Daimler AG Annual Report 2014

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FY2014 Annual Report · Daimler AG

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Annual Report 2014.

Key Figures.

Daimler Group

Amounts in millions of euros

Revenue

Western Europe

thereof Germany

NAFTA

thereof United States

Asia

thereof China

Other markets

Investment in property, plant and equipment

Research and development expenditure 2
thereof capitalized

Free cash flow of the industrial business
EBIT 3
Value added 3
Net profit 3
Earnings per share (in €) 3

Total dividend

Dividend per share (in €)

Employees (December 31)

2014

2013

2012

14/13

% change

129,872

117,982

114,297

43,722

20,449

38,025

33,310

29,446

13,294

18,679

4,844

5,680
1,148

5,479

10,752

4,416

7,290

6.51

2,621

2.45

41,123

20,227

32,925

28,597

24,481

10,705

19,453

4,975

5,489
1,284

4,842

10,815

5,921

8,720

6.40

2,407

2.25

39,377

19,722

31,914

27,233

25,126

10,782

17,880

4,827

5,644
1,465

1,452

8,820

4,300

6,830

6.02

2,349

2.20

279,972

274,616

275,087

+10 1

+15

+16

+20

+24

-4

-3

+3
-11

+13

-1

-25

-16

1 Adjusted for the effects of currency translation, revenue increased by 12%.
2 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
3 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.

Cover photo: Mercedes-Benz Future Truck 2025.
The Future Truck 2025 provides a glimpse of the
future of goods transport. It conserves resources,
reduces emissions, maximizes traffic safety and
increases connectivity in road traffic. This spectacular
study from Mercedes-Benz is far more than a distant
vision: It is planned to put the truck on the road within
ten years. Many of its technological componen ts are
already available and ready for use. The brain of the
Future Truck 2025 is the “Highway Pilot,” whose fasci-
nating capabilities were demonstrated in autonomous
driving on the autobahn in July 2014. The complete
design and technology study had its world premiere at
the IAA Commercial Vehicles Show in 2014.

Daimler’s Divisions >
Facts and Figures 2014 >

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 2
thereof capitalized
Unit sales
Employees (December 31) 3

Daimler Trucks
EBIT 1
Revenue
Return on sales (in %) 1
Investment in property, plant and equipment
Research and development expenditure 2
thereof capitalized
Unit sales
Employees (December 31) 3

Mercedes-Benz Vans
EBIT 1
Revenue
Return on sales (in %) 1
Investment in property, plant and equipment
Research and development expenditure 2
thereof capitalized

Unit sales
Employees (December 31) 3

Daimler Buses
EBIT 1
Revenue
Return on sales (in %) 1
Investment in property, plant and equipment
Research and development expenditure 2
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)

2014

2013

2012

14/13

% change

5,853

73,584
8.0

3,621

4,025
1,035
1,722,561

129,106

4,006

64,307
6.2

3,710

3,808
1,063
1,565,563

96,895

4,391

61,660
7.1

3,495

3,863
1,125
1,451,569

98,020

1,878

32,389

5.8

788

1,188
34
495,668

82,743

682

9,968

6.8

304

293
68

294,594

15,782

197

4,218

4.7

105

182
11
33,162

16,631

1,387

15,991

47,912

98,967

8,878

1,637

31,473

5.2

839

1,171
79
484,211

79,020

631

9,369

6.7

288

329
139

270,144

14,838

124

4,105

3.0

187
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

+46

+14
.

-2

+6
-3
+10

+33

+15

-6

+1
-57
+2

-11
-51

+59

+38

-3
+267
-2

+10

+18

+21

+10

1 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
2 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
3 As of 2014, including the numbers of employees previously counted under “Sales & Marketing Organization.” E see page 111

Daimler Worldwide.

Europe

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

NAFTA

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

Latin America (excluding Mexico)

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

Africa

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

Asia

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

Australia/Oceania

Production locations

Sales outlets

Revenue (in millions of euros)

Employees

Mercedes-Benz
Cars

Daimler
Trucks

Mercedes-Benz
Vans

Daimler
Buses

Sales
Organization
Automotive
Businesses

Daimler
Financial
Services

–

30,595

111,633

–

16,955

7,268

–

729

136

–

1,417

5,435

–

22,385

3,901

–

1,534

733

–

9,962

34,830

–

12,159

21,357

–

2,630

11,376

–

1,092

1,158

–

5,901

13,693

–

636

329

–

7,817

13,868

–

1,029

190

–

499

1,674

–

131

–

302

–

190

–

2,690

14,802

–

292

450

–

980

1,289

–

125

–

4,039

–

1,502

–

639

–

384

–

2,162

–

260

–

6,488

5,095

–

7,963

1,646

–

323

427

–

226

268

–

754

1,248

–

237

194

Notes: Unconsolidated revenue of each division (segment revenue).

The employees previously reported under “Sales & Marketing Organization” are included in the employee numbers for the respective divisions
as of 2014.

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler
Financial Services

Contents.

Clean. Safe. Connected.

Clean.

Safe.

Connected.

The Future Has Begun.

Chairman’s Letter

A | To Our Shareholders
The Board of Management
Report of the Supervisory Board
The Supervisory Board
Highlights of 2014
Daimler and the Capital Market
Objectives and Strategy

B | Combined Management Report
Corporate Profile
Economic Conditions and Business Development
Profitability
Liquidity and Capital Resources
Financial Position
Daimler AG
(condensed version according to HGB)
Sustainability
Overall Assesssment of the Economic Situation
Events after the Reporting Period
Remuneration Report
Takeover-Relevant Information and Explanation
Risk and Opportunity Report
Outlook

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

C | The Divisions
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services

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

E | Consolidated Financial Statements
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

F | Further Information
Responsibility Statement
Independent Auditors’ Report
Ten Year Summary
Glossary
Index
List of Charts and Tables
International Representative Offices

152
154
160
165
168
171

174
176
179

181
182

190
192

193
194
195
196
198

282
284
285
286
288
289
290
292

43
44
46
52
54
60
64

70
72
77
82
88
95

98
101
116
117
118
129
132
146

Clean. Safe. Connected.

Clean. Safe.
Connected.

That’s the future of the automobile –
and that’s what we stand for at Daimler.
As a pioneer of automotive engineering,
we are continually working to shape
the future of mobility. Our thoughts and
actions are guided by the principle of
sustainability. We have already reached
many milestones on the road to emission-
free and accident-free driving. Intelligent
connectivity offers us additional and
completely new opportunities to shape
the mobility of tomorrow. We plan to
use these new technologies to keep our
loyal customers satisfied, gain new
markets and customers, continue along
our path of profitable growth and create
sustained value.

Daimler | Clean. Safe. Connected.

Clean.

Clean mobility. Daimler is on the “road
to emission-free driving.” To this end,
we have created an environmental road-
map that focuses on further efficiency
enhancements to combustion engines,
needs-based hybridization and locally
emission-free electric vehicles with
batteries or fuel cells.

Daimler | Clean. Safe. Connected.

First plug-in hybrid with the three-pointed star: the S 500 PLUG-IN HYBRID1.

A pioneer for efficiency.

Exemplary efficiency = superior performance. Daimler offers proof of this equation with the
S 500 PLUG-IN HYBRID1, a model that once again underscores the Group’s leading role in
the electrification of premium vehicles. The new luxury sedan from Mercedes-Benz makes a
big impression not only with its state-of-the-art hybrid concept but also with the innovations
and exclusive appointment details of the S-Class. The centerpiece of the model’s plug-in
technology is a new high-voltage lithium-ion battery that can be charged externally — using
a household power socket, for example. The first luxury sedan certified as belonging to the
“three liters per 100 km” category is the third hybrid in the S-Class series and a further key
element on the road to emission-free mobility. The first S 500 PLUG-IN HYBRID1 models
were delivered to customers in 2014.

Inspired by F1. Knowledge gained with the Formula 1 drive system
was incorporated into the new Mercedes-Benz S 500 PLUG-IN HYBRID1.
This automobile sets benchmarks for efficiency, dynamic handling
and comfort.

1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.

“The S 500 PLUG-IN HYBRID1 is not only the most efficient
hybrid in the luxury segment but also the most intelligent.
Its predictive operating strategy regulates the interaction
between the electric motor and the combustion engine and
adjusts it in line with the traffic situation, the route ahead
and the battery-charge state.”

From left to right: Dr. Uwe Keller (Project Manager Hybrid Drive), Thomas Ulrich (Hybrid System Testing),
Harald Maurer (Head of S-Class Testing)

Daimler | Clean. Safe. Connected.

2.8 l

per 100 km

The S 500 PLUG-IN HYBRID1 delivers pure driving
pleasure with an impressive system output of 325 kW
(442 hp), exemplary fuel consumption of 2.8 liters/100 km
and CO2 emissions of 65 g/km.

A+

efficiency class

Use of the electric motor significantly reduces
both fuel consumption and CO2 emissions.
The model’s top efficiency class rating of A+ is
therefore well deserved.

1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.

We are electrifying the premium segment. The S 500
PLUG-IN HYBRID1 is a further milestone in Daimler’s
hybrid strategy. Following the S 400 HYBRID2 and
the S 300 BlueTEC HYBRID3, this extraordinary luxury
sedan embodies the ultimate in hybrid technology.

Green light for environmentally friendly hybrids. Daimler is
shaping future mobility by combining combustion engines with
electric drive systems. Hybrid concepts help reduce fuel con-
sumption and enhance performance. Hybrids also use braking
energy to generate electricity to charge the vehicle’s battery;
this offers the greatest potential for lower fuel consumption.
In the S 500 PLUG-IN HYBRID1, an innovative high-voltage
lithium-ion battery and a state-of-the-art braking energy recov-
ery system ensure maximum energy recuperation.

Forward-looking plug-in hybrids. Along with braking energy
recuperation, the groundbreaking S 500 PLUG-IN HYBRID1
also features an onboard charger that enables the vehicle to
be recharged using a wallbox or any conventional household
socket. The next step on the road to the perfect plug-in hybrid
will be inductive wireless charging.

Pioneer for a sustainable hybrid strategy. In 2009, we
introduced the Mercedes-Benz S 400 HYBRID2 — the world’s
first hybrid production vehicle with a lithium-ion battery.
For quite some time, this predecessor of the S 500 PLUG-IN
HYBRID1 was the most economical luxury sedan with a gaso-
line engine. With worldwide sales of approximately 20,000
units, it was also the most successful hybrid in its class.

Now Daimler is continuing its hybrid offensive. All in all,
we plan to launch ten plug-in hybrid models on the market
by 2017.

140 km/h

With a top speed of 140 km/h in the pure
electric driving mode, these vehicles will
make upper-range driving performance a
reality in the hybrid segment.

1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
2 S 400 HYBRID: fuel consumption in l/100 km urban 7.4-6.6/extra-urban 6.5-6.1/combined 6.8-6.3;
CO2 emissions in g/km combined 159-147.
3 S 300 BlueTEC HYBRID: fuel consumption in l/100 km urban 4.8-4.7/extra-urban 4.6-4.3/combined 4.7-4.4;
CO2 emissions in g/km combined 124-115.

Daimler | Clean. Safe. Connected.

2 h The high-voltage battery of the S 500 PLUG-IN HYBRID1 can be recharged

in just two hours — using a wallbox (400V/16A), for example. In the future,
inductive charging technology will make it possible to recharge batteries
without cables or sockets, as shown above.

Route-based operating strategy.

Efficiency at the push of a button. The intelligent strategy employed in the
S 500 PLUG-IN HYBRID1 enables automatic selection of the ideal combination
of combustion engine and electric motor based on the battery-charge state, the
traffic situation or the route ahead, depending on the driver’s preference. Inter-
action between the hybrid drive components can also be regulated manually.

The route-based operating strategy selects for the driver an operating sequence
optimally aligned with the route ahead. Once the destination has been entered

into the COMAND Online navigation system, battery charging and discharging
processes are selected to ensure optimal energy utilization throughout the trip.
One of the goals of the operating strategy is to use the energy in the battery
going uphill and then recharge the battery through recuperation on downhill
stretches. In addition, the operating system will charge the battery as much
possible before the vehicle reaches a city so as to ensure the car can drive
electrically and emission-free on city streets. COMAND Online also provides
predictive data on route profiles and speed limits.

Our environmental roadmap.

We are optimizing our combustion engines.
The most effective way to reduce fuel consumption and
emissions is to systematically improve the efficiency
of combustion engines, because they will be the backbone
of mobility also in the future.

We are improving efficiency through hybridization.
By combining combustion engines with electric motors,
we are achieving further significant reductions in fuel
consumption and emissions. We’re doing this with our
modular hybrid system for cars and commercial vehicles.

We are a pioneer for emission-free drive systems.
Our electric vehicles with batteries or fuel cells ensure
not only locally emission-free mobility but also pure driving
pleasure.

Daimler | Clean. Safe. Connected.

Milestones on the way to emission-free mobility.

By 2017

2014

2013

2012

2011

10 new plug-in hybrid models. Within the framework of Daimler’s comprehensive hybrid strategy,
Mercedes-Benz will launch a total of ten vehicles with plug-in hybrid technology by 2017.

S 500 PLUG-IN-HYBRID1. The world’s first certified “three liters per 100 km” luxury sedan achieves fuel
consumption values that were considered unattainable in the upper-range segment just a few years ago.
This record efficiency requires no sacrifices in terms of performance, comfort or vehicle range.

B-Class Electric Drive2. The first premium electric vehicle in the compact segment was initially intro-
duced in the US and then in Europe. The Mercedes of electric cars offers the comfort, quality and safety
that are typical of vehicles with the star.

129 g/km CO2 emissions. The highest levels of efficiency in all segments. We have reduced the CO2
emissions of our fleet of vehicles sold in Europe to 129 g/km. More than 100 Mercedes-Benz models
have an efficiency class rating of A+ or A and over 60 models emit less than 120 g CO2/km.

Euro VI commercial vehicle fleet. Innovative drive systems continually make our trucks, vans and buses
even cleaner and more economical and efficient. Daimler was the first manufacturer to offer a complete
range of Euro VI commercial vehicles — even before the new emission standards went into effect.

E 300 BlueTEC HYBRID3. The forward-looking combination of a four-cylinder diesel engine and an electric
motor makes this E-Class one of the most efficient models in its segment — and a milestone in terms of
economy, sustainability and comfort.

smart fortwo electric drive4. The third generation of the environmentally friendly city car celebrates its
premiere. Today, the smart electric drive is on the road in 18 countries worldwide and is in constant use in
the car2go car-sharing program. It’s also available as a convertible — the only electric one on the market.

B-Class F-Cell5. During the Mercedes-Benz F-CELL World Drive, three electric cars equipped with fuel
cells ready for series production clocked up 30,923 km in 125 days. This emission-free “journey around
the world” impressively demonstrated the technology’s suitability for everyday use.

Mercedes-Benz Actros. It’s the most economical and therefore most environmentally friendly truck in
its class. So it’s not surprising that the Actros made history with fuel consumption of 25 l/100 km during
the 10,000-km “Record Run.”

1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
2 B-Class Electric Drive: electricity consumption in kWh/100 km weighted 17.9-6.6; CO2 emissions combined 0 g/km.
3 E 300 BlueTEC HYBRID: fuel consumption in l/100 km urban 4.1-3.9/extra-urban 4.1-3.8/combined 4.1-3.8;
CO2 emissions in g/km combined 109-99.
4 smart fortwo electric drive: electricity consumption in kWh/100 km 15.1; CO2 emissions in g/km 0.0.
5 B-Class F-CELL: H2 consumption in kg/100 km 0.97; CO2 emissions in g/km 0.0.

On the road efficiently and emission free.

Clean mobility requires an intelligent combination
of combustion engine, hybrid and electric drive.
In line with our claim to leadership in green tech-
nologies, we continue to develop and produce
different kinds of vehicles with customized drive-
systems. That’s how we are meeting the mobility
requirements of today and tomorrow in all areas
of road transport.

w www.mercedes-benz.com/en/mercedes-benz/efficiency

Efficient technologies inspired by motorsport. Learn more about our new
developments and how they are being implemented in Mercedes-Benz
production vehicles.

Daimler | Clean. Safe. Connected.

Safe.

Safe mobility. Billions of people are on
the move worldwide every day. Daimler
is working to make the mobility of the
future as safe as possible for all of them.
Our primary goal is to ensure that acci-
dents never happen to begin with. As
a pioneer in the field of safety, we are
moving forward on the “road to accident-
free driving.”

Daimler | Clean. Safe. Connected.

The first journey taken by a self-driving truck: the Mercedes-Benz Future Truck 2025.

Hands off the wheel.

At the wheel here is the technology of the future, which is already a reality at Daimler
today. At the IAA Commercial Vehicles 2014, the Mercedes-Benz Future Truck 2025
study offered a visually fascinating and technically feasible preview of the future of freight
transport. The Future Truck 2025 marks a revolution in road freight transport, traffic
infrastructure, the truck-driving profession and the freight forwarding industry, and is thus
a key component of the transport system of tomorrow. The vehicle was designed
to ensure the highest degree of road safety and efficiency, and it will also help to further
reduce fuel consumption. Thanks to the “Highway Pilot” with networked sensors
and cameras, the driver can simply turn control of the truck over to an autonomous
high-tech system. This capability was successfully demonstrated by a
prototype on the autobahn.

Video.
The spectacular world
premiere of the Highway
Pilot system on the A14
highway in Germany.

Daimler | Clean. Safe. Connected.

Outstanding safety. The eye-catching appearance of the Mercedes-Benz Future Truck 2025 underscores the
vehicle’s unique technological capabilities. The self-driving truck also marks a major step away from traditional
trucks and towards the autonomous transport vehicles of tomorrow. With its aerodynamically optimized design,
the truck’s cab exudes maximum calm and power. Cameras have replaced the exterior mirrors, and classic
elements such as headlights seem to be missing at first glance. LED lamps in the bumpers light up after the engine
is started, indicating that the Future Truck 2025 is ready to roll. The truck’s lights turn white when the prototype
is driven manually. When the truck is driving autonomously, the color of the lights changes to a pulsating blue to
clearly indicate the vehicle’s operating mode to other road users.

Innovative design for the cockpit as well. Displays, a touchpad and a tablet computer replace familiar instruments
and switches in the Future Truck 2025. Long-haulage trucks from Mercedes-Benz already feature a visual separation
between living and driving areas. In the future, the cab will also include a workplace for autonomous driving phases.
It will be possible to move the seat back completely and turn it 45 degrees to face into the cab space.

The Highway Pilot keeps the truck in its lane more precisely
than any driver can. When it is driving autonomously, the
Future Truck 2025 will enable drivers to work in a completely
new way.

A revolution on the road. In the summer of 2014, auto industry
specialists and journalists from around the world witnessed
the cutting-edge capabilities of the Highway Pilot in a camou-
flaged prototype of the Future Truck 2025. Although a driver
was sitting at the steering wheel, the Highway Pilot drove the
vehicle all by itself.

Daimler | Clean. Safe. Connected.

“Avoidance of human error at the wheel will reduce danger and
accidents. Traffi c will ﬂ ow more calculably and safely. The traffi c
system will become more ﬂ exible and infrastructure will be
utilized more eff ectively. The Future Truck 2025 will facilitate
a quantum leap in terms of safety and effi ciency.”

Hans Luft, Daimler Wörth plant, Truck Testing

Highway Pilot activated — technology takes the wheel. It’s
a vision that the automotive pioneer Daimler has put on the
road. Back in 2013, Mercedes-Benz Cars became the world’s
fi rst automaker to prove that autonomous driving is possible
in cities and on country roads with the Mercedes-Benz S 500
INTELLIGENT DRIVE research vehicle. That car’s groundbreak-
ing technology was also incorporated into the Mercedes-Benz
Future Truck 2025. In a further milestone for autonomous
driving systems, the fascinating technology in the Future Truck
2025 demonstrated its capabilities in real traffi c situations in
the summer of 2014. This success was particularly noteworthy
because it was achieved with existing and near-production
technologies such as Proximity Control Assist and Active
Brake Assist.

On the road today in the truck of tomorrow. A route of
around 30 kilometers with alternating stretches of open
road and slow-moving traffi c. Just a normal trip? Far from it,
as the journey was taken by a camouﬂ aged prototype of the
Mercedes-Benz Future Truck 2025, which drove itself along
the A14 highway near Magdeburg in Germany. During the trip,
the “driver” did everything but drive, performing tasks such

as order scheduling, checking e-mails and reserving parking
spaces. This revolutionary achievement was made possible by
the Highway Pilot system. The “brain” of the Future Truck 2025
consists of radar sensors, a stereo camera, three-dimensional
maps and a system that allows the truck to communicate with
other road users and road infrastructure.

The Future Truck 2025 pays attention and makes space.
After the driver turns on the highly intelligent system, he or
she can let go of the steering wheel. The long-haulage truck
continues to travel at the desired speed, maintains a safe
distance to the vehicle ahead and stays precisely in its lane.
The Future Truck 2025 also reacts to unanticipated events.
For example, it smoothly adjusts its speed if the traffi c ahead
slows down or comes to a halt. If an emergency vehicle ap-
proaches from the rear, the truck automatically moves over
to make space and then returns to the center of the lane.
Still, even in the cockpit of the future, the driver remains com-
pletely in control. For example, he or she can disengage the
Highway Pilot and resume control of the vehicle at any time by
hitting the brake or the gas pedal or simply pushing a button.

Onboard co-pilots.

Daimler has always been a trailblazer for
innovative safety systems in trucks, vans
and buses. Numerous electronic assistance
systems support drivers, regulate vehicle
speed or autonomously initiate emergency
braking maneuvers. Revolutionary technolo-
gies such as the Highway Pilot rely on the
seamless combination of tried and tested
systems.

Sending an important signal: Blind Spot
Assist warns drivers of the presence of
other road users when the truck makes a
turn. The system is yet another milestone
on the “road to accident-free driving.”

Daimler | Clean. Safe. Connected.

Blind Spot Assist makes turns and lane changes even
safer. Now that assistance systems can prevent, lessen or
warn of accidents that could result from rear-end collisions
or a truck veering off the road, researchers have turned their
attention to potential dangers that arise during turns. Whether
it’s cyclists or pedestrians — things can get dangerous for
other road users if truck drivers can’t see them. The innova-
tive Blind Spot Assist system from Mercedes-Benz uses radar
sensors to monitor the entire side of the truck and can reliably
warn drivers of potential hazards during turns. In addition,
the system monitors the tracking pattern of the semitrailer
during a turn and will issue a warning if its sensors detect a
stationary obstacle such as a set of traffic lights. Blind Spot
Assist also supports drivers when they change lanes. Follow-
ing extensive practical testing, Blind Spot Assist will go into
series production sometime in the next few years.

Blind Spot Assist is an important step on the road to the
transport system of the future and underscores our role as
a pioneer for achieving the highest degree of safety in road
transport.

A positive trend: Despite the fact that
road freight transport has increased,
accidents involving trucks have declined
sharply – thanks to state-of-the-art
assistance systems whose development
is being driven by Daimler in particular.

Active Brake Assist ABA 3: emergency braking for station-
ary obstacles as well. A sudden obstacle after a curve, a
sudden traffic jam — such hazards require extreme alertness
on the part of truck or bus drivers, as well as the ability to
respond quickly. ABA 3 can save lives in such situations,
including the lives of other road users. That’s why as of late
2015, legislation will require all newly registered coaches to
be equipped with an emergency braking assistance system.
The Mercedes-Benz Travego Safety Coach is the world’s first
coach to be equipped with the latest generation of Active
Brake Assist before the legislation goes into effect. The
predecessor generation, ABA 2, was already able to initiate a
braking maneuver when there was a risk of a collision with
slower vehicles ahead or with stationary obstacles. The new
Active Brake Assist 3 prevents imminent collisions with a
stationary object by automatically bringing the vehicle to a
standstill. This forward-looking safety technology from Daim-
ler helps to prevent accidents and significantly reduce the
severity of those accidents that do occur.

Crosswind Assist enhances driving safety and eases the
strain on drivers. Crosswind Assist is yet another safety
system with which Daimler is setting new standards in the van
segment. Since 2013, Mercedes-Benz has been the only van
manufacturer to offer such a system as standard in a Sprinter-
class van. Last year, it also became the first automaker to offer
it in a Vito-class model. The system’s sensors register the
effect side wind gusts have on the vehicle when it is crossing
bridges or passing other cars, for example. ESP (Electronic
Stability Program) then brakes the wheels facing the wind
gust. This significantly reduces sideways movement and
noticeably eases the strain on drivers. The feeling of safety
and comfort is thus enhanced and inappropriate driver reac-
tions in heavy winds are prevented.

Crosswind Assist keeps the van safely
in its lane even in heavy winds.

Our road to accident-free driving.

Milestones on the way to accident-free driving.

Daimler | Clean. Safe. Connected.

An integrated safety concept. Avoiding danger,
permanently easing the strain on drivers, providing active
assistance in difficult situations and offering optimal
protection to all road users – these are the four pillars
of our “road to accident-free driving.”

A safety pioneer. We don’t just build automobiles,
we also continually enhance safety with innovative
protection systems. Daimler engineers are often ahead
of their time in this field.

Intelligent vehicle systems and autonomous driving.
We equip vehicles with “senses” by connecting various
systems to ensure comprehensive protection for vehicle
occupants and all other road users.

By 2017

2015

2014

2013

2012

2011

2010

Further advances in autonomous driving. Step by step, partially autonomous driving will become
possible also at higher speeds. Further steps will incorporate overtaking procedures and highly
autonomous highway driving. Autonomous parking functions will also be available and the prospect
of parking without anyone sitting in the vehicle will be within reach.

Blind Spot Assist. This driver assistance system reliably warns truck drivers of potential hazards during
turns in critical situations where visibility is limited. This important innovation is also one of the safety
technologies included in the Future Truck 2025.

Active Brake Assist ABA 3 in buses. The latest generation of the emergency braking assistance system
also initiates an automatic emergency braking maneuver when it encounters stationary obstacles.
The Mercedes-Benz Travego Safety Coach is equipped with this system and thus ensures greater safety
than is required by current legislation.

MULTIBEAM LED headlights. In its new CLS-Class model, the trailblazing Mercedes-Benz brand
offers a precision LED matrix module that provides even better light quality and even greater safety
at night.

Highway Pilot. Networked assistance systems and improved radar sensors enable this system to carry
out the world’s first autonomous truck journey at normal speeds and in realistic highway traffic situations.

S 500 INTELLIGENT DRIVE. Mercedes-Benz becomes the world’s first automaker to send a self-driving
test vehicle into 21st-century traffic along the historical route once driven by Bertha Benz.

DISTRONIC PLUS with Steering Assist and Stop & Go Pilot. Introduced for the first time in the new
S-Class, the assistance system helps to maintain a safe distance to the vehicle in front and a position in
the center of the lane. This substantially eases the burden on the driver, especially on long stretches and
when driving in slow-moving traffic.

Crosswind Assist. Reduces the sideways movement caused by strong wind gusts and has been standard
equipment in the new Mercedes-Benz Sprinter since the large van’s market launch, making the Sprinter
unique in its segment.

Active Brake Assist ABA 3 in trucks. The third-generation emergency braking assistance system
brings the Mercedes-Benz Antos and Actros trucks to a standstill to prevent collisions also with stationary
obstacles. This either completely prevents rear-end collisions or else reduces their severity.

Collision Prevention Assist. The new B-Class is the only vehicle in the compact segment worldwide
that comes with a radar-based collision warning system with an adaptive braking assistance feature.
The system protects against rear-end collisions at speeds of between 30 and 250 km/h. The B-Class
thus sets a new standard for safety in its segment.

Active Blind Spot Assist. This system supports safe lane changes. If the system detects a vehicle in the
exterior mirror’s blind spot, it first issues a visual warning and an acoustic signal. If the driver fails to react,
the system will then brake the vehicle autonomously.

Active Lane Keeping Assist. This system was initially introduced in upper-range Mercedes-Benz models.
It engages whenever the driver inadvertently drives onto a continuous line to the right or left of the vehicle.
It keeps the vehicle in its lane by autonomously braking the wheels on the other side of the vehicle while
simultaneously warning the driver with a visual signal and an acoustic alarm.

Redefining safe driving.

Safety will remain extremely important in the
future as well. For this reason, we are focusing
on driver assistance systems and autonomous
driving functions up to and including the ground-
breaking use of real-time digital information
via augmented reality systems. In this way, we
are making the interaction between our vehicles
and their drivers more intuitive, more personal
and safer.

w www.daimler.com/technology-and-innovation

Safer driving without any sacrifice of comfort or driving pleasure.
You can learn more about autonomous driving and Intelligent Drive here.

Daimler | Clean. Safe. Connected.

Connected.

Networked mobility. Life and the
working world are becoming more
mobile and more digital. At the same
time, flexible and economical forms of
mobility are needed. Daimler is meeting
the requirements of its customers
and defining a new digital driving culture
with state-of-the-art information
technologies, online communication
systems and automotive services.

Daimler | Clean. Safe. Connected.

Digital DriveStyle made by Daimler: mobile and online.

Welcome
to the digital
lifestyle.

Mobility means personal freedom and a good quality of life. More and more people, especially
in rapidly growing cities and regions, want to be able to move around comfortably in a climate-
friendly manner. Customizable transport solutions that can be compared and accessed via the
Internet are very much in demand. And drivers also want to be “always on” while on the road –
so that they can call up traﬃ c information in real-time or communicate with friends and business
partners, for example.

Because Daimler aims to actively shape the mobility of the future, we align our forward-looking
technologies with the needs of our customers.

Among other things, we are working to connect vehicles with one another, with traﬃ c infra-
structure, with the services we oﬀ er and with other mobility service providers. Together with
well-known partners, we are also looking to establish the infrastructure necessary for eﬃ cient
networked mobility. As an industry trailblazer, we are opening up new perspectives for mobility
and helping people reach their destinations as eﬃ ciently and conveniently as possible.

As varied and ﬂ exible as the lives of our customers:
our innovative portfolio for networked mobility.

This is my way!
Seamless mobility.

7:45 a.m.

My B-Class is being serviced today. Mercedes assist me
has ensured that the whole process will run smoothly
from the beginning. The dealership has reminded me of my
appointment — just one more thing I don’t have to worry
about remembering.

5:00 p.m.

After the meeting, I decide on the spur of the moment
to take a taxi so that I can look through some documents
again in peace and quiet. I use the moovel smartphone
app to order a car from mytaxi, and I can also pay for
the trip with my phone afterwards.

Daimler | Clean. Safe. Connected.

10:15 a.m.

An employee from the dealership picks up the
car at my office. I’ll still be able to get to my
meeting with customers without any problems,
though.

11:10 a.m.

I park my car2go at a charging station right near
my business partner’s office. That’s it — I’m done!
The station will recharge the battery for the next
user – without me having to pay anything. I walk the
rest of the way, enjoy the sunshine and call a friend
I’d like to meet this evening.

5:45 p.m.

I arrive back at my office and shortly afterwards
someone from the dealership shows up to bring
my car back. Now I can leave the office in my
freshly serviced B-Class.

10:30 a.m.

The smart that I booked with car2go is already
waiting for me a block away. As a registered
user, I can simply get in and go. The best thing
about all this is that I can use a smartphone app
to open the blue-and-white smart fortwo that’s
waiting for me.

6:15 p.m.

I get into the car, plug in my iPhone, put on my
favorite songs and take off! COMAND online tells
me there’s a minor traffic jam at the train station,
so I’m able to avoid it.

7:30 p.m.

My B-Class shows me the way to a parking
space near a popular shopping area. I’m meet-
ing a friend and we’re going for a stroll.

Making the mobile lifestyle even better:
Mercedes me.

In an eﬀ ort to meet the individual requirements of our customers, we

develop innovative services that make access to the fascinating world of

Mercedes even more personal and attractive. For example, Mercedes me

brings together all current and future services related to our automobiles –

everything from vehicle purchases and ﬁ nancing to maintenance and

ﬂ exible mobility solutions. All of these services can be accessed via

a digital platform on the Internet or physically in our unconventional

Mercedes me stores.

Daimler | Clean. Safe. Connected.

The best for me. Mercedes me is dedicated to this principle
and therefore links a unique range of customized services
and thrilling experiences with the private and working worlds
of our customers.

Mercedes move me oﬀ ers access to intelligent mobility solu-
tions. The moovel mobility app links up various mobility options
from diﬀ erent service providers and shows customers the
best way to get from A to B. Our own services such as car2go,
car2go black and the mytaxi ordering service are supplemented
by strategic partnerships with other mobility service providers
like as the Flixbus long-distance bus company.

Mercedes connect me enables people to connect with their
own vehicle at any time and from any location. All that’s needed
is a mobile-phone connection, which is established via an
integrated communication module. The module is a standard
feature in selected Mercedes-Benz models. The services include
accident, maintenance and breakdown management, an emer-
gency call system, and telediagnosis. An optional feature allows
a smartphone to be used to turn on the car heater, localize the
parked vehicle and display how much fuel there is in the tank.

Mercedes assist me is a personalized and customized service
for Mercedes-Benz drivers. Among other things, it ensures
online access to customer service centers around the clock,
and includes an automatic appointment-scheduling feature.

Mercedes ﬁ nance me simpliﬁ es access to the tailored auto-
motive ﬁ nancial services provided by Daimler Financial Services.
The portfolio oﬀ ered ranges from ﬂ exible ﬁ nancing solutions
to personalized leasing plans and the right insurance policy for
every customer’s dream car.

Mercedes inspire me oﬀ ers an interesting look at research
and development at Mercedes-Benz and also presents reports
on innovations and mobility solutions. Customers can join a
community to learn about new ideas and to formulate their own,
and they can also talk with experts or obtain support. More
and more services and experiences are being developed for
Mercedes inspire me that go beyond traditional vehicle-related
issues to include events, travel and lifestyle topics.

w www.mercedes.me/en

First Mercedes me store in Hamburg. Mobility meets lifestyle.

Mercedes me premiered at the 2014 Geneva Motor Show as a completely new
type of automotive service. It allows customers and other people interested in
the brand to discover the exciting aspects of the personalized Mercedes-Benz
world wherever and whenever they want to.

information about the Mercedes-Benz brand, vehicle models and services by
using touchscreens and conﬁ guration tools or through conversations with staﬀ
members. The store’s centerpiece is a lounge and bistro area, and the facility
also features an exhibition space for art exhibits, readings and concerts.

The ﬁ rst Mercedes me store opened in the summer of 2014 in the vibrant
Inner Alster Lake section of Hamburg. The store presents interactive brand
and product experiences on an area of 550 square meters. Visitors can obtain

Plans call for the number of such Mercedes-Benz stores in exclusive inner-city
locations to be signiﬁ cantly increased between now and 2020.

Daimler | Clean. Safe. Connected.

Augmented reality provides drivers with more information
in the right place and at the right time. Directional arrow
signs that appear in front of the vehicle, superimposed house
numbers, information about available parking spaces or local
places of interest — navigation can be easy and fun, even if
you’re in an unfamiliar city. Augmented reality (AR) opens up
new possibilities for reducing the strain on drivers even further
while also offering them a more enjoyable driving experience.

Onboard computers and sensors use geopositioning and Inter-
net data to enhance the driver’s field of vision by projecting
relevant digital information onto the windshield in real-time.
Networked assistance systems are one component of AR that
is already available in Mercedes-Benz production cars.

Car-to-X expands drivers’ horizons — and makes overall
traffic flows smoother and safer. Daimler recognized the
enormous potential of Car-to-X communication at an early
stage and has been a driving force behind the development of
this technology for some years. As a result, we have launched
various research projects and are participating in the impor-
tant Car-to-X communication projects worldwide. As a founder
member of the Car 2 Car Communication Consortium, we
are working to create a car-to-car communication system
standardized throughout Europe. In addition, we are a project
leader in field tests of car-to-X communication in practical
use, and thus a pioneer of complete-coverage data exchange
systems.

Trailblazer for
a new era of
intelligent mobility.

Top priority: data protection in connected vehicles.

Connected services and intelligent traffic systems use information from
the vehicle’s surroundings as well as data relating to the road ahead.
All of this data has to be protected to ensure the safety of the driver and
the vehicle.

In the connected vehicle, we see data protection as customer protection.
This is why we prioritize our customers’ freedom of decision: We inform
customers through various media about which data is used for which
purposes, and offer them the possibility to decide for themselves whether
to pass on their data or not. Daimler has extremely high standards also
with regard to data security: We protect data and vehicle systems against
manipulation and misuse at a high level of IT technology in order to keep
ahead of all conceivable dangers.

Daimler is leading the way here, for example by organizing the first
“Connected Driving and Data Protection” specialist conference, which
attracted well-known representatives from business, science, associa-
tions and government agencies for an exchange of ideas in the fall
of 2014.

