Daimler AG Annual Report 2013

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FY2013 Annual Report · Daimler AG

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Annual Report 2013.

Key Figures.

Daimler Group

Amounts in millions of euros

Revenue

Western Europe

thereof Germany

NAFTA

thereof United States

Asia

thereof China

Other markets

2013

2012

2011

13/12

% change

117,982

114,297

106,540

41,123

20,227

32,925

28,597

24,481

10,705

19,453

39,377

19,722

31,914

27,233

25,126

10,782

17,880

39,387

19,753

26,026

22,222

22,643

11,093

18,484

+3 1

-3

-1

-0

-5
-12

+233

+23

+38

+28

Employees (December 31)

274,616

275,087

271,370

Investment in property, plant and equipment

Research and development expenditure

thereof capitalized

Free cash ﬂow of the industrial business

EBIT 2

Value added 2

Net proﬁt 2

Earnings per share (in €) 2

Total dividend

Dividend per share (in €)

4,975

5,385
1,284

4,842

10,815

5,921

8,720

6.40

2,407

2.25

4,827

5,644
1,465

1,452

8,820

4,300

6,830

6.02

2,349

2.20

4,158

5,634
1,460

989

8,755

3,726

6,029

5.32

2,346

2.20

1 Adjusted for the eﬀects of currency translation, increase in revenue of 7%.
2 For the year 2012, the ﬁgures have been adjusted, primarily for eﬀects arising from application of the amended version of IAS 19.

Cover photo: The new Mercedes-Benz S-Class.
The S-Class is not only the technological spearhead of Mercedes-Benz,
but also the pacemaker for automotive development in general.
Comfort and safety merge into “INTELLIGENT DRIVE.” The top model from
Mercedes-Benz oﬀers a multitude of groundbreaking innovations that
are now being gradually applied also in other Mercedes-Benz vehicles.
Furthermore, with the launch of the new S-Class, we have compre-
hensively optimized the production process at our plant in Sindelﬁngen.
This makes an important contribution to growth and eﬃciency.

Daimler Divisions >
Daimler at a Glance >

Divisions.

Amounts in millions of euros

Mercedes-Benz Cars
EBIT 1

Revenue
Return on sales (in %) 1

Investment in property, plant and equipment

Research and development expenditure

thereof capitalized

Unit sales

Employees (December 31)

Daimler Trucks
EBIT 1

Revenue
Return on sales (in %) 1

Investment in property, plant and equipment

Research and development expenditure

thereof capitalized

Unit sales

Employees (December 31)

Mercedes-Benz Vans
EBIT 1

Revenue
Return on sales (in %) 1

Investment in property, plant and equipment

Research and development expenditure

thereof capitalized

Unit sales

Employees (December 31)

Daimler Buses
EBIT 1

Revenue
Return on sales (in %) 1

Investment in property, plant and equipment

Research and development expenditure

thereof capitalized

Unit sales

Employees (December 31)

Daimler Financial Services
EBIT 1

Revenue

New business

Contract volume

Investment in property, plant and equipment

Employees (December 31)

2013

2012

2011

13/12

% change

4,006

64,307

6.2

3,710

3,751
1,063
1,565,563

96,895

4,391

61,660

7.1

3,495

3,863
1,125
1,451,569

98,020

5,192

57,410

9.0

2,724

3,733
1,051
1,381,416

99,091

1,637

31,473

5.2

839

1,140
79
484,211

79,020

631

9,369

6.7

288

321
139
270,144

14,838

124

4,105

3.0

181
3
33,705

16,603

1,268

14,522

40,533

83,539

8,107

1,695

31,389
5.4

989

1,197
180
461,954

80,519

543

9,070

6.0

223

371
137
252,418

14,916

-221

3,929
-5.6

222
23
32,088

16,901

1,293

13,550

38,076

79,986

7,779

1,876

28,751

6.5

1,201

1,321
251
425,756

77,295

835

9,179

9.1

109

358
126
264,193

14,889

162

4,418

3.7

103

225
32
39,741

17,495

1,312

12,080

33,521

71,730

7,065

-9

-3
-6
+8

-1

-3

-15

-5
-56
+5

-2

+16

+29

-13
+1
+7

-1

-7

-18
-87
+5

-2

-17

1 For the year 2012, the ﬁgures have been adjusted, primarily for eﬀects arising from application of the amended version of IAS 19.

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler
Financial Services

We invented the automobile – and now we are passionately shaping its future.

As automotive pioneers, we see it as both motivation and a duty to continue our

tradition with groundbreaking technologies and superior products.

We do our very best for customers who expect the best, and we live and breathe

a culture of operational excellence based on shared values. Our corporate

history features numerous innovations and pioneering achievements; they are

the foundation for our claim to leadership in the automotive industry.

At the same time, our thoughts and actions are guided by the principle of

sustainable and safe mobility. With tailored products and services, we intend

to enter new markets and attract additional groups of customers. Our goal

is to lead our industry in terms of unit sales, revenue and profitability – and

to do so in all the businesses in which we are active. In this way, we want

to create lasting added value – for our shareholders, customers and employees,

and for society in general.

Dieter Zetsche

Wolfgang Bernhard

Christine Hohmann-Dennhardt

Wilfried Porth

Hubertus Troska

Bodo Uebber

Thomas Weber

Efficient Operation - Profitable Growth. Daimler is growing faster, on a broader front

and in more markets than ever before. This growth is based on extensive product

offensives in all our divisions. We are expanding our product range, creating new

segments and specifically addressing regionally different customer requirements.

And in doing all of this, one thing is crucial: We don’t want to grow at any price, but with

sustainable profitability. That’s why the efficiency programs in the divisions are

an additional key element of our growth strategy. Find out more on pages 32 to 73

of this Annual Report.

Contents.

Annual Report 2013 | Contents

4
10
12
14
20
22
26

To Our Shareholders (pages 4 – 31)

The Divisions (pages 148 – 169)

Important Events in 2013
Chairman’s Letter
The Board of Management
Report of the Supervisory Board
The Supervisory Board
Daimler and the Capital Market
Objectives and Strategy

150 Mercedes-Benz Cars
156
Daimler Trucks
161 Mercedes-Benz Vans
Daimler Buses
164
Daimler Financial Services
167

Eﬃcient Operation - Proﬁtable Growth
(pages 32 – 73)

Attractive and Fascinating Products
34
Growth through Global Presence
40
Innovation and Technology Leadership
46
Tailored Financial Services
52
Pioneering Mobility Concepts
56
60
Increased Eﬃciency at All Divisions
64 Motivated and High-performing Employees
68
72

First-class Customer Care
Integrity is the Basis for Our Success

76
81
86
92
99
102
105
117
118
119
126

129
142

Combined Management Report (pages 74 – 147)

Corporate Proﬁle
Economic Conditions and Business Development
Proﬁtability
Liquidity and Capital Resources
Financial Position
Daimler AG (condensed version according to HGB)
Sustainability
Overall Assessment of the Economic Situation
Events after the End of the 2013 Financial Year
Remuneration Report
Information and Explanation Relevant to
Acquisitions
Risk and Opportunity Report
Outlook

172
175
177

178

186
187

188
189
190
192

276
277
278
280
281
282
284

Corporate Governance (pages 170 – 183)

Report of the Audit Committee
Integrity and Compliance
Declaration of compliance with the German
Corporate Governance Code
Corporate Governance Report

Consolidated Financial Statements (pages 184 – 273)

Consolidated Statement of Income
Consolidated Statement of Comprehensive
Income/Loss
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements

Further Information (pages 274 – 284)

Responsibility Statement
Independent Auditors’ Report
Ten Year Summary
Glossary
Index
List of Charts and Tables
International Representative Oﬃces
Internet | Information | Addresses
Daimler Worldwide
Financial Calendar 2014

Information guidance system

 Refers to an illustration or a table in the Annual Report
w Refers to additional information on the Internet
E Cross-reference within the Annual Report
K Refers to a Daimler publication

Important
Events in
2013.

The year 2013 was dominated by product offensives at all of our divisions.

Our innovative vehicles, pioneering technologies and efficient production

processes set new standards in automobile manufacturing and strengthened

our position on international markets, thus laying the groundwork for

further growth.

A | To Our Shareholders | Important Events in 2013

Product oﬀensive in
the luxury segment:
Start of production
of the new S-Class at
the Mercedes-Benz
plant in Sindelﬁngen.
In 2013, Daimler
invests around €1
billion in the facility.

A pioneering feat
on the road to
autono mous driving.
With its S 500
INTELLIGENT DRIVE
research vehicle,
Mercedes-Benz
becomes the world’s
ﬁrst automaker to
prove that autono-
mous driving is also
possible in cities
and on highways and
country roads.

The ﬁrst customized
Mercedes-Benz
Arocs rolls oﬀ the as-
sembly line in Wörth.
Daimler is the ﬁrst
automaker to oﬀer a
comprehensive port-
folio of Euro VI-com-
pliant vehicles in the
heavy-duty class –
six months before
these emission stan-
dards go into eﬀect.

Q1.13

Mercedes-Benz makes the most beautiful cars.
The readers of the automotive magazine “Auto Zeitung”
vote for their favorite cars with the most exciting
designs. The Mercedes-Benz A-Class wins in the com-
pact segment, and the Mercedes-Benz CLS Shooting
Brake not only takes ﬁrst place in the wagon/sedan
category but is also voted the most beautiful car
of any segment.

A new research and development center in India. With
its 1,200 employees, Mercedes-Benz Research and
Development India (MBRDI) in Bangalore is Daimler’s
largest research and development center outside
Germany and the largest and most modern R&D center
of any German automaker in India.

World premiere of the new Mercedes-Benz Atego.
Thanks to a rigorous lightweight engineering process,
state-of-the-art Euro VI engines and a powertrain
that is tuned to speciﬁc applications, the new Mercedes-
Benz Atego achieves record values for fuel eﬃciency,
driving performance and total cost of ownership.

Daimler van joint venture in China opens new research
and development center. After only two years of con-
struction, the new research and development center
of the Chinese vans joint venture Fujian Benz Automotive
Corporation is oﬃcially opened in Fuzhou.

Monitorship successfully concluded at Daimler. The
monitorship that had been agreed on with the SEC
ends as scheduled on March 31, 2013. The monitor
Louis Freeh and his team, who have investigated
Daimler for three years, conﬁrm that the company
now sets standards with regard to integrity and
compliance.

Daimler’s earnings drop year-on-year in ﬁrst quarter.
Many markets did not perform as well as expected in
the ﬁrst three months of the year. Daimler’s revenue
and sales were nonetheless almost unchanged from the
same period of 2012. At €917 million, EBIT is lower
than in the prior year. A signiﬁcant earnings improve-
ment is expected for the following quarters.

Annual Shareholders’ Meeting approves a dividend
of €2.20. At the Annual Shareholders’ Meeting in Berlin,
the shareholders of Daimler AG decide to keep the
dividend unchanged from the previous year, at €2.20
per share. The total dividend payout for 2012 is
€2,349 million.

Mercedes-Benz presents the Concept GLA at the
Shanghai Motor Show. The compact premium-class
SUV combines a dynamic design with great recre-
ational value. With its wide range of striking features,
the concept vehicle demonstrates just how innova-
tive our designers are.

Daimler successfully sells its 7.4% interest in EADS.
In an accelerated placement process, Daimler sells
61.1 million EADS shares to international investors.
The company receives approximately €2.2 billion
in total proceeds from the placement. After completing
the sale, Daimler no longer holds any EADS shares.

Daimler Trucks consolidates its Asia operations to
achieve more growth. With its integrated “Asia Business
Model,” Daimler lays the groundwork for more growth.
Among other things, FUSO brand trucks are produced
also in India for export markets in Asia and Africa.

Spectacular world premiere of the new S-Class. The new
S-Class, the epitome of the cutting-edge luxury sedan,
is unveiled at the delivery center of the Airbus A380
in Hamburg. The vehicle is presented in a spectacular
show for 750 international guests from the worlds
of politics, business and the media.

Mercedes-Benz and Setra have the best commercial
vehicles and brands. Mercedes-Benz and Setra are the
winners in the readers’ choice poll that “ETM-Verlag”
organizes each year to determine the best commercial
vehicles and brands. The two brands’ products and
services take ﬁrst place in eight categories.

Successful second quarter. Daimler’s earnings in
the second quarter are much higher than in the
same period of 2012 and substantially exceed market
expectations. EBIT of €5.2 billion includes a gain
of €3.2 billion from the remeasurement and sale of
the remaining EADS shares.

Q2.13

A | To Our Shareholders | Important Events in 2013

Q3.13

Series production of the new Atego begins at the Wörth
plant. The new truck for light- and medium-duty distri-
bution transportation has been further optimized
and boasts many new features in its powertrain, chassis
and cab.

Production of the new Sprinter begins at the Düsseldorf
plant. The new Sprinter features ﬁve new safety and
assistance systems, including three van ﬁrsts. Besides
being the ﬁrst van with engines that meet the Euro VI
emissions standards, the new Sprinter boasts incredibly
low fuel consumption.

Mercedes-Benz Vans begins operations in Russia.
In cooperation with GAZ, Russia’s largest van
manufacturer, Mercedes-Benz Vans starts producing
the Sprinter Classic in Nizhny Novgorod, Russia.

Additional production capacity for the A-Class.
The ﬁrst A-Class rolls oﬀ the assembly line at Valmet
Automotive in Uusikaupunki, Finland. Production
is thus begun as planned about 13 months after the
announcement of the contract manufacturing.

Daimler becomes more customer focused. Daimler
intensiﬁes its focus on customers and markets to
systematically implement its growth strategies at all of
its divisions. To this end, the Board of Management
decides to strengthen the organization of the divisions.

The long version of the new E-Class rolls oﬀ the assembly
line in Beijing. The car features 14 centimeters more
legroom for rear passengers as well as the widest back
seat in its segment. Together with high-quality interior
appointments, these attributes create an exclusive and
extremely comfortable ambience.

Five Mercedes-Benz world premieres at the Frankfurt
Motor Show. With ﬁve world premieres, Mercedes-
Benz sets standards for automotive excitement and
innovation. The new products include the GLA
compact SUV and the all-new S 500 PLUG- IN HYBRID,
which is to be launched in the second half of 2014.

Daimler achieves excellent results in the third quarter
of 2013. Earnings continue to rise in the third quarter.
Growth in EBIT to €2.2 billion is mainly due to the
good development of sales at the automotive divisions
and the increasing impact of the eﬃciency programs.

The decision is made to build a new car plant in Brazil.
Daimler expands Mercedes-Benz Cars’ global produc-
tion network to include a new location in Brazil. A new
assembly plant in Iracemápolis (near São Paulo) will
manufacture the next generation of the C-Class and
the GLA for the local market beginning in 2016.

A major order for Daimler Buses in Brazil. Following a
call for bids, Daimler Buses receives a contract from the
city of Brasilia to supply 2,100 Mercedes-Benz bus
chassis for the modernization of the local public trans-
portation companies’ ﬂeets.

Five years of car2go. car2go has three reasons to
celebrate in October. The mobility concept marks
its ﬁfth anniversary, has more than 500,000 customers,
and records one million rentals per month. car2go
is now active at 23 locations in seven countries in Europe
and North America.

The new S-Class is voted best luxury sedan. Together
with a panel of automotive experts, the readers
of “BILD am SONNTAG” and “AUTO BILD” vote the
Mercedes-Benz S-Class the best new car in the
upper-range and luxury segments, awarding it the
coveted “Golden Steering Wheel.”

Mercedes-Benz opens a new engine plant in Beijing.
The new plant is Daimler’s ﬁrst production facility for
car engines outside Germany. The plant combines
cutting-edge technologies with lean and sustainable
production processes. The production line has
a ﬂexible design. It will initially have a production
ca pacity of 250,000 units per year.

Daimler acquires a 12% interest in BAIC Motor. Daimler
becomes the ﬁrst foreign automaker to acquire an
interest in a Chinese automotive company. This step is
a clear expression of the partners’ good cooperation
and great mutual trust. It underscores the partners’
long-term commitment to jointly taking advantage of
the Chinese car market’s opportunities and potential.

Daimler and Aston Martin sign agreements on techniscal
partnership. Mercedes-AMG is to supply Aston Martin
with engines for its future sports cars. In line with
the development of the partnership, Daimler we will
receive an interest in Aston Martin of up to 5%.

Q4.13

A | To Our Shareholders | Important Events in 2013

Stuttgart, February 2014

2013 was a strong year for the stock exchanges – and for Daimler shares it was
especially strong. The value of your company increased by 52 percent over the year,
and thus signiﬁcantly surpassed the positive trend of most indices. This positive
development shows us two things: Our current business development is good, and
the markets are conﬁdent that we can perform even better in the future.

Last year, our revenue reached € 118 billion– a new record in Daimler’s history.
EBIT from the ongoing business amounted to € 7.9 billion. As previ-ously announced,
we signiﬁcantly improved our proﬁtability as the year progressed. At the Annual
Shareholders’ Meeting, the Board of Management and the Supervisory Board will
propose an increase in the dividend to € 2.25 per share. With this proposal we
are letting our shareholders participate in the Company’s success and at the same
time expressing our conﬁdence about the ongoing business development.

What I see as the most important achievement of the past ﬁnancial year isn’t apparent
from the ﬁnancial statements at ﬁrst glance: It’s the enormous eﬀorts with which
the entire Daimler team made all of this possible last year. The good results of all our
divisions are thanks to your exceptional work and ideas. Together, we created the
basis for sustainable success in 2013.

The focus at Mercedes-Benz Cars last year was on the new S-Class. This car has always been the touchstone
for our brand promise: “The best or nothing.” That applies to the design of our ﬂagship; but more importantly,
it also applies to the technology inside it: No competitor is more advanced than we are in the area of autonomous
driving. At the same time, we have been able to attract a lot of new and younger customers with our new
compact models. That’s another reason why Mercedes-Benz was the world’s fastest-growing premium auto-
motive brand in 2013.

With our trucks and buses, we were the ﬁrst manufacturer to renew our complete portfolio in the context
of changing over to the Euro VI emission standards. And the reward for that was increasing market share.
At Mercedes-Benz Vans, we put our new ﬂagship on the road last year – the Sprinter – and further strength-
ened our leading position in that segment.

At Daimler Financial Services, we set a new record in 2013: For the ﬁrst time, the number of all vehicles
we currently ﬁnanced or leased passed the three-million mark. And car2go, the pioneer amongst the car-sharing
providers, remains on its growth path: In 2013, car2go was available in 25 cities; some 10,000 cars were
on the road for nearly 600,000 customers.

Other highlights of 2013 can be found on the following pages. They all prove one thing above all:
Daimler is on a growth path. And we intend to accelerate in 2014.

To those ends, we are continuing our product oﬀensives in all divisions. With our cars, we are launching
a total of eight new models this year – from the smart to the S-Class Coupe. We will extend our range
of emission-free vehicles with the B-Class Electric Drive. And with the V-Class, a unique multi-purpose vehicle
with a star on the front is entering the showrooms.

A | To Our Shareholders | Chairman’s Letter

But 2014 is ﬁrst and foremost the year of the new C-Class. It’s a prime example of many of the new strengths
of the star – from top-class quality to groundbreaking assistance systems. The C-Class is also a crucial
car for our further growth in China. The repositioning of Mercedes-Benz in that market is bearing the ﬁrst fruit.

Also in the truck business, we are ensuring that our sales momentum will stay strong in the coming years.
We have completed the family of Mercedes-Benz trucks with the new heavy-duty semitrailer tractors
from Actros and Arocs. In India, we will present new BharatBenz models. And in the US market, a new Western
Star truck will have its world premiere.

Daimler Financial Services supports our growth with appropriate ﬁnancing and leasing oﬀers. And we are
also expanding our range of mobility services. By the end of this year, we aim to have one million enthusiastic
users of car2go. With the project car2go black, Mercedes-Benz vehicles are part of our car-sharing program
for the ﬁrst time.

Our goal across all our divisions is clear: We want to continue growing – and that means growing proﬁtably.
In parallel with our product oﬀensives, we are therefore pushing ahead with our eﬃciency programs
in all divisions. After the successful implementation of short-term improvements, the long-term measures are
now gaining prominence – from the expansion of our module and architecture strategy to the restructuring
of our organization within the framework of Customer Dedication. The main purpose of that program is clear:
getting even closer to our customers and their needs.

But just as important as the right structure is the right spirit. Sustainable corporate success can only
exist on the basis of ethical actions. This is why we devote 100 percent commitment and determination
to sustaining our high standards for integrity and compliance. They are and will remain the foundation
of everything we do.

All in all, it’s clear: The components of our corporate strategy are gradually coming together into one.
Our product oﬀensives are ﬁring, our eﬃciency actions are taking eﬀect, and our investments are bearing fruit.

On this basis, we will continue working with all our eﬀorts so that in the long term,
Daimler remains what it already was last year: a worthwhile investment for you – our shareholders.

Sincerely yours,

Dieter Zetsche

The Board of
Management.

Dieter Zetsche | 60, Chairman of the Board of Management, Head of Mercedes-Benz Cars
Appointed until December 2016

Wolfgang Bernhard | 53, Daimler Trucks and Buses
Appointed until February 2018

Christine Hohmann-Dennhardt | 63, Integrity and Legal Aﬀairs
Appointed until February 2017

A | To Our Shareholders | The Board of Management

We bring growth and eﬃciency
together with new top products and
optimized processes.

Wilfried Porth | 55, Human Resources & Labor Relations Director,
since January 29, 2014 Human Resources and Labor Relations Director &
Mercedes-Benz Vans, appointed until April 2017

Andreas Renschler | 55, Manufacturing and Procurement Mercedes-Benz
Cars & Mercedes-Benz Vans, stepped down on January 28, 2014

Hubertus Troska | 53, Greater China
Appointed until December 2015

Bodo Uebber | 54, Finance & Controlling, Daimler Financial Services
Appointed until December 2019

Thomas Weber | 59, Group Research & Mercedes-Benz Cars Development
Appointed until December 2016

Report of the Supervisory Board.

Dear Shareholders, the Supervisory Board dealt intensively and comprehensively with
the strategic and operational development of the Daimler Group in seven meetings during
the 2013 ﬁnancial year.

In the year 2013, the Supervisory Board performed its tasks
as laid down by applicable law, the Articles of Incorporation
and its rules of procedure, and continually advised and super-
vised the Board of Management on the management of the
company. Following careful reviews and consultations, the Super-
visory Board passed resolutions on numerous business mat-
ters for which its consent was required. Those matters included
investment and personnel planning, capital changes at com-
panies of the Group, investments and the conclusion of contracts
of particular importance for the Group. In addition, the Super-
visory Board examined whether the annual ﬁnancial statements
for the Company, the consolidated ﬁnancial statements, the
combined management report for the Company and the Group,
the risk report and the other ﬁnancial reporting were in con-
formance with requirements. The Board of Management also
informed the Supervisory Board about a large number of
transactions not requiring the Supervisory Board’s consent
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 cooperation
projects. The Supervisory Board discussed the information and
evaluations that were material for its decisions and sugges-
tions together with the Board of Management.

Daimler’s business operations continued to develop success-
fully in 2013. The results of the growth strategy followed
by the Group and expressly supported by the Supervisory Board
became increasingly apparent. In the year under review,
all the automotive divisions launched products that have been
very well received by the customers. The exceptionally
positive reactions to the presentation of the new S-Class and
the Mercedes-Benz Actros family are particularly noteworthy.
The Group’s unit sales and revenue increased signiﬁcantly and
reached new record levels. Earnings from ongoing operations
of €7.9 billion were generally at a good level, although the prior-
year result was not quite equaled. Ongoing high expenses
for the development of the product portfolio and the production
plants once again had an impact on key ﬁnancials in the
year 2013. But it was important that the earnings situation, as
announced at the beginning of the year, continually improved
as the year progressed. The eﬀects of the eﬃciency programs
running in all divisions were becoming increasingly apparent.
The well-balanced worldwide positioning of our business has
helped us to compensate for the diﬃcult situation in the
markets of Western Europe.

During the reporting period, the Board of Management
informed the Supervisory Board about all signiﬁcant key ﬁnan-
cials and continually provided information to it on important
topics. Those topics included the return on equity and the Group’s
liquidity situation, the internal control and risk management
system including compliance, the particular development of sales
and procurement markets, the general economic situation in
the main sales markets and developments in the area of ﬁnancial
services. The Supervisory Board dealt in detail also with the
share-price development and its causes and discussed in detail
with the Board of Management the expected eﬀects of the
strategic projects on the share-price development. Additional
topics were securing the Group’s long-term competitiveness,
fundamental questions of corporate planning including ﬁnancial,
investment, unit-sales and personnel planning, development
at companies of the Group, the revenue development, the
situation of the Company and the divisions and the ongoing
implementation of measures to secure future-oriented,
sustainable mobility.

Cooperation between the Supervisory Board and the Board
of Management. All the members of the Board of Manage-
ment attended all the meetings of the Supervisory Board. The
meetings featured intensive and open exchanges of informa-
tion and opinions. The Supervisory Board arranged an executive
session in each of its meetings in order to discuss topics in
the absence of the Board of Management. No member of the
Supervisory Board attended less than half of the meetings
in the past ﬁnancial year.

The members of the Supervisory Board regularly prepared
for upcoming resolutions on transactions requiring Supervisory
Board consent on the basis of documentation that had been
provided in advance by the Board of Management. They were
supported by the relevant committees and discussed the
actions and transactions upon which decisions were to be taken
with the Board of Management. Furthermore, the members
of the Supervisory Board attended such courses of training and
further training as might be necessary for the performance
of their tasks. In this context, the meetings of the Supervisory
Board dealt with issues of fundamental importance for the
Group such as the macroeconomic situation of key sales markets
or the presentation of new products and forward-looking
technologies. The Supervisory Board meetings were regularly
prepared in separate discussions of the members repre-
senting the employees and the members representing the share-
holders with the members of the Board of Management.

A | To Our Shareholders | Report of the Supervisory Board

Dr. Manfred Bischoﬀ, Chairman of the Supervisory Board.

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 Super-
visory Board. Deviations from the planning were explained
in detail to the Supervisory Board. The Supervisory Board was
kept fully informed of speciﬁc matters also between its meet-
ings. In addition, the Chairman of the Board of Management
informed the Chairman of the Supervisory Board in regular
discussions about important developments and consulted with
him on upcoming decisions. As required in individual cases,
following consultation with the Chairman of the Supervisory
Board, the members were requested to pass resolutions
in writing.

Topics discussed at the Supervisory Board meetings
in the year 2013. In a meeting in early February 2013, in the
presence of the external auditors, the preliminary key ﬁgures
of the annual company and consolidated ﬁnancial statements
for 2012 and the dividend proposal to be made at the 2013
Annual Shareholders’ Meeting were discussed. The preliminary
key ﬁgures for the year 2012 were announced at the Annual
Press Conference on February 7, 2013.

In another meeting held in February 2013, the Supervisory
Board decided on the reappointment of Dr. Dieter Zetsche
and Prof. Dr. Thomas Weber and the changes in the Board
of Management responsibilities of Andreas Renschler
and Dr. Wolfgang Bernhard, as described on page 18 under
“Personnel changes in the Board of Management.”

Also in this meeting, 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 external
auditors, as well as the reports of the Audit Committee and
the Supervisory Board, the corporate governance report,
the remuneration report and the proposal on the appropriation
of distributable proﬁt. In preparation, the members of the
Supervisory Board were provided with comprehensive docu-

mentation including the Annual Report with the consolidated
ﬁnancial statements according to IFRS, the combined manage-
ment report for Daimler AG and the Daimler Group, the corpo-
rate governance report and the remuneration report, the annual
company ﬁnancial statements of Daimler AG, the proposal of
the Board of Management on the appropriation of distributable
proﬁt, and the audit reports of KPMG on the annual company
ﬁnancial statements of Daimler AG and the consolidated ﬁnan-
cial statements, each including the combined management
report, 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 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 Com-
mittee 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
man agement report as presented by the Board of Management.
The company ﬁnancial statements of Daimler AG for the
year 2012 were thereby adopted. The Supervisory Board also
consented to the proposal made by the Board of Manage-
ment on the appropriation of distributable proﬁt and approved
the report of the Supervisory Board, the corporate gover-
nance report and the remuneration report in their current drafts.
Finally, the Supervisory Board approved its proposed
decisions on the items of the agenda for the 2013 Annual
Shareholders’ Meeting.

Furthermore, the Supervisory Board received detailed informa-
tion on the product portfolio of Mercedes-Benz Cars and
discussed in particular the brand positioning and the marketing
and product strategy of Mercedes-Benz Cars. The Supervisory
Board also discussed the results of the externally moderated
eﬃciency review. It thus complied with both a recommendation
of the German Corporate Governance Code and the corre-
sponding requirement of its rules of procedure. The results indi-
cate very good cooperation within the Supervisory Board and
with the Board of Management. Only a few isolated suggestions
were made concerning further eﬃciency enhancements.
Those suggestions, for example on the organization of the annual
strategy workshop of the Supervisory Board, have meanwhile
been acted upon and implemented. Finally, the Supervisory Board
dealt with topics of Board of Management remuneration
and approved the external board positions and sideline business
activities of the members of the Board of Management as
presented in the meeting.

In the meeting of the Supervisory Board held straight after
the Annual Shareholders’ Meeting on April 10, 2013, in which
Sari Baldauf was reelected as a member of the Supervisory
Board, the members of the Supervisory Board representing the
shareholders elected Sari Baldauf as a member of the Nomi-
nation Committee. Furthermore, the members representing the
shareholders elected Dr. Jürgen Hambrecht, who had also
been reelected to the Supervisory Board in the Annual Share-
holders’ Meeting, once again as a member of the Mediation
Committee and of the Presidential Committee. In addition, the
Supervisory Board passed resolutions concerning the mem-
bers representing the employees, who had already been elected
on March 13, 2013. In this context, the Supervisory Board
elected Erich Klemm as the Deputy Chairman of the Supervisory
Board, Erich Klemm and Michael Brecht as members of the
Audit Committee, and Jörg Hofmann as a member of the Presi-
dential Committee. Finally, the members of the Supervisory
Board representing the employees elected Jörg Hofmann as a
member of the Mediation Committee. Erich Klemm was also
elected by the members of the Audit Committee as the Deputy
Chairman of the Audit Committee.

Also in April, the Supervisory Board dealt with the dissolution
of the EADS shareholders’ pact and the disposal of the
remaining approximately 7.4% of the EADS shares held by
Daimler and approved the intended action.

In another meeting at the end of April 2013, the Supervisory
Board decided on the reappointment of Dr. Christine
Hohmann-Dennhardt as a member of the Board of Management,
as described on page 18 under “Personnel changes in the
Board of Management.” After that, the Supervisory Board dealt
with the competitive situation of the Group with reference
to detailed benchmark studies. Subsequently, the Supervisory
Board approved the funds for the establishment of another
facility in Romania for the assembly of a new automatic trans-
mission for passenger cars. The Supervisory Board also
approved a capital contribution to the joint venture Beijing Benz
Automotive Co., which required additional investment to
increase its production capacities in the context of the “China
2020” growth strategy. Furthermore, the Supervisory Board
approved the funds required for the development of spare-part
logistics in China. In the same meeting, within the context of
a report on Daimler India Commercial Vehicles, the Supervisory
Board received detailed information on the development of
the Indian market for commercial vehicles. Finally, the Super-
visory Board dealt with the end of the monitorship and of
the deferred prosecution agreement after Daimler had success-
fully complied with all settlements with the Department
of Justice of the United States (DOJ) and the US Securities
and Exchange Commission (SEC).

Following discussion of the course of business and the results
of the second quarter, in its meeting in July, the Supervisory
Board received information on the macroeconomic development
of the main markets and on the current situation of Daimler
in China. The Supervisory Board also received detailed reports
on the G-Class product area and on AMG, and was informed
about the status and further development of the van cooperation
between Daimler and Volkswagen. In the same meeting, the
Supervisory Board also dealt with the topics for the upcoming
strategy workshop in September.

During that two-day strategy workshop in September, as in the
previous strategy meetings, the Supervisory Board received
information on to what extent the strategic goals of Daimler AG
and the divisions as presented by the Board of Management
in the previous years had already been achieved. Against the
backdrop of the current economic situation, the Supervisory
Board discussed the stage of implementation reached by the
projects initiated in the individual divisions. Other topics
discussed were the positioning of the Group and its divisions
with regard to the competition and the brand and product
strategies.

A | To Our Shareholders | Report of the Supervisory Board

Subsequently, the Supervisory Board dealt intensively with
the major topic of “Mercedes-Benz Cars.” In this context,
the members of the Supervisory Board discussed with the Board
of Management the division’s overall strategy and then
received information on developments and challenges in China
and the United States. The Supervisory Board dealt in detail
also with the sales and marketing strategy of Mercedes-Benz
Cars. Special attention was given to the strategic focus of
the area of research and development, where the Supervisory
Board was informed in particular about current progress with
vehicle platforms and vehicle architecture, as well as measures
to reduce CO2 emissions and increase engine eﬃciency.
“Daimler Trucks” was another main topic. The Board of Manage-
ment and the Supervisory Board dealt in detail with the divi-
sion’s overall strategy and with the strategic focus and further
growth opportunities in the markets of Asia, Europe and
Latin America.

In the meeting in December 2013, the members of the Super-
visory Board representing the shareholders resolved to
propose to the Annual Shareholders’ Meeting that Dr.-Ing.
Bernd Bohr, Joe Kaeser and Dr. Ing. e.h. Dipl.-Ing. Bernd
Pischetsrieder be elected to the Supervisory Board as of the
end of the Annual Shareholders’ Meeting on April 9, 2014
until the end of the Annual Shareholders’ Meeting that decides
on ratiﬁcation of the Board of Management’s actions for 2018.
In addition, the Supervisory Board dealt in detail on the basis of
comprehensive documentation with the operational planning
for the years 2014 and 2015. This included discussion of existing
opportunities and risks, as well as the Group’s risk manage-
ment. Subsequently, the Supervisory Board received information
about the insurance business of Daimler Financial Services.
Under the heading of “Employer Branding,” the Supervisory Board
dealt with the activities of Daimler and its subsidiaries as a
preferred employer in the various markets worldwide. The Super-
visory Board then approved a capital increase for the Brazilian
subsidiaries and the internal restructuring of shareholdings in
Mexican and Canadian companies of the Group. Furthermore,
the members representing the shareholders approved the new
conclusion of current domination and proﬁt-and-loss-transfer
agreements. Other topics dealt with in the December meeting
were corporate governance, as detailed below, and Board
of Management remuneration in light of the requirements of
the amended German Corporate Governance Code.

Corporate Governance. During the year 2013, the Supervisory
Board was continually occupied with standards of good cor-
porate governance. This took place also in consideration of the
fact that the Government Commission German Corporate
Governance Code had decided on some changes for stock-
exchange listed companies in May 2013.

In order to ensure that the work of the Supervisory Board is
eﬀective and functions in line with good corporate governance,
on the one hand, its members must have high levels of specialist
expertise. On the other hand, diversity in terms of nationality,
gender, experience and cultural background must reﬂect the
Group’s size and internationality. Both of these conditions
are fulﬁlled at Daimler. Proposals by the Supervisory Board on
candidates for election representing the shareholders, for
which the Nomination Committee makes recommendations, give
due consideration to the goals stated by the Supervisory
Board for its composition. This applies not only to the internation-
ality of the members, but also for example to the aspect
of diversity and appropriate participation by women. In this
respect, the Supervisory Board gave its previous goals more
concrete form in its meeting in December. On the basis of the
targets set by the Company, the Supervisory Board resolved
that at least 20% of all members of the Supervisory Board are
to be women. In addition, at least 30% of the members of
the Supervisory Board representing the shareholders are to be
female. These targets have already been met. Since the
Annual Shareholders’ Meeting on April 10, 2013, there have been
three women on the side of the shareholder representatives
and two women on the side of the employee representatives.

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
conﬂicts of interest in 2013.

In its meeting in December, the Supervisory Board updated and
amended the wording of the rules of procedure of the Super-
visory Board and its committees, and approved the 2013 decla-
ration 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.

Corporate Governance at Daimler is described in detail in the
Corporate Governance Report on E pages 178 ﬀ and in the
Remuneration Report on E pages 119 ﬀ of this Annual Report.

Report on the work of the committees

The Presidential Committee convened four times last year.
It dealt primarily with corporate governance topics and ques-
tions of remuneration, as well as 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, important targets
were set in the areas of stakeholders, employees and cus-
tomers, as well as relating to the permanent establishment
of integrity.

The Audit Committee met six times in 2013. Details of those
meetings are provided in a separate report of that committee.
E see pages 172 ﬀ

The Nomination Committee convened twice in 2013. Among
other matters, it prepared recommendations for the Super-
visory Board’s proposals to the Annual Shareholders’ Meeting
2014 on candidates for election. The election proposals give
due consideration not only to the deﬁned qualiﬁcations for the
speciﬁc position, but also to the recommendations of the
German Corporate Governance Code.

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 2013.

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 such decisions.

Personnel changes in the Supervisory Board. With eﬀect
as of the end of the Annual Shareholders’ Meeting on April 10,
2013, Andrea Jung was elected as a member of the Super-
visory Board representing the shareholders until the end of the
Annual Shareholders’ Meeting that decides on ratiﬁcation
of the Board of Management’s actions for the year 2017. Further-
more, Sari Baldauf and Dr. Jürgen Hambrecht were reelected
as members of the Supervisory Board representing the share-
holders for the same period. The election proposals made
by the Supervisory Board to the Annual Shareholders’ Meeting
were based on recommendations made by the Nomination
Committee.

As of the Annual Shareholders’ Meeting on April 10, 2013,
the ﬁve-year period of oﬃce began of the employee represen-
tatives who had previously been elected for ﬁve years in the
Supervisory Board elections held on March 13, 2013. The elec-
tions conﬁrmed the extended membership of some of the
Supervisory Board members representing the shareholders.
Those members are Erich Klemm, Michael Brecht, Jürgen
Langer and Jörg Spies. Elke Tönjes-Werner and Wolfgang Nieke
were newly elected to the Supervisory Board. As members
representing the trade unions, in addition to the new member
Dr. Sabine Maaßen, Jörg Hofmann was reelected to the Super-
visory Board. In the person of Valter Sanches, the Supervisory
Board of Daimler AG continues to have a member on the
employee side representing a trade union from outside German.
Dr. Frank Weber was elected to the Supervisory Board for
the ﬁrst time; he represents the management staﬀ in the new
Supervisory Board period. The period of oﬃce of the elected
members representing the employees ends at the end of
the Annual Shareholders’ Meeting that decides on ratiﬁcation
of the Board of Management’s actions for the year 2017.

With eﬀect as of the end of the 2013 Annual Shareholders’
Meeting, Prof. Dr. Heinrich Flegel, Dr. Thomas Klebe,
Ansgar Osseforth, Uwe Werner and Lynton R. Wilson stepped
down from the Supervisory Board.

Personnel changes in the Board of Management.
In the Supervisory Board meeting on February 21, 2013,
Dr. Dieter Zetsche was reappointed as Chairman of the
Board of Management of Daimler AG and Head of Mercedes-
Benz Cars for a further three years as of January 1, 2014.
Also in this meeting, Prof. Dr. Thomas Weber was reappointed
as Member of the Board of Management of Daimler AG with
responsibility for the area of “Group Research & Mercedes-Benz
Cars Development” for a further three years as of January 1,
2014. As of April 1, 2013, Andreas Renschler took over Board
of Management responsibility for the area of “Manufacturing
and Procurement Mercedes-Benz Cars & Mercedes-Benz Vans.”
Also since April 1, 2013, Dr. Wolfgang Bernhard has held Board
of Management responsibility for the area of “Daimler Trucks.”

In the Supervisory Board meeting in April 2013, Dr. Christine
Hohmann-Dennhardt was reappointed as Member of the Board
of Management with responsibility for the area of “Integrity
and Legal Aﬀairs” for a further three years as of March 1, 2014.

In a Supervisory Board meeting on January 28, 2014, the
contract of service of Andreas Renschler as a member of the
Board of Management was amicably terminated. Respon-
sibility for the Mercedes-Benz Vans division was allocated to
Wilfried Porth. Responsibility for Manufacturing and Procure-
ment Mercedes-Benz Cars was allocated to Dr. Dieter Zetsche
until further notice.

In the Supervisory Board meeting on February 18, 2014,
Bodo Uebber was reappointed as Member of the Board
of Management of Daimler AG with responsibility for the area
of “Finance & Controlling/Daimler Financial Services” for
a further ﬁve years as of January 1, 2015.

A | To Our Shareholders | Report of the Supervisory Board

Appreciation. The Supervisory Board thanks all of the
employees and the management of the Daimler Group for their
personal contributions to the successful year 2013. Special
thanks are due to a longstanding member of the Supervisory
Board, Lynton R. Wilson, who stepped down at the end of
the Annual Shareholders’ Meeting in 2013 after many years of
exceptional personal commitment to the Group. With all best
wishes for the future, the Supervisory Board also expresses its
warmest thanks to the departed members, Prof. Dr. Heinrich
Flegel, Dr. Thomas Klebe, Ansgar Osseforth and Uwe Werner,
for their committed eﬀorts in the Supervisory Board.

Stuttgart, February 2014

The Supervisory Board

Dr. Manfred Bischoﬀ
Chairman

Audit of the 2013 company and consolidated ﬁnancial
statements. The ﬁnancial statements of Daimler AG and the
combined management report for the Company and the
Group for 2013 were duly audited by KPMG AG, Wirtschafts-
prüfungsgesellschaft, Berlin, and were given an unqualiﬁed
audit opinion. The same applies to the consolidated ﬁnancial
statements for 2013 prepared according to IFRS.

In the presence of the auditors in a meeting in early February
2014, the Supervisory Board discussed the preliminary key
ﬁgures of the annual company and consolidated ﬁnancial state-
ments for 2013 and the dividend proposal to be made at the
2014 Annual Shareholders’ Meeting. The preliminary key ﬁgures
for the year 2013 were announced at the Annual Press
Conference on February 6, 2014.

In the meeting on February 18, 2014, 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 exter-
nal auditors, as well as the reports of the Audit Committee and
the Supervisory Board, the corporate governance report, the
remuneration report and the proposal on the appropriation of
distributable proﬁt. In preparation, the members of the Super-
visory Board were 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 distributable proﬁt, the
audit reports of KPMG on the annual company ﬁnancial
statements of Daimler AG and the consolidated ﬁnancial state-
ments, each including the combined management report,
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 responsible external auditors, who
reported on the results of their audit and were available to answer
supplementary questions and to provide additional informa-
tion. Following the ﬁnal results of the review by the Audit Com-
mittee and its own review, the Supervisory Board declared its
agreement with the results of the audit by the external auditors,
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 2013 were
thereby adopted. Furthermore, Supervisory Board consented
to the proposal made by the Board of Management on the
appropriation of distributable proﬁt and approved the report
of the Supervisory Board, the corporate governance report
and the remuneration report in their current drafts.

Finally, the Supervisory Board approved its proposed decisions
on the items of the agenda for the 2014 Annual Shareholders’
Meeting.

The Supervisory Board.

Dr. Manfred Bischoﬀ
Munich
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
European Aeronautic Defence and Space Company EADS N.V.
SMS GmbH
UniCredit S.p.A.
Voith GmbH – Chairman

Dr. Jürgen Hambrecht
Ludwigshafen
Former Chairman of the Board of Executive Directors of
BASF SE
Other supervisory board memberships/directorships:
Deutsche Lufthansa AG
Fuchs Petrolub SE – Chairman
Trumpf GmbH + Co. KG – Chairman

Erich Klemm*
Sindelﬁngen
Chairman of the General Works Council, Daimler Group
and Daimler AG; Deputy Chairman of the Supervisory Board
of Daimler AG

Dr. Paul Achleitner
Frankfurt am Main
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG – Chairman
Bayer AG

Sari Baldauf
Helsinki
Former Executive Vice President and General Manager
of the Networks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
F-Secure Corporation
Fortum OYj – Chairwoman
Deutsche Telekom AG
AkzoNobel N.V.

Dr. Clemens Börsig
Frankfurt am Main
Chairman of the Board of Directors of
Deutsche Bank Foundation
Other supervisory board memberships/directorships:
Linde AG
Bayer AG
Emerson Electric Co.

Michael Brecht*
Gaggenau
Deputy Chairman of the General Works Council,
Daimler Group and Daimler AG;
Chairman of the Works Council, Gaggenau Plant,
Daimler AG

Petraea Heynike
Vevey
Former Executive Vice President of the Executive Board
of Nestlé S.A.
Other supervisory board memberships/directorships:
Schulich School of Business
Aiglon College

Jörg Hofmann*
Frankfurt am Main
Vice Chairman of the German Metalworkers’ Union (IG Metall)
Other supervisory board memberships/directorships:
Robert Bosch GmbH
Heidelberger Druckmaschinen AG

Andrea Jung
New York
Senior Advisor, Former Chairman and CEO of
Avon Products, Inc.
(since April 10, 2013)
Other supervisory board memberships/directorships:
Apple Inc.
General Electric Company

Gerard Kleisterlee
Amsterdam
Former President and CEO of Royal Philips Electronics N.V.
Other supervisory board memberships/directorships:
Vodafone Group Plc. – Chairman
Royal Dutch Shell Plc.

Jürgen Langer*
Frankfurt am Main
Chairman of the Works Council of the Frankfurt/Oﬀenbach
Dealership, Daimler AG

A | To Our Shareholders | The Supervisory Board

Dr. Sabine Maaßen*
Frankfurt am Main
General Counsel of the German Metalworkers’ Union
(IG Metall)
(since April 10, 2013)
Other supervisory board memberships/directorships:
ThyssenKrupp AG

Retired from the Supervisory Board on April 10, 2013:

Prof. Dr. Heinrich Flegel*
Stuttgart
Director Research Materials, Lightweight Design and
Manufacturing, Daimler AG; Chairman of the Management
Representative Committee, Daimler Group

Wolfgang Nieke*
Stuttgart
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
(since April 10, 2013)

Valter Sanches*
São Paulo
Director of Communications of the Metalworkers’ Union ABC;
President of the Fundação Sociedade Comunicação,
Cultura e Trabalho (Foundation Society of Communications,
Culture and Work)

Jörg Spies*
Stuttgart
Chairman of the Works Council, Headquarters, Daimler AG

Elke Tönjes-Werner*
Bremen
Member of the Works Council, Bremen Plant, Daimler AG
(since April 10, 2013)

Lloyd G. Trotter
Plainville
Former Vice Chairman General Electric; President & CEO
of the General Electric Group’s Industrial Division;
Managing Partner, Founder, GenNx360 Capital Partners
Other supervisory board memberships/directorships:
PepsiCo Inc.
Textron Inc.
syncreon Holdings Ltd.
syncreon.US Holdings Inc.
syncreon.US Inc.

Dr. h. c. Bernhard Walter
Frankfurt am Main
Former Spokesman of the Board of Management
of Dresdner Bank AG
Other supervisory board memberships/directorships:
Bilﬁnger Berger SE – Chairman
Deutsche Telekom AG

Dr. Frank Weber*
Sindelﬁngen
Director of the Press Shop, Sindelﬁngen Plant, Daimler AG;
Chairman of the Management Representatives of the
Sindelﬁngen Plant
(since April 10, 2013)

Dr. Thomas Klebe*
Frankfurt am Main
General Counsel of the German Metalworkers’ Union
(IG Metall)

Ansgar Osseforth*
Sindelﬁngen
Manager Mercedes-Benz Research and Development,
Daimler AG

Uwe Werner*
Bremen
Chairman of the Works Council, Bremen Plant, Daimler AG

Lynton R. Wilson
Toronto
Chairman of the Board of CAE Inc.;
Chancellor, McMaster University

Committees of the Supervisory Board:

Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoﬀ – Chairman
Erich Klemm*
Dr. Jürgen Hambrecht
Jörg Hofmann*

Presidential Committee
Dr. Manfred Bischoﬀ – Chairman
Erich Klemm*
Dr. Jürgen Hambrecht
Jörg Hofmann*

Audit Committee
Dr. h. c. Bernhard Walter – Chairman
Erich Klemm*
Dr. Clemens Börsig
Michael Brecht*

Nomination Committee
Dr. Manfred Bischoﬀ – Chairman
Dr. Paul Achleitner
Sari Baldauf

* Representative of the employees

Daimler and the Capital Market.

Daimler’s share price gains 52% over the year. Global stock markets developed very positively
in 2013, supported by the expansive monetary policy of the central banks and the easing
of the European sovereign debt crisis. The Board of Management and the Supervisory Board
propose an increased dividend of €2.25 per share (prior year: €2.20). We oﬀer investors
and analysts a comprehensive range of investor relations services. Daimler took advantage
of the high level of liquidity on international capital markets to reﬁnance its operations
at attractive terms.

A.01
Development of Daimler’s share price and of major indices

End of 2013

End of 2012

13/12

% change

Daimler share price (in euros)

62.90

41.32

DAX 30

Dow Jones Euro STOXX 50

Dow Jones Industrial Average

Nikkei

Dow Jones STOXX Auto Index

9,552

3,109

16,577

16,291

482

7,612

2,636

13,104

10,395

351

+52

+25

+18

+27

+57

+37

A.02
Key ﬁgures per share

Amounts in euros

Net proﬁt

Net proﬁt (diluted)

Dividend

Equity (December 31)
Xetra price at year end1
Highest1
Lowest1

1 Closing prices

2013

2012

13/12

% change

6.40

2.25

39.90

62.90

63.15

38.65

6.02

2.20

35.51

41.32

48.45

33.40

+12

+52

+30

+16

A good year on the world’s stock markets. Global stock
markets developed very positively in 2013. At the beginning
of the year, stock markets were buoyed by positive growth
signs in China and by a preliminary agreement for preventing
the United States from falling oﬀ a “ﬁscal cliﬀ.” With major
central banks continuing to pursue an expansionary monetary
policy, investors increasingly allocated the resulting high
market liquidity to purchase equities. As a result, key stock-
market indices rose to all-time highs during the year. However,
the return of uncertainty regarding the sovereign debt crisis
in Europe caused shares to lose some of their gains in the ﬁrst
quarter and at the beginning of the second quarter. But conﬁ-
dence in the economic development of the European Monetary
Union improved again later in the year. This caused investors’
demand for shares to grow even more – a development that espe-
cially beneﬁted cyclical stocks. In the middle of the year,
statements by the Federal Reserve Bank concerning a possible
tapering of its expansionary monetary policy caused share
prices to fall worldwide. This sell-oﬀ was intensiﬁed by higher
interest rates in China and by concerns regarding a decrease
in the availability of credit there.

However, stock markets developed very favorably once again
in the third quarter. This was mainly due to the stabilization
of the macroeconomic situation in Europe, the United States
and China, which oﬀset concerns regarding the political
situation in the Middle East. The budget conﬂict in the US and
the debate about the country’s debt ceiling had only a tem-
porary eﬀect on share prices. In conjunction with positive eco-
nomic indicators, the continued expansionary monetary
policy of key central banks – including the European Central
Bank’s surprise interest rate cut – helped share prices to
increase across the board later in the year. Under these condi-
tions, many stock market indices rose to all-time highs in
the last two months of the year.

The index of the most important shares in the euro zone,
the Dow Jones Euro STOXX 50, rose by 18% in 2013, although
the entire increase occurred in the second half of the year.
Due to the robust condition of the German economy, the lead-
ing German index, the DAX, did even better, rising by 25%.
The DAX reached a new all-time high of 9,589 on December 27.
In the United States, the Dow Jones rose by 27% during the
year, while Japan’s Nikkei index was even 57% higher at the end
of 2013 than at the beginning.  A.01

Daimler share price up by 52% over the year. With a gain
of 52%, Daimler shares were able to substantially outperform
most stock market indices. Financial markets responded
favorably to the publication of the Daimler Group’s results for
2012, the outlook for 2013, and the recommendation that
dividends should remain unchanged at €2.20 per share. This
helped the share price to increase slightly in the ﬁrst quarter.
However, the Daimler share price was not unaﬀected by the
uncertainties associated with the European sovereign debt
crisis and the Cyprus bailout. In addition, business did not develop
as well in the ﬁrst quarter as had been expected at the begin-
ning of the year. During this phase, the Daimler share price
dropped to its lowest point of the year when it fell to €38.65
on April 18.

However, when we published our ﬁnancial statements for
the ﬁrst quarter, we emphasized that we expected results to
improve during the course of the year. In the following weeks,
the share price was also boosted by the very positive feedback
regarding the newly introduced products. Investors responded
especially positively to the presentation of the new S-Class and
the Concept GLA. In this environment, the Daimler share
price rose substantially until mid-May and temporarily peaked
at €50.37 on May 20. However, statements made by the Federal
Reserve Bank and the Chinese central bank in June caused
the Daimler share price to follow the general market trend and
lose some of its gains.

This temporary slump ended in mid-June. In the second half
of the year, the Daimler share price once again beneﬁted from
a more favorable stock market climate and the positive busi-
ness development. For example, the capital markets responded
positively to Daimler’s second-quarter results, which were
better than most market participants had expected. In addition,
the good response to the new products and increasingly
dynamic car sales boosted investors’ interest in Daimler shares.
Daimler used the Frankfurt Motor Show to enable capital
market representatives to experience the new products at ﬁrst
hand. And on September 20, Daimler Trucks held a Capital
Market Day in Wörth. At the event, the division informed analysts
and investors about the latest developments in the truck
business and our ongoing strategy. Under these conditions,
the Daimler share price rose to €58.43 on September 19,
achieving its highest value in more than two and a half years.

The Daimler share price then continued to increase in line
with the general stock market upswing, rising to €63.15
on December 27. This was not only its high for the year 2013
but also the highest price in more than ﬁve years. The Daimler
share price closed the year on December 30 at €62.90.
At the end of the year, the company had a market capitalization
of €67.3 billion.

The Daimler share price thus increased by 52% during the
year, performing better than the Dow Jones STOXX Auto Index
(+37%) and the DAX (+25%). When the dividend payout
of €2.20 per share is also considered, our shareholders had
an overall value gain of 58%.

In the ﬁrst two weeks of the year 2014, stock-market prices
at ﬁrst continued to rise, especially in Europe and North
America. Global equity prices weakened signiﬁcantly after
that, resulting in falls of nearly all major stock-exchange
indices in January overall.

A | To Our Shareholders | Daimler and the Capital Market

Increased dividend of €2.25.  A.02 At the Annual Share-
holders’ Meeting on April 9, 2014, the Board of Management
and the Supervisory Board will propose an increase in the
dividend to €2.25 per share (prior year: €2.20). With this proposal,
we are letting our shareholders participate in Daimler’s ﬁnan-
cial success while expressing our conﬁdence about the ongoing
course of business. The total dividend will thus amount to
€2,407 million (prior year: €2,349 million).

A broad shareholder structure.  A.07 Daimler continues
to have a broad shareholder base of approximately 900,000
shareholders. However, the number of shareholders has
decreased by around 100,000 compared with the prior year.
After slightly increasing its holding in Daimler AG in 2012,
the Kuwait Investment Authority (KIA) readjusted its stake to
its original strategic level during 2013. At the end of the
reporting year, KIA owned 6.8% of Daimler’s shares. The Renault-
Nissan Alliance continues to hold 3.1% of Daimler’s shares.

BlackRock Inc., New York, still hold a stake above the 5%
reporting limit as deﬁned by Germany’s Securities Trading Act
(WpHG). In August 2011, BlackRock notiﬁed us that it owned
5.7% of Daimler’s shares.

A.03
Daimler share price (high/low), 2013

In euros

1/13

2/13

3/13

4/13

5/13

6/13

7/13

8/13

9/13

10/13

11/13

12/13

A.04
Share price index

170

160

150

140

130

120

110

100

12/31/12

2/28/13 4/30/13 6/30/13 8/31/13 10/31/13

12/31/13

Daimler AG
Dow Jones STOXX Auto Index
DAX

A.05
Key ﬁgures for Daimler shares

End of 2013

End of 2012

13/12

% change

+53

-10

Share capital (in millions of euros)

Number of shares (in millions)

3,069

1,069.8

3,063

1,067.6

Market capitalization
(in billions of euros)

Number of shareholders
(in millions)

Weighting in share indices

DAX 30

Dow Jones Euro STOXX 50

Long-term credit ratings

Standard & Poor’s

Moody’s

Fitch

DBRS

67.3

0.9

7.74%

3.23%

A-

44.1

1.0

6.16%

2.58%

A-

A (low)

A.06
Stock-exchange data for Daimler shares

ISIN

German Securities Identiﬁcation Number

Stock-exchange symbol

Reuters ticker symbol

Bloomberg ticker symbol

DE0007100000

710000

DAI

DAIGn.DE

DAI:GR

A.07
Shareholder structure as of December 31, 2013

By type of shareholder

Kuwait Investment Authority

Renault-Nissan

Institutional investors

Retail investors

6.8%

3.1%

73.4%

16.7%

A.08
Shareholder structure as of December 31, 2013

By region

Germany

Europe, excluding Germany

USA

Kuwait

Asia

Rest of the world

32.2%

31.1%

24.4%

6.8%

5.3%

0.2%

The Norwegian Finance Ministry informed us that the shares
held by Norges Bank, Oslo, had dropped below the reporting
limit of 3% stipulated by Section 21 of the WpHG in March 2013.
In April 2013, this limit was once again exceeded and the bank
held 3.04% of the voting rights in Daimler as of April 26, 2013.

In April 2013, we also received notiﬁcations of voting rights from
Credit Suisse AG, SEB AG and Commerzbank AG. According
to those statements, the banks’ directly or indirectly held voting
rights in Daimler had risen above the 3% limit in the run-up to
our Annual Shareholders’ Meeting before dropping signiﬁcantly
below this limit again two weeks later. In September, Deutsche
Bank AG notiﬁed us that its holding of Daimler shares rose above
the 3% reporting limit on September 19, 2013, and that it had
once again dropped below this limit on September 23, 2013,
at 0.29%. Deutsche Bank AG notiﬁed us in December that its
shareholding had fallen to 0.02% as of December 12, 2013.

The aforementioned voting rights notiﬁcations and the
notiﬁcations relating to other ﬁnancial instruments required
by new legislation in 2012 are published on the Internet at
w daimler.com/investor-relations/daimler-shares/
shareholder-structure.

Institutional investors hold a total of 73% of our equity capital
while private investors own 17%. Approximately 63% of our
capital is in the hands of European investors and around 24%
is held by US investors.  A.08

Daimler shares’ weighting in major indices increased during
the reporting year as a result of the share price increase and
the growth in the free-ﬂoat. In the German DAX 30 index,
Daimler was ranked in fourth place at the end of 2013 with
a weighting of 7.74% (2012: 6.16%).  A.05 In the Dow Jones
Euro STOXX 50 index, our stock had a weighting of 3.23%
(2012: 2.58%) with seventh ranking. Daimler shares are listed
on the stock exchanges in Frankfurt and Stuttgart. In 2013,
1,029 million shares (2012: 1,421 million) were traded on stock
exchanges in Germany. In addition, Daimler shares are
increasingly being traded on multilateral trading platforms
and in the over-the-counter market.

Participation in the employee share purchase plan once
again at a high level. Staﬀ members entitled to purchase
employee shares were able to do so once again in March 2013.
As was the case in the previous year, the employees received
a discount as well as bonus shares. At 19.2%, the participation
rate was slightly higher than in 2012 (17.3%). The 33,200
employees who took part in the program purchased a total
of 519,000 shares.

Annual Shareholders’ Meeting once again sparks consider-
able visitor interest. On April 10, 2013, around 5,000 share-
holders (2012: 5,700) attended the Annual Shareholders’ Meet-
ing at the International Congress Center (ICC) in Berlin. At
29.3%, much less equity capital was represented at the meet-
ing than in the previous year (2012: 44.1%). The participants
included actual attendees as well as shareholders who voted
by absentee ballot. The substantial decline in shareholder
attendance (which occurred for all DAX-listed companies with
registered shares) was caused by a decision of the Cologne
Higher Regional Court concerning nominee shareholders’ obliga-
tion to submit voting rights notiﬁcations, which generated
uncertainty among foreign institutional investors. Many of those
investors therefore decided to stay away from annual share-

A | To Our Shareholders | Daimler and the Capital Market

holders’ meetings in Germany. A large majority of the share-
holders approved each of the agenda points proposed by
the company’s administration. Among other things, the meeting’s
participants reelected Sari Baldauf and Dr. Jürgen Hambrecht
as members of the Supervisory Board representing the share-
holders for another ﬁve years. The participants, for the ﬁrst
time, elected Andrea Jung to the Supervisory Board, also for
ﬁve years.

All of the documents and information regarding the Annual
Shareholders’ Meeting can be found at w daimler.com/ir/am.
In the exhibition areas of the ICC, Daimler presented its
technological expertise and broad product range with a focus
on the new E-Class and the new compact cars.

Another year of comprehensive investor relations
activities. In 2013, we once again provided institutional
investors, analysts, rating agencies and private investors with
timely information regarding the company’s business devel-
opment. 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, Frankfurt and Paris.
We regularly reported on our quarterly results in conference
calls and webcasts. The presentations can be watched on our
website at w daimler.com/ir/event/e.

The talks with analysts and investors focused on the latest
earnings expectations for 2013 as well as on the business
development and proﬁtability of the individual divisions and
regions. In mid-June, Daimler also organized a product-focused
capital market event in Berlin, where it presented the new
S-Class ﬂagship vehicle from Mercedes-Benz. The feedback
was extremely positive. In June, Daimler also took part in an
investor conference in Beijing, where it explained the company’s
strategy and provided information regarding its position in
the important Chinese market. At a conference on the occasion
of the Frankfurt Motor Show, the IR team informed numerous
investors about the latest developments at Daimler and accom-
panied them to presentations of important new products.
In addition, the capabilities of the “INTELLIGENT DRIVE” driver
assistance systems were explained. Another highlight of 2013
was the Capital Market Day, which was held at the Wörth truck
plant at the end of September. At that event, Daimler Trucks’
new management team provided information about the division’s
strategies, focus areas and objectives. Audio recordings
and presentation graphics of the event can be accessed on our
website w daimler.com/ir/event/e.

As a supplementary oﬀer, we also invited sustainability-
oriented investors and analysts to take part in the Daimler
Sustainability Dialogue 2013. At this event in Stuttgart,
representatives of non-government organizations, associations,
trade unions and municipalities debated with Daimler
representatives about the company’s key sustainability-
related issues.

Online oﬀers are well-established on many channels.
Our online activities oﬀer a broad range of information that is
reaching more and more people. In addition to maintaining
a well-established presence at daimler.com and daimler.mobi,
Daimler has further intensiﬁed its social media activities.

The Daimler app enables iPhone® and iPad® users to obtain
up-to-the-minute information about not only the Group, its
brands and its products, but also about issues related to tech-
nology and innovation. In addition, it provides users with
comprehensive and up-to-date information from the Investor
Relations unit.

The printed and online versions of the 2012 Annual Report
were the winners of several international competitions.
The contents of the online annual report were not only oﬀered
for desktop computers but also optimized for tablet computers
and smartphones. In this way, we are responding to the
growing number of users of mobile devices.

Number of online shareholders remains at a high level.
Our shareholders are increasingly taking advantage of our
oﬀers for personalized electronic information and communica-
tion: Approximately 88,000 shareholders (2012: 86,000)
received the invitation and agenda for the Annual Shareholders’
Meeting no longer by post but by e-mail in 2013. We would
like to thank those shareholders for helping to protect the envi-
ronment and cut costs. As was the case in the past, these
shareholders once again had the opportunity to win attractive
prizes in a prize draw. To access the e-service for share-
holders and obtain additional information, go to
w https://register.daimler.com.

Reﬁnancing beneﬁts from the high level of capital market
liquidity and a good rating. The central banks’ expansionary
monetary policy also impacted bond markets in 2013. Due to the
high level of liquidity, companies with investment-grade ratings
saw their risk premiums decline once again compared to the prior
year. Daimler beneﬁted from this as well.

In 2013, Daimler primarily covered its reﬁnancing needs by
issuing bonds. Many of these bonds were sold as benchmark
bond issues (bonds with high nominal volumes) on markets
using the euro or the US dollar. In the US capital market, for
example, Daimler Finance North America LLC issued bonds
worth a total of $6 billion in January and August 2013. The bonds
had terms of two, three and ﬁve years. Daimler AG issued
bonds in a total volume of €4.5 billion during the course of
the year, including issued bonds with longer terms of eight
and ten years. Many smaller bonds were also issued in a variety
of currencies in the euro market as well as in Canada, South
Africa, Mexico, Thailand, Brazil, Argentina and South Korea.

At the end of 2013, companies of the Daimler Group
had issued bonds that were still outstanding in a volume
of €38.7 billion (2012: €35.7 billion).

Besides raising ﬁnance through the issuance of bonds, Daimler
also issued a small volume of commercial paper in 2013.
Due to the very favorable market situation, Daimler also con-
ducted several asset-backed security (ABS) transactions
in the United States and Germany during the reporting year.
In the US, for example, the company reﬁnanced its operations
by issuing $4.3 billion of ABS papers backed by receivables
from leasing or loan contracts. Furthermore, Mercedes-Benz
Bank sold €0.9 billion of ABS bonds to European investors.
These bonds are collateralized by receivables from loans.
E see pages 96 f

Objectives and Strategy.

Our overriding corporate goal is to achieve sustained proﬁtable growth and thus continually
increase the value of the Group. We aim to attain the leading position in all of our business
segments. To achieve that goal, we have deﬁned four strategic growth areas for the Group.
We will implement measures related to those areas in the coming years within the framework
of the growth strategies of our divisions. These strategies will be accompanied by eﬃciency
programs to ensure that our growth has a solid ﬁnancial foundation.

A clear claim to leadership in all business segments.
By means of the “Mercedes-Benz 2020” growth strategy,
our Mercedes-Benz Cars division aims to occupy the leading
role for premium automobiles by the end of this decade.
This means that we intend to be ahead of the competition
in terms of our brand image, product range, unit sales
and also proﬁtability. The smart brand will further enhance
its pioneering role in urban mobility. At Daimler Trucks,
we want to further strengthen our position as the Number One
company in the global truck business. Mercedes-Benz Vans
aims to achieve further proﬁtable growth also outside its present
markets and market segments with the “Vans goes global”
strategic initiative. Daimler Buses has set itself the goal of further
strengthening its leading position for buses above 8 metric
tons gross vehicle weight. Daimler Financial Services has targeted
the position of best captive ﬁnancial services provider and
will continue to grow in line with our automotive business, as
well as in the area of mobility services. In all divisions, we
are increasingly utilizing innovations on the interface to digital
technologies.

Focus on the customer. All of our activities are focused on
our customers’ needs. We want to inspire our customers with
– fascinating premium automobiles that set standards

in the areas of design, safety, comfort, perceived value,
reliability and environmental compatibility;

– commercial vehicles that are the best in their respective

competitive environments;

– outstanding services that are related to all of these products;

and

– new customer-oriented mobility solutions that exploit

the potential of increasing digitization.

Target system.  A.09 Our overriding corporate goal
is to achieve sustained proﬁtable growth and thus to continu-
ally increase the value of the Group. We aim to attain the
leading position in all of our business segments. We inspire
our customers with our brands, products and services.
Our core Mercedes-Benz brand plays a key role in these endeav-
ors. Through our groundbreaking technologies, we underscore
our position as a pioneer in the areas of environmentally friendly
drive systems and safety features. We are strengthening
our global presence by safeguarding our position in traditional
markets and expanding into new ones. Outstanding opera-
tional excellence and eﬃciency, along with inspired and high-
performing people, are the foundation of our future corporate
success. At the same time, our entrepreneurial activities are
guided by the principle of sustainability in the areas of eco-
nomics, corporate governance, environmental protection and
safety, as well as in our relations with employees, customers
and society in general. Our four corporate values – passion,
respect, integrity and discipline – form the basis of our actions
and help us to achieve our goals. One key principle applies
to everything we do: No business in the world is worth violating
laws, regulations or ethical standards. For us, integrity and
business success are two sides of the same coin. That is why
we want to lead the competition in terms of integrity as well.

A.09
Target system

A | To Our Shareholders | Objectives and Strategy

Ambitious return targets. In addition to our growth targets,
we have set ourselves a return target (EBIT in relation to revenue)
of 9% on average for our automotive business. This overall
ﬁgure is based on the return targets for the individual divisions,
which we intend to achieve on a sustained basis. These
targets are 10% for Mercedes-Benz Cars, 8% for Daimler Trucks,
9% for Mercedes-Benz Vans and 6% for Daimler Buses. Our
target for the Daimler Financial Services division is a return
on equity of 17%.

Strengthening our core business. A strong core business
is founded on ﬁrst-rate products, competitive cost structures
and a customer-focused organization. In order to prepare
ourselves for growth and a stronger customer focus, we are
increasingly aligning our organizational structure with the
individual divisions as part of a concept under the heading
of “Customer Dedication.” This is bringing us closer to
the customer, while at the same time reducing complexity
and making our organization faster and more ﬂexible.

Four strategic growth areas. We aim to achieve our
goals in four strategic growth areas.  A.10
We will
– strengthen our core business,
– continue growing in new markets,
– take the lead with “green” technologies and safety, and
– forge ahead with the development of new mobility

concepts and services.

A comprehensive model oﬀensive will extend the product
range of Mercedes-Benz Cars in all segments by the year 2020.
The new S-Class, which was launched in all regions within
only three months, is the spearhead not only of our Mercedes-
Benz car program but also of automotive development as a
whole. The S-Class is once again the leader in terms of safety,
comfort, and luxury. It will be followed in 2014 by the S-Class
coupe, the new GLA, the C-Class, and the new smart, which will
be available as a two- and four-seat version. This program
of product renewal and expansion is being accompanied by the
systematic further development of our brands as well. Our
claim to deliver “the best or nothing” underscores our commit-
ment to further consolidating the Mercedes-Benz brand’s
top position in the market. We will use our new compact-class
models in particular to attract younger target groups. Our
brand and corporate communication activities increasingly

involve the use of digital media. New sales formats, such
as “Mercedes-Benz connect me,” and temporary formats, such
as mobile sales pavilions for highlighting the new A-Class,
are creating meeting points for establishing contacts with new
customers as well.

