reduce CO2 emissions in production
(Scope 1 and Scope 2) from 5391 thousand tons in 2022
to 511¹ thousand tons in the year under review³, and
thus by 5%¹
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
2 In 2018 the Scope 1 emissions amounted to 650,000 tons of CO2, while the
Scope 2 emissions totalled 1,040,000 tons of CO2.
3 In addition to the production sites of the consolidated subsidiaries, the production sites
of the following non-consolidated subsidiaries are included: Star Transmission srl
(Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and
STARCAM s.r.o. (Most, Czech Republic).
Reduce waste volume for disposal per vehicle³
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Consolidated Financial Statements
Further Information
Resource conservation in production
Target
Resource conservation in production¹
Reduce energy consumption per vehicle²
Consolidated Financial Statements
- Vans: -25%
Reduce water consumption per vehicle²
- Cars: -33%
Contents
Further Information
For years now, the Mercedes-Benz Group has been
using its own accounting method, which focuses in par-
ticular on fresh water, to monitor and assess its water
consumption. On this account, water consumption per
vehicle at Mercedes-Benz Cars decreased 8%¹ as com-
pared to 2022. Mercedes-Benz Vans was able to reduce
water consumption per vehicle by 6%¹ compared to the
previous year².
As a result of the implementation of these and other
energy efficiency measures, energy consumption
(incl. electricity, natural gas, district heat, heating oil
and liquefied petroleum gas) per vehicle at Mercedes-
Benz Cars in the reporting year was 12%¹ lower than in
2022. Due to similar effects, energy consumption per
vehicle at Mercedes-Benz Vans fell by 8%¹ compared to
the previous year².
Ongoing
Training and further education
Ensure a high-quality and a needs-based professional portfolio
for training and dual study programmes
Ongoing
Continuously develop the qualification programme for employ-
ees
Ongoing
Diversity and inclusion
Improve inclusion for all employees in the Group
Ongoing
Increase the proportion of women in senior management posi-
tions¹ to 30%
2030
Occupational health and safety
Enable employees to work in a healthy and safe environment
Strengthen a sustainable safety culture by developing and com-
municating binding rules of conduct
Ongoing
Use a globally uniform accident documentation system and
introduce it at the German production sites
Ongoing
Target
achieved
1 Management Level 3 and up - Mercedes-Benz Group worldwide (headcounts, fully con-
solidated companies).
HR work in the transformation
As a result of electrification, digitalization and the
increasing use of powerful artificial intelligence (AI)
systems, the job profiles of employees are also chang-
ing. Working processes and structures are changing just
as fundamentally as employee tasks and cooperation
within the Mercedes-Benz Group.
The aim of the Mercedes-Benz Group is to manage the
upcoming changes for its total of 166,056¹ employees
worldwide in a responsible, socially compatible and
future-oriented way. It meets the challenges and
requirements of the personnel transformation with a
corresponding personnel strategy, among other things.
The Mercedes-Benz Group continuously invests in the
qualification of its employees, is constantly expanding
its range of further qualification courses and at the
same time recruits new talent with appropriate skills
profiles. In order to attract such employees and retain
them for the long term, the Mercedes-Benz Group takes
measures to create and further enhance an attractive
and future-oriented working environment for its
employees, among other ways by offering them flexible
forms of work. Particularly in challenging times,
respectful and trust-based cooperation between the
workforce and the management is extremely important.
The Mercedes-Benz Group therefore promotes a diverse
and inclusive corporate, leadership and cooperative
1 Status 31 December 2023: active employees (employees including holiday workers,
without thesis writers, interns, working students, PhD students, senior experts and
trainees) of Mercedes-Benz Group
culture. At the same time, the Group also wants to
provide its employees with a healthy and safe working
environment.