Whether it’s a traffic jam that appears suddenly behind a curve, or black ice up ahead, Car-to-X systems enable data sharing between vehicles
and infrastructure. Drivers thus receive extremely precise information about hazards in their direct vicinity and some distance away.

Augmented reality is transforming windshields into
intelligently networked displays that provide additional
digital information about actual conditions on the
route ahead of the vehicle. Drivers can focus on other
important matters and arrive at their destination in a
more relaxed state.

Seeing, hearing, getting one’s bearings: Our vehicles are already linked to

the digital world in a manner that lends them senses, leading to noticeably

greater comfort and safety and a better quality of life. Our first step here

was Intelligent Drive, which brings all of our assistance systems together.

The pioneering autonomous journeys made by the S 500 INTELLIGENT DRIVE

and the Future Truck 2025 were further milestones in networked mobility.

The use of augmented reality will enable Daimler to open up new dimensions

in driving in the future as well.

Pioneering
mobility concepts.

car2go black Fully automated, smartphone-based car-sharing

system with Mercedes-Benz cars in the pilot cities of Berlin and

Hamburg. mytaxi The taxi-ordering app enables a direct connection

between taxi driver and passenger. car2go Flexible urban mobility

made by Daimler — now operating at 29 locations worldwide. moovel

combines the mobility services of various companies in one app.

Car-to-X communication Wireless exchange of data among

vehicles and between vehicles and traffic infrastructure.

FleetBoard Telematics system for managing transport,

travel times, costs and fuel consumption. CharterWay

services for the procurement, servicing and management

of commercial vehicles. COMAND Online

Integrated multimedia system with Internet access for

all audio, telephone, and navigation functions.

Pioneering

mobility concepts.

Mobilizing people and cities.

We are shaping the mobility of the future with passion
and an innovative spirit to ensure that people can get
to their destinations in a convenient, economical and
environmentally friendly manner. Our vehicles and
mobility concepts skillfully bring together the require-
ments of our customers with the complete range of
options available in the digital world.

www.daimler.com/technology-and-innovation/
mobility-services-and-connectivity

Socially connected and always up to date on the road.
Scan the QR code to learn more about this topic.

The crosswalk is a laser projection from the F 015.
The research vehicle uses light signals and voice
output to communicate with passengers and other
road users, thus becoming a social partner in the
traffic environment.

Daimler | The Future Has Begun.

Harbinger of a mobility revolution: Mercedes-Benz F 015 Luxury in Motion.

The Future
Has Begun.

The F 015 Luxury in Motion brings today’s drivers many of the aspects of the personal mobility of tomorrow.
The visionary research vehicle is our response to a rapidly changing world in which the most coveted luxuries
will be private space and time for oneself. The autonomously driving luxury sedan of the future will become a
valuable personal retreat in the urban traffic environment. During a trip, passengers are able to relax, talk or
work in four lounge chairs arranged in pairs facing each other. The ability to continually exchange information
between the vehicle, passengers and the outside world ensures a high level of safety and a fascinating degree
of comfort. Equipped with a forward-looking F-CELL PLUG-IN HYBRID drive system, the F 015 Luxury in Motion
has an operating radius of approximately 1,100 kilometers that can be driven fully electrically without any
local emissions.

www.mercedes-benz.com/en/
mercedes-benz/innovation/

Find out how autonomous driving will change our society
and transform the automobile into a mobile living space.

We are on track.

“In the coming years, we want to further strengthen what has traditionally

differentiated Daimler from the competition: exceptional quality and technological

leadership. At the same time, we intend to achieve a level of profitability that is

unprecedented at this company.”

Stuttgart, February 2015

In last year’s season, our Silver Arrows won everything that was to be won in

Formula 1 racing: the drivers’ championship and the constructors’ championship.

That’s a fantastic achievement – for which our drivers and our engineers in

Brackley, Brixworth and Stuttgart worked with great determination and perse-

verance. But it isn’t just our motorsport colleagues who in recent years have

made good progress step by step, but the entire Daimler Group.

2014 was a very good year for Daimler. That is to the credit of our approxi-

mately 280,000 employees around the world, and they have therefore earned

the special gratitude of the entire Board of Management. Never before have

so many customers decided in favor of our vehicles: We sold more than

2.5 million of them. As a result, we generated total revenue of 129.9 billion

euros – 10 percent more than in the previous year. The Group’s EBIT

amounted to 10.8 billion euros. And our EBIT from the ongoing business

increased at almost three times the rate of revenue growth to 10.1 billion

euros. So we achieved what we promised you: profitable growth.

At the Annual Shareholders’ Meeting, the Board of Management and the

Supervisory Board will propose an increase in the dividend to 2.45 euros per

share. With this proposal, we are letting our shareholders participate in

the company’s success and at the same time expressing our confidence that

Daimler can achieve even more.

Mercedes-Benz Cars made the main contribution to last year’s excellent results.

With unit sales of 1.72 million vehicles, we sold more cars than ever before.

This is our fourth record year in succession. Our compact cars were an impor-

tant driver of unit sales – thanks also to the new GLA. In addition, we also

Daimler | Chairman’s Lettersold more S-Class automobiles in 2014 than ever before in the history of

this model series. We focused last year not only on the new products,

but also on the expansion of our international production network. Our new

C-Class was a milestone in this respect: In less than six months, we started

production of this car on four continents. It is now produced in parallel in

Germany, the United States, South Africa and China.

But 2014 was also the year of smart at Daimler. Two new models were presented

simultaneously: the fortwo and the forfour. smart retains its unique maneu-

verability, but it is now even more comfortable and even safer. The new smart

models are also a good demonstration of our cooperation with Renault-Nissan.

They show that synergies in development and an absolutely independent auto-

mobile character are not incompatible.

At Daimler Trucks, we are today more broadly and strongly positioned than

ever before with our six own brands and 54 models. In addition, we have

trucks that we produce and distribute in joint ventures with local partners.

This allows us to offer appropriate products to our customers in every region

of the world. The most exciting new vehicles from Daimler Trucks last year

definitely included the Mercedes-Benz Future Truck 2025: This study demon-

strates how autonomous driving will revolutionize goods transport – it will

become safer, more efficient and more connected. In business terms, the

year 2014 differed widely from region to region for Daimler Trucks. In Europe

and Latin America, political uncertainty had a negative impact on market

development. But we profited from very good demand for trucks in Japan and

North America. In India, we have built up a new brand within a very short time

under the name BharatBenz – with new products, a new production site and

a new sales network. Our next step is to enter the Indian bus market, which is

why we are investing in a new bus plant in Chennai, to be completed in 2015.

The focus at Mercedes-Benz Vans in 2014 was on the launch of the new genera-

tion of mid-size vans. For private customers, we put the new V-Class and

the travel and leisure vehicles of the Marco Polo product series on the market.

On the commercial side, the new Vito was launched. The attractive product

range brought the vans division record unit sales of 295,000 vehicles, an

increase of 9 percent compared with 2013.

We can also be satisfied with the development of Daimler Buses. The measures

taken for more growth and efficiency are showing their effects. We were able to

raise the division’s earnings forecast as the year progressed. We significantly

surpassed the EBIT of 2013 already after the first three quarters of the year –

although unit sales did not quite match the prior-year level.

For Daimler Financial Services, 2014 was the most successful year yet. We

concluded more new financing agreements than ever before. Our car-sharing

provider car2go is the market leader and is already profitable at some of its

locations. For Daimler, car sharing is not just a concept, but a business model.

DFS is also first class as an employer: In the “Great Place to Work” study,

our financial services division is the first German company to be ranked amongst

the world’s top 25 employers.

All of these achievements are the result of a clear strategy and its consistent

implementation. And we will continue in exactly the same way in 2015.

By the end of this year, Mercedes-Benz Cars will launch a total of eight new

or upgraded car models, half of which will be SUVs, including the new GLE Coupe.

China will continue to play a major role for our profitable growth. We want

to increase our unit sales there to well over 300,000 cars – two thirds of them

will also be produced in China in the coming years.

Daimler | Chairman’s LetterChina is an important market also for Daimler Trucks: Together with our

Chinese partner Foton and the truck brand Auman, we intend to grow rapidly

there in the coming years. In India, we will expand our product portfolio

in the second half of the year with a new BharatBenz heavy-duty truck. We are

systematically developing our platform strategy in order to protect our

globally leading position. In the past, the platform concept mainly focused on

the powertrain – we are now applying it to the entire vehicle.

moovel is also a kind of platform, with which we utilize the opportunities on the

interface between mobility and mobile Internet. Using the app, it is possible

not only to compare various mobility options such as car2go, bus, train or taxi,

but also to book them and pay for them. Just recently, the use of moovel

was extended to business trips. Our mobility services already have a customer

base of significantly more than one million customers.

The bottom line is that also in the coming years, we want to further streng-

then what has traditionally differentiated Daimler from the competition, excep-

tional quality and technological leadership for example. At the same time,

we aim to reach a level of profitability that is unprecedented at this company.

To get there, we are implementing structural changes in all our divisions.

This will give us more “water under the keel” to secure our growth strategy

over the long term also against headwinds. And it will also make sure we

have the financial resources to continue investing in what we do best and where

it pays off the best: in fascinating products and technologies.

Sincerely yours,

Dieter Zetsche

A | To Our Shareholders | Contents

We implement our
strategy effectively.

In recent years, we have implemented our strategy consistently and with great

determination. Step by step, we are putting the individual components together

into a coherent whole. Our new vehicle models are extremely successful in

their markets. The signs are pointing towards growth at all of our divisions, and

we are on schedule with our efficiency-enhancing programs. In addition, we

have strengthened our leading position in the areas of safety and fuel efficiency

as well as with autonomous driving. On this basis, we intend to continue our

profitable growth in the coming years.

A | To Our Shareholders.

The Board of Management

Report of the Supervisory Board

The Supervisory Board

Highlights of 2014

Daimler and the Capital Market

Objectives and Strategy

The Board of Management.

Dieter Zetsche | 61
Chairman of the Board of Management
Head of Mercedes-Benz Cars
Appointed until December 2016

Wolfgang Bernhard | 54
Daimler Trucks and Buses
Appointed until February 2018

Christine Hohmann-Dennhardt | 64
Integrity and Legal Affairs
Appointed until February 2017

Wilfried Porth | 56
Human Resources and Labor Relations Director &
Mercedes-Benz Vans
Appointed until April 2017

A | To Our Shareholders | The Board of Management

Hubertus Troska | 54
Greater China
Appointed until December 2020

Bodo Uebber | 55
Finance & Controlling, Daimler Financial Services
Appointed until December 2019

Thomas Weber | 60
Group Research & Mercedes-Benz Cars Development
Appointed until December 2016

Since January 1, 2015:
Ola Källenius | 45
Mercedes-Benz Cars Marketing & Sales
Appointed until December 2017

Report of the Supervisory Board.

Dear Shareholders, the Supervisory Board dealt in detail with the strategic and operational
development of the Daimler Group in nine meetings during the 2014 financial year.

In the year 2014, the Supervisory Board performed its tasks
as defined by the law, the Articles of Incorporation and the
rules of procedure, and continually advised and supervised the
Board of Management on the management of the company.
It examined whether the annual company financial statements,
the annual consolidated financial statements, the combined
management report for the Company and the Group, and the
other financial reporting were in conformance with the appli
cable requirements. In addition, the Supervisory Board passed
resolutions on numerous business matters for which its con
sent was required following careful reviews and consultations.
Those matters included investment planning, capital changes
at companies of the Group, investments, divestments and the
conclusion of contracts with particular importance for the
Group. The Board of Management 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. Together with the Board
of Management, the Supervisory Board held intensive and
detailed discussions on the information and assessments
that were material for its decisions and recommendations.

During the reporting period, the Board of Management
regularly informed the Supervisory Board about all significant
key financials of the Group and the divisions. In addition, it
continually provided information to it on important topics such
as return on equity and the Group’s liquidity situation, the
development of sales and procurement markets, the general
economic situation in the main sales markets and develop
ments in the area of financial services. The Supervisory Board
dealt in detail also with the shareprice development and its
causes as well as with the expected effects of strategic projects
on the shareprice development. Additional topics included
the further development of the product portfolio and securing
the Group’s longterm competitiveness. Furthermore, the
Supervisory Board dealt with fundamental questions of corporate
planning including financial, investment, sales and personnel
planning, current developments at companies of the Group,
revenue development, the situation of the Company and the
divisions, and the ongoing implementation of measures
to secure futureoriented, sustainable mobility.

The positive results of the growth strategy implemented by
the Board of Management and expressly supported by the Super
visory Board increasingly became very apparent: Daimler
successfully continued along its path of profitable growth in
financial year 2014. The newly presented products were
extremely well received by the market and the broad geograph
ical spread of our activities had a very positive and sta bilizing
effect, especially in the commercial vehicles business. Daimler
made further good progress also in the important Chinese
market. The Group’s unit sales and revenue reached new historic
records. As announced in early 2014, earnings from the
ongoing business increased significantly. This was due also
to the successful implementation of the efficiency programs
at all the divisions, which significantly improved the cost
position. In addition, the adjustment of the investment port
folio with the sale of the equity interests in RollsRoyce Power
Systems Holding GmbH and Tesla Motors, Inc. resulted in
substantial capital gains and cash inflows, which were applied
to further strengthen the Group’s core business.

Cooperation between the Supervisory Board and the
Board of Management. The meetings of the Supervisory Board
featured intensive and open exchanges of information and
opinions. The Supervisory Board arranged an executive session
in each of its meetings to be able to discuss topics in the
absence of the Board of Management. No member of the Super
visory Board attended fewer than half of the meetings in the
past financial year.

The members of the Supervisory Board regularly prepared
for upcoming resolutions on the basis of documentation that
had been provided in advance by the Board of Management.
They were supported by the relevant committees and intensively
discussed the actions and transactions upon which decisions
were to be taken with the Board of Management. The members
of the Supervisory Board attended such courses of training
and further training regarded as 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 new products and forwardlooking technologies. In addition,
the Supervisory Board meetings were regularly prepared in
separate discussions with the members of the Board of Manage
ment of the members representing the employees and the
members representing the shareholders.

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
meetings. In addition, the Chairman of the Board of Manage
ment informed the Chairman of the Supervisory Board in
regular discussions about important developments and about
those matters that were to be submitted to the Supervisory
Board to pass resolutions on or to take note of.

As required in individual cases, for example in cases of special
urgency, the members were requested to pass resolutions
in writing, following consultation with its Chairman. For the
preparation of such proposed resolutions, comprehensive and
conclusive documentation was distributed to the members
of the Supervisory Board. Furthermore, the members of the
Board of Management were available for a bilateral exchange
of opinions and to answer any questions.

Topics discussed at the Supervisory Board meetings
in the year 2014. In the meeting of the Supervisory Board held
on January 28, 2014, the personnel changes in the Board
of Management explained on E page 50 were discussed
and decided upon.

In a meeting attended by the external auditors in early
February 2014, the preliminary key figures of the annual com
pany and consolidated financial statements for 2013 and the
dividend proposal to be made at the 2014 Annual Shareholders’
Meeting were discussed. The preliminary key figures for the
year 2013 and the proposal on the appropriation of profit were
announced at the Annual Press Conference on February 6, 2014.

In the Supervisory Board meeting held on February 18, 2014,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on E page 50.
Subsequently, it dealt with the annual company financial state
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group, each of which had been issued with an unqualified
audit opinion by the external auditors, as well as with the reports
of the Audit Committee and the Supervisory Board, the cor
porate governance report, the remuneration report and the pro
posal on the appropriation of profit. In preparation, the mem
bers of the Supervisory Board were provided with comprehensive
documentation. The Audit Committee and the Supervisory
Board dealt with those documents in detail and discussed them
intensively in the presence of the external auditors. Following
the final results of the review by the Audit Committee and its
own review, the Supervisory Board declared its agreement
with the results of the audit carried out by the external auditors,
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. On this basis, the Supervisory Board consented
to the proposal made by the Board of Management on the
appropriation of distributable profit. In addition, the Supervisory
Board approved the Report of the Supervisory Board, the
Corporate Governance Report and the Remuneration Report,
as well as its proposed decisions on the items of the agenda
for the 2014 Annual Shareholders’ Meeting.

A | To Our Shareholders | Report of the Supervisory Board Also in the meeting on February 18, 2014, the Supervisory Board
received detailed information on the topic of “Future Mobility.”
Some of the main aspects of this topic were urbanization, demo
graphic developments, the digital revolution and autonomous
driving. Furthermore, the Supervisory Board approved a capital
increase for the Group subsidiary Daimler India Commercial
Vehicles. Finally, it dealt with aspects of Board of Management
remuneration and approved the other board memberships
and sideline activities of the members of the Board of Manage
ment as presented in the meeting.

On March 7, 2014, the Supervisory Board discussed and
approved the transfer to the partner RollsRoyce Holdings plc.
of the 50% equity interest held by Daimler AG in RollsRoyce
Power Systems Holding GmbH.

One of the items on the agenda of the Annual Shareholders’
Meeting held on April 9, 2014 was the election of three members
of the Supervisory Board representing the shareholders.
In its constitutive meeting straight after the Annual Sharehold
ers’ Meeting, the Supervisory Board elected Joe Kaeser
as a member of the Audit Committee. This and other decisions
on the composition of the committee are presented on
E page 50 under “Personnel changes in the Supervisory
Board.”

In another meeting at the end of April 2014, the Supervisory
Board consented to the expansion of the cooperation with
Nissan in the compactcar segment. Amongst other things,
it approved investments in a joint production facility with
Nissan in Mexico. Subsequently, the Supervisory Board decided
on the successor to Erich Klemm in the positions of Deputy
Chairman of the Supervisory Board and member of the commit
tees of the Supervisory Board. Details are provided on
E page 50 under “Personnel changes in the Supervisory
Board.”

In June, the Supervisory Board passed a resolution in written
circulated form on the provision of health care for the active
and retired employees of a US company of the Group, Daimler
Trucks North America.

Following discussion of the course of business and the results
of the second quarter, in its meeting in July, the Supervisory
Board received detailed information on the current development
of Daimler in China and subsequently consented to a capital
increase at the Chinese subsidiary MercedesBenz Auto Finance
Ltd. In this meeting, the Supervisory Board also discussed
an extension of the strategic cooperation with RenaultNissan
and approved that project. The Supervisory Board also dealt
with the agenda of its strategy workshop in 2014.

During the twoday strategy workshop at the MercedesBenz
plant in Bremen, as in the previous strategy meetings, the
Supervisory Board received information on the strategic goals
of Daimler AG and the divisions, as well as on the stage of
their implementation so far. The starting point was an assessment
of the markets and the automotive environment in the year
2025. The Supervisory Board dealt in detail with the expected
changes in structural conditions, in particular in the areas
of geopolitics and industrial policy, emission legislation and
sustainability in the automotive industry. Other important
subjects for discussion included connectivity, autonomous
driving, big data and the challenges of socalled Industry 4.0.
On the basis of the future scenario deemed to be likely,
the Supervisory Board then dealt with the Group’s objective
for the year 2025 and – derived from that – the objectives
of the various divisions. The main points for discussion included
the objectives of the divisions Daimler Trucks and Daimler
Buses as well as MercedesBenz Cars. In connection with Daimler
Trucks and Buses, the topics discussed were model policy,
production network, new competitors from the emerging mar
kets, opportunities in new sales markets and emissionfree
driving for city buses. With regard to MercedesBenz Cars, the
discussions focused on the product portfolio and platform
strategy, the global production network, materialcost efficiency
and supplier quality, innovation strategy and the Best
Customer Experience program.

In October 2014, the Supervisory Board consented in written
circulated form to the termination of the hedge of the price
of the shares held in Tesla and to the sale of those shares.
In another resolution passed in written circulated form in October,
the Supervisory Board decided on the basis of a recommen
dation by the Audit Committee on the restructuring of the real
estate portfolio in Germany and consented to the planned
project.

In the meeting held in December 2014, the Supervisory Board
first decided on the changes in the Board of Management
described on E page 50. Subsequently, the Supervisory Board
dealt in detail on the basis of comprehensive documentation
with the operational planning for the years 2015 and 2016. This
included discussion of existing opportunities and risks as well
as the Group’s risk management. Subsequently, the Supervisory
Board dealt with the optimization of the sales network and
the structure of Daimler’s own salesandservice centers in
Germany, and consented to the sale of some of those centers.
In addition, the Supervisory Board approved contributions
to the German pension fund assets to secure the employees’
retirement benefits.

Also in the meeting in December, on the basis of a recom
mendation by the Nomination Committee, the members
of the Supervisory Board representing the shareholders decided
to propose to the Annual Shareholders’ Meeting that Dr. Paul
Achleitner be reelected to the Supervisory Board with effect as
of the end of the Annual Shareholders’ Meeting held on April 1,
2015 and until the end of the Annual Shareholders’ Meeting that
decides on ratification of the actions in the year 2019. Other
topics dealt with in the December meeting were corporate gover
nance, as detailed below, and Board of Management remu
neration in light of the recommendations of the German Corpo
rate Governance Code. Finally, the Supervisory Board dealt
with the probable main topics of the year 2015.

Corporate governance. During the year 2014, the Supervisory
Board was continually occupied with standards of good
corporate governance.

In its meetings in July and December, the Supervisory Board
slightly updated the wording of the rules of procedure of the
Supervisory Board and its committees, and in December
approved the 2014 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of the
German Stock Corporation Act (AktG). With the exceptions
explained in the declaration, all the recommendations of the Code
have been complied with and continue to be complied with.

The Supervisory Board arranged for an externally moderated
efficiency review to be carried out in 2014, thus fulfilling
the requirements of its rules of procedure and of the German
Corporate Governance Code. The results of the efficiency
review, with which the Supervisory Board dealt intensively
in its meeting in midFebruary 2015, confirm that there is
very good and constructive collaboration within the Supervisory
Board and with the Board of Management.

The Supervisory Board is convinced that effective work in
the Supervisory Board in terms of good corporate governance
requires two things: On the one hand, its members must have
high levels of specialist expertise. On the other hand, diversity
amongst the members in terms of internationality, gender,
experience and cultural background must reflect the Group’s
size and internationality. Both of these requirements are
fulfilled at Daimler. For the purpose of appropriate participation
by women and to secure appropriate internationality amongst
its members, the Supervisory Board has set itself targets in
accordance with the recommendations of the German Corporate
Governance Code, which the Nomination Committee takes
into consideration with its recommendations to the Supervisory
Board as does the Supervisory Board itself with the election
proposals that it makes to the Annual Shareholders' Meeting.
Details of the Supervisory Board's targets and of the stage
of target achievement are presented on E pages 182 ff. of the
Corporate Governance Report.

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, sup
plier or creditor of Daimler or for other third parties – to the
entire Supervisory Board. In fulfilment of the relevant recommen
dations of the German Corporate Governance Code, the Super
visory Board provides information on any conflicts of interest that
occur and on how they were dealt with in its report to the
Annual Shareholders’ Meeting.

There were no indications of any actual conflicts of interest in
2014. Purely as a precaution, in light of her wellknown member
ship of the board of directors of General Electric Company,
Andrea Jung did not participate on March 7, 2014 in the consul
tations and resolution on the sale to the partner RollsRoyce
Holdings plc. of Daimler’s 50% equity interest in RollsRoyce
Power Systems Holding GmbH, in order to avoid any possible
conflict of interest. Apart from that, there were no indications
of any potential conflicts of interest during the reporting
period.

Corporate Governance at Daimler is described in detail in the
Corporate Governance Report on E pages 182 ff and in the
Remuneration Report on E pages 118 ff of this Annual Report.

Report on the work of the committees

The Presidential Committee convened five times last year.
It dealt primarily with corporate governance topics and questions
of remuneration, as well as with personnel matters of the
Board of Management. As in previous years, compliance targets
constituted part of the individual target agreements of the
members of the Board of Management. Once again, additional
nonfinancial targets were also included as criteria in the
target agreements. For the past financial year, they were in the
areas of employee and customer satisfaction, diversity,
and the further development and permanent establishment
of integrity.

The Audit Committee met six times in 2014. Details of those
meetings are provided in a separate report of that committee.
E see pages 176 ff

The Nomination Committee convened twice in 2013. Among
other matters, it prepared recommendations for the Supervisory
Board’s proposals to the Annual Shareholders’ Meeting 2014
on candidates for election. The election proposals give due con
sideration not only to the defined qualifications for the specific
position, but also to the recommendations of the German
Corporate Governance Code. The Nomination Committee had
already made its recommendations in 2013 for the election
proposals to be made to the Annual Shareholders’ Meeting
in 2014.

A | To Our Shareholders | Report of the Supervisory Board 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 2014.

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 9, 2014,
Gerard Kleisterlee, Lloyd G. Trotter and Dr. Bernhard Walter
stepped down from the Supervisory Board. The Annual Share
holders’ Meeting elected Dr. Bernd Bohr, Joe Kaeser and
Dr. Bernd Pischetsrieder as members of the Supervisory Board
representing the shareholders until the end of the Annual
Shareholders’ Meeting that decides on ratification of the actions
for the year 2018. The election proposals made by the Super
visory Board to the Annual Shareholders’ Meeting were based
on recommendations made by the Nomination Committee.

After the departure of Dr. Bernhard Walter as a member and
the longstanding Chairman of the Audit Committee, in its
constitutive meeting straight after the Annual Shareholders’
Meeting, the Supervisory Board elected Joe Kaeser as a
member of the Audit Committee representing the shareholders.
Furthermore, the members of the Audit Committee elected
Dr. Clemens Börsig as the Chairman of that Committee.

On April 30, 2014, Erich Klemm stepped down from his positions
as a member and Deputy Chairman of the Supervisory Board.
Ergun Lümali had already been elected to replace Erich Klemm
in the election of members of the Supervisory Board repre
senting the employees held in 2013. Ergun Lümali therefore
became a member of the Supervisory Board as of May 1, 2014
without the need for another election or resolution. Due to
the departure of Erich Klemm, his successors in the positions
of Deputy Chairman and member of the committees had to
be elected. Effective as of May 1, 2014, the Supervisory Board
elected Michael Brecht as its Deputy Chairman. Michael
Brecht succeeds to Erich Klemm also as a member and Deputy
Chairman of the Mediation Committee and the Presidential
Committee. The Supervisory Board elected Dr. Sabine Maaßen
to the Audit Committee as Erich Klemm’s successor repre
senting the employees with effect as of May 1, 2014. The mem
bers of the Audit Committee elected Michael Brecht as the
Chairman of that Committee.

Jürgen Langer stepped down from the Supervisory Board as
of December 31, 2014. With effect as of January 1, 2015
Michael Bettag was appointed by the court to the Supervisory
Board as his successor representing the employees.

Personnel changes in the Board of Management. In the
Supervisory Board meeting held on January 28, 2014, the
appointment of Andreas Renschler as a member of the Board
of Management was terminated by mutual agreement.
Andreas Renschler was released of his duties as of that date.
Also in that meeting, the Supervisory Board decided that
responsibility for the area of Manufacturing and Procurement
MercedesBenz Cars in the Board of Management of Daimler AG
would be transferred until further notice to its Chairman,
Dr. Dieter Zetsche, in his position as Head of the Mercedes
Benz Cars division. Responsibility for the MercedesBenz
Vans division was allocated to Wilfried Porth.

In the Supervisory Board meeting on February 18, 2014,
Bodo Uebber’s appointment as the member of the Board
of Management of Daimler AG with responsibility for
Finance & Controlling and Daimler Financial Services was
extended for a further five years as of January 1, 2015.

In its meeting on December 11, 2014, the Supervisory Board
decided to expand the Board of Management and to appoint
Ola Källenius as a new member with responsibility for Sales
MercedesBenz Cars for a period of three years with effect
as of January 1, 2015, and to adjust the schedule of responsi
bilities accordingly.

In the Supervisory Board meeting on February 13, 2015,
Hubertus Troska was reappointed as a member of the
Board of Management of Daimler AG with responsibility
for “Greater China” for a further five years with effect
as of January 1, 2016.

Audit of the 2014 company and consolidated financial state-
ments. The financial statements of Daimler AG and the com
bined management report for the Company and the Group for
2014 were duly audited by KPMG AG, Wirtschaftsprüfungs
gesellschaft, Berlin, and were given an unqualified audit opinion.
The same applies to the consolidated financial statements
for 2014 prepared according to IFRS.

In a meeting in early February 2015 attended by the external
auditors, the Supervisory Board discussed the preliminary
key figures of the annual company and consolidated financial
statements for 2014 and the dividend proposal to be made
at the 2015 Annual Shareholders’ Meeting. The preliminary key
figures for the year 2014 were announced at the Annual
Press Conference on February 5, 2015.

Appreciation. The Supervisory Board thanks all of the employ
ees and the management of the Daimler Group for their personal
contributions to the successful year 2014. With all best wishes
for the future, the Supervisory Board also expresses its warmest
thanks to the departed members Gerard Kleisterlee, Erich
Klemm, Jürgen Langer and Lloyd G. Trotter. With great sad
ness and gratitude, the Supervisory Board bids farewell to
Dr. Bernhard Walter as the longstanding Chairman of the Audit
Committee, who passed away in January 2015. Dr. Bernhard
Walter has had a lasting positive impact on the Company through
his work. Special thanks for his great commitment to the
benefit of the Company are also due to Erich Klemm as the
Deputy Chairman of the Supervisory Board and its committees.

Stuttgart, February 2015

The Supervisory Board

Dr. Manfred Bischoff
Chairman

In the meeting on February 13, 2015, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined manage
ment report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the
external auditors, as well as with the reports of the Audit Com
mittee and the Supervisory Board, the corporate governance
report, the remuneration report and the proposal on the appro
priation of profit. In preparation, the members of the Super
visory Board had been provided with comprehensive documen
tation 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
corporate 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 profit, the audit reports of KPMG on the annual company
financial statements of Daimler AG and the consolidated
financial statements, each including the combined management
report, as well as drafts of the reports of the Supervisory
Board and of the Audit Committee.

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
management report as presented by the Board of Management.
The company financial statements of Daimler AG for the
year 2014 were thereby adopted. On this basis, the Supervisory
Board consented to the proposal made by the Board of
Management on the appropriation of distributable profit.
Furthermore, it approved the report of the Supervisory Board,
the corporate governance report and the remuneration
report, as well as its own proposed decisions on the items
of the agenda for the 2015 Annual Shareholders’ Meeting.

A | To Our Shareholders | Report of the Supervisory Board The Supervisory Board.

Dr. Manfred Bischoff
Munich
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
Airbus Group N.V.
SMS GmbH
UniCredit S.p.A.

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

Dr. Paul Achleitner
Munich
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:
Fortum OYj – Chairwoman
Deutsche Telekom AG
AkzoNobel N.V.

Dr. Bernd Bohr
Stuttgart
Former Member of the Management Board
of Robert Bosch GmbH
(since April 9, 2014)
Other supervisory board memberships/directorships:
Formel D GmbH

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.
IOR Istituto per le Opere de Religione (Vatican Bank)

Dr. Jürgen Hambrecht
Ludwigshafen
Chairman of the Supervisory Board of BASF SE
Other supervisory board memberships/directorships:
BASF SE – Chairman
Fuchs Petrolub SE – Chairman
Trumpf GmbH + Co. KG – Chairman

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
Climate and Land Use Alliance

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

Andrea Jung
New York
President and Chief Executive Officer of Grameen America,
Inc.
Other supervisory board memberships/directorships:
Apple Inc.
General Electric Company

Joe Kaeser
Munich
Chairman of the Board of Management of Siemens AG
(since April 9, 2014)
Other supervisory board memberships/directorships:
Allianz Deutschland AG
NXP Semiconductors N.V.

Jürgen Langer*
Frankfurt am Main
Chairman of the Works Council of the Frankfurt/Offenbach
Dealership, Daimler AG
(up to and including December 31, 2014)

Ergun Lümali*
Sindelfingen
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
(since May 1, 2014)

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

Wolfgang Nieke*
Stuttgart
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG

Dr. Bernd Pischetsrieder
Munich
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft, Aktiengesellschaft
in München
(since April 9, 2014)
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München – Chairman
Tetra-Laval International S.A. Group

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
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG

Dr. Frank Weber*
Sindelfingen
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group

Appointed by resolution of the local district court
with effect from January 1, 2015:

Michael Bettag*
Nuremberg
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG

Retired from the Supervisory Board:

Gerard Kleisterlee
Amsterdam
Former President and CEO of Royal Philips Electronics N.V.
(retired on April 9, 2014)

Erich Klemm*
Sindelfingen
Chairman of the General Works Council, Daimler Group
and Daimler AG; Deputy Chairman of the Supervisory Board
of Daimler AG
(retired on April 30, 2014)

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
(retired on April 9, 2014)

Dr. h.c. Bernhard Walter
Frankfurt am Main
Former Spokesman of the Board of Management
of Dresdner Bank AG
(retired on April 9, 2014)

Committees of the Supervisory Board:

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

Presidential Committee
Dr. Manfred Bischoff – Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Jörg Hofmann*

Audit Committee
Dr. Clemens Börsig – Chairman
Michael Brecht*
Joe Kaeser
Dr. Sabine Maaßen*

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

* Representative of the employees

A | To Our Shareholders | The Supervisory BoardHighlights of 2014.

Determination
pays off!

This applies not only to the world of sports but also to companies such as Daimler.
We accompanied the German soccer team along their way to winning the World Cup in 2014. Mercedes-
Benz’s impressive victory in the Formula 1 Championship racing series also reflects our great deter-
mination. All signs point to growth at all of our divisions. We are on schedule with the implementation
of our efficiency programs and our new vehicle models have met with an outstanding response on
the market. Our groundbreaking innovations in the areas of safety, fuel efficiency and autonomous driving
have made a huge impression as well. The components of our strategy are coalescing into a coherent
whole. We will consistently pursue this strategy.

A | To Our Shareholders | Highlights of 2014Q1

Mercedes‑Benz presents the new C‑Class in Detroit.
The all-new C-Class is the highlight of the auto show presen-
tation. The C-Class sets efficiency benchmarks in its class,
thanks to an intelligent lightweight design concept, excellent
aerodynamics and new, economical engines. Numerous
new assistance systems ensure the highest degree of safety.

The new V‑Class rolls off the line. The first new V-Class is
built at the Mercedes-Benz plant in Vitoria, Spain. The production
launch of the new model marks the achievement of a further
milestone in the Mercedes-Benz Vans growth strategy. The new
V-Class combines the functionality of a van with the typical
strengths of Mercedes-Benz cars – everything from emotive
design and high-quality interior appointments to exemplary
safety features and fuel-efficient driving pleasure.

“Mercedes me” is presented in Geneva. Mercedes-Benz
presents its new “Mercedes me” service brand on the eve of the
84th International Motor Show in Geneva. This new umbrella
brand combines existing and future service offerings, making
them easily accessible at any time on a digital platform
on the Internet.

World premiere of the new S‑Class coupe. A stylistically
confident appearance, exclusive appointments and sophisticated
sportiness – the new Mercedes-Benz S-Class coupe at the
Geneva Motor Show. The model’s curve tilting function also
marks a world premiere. The lateral acceleration that acts
upon vehicle occupants is reduced in a manner similar to what
occurs when a motorcycle leans into a steep curve. The new
curve tilting function thus enhances driving pleasure and comfort
on country roads especially.

Daimler begins building a new bus plant in India. Daimler
is investing some €50 million in a bus plant to be built on an
area of roughly 113,000 square meters at the site of an existing
truck manufacturing facility in Chennai. The product range
will include front-engine buses from the BharatBenz brand that
are tailored to the specific needs of the volume bus market
in India.

Daimler to sell its stake in Rolls‑Royce Power Systems.
Daimler announces its intention to sell its 50% interest in Rolls-
Royce Power Systems (RRPS, formerly Tognum) to its partner
Rolls-Royce. On the basis of long-term supply agreements,
Daimler will remain a key supplier of heavy-duty and medium-duty
diesel engines to RRPS. Daimler will use the €2.4 billion in
income it expects from the sale to strengthen the Group’s core
business.

Daimler issues first corporate bond in China. Daimler
becomes the first foreign company to issue a bond in China.
The so-called panda bond has a volume of 500 million
renminbi (approximately €60 million) and a term of one year.
The bond issue provides Daimler with an additional source
of financing for its rapidly expanding business activities in China.

New service: Corporate car‑sharing. Daimler Fleet Manage-
ment, a provider of fleet-management and fleet-leasing
services, will expand its range of services to include corporate
car-sharing for fleet customers. The new mobility solution will
allow corporate fleets to be used more efficiently.