In order to achieve sustained proﬁtable growth, we have
supplemented the “Mercedes-Benz 2020” growth strategy
with the “Fit for Leadership” program. Fit for Leadership
is designed to further improve the proﬁtability of Mercedes-Benz
Cars. That includes enhancing existing eﬃciency measures,
such as our vehicle architecture and module strategy and our
approach to oﬀsetting rising material and production costs.
These and other measures will be supplemented by additional
elements. Fit for Leadership also includes a structural com-
ponent that will ensure our business system remains geared
toward eﬃciency and growth over the long term.

At Daimler Trucks, we have been focusing for several years
now on introducing uniform product platforms for vehicles and
components. Our guiding principle here is “as global as pos-
sible, as local as necessary.” The launch of the new Atego and
the special vehicles Unimog, Econic and SLT marked the
conclusion of our Euro VI product oﬀensive at Mercedes-Benz
Trucks. Our current product range at Daimler Trucks is stron-
ger and more extensive than ever before. At the same time, we
have created a highly ﬂexible global production network.
With our “Daimler Trucks #1” excellence program, we aim to
secure our proﬁtability targets on a sustainable basis. Here
we are concentrating on increasing the eﬃciency of our oper-
ating units. In addition, we want to improve the interaction
between the various business units and functions by means
of interdepartmental initiatives, thus utilizing the potential
of our global position more eﬀectively. An important step in this
direction is the consolidation of our Asian business activities
into our integrated “Asia Business Model” approach. Here, coop-
eration on product development, production, procurement,
sales and ﬁnance between the two independent companies
Mitsubishi Fuso Truck and Bus Corporation and Daimler
India Commercial Vehicles will generate synergies and addi-
tional growth in the Asia-Africa region.

Mercedes-Benz Vans will support the planned worldwide
growth with its new products and technologies. The new
generation of our ﬂagship van – the Mercedes-Benz Sprinter –
and the market launch of the new V-Class and the Vito in
2014 will put us in a very good position for future success with
our van products. The new V-Class represents a move toward
the car segment in terms of both the model’s name and its
product concept. In this manner it establishes the new segment
of premium full-size MPVs.

The Daimler Buses division is strengthening its competitive
position with new products and economical engines. The new
Setra TopClass 500 coach is once again the benchmark for
design and engineering in the luxury coach segment. Since 2013,
Daimler Buses has oﬀered a complete range of Euro VI-
compliant buses in Europe through its Mercedes-Benz and Setra
brands. The Euro VI emission standard went into eﬀect in
the EU in January 2014. In addition, Daimler Buses is continuing
its eﬀorts to safeguard a suitable level of proﬁtability over
the long term, to be the leader in terms of new technologies
and products, and to further expand its business operations
around the world.

Daimler Financial Services is also focused on proﬁtable growth
– and in a variety of ways. The division will continue to grow
in line with the model and market oﬀensives for cars and com-
mercial vehicles. At the same time, it will further expand its
product range in the areas of ﬁnancing, leasing, motor vehicle
insurance and mobility services. Daimler Financial Services
has combined all of its mobility services for individual customers
into a single company known as Daimler Mobility Services GmbH.

Growing in new markets. Growth in global automobile
demand will mainly take place in the markets outside Europe,
North America and Japan in the coming years. Although
we continue to strengthen our position in traditional markets,
we also aim to expand in other regions, especially in Brazil,
Russia, India and China, which are known as the BRIC countries.
In order to achieve Mercedes-Benz Cars’ sales targets, we
are intensifying our local activities, above all in China and Brazil.

We are increasing the production capacities in China for
model series that are already manufactured locally. We will
also begin building our new GLA compact SUV in China
in 2014. We opened a new production plant for four-cylinder
engines in China in November 2013. At the same time,
we are expanding our sales network in the country. Together
with the Chinese battery and vehicle manufacturer BYD,
we have developed a battery-electric automobile for the prom-
ising electric-vehicle segment. This electric vehicle will be
launched in China in 2014 and sold under the DENZA brand
name. Our activities in the ﬁeld of medium-duty and heavy-
duty trucks in China focus on cooperation with our partner
Foton. Mercedes-Benz Vans produces the Vito, Viano and
Sprinter models for the Chinese market in cooperation with
Fujian Benz Automotive Corporation.

A.10
Strategic Pillars of Growth

Strengthening
Core Business

Growing
in New
Markets

A | To Our Shareholders | Objectives and Strategy

Leading
in Green
Technologies
and Safety

+ –

Shaping
New Mobility
Services

A B

The four Strategic Pillars of Growth at Daimler

We will begin manufacturing the C-Class and the GLA for the
local market in Brazil in 2016. Daimler Trucks is investing in the
modernization of its product program in Brazil in an eﬀort
to further improve its strong market position there. At the same
time, the two production plants in São Bernardo do Campo
and Juiz de Fora are undergoing a modernization program.

In Russia, Europe’s biggest truck market, we are continuing
our expansion in cooperation with our partner Kamaz. In the
second half of 2013, Mercedes-Benz Vans began producing
the Sprinter Classic in Russia in cooperation with the commer-
cial vehicle manufacturer GAZ.

Daimler Trucks has been successfully manufacturing trucks
in India under the new BharatBenz brand name since June 2012.
We will launch additional new models on the market in 2014.
These products will allow Daimler to satisfy the rising demand
for robust and reliable trucks in India. Daimler Buses has
integrated all of its local business activities into Daimler India
Commercial Vehicles and is now setting up local bus pro-
duction operations.

The extension of our international production network is being
accompanied by the expansion of our international research
and development network in countries such as China and India.

Daimler Financial Services is gradually expanding its business
activities in line with the growth strategies of the automotive
divisions. Our expansion measures extend beyond the BRIC
countries to other growth markets outside the Western Europe,
North America and Japan.

Leading in green technologies and safety. Our goal as a
pioneer of automotive engineering is to make the future of
mobility safe and sustainable. Varying mobility requirements
call for diﬀerent drive system solutions. Our portfolio here
ranges from optimized internal combustion engines to hybrid
drive systems and locally emission-free driving solutions.
As early as 2013, we were able to reduce the CO2 emissions
of newly registered vehicles from Mercedes-Benz Cars in
the European Union to an average of 134 grams per kilometer.
Our overall objective is to reduce the CO2 emissions of our
new car ﬂeet in the European Union to an average of 125 g/km
by 2016.

Our new engines have enabled us to the lower fuel consumption
of the S-Class by approximately 20% compared with the
predecessor model. The S 500 PLUG-IN HYBRID, which will
be launched in the second half of 2014, will be the most
economical S-Class of all time. E see page 108 We are the
ﬁrst automobile manufacturer in the world to use lithium-ion
batteries in a series-produced car with hybrid drive.

Our range of locally emission-free vehicles with battery-electric
or fuel-cell drive is unique in the automotive industry. Our
product range here includes everything from cars to vans, light
trucks and buses. This means that we can currently cover
nearly every mobility requirement. Moreover, the smart fortwo
electric drive1 made us the leader for new registrations
of electric vehicles in Germany in 2013. Our range of electric
vehicles will be further expanded in 2014 to include the
new B-Class Electric Drive2. Together with Ford and our strategic
cooperation partner, Nissan, we continue to move ahead
with the commercialization of fuel-cell vehicles. To ensure the
creation of the required infrastructure, we are cooperating
with leading industrial companies on the expansion of the hydro-
gen ﬁlling station network in Germany.

We were the ﬁrst truck manufacturer to have made its entire
european product range Euro VI-compliant before the new
emission standard went into eﬀect on January 1, 2014. Despite
the complicated exhaust-gas treatment system required for
this compliance, we were still able to reduce fuel consumption
across all model series. The Actros is the most economical
truck in its market segment in Europe, and the Freightliner
Cascadia Evolution is the most fuel-eﬃcient truck in North
America. With our buses as well, we have achieved fuel savings
of as much as 8% while making the transition to Euro VI.
We are the leader in hybrid technologies, and we sell more
commercial vehicles with hybrid drive than any other
company in the world.

In Europe, we intend to reduce the fuel consumption of our
ﬂeet of trucks by an average of 20% between 2005 and 2020.
Compared with 2005, we already achieved a 10% reduction
in fuel consumption and CO2 emissions when we launched the
new Actros series in 2011, and we are working hard on
achieving the next 10%.

Our goal is to become “greener” not only in terms of our
products; we have also expanded our emission-reduction
activities to other relevant segments of the value chain.

1 smart fortwo electric drive: electricity consumption in kWh/100km 15.1;

CO2 emissions in g/km 0.0.

2 B-Class Electric Drive: market launch at ﬁrst in the USA in Q2 2014.

We will also further strengthen our position as a pioneer in the
development of active and passive safety systems for cars
and commercial vehicles. The safety and assistance systems
in the new S-Class underscore our claim to be the builders
of the world’s safest car. The S 500 INTELLIGENT DRIVE research
car marks a milestone in the transition from a self-moving
(automobile) to an independent (autonomous) vehicle. We want
to make autonomous driving a reality in a series-production
vehicle by the end of this decade. Safety is also a top priority
with our commercial vehicles. We are the only manufacturer
on the market to oﬀer a system like our Active Brake Assist 3,
which initiates an emergency braking maneuver to bring
the vehicle to a full stop if it encounters a stationary obstacle
ahead. As a result, we are now meeting a requirement that
will not take eﬀect for all new vehicles until 2015.

Driving the development of new mobility concepts and
services. More than half of the world’s population now lives
in cities, and this proportion is rising. Digital technologies
are changing our products, our brand and corporate communi-
cation activities and our work environment. As part of this
development, customers are increasingly demanding individual,
needs-oriented and convenient mobility solutions.

This is creating new business opportunities for Daimler, and we
intend to systematically exploit this potential with new and
innovative products and services. They include various mobility
concepts for private, business and public transport applica-
tions – for example, car2go, CharterWay, Bus Rapid Transit (BRT)
and the “moovel” mobility platform. To further expand this
business with innovative mobility services, we have consolidated
our mobility services for individual customers in a new com-
pany. In the coming years, we will continue to expand car2go,
our ﬁrst and most successful mobility service. By the end
of 2013, almost 600,000 customers had registered for car2go
in 25 cities in Europe and North America. The moovel inte-
grated mobility platform allows us to oﬀer our customers the
possibility to optimally combine various private and public
mobility services. A “moovel” payment system is also planned
for the future.

A | To Our Shareholders | Objectives and Strategy

We are also investing in strategic partnerships with various
startup companies such as Flixbus and mytaxi. In the area
of innovative services, we are testing and expanding several
systems, in particular those based on digital and networked
platforms. Such services include an online portal for vehicle-
ﬁnancing customers in the Asia-Paciﬁc region, as well as the
“Detroit Connect” service system for our trucks in the United
States. “Detroit Connect” conducts onboard diagnoses of
the vehicles. At its central service center, the engine manu-
facturer Detroit uses the collected data to ensure that the
next workshop visits of these vehicles will be as smooth and
quick as possible. Last but not least, we are conducting pilot
projects to test online car sales systems. Within the framework
of “Digital Life,” we are linking working environments, corpo-
rate and brand communications, customers, products and new
business opportunities.

In this manner, we are working on vehicle-related concepts
to shape the future of mobility, while also promoting growth
in all of our segments, markets and businesses.

Extensive investments in the future of the company.
In the coming years, we will systematically move ahead with
our investment oﬀensive in order to implement our growth
strategy through the introduction of new products, new technol-
ogies, and state-of-the-art manufacturing capacities. In the
years 2014 and 2015, we therefore will invest approximately €11
billion in property, plant and equipment, as well as €11 billion
in research and development projects.  A.11 to A.14

The property, plant and equipment investment will be used
mainly to prepare for the production launches of our new
models, to modernize our manufacturing facilities in Germany,
to expand local production in growth markets, and to enhance
our sales organization. E see page 96

Most of our outlay for research and development is used for
new products as well as innovative drive systems and safety
technologies. We will launch approximately 30 new car models
by the year 2020 and will also systematically further develop
our range of commercial vehicles. Furthermore, we intend to
continue signiﬁcantly reducing the fuel consumption, and
thus the CO2 emissions, of our vehicles, and to set standards
for safety and autonomous driving. E see pages 106 f

A.11
Investment in property, plant and equipment 2014 – 2015

In %

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

75%

19%

0.3%

A.12
Investment in property, plant and equipment

2012

2013 2014 – 2015

Amounts in billions of euros

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

4.8

3.5

1.0

0.2

0.1

5.0

3.7

0.8

0.3

0.1

Daimler Financial Services

0.02

10.7

8.1

2.0

0.4

0.2

0.03

A.13
Research and development expenditure 2014 – 2015

In %

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

70%

22%

A.14
Research and development expenditure

Amounts in billions of euros

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

2012

2013 2014 – 2015

5.6

3.9

1.2

0.4

0.2

5.4

3.8

1.1

0.3

0.2

11.0

7.7

2.4

0.6

0.3

Efficient Operation —
Profitable Growth.

New top products and optimized processes are sustainably bringing together growth

and efficiency. Through a broad spectrum of activities, our employees are pursuing

the same goal throughout the Group: thrilling our customers and making Daimler

even more efficient and successful. On the following pages, you can find out how this

growth program – the biggest in our corporate history - is being enthusiastically put

into action at all of our divisions around the globe.

B | Eﬃcient Operation — Proﬁtable Growth.

Attractive and Fascinating Products.

Growth through Global Presence.

Innovation and Technology Leadership.

Tailored Financial Services.

Pioneering Mobility Concepts.

Increased Eﬃciency at All Divisions.

Motivated and High-performing Employees.

First-class Customer Care.

Integrity is the Basis for Our Success.

page 34

page 40

page 46

page 52

page 56

page 60

page 64

page 68

page 72

B | Efficient Operation — Profitable Growth.

The brand-new
Mercedes-Benz GLA gets
people’s hearts racing on
both normal roads and
rugged terrain.

Younger, more efficient
and more diverse than
ever before. The broadest
product portfolio in our
history is an excellent
foundation for enhancing
customer loyalty and
attracting new customers.

Attractive and Fascinating Products.
Thrilling people.

Attractive and Fascinating Products.

The coveted S-Class sedan is being followed by an expansion of the top range of our model program. The Concept S-Class Coupe
oﬀers a preview of the new sporty luxury model from Mercedes-Benz.

“New vehicles in all segments
and across the entire model
range are the drivers behind
our sustainable and profitable
growth.”

S-Class years are always very special, and 2013 was no
diﬀerent in this regard. The new Mercedes-Benz ﬂagship and
the world’s best-selling luxury vehicle was launched in all
key markets in record time last year and enthusiastically
received by our customers. The new Mercedes-Benz E-Class
— a successful volume model and the centerpiece of
Daimler’s growth strategy — also met with an outstanding
customer response.

On the oﬀensive with the best Mercedes ﬂeet ever.

The new GLA is now the fourth of a total of ﬁve young
compact models from the brand with the star. The sporty
oﬀ-roader continues our oﬀensive in the growth market for
premium compact vehicles. Daimler scored another success
at the beginning of 2014 with the completely redesigned
and newly developed C-Class, which is the highest-volume

series from Mercedes-Benz. With its clear and sensuous
design, technical innovations and extensive standard equip-
ment, as well as exemplary levels of emissions and fuel
consumption, the new model also meets the highest demands
in its segment.

Mercedes-Benz is currently the fastest-growing premium
brand, in large part due to our young generation of
compact vehicles.

Our ongoing success in the marketplace is demonstrated not
only by our signiﬁcant sales growth, but also by numerous
domestic and international awards. To name one example,
the Interbrand “Best Global Brands 2013” study once again
conﬁrmed the great appeal and charisma of Mercedes-Benz
by naming it the world’s most valuable premium automotive
brand and the most valuable European brand.

w mercedes-benz.com

B | Eﬃcient Operation — Proﬁtable Growth.

The new Mercedes-Benz C-Class boasts a lightweight design concept, a touchpad and head-up display, an agile chassis and exemplary
assistance systems adding up to perceived value that feels like an “upgrade to a higher class.”

Attractive and Fascinating Products.

Upper picture: The new V-Class is the full-size MPV from Mercedes-Benz. The model makes a big impression with regard to value
and quality, safety and eﬃciency at the highest levels — like all vehicles with the star. Lower picture: The Mercedes-Benz Arocs —
the new force in construction — meets the varied demands of the construction sector with a unique diversity of available models.

B | Eﬃcient Operation — Proﬁtable Growth.

The new Setra TopClass 500 features the Predictive Powertrain Control (PPC) system, which is unique in the touring coach segment.

Our strategy for the future: To oﬀer exactly the right
model for every requirement and application.

We are successfully defending our leading position in the bus
sector with the new Setra TopClass 500. The model highlights
our outstanding technological expertise and also completes
the premium portfolio of vehicles from Daimler Buses.

Our innovative vehicles already meet many of tomorrow’s
mobility requirements today.

Daimler was the ﬁrst commercial vehicle manufacturer to oﬀer
a complete range of Euro VI-compliant trucks and buses. These
forward-looking products not only meet the rigorous statutory
emission standards, they are also meeting our sales targets.

The A-Team continues on the road to success: Following on the
heels of the Actros for long-distance haulage and the Antos for
heavy-duty distribution transportation, the new Arocs is now
on the scene to continue the success story at Mercedes-Benz
Trucks. The new construction specialist has attracted a great
deal of interest since its world premiere and is helping Daimler
extend its lead in the European truck market.

The biggest product oﬀensive in Daimler’s history is
strengthening our position as the world’s number one
commercial vehicle manufacturer.

The Mercedes-Benz Sprinter is once again setting new
standards — right from the start of series production of the
latest generation of the model. The Sprinter is a top seller in
the 3.5-ton segment all over the world. It’s also one of the
key pillars of our global growth strategy in the van segment.
This strategy has been an ongoing success — and the new Vito
and new V-Class from Mercedes-Benz are contributing to its
continuation.

w mercedes-benz.com w setra.de/en/coaches-buses/topclass

B | Eﬃcient Operation — Proﬁtable Growth.

Vehicle production for China
in China. Daimler remains on
course for growth with the
expansion of its car production
plant in Beijing.

International automobile
markets continue to oﬀer
enormous potential. We
will play an even greater
role in these markets in the
future not only by expand-
ing our local capacities for
research, development
and production, but also by
optimizing our structures
and strategic partnerships.

Growth through Global Presence.
On course for continued success.

Growth through Global Presence.

Daimler builds BharatBenz trucks in Chennai, India for sale in the local market. The Group now also produces FUSO trucks in Chennai
for export to other Asian countries and to Africa.

“Our international
production network
and our global research
and development
activities play a key
role in our growth
strategy.”

China is the world’s biggest automobile market, and the
future prospects in this market are still outstanding. That’s
why we’re putting our activities in this successful market
on an even broader foundation. For example, Mercedes-Benz
Cars has not only expanded production capacity at the Beijing
plant operated by Beijing Benz Automotive Company (BBAC),
but has also built a new research and development center.
Daimler has also opened its ﬁrst car engine factory outside
Germany that is exclusively devoted to supplying local vehicle
assembly plants.

Ready for the fastest-growing
automobile markets.

The introduction of the long-wheelbase version of the new
Mercedes-Benz E-Class was a further milestone in Daimler’s
implementation of its China strategy. The new model is built
at the BBAC plant and is tailored for the Chinese market.

Close to the customer — for the customer: Local
production and a customized product portfolio.

Brazil is another market of the future that oﬀers outstanding
prospects. As a top sales market for Mercedes-Benz commer-
cial vehicles, it is experiencing an additional economic boom
due to the upcoming World Cup soccer championship and the
Olympic Games. This situation oﬀers us a good opportunity
to enhance our position as the most important truck and bus
manufacturer in Latin America.

w mercedes-benz.com.cn w mercedes-benz.com.br
w daimler.com/company/daimler-worldwide

B | Eﬃcient Operation — Proﬁtable Growth.

The expansion of commercial vehicle manufacturing to the Juiz de Fora plant has enabled Mercedes-Benz do Brasil to optimally meet
the rising demand for commercial vehicles in Latin America.

Growth through Global Presence.

“Most of the global growth
of automobile markets is
taking place in the emerging
markets — and Daimler
is there.”

B.01
Global automobile markets.

Outstanding growth prospects
for global automobile markets

105-115

78.8

82.4

75.5

85.3*

88-90

68.6

66.0

2008

2009

2010

2011

2012

2013

2014

2020

Market volume of cars and commercial vehicles in millions of units.

NAFTA region
Western
Europe
Japan

Other markets

Forecast

* Preliminary ﬁ gures

Source: IHS Automotive

B | Eﬃcient Operation — Proﬁtable Growth.

The biggest research and development location outside Germany — and part of our global growth strategy:
the newly opened Mercedes-Benz Research and Development Center India in Bangalore.

Daimler has been building trucks, bus chassis, engines,
transmissions and axles for Latin America in São Bernardo do
Campo since the 1950s. In order to optimally beneﬁt from the
growth potential oﬀered by the Brazilian economy, we not only
enlarged and modernized our existing plant, but also estab-
lished an additional production facility with the use of Juiz de
Fora for truck manufacturing. In Juiz de Fora, Mercedes-Benz
do Brasil now builds the proven Mercedes-Benz Actros and the
Accelo, a light-duty truck for the Latin American market.

Continuing to exploit enormous sales potential.

India’s automobile market oﬀers good prospects as well.
Its dynamic development will beneﬁt Daimler for a long time
to come. In addition to expanding its research and develop-
ment center in Bangalore, Mercedes-Benz has increased the
production capacity of its facility in Pune. The introduction

of BharatBenz trucks is moving ahead at a fast pace, and
this year we will also expand the range of medium- and
heavy-duty truck models for our Indian customers. Our plant
in Chennai plays an important role in our new Asia Business
Model. The FUSO trucks manufactured in Chennai are deliv-
ered to other countries in Asia and to dynamically developing
markets in Africa.

Local production, state-of-the-art technologies,
and an uncompromising commitment to quality are
the drivers of our global success.

Our locally manufactured cars are able to fulﬁll the
Mercedes-Benz brand pledge “The Best or Nothing” through
the systematic use of the Mercedes-Benz production system
and our global quality management system.

w mercedes-benz.co.in w mercedes-benz.com.br w daimler.com/company/daimler-worldwide

B | Efficient Operation — Profitable Growth.

Extra efficiency and
comfort. The new aero-
acoustic wind tunnel
at the Mercedes-Benz
development center in
Sindelfingen allows us
to aerodynamically
fine-tune our vehicles,
such as the new S-Class
shown here.

Our goal: emission-free
and accident-free — but
full of emotion! We not
only look ahead for our
customers with safety
technologies and green
drive system concepts,
but also put innovations
and driving pleasure on
the road.

Innovation and Technology Leadership.
Clean, safe and connected.

Innovation and Technology Leadership.

“The extension of our lead with regard to efficient drive
systems and innovative safety concepts is a top priority
of our growth strategy.”

We believe that variety is the key to sustainable mobility.
Daimler therefore offers a customer-friendly range of drive
systems, which we are systematically making even more
efficient and environmentally friendly. We already occupy an
outstanding position in the field of electric mobility today.
As illustrated by the new Mercedes-Benz C-Class, we utilize
lightweight design concepts to further reduce fuel consump-
tion as well. Our efforts also focus on aerodynamic improve-
ments. In fact, nearly all Mercedes-Benz models are currently
the world champions for aerodynamics.

Shaping future mobility with pioneering innovations.

enabling partially autonomous driving in the new E-Class
and S-Class. At the end of 2013, the S-Class was voted
"Connected Car of the Year" by the readers of "Auto Bild"
and "Computer Bild" magazines. As a pioneer in this field,
we have plenty more to offer in the future as well. We proved
that in August 2013 with our test drive of the Mercedes-Benz
S 500 INTELLIGENT DRIVE research car, which puts driverless
mobility within reach.

Much of the technology needed for autonomous driving is
already on the road today in Daimler vehicles, or is nearly
ready for series production.

The networking of sensors and vehicle systems to create the
INTELLIGENT DRIVE concept is a new milestone on the road
to accident-free driving. INTELLIGENT DRIVE brings together
all of the Mercedes-Benz assistance systems that transform
vehicles into thinking and far-seeing partners. Such innovative
technologies from the pioneer of automotive safety are already

Another component of our INTELLIGENT DRIVE strategy is
Car-to-X, a system for transmitting information between
vehicles and the traffic infrastructure. Daimler is the world’s
first automaker to introduce this innovation in production
vehicles. This once again underscores the way our technology
leadership and expertise benefit our customers.

w techcenter.mercedes-benz.com/en w mercedes-benz.com

B.02
Car-to-X communication

Real-time warnings ensure that drivers can quickly prepare to deal with critical traffic situations. These warnings can also prevent
such situations from occurring to begin with. Car-to-X communication makes this possible.

B | Eﬃcient Operation — Proﬁtable Growth.

We became the world’s ﬁrst automaker to prove that autonomous driving is possible in cities and on country roads with our Mercedes-Benz
S 500 INTELLIGENT DRIVE research vehicle, which also includes technology that is close to the series-production stage. The S 500 Intelligent
Drive was sent along the 103-kilometer route from Mannheim to Pforzheim that Bertha Benz traveled 125 years ago when she completed the
ﬁrst-ever long-distance drive in an automobile. The self-driving research car was able to handle complex traﬃc situations along the route
without its human driver having to intervene.

Innovation and Technology Leadership.

Upper picture: The Global Hybrid Center in Kawasaki, Japan, is where we develop forward-looking hybrid technologies for Daimler Trucks.
Lower picture: The FUSO Canter Eco Hybrid is the ﬁrst cost-eﬀective production hybrid truck. About 2,000 of this model are on the road worldwide.

B | Eﬃcient Operation — Proﬁtable Growth.

“What will shape the transportation sector
of tomorrow? Daimler is pointing the way with
advanced commercial vehicle technologies.”

The Freightliner Cascadia Evolution oﬀers fuel savings of seven percent, thanks to aerodynamic improvements
and the new Detroit DD15 engine with Daimler BlueTEC exhaust treatment technology.

Daimler is continuing to expand its leadership in the commer-
cial vehicle sector by focusing on innovations that create value
for the company and its customers. The focal areas include
exemplary drive systems that are continually making our trucks,
vans and buses cleaner, more economical and more efficient.
For example, Daimler was the first truck manufacturer to make
its entire product range Euro VI-compliant before the new
emission standard went into effect.

Outstanding next-generation drive system concepts.

The FUSO Canter Eco Hybrid gives Daimler the first cost-effec-
tive hybrid truck that pays off for our customers and the envi-
ronment alike. A total of 2,000 units of this distribution trans-
portation vehicle are already being used by customers around
the world. This model was the winner of the 2014 European

Transport Sustainability Prize. Its outstanding cost-efficiency
is based on a highly efficient hybrid drive system developed at
Daimler Trucks’ Global Hybrid Center in Japan.

Perfect positioning with the industry’s most economical
and innovative products.

The Freightliner Cascadia Evolution from Daimler Trucks North
America (DTNA) is also a key component of our successful
growth strategy. The new flagship model is DTNA’s efficiency
champion — a feat made possible by a powertrain manufac-
tured completely by the Detroit brand. The powertrain’s com-
ponents are optimally aligned with one another. This intelligent
commercial vehicle technology has met with an extremely
positive response from our North American customers.

w freightlinertrucks.com/evolution w fuso-trucks.com w daimler.com/technology-and-innovation

B | Eﬃcient Operation — Proﬁtable Growth.

The right ﬁnancing or leasing
conditions often play an important
role for people who are looking
for a dream car. That’s why the
ﬁnancial services products from
Daimler Financial Services are
integrated into the Mercedes-Benz
websites.

Making it easier for
private and commercial
customers to obtain a
vehicle. Our attractive and
new oﬀers for ﬁnancing,
leasing, insurance, ﬂeet
management and banking
are giving our vehicle busi-
ness even more impetus.

Tailored Financial Services.
Boosting product oﬀensives.

Tailored Financial Services.

Our “Digital Financial Services” are oﬀered precisely where more and more customers spend a lot of their time: on the Internet.

“Our customers can always drive and enjoy the latest models,
thanks to our attractive financing solutions, leasing packages
and automotive insurance.”

Our financing offers fulfill the individual wishes of our custom-
ers. For example, customers can select the amount of the
down payment and the duration of the contract, which, in turn,
lets them influence the amount of the monthly installments.
Once they have paid off the loan, customers obtain ownership
of the vehicle. Leasing customers also individually determine
their installments, depending on the duration of the contract
and the total mileage. When a contract expires, customers
decide whether they would like to switch to a new vehicle. This
regularly ensures that customers pleasantly anticipate driving
the newest model. In 2013, Daimler Financial Services for
the first time had more than three million financed or leased
vehicles on its books worldwide.

Boosting brand loyalty.

Our financial services offer our customers outstanding quality,
which is why our products won numerous awards worldwide
in 2013. These awards once again demonstrate that Daimler
Financial Services has the right corporate philosophy, which
states that satisfied employees ensure satisfied and loyal
customers. This is also the case at the Berlin service center

of the Mercedes-Benz Bank, which was named one of the best
employers in Germany’s capital in 2013.

Offering pioneering services through websites and apps.

Our “Digital Financial Services” enable customers to clarify
financing and leasing issues at home or while on the go.
At the push of the button, customers can display the monthly
payments for their desired cars. What’s more, contracts can
be managed online in many countries. In the United States,
our customers have already used their smartphones to make
more than $200 million in monthly payments.

Star-brand financing and mobility.

In Germany, Daimler Financial Services’ Mercedes-Benz Rent
program enables customers to rent vehicles for short periods
directly from dealerships. This program completes Daimler
Financial Services’ product portfolio, which ranges from
traditional leasing contracts all the way to flexible mobility
concepts such as car2go.

w daimler-ﬁnancialservices.com

B | Eﬃcient Operation — Proﬁtable Growth.

Upper picture: Mercedes-Benz Rent is another attractive means of boosting new target groups’ enthusiasm for the vehicle models.
Lower picture: Mercedes-Benz Bank’s Berlin service center is one of the best employers in the German capital. It provides
an ideal environment for highly motivated employees, who ensure that more and more customers can fulﬁll their dream of owning
a star-brand automobile.

B | Eﬃcient Operation — Proﬁtable Growth.

When the car2go project
was launched ﬁve years
ago, it triggered the
car-sharing revolution;
it is now a resounding
success worldwide. The
white-and-blue city cars
from the smart brand are
now available for spur-of-
the-moment rentals also
in Toronto.

Intelligently mobility
for people and cities.
Our pioneering services
supplement the existing
automobile business
and are attracting
increasing numbers
of new customers.

Pioneering Mobility Concepts.
Redeﬁning the automotive lifestyle.

Pioneering Mobility Concepts.

Today, a wide array of choices is an integral part of individual
mobility. Flexible, green and economical transportation
solutions that can be compared and accessed online are in
high demand, especially in metropolitan areas. This is a
growth market in which Daimler offers innovative concepts
to serve as additional elements of urban mobility. In 2008,
for example, our car2go concept created the segment of
spur-of-the-moment car rentals — an area in which we are
now the market leader. car2go now has some 10,000 vehicles,
which have been rented more than 18 million times to date.
And the demand for this service is steadily growing.

Additional drive for metropolitan areas — and for our
growth offensive: the concepts from Daimler Mobility
Services.

Our moovel mobility platform brings people from A to B in an
optimal way by combining the offers of various mobility provid-
ers. This allows users to find out about the best way to travel
in a city and to compare the offers of public transport, car2go,
taxi, ride-sharing and bicycle hire in terms of time and costs.
Through the continuous expansion of strategic partnerships
such as our acquisition of stakes in the companies Blacklane

and FlixBus in 2013, we can offer our customers an ever
growing range of services. We will significantly expand this
range also in 2014, integrating even more mobility services
and operating moovel in many more cities.

Rapidly growing cities throughout the world are utilizing
state-of-the-art BRT systems and the products offered
by Daimler Buses.

Bus rapid transit (BRT) systems, in which regular-service buses
travel along dedicated lanes, create successful transportation
solutions for urban areas. In cooperation with cities including
Istanbul, Nantes, Mexico City and Bogotá, Daimler has created
numerous BRT concepts for the efficient transportation of
passengers. In addition, around 17,500 Mercedes-Benz buses
are currently used in more than 25 BRT systems worldwide.
Demand is also being boosted by the major sports events that
will soon be held in Brazil. For example, the BRT operators
in Belo Horizonte are investing in 500 star-brand bus chassis
to help the city host the World Cup. In 2013, articulated
and non-articulated buses from Mercedes-Benz were also put
into operation on BRT routes in many other Latin American
countries as well as in South Africa.

w daimler-ﬁnancialservices.com/dfs/mobility-services w car2go.com/en/washingtondc w moovel.com/en w park2gether.com
w brt.mercedes-benz.com

Today, around 70 percent of the city buses used in Brazil’s bus rapid transit systems are from Mercedes-Benz.

B | Eﬃ cient Operation — Proﬁ table Growth.

“From newcomer to market leader! car2go has been
a success story for the past five years, and it’s now
the world’s fastest-growing car-sharing company.”

B.03
Distribution of car2go

1,200

Electric drive
vehicles

10,000

Total number
of vehicles

Hamburg

Düsseldorf

Cologne

Berlin

Stuttgart Munich

Germany

Ulm/Neu-Ulm

Vancouver

Calgary

Seattle

Portland

Toronto

Montreal

Minneapolis

Denver

Columbus

Washington DC

San Diego

Austin

Miami

Birmingham

Amsterdam

London

Vienna

Milan

By the end of 2013, almost 600,000 users in 25 cities had registered for car2go - twice as many as a year earlier.
car2go plans to add another 40 to 50 locations worldwide by 2020.

As of December 2013

B | Eﬃcient Operation — Proﬁtable Growth.

A successful tandem:
The Mercedes plant in
Kecskemét produces the
new compact cars jointly
with the competence
center in Rastatt.

Proﬁtable growth — thanks
to premium products
and eﬃciency. Eﬃcient
packages of measures
make processes at all
divisions even more cost-
eﬀective and ensure
optimal results throughout
the Group.

Increased Eﬃciency at All Divisions.
The recipe for success!

61
61

Increased Eﬃciency at All Divisions.

“The new packages of measures are helping us
to put our power on the road even more efficiently
and to overtake the competitors.”

The new Mercedes-Benz S-Class sets benchmarks also in terms of manufacturing, thanks to numerous new processes.

B | Efficient Operation — Profitable Growth.

On its way to the top, Daimler has introduced efficiency
programs and embedded them in the divisions’ existing strate-
gies. For example, the “Mercedes-Benz 2020” strategy was
supplemented by the “Fit for Leadership” (F4L) component.
In this way, processes can be made even more flexible, faster
and more efficient.

Fit for the future — with new production technologies
and even better processes.

The Mercedes-Benz plants in Kecskemét and Rastatt are
also reporting positive results. The new compact cars from
Mercedes-Benz are being produced there using cross-plant
processes. Thanks to variable capacities and optimized capac-
ity utilization, this production network is making a significant
contribution to the cost efficiency of compact car production.

A lever for even greater productivity, flexibility,
and profitability.

Daimler’s commercial vehicle divisions are also continuing
along their course. Optimization programs are safeguarding

the divisions’ profitability goals: “Performance Vans 2013”
at Mercedes-Benz Vans, “GLOBE 2013” at Daimler Buses
and “Daimler Trucks #1” - the supplementary initiative
of the “Global Excellence” strategy - at Daimler Trucks.
The central focus of Daimler Trucks #1 is the platform and
module strategy. Here, Daimler Trucks is focusing on a
global product portfolio across all three weight categories
for the three truck regions. With this strategy, we can
offer optimally customized vehicles and technologies to
our customers all over the world and take full advantage
of savings potential over the long term.

Sustainable growth according to plan.

We aim to realize earnings contributions of approximately
4 billion in total by the end of 2014 with the help of the
following programs: “Fit for Leadership” at Mercedes-Benz
Cars, “Daimler Trucks #1” at Daimler Trucks, “Performance
Vans 2013” at Mercedes-Benz Vans and “GLOBE 2013” at
Daimler Buses. In this way, we will put our growth strategy
on a solid financial foundation — and we are implementing
this strategy according to plan.

E see pages 28 f

To further optimize our structures and costs, we are combining our engine portfolio to create a cross-brand generation
of heavy-duty engines.

B | Eﬃcient Operation — Proﬁtable Growth.

A skilled workforce is at the heart
of the Mercedes-Benz plant
in Düsseldorf. Our biggest plant
for van production is the global
leader within the Mercedes-Benz
Vans production network also
in terms of expertise.

Almost 275,000 employ-
ees around the world are
committed to our success.
They’ve got a multitude
of talents, qualiﬁcations
and ideas, and all of them
are pursuing the same goal:
putting our growth program
into action.

Motivated and High-performing
Employees. Driven by passion.

Motivated and High-performing Employees.

“Our internationally oriented human resources activities
are not merely accompanying the growth campaign —
they are actively supporting it.”

Our vehicle portfolio is thrilling customers all over the world.
In order to optimally respond to this tremendous demand,
we are expanding our production capacities as part of the
“Mercedes-Benz 2020” offensive. That will make our research
and development, our production and our sales network
increasingly international. As a result, we will need committed
employees at all of our business sites. Through precisely
targeted measures, we recruit the most talented employees
all over the world and provide them with excellent qualification
programs at all of our locations.

program through a dense network of educational institutions.
At the same time, we train our international teams at the pro-
duction plants in Germany. For example, the car powertrain
plant in Stuttgart is a Center of Competence and is responsible
for part of the training program aimed at the new young employ-
ees at the Romanian production locations in Cugir and Sebes,
the first Mercedes-Benz powertrain production plant outside
Germany. In addition, the Mercedes-Benz Qualification System
(MBQS) is now available to the international cars plants. This
program provides the preconditions for efficiently establishing
the qualification courses that are required at each location.

An international HR standard for our new locations.

As we create new Group facilities, we specifically rely on
the combined knowledge and the support of our experienced
employees. The “Global HR Blueprint” program plays a
central role here. It includes the core processes of our human
resources organization and defines the most important
milestones for a successful start of production activities.
The “Global HR Blueprint” currently serves as the guideline
for the establishment of the HR department at the new car
assembly plant in Iracemápolis, Brazil.

Education, qualification and training of the teams.

The expertise of our specialized employees is based on a
first-class training and qualification program. We provide this

Recruiting and developing managers.

We also want to adequately cover our need for young employ-
ees who are capable of performing international leadership
tasks at both the management level and in production. In order
to do so, we are relying on the recruitment of local experts
at our business locations and on the advanced development
of high-potential individuals through programs for young and
talented employees. The Mercedes-Benz Qualification System
(MBQS) is the world standard for the development of managers
in the production business units, as demonstrated for example
by the programs for master craftspeople and team leaders.
The MBQS program is currently undergoing a pilot run at the
plant in Tuscaloosa, Alabama (USA). In the future, it will be
used all over the world.

w career.daimler.com/en

B | Eﬃcient Operation — Proﬁtable Growth.

Upper picture: Our specialized employees ensure outstanding results at the new engine plant in Beijing. The Mercedes-Benz
Qualiﬁcation System sets the standards for their outstanding qualiﬁcations.
Lower picture: Talented young employees receive ﬁrst-class training at the Mercedes-Benz plant in Untertürkheim.

B | Eﬃcient Operation — Proﬁtable Growth.

The Mercedes-Benz Showroom
in Tokyo has attracted more than
one million visitors since it opened
in 2011.

Our vehicles fascinate
and impress people all
over the world.
We are systematically
reﬁning our sales and
service activities so that
our car and commercial
vehicle brands can stay
close to our customers
in the future.

First-class Customer Care.
Fulﬁlling wishes precisely.

First-class Customer Care.

Upper picture: In the recently opened Mercedes-Benz Store in Osaka, visitors can get to know the brand and its products up close.
Lower picture: First-class advice and service are provided in the luxurious atmosphere of the S-Class Lounge.

B | Efficient Operation — Profitable Growth.

“We are supplementing our traditional sales channels with
innovative elements. This approach is very popular with new
target groups as well as with our existing customers.”

If we want to be successful in the future, we have to initiate
changes today. In line with this maxim, we have supple-
mented Mercedes-Benz’s worldwide product offensive with
the sales and marketing initiative “Mercedes-Benz 2020 —
Best Customer Experience.” In this way, we are aligning our
sales organization even more precisely with the changing
requirements of our customers.

Mercedes-Benz addresses its customers in many
different ways — ways that are as individual and flexible
as the customers’ personal preferences.

Mercedes-Benz is relying increasingly on its sales outlets in
city centers, where it can come into direct contact with existing
and potential customers. The youngest of the approximately
20 city stores were opened in Tokyo in 2011, in Milan in 2012
and in Osaka in 2013. The number of these urban stores around
the world is to double to more than 40 by 2020. Temporary
sales formats offer further possibilities for getting in touch
with our customers. For example, a Mercedes-Benz pavilion
in Warsaw attracted more than 20,000 visitors and provided
the framework for an additional 80 events. Thousands of fans
followed these events on Facebook. For many visitors, it was
their very first contact with the brand.

I like it! In direct contact through networks and online.

An integral part of the new sales and marketing initiative is the
online vehicle sales process. At the end of 2013, Mercedes-Benz
became the first producer of premium automobiles to offer new
vehicles on the Internet. Within four weeks, more than 60,000
interested individuals had visited the online platform. The digital
sales channel supplements the traditional showrooms, primarily
addressing young and online-savvy customer groups. As a
result, the Mercedes brand is accessible to customers and
interested individuals always and everywhere. By taking advan-
tage of the trend toward networking, we are also increasingly
coming into contact with customers inside their vehicles. For
example, we offer multimedia systems and apps that provide
not only information and entertainment but also control
options for automotive, service and diagnostic functions.

A strong service partner for commercial vehicles.

We are also focusing on our truck and van customers, offering
them a comprehensive network of local services at more than
95 TruckWorks locations in Germany. In this way, we are making
sure that servicing times are as short as possible and helping
to keep our customers’ investment of time and money at a
minimum when their vehicles are being maintained or repaired.

w mercedes-benz-connection.com/english w connection-online.mercedes-benz.com

The TruckWorks service stations are putting commercial vehicles back on the road quickly all over Germany,
thanks to the expertise of Mercedes-Benz.

Integrity is the Basis for Our Success.

Integrity Dialog: Daimler employees around the world exchange their views on integrity.

B | Eﬃcient Operation — Proﬁtable Growth.

Integrity is the Basis
for Our Success.

Our growth strategies and eﬃciency programs are our drivers on the road to

sustainable corporate success. Ethical behavior is an inseparable aspect of all of

our activities. In other words, integrity forms the basis for our dealings with one

another within the Group and the way we conduct our business activities. Our

shared understanding of what integrity means to us was laid down in our jointly

developped Integrity Code. Through a variety of initiatives and an ongoing dialog,

we are ﬁrmly establishing integrity in the corporate culture at Daimler.

Combined
Management Report.

Cash ﬂows

Value added

EBIT

Ratings

Unit sales

Revenue

The year 2013 was very successful for Daimler overall. We signiﬁcantly increased our

unit sales and revenue, and continuously improved the proﬁtability of our divisions

as the year progressed. We thrilled our customers with numerous new products. And

we set new standards with pioneering innovations, above all with regard to the safety

and environmental compatibility of our vehicles. In the year 2014, we will continue our

growth oﬀensive and further enhance the eﬃciency of our processes.

C | Combined Management Report.

C | Combined Management Report | Contents

76
78
79
80
80

81
82
83

86
89
90
90
90

92
93
95

96
96
98

99
101
101

102

102
103
104
104

Corporate Proﬁle

Business model
Portfolio changes and strategic cooperations
Performance measurement system
Daimler strengthens customer focus
Corporate governance statement

105

105
105
107
110
113
115

Sustainability

Sustainability at Daimler
Research and development
Innovation and safety
Environmental protection
Workforce
Social responsibility

Economic Conditions and Business Development

The world economy
Automotive markets
Business development

Proﬁtability

EBIT
Statement of income
Dividend
Net operating proﬁt
Value added

Liquidity and Capital Resources

Principles and objectives of ﬁnancial management
Cash ﬂows
Other ﬁnancial obligations, ﬁnancial
guarantees and contingent liabilities
Investment in property, plant and equipment
Reﬁnancing
Credit ratings

Financial Position

Consolidated statement of ﬁnancial position
Oﬀ-balance-sheet assets
Funded status of pension obligations

Daimler AG (condensed version according to HGB)

Proﬁtability
Financial position, liquidity and capital resources
Risks and opportunities
Outlook

117

Overall Assessment of the Economic Situation

118

Events after the End of the 2013 Financial Year

119

119
122
123
125

126

129

129
131
131
131
136
138
140
140

142

142
143
144
145
146
146
146
146
147
147

Remuneration Report

Principles of Board of Management remuneration
Board of Management remuneration in 2013
Commitments upon termination of service
Remuneration of the Supervisory Board

Information and Explanation Relevant
to Acquisitions

Risk and Opportunity Report

Risk management system
Opportunity management system
Risks and opportunities
Industry and business risks and opportunities
Company-speciﬁc risks and opportunities
Financial risks and opportunities
Risks from guarantees and legal risks
Overall assessment of the risk and opportunity
situation

Outlook

The world economy
Automotive markets
Unit sales
Revenue and earnings
Free cash ﬂow and liquidity
Dividend
Capital expenditure
Research and development
Workforce
Overall statement on future development

Corporate Profile.

Business model

Daimler can look back on a tradition covering more than
125 years, a tradition that extends 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 unparalleled range of premium automobiles, trucks, vans
and buses. The product portfolio is completed with a range
of tailored financial services and mobility services.

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 devel
opment, 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.

C.01
Consolidated revenue by division

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

52%

25%

12%

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 approximately 8,000 sales
centers worldwide. The global networking of research and deve
lopment activities and of production and sales locations gives
Daimler considerable advantages in international competition,
additional growth opportunities and further potential to
enhance efficiency. In addition, we can apply our innovative
drive and safety technologies in a broad portfolio of vehicles
while utilizing experience and expertise from all parts of the
Group. In the year 2013, Daimler increased its revenue by
3% to €118.0 billion. The individual divisions contributed to this
total as follows: MercedesBenz Cars 52%, Daimler Trucks 25%,
MecedesBenz Vans 8%, Daimler Buses 3% and Daimler
Financial Services 12%. At the end of 2013, Daimler employed
a total workforce of approximately 275,000 people worldwide.

The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the Mercedes
Benz brand, ranging from the compact models of the A and
BClass to various sport utility vehicles, road sters, coupes and
convertibles and to the SClass luxury sedans. Additional pro
ducts are the highquality small cars and innovative ebikes 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, South Africa, India, Vietnam and
Indonesia, and since August 2013, the AClass has also been
produced for us by Valvet Automotive in Finland. Worldwide,
MercedesBenz Cars has 17 production sites at present. In the
medium term, we anticipate significant growth in worldwide
demand for automobiles and aboveaverage growth in the
premium car segment. To ensure that we can participate in this
development, we are creating additional production capacities,
especially in China, the United States and India. In 2013, we also
decided to expand our global production network with a
new plant in Brazil. We plan to produce the next generation
of the CClass as well as the GLA compact SUV there for the
local market starting in 2016. The most important markets
for MercedesBenz Cars in 2013 were Germany with 18% of unit
sales, the other markets of Western Europe (23%), the United
States (20%) and China (15%).

C | Combined Management Report | Corporate Proﬁle

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 Bharat-
Benz. The division’s 27 production facilities are in the NAFTA
region (14, thereof 11 in the United States and 3 in Mexico),
Europe (7), Asia (3), South America (2) and Africa (1). In our new
truck plant in Chennai, India, trucks of the new BharatBenz
brand have been rolling oﬀ the production lines since June 2012.
In 2014, we will launch additional new models. We intend
to use the production site also to develop new export markets
in Asia and Africa. 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 since July 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 for 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 2013
were Asia with 34% of unit sales, the NAFTA region (28%),
Western Europe (14%) and Latin America excluding Mexico (12%).

Daimler Trucks’ area of responsibility also includes our invest-
ment in Tognum (since January 9, 2014, Rolls-Royce Power
Systems AG), a globally leading supplier of complete systems
in the ﬁeld of industrial engines. This company is controlled
by Rolls-Royce Power Systems Holding GmbH, in which Daimler
and Rolls-Royce Holdings plc each holds a 50% interest.

The product range of the Mercedes-Benz Vans division
in the segment of medium-sized and large vans comprises
the Sprinter, Vito and Viano series. In 2012, we expanded
our portfolio with the addition of a city van, the Mercedes Benz
Citan, making us a full-range supplier in the vans business.
The division has production facilities at a total of seven locations:
in Germany, Spain, the United States, Argentina, China in
the context of the joint venture Fujian Benz Automotive Co.,
Ltd, and France in the context of the strategic alliance with
Renault-Nissan; since the second half of 2013, the Mercedes-
Benz Sprinter has been produced under license also by our
partner GAZ in Russia. The most important markets for vans
are in Western Europe, which accounts for 63% of unit sales.
As part of the “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 through appropriate
distribution and production activities in those regions. We
intend to continue our growth also in the North American van
market, where the Sprinter is sold not only as a Mercedes-Benz
vehicle but also under the Freightliner brand.

The Daimler Buses division with its brands Mercedes-Benz and
Setra continues to be the world’s leading manufacturer in its
core markets in the segment of buses above 8 tons. The product
range supplied by Daimler Buses comprises city and intercity
buses, coaches and bus chassis. The most important of the 13
production sites are in Germany, France, Spain, Turkey, Argentina,
Brazil and Mexico. In 2013, 49% of Daimler Buses’ revenue
was generated in Western Europe and 26% in Latin America
(excluding Mexico). While we mainly sell complete buses in
Europe, our business in Latin America, Mexico, Africa and Asia
is focused on the production and distribution of bus chassis.

C.02
Daimler Group structure 2013

Mercedes-Benz
Cars

Daimler Trucks

Mercedes-Benz
Vans

Daimler Buses

Daimler
Financial Services

Revenue

€64.3 billion

€31.5 billion

€9.4 billion

€4.1 billion

€14.5 billion

Employees

96,895

79,020

14,838

16,603

8,107

Brands

Progress with the cooperation between Daimler and
Renault-Nissan. The cooperation between Daimler and Renault-
Nissan developed very positively in 2013. The partnership,
which started in April 2010 with three projects, has meanwhile
grown to ten major projects and now also includes initiatives
in North America and Asia.

A good example of how the partners proﬁt from the cooperation
is the joint production of Mercedes-Benz four-cylinder gasoline
engines in Decherd (Tennessee, USA). Just one and a half years
after ground breaking in 2012, the plant building has now
been completed. Start of production is planned for mid-2014.
The engines produced in Decherd are to be used in the new
Mercedes-Benz C-Class, which will be produced at the Daimler
plant in Tuscaloosa (Alabama, USA), and in new products
from Inﬁniti. The development work for a shared family of new
three- and four-cylinder engines with turbocharging and
direct fuel injection is also making good progress. These engines
will include the latest technologies, allowing signiﬁcantly
reduced fuel consumption.

Cooperation in the commercial-vehicle business is also being
intensiﬁed. It is planned that Mitsubishi Fuso Truck and Bus
Corporation (MFTBC), which is part of Daimler Trucks Asia,
will be supplied with the Nissan van, NV350 Urvan. That vehicle
will be sold by Mitsubishi Fuso in selected export markets.
This form of strategic supply has been successfully implemented
since early 2013 also for light-duty trucks – the FUSO Canter
Guts (payload of 2.0 tons) and the NT450 Atlas (payload of
1.5 tons) – in order to expand the respective product portfolio
to new segments.

The smart/Twingo project is also progressing as planned.
Production preparations are now in full swing for the new two-
seater smart at the smart plant in Hambach (France) and
for the four-seater smart and the Renault Twingo successor
at the Renault plant in Novo Mesto (Slovenia). Market launch
of the car variants is planned for the second half of 2014.
The new generation of the smart and the Renault Twingo are
being developed on the basis of a shared architecture but
will continue to be independent products with unmistakable
brand features.

Agreement on the commercialization of fuel cells.
“Automotive Fuel Cell Cooperation” (AFCC) was already
founded as a joint venture by Daimler (50.1%), Ford (30%)
and Ballard (19.9%) in 2008. In January 2013, Daimler AG,
Ford Motor Company and our strategic cooperation partner
Nissan Motor Co., Ltd. reached an agreement to continue
with the commercialization of fuel cells. The aim of this venture
is to jointly develop a fuel-cell system and thus to reduce
development costs. All three partners will make equal invest-
ments in the project.

The Daimler Financial Services division supports the sales
of the Daimler Group’s automotive brands in 40 countries.
Its product portfolio primarily comprises tailored ﬁnancing
and leasing packages for customers and dealers, but it also
provides services such as insurance, ﬂeet management, invest-
ment products and credit cards, as well as various mobility
services such as the ﬂexible car2go concept. The main areas
of the division’s activities are in Western Europe and North
America, and increasingly also in Asia. In 2013, more than 40%
of the vehicles sold by the Daimler Group were ﬁnanced
or leased by Daimler Financial Services. Its contract volume
of €83.5 billion covers nearly 3.1 million vehicles. Daimler
Financial Services also holds a 45% interest in the Toll Collect
consortium, which operates an electronic road-charging
system for trucks above 12 metric tons on highways in Germany.

Daimler still held a 7.4% equity interest in the European
Aeronautic Defence and Space Company (EADS), a leading
company in the aerospace and defense industries, at
the end of 2012. Those shares were sold on April 17, 2013.

Through a broad network of holdings, joint ventures and
cooperations, Daimler is active in the global automotive industry
and related sectors. The statement of investments of Daimler
AG in accordance with Section 313 of the German Commercial
Code (HGB) can be found in the Notes to the Consolidated
Financial Statements. E see Note 39

Portfolio changes and strategic cooperations

By means of targeted investments and future-oriented partner-
ships, we strengthened our core business, pushed forward
with new technologies and utilized additional growth potential
in 2013. At the same time, we focused on the continuous
further development of our existing business portfolio.

Daimler AG acquires 12% stake in BAIC Motor. In November
2013, we acquired a 12% equity interest in our longstanding
partner BAIC Motor, thus taking an important step within the
framework of our China strategy. This makes Daimler the
ﬁrst non-Chinese automobile manufacturer to acquire a stake
in a Chinese carmaker. BAIC Motor is the car subsidiary of
the Beijing Automotive Group (BAIC Group), which is one of the
leading automotive companies in China. In the past ten years,
the partners Daimler and BAIC have built up a long-term strategic
partnership, beneﬁting both companies as well as the Chinese
automotive industry. These shared activities include the joint
venture BBAC, which has been producing Mercedes-Benz
cars since 2006 and, as the ﬁrst Mercedes-Benz plant for car
engines outside Germany, four- and six-cylinder engines
since 2013. In addition, jointly produced medium- and heavy-
duty trucks of the Auman brand have been rolling oﬀ the
assembly lines at Beijing Foton Daimler Automotive Co., Ltd.
(BFDA) since mid-2012. Another important component of
the partnership is Beijing Mercedes-Benz Sales Service Corpo-
ration (BMBS), which started operations in March 2013.
BMBS is responsible for all sales activities for imported and
locally produced Mercedes-Benz cars. The joint venture
is a major pillar for the sustained growth of Mercedes-Benz
in China.

C | Combined Management Report | Corporate Proﬁle

Establishment of Daimler Trucks and Buses China Ltd.
(DTBC). DTBC was established as a legally separate company
for the Group’s business with trucks and buses in China
in April 2013; it is the ideal framework to further develop
the existing truck business and to continually expand the
product portfolio in China – in the area of buses for example.
Due to its structural independence, DTBC can now focus
even more closely on the speciﬁc requirements of commercial-
vehicle customers. At the same time, the integration of the
bus business facilitates expansion in additional areas of sales.
With the new company, Daimler is consistently continuing
the structural reorganization of its China business.

Establishment of Daimler Mobility Services. Daimler
Financial Services is pursuing the goal of signiﬁcantly expan-
ding its business with mobility services. For this purpose,
in January 2013, Daimler Financial Services brought together
all of its activities in the ﬁeld of innovative mobility services
such as car2go und moovel in a new company, Daimler Mobility
Services GmbH with headquarters in Ulm. In order to further
strengthen this business, Daimler acquired equity interests
in various companies during the course of the year. Those
companies include the long-distance bus operator Flixbus
and the chauﬀeur-service portal Blacklane GmbH.

Daimler sells remaining equity interest in EADS. On March
27, 2013, the extraordinary shareholders’ meeting of EADS
approved a new management and shareholder structure. Sub-
sequently, on April 2, 2013, the shareholders’ pact concluded
in the year 2000 was dissolved and replaced with a new share-
holders’ pact without the participation of Daimler. At the
same time, those EADS shares which had previously been held
by Daimler but of which a consortium of international investors
had beneﬁcial ownership were transferred to those so-called
Dedalus investors. With the dissolution of the previous share-
holders’ pact, Daimler lost its signiﬁcant inﬂuence on EADS.
On April 17, 2013, Daimler disposed of its remaining EADS shares
constituting a stake of approximately 7.4% by way of an acce-
lerated placement procedure. In the second quarter of 2013,
the remeasurement and sale of EADS shares led to a gain
recognized in Group EBIT totaling €3.2 billion, of which €1.7
billion is allocable to the Dedalus investors. The sale resulted
in a cash inﬂow for Daimler of €2.2 billion. Since the con-
clusion of the transaction, Daimler no longer holds any shares
in EADS. In addition, the Group concluded cash-settled con-
tracts which allowed Daimler to participate to a limited extent
in an increase in the EADS share price until the end of 2013.
This agreement resulted in an additional gain for the Daimler
Group of €44 million.

Performance measurement system

Financial performance measures. The ﬁnancial performance
measures used at Daimler are oriented towards our investors’
interests and expectations and provide the foundation for
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 level. It is calculated as the diﬀerence between
the operating result and the cost of capital of the average net
assets. Alternatively, the value added of the industrial divisions
can be determined by using the main value drivers: return on
sales (quotient of EBIT and revenue) and net assets’ productivity
(quotient of revenue and net assets).  C.03

During the year 2013, value added increased to €5.9 billion
(2012: €4.3 billion). The quantitative development of value added
and the other ﬁnancial performance measures is explained
in the “Proﬁtability” chapter. E see pages 90 f

Using the combination of return on sales and net assets’
productivity within the context of a strategy of proﬁtable reve-
nue growth provides the basis for a positive development
of value added. Value added shows to which extent the Group
and its divisions achieve or exceed the minimum return
requirements of the shareholders and creditors, thus creating
additional value.

Proﬁt measure. The measure of operating proﬁt at divisional
level is EBIT, which is calculated before interest and income
taxes. EBIT hence reﬂects the divisions’ proﬁt and loss respon-
sibility. The operating proﬁt measure used at 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, including income taxes and other reconcilia-
tion items.  C.12 on page 86

C.03
Calculation of value added

Value added

Proﬁt measure

–

Net assets

Cost of
capital (%)

Cost of capital

Value
added

Return on
sales

Net assets
productivity

–

Cost of
capital (%)

Net assets

Net assets. Net assets represent 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, in line with
the usual practice in the banking business. Net assets at Group
level include the net 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 from average quarterly net assets.
E see page 91

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 cost of capital of the Group and the industrial divisions
comprises the cost of equity as well as the costs of debt and
pension obligations of the industrial business; the expected
returns on liquidity and plan assets of the pension funds 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. While the cost of debt is derived from the
required rate of return for obligations entered into by the
Group with external lenders, the cost of capital for 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; in 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.  C.04

C.04
Cost of capital

In percent

Group, after taxes

Industrial business, before taxes

Daimler Financial Services, before taxes

2013

2012

Return on sales. As one of the main factors inﬂuencing value
added, return on sales is of particular importance for asses-
sing 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 proﬁtability measure
for Daimler Financial Services is not return on sales, but return
on equity, in line with the usual practice in the banking business.

Key performance indicators. Key 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 expen-
diture. As well as the indicators of ﬁnancial performance,
we also use various non-ﬁnancial indicators for the Group’s
management. 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
employee 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 or the energy and water
consumption of our production sites.

Details of the development of non-ﬁnancial performance
indicators can be found in the chapters “Economic
Conditions and Business Development” and “Sustainability.”
E see pages 81 ﬀ and 105 ﬀ

Daimler strengthens customer focus

In order to implement the growth strategies in all divisions
and to sharpen the focus on customers and markets, the Board
of Management of Daimler AG decided in September 2013
to strengthen the organization of the divisions. Responsibility
for the main sales functions and the important sales markets
has been directly anchored in each division. At the same time,
we have streamlined the cross-divisional functions at the
country level. The functional Board of Management areas have
been focused more on the requirements of the divisions.
Following the successful start of product oﬀensives for cars
and commercial vehicles, the further development of our
structures is now the next strategic step for the achievement
of our growth targets. This is not primarily a matter of cost
advantages, but of more direct customer relations and increa-
sed unit sales. Due to increasingly diverse customer needs,
more and more importance is now placed on the ability to pre-
cisely meet customers’ needs in each individual market.
With the new structure, Daimler is creating ideal conditions
to do that.

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 w daimler.com/corpgov/en.
Pursuant to Section 317 Subsection 2 Sentence 3 of the
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.

C | Combined Management Report | Corporate Proﬁle | Economic Conditions and Business Development

Economic Conditions
and Business Development.

The world economy

At a rate of 2.5%, expansion of the world economy in 2013
was once again lower than its long-term trend of a little over 3%.
 C.05 After a diﬃcult start to the year, the development of
the global economy actually stabilized as the year progressed,
so that a slight revival was apparent, especially in the second
half of the year. As in previous years, the economy was stimulated
by the ongoing expansive monetary policies of all the major
central banks. One of the crucial factors for the stabilization was
that uncertainty in connection with the European sovereign-
debt crisis subsided perceptibly as a result of the measures
taken by the European Central Bank. Although the price of
crude oil ﬂuctuated during the year, on average it was slightly
lower than in 2012.

The economies of the industrial countries achieved disappoint-
ing aggregate growth of approximately 1%, which was once again
considerably below their potential. Economic growth in the
United States of 1.9% was signiﬁcantly weaker than in the pre-
vious year, primarily due to restrictive ﬁscal measures and
reduced investment. In the autumn, tough negotiations concern-
ing the required lifting of the debt ceiling were a substantial
negative factor for the global economy. The Japanese economy
started the year 2013 with relatively good momentum, primarily
driven by the expansive measures taken by the country’s
central bank and government. The resulting considerable depre-
ciation of the yen provided additional stimulus.

After posting consistently strong growth in recent years,
the emerging markets remained signiﬁcantly below original
expectations in 2013 with overall growth of just under 4.5%.
Above all for the major economies of India, Brazil and Russia,
forecasts were revised downwards continually and by signi-
ﬁcant margins during the year. But it was particularly important
for the world economy that the growth slowdown in China
did not continue. In fact, the situation of the Chinese economy
stabilized during the second half of the year, and solid GDP
growth of 7.7% was achieved in the year 2013.

In this global economic environment, exchange rates were
volatile, in some cases very much so. Against the euro, the US
dollar ﬂuctuated over the year in a range from €1.27 to €1.39.
At the end of 2013, the euro was nearly 5% stronger than at the
beginning of the year at $1.38. The ﬂuctuation of the Japanese
yen to the euro was very pronounced within a corridor of ¥113
to ¥145. By the end of 2013, the euro had gained nearly 27%
against the yen compared with the beginning of the year. The
euro closed the year with a gain of approximately 2% against
the British pound, with rather less volatility.

C.05
Economic growth

Gross domestic product, growth rates in %

2012
2013

In the European Monetary Union, ﬁscal policy in 2013 continued
to be dominated by consolidation measures, some of which
were quite signiﬁcant; their overall impact on growth was nega-
tive, similar to in the previous year. Although falling domestic
demand led to another decrease in GDP of approximately 0.5%
for the full year, slight growth was actually achieved from
one quarter to the next. The situation in the southern recession
countries such as Greece, Portugal, Spain and Italy remained
diﬃcult. Economic development stagnated also in France, while
the German economy at least achieved modest growth of 0.4%.

-1

Total

Western
Europe

NAFTA

Asia

South
America

Eastern
Europe

Source: IHS Global Insight

Automotive markets

Despite the below-average development of the world economy
in 2013, global demand for cars increased by approximately
5% and thus reached a new record level.  C.06

On the level of regions and countries, the picture is very
disparate, however. The strong expansion of the Chinese market
and market growth in the United States had a particularly
positive impact on worldwide demand. The car market in China
grew by about 18%; the premium segment also continued
its favorable development after a hesitant start to the year and
actually expanded at a rather faster rate than the overall
market. The US market continued its strong recovery and also
made a signiﬁcant contribution to global growth. Total sales
of 15.5 million cars and light trucks were at their highest level
since 2007.

On the other hand, the overall car market in Western Europe
was once again smaller than in the previous year. However,
demand reached its lowest point in the ﬁrst half of the year and
then revived slightly. In the full year, the Western European
car market posted a moderate decrease of approximately 2%.
The German market displayed a similar development, but
was below the Western European average with a decrease of 4%.
The market development in the United Kingdom was quite
diﬀerent with substantial growth of approximately 10%.

In the ﬁrst half of 2013, the Japanese market was well below
its prior-year level, which had been boosted by state incentives
for car buyers, but compensated for that setback thanks to
the positive development of demand in the second half of the
year. In the major emerging markets with the exception of
China, the growth slowdown had a signiﬁcant impact on demand
for cars. The car market in Russia was 5% below its prior-year
level while market contraction in India was approximately 8%.

C.06
Global automotive markets

Unit sales growth rates 2013/2012 in %

Passenger cars
Commercial vehicles

-5

-10

Total

Western
Europe

NAFTA
region1,2

Asia

South
America1,2

Eastern
Europe

1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks

Source: German Association of the
Automotive Industry (VDA),
various institutions

Global demand for medium- and heavy-duty trucks
was noticeably higher than in the prior year. But there were
considerable diﬀerences in market developments across
the various regions and countries.

Following a weak ﬁrst half of the year, the North American
market showed a moderate improvement in the second half,
so that the volume of 2012 was almost equaled in the full year.

In early 2013, the European truck market was below its prior-
year levels by double-digit percentages. But there was a
signi ﬁcant revival also in this region as the year progressed
and the total volume was noticeably higher than in 2012.
One of the main reasons for this acceleration, however, was
that many purchases were brought forward before the intro-
duction of the Euro VI emission standards. The ﬁrst indications
that this special eﬀect is waning have recently been apparent
in the market.

In Japan, the government’s economic stimulus and the central
bank’s expansive monetary policy had an increasingly positive
impact on the truck business as the year progressed. Sales
in the segment of medium- and heavy-duty trucks exceeded the
prior-year level by approximately 5%. For light-duty trucks,
which include most of the vehicles sold by FUSO, growth was
even stronger at 8%. With expansion of approximately 12%,
the Brazilian market partially recovered from its substantial losses
of the previous year. But this growth was driven more by
catch-up eﬀects and favorable ﬁnancing possibilities than
by any dynamic development of the Brazilian economy.

Demand for trucks in India decreased dramatically, however.
Below-average economic development also in this market led
to a slump in new registrations of more than 25%. The Russian
truck market also contracted, but at a more moderate rate.
But the world’s biggest market for medium- and heavy-duty trucks
developed positively: Growth of around 17% in China was
ultimately the reason why the global market slightly surpassed
its prior-year volume.

In the region of Western Europe, which is particularly important
for Mercedes-Benz Vans, the market for medium-sized
and large vans was diﬃcult once again in 2013. In the full year,
demand fell by 6%; the markets of southern Europe remained
especially weak. The development of the segment for small vans
was similar. But demand for large vans was strong in Latin
America, where double-digit growth was recorded. The US
market almost equaled its volume of the previous year,
and there was a slight revival of demand in the market segment
we address in China.

Western European bus markets expanded slightly, with
purchases brought forward at the end of the year in advance
of the introduction of Euro VI emission standards. In Turkey,
the bus market proﬁted from the ongoing signiﬁcant revival
of demand for city buses, although the market weakened
somewhat towards the end of the year due to the political
situation. The Latin American market also revived following
signiﬁcant contraction in 2012. But demand in Brazil remained
behind expectations in 2013 due to politically related market
uncertainty. Overall, however, the market grew compared with
the previous year.

C | Combined Management Report | Economic Conditions and Business Development

Business development

Unit sales. As previously forecast in the Annual Report 2012, the
Daimler Group further increased its unit sales in 2013. Sales
of 2.35 million vehicles were 7% higher than in 2012. This growth
was driven by all the automotive divisions: Mercedes-Benz
Cars (+8%), Daimler Trucks (+5%), Mercedes-Benz Vans (+7%)
and Daimler Buses (+5%). Each of those divisions also fulﬁlled
the forecasts made for it at the beginning of the year.

The Mercedes-Benz Cars division achieved another record
for unit sales in the year under review, selling 1,565,600
vehicles (2012: 1,451,600). As a result of the attractive new
models that we launched in 2013, growth accelerated as
the year progressed. The Mercedes-Benz brand increased its
unit sales by 9% to the new record of 1,467,400 vehicles.
Mercedes-Benz was the most successful premium brand not
only in Germany, but also in the United States and Japan.
Furthermore, we improved our position in many other markets.

In a volatile European market environment, Mercedes-Benz
performed very well, gaining market share in nearly all major
markets. In Western Europe, we surpassed the previous year’s
unit sales by 3% and increased our share of the weak German
market to 10.3% (2012: 10.1%). The development of unit sales
was particularly pleasing in the United States, where we sold
308,900 vehicles – signiﬁcantly more than ever before. We
achieved considerable growth also in Japan (+22%), India (+27%)
and Brazil (+34%). Our unit sales in China accelerated
especially in the second half of 2013 (+15% in the full year).

Of the Mercedes-Benz model series, growth in unit sales
was especially dynamic for the new compact cars. In 2013,
383,700 customers decided on a model of the A-, B- or
CLA-Class, which is 66% more than in the previous year. Demand
was very strong also for the models of the new E-Class, with
the result that unit sales increased in the year of an extensive
model upgrade by 6% to a total of 332,300 sedans, wagons,
coupes and convertibles. With the SUV models of the M-/R-/
GLK-/GL- and G-Class, unit sales increased to a new record
of 323,300 vehicles (+9%). The C-Class models performed well
in the year before the model change, with sales of 356,700
vehicles (-16%). The new S-Class, which we started delivering
to the ﬁrst customers in July 2013, had an extremely positive
reception from customers and the trade press. Also in the
year of the model changeover, the S-Class defended its posi-
tion as the world’s best-selling luxury sedan. In total, we
sold 71,400 cars in the S-Class segment in 2013 (2012: 80,700).
 C.07

Daimler Trucks was able to slightly increase its unit sales
in a market environment that diﬀered greatly from region
to region in 2013. In total, we shipped 484,200 heavy-, medium-
and light-duty trucks as well as buses of the Thomas Built
Buses and FUSO brands (2012: 462,000); we thus achieved
the highest level of the past seven years and continue to
be the biggest producer of trucks above 6 metric tons gross
vehicle weight with a global reach.  C.08 The key factors
for this success were our extensive product oﬀensive, our com-
prehensive range of modern Euro VI trucks and our global
positioning. The markets behind the growth in unit sales were
above all the countries of Latin America and to a lesser
extent Western Europe, while our unit sales in the NAFTA
region and in Asia were almost stable.