Firmly establishing work and social standards
The Mercedes-Benz Group is committed to fulfilling its
social responsibilities. As a participant in the UN Global
Compact, the Mercedes-Benz Group AG has committed
itself, among other things, to respecting key employee
rights. Based on the labour and social standards of the
International Labour Organization (ILO), Mercedes-Benz
Group AG revised and supplemented its own Group-
wide principles of social responsibility in 2021 and pub-
lished them as the Principles of Social Responsibility
and Human Rights.
Reported violations of the Integrity Code or other inter-
nal Group regulations, as well as legal regulations, that
pose a high risk to the Mercedes-Benz Group and its
employees or to other people are followed up by the
whistleblowing system BPO (Business & People Protec-
tion Office).
Responsible transformation
Depending on their product portfolio and the size of
their operations, the Mercedes-Benz Group sites, and
thus the company's various groups of employees, are
affected to different degrees by digitalization and the
electrification of the automotive industry.
Support and further develop flexible and modern working time
models
systems and load-dependent volume control of the air
supply in paint dryer units.
Ongoing
Ongoing
Efficient water utilization
The Mercedes-Benz Group developed the "Storm Water
Protection Pollutant Discharge Elimination" standard
all the way back in 2014 so that its sites could initiate
targeted water protection measures. It contains guide-
lines on how rainwater management at production sites,
branches and workshops can prevent and reduce
potential pollution from previously contaminated rain-
water. In 2022, the Mercedes-Benz Group adopted a
Water Policy so that it might continue to effectively
contribute to the creation of a more sustainable water
management system. In addition, the Group set itself
the goal of no longer using drinking water in production
operations at any Mercedes-Benz manufacturing loca-
tions worldwide. In order to further minimize fresh
water consumption, the Mercedes-Benz Group also
intends to use hybrid cooling systems. The Group
launched an initial project in this area in Sindelfingen,
Germany, in June 2023 in cooperation with the munici-
pal wastewater management and disposal company.
The goal here is to employ a closed cycle to largely
replace the fresh water used in production with treated
municipal wastewater.
Less waste
The goal of the Mercedes-Benz Group is to keep the
waste volumes generated in its production operations
as low as possible. To this end, the Group seeks to
continuously reduce overall waste, including waste for
disposal. As it does so, the Mercedes-Benz Group's top
priority is to prevent waste.
In order to reduce total waste, it is important to ensure
transparency concerning the waste value streams
and to correctly separate the various types of waste.
The Mercedes-Benz Group generally works with
licensed and regularly certified waste disposal compa-
nies to ensure the professional disposal of our waste
materials in accordance with legal requirements.
Furthermore, it continues to reduce waste such as clip-
pings, sands, filter media and slurries through the
implementation of new or optimized production pro-
cesses.
The Mercedes-Benz Group also works with some suppli-
ers in order to avoid waste. For example, load carriers
and the materials used for securing loads and cargo are
now, where possible, reused in a closed cycle, as are
steel barrels (e.g. for thermal conductive paste, adhe-
sives and lubricants).
In the reporting year, Mercedes-Benz Cars reduced the
total amount of waste per vehicle by 9%¹ and the
amount of waste for disposal per vehicle by 42%¹ com-
pared to 2022. At Mercedes-Benz Vans, total waste per
vehicle increased by 16%¹ as compared to 2022, while
waste volume for disposal per vehicle fell by 21%¹ dur-
ing the reporting year².
2030
2 In addition to the production sites of the consolidated subsidiaries, the production
sites of the following non-consolidated subsidiaries are included: Star Transmission srl
(Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and
STARCAM s.r.o. (Most, Czech Republic).