Daimler Trucks celebrates a production milestone in China.
Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a 50-50
joint venture between Daimler and the Chinese truck manufac-
turer Foton Motor, achieves a major milestone when the
150,000th unit of the jointly produced Auman brand truck
rolls off the assembly line.

Daimler Mobility Services becomes moovel GmbH. The
umbrella company for the car2go, car2go black and moovel
mobility services is renamed moovel GmbH. With this step,
Daimler underscores the importance of the mobility platform,
as well as its strong customer focus. The moovel mobility
app already offers its users a central access portal for
numerous mobility services with various modes of transport.

Dividend of €2.25. During the Annual Shareholders’ Meeting
in Berlin, Daimler AG shareholders approve the distribution
of a dividend of €2.25 per share for the year 2013 (prior year:
€2.20). The total dividend payout amounts to €2,407 million.

car2go launches cross‑border service. Since the end of 2012,
car2go member-card holders in Germany have been able
to rent more than 3,500 smart fortwo vehicles at seven car2go
locations in Germany. Eleven European locations now allow
car2go members from other countries to use the service.

Daimler shares its compliance expertise with other compa‑
nies. The first-ever Daimler Compliance Academy meets with
a great response. More than 50 representatives of companies
from various sectors participate in the academy seminar in
April 2014. The seminar offers an interactive platform for sharing
experiences related to compliance trends and discussing
the challenges compliance officers face.

Partnership with Renault‑Nissan expanded. The Renault-
Nissan Alliance and Daimler AG decide to significantly expand
their cooperation through the joint development of premium
compact cars and the joint production of vehicles in Mexico.
A newly established 50-50 joint venture will be responsible for
building and operating a new manufacturing facility in Aguas-
calientes in the northern part of central Mexico. After the initial
launch phase, the new plant will be ramped up to an annual
capacity of 300,000 units.

Daimler on course for profitable growth. In the second
quarter of 2014, the company once again sets new records for
sales and revenue and significantly increases its operating
profit from ongoing business operations. The outlook for full-
year 2014 remains positive.

A | To Our Shareholders | Highlights of 2014
Q3

World premiere of new smart models. smart presents its
two all-new city cars: fortwo and forfour. The new models
retain the tried-and-tested rear-engine concept but offer more
of everything – more comfort, more safety and more driving
pleasure in the city.

Daimler presents an autonomously driving truck. The
Mercedes-Benz Future Truck 2025 is equipped with the
extremely intelligent Highway Pilot assistance system, which
enables it to drive completely autonomously at speeds of up
to 85 km/h on a highway. With this autonomous vehicle, Daimler
is once again highlighting the pioneering role it plays in inno-
vative technologies as it ushers in a new era of truck transport.

World premiere of the Mercedes‑AMG GT. The new
Mercedes-AMG GT stands for pure driving pleasure and breath-
taking design. Agile, sporty and dynamic – that’s the only way
to describe the second sports car developed fully independently
by Mercedes-AMG. It’s uncompromising on the racetrack, yet
also suitable for everyday use.

The new Western Star 5700XE is presented. This truck
combines Western Star’s legendary styling and reliable durability
with excellent fuel economy as well as Daimler’s tried and
tested aerodynamic features. The 5700XE will go into produc-
tion in Cleveland, North Carolina (USA) in 2015.

Specialist symposiums on connected driving and data
protection and sponsorship. Daimler creates new platforms
for dialogue between society and industry with its “Automobile
on the Data Highway” and “Responsible Sponsorship” specialist
symposiums. In this manner, the company promotes an
interdisciplinary and constructively critical exchange with
its stakeholders.

40‑year partnership with Kuwait. The Kuwait Investment
Authority (KIA) has been an investor in Daimler for the past
40 years. During this time, Kuwait has become Daimler’s most
reliable partner, despite the various ups and downs in the
company’s history. KIA currently owns 6.8% of the company’s
shares, making it Daimler’s largest shareholder. The anni-
versary of the launch of the partnership is celebrated at a cere-
mony in Stuttgart.

Production launch for DENZA in China. The first units
of Daimler’s DENZA electric vehicle roll off the production line
at Shenzhen BYD Daimler New Technology Co., Ltd. (BDNT)
in China. The successful production launch marks yet another
cooperation milestone for Daimler and its Chinese partner
Build Your Dreams (BYD). The DENZA fully lives up to its promise
to be the safest, most reliable and most sophisticated electric
vehicle from and for China.

Daimler Employee Survey 2014. Some 260,000 staff members
from more than 40 countries take part in the Daimler Employee
Survey between September 15 and October 3, 2014. The survey
is an instrument for eliciting employee opinions on important
topics related to the work environment and the management situ-
ation. The results are used to develop measures for improving
the organization.

Public premiere for the Vito. The new Vito is presented
to a global audience in Berlin. In order to better serve commer-
cial customers, the model is available for the first time in
three drive system variants. It also boasts a high payload and
outstanding safety.

New FUSO trucks for Indonesia. The product range in
Indonesia has been expanded with trucks of the new medium-
and heavy-duty series FUSO FI and FUSO FJ. The new FUSO
models are produced in Chennai, India, and are intended to
further strengthen the Group’s market leadership in Indonesia.

Mercedes‑Maybach celebrates its world premiere. Our
new Mercedes-Maybach sub-brand and the first model from
this exclusive brand celebrate their world premiere simul-
taneously in the United States and China. Mercedes-Maybach
stands for prestigious exclusivity and is aimed at highly
sophisticated customers.

Mercedes‑Benz is the most valuable premium automotive
brand. Mercedes-Benz moves up to 10th place in the rankings
for Best Global Brands 2014 compiled by the Interbrand
consulting firm in the United States, making it the only European
company to reach the top 10 in the list of the 100 most valu-
able brands.

Formula 1 World Championship. MERCEDES AMG PETRONAS
wins the Constructors’ Championship by a wide margin.
Mercedes driver Lewis Hamilton is crowned World Champion
after the final race in Abu Dhabi, while Nico Rosberg finishes
the season in second place.

Daimler restructures cooperation with Tesla. Daimler
decides to reorganize its cooperation with Tesla Motors Inc.
and sell its roughly 4% stake in the company. The sale
generates proceeds of approximately €600 million, which
will be used to strengthen business operations. Cooperation
with Tesla will nevertheless remain an important part of
Daimler’s activities in the field of electric mobility in the future.

A new international employer image campaign is launched.
“That’s Us” is the slogan for Daimler’s new employer image
campaign, which puts the company’s employees in the spotlight.
The international campaign is directed at potential job
applicants from all over the world.

€2.5 billion for the company pension fund. The Daimler
Supervisory Board decides to make an extraordinary contribution
of €2.5 billion to the company pension fund in Germany.
This additional funding will give employees more security and
also have a positive impact on the Group’s interest income
in the future.

A | To Our Shareholders | Highlights of 2014
Daimler and the Capital Market.

Daimler’s share price increased by 10% over the course of the year and thus once again
outperformed the DAX and the Dow Jones STOXX Auto Index. Numerous stock indices reached
alltime highs and central banks continued their expansionary monetary policies. The Board
of Management and the Supervisory Board propose an increased dividend of €2.45 per share
(prior year: €2.25). 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 2014

End of 2013

14/13

% change

Daimler share price (in euros)

68.97

62.90

+10

New all-time highs on the world’s stock markets. Global
stock markets remained volatile in 2014 and markets in some
regions finished the year with substantial gains. In general,
the markets benefited from the continued availability of liquidity
from the major central banks, as well as from interest rates
that remained low.

DAX 30

Dow Jones Euro STOXX 50

Dow Jones Industrial Average

Nikkei

Dow Jones STOXX Auto Index

9,806

3,146

17,823

17,451

501

9,552

3,109

16,577

16,291

482

The development of global stock markets over the first three
months of the year was relatively uneven and marked by
major fluctuation. The markets were impacted during this
phase by the Federal Reserve’s tapering of monthly bond
purchases beginning in January 2014. Other influencing factors
were turbulence in key emerging markets and political tensions.

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

2014

2013

14/13

% change

6.51

2.45

40.81

68.97

71.14

56.01

6.40

2.25

39.90

62.90

63.15

38.65

+10

+13

+45

Following this initial phase, global markets resumed their
upward trend, although this positive development was inter
mittently interrupted by increasing concerns regarding the
escalation of the crisis in Ukraine. The announcement by the
European Central Bank (ECB) that it would implement further
monetary measures to counteract deflationary tendencies and
the weak development of credit volume in the euro zone
had a particularly positive effect on investors. The DAX reached
record highs during this phase in the middle of the year.

Stockmarket sentiment was negatively impacted in the subse
quent phase by geopolitical tensions and concerns about
the pace of economic growth in Europe. European markets thus
went into a significant decline during the summer months.
But it did not take long for the markets to recover, and many
sectors were able to recoup at least some of their previous
shareprice losses. In all likelihood, this positive development
was primarily driven by the ECB’s announcement that it would
implement further monetary support measures. Share prices
then declined again at the beginning of the fourth quarter
due to renewed concerns regarding global economic activity
and growth. However, this development was counteracted
by the publication of largely solid thirdquarter corporate results,
as well as by expectations of a continuation of the expan
sionary monetary policy in Europe. As a result, stock markets
developed positively throughout the remainder of the fourth
quarter. In this environment – and despite the discontinuation
of bond purchases by the Federal Reserve in October 2014 –
many indices either reached new alltime highs or came close
to breaking longstanding records during 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 1% in 2014. The leading
German index, the DAX, performed slightly better, rising
by 3%. The DAX broke the 10,000 mark for the first time ever
in July 2014 and reached a new alltime high of 10,087 on
December 5. In the United States, the Dow Jones rose by 8%
during the year, while Japan’s Nikkei index gained 7%.  A.01

Daimler share price up by 10% over the year. Financial
markets responded very favorably to the publication of the
Daimler Group’s results for 2013 and the recommendation
that the dividend be increased to €2.25 per share. This helped
the share price to rise by 9% in the first quarter of 2014 alone.

On April 4, 2014, the Daimler share price stood at €71.14.
This was the highest price for the year and also the highest
value for Daimler shares in more than seven years. However,
the Daimler share price did not remain unaffected by the
subsequent growing concerns regarding the escalation of the
Ukraine crisis. It was only after the ECB announced that
it would implement measures to counteract the weak develop
ment of credit volume in the euro zone that our share price
began to rise again significantly in line with general market devel
opments. The share price remained above €70 in June and
early July.

However, in the weeks that followed, political conflicts
and a disappointing economic outlook for Europe once again
dampened the mood on stock markets. Many investors
temporarily dropped out of the market and moved into less
risky types of investment. Cyclical securities such as auto
motive stocks performed particularly poorly in this environment,
with our share price reaching its low point of the year at
€56.01 on October 10.

As of midOctober, Daimler shares then benefited from
a more favorable stockmarket environment and from the solid
development of our business operations. Our share price
increased again substantially until the end of the financial year
and closed at €68.97 on December 30. At the end of the
year, the company had a market capitalization of €73.8 billion.

Daimler’s share price thus increased by 10% over the course
of the year, outperforming the Dow Jones STOXX Auto Index
(+4%) and the DAX (+3%). When the dividend payout of €2.25
per share is included, our shareholders saw the value of their
investment rise by 13%.

After a quiet start to the year 2015, significant shareprice
increases occurred later in January, especially in the European
stock markets. The announcement of the ECB program to
buy government bonds caused the DAX to climb to a new all
time high. Daimler’s shares were listed at €80.48 at the
end of January, which is 17% above the closing price at the
end of 2014 and the highest price in more than 15 years.

Dividend of €2.45.  A.02 The Board of Management and
the Supervisory Board will recommend a dividend of €2.45
(2013: €2.25) per share at the Annual Shareholders’ Meeting
on April 1, 2015. With this proposal, we are letting our share
holders participate in the company’s financial success while also
expressing our confidence about the ongoing course of
business. The total dividend will amount to €2,621 million
(2013: €2,407 million).

A broad shareholder structure.  A.07 Daimler continues
to have a broad shareholder base of approximately 900,000
shareholders. The Kuwait Investment Authority (KIA) currently
owns 6.8% of the company’s stock, making it Daimler AG’s
largest single shareholder. In September 2014, Daimler AG and
KIA held a ceremony to celebrate their 40year partnership.
The RenaultNissan Alliance continues to hold 3.1% of Daimler’s
shares.

BlackRock Inc., New York, still holds a stake above the 5%
reporting limit as defined by Germany’s Securities Trading Act
(WpHG). In December 2014, BlackRock notified us that it
held 5.03% of Daimler’s shares on December 23.

The Norwegian Finance Ministry informed us that at the
beginning of April 2014, the shares held by Norges Bank, Oslo,
had dropped below the reporting limit of 3% as stipulated by
Section 21 of the WpHG. On April 24, 2014, this limit was once
again exceeded, and the bank held 3.17% of the voting rights
in Daimler as of that date.

A.03
Daimler share price (high/low), 2014

In euros

1/14

2/14

3/14

4/14

5/14

6/14

7/14

8/14

9/14

10/14

11/14

12/14

A.04
Share price index

130

125

120

115

110

105

100

12/31/13

2/28/14 4/30/14 6/30/14 8/31/14 10/31/14

12/31/14

Daimler AG
Dow Jones STOXX Auto Index
DAX

A | To Our Shareholders | Daimler and the Capital MarketA.05
Key figures for Daimler shares

End of 2014 End of 2013

14/13

% change

+10

Share capital (in millions of euros)

Number of shares (in millions)

3,070

1,069.8

3,069

1,069.8

Market capitalization
(in billions of euros)

Number of shareholders (in millions)

Weighting in share indices

DAX 30

Dow Jones Euro STOXX 50

Longterm credit ratings

Standard & Poor’s

Moody’s

Fitch

DBRS

73.8

0.9

8.51%

3.46%

A-

67.3

0.9

7.74%

3.23%

A (low)

A.06
Stock-exchange data for Daimler shares

ISIN

German Securities Identification Number

Stockexchange symbol

Reuters ticker symbol

Bloomberg ticker symbol

DE0007100000

710000

DAI

DAIGn.DE

DAI:GR

A.07
Shareholder structure as of December 31, 2014

By type of shareholder

Kuwait Investment Authority

Renault-Nissan

Institutional investors

Retail investors

6.8%

3.1%

73.7%

16.4%

A.08
Shareholder structure as of December 31, 2014

By region

Germany

Europe, excluding Germany

USA

Kuwait

Asia

Rest of the world

33.7%

26.6%

26.9%

6.8%

5.6%

0.4%

In April 2014, we received notifications of voting rights also
from UBS AG, DekaBank Deutsche Girozentrale and Commerz
bank AG. According to those statements, the banks’ directly
or indirectly held voting rights in Daimler had risen above the
3% limit in the runup to our Annual Shareholders’ Meeting,
before dropping significantly below that limit again in the two
weeks that followed. In January 2014, Deutsche Bank AG
notified us that its voting rights in Daimler had risen above
the 3% reporting limit for a brief period and then once again
dropped below that limit and back to 0.02% on January 28, 2014.

The aforementioned votingrights notifications and the
notifications relating to other financial instruments
prescribed by law since 2012 are published on the Internet
at w daimler.com/investorrelations/daimlershares/
shareholderstructure.

Institutional investors hold a total of 74% of our equity capital
while private investors own 16%. Approximately 60% of our
capital is in the hands of European investors and around 27%
is held by US investors.  A.08

Daimler shares’ weighting in major indices rose further during
the reporting year as a result of the overall share price increase.
With a weighting of 8.51% (2013: 7.74%), Daimler was ranked
third in the German DAX 30 index at the end of 2014.  A.05
In the Dow Jones Euro STOXX 50 index, our shares had a
weighting of 3.46% (2013: 3.23%), which put it in seventh place.
Daimler shares are listed on the stock exchanges in Frankfurt
and Stuttgart. A total volume of 957 million shares were traded
in Germany in 2014 (2013: 1,029 million). Daimler shares are
also increasingly being traded on multilateral trading platforms
and in the overthecounter market.

Employee share purchase plan implemented once again.
Staff members entitled to purchase employee shares were able
to once again do so in March 2014. As was the case in the
prior year, the employees received a discount as well as bonus
shares. At 15.4%, the participation rate was lower than in
2013 (19.2%). This was probably due in part to the significantly
higher share price compared to the previous year. A total
of 26,600 employees took part in the program. Those staff
members purchased a total of 390,000 shares.

Annual Shareholders’ Meeting once again sparks consider-
able visitor interest. Approximately 5,500 shareholders
(2013: 5,000) attended the Annual Shareholders’ Meeting
at the International Congress Center (ICC) in Berlin on April 9,
2014. At 39.25%, a much higher proportion of equity capital
was represented at the meeting than in the previous year (2013:
29.3% – both figures include actual attendees and share
holders who voted by absentee ballot). A large majority of the
shareholders approved each of the agenda points proposed
by the company’s management. Among other things, the meet
ing’s participants elected Dr. Bernd Bohr, Joe Kaeser and
Dr. Bernd Pischetsrieder to the Supervisory Board as represen
tatives of the shareholders for five years. All of the documents
and information regarding the Annual Shareholders’ Meeting can
be found at w daimler.com/ir/am2014. In the exhibition
areas of the ICC, Daimler presented its technological expertise
and broad product range with a focus on the new CClass
and the SClass coupe.

Refinancing benefits from a high level of capital-market
liquidity and a good rating. The ongoing expansionary
monetary policies at central banks also impacted bond markets
during the year under review. As a result of the high level
of liquidity, companies with investmentgrade ratings saw their
risk premiums decline once again compared to the prior year,
which was also to the benefit of Daimler.

In 2014, Daimler primarily covered its refinancing needs by
issuing bonds. A large proportion of these bonds were sold
as benchmark bond issues (bonds with high nominal volumes)
in euro and USdollar markets. In the US capital market,
for example, Daimler Finance North America LLC issued bonds
worth a total of $4.65 billion in March and August 2014. The
bonds had terms of three, five, seven or ten years. In addition,
Daimler AG issued euro bonds in benchmark format with
a total volume of €1.25 billion and terms of eight and ten years.
In 2014, Daimler AG also became the first foreign company
to issue bonds in China (socalled Panda bonds). Furthermore,
many smaller bonds were issued by the Daimler Group in
a variety of currencies in the euro market as well as in Mexico,
Brazil, Argentina, South Africa, Thailand and South Korea.

At the end of 2014, companies of the Daimler Group had
issued bonds that were still outstanding in a volume of €43.2
billion (2013: €38.7 billion). Besides raising funds through
the issuance of bonds, Daimler also issued a small volume
of commercial paper in 2014.

Daimler also conducted several assetbacked security (ABS)
transactions in the United States, Canada and Germany during
the reporting year. In the United States, for example, the
company generated a refinancing volume US$3.1 billion through
two issuances. A further C$0.5 billion was placed in Canada
directly with investors for the first time. In addition, Mercedes
Benz Bank used the Silver Arrow Platform to sell ABS bonds
to European investors once again. This issuance had a total
volume of €1.0 billion.

Continuation of comprehensive investor relations activ-
ities. In 2014, we once again provided institutional investors,
analysts, rating agencies and private investors with timely
information regarding the company’s business development.
We organized road shows for institutional investors and
analysts in the finance capitals of Europe, North America, Asia
and Australia. We also held many oneonone meetings at
investor conferences. This was especially the case at the inter
national motor shows in Geneva and Paris. We regularly
reported on our quarterly results in conference calls and web
casts. The presentations can be seen on our website at
w daimler.com/ir/event/e.

The talks with analysts and investors focused on the latest earn
ings expectations for 2014, as well as on the business devel
opment and profitability of the individual divisions and regions.
Daimler also organized a technologyfocused capitalmarket
event at the beginning of July. During that event, Daimler sent
its MercedesBenz Future Truck 2025 on a drive along a
cordonedoff section of autobahn near the city of Magdeburg
in order to demonstrate how autonomous driving will change
the nature of freight transport in the future. Autonomous driving
involves the targeted and automated operation of a vehicle
under normal traffic conditions without the intervention of
a human driver. The feedback and the media response to the
event were extremely positive. During a capitalmarket day
held in Beijing in September, Daimler presented its strategy and
position in the key Chinese market with presentations,
dis cussions and plant tours. The audio recordings and charts
and illustrations from that event are available at
w daimler.com/ir/event/e.

Online offers are well-established on many channels.
The broad range of information that we offer online is provided
by our wellestablished presence at w daimler.com and via
our socialmedia activities. The informative and attractive print
version and the innovative, highcontent online version of
the Annual Report 2013 led to several prestigious national and
international awards in 2014. The contents of the 2013 online
annual report and of the three 2014 online interim reports were
provided not only 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 continue to take good advantage of our
provision of personalized electronic information and communica
tion. Approximately 84,000 shareholders no longer received
the invitation and agenda for the Annual Shareholders’ Meeting
by post but instead by email in 2014. We would like to thank
those shareholders for helping to protect the environment and
cut costs. As was the case in the past, those shareholders once
again had the opportunity to win attractive prizes in a lottery.
Access to the eservice for shareholders and additional informa
tion can be found at w https://register.daimler.com.

A | To Our Shareholders | Daimler and the Capital MarketObjectives and Strategy.

As the inventor of the automobile, we believe it is our mission and our duty to shape future mobility
in a safe and sustainable manner with outstanding products and services and trend‑setting tech‑
nologies. We strive to attain the leading position in all of our business. Our goals are to be the leader
in technology and innovation, to inspire our customers, and to continue to grow profitably with
first‑class teams. In this way, we intend to continually increase our enterprise value. We have defined
four strategic areas of growth for the Group, which we will focus on in the coming years.

Four objectives

Technology leadership and innovation. We set standards
for technology and innovation. We want our products from
all divisions to be the industry leaders when it comes to safety,
autonomous driving with cars and commercial vehicles, and
green technologies. Here, we exploit the potential generated
by joint research activities throughout the Group and, where
possible, we also utilize shared systems and solutions. We also
seek to be the leader in the use of digital technologies, both
in our products and as channels for maintaining contact with
our customers.

Delighted customers. Our leading brands in all divisions
create added value for our customers. We aim to finish at the
top of all relevant customer‑satisfaction rankings and con‑
vince customers with our outstanding quality. For that purpose,
we create interfaces for sales and aftersales processes that
ensure we can maintain contact with customers at all times.
We also offer our customers tailored transport and mobility
services.

Best teams. We work in teams whose diversity in terms
of gender, nationality and age is extremely important to us.
Our employees are proud to work at Daimler, and we’re
also one of the employers most sought after by job applicants.
Our core corporate values – passion, respect, integrity and
discipline – form the basis of our actions. Integrity is particularly
important to our company. It’s one of the key principles that
stand behind our actions, and it guides our dealings with respect
to the company and its employees, business partners and
customers. We are firmly convinced that conducting business
with integrity makes us more successful over the long term
and is also good for society as a whole.

Profitable growth. We have set ourselves the goal of achiev‑
ing a return on sales of 9% (EBIT in relation to revenue) on
average for the 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. For Daimler
Financial Services, we’ve set a return on equity target of 17%.

The “Mercedes‑Benz 2020” growth strategy is designed to
ensure that our Mercedes‑Benz Cars division will be playing
the leading role in the premium segment by the end of the
decade. We also plan to further enhance the smart brand’s
pioneering role in urban mobility. In addition, we want to further
strengthen Daimler Trucks’ position as the leading truck
manufacturer in the global truck business. With the help of its
“Mercedes‑Benz Vans goes global” strategy, Mercedes‑Benz
Vans is aiming to achieve further profitable growth outside its
established markets and segments as well. Daimler Buses
will further strengthen its leading position in the segment for
buses above eight metric tons gross vehicle weight. Daimler
Financial Services plans to position itself as the 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 order to safeguard our profitability under difficult market
conditions as well, we are adapting our business system in
a way that will enable us to react quickly and flexibly to market
fluctuations and create value as close to our markets as
possible.

Sustainability is another key principle of our actions. For us,
sustainability means conducting business responsibly to
ensure long‑term success in harmony with the environment
and society.

A.09
Strategic Pillars of Growth

Strengthening
Core Business

Growing
in New
Markets

Driving ahead with
connectivity and
mobility concepts

Leading
in Green
Technologies
and Safety

+ –

The four Strategic Growth Areas at Daimler

Four strategic growth areas

We plan to achieve our goals in four strategic growth areas.
 A.09
We will
– further strengthen our core business,
– continue growing in new markets,
– take the lead with green technologies and safety, and
– push forward decisively with the development of connectivity
and new mobility concepts.

Strengthening our core business. The foundations for a strong
core business are first-rate products, competitive cost struc-
tures and a customer-focused organization. In order to prepare
ourselves for growth and a stronger customer focus, we are
aligning our organizational structure more strongly with the indi-
vidual divisions and consolidating our sales and service
activities to ensure quality customer service throughout the
entire vehicle lifecycle.

With a comprehensive model offensive, we will renew and
extend the product range of Mercedes‑Benz Cars in all seg-
ments. Within the framework of the growth strategy that we
approved in 2012, we will launch more than 30 new car models
between 2012 and 2020. Almost half of those new products
have no predecessor model in the current product portfolio; we
already launched two of them in 2014: the GLA Coupe and
the long-wheelbase C-Class for the Chinese market. In 2015,
we will expand our product range with, for example, the
Mercedes-Maybach, the CLA Shooting Brake, the Mercedes-
AMG GT and the GLE Coupe, and we will present two addi-
tional models of the S-Class. Furthermore we will also renew
almost our entire range of SUVs.

We will continue to implement our successful module strategy.
This will allow us to successfully manage the increasing
complexity resulting from additional model variants, as well
as ever-shorter innovation cycles and the expansion of our
international production network. By increasing the level of stan-
dardization and modularization at our manufacturing plants,
we are reducing our investment requirements and fixed costs.
The classification of lead and partner plants is safeguarding
both the transfer of knowledge and the high quality standards
associated with “Made by Mercedes” worldwide. For example,
we succeeded in launching production of the new C-Class at four
plants on four continents in less than six months. This marked
a major milestone in global production management. We continue
to consistently enhance our brands through the creation
of new products and the expansion of existing model series.
In this process “The Best” expresses the overall ambition
of the Mercedes-Benz brand. We are making increasing use of
digital media in the area of customer relations. New sales
formats, such as mobile sales pavilions, create meeting points
that enable us to establish contact with new customers
as well.

A | To Our Shareholders | Objectives and Strategy 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
has improved our cost structure by a total of €2 billion over
the last two years. However, Fit for Leadership also includes
a structural component that’s designed to gear our business
system toward growth and make it more flexible and com‑
petitive. Along with the module strategy and the reorganization
of the international production network, this will also be
achieved by the restructuring of the sales organization in
Germany.

The smart brand – with the new smart fortwo and forfour
models – will enable us to maintain our claim of having the
“best brand for urban mobility” and also allow us to improve
our position in the electric‑mobility segment.

Daimler Trucks continues to rely on its technology leadership
and global presence. Our intelligent use of platforms enables us
to deliver tailor‑made systems and technologies to our cus‑
tomers worldwide, even as we exploit our economies of scale
to the greatest extent possible. Our approach here is to supply
innovative cutting‑edge technologies to the core markets
of the triad (Western Europe, North America, Japan), utilize our
traditional and proven technologies in markets such as Brazil,
China and Russia, and supply markets in India, Africa and certain
Asian countries with simple and locally produced technologies.
Our current product range at Daimler Trucks is stronger and
more extensive than ever before. In Europe, we have launched
a true heavyweight on the market in the form of the SLT,
which has a gross combination weight of 250 metric tons. The
Western Star 5700XE in North America and the FUSO Super
Great V in Japan are two additional models we presented in 2014
that return impressive fuel economy compared with the
competition. We plan to use local value creation in key sales
markets in order to expand our global position.

Our Daimler Trucks #1 program is designed to secure our
profitability targets on a sustained basis. The program’s effi‑
ciency target of €1.6 billion will take full effect as of 2015.
However, we also aim to further increase our unit sales and
revenue. We have started a large number of initiatives
relating to sales of new vehicles as well as aftersales, and we
see major opportunities also in the area of truck‑related
services. At the same time, our interdepartmental initiatives
are improving interaction between the various business
units and functions, and this allows us to more effectively utilize
the potential offered by our global position. An important
step in this direction was the consolidation of parts of our Asian
business activities into the integrated “Asia Business Model”
approach. Here, cooperation on product development, produc‑
tion and sales between Mitsubishi Fuso Truck and Bus Cor‑
poration and Daimler India Commercial Vehicles can generate
synergies and additional growth in Asia and Africa.

Mercedes‑Benz Vans will support our planned worldwide
growth with new products and technologies. The launch
of the new generation of our flagship model in the large van
segment, the Mercedes‑Benz Sprinter, in 2013, and the
introduction of the new Vito for commercial customers in 2014
have put us in a very good position for future success with
our van products. In addition, we plan to benefit more strongly
from growing demand in the NAFTA region through the
launch of the Vito and the expansion of local production of the
Sprinter. In 2014, we also launched the V‑Class – a model
whose name and product concept both signal a move toward
the car segment. In this manner, it establishes the new
segment of premium full‑size MPVs.

Daimler Buses will focus over the next few years on achieving
further growth and efficiency gains. To this end, we not only
plan to increase sales of Mercedes‑Benz and Setra brand buses;
we also want to grow globally through new innovative services.
The Daimler Buses product range stands out through its great
fuel efficiency, economy, environmental friendliness and safety.
The conversion of our model program to the Euro VI standard
makes us the leader in fuel economy today. In 2015, we will
once again set new standards with the introduction of the new
emergency braking system Active Brake Assist (ABA 3) in
the Mercedes‑Benz Travego coach and the new Setra Series 500
coaches. The Setra MultiClass product range has been
extended with low‑entry long‑distance buses which combine
economy and functionality. With the new Mercedes‑Benz
Citaro G articulated bus and the Mercedes‑Benz CapaCity L,
we also offer bus variants that can transport large numbers
of people. This means that we can supply vehicles with ideal
passenger capacities for worldwide Bus Rapid Transit
(BRT) systems.

Daimler Financial Services is also focused on profitable
growth. The division will continue to grow in line with the
model and market offensives for cars and commercial vehicles.
It will also further expand its product range in the areas of
financing, leasing, insurance and mobility services. More than
four out of ten vehicles from the Daimler Group are already
financed or leased by Daimler Financial Services. The company
is also focusing on the expanded use of digital sales channels
and more extensive networking with the vehicle divisions.
Daimler Financial Services has combined all of its mobility
services for individual customers into a single company
known as moovel GmbH.

Daimler Financial Services’ excellent ranking in employer
attractiveness surveys in 2014 serves as further motivation for
the company to maintain its employees’ high level of satis‑
faction and to remain very appealing to external job applicants.

Growing in new markets. Growth in global automobile
demand will take place mainly in markets outside of Europe,
North America and Japan in the coming years. While we
continue to strengthen our position in traditional markets,
we also want to expand in Brazil, Russia, India and China
especially, as well as in other emerging markets.

In order to reach Mercedes‑Benz Cars’ sales targets, we are
intensifying our local activities, particularly in China, Brazil and
India. We are increasing production capacities in China for
model series that are already manufactured locally. We manu‑
facture the GLK SUV in China, as well as the long‑wheelbase
version of the E‑Class. During the year under review, we also
began producing the long‑wheelbase version of the new
C‑Class in China. We will begin local production of the new GLA
compact SUV in China in the spring of 2015. We opened a
new production plant for four‑cylinder engines in China back
in November 2013. In order to serve the promising electric‑
vehicle segment in China, we joined forces with the Chinese
battery and vehicle manufacturer BYD to develop a battery‑
electric automobile. This electric vehicle was launched in China
in 2014 under the DENZA brand name. Our activities in the
field of medium‑duty and heavy‑duty trucks in China focus
on cooperation with our partner Foton. Mercedes‑Benz Vans
manufactures the Vito, Viano and Sprinter models for the
Chinese market in cooperation with Fujian Benz Automotive
Corporation. We are continuing our internationalization
strategy for the research and development unit with a new
R&D center in Beijing, which will employ around 500 men
and women in the future. We also further expanded our dealer‑
ship network in China in 2014 and opened our biggest
training center in the world for car‑dealership employees.

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 range in Brazil in order
to further improve its strong market position over the medium
term. Our two production plants (São Bernardo do Campo
and Juiz de Fora) are also being modernized.

In Russia, Europe’s biggest truck market, we are continuing
cooperation with our partner Kamaz. The previously separate
“Mercedes‑Benz Trucks Vostok” (MBTV) and “Fuso Kamaz
Trucks Rus” (FKTR) joint ventures will be merged into a new
company in the future. Since the second half of 2013,
Mercedes‑Benz Vans has been manufacturing the Sprinter
Classic in Russia in cooperation with the commercial
vehicle manufacturer GAZ.

Daimler Trucks has been successfully manufacturing trucks
in India under the new BharatBenz brand name since June
2012. In 2013, we also began building FUSO‑brand trucks for
export at the Chennai plant. The FUSO trucks built in India
are mainly aimed at other price‑sensitive markets in Asia and
Africa. Daimler Buses has integrated its local business activities
into Daimler India Commercial Vehicles and will establish
local bus manufacturing operations in India in 2015. The expan‑
sion of our international production network is being accom‑
panied by measures to strengthen our international research
and development network in India as well.

The Daimler Financial Services division is steadily expanding
its business activities in line with the growth strategies
of the automotive divisions. The division now offers leasing and
financing models tailored to specific regions. In China, for
example, Daimler Financial Services is supporting the vehicle
business with new and flexible financing models that are
especially designed to meet the requirements of younger and
more trend‑conscious Chinese customers.

Our expansion measures extend beyond the BRIC nations
o other growth markets outside the triad.

Leading in “green” technologies and safety. Our goal
as a pioneer of automotive engineering is to make the future
of mobility safe and sustainable. Different mobility needs
require the use of different drive‑system solutions. Our portfolio
here ranges from optimized internal combustion engines to
hybrid drives and locally emission‑free driving solutions. In 2014,
we were able to reduce the CO2 emissions of newly registered
vehicles from Mercedes‑Benz Cars in the European Union to an
average of 129 g/km. 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.

Certain new C‑Class models consume approximately 30% less
fuel than their predecessors. The S 500 PLUG‑IN HYBRID1
combines the performance of an eight‑cylinder engine with the
fuel economy of a small car and can drive up to 33 km com‑
pletely emission‑free. Consistent hybridization is an important
component of the drive‑system strategy at Mercedes‑Benz
Cars. We plan to launch a total of ten new plug‑in hybrid models
in the period 2014–2017. We expanded our range of series‑
produced electric vehicles in 2014 to include the new electric
B‑Class for the United States and Europe. The Denza brand
gives us an electric vehicle exclusively for the Chinese market.
Together with Ford and our strategic cooperation partner,
Nissan, we continue to move ahead with the commercialization
of fuel cell vehicles. In the fall of 2014, a B‑Class F‑CELL2
from the current Mercedes‑Benz fuel cell fleet demonstrated
that fuel cell vehicles are suitable for mass production, as
the model was driven for 300,000 kilometers under normal
conditions, thereby setting a new endurance record. We are
cooperating with leading industrial companies on the expansion
of the hydrogen filling station network in Germany in order
to set up the infrastructure needed for fuel cell vehicles.

1 S 500 PLUG‑IN HYBRID

Fuel consumption in l/100 km (combined): 2.8; CO2 emissions in g/km
(combined): 65; Electricity consumption in kWh/100 km: 13.5

2 B‑Class F‑CELL

Hydrogen consumption in kg/100 km: 0.97; CO2 emissions in g/km: 0.0

A | To Our Shareholders | Objectives and Strategy We continue to lower the fuel consumption of our trucks and
buses as well. Compliance with the Euro VI emission standard
that went into effect for trucks and buses in 2014 required
the use of complex exhaust‑gas treatment technologies, which,
by themselves, led to an increase in fuel consumption. How‑
ever, with the help of various measures, such as improved engine
efficiency and vehicle aerodynamics, we were able to offset
this effect and actually lower the average fuel consumption in
2014. The Actros, for example, demonstrated the pioneering
role it plays in fuel efficiency in numerous fuel economy tests.
We also continually work to further reduce the fuel consumption
through the use of fuel efficiency technologies such as the
innovative Predictive Powertrain Control (PPC) assistance system.
The Freightliner Cascadia Evolution is currently the most
fuel‑efficient heavy‑duty truck on the North American market.
We have also achieved fuel savings of as much as 8% with
our new Euro VI bus models. We are the world leader for hybrid
technologies in commercial vehicles. The Canter Eco Hybrid,
for example, boasts fuel savings of as much as 23%, and owners
are able to recoup the additional cost for the hybrid model
in just a few years. With the emission‑free FUSO Canter E‑CELL,
which is being tested by customers, we are already responding
to the challenges that will be brought about by more restrictive
emission standards in metropolitan areas in the future.