In Western Europe, a signiﬁcant improvement in the demand
situation became perceptible but not until the second half
of the year. On the one hand, customers ordered Euro V vehicles
before the stricter emission limits came into force in 2014;
on the other hand, customers took advantage of the subsidies
for Euro VI vehicles that were available in some countries.
Daimler Trucks’ unit sales increased by 14% to 65,900 vehicles;
we thus further extended our market leadership in Germany
as well as in Western Europe overall.  C.09

C.07
Unit sales structure of Mercedes-Benz Cars

A-/B-/CLA-Class

C-/SLK-Class

E-/CLS-Class

S-/CL-/SL-Class/SLS/Maybach

M-/R-/GLK-/GL-/G-Class

smart

Western Europe

NAFTA

Asia

Other markets

24%

23%

21%

41%

23%

25%

11%

The smart brand performed very well in the last full year
of its product lifecycle, with sales of 98,200 smart fortwo
cars (-7%). E see pages 150 ﬀ

C.08
Unit sales structure of Daimler Trucks

Western Europe

Latin America

NAFTA

Asia

Other markets

14%

12%

28%

34%

12%

In Latin America, we were able to increase our unit sales
by 28% to 59,300 trucks in 2013. This was aided in particular
by state ﬁnancing incentives and catch-up eﬀects in the
region’s main market, Brazil. However, our market share there
was lower than in the previous year due to intense competition.

With a slightly contracting market, we held our sales in
the NAFTA region stable at 135,200 units (2012: 135,000).
We therefore substantially increased our market share
in the NAFTA region for medium- and heavy-duty trucks
of Class 6 to 8 to 38.2%, thus underscoring our leading
competitive position.

C.09
Market share1

In %

Mercedes-Benz Cars

Western Europe

thereof Germany

United States

China

Japan

Daimler Trucks

Medium- and heavy-duty
trucks Western Europe

thereof Germany

Heavy-duty trucks NAFTA
region (Class 8)

Medium-duty trucks NAFTA
region (Classes 6 and 7)

Medium- and heavy-duty
trucks Brazil

Trucks Japan

Mercedes-Benz Vans

Medium-sized and large
vans Western Europe

thereof Germany

Daimler Buses

Buses over 8 metric tons
Western Europe

thereof Germany

Buses over 8 metric tons
Latin America

2013

2012

13/12

Change in
%-points

5.6

10.3

2.1

1.3

1.2

24.1

39.7

36.0

43.1

24.7

20.2

17.8

26.2

30.9

51.2

41.6

5.3

10.1

2.0

1.4

0.9

22.9

39.2

32.9

36.9

25.5

20.4

18.1

26.7

28.3

48.9

42.7

+0.3

+0.2

+0.1

-0.1

+0.3

+1.2

+0.5

+3.1

+6.2

-0.8

-0.2

-0.3

-0.5

+2.6

+2.3

-1.1

1 Based on estimates in certain markets.

In the Asia region, the situation diﬀered greatly in the various
individual markets. Unit sales increased in Japan but decreased
in Taiwan and Indonesia. Due to the weak economic develop-
ment, demand for trucks in India was signiﬁcantly lower than in
2012. Nonetheless, we were able to advance to fourth position
in the segment for medium- and heavy-duty trucks with the new
BharatBenz vehicles. Our total unit sales of 162,700 vehicles
in Asia were close to the prior-year level.

Through Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Foton, we are repre-
sented in the Chinese truck market with locally produced
vehicles. BFDA started production in mid-2012 and sold 103,300
trucks of the Auman brand in 2013, which are not included
in the Daimler Group’s unit sales. E see pages 156 ﬀ

Mercedes-Benz Vans increased its worldwide unit sales
to 270,100 vans of the Sprinter, Vito, Viano, Vario and Citan
models (2012: 252,400). In the core region of Western Europe,
unit sales rose by 3% to 169,200 vans. Of the Citan city van,
which we launched in the autumn of 2012, Mercedes-Benz Vans
sold 17,700 units in Western Europe (2012: 6,400). Unit sales
of medium-sized and large vans decreased by 4% to 151,500
units, primarily due to the continuation of the very diﬃcult
market situation in the countries of Southern Europe. In Germany,
the domestic market, we sold 71,500 vans (2012: 71,000).
Once again Mercedes-Benz Vans was successful in Eastern
Europe, especially in Russia and Turkey: Unit sales in that
region increased by 12% to 26,900 vehicles. The success story
of the Sprinter continued in North and South America: While
unit sales in the United States rose to 22,800 vehicles (2012:
21,500), an increase of 40% to 19,600 vehicles was achieved
in Latin America. We achieved strong growth also in the Chinese
market, selling 12,700 vans (+44%). In total, we sold 166,200
units of the Sprinter (+5%), 80,900 of the Vito and Viano (-3%)
and 20,200 of the Citan. In addition we sold 2,900 units of
the Vario, which has no longer been produced since September
2013. E see pages 161 ﬀ

Daimler Buses sold 33,700 buses and chassis of the
Mercedes-Benz and Setra brands worldwide in 2013. We thus
increased unit sales by 5% and maintained the market leader-
ship in our core markets in the segment for buses above 8 metric
tons. In Western Europe, we strengthened our market position,
especially for city buses and coaches, in a situation of only mod-
erate growth in overall demand. Accordingly, our unit sales
in the region increased by 15% to 6,700 buses (2012: 5,900);
our market share improved signiﬁcantly to 30.9% (2012:
28.3%). In Germany, our unit sales rose by 20% and our market
share increased to 51.2% (2012: 48.9%). The new Citaro city
bus was particularly successful in Germany. In Latin America,
sales of bus chassis under the Mercedes-Benz brand were
also signiﬁcantly higher than in the previous year at 19,100 units
(2012: 17,800), but growth in demand in Brazil was smaller
than we had expected due to politically related market uncer-
tainty. We defended our leading market position despite
a slight decrease in market share to 41.6% (2012: 42.7%).
In Mexico, we did not reach the prior-year level with sales
of 3,000 units. In the United States, unit sales decreased
as expected, as we had discontinued sales of Orion city buses
in 2012. E see pages 164 ﬀ

C | Combined Management Report | Economic Conditions and Business Development

The business of Daimler Financial Services developed posi-
tively once again and set new records in the year under review.
As we had forecast in Annual Report 2012, worldwide contract
volume continued to grow and reached €83.5 billion (+4%).
Adjusted for exchange-rate eﬀects, there was an increase of 11%.
New business grew compared with the previous year by 6%
to €40.5 billion. All regions contributed to this expansion. Also
in 2013, Daimler Financial Services supported small and
medium-sized enterprises as well as international corporations
in numerous countries with the ﬁnancing and management
of their vehicles and ﬂeets. There was a total of 357,000
contracts with commercial clients on the books at the end
of 2013, representing growth of 9% compared with a year
earlier. We expanded our business also in the ﬁeld of insurance:
The number of 1.27 million automotive policies was higher
than ever before (+20%). We further expanded our business with
innovative mobility services in 2013. The car2go mobility
concept was established in 25 cities of Europe and North America
by the end of the year. With a total of almost 600,000 cus-
tomers, car2go was the market leader for ﬂexible short-term
car rentals. The “moovel” mobility platform, which intelligently
links up various mobility services and shows customers
the best way to get from A to B, started operating in the cities
of Nuremberg and Munich and in the Rhine-Ruhr region in
2013. In November, the Park2gether pilot project went into
operation in Berlin und Hamburg; this service brings owners
of parking spaces together with persons seeking parking spaces
through a special website. E see pages 167 ﬀ

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. While doing so, we ﬂexibly adjust the production
numbers to changing levels of demand. Overall, the order
situation of the Daimler Group developed very positively in 2013.
Due to strong demand in the United States and various emerg-
ing markets, the number of orders placed with Mercedes-Benz
Cars was once again signiﬁcantly higher than the high prior-
year level. This was driven on the product side primarily by the
new models in the compact class, the continued strong
success of the SUVs, and the new E-Class. Due to the stable
demand, we also increased our production volumes. At the
end of the year, the order backlog was signiﬁcantly higher than
a year before. The order situation improved compared with
the previous year also at Daimler Trucks. This was primarily

due to the renewal of the entire product range, but also to pur-
chases being brought forward ahead of the new Euro VI
emission limits that came into force in the European Union in
2014. The total number of orders received by Daimler Trucks
was higher than in 2012 and the order backlog at year-end was
also higher than a year before.

Revenue. The Daimler Group increased its total revenue
in the year 2013 by 3% to €118.0 billion; adjusted for exchange-
rate eﬀects, there was an increase of 7%. This means that
the positive business development of 2012 continued, as we had
expected at the beginning of 2013. Revenue growth acceler-
ated signiﬁcantly in the second half of the year due to the market
success of our new vehicle models. As we had forecast in
Annual Report 2012, the divisions Mercedes-Benz Cars (+4%),
Mercedes-Benz Vans (+3%), Daimler Buses (+4%) and Daimler
Financial Services (+7%) increased their business volumes, in
some cases by signiﬁcant margins. However, the revenue
of €31.5 billion (2012: €31.4 billion) posted by Daimler Trucks
was not quite at the level we had anticipated. Exchange-rate
eﬀects played an important role in this respect, especially the
signiﬁcant depreciation of the Japanese yen against the euro.

In regional terms, Daimler achieved revenue growth in Western
Europe (+4% to €41.1 billion) and in the NAFTA region (+3% to
€32.9 billion). In Asia, our expectations were not quite fulﬁlled:
The Daimler Group’s business volume in that region decreased
by 3% to €24.5 billion as a result of the weak ﬁrst half of the year
and also due to exchange-rate eﬀects.

C.11
Revenue by division

In millions of euros

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

2013

2012

13/12

% change

117,982

114,297

64,307

31,473

9,369

4,105

14,522

61,660

31,389

9,070

3,929

13,550

C.10
Consolidated revenue by region

In billions of euros

2009
2010

2011
2012

2013

Germany

Western Europe
(excl. Germany)

NAFTA region

Asia

Other markets

Proﬁtability.

C.12
EBIT by segment

In millions of euros

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

Reconciliation

Daimler Group

2013

20121

4,006

1,637

631

124

1,268

3,149

10,815

4,391

1,695

543

-221

1,293

1,119

8,820

1 The prior-year ﬁgures have been adjusted primarily due
to the eﬀects of the application of the amended IAS 19.
Further information on the adjustments is provided in Note 1
of the Notes to the Consolidated Financial Statements.

EBIT

13/12

% change

The Daimler Group achieved EBIT of €10.8 billion in 2013,
which is signiﬁcantly higher than the prior-year level
(2012: €8.8 billion).  C.12  C.13

-9

-3

+16

-2

+181

+23

The growth in earnings primarily reﬂects the good develop-
ment of the automotive divisions’ unit sales and the increasing
impact of the eﬃciency programs. Despite the good develop-
ment of unit sales, earnings decreased at Mercedes-Benz Cars
due to the changes in the product mix as well as advance
expenditure for new products; at Daimler Trucks, particularly
warranty costs and exchange rate eﬀects led to a slight
decrease in EBIT. Mercedes-Benz Vans and Daimler Buses
achieved higher earnings than in the previous year. The
EBIT posted by Daimler Financial Services was in the magnitude
of the previous year.

C.13
Development of earnings

In billions of euros

Lower expenses related to the compounding of non-current
provisions and the eﬀects of lower discount rates also boosted
Group EBIT (€95 million; 2012: €504 million). The development
of currency exchange rates had an opposing, negative impact
on earnings.

EBIT
Net proﬁt (loss)

2009

2010

2011

2012

2013

Earnings in both years were inﬂuenced by the sale of EADS
shares: In 2013, the remeasurement and sale of the remaining
7.4% of EADS shares resulted in a gain of €3,223 million;
in 2012, the sale of 7.5% of the shares of EADS resulted in a gain
of €913 million. Impairments recognized on investments in
the area of alternative drive systems reduced Group EBIT by €174
million (2012: €51 million). Expenses of €116 million were
recognized for workforce adjustments in the context of an opti-
mization program of Daimler Trucks in Germany and Brazil.
The repositioning of the European and American business
of Daimler Buses resulted in expenses of €39 million in 2013
(2012: €155 million).

-2

-4

The special items aﬀecting earnings in the years 2013
and 2012 are listed in the table  C.14.

C.14
Special items aﬀecting EBIT

Group EBIT from the ongoing business (EBIT excluding
special items) of €7.9 billion was slightly lower than the level
of €8.1 billion that we had forecast in Annual Report 2012
as there were no more equity-method earnings from our invest-
ment in EADS as of the second quarter of 2013.

In millions of euros

Mercedes-Benz Cars

Impairment of investments in the area of
alternative drive systems

Mercedes-Benz Cars posted EBIT of €4,006 million,
which was lower than the prior-year result of €4,391 million.
The division’s return on sales was 6.2% (2012: 7.1%).  C.15

Daimler Trucks

Workforce adjustments

The division’s earnings primarily reﬂect the further growth
in unit sales, especially in China, the United States and Western
Europe. This was due in particular to our expanded range of
compact cars. Better pricing also contributed to the earnings.
The eﬃciency actions from our “Fit for Leadership” program
also had a positive impact on earnings. However, a changed
model mix and unfavorable exchange rate developments
adversely aﬀected earnings. Earnings were additionally reduced
by expenses related to enhancements of products’ attrac-
tiveness, capacity expansions, advance expenditure for new
technologies and vehicles as well as higher other expenses
relating to the growth in unit sales. EBIT includes an impairment
recognized on investments in the area of alternative drive
systems of €174 million (2012: €51 million).

The Daimler Trucks division achieved EBIT of €1,637 million
and a return on sales of 5.2% (2012: €1,695 million and 5.4%).
 C.15

The revival of unit sales that was apparent especially in the
last quarter made a positive contribution to the development
of earnings. On the one hand, there was a recovery of the
Brazilian market; on the other hand, there was positive impetus
from the business in Western Europe, partially due to pur-
chases being brought forward because of the introduction of
the stricter Euro VI emission standards in 2014. However,
earnings were particularly impacted by increased warranty costs
and exchange rate eﬀects. An additional factor was a total
expense of €116 million for workforce adjustments in the context
of the optimization programs in Germany and Brazil. The eﬃ-
ciency measures taken within the framework of the “Daimler
Trucks #1” program had a positive inﬂuence on earnings.

Mercedes-Benz Vans achieved EBIT of €631 million in 2013
(2012: €543 million). The division’s return on sales was 6.7%
in 2013 compared with 6.0% in 2012.  C.15

The signiﬁcant increase in earnings is partially related to
higher levels of unit sales and better pricing. Ongoing eﬃciency
increases in the context of the “Performance Vans 2013”
program also contributed to the improvement in earnings.
Earnings were negatively inﬂuenced by advance expenditure
for new products. In the previous year, an expense of €64 million
had been recognized in connection with the impairment of
the Chinese joint venture Fujian Benz Automotive Corporation.

C | Combined Management Report | Proﬁtability

2013

2012

-174

-51

-116

–

-64

-39

-155

Mercedes-Benz Vans

Impairment of joint venture Fujian
Benz Automotive Corporation

Daimler Buses

Business repositioning

Reconciliation

Gain on the sale of EADS shares

+3,223

+913

2010
2011

2012
2013

C.15
Return on sales

In %

-3

-6

-8

Mercedes-Benz
Cars

Daimler
Trucks

Mercedes-Benz
Vans

Daimler
Buses

2010
2011

2012
2013

C.16
Return on equity

In %

Daimler Financial Services

C.17
Consolidated statement of income

In millions of euros

Revenue

Cost of sales

Gross proﬁt

Selling expenses

General administrative expenses

Research and non-capitalized
development costs

Other operating income

Other operating expense

Share of proﬁt from investments
accounted for using the equity
method, net

Other ﬁnancial expense, net

Interest income

Interest expense

Proﬁt before income taxes

Income taxes

Net proﬁt

thereof attributable to
non-controlling interests

thereof attributable to
shareholders of Daimler AG

2013

2012

13/12

% change

117,982

114,297

-92,457

25,525

-10,875

-3,865

-4,101

1,530

-399

3,345

-349

212

-884

10,139

-1,419

8,720

-88,821

25,476

-10,455

-3,974

- 4,179

1,507

-291

1,198

-462

233

-937

8,116

-1,286

6,830

-3

-2

+37

+179

-24

-9

-6

+25

+10

+28

1,878

402

+367

6,842

6,428

C.18
Reconciliation of Group EBIT to proﬁt before income taxes

In millions of euros

Group EBIT

Amortization of capitalized
borrowing costs1

Interest income

Interest expense

Proﬁt before income taxes

2013

2012

10,815

-4

212

-884

10,139

8,820

233

-937

8,116

1 Amortization of capitalized borrowing costs is not included in the internal

performance measure EBIT, but is a component of cost of sales.

The Daimler Buses division returned to proﬁtability in 2013
and posted EBIT of €124 million (2012: minus €221 million).
Its return on sales was 3.0% (2012: minus 5.6%).  C.15

This positive development was driven by growth in unit sales
in Western Europe and Latin America as well as by an improved
model mix. Additional factors that led to signiﬁcant earnings
improvements were further eﬃciency progress in the European
business and lower expenses for the repositioning of the Euro-
pean and American businesses. Expenses for repositioning the
business system amounted to €39 million (2012: €155 million).

Daimler Financial Services achieved EBIT of €1,268 million
in 2013, which is close to its earnings of the previous year
(€1,293 million). The division’s return on equity was 19.2%
(2012: 22.0%).  C.16

A larger contract volume contributed towards the earnings
improvement. There were opposing eﬀects on earnings
from negative exchange-rate developments and lower interest
margins. Higher expenses were incurred in connection with
the expansion of business operations.

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. Until the sale of the remaining EADS
shares, gains and/or losses at the corporate level also
included our proportionate share of the results of the equity-
method investment in EADS.

In early April, Daimler left the former EADS shareholder pact.
Due to the resulting loss of signiﬁcant inﬂuence, the EADS
shares were no longer accounted for using the equity method.
This resulted in a gain of €3.4 billion in 2013. On April 17,
2013, the Group sold its remaining EADS shares, comprising
a stake in the company of approximately 7.4%, by way of
an accelerated bookbuilding process; the development of the
EADS share price between April 2, 2013 and the date of
the sale resulted in a loss of €184 million. The Group had also
reached an agreement with cash settlement allowing parti-
cipation to a limited extent in a rise in the EADS share price until
the end of 2013. This agreement resulted in a gain for the
Daimler Group of €44 million. In total, our proportionate share
of the results of EADS resulted in a capital gain of €3.2 billion.
Further information on the disposal of the EADS shares in 2013
is included in E Note 13 of the Notes to the Consolidated
Financial Statements.

A loss of €191 million was recognized (2012: loss of €113 million)
for the other items at the corporate level. The elimination
of intra-group transactions resulted in a gain of €82 million
in 2013 (2012: €8 million).

The reconciliation of Group EBIT to proﬁt before income
taxes is shown in the table  C.18.

C | Combined Management Report | Proﬁtability

In 2013, our share of proﬁt from investments accounted for
using the equity method improved to €3.3 billion (2012:
€1.2 billion). Both years were aﬀected by large gains relating
to the loss of signiﬁcant inﬂuence and the disposal of EADS
shares. In 2013, Daimler lost its signiﬁcant inﬂuence on EADS;
this resulted in a gain of €3.4 billion. In 2012, 7.5% of the
shares of EADS were sold with a resulting gain of €0.9 billion.
 C.17

Other ﬁnancial expense improved from €0.5 billion
to €0.3 billion. This is primarily due to lower expenses from
the compounding of provisions and eﬀects from changes
in discount rates totaling €0.1 billion (2012: €0.5 billion).  C.17

The Group recorded a net interest expense of €0.7 billion
(2012: €0.7 billion). While expenses related to pension and
healthcare obligations were close to the prior-year level, other
interest income improved slightly. This development was
primarily due to measurement eﬀects of interest hedging
instruments, which serve to secure the Group’s reﬁnancing.
Lower interest rates for cash deposits and higher levels
of liquidity oﬀset each other.  C.17

The income tax expense increased only slightly to €1.4
billion (2012: €1.3 billion), despite higher proﬁt before income
taxes. The eﬀective tax rate for 2013 was 14.0% (2012: 15.8%).
The lower eﬀective tax rate was mainly the result of tax-free
gains on the remeasurement and sale of EADS shares. Additional
factors in both years were tax beneﬁts in connection with
the tax assessment of prior years.  C.17

Net proﬁt for the year amounts to €8.7 billion (2012:
€6.8 billion). Net proﬁt of €1.9 billion is attributable to non-
controlling interests (2012: €0.4 billion), a large portion of which
in 2013 is related to the remeasurement of the EADS shares.
Net proﬁt attributable to shareholders of Daimler AG
amounts to €6.8 billion (2012: €6.4 billion), representing
earnings per share of €6.40 (2012: €6.02).  C.17

The calculation of earnings per share (basic) is based
on an average number of outstanding shares of 1,068.8 million
(2012: 1,066.8 million).

Statement of income

The Group’s total revenue increased by 3.2% to €118.0 billion
in 2013; adjusted for exchange rate eﬀects, it increased by
7.3%. The revenue growth primarily reﬂects the higher unit sales
by all automotive divisions and the increased contract volume
at Daimler Financial Services. Further information on the devel-
opment of revenue is provided in the E “Business development”
section of this Management Report.  C.17

Cost of sales amounted to €92.5 billion in 2013, increasing
by approximately 4% compared with the prior year. The increase
in cost of sales was caused by higher business volumes
and consequentially higher material and personnel expenses.
Furthermore, depreciation of equipment on operating leases
increased along with the growing leasing business. There were
opposing eﬀects from lower expenses for reﬁnancing at
Daimler Financial Services. Compared with the Group revenue,
which increased by 3.2% and was inﬂuenced by the deprecia-
tion of major currencies, cost of sales increased by 4.1%, so gross
proﬁt in relation to revenue fell to 21.6% (2012: 22.3%). The
changed product mix also had an impact on this development.
Further information on cost of sales is provided in E Note 5
of the Notes to the Consolidated Financial Statements.  C.17

Due to the growth in unit sales, selling expenses increased
by €0.4 billion to €10.9 billion. The main factors here were
higher expenses for marketing, personnel and IT services.
As a percentage of revenue, selling expenses increased from
9.1% to 9.2%.  C.17

General administrative expenses of €3.9 billion were
slightly below the level of the previous year (2012: €4.0 billion),
mainly driven by exchange rate eﬀects. As a percentage of
revenue, general administrative expenses decreased slightly
to 3.3% (2012: 3.5%).  C.17

Research and non-capitalized development costs were
almost unchanged compared with the previous year at €4.1 billion
(2012: €4.2 billion). They were mainly related to advance
expenditure for the development of new models, the renewal
of existing models, and the further development of fuel-
eﬃcient and environmentally friendly drive systems and safety
technologies. As a proportion of revenue, research and
development costs decreased from 3.7% to 3.5%. Further infor-
mation on the Group’s research and development costs is
provided in the “Research and development, environmental
protection” section of the E “Sustainability” chapter.  C.17

Other operating income of €1.5 billion (2012: €1.5 billion)
was at the prior-year level while other operating expense
increased slightly to €0.4 billion (2012: €0.3 billion). Further
information on the composition of other operating income
and expense is provided in E Note 6 of the Notes to the
Consolidated Financial Statements.  C.17

C.19
Dividend per share

In euros

2.50

2.00

1.50

1.00

0.50

2.20

2.25

1.85

0.00

2009

2010

2011

2012

2013

Dividend

At the Annual Shareholders’ Meeting on April 9, 2014, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.25 per share (prior year:
€2.20). With this proposal, we are letting our shareholders
participate in the Company’s success while expressing our
conﬁdence about the ongoing course of business. The total divi-
dend will thus amount to €2,407 million (prior year: €2,349
million) and the distribution ratio will be 35.2% of the net proﬁt
attributable to the Daimler shareholders (prior year: 36.5%).
 C.19

C.20
Reconciliation to net operating proﬁt

Net operating proﬁt

In millions of euros

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

EBIT of the divisions

Income taxes1

Other reconciliation

Net operating proﬁt

2013

2012

13/12

% change

4,006

1,637

631

124

1,268

7,666

-1,642

3,149

9,173

4,391

1,695

543

-221

1,293

7,701

-1,518

1,119

7,302

-9

-3

+16

-2

-0

+181

+26

1 Adjusted for tax eﬀects on interest income/expense and amortization of

capitalized borrowing costs.

C.21
Value added

In millions of euros

2013

2012

13/12

% change

Daimler Group

5,921

4,300

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

2,007

2,698

369

445

-4

409

365

387

-360

530

+38

-26

+15

+99

-23

Table  C.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.

Value added

As described in the “Performance measurement system”
section of the E “Corporate Proﬁle” chapter  C.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  C.21 and
 C.22 show value added and net assets for the Group and for
the individual divisions. Table  C.23 shows how net assets
are derived from the consolidated statement of ﬁnancial position.

The Group’s value added increased by €1.6 billion to €5.9
billion in 2013, representing a return on net assets of 22.6%
(2012: 19.5%). This was once again substantially higher than
the minimum required rate of return of 8%. Value added in both
years was inﬂuenced in particular by the remeasurement
and sale of the remaining EADS shares.

Mercedes-Benz Cars achieved value added of €2.0 billion
(2012: €2.7 billion). Ongoing growth in unit sales and better
pricing were oﬀset by a less favorable model mix and exchange
rate eﬀects. There was also an impact from expenses relating
to the enhancement of products’ attractiveness, capacity
expansions and advance expenditure for new technologies and
vehicles. The increase in average net assets by €2.6 billion
to €16.7 billion also aﬀected the development of value added.
This was mainly caused by the higher level of ﬁxed assets
following increased investment in new products and produc-
tion plants.

Value added at the Daimler Trucks of €0.4 billion was
at the prior-year level. The slight decrease in EBIT was oﬀset
by the lower level of average net assets. The development
of earnings was primarily driven by the revival of vehicle unit
sales, especially in Brazil and Western Europe. There were
opposing eﬀects from higher warranty costs, exchange rate
eﬀects and expenses in connection with the optimization
programs in Germany and Brazil.

The value added of the Mercedes-Benz Vans division of €0.4
billion was slightly higher than in 2012. Increased earnings
were achieved due to higher unit sales, improved pricing and
eﬃciency improvements. There was an opposing eﬀect from
average net assets, which increased by €0.2 billion to €1.5 billion
due to the higher level of ﬁxed assets.

The Daimler Buses division achieved value added of minus
€4 million (2012: minus €360 million). Higher unit sales
in Western Europe and Latin America, further eﬃciency prog-
ress in the European business system and lower expenses
for optimization programs led to a signiﬁcant increase in EBIT.
The division’s average net assets decreased slightly by
€0.1 billion and thus made a small contribution to the increase
in value added.

The value added of the Daimler Financial Services division
decreased by €0.1 billion to €0.4 billion. Return on equity
was 19.2% (2012: 22.0%). This development was primarily the
result of an increase in average equity of €0.7 billion to €6.6
billion, due to the higher contract volume, while earnings were
at the level of the prior year.

C | Combined Management Report | Proﬁtability

2013

2012

13/12

% change

C.22
Net assets (average)

In millions of euros

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses
Daimler Financial Services1

16,658

10,571

1,547

1,068

6,607

14,107

11,082

1,302

1,157

5,871

Net assets of the divisions

36,451

33,519

Investments accounted for
using the equity method2

Assets and liabilities from
income taxes3
Other reconcilation3

638

1,938

2,479

1,080

1,256

808

Daimler Group

40,648

37,521

1 Total equity
2 To the extent not allocated to the segments
3 Industrial business

+18

-5

+19

-8

+13

-67

+97

+34

C.23
Net assets of the Daimler Group at year-end

In millions of euros

2013

2012

13/12

% change

Net assets of the industrial
business

Intangible assets

Property, plant and equipment

Leased assets

Inventories

Trade receivables

Less provisions for other risks

Less trade payables

Less other assets and liabilities

Assets and liabilities from
income taxes

Total equity of
Daimler Financial Services

9,228

21,732

13,207

16,648

7,208

-11,382

-8,778

-15,983

8,761

20,546

12,163

17,075

6,864

-10,975

-8,515

-14,864

1,878

2,717

6,596

6,092

Net assets

40,354

39,864

-3

-31

Liquidity and Capital Resources.

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 produc-
tion, sales and ﬁnancing companies, are based on the princi-
ples of cost-optimized and risk-optimized liquidity and capital
resources. In addition, it is necessary to adhere to various
restrictions on capital transactions and on the transfer of capital
and currencies.

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 credit, commer-
cial paper, 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 necessary
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 credit market, as well as
a contractually conﬁrmed syndicated credit line with a volume
of €9 billion.

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-concen-
tration or cash-pooling procedures. Daimler has established
standardized processes and systems to manage its bank
accounts, internal cash-clearing accounts and the execution
of 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 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.

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
comparing 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 E Note 22 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 creditwor-
thiness of the respective ﬁnancial institution or issuer. The
credit risk with customers of our automotive business relates
to contracted dealerships and general agencies, other cor-
porate 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 ﬁnan-
cial services business is managed by Daimler Financial

C | Combined Management Report | Liquidity and Capital Resources

Cash used in investing activities  C.24 amounted to
€6.8 billion (2012: €8.9 billion). The decrease compared with
the prior year was primarily the result of purchases and
sales of securities carried out in the context of liquidity manage-
ment, which overall led to signiﬁcantly lower cash outﬂows
(net). The sale of the remaining EADS shares resulted in higher
proceeds in 2013 than in 2012. Compared with the invest-
ments in companies made in 2012, the acquisition of the 12%
stake in BAIC Motor Corporation Ltd. (BAIC Motor) for €0.6
billion and the capital increase at Beijing Benz Automotive Co.,
Ltd. (BBAC) led to higher cash outﬂows in 2013. Furthermore,
slightly higher investment in property, plant and equipment and
in intangible assets resulted in higher cash outﬂows.

C.24
Condensed consolidated statement of cash ﬂows

In millions of euros

2013

2012

13/12

Change

Cash and cash equivalents
at beginning of year

Net cash provided by operating
activities

Net cash used for
investing activities

Net cash provided by ﬁnancing
activities

Eﬀect of exchange-rate changes
on cash and cash equivalents

Cash and cash equivalents
at end of year

10,996

9,576

+1,420

3,285

-1,100

+4,385

-6,829

-8,864

+2,035

3,855

11,506

-7,651

-254

-122

11,053

10,996

-132

+57

Services on the basis of a standardized 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, mea-
surement and management of risks. Key elements for the man-
agement of credit risks are appropriate creditworthiness
assessments, supported by statistical analyses and evaluation
methods, as well as structured portfolio analysis and monitoring.

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. The Credit Committee sets
country limits for this cross-border ﬁnancing. 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 receiv-
ables due from customers are protected with the use of
export-credit insurance, ﬁrst-class bank guarantees 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.

Additional information on the management of market-price
risks, credit default and liquidity risks is provided in
E Note 32 of the Notes to the Consolidated Financial
Statements.

Cash ﬂows

Cash provided by operating activities  C.24 increased
compared with the previous year by €4.4 billion to €3.3 billion.
The growth in net proﬁt before income taxes includes non-
cash eﬀects of €3.4 billion from the remeasurement of the EADS
shares. The development of working capital had positive eﬀects.
This was due to an increase in trade payables and a smaller
increase in inventories; there were opposing eﬀects from the
increase in trade receivables. Growth in new business in the
area of leasing and sales ﬁnancing was slightly above the high
level of the previous year. The generally positive development
of other operating assets and liabilities was mainly connected
with the expansion of business and partially related to
invoicing. Value-added tax included and not yet paid to the
tax authorities as well as higher sales with residual-value
guarantees and with service and maintenance agreements
(due to the generally higher unit sales) already led to payments
received. For dealer bonuses, expenses were taken into
consideration that were not yet connected with payments.
Furthermore, contributions to pension funds were lower
than in 2012. In the previous year, special contributions of
€0.5 billion were made in connection with pension plans
to the plan assets of additional German entities. A positive eﬀect
resulted from lower payments for income taxes; the year
2013 was inﬂuenced by reimbursements of advance payments
in Germany.

Cash ﬂows from ﬁnancing activities  C.24 resulted in a
net cash inﬂow of €3.9 billion (2012: €11.5 billion). The decrease
mainly reﬂects the development of long-term borrowing (net).
The main factor was that repayments of existing long-term loans
increased while new borrowing was slightly higher than in the
previous year. An additional factor was that dividend payments
to non-controlling interests of subsidiaries decreased.

Including negative currency eﬀects, cash and cash equivalents
of €11.1 billion as of December 31, 2013 were at the level
of the previous year. Total liquidity, which also includes market-
able debt securities, rose by €1.5 billion to €18.1 billion.

C.25
Free cash ﬂow of the industrial business

In millions of euros

Net cash provided by operating
activities

Net cash used for investing
activities

Changes in marketable debt
securities

Other changes

Free cash ﬂow of the
industrial business

2013

2012

13/12

Change

10,313

7,527

+2,786

-6,767

-8,166

+1,399

1,548

-252

2,699

-608

-1,151

+356

4,842

1,452

+3,390

C.26
Net liquidity of the industrial business

In millions of euros

Cash and cash equivalents

Marketable debt securities

Liquidity

Financing liabilities

Market valuation and currency
hedges for ﬁnancing liabilities

Financing liabilities (nominal)

Net liquidity

Dec. 31,
2013

Dec. 31,
2012

9,845

5,303

15,148

-1,324

-1,314

13,834

9,887

3,841

13,728

-2,883

663

-2,220

11,508

13/12

Change

-42

+1,462

+1,420

+1,559

-653

+906

+2,326

The parameter used by Daimler to measure the ﬁnancing
capability of the Group’s industrial activities is the free cash
ﬂow of the industrial business  C.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 excluded, as those securities are allocated to liquidity
and changes in them are thus not a part of the free cash ﬂow.

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, eﬀects from the ﬁnancing of dealerships within
the Group are adjusted. In addition, the cash ﬂows to be
shown under cash provided by ﬁnancing activities in connection
with the acquisition or sale of interests in subsidiaries
without the loss of control are included in the calculation
of the free cash ﬂow.

The free cash ﬂow of the industrial business amounted to
€4.8 billion in 2013. The positive proﬁt contributions of the auto-
motive divisions were oﬀset by the increase in working capi-
tal, deﬁned as the net change in inventories, trade receivables
and trade payables, with a total amount of €0.6 billion.
Furthermore, the free cash ﬂow was inﬂuenced by the positive
net change of other operating assets and liabilities which
were connected with the expansion of business and partially
related to invoicing. Positive eﬀects resulted from the sale
of trade receivables of companies by the industrial business
to Daimler Financial Services. The free cash ﬂow of the indus-
trial business was also positively inﬂuenced by the cash inﬂow
from the sale of the remaining EADS shares. There were
negative eﬀects from high investments in property, plant and
equipment and intangible assets, the acquisition for €0.6
billion of a 12% interest in BAIC Motor and the capital increase
at Beijing Benz Automotive Co., Ltd. (BBAC). In addition,
income tax and interest payments reduced the free cash ﬂow
of the industrial business.

The net liquidity of the industrial business  C.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.

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.

Compared with December 31, 2012, the net liquidity
of the industrial business rose by €2.3 billion to €13.8 billion
The increase was mainly caused by the positive free cash
ﬂow of the industrial business; there were opposing eﬀects from
the dividend payment to the shareholders of Daimler AG
for the year 2012 (minus €2.3 billion) and the dividend payment
to minority shareholders of subsidiaries (minus €0.3 billion).

Net debt at Group level, which primarily results from reﬁnancing
the leasing and sales ﬁnancing business, increased compared
with December 31, 2012 by €0.6 billion to €59.6 billion.  C.27

C | Combined Management Report | Liquidity and Capital Resources

Other ﬁnancial obligations, ﬁnancial guarantees
and contingent liabilities

C.27
Net debt of the Daimler Group

In millions of euros

Cash and cash equivalents

Marketable debt securities

Liquidity

Financing liabilities

Market valuation and currency
hedges for ﬁnancing liabilities

Financing liabilities (nominal)

Net debt

Dec. 31,
2013

Dec. 31,
2012

11,053

7,066

18,119

-77,738

-3

-77,741

-59,622

10,996

5,598

16,594

-76,251

665

-75,586

-58,992

13/12

Change

+57

+1,468

+1,525

-1,487

-668

-2,155

-630

C.28
Other ﬁnancial obligations (nominal amounts)

In millions of euros

Obligations from purchasing
agreements

Non-terminable rental and
leasing agreements

Irrevocable loan obligations

Other miscellaneous ﬁnancial
obligations

Other ﬁnancial obligations

Dec. 31,
2013

Dec. 31,
2012

9,771

1,980

1,508

1,356

14,615

8,763

2,139

1,022

1,396

13,320

In the context of its normal business operations, the Group
has entered into other ﬁnancial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2013. Table  C.28 provides an overview of
the nominal amounts of other ﬁnancial obligations. With regard
to their maturities, we refer to E Note 30 (Financial guaran-
tees, contingent liabilities and other ﬁnancial commitments) and
E Note 32 (Management of ﬁnancial risks) of the Notes
to the Consolidated Financial Statements.

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 max-
imum potential obligation resulting from these guarantees
amounts to €0.8 billion at December 31, 2013 (end of 2012:
€1.0 billion); liabilities recognized in this context amount
to €0.1 billion at the end of the year (end of 2012: €0.1 billion).
Most of the ﬁnancial guarantees relate to the situations
described as follows: In connection with the transfer of a major-
ity interest in Chrysler, Daimler provides guarantees for
Chrysler obligations; at December 31, 2013, those guarantees
amounted 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 the Group provided
for obligations of Toll Collect GmbH to the Federal Republic
of Germany. This guarantee is related to the completion and
operation 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 the Group.
The maximum obligation that could result from this guarantee
is substantial, but cannot be reliably estimated.

The contingent liabilities principally constitute buyback
obligations. At December 31, 2013, the best possible estimate
for the loss risk from these guarantees amounted to €1.0
billion (December 31, 2012: €0.8 billion). Warranty and good-
will 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. They mainly comprise possible
expenses from liability and litigation risks as well as from tax
risks and import-duty risks. The best possible estimate
for a possible expense from the other contingent liabilities
is €0.4 billion (2012: €0.1 billion).

Further information on other ﬁnancial obligations and contingent
liabilities from guarantees granted as well as on the electronic
toll-collection system and related risks is provided in E Note 30
(Financial guarantees, contingent liabilities and other ﬁnancial
commitments) and E Note 29 (Legal proceedings) of the Notes
to the Consolidated Financial Statements.

Investment in property, plant and equipment

Renewed increase in investment. In the context of our global
growth strategy, we want to make good use of the opportunities
presented by international automotive markets. This requires
substantial investment in new products and new technologies
as well as in the expansion of our worldwide production net-
work. In 2013, we therefore once again increased our investment
in property, plant and equipment to €5.0 billion (2012: €4.8
billion) and thus reached the magnitude announced in Annual
Report 2012. Of that capital expenditure, €3.2 billion was
invested in Germany (2012: €3.3 billion). As of December 31,
2013, no material ﬁnancial obligations exist in connection with
future investment in property, plant and equipment.

C.29
Investment in property, plant and equipment

In billions of euros

2009

2010

2011

2012

2013

C.30
Investment in property, plant and equipment by division

At Mercedes-Benz Cars, investment in property, plant and
equipment increased by 6% to €3.7 billion in 2013. The most
important projects included the production of the new S-Class
and preparations for the new C-Class, which will be produced
in Bremen as well as Tuscaloosa (United States), Beijing (China)
and East London (South Africa) as of 2014. We also made
substantial investments in the modernization and expansion
of transmission production in Untertürkheim and in the
expansion of our production capacities in the United States.
The main areas of investment at Daimler Trucks were for
the Arocs (the new heavy-duty construction-site truck) as well
as various projects for the global standardization of engines
and other main components. We also invested in the expansion
of our production capacities in Brazil and in the new Bharat-
Benz plant in India. Total investment in property, plant and equip-
ment at Daimler Trucks amounted to €0.8 billion (2012: €1.0
billion). At the Mercedes-Benz Vans division, the focus of invest-
ment was on the successor generation of the Vito goods
van and the Viano passenger van. We also invested in the new
generation of the Sprinter and the production of the Sprinter
Classic by our partner GAZ in Russia. The main investments
at Daimler Buses in 2013 were in new products and the
modernization of production facilities.

In addition to capital expenditure on property, plant and
equipment, we also invested substantial amounts in associates
and joint ventures in 2013. Those investments include the
acquisition of a 12% equity interest in our Chinese partner BAIC
Motor and the investments in our Chinese joint ventures.

We also capitalized development costs of €1.3 billion in 2013
(2012: €1.5 billion); this is presented under intangible assets.
E see page 106

2013

2012

13/12

% change

Reﬁnancing

4,975
4.2

3,710
5.8

839
2.7

288
3.1

76
1.9

19
0.1

4,827
4.2

3,495
5.7

989
3.2

223
2.5

82
2.1

23
0.2

-15

+29

-7

-17

The funds raised by Daimler in the year 2013 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 credit, 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, ABS).

Various issue 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, signiﬁcantly smaller than the EMTN program however,
in markets such as South Africa, Mexico, Thailand and Argentina.
Capital-market programs allow ﬂexible, repeated access
to the capital markets.

In millions of euros

Daimler Group

in % of revenue

Mercedes-Benz Cars
in % of revenue

Daimler Trucks

in % of revenue

Mercedes-Benz Vans
in % of revenue

Daimler Buses

in % of revenue

Daimler Financial Services

in % of revenue

C | Combined Management Report | Liquidity and Capital Resources

In 2013, the Group covered its liquidity 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.  C.32

The carrying values of the main reﬁnancing instruments and
the weighted average interest rates are shown in table  C.31.
At December 31, 2013, they are mainly denominated in the
following currencies: 48% in euros, 25% in US dollars, 4%
in Brazilian real, 3% in Japanese yen and 4% in Canadian dollars.

In addition, a large number of smaller bonds were issued
in various currencies in the euro market as well as in Canada,
South Africa, Thailand, Brazil, Argentina, South Korea and
Turkey. More than one third of the bond volume was issued
in euros and more than one third was issued in US dollars.

The ongoing high degree of uncertainty in global ﬁnancial
markets in 2012, due in particular to the European sovereign-
debt crisis, meant that issuers with good ratings were
already able to place corporate bonds at attractive conditions,
and conditions for Daimler continued to improve in 2013.
Within the framework of our liquidity management, we there-
fore tended to raise more funds with longer maturities.

Daimler also issued commercial paper in small volumes
in 2013.

In 2013, several asset-backed securities (ABS) transactions
were carried out in the United States and Germany due
to the favorable market environment. For example, in April and
November 2013, a reﬁnancing volume of $3.3 billion was
generated in the United States through the issuance of ABS
paper backed by leasing receivables. In addition, in July
2013, an ABS transaction with a volume of nearly $1 billion
was placed in the United States based on credit receivables.
In November, Mercedes-Benz Bank placed ABS bonds
in a volume of €925 million, also backed by credit receivables,
with European investors.

Bank credit was another important source of reﬁnancing
in 2013. 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 Kreditanstalt
für Wiederaufbau (KfW), the European Investment Bank
and the Brazilian Development Bank (BNDES). In this way,
we continued our diversiﬁcation in the ﬁeld of reﬁnancing
through banks.

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
participated in the consortium. The credit line was over-
subscribed and has more favorable conditions than the previous
€7 billion facility. Daimler does not intend to utilize the credit
line.

At the end of 2013, Daimler had short- and long-term credit
lines totaling €35.4 billion (2012: €33.7 billion), of which
€15.0 billion was not utilized (2012: €12.2 billion). They include
a syndicated credit line arranged in September 2013 with
a consortium of international banks with a volume of €9 billion,
which has not been utilized.

At December 31, 2013, the total of ﬁnancial liabilities shown
in the consolidated statement of ﬁnancial position amounted
to €77,738 million (2012: €76,251 million).

Detailed information on the amounts and terms of ﬁnancing
liabilities is provided in E Note 24 and Note 32 of the Notes
to the Consolidated Financial Statements. E Note 32 also
provides information on the maturities of the other ﬁnancial
liabilities.

C.31
Reﬁnancing instruments

Average interest rates

Carrying values

Dec. 31,
2013

Dec. 31,
2012

Dec. 31,
2013

Dec. 31,
2012

in %

in millions of euros

2.14

2.02

3.32

1.54

1.86

1.52

44,875

1,086

40,845

1,768

3.80

19,089

20,210

2.13

11,257

12,121

Volume

Month of
emission

Maturity

750 million USD

Jan. 2013

Jan. 2015

1,250 million USD

Jan. 2013

Jan. 2016

1,000 million USD

Jan. 2013

1,000 million EUR

Mar. 2013

500 million EUR

Mar. 2013

750 million EUR

June 2013

Jan. 2018

July 2016

Mar. 2023

June 2021

1,500 million USD

Aug. 2013

Aug. 2016

1,500 million USD

Aug. 2013

Aug. 2018

500 million EUR

750 million EUR

Oct. 2013

Oct. 2016

Apr. 2020

1,000 million EUR

Nov. 2013

Nov. 2018

Notes/bonds and
liabilities from ABS
transactions

Commercial paper

Liabilities to ﬁnancial
institutions

Deposits in the direct
banking business

C.32
Benchmark emissions

Issuer

Daimler Finance
North America

Daimler AG

Daimler Finance
North America

Daimler AG

C.33
Credit ratings

Long-term credit ratings

Standard & Poor’s

Moody’s

Fitch

DBRS

Short-term credit ratings

Standard & Poor’s

Moody’s

Fitch

DBRS

End of 2013

End of 2012

A-

A (low)

A-2

P-2

A-2

P-2

R-1 (low)

Credit ratings

In 2013, the outlook for the long-term credit rating of Daimler AG
was changed from positive to stable by the rating agency
Moody’s Investors Service. The other rating agencies conﬁrmed
their credit ratings for Daimler during the course of the year.
Daimler AG therefore has comparable credit ratings at the level
of A- with all four of the agencies it has engaged.  C.33

In a publication of February 12, 2013, Standard & Poor’s
Ratings Services (S&P) explained its credit rating for
Daimler AG and thus aﬃrmed our existing long-term corporate
rating of A- and the stable outlook. On November 21, 2013,
S&P once again conﬁrmed its rating for Daimler AG following
the application of revised corporate criteria, which S&P
had published on November 19, 2013.

Fitch Ratings (Fitch) aﬃrmed the existing long-term issuer risk
of Daimler AG of A- with a stable outlook on May 24, 2013.
This assessment was justiﬁed by Fitch with the Group’s robust
ﬁnancial structure and its signiﬁcant net cash position. With
regard to its ﬁnancial metrics, Fitch stated that Daimler enjoys
adequate headroom in its current ratings.

On July 11, 2013, Moody’s Investors Service (Moody’s) also
aﬃrmed the existing long-term issuer default rating of A3
for Daimler AG and the subsidiaries rated by Moody’s. At the
same time, the outlook was changed from positive to stable.
Moody’s explained the revised outlook by the fact that Daimler’s
credit metrics had eroded since the previous assessment
of the outlook in August 2011 to a level below what would be
needed to qualify for an upgrade and that a return to a level
that would support a higher rating was not expected within
the next 12 to 18 months. Moody’s stated, however, that
Daimler’s performance had recently been relatively resilient.

The Canadian agency DBRS conﬁrmed its long-term credit
rating for Daimler AG and its related companies at A (low) with
a stable outlook on October 21, 2013. The conﬁrmation
of the ratings is based on the Group’s strong business proﬁle
as a highly established premium automotive manufacturer
as well as the world’s leading truck producer. DBRS stated that
Daimler’s current ﬁnancial proﬁle is wholly commensurate
with the assigned ratings.

All of the rating agencies assume that the Group’s proﬁtability
will improve in the year 2014 due to the launch of new vehicle
models.

The short-term ratings of all four rating agencies remained
unchanged in 2013.

C | Combined Management Report | Liquidity and Capital Resources | Financial Position

Financial Position.

Consolidated statement of ﬁnancial position

The balance sheet total increased compared with December
31, 2012 from €163.1 billion to €168.5 billion; adjusted
for the eﬀects of currency translation, the increase amounted
to €13.1 billion. Daimler Financial Services accounts for
€89.4 billion of the balance sheet total (2012: €85.5 billion);
this is equivalent to 53% of the Daimler Group’s total assets
(2012: 52%).

The increase in total assets is primarily due to the growth
of the ﬁnancial services business, high levels of investment
in property, plant and equipment and higher liquidity (cash,
cash equivalents and marketable debt securities). The sale of
EADS shares led to a decrease in investments accounted
for using the equity method. On the liabilities side of the balance
sheet, there were increases in equity and ﬁnancing liabilities
as well as an increase in deferred tax liabilities and deferred
income. Current assets account for 42% of the balance
sheet total, which is higher than in the previous year (2012: 41%).
Current liabilities account for 35% of the balance sheet total
(2012: 36%).  C.35

Intangible assets of €9.4 billion (2012: €8.9 billion) include
€7.3 billion of capitalized development costs (2012: €7.2 billion)
and, as in the previous year, €0.7 billion of goodwill. Mercedes-
Benz Cars accounts for 68% of the development costs and
Daimler Trucks accounts for 24%. Capitalized development costs
amounted to €1.3 billion (2012: €1.5 billion), and account for
23.8% of the Group’s total research and development expendi-
ture (2012: 26.0%). E see page 106
Capital expenditure E see page 96 was higher than depre-
ciation and caused property, plant and equipment to increase
by €1.2 billion to €21.8 billion (2012: €20.6 billion). Adjusted
for exchange-rate eﬀects, the increase amounted to €1.8 billion.
A total of €5.0 billion was invested in 2013 – mainly at the
sites in Germany – in the launch of new products, the expansion
of production capacities and modernization.

C.34
Consolidated statement of ﬁnancial position

In millions of euros

Assets

Intangible assets

Property, plant and equipment

Equipment on operating leases and
receivables from ﬁnancial services

Investments accounted for using
the equity method

Inventories

Trade receivables

Cash and cash equivalents

Marketable debt securities

Other ﬁnancial assets

Other assets

Total assets

Equity and liabilities

Equity

Provisions

Financing liabilities

Trade payables

Other ﬁnancial liabilities

Other liabilities

Total liabilities

Dec. 31,
2013

Dec. 31,
20121

13/12

% change

9,388

21,779

8,885

20,599

78,930

75,118

3,432

17,349

7,803

11,053

7,066

6,241

5,477

4,304

17,720

7,543

10,996

5,598

5,960

6,339

168,518

163,062

43,363

23,098

77,738

9,086

8,276

6,957

39,330

24,474

76,251

8,832

8,449

5,726

168,518

163,062

-20

-2

+26

-14

+10

-6

-2

+21

1 The prior-year ﬁgures have been adjusted primarily due to the eﬀects

of the application of the amended IAS 19.
Further information on the adjustments is provided in Note 1
of the Notes to the Consolidated Financial Statements.

Equipment on operating leases and receivables from
ﬁnancial services increased to a total of €78.9 billion
(2012: €75.1 billion). The increase of €8.2 billion adjusted
for exchange-rate eﬀects was caused by the higher level
of new business due to growth in unit sales by the automotive
divisions. The proportion of total assets of 47% is slightly
higher than in the previous year (46%).

Investments accounted for using the equity method
of €3.4 billion (2012: €4.3 billion) primarily comprise the
carrying amounts of our equity interests in Rolls-Royce Power
Systems AG, in Beijing Benz Automotive Co., Ltd. and BAIC
Motor in the area of passenger cars in China, and in Beijing
Foton Daimler Automotive and Kamaz in the truck business.
The decrease primarily reﬂects the dissolution of the share-
holders’ pact and the loss of signiﬁcant inﬂuence on EADS
in April 2013. There was an opposing eﬀect from the acquisition
of shares in BAIC Motor.

Inventories decreased from €17.7 billion to €17.3 billion,
equivalent to 10% of total assets (2012: 11%). Adjusted
for exchange-rate eﬀects, there was an increase of €0.6 billion
mainly of inventories in the United States, Brazil and Japan,
while inventories decreased in China due to the high levels
of car unit sales in the fourth quarter of 2013.

Trade receivables increased by €0.3 billion to €7.8 billion.
The Mercedes-Benz Cars division accounts for 40% of the
receivables and the Daimler Trucks division accounts for 38%.
The increase primarily relates to Daimler Trucks and is con-
nected with the sales revival in South America and vehicle pur-
chases brought forward in Western Europe due to the intro-
duction of stricter emission standards in 2014.

Cash and cash equivalents of €11.1 billion were at the
prior-year level. Adjusted for exchange-rate eﬀects, there was
an increase of €0.3 billion.

C.35
Balance sheet structure Daimler Group

In billions of euros

2012
2013

Assets

Equity and liabilities

Non-current assets

Current assets

of which: Liquidity

18
169

17
163

163

169

Equity

Non-current liabilities

Current liabilities

Marketable debt securities increased compared with
December 31, 2012 from €5.6 billion to €7.1 billion. They consist
of debt instruments, most of which are quoted in an active
market, and are allocated to liquidity. The debt instruments
generally have an external rating of A or better.

Other ﬁnancial assets increased by €0.3 billion to €6.2 billion.
They principally comprise investments (in Renault and
Nissan for example), derivative ﬁnancial instruments, and
loans and other receivables due from third parties.

Other assets of €5.5 billion primarily comprise deferred
tax assets and tax refund claims (2012: €6.3 billion).
The decrease is mainly a reﬂection of exchange-rate eﬀects.

The Group’s equity increased compared with December 31, 2012
from €39.3 billion to €43.4 billion. Net proﬁt E see page 89
of €8.7 billion was primarily oﬀset by the distribution of the
dividend of €2.3 billion for the year 2012 to the share holders
of Daimler AG and the eﬀects of currency translation of
€1.5 billion. In addition, due to the transfer of EADS shares
to the Dedalus investors, equity decreased without any impact
on the income statement by €2.4 billion. Equity attributable
to the shareholders of Daimler AG increased to €42.7 billion
(2012: €37.9 billion).

100

C | Combined Management Report | Financial Position

Oﬀ-balance-sheet assets

In addition to the assets presented in the statement of ﬁnancial
position, the Group uses to a small extent oﬀ-balance-sheet
assets within the framework of rental and leasing agreements.

Funded status of pension obligations

The funded status of the Group’s pension beneﬁt obli-
gations, deﬁned as the diﬀerence between the present value
of the pension obligations and the fair value of pension plan
assets, amounts to minus €8.6 billion at December 31, 2013,
compared with minus €9.7 billion at December 31, 2012.
At December 31, 2012, the present value of the Group’s pension
obligations amounted to €23.2 billion, compared with €23.9
billion a year earlier. The decrease resulted primarily from the
increase in discount rates, especially for the German and
US plans. As a result, actuarial losses from deﬁned beneﬁt
pension plans, which are recognized in equity under retained
earnings, decreased by €1.3 billion before taxes. The plan
assets available to ﬁnance the pension obligations increased
from €14.2 billion to €14.7 billion at December 31, 2013.

Further information on the eﬀects on the statement
of ﬁnancial position and the statement of income as well
as on pensions and similar obligations is provided in
E Note 1 and E Note 22 respectively of the Notes
to the Consolidated Financial Statements.

The equity ratio was 24.3% for the Group (2012: 22.7%) and
43.4% for the industrial business (2012: 39.8%). The 2012
and 2013 equity ratios are adjusted for the paid and proposed
dividend payments for the years 2012 and 2013.

Provisions decreased to €23.1 billion (2012: €24.5 billion);
as a proportion of the balance sheet total, they decreased
to 14% (2012: 15%). They primarily comprise provisions for pen-
sions and similar obligations (€9.9 billion; 2012: €11.3 billion)
as well as provisions for product warranties (€4.7 billion; 2012:
€5.1 billion), for personnel and social costs (€3.2 billion;
2012: €2.7 billion) and for income taxes (€1.3 billion; 2012: €1.7
billion). The decrease in provisions mainly relates to provisions
for pensions and similar obligations and primarily reﬂects
the increase in discount rates, especially in Germany, where
they rose from 3.1% to 3.4%.

Financing liabilities of €77.7 billion were higher than a year
earlier (2012: €76.3 billion). The increase of €5.8 billion
after adjusting for exchange-rate eﬀects is mainly the result
of the growing leasing and sales-ﬁnancing business. Of the
total ﬁnancing liabilities, 50% are accounted for by bonds, 25%
by liabilities to ﬁnancial institutions, 14% by deposits in
the direct banking business and 8% by liabilities from ABS
transactions.

Due to the higher volume of business, trade payables
increased compared with the end of 2012 to €9.1 billion
(2012: €8.8 billion). The Mercedes-Benz Cars division accounts
for 60% of the payables and the Daimler Trucks division
accounts for 28%.

Other ﬁnancial liabilities decreased by €0.2 billion to
€8.3 billion. They mainly consist of liabilities from residual-
value guarantees, security deposits received and liabilities
relating to wages and salaries, as well as derivative ﬁnancial
instruments and accrued interest on ﬁnancing liabilities.

Other liabilities of €7.0 billion primarily comprise deferred
taxes, tax liabilities and deferred income (2012: €5.7 billion).
The increase mainly resulted from deferred revenues from
multi-year service and maintenance agreements, increased
deferred tax liabilities relating to derivative ﬁnancial instru-
ments, and pensions and similar 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
 F.03, the Consolidated Statement of Changes in Equity
 F.05 and the related notes in the Notes to the Consolidated
Financial Statements.

101

Daimler AG

Condensed version according to the German Commercial Code (HGB)

In addition to reporting on the Daimler Group, in this chapter,
we also describe the development of Daimler AG.

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
Daimler Group.

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 network of 32 German sales-and-service centers,
through foreign sales subsidiaries and through third parties.

The annual ﬁnancial statements of Daimler AG are prepared
in accordance with the German Commercial Code (HGB).
The consolidated ﬁnancial statements are prepared in accor-
dance with the International Financial Reporting Standards
(IFRS). This results in some diﬀerences with regard to recogni-
tion and measurement, primarily relating to intangible assets,
provisions, ﬁnancial instruments, the leasing business and
deferred taxes.

The main performance indicators for Daimler AG are unit sales,
revenue and net proﬁt.

Proﬁtability

Daimler AG posted proﬁt from ordinary activities of €3.5
billion for 2013 (2012: €5.1 billion). While an operating proﬁt
of €0.8 billion was achieved (2012: €1.4 billion), the development
of earnings was also inﬂuenced by a decrease in ﬁnancial
income of €1.0 billion.

Revenue increased, as forecast in the previous year, due to
the higher unit sales of vehicles and components by €2.8 billion
to €75.5 billion. In the car business, revenue therefore rose by
4% to €55.1 billion. Also with trucks and vans, revenue increased
for this reason by 5% to €20.4 billion.

The earnings achieved by the car business in 2013 were
lower than in the previous year. The development of earnings
was inﬂuenced by ongoing growth in unit sales in Western
Europe, the United States and Japan. Our expanded range of
compact cars made a particularly strong contribution. There
were opposing, negative eﬀects from the changed model mix
and expen diture to enhance the products’ attractiveness, as
well as expenditure for new technologies and products, amongst
other factors. Unit sales in the car business increased by 7%
to 1,451,000 vehicles1 in the year under review. Of the various
model series, compact cars were once again extremely
successful in 2013: Their sales increased by 67% to 398,000
units1. The E-Class segment posted sales growth of 7%
to 293,000 units1. Due to the model change and for lifecycle
reasons, unit sales in the S-Class and C-Class segments
were lower than in the previous year.

Earnings from trucks and vans were slightly lower than in
2012. Unit sales of trucks increased by 9% to 105,000 vehicles1.
Sales of vans reached 253,000 units (2012: 249,000)1.

Cost of sales (excluding research and development expenses)
increased by 5.4% to €63.0 billion. The increase in unit sales
and expenses for the enhancement of product attractiveness
and for new technologies and products led to a higher cost
of sales.

Research and development expenses, which are included
in cost of sales, were slightly lower than in the previous year
at €4.6 billion (2012: €4.8 billion); as a proportion of revenue,
they amounted to 6.1% (2012: 6.6%). Research and devel-
opment expenses were primarily related to the renewal of the
product portfolio, especially with regard to the model series
of the C-, E- and S-Class as well as the compact class. In addi-
tion, we are continuously working on new generations of
engines and alternative drive systems. At the end of the year,
approximately 17,000 people were employed in the area
of research and development.

1 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
are not counted in the unit sales of Daimler AG.

102

C | Combined Management Report | Daimler AG

Selling expenses increased by €0.1 billion to €6.0 billion,
mainly due to higher expenses for personnel, outgoing shipping
and marketing. In relation to revenue, selling expenses
decreased from 8.1% to 8.0%.

Financial position, liquidity and capital resources

Compared with December 31, 2012, the balance sheet total
increased from €83.4 billion to €85.3 billion.

General administrative expenses of €2.6 billion were
at the prior-year level (2012: €2.6 billion).

Other operating income, net amounted to €1.5 billion
(2012: €1.8 billion). The change compared with the prior year
was mainly the result of reclassifying expenses of €0.2 billion
for top-up amounts (“Aufstockungsbeträge”) for partial retire-
ment obligations; in the previous year, those expenses
were presented under functional costs.

Financial income decreased by €1.0 billion to €2.7 billion,
mainly due to lower net income from investments in subsidiaries
and associated companies and lower net interest income.
The decrease primarily reﬂects the lower special items than in
the previous year in connection with the sale of EADS shares.
In addition, the ﬁnancial result was inﬂuenced by lower income
from the special purpose assets reserved for pensions and
similar obligations and by a higher interest portion of retirement
beneﬁt obligations.

The income tax beneﬁt for 2013 amounts to €0.2 billion
(2012: €0.4 billion). This includes tax beneﬁts relating
to the tax assessment of previous years. Income taxes were
additionally inﬂuenced by the amount and composition
of proﬁts before income taxes. No tax was payable on a large
proportion of ﬁnancial income in 2013 and 2012.

Net proﬁt decreased, as forecast in the previous year,
from €5.5 billion to €3.7 billion. This development is
due partially to the lower operating proﬁt, but in particular
to the lower ﬁnancial income.

The economic situation of Daimler AG primarily results
from the business operations of Daimler AG and its subsidiaries.
Daimler AG participates in the operating results of the subsid-
iaries through 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”. E see pages 117 f

Non-current assets increased by €2.0 billion to €44.7 billion
during 2013, due to the higher level of ﬁnancial assets,
property, plant and equipment as well as increased intangible
assets. Investments in property plant and equipment (approxi-
mately €2.8 billion excluding leased assets) mainly constituted
investments for the production of the new C- and S-Class,
the compact class and investments in engine and transmission
projects.

Inventories of €6.7 billion were close to the prior-year level
(2012: €6.6 billion).

Receivables, securities and other assets increased com-
pared with December 31, 2012 by €2.1 billion to €28.9 billion.
The main cause of the development was the increase of
€2.1 billion in securities. Cash and cash equivalents decreased
by €2.4 billion to €4.7 billion.

Gross liquidity – deﬁned as cash and cash equivalents
and other marketable securities – of €9.3 billion was slightly
lower than a year earlier (2012: €9.6 billion).

Cash provided by operating activities amounted to €6.0
billion in 2013 (2012: €5.4 billion). Lower net proﬁt than in the
previous year was more than oﬀset by lower tax payments
and higher trade payables. The development of trade payables
is connected with the expansion of business and partially
reﬂects invoicing factors.

C.36
Condensed statement of income of Daimler AG

In millions of euros

Revenue

Cost of sales (including R&D expenses)

Selling expenses

General administrative expenses

Other operating income, net

Operating proﬁt

Financial income

Proﬁt from ordinary activities

Income tax beneﬁt

Net proﬁt

2013

2012

75,531

-67,579

-6,032

-2,594

1,497

823

2,687

3,510

203

3,713

72,727

-64,600

-5,883

-2,600

1,755

1,399

3,710

5,109

366

5,475

Transfer to retained earnings

-1,306

-2,737

Distributable proﬁt

2,407

2,738

103

C.37
Balance sheet structure of Daimler AG

In millions of euros

Assets

Non-current assets

Inventories

Receivables, securities and other assets

Cash and cash equivalents

Current assets

Prepaid expenses

Equity and liabilities

Share capital

(conditional capital €590 million)

Capital reserve

Retained earnings

Distributable proﬁt

Equity

Provisions for pensions and similar obligations

Other provisions

Provisions

Trade payables

Other liabilities

Liabilities

Deferred income

Cash ﬂows from investing activities resulted in a net cash
outﬂow of €7.1 billion in 2013 (2012: €5.5 billion). This was
primarily the result of investments in ﬁnancial assets and prop-
erty, plant and equipment as well as the acquisition of securities.

Dec, 31,
2013

Dec, 31,
2012

44,748

6,682

28,869

4,718

40,269

259

85,276

42,763

6,612

26,736

7,089

40,437

177

83,377

3,069

3,063

11,477

18,748

2,407

35,701

3,405

9,214

12,619

5,352

31,111

36,463

493

85,276

11,390

17,061

2,738

34,252

3,097

9,205

12,302

5,004

31,383

36,387

436

83,377

Cash ﬂows from ﬁnancing activities resulted in a net cash
outﬂow of €1.3 billion (2012: net cash inﬂow of €2.4 billion).
The payment of the dividend for the year 2012 accounts
for a cash outﬂow of €2.3 billion. On the other hand, mainly
an increase in ﬁnancing liabilities led to a cash inﬂow.

Equity increased compared with December 31, 2012 by €1.4
billion to €35.7 billion. This change primarily resulted from
the net proﬁt for 2013, of which, pursuant to Section 58 Sub-
section 2 of the German Stock Corporation Act (AktG),
€1.3 billion was transferred to retained earnings. The equity ratio
at December 31, 2013 was 41.9% (December 31, 2012: 41.1%).

Provisions increased compared with December 31, 2012
by €0.3 billion to €12.6 billion. This was mainly caused
by the increase in provisions for pensions and similar obligations.

Liabilities increased by €0.1 billion to €36.5 billion. This change
was mainly caused by ﬁnancing liabilities (plus €4.7 billion).
There was an opposing eﬀect primarily from the decrease in
liabilities to subsidiaries (minus €4.7 billion).

Risks and opportunities

The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as 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 are described in the “Risk and Opportunity
Report”. E see pages 129 ﬀ Charges may additionally arise
from relations with subsidiaries and associated companies in
connection with statutory or contractual obligations (in par-
ticular with regard to ﬁnancing).

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
also largely reﬂect our expectations for the parent company.
E see pages 142 ﬀ Daimler AG expects to post net proﬁt
in the year 2014 that will be slightly below the level of 2013.
The planned higher income from investments in subsidiaries
and associated companies will be more than oﬀset, in particular
by the expected income tax expense.

104

Sustainability.

C | Combined Management Report | Daimler AG | Sustainability

Sustainability at Daimler

Our sustainability strategy. We want to enhance the value
of our company over the long term. And we can do that only
if we deﬁne value creation holistically and measure the success
of our business operations not only with the use of ﬁnancial
ﬁgures. In order to do that, we have ﬁrmly established sustain-
ability as one of our goals and as a basic principle of our
corporate strategy. The principle of sustainability determines
our entrepreneurial activity: in the areas of economics,
corporate governance, environmental protection and safety,
as well as in our relations with employees, customers and
society as a whole. E see page 26

The ideas that are of fundamental importance to us include
the ten principles of the Global Compact, to which we are
committed as a founding member of the compact and a member
of the LEAD team since 2011. Our environmental and energy
principles deﬁne the framework of our environmental protection
activities and objectives. We also comply with the labor
standards established by the International Labour Organization
(ILO) and with the OECD guidelines for multinational
companies.

Eﬀective and coordinated strategies and initiatives ensure
that the concept of sustainability is ﬁrmly embedded in our
business operations. In our Group-wide sustainability manage-
ment system, these strategies are supported by speciﬁc
measures and measurable targets. Our “Sustainability Program
2020” is an important step in this direction; it deﬁnes our
main areas of activity in the years ahead. We aim to steadily
continue reducing pollutants and emissions, further enhance
the safety of our vehicles, expand our dialogue with our suppliers
and dealers, and further strengthen our social involvement.

Group-wide sustainability management. At Daimler,
sustainability is thematically and organizationally embedded
in our Group-wide corporate governance activities.
E see pages 178 ﬀ The Corporate Sustainability Board (CSB)
is the central management body for all sustainability-related
issues. The operational work is conducted by the Corporate
Sustainability 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 reach the 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.

Comprehensive reporting on sustainability. In 2013,
Daimler published its ninth Group-wide sustainability report.
It provides a detailed and comprehensive sustainability
balance sheet for the previous ﬁnancial year and is supple-
mented by an interactive online sustainability report
that contains more detailed and extensive information.
w sustainability.daimler.com

The new sustainability report covers ﬁnancial year 2013.
It will be presented at Daimler’s Annual Shareholders’ Meeting
in early April 2014. The report was already drawn up in
line with the Global Reporting Initiative (GRI) guidelines 4.0.
In this context, Daimler speciﬁcally highlighted all of the
company’s key sustainability-related issues. This applies in
particular to focal topics such as the reduction of the CO2
emissions generated by our products and production activities,
the use of senior experts, our activities in China, and the
company’s mobility concepts. In addition, we report on speciﬁc
issues such as the handling of contracts for work and services
and Daimler’s position regarding the issue of refrigerants.
E see page 112

Research and development

Research and development as key success factors.
Research and development have always played a key role
at Daimler. Our researcher engineers anticipate trends,
customer wishes and the requirements of the mobility
of the future, and our developer 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 need-oriented, safe
and sustainable mobility. Our technology portfolio and
our key areas of expertise are oriented toward this objective.