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Further Information
Employee issues
Target
Target
horizon
HR work in the transformation
Shape the transformation of the Mercedes-Benz Group for its
employees in a responsible, socially acceptable and future-ori-
ented manner
Ongoing
Ensure lasting constructive cooperation between company and
employee representatives
Ongoing
Further develop the "People Principles" and embed them in the
Group; create a common understanding of an agile and innova-
tive leadership culture in the transformation process
Ensure market-conformant salary structures through compliance
with the Corporate Compensation Policy
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
2030
Target horizon
2039
Target horizon
Increase the proportion of electrified vehicles in the
fleet of new vehicles at Mercedes-Benz Vans to more
than 50%¹
Offer an electrified 4 alternative for every model from
Mercedes-Benz Vans
Electrify all new vehicle architectures¹,3
Offer an electrified³ variant for every model from
Mercedes-Benz Cars¹
Increase the proportion of electrified³ vehicles in the
fleet of new vehicles at Mercedes-Benz Cars to as
high as 50%¹
Reduction of the CO2 emissions per car in the new
vehicle fleet up to 50% along all stages of the value
chain1,2
A fleet of new Mercedes-Benz vehicles that is net
carbon-neutral along all stages of the value chain
Climate protection for vehicles
Climate protection
Target
Mercedes-Benz Cars and Mercedes-Benz Vans are tak-
ing the necessary steps to go all-electric. The pace of
transformation is determined by market conditions and
customers. Mercedes-Benz Cars and Mercedes-Benz
Vans plan to be in a position to cater to different cus-
tomer needs, whether it's an all-electric drivetrain or a
combustion engine, until well into the 2030s. Climate
protection is a key cornerstone of the Mercedes-Benz
Group's sustainable business strategy. As early as
November 2021, the Mercedes-Benz Group under-
scored its commitment to this transformation during
the COP26 UN Climate Change Conference.
The Mercedes-Benz Group believes that the complete
electrification of its product range is the most impor-
tant lever of making its entire new vehicle fleet net car-
bon-neutral across all stages of the value chain by 2039.
The Mercedes-Benz Group is continuing to seek to
shape the transformation to an all-electric and soft-
ware-driven future. The Mercedes-Benz Group remains
focused and tactically flexible in terms of its strategy.
Accordingly, the Mercedes-Benz Group has adjusted
some of its electrification targets and target corridors
based on market conditions and customer require-
ments.
Climate protection for vehicles
In order to achieve this goal, the Mercedes-Benz Group
is transforming the products and services that are at
the heart of its business activities. The company also
takes into account climate protection in all of the life
cycle phases of its automobiles from the supply
chain and its own manufacturing operations to the use
and disposal of the vehicles.
As a player in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement. It is
convinced of the goals of the agreement and is working
to implement them in all of its divisions. About one fifth
of all greenhouse gas emissions in Europe are produced
as a result of the transport of people and goods on
streets and roads. The Mercedes-Benz Group is taking
deliberate measures to counteract this trend and has
made climate protection a core element of its business
strategy. The Group's ambition is to make the entire
Mercedes-Benz new vehicle fleet net carbon-neutral¹
across all stages of the value chain by 2039.
By the end
of the decade
Environmental issues
In the second half
of the decade
In the second half
of the decade
Responsibilities
Further Information
Consolidated Financial Statements
Corporate Governance
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Contents
Annual Report 2023 | Mercedes-Benz Group
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
4 All-electric vehicles
3 Plug-in hybrids and all-electric vehicles
1 The pace of transformation is determined by market conditions and customers.
2 Compared to 2020 (value chain stages: procured goods, production, logistics, fuel and
energy generation, driving operation, disassembly and treatment processes)
By the end of
the decade
Target achieved
In the second half
of the decade
Further Information
Consolidated Financial Statements
Corporate Governance
Sustainability in the supply chain
The Mercedes-Benz Group has established a Tax Com-
pliance Management System (Tax CMS) in order to
ensure effective tax compliance throughout the Group.
The Tax CMS is a separate sub-unit of the general intra-
Group Compliance Management System. The Tax CMS
also operates an active tax-risk management system
that is consistently applied throughout the Group in
order to monitor and check whether tax obligations are
being fulfilled, and also to support those responsible
for ensuring such fulfilment. Another goal here is to
identify and reduce tax risks at the Group, and thus the
associated personal risks that may be faced by the
employees active in this area. The system includes
numerous measures - for example, continuous moni-
toring of tax risks and the incorporation of tax risk
issues into the internal control system and the Group-
wide risk management process in line with the compa-
ny's risk management policy. Based on the Code of
Conduct the Mercedes-Benz Group did not become
aware of any material violations during the reporting
year.