We intend to reduce the fuel consumption of our fleet of trucks
in Europe by 20% between 2005 and 2020. We’ve already
achieved a 10% reduction in fuel consumption and CO2 emissions
as compared with 2005 through the launch of the new Actros
series in 2011, and we’re now working hard to achieve the
remaining 10%.

We will also further strengthen our position as a pioneer in the
development of active and passive safety systems for cars
and commercial vehicles. Our goal here is to offer the highest
degree of safety in all our model series. The new C‑Class
station wagon launched in 2014 is equipped with new assistance
systems from the S‑Class and E‑Class. Moreover, these
systems have been expanded to include important new features.
We’re also a leader when it comes to safety in smaller models.
For example, the new‑generation B‑Class comes with COLLISION
PREVENTION ASSIST PLUS as standard equipment. This
system can reduce the number of severe rear‑end collisions by
up to 30% as compared to vehicles without a similar system.
The S 500 INTELLIGENT DRIVE research car marks a milestone
on the road to autonomous driving, which we want to make
a reality in a series‑production vehicle by the end of this decade.
The Mercedes‑Benz Future Truck 2025 marks a step forward
toward making autonomous driving a reality with trucks as well;
this would improve safety on major highways. Already today,
the new Blind Spot Assist system helps prevent collisions when
a vehicle makes a turn, and Active Brake Assist 3 brings the
vehicle to a standstill when it encounters stationary obstacles.

Driving ahead with connectivity and new mobility concepts.
Approximately 60% of the world’s population will be living in
cities within ten years’ time. Digital technologies are changing
products and services and impacting the entire value chain
of our company in a manner that was previously unimaginable.
This is creating new business opportunities for Daimler, and
we intend to exploit this potential in two ways. First, we are
further expanding our range of mobility services. These include
various mobility concepts for private, business and public
transport applications – for example, car2go, CharterWay, Bus
Rapid Transit (BRT) and the “moovel” intermodal mobility plat‑
form. moovel offers our customers the opportunity to optimally
combine various private and public mobility services and
book these via a single payment system. We continue to expand
our first and most successful mobility service, car2go, on
an international scale and use it as an integral component of
moovel. By the end of 2014, car2go was established in
29 locations in Europe and North America and moovel had more
than one million customers for its mobility services for the
first time. We have consolidated our business activities with
innovative mobility services into a single company known
as moovel GmbH within the Daimler Financial Services division.
We are also safeguarding and expanding our activities in this
area though the acquisition of the mobility services provider
RideScout LLC in the United States and of Intelligent Apps
GmbH, which offers the mytaxi mobility service. As a result
of these acquisitions, moovel is expanding its presence
in the international mobility services market and accelerating
the global development of this growth sector.

The second part of our approach for exploiting the business
potential offered by digital technologies involves testing
and expanding our range of innovative services, especially those
based on increased digitization and networking. For example,
the “Mercedes me” service brand brings together at a single
digital Web platform all existing and future services for our
customers. Among other things, “Mercedes me” includes the
new “Mercedes connect me” package of services, which
can be accessed using an integrated communications module
in the vehicle. Services here include accident, breakdown
and maintenance management and telediagnosis. The rollout
began in 2014 in the C‑Class station wagon and the new‑
generation B‑Class.

We’re also extending our digital services for trucks. For example,
the “Detroit Virtual Technician” in North America makes it
possible for the customer service center operated by our engine
and powertrain manufacturer, Detroit, to analyze engine
data, diagnose problems and arrange the provision of needed
services.

Extensive investment in the future of the company

In the coming years, we will continue to move ahead system‑
atically with our investment offensive in order to implement
our growth strategy through the introduction of new products,
new technologies and state‑of‑the‑art manufacturing capac‑
ities. We will therefore invest approximately €11 billion in prop‑
erty, plant and equipment in 2015 and 2016, as well as more
than €13 billion in research and development projects.  A.10
to A.13

The investment in property, plant and equipment will mainly
be used to prepare for the production launches of our new
models, to modernize and realign our manufacturing facilities
in Germany, to expand local production in growth markets
and to enhance our sales organization. E see page 92

Most of our outlay for research and development is used for new
products and innovative drive systems and safety technolo‑
gies. Between 2012 and 2020, we will launch more than 30 new
car models and will also systematically further develop our
range of commercial vehicles. In addition, we intend to continue
significantly reducing our vehicles’ fuel consumption, and
thus their CO2 emissions, for example with the use of innovative
hybrid drive systems. We will also continue to set standards
in the areas of safety and autonomous driving for cars and com‑
mercial vehicles. E see pages 104 f

A.10
Investment in property, plant and equipment 2015 – 2016

In %

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

73%

21%

0.3%

A.11
Investment in property, plant and equipment

2013 actual 2014 actual 2015 – 2016

Amounts in billions of euros

Daimler Group

Mercedes‑Benz Cars

Daimler Trucks

Mercedes‑Benz Vans

Daimler Buses

5.0

3.7

0.8

0.3

0.1

4.8

3.6

0.8

0.3

0.1

Daimler Financial Services

0.02

11.1

8.1

2.3

0.5

0.2

0.03

A.12
Research and development expenditure 2015 – 2016

In %

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

73%

18%

A.13
Research and development expenditure

Amounts in billions of euros

Daimler Group

Mercedes‑Benz Cars

Daimler Trucks

Mercedes‑Benz Vans

Daimler Buses

2013 actual 2014 actual 2015 – 2016

5.5

3.8

1.2

0.3

0.2

5.7

4.0

1.2

0.3

0.2

13.3

9.7

2.4

0.8

0.4

A | To Our Shareholders | Objectives and Strategy We set new standards
with pioneering
innovations.

The year 2014 was generally very successful for Daimler. We once again significantly

increased our unit sales and revenue, and we were also able to continuously improve

the Group’s profitability. We thrilled our customers with numerous new products.

With pioneering innovations, we set new standards above all with the safety and

environmental compatibility of our vehicles. In the year 2015, we will continue our

growth offensive and further improve the efficiency of our processes.

B | Combined Management Report.

Corporate Profile
Business model
Portfolio changes and strategic partnerships
Performance measurement system
Corporate governance statement

Economic Conditions and Business Development
The world economy
Automotive markets
Business development

Profitability
EBIT
Consolidated 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
Refinancing
Credit ratings

Financial Position

72
72
74
75
76

77
77
78
79

82
82
85
86
86
86

88
88
89

91
92
92
94

Daimler AG (condensed version according to HGB)
Profitability
Financial position, liquidity and capital resources
Risks and opportunities
Outlook

98
98
99
100
100

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

101
101
102
104
108
111
113

Overall Assessment of the Economic Situation

116

Events after the Reporting Period

Remuneration Report
Principles of Board of Management remuneration
Board of Management remuneration in 2014
Commitments upon termination of service
Remuneration of the Supervisory Board

117

118
118
121
122
128

Takeover-Relevant Information and Explanation

129

Risk and Opportunity Report
Risk and 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
Investment
Research and development
Workforce
Overall statement on future development

132
132
134
134
140
142
144

145

146
146
147
148
149
150
150
150
150
151
151

B | Combined Management Report | ContentsCorporate 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 rounded out by
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.

With its strong brands, Daimler is active in nearly all the countries
of the world. The Group has production facilities in a total
of 19 countries and more than 8,500 sales centers worldwide.
The global networking of research and development activities
and of production and sales locations gives Daimler consider
able advantages in the international competitive field and
also offers additional growth opportunities. In addition, we can
apply our innovative drive and safety technologies in a broad
portfolio of vehicles while utilizing experience and expertise
from all parts of the Group.

B.01
Consolidated revenue by division

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

55%

23%

12%

In 2014, Daimler increased its revenue by 10% to €129.9 billion.
The individual divisions contributed to this total as follows:
MercedesBenz Cars 55%, Daimler Trucks 23%, MercedesBenz
Vans 7%, Daimler Buses 3% and Daimler Financial Services
12%. At the end of 2014, Daimler employed a total workforce
of approximately 280,000 people worldwide.

The products supplied by the Mercedes‑Benz Cars division
comprise a broad spectrum of premium vehicles of the
MercedesBenz brand and its MercedesAMG and Mercedes
Maybach subbrands. These vehicles range from the compact
models of the AClass and BClass to various sport utility
vehicles, roadsters, coupes and convertibles, and SClass luxury
sedans. Additional products are the highquality small cars
of the smart brand. The main country of manufacture is Germany,
but the division also has production facilities in the United
States, China, France, Hungary, Romania, South Africa, India,
Vietnam and Indonesia. Since August 2013, the AClass has
also been produced for us by Valmet Automotive in Finland.
All in all, MercedesBenz Cars has 18 production sites worldwide
at present. In the medium term, we anticipate significant
growth in worldwide demand for automobiles and aboveaverage
growth in the premium car segment. In order to ensure we
can exploit this potential, we are creating additional production
capacities, especially at Beijing Benz Automotive Co., Ltd.
(BBAC) in China and at our plants in the United States and India.
We will also expand our global production network with a
new plant in Brazil, where we plan to produce the next genera
tion of the CClass as well as the GLA compact SUV for
the local market starting in 2016. The most important markets
for MercedesBenz Cars in 2014 were Germany with 16%
of unit sales, the other markets of Western Europe (23%), the
United States (20%) and China (17%).

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
MercedesBenz, Freightliner, Western Star, FUSO and Bharat
Benz. The division’s 27 production facilities are located 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 China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Beiqi Foton Motor Co.,
Ltd., has been producing trucks under the Auman brand name
since 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
used mainly in municipal applications. Due to close links
in terms of production technology, the division’s product range
also includes the buses of the Thomas Built Buses and FUSO
brands. Daimler Trucks’ most important sales markets in 2014
were Asia, with 34% of unit sales, the NAFTA region (33%),
Western Europe (12%) and Latin America excluding Mexico (9%).

The product range of the Mercedes‑Benz Vans division
in the segment for medium-sized and large vans comprises
the Sprinter and Vito series. Our portfolio is rounded out at
the lower end by the Mercedes Benz Citan city van, the addition
of which makes us a full-range supplier in the van market.
In 2014, we also introduced the new V-Class, which is a new
multi-purpose vehicle (MPV). We continue to manufacture
the Viano in China for private customers. Mercedes-Benz Vans
has manufacturing facilities at a total of nine locations in
Germany, Spain, the United States and Argentina, as well as
in China within the framework of the Fujian Benz Automotive Co.,
Ltd. joint venture, and in France in the context of the strategic
alliance with Renault-Nissan. The Mercedes-Benz Sprinter
Classic is produced under license by our partner GAZ in Russia.
The most important markets for vans at the moment are in
Western Europe, which accounts for 65% of unit sales. As part
of the “Mercedes-Benz Vans goes global” business strategy,
we are also increasingly developing the growth markets
of South America and Asia, as well as the Russian van market,
through appropriate distribution and production activities in
those regions. We plan to more effectively exploit the potential
of the expanding North American van market in the future
through local production of the Sprinter and the introduction
of the Vito. The Sprinter is sold in the United States not
only as a Mercedes-Benz vehicle but also under the Freight-
liner brand name.

The Daimler Buses division with its brands Mercedes-Benz
and Setra is the undisputed industry leader in its core markets
in the segment for buses above 8 metric tons. The division’s
product range comprises city and intercity buses, coaches and
bus chassis. The largest of the division’s 13 production sites
are located in Germany, France, Spain, Turkey, Argentina, Brazil
and Mexico. During the year under review, we also laid the
cornerstone for a new bus plant in India that will begin operating
in 2015. Daimler Buses generated 23% of its revenue in Western
Europe and 53% in Latin America (excluding Mexico) in 2014.
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.

The Daimler Financial Services division supports the sales
of the Daimler Group’s automotive brands in 40 countries.
Its product portfolio primarily consists of tailored financing and
leasing packages for customers and dealers, but it also pro-
vides insurance, fleet management services, investment prod-
ucts and credit cards, as well as various mobility services
such as the “moovel” mobility platform, the “mytaxi” app and
the flexible car2go car-sharing concept. The main areas of
the division’s activities are Western Europe and North America,
and increasingly Asia as well. During the year under review,
Daimler Financial Services financed or leased more than four
out of ten vehicles sold by the Daimler Group. The division’s
contract volume of €99.0 billion covers more than 3.3 million
vehicles. Daimler Financial Services also holds a 45% interest
in the Toll Collect consortium, which operates an electronic road-
charging system for trucks on highways in Germany.

Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries, holdings
and partnerships. The statement of investments of Daimler AG
in accordance with Section 313 of the German Commercial Code
(HGB) can be found in E Note 39 of the Notes to the Con-
solidated Financial Statements.

B.02
Daimler Group structure 2014

Mercedes-Benz
Cars

Daimler Trucks

Mercedes-Benz
Vans

Daimler Buses

Daimler
Financial Services

Revenue

€73.6 billion

€32.4 billion

€10.0 billion

€4.2 billion

€16.0 billion

Employees

129,106

82,743

15,782

16,631

8,878

Brands

B | Combined Management Report | Corporate ProfilePortfolio changes and strategic partnerships

By means of targeted investments and futureoriented partner
ships, we strengthened our core business and utilized addi
tional growth potential in 2014. At the same time, we focused
on the continuous further development of our existing busi
ness portfolio.

Daimler sells its interest in Rolls‑Royce Power Systems
Holding. In March 2014, the Board of Management and
the Supervisory Board of Daimler AG decided to exercise an
option to sell the Company’s interest in RollsRoyce Power
Systems Holding (RRPSH) to the other shareholder. RollsRoyce’s
acquisition of Daimler’s shares will allow it to strengthen
the company by integrating additional RollsRoyce activities and
technologies into it. On the basis of longterm supply agree
ments, Daimler will remain a key supplier of heavyduty and
mediumduty diesel engines to RollsRoyce Power Systems.
Daimler also plans to further expand its business activities with
engines and drive systems for professional nonbus and
nontruck (offhighway) applications. The transaction generated
proceeds of €2.4 billion for Daimler in the third quarter.
Daimler will use these funds to strengthen the Group’s core
business.

Strategic partnership in China strengthened. Also in
March 2014, Daimler AG and its Chinese partner Beijing Auto
motive Industry Corporation (BAIC) signed an agreement to
increase production capacities at Beijing Benz Automotive Co.,
Ltd. (BBAC). This move will lead to a further expansion of our
activities in China and will also strengthen our strategic partner
ship with BAIC. Around €4 billion is currently being invested
at BBAC, with €1 billion earmarked for the expansion of local
car and engine production capacity alone through 2015. The
existing annual capacity at BBAC for production of the CClass,
EClass and GLK will be more than doubled to over 200,000
units by the end of 2015. This figure also includes the GLA com
pact SUV, which BBAC will begin manufacturing in 2015.

Daimler had already deepened its strategic partnership
with BAIC in November 2013 with the acquisition of a 12% equity
interest in BAIC Motor, the car division of the BAIC Group.
BAIC Motor has been listed on the Hong Kong Stock Exchange
since December 2014.

moovel GmbH consolidates mobility services. In April 2014,
the umbrella company for the car2go, car2go black and moovel
mobility services was renamed as moovel GmbH. The moovel
mobility app offers users a central access portal for numerous
mobility services. The app’s features were expanded in 2014
and moovel also began offering the app in additional cities both
in Germany and abroad during the year under review. moovel
has also teamed up with new partners, which gives customers
even more choices for getting where they need to go. The
renaming underscores the importance of the mobility platform,
as well as its strong customer focus.

In September 2014, moovel completely acquired Intelligent
Apps GmbH, which offers the mytaxi service, and also took
over the US mobility services provider RideScout LLC. mytaxi
is the world’s first app that directly links passengers and
taxi drivers. moovel GmbH has had an interest in mytaxi since
the beginning of 2012. RideScout is the well known provider
of the leading mobility app in North America. RideScout offers an
appbased mobility platform that shows customers in nearly
70 cities in North America the best way to get to their destina
tions. With the acquisition of RideScout, moovel is strength
ening its presence in the international mobility services market
and accelerating its global development.

Daimler takes over battery manufacturing activities.
In April 2014, Daimler AG and Evonik Industries AG reorganized
their electric mobility activities in Kamenz and Kirchheim
unter Teck. Daimler has now acquired the shares of LiTec
Battery GmbH previously held by Evonik (50.1%), as well as
Evonik’s stake in Deutsche ACCUmotive GmbH & Co. KG (10%).
This makes it the sole shareholder in both companies. With
the increasing concentration of batterycell production at several
large specialist companies, and as a result of extreme price
competition between major manufacturers, battery cells have
now become an inexpensive mass product. Given this situa
tion, it no longer makes any economic sense for us to manufac
ture battery cells for specific use in automotive applications.
We have therefore decided to discontinue production of cells
at LiTec at the end of 2015. Nevertheless, the development
of complete battery systems still requires the type of extremely
specific expertise that we have accumulated over the past
few years and will to continue to utilize in the future. As a result,
Deutsche ACCUmotive will significantly expand its lithiumion
battery production capacity in Kamenz. We will invest approxi
mately €100 million in this expansion over the next few years.

Additional capacities for transmission production. As part
of our efforts to accommodate the increasing demand for
automatic transmissions, we laid the cornerstone in April 2014
for a new assembly plant to be operated by our Star Trans
mission subsidiary in Romania. This additional capacity in Sebes
will supplement existing transmission activities at the Unter
türkheim plant, where the new ninespeed 9GTRONIC automatic
transmission from MercedesBenz will go into production
in 2016.

Cooperation with Renault‑Nissan expanded. Cooperation
between Daimler and RenaultNissan remains very successful.
The number of joint projects has increased fourfold, from three
to 12, since the partnership commenced in 2010.

An important milestone in 2014 was the market launch
of the first vehicles fully codeveloped from scratch: the new
Renault Twingo and the new smart fortwo and forfour models.
The smart fortwo is built at the smart plant in Hambach, France,
while the Renault Twingo and smart forfour are manufactured
at the Renault plant in Novo Mesto, Slovenia. The Renault
Twingo was launched in Europe in September; the smart fortwo
and smart forfour followed in November.

In June, joint production of a twoliter, turbocharged four
cylinder gasoline engine began at a new plant in Tennessee
in the United States. The engines, which are built at the
Infiniti Decherd Powertrain facility, will initially be used in the
Infiniti Q50 sports sedan for the European market and in the
MercedesBenz CClass. When fully ramped up, the new plant
will have a production capacity of 250,000 units each year.

Also in June 2014, RenaultNissan and Daimler AG announced
an agreement covering the development of premium compact
cars and the joint production of vehicles in Mexico. A new
50:50 joint venture is responsible for building and operating
a new manufacturing facility in Aguascalientes, Mexico.
The new plant is being constructed at a site in the direct vicinity
of an existing Nissan facility. After the production launch, the
new plant will be ramped up to an annual capacity of 300,000
units. Production is scheduled to begin with Infiniti models
in 2017. The plant will start manufacturing MercedesBenz brand
vehicles in 2018.

In the van segment, Daimler’s Mitsubishi Fuso Truck and
Bus Corporation (MFTBC) and Nissan Motor Co. Ltd. signed
a contract in October 2014 covering the supply of finished
commercial vans for export. Under the terms of the contract,
Nissan is supplying its “NV350 Urvan” (GVW: 3.5 metric
tons) to Mitsubishi Fuso, which has been selling the model as
the “Canter Van” in the Middle East since the end of 2014.

Cooperation with Tesla restructured. Daimler reorganized
its cooperation with Tesla Motors Inc. in October. Within the
framework of this restructuring, we terminated the shareprice
hedge initiated at the end of 2013 and sold our stake of
approximately 4% in Tesla. The partnership and cooperation
with Tesla do not require us to have a financial interest in
the company. The sale of our Tesla shares generated proceeds
of approximately €0.6 billion, which will be used to strengthen
business operations. Cooperation with Tesla will nevertheless
remain an important part of Daimler’s activities in the field
of electric mobility in the future.

Interest in MV Agusta. In October 2014, MercedesAMG
and the motorcycle manufacturer MV Agusta signed a cooper
ation agreement that will create a longterm partnership.
The two brands, which have long traditions and histories, will
cooperate in the area of sales and marketing. After the
agreement was approved by the responsible antitrust author
ities, MercedesAMG GmbH acquired a 25% interest in
MV Agusta S.p.A. in November 2014.

Performance measurement system

Financial performance measures. The financial performance
measures used at Daimler are oriented toward our investors’
interests and expectations and provide the foundation for our
valuebased management.

Value added. Value added is a key element of our performance
measurement system, which is applied at both the Group and
the divisional levels. It is calculated as the difference between
operating profit and the cost of capital of average net assets.
Alternatively, the value added of the industrial divisions can be
determined using the main value drivers of return on sales
(quotient of EBIT and revenue) and net assets’ productivity
(quotient of revenue and net assets).  B.03

During the year 2014, value added amounted to €4.4 billion
(2013: €5.9 billion). The quantitative development of value
added and the other financial performance measures is
explained in the “Profitability” chapter. E see pages 86 f

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

Profit measure. The measure of operating profit at the
divisional level is EBIT, which is calculated before interest and
income taxes. EBIT hence reflects the divisions’ profit and
loss responsibility. The operating profit measure used at the
Group level is net operating profit. It comprises the EBIT
of the divisions as well as profit and loss effects for which the
divisions are not held responsible. The latter include income
taxes and other reconciliation items.  B.12 on page 82

B.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

B | Combined Management Report | Corporate ProfileNet 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 daytoday 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 the Group
level include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual
net assets are calculated from average quarterly net assets.
E see page 87

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 obli
gations 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 longterm riskfree secu
rities (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 and the
anticipated return from plan assets are calculated on the basis
of discount rates used in accordance with IFRS. The expected
return on liquidity is based on money market interest rates.
The Group’s cost of capital is the weighted average of the indi
vidually required or expected rates of return. During the
reporting period, the cost of capital amounted to 8% after taxes.
For the industrial divisions, the cost of capital amounted
to 12% before taxes; for Daimler Financial Services, a cost
of equity of 13% before taxes was applied.  B.04

B.04
Cost of capital

In percent

Group, after taxes

Industrial business, before taxes

Daimler Financial Services, before taxes

2014

2013

Return on sales. As one of the main factors influencing value
added, return on sales is of particular importance for assess
ing 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. The important financial
indicators for measuring our operating financial performance,
in addition to EBIT and revenue, are the free cash flow of the
industrial business, investment, and research and development
expenditure. Along with the indicators of financial perfor
mance, we also use various nonfinancial indicators to help us
manage the Group. Of particular importance in this respect
are the unit sales of our automotive divisions, which we use as
the basis for our capacity and human resources planning,
and workforce numbers.

Furthermore, within the context of our sustainability manage
ment, we use other nonfinancial indicators such as the
CO2 emissions of our vehicle fleet and the energy and water
consumption of our production sites. Nonfinancial indicators
are also used to determine the compensation for our Board
of Management members. In addition, integrity and compliance
are important criteria used in annual goal agreements for
our managers, as well as in targetachievement assessments.

Details of the development of nonfinancial performance
indicators can be found in the chapters “Economic Condi
tions and Business Development” and “Sustainability.”
E see pages 77 ff and pages 101 ff For “Integrity and
Compliance,” E see pages 179 ff

Corporate governance statement

The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB)
can be viewed 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.

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

Economic Conditions
and Business Development.

The world economy

With a real rate of growth of 2.7%, the world economy failed
to fulfill our hopes for a more noticeable acceleration of
economic expansion. As was the case in the two previous years,
growth was also once again lower than the long-term trend.
 B.05 This development was mainly due to ongoing weak
demand in the European Monetary Union and the difficult
economic situation in several important emerging markets.
Prices on the global financial markets fluctuated greatly
throughout the year. This was also the case with raw material
prices, which declined noticeably in the second half of the
year, especially for crude oil.

The economies of the industrialized countries were somewhat
more dynamic than in the prior year. Taken together, the real
gross domestic product (GDP) of these countries rose by approxi-
mately 1.7%. A particularly pleasing development during the
year under review was the dynamic economic growth recorded
in the United States, whose economy grew by significantly
more than 3% in the period following a weather-related decline
in the first quarter. If not for the negative basis effect from
the first quarter, overall economic growth in the United States
in full-year 2014 would have been higher than the recorded
figure of approximately 2.5%. Economic growth in Japan was
impacted during the year under review by the significant
increase in the country’s value-added tax at the beginning
of the second quarter, which caused consumers to bring
purchases forward before the tax hike. All in all, the Japanese
economy grew by less than a half percent in 2014.

Whereas growth in English-speaking countries was quite
robust (the British economy also experienced dynamic growth
of 2.6%), the European Monetary Union lagged well behind
in comparison. Although the euro zone was able to recover
from the recession of the prior year, economic growth still
failed to reach 1% there in 2014. This was largely due to the
sluggishness of the euro zone’s larger economies such as
France and Italy, as well as the fact that the German economy
was barely able to generate any momentum in the second
half of the year. By contrast, countries plagued by recession
in recent years, such as Spain, Ireland and Portugal, developed
favorably in the year under review. The European Central
Bank intensified its expansionary monetary policies throughout
the year in response to ongoing deflation concerns and the
low amount of lending in the euro zone.

The overall pace of economic growth in the emerging markets
slowed once again in 2014. Growth in these markets amounted
to approximately 4% in an environment marked by rising infla-
tion and in some cases dramatic currency devaluations. Whereas
the slowdown in China associated with economic restructuring
measures led to growth of 7.4%, which was in line with expecta-
tions, developments in countries such as Brazil, Argentina,
South Africa and Russia were particularly disappointing. In the
case of Russia, the conflict with Ukraine and the associated
economic sanctions as well as the drastic fall in the oil price put
an additional strain on the economy.

In this global economic environment, exchange rates were
volatile, in some cases very much so. For example, the euro
fluctuated against the US dollar over the year in a range
from $1.21 to $1.40. At the end of 2014, the euro stood at $1.21,
which was nearly 12% lower than the exchange rate at the
beginning of the year. The fluctuation of the Japanese yen against
the euro was once again very pronounced within a corridor
of ¥134 to ¥150. By the end of 2014, the euro was close to the
level of the previous year. The euro closed the year with a loss
of approximately 7% against the British pound, with rather less
volatility between the two currencies during 2014. While the
euro gained 55% against the Russian ruble in 2014, it was slightly
weaker (-1%) against the Brazilian real at the end of 2014,
with high volatility during the year.

B.05
Economic growth

Gross domestic product, growth rates in %

2013
2014

-1

Total

Western
Europe

NAFTA

Asia

South
America

Eastern
Europe

Source: IHS Global Insight, S/DM

Automotive markets

The continued moderate growth of the world economy was
also reflected by slower growth in global demand for cars.
In a situation marked by very significant differences between
regions, the global car market only expanded by approximately
3.5%, which was somewhat lower than what we had originally
expected.  B.06

The Chinese and US markets once again made the biggest
contribution to the growth in global car sales during the year
under review. Car demand in China grew by approximately
10%. With a total sales volume of approximately 18 million units,
China was able to strengthen its position as the world’s
largest automobile market. Sales also developed very positively
in the United States, where demand for cars and light trucks
rose by nearly 6% to roughly 16.4 million units – the highest
market volume since before the great financial crisis of 2006.

After several years marked in some cases by sharply contracting
markets, demand for cars in Western Europe once again rose
in 2014. The region was thus able to make a positive contribution
to the development of the global car market. All in all, demand
increased by nearly 5% over the prior year, although the develop-
ment of individual markets varied greatly. Formerly crisis-
ridden countries such as Spain and Portugal displayed clear
signs of recovery and recorded double-digit sales increases.
At the opposite end of the spectrum was the Netherlands, whose
car market contracted by approximately 7%. Among the core
markets, the UK once again displayed a particularly positive devel-
opment, posting an increase of more than 9% in the year
under review. Germany and Italy recorded moderate gains
over the prior year, while the market in France stagnated.

Sales in Japan developed more positively than had been antici-
pated at the beginning of the year, with full-year sales rising
slightly despite the value-added tax increase. With the exception
of China, the most important emerging markets were char-
acterized by difficult market conditions that were in some cases
caused by very weak economies. India recorded the best per-
formance here, as the market became somewhat more vibrant
in the second half of 2014 so that car sales ended up slightly
exceeding the figure recorded in the prior year. The car markets
in Brazil and Russia contracted significantly, however.

B.06
Global automotive markets

Unit sales growth rates 2014 in %

Passenger cars
Commercial vehicles

-5

-10

-15

-20

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, S/DM

With few exceptions, sluggish economic development
also had a negative impact on global demand for medium-
duty and heavy-duty trucks. Global market volume de-
creased by approximately 5% in 2014.

The key North American market was able to clearly buck the
negative trend, however. Thanks to solid economic growth
in the United States in particular, demand for Class 6–8 trucks
increased by 13% in North America during the year under
review. The Japanese market also performed well. Demand for
light-, medium- and heavy-duty trucks in Japan was seemingly
unaffected by the value-added tax increase and exceeded
the prior-year level by approximately 17%. However, FUSO’s
biggest sales market, Indonesia, contracted by more than
15% compared with 2013.

In Europe, demand for medium-duty and heavy-duty trucks
was well below the prior-year level. The truck market in Europe
contracted by roughly 8% due to the negative effects of new
emission regulations (Euro VI) and the ongoing relative overall
sluggishness of the region’s economies. The market in Brazil
was subject to great pressure in the year under review. Here,
a markedly weak economy and less favorable financing terms
within the framework of the government’s FINAME program
led to a 10% decline in demand.

The market in India, on the other hand, stabilized over the
course of 2014, with the overall sales volume declining only
slightly from the prior year. This was in marked contrast
to the double-digit decreases that the market had suffered in
previous years. The drop in demand in Russia was severe,
however. According to recent forecasts, the economic crisis
in the country caused the truck market to contract by more
than 20%. Developments in China – the world’s largest truck-
sales market – were negatively impacted by the controlled
slowdown of economic growth and various regulatory measures.
Total demand was significantly lower than in 2013. The expected
effect of purchases being brought forward before the intro-
duction of stricter emission regulations in January 2015 hardly
materialized.

After two years of declining demand, the van market in Western
Europe expanded again in 2014, with growth of 6% in the
market volume for medium-sized and large vans. Demand for
small vans also increased by 6%. Significant market recovery
was observed in the countries of Southern European in particular.
The market for large vans in the United States also expanded,
while demand in the van segment that we specifically address
in China also increased slightly. However, the unfavorable
situation in Latin America led to a sharp decline in the market
for large vans in that region.

The Western European market for buses did not match the
already weak level of the previous year. The German coach
segment was positively impacted by the expansion of long-
distance bus services in the country. Demand for buses in
Eastern Europe was well below the prior-year level, however.
This negative development was largely due to the market
contraction in Turkey, which we had anticipated. At the same
time, the difficult economic situation in Brazil and Argentina
led to a sharp decline in the bus market volume in Latin America
as well.

Business development

Unit sales. As was previously forecast in the Annual Report
2013, Daimler recorded a substantial overall increase in unit
sales in 2014. Sales of more than 2.5 million vehicles were
8% higher than in the prior year. This growth was largely driven
by Mercedes‑Benz Cars (+10%) and Mercedes‑Benz Vans (+9%).
These divisions thus enabled the Group to fulfill the forecasts
it made at the beginning of the year. The 2% increase in unit
sales at Daimler Trucks was lower than we originally expected,
mainly due to the weak state of the markets in Western Europe
and Latin America. At the beginning of the year, we expected
to see a significant increase in bus sales. However, unit
sales for full‑year 2014 were slightly below the prior‑year level.
This development was primarily caused by the weakness
of Latin American markets, which we did not foresee at the
beginning of 2014.

The Mercedes‑Benz Cars division once again posted a new
record with unit sales of 1,722,600 vehicles in the year under
review (2013: 1,565,600). Our very positive overall business
development throughout the year was largely due to the launch
of several new and attractive products. The Mercedes‑Benz
brand increased its unit sales by 11% to the record level
of 1,630,100 vehicles in 2014. We significantly improved our
position in China in particular, as well as gaining market
share in various regions.

In Europe, Mercedes‑Benz performed very well overall in
a volatile market environment. Particularly strong growth was
recorded in Spain (+35%), the UK (+13%) and France (+9%).
Sales in Western Europe were up 6% from the prior year, although
sales in Germany did fall slightly by 2%. With unit sales of
334,000 (+8%), Mercedes‑Benz sold more vehicles in the United
States than ever before. Growth accelerated in China, where
sales rose by 25% to 275,000 units. We also recorded significant
sales increases in Japan (+15%), India (+14%) and Brazil (+6%).

Our sales growth was driven primarily by the S‑Class, our com‑
pact models and the new C‑Class models. A total of 471,700
customers (+23%) opted to buy a vehicle from the A‑Class,
B‑Class, CLA‑Class or new GLA‑Class series during the year
under review. E‑Class vehicles also remained very popular;
sales of 329,000 units of that model almost equaled the prior‑
year figure. Mercedes‑Benz also further strengthened its
leading position in the global market for luxury vehicles. A total
of 125,100 cars were sold in the S‑Class segment (+75%)
during the year under review – more than ever before in the long
history of that model series. Business with our SUVs also
developed very positively, with sales of these models increasing
to the record level of 341,500 vehicles (+6%). The C‑Class
models also performed extremely well in a year marked by
a model changeover. Unit sales totaled 362,700 automobiles
(+2%) although the new C‑Class was not available in all
core markets until October 2014.  B.07

With sales of 92,500 units (‑6%), developments at smart
during the model changeover year remained relatively stable.
E see pages 154 ff

Daimler Trucks was able to slightly increase its unit sales
in a market environment that differed greatly from region
to region in 2014. Deliveries of heavy, medium and light‑duty
trucks, as well as buses of the Thomas Built Buses and
FUSO brands, totaled 495,700 units in the year under review
(2013: 484,200). We thus achieved the highest level of sales
since 2006 and we remain the biggest global manufacturer
of trucks above 6 metric tons gross vehicle weight.  B.08
The high degree of market acceptance of our trucks is due in
large part to their extremely competitive total cost of owner‑
ship, which is the most important factor in our customers’
purchasing decisions. That is why fuel efficiency is a top priority
in all regions. The Euro VI Actros in Europe, the Freightliner
Cascadia Evolution in North America and the FUSO Super Great V
in Japan are all at the forefront in terms of fuel economy.

In Western Europe, we increased our market share slightly to
24.4% (2013: 24.1%) in a difficult market environment. However,
at 57,400 units, sales were 13% lower than in the previous
year. This was due not only to advance purchases made in 2013
prior to the introduction of the Euro VI emission standard,
but also to the generally sluggish economy in the region during
the year under review.  B.09

B.07
Unit sales structure of Mercedes-Benz Cars

A-/B-/CLA-/GLA-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

28%

21%

19%

20%

39%

23%

28%

10%

B.08
Unit sales structure of Daimler Trucks

Western Europe

Latin America

NAFTA

Asia

Other markets

12%

33%

34%

12%

B | Combined Management Report | Economic Conditions and Business DevelopmentAt 33,900 units, sales in Eastern Europe were 5% lower than
in the prior year. Here, the increase in unit sales in Turkey
to the record level of 22,200 vehicles could not offset declines
in our other markets, especially Russia. Sales in Latin America
fell significantly due to a lack of dynamic growth. Our main market
in the region – Brazil – was strongly impacted by this, and
unit sales in the country therefore declined by 17% to 32,200
vehicles. Nonetheless, we were able to increase our market
share in the medium-duty and heavy-duty segment to 25.8%
(2013: 24.7%).

Our market share of 37.2% in the NAFTA region (2013: 38.2%)
once again made us the undisputed market leader in the
segment for Class 6–8 medium-duty and heavy-duty trucks.
Sales in the region rose by 19% to the record level of
161,500 units. The Freightliner Cascadia Evolution, which
was added to the product portfolio in March 2013,
played a major role in our sales success in North America.