The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles’ market
success. At the end of 2013, Daimler employed 21,300 men and
women at its research and development units (2012: 21,100).
A total of 13,600 employees (2012: 13,400) worked at Group
Research & Mercedes-Benz Cars Development, 5,600 (2012:
5,600) at Daimler Trucks, 1,000 (2012: 1,000) at Mercedes-Benz
Vans, and 1,100 (2012: 1,100) at Daimler Buses.

105

Our international research and development network.
During the year under review, we expanded our research
and development network in a targeted manner, expanding
it to 22 locations in ten countries. Our biggest facilities
are in Sindelfingen and Stuttgart-Untertürkheim in Germany.
In Sunnyvale, California, the new headquarters of our
research facilities in North America, approximately 100 people
are employed at present and this number is scheduled to
be doubled. In Asia, we have an important center in Bangalore,
India, and the Global Hybrid Center in Kawasaki, Japan,
as well as a research and development center in Beijing, which
began operations in 2012. We opened a new research center
in Bangalore in January 2013. With its approximately 1,300
employees, the new facility is Daimler’s largest research and
development center outside Germany. In March 2013, our
van joint venture in China, Fujian Benz Automotive Corporation,
opened Mercedes-Benz Vans’ first product development
center outside Germany, in Fuzhou. We also work together
with numerous renowned research institutions worldwide
and participate in international exchange programs for young
scientists.

C.38
Research and development expenditure

In billions of euros

total
thereof capitalized

2009

2010

2011

2012

2013

C.39
Research and development expenditure by division

In millions of euros

Daimler Group
thereof capitalized

Mercedes-Benz Cars
thereof capitalized

Daimler Trucks
thereof capitalized

Mercedes-Benz Vans
thereof capitalized

Daimler Buses
thereof capitalized

2013

2012

13/12

% change

5,385
1,284

3,751
1,063

1,140
79

321
139

181
3

5,644
1,465

3,863
1,125

1,197
180

371
137

222
23

-5
-12

-3
-6

-5
-56

-13
+1

-18
-87

Targeted involvement of the supplier industry. In order
to reach our ambitious goals, we are also cooperating very
closely with research and development units from the supplier
industry. Daimler must be closely interconnected 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. As part of our joint research
and development work, we ensure that our company retains
the key technological expertise it needs in order to keep our
brands distinct and to safeguard the future of the automobile
in general.

Intellectual property rights secure our leadership in tech-
nology and innovation. 128 years after the automobile was
invented, our researchers and developers continue to regularly
apply for patents to protect their new ideas. At the end of
2013, the patent portfolio of Daimler AG and its subsidiaries
comprised more than 21,800 patents and patent applications
(2012: 21,800). The new S-Class alone involves more than 800
of these intellectual property rights. They not only secure our
scope to apply innovative technologies, they also ensure the
exclu sivity of innovations such as the high-comfort chassis
system MAGIC BODY CONTROL. In addition to owning the intel-
lectual property rights to our technology, we have more than
6,100 protected product designs. Our portfolio of intellectual
property rights is completed with around 32,500 legally
protected trademarks worldwide. They include the Mercedes-
Benz brand, which, according to the internationally well-
known brand consultant Interbrand, is the most valuable premium
automotive brand in the world. Our portfolio of intellectual
property rights is also becoming increasingly important with
regard to future alliances and partnerships. The intellectual
property rights supplement our researchers and development
engineers’ exper tise and make Daimler a sought-after
partner for technology and product partnerships.

€5.4 billion for research and development. We want to
continue shaping technological transformation in the automotive
sector through our pioneering innovations. As we had already
announced in the Annual Report 2012, we once again invested
a very large amount of money in research and development
work in 2013. Of the total investment of €5.4 billion (2012: €5.6
billion), €1.3 billion (2012: €1.5 billion) was capitalized as
development costs, which amounts to a capitalization rate
of 24% (2012: 26%). The amortization of capitalized research
and development expenditure totaled €1.1 billion during the year
under review (2012: 1.0 billion). With a rate of 4.6% (2012:
4.9%), the research and development expenditure also stayed
at a high level in comparison with revenue. The focus was
on new vehicle models, extremely fuel-efficient and environmen-
tally friendly drive systems and new safety technologies.
We made improvements in all of the main areas that further
increased our vehicles’ efficiency – ranging from energy
management and aerodynamics to lightweight engineering.

The most important projects at Mercedes-Benz Cars were
the successors of the C-, E- and S-Class, the new compact cars
and the new smart models. In addition, we are constantly
working to develop new engine generations, alternative drive
systems and innovative safety technologies. Mercedes-Benz
Cars spent a total of €3.8 billion on research and development
in 2013 (2012: €3.9 billion). Daimler Trucks invested €1.1 billion
in research and development projects (2012: €1.2 billion).
That division’s main projects were the continuous further devel-
opment of engines with a focus on optimizing fuel consumption

106

C | Combined Management Report | Sustainability

During the year under review, new products and technologies
enabled us to make continued rapid progress on the “Road
to Emissionfree Driving.” The following examples show how
this is happening.

Efficient cars and commercial vehicles with internal-
combustion engines. Much of our research and development
work continues to focus on making our cars and commercial
vehicles with internal combustion engines even more efficient.
The especially economical BlueEFFICIENCY models are reducing
the fuel consumption and CO2 emissions of our MercedesBenz
cars and vans compared with the predecessor vehicles by
up to 30% for certain models. This reduction is made possible
by engines with small displacements and turbochargers, as
well as by lightweight engineering, aerodynamic improvements,
tires with low roll resistance, demandappropriate energy
management and an automatic startstop function. A good exam
ple of this is the A 180 CDI BlueEFFICIENCY Edition1, which
we began to deliver to customers in March 2013. The car
consumes only 3.6 liters of diesel per 100 kilometers and emits
only 92 grams of CO2 per kilometer. The new SClass also
features numerous coordinated modifications of the body,
the engines and the ancillary components that substantially
reduce fuel consumption. The new CClass, which will be
delivered to customers beginning in the spring of 2014, boasts
impressive fuel efficiency. Thanks to intelligent lightweight
engineering, the overall vehicle weighs about 100 kilograms less
than its predecessor. The weight reduction significantly
reduces fuel consumption to levels that are the best in this
segment.

1 A 180 CDI BlueEFFICIENCY Edition: fuel consumption in l/100 km

urban 4,2 / extraurban 3,2 / combined 3,6;
CO2 emissions in g/km combined 92.

and complying with new emission standards, working on alter
native drive systems and the successor generations of existing
products. R&D expenditure at MercedesBenz Vans concen
trated on the successor models of the Vito and the Viano.
The Daimler Buses division primarily focused its development
activities on new products, compliance with new emissions
standards, and alternative drive systems.  C.38  C.39

Innovation and safety

A tradition of innovation. Innovations have played a key
role at our company ever since Carl Benz and Gottlieb Daimler
invented the automobile. Today, they are more important
than ever before, because the accelerated pace of technological
development and the challenges posed by climate change
and environmental protection policies face us with the task
of reinventing the automobile. Our customers expect safe,
comfortable and powerful vehicles that are simultaneously
becoming ever more fuelefficient and environmentally friendly.
In order to meet these requirements, we are forging ahead
with our work in the research and development units.

On the road to emission-free mobility. Finite oil reserves,
rising energy prices, population growth – especially in urban
centers – and the unabated demand for mobility require
new solutions for all aspects of transport. Our aim is to offer
an intelligent mix of drive systems for every need. We intend
to significantly reduce the fuel consumption and pollutant emis
sions of our vehicles today and to eliminate them entirely
in the long term. We are implementing this intelligent mix of drive
systems for our cars and commercial vehicles as part of
our “Road to Emissionfree Driving” strategy. We have defined
the following focal areas for this approach:
1. We continue to enhance our vehicles with stateoftheart
internalcombustion engines that we are optimizing to
achieve significantly lower fuel consumption and emissions.
2. We are achieving further perceptible increases in efficiency
through customized hybridization, i.e. the combination
of combustion engines and electric motors.

3. Our electric vehicles, powered by batteries or fuel cells,
are making locally emissionfree driving possible.  C.40

C.40
Road to emission-free mobility

Optimizing our vehicles
with modern conventional
powertrains

Hybridization for further
increase in eﬃciency

Locally emission-free
driving with electric
vehicles powered by
fuel cells or batteries

Energy for the future

Clean fuels for internal combustion engines

Energy sources for locally emission-free driving

107

We have also reduced the fuel consumption of the most recent
models of our commercial vehicles. Our new Actros, Arocs,
Antos and Atego models and the all-new Freightliner Cascadia
Evolution heavy-duty truck are the cleanest and most eco-
nomical vehicles in their respective classes. In addition, our new
buses also have outstanding fuel efficiency. E see pages 110 f

hybrid” uses the navigation data provided by COMAND
Online to control the charging and discharging of the high-volt-
age battery. For example, it aims to use the energy contained
in the battery to drive the vehicle before it reaches a downhill
stretch because the energy recovery system will then be
able to recharge the battery.

The new Mercedes-Benz B-Class Electric Drive4. At the New
York International Auto Show, Mercedes-Benz unveiled the
new B-Class Electric Drive4, which will be introduced
in the US market in 2014 before later being launched in Europe.
The electric Mercedes sets high standards amongst electric
vehicles for comfort, quality and safety. For the B-Class Electric
Drive, we are once again taking advantage of TESLA Motors’
expertise and incorporating the powertrain unit that company
developed. The car’s quiet, locally emission-free operation
is made possible by a 130 kW electric motor, which delivers its
maximum torque of 340 Nm as soon as the driver steps on
the gas pedal. That’s about the same as the amount of torque
provided by a state-of-the-art three-liter gasoline engine.
A high-performance lithium-ion battery supplies the electrical
drive system with energy. The battery is located in the “energy
space” of the car’s underbody, where it is safely protected and
takes up little room. This smart packaging ensures that the
five-seat vehicle retains the B-Class’s well-known interior spa-
ciousness and large trunk size. To extend the car’s range,
its top speed is electronically limited to 160 km/h. The vehicle
has a range of about 200 kilometers, depending on the
driving cycle.

A unique spectrum of electrically powered vehicles.
Because our spectrum of battery or fuel-cell powered locally
emission-free vehicles ranges from cars and vans to light
trucks and buses, the models we offer in this area can meet
almost any road mobility requirement. In June 2012, we
began to produce the new smart fortwo electric drive5, which
is now available in 14 markets worldwide, including China
and the United States. With a market share of around 30%,
the smart fortwo electric drive5 is the leader in Germany’s
electric car segment. More than 1,200 e-smarts are being used
around the clock as part of our innovative car2go mobility
service. The technology is proving its worth every day in various
large cities around the globe. The Mercedes-Benz B-Class
F-CELL6 and the Mercedes-Benz Citaro FuelCELL Hybrid city bus
are the world’s most extensively tested fuel-cell vehicles.
The Mercedes-Benz A-Class E-CELL7 has been on the road since
the fall of 2010. In the van segment, we have been delivering
panel-van and crewbus versions of the Mercedes-Benz Vito
E-CELL8 to customers since mid-2010. We also offer FUSO
Canter E-CELL and Freightliner Custom Chassis MT E-Cell light
trucks. Customers began to receive the Mercedes-Benz SLS
AMG Coupe Electric Drive9 in mid-2013. This model is geared
toward technology-focused super-sports car fans with a
passion for state-of-the-art engineering and futuristic high-
tech solutions. In China, we will launch the first electric vehicle
built by the DENZA brand in 2014. We jointly developed,
and now produce, this innovative model with our partner BYD.

Innovation award for NANOSLIDE. For its all-new NANOSLIDE®
coating technique for cylinder walls, Daimler received the
German Innovation Award for Climate and the Environment (IKU)
2013 in the category “Process Innovations for Climate Protection”
in December 2013. The award is presented by the German
Ministry for the Environment, Nature Conservation and Nuclear
Safety (BMU) and the Federation of German Industry (BDI)
to honor ideas and developments that help protect the climate
and the environment. NANOSLIDE technologies, such as
those used in the new Mercedes-Benz six-cylinder engines
and in selected AMG drive systems, optimize friction within
the engine. Because NANOSLIDE enables Daimler to dispense
with cast-iron cylinder liners, engine weight can be reduced
by several kilograms. Both of these improvements save fuel –
by around 3% in the case of six-cylinder engines, for example.
In the NANOSLIDE process, an electric arc is used to melt iron-
carbon alloy wires. A flow of gas is then applied to spray the
melted material onto the interior cylinder wall of the lightweight
aluminum crankcase. The resulting lining is then finely
smoothed so that the coating is only 0.1 to 0.15 mm thick.
The micropores uncovered by this process allow the surface
to absorb unusually large amounts of motor oil. In addition
to creating very low levels of friction, the material’s ultrafine
to nanocrystalline structure makes the lining very resistant
to wear and tear. As a consequence, the NANOSLIDE technique
is climate-friendly as well as extremely economical.

Innovative hybrid technology in the new S-Class. Already
in 2009, Mercedes-Benz presented the S 400 HYBRID1,
the world’s first series-produced car with a hybrid drive system
that uses a lithium-ion battery. We are now offering hybrid
drive systems for the new S-Class series in a total of three mod-
els: the S 400 HYBRID1, the S 300 BlueTEC HYBRID2 and the
S 500 PLUG-IN HYBRID3. The last of these models was presented
to the public at the Frankfurt Motor Show in 2013 and will
be delivered to customers as of September 2014. All of these
second-generation hybrid drive systems are smoothly inte-
grated into the powertrain. Whereas the batteries of the S 400
HYBRID1 and the S 300 BlueTEC HYBRID2 are only recharged
by the combustion engine or when the vehicle is braking or
coasting, the new high-voltage lithium-ion battery in the S 500
PLUG-IN HYBRID3) can also be recharged from an external
source through a charging socket in the right rear bumper. With
the help of a synchronous electric motor, the S-Class can
travel considerable distances solely on electricity. This allows
it to achieve fuel consumption that would have seemed impos-
sible in the large-sedan segment just a few years ago. The
car achieves these record values without compromising on per-
formance, comfort or range. And thanks to the pre-air con-
ditioning functions, occupants also enjoy a very comfortable
climate-controlled interior. The second-generation S-Class
hybrids have an anticipatory energy management system that
improves energy efficiency. The hybrid drive’s operating
strategy not only takes the current driving situation and the
driver’s preferences into account, but also anticipates probable
changes in the route (uphill and downhill gradients, curves
and speed limits) over the next eight kilometers. The “smart

108

Our “road to accident-free driving.” Vehicle safety is one
of our core areas of expertise and a key component of our
product strategy. For over 60 years, our engineers have been
ahead of their time in the development of new safety techno
logies. Our vision of accidentfree driving continues to motivate
us to make mobility as safe as possible for all road users.

Autonomous driving with the S 500 INTELLIGENT DRIVE.
The S 500 INTELLIGENT DRIVE is a milestone on the road
to accidentfree driving. In August 2013, MercedesBenz became
the world’s first automaker to prove that autonomous driving
is also possible in cities and on highways and country roads.
The vehicle covered the same route taken by Bertha Benz
125 years ago, when she became the first person to complete
such a long trip in an automobile. In the dense traffic of the
21st century, the innovative MercedesBenz SClass research
vehicle faced the difficult challenge of driving autonomously
in highly complex situations – with traffic lights, roundabouts,
pedestrians, cyclists and streetcars. The unusual aspect of
this pioneering achievement is that it was accomplished not with
extremely expensive special technology, but instead with
the help of technology that is close to the seriesproduction
stage. This technology is similar to systems that are already
available for the new EClass and SClass. Beginning in 2014,
they will also be available in the new CClass.

C | Combined Management Report | Sustainability

Anticipatory active chassis. The new Stereo Multi Purpose
Camera (SMPC), or “stereo camera” for short, provides vehicle
occupants with even more safety and comfort. The system’s
two “eyes” enable it to monitor in 3D an area extending approxi
mately 50 meters in front of the vehicle. The system can also
see as far as 500 meters ahead. The information is analyzed
with the help of sophisticated algorithms. Within a wide area,
the system can thus detect and spatially localize oncoming vehi
cles as well as vehicles that are driving ahead or coming from
the side. It can also recognize and localize pedestrians and var
ious types of traffic signs and road markings. The new camera
supplies data to a variety of systems for further processing.
One of them is the oneofakind ROAD SURFACE SCAN
system, which was first introduced in the new SClass and turns
the ABC feature into MAGIC BODY CONTROL. ROAD SURFACE
SCAN recognizes and measures the road surface ahead, while
ACTIVE BODY CONTROL, which is an enhanced active sus
pension system, uses this information to largely offset body
movements caused by the road. The chassis is adjusted
to each situation within a fraction of a second, enabling body
movement to be substantially reduced. This results in an
unprecedented level of ride comfort.  C.41

1 S 400 HYBRID: fuel consumption in l/100 km

urban 7.4 – 6.6 / extraurban 6.5 – 6.1 / combined 6.8 – 6.3;
CO2 emissions in g/km combined 159 – 147.

2 S 300 BlueTEC HYBRID: fuel consumption in l/100 km

urban 4.8 – 4.7 / extraurban 4.6 – 4.3 / combined 4.7 – 4.4;
CO2 emissions in g/km combined 124 – 115.

3 S 500 PLUGIN HYBRID: market launch in second half of 2014.
4 BClass Electric Drive: market launch at first in the USA in Q2 2014.
5 smart fortwo electric drive: electricity consumption
in kWh/100 km 15.1; CO2 emissions in g/km 0.0.
6 BClass FCELL: H2 consumption in kg/100 km 0.97;

CO2 emissions in g/km 0.0.

7 AClass ECELL: electricity consumption in kWh/100 km 17.5;

CO2 emissions in g/km 0.0.

8 Vito ECELL: electricity consumption in kWh/100 km 25.2;

CO2 emissions in g/km 0.0.

9 SLS AMG Coupe Electric Drive: electricity consumption in kWh/100 km 26.8;

CO2 emissions in g/km 0.0.

C.41
All-round visibility in the S-Class

Multi-mode radar
80 m range/opening angle 16°
30 m range/opening angle 80°

Stereo multi-purpose camera
500 m range, with 3-D capability over a
range of 50 m/opening angle 45°

Long-range radar
with mid-range scan
200 m range/opening angle 18°
60 m range/opening angle 60°

Ultrasonic sensors
1.2/4.5 m range

Short-range radar
0.2-30 m range/opening angle 80°

Near/far infrared camera
160 m range/opening angle 20°

109

Five new assistance systems in the Mercedes-Benz
Sprinter. One of the main activities during the development
of the new Sprinter was the creation of a whole series of new
assistance systems, including world firsts for the van segment.
Among the systems premiered are Crosswind Assist, COLLI-
SION PREVENTION ASSIST, Blind Spot Assist, Highbeam Assist
and Lane Keeping Assist. The many new assistance systems
underscore Mercedes-Benz Vans’ role as a safety technology
pioneer and a driving force for innovation. Crosswind Assist
is a milestone in safety technology. Within the limits of what
is physically possible, the system almost completely offsets
the effects that gusts of wind have on the vehicle. It greatly
reduces driver stress, as motorists no longer have to steer as
much against sudden gusts of wind. Crosswind Assist uses
the standard-fitted ESP® sensors to determine the force exerted
by crosswinds and gusts on the vehicle. To counteract this
force, the assistance system brakes specific wheels on the wind-
ward side of the van. This causes the vehicle to steer in the
direction of the wind and prevents it from drifting, which would
have dangerous consequences.

C.42
Average CO2 emissions of the new car ﬂeet of Mercedes-Benz Cars
in the EU

2009

2010

2011

2012

2013

CO2/km

170

160

150

140

130

120

110

Environmental protection

A comprehensive approach to environmental protection.
Daimler is strongly committed to improving the environment
and the quality of life in the geographic locations and social
settings in which we operate. Protecting the environment
is a primary corporate objective of the Daimler Group. Environ-
mental protection is not separate from other objectives at
Daimler; instead, it is an integral component of a corporate strat-
egy aimed at long-term value creation. For Daimler, a focus
on the highest possible product quality includes compliance
with stringent environmental standards and the sparing
use of vital natural resources. Our measures for manufacturing
environmentally friendly products therefore take the entire
product lifecycle into account – from design, production and
product use all the way to recycling and disposal. The envi-
ronmental 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 that have 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.

€2.9 billion for environmental protection. In 2013, we con-
tinued to energetically pursue the goal of conserving resources
and reducing all relevant emissions. We have kept a close
eye on the effects of all our processes, ranging from vehicle
development and production to recycling and environmentally
friendly disposal. We increased our expenditure for environ-
mental protection by 4% to €2.9 billion in 2013.

Further reduction of CO2 emissions from cars. Mercedes-
Benz made intensive efforts early on to reduce the fuel
consumption of its vehicles while enhancing their performance –
and thus increasing driving enjoyment and safety margins.
With a fleet average of 134 g/km (2012: 140 g/km), we once
again significantly reduced the average CO2 emissions of
the cars we sell in the European Union in 2013. More than
50 Mercedes-Benz models emit less than 120 g CO2/km,
and over 100 models bear the energy efficiency label A+ or A.
 C.42

One example of these models is the E 220 BlueTEC Blue-
EFFICIENCY Edition1. With emissions of 114 grams of CO2 per
kilometer, it is not only the most efficient vehicle in its
segment but also conforms to the Euro 6 emissions standards.
Consequently, it is ranked in the best efficiency class: A+.
The E 300 BlueTEC Hybrid2 emits even less CO2. This car com-
bines a 150-kW four-cylinder diesel engine with a 20-kW
electric motor and consumes only 4.1 liters/100 km on average
(NEDC combined). That corresponds to CO2 emissions of
107 grams per kilometer.

1 E 220 BlueTEC BlueEFFICIENCY Edition: fuel consumption in l/100 km

urban 5,6 – 5,4 / extra-urban 4,1 – 3,7 / combined 4,6 – 4,4;
CO2 emissions in g/km combined 122 – 114.

2 E 300 BlueTEC HYBRID: fuel consumption in l/100 km

urban 4,2 – 4,2 / extra-urban 4,2 – 4,1 / combined 4,2 – 4,1;
CO2 emissions in g/km combined 110 – 107.

C | Combined Management Report | Sustainability

Innovative technologies for locally emission-free mobility
will enable us to further reduce the fuel consumption and CO2
emissions of our vehicles. Our goal is to reduce the CO2
emissions of our new-vehicle fleet in the European Union to
125 g/km by 2016. We have also continuously reduced the
pollutant emissions of our cars in recent years: by more than
80% since 1995 and by 23% in the past five years. We have
achieved even more dramatic reductions with our BlueTEC diesel
cars. Thanks to BLUETEC technology, we are a world leader
for diesel vehicles. Automobiles equipped with this technology
conform to the strictest emissions standards and are the
cleanest diesel cars in the world. Moreover, the percentage
of our new cars equipped with state-of-the-art Euro 6 tech-
nology is significantly higher than that of any other manufacturer.

Economical and low-emission commercial vehicles.
We have also continuously reduced emissions of CO2 and other
pollutants from our commercial vehicles in recent years.
Along with the introduction of BLUETEC technology, these
reductions have been achieved through more efficient new
engines, axle ratios better suited to specific needs, and improve-
ments in tires and aerodynamics. Daimler is the first manu-
facturer to offer its entire European product range in a Euro VI
version. This development began in 2011 with the launch
of the new Actros for long-distance road haulage. It was followed
in 2012 by the Antos for heavy-duty distribution transportation.
In 2013, we introduced the Arocs for the construction sector and
the Atego for light-duty distribution transportation. We com-
pleted our Mercedes-Benz Trucks product offensive with the
Mercedes-Benz Unimog and Mercedes-Benz Econic special
vehicles, which have been rolling off the assembly line in Wörth
equipped with BLUETEC 6 technology since the fourth quarter
of 2013. Despite complex exhaust-gas aftertreatment, our new
Euro VI engines consume up to 4% less fuel than the prede-
cessor Euro V engines. We are also leading the way with the
introduction of the latest exhaust technology in the bus sector.
All Mercedes-Benz and Setra model series are now available
with Euro VI technology. In 2013, we also set a new benchmark
for fuel efficiency on the North American truck market with
the launch of our new heavy-duty Freightliner Cascadia Evolution.
Thanks to its new Detroit DD15 engine equipped with proven
Daimler BLUETEC exhaust technology and its improved aerody-
namics, the new heavy-duty truck consumes 7% less fuel
than the predecessor model. This was measured and confirmed
by an independent agency in the course of a one-week test
drive across the United States.

Hybrid technology can also greatly reduce the consumption
of diesel fuel – particularly in buses and in commercial vehicles
used for distribution transportation. For example, the FUSO
Canter Eco Hybrid consumes up to 23% less fuel than a compa-
rable diesel truck, depending on use, and the Freightliner
M2e Hybrid consumes up to 30% less fuel than a conventional
diesel-powered M2 106. No other commercial vehicle manu-
facturer has more experience or has done more testing
in the areas of alternative drive systems and electric mobility.
We also have the most extensive lineup of series-production
vehicles in this field, ranging from vans and trucks to buses.
On the road worldwide, there are more than 1.2 million environ-
mentally friendly Daimler commercial vehicles equipped
with SCR technology, as well as a further 21,000 vehicles
with alternative drive technology.

In Europe, we aim to reduce the fuel consumption of our truck
fleet by an average of 20% between 2005 and 2020. Compared
with the year 2005, we already achieved a reduction of 10%
in fuel consumption and CO2 emissions with the launch of the
new Actros model series in 2011, and we are working system-
atically on achieving the next 10%.

First series-produced Euro VI-compliant regular-service
bus. The new Mercedes-Benz Citaro is the first regular-service
bus with engines that conform to the Euro VI emissions
standards to go into series production significantly in advance
of the new emission standards. The emissions of a Citaro
equipped with Euro VI exhaust technology have been reduced
by about 80% compared to those of its predecessors, which
significantly improves the quality of the urban environment.
At the same time, fuel costs for bus operators are being reduced,
because the new city buses consume around 8% less diesel
fuel. Economy is improved through an intelligent combination
of an all-new engine generation and the supply of power to
auxiliary systems from an energy recovery module. By the end
of 2013, approximately 1,200 Mercedes-Benz and Setra
buses equipped with environmentally friendly Euro VI exhaust
technology had already been delivered to customers.

FUSO Canter Eco Hybrid and Daimler FleetBoard receive
sustainability award. Daimler Trucks was presented with the
“European Transport Award for Sustainability 2014” for two of
its products in November 2013. This international award is given
by the editors of “Transport,” the newspaper for the freight
transport sector. Representatives from business, research and
the media make up the seven-member panel that judged
the applications submitted. The panel members made their
choices based on the criteria of economy, environmental
impact and social responsibility. The FUSO Canter Eco Hybrid
won by a sizable margin in the category “Distribution trans-
portation truck up to 12 tons.” The truck’s great economy is due
to its highly efficient enhanced drive technology. The Global
Hybrid Center in Japan developed a parallel hybrid architecture
in which a supplementary electric motor is located between
the clutch and the transmission. The FUSO Canter Eco Hybrid’s
drive technology is based on this architecture. The new Canter
Eco Hybrid’s operating strategy is to start moving using only
the electric drive. This also makes it very quiet. The diesel
engine engages at a speed of around ten kilometers per hour.
Depending on how much power is needed, the electric
motor also supports the diesel engine for acceleration at
higher speeds.

The Daimler FleetBoard consulting service was awarded first
prize in the category “Driver and transportation management
systems.” Many transport companies use the FleetBoard
consultants to sustainably integrate telematics and transport
management into the existing IT landscape and thus improve
their transportation processes. Moreover, FleetBoard helps
its clients to permanently cut fuel consumption and reduce wear
and tear by adopting an efficient driving style. Taken together,
these measures make a company’s operations noticeably more
sustainable. In this way a smaller CO2 footprint is achieved
along the entire logistics chain.

111

Extensive recyclability of old vehicles. To make our vehicles
more environmentally friendly, we are reducing our auto-
mobiles’ emissions and the resources they consumes over their
entire lifecycle. We therefore pay close attention to creating
a recycling-friendly design even 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.

Other proven elements of our recycling concept are the resale
of inspected and certiﬁed used parts, the reconditioning
of parts that have been replaced, and the workshop disposal
system MeRSy Recycling Management.

Avoiding waste. In the area of waste management, Daimler
believes that recycling 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 techno-
logical processes and environmentally aware production
planning. Waste materials that are unavoidable are generally
recycled. As a result, the recycling rate for waste at our plants
is over 90% on average. At some plants almost 100% of the
waste is now recycled, meaning that waste destined for land-
ﬁlls has been almost completely eliminated.

As we pursue our environmental protection activities, we
rely on comprehensive environmental management 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.

Extensive measures for environmental protection in
production. In recent years, we have been able to limit
the energy consumption, CO2 emissions, production-related
solvent emissions and noise pollution at our plants with
the help of environmentally friendly production processes.
As a result, energy consumption during the period from
2008 to 2013 increased at a rate of 1.2% to 11.1 million mega-
watt-hours, which was well below the rate of production
growth. Thanks to a transition to lower CO2 energy carriers and
more eﬃcient energy generation, CO2 emissions decreased
during the same period by 11.2% to a total of 3.4 million tons.
With our ongoing energy savings projects, we were also
able to at least partially compensate for the additional energy
consumption that resulted from the signiﬁcant increase in
production and the ramp-up of two new plants, one in India and
one in Hungary. The increase in energy consumption compared
with the previous year was therefore disproportionately low
at 2.7%, and CO2 emissions were at the level of the prior year.
With resource-conserving technology such as circulation
systems, we kept our water consumption stable between 2008
and 2013, despite signiﬁcant growth in production.

The world’s most modern wind tunnel. Through a variety
of improvements, we have substantially reduced the noise
produced by our cars, trucks and buses – and we plan to reduce
it further in the future. The new aeroacoustic wind tunnel
in Sindelﬁngen is helping us reach that goal. This facility, which
occupies 4,200 square meters and went into operation in
2013, is setting new standards in ﬂow quality and metrology.
In the aeroacoustic wind tunnel, we carry out measurements
of air resistance, acoustic properties and ﬂow ﬁelds at simulated
speeds of up to 265 km/h. The testing done at this new facility
provides the foundation for reducing the air resistance of our
vehicles, and as a result their fuel consumption and CO2
emissions. This testing also provides information about how
to prevent wind noise at high speeds – an important con-
sideration when it comes to comfort.

Mercedes-Benz is the pacesetter in the ﬁeld of aerodynamics,
and in almost every vehicle class we make the cars with
the best aerodynamic values. Some of the latest examples
are the CLA, which has a drag coeﬃcient (cd) of 0.22 –
the lowest in the world for a series-production vehicle – and
the new S-Class, which has a cd value of 0.23.

Lower weight, more recyclates and more natural materials.
We want to make our vehicles lighter while further reducing
the environmental impact of the materials used in their produc-
tion. To achieve these goals, we are using new lightweight
materials and components. In addition, we are increasingly
using renewable resources and recycled materials.

Lightweight construction can reduce the weight of a vehicle
without compromising safety and comfort. Material selection,
component design and manufacturing technology all play
key roles in lightweight engineering. Not every material is suit-
able for every component. At 35%, the bodywork accounts
for the largest portion of a vehicle’s total weight. After that comes
the running gear at 25%, the comfort and safety equipment
at 20%, and the engine and transmission also at 20%. This distri-
bution means that the most eﬀective way to reduce vehicle
weight is to focus on the body. So instead of using conventional
types of steel, we are increasingly employing high-strength
and ultra-high-strength alloys in our bodywork. Lightweight
engineering in the new S-Class has enabled us to make improve-
ments in the body and other components that have reduced
the vehicle’s weight by almost 100 kilograms compared with
the previous model.

Carbon dioxide as a future refrigerant. The debate about
refrigerants for cars’ air conditioning was at the focus of public
interest for several months in 2013. The only currently available
refrigerant that meets the legal limits is a chemical compound
by the name of R1234yf. The safety risks connected with that
refrigerant that Daimler has identiﬁed in several tests ulti-
mately led to the decision to use the safe and environmentally
friendly refrigerant CO2 in the future. CO2 is neither ﬂammable
nor toxic and it cools very quickly. We are therefore working
hard on the development of CO2 air conditioning. Until the new
technology is ready for application, Daimler will continue
to use the refrigerant R134a with its proven safety properties,
like most of the other automobile manufacturers. According
to an EU directive, this is allowed until the end of 2016, depend-
ing on the date and other details of a vehicle’s type approval.
All models of the Mercedes-Benz and smart brands have the
relevant type approval with Europe-wide validity.

112

C | Combined Management Report | Sustainability

Workforce

Number of employees remains stable. At December 31,
2013, the Daimler Group employed a total of 274,616 men and
women. As expected, the workforce remained as large as it
had been at the end of 2012. Whereas the number of employees
rose in Germany to 167,447 (2012: 166,363), it declined to
20,993 in the United States (2012: 21,720). At the end of 2013,
Daimler had 14,091 employees in Brazil (2012: 14,610) and
11,275 in Japan (2012: 11,286).  C.43 Our consolidated sub-
sidiaries in China had a total headcount of 1,966 at the end
of the year (2012: 2,730). Workforce numbers dropped in China
as a result of integrating the car sales organizations into a
non-consolidated joint venture company. In addition, 2,274 South
African sales employees who were previously assigned to
Mercedes-Benz Cars are now listed within the sales organization.
At the end of the reporting year, Daimler AG employed
a total of 150,605 men and women (2012: 149,644).

Slight increase in average age of our employees. In 2013,
our global workforce had an average age of 42.3 years
(2012: 41.9). Our employees in Germany were 43.5 years old
on average (2012: 43.1). Employees who are 50 years old
or older currently make up about 34% of our permanent work-
force at Daimler AG. On the basis of current assumptions,
this proportion will rise to about 50% over the next ten years.
Changes in the collective bargaining agreement and the
legal framework, such as retirement at age 67, are intensifying
this demographic trend.

As part of our diversity management activities, we are addressing
the challenges resulting from the aging of our workforce.
This means that we have to create ways for older employees
to get more involved in our work processes, and also
that we must recruit younger people in a targeted manner.

Workforce numbers increased in 2013 at Daimler Financial
Services. They also rose at our vehicle sales organization
because of the aforementioned structural effect. Whereas the
number of employees at Mercedes-Benz Vans remained
largely unchanged compared with the end of 2012, it decreased
at Mercedes-Benz Cars, Daimler Trucks and Daimler Buses.
 C.44

C.43
Employees at 12/31/2013

By region

Germany

Europe, excluding Germany

We have combined in-house services worldwide in shared
service centers in order to further improve the quality and
efficien cy of our administrative functions and various services.
These shared services include financial processes, IT and
development tasks, sales functions and certain location-specific
services. The shared service centers are not consolidated
because they do not affect our profitability, cash flow or financial
position. The centers employed approximately 4,700 men
and women at the end of 2013.

The employees of our Chinese joint ventures are also
not included in the Group’s total workforce; they employed
approximately 17,600 people at December 31, 2013.

High level of profit sharing. For the successful financial
year of 2012, Daimler’s management and General Works Council
agreed once again to pay a performance participation bonus
to our employees paid according to collective bargaining wage
tariffs. At the end of April 2013, all of the eligible employees
at Daimler AG were paid an amount of €3,200. This is a visible
expression of how we honor our employees for their efforts
and commitment.

The eligible employees of Daimler AG in Germany will also
receive a fair and appropriate performance participation bonus
for financial year 2013. The amount has been determined
on the basis of a new, transparent system that was agreed upon
by the management and the General Works Council. The
resulting amount is €2,541. The management has also decided
to pay a one-time special bonus of €500. This special bonus
is an expression of gratitude to the employees for their special
commitment last year. The full participation in the company’s
success of €3,041 will be paid out in April 2014.

61.0%

12.7%

7.6%

5.1%

4.1%

9.4%

USA

Brazil

Japan

Other

C.44
Employees by division

Employees (December 31)

% change

2013

2012

13/12

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Sales & Marketing Organization

Daimler Financial Services

Other

274,616

275,087

96,895

79,020

14,838

16,603

52,455

8,107

6,698

98,020

80,519

14,916

16,901

50,683

7,779

6,269

-0

-1

-2

-1

-2

113

Cooperative State University in 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.

In 2013, CAReer once again enabled approximately 300 college
graduates from around the world to begin a career at Daimler.
The program focuses on young people who have graduated
in technical and commercial fields with above-average grades
and applicants with practical experience. Women currently
account for around one third of CAReer participants; our trainees
and alumni come from approximately 30 different nations.

We are also making our training activities more international
so that we can establish high training standards in growth
regions and recruit highly qualified skilled employees. In 2013,
we developed the Mercedes-Benz Qualification System
(MBQS) for our international car locations. The system describes
the general conditions for efficient training programs outside
Germany that provide participants with the required qualifica-
tions, including programs for training master craftspeople.
We are also incorporating some elements of the German work-
study system in various projects outside Germany.

We had 8,630 apprentices and trainees worldwide at the end
of 2013 (2012: 8,267). A total of 2,014 young people began
their vocational training at Daimler in Germany during the year
under review (2012: 2,109). The number of people we train
and subsequently hire is based solely on the Group’s needs and
its future development. In 2013, 89% of Daimler trainees
were hired after completing their apprenticeships (2012: 91%).

High standards for awarding contracts for work and services.
Contracts for work and services are important instruments
to enable companies to remain flexible and competitive in their
business operations. Through such contracts, Daimler pro-
cures services that can be provided better and more efficiently
by the specialists of the respective supplier than by the Group
itself. They include for example facility management services
and the operation of plant canteens as well as specialized logis-
tics and highly complex services in areas such as development,
IT and consulting.

Contracts for work and services regulate the provision
of a precisely defined service in return for a fixed payment.
In order to secure transparent and fair conditions for all
parties in the execution of such contracts, Daimler decided
on new standards for the award and execution of contracts
for work and services on Daimler premises in autumn 2013.
These standards apply in particular to working conditions
and the wages of the employees deployed by contracted com-
panies, and go significantly further than the conditions
required by applicable law.

To ensure that the new social principles are effective also
on a sustained basis, Daimler will systematically monitor
for adherence to them. Daimler therefore checks not only during
an invitation to tender whether the participating companies
fulfill the standards, but also regularly while the services are
provided.

In May 2013, Daimler introduced a new human resources
concept that takes advantage of the experience of the
company’s retired employees. These “senior experts” can volun-
tarily return to the company for a temporary period if the
departments need their services. The program promotes coop-
eration among people of different ages in order to benefit
from their specific strengths. In this way, the concept combines
the young employees’ innovative strength with the retirees’
wealth of experience. The experience we have gained with the
senior experts so far confirms that the program’s aims are
being achieved.

Number of years at Daimler. In 2013, our employees had
worked for the Daimler Group for an average of 16.2 years.
This figure was slightly above the previous year’s level
(2012: 15.8 years). In Germany, employees had worked for
the Group for an average of 19.2 years at the end of 2013
(2012: 18.8 years). The comparative figure for Daimler AG was
19.5 years (2012: 19.1 years). Daimler employees outside
Germany had worked for the Group for an average of 11.3 years
(2012: 11.0 years).

Diversity management activities. Diversity management
is a strategic success factor for the company’s future viability.
Because mixed teams are better than homogeneous ones
at solving complex tasks, Daimler’s diversity management activi-
ties primarily focus on making managers more aware of this
issue. We also use mentoring programs, communication activi-
ties, conferences, workshops and e-learning tools for this
purpose. This continuous focus on diversity management enables
our corporate culture to steadily evolve.

Increased proportion of women employees. Our instruments
for supporting the targeted promotion of women include flex-
ible working-time models, childcare facilities close to the work-
place and special mentoring programs. Daimler has committed
itself to increasing the proportion of women in senior manage-
ment positions throughout the Group to 20% by 2020. The
share of women in such positions has risen continually over the
last few years to reach 12.7% at the end of 2013 (2012: 11.9%).
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, women
accounted for 16.3% of the total workforce worldwide (2012:
16.2%). At Daimler AG, women accounted for 14.6% of the
employees at the end of the year under review (2012: 14.4%).

Employee qualification. 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
€107 million on the training and qualification of our employees
in the year under review (2012: €112 million). On average,
every employee spent 4.1 days in qualification courses in 2013
(2012: 4.0 days).

Securing young talent. Daimler takes a holistic approach
to securing young talent. For example, our Genius initiative
enables children and teenagers to gain valuable information
about technologies of the future and professions in the
automotive industry. w genius-community.com High school
graduates can apply to participate in a technical or commercial
apprenticeship at one of our locations or to study at the

114

Social responsibility

The main elements of our social involvement. Because
we consider business success to be inseparable from social
responsibility, we are working worldwide for the future of
our society in line with our values and local needs.

To promote social development, we spent more than €60 million
on donations to nonprofit institutions and sponsorships of
socially beneficial projects in 2013. Added to this are our founda-
tions and corporate volunteering activities, as well as self-
initiated projects.

We concentrate on areas that promote our role as a “good
neighbor” of the communities in which we operate worldwide.
We also focus on projects that can benefit from our core
areas of expertise as an automobile manufacturer as well as
our specific know-how. In particular, that includes projects
devoted to science, technology, the environment, education,
traffic safety, the arts and culture. We also support chari -
table projects, community projects and projects for promoting
social and political dialogue.

Transparency and control. The Board of Management’s
committee for donations and sponsorship controls all of the
company’s donations and sponsorship activities worldwide.
The committee bases its decisions on the donation and sponsor-
ship guidelines, which creates binding regulations for the
relevant criteria, legal stipulations and ethical standards.
We also create transparency with the help of our donation and
sponsorship database, which records all of the Group’s
donations and sponsorship activities worldwide. Regular com-
munication measures help employees to abide by the guide-
lines worldwide and make them aware of the risks associated
with donations and sponsorship activities.

Support for political parties. In 2013, we supported demo-
cratic parties solely in Germany, donating a total of €320,000
(2012: €435,000). Of this total, the CDU and SPD parties
each received €100,000 (2012: €150,000), and the FDP, the CSU,
and BÜNDNIS 90/DIE GRÜNEN each received €40,000
(2012: €45,000).

Funding through foundations. We support universities,
research institutes and interdisciplinary science projects
worldwide to promote sustained innovation and the international
sharing of ideas. We have combined these activities in our
foundations.

The Daimler and Benz Foundation is endowed with €125 million.
As a promoter of the knowledge society, the foundation
helps to fund the scientific development of research ideas
in the areas of environmental protection and technological
safety. It also funds a special team of mobility experts who study
the effects and socially relevant aspects of autonomous
driving. w daimler-benz-stiftung.de

Within the framework of the founders’ Association for German
Science, the Daimler Foundation is, among other things, involved
in selecting the winners of the German future Prize for Tech-
nology and Innovation. As part of MINTernational, the foundation
also supports young scientists at academic institutions and
helps to make universities more international.
w stifterverband.org

C | Combined Management Report | Sustainability

Science, technology and the environment. Daimler has been
helping environmental organizations conduct various projects
for several years now. For example, the Baden-Württemberg
chapter of the Nature and Biodiversity Conservation Union
of Germany (NABU) cooperated with Daimler to launch a marsh
renaturation project in 2012. Almost all of the marshes in
Baden-Württemberg have been drained and severely damaged
in past centuries, but the partners aim to restore two of them.
This project will benefit many threatened plant and animal species
as well as the climate in general.

Education and traffic safety. Our MobileKids program has been
successfully promoting safety and the future of mobility since
2001. This initiative teaches schoolchildren about traffic safety
in a playful and engaging manner. The ideas and content of
MobileKids are also taught in other countries including China,
Turkey and Hungary. To date, the program has prepared
more than one million children worldwide to behave safely
in road traffic. w mobilekids.net

Improving access to education is one of the most long-lasting
investments benefiting society and also our company. That
is why we launched the Genius education initiative, which is
geared toward children and teenagers and combines various
educational projects focusing on future technologies, mobility
and environmental issues. We use age-appropriate programs
and free workshops to provide playful and practical instruction
outside a school setting. In conformity with the formal curric-
ulum, we have also developed instructional materials on science
and technology subjects. In this context, we offer teacher
conferences and training courses related to these materials.
w genius-community.com

C.45
Donations and sponsoring in 2013

Charity/Community

Arts & Culture

Education

Science/Technology/Environment

Political Dialog

38%

36%

13%

115

The arts and culture. Daimler supports the arts and culture
as a key element of its business identity. These activities
focus on the promotion of regional culture. Among other things,
we support the Berlin Philharmonic Orchestra and the
MecklenburgVorpommern Music festival. In China, we have
a strategic partnership with the National Center for the
Performing Arts and support Art Beijing and the International
Music Festival. In South Africa, we are a partner of the country’s
“21 icons” project, which aims to use national role models
such as Nelson Mandela to inspire young people to follow in
their tracks. w 21icons.com

Charitable projects. In cooperation with the aid organization
Wings of Help, two convoys consisting of several new Mercedes
Benz Actros semitrailer trucks transported relief supplies
to Syrian refugees in Turkey. The trucks carried some 35,000
blankets, winter clothing for 120,000 people, baby food for
150,000 children, vaccinations, tents, wheelchairs, ambulances
and mobile medical centers almost 4,000 kilometers over
land to the area along the TurkishSyrian border.

Following the devastating typhoon in November 2013, Daimler
quickly provided €500,000 to the suffering population in
the Philippines and called on its employees to donate as well.
The donation to the German Red Cross was invested in water
treatment facilities and in measures for preventing epidemics.

As part of our national sponsorship program, we donated
money in 2013 also to charitable initiatives that focus
on helping families and children in Germany. Among them
is the brotZeit project, which combines programs for support
ing active senior citizens with the care of socially disadvan
taged children. Needy children are served a free, balanced
breakfast, and senior citizen volunteers provide slow learners
with individualized support. w brotzeitfuerkinder.com

Corporate volunteering. Daimler Financial Services now
organizes Days of Caring in more than 20 countries. In 2013,
over 2,300 employees took part in the worldwide program
to jointly help charitable institutions for a whole day. The climax
of these activities was the Week of Caring in the United States,
where around 1,000 employees spent a whole week working
on charitable projects at more than 30 different institutions.

We continued to expand our ProCent initiative during the year
under review. In this initiative, Daimler employees voluntarily
donate the cent amounts of their net salaries to socially beneficial
projects. The company matches every cent donated and
collects the money in a support fund. In line with the suggestions
of its employees, Daimler uses this money to support envi
ronmental and social projects in Germany and other countries
worldwide. In 2013, we provided 175 projects with more than
€1 million in funding. More than €1.7 million has been donated
to socially beneficial projects since the initiative was
launched in 2012.

In the “Gift a Smile” Christmas campaign, Daimler employees
in the Stuttgart area put together 7,700 present parcels of
toys, school articles, sweets and clothes for children and teen
agers from socially disadvantaged families. Daimler provided
the Christmas boxes for this campaign. A FUSO truck collected
the packages from various locations. The presents were then
distributed by the nonprofit food bank “Die Tafeln.”

More information about 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.” w daimler.com/nachhaltigkeit

116

C | Combined Management Report | Sustainability | 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 is very satisfactory at the time of publi-
cation of this Annual Report. On the basis of a wide-ranging
product oﬀensive at all divisions, we continued along our
growth path during the year under review. We were able to
achieve our growth targets to a very large extent and our
proﬁtability improved signiﬁcantly as the year progressed.

Although some major sales markets were still diﬃcult,
all of our automotive divisions increased their unit sales and
further improved their market position, in some cases signi-
ﬁcantly. Mercedes-Benz Cars set a new record for unit sales,
the Mercedes-Benz Vans and Daimler Buses divisions both
posted increases, and the Daimler Trucks division improved
on its prior-year unit sales. Along with the positive develop-
ment of the automotive business, the Daimler Financial Services
division also expanded signiﬁcantly in 2013. The Group’s
total revenue also grew, by 3% to €118.0 billion; adjusted for
exchange-rate eﬀects, there was actually an increase of 7%.

Operating proﬁt (EBIT) from the ongoing business of €7.9 billion
was at a high level, although we did not quite match the prior-
year ﬁgure, which was our target for the year 2013. The contin-
uation of high expenditure for the expansion of the product
portfolio and the production network once again had an impact
on our key ﬁnancial metrics in the year under review. But it
was important that our earnings situation improved continuously
as the year progressed. As a result, we achieved a very good
return on capital employed also in 2013; with a return on net
assets of 22.7% (2012: 19.6%), we once again earned signi-
ﬁcantly more than our cost of capital. This is reﬂected also by
our value added, which at €5.9 billion was signiﬁcantly higher
than the prior-year ﬁgure of €4.3 billion. This increase was due
not only to the positive development of business operations,
but also to the capital gain on the remeasurement and sale of the
remaining 7.4% of EADS shares in April 2013.

Thanks to the ongoing high level of earnings, we continue
to have sound key ﬁnancial metrics. At year-end, the Group’s
overall equity ratio was 24.3% (2012: 22.7%) and the equity
ratio of the industrial business was 43.4% (2012: 39.8%). The net
liquidity of our industrial business also remained at a comfort-
ably high level of €13.8 billion at the end of the year (2012: €11.5
billion). The free cash ﬂow from the industrial business – the
parameter we use to measure ﬁnancial strength – was €4.8 billion
in 2013 (2012: €1.5 billion). This reﬂects the sale of the remain-
ing shares of EADS in April 2013 yielding a cash inﬂow of €2.2
billion. On the other hand, there was a payment of €0.6 billion
for the acquisition of a 12% equity interest in the Chinese auto-
mobile manufacturer BAIC. The free cash ﬂow was already
positively inﬂuenced in 2012 by the reduction of our EADS share-
holding. When the special eﬀects of both years are excluded,
a signiﬁcant increase is apparent, which is driven by operating
proﬁt but also by reporting-date factors.

We want our shareholders to participate appropriately in
the earnings achieved by Daimler in 2013. At the Annual Share-
holders’ Meeting on April 9, 2014, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €2.25 per share (prior year: €2.20). With
this decision, we are also expressing our conﬁdence about the
ongoing course of business.

The generally very positive business development in the
year 2013 was supported by several factors, with which we
are positioning ourselves for a successful future. The motto
of “Doing business eﬃciently and growing proﬁtably” primarily
relates to the eﬃcient structuring of the most far-reaching
growth program in the Group’s history.

A core element of our successful growth strategy is the wide-
ranging product oﬀensive at all divisions, with which we
are winning new customers and developing additional markets.
Mercedes-Benz Cars currently has the youngest and most
attractive product portfolio of all time, which we upgraded in
2013 with the new E-Class, the new compact coupe CLA,
and the new S-Class. Also with trucks, we have nearly completely
renewed our range of products and engines in recent years.
The most important new models include the Arocs – a construc-
tion-site truck, the new Sprinter van, the new coach Setra
TopClass 500, and the Freightliner Cascadia Evolution – our
new ﬂagship truck in the North American market.

117

Furthermore, we underscored our technology leadership with
groundbreaking innovations in 2013. The new S-Class is the
undisputed spearhead of automotive technology. It is a pioneer
in the areas of safety, driving comfort and luxury. The S 500
INTELLIGENT DRIVE is a milestone along the way to accident-free
driving. With this research vehicle, we were the ﬁrst auto-
mobile manufacturer in the world to demonstrate in August 2013
that autonomous driving is possible also in long-distance
and urban traﬃc. And before the end of 2014, we will launch
the S 500 PLUG-IN HYBRID, the most fuel-eﬃcient luxury
sedan of all time.

In general, we once again made considerable progress with the
reduction of fuel consumption in 2013, thanks to our new
models of cars and commercial vehicles. For example, we once
again signiﬁcantly reduced the average CO2 emissions of the
cars we sell in the European Union from 140 grams per kilometer
to 134 g/km in 2013. Furthermore, we were the ﬁrst producer
of commercial vehicles to convert its entire product range in
Europe to the new Euro VI emission limits before they took eﬀect
in January 2014. Despite the equipment for exhaust-gas after-
treatment, the fuel consumption of our new Euro VI engines is up
to 4% better than their Euro V predecessors. The Actros is
the most economical truck in its market segment in Europe and
the Freightliner Cascadia Evolution is the most fuel-eﬃcient
truck in North America.

We are ideally prepared for the future also in the ﬁeld of
alternative drive systems. Our portfolio of locally emission-free
vehicles with batteries and fuel cells is unique. It ranges from
cars to vans and from light trucks to buses. And with commercial
vehicles, we are the world’s leading supplier of vehicles with
hybrid drive.

We eﬀectively expanded our worldwide network of production
sites and research facilities in 2013, placing our future growth
on a broad regional basis. The focus is on the growth markets
of China, India, Brazil and Russia. Substantial investment in our
plants in Germany demonstrates that they continue to play
a key role as competence centers for our international network.
In China, we have increased the production capacities for
the model series that are already produced in that market.
In addition, we will also produce the new compact SUV –
the GLA – in China starting in 2014. Already in November 2013,
we opened our ﬁrst engine plant outside Germany in Beijing.
In the same month, we acquired a 12% equity interest in our long-
standing partner BAIC, thus taking a further important step
within the framework of our China strategy.

Key components of our growth strategy are the eﬃciency
programs we have initiated in all of our divisions. In this way,
we ensure that our ﬁnancing strength is protected also under
diﬃcult market conditions and that we will be able to continue
growing proﬁtably in the future. The implementation of these
programs is running according to plan. This is reﬂected also by
the development of earnings in the second half of 2013. With
these programs, we intend to realize sustained earnings contri-
butions totaling approximately €4 billion by the end of 2014.

Following the successful start of the product oﬀensives
for cars and commercial vehicles, the further development
of our structures is now the next strategic step to help us
achieve our growth targets. In order to focus our activities even
more on customers and markets, we decided in September
2013 to strengthen the organization of the divisions. Under the
heading of “Customer Dedication,” we are anchoring respon-
sibility for the main sales functions and the major sales markets
directly in the respective divisions. With a leaner organization
and more eﬃcient structures, we are creating the right conditions
to utilize growth potential in our core business and in new
markets. The main objective is to become even more attractive
for new groups of customers with our new products, while
intensifying the brand loyalty of our existing customers.

The future development of automotive markets oﬀers us enor-
mous opportunities, but is also connected with great challenges.
With our growth strategies, our eﬃciency programs and the
new structure of the Group, we laid the foundations in 2013
to utilize the opportunities and successfully meet the challenges
ahead. As a result, we should succeed in combining growth
with eﬃciency over the long term.

Events after the End of
the 2013 Financial Year.

Since the end of the 2013 ﬁnancial year, there have been
no further occurrences that are of major signiﬁcance
for Daimler. The course of business in the ﬁrst two months
of 2014 conﬁrms the statements made in the “Outlook”
section of this Annual Report.

118

C | Combined Management Report | Overall Assessment of the Economic Situation | Events after the End of the 2013 Financial Year | Remuneration Report

Remuneration Report.

The Remuneration Report summarizes the principles that
are applied to determine the remuneration of the Board
of Management 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.

Principles of Board of Management remuneration

Goals. 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 appli-
cable law, so that Daimler is an attractive employer also
for first-class executives. By means of adequate variability, the
system should also clearly and directly reflect the joint and
individual performance of the Board of Management members
and the sustained performance of the Group.

Practical implementation. 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 appropriateness, 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:
– the effects of the individual fixed and variable components,

that is, the methods behind them and their reference
parameters;

– the relative weighting of the components, that is,

the relationship between the fixed base salary and the
short-term and long-term variable components;
– the ratio of an average employee’s income to that

of a member of the Board of Management;

and the resulting 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 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. For this purpose, the
Supervisory Board has defined the group of senior executives
with the use of the Company’s internal levels of hierarchy.

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
Management, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.

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 for 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.

For the long-term variable component of remuneration,
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.

In this way, the individual base and target remuneration and
the relevant performance parameters are set by the beginning
of each year.

After the end of each year, target achievement is measured
and the actual remuneration is calculated by the Presidential
Committee and is submitted to the Supervisory Board
for its approval.

The system of Board of Management remuneration in
2013. The remuneration system comprises a fixed base salary
(approximately 29% of the target remuneration), an annual
bonus (approximately 29% of the target remuneration), and
a variable component of remuneration with a long-term
incentive effect (approximately 42% of the target remuneration).
The spectrum of target achievement and the reference
parameters remained unchanged. 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 with the application of a bonus-malus
rule (so-called deferral), depending on the development
of the Daimler share price compared with an automotive index
(Dow Jones STOXX Auto Index) E see pages 22 f, which
Daimler AG uses as a benchmark for the relative share-price
development. Both the delayed payout of the portion of the

119

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
an 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 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.
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 con-
verted into the final number of phantom shares allocated.
After another plan year has elapsed, the amount to be paid
out is calculated from this 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 this year.

Reference parameters for Plan 2013:
– 50% relates to the Group’s return on sales compared with
a group of competitors (BMW, Fiat, Ford, Honda, Paccar,
Renault, Toyota, Volvo and Volkswagen). For the measurement
of this success criterion, the competitors’ average return
on sales is calculated over a period of three years, whereby
the best and worst values are not taken into consideration.
The extent that Daimler’s return on sales deviates by up to +/-2
percentage points from the average thus calculated is
deemed to be the range of target achievement. This means
that target achievement is 200% if Daimler’s return on
sales is 2 percentage points or more above the competitors’
average. Target achievement is 0% if Daimler’s return on
sales is 2 percentage points or more below the competitors’
average.

– 50% relates to the Group’s return on net assets in relation
to the cost of capital. This criterion stands for the value
created by the Group. In a defined range between 6% and 8%
and between 8% and 16% (since the 2013 plan), appropriate
performance factors are allocated to the individual figures
for return on net assets in a linear relationship. This means
that target achievement is 200% if Daimler’s return on net
assets is 16% or more. Target achievement is 0% if Daimler’s
return on net assets is 6% or less.

Value upon allocation:
Determined annually in relation to a market comparison;
for 2013, approximately 1.3 to 1.6 times the base salary.

Range of possible target achievement:
0 to 200%, that is, the plan has an upper limit.
It may also be zero.

annual bonus (with the use of the bonus-malus rule) and
the variable component of remuneration with a long-term
incentive effect with its link to additional, ambitious com-
parative para meters and to the share price reflect the recom-
mendations of the German Corporate Governance Code
and give due consideration to both positive and negative
developments. The details of the 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.

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 respective 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 Management members and the achievement
of compliance targets. Optionally, additional key figures/assess-
ment bases and targets can be included.

Primary reference parameters:
– 50% relates to a comparison of actual EBIT in 2013

with EBIT targeted for 2013.

– 50% relates to a comparison of actual EBIT in 2013

with actual EBIT in 2012.

Amount with 100% target achievement
(target annual bonus):
In the year 2013, 100% of the base salary.

Range of possible target achievement:
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 bonus, can vary between 0%
and 200%. The limits of this bandwidth are defined by a deviation
of plus or minus 2% of the prior-year revenue.

On the basis of the resulting degree of target achievement,
an amount of up to 10% can be added or deducted, depending
on the aforementioned predefined key figures/assessment
basis. Since 2012, non-financial targets have been used
as a basis for assessment; for the past financial year, those
targets were employee and customer satisfaction, diversity
as well as the further development and permanent establishment
of the corporate value of integrity. Furthermore, the Super-
visory Board has the possibility, based for example on the agreed
targets that have been set, to take account of the personal
performance of the individual Board of Management members
with an addition or deduction of up to 25%.

Once again in 2013, further individual targets were agreed upon
with the Board of Management with regard to the development
and sustained function of the compliance management system.
The complete or partial non-achievement of individual com-
pliance 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 achieve-
ment, even in the case of full accomplishment.

120

Value of the phantom shares on payout:
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 prelimi-
nary number of phantom shares allocated. During the four-year
period between the allocation of the preliminary 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.

Guidelines for share ownership. As a supplement to these
three components of remuneration, “Stock Ownership
Guidelines” exist for the Board of Management. These guide-
lines 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 was set when the Performance Phantom Share Plan
was introduced in relation to double the then annual base salary
for each ordinary member of the Board of Management and
triple the then annual base salary for 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.

Appropriateness of Board of Management remuneration.
In accordance with Section 87 of the German Stock Cor-
poration 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 in 2013. 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,
which in 2013 was fundamentally unchanged from 2012 and 2011,
had already been approved by the Annual Shareholders’
Meeting in 2011.

New recommendations of the German Corporate Gover-
nance Code/Adjustment of the remuneration system with
aﬀect as of January 1, 2014. According to the recommenda-
tion newly included in the German Corporate Governance Code
as amended on May 13, 2013, the maximum amount of Board
of Management remuneration is to be limited, both overall and
with regard to its variable components.

When the amended Code of May 2013 took eﬀect, the
remuneration agreements with the members of the Board
of Management already called for limits on the components
of remuneration, which however, did not completely meet
the requirements of the new recommendation. Eﬀective
January 1, 2014, the members of the Board of Management
approved the inclusion in their current contracts of service
of limits in line with Clause 4.2.3 Paragraph 2 Sentence 6
of the Code. In the adjustment agreements, percentage limits
with reference to the base salary were agreed upon also
for the annual bonus payments that had not yet been paid
for ﬁnancial years 2012 and 2013. The percentage limit

C | Combined Management Report | Remuneration Report

referring to the grant value for the remuneration from the long-
term and share-based component of remuneration, the
so-called Performance Phantom Share Plan, was also extended
to future dividend equivalents falling due from tranches
issued before January 1, 2014 and still running.

In addition to these also retroactive arrangements (i.e. limitation
of the total amount to be paid out from the annual bonus of
a ﬁnancial year to 2.35 times the base salary of the respective
ﬁnancial year and the inclusion of the dividend equivalent in
the limit of the PPSP), the maximum limit of total remuneration
for the Board of Management was set as of ﬁnancial year
2014 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 commit-
ments from the respective ﬁnancial years, 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.

In addition, eﬀective January 1, 2014, the bandwidth
of possible target achievement for the annual bonus was
adjusted as follows:

For the primary reference 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 bandwidth of 0 to 200% are deﬁned
as of 2014 as a deviation of +/- 3% from prior-year revenue
(previously 2%).

Furthermore, the Supervisory Board decided, with ﬁrst-time
application for PPSP 2014, to redeﬁne the competitive
group relevant for the performance measure “return on sales”
to include all stock-exchange-listed vehicle manufacturers
with an automotive proportion of more than 70% and an invest-
ment-grade rating. Another increase in the criteria is that
within the context of the unchanged possible bandwidth
of 0 to 200%, target achievement of 100% is only granted with
an average return on sales of 105% of the competitive group.
Moreover, the previous “return on net assets” performance
measure has been replaced with the development of the price
of Daimler shares compared with the share-price develop-
ment of the competitive group newly deﬁned for the calculation
of “return on sales.” The limits of possible target achievement
of 0 to 200% are deﬁned by a deviation of +/- 50% from the aver-
age share-price development of the competitive group.

The system of remuneration of the Board of Management
otherwise remains unchanged.

121

Board of Management remuneration in 2013

Total Board of Management remuneration in 2013. The total
remuneration granted by Group companies (excluding retirement
beneﬁt commitments) to the members of the Board of Manage-
ment of Daimler AG is calculated as the total of the amounts of
– the base salary in 2013,
– the half of the annual bonus for 2013 payable in 2014,
– the half of the medium-term share-based component

The remuneration of the Board of Management for the year 2013
amounts to €32.1 million (2012: €28.2 million). Of that total,
€9.1 million was ﬁxed, that is, non-performance-related remuner-
ation (2012: €7.5 million), €12.1 million (2012: €9.3 million)
was short- and medium-term variable performance-related remu-
neration (annual bonus with deferral), and €10.9 million was
variable performance-related remuneration granted in 2013 with
a long-term incentive eﬀect (2012: €11.4 million).  C.46

of the annual bonus for 2013 payable in 2015 with its value
at the balance sheet date (entitlement depending on
the development of Daimler’s share price compared with
the Dow Jones STOXX Auto Index),

When comparing with the prior-year ﬁgures, with regard to
the total of base salary, the annual bonus and the PPSP granted,
it is necessary to consider eﬀect pro rata over time of the
appointment of Mr. Troska taking eﬀect as of December 13, 2012.

– the value of the long-term share-based remuneration

at the time when granted in 2013, and
– the taxable non-cash beneﬁts in 2013.

For both of the share-based components – the second
50% of the annual bonus and the PPSP with a long-term orien-
tation – 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 parameters. Upward deviation is possible only as far
as the maximum limits described above. Both components can
also be zero.

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 2013 as shown
in the table  C.47.

C.46
Board of Management remuneration in 2013

In thousands of euros

Dr. Dieter Zetsche

Dr. Wolfgang Bernhard

Dr. Christine Hohmann-Dennhardt

Wilfried Porth1

Andreas Renschler2

Hubertus Troska

Bodo Uebber3

Prof. Dr. Thomas Weber

Total

2013
2012

Base salary

Short and medium-term variable
remuneration (annual bonus)
Short-term Medium-term

Long-term variable remuneration
(PPSP)
Number Value when granted
(2013: at share price €44.39)
(2012: at share price €48.23)

2,008
2,008

1,707
1,426

715
715

755
755

715
37

866
866

715
715

590
508

590
526

608
508

623
536

590
24

736
636

626
490

590
508

590
526

608
508

623
536

590
24

736
636

626
490

63,643
68,273

25,458
27,309

28,420
30,487

25,458
–

30,433
32,647

27,031
28,998

2,825
3,293

1,130
1,316

1,130
1,317

1,044
1,229

1,226
1,460

1,130
–

1,199
1,402

1,200
1,399

Total

8,247
8,153

3,025
3,047

3,025
3,084

2,975
2,960

3,227
3,287

3,025
85

3,537
3,540

3,167
3,094

7,204
6,526

6,070
4,654

251,359
242,332

10,884
11,416

30,228
27,250

1 Taking into account supervisory board remuneration of €85,734 (2012: €88,460).
2 Taking into account supervisory board remuneration of €35,646 (2012: €10,913).
3 Taking into account supervisory board remuneration of €152,197 (2012: €173,048).

122

C | Combined Management Report | Remuneration Report

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 until it is paid out;

– as a pension with an annual increment (see above
Daimler Pension Plan pursuant to applicable law).

The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse
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).

C.47
Non-cash beneﬁts and other fringe beneﬁts

In thousands of euros

Dr. Dieter Zetsche

Dr. Wolfgang Bernhard

Dr. Christine Hohmann-Dennhardt

Wilfried Porth
Andreas Renschler1
Hubertus Troska2

Bodo Uebber

Prof. Dr. Thomas Weber

Total

2013

2012

151

511

603

112

210

1,854

151

191

114

152

112

156

943

1 Taking into account jubilee money of €62,995.
2 Taking into account jubilee money of €59,714. For the fulﬁllment

of disclosure obligations pursuant to Section 285 No. 9a of the German
Commercial Code (HGB), this amount is reduced by €155,000 for the
year 2013. 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.

Commitments upon termination of service

Retirement provision. The pension agreements of some
Board of Management members include 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. Those pension rights were granted until
2005 and remain valid; they 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 a 3.5% annual increase in beneﬁts
(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 Manage-
ment member is entitled to 60% of that member’s pension.
That amount can increase by up to 30 percentage points depend-
ing on the number of dependent children.

Eﬀective as of January 1, 2006, we replaced the pension
agreements of the Board of Management members with a new
arrangement, the so-called 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, 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 upon retirement at or after the age of 60,
or as a disability pension upon retirement before the age
of 60 due to disability.

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 con-
tributions by Daimler, but is oriented towards the capital
market, combined with Daimler’s commitment to guarantee
the total of contributions paid. The Supervisory Board of
Daimler AG has approved the application of this system for
all newly appointed members of the Board of Management
(so far, Hubertus Troska). Accordingly, each member of the Board
of Management is credited with a capital component each
year. This amount is calculated from 15% of the total of the base
salary and the actual annual bonus. These contributions to
retirement provision are granted until the age of 62. The beneﬁt
from the pension plan is payable to surviving Board of Man-
agement members upon retirement at or after the age of 62,
or as a disability pension upon retirement before the age
of 62 due to disability.

For the measurement of the total commitment, the targeted
level of retirement provision – also according to the period
of Board of Management membership – and the resulting
annual and long-term expense for the Company are taken into
consideration for each member of the Board of Management.

123

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
statements of Daimler AG and 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.
In 2013, 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 2013 to former members of the Board of Management
of Daimler AG and their survivors amounted to €14.6 million
(2012: €15.4 million). Pension provisions for former members
of the Board of Management and their survivors amounted
to €217.0 million at December 31, 2013 (2012: €225.9 million).

Departing Board of Management members with pension agree-
ments modiﬁed as of the beginning of 2006 receive, for the
period beginning after the end of the original service period and
for the last time upon 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 case
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 €2.5 million in 2013 (2012: €2.4 million). The present
value of the total deﬁned beneﬁt obligation according to IFRS
amounted to €70.1 million at December 31, 2013 (December 31,
2012: €81.7 million). Taking age and period of service into
account, the individual entitlements, service costs and present
values are shown in the table.  C.48

Commitments upon early termination of service. In the case
of early termination of a service contract without an important
reason, Board of Management service contracts include com-
mitments to payment of the base salary and provision of a
company car until the end of the original service period at a maxi-
mum. Such persons are only entitled to payment of the per-
formance-related component of remuneration pro rata for the
period until they leave the Company. Entitlement to payment
of the performance-related component of remuneration with
a long-term incentive eﬀect is deﬁned by the conditions
of the respective plans.

The total of the payments described above 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.

C.48
Individual entitlements, service costs and present values for members of the Board of Management

In thousands of euros

Dr. Dieter Zetsche

Dr. Wolfgang Bernhard

Wilfried Porth

Andreas Renschler

Hubertus Troska

Bodo Uebber

Prof. Dr. Thomas Weber

Total

Annual pension
(as regulated
until 2005)
as of age 60

Service cost
(for pension,
pension capital and
Daimler Pensions Plan)

Present value
of obligations
(for pension,
pension capital and
Daimler Pensions Plan)

1,050
1,050

–
–

156
156

250
250

–
–

275
275

300
300

2,031
2,031

–
872

401
265

223
156

423
309

272
5

714
510

426
333

2,459
2,450

29,896
39,597

1,774
1,494

6,579
6,472

9,798
10,243

2,488
2,227

10,127
9,974

9,444
11,701

70,106
81,708

2013
2012

Dr. Hohmann-Dennhardt has no entitlement to a company retirement beneﬁt.