The Code of Conduct stipulates that all intentional vio-
lations of external and/or internal tax guidelines must
be reported and investigated. The same applies to any
failure to make corrections to procedures performed in
an erroneous manner, as outlined in our internally valid
Treatment of Violations Policy. Further information can
be found in the Integrity and Compliance chapter.
Regular information to the Supervisory Board on risks
and opportunities as well as current regulatory issues
Regular communication between CFO and
Head of Taxes
The tax policies define the responsibilities, tasks and
obligations of those individuals in the Group who deal
with tax issues and also contain specific provisions for
ensuring that legal requirements are met. Management
is kept informed about relevant tax issues by means of
monthly reports and regular communications, as well as
when required. Moreover, it is involved in compliance
processes:
The Group tax strategy drawn up by the Board of Man-
agement of Mercedes-Benz Group AG defines the
framework of action here, and this strategy is further
specified and implemented by means of organizational
and content-related policies, guidelines and instruc-
tions. The tax strategy is regularly reviewed for appro-
priate adjustments.
Further Information
Consolidated Financial Statements
Corporate Governance
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Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group is committed to the respon-
sible procurement of production materials, non-produc-
tion materials and services.
The Group has incorporated the guidelines for sustain-
able supply chain management into the Responsible
Sourcing Standards (RSS). These are contractually stip-
ulated with direct suppliers and are applied worldwide.
The goal here is to prevent, minimize or, if possible, put
a stop to any negative effects on human rights world-
wide. The RSS define the minimum requirements for
suppliers. They are already used as a basis for the ten-
dering process for suppliers of production materials.
The RSS require direct suppliers to communicate the
RSS provisions to their own employees and to their
direct suppliers, and ensure that the RSS are complied
with in their business processes and in the areas in
which they exert an influence. Suppliers are to conserve
natural resources and avoid environmental damage,
repair any damage that does occur, and compensate for
such damage that cannot be avoided or repaired.
Measures in the supply chain
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Annual Report 2023 | Mercedes-Benz Group
The Business & People Protection Office (BPO) whistle-
blower system makes it possible for employees and
external whistleblowers around the world to report
rules violations. With regard to supply chains, sus-
pected violations of the Responsible Sourcing Stand-
ards can be reported via the BPO. If the misconduct or
problem falls within the supplier's area of responsibility,
the supplier must take measures to immediately correct
or eliminate the problem. Further information about the
Compliance Programme can be found in the Integrity
and Compliance chapter.
Complaint management
The Board of Management of the Mercedes-Benz Group
is responsible for setting strategic goals, including tar-
gets for reducing the CO2 emissions, and for monitoring
the progress made in achieving these goals. The Prod-
uct Steering Board (PSB) at Mercedes-Benz Cars is
responsible for the car fleet. In particular, this body
monitors the development of CO2 emissions of the
Mercedes-Benz car fleet by comparing them with the
legally defined targets in markets subject to CO2-emis-
sion regulations. The PSB is assigned to the Committee
for Model Policy and Product Planning (AMP).
Further Information
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Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group uses a variety of measures
and concepts to ensure the fulfilment of its due dili-
gence obligations in the supply chain. This includes
training, preventive and corrective measures, risk analy-
ses, documentation for tracking and reporting purposes
and effectiveness checks. The Mercedes-Benz Group
uses these tools in order to increase the transparency
of the supply chain and ensures that the internationally
recognized human rights are upheld by business part-
ners as well, and that other social standards and envi-
ronmental requirements are met. The procurement
units for production materials, non-production materi-
als and services play a key role here. Further informa-
tion in the chapters Social Compliance and Environ-
mental Issues.