B.09
Market share1

In %

Mercedes-Benz Cars

Western Europe

thereof Germany

United States

China

Japan

Daimler Trucks

Medium-duty 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-duty and heavy-duty trucks Brazil

Trucks Japan

Medium-duty and heavy-duty trucks India

Mercedes-Benz Vans

Medium-sized and large vans
Western Europe

thereof Germany

Small vans Western Europe

Large vans USA

Daimler Buses

Buses over 8 metric tons Western Europe

thereof Germany

Buses over 8 metric tons Brazil

1 Based on estimates in certain markets.

2014

2013

14/13

Change in
% points

5.5

9.7

2.1

1.5

1.3

24.4

39.8

35.9

40.3

25.8

20.1

5.0

18.2

26.5

3.2

8.9

34.4

57.1

49.7

5.6

10.3

2.1

1.3

1.2

24.1

39.7

36.0

43.1

24.7

20.2

3.0

17.8

26.2

3.2

8.4

30.9

51.2

44.1

-0.1

-0.6

0.0

+0.2

+0.1

+0.3

+0.1

-0.1

-2.8

+1.1

-0.1

+2.0

+0.4

+0.3

0.0

+0.5

+3.5

+5,9

+5.6

Overall business development in Asia was positive, but
the situation varied from region to region. Whereas unit sales
increased in Japan and India, they declined in Indonesia.
Nevertheless, we were able to improve our market position
in both Japan and Indonesia, and we also gained market
share in India with our BharatBenz trucks in what was generally
a weak market. All in all, our sales in Asia increased by 3%
to 167,200 units.

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. In the year under review, BFDA sold 99,200 Auman
brand trucks (2013: 103,300), which are not included in the
Daimler Group’s unit sales. E see pages 160 ff

Mercedes-Benz Vans sold 294,600 vehicles worldwide
in 2014. This figure marks a new sales record and an increase
of 9% from the prior year. Our Sprinter, Vito and Citan vans
are targeted mainly at commercial customers, while the Viano
and new V-Class models are designed primarily for private
use. Unit sales in Western Europe, our most important market,
rose by 12% to 190,000 vans. This positive development was
largely due to a strong comeback in southern European markets,
although we also set a new record in Germany with sales
of 79,900 units (2013: 71,500). Despite a difficult market envi-
ronment in Eastern Europe, Mercedes-Benz Vans once again
increased its sales in the region, this time by 14% to 30,800 units.
This figure includes 6,700 Sprinter Classic models that were
built and sold in Russia. The success story of our Sprinter contin-
ues in the United States as well. With unit sales of 25,800
(2013: 22,800), we increased our market share to the record
level of 8.9%. At 12,800 units, sales in China were slightly
above the prior-year level. Sales in Latin America declined by
18% to 16,100 units due to the difficult economic situation
in the region. We sold a total of 186,300 Sprinters worldwide
during the year under review, setting a new record (+12%).
Despite model changeovers, we were still able to significantly
surpass the prior-year figure in the segment for mid-size
vans (including the new V-Class) with sales of 86,000 units
(2013: 80,900). Sales of the Mercedes-Benz Citan totaled
22,100 units (+10%). E see pages 165 ff

Daimler Buses sold 33,200 buses and chassis of the
Mercedes-Benz and Setra brands worldwide in 2014, not quite
equaling the prior-year level (2013: 33,700). However, we
significantly extended our market leadership in our core markets
in the segment for buses above 8 metric tons. Our business
with complete buses in Western Europe developed well. Due to
the very positive response to the new city-bus generation
Citaro and the new Setra TopClass 500 and ComfortClass 500,
our unit sales increased by 13% to 7,600 buses (2013: 6,700),
while our market share in Western Europe reached an all-time
high of 34.4% (2013: 30.9%). In Germany, our unit sales also
increased by a double-digit rate of 17% and our market share
of 57.1% was significantly higher than in 2013. At 17,600 units,
sales in Latin America were down significantly from the prior year
(19,100). This negative development was largely due to the
generally weak economy. Nevertheless, we were able to strongly
expand our already leading market share in the region to
48.6% (2013: 41.6%). At 3,600 units, sales in Mexico were signif-
icantly higher than in the prior year. E see pages 168 ff

Revenue. The Daimler Group increased its total revenue
in the year 2014 by 10% to €129.9 billion; adjusted for exchange
rate effects, the increase amounted to 12%. This means that,
as we had expected at the beginning of 2014, our dynamic
growth accelerated further thanks to the success of our new
vehicle models. As we had forecast in the Annual Report 2013,
the divisions Mercedes-Benz Cars (+14%), Mercedes-Benz
Vans (+6%) and Daimler Financial Services (+10%) increased their
business volumes by significant margins. Daimer Trucks and
Daimler Buses also achieved slight revenue growth. However,
the revenue of €32.4 billion (2013: €31.5 billion) recorded by
Daimler Trucks was not quite at the level we had aimed for, due
in particular to the weak Japanese yen. The bus and trucks
divisions were also negatively affected by the difficult situation
of the markets in Latin America and Eastern Europe.

In regional terms, Daimler achieved revenue growth in
Western Europe (+6% to €43.7 billion), in the NAFTA region
(+15% to €38.0 billion) and in Asia (+20% to €29.4 billion).

B.11
Revenue by division

In millions of euros

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

2014

2013

14/13

% change

129,872

117,982

73,584

32,389

9,968

4,218

15,991

64,307

31,473

9,369

4,105

14,522

+10

+14

+10

Business at Daimler Financial Services developed very
positively in the year under review, with the division once
again setting new records. As we had forecast in the Annual
Report 2013, worldwide contract volume grew substantially,
reaching the new record level of €99.0 billion (+18%). Adjusted
for exchange rate effects, the increase amounted to 12%.
As expected, new business also increased significantly, by 18%
to €47.9 billion. Growth here was driven by all regions. During
the year under review, Daimler Financial Services once again
supported a large number of companies with the financing
and management of their vehicles and fleets. A total of 305,000
contracts with fleet clients were on the books at the end
of 2014, an increase of 1% from the prior year. We significantly
expanded our business in the field of insurance as well.
At 1.4 million, the number of automotive policies we brokered
was higher than ever before (+10%). We continued to enhance
our business with innovative mobility services during the
year under review. The mobility subsidiary moovel had passed
the mark of one million customers by the end of the year.
With the flexible car-sharing model car2go, moovel was oper-
ating in 29 locations in Europe and North America by the
end of 2014. car2go is thus the clear market leader for flexible
short-term car rentals. E see pages 171 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 production
numbers to changing levels of demand. Overall, the order situa-
tion of the Daimler Group developed very positively in 2014.
Due to strong demand in the United States and China in partic-
ular, the number of orders placed with Mercedes-Benz Cars
was once again higher than the high level of orders recorded
in the prior year. This was driven on the product side primarily
by the models from the new compact class, the continued
strong success of our SUVs, the new S-Class and, in the second
half of the year, the new C-Class as well. Due to the stable
demand, we also increased our production volumes substan-
tially. Nevertheless, the order backlog at the end of 2014
was higher than a year before. Order levels at Daimler Trucks
were generally stable despite the difficult situation in various
markets. This stability was largely a result of high demand in the
NAFTA region, as well our attractive product range. The total
number of orders received by Daimler Trucks in 2014 and the
order backlog at year-end were both significantly higher than
in the previous year.

B.10
Consolidated revenue by region

In billions of euros

2010
2011

2012
2013

2014

Germany

Western Europe
(excl. Germany)

NAFTA region

Asia

Other markets

B | Combined Management Report | Economic Conditions and Business DevelopmentProfitability.

EBIT

The Daimler Group achieved EBIT of €10.8 billion in 2014
(2013: €10.8 billion), with significant increases across all
divisions in total. Compared to the previous year, there was
a negative impact on Group EBIT, however, caused by a
lower contribution from the reconciliation of segment EBIT
to Group EBIT.  B.12  B.13

This result was positively affected in particular by the new
S-Class in its first full year, the expanded range of compact
automobiles and better pricing at Mercedes-Benz Cars. At
Daimler Trucks, increased unit sales in the NAFTA region were
the main factor contributing to the significant earnings
improvement in 2014. The earnings posted by Mercedes-Benz
Vans were also significantly higher than in the previous year,
due in particular to the very positive development of unit sales.
Daimler Buses achieved significantly improved earnings pri-
marily due to strong unit sales of complete buses and a positive
product mix in Western Europe. Daimler Financial Services
was also able to significantly surpass its prior-year earnings
as a result of increased contract volume. In all divisions,
the increasing impact of the implemented efficiency programs
had a positive impact on operating profit. The development
of currency exchange rates had a negative impact on earnings,
however.

Gains recognized on the disposal of shares in Rolls-Royce Power
Systems Holding GmbH (RRPSH) and on the remeasurement
and sale of shares in Tesla Motors Inc. (Tesla) (less the loss on
the related share-price hedges) boosted earnings by a total of
€1,482 million. Expenses connected with the EU Commission’s
ongoing antitrust investigation of European manufacturers of
commercial vehicles reduced earnings by €600 million. In the
previous year, the remeasurement and sale of the remaining 7.4%
of EADS shares resulted in a gain of €3,223 million.

Due to the favorable business development in all divisions,
Daimler was able to significantly exceed its prior-year EBIT from
the ongoing business of €8.0 billion, achieving €10.1 billion
in 2014, which is in line with our expectations as stated in the
Outlook section of Annual Report 2013.  B.12

The Mercedes-Benz Cars and Daimler Trucks divisions signif-
icantly increased their EBIT from the ongoing business in 2014
and thus met the forecasts made in Annual Report 2013.
The same applies to the Mercedes-Benz Vans division, which
achieved EBIT from the ongoing business at the prior-year
level. However, the earnings of the Daimler Buses and Daimler
Financial Services divisions developed better than we had
expected at the beginning of 2014. We had anticipated a slight
improvement at Daimler Buses and stabilization at the prior-
year level at Daimler Financial Services. We adjusted those
assessments upwards as the year progressed in the context
of our quarterly reporting.

B.12
EBIT by segment

In millions of euros

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

Reconciliation

Daimler Group

2014

2013

5,853

1,878

682

197

1,387

755

10,752

4,006

1,637

631

124

1,268

3,149

10,815

EBIT

14/13

% change

+46

+15

+59

-76

-1

EBIT from ongoing business

2014

2013

14/13

% change

5,964

2,073

638

211

1,387

-127

10,146

4,180

1,753

631

163

1,268

8,004

+43

+18

+29

+27

The significant earnings improvement at Daimler Buses
resulted primarily from increased unit sales of complete buses.
The main factor behind the increased earnings at Daimler
Financial Services was the very positive development of new
business in combination with lower risk costs.

The special items affecting earnings in the years 2014
and 2013 are listed in table  B.14.

Mercedes-Benz Cars posted EBIT of €5,853 million, which is
significantly higher than the prior-year figure of €4,006 million.
The division’s return on sales was 8.0% (2013: 6.2%).  B.15

The development of earnings primarily reflects the ongoing
growth in unit sales, especially in Asia, Europe and the United
States. This was due in particular to the new S-Class in its
first full year and the expanded range of compact automobiles.
Mercedes-Benz Cars also improved its earnings as a result
of better pricing and the efficiency program “Fit for Leadership”.
Adverse effects on earnings resulted from expenses for the
enhancement of products’ attractiveness, capacity expansions
and advance expenditure for new technologies and vehicles.
In addition, currency translation had a negative impact. EBIT also
include impairments of €30 million recognized on investments
in the area of alternative drive systems.

All the automotive divisions were also affected by the
restructuring of Daimler’s own sales organization in Germany
by a total of €116 million. In this context, we refer to
the information provided in E Note 5 of the Notes to the
Con solidated Financial Statements.

Daimler Trucks achieved EBIT of €1,878 million (2013: €1,637
million), which is significantly higher than the prior-year figure.
The division’s return on sales was 5.8% (2013: 5.2%).  B.15

Significantly higher unit sales in the NAFTA region and Japan
made a major contribution to the earnings improvement in 2014.
Lower warranty costs and the successful efficiency and
growth program “Daimler Trucks #1” also had positive effects.
Unit sales and EBIT were adversely influenced in 2014 by the
weak economic situation in Latin America and Europe, as well
as by the after-effects of the introduction of Euro VI emission
regulations at the beginning of 2014. Currency effects and
expenses of €149 million for workforce adjustments in the con-
text of optimization programs in Brazil and Germany also had
a negative impact. EBIT also includes an expense of €30 million
from the impairment of the carrying value of the investment
in Kamaz. An additional factor is that there was no longer
a contribution to earnings from RRPSH following the execution
of the put option.

B.13
Development of earnings

In billions of euros

EBIT
Net proﬁt (loss)

2010

2011

2012

2013

2014

B.14
Special items affecting EBIT

In millions of euros

Mercedes-Benz Cars

Impairment of investments in the area
of alternative drive systems

Restructuring of sales organization in Germany

Daimler Trucks

Workforce adjustments

Impairment of investment in Kamaz

Restructuring of sales organization in Germany

Mercedes-Benz Vans

Reversal of impairment of investment in
Fujian Benz Automotive Corp. Ltd.

Restructuring of sales organization in Germany

Daimler Buses

Business repositioning

Restructuring of sales organization in Germany

Reconciliation

Sale of shares in RRPSH

Measurement of put option for RRPSH

Remeasurement of Tesla shares

Sale of Tesla shares and hedge of Tesla
share price

Expenses related to EU antitrust proceedings

Remeasurement and sale of remaining shares
in EADS

2014

2013

-30

-81

-149

-30

-16

+61

-17

-12

-2

+1,006

-118

+718

-124

-600

-174

–

-116

–

-39

–

-60

–

-23

–

+3,223

2010
2011

2012
2013

2014

B.15
Return on sales

In %

-3

-6

-9

Mercedes-Benz
Cars

Daimler
Trucks

Mercedes-Benz
Vans

Daimler
Buses

B | Combined Management Report | Profitability

B.16
Return on equity

Daimler Financial Services

In %

2010

2011

2012

2013

2014

B.17
Consolidated statement of income

2014

20131

14/13

% change

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 equity-method
investments, net

Other financial expense, net

Interest income

Interest expense

Profit before income taxes

Income taxes

Net profit

thereof

129,872

-101,688

28,184

-11,534

-3,329

-4,532

1,759

-1,160

897

458

145

-715

10,173

-2,883

7,290

117,982

-92,855

25,127

-11,050

-3,188

-4,205

1,530

-399

3,345

-349

212

-884

10,139

-1,419

8,720

attributable to non-controlling
interests

thereof

attributable to
shareholders of Daimler AG

328

1,878

6,962

6,842

1 The figures for 2013 have been adjusted due to restructuring within

functional costs. Further information is provided in Note 1 of the Notes
to the Consolidated Financial Statements.

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

In millions of euros

2014

2013

Group EBIT

10,752

10,815

Amortization of capitalized borrowing costs1

Interest income

Interest expense

-9

145

-715

-4

212

-884

Profit before income taxes

10,173

10,139

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

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

+10

+12

+15

+191

-73

-32

-19

+103

-16

-83

Mercedes-Benz Vans posted EBIT of €682 million in 2014,
a significant improvement on its prior-year earnings
of €631 million. The division’s return on sales increased
to 6.8% from 6.7% in 2013.  B.15

Operating profit reflects the very positive development of unit
sales, especially in Europe and the NAFTA region. Earnings
were negatively impacted, however, by research and develop-
ment expenditure for new products and by expenses for the
market launch of the new V-Class multipurpose vehicle and the
new Vito; currency effects had an additional negative impact
on earnings. EBIT increased by €61 million following the reversal
of an impairment previously recognized on an investment
in the joint venture Fujian Benz Automotive Corporation (FBAC).

Daimler Buses significantly increased its EBIT to €197 million
in 2014 (2013: €124 million). The division’s return on sales was
4.7% (2013: 3.0%).  B.15

This earnings improvement resulted primarily from increased
unit sales of complete buses and a positive product mix in
Western Europe, as well as from further efficiency progress
with “GLOBE 2013” and positive exchange rate effects. There
was an opposing, negative impact from lower unit sales of bus
chassis in Latin America. Although the economic situation
in Brazil and Argentina was difficult and, as had been expected,
the Turkish market contracted, profitability improved signifi-
cantly compared with the previous year. Expenses for reposition-
ing the division’s business amounted to €12 million in 2014
(2013: €39 million).

Daimler Financial Services posted EBIT of €1,387 million,
significantly surpassing its prior-year earnings (2013: €1,268
million). The division’s equity ratio was 19.4% (2013: 19.2%).
 B.16

This development was primarily due to the increased contract
volume and the ongoing positive development of risk costs,
whereby currency effects and additional expenses in connection
with business expansion were more than offset.

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.

Items at the corporate level resulted in income of €713 million
(2013: €3,067 million), primarily related to our equity interests
in RRPSH and Tesla in 2014. The sale of Daimler’s shares in
RRPSH resulted in a gain of €1,006 million while the remeasure-
ment of the put option resulted in an expense of €118 million.
In connection with our investment in Tesla, the loss of significant
influence on that company meant that the Tesla shares had
to be remeasured, resulting in a gain of €718 million. The hedge
of Tesla’s share price and the sale of those shares resulted
in total expenses of €124 million. Items at the corporate level
also include expenses of €600 million related to the ongoing
antitrust investigations of European manufacturers of commer-
cial vehicles by the EU Commission. In 2013, earnings were
impacted in particular by Daimler’s exit from the former EADS
shareholder pact in April 2013. This resulted in a gain of

€3.2 billion, mainly due to the remeasurement of the shares
following the loss of significant influence on EADS (€3.4 billion).
In addition, until that date, items at the corporate level also
included the proportionate earnings of the equity-method invest-
ment in EADS. Further information on the sale of the shares
in RRPSH and Tesla and of the EADS shares in 2013 is provided
in E Note 13 of the Notes to the Consolidated Financial
Statements.

The elimination of intra-group transactions resulted
in income of €42 million in 2014 (2013: €82 million).

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

Consolidated statement of income

The Group’s total revenue increased by 10.1% to €129.9 billion
in 2014; adjusted for exchange rate effects, it increased by
12.1%. The revenue growth primarily reflects the strong demand
for the products of Mercedes-Benz Cars, especially in Asia,
Europe and the United States. Further information on the devel-
opment of revenue is provided in the E “Business development”
section of this Management Report.  B.17

Cost of sales amounted to €101.7 billion in 2014, increasing
by approximately 9.5% compared with the previous year.
The rise in cost of sales was caused by higher business volumes
and consequentially higher material expenses. Personnel
expenses and depreciation of leased equipment and property,
plant and equipment also increased. Overall, cost of sales
increased at a lower rate than revenue, so gross profit in rela-
tion to revenue increased to 21.7% (2013: 21.3%). Further
information on cost of sales is provided in E Note 5 of the
Notes to the Consolidated Financial Statements.  B.17

Due to the growth in unit sales, selling expenses increased
by €0.5 billion to €11.5 billion. The main factors here were
higher expenses for marketing and personnel. As a percentage
of revenue, selling expenses decreased from 9.4% to 8.9%.
 B.17

General administrative expenses of €3.3 billion were slightly
above the level of the previous year (2013: €3.2 billion), mainly
driven by higher IT and personnel expenses. As a percentage
of revenue, general administrative expenses decreased slightly
to 2.6% (2013: 2.7%).  B.17

Research and non-capitalized development costs increased
by €0.3 billion to €4.5 billion in 2014. They were mainly related
to the development of new models, advance expenditure for the
renewal of existing models and the further development of
fuel-efficient and environmentally friendly drive systems and
safety technologies. As a proportion of revenue, research
and non-capitalized development costs slightly decreased from
3.6% to 3.5%. Further information on the Group’s research
and development costs is provided in the “Research and devel-
opment” section of the E “Sustainability” chapter of this
Management Report.  B.17

Other operating income increased to €1.8 billion (2013:
€1.5 billion) and other operating expense rose significantly
this year to €1.2 billion (2013: €0.4 billion), due in particular
to expenses of €0.6 billion related to the ongoing antitrust inves-
tigations of European manufacturers of commercial vehicles
by the EU Commission. Further information on the composition
of other operating income and expense is provided in
E Note 6 of the Notes to the Consolidated Financial State-
ments.  B.17

In 2014, our share of profit from equity-method invest-
ments decreased to €0.9 billion (2013: €3.3 billion). Both years
were affected by large gains relating to the loss of significant
influence on companies which were previously accounted for
using the equity method. In 2014, Daimler lost its significant
influence on Tesla; the subsequent remeasurement of our Tesla
shares resulted in a gain of €0.7 billion. In 2013, Daimler
lost its significant influence on EADS, which resulted in a gain
of €3.4 billion.  B.17

Other financial expense/income improved from an expense
of €0.3 billion to income of €0.5 billion. This was primarily
due to the disposal of the RRPSH shares, which resulted in a
gain of €1.0 billion in 2014.  B.17

Net interest expense improved to €0.6 billion (2013: €0.7
billion). Expenses in connection with pension and healthcare
benefits were at the prior-year level. Other interest expense
improved due to lower costs of maintaining adequate liquidity
following the successive expiry of refinancing at high interest
rates. There was an opposing effect from lower income from
cash deposits and from the remeasurement of interest-rate
hedges.  B.17

The tax expense of €2.9 billion entered under income-tax
expense is €1.5 billion higher than in 2013. The effective
tax rate for 2014 was 28.3% (2013: 14.0%). In 2014, a gain was
recognized on the sale of the RRPSH shares that was largely
tax free. In connection with the ongoing antitrust investigations
of European manufacturers of commercial vehicles by the
EU Commission, expenses arose that were not tax deductible.
In 2013, the gain on the remeasurement and sale of Daimler’s
EADS shares was largely tax free. Adjusted for those gains and
losses, earnings subject to normal income taxes increased
in 2014 compared with the previous year, which led to a corre-
spondingly higher tax expense. Additional factors were that
gains were recognized on the reversal of impairments of deferred
tax assets in 2014 and that there were high tax benefits in
connection with the tax assessment of previous years in 2013.
 B.17

B | Combined Management Report | ProfitabilityB.19
Dividend per share

In euros

1.85

2.50

2.00

1.50

1.00

0.50

2.20

2.25

2.45

2010

2011

2012

2013

2014

B.20
Reconciliation to 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

2014

2013

14/13

% change

5,853

1,878

682

197

1,387

9,997

-3,074

755

7,678

4,006

1,637

631

124

1,268

7,666

-1,642

3,149

9,173

+46

+15

+59

+30

+87

-76

-16

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

of capitalized borrowing costs.

B.21
Value added

In millions of euros

2014

2013

14/13

% change

Daimler Group

4,416

5,921

-25

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

3,799

2,007

761

473

457

369

445

-4

409

+89

+106

+12

Net profit for the year amounts to €7.3 billion (2013: €8.7
billion). Net profit of €0.3 billion is attributable to non-controlling
interests (2013: €1.9 billion); a large portion of the prior-year
amount is related to the remeasurement of the EADS shares.
Net profit attributable to the shareholders of Daimler AG
amounts to €7.0 billion (2013: €6.8 billion), representing earnings
per share of €6.51 (2013: €6.40).  B.17

The calculation of earnings per share (basic) is based on
an average number of outstanding shares of 1,069.8 million
(2013: 1,068.8 million).

Dividend

At the Annual Shareholders’ Meeting on April 1, 2015, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.45 per share (prior year:
€2.25). 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
dividend will thus amount to €2,621 million (prior year:
€2,407 million) and the distribution ratio will be 37.6% of the
net profit attributable to the Daimler shareholders
(prior year: 35.2%).  B.19

Net operating profit

Table  B.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 in table
 B.03, the cost of capital is the result of net assets and cost
of capital expressed as a percentage, which is subtracted
from earnings in order to calculate value added. The tables
 B.21 and  B.22 show value added and net assets for
the Group and for the individual divisions. Table  B.23 shows
how net assets are derived from the consolidated statement
of financial position.

The Group’s value added amounted to €4.4 billion in 2014
(2013: €5.9 billion), representing a return on net assets of
18.8% (2013: 22.6%). This was once again substantially higher
than the minimum required rate of return of 8%. Value added
in the previous year was influenced in particular by the remea-
surement and the sale of the remaining EADS shares. 2014
was also affected by special items from the sale of the 50%
equity interest in RRPSH and from the remeasurement
and sale of the Tesla shares. Adjusted for these one-time
effects, the Group’s value added increased in 2014 primarily
due to the favorable business development of all divisions.

The value added of Mercedes-Benz Cars increased by
€1.8 billion to €3.8 billion. This was mainly the result of the
positive development of earnings caused by the ongoing
growth in unit sales, the expanded product range and the posi-
tive efficiency measures of the “Fit for Leadership” program.
There were opposing, negative effects on value added from
expenses relating to the enhancement of products’ attrac-
tiveness, capacity expansions and advance expenditure for new
technologies and vehicles. The division’s average net assets
increased only slightly by €0.5 billion.

Value added at Daimler Trucks more than doubled compared
with the previous year and reached €0.8 billion. This was due not
only to higher earnings resulting from significant growth in
unit sales in the NAFTA region and Japan, lower warranty costs
and the successful implementation of the “Daimler Trucks #1”
growth and efficiency program, but also to the reduction in
average net assets following the sale of the 50% equity interest
in the associated company RRPSH.

Mercedes-Benz Vans’ value added of €0.5 billion was
slightly higher than in 2013. Higher earnings were achieved
due in particular to the very positive development of unit
sales. On the other hand, average net assets increased
by €0.2 billion to €1.7 billion, primarily as a result of increased
fixed assets and the rise in the carrying value of Daimler’s
interest in the Chinese joint venture FBAC following the reversal
of a previous impairment.

The Daimler Buses division achieved positive value added
of €79 million in 2014 (2013: negative €4 million). This was
mainly the result of improved earnings due to increased unit
sales of complete buses and the positive product mix, as
well as ongoing efficiency progress. Average net assets slightly
decreased by €86 million and made a minor contribution
to the increase in value added.

Daimler Financial Services’ value added of €0.5 billion was
higher than in 2013. The division’s return on equity amounted
to 19.4% (2013: 19.2%). The development of value added primarily
reflects the increase in EBIT due to the growth in contract
volume and the ongoing positive development of risk costs.
Average equity rose by €0.5 billion to €7.2 billion.

B.22
Net assets (average)

In millions of euros

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses
Daimler Financial Services1

Net assets of the divisions
Equity-method investments2

Assets and liabilities from
income taxes3
Other reconciliation3

2014

2013

14/13

% change

17,114

9,313

1,742

982

7,154

36,305

618

2,700

1,156

16,658

10,571

1,547

1,068

6,607

36,451

638

2,479

1,080

-12

+13

-8

-0

-3

Daimler Group

40,779

40,648

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

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

In millions of euros

2014

2013

14/13

% 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

9,144

23,125

14,374

20,004

7,824

-13,420

-9,852

-22,438

9,228

21,732

13,207

16,648

7,208

-11,382

-8,778

-15,983

-1

+20

+18

+12

+40

3,981

1,878

+112

7,617

6,596

Net assets

40,359

40,354

+15

B | Combined Management Report | Profitability

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
consistently for all Group entities by Treasury. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.

Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies – as well as pro-
duction, sales and financing companies – are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply
with restrictions on capital transactions and on the transfer
of capital and currencies.

Liquidity management ensures the Group’s ability to meet
its payment obligations at any time. For this purpose, liquidity
planning provides information about all cash flows from
operating and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appropriate
instruments for liquidity management (e.g. bank credits,
commercial papers, notes); liquidity surpluses are invested
in the money market or the capital market to optimize risk
and return. Our goal is to ensure the level of liquidity regarded
as 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 busi-
ness which are available for securitization in the capital
market, as well as a contractually confirmed syndicated credit
facility with a volume of €9 billion.

Cash management determines the Group’s cash require-
ments and surpluses. The number of external bank trans-
actions is minimized by the Group’s internal netting of cash
requirements and surpluses. Netting is done by means
of cash-concentration or cash-pooling procedures. Daimler
has established 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 obliga-
tions. Pension assets are held in separate pension funds and
are thus not available for general business purposes. The funds
are allocated to different asset classes such as equities,
fixed-interest securities, alternative investments and real estate,
depending on the expected development of pension obliga-
tions and with the help of a process for risk-return optimization.
The performance of asset management is measured by com-
paring with defined reference indices. Local custodians of the
pension funds are responsible for the risk management
of the individual pension funds. The Global Pension Committee
limits these risks by means of Group-wide binding guidelines
whereby applicable laws are given due consideration. Additional
information on pension plans and similar obligations is
provided in 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 creditworthi-
ness of the respective financial institution or issuer. The credit
risk with customers of our automotive business relates to con-
tracted dealerships and general agencies, other corporate
customers and retail customers. In connection with the export
business, general agencies that according to our creditwor-
thiness analysis are not sufficiently creditworthy are generally
required to provide collateral such as first-class bank guaran-
tees. The credit risk with end customers in the financial services
business is managed by Daimler Financial Services on the basis
of a standardized risk management process. In this process,
minimum requirements are defined for the sales-financing and
leasing business and standards are set for credit processes
as well as for the identification, measurement and management
of risks. Key elements for the management of credit risks
are appropriate creditworthiness assessments, supported
by statistical analyses and evaluation methods, as well
as structured portfolio analysis and portfolio 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 invest-
ment guarantees. Some cross-border receivables 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.

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

Cash flows

Cash used for/provided by operating activities  B.24
resulted in a cash outflow of €1.3 billion in 2014 (2013: cash
inflow of €3.3 billion). This decrease was mainly caused by
the realization of the growth strategy. Working capital increased
at a higher rate than in the prior-year period due to the higher
inventory increase. Growth in new business in leasing and sales
financing surpassed the high level of the prior-year period
by €2.6 billion. An additional factor is that the positive business
development in 2014 led to higher income-tax payments.
Furthermore, there was a cash outflow of €2.5 billion for the
extraordinary contribution to the German pension fund assets.
These effects were partially offset by the higher result from
ongoing business which did not include the lower measurement
effects compared to the prior-year period. In 2014, they
were related to RRPSH and Tesla with a total of €0,4 billion
and in 2013 to EADS with €3,4 billion.

Cash used for investing activities  B.24 amounted to
€2.7 billion (2013: €6.8 billion). The change compared with the
prior-year period resulted primarily from acquisitions and
disposals of securities in the context of liquidity management.
Those transactions resulted in a net cash inflow in 2014,
whereas acquisitions of securities significantly exceeded dispos-
als in the previous year. In addition, lower investments in
intangible assets had a positive impact. Investments in property,
plant and equipment for the ramp-up of new products and
for the expansion of production capacities were slightly below
the high level of recent years. Both years were affected by
proceeds from the sale of equity interests. In August 2014, the
sale of the shares in RRPSH was concluded and a capital
gain of €2.4 billion was recognized. In October 2014, the sale
of shares in Tesla and the termination of the related share-
price hedge led to a cash inflow of €0.6 billion. In 2013, cash
used for investing activities was significantly affected by the
sale of the remaining shares in EADS (€2.3 billion); there were
opposing, negative effects of €0.6 billion from the acquisition
of a 12% equity interest in BAIC Motor Corporation Ltd. (BAIC
Motor) and of €0.2 billion from the capital increase at
Beijing Benz Automotive Co., Ltd. (BBAC).

B.24
Condensed consolidated statement of cash flows

In millions of euros

Cash and cash equivalents
at beginning of period

Cash used for/provided
by operating activities

Cash used
for investing activities

Cash provided by
financing activities

Effect of exchange-rate changes
on cash and cash equivalents

Cash and cash equivalents
at end of period

2014

2013

14/13

Change

11,053

10,996

+57

-1,274

3,285

-4,559

-2,709

-6,829

+4,120

2,274

3,855

-1,581

323

-254

+577

9,667

11,053

-1,386

B | Combined Management Report | Liquidity and Capital Resources

Cash provided by financing activities  B.24 amounted
to €2.3 billion (2013: €3.9 billion). The decrease resulted almost
solely from the change in financing liabilities.

Cash and cash equivalents decreased compared with
December 31, 2013 by €1.4 billion, after taking currency
translation into account. Total liquidity, which also
includes marketable debt securities, decreased by €1.8
billion to €16.3 billion.

The parameter used by Daimler to measure the financial
capability of the Group’s industrial business is the free cash
flow of the industrial business  B.25, which is derived
from the reported cash flows from operating and investing
activities. The cash flows from the acquisition and sale of
marketable debt securities included in cash flows from invest-
ing activities are deducted, as those securities are allocated
to liquidity and changes in them are thus not a part of the free
cash flow.

B.25
Free cash flow of the industrial business

In millions of euros

Cash provided by
operating activities

Cash used for investing activities

Change in marketable
debt securities
Other adjustments1

Free cash flow
of the industrial business

2014

2013

7,539

-2,887

-195

1,022

10,313

-6,767

1,548

-252

14/13

Change

-2,774

+3,880

-1,743

+1,274

5,479

4,842

+637

1 The effects from the financing of the Group’s own dealerships, which are
reflected in cash provided by operating activities, are eliminated under
other adjustments.

B.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,
2014

Dec. 31,
2013

8,341

5,156

13,497

3,193

263

3,456

16,953

9,845

5,303

15,148

-1,324

-1,314

13,834

14/13

Change

-1,504

-147

-1,651

+4,517

+253

+4,770

+3,119

Other adjustments relate to additions to property, plant and
equipment that are allocated to the Group as their beneficial
owner due to the form of their underlying lease contracts.
Furthermore, adjustments are made for the effects of financing
dealerships within the Group. In addition, the calculation of
the free cash flow includes those cash flows to be shown under
cash from financing activities in connection with the acquisi-
tion or sale of interests in subsidiaries without loss of control.

The free cash flow of the industrial business amounted to
€5.5 billion in 2014. The sale of the shares in RRPSH and Tesla
contributed €3.0 billion of that amount. On the other hand,
the free cash flow of the industrial business was reduced by
the cash outflows for the extraordinary contribution to the
German pension fund assets of €2.5 billion and for the settle-
ment of a healthcare plan in the United States. Adjusted
for these special effects, the free cash flow of the industrial
business amounted to €5.2 billion.

The positive contributions to earnings from the automotive
divisions were reduced by the increase in working capital,
defined as the net change in inventories, trade receivables
and trade payables, in a total amount of €2.3 billion. This
included positive effects from the sale of trade receivables
to Daimler Financial Services by companies in the industrial
business. The positive development of other operating assets
and liabilities was related to the business expansion and is
primarily due to payments received from sales with service and
maintenance contracts and sales with residual-value guaran-
tees. In addition, high expenses for dealer bonuses and provisions
are considered. There were opposing, negative effects from
ongoing high investments in property, plant and equipment and
intangible assets, as well as from income taxes and interest
payments.

At the beginning of 2014, we expected the free cash flow to
be significantly below prior-year level. However, when comparing
with the previous year, it is necessary to consider that the
free cash flow in both years included effects from acquisitions
and disposals of equity interests. In 2013, the sale of the
shares in EADS led to a cash inflow of €2.3 billion while the
acquisition of the equity interest in BAIC Motor resulted in
a cash outflow of €0.6 billion. After adjusting for special effects,
the free cash flow of the industrial business of €5.2 billion
in the year 2014 was significantly higher than the previous year
value of €3.2 billion, in line with our forecast as adjusted
during the year.

The increase in the free cash flow adjusted for special effects
of €2.0 billion to €5.2 billion reflects the positive business devel-
opment and was primarily due to higher profit contributions
from the automotive divisions. The higher inventory increase
due to realization of the growth strategy was not offset
by the development of trade receivables and payables. Positive
effects resulted from the development of other operating
assets and liabilities.

The net liquidity of the industrial business  B.26 is calcu-
lated 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.

The contingent liabilities principally constitute buyback obli-
gations. At December 31, 2014, the best possible estimate
for the loss risk from these guarantees amounted to €1.2 billion
(2013: €1.0 billion). Warranty and goodwill commitments
(product guarantees) provided by the Group in connection with
its vehicle sales are not included in the contingent liabilities.
Contingent liabilities also include other contingent liabilities.
The best possible estimate for potential expenses from the
other contingent liabilities is €0.4 billion (December 31, 2013:
€0.4 billion).

B.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,
2014

Dec. 31,
2013

9,667

6,634

16,301

-86,689

270

-86,419

-70,118

11,053

7,066

18,119

-77,738

-3

-77,741

-59,622

14/13

Change

-1,386

-432

-1,818

-8,951

+273

-8,678

-10,496

B.28
Other financial obligations (nominal amounts)

In millions of euros

Dec. 31,
2014

Dec. 31,
2013

Obligations from purchasing agreements

9,769

9,771

Non-terminable rental and
leasing agreements

Irrevocable loan obligations

Miscellaneous other financial obligations

Other financial obligations

2,157

1,320

2,318

15,564

1,980

1,508

1,356

14,615

To the extent that the Group’s internal refinancing of the financial
services business is provided by the companies of the indus-
trial business, this amount is deducted in the calculation of the
net debt of the industrial business. At December 31, 2014,
the Group’s internal refinancing was of a higher volume than
the financing liabilities originally taken on in the industrial
business due to the application of the industrial business’s own
financial resources. This resulted in a positive value for the
financing liabilities of the industrial business, thus increasing
net liquidity, so the net liquidity of the industrial business
exceeds the gross liquidity presented here.