124

C | Combined Management Report | Remuneration Report

Remuneration of the Supervisory Board

Supervisory Board remuneration in 2013. The remuneration
of the Supervisory Board is determined by the 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 April 2011 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 per-
formance of their office, fixed remuneration of €100,000. The
Chairman of the Supervisory Board receives an additional
€200,000 and the Deputy Chairman of the Supervisory Board
receives an additional €100,000. The members of the Audit
Committee are paid an additional €50,000, the members of the
Presidential Committee are paid an additional €40,000 and
the members of the other committees of the Supervisory Board
are paid an additional €20,000; an exception is the Chairman
of the Audit Committee, who is paid an additional €100,000.
Additional payments are made for activities in a maximum
of three committees; any persons who are members of more
than three such committees receive additional payments
for the three most highly paid functions. Members of a Super-
visory 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 individual
remuneration of the members of the Supervisory Board is
shown in the table.  C.49

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.

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
of employment.

The remuneration of all the activities of the members
of the Supervisory Board of Daimler AG in the year 2013
was thus €3.0 million (2012: €3.0 million).

Loans to members of the Supervisory Board. In 2013,
no advances or loans were made to members of the Supervisory
Board of Daimler AG.

C.49
Supervisory Board remuneration

Name

In euros

Dr. Manfred Bischoff
Erich Klemm1

Dr. Paul Achleitner

Sari Baldauf

Dr. Clemens Börsig
Michael Brecht1

Prof. Dr. Heinrich Flegel

Dr. Jürgen Hambrecht

Petraea Heynike
Jörg Hofmann1

Andrea Jung
Dr. Thomas Klebe1, 3

Gerard Kleisterlee
Jürgen Langer1
Dr. Sabine Maaßen1
Wolfgang Nieke1
Ansgar Osseforth4
Valter Sanches2
Jörg Spies1
Elke Tönjes-Werner1

Lloyd G. Trotter

Function(s) remunerated

Total in 2013

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 Nomination Committee

Member of the Supervisory Board and the Audit Committee

Member of the Supervisory Board (until April 10, 2013)

Member of the Supervisory Board and of the Presidential Committee

Member of the Supervisory Board

Member of the Supervisory Board and of the Presidential Committee (since April 10, 2013)

Member of the Supervisory Board (since April 10, 2013)

Member of the Supervisory Board and of the Presidential Committee (until April 10, 2013)

Member of the Supervisory Board

Member of the Supervisory Board (since April 10, 2013)

Member of the Supervisory Board (until April 10, 2013)

Member of the Supervisory Board

Member of the Supervisory Board (since April 10, 2013)

Member of the Supervisory Board

Dr. h. c. Bernhard Walter

Member of the Supervisory Board and Chairman of the Audit Committee

Dr. Frank Weber
Uwe Werner1
Lynton R. Wilson5

Member of the Supervisory Board (since April 10, 2013)

Member of the Supervisory Board (until April 10, 2013)

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.
The Hans-Böckler Foundation is a German not-for-profit organization of the German Trade Union Federation.

2 Mr. Sanches has directed that his board remuneration is to be paid to the Hans-Böckler Foundation.
3 Dr. Klebe also received remuneration and meeting fees of €9,700 for his board services at Daimler Luft- und Raumfahrt Holding AG.

These amounts are also to be transferred to the Hans-Böckler Foundation.

4 Mr. Osseforth has directed that a portion of his board remuneration is to be paid to a
German Foundation for adult education (“Treuhandstiftung Erwachsenenbildung”).

5 Mr. Wilson also received remuneration of €3,654 for his board services at Mercedes-Benz Canada Inc.

and Mercedes-Benz Financial Services Canada Corp.

373,200

308,700

127,700

163,200

164,300

29,597

152,100

107,700

139,051

78,377

52,456

106,600

107,700

78,377

29,597

107,700

77,277

105,500

213,200

78,377

29,597

33,251

125

Information and Explanation Relevant
to Acquisitions.

(Report pursuant to Section 315 Subsection 4 and Section 289 Subsection 4 of the German Commercial Code (HGB))

the case of a change of control of the issuer of the shares
in question. Following the acquisition of their equity interests
in Daimler, each of Renault S. A. and Nissan Motor Co., Ltd.
has stated in its voting-rights notiﬁcation issued pursuant
to Sections 21 ﬀ of the German Securities Trading Act (WpHG)
that the Daimler shares held by the other company are to
be allocated to it pursuant to Section 22 Subsection 2 of the
German Securities Trading Act (WpHG) (coordinated action).

Provisions of applicable law and of the Articles of Incor-
poration 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 dismissed 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 Manage-
ment 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 appoint-
ment of members of the Board of Management to three years.
Reappointment or the extension of a period of oﬃce is permis-
sible, in each case for a maximum of ﬁve years.

Pursuant to Section 31 Subsection 2 of the German Codeter-
mination 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 appoint-
ment within one month of the vote by the Supervisory Board.
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
Chairman of the Board of Management then has two votes.
The same procedure applies for dismissals of members
of the Board of Management.

Composition of share capital. The share capital of Daimler
AG amounts to approximately €3,069 million at December 31,
2013. It is divided into 1,069,772,847 registered shares of
no par value. 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.
The rights and obligations arising from the shares are derived
from the provisions of applicable law. There were no treasury
shares at December 31, 2013.

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.

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 are obliged by the Plans’ terms and conditions
and by the so-called 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.

On April 7, 2010, Daimler AG and the Renault-Nissan Alliance
signed a master cooperation agreement on wide-ranging
strategic cooperation and a cross-shareholding. Renault S. A.
and Nissan Motor Co., Ltd. each received an equity interest
of 1.55% in Daimler AG, and Daimler AG received equity interests
of 3.1% in each of Renault S. A. and Nissan Motor Co., Ltd.
Due to an increase in the total number of outstanding shares
of Daimler AG following the exercise of stock options, each
shareholding in Daimler of Renault S. A. and Nissan Motor Co.,
Ltd. amounted to 1.54% at December 31, 2013. For the
duration of the master cooperation agreement or for a period
of ﬁve years (whichever is the shorter), without the prior
consent of the other party, i) Daimler AG may not transfer its
shares in Renault S. A. and Nissan Motor Co., Ltd. to a third
party, and ii) Renault S. A. and Nissan Motor Co., Ltd. may not
transfer their shares in Daimler AG to a third party. Transfers
to third parties that are not competitors of one of the issuers
of the shares in question are exempted from this prohibition
under certain circumstances, including the case of internal
corporate transfers, transfers related to a takeover oﬀer from
a third party for the shares of one of the other parties, or

126

C | Combined Management Report | Information and Explanation Relevant to Acquisitions

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 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 Corpo-
ration 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 Management
if there is an important reason to do so.

Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended
by a resolution of a Shareholders’ Meeting. Unless otherwise
required by applicable law, resolutions of the Annual Share-
holders’ Meeting – with the exception of elections – are passed
pursuant to Section 133 of the German Stock Corporation
Act (AktG) and Article 16 Paragraph 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, any amendment to the purpose of the Company requires
a 75% majority of the share capital represented at the Share-
holders’ 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 Paragraph 2 of the Articles
of Incorporation. Pursuant to Section 181 Subsection 3 of
the German Stock Corporation Act, amendments to the Articles
of Incorporation take eﬀect upon being entered in the Com-
mercial Register.

Authorization of the Board of Management to issue
or buy back shares. By resolution of the Annual Shareholders’
Meeting of April 14, 2010, the Board of Management was
authorized with the consent of the Supervisory Board during
the period until April 13, 2015 to acquire the Company’s
own shares for all legal purposes, in particular for certain deﬁned
purposes, up to a maximum of 10% of the share capital at
the time of the resolution of the Annual Shareholders’ Meeting.
The purchase of the Company’s own shares is allowed, inter
alia, for the following purposes: for the purpose of canceling
them, oﬀering them to third parties in connection with a
corporate merger or acquisition, disposing of them in another
way than through the stock exchange, oﬀering them to all
shareholders, or serving the stock option plan created in or before
2004. 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, whereby
the period of the individual option may not exceed 18 months.
No use has yet been made of this authorization.

By resolution of the Annual Shareholders’ Meeting held
on April 8, 2009, the Board of Management was authorized
with the consent of the Supervisory Board to increase
the share capital of Daimler AG by up to €1 billion during the
period until April 7, 2014 by issuing new registered shares
of no par value in exchange for cash or non-cash contributions,
wholly or in partial amounts, on one or several occasions
(Approved Capital 2009). 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. No use has
yet been made of Approved Capital 2009.

Furthermore, the Board of Management was authorized by
resolution of the Annual Shareholders’ Meeting of April 14, 2010,
– with the consent of the Supervisory Board during the period

until April 13, 2015 to issue convertible bonds and/or bonds
with warrants or a combination of those instruments, once
or several times, 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.

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 with conversion or warrant
rights to shares in Daimler AG. The bonds can also be issued
by direct or indirect majority-owned subsidiaries of Daimler AG.

Accordingly, the share capital was conditionally increased
by up to €500 million (Conditional Capital 2010). No use
has yet been made of this authorization to issue convertible
bonds and/or bonds with warrants.

Material agreements taking eﬀect in the event of a change
of control. Daimler AG has concluded various material agree-
ments, 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 €2.0

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 conso-

lidated subsidiaries for a total amount of €592 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.

127

– An agreement concerning the acquisition of a majority

– A shareholders’ agreement with Rolls-Royce Holdings plc

(Rolls-Royce) and Vinters International Limited, a subsidiary
of Rolls-Royce, relating to the acquisition of Tognum AG
(as of January 9, 2014, Rolls-Royce Power Systems AG) of
Friedrichshafen by Rolls-Royce Power Systems Holding
GmbH (formerly Engine Holding GmbH) and the merger with
Rolls-Royce’s Bergen business. Daimler and Vinters Inter-
national Limited each hold 50% of the shares of Rolls-Royce
Power Systems Holding GmbH. In the case of a change
of control of one of the contracting parties, the agreement
gives the other contracting party the right to acquire the
shares of that party in the jointly held company at appropriate
conditions at the time of the change of control.

– An agreement relating to a joint venture with BAIC Motor
Co., Ltd. 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
Foton 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 auto-
motive 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.

(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, as well as for a
put option for the minority shareholder, Ballard Power Systems.
Control as deﬁned by this agreement is the beneﬁcial
ownership of the majority of the voting rights and the result-
ing 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 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 ter-
minate 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 econom-
ically, 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 the 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 van, the use of an existing architecture for compact
cars and the predevelopment of a hydrogen tank system.
A change of control is deemed to occur at a threshold of 50%
of the voting rights or upon authorization to appoint a
majority of the members of the 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 devel-
opment of shared components even if the development were
terminated for that party.

– Furthermore, Daimler AG has concluded a cooperation

agreement with Ford and Nissan regarding the joint predevel-
opment of a fuel-cell system. In the case 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 or upon authorization to appoint a majority
of the members of the managing board.

128

C | Combined Management Report | Information and Explanation Relevant to Acquisitions | Risk and Opportunity Report

Risk and Opportunity Report.

In the context of the two-year operational planning – with
the use of deﬁned risk categories – risks are identiﬁed and
assessed for the divisions and operating units, the major
joint ventures and associated companies and the corporate
departments. The risk consolidated group mirrors the con-
solidated group of the consolidated ﬁnancial statements and
goes even further if necessary.

Risk assessment takes place on the basis of the probability
of occurrence and possible impact of the risk according to the
categories low, medium and high. When assessing the impact
of a risk, the eﬀect before countermeasures in relation to EBIT
is considered. 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. Assessment of the
dimensions of the probability of occurrence and possible impact
is based on the categories shown in table  C.50.

C.50
Assessment of probability of occurence and possible impact

Category

Possible impact

Low

€0 ≤

Medium

€500 million ≤

High

Impact

< €500 million

< €1 billion

≥ €1 billion

The Daimler Group’s divisions are exposed to a large number
of risks which are inextricably linked with our entrepreneurial
activities. A risk is understood as the danger that events or
actions by the Group or one of its divisions prevent the Group
from achieving its targets. It is also important for the Daimler
Group to identify possible opportunities so that they can be uti-
lized in the context of entrepreneurial activity, thus securing
and enhancing the Daimler Group’s competitiveness. An oppor-
tunity is understood as the possibility to meet or surpass the
planned targets as a result of events, developments or actions.

The divisions have direct responsibility for recognizing and
managing entrepreneurial 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 process. In order to identify risks and opportunities at an
early stage and to assess and deal with them consistently,
eﬀective management and control systems are applied, which
are integrated into a risk management system and an oppor-
tunity management system. Opportunities and risks are not
oﬀset. The two systems are described below.

Risk management system

The risk management system with regard to material risks
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 relevant legal entities, divisions
and corporate functions. The risk management system is
intended to systematically identify, assess, control, monitor
and document material risks and risks threatening Daimler’s
existence, in order to secure the achievement of corporate
goals and to enhance risk awareness at the Group. Risk assess-
ment principally takes place for a two-year planning period,
although Daimler also identiﬁes and monitors risks related to a
longer period in the discussions for the derivation of medium-
term and strategic goals. Reporting in the Management Report
is with reference to one year.

129

Quantiﬁcation of each aggregated risk category in the Manage-
ment Report summarizes the individual risks reported for
each category. To the extent 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.

Risk controlling at the Daimler Group takes place at the level
of the divisions based on individual risks. If the impact of
an individual risk exceeds the amount of €2 billion, this risk
is described separately.

The tasks of a person responsible for a risk include, in addi-
tion to identifying and assessing the risks, developing measures
and initiating them if appropriate so that risks are avoided,
reduced or counteracted. All reported risks of the individual
entities and of the related countermeasures that have been
initiated are monitored locally. Corporate risk management
at headquarters regularly reports on the identiﬁed risks to
the Board of Management and the Supervisory Board. As well
as the regular reporting, there is also an internal reporting
obligation within the Group for risks arising unexpectedly.

The principle of completeness also applies to risk management.
This means that at the level of the individual entities, all
speciﬁc risks must ﬂow into the risk management process.
Such a risk exists if the probability of occurrence of the
risk exceeds a uniform threshold deﬁned for the whole Group.
Latent risks that are below this threshold are monitored
in the internal control system (ICS). Compliance risks are thor-
oughly identiﬁed by the Group. Regular courses of training aim
to reduce the number of compliance risks.

The internal control and risk management system with
regard to the accounting process has the goal of ensuring
the correctness and eﬀectiveness of accounting and ﬁnancial
reporting. It is designed in line with the internationally recog-
nized framework for internal control systems of the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO Internal Control – Integrated Framework), is continually
further developed 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, we regularly check that
– the Group’s uniform ﬁnancial reporting, valuation and

accounting guidelines are continually updated and regularly
trained 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 exist to guarantee the completeness

of ﬁnancial reporting;

– processes exist for the segregation of duties and for

the “four-eyes principle” in the context of preparing ﬁnancial
statements, and authorization and access rules exist for
relevant IT accounting systems.

We systematically assess the eﬀectiveness of the internal
control system with regard to the corporate accounting process.
The ﬁrst step consists of risk analysis and 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.
Regular random tests are carried out to assess the eﬀectiveness
of the controls. Those tests constitute the basis for self-
assessment of the appropriate magnitude and eﬀectiveness
of the controls. The results of this self-assessment are docu-
mented and reported in a global IT system. Any weaknesses rec-
ognized 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 about
the eﬀectiveness 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 are avoided in accounting.

The organizational embedding and monitoring of risk
management takes place through the risk management orga-
nization established at the Group. As previously described
in the “Risk management system” section with regard to material
risks and risks threatening Daimler’s existence, the divisions,
corporate functions and legal entities inquire about the speciﬁc
risks 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 Supervisory
Board as well as to the Group Risk Management Committee
(GRMC). In order to ensure the complete presentation and
assessment not only of material risks and risks threatening the
existence of the Group, but also of the control and risk pro-
cess with regard to the corporate accounting process, Daimler
has established the Group Risk Management Committee.
It is composed of representatives of the areas of Finance &
Controlling, Accounting, Legal Aﬀairs and Group Compliance,
and is chaired by the Board of Management Member for Finance
(CFO). The Internal Auditing department contributes material
statements on the internal control and risk management system.
In addition to fundamental issues, the committee has the
following tasks:
– The GRMC deﬁnes and shapes the framework conditions
with regard to the organization, methods, processes and
systems that are needed to ensure a functioning, Group-wide
and thorough 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
cor rective measures can be commissioned as necessary
or appropriate to eliminate any system failings or weak-
nesses exposed.

130

C | Combined Management Report | Risk and Opportunity Report

However, responsibility for operational risk management for
risks threatening the existence of the Group 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. The measures taken by the
GRMC ensure that relevant risks and any existing process weak-
nesses in the corporate accounting process are identiﬁed
and eliminated as early as possible.

In the Board of Management and the Audit Committee of
the Supervisory Board of Daimler AG, regular reports are given
regarding the current risk situation and the eﬀectiveness,
functions and appropriateness of the internal control and risk
management system. Furthermore, the responsible managers
regularly discuss the risks of business operations 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 entire monitoring and risk manage-
ment system. If required, measures are then initiated in cooper-
ation with the relevant management. The external auditors
audit the system for the early identiﬁcation of risks that is inte-
grated in the risk management system for its fundamental
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 discovered in the internal
control and risk management system.

The tasks of the persons responsible for opportunity manage-
ment is, in addition to identifying and assessing the oppor-
tunities, also to develop and if appropriate initiate measures
designed to utilize an opportunity, enhance an opportunity,
or to implement it fully or partially in cooperation with a partner.
When the utilization of opportunities depends on other topics
whose development cannot be directly inﬂuenced by the report-
ing unit, those opportunities are to be documented and moni-
tored. When the measures to be taken to utilize an opportunity
are not assessed as being economical, such an opportunity
is no longer pursued. The development of opportunities and the
status of measures being taken are monitored at regular
intervals.

Risks and opportunities

The following text describes in detail the risks and oppor-
tunities that can have a signiﬁcant inﬂuence on the proﬁtabil-
ity, 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 men-
tioned, the following risks and opportunities relate to all the auto-
motive divisions: Mercedes-Benz Cars, Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses.

In addition, risks and opportunities that are not yet known
about or assessed as not material can inﬂuence our proﬁtability,
cash ﬂows and ﬁnancial position.

Opportunity management system

In 2013, the system of opportunity management, which is
related to risk management, was expanded at Daimler in
order to be able to consider risks and opportunities together.

Opportunity management at the Daimler Group is based on
the risk management system with regard to material risks and
risk threatening Daimler’s existence. The objective of oppor-
tunity management is to recognize at an early stage the possi-
ble opportunities arising in business activities as a result of
positive developments, and to utilize them as optimally as pos-
sible for the Group by taking appropriate measures. Taking
advantage of opportunities can lead to goals being achieved or
in the ideal case being overachieved. At the Daimler Group,
a con tinuous process exists for opportunity management which
includes all the opportunities that are relevant and imple-
mentable in the view of the supplying entities. Within the con-
text of the operational planning, potential opportunities are
identiﬁed in addition to risks. Those opportunities are considered
that are possible but which have not so far been included
in the planning. Unlike with risks, opportunities are assessed
in relation only to their impact; there is no consideration of
their probability of occurrence. The assessment of the impact
takes place according to the principles described and is
based on the same categories as the risk management system.
 C.50

Industry and business risks and opportunities

The following text deals with the industry and business
risks of the Daimler Group. A quantiﬁcation of these risks
and opportunities is shown in table  C.51.

Economic risks and opportunities. Economic risks and oppor-
tunities constitute the framework for the risks and oppor-
tunities listed in the following categories and ﬂow as premises
into the quantiﬁcation of these risks and opportunities.

With regard to the world economy, Daimler along with the
majority of economic research institutes anticipates signiﬁcant
acceleration of growth. Economic developments in 2013 are
described in detail in the “Economic Conditions and Business
Development” section of this Management Report; growth
assumptions for 2014 are explained in the Outlook section (see
page 142). As the economic conditions have a signiﬁcant
inﬂuence on automobile sales markets and their development
is one of the Group’s biggest risks and opportunities, the
assessment of the economy is connected with potential risks
and opportunities.

Economic risks and opportunities are linked with assumptions
and forecasts on the general development of the individual
topics. Overall, economic risks for the business environment have
tended to decrease slightly compared with the prior year and
the opportunities for the world economy have increased slightly.

131

With the unexpectedly smooth increase in the ﬁscal debt ceil-
ing in the United States, a key individual risk was already
averted early in 2014. But the latest weakening of some lead-
ing indicators has shown that the revival of the US economy
is still susceptible to disruptions. One crucial factor will be how
the planned exit from the expansive monetary policy is man-
aged and whether – as hoped – investors and consumers boost
the rate of growth. If this revival does not occur, the economic
upturn would be much less pronounced. As the Daimler Group
generates a considerable volume of its unit sales in the United
States, especially in the Mercedes-Benz Cars and Daimler
Trucks divisions, and such a lack of dynamic growth could also
spread to other regions, such a development would have
signiﬁcant consequences. However, if investment activity in the
United States is more dynamic than previously assumed,
this could result in substantially stronger growth. The conse-
quential positive eﬀects on employment and income would boost
demand for the automotive divisions.

If there is no continuation of the required consolidation of
state budgets and reform eﬀorts in the countries of the Euro-
pean Monetary Union, this could cause renewed turmoil
in the ﬁnancial markets, increasing reﬁnancing costs through
rising capital-market interest rates, and thus jeopardizing
the already fragile economic recovery. The European market
continues to be very important for Daimler across all divi-
sions; for the Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Buses divisions, it is still the biggest sales market
in fact. An opportunity that is diﬃcult to assess is to be seen
in a signiﬁcantly improved economic development in the euro
zone. If the reform measures already initiated take eﬀect faster
and more eﬀectively than so far assumed, economic growth
could accelerate, which would beneﬁt the development of invest-
ment and demand for motor vehicles in the important Euro-
pean market.

A signiﬁcant growth slowdown in Japan, triggered by the failure
of the country’s expansive monetary and ﬁscal policy and the
lack of structural reforms, is to be regarded as more of a region-
ally limited risk. 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.

Due to the signiﬁcant growth of its importance in recent years,
an economic slump in China would represent a considerable
risk for the world economy. Such a crisis could be triggered by
diﬃculties with the planned economic restructuring away
from high investment and credit and towards more consumption.
But uncertainties surrounding the Chinese ﬁnance sector,
the indebtedness of some provinces and a renewed overheating
of the real-estate market are conceivable causes. On the other
hand, we see a further opportunity in an even stronger develop-
ment of the Chinese economy. This could be triggered
by the reform measures taking rapid eﬀect, accompanied
by increased consumption.

Another risk is to be seen in a renewed weakening of growth
in major emerging markets. There were disappointing develop-
ments already during 2013, especially in countries such as
India, Russia and Brazil, but other economies such as Indonesia
and Turkey also developed below their possibilities. Another
factor in 2014 is that political elections are taking place in major
emerging countries (India, South Africa, Turkey, Indonesia
and Brazil), which tends to increase the uncertainty about ongoing
developments, putting those currencies under additional
pressure and not least reducing investment activity. As Daimler
is already very active in these countries or their markets play
a strategic role, such a scenario represents a risk. An opportunity
is to be seen in the implementation of reforms occurring in
some important emerging economies. If structural reforms are
consistently carried out in countries such as India, Russia
and Brazil, ﬂows of global capital into these countries would
increase again, resulting in new scope for growth.

An exit from the current expansive monetary policy with
too little preparation or carried out too quickly is to be seen
as an additional risk. Announcements by the US Federal
Reserve that bond buybacks would be reduced triggered unrest
in the ﬁnancial markets already in 2013. Long-term interest
rates increased and there were capital outﬂows and currency
depreciation in the emerging markets. In some countries,
this also resulted in additional inﬂationary pressure, which, in
combination with a more restrictive interest policy, reduced
the potential for growth. If a decrease in global liquidity in 2014
leads to more substantial eﬀects, this could signiﬁcantly
reduce GDP growth through the chain of cause and eﬀect
described above, especially in the emerging economies.
Increased volatility in the ﬁnancial markets would also dampen
investor and consumer conﬁdence, with an impact on the
global economy.

C.51
Industry and business risks and opportunities

Risk category

Probability of occurrence

Impact

Opportunity category

Impact

General market risks

Risks relating to leasing
and sales ﬁnancing

Procurement market risks

Risks relating to the legal
and political framework

Medium

Low

Medium

Low

High

General market opportunities

High

Low

Medium

High

Opportunities relating to leasing
and sales ﬁnancing

Procurement market opportunities

Opportunities relating to the legal
and political framework

Low

132

C | Combined Management Report | Risk and Opportunity Report

In view of the very low inflation rate in the European Monetary
Union (EMU) at the end of 2013, the danger of deflation
has been discussed, above all in the media. A lasting and broad-
based fall in prices would constitute a considerable threat
to the economic recovery of the EMU.

General market risks and opportunities. The situation of
the world economy is affected by volatilities, leading to risks but
also opportunities in the development of demand for motor
vehicles.

The assessment of market risks and opportunities is con-
nected with assumptions and forecasts on the overall develop-
ment of markets in the various regions. The potential effects
of the risks on the development of the Daimler Group’s unit sales
are included proportionately in risk scenarios. The danger
of worsening market developments generally exists for all the
divisions of the Daimler Group. Markets and competitors
are therefore continuously analyzed and monitored; if necessary,
specific marketing and sale programs are implemented.
Due to the competitive pressure in the automotive markets,
it is essential that production and cost structures are regularly
and successfully adapted to the changing conditions. Clear
strategies have been formulated for all the divisions. Each division
consistently pursues the goal of growing profitably and
increasing its efficiency.

One effect of the recent crisis years is that the financial
situation of some dealers and vehicle importers has wors-
ened. As a result, supporting actions still cannot be ruled
out, which would negatively impact the profitability, cash flows
and financial position of the Daimler Group. Details of the
risk and opportunity situation of our suppliers are provided
in the section “Procurement market risks and opportunities.”

In addition to these issues affecting all of the segments,
segment-specific risks also exist. In the Mercedes-Benz Cars
division, they include increasing competitive pressure
with the danger that sales will have to be promoted by means
of more attractive financing packages and other sales incen-
tives going beyond what is currently offered. Measures taken
to support the segment’s unit sales would adversely affect
the projected earnings. Depending on the magnitude 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,
as well as sales and marketing campaigns. These measures can
also be extended to securing the business in the area of
after sales.

The Daimler Trucks division is also subject to increased
competitive pressure and the resulting risk that prices and
cost savings may not be achieved as expected. The same
applies to the Mercedes-Benz Vans and Daimler Buses divisions.
The measures described apply to all segments. The Daimler
Buses segment also sees uncertainty regarding the achievement
of its planned earnings targets, due to political and economic
uncertainties and possible increases in material prices.

Further risks and opportunities at Mercedes-Benz Cars relate
to the development of the used-car market. In the division’s
planning, certain assumptions are made on 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.
Depending on the region and current market situation, the
countermeasures taken generally include continuous market
monitoring as well as, if required, price-setting strategies
designed to regulate vehicle inventories.

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 parti-
cipates in marketing expenses, especially for advertising cam-
paigns in the media.

In general, there is also the possibility that the overall market
for the automotive industry will develop better than assumed
in the internal forecasts upon which the Group’s target planning
is based. This includes positive deviations from planning
premises. China for example is regarded as a market offering
many potential opportunities. The existing market oppor-
tunities for the companies of the Daimler Group can only be
utilized if production activities are organized accordingly and
the gaps between demand and supply can be recognized and
covered in time. This could require increases in production
volumes. The Mercedes-Benz Cars division sees the possibility
of a market opportunity for sales of additional vehicles in
various model series. Opportunities exist also for Mercedes-
Benz Vans on the basis of positive market developments.

The possibility of higher unit sales of vehicles exists in the
Daimler Trucks segment as a result of improved market devel-
opments or changed conditions in the market. The measures
that could be taken by the Daimler Group to utilize this potential
opportunity include a combination of local sales and marketing
actions and central strategic product and capacity planning.

133

Daimler continues to counteract procurement risks by
means of targeted commodity and supplier risk management.
The Group attempts to reduce its dependency on individual
materials in the context of commodity management, by making
appropriate technological progress for example. Daimler pro-
tects itself against the volatility of raw material prices by enter-
ing into long-term supply agreements, which make short-term
risks for material supplies and the eﬀects of price ﬂuctuations
more calculable. Furthermore, the Group makes use of deri-
vative price-hedging instruments for certain metals.

Supplier risk management aims to identify suppliers’ potential
ﬁnancial diﬃculties at an early stage and to initiate suitable
countermeasures. Also after the recent crisis years, the situation
of some of our suppliers is still diﬃcult due to the tough
competitive pressure. This has necessitated individual or joint
support actions by vehicle manufacturers to ensure their
own production and sales. In the context of supplier risk manage-
ment, regular reporting dates are set for suppliers depending
on our assessment of them, in which key performance indicators
are reported to Daimler and any required support actions
are decided upon.

Risks and opportunities related to the legal and political
framework. The 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 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. Daimler
expects to expend an even larger proportion of the research
and development budget to ensure the fulﬁllment of these
regulations. Many countries have already implemented stricter
regulations to reduce vehicles’ emissions and fuel con-
sumption, or are now doing so.

For example, new 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
carbon dioxide per mile as of 2025 (approximately 100 grams
CO2 per kilometer). These new regulations will require an aver-
age annual reduction in CO2 emissions as of 2017 for cars
of 5% and for SUVs and pickups at ﬁrst of 3.5% (this rather lower
rate applies until 2022). This will hit the German premium
manufacturers and thus also the Mercedes-Benz Cars division
harder than for example the US manufacturers. As a result of
strong demand for large, powerful engines in the United States
and Canada, ﬁnancial penalties cannot be ruled out.

Risks and opportunities relating to the leasing and sales
ﬁnancing business. 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 prod-
ucts. In connection with the stated risks for the development
of the used-vehicle market, in particular for the automotive divi-
sions, there is the risk that the prices realizable for used vehi-
cles at the end of leasing contracts are below their book values
(residual-value risk). In connection with the management of
vehicles returned at the end of leasing contracts, opportunities
also arise if the prices that can be obtained when the vehicles
are resold are above their carrying values, so that the resale
results in additional earnings. Another risk in the ﬁnancial
services business consists of a borrower’s worsening credit-
worthiness, so that some or all of a receivable might not
be recoverable due to a customer’s insolvency (default risk or
credit risk). Daimler counteracts residual-value risks and
credit risks by means of appropriate market analyses, credit-
worthiness checks on the basis of standardized scoring
and rating methods, and the collateralization of receivables.
Another risk connected with the leasing and sales-ﬁnancing
business is the possibility of increased reﬁnancing costs due
to potential changes in interest rates. An adjustment of
credit conditions for customers 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 could also arise from of a lack of match-
ing maturities with our reﬁnancing. The risk of mismatching
maturities is minimized by coordinating our reﬁnancing with the
periods of ﬁnancing agreements, from the perspective of
interest rates as well as liquidity. Any remaining risks of changes
in interest rates are managed with the application of derivative
ﬁnancial instruments. Further information on credit risks and the
Group’s risk-minimizing actions is provided in E Note 32
of the Notes to the Consolidated Financial Statements.

Procurement market risks and opportunities. Procurement
market risks arise for the Group in particular from ﬂuctuations
in prices of raw materials. The economy-related fall in raw
material prices in 2011 continued with increased volatility through
2012 and into the year 2013. On the basis of the more stable
development of the European Monetary Union and positive data
from the US economy and labor market, this trend slowly
reversed and then turned into a sideways movement of raw
material prices in the second half of 2013. Only small oppor-
tunities are anticipated in the raw material markets in view
of the situation of the world economy.

Given the intensive inﬂuence of institutional investors, which
is reﬂected in growing demand for commodity investments and
is thus increasing price volatility in the raw material markets,
the outlook for price developments remain uncertain. Vehicle
manufacturers are generally limited in their ability to pass
on the higher costs of commodities and other materials in higher
prices for their products because of the 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.

134

C | Combined Management Report | Risk and Opportunity Report

Regulations on the CO2 emissions of new cars also exist in the
EU. For 2015, all new cars in Europe will have to meet a ﬂeet
average of 130 g CO2/km. The relevant limit for Daimler depends
on the portfolio of cars we sell in the European Union and will
depend on vehicle weight. Furthermore, the EU Parliament and
the EU Council of Ministers are currently dealing with an
EU regulation proposed by the EU Commission calling for ﬂeet
averages to be reduced to 95 g CO2/km by the year 2020.
Daimler will have to pay penalties if it exceeds its limits.

For the Chinese market, the authorities have deﬁned ﬂeet average
fuel consumption as of 2015 of 6.9 liters per 100 kilometers
(approximately 160 g CO2/km) as the industry’s target for new
cars. As the legislative procedure for 2015 has not yet been
concluded, there is a risk that although each car will be calcu-
lated for the average of the ﬂeet, it must individually at least
meet the previous limits, posing a big challenge for cars with
powerful engines. Sanctions have not yet been announced.
For the year 2020, a new, very demanding target has been set
of 5.0 l/100 km (approximately 117 g CO2/km), although
the exact details are still under discussion. 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.

Daimler gives these targets due consideration in its product
planning. The increasingly ambitious targets require signiﬁcant
numbers of plug-in hybrids or cars with other types of electric
drive. The market success of these drive systems will be primarily
determined by regional market conditions, for example the
battery-charging infrastructure and state support. But as market
conditions cannot be predicted with certainty, a residual risk
exists.

Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive a type approval if their air-conditioning
units are ﬁlled with a refrigerant that meets certain criteria with
regard to climate friendliness. The directive calls for an intro-
ductory period until December 31, 2016 for such refrigerants
to be used in all new vehicles. Mercedes-Benz Cars had origi-
nally planned to use the refrigerant R1234yf in its new vehicle
models as early as possible and therefore did not intend to
make use of this transitional period. However, due to the safety
risks identiﬁed by Mercedes-Benz Cars in 2012, Daimler has
decided not to use refrigerant R1234yf in its vehicles and has
started with the development of CO2 air-conditioning systems.
At present, the Group does not assume that this will result in any
signiﬁcant eﬀects on its ﬁnancial position, cash ﬂows or
proﬁtability.

Strict regulations for the reduction of vehicles’ emissions
and fuel consumption are connected with 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 consump-
tion by heavy commercial vehicles. In China, legislation has
been drafted which is likely to aﬀect our exports to that country
and require additional expenditure as of 2015. The European
Commission is currently working on methods for measuring the
CO2 emissions of heavy commercial vehicles that will probably
have to be applied as of 2017. The Group has to assume that the
statutory limits will be very diﬃcult to meet in some countries.

Although worldwide statutory safety regulations require
a certain level of expenditure; Daimler does not anticipate
any additional risks in this respect due to its longstanding
strong focus on vehicle safety.

Very demanding regulations for CO2 emissions are also
planned for light commercial vehicles; especially in the long
term, this will present a challenge for the Mercedes-Benz
Vans division, which 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 no more
than 147 g CO2/km as of 2020; penalty payments may
otherwise be imposed.

In addition to emission, consumption and safety regulations,
traﬃc-policy restrictions for the reduction of traﬃc jams 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 in Beijing, Guangzhou
or Shanghai, and can have a dampening eﬀect on the develop-
ment of unit sales, especially in the growth 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.

The position of the Daimler Group in key foreign markets
could also be aﬀected by an increase in bilateral free-trade
agreements without the involvement of the European Union.
This occurs for example if two Asian countries or regions abolish
their import duties. Imports of vehicles from the EU would
then suﬀer cost disadvantages in the amount of the import
duties, as they would still have to be paid on exports of
goods exported from Europe while trading between the Asian
parties to such an agreement would be free of those duties.

135

Furthermore, the danger exists that individual countries will
attempt to defend their competitiveness in the world’s markets
by resorting to interventionist and protectionist actions.
Particularly in the markets of developing and emerging countries,
we are increasingly faced with tendencies to limit imports
or at least reduce the rate of growth of imports, and to attract
direct foreign investment by means of appropriate industrial
policies. For example, Argentina demands that imports and
exports are in balance. In Brazil, the current tax on industrial
products can be reduced by up to 32 percentage points with the
provisos of local production, procurement and research and
development. As of 2014 in Russia, for locally produced vehicles,
there may no longer be any ﬁnancial compensation for the
recycling fees for old vehicles paid upon the sale of new vehicles,
depending amongst other things on local employment and
production volumes. In South Africa, ﬁnancial support is available
depending on levels of investment and production volumes.
And in India, a second, higher rate of import duty has been intro-
duced for the local assembly of vehicles if their engines, trans-
missions and axles are imported as complete units. These are
just a few examples. Daimler has already increased the local
value added in order to adapt to the requirements of industrial
policy and has thus taken appropriate action in good time.
The increasing proximity of our production sites to local markets
and consideration of logistical and other advantages result
in opportunities in terms of utilizing those markets’ potential.

Company-speciﬁc risks and opportunities

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  C.52.

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 our corporate goals are the brand image, design and quality
of our product – and thus their acceptance by customers –
as well as technical features based on innovative research and
development. Convincing solutions, which for example pro-
mote accident-free driving or further improve our vehicles’ fuel
consumption and emissions such as with diesel-hybrid or
electric vehicles, are of key importance for safe and sustainable
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 manufacturing in the vari-
ous divisions is subject to production and technology risks.

The demanding combination of requirements, complexity and
quality can lead to higher advance expenditure and thus also
to an adverse impact on the Group’s proﬁtability, as those three
factors have the highest priority for the Daimler Group. One
of the associated risks is that development expenditure cannot
later ﬂow directly into the end product if the solution is not
ideally usable for the customer or proves not to be marketable.
In addition, the launch of new products is generally con-
nected with high investment. In order to achieve a very high level
of quality, 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 products and technologies that sometimes
exceed the originally planned volume. This cost overrun would
then reduce the anticipated earnings from the launch of a
new model series or product generation. This aﬀects the seg-
ments that are currently launching new products or that are
planning to do so. Due to the currently high number of product
launches, production and technology risks are generally
higher than in the previous year.

Furthermore, in the Mercedes-Benz Cars segment, there is
a risk with a very low probability of occurrence that the opera-
tion of production plants could be interrupted. Spare parts
are held available for those production plants as a precaution.

The Mercedes-Benz Cars division may be able to utilize
additional production opportunities by increasing its production
capacities. For this purpose, shift models and the worldwide
production networks would be used, investment plans
implemented and analyses conducted, for example with regard
to enhancing the ﬂexibility of production equipment.

Guarantee and goodwill claims are another issue aﬀecting
the automotive segments. These claims can arise when the
quality of the manufactured products 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 problems and care of the products. 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 danger of making corrections on end-products
and to supply customers with the best possible products.
Furthermore, processes are implemented at the Daimler Group
to regularly obtain customers’ opinions on the support pro-
vided so that our service and customer satisfaction can be con-
tinuously improved.

C.52
Company-speciﬁc risks and opportunities

Risk category

Probability of occurrence

Impact

Opportunity category

Impact

Production and technology risks

Information technology risks

Personnel risks

Risks related to equity interests and
joint ventures

Low

High

Medium

Production and technology opportunities

Low

Information technology opportunities

Personnel opportunities

Opportunities related to equity interests
and joint ventures

–

Low

136

C | Combined Management Report | Risk and Opportunity Report

sures in the area of generation management. 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. If this risk mate-
rializes, depending on the size of the personnel shortage, an
impact on the Group’s activities and thus also on the earnings
of the Daimler Group is to be expected.

As described above, our employees constitute great potential
for the Daimler Group. With their ideas and suggestions, they
are involved in the respective activities and working processes
and thus contribute considerably to our improvements and
innovations.

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 our employees’
ideas and suggestions for improvement.

Furthermore, workgroups create processes and instruments
to produce new business ideas and to establish cross-depart-
mental cooperation. In this context, an online community
exists in the area of business innovation to which suggestions
for discussions can be submitted, which all employees can
assess and develop further.

Risks and opportunities related to equity interests and
joint ventures. Cooperation with partners in joint ventures and
associated companies is of increasing importance for Daimler
to utilize additional growth opportunities, and also against the
background of increasing national regulations, particularly
in the emerging markets. The successful implementation of coop-
eration with other companies is also of key importance to
realize cost advantages and to combat the competitive pressure
in the automotive industry.

Daimler generally bears a proportionate share of the risks
and opportunities of its joint ventures and associated companies
in growth markets. In the relevant regions, the increasing
relevance of cooperation with partners in joint ventures, asso-
ciated companies and cooperations therefore increases the
potential risks and opportunities, because the factors that have
a negative impact on those companies’ proﬁtability also
reduce the Group’s earnings in proportion to the ownership
interest.

In principle, there is also a danger that due to a failure of
production equipment or a problem with a production plant,
the level of production cannot be maintained as planned.
In order to avoid bottleneck situations, priority is placed on
the regular maintenance of production equipment and on
avoiding capacity bottlenecks by means of foresighted planning.
The possibility of a risk occurring in this context is low.
Another factor is that the availability and quality of products
is continuously monitored within the context of managing
the entire value chain.

Information technology risks. Information technology plays
a crucial role for the Daimler Group’s business processes.
Storing and exchanging data in a timely, complete and correct
manner and being able to utilize fully functioning IT applica-
tions are of key importance for a global group such as Daimler.
Risks of occurrences which could result in the interruption
of our business processes due to the failure of IT systems or
which could cause the loss or corruption of data are there-
fore identiﬁed and evaluated over the entire lifecycles of appli-
cations and IT systems. Daimler has deﬁned suitable actions
for risk avoidance and limitation of damage, which are continu-
ally adapted to changing circumstances. These activities
are embedded in a multi-stage IT risk management process.
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.
In order to meet the growing demands placed on the conﬁ-
dentiality, integrity and availability of data, Daimler operates
its own risk management system for information security.
Despite all the precautionary measures taken, Daimler cannot
completely rule out the possibility that IT disturbances
will arise and have a negative impact on the Group’s business
processes. IT risks are not allocated to the segments of the
Daimler Group because there are no segment-speciﬁc diﬀerences
with regard to the types of risk in the IT risk portfolio.

Personnel risks. Daimler’s success is highly dependent on
our employees and their expertise. Competition for highly
qualiﬁed staﬀ and management is still very intense in the industry
and the regions in which we operate. Our future success also
depends on the magnitude to which we succeed over the long
term in recruiting, integrating and retaining executives, engi-
neers and other specialists. Our human resources instruments
take such personnel risks into consideration, while contri-
buting towards the recruitment and retention of staﬀ with high
potential and expertise and ensuring transparency with regard
to our resources. One focus of our human resources management
is on the targeted personnel development and further training
of our workforce. Our employees beneﬁt for example from the
range of courses oﬀered by the Daimler Corporate Academy
and from the transparency created by LEAD, our uniform world-
wide performance and potential management system. Because
of demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a suﬃ-
cient 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 mea-

137

The possible risks include negative ﬁnancial developments
for the equity interests of the Daimler Group. If cooperations
(joint ventures) do not develop as desired or if the develop-
ment of companies does not meet expectations, growth targets
can be negatively impacted. Risks exist in connection with
equity interests in the segments Mercedes-Benz Cars and
Daimler Trucks. The cases involved are subject to a conti-
nuous monitoring process so that a company can be quickly
supported if required and its proﬁtability can be protected.

The development of production facilities and joint ventures
in the Chinese market is exposed to risks. Eﬃcient production
processes are established to deal with and reduce those
risks. Furthermore, dependencies between contracting parties
and possible changes in the framework conditions in China,
in which the danger of increased costs is inherent, must be
included in the local decision processes.

Financial risks and opportunities

The following section deals with the ﬁnancial risks and
opportunities of the Daimler Group. A quantiﬁcation
of these risks and opportunities is shown in table  C.53.

In principle, the Group’s operating and ﬁnancial risk expo-
sures underlying the ﬁnancial risks and opportunities can
be divided into in symmetrical and asymmetrical risk and oppor-
tunity 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 liquidity exposures), 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 busi-
ness and ﬁnancing activities, and applies derivative ﬁnancial
instruments for hedging purposes, whereby both market-price
risks and opportunities are limited.

In addition, the Group is exposed to credit and liquidity risks.
As part of the risk management process, Daimler regularly
assesses these risks by considering changes in key economic
indicators and market information. Market-sensitive instru-
ments held in funds set up to cover pension and health-care
beneﬁts, including equities and interest-bearing securities,
are not included in the following analysis.

Exchange rate risks and opportunities. The Daimler Group’s
global reach means that its business operations and ﬁnancial
transactions are connected with risks arising from ﬂuctuations
of foreign exchange rates, especially of the US dollar and
other important currencies against the euro. An exchange rate
risk or opportunity arises in the operating business 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 incurred in euros. The Daimler Trucks divi-
sion is also exposed to such transaction risks, but only to
a minor degree because of its worldwide production network.
Currency exposures are gradually hedged with suitable ﬁnan-
cial instruments (predominantly foreign exchange forwards and
currency options) in accordance with exchange rate expecta-
tions, which are constantly reviewed. Exchange rate risks 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 holds 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 generally to match funding in terms
of maturities and interest rates. However, to a limited mag-
nitude, 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 and forward rate agreements are used to achieve the
desired interest rate maturities and asset/liability structures
(asset and liability management).

C.53
Financial risks and opportunities

Risk category

Probability of occurrence

Impact

Opportunity category

Impact

Exchange rate risks

Interest rate risks

Share price risks

Commodity price risks

Liquidity risks

Credit risks

Risks relating to pension plans

Risks from changes in credit ratings

Low

High

Low

High

Low

High

Low

Exchange rate opportunities

Interest rate opportunities

Share price opportunities

Commodity price opportunities

Liquidity opportunities

Credit opportunities

Opportunities relating to pension plans

Opportunities from changes in credit ratings

High

Low

High

Low

138

C | Combined Management Report | Risk and Opportunity Report

Equity price risks and opportunities. Daimler holds invest-
ments in shares of companies, which are predominantly classiﬁed
as long-term investments (especially Nissan and Renault)
or which are included in the consolidated ﬁnancial statements
using the equity method (primarily Kamaz and Tesla). There-
fore, the Group does not include these investments in an equity
price risk analysis.

Commodity price risks and opportunities. Associated with
Daimler’s business operations, the Group is exposed to changes
in the prices of consignments and commodities. The Group
addresses these procurement risks by means of concerted com-
modity and supplier risk management. To a minor magnitude,
derivative commodity instruments are used to reduce some of
the Group’s commodity risks, primarily the risks associated
with the purchase of metals.

Liquidity risks. In the normal course of business, we make
use of bonds, commercial paper and securitized transactions
as well as bank credits in various currencies, primarily to
reﬁnance the leasing and sales-ﬁnancing business. A negative
development of the capital markets could increase the Group’s
ﬁnancing costs. More expensive reﬁnancing would also have a
negative eﬀect on the competitiveness and proﬁtability of
our ﬁnancial services business if we were unable to pass on the
higher reﬁnancing costs to our customers; a limitation of
the ﬁnancial services business would have a negative impact
on the automotive business.

Credit risks. The Group is exposed to credit risks which result
primarily from its ﬁnancial services activities and from its
operating business. In addition, credit risks also arise from the
Group’s liquid assets. Should defaults occur, this would nega-
tively aﬀect the Group’s ﬁnancial position, cash ﬂows and prof-
itability. In recent years, the limit methodology has been
continually further developed in order to counteract the ever
worsening creditworthiness of the banking sector. In con-
nection 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.

Further information on ﬁnancial risks, risk-limiting measures
and the management of these risks is provided in E Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group’s ﬁnancial instruments is provided
in E Note 31.

Risks and opportunities relating to the pension plans.
Daimler has pension beneﬁt obligations, and to a smaller mag-
nitude obligations relating to healthcare beneﬁts, which are
largely covered by plan assets. The balance of obligations less
plan assets constitutes the funded status for these employee
beneﬁt plans. Even small changes in the assumptions used for
the valuation of the beneﬁt plans such as a change in the
discount rate could have a negative or positive eﬀect on the
funded status of our pension and health-care plans or could
lead to changes in the periodic net pension expense in the follow-
ing ﬁnancial year. The market value of plan assets is deter-
mined to a large degree by developments in the capital markets.
Unfavorable or favorable developments, especially relating
to equity prices and ﬁxed-interest securities, could reduce or
increase that market value. Plan assets at December 31,
2013 did not include signiﬁcant investments in government
bonds that are currently aﬀected by the European sovereign
debt crisis; all government bonds denominated in euros have
a rating of at least AA on the balance sheet date. Further
information on the pension plans is provided in E Note 22
of the Notes to the Consolidated 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 in connection with potential downgrades,
which could have a negative impact on the Group’s ﬁnancing.
Advance investment expenditures related to the Group’s
growth strategy are also connected with risks for our credit
ratings if the earnings and cash ﬂows anticipated from
the growth cannot be realized.

Opportunities exist in connection with upgrades of the credit
ratings issued by the rating agencies, because this could lead
to lower borrowing costs for the Group. If, with the help of the
new products in the automotive divisions, the Group’s business
development should signiﬁcantly surpass the expectations
of the rating agencies, opportunities could arise for the ratings.

139

paigns or other costly actions. Some of these proceedings
may have an impact on the Group’s reputation. It is possible,
as these proceedings are connected with a large degree
of uncertainty, 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, substantial additional
expenditures may arise. This also applies to legal proceed-
ings 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 sustained eﬀect on the Group’s cash ﬂows, ﬁnancial
position or proﬁtability. Further information on legal proceed-
ings is provided in E Note 29 of the Notes to the Conso-
lidated Financial Statements.

Overall assessment of the risk and opportunity situation

The Group’s overall risk situation is the sum of the individual
risks of all risk categories for the divisions and the corporate
functions and legal entities. In addition to the risk categories
described above, unpredictable events are possible that
can disturb production and business processes such as natural
disasters or terrorist attacks. This could adversely aﬀect
consumer conﬁdence and could cause production interruptions
due to supplier problems and intensiﬁed safety measures
at national borders. In this context, Daimler also considers the
risks of additional earthquakes in Asia, the danger of weather
damage and political instability in sales regions. In the case of
natural disasters, emergency plans are developed to allow
the resumption of business activities. In addition, further pro-
tective measures are taken and, if possible, insurance cover
is obtained. Other smaller risks relate to project and process
risks as well as the shortage or lack of resources. In order
to avoid or minimize these risks, measures are deﬁned for each
individual case and must be implemented accordingly.

Risks from guarantees and legal risks

Furthermore, the Group is exposed to legal risks and risks
from guarantees. Provisions are recognized for those risks
if and to the extent that they are likely to be utilized and
the amounts of the obligations can be reasonably estimated.

Risks from guarantees. The issue of 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
of more than 12 metric tons gross vehicle weight. 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 con-
sortium and its equity interest in Toll Collect GmbH, risks also
arise from guarantees that Daimler has assumed with the other
partners in the Toll Collect consortium (Deutsche Telekom AG
and Coﬁroute SA) supporting obligations of Toll Collect GmbH
towards 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 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
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 E Note 29 (Legal proceedings) and E Note 30
(Financial guarantees, contingent liabilities and other ﬁnancial
commitments) of the Notes to the Consolidated Financial
Statements.

Legal risks. Various legal proceedings, claims and governmental
investigations (legal proceedings) are pending against Daimler
AG and its subsidiaries on a wide range of topics, including vehi-
cle safety, emissions, fuel economy, ﬁnancial services, dealer,
supplier and other contractual relationships, intellectual prop-
erty rights, warranty claims, environmental matters, legal
proceedings relating to competition law, and shareholder litiga-
tion. Some of these proceedings allege defects in various
components in several diﬀerent vehicle models or allege design
defects relating to vehicle stability, pedal misapplication,
brakes or crashworthiness. Some of the claims asserted by way
of class action suits seek repair or replacement of the vehicles
or compensation for their alleged reduction in value, while others
seek recovery for damage to property, personal injuries or
wrongful death. Adverse decisions in one or more of these pro-
ceedings could require us to pay substantial compensatory
and punitive damages or undertake service actions, recall cam-

140

C | Combined Management Report | Risk and Opportunity Report

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 we succeed
in oﬀering up-to-date and technologically leading products in
the markets. As one of the fundamental principles of entre-
preneurial activity, Daimler places particular priority on adher-
ence to applicable law and ethical standards. In addition,
a secure approach to sensitive data is a precondition for doing
business with customers and suppliers in a trusting and
cooperative environment. The Group takes extensive measures
so that risks that may arise in this context with an impact
on our reputation are subject to well-regulated internal controls.

In order to obtain an overall picture, Corporate Risk Manage-
ment collates the information described on risks from the
individual organizational units. There are no discernible risks
that either alone or in combination with other risks could
jeopardize the continued existence of the Group. But since
considerable economic and industry risks still exist, setbacks
on the way to regularly achieving our growth and proﬁtability
targets cannot be completely ruled out. However, the business
environment of the Daimler Group has tended to improve
slightly compared with the previous year. Daimler is conﬁdent
that due to the established risk management system at the
Group, risks are recognized at an early stage and the current
risk situation can be successfully managed as a result.

For a holistic picture of the entrepreneurial activity of the
Daimler Group, it is necessary to consider not only the risk side
but also the opportunity side. The aforementioned oppor-
tunities represent potential and also challenges for the Daimler
Group. By eﬀectively and ﬂexibly focusing the production
program on changing conditions, the divisions of the Daimler
Group strive to secure or surpass their respective targets
and plans. As far as can be inﬂuenced by the Daimler Group
and if measures prove to be economical, the Group takes
appropriate action to realize the potential of its opportunities.

141

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 2013. This planning is based on the premises we set
regarding the economic situation and on 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 organiza-
tions 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 com-
petitive situation. We are constantly adjusting our expectations,
taking into account the latest forecasts on the development
of the world economy and of automotive markets, as well as our
recent business development. The statements made below
are based on the knowledge available to us in February 2014.

Our assessments for the year 2014 are based on the assumption
of stable political and economic conditions, and the expec-
tation that the upward trend 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. E see pages 129 ﬀ

The world economy

At the beginning of 2014, most leading indicators – above all
the index of global business conﬁdence – suggest that growth
of the world economy will accelerate moderately this year.
After two years with signiﬁcantly below-average rates of growth
of global GDP, there are now good chances of a perceptible
improvement. In particular, growth should gain momentum in the
advanced economies, while the prospects for some emerging
economies remain rather moderate.

The economic development of the United States is expected
to be rather dynamic compared with 2013. A steadily improving
labor market, the positive wealth eﬀects of higher equity
and real-estate prices, low inﬂation and an upturn in investment
should allow signiﬁcant acceleration of economic growth
to a rate of between 2.5 and 3%. However, this is based on the
assumption that there are no major restrictions from the side
of ﬁscal policy. Despite the incipient economic improvement,
the US Federal Reserve is not expected to increase interest
rates in 2014. But the expansive monetary policy in the form
of monthly bond buybacks is likely to be gradually phased
out. Furthermore, there are indications that economic dynamism
in Japan will subside as the year progresses, primarily due
to the country’s ﬁscal policy and the planned tax increases.

Although the European sovereign debt crisis is far from being
ﬁnally resolved, the associated burdens have decreased
to such an extent that the economy of the European Monetary
Union should move out of recession in 2014. But ongoing
high levels of unemployment and the disappointingly low level
of lending are likely to prevent any signiﬁcant acceleration
of growth. Overall, ﬁscal policy will remain restrictive, although
much less so than last year. Total GDP growth will therefore
probably remain moderate at approximately 1%. Growth of the
German economy should once again be above average.
The economic outlook for the United Kingdom is even more
favorable, with GDP growth of probably more than 2%.

The economic revival in the United States and Europe will have
a positive impact on the emerging economies through a signi-
ﬁcant increase in world trade. But structural problems are hin-
dering a more sustained economic upturn in some countries
such as India, Brazil and Russia. Another factor is that monetary
policy is likely to be restrictive in some countries in order
to limit inﬂationary pressure and to avoid capital outﬂows.
The emerging economies are therefore expected to post similar
growth to the previous year at approximately 4.5%. The main
assumption in this respect is that the reform measures taken
in China are eﬀective and the Chinese economy moves onto
a stable growth path of at least 7 to 7.5%.

In total, therefore, global economic output could expand
by rather more than 3% in 2014.

142

With regard to the currencies important for our business, we
continue to anticipate sharp exchange-rate ﬂuctuations in 2014.
Compared with the average exchange rates in the year 2013
(USD/€: 1.33; GBP/€: 0.85), we anticipate a trend of slight depre-
ciation of the US dollar, while the British pound should remain
fairly stable against the euro. With regard to the Japanese yen
(average for 2013: 130 yen/euro) and exchange rates impor-
tant to us of various emerging markets, we assume that those
currencies will depreciate once again.

In order to counteract the risks arising for our business
as a result of the still very volatile exchange rates, we conduct
hedging transactions as far as this makes sense for the
various currencies. For the year 2014, we have hedged well
over half of the exchange-rate risks as of mid-February.

Automotive markets

The more favorable economic outlook should result in further
growth in global demand for cars in 2014. From today’s
perspective, demand is expected to rise by a rate of 4 to 5%.

The Chinese market should once again make the biggest
contribution to global market growth. Following the strong
increase in the previous year, further expansion of the car
market by approximately 10% should be possible. The US market
is also likely to grow. Although its growth will probably be
more moderate than in 2013, the US market volume should
expand to about 16 million passenger cars and light trucks
– a volume that was last reached in 2007 before the worldwide
ﬁnancial crisis.

After signiﬁcant contraction of the overall Western European
car market lasting several years, we expect a hesitant market
recovery in 2014. Thanks to the continued reduction of risks
from the sovereign debt crisis and a slight economic revival,
an improvement of the demand situation is anticipated in some
major markets. Demand should revive again somewhat also
in Germany.

Demand for cars in Japan is expected to fall, however.
This has less to do with the economic outlook than with the
increase in value-added tax planned for April. Considerable
volumes of purchases were therefore brought forward to the
second half of 2013, so a market correction is to be
expected this year.

C | Combined Management Report | Outlook

In the major emerging markets (except China), another weak
demand situation is anticipated following the weak market
development of last year. The Russian market should be slightly
larger than in the previous year and we expect a moderate
recovery of the car market in India.

After the world market for medium- and heavy-duty trucks
expanded slightly in 2013 despite diﬃcult market conditions,
further moderate growth is expected this year. But market devel-
opments will continue to diﬀer signiﬁcantly from one region
to another.

In the NAFTA region, we anticipate signiﬁcant market growth
of up to 10% due to the increasingly dynamic economy.
Decreasing uncertainty with regard to ﬁscal policy should
be a factor contributing towards the gradual end of
the lack of demand in the market over the coming months.

The development of the European market in recent months
was primarily aﬀected by the introduction of the Euro VI
emission standards. Purchases brought forward had a very
positive inﬂuence on demand towards the end of 2013.
Recently, however, this special eﬀect has started to subside.
Developments during the rest of 2014 will depend in parti-
cular on the extent to which the economic revival in Europe
can oﬀset the negative impact of the purchases brought
forward. From today’s perspective, we expect the market volume
for the full year to be slightly below the level of 2013.

Ongoing economic stimuli and an expansive monetary policy
should continue to have a positive eﬀect on the Japanese truck
market in 2014; slight growth is anticipated for light-, medium-
and heavy-duty trucks overall. The Brazilian market for medium-
and heavy-duty trucks is likely to be just below the prior-year
level, primarily due to the below-average development of invest-
ment activity and somewhat less favorable ﬁnancing condi-
tions. In Russia, demand for trucks is likely to recover slightly.
The Indian market should stabilize after the signiﬁcant losses
of the previous years. China, the world’s biggest market for
trucks, should post moderate growth.

Overall, we anticipate stable demand for medium-sized and
large vans in Europe in 2014, whereby market developments
will diﬀer greatly in the various countries. Also for small
vans, we expect to see a market volume in Europe in the mag-
nitude of the previous year. For the United States, we anti-
cipate a signiﬁcant increase in demand in the market for large
vans in 2014. In Latin America, the market for large vans
should also continue to expand, and we anticipate a further
revival of demand also in China in 2014.

We expect a slightly larger market volume for buses
in Western Europe in 2014 than in 2013. In Latin America,
we anticipate stable demand for buses. The market for
buses in Brazil should remain at a good level in view of the
upcoming soccer World Cup in 2014.

143

Unit sales

Mercedes-Benz Cars will consistently follow its path of
growth in the context of the “Mercedes-Benz 2020” oﬀensive
in 2014. A rejuvenated model portfolio and important new
product launches should help us to signiﬁcantly increase our
unit sales and thus reach a new record. The new S-Class is
likely to make a large contribution to the growth in unit sales.
The brand’s ﬂagship established itself as the market leader
already in 2013. As of the third quarter, the new S-Class coupe
will also be available and will set new standards in the luxury
segment. The all-new C-Class sedan will be delivered to its ﬁrst
customers in Europe as early as March 2014, and the GLA
sports utility vehicle will be launched in the high-volume compact-
car segment also in March 2014 as the fourth model of the
new compact cars. For the second half of 2014, Mercedes-Benz
anticipates further sales impetus above all from the market
launch of the new C-Class station wagon and the new genera-
tion of the CLS and the CLS Shooting Brake. In addition,
the brand is likely to proﬁt also in 2014 from the great market
success of its models in the SUV segment.

Within the framework of the “Mercedes-Benz 2020” long-
term growth strategy, we will consistently expand our product
portfolio in all segments also in the coming years. We will
increase to ﬁve the number of models oﬀered by Mercedes-Benz
in the compact-car segment. In parallel, we will continue
the model oﬀensive also at the top end of the portfolio, for
example with additional models of the new S-Class and
with an additional SUV variant.

From a regional perspective, we expect the markets in North
America and Asia to make major contributions to our growth in
unit sales. In Asia, the Chinese market is especially important
for us. We have signiﬁcantly enhanced the eﬀectiveness of our
sales organization in China. We will expand the range of
models oﬀered there in 2014, partially with locally produced
vehicles such as the compact SUV - the GLA, and we will
further expand the dealer network also outside the major cities.

The smart brand will present the successor to its smart two-
seater as well as the new smart four-seater in 2014. Due
to the model change and the associated production adjustments,
we assume that the brand’s unit sales will be signiﬁcantly
lower in 2014 than in the previous year. The new models should
then facilitate strong sales growth in the following years.

Daimler Trucks anticipates a signiﬁcant increase in total
unit sales in 2014.

In Western Europe, the aftereﬀects of purchases brought
forward to the second half of 2013 due to the imminent
introduction of Euro VI emission limits could at ﬁrst lead to
lower demand in 2014. However, in view of the anticipated
upward development of the general economic situation, this
weakness should become less pronounced as the year
progresses. We intend to further strengthen our very good
position with the full availability of our new model range
and the high acceptance of our products in the market.

In Brazil, after the market slump in 2012 and a recovery
phase in 2013, we now anticipate a slight decrease in demand.
Our extensive measures taken to optimize production, products
and sales should further strengthen our market position. These
measures include the investment of approximately one billion
Brazilian real (approximately €300 million) in the next two years.
Those funds will ﬂow primarily into the development of new
products and innovative technologies and into process optimi-
zation and modernization at the plants in São Bernardo
do Campo and Juiz de Fora.

Unit sales in the NAFTA region should develop positively
and be signiﬁcantly higher than in 2013. Following last year’s
gain in market share, our products will optimally satisfy
customers’ needs also in 2014, and will thus continue to secure
our strong market position.

In Asia, the availability of additional BharatBenz models
in the Indian market should make a major contribution
to growth in unit sales. In addition, we are generating synergy
potential and further growth possibilities in the context
of our new “Asia Business Model.” In Japan, we will participate
in the expected slight market growth.

Mercedes-Benz Vans anticipates a signiﬁcant increase
in unit sales in 2014. With the Citan, we are now a full-range
supplier and can thus utilize additional growth potential.
With regard to medium-sized and large vans, we expect unit
sales in Europe to rise signiﬁcantly, whereby the new Sprinter
and the new Vito and the V-Class will stimulate additional
demand. We anticipate a further signiﬁcant increase in unit
sales also for the Citan. In the context of the “Vans goes
global” business strategy, we intend to continue our expansion
also in North and South America and in China.

Daimler Buses is pursuing the goal in 2014 of signiﬁcantly
increasing its unit sales and maintaining its leading position
in its core markets for buses above 8 tons with innovative and
high-quality new products. Not least due to the soccer World
Cup in 2014 and new products for the high-volume school-bus
segment, we expect unit sales to increase in Brazil. In Europe,
we anticipate a stable development of unit sales. The “GLOBE
2013” growth and eﬃciency oﬀensive was launched in 2012
to utilize further growth potential and to strengthen our competi-
tiveness; it is expected to result in further gains in 2014.

144

C | Combined Management Report | Outlook

– With the programs “Fit for Leadership” at Mercedes-Benz

Cars, “Daimler Trucks #1” at Daimler Trucks, “Performance
Vans 2013” at Mercedes-Benz Vans and “GLOBE 2013”
at Daimler Buses, we intend to realize earnings contributions
totaling approximately €4 billion by the end of 2014 as
a result of measures taken for the sustained improvement
of cost structures and through additional business activities.
Implementation is proceeding according to plan. These
programs will be fully reﬂected in the earnings of 2015 and
the following years.

– However, the advance expenditure for our model oﬀensive,

for innovative technologies and for the worldwide production
facilities will ﬁrst aﬀect our earnings in the form of increased
costs and depreciation.

– Within the context of our growth strategy, we are increasing
our production capacities and expanding our worldwide
production network. At the same time, we are enhancing
the ﬂexibility of our manufacturing and cost structures.
– We are also further developing our sales structures – in

North America, in Eastern Europe and especially in the BRIC
countries.

– Although the currently very low level of interest rates and
risk premiums is easing our reﬁnancing, it is also creating
more competition and thus lower margins in the ﬁnancial
services business.

– Despite our hedging transactions, we must assume that
a sustained high value of the euro against the US dollar,
the Japanese yen and other currencies important to Daimler,
including those of various emerging economies, will
adversely aﬀect the development of earnings compared
with last year.

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 signiﬁcantly in 2014.

For the individual divisions, we aim to achieve the following
EBIT targets in full-year 2014:
– Mercedes-Benz Cars: signiﬁcantly above the prior-year level,
– Daimler Trucks: signiﬁcantly above the prior-year level,
– Mercedes-Benz Vans: at the prior-year level,
– Daimler Buses: slightly above the prior-year level and
– Daimler Financial Services: at the prior-year level.

With its “DFS 2020” strategy, Daimler Financial Services
aims to achieve further proﬁtable growth in the coming years.
For the year 2014, we anticipate signiﬁcant growth in new
business and contract volume. Important growth drivers are
the product oﬀensives of the automotive divisions, the
addressing of younger customers as a new target group, the
expansion of business especially in Asia, the further devel-
opment of our online sales channels and the development of
innovative mobility oﬀers. In addition to car2go, we will
systematically expand our range of mobility services. Two
examples of this are the “moovel” mobility platform and
the “Park2gether” online service for ﬁnding parking spaces.

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 2014.

Revenue and earnings

We assume that the Daimler Group’s revenue will grow
signiﬁcantly in 2014. Although there is still great uncertainty
regarding the future development of our markets, we can
assume that demand will generally increase. Another positive
factor is that we should proﬁt from the numerous new
models that we launched in all of our automotive divisions
in 2012 and 2013. The new models of the year 2014 will
additionally stimulate demand, for example the new C-Class
and the new GLA compact SUV at Mercedes-Benz Cars.
Furthermore, we are increasingly developing the growth markets
of Asia, Eastern Europe and Latin America for our products
– partially also through local production. The revenue growth
we anticipate is likely to be driven by all divisions, whereby
Daimler Trucks and Mercedes-Benz Cars will probably deliver
the biggest contributions in absolute terms. In regional
terms, we expect to achieve above-average growth rates
in the emerging markets and in North America.

The following factors are particularly important for the
earnings situation of the Daimler Group in 2014:
– Due to our Group-wide product oﬀensive, we are starting

the year 2014 in all automotive divisions with a large number
of new and attractive products and new technologies.
This will enable us to convince our customers also in diﬃcult
markets.

– In order to focus our activities even more sharply on our
customers and markets, we decided in September 2013
to strengthen the organization of the divisions. Under the
heading of “Customer Dedication,” we are placing respon-
sibility for the main sales functions and the important sales
markets directly in the respective divisions. In this way, we
will become faster and more ﬂexible, and will create the right
conditions to better utilize the growth potential in our core
business and in new markets.

145

At the Mercedes-Benz Cars division, the focus of our capital
expenditure will be on renewing and expanding our product
range. The main projects include the preparations for the new
C-Class family, the new smart models and further investment
for our new compact cars. But substantial investment is
planned also for the modernization and expansion of engine
and transmission production at the plant in Untertürkheim,
as well as for the expansion of our production capacities in the
United States. After completing its Euro VI product oﬀensive,
Daimler Trucks will mainly invest in successor generations
of existing products as well as the expansion and modernization
of the plants, and new global component projects in 2014.
At Mercedes-Benz Vans, the focus will be on further developing
the existing model range and expanding the sales and service
organization outside Western Europe, especially in the United
States, Russia, Latin America and China. Key projects at
Daimler Buses are advance expenditures for new models and
product enhancements.

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. 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 that are
tailored to the needs of our customers. In 2014, we will spend
a very large amount on research and development, which will
probably be in the magnitude of the previous year. Key projects
at Mercedes-Benz Cars include the successor generation of
the C-Class and the new smart models. In addition, we will invest
considerable amounts in new low-emission and fuel-eﬃcient
engines, alternative drive systems and innovative safety technol-
ogies. Like at Mercedes-Benz Cars, research and development
expenditure at Daimler Trucks is also likely to be in the magnitude
of 2013. As before, the main areas here are the successor
generations for existing products as well as developing and
adapting new engine generations, with which we will further
reduce fuel consumption and fulﬁll increasingly strict emission
regulations. The further development of engines to meet future
emission standards and to increase fuel eﬃciency is an important
area of research and development also at Mercedes-Benz
Vans and Daimler Buses. Alternative drive systems also play
an important role, in particular at Daimler Buses.

Free cash ﬂow and liquidity

The anticipated development of earnings in the automotive
divisions will also have a positive impact on the free cash ﬂow
of the industrial business in 2014. When comparing with 2013,
however, it is necessary to consider that the free cash ﬂow
of that year was positively inﬂuenced not only by the successful
EADS transactions but also by year-end eﬀects, which will
be oﬀset again this year. In combination with ongoing high levels
of investment and research and development spending, this
is likely to mean that the free cash ﬂow of the industrial business
will be signiﬁcantly lower in 2014 than in 2013.