Consolidated Financial Statements
The Division and Product Strategy unit at Mercedes-
Benz Vans ensures compliance with the CO2 fleet emis-
sion limits and reports on this regularly to the Van Exec-
utive Committee.
The Committee for Model Policy and Product Planning
and the Van Executive Committee regularly report to
the Board of Management of Mercedes-Benz Group AG
about the development of CO2 emissions. The Board of
Management then decides which measures need to be
implemented. On the market side of the equation, price
and volume control measures can also affect our ability
to achieve our CO2 targets.
Electrified product range
In 2020, secondary material targets were defined for
Mercedes-Benz Cars and Mercedes-Benz Vans, and these
were then firmly incorporated into the requirements for
contract awards. In the reporting year, the Company car-
ried out a model series-specific analysis at component
level in order to realize further potential for increasing
secondary materials. Project milestones and the status of
projects with regard to the use of secondary materials are
presented on a quarterly basis in the executive bodies for
the various model series. The responsible member of the
Board of Management of Mercedes-Benz Cars and the
responsible executive management team member of
Mercedes-Benz Vans are also provided with information
on a regular basis within the framework of the activities of
a committee that manages strategic sustainability matters.
-
Aluminium: Mercedes-Benz Cars and Mercedes-Benz
Vans already use recycled materials, including recycled
aluminium, in numerous series-production vehicles. Alu-
minium is a light metal that can be recycled without any
loss of quality, and the recycling process for aluminium
uses less energy than would be required to produce new
aluminium. In order to continue increasing its use of recy-
cled materials, Mercedes-Benz AG is working with its sup-
pliers to develop aluminium alloys with high end-of-life
scrap potential from old vehicles or packaging, for
example. In addition, by amending existing supply agree-
ments, Mercedes-Benz AG and its suppliers continued to
work on the decarbonization of the aluminium supply
chain for all of their production operations in Europe. At
least one third of the primary aluminium that will be used
for new electric models in Europe is to be produced using
energy from renewable sources.
Steel: The use of secondary materials such as steel scrap
can reduce primary resource requirements in line with a
circular economy. For example, Mercedes-Benz AG and its
partner therefore ensure the recycling of scrap steel from
the Mercedes-Benz Cars plant in Sindelfingen, Germany.
materials, as well as recyclability. Mercedes-Benz Group
requirement specifications already define a minimum pro-
portion of recycled material for each component in new
Mercedes-Benz cars. This proportion varies depending on
the vehicle model and series in question. As part of its
sustainable business strategy, the Mercedes-Benz Group
also relies on the use of natural fibres and textiles as a
means of replacing conventional plastics with renewable
raw materials.
Plastics and recyclates: throughout their entire life
cycles, vehicles from the Mercedes-Benz brand are in
future to be more environmentally friendly and less
resource-intensive than before. The cornerstones of this
approach involve the use of recyclates and lightweight
resources.
Plastics, steel and aluminium have been identified as par-
ticularly important such materials in Mercedes-Benz vehi-
cles. We need large volumes of these materials for the
production of our vehicles, and their extraction and pro-
cessing also consume large amounts of energy and
The supply chain also plays an important role in efforts to
conserve resources. The Mercedes-Benz Group wants to
decouple resource consumption from economic growth.
To achieve this goal, it is relying on the support of its sup-
pliers. With their help, the Group wants to continuously
increase the proportion of secondary and renewable
materials in its vehicles.
Resource conservation
in the supply chain
"Ambition 2039". As a milestone, for example, contracts
were signed with two steel suppliers from Europe and
America in the year under review, which provide for
deliveries of CO2-reduced steel for current and future
model series. Progress on climate protection in the sup-
ply chain is reported at regular intervals in the Group
Sustainability Committee (GSC).
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
With its Responsible Sourcing Standards, the Mercedes-
Benz Group has also defined other environmental require-
ments in its supplier agreements. Further information can
be found in the "Sustainability in the supply chain" section.