Compared with December 31, 2013, the net liquidity of the
industrial business increased from €13.8 billion to €17.0 billion.
The increase mainly reflects the positive free cash flow.
Dividend payments to the shareholders of Daimler AG and
to minority interests of subsidiaries reduced net liquidity
by €2.6 billion. The adoption of the refinancing of the Group’s
own dealerships by the industrial business was offset by
the positive currency effects.

Net debt at Group level, which primarily results from the refi-
nancing of the leasing and sales-financing business, increased
by €10.5 billion compared with December 31, 2013.  B.27

Other financial obligations, financial guarantees
and contingent liabilities

In the context of its ordinary business operations, the Group
has entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2014. Table  B.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 maximum
potential obligation resulting from these guarantees amounts
to €0.8 billion at December 31, 2014 (end of 2013: €0.8 billion);
liabilities recognized in this context amount to €0.1 billion
at the end of the year (end of 2013: €0.1 billion). In connection
with the Chrysler transaction entered into 2007 and 2009,
Daimler provides guarantees for Chrysler obligations; at
December 31, 2014, 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.

B | Combined Management Report | Liquidity and Capital Resources

Investment

Investment still on high level. In the context of our growth
strategy, we aim 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 2014, we therefore once again invested a very high
amount of €4.8 billion in property, plant and equipment (2013:
€5.0 billion). However, we did not quite reach the investment
volume that we planned in the previous year and announced
in Annual Report 2013. This was partially due to the very
efficient application of our financial resources and the postpone-
ment of some investment projects. As of December 31, 2014,
no material financial obligations exist in connection with future
investment in property, plant and equipment.

B.29
Investment in property, plant and equipment

In billions of euros

At Mercedes-Benz Cars, investment in property, plant and
equipment of €3.6 billion was almost at the prior-year level.
The most important projects included the models of the new
C-Class, which has been in production since 2014 in Bremen
as well as in Tuscaloosa, Beijing and East London. Another
focus of investment was on new sport-utility vehicles. We also
made substantial investments in the modernization and
realignment of our German production plants as competence
centers, as well as in the expansion of our production
capacities in the United States. The main areas of investment
at Daimler Trucks were for new products such as the Western
Star 5700XE, the new FUSO Super Great V and the new Actros
and Arocs heavy-duty tractor units (SLT). In addition, progress
was made with various projects for the global standardization
of engines and other major components. As in the previous
year, total investment in property, plant and equipment at
Daimler Trucks amounted to €0.8 billion. At the Mercedes-Benz
Vans division, the focus of investment was on the new Viano
multipurpose vehicle and the next generation of the Vito.
The main investments at Daimler Buses in 2014 were in new
products and the modernization of production facilities.

In addition to capital expenditure on property, plant and
equipment, we also invested amounts in associated companies
and joint ventures in 2014.

Furthermore, we capitalized development costs of €1.1 billion
in 2014 (2013: €1.3 billion); this is presented under intangible
assets. E see page 103

2010

2011

2012

2013

2014

Refinancing

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

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

2014

2013

14/13

% change

4,844
3.7

3,621
4.9

788
2.4

304
3.0

105
2.5

23
0.1

4,975
4.2

3,710
5.8

839
2.7

288
3.1

76
1.9

19
0.1

-3

-2

-6

+38

+21

The funds raised by Daimler in the year 2014 primarily
served to refinance the leasing and sales-financing business.
For that purpose, Daimler made use of a broad spectrum of
various financing instruments in various currencies and markets.
They include bank credits, commercial papers in the money
market, bonds with medium and long maturities, customer
deposits at Mercedes-Benz Bank and the securitization of receiv-
ables 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 Mexico, Argentina, South Africa, Thailand and
South Korea. Capital-market programs allow flexible, repeated
access to the capital markets.

In 2014, the Group covered its refinancing requirements mainly
through the issuance of bonds. A large proportion of those
bonds were placed in the form of so-called benchmark emissions
(bonds with high nominal volumes) in the US dollar and euro
market.  B.32

The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table  B.31.
At December 31, 2014, they are mainly denominated in
the following currencies: 43% in euros, 26% in US dollars, 4% in
Brazilian real, 3% in Japanese yen and 4% in Canadian dollars.

As the first international corporation, Daimler AG placed
bonds in the domestic capital market of the People’s Republic
of China, so-called panda bonds. In addition, a large number
of smaller bonds were issued in various currencies in the euro
market, as well as in Mexico, Brazil, Argentina, South Africa,
Thailand and South Korea.

Refinancing was facilitated by high capital-market liquidity
as well as by Daimler’s good credit ratings. The continuation
of expansive monetary policies by the central banks had
a significant impact on the situation of the bond markets also
in 2014. The high volumes of available liquidity meant that
risk premiums for companies with investment-grade ratings
fell once again compared with the previous year; this was
to the benefit also of Daimler.

In addition, Daimler issued small volumes of commercial
papers in 2014.

At December 31, 2014, the total of financial liabilities
shown in the consolidated statement of financial position
amounted to €86,689 million (2013: €77,738 million).

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

B.31
Refinancing instruments

Furthermore, several asset-backed securities (ABS) transactions
were carried out in the United States, Canada and Germany.
In the United States for example, two emissions generated
a refinancing volume totaling US$3.1 billion. Bonds in a volume
of CAN$0.5 billion were issued in Canada, and were for the
first time placed directly with investors. In addition, Mercedes-
Benz Bank once again sold ABS bonds in a volume of €1.0 billion
to European investors through its Silver Arrow Platform.

Bank credit was another important source of refinancing
in 2014. Funds were provided not only by large, globally active
banks, but increasingly also by a number of local banks.
The lenders included supranational banks such as the European
Investment Bank and the Brazilian Development Bank (BNDES).
In this way, we continued our diversification in refinancing
through banks.

Notes/bonds and
liabilities from ABS
transactions

Commercial paper

Liabilities to financial
institutions

Deposits in the direct
banking business

B.32
Benchmark emissions

Issuer

In order to secure sufficient financial flexibility, in September
2013, Daimler concluded a €9 billion syndicated credit facility
with a consortium of international banks with a maturity of five
years and two extension options of two years in total. This
provides the Group with financial flexibility until the year 2020.
More than 40 European, American and Asian banks partici-
pated in the consortium. Daimler does not intend to utilize the
credit line. In 2014, Daimler exercised the option to extend
the facility by another year until 2019. All the banks in the con-
sortium participated in the extension.

At the end of 2014, Daimler had short- and long-term credit
lines totaling €41.7 billion (2013: €35.4 billion), of which
€17.2 billion was not utilized (2012: €15.0 billion). They include
a syndicated credit facility arranged in September 2013 with
a consortium of international banks with a volume of €9 billion.

Daimler AG

Daimler Finance
North America LLC

Daimler AG

Daimler Finance
North America LLC

Average interest rates

Carrying values

Dec. 31,
2014

Dec. 31,
2013

Dec. 31,
2014

Dec. 31,
2013

in %

in millions of euros

1.68

1.11

3.08

1.06

2.14

2.02

49,165

2,277

44,875

1,086

3.32

22,893

19,089

1.54

10,853

11,257

Volume

Month of
emission

Maturity

€750 million

Jan. 2014

Jan. 2022

US$1,500 million

Mar. 2014

Mar. 2017

US$650 million

Mar. 2014

Mar. 2021

€500 million

July 2014

July 2024

US$1,500 million

Aug. 2014

Aug. 2017

US$500 million

Aug. 2014

Sept. 2019

US$500 million

Aug. 2014

Aug. 2024

B | Combined Management Report | Liquidity and Capital Resources

Credit ratings

Daimler’s credit ratings remained unchanged in 2014.
Daimler AG therefore has comparable ratings at the level of
A- with all four of the credit-rating agencies it has engaged.
The outlook for the ratings is assessed as “stable” by all four
agencies.  B.33

B.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 2014

End of 2013

A-

A (low)

A-2

P-2

A-2

P-2

R-1 (low)

On December 19, 2014, Moody’s Investors Service (Moody’s)
confirmed its long-term credit rating for Daimler AG of A3
with a stable outlook. Moody’s referred to the highly valued
premium brand Mercedes-Benz, the positioning of Daimler
Trucks as the global market leader in the truck business, the
strong positions of Mercedes-Benz Vans and Daimler Buses
in their respective market segments, and the credit metrics
which place the Group well within its rating category.

On November 27, 2014, Standard & Poor’s Ratings Services
(S&P) published a report on Daimler AG in which it confirmed
our long-term corporate credit rating at A- as well as the
stable outlook. In S&P’s terminology, the rating is the result
of a “satisfactory” business risk and a “minimal” financial
risk. The business risk is partially a reflection of the Group’s
exposure to cyclical demand for cars, trucks and other vehicles.
The financial risk profile is supported by the Group’s strong
financial metrics.

On July 7, 2014, Fitch Ratings (Fitch) also emphasized Daimler’s
wide geographical and product diversification, and confirmed
its long-term issuer default rating of A- with a stable outlook.
The heavy product pipeline was assessed as having a positive
impact on the credit rating. However, high capital expenditure
and investment in research and development were regarded
as constraining factors. Fitch believes that Daimler enjoys
adequate headroom in its ratings with regard to the relevant
financial metrics.

The Canadian credit agency DBRS confirmed on October 24,
2014, its long-term rating for Daimler AG at A (low) with
a stable trend. DBRS referred to the improved financial perfor-
mance of Mercedes-Benz Cars and Daimler Trucks reflecting
those divisions’ product offensives, as well as the implementa-
tion of their cost-reduction activities, which are expected to
contribute substantially to expanding the Group’s profit margins
in the future.

The short-term credit ratings of all four rating agencies
remained unchanged in 2014.

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

Financial Position.

The balance sheet total increased compared with December 31,
2013 from €168.5 billion to €189.6 billion; adjusted for the
effects of currency translation, the increase amounted to €14.0
billion. Daimler Financial Services accounts for €105.5 billion
of the balance sheet total (2013: €89.4 billion); this is equivalent
to 56% of the Daimler Group’s total assets (2013: 53%).

The increase in total assets is primarily due to the growth of
the financial services business, higher inventories and higher
levels of other assets. On the liabilities side of the balance
sheet, there were increases in particular in financing liabilities,
provisions and other financial liabilities. Current assets
account for 41% of the balance sheet total, which is close to
the prior-year level of 42%. Current liabilities account for 35%
of the balance sheet total, as at the end of the previous year.

Intangible assets of €9.4 billion include €7.2 billion of
capitalized development costs (2013: €7.3 billion) and, as in
the previous year, €0.7 billion of goodwill. Mercedes-Benz
Cars accounts for 69% of the development costs and Daimler
Trucks accounts for 22%. Capitalized development costs
amounted to €1.1 billion (2013: €1.3 billion), and account
for 20.2% of the Group’s total research and development
expenditure (2013: 23.4%) E see page 103.
Investment in property, plant and equipment E see page 92
was higher than depreciation and caused property, plant and
equipment to rise to €23.2 billion (2013: €21.8 billion). In 2014,
€4.8 billion (2013: €5.0 billion) was invested worldwide, in
particular at our production and assembly sites for new products
and technologies and for the expansion and modernization
of production facilities. The sites in Germany accounted
for €3.1 billion of the capital expenditure (2013: €3.2 billion).

B.34
Consolidated statement of financial position

Dec. 31,
2014

Dec. 31,
2013

14/13

% change

In millions of euros

Assets

Intangible assets

Property, plant and equipment

Equipment on operating leases
and receivables from financial
services

Equity-method investments

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

9,367

23,182

94,729

2,294

20,864

8,634

9,667

6,634

5,987

8,277

9,388

21,779

78,930

3,432

17,349

7,803

11,053

7,066

6,241

5,477

189,635

168,518

44,584

28,393

86,689

10,178

10,706

9,085

43,363

23,098

77,738

9,086

8,276

6,957

Total equity and liabilities

189,635

168,518

-0

+20

-33

+20

+11

-13

-6

-4

+51

+13

+23

+12

+29

+31

+13

Equipment on operating leases and receivables from
financial services increased to a total of €94.7 billion (2013:
€78.9 billion). The increase was primarily caused by the
higher level of new business at Daimler Financial Services.
In addition, there was an increase due to effects of currency
translation in an amount of €5.0 billion. The growth reflects
the successful course of business, especially in the United
States. Above-average growth was also achieved in the sales-
financing business in China and other Asian countries, as
well as in Turkey. In Europe, the leasing and sales-financing
business grew by 11%. The proportion of total assets of 50%
is above the prior-year level (47%).

Inventories increased from €17.3 billion to €20.9 billion, equiva-
lent to 11% of total assets (2013: 10%). Adjusted for currency
effects, there was an increase of €2.9 billion, partially due to the
launch of new models and a larger number of model variants
as well as the expected positive development of unit sales.
This resulted primarily at the Mercedes-Benz Cars and Daimler
Trucks divisions in increased stocks of finished and unfinished
goods in Germany, China and the United States.

Trade receivables increased by €0.8 billion to €8.6 billion.
The Mercedes-Benz Cars division accounts for 45% of these
receivables and the Daimler Trucks division accounts for 32%.

Equity-method investments of €2.3 billion (2013: €3.4 billion)
primarily comprise the carrying amounts of our equity inter-
ests in Beijing Benz Automotive Co., Ltd. and BAIC Motor
Corporation Ltd. in the car business and Beijing Foton Daimler
Automotive Co., Ltd. and Kamaz OAO in the truck business.
The decrease compared with the end of 2013 is the result of
selling the 50% equity interest in RRPSH to Rolls-Royce Holdings
plc in the third quarter of 2014.

Cash and cash equivalents decreased compared with
the end of 2013 by €1.4 billion to €9.7 billion. The decrease
amounted to €1.7 billion after adjusting for exchange-rate
effects.

Marketable debt securities decreased compared with
December 31, 2013 from €7.1 billion to €6.6 billion. Those assets
include debt instruments that are allocated to liquidity,
most of which are publicly traded. They generally have an
external rating of A or better.

B.35
Balance sheet structure Daimler Group

In billions of euros

Other financial assets decreased from €6.2 billion to
€6.0 billion. They primarily consist of the investments in Renault
and Nissan and derivative financial instruments, as well as
loans and other receivables due from third parties.

2013
2014

Assets

113

Equity and liabilities

Non-current assets

Current assets

of which: Liquidity

16
190

18
169

169

190

Equity

Non-current liabilities

Current liabilities

Other assets of €8.3 billion (2013: €5.5 billion) primarily
comprise deferred tax assets and tax refund claims. The
increase in deferred tax assets primarily relates to non-profit
effects from pensions and similar obligations as well as
from derivative financial instruments.

The Group’s equity increased compared with December 31,
2013 from €43.4 billion to €44.6 billion. Equity attributable to
the shareholders of Daimler AG increased to €43.7 billion
(2013: €42.7 billion). Net profit of €7.3 billion E see page 85
and positive currency translation effects of €1.8 billion led
to the increase in equity. There were negative effects on equity,
however, from the distribution of the dividend for financial
year 2013 to the shareholders of Daimler AG (€2.4 billion),
actuarial losses from defined benefit pension plans (€3.7 billion)
and the remeasurement of derivative financial instruments
(€1.9 billion). Compared to the 3% increase of equity, the balance
sheet total disproportionately increased by 13%. Due to the
above described effects, the Group’s equity ratio of 22.1% was
below the level of the end of 2013 (24.3%); the equity ratio for
the industrial business was 40.8% (2013: 43.4%). It is necessary
to consider that the equity ratios at the end of 2013 and
2014 are adjusted for the paid and proposed dividend payments.

Other financial liabilities amounted to €10.7 billion (2013:
€8.3 billion). They mainly consist of liabilities from derivative
financial instruments, residual value guarantees, accrued inter-
est expenses on financing liabilities, deposits received and
liabilities from wages and salaries. The increase after adjusting
for exchange-rate effects (€1.6 billion) is primarily related
to derivative financial instruments.

Other liabilities of €9.1 billion (2013: €7.0 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase mainly results from deferred income (€1.4 billion).

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
E see page 192, the Consolidated Statement of Changes
in Equity E see page 194 and the related notes in the Notes
to the Consolidated Financial Statements.

Provisions increased to €28.4 billion (2013: €23.1 billion);
as a proportion of the balance sheet total, they amounted
to 15%, which is above the prior-year level of 14%. They primarily
comprise provisions for pensions and similar obligations
of €12.8 billion (2013: €9.9 billion), which mainly consist of the
difference between the present value of defined benefit
pension obligations of €30.1 billion (2013: €23.2 billion) and
the fair value of the pension plan assets applied to finance
those obligations of €18.6 billion (2013: €14.7 billion). The fall
in discount rates, especially for the German plans from 3.4%
at December 31, 2013 to 1.9% at December 31, 2014, led to an
increase in the present value of the defined benefit pension
obligations. This effect was partially offset by the extraordinary
contribution of €2.5 billion to the German pension plan assets.
Provisions also relate to liabilities from income taxes of €1.6
billion (2013: €1.3 billion) as well as from product warranties of
€5.0 billion (2013: €4.7 billion), from personnel and social
costs of €3.9 billion (2013: €3.2 billion) and other provisions of
€5.0 billion (2013: €4.0 billion). Of the change in other provi-
sions, €0.6 billion is accounted for by an increase in the provision
relating to the EU Commission’s investigation of European
truck manufacturers.

Financing liabilities of €86.7 billion were above the level of
December 31, 2013 (€77.7 billion). As well as currency effects
of €3.4 billion, the increase primarily reflects the refinancing
of the growing leasing and sales-financing business. 50% of the
financing liabilities are accounted for by bonds, 26% by liabili-
ties to financial institutions, 13% by deposits in the direct banking
business and 7% by liabilities from ABS transactions.

Trade payables increased to €10.2 billion due to the higher
volume of business (2013: €9.1 billion). The Mercedes-Benz Cars
division accounts for 61% of those payables and the Daimler
Trucks division accounts for 26%.

B | Combined Management Report | Financial PositionDaimler 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.

Profitability

Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart. Its principal business activities com-
prise the development, production and distribution of cars,
vans and trucks in Germany and the management of the activi-
ties 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 recog-
nition 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.

Profit from ordinary activities reported by Daimler AG for 2014
amounts to €5.0 billion (2013: €3.5 billion). The development
of earnings reflects the growth in operating profit of €0.6 billion
to €1.4 billion and the increase in financial income of €0.9
billion to €3.6 billion.  B.36

Revenue increased, as forecast in the previous year, due
to higher unit sales of vehicles and components by €8.4 billion
to €83.9 billion. In the car business, revenue thus rose by
14% to €63.0 billion. Also with trucks and vans, revenue increased
for the same reason by 3% to €20.9 billion.

The earnings achieved by the car business in 2014 were
significantly higher than in the previous year. The development
of earnings was influenced by ongoing growth in unit sales
in Europe, Asia and the United States as well as an improved
model mix. The main growth drivers were the S-Class and
our expanded range of compact cars. There were opposing,
negative effects from expenditure to enhance products’
attractiveness and for new technologies and products, amongst
other factors. Unit sales in the car business increased by 9%
to 1,576,000 vehicles1 in the year under review. Of the various
model series, the S-Class segment was extremely successful
in 2014 with an 86% increase in unit sales to 129,000 vehicles1.
Compact cars posted sales growth of 22% to 486,000 units1.
Due to lifecycle reasons, unit sales in the E-Class segment were
lower than in the previous year.

Earnings from trucks and vans were higher than in 2013. Sales
of trucks reached 92,000 units1 (2013: 105,000). Sales of vans
increased by 11% to 281,000 units1.

1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have
not yet been sold on to external customers by those companies.
Vehicle sales by production companies of the Daimler Group are
not counted in the unit sales of Daimler AG.

Cost of sales increased by 10% to €75.3 billion. Increases
in unit sales and expenses for new technologies and products
led to higher cost of sales. Research and development
expenses, which are included in cost of sales, were higher
than in the previous year at €4.9 billion (2013: €4.7 billion);
as a proportion of revenue, they amounted to 5.8% (2013: 6.2%).
Research and development expenses were primarily related
to the renewal and expansion of the product portfolio, especially
with regard to the model series of the E-Class, the SUVs
and the compact class. In addition, we are continuously work-
ing 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.

Selling expenses increased by €0.3 billion to €6.5 billion.
This was primarily due to higher expenses for personnel
and marketing. As a proportion of revenue, selling expenses
decreased from 8.3% to 7.7%.

General administrative expenses of €1.9 billion were
slightly above the prior-year level (2013: €1.8 billion).
In relation to revenue, they amounted to 2.2% (2013: 2.4%).

Other operating income amounted to €1.1 billion (2013:
€1.5 billion). The change compared with the previous year was
mainly the result of higher expenses in connection with the
ongoing antitrust investigation by the EU Commission of Euro-
pean manufacturers of commercial vehicles.  B.36

Financial income improved by €0.9 billion to €3.6 billion,
primarily due to higher net income from investments in subsid-
iaries and associated companies. That increase was mainly
the result of the sale of our 50% equity interest in Rolls-Royce
Power Systems Holding GmbH to Rolls-Royce Holdings plc.

The income tax expense amounted to €1.2 billion (2013
income tax benefit of €0.2 billion). In 2013, high tax benefits
were included in connection with the tax assessment of
previous years. The non-recurring of those tax benefits and
a higher income tax expense for 2014 due to the improved
profit before income taxes led to the increase in the income
tax expense compared to prior year.

Net profit increased from €3.7 billion to €3.8 billion.
This development primarily reflects the improved operating
profit and the increased financial income. Due in particular
to the higher than forecast operating profit, net profit is above
the level that was originally expected.

The economic situation of Daimler AG primarily results from
its business operations and those of its subsidiaries. Daimler AG
participates in the operating results of its subsidiaries through
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 116 f

Financial position, liquidity and capital resources

The balance sheet total of €85.3 billion is at the level
of a year earlier.

Non-current assets decreased by €1.0 billion to €43.8 billion
in 2014, primarily due to the lower amount of financial assets.
This mainly reflects the sale of our 50% equity interest in Rolls-
Royce Power Systems Holding GmbH to Rolls-Royce Holdings
plc. Investments in property plant and equipment (approximately
€2.5 billion excluding leased assets) mainly comprised invest-
ments for the production of the C-, E- and S-Class, as well as
investments in engine and transmission projects.

Inventories increased by €1.1 billion to €7.8 billion at
December 31, 2014. The increase was mainly related to finished
goods and raw materials and manufacturing supplies, as
well as unfinished goods to a lower extent, and was caused
by the high production volume.

Receivables, securities and other assets increased com-
pared with December 31, 2013 by €1.1 billion to €30.0 billion.
The main reason for this development was growth in receiv-
ables of €0.9 billion. Cash and cash equivalents decreased
by €1.3 billion to €3.4 billion, partially due to the extraordinary
contribution to pension plan assets of €2.4 billion.

Gross liquidity – defined as cash and cash equivalents
and other marketable securities – of €8.6 billion was lower
than a year earlier (2013: €9.3 billion).

Cash provided by operating activities amounted to €3.2 billion
at the end of 2014 (2013: €6.0 billion). The decrease primarily
reflects significantly higher contributions to pension plan assets
as well as higher inventory growth. There was an opposing,
positive effect on the cash flow from the increased operating
profit in 2014.

B.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 expense/benefit

Net profit

2014

2013

83,947

-75,307

75,531

-68,183

-6,518

-1,885

1,122

1,359

3,635

4,994

-1,223

3,771

-6,243

-1,779

1,497

823

2,687

3,510

203

3,713

Transfer to retained earnings

-1,150

-1,306

Distributable profit

2,621

2,407

B | Combined Management Report | Daimler AGCash flows from investing activities resulted in a net cash
outflow of €1.3 billion in 2014 (2013: €7.1 billion). The lower
cash outflow was the result of lower net investment in securities.
Another factor is that investments in financial assets also
decreased. The sale of the equity interest in Rolls-Royce Power
Systems Holding GmbH had a positive impact on cash flows
from investing activities.

Equity increased compared with December 31, 2013 by
€1.4 billion to €37.1 billion. This change primarily resulted
from the net profit for 2014, of which, in accordance with
Section 58 Subsection 2 of the German Stock Corporation Act
(AktG), €1.2 billion was transferred to retained earnings.
The equity ratio at December 31, 2014 was 43.5% (December 31,
2013: 41.9%).

Cash flows from financing activities resulted in a net cash
outflow of €3.2 billion (2013: €1.3 billion). The increased
outflow is explained by the lower volume of external financing
liabilities entered into compared with the previous year.
Intragroup (cash) liabilities to subsidiaries in the context of
the central finance and liquidity management decreased
compared with 2013 at a lower rate. Cash flows from financing
activities include the payment of the dividend for the year
2013 in an amount of €2.4 billion.

Provisions decreased compared with December 31, 2013
by €0.8 billion to €11.9 billion. This primarily reflects lower
provisions for pensions and similar obligations resulting from
the extraordinary contribution of €2.4 billion to the pension
plan assets. There was an opposing effect, however, mainly due
to the increase in the expenses relating to the ongoing anti-
trust investigation by the European manufacturers of commer-
cial vehicles, an increase in personnel and social-security
obligations and the sales-related increase in provisions for
warranty claims.

Liabilities decreased by €0.7 billion to €35.8 billion.
This change is mainly related to liabilities to subsidiaries
(minus €2.6 billion). Financing liabilities increased by
€1.9 billion, however.

Dec. 31,
2014

Dec. 31,
2013

Risks and opportunities

43,772

7,846

29,985

3,399

41,230

256

85,258

44,748

6,682

28,869

4,718

40,269

259

85,276

3,070

3,069

11,480

19,891

2,621

37,062

1,391

10,470

11,861

5,412

30,379

35,791

544

85,258

11,477

18,748

2,407

35,701

3,405

9,214

12,619

5,352

31,111

36,463

493

85,276

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 132 ff For Daimler AG, we assess the
probability of occurrence of the risks connected with pension
plans as high. These risks increase along with a decreasing
discount rate. Charges may additionally arise from relations with
subsidiaries and associated companies in connection with
statutory or contractual obligations (in particular with regard
to financing).

Outlook

Due to the interrelations between Daimler AG and its subsid-
iaries and the relative size of Daimler AG within the Group,
we refer to the statements in the “Outlook” chapter, which also
largely reflect our expectations for the parent company.
E see pages 146 ff Daimler AG expects to post a significantly
lower net profit in the year 2015 than in 2014. That decrease
will primarily be caused by the expected higher expense from
provisions for pensions and similar obligations, which in turn
is the result of the ongoing low level of market interest rates.
In addition, the restructuring of our sales-and-service
centers in Germany is connected with substantial charges
on our operating profit in 2015.

B.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 €500 million)

Capital reserve

Retained earnings

Distributable profit

Equity

Provisions for pensions and similar obligations

Other provisions

Provisions

Trade payables

Other liabilities

Liabilities

Deferred income

100

Sustainability.

B | Combined Management Report | Daimler AG | Sustainability

Sustainability at Daimler

Our view of sustainability. For us, sustainability means
conducting business responsibly to ensure long-term success
in harmony with the environment and society. We are moving
toward our goals by making sustainability a firmly integrated
aspect of our operations and by requiring and promoting a strong
sense of responsibility for sustainable operations among all of
our managers and employees throughout the Group. We include
our business partners in this process and conduct a dialogue
on these issues with our stakeholders. Our management struc-
tures, processes and systems are designed in accordance
with this concept of sustainability. As one of the world’s foremost
automakers, Daimler clearly occupies a leading position
in the area of sustainability.

Our sustainability strategy. We have developed a Group-wide
sustainability strategy to enable us to meet the requirements
associated with sustainability, and we systematically pursue the
sustainability goals we have set for ourselves. This strategy
is embedded in our corporate strategy, which is based on our
four core values of passion, respect, integrity and discipline.
We can only ensure sustained profitability and society’s accep-
tance of our business activities if we take into account the
impact all of our business processes have on the environment
and society, and if we align our business targets with envi-
ronmental and social requirements.

Our sustainability strategy has six core aspects (“dimensions
of responsibility”), to which relevant areas have been assigned
where action needs to be taken. We have linked them with
targets and target indicators. Together, all of our goals and
targets serve as the basis for our medium- to long-term
Sustainability Program 2020, which we use to measure our
performance, although we also wish our performance to
be judged externally. Sustainability Program 2020 also defines
the areas in which we plan to take action in the coming years.
For example, we aim to further reduce pollutants and emissions,
further enhance the safety of our vehicles, and further expand
and more systematically structure our efforts to protect human
rights. We also seek to improve our dialogue with our suppliers
and dealers and to further strengthen our social commitment.

Our business activities are also strongly guided by the ten
principles of the UN Global Compact, to which we are firmly
committed as a founding member. We are also a member
of the Global Compact LEAD Group. Our internal principles
and guidelines are based on this international reference frame-
work as well as on other international principles.

– We are committed to both legal and ethical standards and

we must ensure that these standards are adhered to around
the world – by our business partners and suppliers as well.

– Road traffic is one of the causes of CO2 and pollutant

emissions. As an automobile manufacturer, we work to promote
sustainable mobility solutions and have demonstrated our
innovative capability with regard to environmental and resource
protection and safety.

– Our operations impact the environment, and this is especially

the case in vehicle production. We therefore employ a
consistent system of environmental management in order
to minimize this impact.

– As an employer, we have a responsibility to ensure fair and
attractive working conditions for our 280,000 employees
worldwide.

– As a corporate citizen, we seek to contribute to the common

good beyond the level of our business operations, and
we utilize our special expertise in order to achieve this goal.

Group-wide sustainability management. At Daimler,
sustainability is thematically and organizationally embedded
in our Group-wide corporate governance activities.
E see pages 182 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 meet key sustainability targets. The scorecard
uses a color-coded system either to display the success of quan-
titative 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.

101

Comprehensive reporting on sustainability. In 2014,
Daimler published its tenth Group-wide sustainability report.
The report provides a detailed and comprehensive sustain-
ability balance sheet for the previous financial year and
is supplemented by an interactive online sustainability report
that contains more detailed and extensive information.
w daimler.com/sustainability

The new sustainability report on financial year 2014 will be
presented at Daimler’s Annual Shareholders’ Meeting in early
April 2015. The report was drawn up in line with the Global
Reporting Initiative (GRI) guidelines 4.0. In this context, Daimler
specifically highlights all of the company’s key sustainability-
related issues. This applies in particular to focal topics such as
further reductions in the fuel consumption of our vehicles
through hybridization, for example, as well as our attractiveness
as an employer, our activities in China and the company’s
mobility concepts. In addition, we report on specific issues
such as the remanufacturing of used engines, the further
expansion of initiatives related to integrity and compliance, and
efforts to boost employee commitment to sustainability-
related issues.

Research and development

Research and development as key success factors.
Research and development have always played a key role at
Daimler. Our researchers anticipate trends, customer wishes
and the requirements of the mobility of the future, and our
development engineers systematically implement these ideas
in products that are ready for series production. Our goal
is to offer our customers fascinating products and customized
solutions for 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 2014, Daimler employed 21,700 men and
women at its research and development units (2013: 21,300)
A total of 14,000 employees (2013: 13,600) worked at Group
Research & Mercedes-Benz Cars Development, 5,500 (2013:
5,600) at Daimler Trucks, 1,000 (2013: 1,000) at Mercedes-Benz
Vans and 1,100 (2013: 1,100) at Daimler Buses. Around 4,600
researchers and development engineers (2013: 4,400) worked
outside Germany.

Our international research and development network.
Our global research and development network comprises
21 locations in ten countries. Our biggest facilities are
in Sindelfingen and Stuttgart-Untertürkheim in Germany.
Approximately 120 people are currently employed in
Sunnyvale, California, the headquarters of our research facili-
ties in North America. Other important research locations
in North America are Long Beach, California; Portland, Oregon;
and Redford, Michigan. Our most important locations in Asia
are our facility in Bangalore, India; the Global Hybrid Center
in Kawasaki, Japan; and our research and development
center in Beijing. With its approximately 2,000 employees,
Mercedes-Benz Research and Development India (MBRDI)
is Daimler’s largest research and development center outside
Germany. In November 2014, Daimler Greater China Ltd.
opened a new research and development center in China,
thereby expanding the existing R&D network in Beijing.
The Advanced Design Studio is the most important component
of the new center and it also serves as the Group’s new
design hub in Asia. Its primary task is to provide Chinese cus-
tomers with an even more intense Mercedes-Benz brand
experience. Some 500 highly qualified engineers and designers
will work at the new Mercedes-Benz research and develop-
ment center in China in the future. In 2013, our van joint venture
in China, Fujian Benz Automotive Corporation, opened
a new product development center in Fuzhou. This facility,
which is the first Mercedes-Benz Vans product development
center outside Germany, has a design and calculation
department, proving grounds, test labs and component
and complete-vehicle test rigs.

Along with our internal activities, we also maintain close
contacts with external research institutions. For example,
we work together with various renowned research institutes
and participate in international exchange programs for
up-and-coming scientists.

Targeted involvement of the supplier industry. In order
to reach our ambitious goals, we also cooperate very closely
with research and development units from the supplier
industry. Daimler must be closely meshed with supplier com-
panies 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. Strong partners from the sup-
plier industry are also indispensable for our efforts to develop
and offer new concepts for future mobility. As part of our
joint research and development work, we ensure that the Group
retains the key technological expertise it needs in order
to keep our brands distinct and to safeguard the future of the
automobile in general.

102

Intellectual property rights secure our leadership in
technology and innovation. Carl Benz invented and patented
the automobile in 1886. Since then, we have refined auto-
mobiles with more than 100,000 patents. In the year 2014, a
total of 2,049 new ideas were registered for patents (2013:
2,078). These patent applications secure not only scope for the
application of innovative technologies, but also the exclusivity
of our innovations. Inventions are identified and protected at all
of our sites in the global research and development network –
especially in Germany, China, Japan, the United States and India.
In addition to industrial property rights, unique visual aspects
of our products are protected with over 6,400 designs registered
in 2014 (2013: 6,100). Furthermore, with a portfolio of more
than 32,900 trademarks (2013: 32,500), we protect the renowned
and valuable Mercedes-Benz brand, the three-pointed
star and all other product brands in each relevant market.

€5.7 billion for research and development. We want
to continue shaping mobility through our pioneering innovations
in the coming years. As we had already announced in Annual
Report 2013, we once again invested the very large amount
of €5.7 billion in research and development work in 2014
(2013: €5.5 billion). Of that amount, €1.1 billion (2013: €1.3 billion)
was capitalized as development costs, which amounts to
a capitalization rate of 20% (2013: 23%). The amortization
of capitalized research and development expenditure totaled
€1.2 billion during the year under review (2013: €1.1 billion).
With a rate of 4.4% (2013: 4.7%), research and development
expenditure also remained at a high level in comparison
with revenue. Research in the reporting year focused on new
vehicle models, extremely fuel-efficient and environmentally
friendly drive systems and new safety technologies. We made
improvements in all of the main areas that help further
increase our vehicles’ efficiency – ranging from innovative
drive-system concepts to energy management, aerodynamics
and lightweight engineering.

The most important development projects at Mercedes-Benz
Cars were the successor models of the E-Class and M-Class,
as well as our new generation of compact cars. In addition, we
continually invest in new low-emission engines, alternative
drive systems and innovative safety technologies. Mercedes-
Benz Cars spent a total of €4.0 billion on research and devel-
opment in 2014, surpassing the high level of expenditure in 2013
(€3.8 billion). Daimler Trucks invested €1.2 billion in research
and development projects (2013: €1.2 billion). The focus there
was on new medium-duty and heavy-duty engines as well as
on the successor generations of existing products. R & D expen-
diture at Mercedes-Benz Vans mainly for ongoing product
enhancement measures, as well as efforts to further reduce
emissions and increase fuel efficiency. Daimler Buses pri-
marily focused its development activities on new products, the
fulfillment of new emissions standards and the creation
of alternative drive systems. Around half of our research and
development expenditure is applied for the development
of green technologies.  B.38  B.39

B.38
Research and development expenditure

In billions of euros

total
thereof capitalized

2010

2011

2012

2013

2014

B.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

2014

2013

14/13

% change

5,680
1,148

4,025
1,035

1,188
34

293
68

182
11

5,489
1,284

3,808
1,063

1,171
79

329
139

187
3

+3
-11

+6
-3

+1
-57

-11
-51

-3
+267

103

B | Combined Management Report | SustainabilityDuring the year under review, new products and technologies
once again enabled us to make substantial progress on the
“Road to Emission-free Driving.” The examples on the following
pages show how this is happening.