For the year 2014, we aim to have liquidity available in a
volume 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 reﬁnanc-
ing 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 bank mar-
kets also in the year 2014. We want to cover our funding needs
in the planning period primarily by means of bonds, commer-
cial 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 2014. An additional goal
is to continue securing a high degree of ﬁnancial ﬂexibility.

Dividend

At the Annual Shareholders’ Meeting on April 9, 2014, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.25 per share (prior year:
€2.20). With this proposal, we are letting our shareholders
participate in the Company’s success while expressing our
conﬁdence about the ongoing course of business. We want
our shareholders to participate appropriately in Daimler’s
ﬁnancial success also in the coming years. In setting the dividend,
we will aim to distribute approximately 40% of the net proﬁt
attributable to Daimler shareholders.

Capital expenditure

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 tech-
nological transformation of the automotive industry. For this
purpose, we will once again signiﬁcantly increase our already
very high investment in property, plant and equipment in the
year 2014. The Mercedes-Benz Cars division and to a lower
extent the Daimler Trucks division will contribute to this increase.
In addition to capital expenditure, we are developing our
position in the emerging markets by means of targeted ﬁnan-
cial investment in joint ventures and equity interests.

146

C | Combined Management Report | Outlook

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 worsening of the sovereign-debt
crisis in the Eurozone; an exacerbation of the budgetary situation in the
United States; a deterioration of our reﬁnancing possibilities on the credit and
ﬁnancial markets; events of force majeure including natural disasters, acts
of terrorism, political unrest, industrial accidents and their eﬀects on our sales,
purchasing, production or ﬁnancial services activities; changes in currency
exchange rates; a shift in consumer preference towards smaller, lower-margin
vehicles; or 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 in 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
of 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 proceed-
ings; 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 state-
ments. We do not intend or assume any obligation to update these forward-
looking statements since they are based solely on the circumstances
at the publication date.

Workforce

Due to the anticipated business development, production
volumes will continue rising in 2014. At the same time, we will
signiﬁcantly increase our eﬃciency and thus also productivity
as a result of the programs we are carrying out in all divisions.
Against this backdrop, we assume that we will be able to
achieve our ambitious growth targets with a largely stable work-
force. In the context of expanding our production network,
new jobs will tend to be created primarily in North America
and Asia. Workforce growth is likely to take place also at
our joint ventures in China and Russia, whose employees are
not included in the ﬁgures for the Daimler Group.

Overall statement on future development

On the basis of the measures we initiated in 2013, we can
look to 2014 and the following years with conﬁdence. We made
considerable progress with our growth and eﬃciency strategy
in the year under review. In all of our automotive divisions, we are
successfully facing the competition with new and extremely
attractive products. At Mercedes-Benz Cars, we will gain new
customers and further strengthen our worldwide market
position with our new and very attractive models in the compact
class. The new C-Class will ensure additional unit sales in
2014, and with the new S-Class, we are once again deﬁning the
benchmark in the segment of luxurious automobiles. Daimler
Trucks is extremely well positioned with its existing product port-
folio, the all-new range of Mercedes-Benz trucks (Actros,
Arocs, Antos, Atego, Unimog and Econic), the new Freightliner
Cascadia Evolution and the FUSO models from Chennai in
India, and our products in the areas of buses and vans are world-
wide leaders amongst the competition. Furthermore, as a
result of extensive investment in our sales organization and
production facilities, we have created the right conditions
to eﬀectively utilize the growth opportunities oﬀered in Asia,
Latin America and Eastern Europe in all our divisions. The
continuation of a very high budget for research and development
expenditure ensures that we will convince our customers
also in the coming years with tailored products, new technolo-
gies and groundbreaking solutions for sustainable mobility.

To make sure that our targeted growth and the associated
investment activity take place on a sound ﬁnancial basis, we are
implementing wide-ranging programs to enhance eﬃciency
in all our divisions, whose eﬀects were already apparent in 2013
and which will have a positive impact on earnings above all
in the following years. In addition, we will focus our organization
even more on customers and markets with the “Customer
Dedication” initiative. This will make us faster and more ﬂex-
ible in the management of our business and in addressing
customers’ desires, and will create the right conditions for
us to grow proﬁtably in our core business and in new markets.

147

The Divisions.

Mercedes-Benz
Cars

Daimler
Buses

Daimler
Trucks

Daimler
Financial Services

Mercedes-Benz
Vans

Daimler’s divisions generally performed well in a market environment that remained

diﬃcult. We renewed our product range while continuing to increase our eﬃciency.

We were able to improve our market position in many areas.

D | The Divisions.

D | The Divisions | Contents

150 – 155 Mercedes-Benz Cars

164 – 166 Daimler Buses

– Higher unit sales in all core markets
– “GLOBE 2013” growth and eﬃciency oﬀensive shows
eﬀects
– Product portfolio changed over to Euro VI emission

technology

– Numerous international major orders received
– Signiﬁcant improvement in EBIT to plus €124 million

(2012: minus €221 million)

167 – 169 Daimler Financial Services

– Three million vehicles ﬁnanced for the ﬁrst time
– Continued progress for the insurance business
– Approximately 600,000 customers for car2go
– Expansion of digital sales channels
– Awards for customer and dealer satisfaction and
attractiveness as an employer
– EBIT in prior-year magnitude at €1.3 billion

– Unit sales and revenue at record levels
– “Fit for Leadership” pushed forward
– Successful continuation of product oﬀensive
– New S-Class sets standards for safety, comfort

and luxury

– Performance brand AMG on a growth path
– Numerous awards for Mercedes-Benz
– Strengthened market presence in China
– Presentation of “Best Customer Experience”
– Extensive investment in worldwide production network
– CO2 emissions reduced to an average of 134 g/km
– EBIT of €4.0 billion (2012: €4.4 billion)

156 – 160 Daimler Trucks

– Unit sales at highest level since 2006
– Proﬁtability secured by “Daimler Trucks #1”
– Product oﬀensive completed: new Arocs for construction
sector, new Atego for light- and medium-duty delivery
transport, and special vehicles SLT, Econic and Unimog

– Successful completion of Euro VI introduction before
new standard takes eﬀect
– Further progress with fuel economy
– Successful development of joint ventures in Russia and Asia
– EBIT of €1.6 billion (2012: €1.7 billion)

161 – 163 Mercedes-Benz Vans

– Unit sales above prior-year level
– Successful implementation of measures to improve earnings
– Market launch of new Sprinter
– Activities in China strengthened by new research and
development center
– Production start of Sprinter Classic in Russia
– EBIT of €631 million (2012: €543 million)

149

Mercedes-Benz Cars.

2013 was another record year for Mercedes-Benz Cars. Unit sales, revenue and production
reached all-time highs. As we anticipated at the beginning of 2013, EBIT displayed a clear upward
trend as the year progressed. Our most important new model was the S-Class, a pioneer
of automotive development that underscores our leadership in the luxury segment. Additional
new models in 2013 were the new E-Class and the CLA compact coupe. We also unveiled
the new GLA, a compact SUV. Targeted investment in our global production network and sustained
improvements in eﬃciency have put us on track for further proﬁtable growth.

D.01
Mercedes-Benz Cars

Amounts in millions of euros

% change

2013

2012

13/12

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and development
expenditure thereof capitalized

Production

Units sales

4,006

64,307

6.2

3,710

3,751
1,063

4,391

61,660

7.1

3,495

3,863
1,125

1,588,658

1,455,650

1,565,563

1,451,569

Employees (December 31)

96,895

98,020

-9

-3
-6

-1

D.02
Unit sales by Mercedes-Benz Cars

In thousands

Mercedes-Benz

thereof A-/B-/CLA-Class

C-/SLK-Class

E-/CLS-Class

S-/CL-/SL-Class/
SLS/Maybach

M-/R-/GLK-/GL-/
G-Class

smart

Mercedes-Benz Cars

thereof Western Europe

thereof Germany

NAFTA region

thereof United States

China

Japan

150

2013

2012

13/12

% change

1,467

1,346

384

357

332

323

1,566

640

280

363

319

239

231

425

314

295

106

1,452

631

290

342

300

208

+66

-16

-12

-7

-3

+15

+20

New records set for unit sales and revenue. Mercedes-Benz
Cars, comprising the brands Mercedes-Benz and smart,
accelerated its growth with sales of 1,565,600 vehicles in the
year under review (2012: 1,451,600).  D.01 Revenue also
increased to a new record level, rising by 4% to €64.3 billion.
At €4.0 billion, EBIT was lower than the ﬁgure for the previous
year. However, following a weaker ﬁrst half of the year, we
were able to signiﬁcantly improve our earnings in the third and
fourth quarters of 2013. The launch of several new and attrac-
tive products made a major contribution to the very positive
overall business development throughout the year. Eﬃciency
improvements from the “Fit for Leadership” program also
had an increasingly positive eﬀect on earnings as the year
progressed.

Fit for Leadership. “Fit for Leadership” is a key element of
our “Mercedes-Benz 2020” growth strategy. In the short term,
the program combines existing and additional eﬃciency-
boosting measures. Over the long term, it will optimize the
Mercedes-Benz business system and create the structures
necessary to achieve the growth deﬁned by “Mercedes-Benz
2020.” With “Fit for Leadership,” we plan the implementation
of measures to achieve a sustained improvement in our cost
structures of approximately €2 billion by the end of 2014.
For the year 2013, we had the objective of achieving 30% of
the total cost reductions we aimed for. This target was
signiﬁcantly surpassed. Numerous measures have already
been taken to increase eﬃciency in areas from product
creation to the optimization of our procurement and sales pro-
cesses, with the result that we were able to realize savings
of approximately €800 million by the end of the year. Substantial
progress was made for example with the optimization of
production and with reducing material costs and ﬁxed costs.
We systematically identiﬁed technical and constructive poten-
tial for optimization and were able to achieve considerable
eﬀects by applying new procedures in awarding contracts
to suppliers. We plan to systematically improve our processes
in all areas in the coming years and to make them even more
transparent. Among other things, we will carry out cost and
proﬁtability initiatives as standard features in all phases of the
product creation process.

D | The Divisions | Mercedes-Benz Cars

Mercedes Benz starts a new chapter of its success story with the all-new C-Class.

vehicle registration statistics. Also in the year of the model
changeover, the S-Class defended its position as the world’s
best-selling luxury sedan. We sold a total of 71,400 vehicles
in the S-Class segment in 2013 (2012: 80,700).

The new E-Class – eﬃcient, intelligent and emotive.
The world premiere of the new E-Class at the North American
International Auto Show marked the start of Mercedes-Benz’s
broadly based product oﬀensive. The model’s front end has
been fully redesigned with new headlights featuring a single lens
that covers all functional elements. Along with the sedan
and the wagon, Mercedes-Benz also completely upgraded the
coupes and convertibles in the E-Class family. The changes
include powerful and eﬃcient BlueDIRECT four-cylinder engines
with sophisticated fuel-injection technology, as well as
pioneering assistance systems.

The new CLA coupe – (air) resistance is futile. The CLA
has established a new segment with its world-leading aerody-
namic properties, an avant-garde coupe design and the
optional 4MATIC all-wheel drive system. Breathtakingly sporty
proportions and a powerful and dynamic design idiom featur-
ing interplay between concave and convex surfaces lend
the four-door coupe its distinctive appearance. With a Cd value
of 0.23, and even 0.22 in the CLA 180 BlueEFFICIENCY1,
the CLA sets a new benchmark both for the Mercedes-Benz
model lineup and for all other production vehicles. Deliveries
to customers of the new CLA started in April 2013. A total
of 59,200 units had already been sold by the end of the year.

1 CLA 180 BlueEFFICIENCY: fuel consumption in l/100 km

urban 6.8 / extra-urban 4.0 / combined 5.0;
CO2 emissions in g/km combined 117.

Record unit sales for Mercedes-Benz. We once again set
a new record in 2013 with unit sales of 1,467,400 Mercedes-Benz
brand cars, marking a 9% increase over the previous year.
 D.02 Growth became signiﬁcantly more dynamic as the year
progressed due to the launch of our attractive new models.
Mercedes-Benz was the most successful premium carmaker
in Germany, Japan and the United States in 2013. We also
further improved our position in many markets around the globe.

Mercedes-Benz performed very well overall in a volatile market
environment in Europe. In fact, we gained additional market
share in nearly all key markets. Growth was particularly strong
in the United Kingdom (+14%), Russia (+19%) and Turkey (+61%).
We recorded a 3% increase in unit sales compared to the prior
year in Western Europe and increased our share of the weak
German market to 10.3% (2012: 10.1%). The development was
especially positive in the United States, where we set a new
record with sales of 308,900 vehicles. We were able to record
substantial increases also in Japan (+22%), India (+27%) and
Brazil (+34%). Unit sales in China rose signiﬁcantly, especially
in the second half of 2013, leading to a full-year increase
of 15%.

Among the various Mercedes-Benz model series, the new
compact cars displayed an exceptionally dynamic development.
During the year under review, a total of 383,700 customers
opted to buy a vehicle from the A-, B- or CLA-Class model series.
This ﬁgure corresponds to a 66% increase in compact model
sales. The new E-Class models launched in June were also
in great demand, with a 6% increase in unit sales in the year
of the model changeover to 332,300 sedans, station wagons,
coupes and convertibles. Sales of M-/R-/GLK-/GL-/G-Class
SUVs rose to the new record level of 323,300 vehicles (+9%).
With sales of 121,400 units (+1%), the M-Class was once
again the top-selling vehicle in its market segment. The C-Class
performed well in the year before its model changeover,
recording sales of 356,700 units (-16%). The new S-Class, deliv-
eries of which began in July 2013, was extremely well received
by both customers and automotive journalists. The brand’s
new ﬂagship model has been available in all core markets since
October and has already made its way to the top of new-

151

The new S-Class – aspiration: the world’s best automobile.
In mid-May 2013, we presented the new S-Class to a global
audience in Hamburg. The model is a cutting-edge engineering
achievement for both Mercedes-Benz and automotive devel-
opment in general. Its launch marked the high point of our 2013
product offensive, and its extraordinary fuel economy and
outstanding aerodynamics ensure environmentally friendly per-
formance. This is especially true of the S 500 PLUG-IN HYBRID1,
which we presented at the Frankfurt Motor Show in September
2013. With its innovative driver assistance and safety systems
from the Mercedes-Benz “INTELLIGENT DRIVE” program, the
S-Class is also a pioneering vehicle on the way to autonomous
driving. No other vehicle embodies the Mercedes-Benz brand
promise of “the best or nothing” as clearly as the S-Class.
The new luxury sedan has generated a huge amount of interest:
20,000 orders for the S-Class had already been received even
before the new model was officially launched.
E see page 108

The new Mercedes-Benz GLA – an all-round talent. The SUV
from our new compact-car family combines superior everyday
driving performance with off-road mobility. A flexible interior and
high-quality appointments that show loving attention to detail
clearly position the GLA as a premium compact SUV. The new
GLA completes the extensive range of Mercedes-Benz SUVs.
At the same time, it is the fourth of a total of five new compact
models from the brand. The GLA celebrated its world pre-
miere at the Frankfurt Motor Show in September 2013. Deliveries
to customers will begin in March 2014.

The smart fourjoy: forerunner of a new generation. The
smart fourjoy show car, which was unveiled in the fall of 2013,
offered a preview of the new smart design idiom. The brand
will launch two new models in 2014: the successor to the smart
fortwo, which will retain the predecessor model’s unique
vehicle length of only 2.69 meters, and a new four-seat smart
forfour, which offers unprecedented interior spaciousness
in this vehicle class.

With sales of 1,900 smart fortwo electric drive2 cars and
a market share of about 30%, the smart brand was the clear
market leader for electric vehicles in Germany in 2013. The
electric smart has also proved its worth in the car2go system.
The electric lineup consisting of the fortwo coupe and fortwo
convertible has been expanded to include the smart ebike.
The bike’s award-winning design and highly efficient and high-
performance drive-system package enables it to occupy an
exceptional position in this competitive field. The smart ebike
also underscores the smart brand’s goal of redefining urban
mobility above and beyond the use of conventional automobiles.

The smart brand performed well in 2013, recording total
sales of 98,200 smart fortwo cars in the fortwo’s last full
year of production before the model changeover.

AMG – cutting-edge technology and fascination. Impressive
results in motorsports and a unique array of high-performance
vehicles continue to underscore AMG’s reputation as the success-
ful performance brand from Mercedes-Benz. The AMG brand
promise of “Driving Performance” has been a guarantee for the
most sophisticated technology and pure driving fascination
for more than 45 years now. The SLS AMG3 super sports car
developed independently by Mercedes-AMG has been a brand
icon since its initial presentation in 2009. The SLS AMG model
is coveted all over the world. This is due not least to the car’s
motorsports success and to the great variety the series offers.
AMG has also impressively demonstrated its innovative
capabilities with the SLS AMG Electric Drive4 super sports
coupe, which boasts a unique drive system.

As part of the “AMG Performance 50” growth strategy, we
are expanding the AMG product range and positioning the brand
in new market segments. For example, AMG has three new
models in the compact segment: the sporty A 45 AMG5, a four-
door coupe and a compact SUV. The new model variants enable
Mercedes-AMG to offer its customers more scope for indi-
vidualizing vehicles than ever before. Various AMG automobiles
are also available as exceptionally exclusive and powerful

The four-door CLA Coupe features a sporty design as well as dynamic handling and performance.

152

D | The Divisions | Mercedes-Benz Cars

No other car embodies the brand promise of Mercedes-Benz – “The Best or Nothing” – like the S-Class.

S-models, and they can also be equipped with the newly devel-
oped, performance-focused AMG 4MATIC all-wheel drive system.

Strengthened market presence in China. In China, we further
enhanced the eﬃciency of our sales activities and signiﬁcantly
expanded the dealer network in 2013. The sales company
Beijing Mercedes-Benz Sales Service Co., Ltd., a 51:49 joint
venture with our partner BAIC, started work in March 2013.
All marketing and sales activities for Mercedes-Benz cars from
both local production and imports are now under the roof
of a single organization, allowing signiﬁcantly more eﬃcient and
eﬀective processes than with the previous two separate com-
panies. The network of more than 330 dealerships at the end
of the year will be further expanded. In 2013 alone, 75 new
dealerships were added; in 2014, we intend to include another
100 dealers in the network in 40 new cities. This means that
the brand is increasingly present also outside the large metro-
polises. In parallel, we are continuously expanding the infra-
structure for our after-sales business and are modernizing our
logistics processes. We signiﬁcantly upgraded the product
range available to our Chinese customers in 2013 with seven
product premieres, including the new S-Class and A-Class.
Since September 2013, the long version of the new E-Class has
been available in China; it is produced especially for the local
market in the Beijing plant of Beijing Benz Automotive Co., Ltd.
Oﬀering 14 centimeters more legroom in the rear, this model
meets the high demands of our Chinese customers.

Numerous awards for Mercedes-Benz cars. Mercedes-Benz
once again set new standards for automotive manufacturing
in 2013 with a courageous and conﬁdent approach that led to
numerous awards. For example, automotive experts and readers
of “Bild am Sonntag” newspaper and “Auto Bild” magazine
selected the new S-Class as the best sedan in its class in the
Europe-wide competition for the “Golden Steering Wheel”
award. Mercedes-Benz models also made a big impression with
their intelligent design trends. The S-Class captured top honors
in the “German Design Award 2014” competition, while the
A-Class and the CLA-Class were presented with the world-
renowned “red dot award” for outstanding design quality.

1 S 500 PLUG-IN HYBRID: market launch in the second half of 2014.
2 smart fortwo electric drive: electricity consumption in kWh/100km 15.1;

CO2 emissions in g/km 0.0.

3 SLS AMG: fuel consumption in l/100 km

urban 19.9 – 19.7 / extra-urban 10.2 – 9.3 / combined 13.7 – 13.2;
CO2 emissions in g/km combined 321 – 308.

4 SLS AMG Coupe Electric Drive: electricity consumption in kWh/100km 26.8;

CO2 emissions in g/km 0.0.

5 A 45 AMG: fuel consumption in l/100 km

urban 9.1 – 8.8 / extra-urban 5.9 – 5.8 / combined 7.1 – 6.9;
CO2 emissions in g/km combined 165 – 161.

153

The CLA-Class was also the overall winner in the “Auto Bild
Design Award” competition, in which it was voted Germany’s
most beautiful car. Environmental compatibility was the focus
of a study conducted by the renowned “ÖkoTrend” institute.
The study resulted in the Mercedes-Benz ML 250 BlueTEC
4MATIC1 and the Mercedes-Benz B 200 Natural Gas Drive2 being
named the most environmentally friendly vehicles in their
respective categories. Mercedes-Benz also distinguished itself
in terms of purely business criteria in 2013. For example,
“Firmenauto” magazine chose the E-Class 300 BlueTEC HYBRID3
station wagon, the B-Class and the smart fortwo electric
drive4 as “Company Cars of the Year 2013.” And in the detailed
residual value forecast conducted by “FOCUS online,” the
CLA, the CLS Shooting Brake, the ML 250 BlueTEC 4MATIC1
and the B 180 CDI5 posted the highest value-retention per-
centages and ﬁnished at the top of their respective segments.
The most recent evidence of Mercedes-Benz’s positive devel-
opment in China can be found in the J.D. Power Asia Paciﬁc
“Initial Quality Study 2013,” which gave the brand with the star
the highest initial quality rating among 65 international and
domestic automakers in China. In addition, the new S-Class was
named “Car of the Year” in China by the editors in chief of
the country’s most important automotive journals.

Best Customer Experience. Part of the “Mercedes-Benz 2020”
growth strategy involves refocusing our global sales orga-
nization in line with changing customer demands. Our goal here
is to make Mercedes-Benz even more attractive to new con-
temporary-minded target groups, while at the same time main-
taining the brand loyalty of established customers. To this
end, the company presented in 2013 the core measures to be
taken in sales and marketing within the framework of the
Mercedes-Benz 2020 growth strategy. Titled “Mercedes-Benz
2020 – Best Customer Experience,” these measures combine
a broad range of new approaches to sales, marketing, and after-
sales activities that will be carried out with one overriding
goal in mind – to oﬀer our customers a consistent premium
experience whenever they encounter the brand. For example,
Mercedes-Benz will increasingly utilize inner-city sales formats
in the future in order to directly approach customers and
the interested public in their environment and in a relaxed atmo-
sphere. Some 20 inner-city marketing locations in cities such
as Berlin, Paris, Milan, New York, Beijing and Tokyo are already
attracting visitors and oﬀering them an exciting and compre-
hensive brand experience. The number of such sites around the
world is to more than double by 2020. We also systematically
utilize digital media for all customer contact activities. Contact

New eﬃcient engines, new assistance systems and a new design idiom: Mercedes-Benz has thoroughly modernized the E-Class.

154

D | The Divisions | Mercedes-Benz Cars

The compact premium SUV – the GLA – another milestone in the product and growth offensive of Mercedes-Benz.

with the brand is being further simplified by new communi-
cation channels such as the “Mercedes-Benz connect me” online
shop, which was launched in Hamburg in late 2013. The exist-
ing sales team is also being expanded to include new professional
profiles such as mobile sales consultants. This is important
because Mercedes-Benz partners – dealerships and authorized
sales outlets – will remain the most important points of
contact for customers in the future.

Expansion of the production network. In order to meet
the strong demand for our new products, we are expanding
our production operations in a manner that will make them
more responsive to customer and market requirements.
At the same time, we are continually enhancing the productivity
of existing facilities. These measures will also allow us to
create the production conditions needed to achieve the targets
of our “Mercedes-Benz 2020” growth strategy.

Substantial investments in Germany underscore our commit-
ment to the country as a key manufacturing location. Germany
remains the heart of our global production network, in which
our German plants serve as centers of expertise. We invested
more than €1 billion in our Sindelfingen facility in 2013; the
launch of the new S-Class accounted for a large portion of that
outlay. The investment volume at our main plant in Stuttgart-
Untertürkheim amounted to more than €800 million during
the year under review. In addition, we will invest more than €1
billion in our facility in Bremen by the end of 2014. The focus
there is on preparations for the plant’s role as the competence
center for the new C-Class. This model is now being built in
a production network comprising the plants in Bremen, Tusca-
loosa (USA), Beijing (China) and East London (South Africa).

We are also continuing with the expansion of our international
production locations. One focus here is on the plant in Tusca-
loosa, Alabama, in the United States. Preparations are being
made there for the production of the new C-Class as of 2014
and of an all-new Mercedes-Benz model series starting
in 2015.

Together with our partner BAIC, we are investing a total of
roughly €4 billion over a period of several years in our
facility in Beijing. The first long-wheelbase version of the new
E-Class rolled off the assembly line there in September 2013.
In November, the first Mercedes-Benz engine plant outside
Germany went into operation in Beijing, and local production
of the GLA compact SUV is scheduled to begin in 2014.

Valmet Automotive, a specialist manufacturing company,
began providing additional capacity for A-Class production
in August 2013. The Valmet plant in Uusikaupunki, Finland,
will manufacture more than 100,000 A-Class cars flexibly and
in line with market requirements by the end of 2016.

We are expanding our production capacity also in Brazil,
where a new assembly plant in Iracemápolis near São Paulo
will begin producing the next generation of the C-Class
and the GLA for the local market in 2016.

Further reduction of CO2 emissions. Our new engines and
extremely efficient model variants once again enabled us to
substantially reduce the average CO2 emissions of the cars we
sold in the European Union in 2013 – this time from 140 g/km
to 134 g/km. Our new compact-class models played a major role
in this accomplishment. Our overall objective is to reduce the
average CO2 emissions of our fleet of new cars in the European
Union to 125 g/km by 2016. E see pages 110 f

1 ML 250 BlueTEC 4MATIC: fuel consumption in l/100 km

urban 7.1 – 6.7 / extra-urban 5.7 – 5.3 / combined 6.2 – 5.8;
CO2 emissions in g/km combined 163 – 154.

2 B-Class 200 Natural Gas Drive: natural gas consumption

in kg/100 km urban 6.0 – 5.6 / extra-urban 3.4 – 3.3 / combined 4.4 – 4.3;
CO2 emissions in g/km combined 162 – 153.

3 E-Class 300 BlueTEC HYBRID: fuel consumption in l/100 km
urban 4.5 / extra-urban 4.6 – 4.4 / combined 4.5 – 4.4;
CO2 emissions in g/km combined 119 – 116.

4 smart fortwo electric drive: electricity consumption in kWh/100km 15.1;

CO2 emissions in g/km 0.0.

5 B 180 CDI: fuel consumption in l/100 km

urban 5.2 – 4.9 / extra-urban 4.1 – 3.7 / combined 4.5 – 4.1;
CO2 emissions in g/km combined 117 – 108.

155

Daimler Trucks.

Daimler Trucks continued to forge ahead with its product oﬀensive in 2013. The presentation
of the new Mercedes-Benz Arocs and Atego models and of the Mercedes-Benz SLT, Econic and
Unimog special trucks enabled Daimler Trucks to complete its Euro VI-compliant product range
well before the stricter emissions standards came into eﬀect at the beginning of 2014. The new
product from Daimler Trucks North America, the Freightliner Cascadia Evolution, has met with
an outstanding market response. The BharatBenz brand’s expanded product lineup is also setting
new standards on India’s roads. The new “Asia Business Model,” an excellence initiative of the
“Daimler Trucks #1” program, reached a milestone when production of FUSO models commenced
in Chennai, India.

Successful products and increased eﬃciency take eﬀect
in a volatile market environment. Daimler Trucks was
operating in a regionally very disparate market environment
in 2013. Demand for trucks developed positively in Europe,
Brazil and Japan, while market volumes in India and Russia were
signiﬁcantly lower than in the previous year. Demand in
the NAFTA region remained slightly below the prior-year level.
Growth rates actually reached double digits in Brazil, where
the market recovered following a slump in demand in 2012.
The increase in demand in Japan was buoyed by the government’s
economic stimulus program. After a weak start to the year,
rather more lively growth in Europe in the second half of 2013
led to an upturn in demand. This was mainly driven by pur-
chases of Euro V-compliant vehicles being brought forward
before the stricter Euro VI emissions standard took eﬀect
in early 2014. Daimler Trucks responded to this volatile market
environment with its successful new product range, positive
eﬀects from the “Daimler Trucks #1” eﬃciency program and
a high level of production ﬂexibility. As a consequence, sales
of Daimler Trucks rose to 484,200 units (2012: 462,000).
However, changes in currency exchange rates caused revenue
to increase only slightly to €31.5 billion (2012: €31.4 billion).
EBIT of €1,637 million was slightly below the prior-year level
(2012: €1,695 million). Personnel adjustments in Germany
and Brazil reduced earnings by €116 million.

D.03
Daimler Trucks

Amounts in millions of euros

% change

2013

2012

13/12

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and development
expenditure
thereof capitalized

Production

Unit sales

Employees (December 31)

1,637

31,473

5.2

839

1,695

31,389

5.4

989

1,140
79

490,280

484,211

79,020

1,197
180

450,622

461,954

80,519

-3

-15

-5
-56

-2

D.04
Unit sales by Daimler Trucks

In thousands

Total

Western Europe

thereof Germany

United Kingdom

France

NAFTA region

thereof United States

Latin America (excluding Mexico)

thereof Brazil

Asia

thereof Japan

Indonesia

Additional information:

BFDA (Auman Trucks)

Total (including BFDA)

156

2013

2012

13/12

% change

484

135

118

163

103

588

462

135

114

164

493

+14

+36

+21

+28

+34

-1

+10

-6

+19

D | The Divisions | Daimler Trucks

In 2013, Daimler was the ﬁrst truck manufacturer to change over its complete European product range to Euro VI emission standards.

Daimler Trucks #1 leads to ﬁrst visible successes. To make
sure that Daimler Trucks is a leader also in terms of proﬁtability,
the division launched the “Daimler Trucks #1” excellence
initiative in 2012. The program encompasses measures at the
individual business units as well as initiatives aﬀecting the
entire division. By the end of 2014, we plan the implementation
of measures for the sustained improvement of cost structures
and additional business activities with an earnings eﬀect of €1.6
billion. As planned, we already achieved 30% of our optimi-
zation targets with regard to earnings in 2013. Substantial prog-
ress was achieved for example with optimizing production
and reducing material costs and ﬁxed costs. We will continue
to work hard on implementing the program this year. The
current product oﬀensive and the development of new markets
are contributing considerably to the achievement of our
growth and eﬃciency targets for all the division’s brands.

In our business in Asia, we made considerable progress in
the year under review as a result of more intensive cooperation
between FUSO and Daimler India Commercial Vehicles. That
includes closer cooperation in the areas of ﬁnance, development
and sales. In addition, the production of FUSO trucks started
in May in Chennai, India.

Unit sales rise to highest level since 2006. In line with our
forecast, Daimler Trucks slightly increased its unit sales in
2013, resulting in the highest level in seven years. Because the
global economic situation continued to be diﬃcult, the truck
business actually made a very weak start to the year. However,
the gap in demand compared with 2012 decreased gradually
as the year progressed. Customers responded extremely well
to Daimler Trucks’ new model range, enabling us to increase
our market share in many countries.

The initiatives aﬀecting all of the division’s units also make
an important strategic contribution so that we can beneﬁt
as eﬀectively as possible from our global positioning. As part
of its module strategy, for example, Daimler Trucks aims
to achieve a much higher proportion of shared parts in its prod-
ucts, without eliminating key distinctions between the various
brands. Reduced complexity and fewer types of parts generate
cost beneﬁts in procurement and signiﬁcant economies
of scale in production and logistics. The after-sales business
is another focus of our program. In this area, global coop-
eration has been signiﬁcantly strengthened by the systematic
exchange of successful business processes across all regions.
Furthermore, the revenue generated by the remanufacturing
of components is to be increased by 30% in the medium term
by means of expanded regional product portfolios and
by developing new markets.

157

In addition to BharatBenz trucks, FUSO trucks have also been produced in Chennai for the export markets of Asia and Africa since May 2013.

and stricter emissions standards. Demand was boosted in 2013
by the ﬁnancing incentives of the government’s FINAME pro-
gram and by catch-up eﬀects following the market’s previous
slump. Under these conditions, our unit sales rose by 34%
to 38,800 trucks. After suﬀering major losses at the beginning
of the year, Mercedes-Benz launched speciﬁc product and
process-related measures that helped it signiﬁcantly stabilize
its market share in the hotly contested medium- and heavy-
duty segments at 24.7% for the year as a whole (2012: 25.5%).

In Western Europe, demand did not rise signiﬁcantly until the
second half of the year. On the one hand, customers ordered
Euro V-compliant vehicles before the stricter emissions standards
went into eﬀect in early 2014. On the other hand, buyers in
countries such as the Netherlands, Switzerland and Italy took
advantage of subsidies for the purchase of Euro VI-compliant
vehicles. During the reporting year, Daimler Trucks’ sales in the
region increased by 14% to 65,900 units. Our Mercedes-Benz
brand extended its lead further, achieving a market share of 24.1%
(2012: 22.9%). Almost half of the new Actros model series
were already sold as Euro VI-version trucks. Despite facing a
diﬃcult market environment in Turkey, we sold 19,500 vehicles
there in 2013, increasing our unit sales by 7%; our market
share remained at the very high level of 49.5% (2012: 45.4%).
Economic diﬃculties caused demand for trucks to decline
in Russia, leading to a drop in unit sales of 22% to 5,600 vehicles.
Demand picked up in 2013 in Latin America’s main market,
Brazil. In the previous year, demand for trucks had been greatly
impacted by a combination of negative economic factors

158

With a slightly contracting market, our unit sales in the NAFTA
region remained stable at 135,200 trucks (2012: 135,000).
We increased our market share of Class 8 trucks to 36.0% (2012:
32.9%). At 38.2%, market share for the entire Class 6-8 segment
was also substantially higher than in 2012 (34.0%). As a result,
we once again signiﬁcantly extended our market lead. Although
production of the new Freightliner Cascadia Evolution did not
begin until March 2013, sales of more than 14,000 units of the
model contributed substantially to the division’s sales success.
The good sales development speaks for Daimler Trucks’ advanced
vehicle technology. Thanks to the new Detroit DD15 engine,
the proven Daimler BLUETEC exhaust treatment technology
and aerodynamic improvements, customers beneﬁt from
improved fuel eﬃciency of up to 7% compared with the ﬁrst
generation of the Cascadia, which was already EPA 2010-
compliant. The Detroit brand supplies engines, axles and trans-
missions. Daimler Trucks is the only truck manufacturer
in the NAFTA region to oﬀer a fully integrated powertrain from
a single source. Customers thus beneﬁt from optimally coor-
dinated drive system components. The Detroit powertrain com-
ponents are oﬀered in the division’s entire North American
product family – from Freightliner and Western Star trucks to
Thomas Built Buses. Daimler Trucks is a pioneer of resource
conservation with its products also in the United States. At the
beginning of 2012, Daimler Trucks’ entire North American
vehicle lineup was already certiﬁed according to the Greenhouse
Gas 2014 Standard (GHG14), which takes eﬀect in 2014. The
certiﬁcation covers the long-haul, medium-duty, construction
and municipal trucks of the Freightliner and Western Star brands.

D | The Divisions | Daimler Trucks

In Asia, Daimler Trucks beneﬁts from its global spread through
the subsidiaries Mitsubishi Fuso Truck and Bus Corporation
(MFTBC), based in Kawasaki, Japan, and Daimler India Commer-
cial Vehicles Pvt. Ltd. (DICV), whose headquarters are in
Chennai, India. In Chennai, where Daimler Trucks started pro-
ducing BharatBenz brand trucks in summer 2012, the plant
has also been manufacturing FUSO brand vehicles for selected
export markets since the second quarter of 2013. Daimler
Trucks is securing its leading role in new growth markets through
the implementation of the new “Asia Business Model,” an
initiative of the “Daimler Trucks #1” program which generates
synergies between MFTBC and DICV along the entire value
chain, and by expanding the model range to exploit additional
sales opportunities in Asia and Africa. Our performance
in the sales markets diﬀered widely throughout Asia last year.
In Japan, we sold 38,300 vehicles, increasing our unit sales
by 10%. Demand for trucks there was boosted by the govern-
ment’s economic stimulus program. Our market share in
the overall segment of 20.2% stayed at the prior-year level;
it increased slightly in the light-duty segment, from 21.8%
to 22.3%. In India, demand for trucks was much lower than in
the previous year due to the weak economic development.
Nonetheless, the successful launch of our BharatBenz vehicles
enabled us to claim fourth place in the medium- and heavy-
duty truck segment. In total, Daimler Trucks sold 6,500 vehicles
in India (2012: 1,300). The ﬁrst industry honors for the entire
BharatBenz product range, including the coveted national award
“Apollo CV of the Year 2013,” underscore the brand’s suc-
cessful launch in India. Competition is very tough in other Asian
markets, where some truck manufacturers are granting
substantial discounts in order to position their products more
favorably in the market. We sold 64,700 trucks in Indonesia
and took a 46.9% share of the country’s total truck market
(2012: 68,500 and 43.7%). Demand for trucks declined signi-
ﬁcantly in Taiwan, where we sold 5,700 units and attained
market share of 41.7% (2012: 12,300 and 55.2%).

With the launch of the Freightliner Cascadia Evolution, we were able to signiﬁcantly expand our market share in Class 6-8 in the NAFTA region.

159

Strengthened cooperation with our partners. Beijing Foton
Daimler Automotive Co., Ltd. (BFDA), which started production
in mid-2012, is the ﬁrst 50 – 50 joint venture in the Chinese
truck segment between a local manufacturer and a foreign part-
ner. This cooperation with Foton gives Daimler Trucks a key
presence in the Chinese truck market. BFDA’s products bear
the Auman nameplate. They cover the various market seg-
ments and are oﬀered with engines ranging from 110 to 480
horsepower. The Mercedes-Benz OM 457 engine is scheduled
to be locally manufactured by BFDA beginning in 2016. Daimler
Trucks will beneﬁt from this local production through parts
deliveries and licensing fees. In exchange, the OM 457 engine
will enable BFDA to comply with the stricter emissions regu-
lations that are to be introduced in Asia. The BFDA joint venture
sold 103,300 Auman trucks during the year under review.

Launch of Euro VI trucks successfully completed before
new emission standards take eﬀect. With the start of series
production of the Mercedes-Benz Atego and Arocs and the
special trucks Mercedes-Benz Unimog, Econic and SLT, Daimler
Trucks successfully completed its Euro VI product oﬀensive
for trucks and fully updated the Mercedes-Benz product lineup.
The campaign was kicked oﬀ in 2011 with the launch of
the new Actros long-haulage truck. The Antos for heavy-duty
distribution followed in 2012. In 2013, the product range
was completed with the Arocs construction-site specialist and
the new Atego for light- and medium-duty delivery work.
Euro VI technology is available also for Mercedes-Benz special
trucks. Examples include the new Mercedes-Benz Unimog
(in series production since August 2013) and the new Mercedes-
Benz SLT heavy-duty tractor (sales launch in September 2013).

In Russia, Daimler Trucks is beneﬁting from a modular system
within the framework of its partnership with Kamaz. Since 2013,
Mercedes-Benz Axor cabs have been installed in the new
generation of Kamaz trucks on the basis of supply and licensing
agreements. And since November 2012, Daimler Trucks has
been supplying diesel and natural-gas engines as well as axles
to Kamaz as part of a supply agreement. These measures
have substantially expanded the partnership, which also includes
two local joint ventures for the production and sale in Russia
of Mercedes-Benz trucks (Mercedes-Benz Trucks Vostok) and
FUSO trucks (FUSO KAMAZ Trucks Rus Ltd.). The 50 – 50
joint venture Mercedes-Benz Trucks Vostok is further developing
local production in Naberezhnye Chelny. Since November 2013,
that facility has been assembling and painting truck chassis
in order to increase ﬂexibility and simplify cooperation with body
manufacturers.

In early 2013, MFTBC and Nissan Motor Co., Ltd. began
to supply each other with light trucks in line with their strategic
partnership agreement. Within this partnership, our product
range in Asia is supplemented by the FUSO Canter Guts, which
is known as the Atlas F24 model at Nissan. In return, Nissan
sells the FUSO Canter light truck under the model designation
NT450 Atlas.

Additional measures to reduce fuel consumption.
The introduction of Predictive Powertrain Control (PPC) was
another important step in the quest to increase fuel eﬃciency.
As far as solutions for intelligently controlling powertrains
are concerned, PPC is the most advanced system on the market,
and can optimize fuel consumption by recognizing the topo-
graphy of the road ahead. To this end, it also modiﬁes the opera-
tion of the transmission, resulting in additional fuel savings
of up to 5% compared to vehicles without PPC. In Germany, one
out of three Actros trucks is already being ordered with the
new system.

More than 45,000 truck drivers with “ProﬁTraining.”
Mercedes-Benz Trucks has trained more than 45,000 drivers
since it received government recognition for its training
courses in June 2008. The courses conform to the requirements
of German legislation on professional driver qualiﬁcation.
Today, Mercedes-Benz oﬀers a comprehensive range of courses
at almost 180 certiﬁed training centers throughout Germany.
A total of 24 new Actros trucks are provided for training purposes.
The trucks have 40 tons gross vehicle weight and a cab that
has been converted to hold seven occupants.

FUSO Canter Eco Hybrid and Daimler FleetBoard win
the European Transport Award for Sustainability 2014.
A panel of experts from the ﬁelds of science, business and
journalism judged the products entered for the award accord-
ing to their eﬃciency, environmental friendliness and social
responsibility. The FUSO Canter Eco Hybrid won the award in
the category “Distribution Truck up to 12 Tons,” where it
clearly outshone its competitors. In addition, Daimler FleetBoard
won ﬁrst prize for its consulting services in the “Driver and
Transport Management Systems category.”

160

D | The Divisions | Daimler Trucks | Mercedes-Benz Vans

Mercedes-Benz Vans.

In 2013, Mercedes-Benz Vans launched the new Sprinter – the global vehicle in the van segment.
With its new safety and assistance systems, the Sprinter sets new standards in its class. Our unit
sales increased in 2013 and we achieved double-digit growth rates in China, Latin America and
Eastern Europe. Despite sharp market declines in Western European, we were able to improve
our earnings. We are continuing our “Vans goes global” growth strategy. By starting production
of the Sprinter Classic in Russia and strengthening our activities in China, we have laid the
foundations for continued growth.

Growth in unit sales, revenue and earnings. Despite diﬃcult
market conditions in Europe, global unit sales by Mercedes-
Benz Vans increased by 7% in ﬁnancial year 2013. Altogether,
270,100 units of the Sprinter, Vito, Viano, Vario and Citan
models were sold. We achieved double-digit growth rates in
China (+44%), Latin America (+40%) and Eastern Europe (+12%).
At €9.4 billion, revenue was also higher than in the previous
year (2012: €9.1 billion). We posted EBIT of €631 million, which
is an improvement of 16% over the prior-year result.  D.05

Improved earnings thanks to Performance Vans 2013.
In the year under review, Mercedes-Benz Vans successfully
completed the short-term earnings-improving program
“Performance Vans 2013” and implemented the related mea-
sures. Important components of the program included cost
optimizations across the entire organization. In the context
of eﬃciency improvements in the area of production, assembly
times per vehicle were reduced as a result of various actions.
Additional savings were achieved also in the area of logistics and
with production-material costs. As well as optimizing costs,
“Performance Vans 2013” is also improving the revenue situation.
The Citan was launched in the Russian market for example,
and additional potential was utilized for our entire product range
in the ﬂeet business and in Latin America.

D.05
Mercedes-Benz Vans

Amounts in millions of euros

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and development
expenditure
thereof capitalized

Production

Unit sales

Employees (December 31)

2013

2012

13/12
% change

631

9,369

6.7

288

321
139

543

9,070

6.0

223

371
137

270,675

270,144

14,838

257,496

252,418

14,916

+16

+29

-13
+1

-1

D.06
Unit sales by Mercedes-Benz Vans

2013

2012

13/12

% change

Total

Western Europe

thereof Germany

Eastern Europe

United States

Latin America (excluding Mexico)

China

Other markets

270,144

169,175

252,418

164,907

71,520

26,876

22,802

19,580

12,705

19,006

71,044

24,026

21,474

13,954

8,836

19,221

+12

+40

+44

-1

161

Continued success of the product range. Worldwide,
Mercedes-Benz Vans sold 270,100 units of the Sprinter, Vito,
Viano, Vario and Citan models in 2013. This was an increase
of 7% compared with the previous year.  D.06 In our core region
of Western Europe, sales increased by 3% to 169,200 units.
Of the Citan city van, which was introduced in the fall of 2012,
Mercedes-Benz Vans sold 17,700 units in Western Europe
(2012: 6,400). Unit sales of medium-sized and large vans
decreased by 4% to 151,500 vehicles, primarily due to the ongo-
ing very diﬃcult situation in the countries of Southern Europe.
In Germany, our domestic market, we sold 71,500 vans (2012:
71,000). In Eastern Europe, especially in Russia and Turkey,
Mercedes-Benz Vans once again posted positive sales results.
Sales in this region rose to 26,900 units, equivalent to growth
of 12%. The Sprinter continued its success story also in North
and South America in 2013. In Latin America, we posted
substantial growth of 40% to 19,600 units, while sales in the
United States rose by 6% to 22,800 vehicles. After a signiﬁcant
decrease in the previous year, sales ﬁgures for Mercedes-
Benz Vans in the Chinese market rebounded energetically, and
with 12,700 units surpassed the prior-year unit sales by
44%. We sold 166,200 units of the Sprinter worldwide in 2013,

which is an increase of 5% compared with 2012. Altogether,
80,900 units of the Vito and Viano models were sold in 2013
(2012: 83,700). The Mercedes-Benz Citan accounted for
20,200 units in its ﬁrst full year of production. Unit sales of the
Vario, production of which was discontinued in September,
amounted to 2,900 vehicles.

Major capital expenditure in Spain. We are investing almost
€200 million in the van plant in Vitoria, Spain. The investment
will prepare that facility for production of the new V-Class and
the new Vito starting in 2014. The funds are mainly being used
for the modernization and reorganization of the body shop,
the paint shop and the assembly lines. We are also optimizing
the logistics at the site. Another consequence of this investment
is that new jobs will be created at the plant.

The best Mercedes-Benz Sprinter of all time - not only safer, but also more economical, environmentally friendly and attractive than ever.

162

D | The Divisions | Mercedes-Benz Vans

The new V-Class from Mercedes-Benz Vans – convincing in terms of quality, safety and eﬃciency at the highest levels.

Global growth strategy on the right track. With its “Vans goes
global” strategy, Mercedes-Benz Vans strives to utilize new
growth potential and expand existing activities within and beyond
the core European markets. Along with the United States
and Latin America, China and Russia are particularly important
growth regions. Accordingly, we intensiﬁed our activities
in China in 2013. In March, the new research and development
center of the Chinese vans joint venture, “Fujian Benz Auto-
motive Corporation,” was oﬃcially opened in Fuzhou. This facility,
which is the ﬁrst research and development center of the
Vans division outside Germany, includes a test track, test rigs,
an exhaust gas lab and an endurance testing workshop. The
focus is on the vehicles that Mercedes-Benz Vans produces and
sells locally in China: the Sprinter, Vito and Viano. We also
passed a milestone in our vans strategy with the start of produc-
tion of our Sprinter Classic in Russia. In the second half of
2013, we began producing the Sprinter Classic there in cooper-
ation with Russia’s largest van manufacturer, GAZ. These locally
produced vehicles are sold in the Russian market through the
Mercedes-Benz sales organization. Another aspect of the partner-
ship involves the joint production of engines. The GAZ facility
in Yaroslavl manufactures Mercedes-Benz OM646 four-cylinder
diesel engines, which are subsequently installed in the
Sprinter Classic.

Benchmark and global vehicle: the new Mercedes-Benz
Sprinter. Having lent its name to an entire class of vehicles,
it is the innovation leader and the true global vehicle among
vans: the Mercedes-Benz Sprinter. After more than eight million
test kilometers and investment of €300 million, the new
Sprinter was launched by Mercedes-Benz Vans in 2013. Produc-
tion began in July at the two German plants in Düsseldorf and
Ludwigsfelde. With ﬁve new assistance systems, the Sprinter
sets new standards for safety in its class. Three of those
systems made their global van debut. While Crosswind Assist
comes as standard equipment, COLLISION PREVENTION
ASSIST (a proximity warning system) and Blind Spot Assist are
both available as options. Other new features include High-
beam Assist and Lane Keeping Assist. The development engi-
neers at Mercedes-Benz are convinced that these electronic
“assistants” will have a signiﬁcant positive impact on the number
and seriousness of accidents. In addition, Mercedes-Benz
has improved the Sprinter’s handling even further. The lowering
of the chassis has improved the van’s wind resistance and
fuel consumption, and makes it easier to load and unload cargo.
What’s more, the new Sprinter is also associated with yet
another world premiere. For the ﬁrst time, the complete range
of engines was converted to meet the strict Euro VI emissions
standard before it went into eﬀect. Euro VI drastically reduces
the emission limits for nitrogen oxides, hydrocarbons and
particle mass. The Sprinter is able to meet these tough limits
thanks to BLUETEC engine technology and an SCR system
that injects AdBlue into the exhaust gas. At the same time, the
Sprinter is the segment’s undisputed leader in terms of fuel
eﬃciency. Combined fuel consumption is as low as 6.3 l/100 km,
thanks to the combination of highly eﬃcient diesel engines,
an optimized drivetrain, a longer axle ratio, ancillary units and
the eﬃciency package “BlueEFFICIENCY PLUS.” This is a sensa-
tional new record for Sprinter class vehicles.

163

Daimler Buses.

Numerous new products and the systematic continuation of the “GLOBE 2013” growth and
eﬃciency program contributed to the turnaround at Daimler Buses. Higher unit sales and further
eﬃciency progress led to a signiﬁcant earnings improvement in ﬁnancial year 2013. The division
thus conﬁrmed its leadership in the core markets of Western Europe and Latin America. During the
year under review, the division focused on converting the entire European product range to Euro
VI-compliant exhaust-gas technology. Daimler Buses set new standards in the luxury coach segment
with the presentation of the new Setra TopClass 500.

D.07
Daimler Buses

Amounts in millions of euros

% change

2013

2012

13/12

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and
development expenditure
thereof capitalized

Production

Sales

Employees (December 31)

124

4,105

3.0

181
3

34,467

33,705

16,603

-221

3,929

-5.6

222
23

31,384

32,088

16,901

-7

-18
-87

+10

-2

D.08
Unit sales by Daimler Buses

2013

2012

13/12

% change

Total

Western Europe

thereof Germany

Mexico

Latin America (excluding Mexico)

Asia

Other markets

33,705

32,088

6,714

2,440

2,959

19,118

1,704

3,210

5,851

2,039

3,477

17,800

1,886

3,074

+15

+20

-15

-10

Earnings signiﬁcantly above prior-year level. Worldwide,
Daimler Buses sold 33,700 buses and bus chassis in 2013
(2012: 32,100). With this growth of 5%, the division conﬁrmed
its leading position in its core markets for buses with a gross
vehicle weight of over eight tons.  D.07 Growth impetus was
provided above all by our core markets Western Europe and
Latin America. Revenue improved by 4% to €4.1 billion. EBIT of
plus €124 million was signiﬁcantly better than in the previous
year (2012: minus €221 million). In 2012, expenses of €155 million
were incurred for the reorganization of the North American
and European business systems. Those measures and other
measures taken in Latin America adversely aﬀected EBIT
by €39 million in 2013.

Positive impact of the “GLOBE 2013” growth and eﬃciency
program. In 2012, we launched the “GLOBE 2013” growth
and eﬃciency campaign in order to utilize additional growth
potential and to strengthen the division’s competitiveness,
especially in Europe. Daimler Buses successfully completed this
program by the end of 2013 and implemented the related
measures. They include the systematic further development
of our European production network, the reduction of variable
costs and the optimization of ﬁxed costs. Some of the mea-
sures will take eﬀect in 2014. Growth in our core markets and
in new markets was supported by a new-customer oﬀensive
and a new system of market management. Measures taken in
the after-sales business also contributed to growth.

164

D | The Divisions | Daimler Buses

Upper picture: Luxury and economy for a state-of-the art travel experience – the Setra TopClass 500 sets new standards in the premium class.
Lower picture: The success of the Mercedes-Benz Tourismo is based on its clear focus as an extremely economical and safe coach.

165

Setra ComfortClass 500 is Coach of the Year 2014. Barely
one year after its world premiere, the new Setra ComfortClass
500 was named “Coach of the Year 2014.” The international
“Bus and Coach of the Year” jury of experts awarded the pres-
tigious prize to the S 515 HD after extensive testing. The jury
was particularly impressed by the economical overall concept
of this generation of Setra coaches, which feature environ-
mentally friendly Euro VI-compliant engines and consume 8.2%
less fuel than the preceding model.

The Mercedes-Benz Citaro, which is the ﬁrst regular-service
bus with Euro VI-compliant drive technology, received
an award from the “Kraftfahrer-Schutz” automobile club
for its environmentally friendly technology.

Major international contracts. The Wiener Linien public
transport company in Vienna has ordered 217 Mercedes-Benz
Citaro buses as part of its ﬂeet modernization program.
In another positive development, we won a contract from
Österreichische Bundesbahnen (Austrian State Railways)
for the delivery of 390 units between 2013 and 2017. In South
Africa, Daimler Buses won a Bus Rapid Transit (BRT) contract
involving the delivery of 134 Mercedes-Benz Euro V chassis for
the Johannesburg metropolitan transport network, which
covers around 120 kilometers. In Brazil, following an invitation
to tender from the city of Brasilia, we received large orders
from four transport companies to renew the bus ﬂeet of the public
transport system. The total order comprises 2,100 Mercedes-
Benz bus chassis. In addition, 500 bus chassis will go to the
operators of the BRT systems in Belo Horizonte.

Reorganization of used vehicle activities under the new
BusStore brand. As part of the reorganization that saw
the introduction of the BusStore brand, Daimler Buses created
a Europe-wide network speciﬁcally for the marketing of used
buses and coaches. With this network, Daimler Buses is strength-
ening its used-bus business. From now on, the division will
oﬀer its customers a large selection of used vehicles from
Mercedes-Benz and Setra – as well as all from other common
brands – under one roof.

Reorganization of bus business in India. Daimler Buses
has successfully integrated its bus business in India into Daimler
India Commercial Vehicles (DICV). In addition, a cooperation
agreement was signed with the British bus body manufacturer
Wrightbus in 2013. On behalf of Daimler Buses, Wrightbus will
ﬁt the locally produced chassis with vehicle bodies.

Successful business developments in all core regions.
In Western Europe, the Daimler Buses brands Mercedes-Benz
and Setra oﬀer not only a complete range of city buses, inter-
city buses and coaches, but also bus chassis. Sales in this region
grew by 15% to 6,700 units due to growth in the business
with complete buses.  D.08 Daimler Buses further enhanced
its leading position in Western Europe and attained market
share of 30.9% in 2013 (2012: 28.3%). The very high demand for
our Mercedes-Benz buses, in particular for the new Citaro
city bus, had a very positive eﬀect on our unit sales in Germany,
with growth of 20% to 2,400 units. Our market share here
was 51.2% (2012: 48.9%). In Turkey, we posted sales of 1,200
units (2012: 1,100 units), although the market there has
become more competitive. In Latin America (excluding Mexico),
the market recovered signiﬁcantly following the introduction
of the stricter Euro V exhaust-gas standards in 2012. Sales
of Mercedes-Benz bus chassis rose by 7% to 19,100 units.
However, demand in Brazil did not meet expectations due to
uncertainty in the market related to the political conditions
there. With a market share of 41.6% (2012: 42.7%), we retained
our leading position in the Latin American market. Sales
of 3,000 units in Mexico were lower than in the previous year.
After the reorganization of the North American business
system and the end of production of Orion buses in 2012,
unit sales in the United States fell, as expected.

Market launch of buses and coaches compliant with Euro VI.
In 2013, with a total of six premieres ranging from the Sprinter
minibus to the super-high-decker, Daimler Buses completed its
line-up of buses and coaches in Europe with vehicles featuring
Euro VI-compliant exhaust-gas technology. The Mercedes-Benz
Citaro, the most successful city bus of all time, was presented
with Euro VI engines already in late 2012. Daimler Buses uses
BlueTec 6 technology for exhaust-gas puriﬁcation in all model
series and engines from Mercedes-Benz and Setra. The new
engines comply with the strict limits of the Euro VI standard
and in some cases the emission levels are signiﬁcantly below
those limits. Emissions of particulates and nitrogen oxides
have been reduced to a level that is almost undetectable. In 2013,
Mercedes-Benz launched the Travego coach, the Tourismo K
compact midibus, the Intouro in new lengths, the Citaro LE and
the Sprinter Travel. The Setra brand also launched new vehi-
cles, including the Setra TopClass 500 and the S 431 DT double-
decker bus of the TopClass 400 series. The new bus generation
sets standards in terms of comfort and economy.

The new Setra TopClass 500 sets new standards in the
luxury travel segment. The dynamic and elegant new coaches
of the Setra TopClass 500 series celebrated their world pre-
miere at the “Busworld Kortrijk” bus show. They represent a new
travel experience that combines luxury and economy at the
highest level. The superior long-distance coaches emphasize the
aspects of design, quality and safety, which they combine
with the outstanding economical features of the newly launched
Setra ComfortClass 500.

166

D | The Divisions | Daimler Buses | Daimler Financial Services

Daimler Financial Services.

At Daimler Financial Services, the number of ﬁnanced or leased cars and commercial vehicles passed
the three-million mark for the ﬁrst time ever. New business and contract volume reached
new record levels. The division also set a new record for brokering automotive insurance policies.
At the end of 2013, the car-sharing program car2go had almost 600,000 customers and was
the market leader in its segment. Once again, customers and dealers alike gave the Daimler Group’s
ﬁnancial services division very high marks.

D.09
Daimler Financial Services

Amounts in millions of euros

% change

2013

2012

13/12

EBIT

Revenue

New business

Contract volume

Investment in property, plant
and equipment

Employees (December 31)

1,268

14,522

40,533

83,539

8,107

1,293

13,550

38,076

79,986

7,779

-2

-17

Contract volume of more than three million vehicles.
The business operations of Daimler Financial Services once
again developed favorably in 2013. The company concluded
nearly 1.2 million new ﬁnancing and leasing contracts worldwide
in the year under review, the total number of all ﬁnanced or
leased vehicles passed the three-million mark for the ﬁrst time.
New business increased by 6% to €40.5 billion, thus setting
a new record. Contract volume increased by 4% to a record value
of €83.5 billion. Adjusted for exchange-rate eﬀects, the
increase amounted to 11%. EBIT of €1,268 million was in the
magnitude of the prior-year level (2012: €1,293 million).
 D.09

Successful business development in Europe. Daimler Finan-
cial Services concluded new ﬁnancing and leasing contracts
worth €19.4 billion in the Europe region (+7%). Business devel-
opment was especially dynamic in the Benelux countries (+26%),
the United Kingdom (+21%) and Turkey (+13%). In Germany,
Mercedes-Benz Bank’s new business increased by 1% to €9.2
billion; the volume of deposits in the direct banking business
was €11.3 billion (-7%). At the end of the year, Daimler Financial
Services’ contract volume in Europe amounted to €37.3 billion,
representing an increase of 8%.

Gains in North and South America. New business in North
and South America reached €15.5 billion, topping the high level
of the previous year by 6%. In the United States, new business
grew by a further 10% compared with 2012. There were strong
gains also in Argentina (+22%) and Mexico (+10%). Contract
volume in the Americas region reached €34.6 billion, represent-
ing an increase of 2%. Adjusted for exchange-rate eﬀects,
the increase amounted to 9%.

Strong demand in Africa & Asia-Paciﬁc. In the Africa &
Asia-Paciﬁc region, new business increased compared with
the previous year by 6% to €5.6 billion. Business development
was especially dynamic in India (+96%) and Thailand (+56%).
Contract volume at the end of 2013 was €11.6 billion, increasing
by 2% compared with a year earlier. Adjusted for exchange-
rate eﬀects, this represents an increase of 19%.

167

Upper picture: Employees of Mercedes-Benz Financial Services in Taiwan. Our customers enjoy ﬁrst-class service around the globe.
Lower picture: For the ﬁrst time ever, Daimler Financial Services’ contract volume passed the mark of three million vehicles in 2013.

168

D | The Divisions | Daimler Financial Services

Record set for automotive insurance brokerage. In the year
under review, Daimler Financial Services brokered approxi-
mately 1.27 million automotive insurance policies. This repre-
sents an increase of 20% compared with the previous year
and is a new record. The development of demand for our insur-
ance policies was particularly good in India (+208%) and
Turkey (+145%). In China, an average of six out of ten cars with
the star were delivered with an insurance policy brokered
by us. Thanks to our cooperation with major insurance compa-
nies, Mercedes customers receive attractive insurance con-
ditions for their vehicles and can have their automobiles repaired
in authorized workshops in the case of damage.

Growth also in the business with commercial customers.
In 2013, Daimler Financial Services once again helped individual
commercial customers, medium-sized companies and major
international corporations in numerous countries to ﬁnance and
manage their vehicles and ﬂeets. New business stood at
146,000 units, which represents a 16% increase on the previous
year. A total of 357,000 contracts with commercial customers
were on the books – a 9% increase compared with 2012. In addi-
tion, Daimler Fleet Management realigned its activities and
expanded its presence in Europe. In the United Kingdom for
example, Daimler Fleet Management has been oﬀering
attractive services for multi-brand ﬂeets in cooperation with
its partner Leasedrive since the fourth quarter of 2013.

car2go with nearly 600,000 customers. In 2013, we continued
to expand our business operations in the area of innovative
mobility services. At the end of the year, the car2go mobility
concept was represented in 25 cities in Europe and North
America and was operating a ﬂeet of more than 10,000 smart
fortwo cars. In 2013, car2go attracted more than 300,000
new customers worldwide, thus more than doubling its customer
base compared with the end of 2012. With a total of nearly
600,000 customers, car2go was the market leader in the seg-
ment of ﬂexible short-term car rentals. The moovel mobility
platform, which intelligently connects various mobility services
with one another and shows customers how best to get
from point A to point B via various means of transportation,
was launched in 2013 in the cities of Nuremberg and Munich
and in the Rhine-Ruhr region. In addition, the Park2gether
pilot project was launched in Berlin and Hamburg in November.
This innovative project uses an online exchange to bring
together parking space owners and drivers seeking a parking
space.

Expansion of digital sales channels. In 2013, Daimler
Financial Services expanded the online availability of its prod-
ucts in order to remain close to its customers in the digital
world as well. With the help of websites and apps that are clearly
organized and easy to use, customers can access comprehen-
sive information about the company’s services and can ﬁnd out
the monthly installments for their chosen car. In many coun-
tries, existing customers can also use online portals to review
their contract data and make any desired changes. In the
United States, some of these functions have already been directly
integrated into Daimler vehicles’ onboard infotainment systems.

High levels of customer and dealer satisfaction. The out-
standing quality of the services provided by Daimler Financial
Services once again received numerous honors in the year
under review. In Germany, the industry magazine “Autohaus”
named Mercedes-Benz Bank the best provider of automotive
ﬁnancial services in the premium segment for the ﬁfth year
in succession. In addition, the “Autohaus” insurance monitor
once again named Mercedes-Benz Bank as by far the best
provider of automotive insurance in the premium segment.
The ﬁnancial services oﬀered by Mercedes-Benz Bank also
took ﬁrst place in a test purchase study commissioned by the
automotive magazine “Automobilwoche.” In a survey of dealer
satisfaction in the United Kingdom, Daimler Financial Services’
national subsidiary beat its competitors for the seventh time
in a row. In the United States, Mercedes-Benz Financial Services
took ﬁrst place for the third consecutive year in the “Floor-
plan Satisfaction” category of a dealer ﬁnancing study conducted
by J.D. Power. In China, the call center of the Mercedes-Benz
Auto Finance Company China was honored as the country’s best
call center in its class.

A highly attractive employer. In the survey conducted in 2013
by the independent “Great Place to Work” institute, Daimler
Financial Services once again stood out as an attractive employer.
The national subsidiaries of Daimler Financial Services were
among the favorite employers in Portugal, the Netherlands,
Turkey, China, South Korea, Canada and Mexico. For some of
the national subsidiaries, this was a repeated honor.

Toll Collect continued to operate smoothly in 2013.
This automatic system for toll collection on German highways
continued to operate smoothly and reliably in 2013. Approx-
imately 775,300 onboard devices for automatic toll collection
were in operation at the end of the year. A total of 27.2 billion
kilometers driven was recorded during the year under review.
Daimler Financial Services holds a 45% equity interest in
the Toll Collect consortium.

169

Corporate
Governance.

Annual Meeting

Shareholders

Integrity

Supervisory
Board

Corporate governance

Daimler’s Board of Management and Supervisory Board are

committed to the principles of good corporate governance.

All of our activities are based on the principles of responsible,

transparent and sustainable management.

E | Corporate Governance.

E | Corporate Governance | Contents

172 – 174 Report of the Audit Committee

178 – 183 Corporate Governance Report

– The main principles applied in our corporate governance
– Composition and mode of operation of the Board of
Management, the Supervisory Board and its committees
– Shareholders and the Annual Shareholders’ Meeting
– Shares held by the Board of Management and the
Supervisory Board, directors’ dealings
– Risk management and ﬁnancial reporting
– Corporate governance statement

175 – 176

Integrity and Compliance

– Continuation of worldwide integrity dialog
– Executives as a role model
– A view from outside from the Advisory Board with
external experts
– Strengthening of compliance management and

the whistleblower system

– Cooperation with our business partners

177

Declaration by the Board of Management and
Supervisory Board of Daimler AG of Compliance
with the German Corporate Governance Code

– D & O insurance deductible for the Supervisory Board
– Targets for the composition of the Supervisory Board
– Upper limits for Board of Management remuneration

171

Report of the Audit Committee.

Dear Shareholders,

On the basis of the allocation of tasks laid down in the Rules
of Procedure for the Supervisory Board and its committees,
the Audit Committee deals primarily with questions of ﬁnancial
reporting. It also discusses the eﬀectiveness and functional
capabilities of the risk management system, the internal con-
trol system, the internal auditing system and compliance man-
agement. In addition, it deals with the annual audit and reviews
the qualiﬁcations and independence of the external auditors.

After receiving the approval of 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 independent members of the Audit Committee, both the
Chairman of the Audit Committee, Dr. h. c. Bernhard Walter, and
Dr. Clemens Börsig have expertise in the ﬁeld of ﬁnancial
reporting, as well as special knowledge and experience in the
application of accounting principles and internal methods
of control.

The six meetings of the Audit Committee in 2013 were attended
by, in addition to the members of the Audit Committee, the
Chairman of the Supervisory Board, 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 and other experts were also present for the appro-
priate 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 Man-
agement responsible for Finance and Controlling and for Integrity
and Legal Aﬀairs and the heads of Corporate Accounting,
Internal Auditing, Group Compliance and Legal Aﬀairs. The Chair-
man of the Audit Committee informed the Audit Committee
about the results of those bilateral discussions in each case at
the next available opportunity. The Chairman of the Audit
Committee also informed the Supervisory Board about the
activities of the Committee and about its meetings and
discussions in the following Supervisory Board meetings.

In a meeting attended by the external auditors in early February
2013, the Audit Committee dealt with the preliminary ﬁgures of
the annual company ﬁnancial statements and the annual con-
solidated ﬁnancial statements for the year 2012, as well as with
the proposal on the appropriation of proﬁts made by the
Board of Management. The preliminary key ﬁgures were pub-
lished at the Annual Press Conference on February 7, 2013.

In another meeting in February 2013, the Audit Committee 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 for the
year 2012, each of which had been issued with an unqualiﬁed
audit opinion by the external auditors, as well as with the
proposal on the appropriation of proﬁts; representatives of the
external auditors were present and reported on the results of
the audit. In preparation, the members of the Audit Committee
and all of the members of the Supervisory Board were pro-
vided with comprehensive documentation, including the Annual
Report with the consolidated ﬁnancial statements according
to IFRS and the combined management report for Daimler AG
and the Daimler Group, the corporate governance report
and the remuneration report, the annual ﬁnancial statements
of Daimler AG, the proposal made by the Board of Manage-
ment on the appropriation of proﬁts, the audit reports of KPMG
on the annual company ﬁnancial statements of Daimler AG
and the annual consolidated ﬁnancial statements according to
IFRS, each including the combined management report, and
the drafts of the reports of the Supervisory Board and of the
Audit Committee. The audit reports and important issues
related to ﬁnancial reporting were discussed with the external
auditors. In this context, the Audit Committee of Daimler AG
also dealt with the monitoring of the ﬁnancial reporting process,
the eﬀectiveness of the internal control system, the risk
management system and the internal auditing system, as well
as questions of compliance. This also included the further
development and required adjustments of the Group-wide com-
pliance structure and activities as decided upon by the Board
of Management, for example the optimized due-diligence process
for sales partners. Following an intensive review and discus-
sion, the Audit Committee recommended that the Supervisory
Board approve the annual ﬁnancial statements and adopt
the recommendation of the Board of Management to pay a divi-
dend of €2.20 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit Committee
for the year 2012.

172

E | Corporate Governance | Report of the Audit Committee

Dr. Bernhard Walter, 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 2012 for
auditing and non-auditing services. With due consideration of 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
2013. The Audit Committee partially based its recommendation
on the very good results of its own quality analysis carried
out in May and June 2012 of the external audit for the previous
ﬁnancial year. Subject to the outcome of voting by the Annual
Shareholders’ Meeting, the Committee approved the fees to be
agreed upon with the external auditors for ﬁnancial year 2013.
Finally, on the basis of its responsibility, the Audit Committee
dealt with the draft agenda for the 2013 Annual Shareholders’
Meeting and the annual audit plan of the Internal Auditing
department.

In the meetings during 2013 relating to the quarterly results,
the Audit Committee discussed the interim ﬁnancial reports
before their publication with the Board of Management and
with the company of auditors engaged to carry out the auditors’
review of interim ﬁnancial statements, dealt with the respective
risk reports, and received reports from the Group Compliance
and Corporate Audit departments. In addition, the Audit
Committee dealt on a quarterly basis with notiﬁcations from
employees of the Company concerning possible violations
of rules. Employees and third parties submitted these notiﬁca-
tions conﬁdentially and if desired anonymously (if compatible
with local data-protection law) to the Company’s own whistle-
blower system, the BPO (Business Practices Oﬃce), which
then processed them. Until February 2013, the Audit Committee
regularly communicated with the independent monitor, Judge
Louis Freeh. On the occasion of his last participation in a meet-
ing of the Audit Committee, Judge Freeh reported on his ﬁnal
impressions of the status of compliance at Daimler. Judge Freeh
stated that the Group’s management and employees had
acted in an extremely committed manner. He explained that as

a result, it had been possible to establish a compliance system
of the highest standards, which could bear any comparison
at an international level. The Audit Committee thanked Judge
Freeh for his constructive cooperation in the past years.