Suppliers of production materials to Mercedes-Benz Cars
and Mercedes-Benz Vans are expected to operate with an
environmental management system that is certified
according to ISO 14001 or EMAS. Depending on the spe-
cific risks, this also applies to suppliers of non-production
materials and services.
Mercedes-Benz Cars and Mercedes-Benz Vans are also
cooperating with organizations such as CDP (formerly Car-
bon Disclosure Project) so that they can depict the envi-
ronmental impact of their supply chains even more trans-
parently. The suppliers have been reporting on their
Annual Report 2023 | Mercedes-Benz Group
- Vans: 80%
- Cars: 70%
Milestone: increase the share of energy from renew-
able sources to cover energy consumption
to cover 100% of energy consumption
Increase the share of energy from renewable sources
Reduction of CO2 emissions (Scope 12 and 23) by 80%4
Target
86
Climate protection in production
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
87
To Our Shareholders
Contents
environmental impact and climate protection efforts
within the framework of the CDP Supply Chain Programme
since 2019. CDP provides the corresponding tools for
recording, assessing and publishing environmental and
climate data.
2039
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
85
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group has defined the CO2 emis-
sions of its new passenger car fleet in Europe as one of
its most important non-financial performance indica-
tors. In the reporting year, the average CO2 emissions of
the Mercedes-Benz new vehicle fleet in Europe (Euro-
pean Union, Norway and Iceland), applying the statu-
tory regulations, on the basis of internal data amount to
111g/km (including vans registered as passenger cars)
and were thus lower than in the previous year. Taking
the vehicles of the joint venture smart Automo-
bile Co., Ltd. into account in the Mercedes-Benz CO2
pool, the average CO2 emissions in Europe (European
Union, Norway and Island) amounted to 109 g/km
according to internal calculations. This means that the
CO2-emission figures for the Mercedes-Benz Group
were significantly below the CO2 targets in Europe in
2023. The Mercedes-Benz Group also expects that the
average CO2 emissions of the Mercedes-Benz fleet in
Europe (European Union, Norway and Iceland) will be
further reduced in 2024. This development will be
especially favoured by the fact that the share of total
car sales accounted for by all-electric and plug-in
hybrid vehicles will continue to increase. Further infor-
mation can be found in the Outlook chapter.
Development of CO2 emissions in Europe
Electrified vehicles from Mercedes-Benz Vans
accounted for 5% of the Group's worldwide unit sales
in the year under review.
-
In the van segment as well, the Mercedes-Benz Group
is convinced of the ecological and economic advan-
tages of all-electric vehicles and has firmly anchored its
claim to leadership in electric mobility in its strategy. In
this way, Mercedes-Benz Vans is also setting the course
for an all-electric future, and beginning in 2026 all new
vans are to be developed as all-electric models exclu-
sively. All model series have already been systemati-
cally electrified, and today body manufacturers and
customers can choose an all-electric van in every seg-
ment for both commercial and private use. The mod-
els here include the eVito, the EQV, the eSprinter, the
eCitan and the EQT. (WLTP: combined energy consump-
tion: 20.7-19.3 kWh/100 km; combined CO2 emissions:
Og/km; CO2 class: A).
Electrified vehicles (EV) at Mercedes-Benz Cars
accounted for 20% of the Group's worldwide unit sales
in the year under review. All-electric models (BEVs)
accounted for 12% of the Group's worldwide unit sales
in the year under review.
The Mercedes-Benz Group has been offering all-electric
vehicles since 2018. During the year under review, the
Group presented the Mercedes-Maybach EQS SUV,
which brought the number of all-electric models in the
Mercedes-Benz Cars portfolio to nine in 2023. Plug-in
hybrids are also an important transitional technology
on the road to an all-electric future. Customers could
choose between more than 25 plug-in hybrid model
variants in the reporting year.
The Mercedes-Benz Group's goal is to further expand its
range of electric vehicles. The Group's commitment to
research and development is correspondingly strong.