Efficient cars and commercial vehicles with internal combus-
tion 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. This
is largely made possible by engines with low displacement and
turbochargers, as well as by lightweight engineering, aerody-
namic improvements, tires with low roll resistance, demand-
appropriate energy management and an automatic start-stop
function. A good example of this is the new C-Class, which we
began to deliver to customers in April 2014. The improvements
we made to the vehicle body, as well as to the model’s engines
and auxiliary systems, have significantly decreased fuel
consumption, by as much as 32% in some cases. We are exploit-
ing additional potential through intelligent and customized
hybrid ization. For example, the most fuel-efficient C-Class model
at present – the C 300 BlueTEC HYBRID1 – consumes only
3.6 liters of diesel per 100 kilometers (NEDC combined) and
has CO2 emissions of just 94 grams per kilometer. The most
economical variant of the new updated B-Class – the B 180 CDI
BlueEFFICIENCY Edition2 – boasts fuel-consumption and
emission figures that are just as low.

We have also further reduced the fuel consumption of the most
recent additions to our range of trucks. Our new Actros,
Arocs, Antos and Atego series and the heavy-duty Freightliner
Cascadia Evolution in the United States, and the new FUSO
Super Great V are all the cleanest and most economical trucks
in their respective classes. In addition, our new buses are
making a huge impression with outstanding fuel efficiency.
E see page 109

Innovation and safety

Innovations for the mobility of the future. The greatest
possible customer utility, the most stringent safety standards,
maximum environmental compatibility and efficiency – we
rely on innovative concepts and environmentally sound product
development to help us achieve all of those goals simultane-
ously. Our innovations range from pioneering vehicle and drive-
system technologies to intelligent lightweight engineering
concepts and sophisticated assistance systems that can prevent
accidents. Over recent years in particular, we have made
tremendous progress on the road to accident and emission-free
driving. We have a greater range of electric vehicles on the
road than any other automaker and we also set standards for
safety. We have established a leading position in the area
of autonomous driving in particular, and we plan to further
strengthen this position.

On the road to emission-free mobility. Finite oil reserves,
population growth – especially in urban centers – and the
unabated demand for mobility require new solutions for all
aspects of transport. Our goal is to safeguard mobility
for the generations to come. We therefore strive to offer our
customers safe and efficient low-emission vehicles and
associated services. Our vision for the future is to establish
a mix of drive systems that reflect market demands. Our
“Road to Emission-free Driving” initiative defines the key
development approaches for creating extremely fuel-
efficient and environmentally friendly drive-system tech-
nologies at all of our divisions:

1. We continue to enhance our vehicles with state-of-the-art
internal combustion engines that we are optimizing to
achieve significantly lower fuel consumption and emissions.
2. We are achieving further 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 emission-free driving possible.  B.40

B.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

104

road ahead. “Intelligent HYBRID” is the only predictive operating
strategy in existence to engage not only when a destination
is programmed into the navigation system, but also when the
destination-guidance feature is inactive. In this case, the
system bases the probability the vehicle will stay on its current
route on the type of road it is traveling on. E see pages 8 ff

Another new feature in the Mercedes-Benz S 500 PLUG-IN
HYBRID3 is the so-called haptic gas pedal, which gives drivers
a double impulse signal to indicate when they should take
their foot off the gas in order to coast the vehicle and recover
energy. When the vehicle is in the pure electric mode, the
system can tell the driver when it is time to engage the combus-
tion engine. The current energy flow is shown in the instru-
ment cluster and on a central display in all operating modes
if the customer chooses to activate this function.

1 C 300 BlueTEC HYBRID: fuel consumption in l/100 km: urban 4.1-3.9,

extra-urban 3.9-3.4, combined 4.0-3.6; CO2 emissions in g/km:
combined 104-94

2 B 180 BlueEFFICIENCY Edition: fuel consumption in l/100 km: urban 4.3,
extra-urban 3.2, combined 3.6; CO2 emissions in g/km: combined 94
3 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km: combined: 2.8;

CO2 emissions in g/km: combined 65;
electricity consumption in kWh/100 km: 13.5

4 S 400 HYBRID: fuel consumption in l/100 km: urban 7.4-6.6,

extra-urban 6.5-6.1, combined 6.8-6.3;
CO2 emissions in g/km: combined 159-147

5 S 300 BlueTEC HYBRID: fuel consumption in l/100 km: urban 4.8-4.7,

extra-urban 4.6-4.3, combined 4.7-4.4; CO2 emissions in g/km:
combined 124-115

First plug-in hybrid with the star. The first certified “three-liter”
luxury sedan in the world marks yet another milestone on the
road to emission-free mobility. The new Mercedes-Benz S 500
PLUG-IN HYBRID3 combines an ultramodern hybrid drive
concept with the unique innovations and luxurious appointments
typical of the S-Class. This long-wheelbase sedan, which we
began to deliver to customers in October 2014, makes a huge
impression with its exceptionally dynamic handling and
efficiency. E see pages 4 ff

The S 500 PLUG-IN HYBRID3 joins the S 400 HYBRID4 and
the S 300 BlueTEC HYBRID5 as the third hybrid model in
the S Class series. We will launch a total of ten plug-in hybrid
cars in the period until 2017. It will be possible to recharge
all these models batteries’ also from external power sources.

Intelligent energy management for hybrid vehicles. The
engineers who develop new hybrid models are benefiting more
and more from cooperation with our successful Formula 1
racing team, which also uses high-tech hybrid drive to save
on fuel. The synergies here benefit both production vehicles
and race cars. Many hybrid vehicles fail to take on energy when
driving downhill because their high-voltage batteries are often
too fully charged at the wrong moment to absorb the additional
energy recovered in such situations. The “Intelligent HYBRID”
operating strategy that Mercedes-Benz utilizes in the S-Class
and will use in other models in the future ensures that the
high-voltage battery remains in a charging stage that allows all
the possibilities offered by energy recovery on a given road
and terrain to be fully exploited. If the battery is too fully charged,
the electric motor automatically supports the combustion
engine in order to allow the battery to discharge to a level that
enables it to fully absorb the anticipated amount of recovered
energy. The system uses data from the COMAND Online navi-
gation system to calculate the recovery potential along the

B.41
Intelligent operating strategy: Operating modes

HYBRID
Ò Electric operation or driving with

the combustion engine is possible

E-MODE
Ò Pure electric operation
Ò Metering of electric output via the

E-SAVE

Ò The current charge status is

CHARGE
Ò The HV battery is charged via the

maintained

combustion engine

Ò Automatic selection of drive type

haptic accelerator pedal

Ò Limited electric operation is

Ò Electric operation is not possible

(variable pressure point)

possible

Ò Optimum use of combustion
engine and electric motor

Ò Maximum availability of electric

motoring

Ò Preservation of the HV battery
capacity for future electric

Ò Charging of the HV battery for

future electric motoring

motoring

105

B | Combined Management Report | SustainabilityA unique spectrum of electrically powered vehicles. Our
spectrum of electric vehicles ranges from cars to vans, light
trucks and buses. The following is a list of electric Daimler
vehicles currently on the road: the smart fortwo electric drive1,
the A-Class E-CELL2, the SLS AMG Coupe Electric Drive3,
the B-Class F-CELL4, the B-Class Electric Drive5 and, in the
commercial vehicle segment, the Vito E-CELL, the Mercedes-
Benz Citaro FuelCELL Hybrid, the FUSO Canter E-CELL
and the Freightliner Custom Chassis MT E-CELL All-Electric.

The smart fortwo electric drive1 is now available in 18 markets
worldwide and is also one of the best-selling electric cars
in Germany. More than 1,300 e-smarts are also being used
around the clock in various cities as part of our innovative
car2go mobility service.

The new B-Class Electric Drive5 was initially launched in the
US market in 2014 and was later introduced in Germany
as well in November. The model sets standards for compact
electric vehicles in terms of comfort, quality and safety.
Its quiet, locally emission-free operation is made possible by
a 132 kW electric motor, which delivers its maximum torque
of 340 Nm as soon as the driver presses the gas pedal. That is
about the same as the amount of torque provided by a state-
of-the-art three-liter gasoline engine. Energy for the electric drive
system is supplied by a powerful lithium-ion battery, which
is located in the “energy space” of the car’s underbody, where
it is safely protected and takes up little room. This setup
is also what allows the five-seater to maintain the famously
spacious interior and cargo area of the conventional B-Class.
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.

In China, we launched the first electric car of the DENZA
brand in September 2014. We jointly developed, and now locally
produce, this innovative model with our partner BYD. The
DENZA fully lives up to its promise to be the safest, most reliable
and most sophisticated electric vehicle from and for China.
With its range of up to 300 kilometers, the DENZA is the perfect
automobile for daily use. Thanks to a wheelbase that corre-
sponds to that of a Mercedes-Benz E-Class, this electric car
is also able to offer plenty of legroom in the back as well,
not to mention cargo volume of 460 liters. As a result of its
outstanding safety concept, the DENZA was also the first
electric vehicle to receive five stars in a crash test for China’s
new-car assessment program (NCAP).

Fuel cell endurance test. In October 2014, a B-Class
F-CELL4 from Mercedes-Benz’s current fuel-cell fleet set
a new endurance record after being driven for more than
300,000 kilometers in totally normal conditions. This test, which
had never before been conducted anywhere in the world,
shows that fuel-cell vehicles also operate reliably under extreme
stress and can be driven for many years. Daimler AG was
presented with the “f-cell Award 2014” for the record-setting
test, which marked the third time the company has won
this fuel cell innovation competition.

The Mercedes-Benz B-Class F-CELL4 is manufactured under
series production conditions. Customers in Europe and the
United States have been driving the model under normal every-
day conditions since 2010. Daimler’s fuel-cell fleet, which
together with a large number of research cars now totals more
than 300 vehicles, has clocked up well over nine million
kilometers of driving to date. Our engineers continue to use the
results of studies on how they operate to identify additional
optimization potential and to make corresponding improvements
in the development of the next generation of fuel-cell vehicles.
Daimler is still working with the clear goal of manufacturing and
marketing competitive fuel-cell vehicles in 2017.

Autonomous driving in the United States. In September 2014,
Mercedes-Benz became one of the first automakers to receive
permission to test autonomously driving vehicles on public roads
in California. Since October 2014, Daimler has also been using
the largest test site in the United States – the Concord Naval
Weapons Station (CNWS) – for conducting additional tests
with this forward-looking technology. Self-driving vehicles can
be safely tested in Concord, California, even in particularly
dangerous conditions and situations. Nevertheless, our research
here continues to focus on tests under real-life conditions.
Our research activities in the United States are designed to pro-
mote the development of autonomous driving worldwide,
as the road infrastructure in the United States differs from that
in Germany in many ways. For example, streets, roads and
highways in Germany are generally narrower than in the United
States, where lanes are also wider and some major highways
can have six or even eight lanes. Traffic lights in the United States
are also mounted on the other side of the intersection from
where the vehicle is standing. In addition, merging traffic is more
common in the United States, which also has four-way stop
signs that give the right of way to the first vehicle that arrives
at the intersection. The knowledge Mercedes-Benz gains
in the US is helping the brand take significant steps forward
with the development of autonomous driving technology.

In 2013, Daimler impressively demonstrated in Germany that
autonomous driving is already technologically possible even
in complex urban and rural traffic situations: In August 2013, the
Mercedes-Benz S 500 INTELLIGENT DRIVE – a new S-Class
equipped with technology close to series production – drove
completely autonomously along the roughly 100-kilometer
historical route once traveled by Bertha Benz from Mannheim
to Pforzheim.

Intelligent automobile connectivity. Digitization has long
since become a normal part of our lives. Today’s automobiles
are also “always on” and intelligently connected. Mercedes-
Benz brought the Internet into the automobile many years ago;
now it is connecting the car itself to the Web. Beginning with
the new C-Class station wagon, our “Mercedes connect me”
system has enabled us to successively equip our models with
a state-of-the-art communication module that makes it possible
for our customers to access their vehicle anytime and from
anywhere via their smartphone, tablet or any other computer.
This communication module also allows traffic information
to be called up in the vehicle in real time and ensures rapid
assistance in the event of an accident.
w mercedes-benz.com/en/mercedes-me/

106

It goes without saying that safe and comfortable operation
was a top priority in the development of all of our new info
tainment systems. That’s because minimal driver distraction
and a high degree of userfriendliness are more important
to us than the integration of technical gimmicks.

in road traffic. The research vehicle sets standards also in
terms of its drive system: Its total range under electric power
with fuel cells is approximately 1,100 kilometers. Approxi
mately 200 km can be driven under battery power and 900 km
with electricity from the fuel cells. E see pages 36 f

Naturally, we also paid close attention to data protection
from the very beginning. The car of the future will increasingly
become a digital companion, which means data always has
to be just as safe and secure as the vehicle and its occupants.
We therefore refer to our approach here as “Privacy by Design,”
by which we mean that data protection is given top priority as
early as the design stage for networked services.

F 015 Luxury in Motion. In early January 2015, MercedesBenz
presented the new research vehicle “F 015 Luxury in Motion”
at the International Consumer Electronics Show (CES) in Las
Vegas. The autonomously driving luxury sedan shows how
the automobile is being transformed from a vehicle into a space
for private relaxation. With a very roomy loungestyle interior,
the F 015 raises the aspects of comfort and luxury to a new level.
A key idea of the research vehicle is the continuous exchange
of information between car, occupants and the outside world.
This takes place with the help of six displays harmoniously
integrated into the dashboard as well as the sides and rear of
the passenger compartment. The occupants can interact
with the connected car intuitively using gestures, eye movements
or the highdefinition touch screen. And the F 015 Luxury
in Motion is in touch with its environment using laser projection
and LED signals, and thus becomes an interactive partner

World premiere of the future of truck transportation.
From a vision to reality – the spectacular MercedesBenz Future
Truck 2025 study, which was presented at the IAA Commercial
Vehicles show in September 2014, offers a visually fascinating
and technically feasible preview of the longdistance trucks
of tomorrow. In ten years, trucks could be driving autonomously
on highways, which would be good for the economy and society.
Such a development would boost transport efficiency, make
driving safer for everyone, and further reduce fuel consumption
and CO2 emissions. MercedesBenz therefore continues to
link existing assistance systems with improved sensor technology
in its “Highway Pilot” system, which has already made auto
nomous driving at realistic speeds on highways a reality today.
E see pages 14 ff

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

CO2 emissions in g/km: 0.0

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

CO2 emissions in g/km: 0.0

3 SLS AMG Coupe Electric Drive: electricity consumption in kWh/100 km:

26.8; CO2 emissions in g/km: 0.0

4 BClass FCELL: H2 consumption in kg/100 km: 0.97;

CO2 emissions in g/km: 0.0

5 BClass Electric Drive: electricity consumption in kWh/100 km: 16.6;

CO2 emissions in g/km: 0.0

B.42
Autonomous driving with the Mercedes-Benz Highway Pilot

Short Range Radar

Lateral Radar on both sides

Front Stereo Camera

Highway Pilot | On

Full Range Radar

Vehicle to Infrastructure Communication

Vehicle to Vehicle Communication

107

B | Combined Management Report | SustainabilityOur “road to accident-free driving.” Vehicle safety is
one of our core areas of expertise and a key component of
our product strategy. An important chapter in the history
of vehicle safety actually began 75 years ago when the engineer
Béla Barényi joined the former Daimler-Benz AG. Mercedes-
Benz has been shaping the development of safety systems ever
since that time. Many of the company’s innovations, especially
those for protecting vehicle occupants and other road users, have
saved countless lives. Our vision of accident-free driving will
continue to motivate us to make mobility as safe as possible
for everyone in the future.

Intelligent Drive in the new C-Class. Ensuring the highest
degree of safety for everyone – this is the stated goal
of Mercedes-Benz. That is why within the framework of the
Mercedes-Benz Intelligent Drive program, we equipped
the new C-Class with many of the new assistance systems
with expanded features that celebrated their world premiere
in the S-Class and E-Class. Although the European NCAP
(New Car Assessment Program) crash tests were more extensive
and stringent in 2014 than in the previous year, the new
Mercedes-Benz C-Class passed them with flying colors. The
model thus received the best rating of five stars for occupant
safety, child safety, pedestrian protection and its assistance
systems. The Mercedes-Benz C-Class also received the
Euro NCAP Advanced Reward for two of its safety systems:
ATTENTION ASSIST, which detects signs of driver fatigue,
and the PRE SAFE® anticipatory occupant protection system.
The Mercedes-Benz GLA compact SUV and the V-Class
underwent NCAP tests as well and also received top marks.

PRE-SAFE® expanded to include important new functions.
Ten years ago, Mercedes-Benz presented a groundbreaking
safety-technology concept in the form of the PRE-SAFE® antici-
patory occupant protection system, which has been continu-
ously further developed ever since. New important components
were also added in 2014. These new PRE-SAFE® functions
can help prevent accidents with pedestrians and rear-end colli-
sions in city traffic, defuse dangerous situations caused by
traffic coming from behind, and enhance the protection offered
by seatbelts. The PRE-SAFE® Brake can now also detect
pedestrians and initiate an autonomous braking maneuver to
avoid a collision at speeds up to 50 km/h. PRE-SAFE® PLUS
can recognize an imminent rear-end collision and warn cars
behind by rapidly flashing the rear hazard lights. If the danger
of a collision persists, the system can also firmly apply the brakes
to the stationary car and thus minimize the risk of whiplash
by reducing the forward jolt caused by the impact. In addition,
the autonomous braking feature to protect against collisions with
vehicles ahead has also been significantly improved.

Blind Spot Assist for trucks. Collisions during turns occur
very frequently and usually cause serious damage. This
is especially true when trucks and unprotected pedestrians or
cyclists are involved. Blind Spot Assist from Mercedes-Benz
helps prevent such collisions by reliably warning truck drivers
of potential danger during turns in situations where visibility
is limited. Organizations such as the German Insurance Associa-
tion (GDV) estimate that Blind Spot Assist can prevent around
half of all accidents that involve trucks and pedestrians or cyclists.
As a result, the number of associated fatalities could fall by
nearly one third. The heart of Blind Spot Assist is a radar sensor
mounted in front of the truck’s rear axle on the passenger
side of the vehicle. The system is arranged in such a way that
it covers the entire length of a semi-trailer truck or a truck
and trailer combination. The area monitored even extends forward
to two meters in front of the truck. The driver is given a visual
signal if a moving object is detected in the monitored area at the
side of the truck. If there is the risk of a collision, additional
visual and audible warnings are issued. Visual and audible warn-
ings are also issued if the sensors detect a stationary obstacle
such as a traffic light or street light in the tracking pattern of the
truck during the process of turning. This comprehensive
support for the driver occurs over the entire speed range of the
truck from a standstill to the permitted maximum speed.

New emergency braking system for touring coaches.
In recent years, the Mercedes-Benz Travego high-deck touring
coach has been setting standards for safety technology.
The latest world first in the Travego is Active Brake Assist 3
(ABA 3). The predecessor generation, ABA 2, was already able
to initiate a braking maneuver when the danger of a collision
with slower vehicles ahead or with stationary obstacles existed.
The new ABA 3 can do even more. For example, it is able to
initiate automatic emergency braking when stationary obstacles
are encountered. New legislation requires that all touring
coaches newly registered as of November 2015 be equipped
with an emergency braking assistance system. These require-
ments will also be further tightened beginning in the fall
of 2018. The Travego with ABA 3 can already do more today
than the regulations for 2018 will require.

Environmental protection

A comprehensive approach to environmental protection.
Protecting the environment is a primary corporate objective
of the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral
component of a corporate strategy 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 prod-
ucts therefore take the entire product lifecycle into account –
from design, production and product use all the way to
disposal and recycling. The environmental and energy-related
guidelines approved by the Board of Management define the
environmental and energy-related policy of the Daimler Group.
This expresses our commitment to integrated 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.

108

€2.8 billion for environmental protection. In 2014, we
continued to energetically pursue the goal of conserving
resources and reducing all relevant emissions. We kept a close
eye on the impact of all our processes, ranging from vehicle
development and production to recycling and environmentally
friendly disposal. Our expenditure for environmental pro-
tection fell temporarily from €2.9 billion to €2.8 billion in 2014,
mainly as a result of powertrain model cycles.

Environmentally responsible product development. A
vehicle’s environmental impact is largely predetermined
in the first stages of development. The earlier environmentally
responsible product development (Design for Environment,
DfE) is integrated into the development process, the more effi-
ciently it can help minimize the impact on the environment.
The continual improvement of our products’ environmental
compatibility is therefore a major requirement when setting
product specifications. Our DfE experts are involved in all stages
of the vehicle development process as a cross-functional
team. We also systematically integrate our product design pro-
cesses into our environmental and quality management
systems in accordance with ISO 14001 and ISO 9001. Mercedes-
Benz has been in full compliance with the relevant standard
– ISO 14006 – since 2012. Mercedes-Benz has also been certified
according to ISO TR 14062, the standard for environmentally
oriented product development, since 2005. It was the first auto-
maker in the world to achieve this certification.

Further reductions in cars’ CO2 emissions. Daimler makes
great efforts to reduce the fuel consumption of its vehicles
while enhancing their performance – and thus increasing driving
enjoyment and safety reserves. With a fleet average of
129 g/km (2013: 134 g/km), we once again significantly reduced
the average CO2 emissions of the cars we sell in the European
Union in 2014. This achievement was due to the further optimi-
zation of our BlueEFFICIENCY measures, the success of our
efficient hybrid drive and extremely fuel-efficient new models.
Over the past five years, we have reduced the CO2 emissions
of our cars by more than 19%. More than 60 Mercedes-Benz
models emit less than 120 g CO2/km, and more than 90
models have received A+ or A energy efficiency labels.  B.43

These include the new S 500 PLUG-IN HYBRID1. With certified
fuel consumption of 2.8 l/100 km and emissions of 65 g
of CO2/km, the model is the most efficient vehicle in its seg-
ment and therefore also bears the best efficiency label of A+.
E see pages 4 ff The E 300 BlueTEC Hybrid is also very fuel-
efficient2. The car combines a 150-kW four-cylinder diesel engine
with a 20-kW electric motor and consumes only 3.8 liters/
100 km on average. That corresponds to CO2 emissions of
99 grams per kilometer.

Economical and low-emission commercial vehicles. We
have also continuously reduced emissions of CO2 and 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, the Mercedes
PowerShift 3 automated transmission fitted as standard equip-
ment, axle ratios better suited to specific needs and improve-
ments to tires and aerodynamics. Daimler was also the first
manufacturer to offer its entire European product range in
a Euro VI version well before those new emissions standards
went into effect in January 2014. 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 completed 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 treatment, our new Euro VI engines consume up
to 5% less fuel than the predecessor 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.

1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km: combined: 2.8;

CO2 emissions in g/km (combined): 65;
electricity consumption in kWh/100 km: 13.5

2 E 300 BlueTEC HYBRID: fuel consumption in l/100 km: urban 4.1-3.9,

extra-urban 4.1-3.8, combined 4.1-3.8;
CO2 emissions in g/km: combined 109-99

B.43
Average CO2 emissions of the new car ﬂeet of Mercedes-Benz Cars
in the EU

g/km

170

160

150

140

130

120

2010

2011

2012

2013

2014

B.44
CO2 emissions

We plan to use innovative technologies for locally emission-free
mobility and, more importantly, new hybrid models, in order
to further reduce the fuel consumption and CO2 emissions of
our cars. 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 over 20% in the past five years. Thanks to BLUETEC tech-
nology, we are a world leader for diesel vehicles. Automobiles
equipped with this technology conform to the strictest emis-
sions standards and are the cleanest diesel cars in the world.

Year

2010

2011

2012

2013

2014

g/km

158

150

140

134

129

109

B | Combined Management Report | SustainabilityIn 2013, we also set a new benchmark for fuel efficiency
in the North American truck market with the launch of our
new heavy-duty Freightliner Cascadia Evolution. Thanks to
its improved aerodynamics and its new Detroit DD15 engine
equipped with proven Daimler BLUETEC exhaust technology,
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.

Through its use of further refined technologies, Daimler
has also succeeded in meeting the targets of a research project
organized by the US Department of Energy. Our test vehicle
achieved the required efficiency gains in 2014 for both the entire
tractor-trailer and engine efficiency. Daimler was able to
demonstrate engine efficiency of more than 50% on a test rig,
and during two test drives on a highway the tractor-trailer
combination displayed up to 61% greater overall efficiency
compared with the base vehicle from 2009.

The consumption of diesel fuel can also be greatly reduced
by hybrid technology – particularly in vans and trucks used
for distribution transportation. For example, the FUSO Canter
Eco Hybrid consumes up to 23% less fuel than a comparable
diesel truck, depending on use, and the Freightliner M2e Hybrid
consumes up to 30% less fuel than a conventional diesel-
powered M2 106. No other commercial vehicle manufacturer
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. There are more than
1.2 million environmentally friendly Daimler commercial
vehicles equipped with SCR technology on the road worldwide,
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%.

Actros wins the “Fuel Duel.” The Actros once again demon-
strated its outstanding fuel economy during the year under
review by beating the competition in “Fuel Duel” fleet trials.
The Mercedes-Benz brand claim for the Actros in the com-
petition was that the model is the most fuel-efficient truck
and would therefore consume less fuel than the most eco-
nomical truck in the other fleets participating in the “Fuel Duel.”
The Actros took part in just under 600 fuel duels in 2014 and
emerged as the winner more than 90% of the time. On average,
the Actros was 11% more fuel-efficient than comparable
rival models.

Economical super trucks. We utilize highly efficient
powertrains and sophisticated aerodynamic features in our
North American semi-trucks (Class 8) in order to reduce
their fuel consumption and CO2 emissions. This is true of the
new Western Star 5700XE as well. The truck’s front end and
its chassis and cab paneling were aerodynamically redesigned
in a manner that significantly lowered air resistance. The
model is also equipped with a new integrated Detroit Diesel
powertrain featuring a DD15 engine that operates at a lower
revolutions as well as a DT12 automated transmission and a par-
ticularly fuel-saving rear axle. The individual measures and
especially the finely tuned overall package have led to a reduc-
tion in fuel consumption of nearly 15% as compared to the
reference vehicle, a Western Star 4900 FE.

Award for climate protection and environmental manage-
ment. At the 2014 CDP Climate Leadership Award Conference
in Munich, CDP (formerly the Carbon Disclosure Project)
acknowledged Daimler AG as the leader in its sector for the
automotive industry. The company received the award for
its outstanding commitment and exemplary transparency in
addressing climate change and achieved the maximum
possible score of 100 in the Climate Disclosure Leadership
Index (CDLI). Daimler also received the highest possible
performance rating of “A” for the measures it has introduced,
the progress it has already made and its planned strategies
for reducing CO2 emissions. One of the things the CDP honored
Daimler for was the fact that the company has reduced the
CO2 emissions of its new car fleet in Europe by more than 20%
over the last five years. Along with its continual improvements
to individual vehicle models, the Group’s efficient production,
including the environmentally friendly generation of electricity,
also contributes to its positive performance.

During the year under review, Daimler AG was also once
again very successful in the manufacturer rankings of the
motoring association Verkehrsclub Deutschland (VCD).
VCD cited the company’s open information policy and its early
compliance with the more extensive particulate thresholds
for direct-injection gasoline engines, which do not go into effect
until 2017, as important factors in its decision to name
Daimler the most environmentally friendly manufacturer in 2014.

Lower weight, more recyclates and more natural materials.
We want to make our vehicles lighter and further reduce the
environmental impact of the materials used in their production.
To achieve these goals, we are using new lightweight materials
and components. In addition, we are increasingly utilizing renew-
able resources and recycled materials. Intelligent lightweight
construction can reduce the weight of a vehicle without compro-
mising safety and comfort. Along with material selection,
component design and manufacturing technology also play a key
role in lightweight engineering. Not every material is suitable
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%. The
most effective way to reduce vehicle weight is therefore to
focus on the body.

For example, the innovative aluminum hybrid body for the
new C-Class is approximately 70 kilograms lighter than a conven-
tional body made of steel. In total, we were able to reduce
the vehicle’s weight by almost 100 kilograms compared with
the previous model. The share of aluminum used for the
vehicle body increased to nearly 50%, compared with less
than 10% with the predecessor model.

110

Extensive recyclability of old vehicles. To make our vehicles
more environmentally friendly, we are reducing our auto-
mobiles’ emissions and the resources they consume over their
entire lifecycle. We therefore pay close attention to creating
a recycling-friendly design already at the development stage.
Up to 85% of the materials in all Mercedes-Benz models are
recyclable and as much as 95% of the materials are reusable.
This means we were in compliance with the new EU recycling
directive before it even went into effect at the beginning of 2015.

Other proven elements of our recycling concept are the
resale of inspected and certified used parts, the remanufactur-
ing of parts and the MeRSy Recycling Management workshop
disposal system.

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 focused production
planning. Waste materials that are unavoidable are generally
recycled. As a result, the recycling rate for waste at our plants
is over 85% on average. At some plants, almost 100% of the
waste is now recycled, meaning that waste destined for landfills
has been almost completely eliminated.

As we systematically pursue our environmental protection
activities, we rely on comprehensive environmental manage-
ment systems. Today, more than 98% of our employees
worldwide work in plants whose environmental management
systems have been certified as conforming to the ISO 14001
or EMAS environmental standards.

Extensive measures for environmental protection in pro-
duction. In recent years, we have been able to limit the
energy consumption, CO2 emissions, production-related solvent
emissions and noise at our plants with the help of environmen-
tally friendly production processes. As a result, energy consump-
tion during the period 2010 – 2014 increased by only 5.4%
to 10.9 million megawatt-hours, which was well below the rate
of production growth. During the same period, CO2 emissions
actually decreased by 6.0% to a total of 3.3 million metric tons,
thanks to a transition to energy sources that produce less
CO2. Our ongoing energy-saving projects enabled us to more
than offset the additional energy consumption that resulted
from the significant increase in production in 2014. Energy
consumption in the reporting year therefore decreased by 1.9%
from the prior year, and CO2 emissions actually decreased by
2.6%. With resource-conserving technology such as circulation
systems, water consumption rose by only about 6.2% between
2010 and 2014, well below the rate of production growth. Despite
the aforementioned increase in production, the savings mea-
sures taken meant that it was actually possible to reduce water
consumption by almost 3% compared to the prior year.

B | Combined Management Report | Sustainability

Workforce

Slight increase in number of employees. On December 31,
2014, the Daimler Group employed a total of 279,972 men and
women. Due to the high demand for our products, the work-
force grew by 2% compared with the end of 2013. At the begin-
ning of 2014, we had anticipated that the workforce would
remain stable. The number of employees in Germany increased
to 168,909 (2013: 167,447) and employee numbers also rose
in the United States, to 22,833 (2013: 20,993). At the end of 2014,
Daimler employed 12,313 men and women in Brazil (2013:
14,091) and 11,400 (2013: 11,275) in Japan.  B.45. Our consol-
idated subsidiaries in China had a total headcount of 2,664
at the end of the year (2013: 1,966). At the end of the reporting
year, the parent company Daimler AG employed a total of
151,524 men and women (2013: 150,605).

Due to reorganization within the context of the Customer
Dedication initiative, the employees previously reported under
“Sales & Marketing Organization” are included in the employee
numbers for the respective divisions as of 2014. However, this
does not apply to the Group’s own sales and service centers
in Germany and the global logistics center in Germersheim, whose
employees are included under “Group Functions & Services”
as of 2014. Workforce numbers in all divisions increased com-
pared with the previous year.  B.46

B.45
Employees at 12/31/2014

By region

Germany

Europe, excluding Germany

USA

Brazil

Japan

Other

60.3%

12.9%

8.2%

4.4%

4.1%

10.1%

B.46
Employees by division

Employees (December 31)

% change

2014

2013

14/13

Daimler Group

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

Group Functions & Services

Sales & Marketing Organization

Other

279,972

129,106

82,743

15,782

16,631

8,878

26,832

–

274,616

96,895

79,020

14,838

16,603

8,107

–

52,455

6,698

+33

+10

–

111

Number of years at Daimler. The average number of years
Daimler employees have worked for the company was close to the
prior-year level at 16.1 years (2013: 16.2 years). In Germany,
employees had worked for the Group for an average of 19.4 years
at the end of 2014 (2013: 19.2 years). The comparative figure
for Daimler AG was 19.8 years (2013: 19.5 years). Daimler
employees outside Germany had worked for the Group for an
average of 11.0 years (2013: 11.3 years).

Diversity management activities. The statement “Daimler’s
success. Your benefit. Our responsibility.” underscores the
importance of diversity management as a strategic factor of
success at Daimler. Our goal is to create and use mixed teams
to encourage our creativity and progress in all areas so that
we can all shape the future of Daimler together. Our various
diversity management measures help make our managers
in particular more aware of the importance of diversity. These
measures also teach diversity skills and help generate new
ideas for the daily work environment.

Our participation in Germany’s Diversity Day, which was initiated
by the German Diversity Charter in 2013, also underscores
our commitment to, and appreciation of, diversity in our company.
The various skills and expertise of our employees enable us
as a global company to meet the ever more varied requirements
and wishes of our customers around the world.

Increased proportion of women employees. Our instru-
ments for supporting the targeted promotion of women include
flexible working-time models, childcare facilities close to
the workplace and special mentoring programs. Daimler has
committed itself to increasing the proportion of women in
senior management positions to 20% by 2020. The proportion
of women in such positions has continually risen over the
last few years to reach 14.1% at the end of 2014 (2013: 12.7%).
Because we are a technologically oriented company, the targets
take into account sector-specific conditions and women’s
current share of our workforce. At the Daimler Group, the propor-
tion of women in the total worldwide workforce increased
to 16.8% (2013: 16.3%). At Daimler AG, women accounted for
14.9% of all employees at the end of the year under review
(2013: 14.6%).

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 €121 million on the training and qualification of our
employees in the year under review (2013: €107 million).
On average, every employee spent 4.1 days in qualification
courses in 2014 (2013: 4.1 days).

We have combined in-house services worldwide in shared service
centers in order to further improve the quality and efficiency
of our administrative functions and various services. These shared
services include financial processes as well as HR, IT and
development tasks, sales functions, and certain location-specific
services. Some of the shared service centers are not con-
solidated because they do not affect our profitability, cash flow
or financial position; those companies employed more than
6,000 men and women at the end of 2014.

The Group’s workforce also does not include the employees
of companies that we manage together with Chinese partners;
at December 31, 2014, they numbered 20,600 people.

High level of profit sharing. On the basis of the company
agreement on profit sharing valid for 2013 and 2014, all eligible
employees at Daimler AG subject to collective bargaining
agreements were paid an amount of €2,541 for the 2013 financial
year. Group management also decided to pay out a one-time
bonus of €500 as an expression of gratitude to our employees
for their special commitment. The full participation in the
company’s success – €3,041 – was paid out in April 2014.

The eligible employees of Daimler AG in Germany will also
receive a performance participation bonus for the company’s
very positive business development in financial year 2014.
The amount of the profit-sharing payout, which was determined
on the basis of the valid company agreement, totals €4,350.
The increase from the prior year is a result of the significant
increase in earnings at the divisions used for the profit-
sharing calculation: Mercedes-Benz Cars, Daimler Trucks and
Mercedes-Benz Vans. Employees will receive their profit-
sharing payout in April 2015.

Slight increase in average age of our employees. The
average age of our global workforce in 2014 was 42.4 years
(2013: 42.3). Our employees in Germany were 43.8 years
old on average (2013: 43.5). Employees who are 50 years old
or older currently make up about 36% of our permanent
workforce at Daimler AG. On the basis of current assumptions,
this proportion will rise to about 50% over the next ten years.

In order to address the challenges resulting from the aging
of our workforce, we launched and successfully continued numer-
ous projects and activities at our German locations in 2014.
They included measures for improving workplace ergonomics
as well as concepts for work organization, personnel allo-
cation management, health management and human resources
development and management.

In 2013, Daimler introduced a new human resources concept
that takes advantage of the experience of the company’s
retired employees. These “senior experts” as they are called,
can voluntarily return to the company for a temporary period
when specific departments need their services for a time.
The experience we have gained so far shows that the program
is extremely popular with both the senior experts and the
departments. The expert pool now comprises approximately
400 retirees with a combined 12,000 years or so of experience.

112

Daimler Health Check. Holistic health management has
been a top priority at Daimler for many years now. Along with
the extensive measures established at all plants, Daimler
also launched an initial pilot program for its new Health Check
system at three selected locations in 2013. The Health Check
system, which was agreed upon with the General Works Council,
is offered to all employees subject to collective bargaining
agreements. Participation is voluntary and employees can join
up once every three years.

The Health Check focuses on early detection of risk factors
and support for employees interested in maintaining their
personal health. Employees can also select a “health counselor”
to help them achieve their individual health goals and stay
healthy over the long term.