The Audit Committee received the report on non-audit services
provided by the external auditors in its meeting in June 2013.
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 determined. This meeting was also used to analyze the
audit for the year 2012 and to perform the Audit Committee’s
monitoring duties with regard to the ﬁnancial reporting process
and the functional capabilities of the internal control system, the
risk management system and the internal auditing system. On
the basis of the statements of the external auditors as assessed
by the Audit Committee, the internal control and risk man-
agement system was dealt with in this context. As well as the
area of ﬁnancial reporting, the internal control system includes
the functions of internal auditing and compliance management.
The Committee discussed the activity reports on the internal
control and risk management system and dealt in particular detail
with changes to the system and its further development.

Also in the meeting in June 2013, the Audit Committee dealt with
new developments in accounting and ﬁnancial reporting and
other audit-relevant areas; the members of the Committee hereby
undertook the training and further training required among
other things for the performance of their tasks. The Committee
also received information on the status of legal risks, on the
new pension management system, on the status of currency and
liquidity management and on other current topics.

173

Also in this meeting, the Committee discussed the report on
the fees paid to the external auditors in the year 2013 for auditing
and non-auditing services. The Audit Committee 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 ﬁnancial year 2014;
in this context, the results of the independence review and the
discussion of the quality of the external audit were taken into
consideration. Subject to the consenting vote of the shareholders
in 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 year 2014.

Finally, on the basis of its responsibility, the Audit Committee
dealt with the draft agenda for the 2014 Annual Shareholders’
Meeting and the annual audit plan of the Internal Auditing
department.

As in previous years, the Audit Committee once again conducted
a self-evaluation of its own activities in 2013. 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 2014

The Audit Committee

Dr. h. c. Bernhard Walter
Chairman

In the meeting in July 2013, on the basis of the report by the
Group’s data protection oﬃcer, the Audit Committee dealt with
key topics and current developments in the ﬁeld of data
protection. In its meeting in October 2013, for topical reasons,
the Committee received reports from the heads of the Legal
Aﬀairs and Tax departments.

In a meeting attended by the external auditors in early February
2014, the Audit Committee dealt with the preliminary ﬁgures of
the annual company ﬁnancial statements and the annual
consolidated ﬁnancial statements for the year 2013, as well as
with the proposal on the appropriation of proﬁts made by
the Board of Management. The preliminary key ﬁgures were pub-
lished at the Annual Press Conference on February 6, 2014.

In another meeting in February 2014, the Audit Committee exam-
ined and discussed 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 2013, which had been issued with an unqualiﬁed audit
opinion by the external auditors, as well as with the proposal
on the appropriation of proﬁts; this took place 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 additional information. In preparation, the members
of the Audit Committee and all members of the Supervisory Board
were provided with comprehensive documentation, including
the Annual Report with the consolidated ﬁnancial statements
according to IFRS and the combined management report for
Daimler AG and the Daimler Group, the corporate governance
report and the remuneration report, the annual ﬁnancial
statements of Daimler AG, the proposal made by the Board of
Management on the appropriation of proﬁts, the audit reports
of KPMG on the annual company ﬁnancial statements and the
annual consolidated ﬁnancial statements according to IFRS of
Daimler AG, each including the combined management report,
and the drafts of the reports of the Supervisory Board and
of the Audit Committee. The audit reports and important issues
related to ﬁnancial reporting were discussed with the external
auditors. In this context, the Audit Committee also dealt with the
monitoring of the ﬁnancial reporting process, the eﬀectiveness
of the internal control system, the risk management system and
the internal auditing system, as well as questions of compliance.
Following an intensive review and discussion, the Audit Com-
mittee recommended that the Supervisory Board approve the
annual ﬁnancial statements and adopt the recommendation of
the Board of Management to pay a dividend of €2.25 per share
entitled to a dividend.

Furthermore, the Audit Committee approved the Report of the
Audit Committee in the current version.

174

E | Corporate Governance | Report of the Audit Committee | Integrity and Compliance

Integrity and Compliance.

A culture of integrity

Integrity is one of our four corporate values, which form the
foundations for 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. For these reasons,
Daimler has a Board of Management position for Integrity and
Legal Aﬀairs, which comprises the Legal and Compliance orga-
nization, Corporate Data Protection and the units for Integrity
Management and Corporate Responsibility Management. Our goal
is to make integrity a permanent part of our corporate culture.
The further development and permanent establishment of integ-
rity is therefore also a component of the target agreements
for Board of Management remuneration. Among other things, we
orient our business conduct towards the principles of the Global
Compact of the United Nations. Daimler is a founding member of
this initiative by Koﬁ Annan and is a member of the LEAD Group.

Dialog, training and communication. Daimler promotes
integrity through a variety of measures. They include the
Group-wide Integrity Dialog, which has been in progress since
2011 and was continued in 2013. The Integrity Dialog is
aimed at the entire workforce and is managed by a workgroup
made up of members from various Board of Management
areas. The regular exchange of opinions on questions of integ-
rity is to become an integral component of our everyday
working life. This objective is supported by oﬀers speciﬁc to
various units and target groups as well as by extensive
accompanying communication – for example through a dedi-
cated Intranet section on the subject.

Our “Integrity Code,” which took eﬀect in November 2012,
reﬂects the results of this dialog. The principles of behavior
and guidelines for everyday conduct set out in the Integrity Code
are therefore based on a shared understanding of values.
The Code is valid throughout the Group and is available in 22
languages. In addition, an intranet guide has been prepared
for the application of the Code in everyday situations, providing
answers to the most frequently asked questions. Furthermore,
a team of experts is available to answer questions on all aspects
of the Code.

The Integrity Code also forms the basis for the range of
training courses we oﬀer on integrity and compliance. In 2013,
we revised our training approach in order to intermesh the
two areas more closely with each other. Depending on the risk
and target group, we use classroom trainings and web-based
training. In this way, we intend to anchor ethical and compliant
behavior at the Group over the long term.

In 2013, we developed a new course of web-based training that
clearly communicates our principles of behavior and our shared
understanding of values. The training course includes chapters on
the prevention of corruption, on our BPO whistleblower system
and – in addition for managers – a module on antitrust law. The
course is obligatory and is addressed at approximately 112,000
employees with e-mail access worldwide.

From 2011 until 2013, we increased the awareness of our
employees worldwide to integrity and compliance with our
“fairplay” campaign – with posters and leaﬂets in 19 languages
and in more than 40 countries.

Managers as a role model. Our Integrity Code deﬁnes the
expectations that Daimler has of its managers. Due to their
role of setting an example, they have a special responsibility
for the culture of integrity at Daimler. For this reason, we
placed a focus on oﬀers for this target group in 2013. That
includes modules for integrity and compliance in all seminars
for promoted managers. Our Top Management Meeting in 2013
also focused on the topic of leadership responsibility. In
addition, integrity and compliance are important criteria in
the annual target agreements and in assessing the target
achievement of our managers.

External perspective through the Advisory Board. The
“Advisory Board for Integrity and Corporate Responsibility” that
we established in September 2012 with external experts
from various ﬁelds accompanies the integrity process at Daimler
with a constructively critical approach. The Board met three
times in 2013 to exchange information and opinions on current
topics with representatives of the Company.

175

Whistleblower system. Our whistleblower system BPO
(Business Practices Oﬃce) serves as a valuable source of infor-
mation on possible risks and speciﬁc violations of rules. For us,
it is therefore an important instrument for good corporate
governance.

Our whistleblower system receives information on misconduct
from employees and from external parties worldwide, around
the clock, through various reporting channels and - if allowed by
local law - also anonymously. This allows us to react appro-
priately, if possible before any damage has been caused for our
employees and the Company. A prerequisite for the accep-
tance of a whistleblower system is that it is organized in a fair
manner, that it follows the principle of proportionality, and
that whistleblowers and other parties involved are equally pro-
tected. We laid down these criteria in a corporate policy with
worldwide validity in 2013. In addition, since February 1, 2012,
in Germany, we have commissioned an independent lawyer as
a neutral intermediary. He also accepts information on violations
of rules and due to his profession duty of discretion he is
obliged to maintain conﬁdentiality.

Cooperation with our business partners. We regard our
business partners’ integrity and behavior in conformance with
regulations as a ﬁrm precondition for trusting cooperation.
In the selection of our direct business partners, we ensure that
they comply with the law and observe ethical principles.
Depending on the risk, we oﬀer our business partners web-based
or classroom trainings. In addition, we have clearly formulated
the expectations we have of our business partners in the brochure
“Ethical Business. Our Shared Responsibility.”

Settlement with the US authorities: conclusion of moni-
torship. The three-year monitorship by Louis Freeh agreed upon
in the framework of the settlement reached with the US
Department of Justice ended as planned on March 31, 2013.
The monitor conﬁrmed that with the end of the monitorship, we
had reached an exemplary standard of integrity and compliance.
We regard this as an motivation and obligation to maintain
the achieved standard, to develop it further, and to consistently
remain on the path we have taken.

Compliance

Compliance is an essential element of integrity culture at
Daimler. For us, it is only natural that we adhere to all relevant
legislation, voluntary commitments and internal rules, and
that we act in accordance with ethical principles. We place the
utmost priority on complying with all applicable anti-corruption
regulations and on maintaining and promoting fair competition.
We have set this out in binding form in our Integrity Code, and
we intend to permanently establish integrity and compliance as
ﬁxed components of our value chain.

Compliance management system (CMS) as a foundation.
Our CMS is based on national and international standards and
helps us to ensure that we conduct ourselves in conformance
with applicable laws and regulations in our day-to-day business.
We continually review the eﬀectiveness of the system and
adjust it to worldwide developments, changed risks and new legal
requirements. In this way, we continuously improve our eﬃ-
ciency and eﬀectiveness. In 2013, we improved our processes,
such as the due diligences of our business partners, and
further developed the measures we take to prevent money
laundering in goods trading. Our CMS is subject to periodic
reviews by the Internal Auditing department and fulﬁlls external
requirements.

Analysis of compliance risks. In a further improved systematic
risk analysis for the year 2013, as in previous years, we
assessed the compliance risks of all our business units. Both
qualitative and quantitative indicators were assessed, includ-
ing the respective business model, business environment and
type of contracting-party relationship. The results of this
analysis are the basis for risk management. Together with the
business units, we deﬁne measures to be taken to minimize
risks. One focus of our activities is on sales companies in high-risk
countries. Responsibility for implementing and monitoring
these measures lie within the management of each business
unit, which cooperates closely with the Group Compliance
department.

Strengthening our worldwide structures. In order to further
establish our Group-wide Compliance Organization as a partner
of the divisions and to even better counteract the risks speciﬁc
to our various divisions and markets, we have strengthened our
divisional structure. Each division is supported by a divisional
or regional compliance oﬃcer, who advises the business units
on matters of compliance. In addition, worldwide local com-
pliance managers make sure that our standards are observed.
In order to guarantee the independence of the divisions, the
divisional and regional compliance oﬃcers report to the Chief
Compliance Oﬃcer. He reports directly to the Member of the
Board of Management for Integrity and Legal Aﬀairs and to the
Chairman of the Supervisory Board.

176

E | Corporate Governance | Integrity and Compliance | Declaration of compliance with the German Corporate Governance Code

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.

Upper limits for the total monetary remuneration of the
members of the Board of Management and its variable remu-
neration components (Clause 4.2.3 Paragraph 2 sentence 6):
This recommendation was newly included in the Code of
May 13, 2013. The remuneration agreements with the members
of the Board of Management already specified upper limits
for remuneration components at the time, which however did not
yet fully satisfy the requirements of the new recommendation.
With effect from January 01, 2014, the members of the Board of
Management consented to the inclusion of the upper limits
recommended in Clause 4.2.3 Paragraph 2 sentence 6 of the
Code in their current agreements. The modification agree-
ments also contained provisions for upper limits for the annual
bonuses for the financial years 2012 and 2013 that had not yet
come due for payment, as a percentage of basic remuneration.
The percentage limit relative to the assignment value for the
remuneration from the long-term and share-based remuneration
component, referred to as Performance Phantom Share Plan,
was also extended to include dividend equivalents due to be paid
in the future on the tranches that were issued and are still
running as of January 1, 2014. Any further intervention in the
remuneration for previous financial years would no more be
appropriate under the principle of contractual fidelity and in our
understanding of Clause 4.2.3 Paragraph 2 sentence 6 are
also not required.

Stuttgart, December 2013

For the Supervisory Board
Dr. Manfred Bischoff
Chairman

For the Board of Management
Dr. Dieter Zetsche
Chairman

The Board of Management and the Supervisory Board of
Daimler AG declare that the recommendations of the German
Corporate Governance Code Commission in the Code version
dated May 15, 2012, published by the Federal Ministry of Justice
in the official section of the Federal Gazette, have been and
are being applied since the last declaration of compliance issued
in December 2012, with the exception of Clause 3.8 Para-
graph 3 (D & O insurance deductible for the Supervisory Board)
and one deviation from Clause 5.4.1 Paragraph 2 (concrete
objectives for the composition of the Supervisory Board), which
was declared as a precautionary measure. The recommenda-
tions of the German Corporate Governance Code in the version
dated May 13, 2013 have continued to be observed by Daimler AG
since the time of their publication in the official section of
the Federal Gazette, with the aforementioned exceptions and
the deviation from Clause 4.2.3 Paragraph 2 sentence 6
(upper limits for the remuneration of the members of the Board
of Management and its variable remuneration components)
declared as a precautionary measure. Daimler AG will continue
to observe these recommendations in the future, with the
declared and elaborated deviations.

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 remu-
neration 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 compen-
sation 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 in
the absence of any influence on the appointments for the
employees’ side, the Supervisory Board has limited its target
objectives for the number of independent members of the
Supervisory Board and consideration of potential conflicts of
interest in its composition to the shareholders’ side.

177

Corporate Governance Report.

Good corporate governance is the foundation for 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 the
sustainable success of the Daimler Group with its strong traditions.

The main principles applied in our corporate governance

German Corporate Governance Code. 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 Incor-
poration. The German Corporate Governance Code gives
recommendations and makes suggestions for the details of this
framework. There is no statutory duty to follow these standards.
But 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 2013,
Daimler AG has followed and continues to follow the recommen-
dations of the German Corporate Governance Code. The
declaration of compliance is printed on E page 177 of this
Annual Report and can be accessed on our website at
w daimler.com/dai/gcgc. Previous, no longer applicable
declarations of compliance from the past five years and
the German Corporate Governance Code are also available there.

Daimler AG has followed and continues to follow the suggestions
of the Code as amended on May 13, 2013 with just one exception:
Deviating from the suggestion in Clause 2.3.4 of the German
Corporate Governance Code, 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. Continuing
the broadcast after that point, in particular broadcasting com-
ments made by individual shareholders, could be construed as
an unjustified infringement of privacy rights. When considering
this matter, the interests of transmission do not automatically
take precedence over shareholders’ privacy rights. This is
reflected by the statutory requirement for the entire transmission
to have a legal basis in the Company’s Articles of Incorporation
or in the rules of procedure for shareholders’ meetings.

Standards of Business 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 composed of several documents and
policies and are based on the company values of passion,
respect, integrity and discipline. Two key elements of our Stan-
dards of Business Conduct are the “Integrity Code” and our
“Business Partner Brochure.”

Integrity Code. The Integrity Code came into effect in 2012
and replaced the guidelines that had previously been in effect
since 1999. It defines the principles of behavior and guidelines
for everyday conduct at Daimler, and apply to interpersonal
conduct within the company as well as conduct toward cus-
tomers and business partners. Fairness, responsibility and com-
pliance with legislation are key principles in this context.
The Integrity Code is based on a joint understanding of values,
which was developed together with the Daimler employees.
In addition to general principles of behavior, it includes require-
ments and regulations concerning the protection of human
rights, dealing with conflicts of interest and preventing all forms
of corruption.

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 internationally
recognized human and workers’ rights, such as the prohibition
of child labor and forced labor, as well as freedom of associa-
tion and sustainable protection of the environment. Daimler also
commits itself to guaranteeing equal opportunities and adhering
to the principle of “equal pay for equal work.” The Integrity Code
is available on the Internet at w daimler.com/dai/guidelines.

Business Partner Brochure. Our brochure under the heading
“Ethical Business. Our Shared Responsibility.” appeared in
2012. It shows with reference to the United Nations Global
Compact principles the expectations that Daimler has with
regard to ethical behavior in business. Since then, more than
63,000 external partners have received the brochure – for
example all suppliers, joint-venture partners, dealers, and mar-
keting and sponsoring partners. The Business Partner Brochure
is also available on the Internet at w daimler.com/dai/iac.

178

E | Corporate Governance | Corporate Governance Report

Composition and mode of operation of the Board of
Management, the Supervisory Board and its committees
 E.01

Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict sep-
aration between the Board of Management and the Supervi-
sory Board (two-tier board). Accordingly, the Board of Manage-
ment 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.

Board of Management. As of December 31, 2013, the Board
of Management of Daimler AG comprised eight members;
since January 29, 2014, it has had seven members. Information
on their areas of responsibility and their curricula vitae are
posted on our website at w daimler.com/bom. The members
of the Board of Management and their areas of responsibility
are also listed on E pages 12 and 13 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 com-
parable requirements of companies outside the Daimler Group.

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 and decides
on the corporate goals. The members of the Board of Man-
agement have joint responsibility for managing the Group’s entire
business. Irrespective of this overall responsibility, the indi-
vidual members of the Board of Management manage their allo-
cated areas within the framework of their instructions in their
own responsibility. 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 man-
agement report of the Company and the Group. 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 tasks of the Board of Management also
include establishing and monitoring an appropriate and eﬃcient
risk management system.

For certain types of transaction of fundamental importance
deﬁned by the Supervisory Board, the Board of Management
requires the 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 management system and com-
pliance. 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 w daimler.com/
dai/rop. Those rules describe for example the procedure to be
observed when passing resolutions and ways to avoid conﬂicts
of interest.

The Board of Management has not formed any committees.

When making appointments to executive positions at the Group,
the Board of Management gives due consideration to the
issue of diversity, with regard for example to the criteria of age,
internationality and gender. Diversity-management activities
include diversity workshops in the divisions in which current
diversity challenges and ideas are discussed across various
hierarchies, the development of internal networks, external
cooperation with educational facilities, and membership of
selected initiatives. A key area of action is the targeted promotion
of women, by means for example of ﬂexible working-time
arrangements, setting up day nurseries close to workplaces, a
special mentoring program for women and a separate program
for encouraging next-generation female specialists in the ﬁelds
of engineering and technology. The proportion of women in
executive positions is currently 13% and is to be increased to
20% by the year 2020.

Supervisory Board. In accordance with the German Codeter-
mination Act (MitbestG), the Supervisory Board of Daimler AG
comprises 20 members. Half of them are elected by the share-
holders at the Annual Meeting. The other half comprises mem-
bers who are elected by the Company’s employees who work
in Germany. Information on the individual members of the Super-
visory Board is available on the Internet at w daimler.com/
dai/supervisoryboard and on E pages 20 and 21 of this Annual
Report. 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 monitors and advises the Board of
Management with regard to its management of the Company.
At regular intervals, the Supervisory Board receives reports
from the Board of Management on the Group’s strategy, corpo-
rate planning, revenue development, proﬁtability, business
development and general situation, as well as on the internal
control system, the risk management system and compliance.
The Supervisory Board has retained the right of approval for trans-
actions of fundamental importance. Furthermore, the Super-
visory Board has speciﬁed the information and reporting duties
of the Board of Management to the Supervisory Board, to
the Audit Committee and – between the meetings of the Super-
visory Board – to the Chairman of the Supervisory Board.

E.01
Governance structure

Shareholders (Annual Meeting of shareholders)

Election of shareholder representatives to the Supervisory Board

Supervisory Board (10 shareholder and 10 employee representatives),
Nomination Committee, Audit Committee, Presidential Committee,
Mediation Committee

Appointments, monitoring, consulting

Board of Management

179

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 connection
with the composition of the Board of Management, the Super-
visory 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 par-
ticular to age, nationality, gender and other personal char-
acteristics. The Supervisory Board also decides on the system
of remuneration 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 remu-
neration 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 workforce. For the individual Board of Management
remuneration in total and with regard to its variable components,
the Supervisory Board has set upper limits taking eﬀects as of
January 1, 2014. Further information on Board of Management
remuneration can be found in the Remuneration Report of this
Annual Report. E pages 119 ﬀ

The Supervisory Board reviews the annual company ﬁnancial
statements, the annual consolidated ﬁnancial statements and
the 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 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 Super-
visory Board approves the ﬁnancial statements and the
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 2013 is
available on E pages 14 ﬀ of this Annual Report and on the
Internet at w daimler.com/dai/sbc.

The Supervisory Board has given itself a set of rules of procedure,
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 proce-
dure of passing resolutions. The rules of procedure of the Super-
visory Board can be seen on our website at w daimler.com/
dai/rop.

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 a so-called executive session for
discussions of the Supervisory Board in the absence of the
members of the Board of Management.

The Supervisory Board is to be composed so that its members
together dispose of the knowledge, skills, and specialist expe-
rience that are required for the proper execution of their tasks.
Proposals by the Supervisory Board of candidates for election
by the Shareholders’ Meeting as members representing the share-
holders of Daimler AG, for which the Nomination Committee
makes recommendations, take not only the requirements of
applicable law, the Articles of Incorporation and the German
Corporate Governance Code into consideration, but also a list
of criteria of qualiﬁcations and experience. They include for
example market knowledge in the regions important to Daimler,
expertise in the management of technologies and experience
in certain management functions. Other important conditions
for productive 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.

With regard to its own composition, the Supervisory Board has
set the following goals, which, while considering the Group’s
speciﬁc situation, also consider the international activities of the
Group, potential conﬂicts of interest, the number of indepen-
dent Supervisory Board members, an age limit to be set, and
diversity, and allow for the appropriate participation of women:

– In order to ensure suﬃcient internationality, for example by

means of many years of international experience, a proportion
of at least 40% of international members representing the
shareholders, and the resulting proportion of the entire Super-
visory Board of at least 20%, is deemed by the Supervisory
Board to be an appropriate target. Irrespective of the many
years of international experience of other members of the
Supervisory Board, this target is already exceeded with Dr. Paul
Achleitner, Sari Baldauf, Petraea Heynike, Andrea Jung,
Gerard Kleisterlee and Lloyd G. Trotter on the shareholders’
side with a proportion of 60% and with Valter Sanches on
the employees’ side with more than one third for the entire
Supervisory Board.

– At least half of the members of the Supervisory Board

representing the shareholders should have
· neither an advisory nor a board function for a customer,

supplier, creditor or other third party nor

· a business or personal relationship to the company or

its boards

whose speciﬁc details could cause a conﬂict of interests.
No potential conﬂict of interests currently exists for any
member of the Supervisory Board representing the share-
holders.

– 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 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 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 indi-
cations for any of the members of the Supervisory Board
representing the shareholders that relevant relationships or
circumstances exist that would compromise their indepen-
dence. No member of the Supervisory Board is a member of
a board of, or advises, a signiﬁcant competitor.

180

E | Corporate Governance | Corporate Governance Report

– The Supervisory Board has decided to adjust the general

age limit for its members. It has changed the rules of proce-
dure so that candidates for election as representatives of
the shareholders 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 the election. This is intended to expand the group
of potential Supervisory Board candidates and also to allow
reelection. None of the members of the Supervisory Board
currently in oﬃce who was proposed and elected for a full
period of oﬃce exceeded the applicable general age limit
at the time of his or her election.

– With regard to the appropriate consideration of women, on the
basis of the Daimler Group’s objectives, the Supervisory
Board set its own target of having 20% of all the positions
on the Supervisory Board occupied by women. In addition, at
least 30% of the Supervisory Board members representing
the shareholders should be female. These targets have
already been met: With Sari Baldauf, Petraea Heynike and
Andrea Jung, 30% of the members on the shareholders’
side are women. With the members on the employees’ side
newly elected during the reporting period, Dr. Sabine
Maaßen and Elke Tönjes-Werner, the proportion of women
in the entire Supervisory Board is 25%.

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. No member of the Super-
visory Board is a member of the board of management of a
listed company or has a board or advisory function for a signiﬁ-
cant competitor. The members of the Supervisory Board
attend in 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 subjects of technological and economic
developments, accounting and ﬁnancial reporting, internal
control and risk management systems, compliance,
new legislation and board of management remuneration.

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 permis-
sible 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 Media-
tion 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 com-
mittee meeting. The Supervisory Board has issued rules of pro-
cedure for each of its committees. Those rules of procedure
can be seen on our website at w daimler.com/dai/rop as well
as information on the current composition of these committees
w daimler.com/dai/sbc, which is also available on E page 21
of this Annual Report.

Presidential Committee. The Presidential Committee is com-
posed 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 and is responsible for their contractual
aﬀairs. It submits proposals to the Supervisory Board on the
design of the remuneration system for the Board of Management
and on the appropriate individual remuneration of its mem-
bers. In this context, it follows the relevant recommendations
of the German Corporate Governance Code, to the extent that
the Company has not declared a deviation pursuant to Section
161 of the German Stock Corporation Act (AktG). The Presi-
dential Committee decides on the granting of approval for side-
line 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 side-
line activities of each member 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.

Nomination Committee. The Nomination Committee is com-
posed 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 comprised solely of members representing the
shareholders and makes recommendations to the Supervisory
Board concerning persons to be proposed for election as
members of the Supervisory Board representing the shareholders
at the Annual Shareholders’ Meeting. In doing so, the Nomi-
nation Committee takes into consideration the requirements
of 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 posi-
tion to be occupied.

Audit Committee. The Audit Committee is composed of four
members, who are elected by a majority of the votes cast on the
relevant resolution of the Supervisory Board. The Chairman
of the Supervisory Board is not simultaneously the Chairman
of the Audit Committee.

Both the Chairman of the Audit Committee, Dr. h. c. Bernhard
Walter, and a member of the Audit Committee, Dr. Clemens
Börsig, are independent members and have expertise in the
ﬁeld of ﬁnancial reporting as well as special knowledge
and experience in the application of accounting principles
and internal methods of control.

181

The Audit Committee deals with the supervision of the
accounting process and the annual external audit, the risk and
compliance management system, and the internal control and
auditing system. 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,
which has been established to deal with complaints and infor-
mation about any breaches of guidelines, criminal oﬀences or
dubious accounting, ﬁnancial reporting or auditing. It regularly
receives information about dealing with these complaints and
information.

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 con-
solidated ﬁnancial statements, as well as the management
report of the Company and the Group, and discusses them with
the external auditors. The responsible auditor at KPMG AG
Wirtschaftsprüfungsgesellschaft, the company of auditors com-
missioned to carry out the external audit, is Mr. Mathieu
Meyer. The Audit Committee makes a proposal to the Supervi-
sory Board on the adoption of the annual company ﬁnancial
statements of Daimler AG, on the approval of the annual con-
solidated ﬁnancial statements and on the appropriation of
proﬁts. 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 Meeting, it engages them
to conduct the annual audit of the company and consolidated
ﬁnancial statements and to review the interim reports, negoti-
ates 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 manage-
ment system with regard to accounting.

Finally, the Audit Committee approves services that are not
directly related to the annual audit provided by the ﬁrm of
external auditors or its aﬃliates to Daimler AG or to companies
of the Daimler Group.

Mediation Committee. The Mediation Committee is com-
posed 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 rep-
resenting the shareholders, 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 Codetermi-
nation 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.

Shareholders and the Annual Shareholders’ Meeting

The Company’s shareholders exercise their membership rights,
in particular their voting rights, at the 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. Documents and information relating to the Shareholders’
Meeting can be found on our website at w daimler.com/ir/am.
The Annual Shareholders’ Meeting is generally held within four
months of the end of a ﬁnancial year. The Company facilitates
the personal exercise of the shareholders’ rights and proxy voting
among other things by appointing proxies who are strictly
bound by the shareholders’ voting instructions and who can be
contacted also during the Annual 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 so-called e-service for
shareholders.

Among other matters, the Annual Shareholders’ Meeting decides
on the appropriation of distributable proﬁts, the ratiﬁcation
of the actions of the members of the Board of Management and
of the Supervisory Board, the election of the external auditors,
the election of the members of the Supervisory Board represent-
ing the shareholders and the remuneration of the Supervisory
Board. The Annual Meeting also makes other decisions, especially
on amendments to the Articles of Incorporation, capital mea-
sures, and the approval of certain intercompany agreements.
Shareholders can submit countermotions on resolutions pro-
posed by the Board of Management and the Supervisory Board
and, within the provisions of applicable law, can challenge res-
olutions passed by the Shareholders’ Meeting in a court of law.

The inﬂuence of the Shareholders’ Meeting on the management
of the Company is limited by law, however. The Shareholders’
Meeting can only make management decisions if it is requested
to do so by the Board of Management.

Deviating from the suggestions in Clause 2.3.4 of the German
Corporate Governance Code, 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.

We maintain close contacts with our shareholders in the context
of comprehensive investor relations and public relations. We
regularly and comprehensively inform our shareholders, ﬁnancial
analysts, shareholder associations, the media and the inter-
ested public about the situation of the Group, and inform them
without delay about any signiﬁcant changes in its business.

In addition to other methods of communication, we also make
intensive use of the Company’s website. All of the important
information disclosed in 2013, 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, and the ﬁnancial
calendar, can be found at w daimler.com/investors. All the
dates of important disclosures such as annual reports and
interim reports and the date of the Annual Shareholders’ Meeting
are announced in advance in the ﬁnancial calendar. The ﬁnan-
cial calendar can also be seen inside the rear cover of this annual
report. Disclosures are made in English as well as in German.

182

E | Corporate Governance | Corporate Governance Report

Shares held by the Board of Management and the
Supervisory Board, directors’ dealings

At December 31, 2013, the members of the Board of Manage-
ment held a total of 0.24 million shares or options of Daimler AG
(0.022% of the shares issued). At the same date, members
of the Supervisory Board held a total of 0.03 million shares or
options of Daimler AG (0.002% of the shares issued).

In 2013, members of the Board of Management and the Super-
visory Board and, pursuant to the provisions of Section 15a of
the German Securities Trading Act (WpHG), persons in a close
relationship with the aforementioned persons, conducted trans-
actions with shares of Daimler AG or related ﬁnancial instru-
ments as listed in the table below.  E.02 Daimler AG discloses
these transactions without delay after receiving notiﬁcation
of them. Current information is available on our website at
w daimler.com/dai/dd/en.

Risk management and ﬁnancial reporting

Risk management at the Group. Daimler has a risk manage-
ment system commensurate with its size and position as a
company with global operations. E see pages 129 ﬀ 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 Supervisory Board deals with the risk management
system in particular with regard to the approval of the opera-
tional planning. The Audit Committee discusses at least once a
year the eﬀectiveness and functionality of the risk manage-
ment 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 Corporate Audit 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 Inter-
national 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 Finan-
cial Statements. E see Note 1 of the Notes to the Consoli-
dated Financial Statements. The annual ﬁnancial statements of
Daimler AG, which is the parent company, are prepared in
accordance with the accounting standards of the German Com-
mercial Code (HGB). Both sets of ﬁnancial statements are
audited by a ﬁrm of accountants elected by the Annual Share-
holders’ Meeting to conduct the external audit.

Interim reports for the Daimler Group are prepared in accordance
with IFRS for interim reporting, as adopted by the European
Union, as well as, with regard to the interim management reports,
the applicable provisions of the German Securities Trading Act
(WpHG). Interim ﬁnancial reports are reviewed by the external
auditors elected by the Annual Shareholders’ Meeting.

Corporate governance statement

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 w daimler.com/dai/dsr
and can be accessed there.

E.02
Directors’ dealings (and dealings of related persons pursuant to Section 15a of the German Securities Trading Act (WpHG)) in the year 2013

Date

Name

Function

Type and place of transaction

Number

Price

Total volume

July 17, 2013

July 15, 2013

May 8, 2013

May 6, 2013

May 8, 2013

May 6, 2013

Sept. 19, 2013 Dr. Weber, Frank

Member of the Supervisory Board

Sale of new shares, Frankfurt

Sept. 19, 2013 Dr. Weber, Frank

Member of the Supervisory Board

Acquisition of shares through
exercise of options (OTC)

4,000

Dr. Zetsche, Dieter

Chairman of the Board of Management

Acquisition of shares, Frankfurt

22,000

Dr. Zetsche, Dieter

Chairman of the Board of Management

Sale of new shares, Frankfurt

Dr. Zetsche, Dieter

Chairman of the Board of Management

Acquisition of shares through
exercise of options (OTC)

Renschler, Andreas Member of the Board of Management

Acquisition of shares, Frankfurt

Renschler, Andreas Member of the Board of Management

Sale of new shares, Frankfurt

Renschler, Andreas Member of the Board of Management

Acquisition of shares through
exercise of options (OTC)

150,000

3,490

45,000

€58.76

€43.57

€52.08

€51.89

€43.57

€43.18

€43.45

€43.57

€235,040

€174,280

€1,145,760

€7,783,500

€6,535,500

€150,698

€1,955,250

€1,960,650

Prof. Dr. Weber,
Thomas

Member of the Board of Management

Acquisition of shares, Frankfurt

4,650

€43.24

€201,066

Member of the Board of Management

Sale of new shares, Frankfurt

60,000

€43.45

€2,607,000

Member of the Board of Management

Acquisition of shares through
exercise of options (OTC)

60,000

€43.57

€2,614,200

183

Consolidated
Financial Statements.

Financial
position

Equity-
method

Revenue

Taxes

Capital

Interest

The Consolidated Financial Statements presented as follows have been prepared

in accordance with the International Financial Reporting Standards (IFRS).

They also comply with additional requirements set forth in Section 315a (1)

of the German Commercial Code (HGB).

F | Consolidated Financial Statements.

F | Consolidated Financial Statements | Contents

186

Consolidated Statement of Income

187

188

189

190

Consolidated Statement of Comprehensive
Income/Loss

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

192

Notes to the Consolidated Financial Statements

192

203

205

206

208

209

212

214

215

218

220

221

222

1. Signiﬁcant accounting policies

2. Accounting estimates and assessments

3. Signiﬁcant acquisitions and dispositions

of interests in companies and of other assets
and liabilities

4. Revenue

5. Functional costs

6. Other operating income and expense

7. Other ﬁnancial expense, net

8. Interest income and interest expense

9. Income taxes

10. Intangible assets

11. Property, plant and equipment

12. Equipment on operating leases

13. Investments accounted for using

the equity method

14. Receivables from ﬁnancial services

15. Marketable debt securities

16. Other ﬁnancial assets

17. Other assets

18. Inventories

19. Trade receivables

222

225

229

235

236

237

238

240

242

250

257

260

261

263

264

20. Equity

21. Share-based payment

22. Pensions and similar obligations

23. Provisions for other risks

24. Financing liabilities

25. Other ﬁnancial liabilities

26. Deferred income

27. Other liabilities

28. Consolidated statement of cash ﬂows

29. Legal proceedings

30. Financial guarantees, contingent liabilities

and other ﬁnancial obligations

31. Financial instruments

32. Management of ﬁnancial risks

33. Segment reporting

34. Capital management

35. Earnings per share

36. Related party relationships

37. Remuneration of the members of the

Board of Management and the Supervisory Board

38. Principal accountant fees

39. Additional information

185

Consolidated Statement of Income.

F.01

In millions of euros

Revenue

Cost of sales

Gross proﬁt

Selling expenses

General administrative expenses

Research and non-capitalized
development costs

Other operating income

Other operating expense

Share of proﬁt/loss from
investments accounted for using
the equity method, net

Other ﬁnancial expense, net

Interest income

Interest expense
Proﬁt before income taxes2
Income taxes

Net proﬁt

thereof proﬁt attributable to
non-controlling interest

thereof proﬁt attributable to
shareholders of Daimler AG

Earnings per share (in euros)
for proﬁt attributable
to shareholders of Daimler AG

Basic

Diluted

Consolidated

Industrial Business
(unaudited additional
information)

Daimler Financial Services
(unaudited additional
information)

Note

2013

2012
(adjusted)1

2013

2012
(adjusted)1

2013

2012
(adjusted)1

103,460

-80,154

23,306

-10,414

-3,337

-4,101

1,467

-380

3,344

-342

212

-878

8,877

-874

8,003

100,747

-77,572

23,175

-10,060

-3,337

-4,179

1,446

-276

1,214

-456

232

-925

6,834

-825

6,009

14,522

-12,303

2,219

-461

-528

–

-19

-7

–

-6

1,262

-545

717

13,550

-11,249

2,301

-395

-637

–

-15

-16

-6

-12

1,282

-461

821

114,297

-88,821

25,476

-10,455

-3,974

-4,179

1,507

-291

1,198

-462

233

-937

8,116

-1,286

6,830

402

6,428

117,982

-92,457

25,525

-10,875

-3,865

-4,101

1,530

-399

3,345

-349

212

-884

10,139

-1,419

8,720

1,878

6,842

6.40

6.02

1 Information related to the adjustments of the prior-year ﬁgures is disclosed in Note 1.
2 The reconciliation of Group EBIT to proﬁt before income taxes is disclosed in Note 33.

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

186

F | Consolidated Financial Statements | Consolidated Statement of Income | Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive
Income/Loss1.

F.02

In millions of euros

Net proﬁt

Unrealized losses from currency translation adjustments

Unrealized gains from ﬁnancial assets available for sale

Unrealized gains from derivative ﬁnancial instruments

Unrealized gains from investments accounted for using the equity method

Items that may be reclassiﬁed to proﬁt/loss

Actuarial losses on investments accounted for using the equity method

Actuarial gains/losses from pensions and similar obligations

Items that will not be reclassiﬁed to proﬁt/loss

Other comprehensive income/loss, net of taxes

thereof loss attributable to non-controlling interest

thereof income/loss attributable to shareholders of Daimler AG

Total comprehensive income

thereof income attributable to non-controlling interest

thereof income attributable to shareholders of Daimler AG

1 For other information on comprehensive income/loss, see Note 20.
2 Information on adjustments to the prior-year ﬁgures is disclosed in Note 1.

Consolidated

2013

2012
(adjusted)2

8,720

-1,531

802

-685

-1

1,119

1,118

433

-19

452

9,153

1,859

7,294

6,830

-502

164

702

371

-192

-2,281

-2,473

-2,102

-115

-1,987

4,728

287

4,441

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

187

Consolidated Statement of Financial Position.

F.03

Consolidated

Note

In millions of euros

Assets
Intangible assets

Property, plant and equipment

Equipment on operating leases

Investments accounted for using
the equity method

Receivables from ﬁnancial services

Marketable debt securities

Other ﬁnancial assets

Deferred tax assets

Other assets

Total non-current assets
Inventories

Trade receivables

Receivables from ﬁnancial services

Cash and cash equivalents

Marketable debt securities

Other ﬁnancial assets

Other assets

Total current assets

Total assets

Equity and liabilities
Share capital

Capital reserve

Retained earnings

Other reserves

Treasury shares

Equity attributable to shareholders of Daimler AG
Non-controlling interests

Total equity
Provisions for pensions and similar obligations

Provisions for income taxes

Provisions for other risks

Financing liabilities

Other ﬁnancial liabilities

Deferred tax liabilities

Deferred income

Other liabilities

Total non-current liabilities
Trade payables

Provisions for income taxes

Provisions for other risks

Financing liabilities

Other ﬁnancial liabilities

Deferred income

Other liabilities

Total current liabilities

2013

At December 31, At January 1,
2012
(adjusted)1

2012
(adjusted)1

9,388

21,779

28,160

3,432

27,769

1,666

3,523

1,829

531

98,077

17,349

7,803

23,001

11,053

5,400

2,718

3,117

8,885

20,599

26,058

4,304

27,062

1,539

3,890

2,733

534

95,604

17,720

7,543

21,998

10,996

4,059

2,070

3,072

8,259

19,180

22,811

4,304

25,007

947

2,957

2,820

383

86,668

17,081

7,849

20,560

9,576

1,334

2,007

2,711

70,441

168,518

67,458

163,062

61,118

147,786

3,069

11,850

27,628

133

–

42,680

683

43,363

9,869

823

5,270

44,746

1,701

892

2,728

66,047

9,086

517

6,619

32,992

6,575

1,868

1,451

59,108

3,063

12,026

22,017

799

–

37,905

1,425

39,330

11,299

727

5,150

43,340

1,750

268

2,444

3,060

11,895

20,332

389

–

35,676

1,582

37,258

7,866

2,498

5,309

35,466

1,943

418

2,118

65,016

55,674

9,515

1,030

6,782

8,832

1,006

6,292

32,911

6,699

1,640

1,336

58,716

Total equity and liabilities
1 Information on adjustments of the prior-year ﬁgures is disclosed in Note 1.

168,518

163,062

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

188

Industrial Business
(unaudited additional
information)

Daimler Financial Services
(unaudited additional
information)

2013

At December 31,
2012
(adjusted)1

2013

At December 31,
2012
(adjusted)1

9,289

21,732

13,207

3,419

-29

-767

1,348

-1,818

46,387

16,648

7,208

-14

9,845

5,297

-6,670

447

32,761

79,148

36,767

9,726

823

5,152

13,542

1,575

-1,300

2,283

31,816

8,778

438

6,230

8,808

20,546

12,163

4,291

-33

-216

2,178

-1,753

45,993

17,075

6,864

-17

9,887

3,832

-6,625

536

31,552

77,545

33,238

11,151

726

4,992

10,950

1,613

-1,808

1,989

29,645

8,515

900

5,983

-8,067

5,023

1,153

1,155

14,662

77,545

14,953

13,895

27,798

1,660

4,290

481

2,349

27,095

1,530

4,106

555

2,287

51,690

49,611

701

595

645

679

23,015

22,015

1,208

103

9,388

2,670

37,680

89,370

1,109

227

8,695

2,536

35,906

85,517

6,596

143

118

31,204

126

2,192

445

6,092

148

158

32,390

137

2,076

455

34,231

35,371

308

389

45,210

1,778

517

262

48,543

89,370

317

106

309

40,978

1,676

487

181

44,054

85,517

26,701

-12,218

7,798

1,548

1,480

54,854

147,786

4,797

1,351

1,189

10,565

79,148

F | Consolidated Financial Statements | Consolidated Statement of Financial Position | Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows1.

Consolidated

Industrial Business
(unaudited additional
information)

Daimler Financial Services
(unaudited additional
information)

2013

2012
(adjusted)2

2013

2012
(adjusted)2

2013

2012
(adjusted)2

F.04

In millions of euros

Proﬁt before income taxes

Depreciation and amortization

Other non-cash expense and income

Gains (-)/losses on disposals of assets

Change in operating assets and liabilities

Inventories

Trade receivables

Trade payables

Receivables from ﬁnancial services

Vehicles on operating leases

Other operating assets and liabilities

Income taxes paid

Cash provided by/used for operating activities

Additions to property, plant and equipment

Additions to intangible assets

Proceeds from disposals of property, plant and
equipment and intangible assets

Investments in share property

Proceeds from disposals of share property

Acquisition of marketable debt securities

Proceeds from sales of marketable debt securities

Other

Cash used for investing activities

Change in short-term ﬁnancing liabilities

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 issuance of share capital

Acquisition of treasury shares

Acquisition of non-controlling interests in subsidiaries

Proceeds from disposals of interests
in subsidiaries without loss of control

Internal equity transactions

10,139

4,368

-3,345

193

-592

-695

610

-5,334

-2,990

2,240

-1,309

3,285

-4,975

-1,932

180

-969

2,414

-6,566

4,991

-6,829

845

37,602

-31,987

-2,349

-269

101

-24

-73

–

8,116

4,067

-278

-768

-840

138

-621

-4,395

-3,676

-741

-2,102

-1,100

-4,827

-1,830

196

-764

1,767

-8,089

4,742

-59

-8,864

-68

36,904

-22,590

-2,346

-387

-25

-47

–

8,877

4,343

-3,380

193

-475

-757

602

267

-263

1,950

-1,044

10,313

-4,956

-1,894

170

-964

2,413

-6,072

4,524

-6,767

-432

5,271

-5,537

-2,349

-268

-24

-73

-75

6,834

4,042

-339

-768

-677

565

-662

803

-126

-462

-1,683

7,527

-4,804

-1,800

189

-759

1,766

-6,756

4,057

-59

-8,166

-373

9,539

-4,724

-2,346

-380

-25

-47

–

Cash provided by/used for ﬁnancing activities

3,855

11,506

-3,382

1,715

Eﬀect of foreign exchange rate changes
on cash and cash equivalents

Net increase/decrease in cash and cash equivalents

Cash and cash equivalents at the beginning
of the period

Cash and cash equivalents at the end
of the period

-254

10,996

-122

1,420

9,576

11,053

10,996

-206

-42

9,887

9,845

-97

979

8,908

9,887

1 For other information on consolidated statements of cash ﬂows, see Note 28.
2 Information on adjustments to the prior-year ﬁgures is disclosed in Note 1.

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

1,262

1,282

–

-117

-5,601

-2,727

290

-265

-7,028

-19

-38

-5

-494

467

-62

1,277

32,331

-26,450

–

-1

–

7,237

-48

1,109

1,208

–

-163

-427

-5,198

-3,550

-279

-419

-8,627

-23

-30

-5

-1,333

685

-698

305

27,365

-17,866

–

-7

–

-11

9,791

-25

441

668

1,109

189

Consolidated Statement of Changes in Equity1.

Share
capital

Capital
reserves

Retained
earnings
(adjusted)3

Currency
translation
(adjusted)

Financial
assets
available for sale

F.05

In millions of euros

Balance at January 1, 2012
before adjustments

Eﬀects from ﬁrst-time adoption of IAS 19R

Eﬀect from adjustment of early retirement
and partial retirement plans

Balance at January 1, 2012
after adjustments2

Net proﬁt

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

Dividends

Share-based payment

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

Changes in ownership interests in subsidiaries

Other

3,060

11,895

–

3,060

11,895

–

102

-5

24,228

-3,862

-34

20,332

6,428

-4,008

1,611

4,031

-2,346

–

Balance at December 31, 2012

3,063

12,026

22,017

Balance at January 1, 2013
before adjustments

Eﬀects from ﬁrst-time adoption of IAS 19R

Eﬀect from adjustment of early retirement
and partial retirement plans

Balance at January 1, 2013
after adjustments2

Net proﬁt

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

Dividends

Share-based payment

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

Changes in ownership interests in subsidiaries

Other

3,063

12,026

–

3,063

12,026

–

-23

-227

27,977

-5,919

-41

22,017

6,842

1,490

-372

7,960

-2,349

–

Balance at December 31, 2013

3,069

11,850

27,628

-969

261

1 For other information on changes in equity, see Note 20.
2 Information on adjustments to the prior-year ﬁgures is disclosed in Note 1.
3 Retained earnings also include items that will not be reclassiﬁed to proﬁt or loss. Actuarial losses from pensions

and similar obligations amount to €4,983 million net of tax in 2013 (2012: €6,139 million net of tax).

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

190

1,049

-52

–

997

-481

–

516

530

-14

–

516

–

-1,485

–

163

–

234

–

234

–

-6

–

F | Consolidated Financial Statements | Consolidated Statement of Changes in Equity

Other reserves items
that may be
reclassiﬁed in proﬁt/loss

Share of
investments
accounted for
using the equity
method

Derivative
ﬁnancial
instruments

Equity
attributable to
shareholders
of Daimler AG
(adjusted)

Treasury
shares

Non-
controlling
interest
(adjusted)

Total
equity
(adjusted)

39,624

-3,914

-34

35,676

6,428

-3,282

1,295

4,441

-2,346

-25

102

-5

37,905

43,879

-5,933

-651

988

-287

701

–

1,141

-338

803

–

-28

–

-29

-1

–

-1

–

-43

-11

–

853

-12

-25

–

-24

–

In millions of euros

41,337

Balance at January 1, 2012
before adjustments

-4,045

Eﬀects from ﬁrst-time adoption of IAS 19R

Eﬀect from adjustment of early retirement
and partial retirement plans

-34

37,258

6,830

-3,437

1,335

4,728

Balance at January 1, 2012
after adjustments

Net proﬁt

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

-2,733

Dividends

-25

-76

Share-based payment

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

Changes in ownership interests in subsidiaries

Other

39,330

Balance at December 31, 2012

1,713

-131

1,582

402

-155

287

-387

-178

1,425

1,631

-206

45,510

-6,139

-41

–

-41

37,905

6,842

1,211

-759

7,294

-2,349

-24

-23

-227

42,680

1,425

1,878

-6

-13

1,859

-269

–

-2,433

683

Balance at January 1, 2013
before adjustments

Eﬀects from ﬁrst-time adoption of IAS 19R

Eﬀect from adjustment of early retirement
and partial retirement plans

Balance at January 1, 2013
after adjustments

Net proﬁt

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

Dividends

Share-based payment

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

39,330

8,720

1,205

-772

9,153

-2,618

-24

-2,456

Changes in ownership interests in subsidiaries

-133

Other

43,363

Balance at December 31, 2013

191

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 18, 2014.

Basis of preparation

Applied IFRSs. The accounting policies applied in the con-
solidated ﬁnancial statements comply with the IFRSs required
to be applied in the EU as of December 31, 2013.

IFRSs issued, EU endorsed and initially adopted in the
ﬁnancial year. In December 2011, the IASB published amend-
ments to IFRS 7 Financial Instruments: disclosures relating
to the oﬀsetting of ﬁnancial instruments. The additional disclo-
sure obligations relate to oﬀset ﬁnancial instruments as well
as to ﬁnancial instruments which are not oﬀset but which are
subject to global oﬀsetting agreements or similar agreements.
The amendments to IFRS 7 are to be applied for annual periods
beginning on or after January 1, 2013 and retrospectively.
Further information is provided in Note 31.

In May 2011, IASB published IFRS 13 Fair Value Measurement,
which combines the regulations for fair value measurement
that were previously contained in the individual IFRSs into a single
standard and replaces them with a uniform IFRS framework
for measuring fair value. In compliance with the transitional
provisions of IFRS 13, the Group has applied the new provi-
sions prospectively since January 1, 2013. The initial application
of the standard does not lead to signiﬁcant changes in the
measurement of assets and liabilities. Further information is
provided in Note 31.

In June 2011, IASB published amendments to IAS 19 Employee
Beneﬁts. The amendments to IAS 19 must be applied retro-
spectively in ﬁnancial statements for annual periods beginning
on or after January 1, 2013. Daimler has adjusted the ﬁgures
reported for the previous year for eﬀects arising from application
of the amended version of IAS 19.

At Daimler, the amendments to IAS 19 lead to the following
signiﬁcant eﬀects:

Pensions and similar obligations. The Group has previously
used the corridor method, which is no longer permitted under
the revised IAS 19. As a result, actuarial losses existing in
the Group have a direct eﬀect on the consolidated statement
of ﬁnancial position and lead to an increase in provisions
for pension and similar obligations and a reduction in equity.
Since the actuarial losses will be recognized directly in other
comprehensive income, the consolidated statement of income
will in the future remain free from the eﬀects of the amorti-
zation of the amount exceeding the corridor. Moreover, the net
interest cost approach for discounting the net pension beneﬁt
obligation at the rate used for the measurement of the gross
pension obligation will be applied. Since the net pension
beneﬁt obligation is reduced by any plan assets, the same
discount rate is assumed for discounting plan assets.

192

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Obligations for part-time early retirement. As a result of the
revised deﬁnition of termination beneﬁts provided in IAS 19,
the top-up amounts agreed in the framework of the part-time
early retirement agreements now represent other long-term
employee beneﬁts. The pro-rata accumulation of top-up
amounts over the relevant active service period of employees
who receive part-time early retirement beneﬁts leads
to a reduction in provisions for part-time early retirement.

Table  F.06 shows the eﬀects of the application of IAS 19
on the line items of the consolidated statement of ﬁnancial
position as of January 1, 2012 and December 31, 2012.

The eﬀects on the consolidated statement of income
for 2012 are presented in table  F.07.

Basic and diluted earnings per share each increased
in 2012 by €0.31.

Table  F.08 and  F.09 show the eﬀects on the Group’s
consolidated statement of ﬁnancial position and consolidated
statement of income if the Group had not applied IAS 19R
as of January 1, 2013.

Diluted and undiluted earnings per share decreased
in 2013 by €0.46.

The EBIT eﬀect from the retention of IAS 19 mainly results
from the disposal of the investment in European Aeronautic
Defence and Space Company EADS N.V. (EADS). If the corridor
method had still been applied, the equity investment would
have been increased by the actuarial losses. As a result, this
would have led to a decreased disposal result.

The changeover to the revised IAS 19 led to a review of
the calculation of the pension obligations for part-time early
retirement beneﬁts. Subsequently, the obligations from the
outstanding settlement amount pursuant to IAS 8.42 recorded
as of December 31, 2012 and January 1, 2012 were adjusted
by €58 million and €48 million, respectively. The eﬀects after tax
on equity amount to €41 million and €34 million, respectively.
The eﬀects on the consolidated statement of income and on
earnings per share in 2012 are not material.

According to amendments to IAS 1 Presentation of Items
of Other Comprehensive Income, items of other comprehensive
income that may be reclassiﬁed to proﬁt and loss have
to be disclosed separately from items of other comprehensive
income that will not be reclassiﬁed to proﬁt or loss. Daimler
applies these changes in disclosures since January 1, 2013.

F.06
Eﬀects of the revised IAS 19 on the consolidated statement
of ﬁnancial position

In millions of euros

Investments accounted for using
the equity method

Other assets

Total equity

Provisions for pensions and similar obligations

Provisions for other risks

Balance of deferred tax assets
and deferred tax liabilities

December 31,
2012

January 1,
2012

-342

-33

-6,139

8,264

-347

-357

-37

-4,045

4,682

-334

-2,153

-697

F.07
Eﬀects of the revised IAS 19 on the consolidated statement of income

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Share of proﬁt/loss from investments accounted
for using the equity method, net

Other ﬁnancial expense, net

Interest result

Income taxes

Net proﬁt

2012

-27

-4

-1

208

193

-66

342

F.08
Eﬀects of the retention of IAS 19 on the consolidated statement
of ﬁnancial position

In millions of euros

December 31, 2013

Investments accounted for using the equity method

Other assets

Total equity

Provisions for pensions and similar obligations

Provisions for other risks

Balance of deferred tax assets and deferred tax liabilities

F.09
Eﬀects of the retention IAS 19 on the consolidated statement
of income

In millions of euros

EBIT

Interest result

Income taxes

Net proﬁt

-51

4,558

-6,708

413

1,719

2013

-492

-62

-495

193

The amendments to IAS 36 Recoverable Amount Disclosures
for Non-Financial Assets are applied earlier in 2013.
Accordingly there is no requirement to disclose the recover-
able amount of cash-generating units.

All other IFRSs with an initial application in the EU
as of January 1, 2013 had no signiﬁcant impact on the
consolidated ﬁnancial statements.

IFRSs issued and EU endorsed but not yet adopted.
In May 2011, the IASB issued three new standards that provide
guidance with respect to accounting for investments of the
reporting entity in other entities. The EU endorsed the standards
in December 2012. IFRS 10 Consolidated Financial Statements
supersedes consolidation rules in IAS 27 Consolidated and
Separate Financial Statements as well as SIC-12 Consolidation –
Special Purpose Entities. IFRS 10 establishes a single
con solidation model based on control that applies to all entities
irrespective of the type of controlled entity. According to the
new model control exists if the potential parent company has
the power of decision over the potential subsidiary based on
voting rights or other rights, if it participates in positive or nega-
tive variable returns from the potential subsidiary, and if it
can aﬀect these returns by its power of decision. The standard
is not expected to have a signiﬁcant inﬂuence on the Group’s
Financial Statements.

IFRS 11 Joint Arrangements provides new guidance on account-
ing for joint arrangements. The standard supersedes IAS 31
Interests in Joint Ventures as well as SIC-13 Jointly Controlled
Entities – Non-Monetary Contributions by Ventures. In the
future, it has to be decided whether a joint operation or a joint
venture exists. In a joint venture the parties that have joint
control have rights to the net assets. A joint operation exists,
if the parties that have joint control have rights to the assets
and obligations for the liabilities. In the case of a joint operation
the proportionate assets, liabilities, revenues and expenses
have to be recognized. Interests in a joint venture shall be
accounted for as an investment using the equity method. The
identiﬁed joint operations at Daimler do not have a signi-
ﬁcant inﬂuence on the Group’s Financial Statements. Therefore,
Daimler continues to account for the investments using the
equity method or the investments are measured at amortized
costs.

IFRS 12 Disclosure of Interests in Other Entities provides guid-
ance on disclosure requirements for interests in other entities
by combining existing disclosure requirements from several
standards in one comprehensive disclosure standard.

Daimler will apply the new consolidation standards as of the
mandatory eﬀective date for IFRS users in the EU as of January 1,
2014 on a retrospective basis.

Other IFRSs and interpretations issued are not expected to
have a signiﬁcant inﬂuence on the Group’s ﬁnancial position,
cash ﬂows or earnings.

IFRSs issued but neither EU endorsed nor yet adopted.
IFRS 9 Financial Instruments reﬂects the ﬁrst and third phase
of the IASB project to replace IAS 39 and deals with the
classiﬁcation and measurement of ﬁnancial assets and ﬁnancial
liabilities as well as regulations for general hedge accounting.
Accordingly, in the future, ﬁnancial assets will be classiﬁed and
measured either at amortized cost or at fair value. The provi-
sions relating to ﬁnancial liabilities will generally be adopted from
IAS 39. With the amendment to IFRS 9 issued in November
2013, mandatory adoption as of January 1, 2015 was cancelled.
A new adoption date will be deﬁned only when the standard
has been ﬁnalized. Only then endorsement by the EU is planned.
The analysis of the eﬀects of applying IFRS 9 on the
con so lidated ﬁnancial statements has not yet been ﬁnished.

Other IFRSs issued but not EU endorsed are not expected
to have a signiﬁcant inﬂuence on the Group’s ﬁnancial position,
cash ﬂows or earnings. Subject to EU endorsement of these
standards, which are then to be adopted in future periods,
Daimler currently does not plan to apply these standards earlier.

Presentation. Presentation in the statement of ﬁnancial
position diﬀerentiates between current and non-current assets
and liabilities. Assets and liabilities are classiﬁed as current
if they mature 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.

Commercial practices with respect to certain products
manufactured by the Group necessitate that sales ﬁnancing,
including leasing alternatives, be made available to the
Group’s customers. Accordingly, 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 consolidated
ﬁnancial statements, unaudited information with respect
to the results of operations and ﬁnancial position of the Group’s
industrial and ﬁnancial services business activities (Daimler
Financial Services) is provided in addition to the audited conso-
lidated ﬁnancial statements. Such information, however,
is not required by IFRS and is not intended to, and does not
represent the separate IFRS results of operations and ﬁnan-
cial 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.

194

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

As an additional funding source, Daimler transfers ﬁnance
receivables, in particular receivables from the leasing
and automotive business, to special purpose entities. Daimler
thereby principally retains the signiﬁcant risks of the
transferred receivables. According to IAS 27 Consolidated
and Separate Financial Statements and the Standing Inter-
pretations Committee (SIC) Interpretation 12 Consolidation –
Special Purpose Entities, these special purpose entities
have to be consolidated by the transferor. The transferred ﬁnan-
cial assets remain in Daimler’s consolidated statement
of ﬁnancial position.

F.10
Composition of the Group

Consolidated subsidiaries

Germany

International

Subsidiaries accounted for at cost

Germany

International

Subsidiaries accounted for
using the equity method

Germany

International

Associated companies and joint ventures

Germany

International

2013

2012

271

474

287

513

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,
in general, the ﬁnancial statements of Daimler AG’s sub-
sidiaries, including special purpose entities which are directly
or indirectly controlled by Daimler AG. Control means the
power, directly or indirectly, to govern the ﬁnancial and operat-
ing policies of an entity so that the Group obtains beneﬁts
from its activities.The ﬁnancial statements of consolidated sub-
sidiaries 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 conso-
lidated ﬁnancial statements are prepared using uniform recog-
nition and measurement principles. All signiﬁcant inter-
company accounts and transactions relating to consolidated
subsidiaries and consolidated special purpose entities
are eliminated.

Equity investments in which Daimler has the ability to exercise
signiﬁcant inﬂuence over the ﬁnancial and operating policies
of the investee (associated companies) and entities over whose
activities Daimler has joint control with a partner (joint
ventures) are generally included in the consolidated ﬁnancial
statements using the equity method.

Subsidiaries, associated companies and joint ventures 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. The aggregate balance sheet totals
of these subsidiaries would amount to approximately 1% of the
Group’s balance sheet total; the aggregate revenues and
the aggregate proﬁt/loss before income taxes amount to approx-
imately 1% of Group revenue and proﬁt before income taxes.

Table  F.10 shows the composition of the Group.

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
owners.

195

Investments in associated companies and joint ventures.
Associated companies and joint ventures are generally
accounted for using the equity method.

When the status of an investment changes from joint venture
to associated company, Daimler continues to apply the equity
method and recognizes any gain or loss only to the extent
of the reduction in ownership interest.

At the acquisition date, the excess of the cost of Daimler’s
initial investment in an associate or joint venture and the share
of the net fair value of the associate’s or joint venture’s iden-
tiﬁable assets and liabilities is recognized as investor level good-
will and is included in the carrying amount of the investment
accounted for using the equity method. Step acquisitions, through
which signiﬁcant inﬂuence or joint control is obtained for
the ﬁrst time, are generally accounted for in accordance with
IFRS 3 Business Combinations, which means the previously
held equity interest is remeasured at its acquisition-date fair
value; resulting gains and losses are recognized in proﬁt
or loss. If an additional ownership interest is acquired in an exist-
ing associated company while signiﬁcant inﬂuence is main-
tained, goodwill is calculated only on the incremental interest
acquired. The pre-existing investment is not measured
anew at fair value.

F.11
Exchange rates of the US dollar

2013

€1 =

2012

€1 =

Average exchange rate on December 31

1.3791

1.3194

Average exchange rates during the respective period

First quarter

Second quarter

Third quarter

Fourth quarter

Exchange rates of the Japanese yen

1.3206

1.3062

1.3242

1.3610

1.3108

1.2826

1.2502

1.2967

2013

€1 =

2012

€1 =

Average exchange rate on December 31

144.7200

113.6100

Average exchange rates during the respective period

First quarter

Second quarter

Third quarter

Fourth quarter

121.7900

103.9900

129.0700

102.7400

131.0200

98.3000

136.4800

105.1200

Daimler assesses at each reporting date whether objective
evidence of impairment is present with regard to its investments
in associated companies and joint ventures. If such indication
exists, the Group determines the impairment. If the carrying
amount exceeds the recoverable amount of an investment,
the carrying amount is reduced to the recoverable amount.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. An impairment loss or the reversal
of such a loss is recognized in the consolidated statement
of income in the line item “Share of proﬁt/loss from investments
accounted for using the equity method, net”. Income and
expenses from the sale of investments accounted for using
the equity method are shown in the same line item.

Proﬁts and losses from transactions with associated
companies and joint ventures are eliminated by adjusting
the carrying amount of the investment accordingly.

Daimler’s share of any dilution gains and losses resulting
from capital increases by its investees accounted for using
the equity method in which the Group or other shareholders
do not participate are recognized in “Share of proﬁt/loss
from investments accounted for using the equity method, net.”

In the special event that the ﬁnancial statements of associated
companies or joint ventures 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).

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 trans-
lated 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 adjust-
ments 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 and the Japanese Yen,
the most signiﬁcant foreign currencies for Daimler, were as
shown in table  F.11.

196

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Accounting policies

Revenue recognition. Revenue from sales of vehicles, service
parts and other related products is recognized when the
risks and rewards of ownership of the goods are transferred
to the customer, the amount of revenue can be estimated
reliably and collectability is reasonably assured. Revenue is recog-
nized net of sales reductions such as cash discounts and
sales incentives granted.

Daimler uses sales incentives in response to a number
of market and product factors, including pricing actions and
incentives oﬀered by competitors, the amount of excess
industry production capacity, the intensity of market competi-
tion, and consumer demand for the product. The Group may
oﬀer a variety of sales incentive programs at a point in time,
including cash oﬀers to dealers and consumers, lease subsidies
which reduce the consumers’ monthly lease payment,
or reduced ﬁnancing rate programs oﬀered to costumers.

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.

The Group oﬀers an extended, separately priced warranty
for certain products. Revenue from these contracts is deferred
and recognized into income 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 transactions with multiple deliverables, such as when
vehicles are sold with free or reduced-in-price service programs,
the Group allocates revenue to the various elements based
on their estimated fair values.

Sales in which the Group guarantees the minimum resale value
of the product are accounted for as an operating lease. The
guarantee of the resale value may take the form of an obligation
by Daimler to pay any deﬁciency between the proceeds the
customer receives upon resale and the guaranteed amount, or
an obligation to reacquire the vehicle after a certain period
of time at a set price. Gains or losses from the resale of these
vehicles are included in gross proﬁt in the consolidated state-
ment of income.

Revenue from operating leases is recognized on a straight-
line basis over the lease term. Among the assets subject
to operating leases are Group products which are purchased
by Daimler Financial Services from independent third-party
dealers and leased to customers. After revenue recognition
from the sale of the vehicles to independent third-party
dealers, these vehicles create further revenue from leasing
and remarketing as a result of lease contracts entered into.
The Group estimates that the revenue recognized following
the sale of vehicles to dealers equals approximately the
additions to leased assets at Daimler Financial Services. Addi-
tions to leased assets at Daimler Financial Services were
approximately €8 billion in 2013 (2012: approximately €8 billion).

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, con-
struction 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 proﬁt or loss 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.

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 pre-
miums and discounts are included. The interest components
of pensions and similar obligations are also presented in this line
item.

An exception to the aforementioned principles is made for
Daimler Financial Services. In this case, the interest income and
expense and the result from derivative ﬁnancial instruments
are disclosed under revenue and cost of sales respectively.

197

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.

Income taxes. Current income taxes are determined based
on the respective local taxable income of the period and local
tax rules. In addition, current income taxes include adjust-
ments for uncertain tax payments or tax refunds for periods
not yet assessed as well as interest expense and penalties
on the underpayment of taxes. Changes in deferred tax assets
and liabilities are included in income taxes except for
changes recognized in other comprehensive income/loss
or directly in equity.

Deferred tax assets or liabilities are determined based
on temporary diﬀerences between ﬁnancial reporting and the
tax basis of assets and liabilities including diﬀerences from
consolidation, loss carryforwards and tax credits. Measurement
is based on the tax rates expected to be eﬀective in the period
in which an asset is realized or a liability is settled. For this pur-
pose, the tax rates and tax rules are used which have been
enacted or substantively enacted at the reporting date. Deferred
tax assets are recognized to the extent that taxable proﬁt
at the level of the relevant tax authority will be available for the
utilization of the deductible temporary diﬀerences. Daimler
recognizes a valuation allowance for deferred tax assets when
it is unlikely that a corresponding amount of future taxable
proﬁt will be available.

For uncertain income tax items for which the risk exists that
they will not be utilizable, a provision for income taxes is recog-
nized or, in the case of tax loss carryforwards, the correspond-
ing deferred tax asset is reduced. The assessment is based
on the best possible assessment of the expected tax payment.

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. Diluted
earnings per share additionally reﬂect the potential dilution
that would occur if all stock option plans were exercised.

Goodwill. For acquisitions, goodwill represents the excess
of the consideration 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.

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.

Other intangible assets. Intangible assets acquired are
measured at cost less accumulated amortization. If necessary,
accumulated impairment losses are recognized.

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.

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 impair-
ment 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.

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.

198

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

is conducted. This planning is based on expectations regard-
ing future market share, the growth of the respective markets
as well as the products’ proﬁtability. The multi-year planning
comprises a planning horizon until 2020 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 information
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 gener-
ally does not consider any growth rates. In addition, several sensi-
tivity analyses are conducted. These show that even in 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.

F.12
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

Property, plant and equipment. Property, plant and equip-
ment 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.
Plant and equipment under ﬁnance leases are stated at the
lower of present value of minimum lease payments or fair value
less the respective accumulated depreciation and any accu-
mulated impairment losses. Depreciation expense is recognized
using the straight-line method. The residual value of the asset
is considered.

Property, plant and equipment are depreciated over the useful
lives as shown in table  F.12.

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 (oper-
ating lease). Rent expense on operating leases by which
the Group is lessee is recognized over the respective lease terms
on a straight-line basis. Equipment on operating leases by which
the Group is lessor is carried initially at its acquisition or manu-
facturing costs and is depreciated to its expected residual values
over the contractual term of the lease, on a straight-line basis.
The same accounting principles apply to assets if Daimler sells
such assets and leases them back from the buyer.

Impairment of non-current non-ﬁnancial assets. 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 impair-
ment loss is recognized for the diﬀerence.

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
discounting 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 Manage-
ment and which is valid at the date when the impairment test

199

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.

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 con-
cerned. The Group generally discloses these assets or disposal
groups separately in the consolidated statement of ﬁnancial
position.

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 instru-
ments 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 contrac-
tual provisions of the ﬁnancial instrument.

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 acqui-
sition or issuance are considered by determining the carrying
amount if the ﬁnancial instruments are not measured at fair value
through proﬁt or loss. If the transaction date and the settle-
ment date (i.e. the date of delivery) diﬀer, Daimler uses the trans-
action date for purposes of initial recognition or derecognition.

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 investments.

Inventories. Inventories are measured at the lower of cost
and net realizable value. The net realizable value is the estimated
selling price less any remaining costs to sell. The cost of
inventories is generally based on the speciﬁc identiﬁcation
method and includes costs incurred in acquiring the inven-
tories and bringing them to their existing location and condition.
Costs for large numbers of inventories that are interchange-
able are allocated under the average cost formula. In the case
of manufactured inventories and work in progress, 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 ﬁnancial
assets designated as held for trading.

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.

200

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

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.

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 recog-
nized in other comprehensive income/loss resulting from mea-
surement at fair value are recognized in proﬁt or loss. If a reli-
able 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.

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.