Further Information
In the reporting year, the average CO2 emissions of
vehicle category N1 light trucks (GVW of up to 3.5 tons)
in Europe (European Union, Norway and Iceland) as
measured on the basis of the legal regulations on the
basis of internal data amount to 204 g/km. This means
that the figures for Mercedes-Benz will be below the
CO2 target. The Mercedes-Benz Group expects that
increased unit sales of all-electric vehicles will lead to
a further reduction of CO2 emissions in 2024.
Development of CO2 emissions in the United States
In the United States, fleet values are regulated by two
separate federal standards for limiting greenhouse
gases and fuel consumption in vehicle fleets: the
Greenhouse Gas Protocol (GHG) and the Corporate
Average Fuel Economy (CAFE) standard. For the 2023
model year, the GHG fleet figure is 170 g CO2/mi for the
car fleet and 259 g CO2/mi for the light duty truck (LDT)
fleet (vans and SUVs - based on latest forecast). Due to
an increase in the share of the total fleet in the United
States accounted for by electrified vehicles (EV), the
Mercedes-Benz Group came in below its average fleet
target of 179 g CO2/mi for the car fleet. The target
value of 233 g CO2/mi for the light duty truck (LDT) fleet
(vans and SUVs) could not be reached. However, the
Mercedes-Benz Group was able to offset the remaining
difference through the purchase of external credits.
CO2 emissions are offset by certified compensation projects.
2 Net carbon-neutral means that no CO2 emissions are created or any resulting
which is the importer and general sales company for imported finished vehicles in China.
1 Mercedes-benz China Ltd. (MBCL) is a joint venture between MB and Lei Shing Hong,
The Mercedes-Benz Group implements various projects
and measures in order to avoid and reduce CO2 emis-
sions in its supply chains for services as well as for pro-
duction and non-production materials. This is why in
the future the Group intends to work only with partners
that share its view of sustainability with regard to the
climate, the environment and human rights and has
also incorporated net carbon neutrality2 into the terms
of its contracts. As early as 2020, Mercedes-Benz Cars
and Mercedes-Benz Vans sent out to suppliers of pro-
duction materials the ambition letter, which is a decla-
ration of intent regarding net carbon-neutral products.
Signing the ambition letter is today a key criterion for
the awarding of contracts. By signing this document,
supplier companies commit themselves to supply
Mercedes-Benz cars and Mercedes-Benz vans only with
production material that is net carbon-neutral by 2039
at the latest and thus to the Mercedes-Benz Group's
2039
1 Measured on the basis of the annual procurement volume that, in turn, is based on
target figures updated monthly; guaranteed by means of signatures.
Contents
Target horizon
Target
in the supply chain.
Climate protection
6.95 l/100 km; the figure that was actually achieved was
8.46 l/100 km taking into account off-cycle technolo-
gies (8.52 l/100 km not taking into account off-cycle
technologies). MBCL plans to purchase external credits
in order to close consumption gaps in the fleet's target
achievement at short notice.
In China, domestic and imported cars are reported sep-
arately and according to fleet consumption values,
unlike in Europe and the United States. This means the
figures for the imported fleet are the relevant figures for
Mercedes-Benz China (MBCL)¹, which does not manu-
facture vehicles in the country. The target was
Development of CO2 emissions in China
The models of the Mercedes-Benz Sprinter are subject
to the GHG regulation for Classes 2b and 3 with a gross
vehicle weight (GVW) of between 3.86 tons and 6.35
tons. The CO2 targets in these classes depend on the
payload, the towing capacity and the drive type of the
vehicles. In the reporting year, the CO2 emissions of
Mercedes-Benz medium duty vehicles (MDV) were
436 g CO2/mi, which is lower than the target value of
476 g CO2/mi. The Group expects its figures to also be
lower than the CO2 target values in the years ahead.
Climate protection in the supply chain
All production materials procured by Mercedes-Benz
Cars and Mercedes-Benz Vans are net carbon-neutral¹
Climate protection in production¹