Impairment of ﬁnancial assets. At each reporting date, the
carrying amounts of ﬁnancial assets other than those to be mea-
sured 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 environ-
ment. 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.

Loans and receivables. If there are objective indications that
the value of a loan or receivable has been 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 impair-
ment 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 allow-
ance 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 recog-
nized in the statement of income) is reclassiﬁed from other
comprehensive income/loss to the statement of income. Rever-
sals 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
reversed 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.

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.

201

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 are recognized in other comprehensive
income/loss. Amounts recognized in other comprehensive
income/loss are reclassiﬁed to the statement of income when
the hedged 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.

Pensions and similar obligations. The measurement of
deﬁned beneﬁt plans for pensions and other post-employment
beneﬁts (medical care) in accordance with IAS 19 Employee
Beneﬁts is based on the projected unit credit method. Plan assets
invested to cover deﬁned pension beneﬁt 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 post-employment bene-
ﬁt plans, diﬀerences between actuarial assumptions used
and actual developments as well as changes in actuarial assump-
tions result in actuarial gains and losses, which have a direct
impact on the consolidated statement of ﬁnancial position or
on the consolidated statement of income.

The balance of deﬁned beneﬁt plans for pensions and other
post-employment beneﬁts 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 recog-
nized 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.

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. 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
management, the type of hedging relationship, the nature
of the risk being hedged, the identiﬁcation of the hedging instru-
ment and the hedged item, as well as a description of the
method used to assess hedge eﬀectiveness. Hedging transac-
tions are expected to be highly eﬀective in achieving oﬀset-
ting risks from changes in fair value or cash ﬂows and are regu-
larly assessed to determine that they have actually been
highly eﬀective throughout the ﬁnancial reporting periods
for which they are designated.

202

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
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.

Share-based payment. Share-based payment comprises
cash-settled liability awards and equity-settled equity awards.

The fair value of equity awards is generally determined by
using a modiﬁed Black-Scholes option pricing model at grant
date and represents the total payment expense to be recog-
nized during the service period with a corresponding increase
in equity (paid-in capital).

Gains or losses on the curtailment or settlement of a deﬁned
beneﬁt plan are recognized when the curtailment or settlement
occurs.

Provisions for other risks and contingent liabilities.
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 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, upon lease inception, or when a new
warranty program is initiated. Estimates for accrued warranty
costs are primarily based on historical experience.

Daimler records the fair value of an asset retirement obligation
from the period in which the obligation is incurred.

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.

Liability awards are measured at fair value at each balance
sheet date until settlement and are classiﬁed as provisions.
The expense of the period comprises the addition to and/or
the reversal of the provision between two balance sheet
dates 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 used for investing activities.

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 invest-
ments accounted for using the equity method. 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 partic-
ular 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 impairment tests carried
out in 2013, the recoverable amounts are substantially larger
than the net assets of the Group’s cash-generating units.

203

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
values and fair values of equity-method ﬁnancial investments
in listed companies.

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 assumptions are determined
either by qualiﬁed estimates or by expertise provided by 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 systematic depre-
ciation; changes in residual values lead either to prospective
adjustments to the systematic depreciation or, in the case of a
signiﬁcant drop in expected residual values, to impairment.
If systematic 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 consid-
eration 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 ade-
quacy of collateral. 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 infor-
mation.

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, upon lease inception, or when new warranty pro-
grams are initiated. Based on historical warranty claim experi-
ence, 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 investigations are pending against Daimler AG
and its subsidiaries on a wide range of topics. Adverse
decisions in one or more of those proceedings could require
us 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 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 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. The end of a legal dispute can
result in Daimler having to make payments in excess of the
provisions recognized for that purpose. It is also possible that
the outcome of individual cases for which no provisions could
be recognized might force the Group to make payments whose
amounts or range of amounts could not be reliably estimated
at December 31, 2013. Although the ﬁnal outcome of such cases
can have a material eﬀect on Daimler’s earnings or cash
ﬂows in a certain reporting period, in our assessment, any such
resulting obligations will not have a sustained impact on
the Group’s ﬁnancial position. Further information on legal
proceedings is provided in Note 29.

204

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Pension obligations. The calculation of provisions for
pensions and similar obligations and the related pension cost
are based on various mathematical models. 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 subsidiaries 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. 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, we take 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 connec-
tion 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. Signiﬁcant acquisitions and dispositions of interests in
companies and of other assets and liabilities

Acquisitions

BAIC Motor. In 2013, BAIC Motor Corporation Ltd. (BAIC
Motor) issued new shares to Daimler representing a 12% equity
interest for a price of €627 million (including transaction
costs). The investment in BAIC Motor is presented in the consoli-
dated ﬁnancial statements according to the equity method.
At the same time, BAIC Motor increased its share of the joint
venture Beijing Benz Automotive Co., Ltd. (BBAC) by 1%
to 51%; Daimler increased its share of the jointly owned sales
company Beijing Mercedes-Benz Sales Service Co., Ltd.
also by 1% to 51%. See Notes 13 and 36 for further information
on these transactions.

Disposals

EADS. The disposal of our shareholding in the European
Aeronautic Defence and Space Company EADS N.V.
(since January 2, 2014: Airbus Group N.V.) and the loss of signi-
ﬁcant inﬂuence on that company is explained in Note 13.

MBtech Group. In December 2011, Daimler and AKKA
Technologies SA signed a contract on the sale of a 65% interest
in the former Daimler subsidiary MBtech Group GmbH & Co.
KGaA (MBtech Group). The transaction was concluded on April 12,
2012 and resulted in a cash inﬂow of €48 million and a
gain before income taxes of €10 million in 2012. These amounts
are primarily allocated to the Mercedes-Benz Cars segment.
The remaining equity interest in MBtech Group is accounted for
using the equity method. At the time of the transaction, the
assets and liabilities of MBtech Group amounted to €85 million
and €78 million respectively; the total amount of assets
included cash and cash equivalents of €8 million.

205

F.13
Revenue

In millions of euros

4. Revenue

2013

2012

Table  F.13 shows the composition of revenue at Group level.

Revenue by segment  F.92 and region  F.94 is presented
in Note 33.

5. Functional costs

Cost of sales. Items included in cost of sales are shown
in table  F.14.

Amortization expense of capitalized development costs
in the amount of €1,134 million (2012: €982 million) is presented
in expense of goods sold.

Selling expenses. In 2013, selling expenses amounted
to €10,875 million (2012: €10,455 million). Selling expenses
include direct selling costs as well as selling overhead expenses
and consist of personnel expenses, material costs and other
selling costs.

General administrative expenses. General administrative
expenses amounted to €3,865 million in 2013 (2012: €3,974
million) and comprise expenses which were not attributable
to production, sales or research and development functions,
and include personnel expenses, depreciation and amortization
on ﬁxed and intangible assets, and other administrative costs.

Research and non-capitalized development costs.
Research and non-capitalized development costs were €4,101
million in 2013 (2012: €4,179 million) and primarily comprise
personnel expenses and material costs.

Optimization programs. Measures and programs with imple-
mentation costs that materially impacted EBIT of the segments
are brieﬂy described below.

Daimler Trucks. At the end of January 2013, Daimler Trucks
announced workforce adjustments as part of its goal of increas-
ing its proﬁtability by stronger utilization of scale eﬀects.
In the administrative sector in Brazil a voluntary redundancy
program was launched in the ﬁrst quarter of 2013 targeting
a reduction of approximately 850 people (including Daimler
Buses). Furthermore, in non-productive areas in Germany,
a reduction of approximately 800 people is planned for which
a program was started in May 2013, based on socially accept-
able voluntary measures.

Sales of goods

Rental and leasing business

Interest from the ﬁnancial services
business at Daimler Financial Services

Sales of other services

103,594

10,966

100,531

10,166

3,040

382

3,224

376

117,982

114,297

F.14
Cost of sales

In millions of euros

Expense of goods sold

Depreciation of equipment on operating leases

Reﬁnancing costs at
Daimler Financial Services

Impairment losses on receivables from
ﬁnancial services

Other cost of sales

2013

2012

-82,979

-4,376

-80,617

-3,813

-1,578

-1,861

-416

-3,108

-92,457

-390

-2,140

-88,821

206

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Daimler Buses. In 2012, Daimler Buses decided to restructure
some sections of its business system to improve eﬃciency
and generate growth in order to increase its market shares for
buses in Western Europe, to adapt the product portfolios
to changed market requirements and to reduce costs. These
measures also included a reduction of up to 10% of the
workforce in Western Europe. The activities of Daimler Buses
in North America were already restructured in 2012. In this
context, the production of Orion city buses was discontinued
and the workforce was scaled down by approximately 900
employees. In addition, further optimization measures were
initiated in non-productive areas in Brazil for which the
voluntary severance program described under Daimler Trucks
was started in the ﬁrst quarter of 2013.

F.15
Optimization programs

In millions of euros

Daimler Trucks

EBIT

Cash outﬂow

Daimler Buses

EBIT

Cash outﬂow

2013

2012

-116

-50

-39

–

-155

-28

Table  F.15 shows the expenses related to the optimization
programs which aﬀected the EBIT of the segments. The cash
ﬂows associated with the implementation of the programs are
also shown.

F.16
Income and expenses associated with optimization programs
at Daimler Trucks and Daimler Buses

These expenses primarily relate to personnel measures
and are included in the line items within the consolidated
statement of income as shown in table  F.16.

The provisions recognized for the measures at Daimler Trucks
amounted to €64 million as of December 31, 2013. At Daimler
Buses, the provisions recognized for the measures amounted
to €36 million as of December 31, 2013 (€58 million as of
December 31, 2012).

Cash outﬂows resulting from the optimization programs
are expected until the end of 2017, whereby the largest part
of the payments will already occur in 2014.

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized
development costs

Other operating expenses

Other operating income

For the optimization programs at Daimler Trucks, the Group
anticipates further expenses of up to €150 million.

F.17
Personnel expenses and number of employees

2013

2012

-71

-14

-50

-13

-10

-72

-30

-17

-19

-17

–

-155

2013

2012

Personnel expenses and number of employees. Personnel
expenses included in the consolidated statement of income
as well as the average numbers of people employed are included
in table  F.17.

Information on the remuneration of the current and former
members of the Board of Management and the current
members of the Supervisory Board is included in Note 37.

In millions of euros and
number of people employed

Personnel expenses1

-18,753

-18,002

Average number of people employed

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

Sales and Marketing

Other

97,003

80,186

15,073

16,557

7,937

52,151

6,477

98,218

80,503

14,904

17,186

7,526

50,154

6,114

275,384

274,605

1 See Note 1 for details of adjustments to the prior-year ﬁgures.

207

F.18
Other operating income

In millions of euros

Income from costs recharged to third parties

Government grants and subsidies

Gains on sales of property, plant and equipment

Rental income, other than income relating
to ﬁnancial services

Reimbursements under insurance policies

Other miscellaneous income

6. Other operating income and expense

2013

2012

For the composition of other operating income see table
 F.18.

840

486

1,530

727

122

480

1,507

Income from services recharged to unrelated parties includes
income from licenses and patents, shipping costs charged
to third parties 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.

F.19
Other operating expense

In millions of euros

Loss on sales of property, plant and equipment

Other miscellaneous expense

2013

2012

-88

-311

-399

-67

-224

-291

Other miscellaneous income includes reimbursements
of non-income related taxes, income from the operation
of employee canteens and other miscellaneous items.

For the composition of other operating expense, see table
 F.19.

Other miscellaneous expense includes losses from disposals
of current assets, changes in other provisions partially in connec-
tion with legal proceedings, and other miscellaneous items.

7. Other ﬁnancial expense, net

Table  F.20 shows the components of other ﬁnancial
expense, net.

F.20
Other ﬁnancial expense, net

In millions of euros

2013

2012

Other ﬁnancial expense, net includes a loss of €140 million
on the sale of the remaining EADS shares in 2013. See Note 13
for detailed information on the sale of the EADS shares.

Expense from compounding of provisions and
eﬀects of changes in discount rates1

Miscellaneous other ﬁnancial
expense/income, net

-95

-254

-349

-504

-462

1 Excluding the expense from compounding provisions for pensions and

similar obligations.

8. Interest income and interest expense

Table  F.21 shows the components of interest income
and interest expense.

F.21
Interest income and interest expense

In millions of euros

Interest income

Net interest income on the net asset from
deﬁned beneﬁt pension plans

Interest and similar income

Interest expense

Net interest expense on the net obligation
from deﬁned beneﬁt pension plans

Interest and similar expense

2013

2012

210

212

-355

-529

-884

226

233

-346

-591

-937

208

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

9. Income taxes

Proﬁt before income taxes is comprised as shown
in table  F.22.

Proﬁt before income taxes in Germany includes the share
of proﬁt/loss from investments accounted for using the equity
method if the shares of those companies are held by German
companies.

Table  F.23 shows the components of income taxes.

F.22
Proﬁt before income taxes

In millions of euros

German companies

Non-German companies

The current tax expense includes tax beneﬁts at German
and foreign companies of €1,038 million (2012: €1,164 million)
recognized for prior periods.

F.23
Components of income taxes

The deferred tax expense is comprised of the components
in table  F.24.

For German companies, in 2013 and 2012, deferred taxes
were calculated using a federal corporate tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year’s federal cor-
porate taxes, plus a trade tax 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.

In millions of euros

Current taxes

German companies

Non-German companies

Deferred taxes

German companies

Non-German companies

Table  F.25 includes a reconciliation of expected income
tax expense to actual income tax expense determined using
the applicable German combined statutory rate of 29.825%
(2012: 29.825%).

F.24
Components of deferred tax expense

In millions of euros

2013

2012

5,630

4,509

10,139

3,778

4,338

8,116

2013

2012

202

-1,007

-180

-434

353

-540

-514

-585

-1,419

-1,286

2013

2012

In 2013 and 2012, the Group released valuation allowances
on deferred tax assets of foreign subsidiaries. The resulting
tax beneﬁts are included in the line item “Change of valuation
allowance on deferred tax assets”.

Deferred taxes

due to temporary diﬀerences

due to tax loss carryforwards and tax credits

-614

-710

-1,099

-2,894

1,795

F.25
Reconciliation of expected income tax expense to actual income tax

In millions of euros

Expected income tax expense

Foreign tax rate diﬀerential

Trade tax rate diﬀerential

Tax law changes

Change of valuation allowance
on deferred tax assets

Tax-free income and non-deductible expenses

Other

Actual income tax expense

2013

2012

-3,024

-51

-10

143

1,546

-77

-1,419

-2,421

-128

-13

283

1,002

-21

-1,286

209

F.26
Deferred tax assets and liabilities

In millions of euros

Deferred tax assets

Deferred tax liabilities

Deferred tax assets, net

F.27
Split of tax assets and liabilities before oﬀset

In millions of euros

Intangible assets

Property, plant and equipment

Equipment on operating leases

Inventories

Investments accounted for using the
equity method

Receivables from ﬁnancial services

Other ﬁnancial assets

Tax loss and tax credit carryforwards

Provisions for pensions and similar obligations

Other provisions

Liabilities

Deferred income

Other

Valuation allowances

Deferred tax assets, gross

Development costs

Other intangible assets

Property, plant and equipment

Equipment on operating leases

Inventories

Receivables from ﬁnancial services

Other ﬁnancial assets

Other assets

At December 31,
2012

2013

1,829

-892

937

2,733

-268

2,465

At December 31,
2012

2013

367

1,131

603

275

3,391

3,542

818

1,862

614

899

292

13,868

-1,081

12,787

-2,195

-175

-1,442

-4,940

-72

-656

-249

-98

288

1,122

729

280

3,428

4,718

1,060

1,779

758

836

279

15,343

-2,337

13,006

-2,141

-135

-1,301

-4,294

-50

-672

-172

-125

Provisions for pensions and similar obligations

-1,604

-1,288

Other provisions

Other

Deferred tax liabilities, gross

Deferred tax assets, net

-159

-260

-11,850

937

-124

-239

-10,541

2,465

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.
Moreover, in 2013 and 2012, the line item also includes
tax-free gains realized on the sale and remeasurement of EADS
shares and tax beneﬁts relating to tax assessments for prior
years. The tax beneﬁts relating to tax assessments for prior years
consist of the current tax beneﬁts recognized for prior periods
as well as partly oﬀsetting deferred tax expenses recognized
for prior periods.

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 con-
solidated 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  F.26.

In respect of each type of temporary diﬀerence and in respect
of each type of unutilized tax losses and unutilized tax
credits, the deferred tax assets and liabilities before oﬀset
are summarized in table  F.27.

The development of deferred tax assets, net, is shown
in table  F.28.

Including the items recognized in other comprehensive
income/loss (including items from investments accounted
for using the equity method), the expense for income taxes
is comprised as shown in table  F.29.

In the consolidated statement of ﬁnancial position, the valua-
tion allowances on deferred tax assets, which are mainly
attributable to foreign companies, decreased by €1,256 million
compared to December 31, 2012. On the one hand, this is
a result of the reversal of valuation allowances of €143 million
recorded in net proﬁt. On the other hand, the capital losses
resulting from the sale of the former investment in Chrysler were
utilized. At December 31, 2012 the deferred tax assets on
those capital losses were completely oﬀset by a valuation allow-
ance because the losses have a limited carryforward period
and can only be oﬀset by gains on disposal of capital. In 2013,
as a result of intercompany sales, gains on disposal of capital
were realized and the capital loss in the amount of €2,161 million
was used. Because the Group did not recognize deferred tax
liabilities on retained earnings of non-German subsidiaries as
these earnings are intended to be permanently reinvested
in those operations, no signiﬁcant impact on earnings resulted
from the intercompany sale. Additionally, a decrease of the
valuation allowance was recognized in equity due to the expira-
tion of tax loss carryforwards, which were already adjusted
by a valuation allowance at December 31, 2012 and due to trans-
lation eﬀects.

210

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

At December 31, 2013, the valuation allowance on deferred
tax assets relates, among other things, to tax loss carryfor-
wards in connection with capital losses (€193 million), corpo-
rate income tax loss carryforwards (€453 million) and tax
credits (€17 million). The deferred tax assets on loss carryfor-
wards connected with capital losses were reduced to zero
by valuation allowances because the carryforward periods
of those losses are limited and can only be utilized with
future capital gains. As of today, these are not expected to
occur in the coming years. The capital losses expire in 2016.
Deferred tax assets for corporate income tax loss carryfor-
wards adjusted by a valuation allowance relate with €116 million
to tax loss carryforwards which expire at various dates from
2016 through 2018, with €120 million to tax loss carryforwards
which expire at various dates from 2019 through 2033 and
with €217 million to tax loss carryforwards which can be carried
forward indeﬁnitely. Of the tax credit carryforwards adjusted
by a valuation allowance, €11 million expire at various dates from
2014 through 2018 and €6 million expire at various dates
from 2019 through 2033. Furthermore, the valuation allowance
primarily 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 2013 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 €320 million for those foreign subsid-
iaries. Daimler believes it is more likely than not that due
to future taxable income, deferred tax assets which are not
subject to valuation allowances can be utilized. In future
periods, Daimler’s estimate of the amount of deferred tax assets
that is considered realizable may change, and hence the
valuation allowances may increase or decrease.

The cumulative undistributed earnings of non-German subsid-
iaries are largely intended to be reinvested in those operations.
On retained earnings of non-German subsidiaries of €16,419
million (2012: €15,484 million), the Group did not recognize
deferred tax liabilities. If the dividends are paid out an amount
of 5% of the dividends will be taxed under German taxation
rules and, if applicable, with non-German withholding tax. Addi-
tionally, income tax consequences 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 taxable temporary diﬀerences
for these undistributed foreign earnings.

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.

F.28
Change of deferred tax assets, net

In millions of euros

2013

2012

Deferred tax assets, net as of January 1

Deferred tax expense

2,465

-614

2,402

-1,099

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

Deferred tax assets, net as of December 31

1 Primarily eﬀects from currency translation.

F.29
Tax expense in equity

In millions of euros

Income tax expense

Income tax expense/beneﬁt
recorded in other reserves

-6

-338

-287

-372

-198

937

1,537

-88

2,465

2013

2012

-1,419

-1,286

-772

-2,191

1,335

211

10. Intangible assets

Intangible assets developed as shown in table  F.30.

At December 31, 2013, goodwill of €392 million (2012:
€429 million) relates to the Daimler Trucks segment and €188
million (2012: €197 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, 2013: €1,913
million; carrying amount at December 31, 2012: €3,037 million).
In addition, other intangible assets with a carrying amount
at December 31, 2013 of €275 million (2012: €155 million)
are not amortizable. Other non-amortizable intangible assets
are trademarks with indeﬁnite useful lifes, which relate
to the Daimler Trucks segment as well as distribution rights
of Mercedes-Benz Cars with indeﬁnite useful lifes. The
Group plans to continue to use these assets unchanged.

F.30
Intangible assets

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Amortization

Balance at January 1, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Carrying amount at December 31, 2012

Carrying amount at December 31, 2013

1 Primarily changes from currency translation.

212

Development
costs
(internally
generated)

Other intangible
assets
(acquired)

Goodwill
(acquired)

1,014

–

-12

1,002

–

-61

941

278

–

-5

273

–

-13

260

729

681

10,426

–

1,486

–

-568

-25

11,319

–

1,301

–

-678

-42

11,900

3,767

982

–

-565

-25

4,159

1,138

–

-667

-40

4,590

7,160

7,310

2,401

–

364

–

-72

-84

2,609

–

682

–

-123

-139

3,029

1,537

198

–

-68

-54

1,613

242

–

-116

-107

1,632

996

1,397

Total

13,841

–

1,850

–

-640

-121

14,930

–

1,983

–

-801

-242

15,870

5,582

1,180

–

-633

-84

6,045

1,380

–

-783

-160

6,482

8,885

9,388

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Table  F.31 shows the line items of the consolidated
statement of income in which total amortization expense
for intangible assets is included.

F.31
Amortization expense for intangible assets
in the consolidated statement of income

Intangible assets include capitalized borrowing costs
on qualiﬁed assets according to IAS 23 which related only
to capitalized development costs. In 2013, borrowing costs
in the amount of €17 million (2012: €21 million) were capitalized;
amortization amounted to €4 million (2012: €0 million).
The base for the calculation of borrowing costs was an average
cost of debt of 0.9% (2012: 1.5%).

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized development costs

2013

2012

1,319

1,117

1,380

1,180

F.32
Property, plant and equipment

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Depreciation

Balance at January 1, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Carrying amount at December 31, 2012

Carrying amount at December 31, 2013

1 Primarily changes from currency translation.

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

14,752

20,070

312

232

-138

-217

944

728

-784

-198

14,941

20,760

–

218

199

-76

-447

14,835

–

1,181

918

-945

-339

21,575

7,858

14,148

955

-744

-123

14,237

1,070

–

-875

-207

291

-99

-83

7,968

258

–

-32

-150

8,044

6,973

6,791

19,001

1,656

520

-606

-289

20,282

–

1,853

536

-700

-463

21,508

14,534

1,641

-2

-531

-204

15,438

1,664

–

-625

-335

1,898

1,913

-1,480

-18

-53

2,260

–

1,833

-1,666

-27

-127

2,273

–

14,225

16,142

6,523

7,350

4,844

5,366

2,259

2,272

Total

55,721

4,825

-1,546

-757

58,243

–

5,085

-13

-1,748

-1,376

60,191

36,541

2,887

-1,374

-410

37,644

2,992

–

-1,532

-692

38,412

20,599

21,779

213

F.33
Equipment on operating leases

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions due to business combinations

Other additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Depreciation

Balance at January 1, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2012

Additions

Reclassiﬁcations

Disposals
Other changes1

Balance at December 31, 2013

Carrying amount at December 31, 2012

Carrying amount at December 31, 2013

1 Primarily changes from currency translation.

11. Property, plant and equipment

Property, plant and equipment developed as shown
in table  F.32.

In 2013, government grants of €34 million (2012: €75 million)
were deducted from property, plant and equipment.

Property, plant and equipment include buildings, technical
equipment and other equipment capitalized under ﬁnance lease
arrangements with a carrying amount of €262 million (2012:
€348 million). In 2013, additions to and depreciation expense
on assets under ﬁnance lease arrangements amounted to
€17 million (2012: €33 million) and €67 million (2012: €93 million),
respectively.

12. Equipment on operating leases

The development of equipment on operating leases
is included in table  F.33.

As of December 31, 2013, equipment on operating leases with
a carrying amount of €5,084 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 (December 31, 2012: €3,803 million) (see also
Note 24).

Minimum lease payments. Non-cancelable future lease
payments to Daimler for equipment on operating leases are
due as presented in table  F.34.

28,409

–

14,700

–

-10,742

-22

32,345

–

15,953

-12,458

-975

34,878

5,598

3,813

–

-3,161

6,287

4,376

–

-3,733

-212

6,718

26,058

28,160

F.34
Maturity of minimum lease payments for equipment on operating leases

In millions of euros

Maturity

within one year

between one and ﬁve years

later than 5 years

At December 31,
2012

2013

4,877

4,692

112

9,681

4,391

4,913

156

9,460

214

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

13. Investments accounted for using the equity method

Table  F.35 contains key ﬁnancial ﬁgures of investments
in associated companies and joint ventures accounted for using
the equity method.

Table  F.36 presents summarized IFRS ﬁnancial information
on investments accounted for using the equity method,
which was the basis for applying the equity method in the
Group’s consolidated ﬁnancial statements.

F.35
Key ﬁgures for investments accounted for using the equity method

EADS

RRPSH

BBAC

BFDA

BAIC Motor

Kamaz

Others

Total

In millions of euros

December 31, 2013

Equity interest (in %)

Market value
(based on listed share prices)1
Equity investment2
Equity result (2013)2

December 31, 2012

Equity interest (in %)

Market value
(based on listed share prices)1
Equity investment2
Equity result (2012)2

1 Proportionate market values.
2 Including investor-level adjustments.

50.0

49.0

50.0

–

3,397

–

1,494

14.9

50.0

3,606

1,388

1,224

–

1,549

–

640

50.0

–

510

101

–

298

-26

50.0

–

328

-13

12.0

–

595

–

15.0

121

155

15.0

165

–

250

-184

–

364

-187

–

3,432

3,345

–

4,304

1,198

F.36
Summarized IFRS ﬁnancial information on investments accounted for using the equity method

EADS

RRPSH

BBAC

BFDA

BAIC Motor

Kamaz

Others

Total

In millions of euros

Income statement information1

2013

Sales

Net proﬁt/loss

2012

Sales

Net proﬁt/loss

Balance sheet information2

2013

Total assets

Equity

Liabilities

2012

Total assets

Equity

Liabilities

–

53,680

1,475

–

86,151

11,850

74,301

3,340

133

3,015

5,834

3,334

2,500

6,058

3,562

2,496

4,490

192

3,670

232

2,788

1,406

1,382

3,035

1,105

1,930

3,201

-53

376

-26

1,817

595

1,222

1,951

656

1,295

554

269

–

5,100

2,253

2,847

–

2,620

117

3,062

151

1,849

887

962

1,902

895

1,007

4,638

5,269

-325

4,613

1,333

3,280

4,371

899

3,472

18,843

752

69,072

1,561

22,001

9,808

12,193

103,468

18,967

84,501

1 Figures for EADS and Kamaz relate to the period from October 1 to September 30. Figures for BBAC and RRPSH relate to the period from January 1 to

December 31. Figures for BFDA relate to the period from October 1, 2011 to September 30, 2012 for the year 2012 and from October 1, 2012 to
November 30, 2013 for the year 2013. Figures for BAIC Motor relate to the period from January 1 to September 30, 2013 based on local GAAP.

2 Figures for EADS and Kamaz as of September 30. Figures for BBAC and RRPSH as of December 31. Figures for BFDA as of September 30 for 2012

and as of November 30 for 2013. Figures for BAIC Motor as of September 30, 2013 based on local GAAP.

215

EADS (since January 2, 2014: Airbus Group N.V.). The Group
reported and reports its investment in and its proportionate
share in the results of the European Aeronautic Defence and
Space Company EADS N.V. (EADS) in the reconciliation of
total segments’ assets to Group assets and total segments’
EBIT to Group EBIT, respectively, in the segment reporting.

On March 27, 2013, the Extraordinary Shareholders’ Meeting
of EADS approved the new management and shareholder
structure. Subsequently, the shareholders’ pact concluded
in the year 2000 was dissolved and replaced with a new
shareholders’ pact without the participation of Daimler on April 2,
2013. At the same time, EADS shares which were previously
held by Daimler but were economically allocable to the Dedalus
investors were transferred to the Dedalus investors. With
the dissolution of the previous shareholders’ pact, Daimler lost
its signiﬁcant inﬂuence on EADS. As a result of the loss
of signiﬁcant inﬂuence and the transfer of the EADS shares,
on April 2, 2013, the EADS shares were remeasured through
proﬁt or loss at the higher current stock-market price of EADS
shares. Overall, this resulted in income of €3,356 million,
which was recognized in Group EBIT in 2013. Of that amount,
€1,669 million is allocable to Daimler shareholders and
€1,687 million is allocable to the Dedalus investors. The income
of €3,356 million was disclosed within investments accounted
for using the equity method and is therefore solely a book gain
with no impact on cash. Furthermore, income of €41 million
resulted from measurement using the equity method; thereof
€34 million in the ﬁrst quarter of 2013 and €7 million in the
second quarter of 2013.

On April 16, 2013, the Group announced that it would sell
its remaining stake of approximately 7.4% in EADS through
an accelerated placement procedure. The sale, which took
place on April 17, 2013 at an oﬀer price of €37 per EADS share,
led to an additional expense of €184 million in Group EBIT in
2013. The additional expense is disclosed within other ﬁnancial
expenses, net, and resulted from the fall in the EADS share
price since April 2, 2013. The sale generated a cash inﬂow of
€2,239 million in 2013. Following the conclusion of the trans-
action, Daimler no longer holds any shares in EADS. Moreover,
in 2013 the Group entered into cash-settled contracts with
both Goldman Sachs and Morgan Stanley, which allowed a limited
upside participation in the EADS share price until the end
of 2013. This resulted in income of €44 million disclosed within
other ﬁnancial expenses, net, for the year 2013.

At December 6, 2012, Daimler had sold a 7.5% stake in EADS
by way of an accelerated book building. The share price was ﬁxed
at €27.23, which reﬂected the ﬁnal share price at December 5,
2012 at the Paris Stock exchange. Daimler realized a cash inﬂow
of approximately €1.7 billion. The sale resulted in a gain of
€913 million, which is included in the equity result. Following
the transaction, Daimler held a 14.9% equity interest in EADS.
Because of the agreed participation rights in the Supervisory
Board, Daimler was able to exercise signiﬁcant inﬂuence
on EADS. The 14.9% share in EADS was held by a subsidiary
of Daimler which had issued equity interests to investors
in exchange for cash in 2007. As a result of this transaction,
the Group reported a non-controlling interest in its consoli-
dated statement of ﬁnancial position representing the investor’s
ownership in the consolidated subsidiary that issued the
equity interest. The amount reported as non-controlling inter-
est reﬂected the investor’s 50% share in the net assets
of that subsidiary at December 31, 2012.

RRPSH (formerly Engine Holding)/Tognum (since January 9,
2014: Rolls-Royce Power Systems AG). In the ﬁrst half of
2012, the contribution by Rolls-Royce Holdings plc. (Rolls-Royce)
to Rolls-Royce Power Systems Holding GmbH (RRPSH) of
the reciprocating engine business that trades under the Bergen
brand was completed. As compensation for the 50% stake,
Daimler made a cash contribution of €200 million to RRPSH.

On September 25, 2012, the dependent company Tognum
and the controlling company RRPSH concluded a control and
proﬁt and loss transfer agreement, resulting in Tognum sub-
ordinating the management of its company under the control
of RRPSH and committing to transfer its total proﬁt to RRPSH.
The obligation to transfer proﬁts was applicable for the ﬁrst time
for the entire proﬁt of ﬁnancial year 2012, in which the agree-
ment became eﬀective.

On November 15, 2012, Tognum’s shareholders’ meeting
approved the agreement and the control and proﬁt and loss
transfer agreement was entered in the commercial register
on December 19, 2012.

On January 1, 2013, Rolls-Royce assumed, as contractually
agreed, control over RRPSH and RRPSH is included as a subsid-
iary in the consolidated ﬁnancial statements of Rolls-Royce.
Daimler continues to exercise signiﬁcant inﬂuence on Tognum
through its equity interest in RRPSH.

The decision of the regional court of Frankfurt am Main
of November 15, 2011 to transfer Tognum AG shares which
are not already owned by RRPSH in return for compensation
(squeeze-out under takeover law) took eﬀect in March
2013 and RRPSH has held 100% of Tognum’s shares since then.

216

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Kamaz. Resulting from its representation on the board of
directors of Kamaz OAO (Kamaz) and its signiﬁcant contractual
rights under the terms of a shareholder agreement, 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
results of Kamaz are allocated to the Daimler Trucks segment.

Others. The equity results of the other investments mainly result
from startup losses at several companies in the area of alter-
native drive systems (2013: €205 million; 2012: €89 million) which
are allocated to the Mercedes-Benz Cars segment. In 2013,
impairments of investments of €174 million (2012: €51 million)
are included.

The Group’s investment in Fujian Benz Automotive Co.,
Ltd. (FBAC) is included in other investments and is allocated
to the Mercedes-Benz Vans segment. In 2012, the Group
recorded an impairment loss of €64 million with respect to its
investment in FBAC. The loss is included in the equity result.

The Group’s investment in Tesla Motors, Inc. (Tesla) is also
included in other investments. The shares in Tesla are held
by a 100%-consolidated Daimler subsidiary. At December 31,
2011, Daimler held 60% and Aabar Investments PJSC (Aabar)
held 40% of that subsidiary. In June 2012, Aabar exchanged its
40% interest in the holding subsidiary for 3.2% of Tesla’s
shares. In October 2012, Tesla issued approximately 8 million
new shares in the context of a capital increase in which
Daimler did not participate. As a result, Daimler held a 4.3%
equity interest in Tesla as of December 31, 2012. In 2013,
the Group realized a dilution gain of €11 million due to a capital
increase in which Daimler did not take part. The equity inter-
est in Tesla amounts to 4.0% as of December 31, 2013; the fair
value and the carrying amount of the investment were €531
million and €13 million as of December 31, 2013 respectively
(December 31, 2012: €125 million and €6 million). Due to
its representation on the board of directors, participation in
decision-making processes and jointly conducted projects,
the Group can exercise signiﬁcant inﬂuence on Tesla. Therefore,
the Group accounts for its equity interest in Tesla using the
equity method; the investment and the proportionate share in
the results of Tesla are allocated to the Mercedes-Benz Cars
segment.

Further information on investments accounted for using
the equity method is included in Note 36.

The objections to the decision were withdrawn because the
appellant’s representatives and RRPSH agreed to an out-of-court
settlement. The minority shareholders of Tognum AG, whose
shares were transferred to RRPSH in the context of the squeeze-
out under takeover law, and the former shareholders of
Tognum AG, who accepted the compensation of the control
and proﬁt and loss transfer agreement eﬀective December 19,
2012, received compensation of €31.61 per share pursuant
to the out-of-court settlement.

Rolls-Royce granted Daimler the right to exercise a put option
on the shares it holds in RRPSH at a price which generally hedges
Daimler’s investment in RRPSH. Starting on January 1, 2013,
the put option has a duration of six years. On December 31, 2013,
the value of this option was €118 million (2012: €178 million).
The option has been recognized as an asset to be measured
at fair value through proﬁt or loss in the following periods.
The change in the fair value of the option during 2013 resulted
in a loss of €60 million (2012: gain of €1 million), which is rec-
ognized in other ﬁnancial expense, net. The carrying amount
of this option, which is presented under “Other ﬁnancial
assets”, as well as future changes in its fair value are recognized
in segment reporting as corporate items in the reconciliation
to Group ﬁgures.

The equity interest in and the proportionate share of RRPSH’s
proﬁt or loss are allocated to the Daimler Trucks segment.

BBAC. The investment and the proportionate share in the results
of Beijing Benz Automotive Co., Ltd. (BBAC) are allocated
to the Mercedes-Benz Cars segment. In 2013, Daimler partici-
pated in a capital increase and made a payment of approxi-
mately €160 million. The Chinese partner BAIC Motor Corpora-
tion Ltd. (BAIC Motor) participated with the same amount.
On November 18, 2013, BAIC Motor increased its stake in BBAC
by 1% to 51% in the course of a capital increase in which
Daimler did not participate.

BFDA. In 2012, Beijing Foton Daimler Automotive Co., Ltd.
received a capital contribution of €344 million from Daimler.
The investment and the proportionate share in the results
of BFDA are allocated to the Daimler Trucks segment.

BAIC Motor. On November 18, 2013, BAIC Motor issued new
shares to Daimler representing a 12% stake in BAIC Motor
for a purchase price of €627 million including incidental acqui-
sition costs. Resulting from Daimler’s representation on the
board of directors of BAIC Motor and other contractual arrange-
ments the Group classiﬁed this investment as an investment
in an associate, to be accounted for using the equity-method,
and allocated the investment to reconciliation of total seg-
ment’s assets to Group assets. In December 2013, the share-
holders of BAIC Motor declared a dividend to its shareholders.
The portion of €23 million attributable to Daimler has decreased
the investment book value respectively. The Group is in the
process to perform an allocation of the purchase price on the
identiﬁable assets and liabilities.

217

14. Receivables from ﬁnancial services

Table  F.37 shows the components of receivables from
ﬁnancial services.

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

Wholesale receivables 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.

Other receivables mainly represent non-automotive assets
from contracts of the ﬁnancial services business with third
parties.

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.

Allowances. Changes in the allowance account for receivables
from ﬁnancial services are included in table  F.38.

The total expense of impairment losses on receivables
from ﬁnancial services amounted to €416 million in 2013
(2012: €390 million).

F.37
Receivables from ﬁnancial services

In millions of euros

Receivables from

Retail

Wholesale

Other

Gross carrying amount

Allowances for doubtful accounts

Carrying amount, net

Current Non-current

At December 31, 2013
Total

Current Non-current

At December 31, 2012
Total

13,513

9,781

23,391

-390

23,001

26,169

1,723

358

28,250

-481

27,769

39,682

11,504

455

51,641

-871

50,770

13,289

8,995

102

22,386

-388

21,998

25,379

1,687

546

27,612

-550

27,062

38,668

10,682

648

49,998

-938

49,060

F.38
Changes in the allowance account for receivables from ﬁnancial services

2013

2012

938

405

-273

-137

-62

871

946

370

-235

-132

-11

938

In millions of euros

Balance at January 1

Charged to costs and expenses

Amounts written oﬀ

Reversals

Currency translation and other changes

Balance at December 31

218

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Credit risks. Table  F.39 gives 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.

Finance leases. Finance leases consist of 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  F.40.

As of December 31, 2013, receivables from ﬁnancial services
with a carrying amount of €3,007 million (2012: €3,056 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).

Within the context of the ongoing concentration on the auto-
motive business, Daimler Financial Services sold non-automotive
assets that were subject to leveraged leases in 2013. This
resulted in a total cash inﬂow of €48 million in 2013. There was
no signiﬁcant impact on the consolidated statement of income.

F.39
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

At December 31,
2012

2013

47,264

45,411

1,479

266

173

2,015

1,491

1,478

293

158

2,063

1,586

50,770

49,060

Furthermore, Daimler Financial Services sold in February 2014
additional non-automotive assets that were subject to leveraged
lease contracts with a net book value of US$32 million for
a purchase price of US$94 million. The resulting pre-tax income
is allocated to the Daimler Financial Services segment in the
ﬁrst quarter of 2014. On the grounds of materiality, there has
been no separate presentation as “non-current assets held
for sale” in the consolidated statement of ﬁnancial position.

less than 30 days

30 to 59 days

60 to 89 days

90 to 119 days

120 days or more

Total

Receivables impaired individually

Carrying amount, net

F.40
Maturities of the ﬁnance lease contracts

In millions of euros

Contractual future lease payments

Unguaranteed residual values

Gross investment

Unearned ﬁnance income

Gross carrying amount

Allowances for doubtful accounts

Carrying amount, net

At December 31, 2013

< 1 year

1 year up to
5 years

> 5 years

Total

< 1 year

1 year up to
5 years

At December 31, 2012

> 5 years

Total

4,667

367

5,034

-489

4,545

-150

4,395

7,568

1,796

9,364

-889

8,475

-213

8,262

482

538

-85

453

-15

438

12,717

2,219

14,936

-1,463

13,473

-378

13,095

4,307

485

4,792

-468

4,324

-163

4,161

6,798

1,665

8,463

-861

7,602

-205

7,397

425

496

-59

437

-27

410

11,530

2,221

13,751

-1,388

12,363

-395

11,968

219

15. Marketable debt securities

As of December 31, 2013, current and non-current marketable
debt securities with a total carrying amount of €7,066 million
are presented separately in the consolidated statement of ﬁnan-
cial position (2012: €5,598 million).

The marketable debt securities are part of the Group’s liquidity
management and comprise debt instruments and are classiﬁed
as available-for-sale.

As of December 31, 2013, a pool of marketable debt securities
with a book value of €204 million (2012: €200 million) was
pledged as collateral mainly for liabilities to ﬁnancial institutions.

Further information on marketable debt securities is provided
in Note 31.

16. Other ﬁnancial assets

The line item “Other ﬁnancial assets” shown in the
consolidated statement of ﬁnancial position is comprised
of the classes presented in table  F.41.

In 2013, equity instruments carried at cost with a carrying
amount of €37 million were sold (2012: €9 million). The gains
realized on the sales were €15 million in 2013 (2012: €4 million).
As of December 31, 2013, the Group principally did not intend
to dispose of any reported equity instruments carried at cost.

Financial assets recognized at fair value through proﬁt
or loss relate exclusively to derivative ﬁnancial instruments
which are not used in hedge accounting.

As of December 31, 2013, other receivables and ﬁnancial
assets include a loan and accumulated interest to Chrysler
LLC of US$2.2 billion (December 31, 2012: US$2.0 billion).
As in the previous year, the receivables were fully impaired.

Further information on other ﬁnancial assets is provided
in Note 31.

F.41
Other ﬁnancial assets

In millions of euros

Current

At December 31, 2013
Total

Non-current

Current

At December 31, 2012
Total

Non-current

Available-for-sale ﬁnancial assets

thereof equity instruments recognized at fair value through proﬁt or loss

thereof equity instruments carried at cost

Derivative ﬁnancial instruments used in hedge accounting

Financial assets recognized at fair value through proﬁt or loss

Other receivables and ﬁnancial assets

–

1,006

1,631

2,718

2,052

1,452

600

697

269

505

3,523

2,052

1,452

600

1,703

350

2,136

6,241

–

306

103

1,661

2,070

2,031

1,440

591

1,058

238

563

3,890

2,031

1,440

591

1,364

341

2,224

5,960

220

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

17. Other assets

Non-ﬁnancial other assets are comprised as shown
in table  F.42.

Other expected reimbursements predominantly relate
to recovery claims from our suppliers in connection with
issued product warranties.

18. Inventories

Inventories are comprised as shown in table  F.43.

The amount of write-down of inventories to net realizable
value recognized as expense in cost of sales was €311 million
in 2013 (2012: €294 million). Inventories that are expected
to be turned over after more than twelve months amounted
to €798 million at December 31, 2013 (2012: €691 million)
and are primarily spare parts.

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 €627 million (2012: €584 million) was pledged as collateral
to the Daimler Pension Trust e.V..

The carrying amount of inventories recognized during
the period by taking possession of collateral held as security
amounted to €60 million in 2013 (2012: €70 million). The
utilization of these assets occurs in the context of the normal
business cycle.

F.42
Other assets

In millions of euros

Reimbursements due to income tax refunds

Reimbursements due to other tax refunds

Reimbursements due to the Medicare Act (USA)

Other expected reimbursements

Prepaid expenses

Others

Current

At December 31, 2013
Total

Non-current

Current

At December 31, 2012
Total

Non-current

650

1,686

–

138

296

347

3,117

108

104

147

116

531

685

1,707

108

242

443

463

483

1,678

–

169

373

369

3,648

3,072

160

132

122

534

506

1,714

160

301

434

491

3,606

F.43
Inventories

In millions of euros

At December 31,
2012

2013

Raw materials and manufacturing supplies

Work in progress

2,011

2,275

2,137

2,292

Finished goods, parts and products held for resale

13,028

13,235

Advance payments to suppliers

17,349

17,720

221

19. Trade receivables

20. Equity

Trade receivables are comprised as shown in table  F.44.

See also the consolidated statement of changes in equity
 F.05.

As of December 31, 2013, €116 million of the trade receivables
mature after more than one year (2012: €117 million).

Allowances. Table  F.45 includes changes in the allowance
account for trade receivables.

The total expenses relating to the impairment losses
of trade receivables amounted to €105 million in 2013
(2012: €129 million).

Credit risks. Table  F.46 gives an overview of credit risks
included in trade receivables.

Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.

Further information on ﬁnancial risk and types of risk
is provided in Note 32.

F.44
Trade receivables

In millions of euros

Gross carrying amount

Allowances for doubtful accounts

Carrying amount, net

At December 31,
2012

2013

8,200

-397

7,803

7,945

-402

7,543

F.45
Changes in the allowance account for trade receivables

In millions of euros

Balance at January 1

Charged to costs and expenses

Amounts written oﬀ

Currency translation and other changes

Balance at December 31

2013

2012

402

-59

-12

397

467

-123

-3

402

The share 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 appli-
cable, with the exception of any new shares potentially not
entitled to dividend, to an equal portion of the proﬁts as deﬁned
by the dividend distribution resolved at the Annual Meeting.
Each share represents a proportionate amount of approximately
€2.87 of the share capital. For the development of shares
issued or outstanding see  F.47.

Treasury shares. By resolution of the Annual Shareholders’
Meeting on April 14, 2010, the Board of Management, with
the consent of the Supervisory Board, was authorized until
April 13, 2015 to acquire treasury shares for all legal purposes
in a volume up to 10% of the share capital issued as of the
day of the resolution. The authorization applies for example
to the purchase of shares for the purpose of cancellation,
for using them for business combinations or to acquire compa-
nies, or for disposal in other ways than through the stock
exchange or by oﬀering them to all shareholders. This authori-
zation has not been exercised in the reporting period.

Through a ﬁnal verdict reached by the higher regional court
in Frankfurt am Main in November 2009, the exchange ratio
speciﬁed in the domination and proﬁt and loss transfer agree-
ment between the former Daimler-Benz AG and the former
AEG AG from 1988 as well as the compensation payment for
unpaid AEG dividends determined in this agreement had
been increased for the beneﬁt of those AEG shareholders.
In 2010, Daimler AG began to satisfy the claims of former
AEG shareholders.

In 2012, a further 0.005 million treasury shares worth a total of
€0.21 million were purchased and transferred to former AEG
shareholders. 0.017 million treasury shares worth a total of
€0.63 million were retransferred to Daimler AG as they could
not be transferred to the authorized AEG shareholders. These
shares were immediately sold on the stock exchange for a
total of €0.62 million; the proﬁt from the transaction was rec-
ognized within retained earnings.

The claims resulting from this verdict by the higher regional
court in Frankfurt am Main have lapsed.

As was the case at December 31, 2012, no treasury shares
are held by Daimler AG at December 31, 2013.

222

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Employee share purchase plan. In 2013, 0.5 million Daimler
shares representing €1.5 million or 0.05% of the share capital
were purchased for a price of €24 million and reissued to
employees (2012: 0.5 million Daimler shares representing €1.5
million or 0.05% of the share capital were purchased for
a price of €25 million).

Approved capital. By resolution of the Annual Meeting
on April 8, 2009, 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 7, 2014 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 contri-
butions (Approved Capital 2009). 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.
The approved capital has not yet been issued.

Conditional capital. By resolution of the Annual Meeting
on April 14, 2010, the Board of Management, was authorized
with the consent of the Supervisory Board, until April 13,
2015 to issue once or several times 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. Among other things, the Board of Management was
authorized with the consent of the Supervisory Board to
exclude shareholders’ subscription rights for the bonds with
conversion or warrant rights for new registered no-par-
value shares in Daimler AG under certain conditions and within
deﬁned limits. The bonds can also be issued by majority-
owned direct or indirect subsidiaries of Daimler AG.

Accordingly, the share capital is conditionally increased
by an amount of up to €500 million (Conditional Capital 2010).
The authorization to issue convertible and/or warrant bonds
has not yet been utilized.

F.46
Credit risks included in trade receivables

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

60 to 89 days

90 to 119 days

120 days or more

Total

Receivables impaired individually

Carrying amount, net

F.47
Development of shares issued

In millions of shares

At December 31,
2012

2013

5,536

5,137

554

113

803

1,464

7,803

631

132

885

1,521

7,543

2013

2012

Shares outstanding/issued on January 1

1,068

1,066

Repurchase of treasury shares to settle
obligations towards former AEG shareholders

Utilization of treasury shares due to the
settlement of obligations towards former
AEG shareholders

Shares repurchased in the share buyback
program and not cancelled (previous years)

Reissued shares to employees in the
employee share purchase plan

Creation of new shares by exercise
of stock options

-1

Shares outstanding/issued on December 31

1,070

1,068

223

Stock option plans. As of December 31, 2013, 0.2 million
options from stock option plan initiated 2004 granting
subscription rights to new shares representing €0.6 million
of the share capital had not yet been exercised (December 31,
2012: 3 million options from stock option plans initiated until
and including 2004 granting subscription rights to new shares
representing €8 million of the share capital).

Dividends. 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 com-
pany only) in accordance with the German Commercial
Code (HGB). For the year ended December 31, 2013, the Daimler
management will propose to the shareholders at the Annual
Meeting to pay out €2,407 million of the distributable proﬁt
of Daimler AG as a dividend to the shareholders, equivalent
to €2.25 per no-par-value share entitled to a dividend (2012:
€2,349 million and €2.20 per no-par-value share entitled
to a dividend respectively).

Table  F.48 shows the details of changes in retained earnings
and other reserves from other comprehensive income/loss.

In the line item “Unrealized gains/losses from investments
accounted for using the equity method”, the amounts for 2013
include the following components (amounts attributable to
shareholders of Daimler AG only): unrealized losses from cur-
rency trans lation adjustments before taxes and net of taxes of
€80 million (2012: unrealized gains from currency translation
adjustments before taxes and net of taxes of €12 million),
unrealized losses from ﬁnancial assets available for sale before
taxes of €41 million and net of taxes of €38 million (2012:
unrealized losses from ﬁnancial assets available for sale before
taxes and net of taxes of €45 million) and unre alized gains
from derivative ﬁnancial instruments before taxes of €153 mil-
lion and net of taxes of €107 million (2012: unrealized gains
from deri vative ﬁnancial instruments before taxes of €89 million
and net of taxes of €60 million).

The changes in retained earnings and other reserves
from other comprehensive income/loss that are attributable
to non-controlling interest are shown in table  F.49.

Changes in ownership interests in subsidiaries. The changes
in ownership interests in subsidiaries shown in the conso-
lidated statement of changes in equity in 2012 primarily result
from an increase in ownership interest in Mercedes-Benz
(China) Ltd. from 51% to 75%; the minority shareholder did not
participate in this capital increase.

F.48
Changes in retained earnings and other reserves

Before
taxes

Taxes

2013
Net of
taxes

Before
taxes

Taxes

In millions of euros

Unrealized losses from currency translation adjustments

-1,531

Financial assets available for sale

Unrealized gains

Income (-) reclassiﬁed through proﬁt or loss

Unrealized gains from ﬁnancial assets available for sale

Derivative ﬁnancial instruments

Unrealized gains

Income (-)/expense reclassiﬁed through proﬁt or loss

Unrealized gains from derivative ﬁnancial instruments

Investments accounted for using the equity method

Unrealized losses/gains

Expense/income (-) reclassiﬁed through proﬁt or loss

Unrealized gains from investments accounted for using
the equity method

Items that may be reclassiﬁed to loss/proﬁt

Actuarial losses on investments accounted for using the equity method

Actuarial gains/losses from pensions and similar obligations

Items that will not be reclassiﬁed to proﬁt/loss

Other comprehensive income/loss

-1

1,388

-248

1,140

-21

-285

-1

1,491

1,490

1,205

–

-6

-410

-338

-9

-47

-56

-400

-372

-772

-1,531

-502

-1

978

-176

802

-30

-685

-1

1,119

1,118

433

165

-1

164

151

838

989

112

-83

680

-299

-3,818

-4,117

-3,437

–

-43

-244

-287

-26

-22

-309

107

1,537

1,644

1,335

2012
Net of
taxes

-502

165

-1

164

108

594

702

-79

371

-192

-2,281

-2,473

-2,102

224

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

21. Share-based payment

As of December 31, 2013, the Group has the 2010 – 2013
Performance Phantom Share Plans (PPSP) and the Stock Option
Plan 2004 outstanding. The unexercised rights from Stock
Option Plan 2003 expired on March 31, 2013. The exercisable
stock options of 2004 are equity-settled share-based
payment instruments and are measured at fair value at the
date of grant. 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 only if certain deﬁned
conditions are met. PPSP 2009 was paid out as planned
in the ﬁrst quarter of 2013.

Moreover, 50% of the annual bonus of the members of the Board
of Management will be 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.

F.49
Changes in retained earnings and other reserves from other comprehensive income/loss attributable to non-controlling interest

Before
taxes

Taxes

2013
Net of
taxes

Before
taxes

Taxes

2012
Net of
taxes

In millions of euros

Unrealized losses from currency translation adjustments

Unrealized gains from ﬁnancial assets available for sale

Unrealized losses/gains from derivative ﬁnancial instruments

Unrealized gains/losses from investments accounted for using
the equity method

Items that may be reclassiﬁed to loss

Actuarial losses from investments accounted for using the equity method

Items that will not be reclassiﬁed to loss

Other comprehensive loss

-46

-1

-6

–

-6

–

-13

–

-13

-46

-1

-19

–

-19

-21

-27

-46

-109

-155

–

-21

-20

-39

-76

-115

225

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 presented in table  F.50.

Table  F.51 includes expenses in the consolidated statement
of income resulting from rights of current members of the
Board of Management who were active as of December 31, 2013.

The details shown in table  F.51 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 2013 can be found in the
Remuneration Report. E Management Report from page 119

Performance Phantom Share Plans. In 2013, the Group
adopted a Performance Phantom Share Plan (PPSP), similar
to that used from 2005 to 2012, under which eligible employees
are granted phantom shares entitling them to receive cash
payments after four years. The amount of cash paid to eligible
employees 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 mem-
bers of the Board of Management is limited to 2.5 times the allot-
ment value, used for the preliminary number of phantom shares.

F.50
Eﬀects of share-based payment

In millions of euros

PPSP

SOP

Medium-term component of annual bonus
of the members of the Board of Management

Remuneration
expense
2012

-121

-1

-4

-126

2013

-250

-2

-7

-259

Provision
at December 31,
2012

214

–

224

2013

344

–

355

F.51
Expenses in the consolidated statement of income resulting from share-based payments of current members of the Board of Management

In millions of euros

Dr. Dieter Zetsche
2012

2013

Dr. Wolfgang Bernhard Dr. Christine Hohmann-Dennhardt
2012
2013

2013

2012

Wilfried Porth
2012

2013

PPSP

SOP

Medium-term component
of the annual bonus

-10.9

-1.6

-1.9

-5.8

-0.8

-1.2

-4.2

–

-0.6

-1.7

–

-0.4

-2.5

–

-0.6

-0.8

–

-0.5

-4.4

–

-0.7

-2.2

–

-0.4

In millions of euros

Andreas Renschler
2012

2013

Hubertus Troska
2012

2013

Bodo Uebber
2012

2013

Prof. Dr. Thomas Weber
2012

2013

PPSP

SOP

Medium-term component
of the annual bonus

-4.9

–

-0.7

-2.6

–

-0.5

-2.2

–

-0.6

-0.9

–

-5.2

–

-0.8

-2.8

–

-0.6

-4.6

-0.1

-0.7

-2.4

-0.3

-0.4

226

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

The number of phantom shares that vest will be based
on the return on net assets, derived from internal targets,
and return on sales, compared with benchmarks oriented
towards competitors.

In the event of exercise, the Group has generally issued
ordinary shares so far.

Table  F.52 shows the basic terms of the SOP.

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
one Daimler ordinary share, the quoted price almost completely
represents the fair value of each phantom share. The pro-
portionate remuneration expenses for the individual years are
determined on the basis of the year-end quoted price of
Daimler ordinary shares and the estimated target achievement.

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 exceptional and unpredictable developments were
measured at their intrinsic values as of December 31. In 2013,
the remaining options from previous year were exercised
completely.

Stock Option Plans. In April 2000, Shareholders’ Meeting
approved the Daimler Stock Option Plan (SOP), which grants
stock options for the purchase of Daimler ordinary shares
to eligible employees. Options granted under the SOP are
exercisable at a reference price per Daimler ordinary share,
which is determined in advance, plus a 20% premium. The
options become exercisable in equal installments at the earliest
on the second and third anniversaries of the date of grant.
All unexercised options expire ten years after the date of grant.
If the market price per Daimler ordinary share on the date
of exercise is at least 20% higher than the reference price, the
holder is entitled to receive a cash payment equal to the
original exercise premium of 20%. No new stock options were
granted after 2004.

Table  F.53 shows an analysis of the stock options issued.

The weighted average share price of Daimler ordinary
shares during the exercise period was €48.83 (2012: €38.27).
As of December 31, 2013, the weighted average remaining
contractual life of outstanding stock options was 0.25 years
(2012: 1.11 years).

F.52
Basic terms of the SOP

Year of grant

2004

F.53
Analysis of the stock options issued

Balance at the beginning of the year

Exercised

Disposals/Forfeited

Outstanding at year-end

Exercisable at year-end

Reference
price
euros per share

Exercise
price
euros per share

Options
granted
in millions

Options
outstanding
in millions

Options
exercisable
in millions
At December 31, 2013

36.31

43.57

18.0

0.2

Number of
stock options
in millions

2013
Average
exercise price
euros per share

Number of
stock options
in millions

2012
Average
exercise price
euros per share

2.7

-2.2

-0.3

0.2

42.24

42.62

37.33

43.57

5.5

-1.2

-1.6

2.7

42.80

34.62

49.88

42.24

227

Table  F.54 includes an analysis of the stock options issued
to the members of the Board of Management who were active
as of December 31, 2013.

The members of the Board of Management Dr. Wolfgang
Bernhard, Dr. Christine Hohmann-Dennhardt, Wilfried Porth,
Hubertus Troska and Bodo Uebber had no exercisable or
outstanding option rights, neither in 2013 nor in the prior year.

With regard to the ﬁgures shown in table  F.54, it has
to be considered that beneﬁts from the stock option plans only
arise if the Daimler share price exceeds the hurdle which has
been individually deﬁned for each stock option plan and if the
owner of the stock options conducts an exercise. As variable
remuneration, only the diﬀerence between the reference and
exercise price of the respective stock option plan is paid out.
The following average exercise price is only a statistical factor,
which results from the weighted average of the exercise
prices shown in the table for the basic terms of the SOP.

F.54
Analysis of the stock options issued to the current members of the Board of Management

Number of
stock options
in millions

2013
Average
exercise price
euros per share

Number of
stock options
in millions

2012
Average
exercise price
euros per share

0.1

-0.1

–

43.57

–

0.4

-0.3

–

0.1

37.84

34.40

–

43.57

1.3 years

Number of
stock options
in millions1

2013
Average
exercise price
euros per share

Number of
stock options
in millions1

2012
Average
exercise price
euros per share

–

43.57

–

0.1

–

39.43

34.40

–

43.57

1.3 years

Number of
stock options
in millions

2013
Average
exercise price
euros per share

Number of
stock options
in millions

2012
Average
exercise price
euros per share

0.1

-0.1

–

43.57

–

0.2

-0.1

–

0.1

37.54

34.40

–

43.57

1.3 years

Dr. Dieter Zetsche

Balance at beginning of year

Exercised

Disposals/Forfeited

Outstanding at year-end

Exercisable at year-end

Weighted maturity

Andreas Renschler

Balance at beginning of year

Exercised

Disposals/Forfeited

Outstanding at year-end

Exercisable at year-end

Weighted maturity

1 For number of stock options partially no disclosure due to rounding.

Prof. Dr. Thomas Weber

Balance at beginning of year

Exercised

Disposals/Forfeited

Outstanding at year-end

Exercisable at year-end

Weighted maturity

228

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Major parts of pension obligations in Germany relating to deﬁned
beneﬁt pension plans are funded by assets invested in long-
term outsourced funds. Since the year 1999, a contractual trust
arrangement (CTA) has existed between Daimler AG and the
Daimler Pension Trust. The Daimler Pension Trust acts as a collat-
eral trust fund. With the provision of assets for obligations
arising from deﬁned beneﬁt pension plans of other companies
of the Group and the introduction of pension plans based
on the lifecycle model described above, additional CTAs were
concluded in 2012 between the collateral trust fund and
the respective companies of the Group.

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 components.
The major part of the obligations outside Germany from
deﬁned beneﬁt pension plans are funded by assets outplaced
into long-term investment funds.

F.55
Compositions of provisions for pension beneﬁt plans
and similar obligations

In millions of euros

Provision for pension beneﬁts

Provision for other post-employment beneﬁts

December 31,
2012

2013

8,624

1,245

9,869

9,788

1,511

11,299

22. Pensions and similar obligations

Table  F.55 shows how provisions for pension beneﬁt
plans and similar obligations are comprised.

At the Daimler Group, country-speciﬁc and deﬁned beneﬁt
pension obligations exist as well as, to a smaller extent,
deﬁned contribution pension obligations. In addition, health-
care beneﬁt obligations are recognized outside Germany.

Deﬁned beneﬁt pension plans

Provisions for pension beneﬁts are made for deﬁned entitle-
ments to active or former employees of the Daimler Group and
their survivors. Principally, the deﬁned beneﬁt pension plans
provided by Daimler vary according to the economic, tax and
legal circumstances of the country concerned. Generally,
the deﬁned beneﬁt pension plans also provide beneﬁts in the
case of invalidity and death.

The Group’s main German and non-German pension plans
are described below.

German plans. 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,
for 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
respective year, and for executives it depends on their res-
pective 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. New entrants now beneﬁt from value increases
of the contributions through a fund investment in 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, as twelve annual installments, or a single
lump sum.

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.

As well as the employer-ﬁnanced pension plans granted
by German companies, the employees of some companies
are also oﬀered various earnings-conversion models.

229

Risks from deﬁned beneﬁt pension plans. 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.

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.56
Present value of deﬁned pension beneﬁt obligations and fair value of plan assets

In millions of euros

Present value of the deﬁned beneﬁt obligation
at January 1

Current service cost

Interest cost

Contributions by plan participants

Actuarial gains (-)/losses from changes
in demographic assumptions

Actuarial gains (-)/losses from changes
in ﬁnancial assumptions

Actuarial losses from experience adjustments

Actuarial gains (-)/losses

Past service cost, curtailments and settlements

Pension beneﬁts paid

Currency exchange-rate changes and other changes

Present value of the deﬁned beneﬁt obligation
at December 31

Fair value of plan assets
at January 1

Interest income from plan assets

Actuarial gains

Actual return on plan assets

Contributions by the employer

Contributions by plan participants

Beneﬁts paid

Currency exchange-rate changes and other changes

German
plans

2013
Non-German
plans

Total

German
plans

2012
Non-German
plans

Total

23,943

20,698

3,245

19,077

16,058

548

755

-14

-1,136

121

-1,029

–

-829

-214

453

635

-71

-892

121

-842

–

-691

120

-244

–

-187

–

-138

-219

404

864

116

-2

4,298

4,380

-822

-80

320

734

114

–

4,089

4,144

–

-680

3,019

130

-2

209

236

-142

-88

23,230

20,310

2,920

23,943

20,698

3,245

14,207

12,143

2,064

12,597

464

262

726

537

-763

-96

381

199

580

448

-641

146

-122

-102

2,080

-840

-902

601

707

1,308

1,067

-736

-32

10,726

503

611

1,114

911

–

-608

–

1,871

194

156

-128

-32

14,207

12,143

2,064

-9,736

-8,555

–

-1,181

-9,788

-8,555

-1,233

Fair value of plan assets at December 31

14,668

12,588

Funded status

thereof recognized in other assets

thereof recognized in provisions for pensions
and similar obligations

-8,562

-7,722

–

-8,624

-7,722

230

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 broad spread of investments and of
the selections of asset managers using quantitative and quali-
tative analyses as well as the continual monitoring of performance
and risk help to reduce the investment risk. The Group regu-
larly makes additional contributions to the plan assets in order
to cover the future obligations from deﬁned beneﬁt pension
plans.

Reconciliation of the net obligation from deﬁned beneﬁt
pension plans. The development of the relevant factors
is shown in table  F.56.

Composition of plan assets. Plan assets and income
from plan assets are used solely to pay pension beneﬁts and
to administer the plans. The Group’s plan asset allocations
are presented in table  F.57.

Market prices are available for equities and bonds due to their
listing in active markets. As of the balance sheet date, the assets
of the German pension plans do not include any signiﬁcant
investments in government bonds that are currently aﬀected
by the European sovereign-debt crisis; all government bonds
denominated in euros have a rating of at least AA as of the
balance sheet date.

The investment strategy is determined by the Investment Com-
mittees, which are composed of representatives of the Finance
and Human Resources departments, and each investment
strategy is generally determined annually by the respective
committee.

F.57
Composition of plan assets

In millions of euros

Energy, commodities and utilities

Financials

Healthcare

Industrials

Consumer goods

Information technology and telecommunication

Others

Equities

Government bonds in EUR

Government bonds in USD

Government bonds in other currencies

Government bonds

Corporate bonds

Securitized bonds

Bonds

Other exchange-traded instruments

Total exchange-traded instruments
Alternative investments1

Real estate

Other non-exchange-traded instruments

Cash and cash equivalents

Total non-exchange-traded instruments

Plan assets as of December 31

thereof fair value of own transferable
ﬁnancial instruments

thereof fair value of self-used plan assets

1 Alternative investments mainly include private equity.

German
plans

2013
Non-German
plans

Total

839

995

387

479

865

636

4,289

4,084

936

329

5,349

1,948

1,066

8,363

737

861

322

408

732

538

–

3,598

4,078

628

–

4,706

1,501

1,009

7,216

12,657

10,815

690

496

740

2,011

14,668

592

408

695

1,773

12,588

102

134

133

691

308

329

643

447

1,147

1,842

238

2,080

–

Total

917

932

365

407

805

588

152

4,166

3,348

998

377

4,723

1,584

981

7,288

11,499

1,021

460

119

1,108

2,708

14,207

102

German
plans

2012
Non-German
plans

807

788

302

348

684

501

–

3,430

3,348

643

3,991

1,278

888

6,157

9,629

931

398

119

1,066

2,514

12,143

102

110

144

121

152

736

–

355

377

732

306

1,131

1,870

–

194

2,064

–

231

Pension cost. The components of pension cost included
in the consolidated statement of income are presented in table
 F.58.

Table  F.60 shows the signiﬁcant weighted average measure-
ment factors used to determine pension beneﬁt obligations.

Table  F.59 presents the line items within the consolidated
statement of income in which the net periodic pension cost
is included.

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.

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 assump-
tions used to calculate the projected beneﬁt obligations vary
according to the economic conditions of the countries in which
the pension plans are situated.

The calculation for the sensitivity of life expectancy for the
German plans is based on the 2005 G mortality tables
of K. Heubeck. For Non-German plans, comparable country
speciﬁc valuation methods are used.

Sensitivity analysis. An increase or decrease in the
main actuarial assumptions would aﬀect the present value
of the pension obligations as shown in table  F.61.

The calculations carried out by actuaries were done in isolation
for the evaluation parameters regarded as important.

For the calculation of the sensitivity of life expectancy,
by means of ﬁxed (non-age-dependent) factors, a life expectancy
one year higher or one year lower was achieved for a reference
person.

F.58
Pension cost

In millions of euros

Current service cost

Past service cost, curtailments and settlements

Net interest expense

Net interest income

German
plans

2013
Non-German
plans

-453

–

-253

–

-706

-95

–

-40

-133

Total

-548

–

-293

-839

German
plans

2012
Non-German
plans

-320

–

-233

–

-553

-84

-4

-37

-118

Total

-404

-4

-270

-671

F.59
Net periodic pension cost within the consolidated statement of income

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized development costs

Interest income

Interest expense

2013

2012

-313

-121

-43

-71

-293

-839

-264

-68

-34

-42

-270

-671

232

F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Eﬀect on future cash ﬂows. In 2014, Daimler currently expects
to make cash contributions of €0.6 billion to its pension plans;
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 €0.8 billion in 2014.

The weighted average duration of the deﬁned beneﬁt
obligations is provided in table  F.62.

F.60
Signiﬁcant factors for the calculation of pension beneﬁt obligations

In percent

Discount rates
Expected increase in cost of living1

German plans
December 31,
2012

Non-German plans
December 31,
2012

2013

3.1

1.8

4.5

–

3.8

–

2013

3.4

1.8

1 For most non-German plans, expected increases in cost of living do not have an impact on the amount of the obligation.

F.61
Sensitivity analysis for the present value of the deﬁned beneﬁt obligation

In millions of euros

Sensitivity for discount rates

Sensitivity for expected increase in cost of living

Sensitivity for life expectancy

F.62
Weighted average duration of the deﬁned
beneﬁt obligations

in years

German plans

Non-German plans

2013

2012

December 31, 2013
Non-German
plans

German
plans

-720

760

-90

350

-380

-80

100

-10

Total

-800

860

100

-100

360

-390

+ 0.25%

- 0.25%

+ 0.10%

- 0.10%

+ 1 year

- 1 year

233

F.63
Key data for other post-employment beneﬁts

Deﬁned contribution pension plans

In millions of euros

2013

2012

Present value of deﬁned beneﬁt obligations

1,258

1,520

Fair value of plan assets and
reimbursement rights

Funded status

Net periodic cost for other
post-employment beneﬁts

121

-1,137

168

-1,352

-92

-122

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 contribu-
tions. The Group also pays contributions to governmental
pension schemes. In 2013, the total cost from payments made
under deﬁned contribution plans amounted to €1.3 billion
(2012: €1.4 billion). These payments are primarily 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 accounts for 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 infor-
mation directly with participating employers. Higher contributions
by the Group to such a pension plan could be required in par-
ticular 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. As of December 31,
2013, the Group does not anticipate signiﬁcant costs from the
existing collective plans of multiple employers; no exit from
any of these plans is intended.