Social responsibility

Continued high degree of social involvement. Our global
presence offers us the opportunity to help shape the social
environment and promote an intercultural dialogue in the places
where we do business around the world. We concentrate
here on areas where we can have an impact through our role
as a “good neighbor.” We also participate in projects to
which we can contribute our specific knowledge and core areas
of expertise as an automobile manufacturer. Our activities
focus on the following areas: support for science, education,
traffic safety, the environment, the arts and culture, com-
munity projects, charitable projects, projects for which our
employees volunteer, and projects for promoting dialogue
and understanding.

In 2014, we spent almost €60 million on donations to nonprofit
institutions and on sponsorships of socially beneficial projects.
This does not include our foundations and corporate volunteering
activities, or self-initiated projects.

Transparency and control. The donation and sponsorship
committee controls all of our donations and sponsorship
activities worldwide. The committee bases its decisions on our
donation and sponsorship guidelines, and we also create
transparency with the help of our donation and sponsorship
database. Regular communication actions help employees
adhere to the guidelines and also make them aware of the risks
associated with donations and sponsorship activities.

Contributions to political parties. In 2014, we once again
supported democratic parties solely in Germany, donating
a total of €320,000. The distribution of the contributions
remained unchanged: The CDU and SPD parties each received
€100,000 while the FDP, the CSU and BÜNDNIS 90/DIE
GRÜNEN each received €40,000.

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 auto-
motive industry. w genius-community.com School leavers can
apply to participate in a technical or commercial apprentice-
ship at one of our locations or to study at the 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.

Daimler launched a new employer image campaign in October
2014. The campaign creates the conditions necessary to ensure
a uniform and recognizable presence in the global recruitment
market, and it also improves our image as an attractive employer.
The campaign targets high-school and university students,
university graduates and experienced professionals as well.
A total of 20 different motifs with 48 variations were developed
for these target groups; all of the motifs and variations feature
male and female Daimler employees of different ages and back-
grounds. Each motif also highlights one or more products
from the Daimler Group.

We had 8,346 apprentices and trainees worldwide at the end
of 2014 (2013: 8,630). A total of 1,990 young people began
their vocational training at Daimler in Germany during the year
under review (2013: 2,014). The number of people we train
and subsequently hire is based solely on the Group’s needs and
its future development. In 2014, 89% of Daimler trainees
were hired after completing their apprenticeships (2013: 89%).

Successful employee survey. We conducted a Group-wide
employee survey once again in 2014. Nearly 260,000 employees
in more than 40 countries were invited to participate in the
survey and express their opinions to us between mid-September
and the beginning of October. The very high participation
rate of 70% underscores our employees’ interest and their will-
ingness to actively help shape the further development
of the company.

Overall, the results of the survey were similar to those of recent
years. For example, employee commitment remains above
average when compared with external benchmarks. The careful
and detailed analysis of the results began in early December.
The analysis will identify areas where action can be taken in order
to achieve sustained improvements for the benefit of the
Group and its employees.

Award for Daimler Financial Services. Daimler’s Financial
Services division was named one of the 25 best international
employers worldwide by the independent Great Place to
Work Institute in 2014. This makes Daimler Financial Services
the first German company ever to finish that high in this
ranking of the world’s most attractive employers. In the most
recent survey conducted for the ranking, nine out of ten
Daimler Financial Services employees described their company
as a great place to work. Like the rest of the Group, Daimler
Financial Services is expressly committed to a corporate culture
founded in values such as trust, personal responsibility,
openness to new ideas and, last but not least, enjoyment
of one’s work.

113

B | Combined Management Report | SustainabilityScience funding. Sustainable development cannot be
achieved without the targeted funding of science, research
and technology worldwide. The international exchange
of knowledge and the funding of innovations are key drivers
of developments here. We therefore support universities,
research institutes and interdisciplinary scientific projects
around the globe. We have consolidated these activities
in foundations.

The Daimler and Benz Foundation, for example, is endowed
with €125 million. It is investing approximately €1.5 million
in the “Villa Ladenburg” project, in which a team composed
of more than 20 researchers is studying the individual and
social impact that self-driving vehicles will have in the future.
w daimler-benz-stiftung.de/cms/en

The Association for German Science, the Daimler and
Benz Foundation and the Daimler foundation are using the
MINTernational program with the goal of making the MINT
subjects (mathematics, information technology, natural sciences
and technology) more international in Germany. An inter-
national competition honors colleges and universities that have
developed particularly innovative concepts for preparing
MINT students in Germany for the world market on the one
hand, and for getting the best students from abroad to come
study in Germany on the other. The first award-winning institu-
tions received a total of €500,000 to help them implement
their concepts. w stifterverband.org/ueber_den_stifterverband/
english

B.47
Donations and sponsoring in 2014

Charity/Community

Arts & Culture

Education

58%

18%

Science/Technology/Environment

12%

Political Dialog

Education. Improving access to education is one of the most
lasting investments to the benefit of society and also our
company. Education creates opportunities and opens doors to
a future full of possibilities. That is why we fund numerous
education projects around the world that promote interest in and
passion for science and technology, as well as the ability to
look beyond the working world and remain open to new ideas.

Together with the women’s organization CYDD, we are also
helping socially disadvantaged young women learn technical
professions in Turkey. The award winning project “Each Girl
is a Star” offers young women between the ages of 15 and 18
a four-year training program with an internship at Mercedes-
Benz Turkey or at dealerships or supplier companies. In view
of the project’s success, we have also expanded it to include
a university scholarship program.

Traffic safety. As we move along the “road to accident-free
driving,” we are utilizing assistance systems to ease the burden
on drivers and to protect and support them in dangerous
situations. More importantly, we also seek to ensure that every-
one on streets and roads remains safe. We pursue this goal
with traffic-education projects for schoolchildren and safety
training programs for adults, for example.

Since 2001, our MobileKids program has taught more than
1 million children worldwide how to stay safe in road traffic.
We believe that safe mobility and accident prevention should
be a given for children and adults in their daily lives. That
is why our traffic safety courses are conducted in a playful and
engaging manner. Besides teaching safe behavior as pedes-
trians, cyclists or passengers in vehicles, our training courses
also teach proper behavior in the public transport system.
w mobilekids.net/de-EN

Nature conservation. We share responsibility for preserving
the diversity of natural habitats for future generations.
That is why we have been supporting the projects and initia-
tives of environmental organizations around the world for
many years now, as we help to make sure the Earth remains
a place worth living in.

For example, Daimler supports a renaturing project conducted
by the Global Nature Fund that is helping to protect endan-
gered mangroves in India, Sri Lanka, Cambodia and Thailand.
Among other things, the project has restored more than
100 hectares of severely damaged mangrove forests. This not
only preserves biodiversity in the forests, it also ensures they
can do their job of storing CO2 and protecting the surrounding
area against floods. The project also teaches the local popu-
lation about environmental protection measures and provides
it with alternative sources of income.

114

Employee commitment. We not only act responsibly around
the world as a company, we also support our employees’
efforts to help communities and promote the common good all
around the globe. Countless initiatives demonstrate just how
seriously our employees take their responsibility, and how willing
they are to offer others opportunities they would normally
never have.

In the ProCent initiative, for example, Daimler employees volun-
tarily 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 accordance with
the suggestions of its employees, Daimler then uses this money
to support environmental and social projects all over the
world. In 2014, we provided 188 projects with more than €1
million in funding in this manner.

The Day of Caring in 2014 once again attracted more than
2,300 Daimler Financial Services employees from around the
globe, who came together to jointly help charitable institutions
for a whole day. The climax of these activities was the Week of
Caring in the United States and Canada, which took place
for the second time: Some 1,100 employees spent a whole week
working on charitable projects at more than 30 different
organizations.

Dialogue and understanding. Openness and tolerance are
important pillars of our corporate culture. As a company that
operates around the world, we support projects and institu-
tions that promote intercultural dialogue in the interest of mutual
understanding and the peaceful coexistence of cultures.
We also support initiatives for the strengthening of democracy.

More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
“Sustainability.” w daimler.com/sustainability

The arts and culture. A rich cultural life and a vibrant
art scene foster creativity and innovation. It is therefore very
important to us to support the arts and culture.

Among other ways, we support the arts and culture through
the Daimler Art Collection, which was established in 1977
and now includes some 2,600 works by 700 artists. In general,
our activities focus on the promotion of regional culture
in the areas of the fine arts, jazz, classical music and film.

With its museums, libraries, archives and research institutes,
the Prussian Cultural Heritage Foundation is one of the biggest
cultural and scientific institutions in the world. We support
the foundation’s strategic goals in order to make an effective
contribution to strengthening the role of culture in society.
We are mainly interested here in increasing awareness of the
foundation’s cultural heritage and the work done by its
museums, and we also support new concepts for bringing
more culture to communities.

Communities and charitable projects. For us, a global
presence also means global responsibility. This is why
we support the communities in which we operate as well as
numerous aid projects all over the world. Our efforts here
go beyond assisting in the aftermath of natural or manmade
disasters. We also initiate long-term projects designed to
help people help themselves.

Following the devastating floods in the Balkans, Daimler quickly
donated €250,000 in May 2014 for the people affected in the
region. The donation was given to Caritas International, which
used it to provide emergency assistance and to fund the
necessary repair work. Daimler and the General Works Council
also launched an employee donation drive that enabled us
to give Caritas an additional €20,000.

Following two aid transport projects for Syrian refugees in 2013,
Daimler continued its Syria aid in 2014. In a joint initiative
of employees and the company, approximately €250,000 was
collected. For the flights to Erbil in North Iraq organized by
“Wings of Help – Luftfahrt ohne Grenzen e. V.” (an association
endeavoring to provide cross-border air transport), we
supplied tents, blankets, medicine and other relief goods.

The “Ekukhanyeni” project helps severely impoverished people
in a town near Johannesburg, South Africa. Mercedes-Benz
South Africa has been supporting the initiative, which has built
a daycare center and an elementary school, since 2010.
These days, “Ekukhanyeni” is also promoting the establishment
of more natural farming techniques, as well as managing
landscape planning, the energy supply and the expansion
of local infrastructure.

115

B | Combined Management Report | SustainabilityOverall Assessment of the Economic Situation.

As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 18.8%
(2013: 22.6%). We therefore earned significantly more than our
cost of capital also in 2014. This is reflected by our value
added, which remained at the high level of €4.4 billion (2013:
€5.9 billion) due to the positive development of our business
operations. The sole reason for the decrease compared with
the previous year is that the positive special effect from the
sale of our EADS shares in 2013 was significantly higher than
the effects from the sales of our shares in Rolls-Royce
Power Systems Holding GmbH (RRSPH) and Tesla in 2014.

In line with the ongoing high level of earnings, we continue
to have very sound key financial metrics. At year-end,
the Group’s overall equity ratio was 22.1% (2013: 24.3%) and
the equity ratio of the industrial business was 40.8% (2013:
43.4%). The equity ratios decreased because the balance sheet
total increased at a much higher rate (+13%) than equity
(+3%). Our net liquidity of the industrial business increased
to the very high level of €17.0 billion (2013: €13.8 billion).
The free cash flow of the industrial business – the parameter
we use to measure financial strength – reached the high
level of €5.2 billion after adjusting for special items
(2013: €3.2 billion), and is thus significantly higher than
the proposed dividend distribution.

We want our shareholders to participate appropriately in
the earnings achieved by Daimler in 2014. At the Annual Share-
holders’ Meeting on April 1, 2015, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €2.45 per share (prior year: €2.25). With
this decision, we are also expressing our confidence about the
ongoing course of business.

In the opinion of the Board of Management, the Daimler Group’s
economic situation is very satisfactory at the time of publica-
tion of this Annual Report. In recent years, we have implemented
our strategy effectively and with great determination. That is
now beginning to pay off and is reflected by the results of our
operations in 2014.

We continued and accelerated along our growth path in the
year under review. We are on schedule with the implementation
of our efficiency programs and our new products are extremely
well received in their markets. As a result, we were able to achieve
most of the targets we had set for the year 2014.

We significantly increased our unit sales by 8% to 2.5 million
passenger cars and commercial vehicles despite difficult
conditions in some major markets. Thanks to numerous new and
successful products, Mercedes-Benz Cars and Mercedes-Benz
Vans set new records for unit sales. Daimler Trucks achieved
a small increase. Only Daimler Buses did not quite match
its unit sales of the previous year due to the market weakness
in Latin America. Driven by the generally very positive develop-
ment of the automotive business, the Daimler Financial Services
division also expanded significantly in the reporting period.
The Group’s revenue therefore also grew significantly: – by 10%
to €129.9 billion; adjusted for exchange-rate effects, there
was actually an increase of 12%.

As we had expected, operating profit (EBIT) from the ongoing
business of €10.1 billion was significantly higher than in the
previous year (€8.0 billion). Key positive factors were the favor-
able product mix at Mercedes-Benz Cars and the increasing
impact of the measures taken to increase efficiency, which we
have implemented in all divisions.

With “Fit for Leadership” at Mercedes-Benz Cars, “Daimler
Trucks #1” at Daimler Trucks, “Performance Vans” at
Mercedes-Benz Vans and “GLOBE 2013” at Daimler Buses,
we achieved total contributions to earnings of approximately
€4 billion by the end of 2014. The programs included measures
taken for sustained improvements in cost structures as well as
additional business activities. The full impact of these programs
will be reflected in 2015.

116

Events after the
Reporting Period.

Since the end of the 2014 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2015 confirms the
statements made in the “Outlook” section of this Annual Report.

A core element of our profitable 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
2014 with the new C-Class, the new compact sport-utility
vehicle GLA and the new S-Class Coupe. In addition, the smart
brand started a new era with the launch of the two all-new
models fortwo and forfour. Furthermore, we had the premiere
in November 2014 of our new sub-brand Mercedes-Maybach
and the first automobile of this new and especially exclusive
brand. At Daimler Trucks and Daimler Buses, we have almost
completely renewed our product range and engines in recent
years. The most important new models in 2014 included the
Actros and Arocs heavy-duty trucks, the new FUSO Super Great V
and the new Western Star 5700XE at the truck division, as
well as the large articulated bus Mercedes-Benz CapaCity L
at the bus division. The Mercedes-Benz Vans division also
continued with its product offensive; its important new models
were the Vito goods van and the V-Class multipurpose vehicle.

We once again demonstrated our technological leadership
in 2014 in terms of the fuel efficiency, safety and connectivity
of our vehicles. With innovative drive systems and highly
economical model versions, we were once again able to signifi-
cantly reduce the average CO2 emissions of the cars we
sell in the European Union from 134 grams per kilometer
to 129 g/km.

The new research vehicle F 015 stands in equal measures for
clean, safe and connected, and thus for the future of the
automobile. We have achieved a competitive advantage above
all in the field of autonomous driving with the Mercedes-Benz
S 500 INTELLIGENT DRIVE and the Future Truck 2025. These
research vehicles show that fully autonomous driving can
soon become reality on our roads in the foreseeable future.
E see page 167 and pages 36 f

We effectively expanded our worldwide network of production
sites and research facilities in 2014, placing our future growth
on a broad regional basis. We will expand our production capaci-
ties above all in China, India and the United States. In parallel,
substantial investment in our plants in Germany demonstrates
that they continue to play a key role as competence centers
for our international network.

From a sound financial basis, we invest more than €10 billion
each year in property, plant and equipment as well as in
research and development – in new products, in new techno-
logies and in our sites. And for the coming years, we have
actually planned even higher amounts.

We are on the right track with our growth strategies, the
efficiency programs and the high levels of investment
in the future of the Group. We therefore look to the coming
years with great confidence and continue to aim for further
profitable growth.

117

B | Combined Management Report | Overall Assessment of the Economic Situation | Events after the Reporting PeriodRemuneration 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.

The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also with regard to development over time. For this purpose,
the Supervisory Board has defined the group of senior executives
with the use of the Company’s internal levels of hierarchy.

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. The adequate combination of non-performance-
related and performance-related components of remuneration
is designed to create an incentive to secure the Group’s long-
term success. The fixed component of remuneration is paid as
a base salary; the variable components intended to reflect,
clearly and directly, the joint and individual performance of the
members of the Board of Management as well as the long-
term performance of the Group. The interests of all stakeholders,
in particular those of the shareholders as the owners of the
Company and those of the employees, are harmonized through
the focus on the Group’s long-term success.

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 follow-
ing 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, and

– the relative weighting of the components, that is, the

relationship between the fixed base salary and the short-
term and long-term variable components

and the target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.

In carrying out this review, the Presidential Committee and the
Supervisory Board consult independent external advisors,
above all to facilitate a comparison with remuneration systems
common in the market. If the review results in a need for
changes to the remuneration system for the Board of Manage-
ment, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.

On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management 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
so-called Performance Phantom Share Plan (PPSP) the Super-
visory Board sets an amount to be granted for the upcoming
financial year in the form of an absolute amount in euros and
sets the related performance targets.

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 then calculated by the Presidential
Committee and submitted to the Supervisory Board for its
approval.

118

The system of Board of Management remuneration in 2014.
The fixed base salary and the annual bonus continue to com-
prise approximately 29% of the target remuneration, while the
variable component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 42% of the target remu-
neration. The base salary was increased by an average of 5%,
for the first time since 2011. Changes were also made to
the range of possible target achievement for the annual bonus
and to the reference parameters of the PPSP. The reference
parameters of the annual bonus and the range of possible target
achievement for the PPSP remained unchanged.

As before, only 50% of the annual bonus is paid out in the March
of the following year. The other 50% is paid out a year later
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 bench-
mark for the relative share-price development. Both the delayed
payout of the portion of the annual bonus (with the use of the
bonus-malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious compara-
tive parameters and to the share price reflect the recommenda-
tions of the German Corporate Governance Code and give
due consideration to both positive and negative developments.

The maximum amounts of remuneration of the members
of the Board of Management are limited, both overall and with
regard to the variable components, in accordance with the
recommendation included in the German Corporate Governance
Code in 2013. Effective January 1, 2014, the members of
the Board of Management agreed to the inclusion of such limits
in their current contracts of service.

The maximum amounts of remuneration of the members
of the Board of Management were 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 commitments from the
respective financial years, the maximum limit of total remu-
neration increases by these amounts. The possible cap on the
amount exceeding the maximum limit takes place with
the payment of the PPSP issued in the relevant financial year,
i.e. for the year 2014, with payment of the PPSP in 2018.

The individual components of the remuneration system
are as follows:

The base salary is fixed remuneration relating to the entire year,
oriented towards the area of responsibility of each Board of
Management member and paid out in twelve monthly installments.

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. In addition, qualitative targets are defined
and included.

Primary reference parameters:
– 50% relates to a comparison of actual EBIT in 2014

with EBIT targeted for 2014.

– 50% relates to a comparison of actual EBIT in 2014

with actual EBIT in 2013.

Amount with 100% target achievement (target annual bonus):
In the year 2014, 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 annual bonus, can vary between
0% and 200%. For the primary reference parameter relating
to half of the annual bonus “comparison of actual EBIT in the
financial year with EBIT targeted for the financial year,” the
limits of the unchanged possible range of 0% to 200% are defined
as of 2014 by a deviation of +/- three percent of the prior-year
revenue (previously two percent). For the other primary reference
parameter, which also relates to half of the annual bonus,
“comparison of actual EBIT in the financial year with actual EBIT
in the prior year,” the limits of the unchanged possible range
of 0% to 200% continue to be defined by a deviation of +/- two
percent of the prior-year revenue.

The Supervisory Board has the possibility, with the degree
of target achievement calculated from the primary reference
parameters, to take account of the personal performance
of the individual Board of Management members with an addition
or deduction of up to 25% on the basis of the agreed individual
targets. In addition, an amount of up to 10 percent can be added
or deducted, depending on the key figures/assessment basis
determined in advance. Since 2012, non-financial targets have
been used as a basis for assessment. For the past financial
year, those targets were employee satisfaction, diversity,
customer satisfaction/product quality, and the further devel-
opment and permanent establishment of the corporate
value of integrity.

In 2014, 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 com-
pliance targets cannot result in any increase in individual
target achievement, even in the case of full accomplishment.

The total amount to be paid out from the annual bonus is
limited to 2.35 times the base salary of the respective financial
year. In the agreements on the inclusion maximum amounts
of remuneration in their current contracts of service effective
as of January 1, 2014, the members of the Board of Manage-
ment also agreed to the application of this percentage limit to
the annual bonus payments for the years 2012 and 2013,
which at that time had not yet been paid out.

119

B | Combined Management Report | Remuneration Report 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 (performance period). Depending on the achievement
of these performance targets with a possible range of 0% to 200%,
after three years, the phantom shares allocated at the begin-
ning of the plan are converted into the final number of phantom
shares allocated. After another plan year has elapsed, the
amount to be paid out is calculated from this final number
of phantom shares and the applicable share price at that time.
The share price relevant for the payout under this plan is
also relevant for allocating the preliminary number of phantom
shares for the plan newly issued in the respective year.

Reference parameters for Plan 2014:
– 50% relates to the Group’s return on sales in a three-year
comparison with a newly defined group of competitors
comprising all listed vehicle manufacturers with an automotive
proportion of more than 70% by revenue and an investment-
grade credit rating (BMW, Ford, Fuji Heavy, Honda, Hyundai,
Isuzu, Mazda, Nissan, Paccar, Toyota, Volvo and Volkswagen).
For the measurement of this success criterion, the com-
petitors’ average return on sales is calculated over a period
of three years. Target achievement of 100% only occurs
when the average return on sales of the Daimler reaches 105%
of the average return on sales of the group of competitors.
Target achievement occurs to the extent to which Daimler’s
return on sales deviates by a maximum of +/-2 percentage
points from 105% of the calculated average of the competitors.
So target achievement of 200% occurs if Daimler’s return
on sales exceeds 105% of the average of the competitors
by 2 percentage points or more. And target achievement of 0%
occurs if Daimler’s return on sales is 2 percentage points
or more lower than 105% of the calculated average of the
competitors. In the deviation range of +/- 2 percentage points,
target achievement varies in proportional to the deviation.

– 50% relates to the new “relative share performance,”

i.e. the development of Daimler’s share price in a three-year
comparison with the development of a share-price index
for the defined group of competitors. If the development of
Daimler’s share price (in percent) is the same as of the
index (in percent), target achievement is deemed to be 100%.
If the development of Daimler’s share price (in percent)
is 50 percentage points or more below (above) the develop-
ment of the index, target achievement is deemed to be
0% (200%). In the deviation range of +/- 50 percentage points,
target achievement varies in proportional to the deviation.

Value upon allocation:
Determined annually by the Supervisory Board;
for 2014, 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.

Value of the phantom shares on payout:
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.

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 spec-
ified at the beginning of the plan, which is relevant for the
preliminary number of phantom shares allocated. This maximum
amount includes the dividend equivalent paid out during the
four-year plan period. In the agreements on the inclusion maxi-
mum amounts of remuneration in their current contracts
of service effective as of January 1, 2014, the members of the
Board of Management also agreed to the application of this
limit to the dividend equivalents not yet due at that time from
plans issued before January 1, 2014 and still running.

For all PPSP of 2015 and following years, an additional limit
on target achievement was agreed upon for the reference
parameter return on sales. In the case of target achievement
between 195% and 200%, an additional comparison is made
on the basis of the return on sales achieved in absolute terms.
If the actual return on sales for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.

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 in 2005 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 Corporation
Act (AktG), the Supervisory Board of Daimler AG once again
had an assessment of the system of Board of Management remu-
neration carried out by an external remuneration expert in
2014. The result was that the remuneration system as described
above was confirmed as being in conformance with the require-
ments of applicable law. The remuneration system was approved
as described by the Annual Shareholders’ Meeting in 2014
with an approval ratio of 96.8%.

120

Board of Management remuneration in 2014

Board of Management remuneration in 2014 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB). The total remuneration granted by Group com-
panies (excluding retirement benefit commitments) to the mem-
bers of the Board of Management of Daimler AG is calculated
as the total of the amounts of
– the base salary in 2014,
– the half of the annual bonus for 2014 payable in 2015
and measured as of the end of the reporting period,
– the half of the medium-term share-based component

of the annual bonus for 2014 payable in 2016 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler’s share price compared with
the Dow Jones STOXX Auto Index),

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

at the time when granted in 2014, and
– the taxable non-cash benefits in 2014.

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.

remuneration (annual bonus with deferral), and €10.1 million
was variable performance-related remuneration granted
in 2014 with a long-term incentive effect (2013: €10.9 million).
 B.48

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 2014 as shown
in table  B.49.

B.49
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

2014

2013

163

431

332

121

151

511

603

112

210

1,405

1,854

The remuneration of the Board of Management for the year 2014
amounts to €29.9 million (2013: €32.1 million). Of that total,
€8.2 million was fixed, that is, non-performance-related remuner-
ation (2013: €9.1 million), €11.6 million (2013: €12.1 million)
was short- and medium-term variable performance-related

1 Board of Management remuneration granted until January 28, 2014.
2 For the fulfillment of disclosure obligations pursuant to Section 285 No.
9a of the German Commercial Code (HGB), this amount is reduced by
€139,000 for the year 2014. The corresponding fringe benefits were grant-
ed 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.

B.48
Board of Management remuneration in 2014

In thousands of euros

Dr. Dieter Zetsche

Dr. Wolfgang Bernhard

Dr. Christine Hohmann-Dennhardt

Wilfried Porth

Andreas Renschler2

Hubertus Troska

Bodo Uebber

Prof. Dr. Thomas Weber

Total

2014
2013

Base salary

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

Long-term variable remuneration
(PPSP)
Number Value when granted
(2014: at share price €66.83)
(2013: at share price €44.39)

2,008
2,008

1,727
1,707

779
715

758
715

62
755

758
715

901
866

758
715

670
590

633
590

652
608

47
623

652
590

775
736

652
626

670
590

633
590

652
608

47
623

652
590

775
736

652
626

43,424
63,643

18,380
25,458

17,370
25,458

18,159
25,458

–
28,420

17,370
25,458

20,765
30,433

18,444
27,031

2,902
2,825

1,228
1,130

1,161
1,130

1,1511
1,044

–
1,226

1,161
1,130

1,2983
1,199

1,233
1,200

Total

8,364
8,247

3,347
3,025

3,185
3,025

3,213
2,975

156
3,227

3,223
3,025

3,749
3,537

3,295
3,167

6,782
7,204

5,808
6,070

153,912
251,359

10,134
10,884

28,532
30,228

1 PPSP 2014 taking into account supervisory board remuneration of €62,707 (2013: €85,734).
2 Board of Management remuneration granted until January 28, 2014 (supervisory board remuneration 2013: €35,646).
3 PPSP 2014 taking into account supervisory board remuneration of €89,391 (2013: €152,197).

121

B | Combined Management Report | Remuneration Report The benefit from the pension plan is payable to surviving
Board of Management members at the earliest at the age of 62,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, irrespective of their age upon
retirement.

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 (Pension Capital
6% or 5%; Daimler Pensions Plan in accordance with
applicable law);

– as an annuity with annual increases (Pension Capital 3.5%

or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).

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

Departing Board of Management members with pension
agreements modified as of the beginning of 2006 receive, for
the period between the end of the last contract period and
reaching the age of 60, payments in the amounts of the pension
commitments granted as described in the previous section.
Departing Board of Management members are also provided
with a company car, in some 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 per-
centage increases described above in the explanation of these
pension agreements.

Service costs for pension obligations according to IFRS
amounted to €2.8 million in 2014 (2013: €2.5 million). The present
value of the total defined benefit obligation according to IFRS
amounted to €80.5 million at December 31, 2014 (December 31,
2013: €70.1 million). Taking age and period of service into
account, the individual entitlements, service costs and present
values are shown in the table.  B.50

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;
the same procedure was applied for the relevant hierarchy
level for Wilfried Porth for the period before his membership
of the Board of Management. The pension rights have been
frozen at that level, however. Payments of these retirement pen-
sions start upon request when the term of service ends at or
after the age of 60, or are paid as disability pensions if the term
of service ends before the age of 60 due to disability. The
respective agreements provide for 3.5% annual increases start-
ing when benefits are received (with the exception that
Wilfried Porth’s benefits are adjusted in accordance with appli-
cable law). The agreements include a provision by which a
spouse of a deceased Board of Management member is entitled
to 60% of that member’s pension. That amount can increase by
up to 30 percentage points depending on the number of depen-
dent 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 contribu-
tions to pension plans are granted only until the age of 60.
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 60, also
if retirement is before 60. If a member of the Board of Manage-
ment retires due to disability, the benefit is paid as a disability
pension, also before the age of 60.

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 contri-
butions by Daimler, but is oriented towards the capital market.
Daimler makes a commitment to guarantee the total of contribu-
tions paid, which are invested in the capital market according
to a precautionary investment concept. The Supervisory Board
of Daimler AG has approved the application of this system
for all members of the Board of Management newly appointed
since 2012. The amount of the annual contributions results
from a fixed percentage of the base salary and the total annual
bonus for the respective financial year calculated as of the
balance sheet date. This percentage is 15%. This calculation
takes into consideration the targeted level of retirement
provision for each Board of Management member – also accord-
ing to the period of membership – and the resulting annual
and long-term expense for the Company. The contributions
to retirement provision are granted until the age of 62.

122

Loans to members of the Board of Management.
In 2014, 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 Manage-
ment of Daimler AG and their survivors. Payments made
in 2014 to former members of the Board of Management
of Daimler AG and their survivors amounted to €16.8 million
(2013: €14.6 million). Pension provisions for former members
of the Board of Management and their survivors amounted
to €263.0 million at December 31, 2014 (2013: €217.0 million).

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 commitments to payment of the base salary and
provision of a company car until the end of the original service
period at a maximum. Such persons are only entitled to
payment of the annual bonus pro rata for the period until the
end of the contract of service or of the Board of Management
membership takes effect. Entitlement to payment of the
performance-related component of remuneration with a long-
term incentive effect that has already been allocated is
defined by the conditions of the respective plans. To the extent
that the payments described above are subject to the provi-
sions of the so-called severance cap of the German Corporate
Governance Code, their total including fringe benefits is
limited to double the annual remuneration and may not exceed
the total remuneration for the remaining period of the
service contract.

Sideline activities of Board of Management members.
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members’ duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they
are disclosed in the notes to the annual company financial
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.

B.50
Individual entitlements, service costs and present values for members of the Board of Management

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

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

Present value2
of obligations
(for pension,
pension capital and
Daimler Pensions Plan)

In thousands of euros

Dr. Dieter Zetsche

Dr. Wolfgang Bernhard

Wilfried Porth

Andreas Renschler1

Hubertus Troska

Bodo Uebber

Prof. Dr. Thomas Weber

Total

2014
2013

1,050
1.050

–
–

156
156

225
250

–
–

275
275

300
300

2,006
2,031

827
–

380
401

220
223

30
423

314
272

676
714

333
426

2,780
2,459

1 Mr. Renschler pro rata until January 28, 2014.
2 The sharp increase in the present values is primarily due to the decrease in the relevant discount rate.
Dr. Hohmann-Dennhardt has no entitlement to a company retirement benefit.

39,238
29,896

2,565
1,774

8,788
6,579

–
9,798

3,321
2,488

14,148
10,127

12,454
9,444

80,514
70,106

123

B | Combined Management Report | Remuneration Report

Details of Board of Management remuneration in 2014
pursuant to the requirements of the German Corporate
Governance Code
The following tables show for each individual member of
the Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the financial year and the retirement pension
expense in or for the financial year in accordance with the
recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.

The total of “benefits granted” for financial year 2013
is calculated from:
– the base salary in 2013,
– the taxable non-cash benefits and other fringe benefits

in 2013,

– the half of the annual bonus payable in 2014 for 2013

at the value with target achievement of 100%,

– the half of the share-based component of the annual

bonus payable in 2015 for 2013 at the value with target
achievement of 100%,

B.51
Benefits granted

Dr. Dieter Zetsche
Chairman of the Board of Management and
Head of Mercedes-Benz Cars

Dr. Wolfgang Bernhard
Daimler Trucks and Buses

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max.
min.

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max.
min.

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration
(50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration (plan period of 4 years)

Total

Retirement pension expense (service costs)

2,008

151

2,159

1,004

2,825

4,833

–

2,008

163

2,171

1,004

2,902

4,910

827

2,008

163

2,171

827

2,008

163

2,171

2,360

6,875

11,595

827

715

805

358

1,130

1,846

401

779

163

942

390

1,228

2,008

380

779

163

942

380

779

163

942

916

2.910

4,742

380

Total remuneration

6,992

7,908

2,998

14,593

3,052

3,330

1,322

6,064

Total limit1 for components of remuneration
granted in 2014
Excluding

– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)

10,149

5,172

Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs

Wilfried Porth
HR & Labor Relations Director and
Mercedes-Benz Vans

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max

min

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max

min

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration
(50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration (plan period of 4 years)

Total

Retirement pension expense (service costs)

715

799

358

1,130

1,846

–

758

852

379

1,161

1,919

–

758

852

–

758

852

891

2,750

4,532

–

715

808

358

1,130

1,846

223

758

851

379

1,214

1,972

220

758

851

220

758

851

891

2,875

4,657

220

Total remuneration

2,645

2,711

852

5,384

2,877

3,043

1,071

5,728

Total limit1 for components of remuneration
granted in 2014
Excluding

– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)

4,971

5,066

1 Total limit = maximum amount for financial year 2014 g 1.5 times (Dr. Zetsche)/1.9 times target remuneration 2014 (base salary, target annual bonus,

value when granted of PPSP, excluding fringe benefits and retirement pension commitments).

124

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

– the half of the annual bonus payable in 2015 for 2014

at the time when granted in 2013 (payable in 2017) and

at the value with target achievement of 100%,

– the retirement pension expense in 2013

(service cost in 2013).

The total of “benefits granted” for financial year 2014
is calculated from
– the base salary for 2014,
– the taxable non-cash benefits for the year 2014,

– the half of the share-based annual bonus payable in 2016
for 2014 at the value with target achievement of 100%,

– the value when granted in 2014 of the long-term share-based

remuneration (payable in 2018), and

– the retirement pension expense in 2014

(service costs in 2014).

Benefits granted

In thousands of euros

Base salary

Andreas Renschler2

Hubertus Troska
Greater China

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Jan. 28,
max.
min.

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max.
min.

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration
(50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration (plan period of 4 years)

Total

Retirement pension expense (service costs)

755

511

1,266

378

1,262

2,018

423

–

Total remuneration

3,707

162

100

Total limit1 for components of remuneration
granted in 2014
Excluding

– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)

–

146

246

233

715

603

758

431

758

431

758

431

1,318

1,189

358

1,130

1,846

272

379

1,161

1,919

314

891

2,750

4,532

314

3,436

3,422

1,503

6,035

4,971

Bodo Uebber
Finance & Controlling and
Daimler Financial Services

Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max

min

Jan. 1 – Dec. 31,
2013

2014

Jan. 1 – Dec. 31,
max

min

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration
(50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration (plan period of 4 years)

Total

Retirement pension expense (service costs)

866

112

978

433

1,351

2,217

714

901

332

901

332

901

332

1,233

451

1,388

2,290

676

1,060

3,288

5,408

676

715

210

925

358

1,200

1,916

426

758

121

879

379

1,233

1,991

333

758

121

879

333

758

121

879

891

2,920

4,702

333

Total remuneration

3,909

4,199

1,909

7,317

3,267

3,203

1,212

5,914

Total limit1 for components of remuneration
granted in 2014
Excluding

– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)

5,922

5,100

1 Total limit = maximum amount for financial year 2014 g 1.5 times (Dr. Zetsche)/1.9 times target remuneration 2014 (base salary, target annual bonus,

value when granted of PPSP, excluding fringe benefits and retirement pension commitments).

2 In 2014, Board of Management remuneration granted until January 28, 2014.

125

B | Combined Management Report | Remuneration Report

The total of “payments made” for financial year 2013
is calculated from:
– the base salary in 2013,
– the taxable non-cash benefits and other fringe benefits

in 2013,

– the value of the long-term share-based payment (PPSP 2009)

paid in 2013,

– the dividend equivalent of the current PPSP
(2010, 2011, 2012 and 2013) paid in 2013,

– the value of stock options 2004 when exercised

– the half of the annual bonus payable in 2014 for 2013

(as defined by German tax law), and

at the value as of the end of the reporting period,

– the retirement pension expense in 2013 (service costs in 2013).

– the half of the share-based annual bonus paid in 2013 for 2011,

B.52
Payments made

In thousands of euros

Base salary

Dr. Dieter Zetsche
Chairman of the Board of Management and
Head of Mercedes-Benz Cars

Dr. Wolfgang Bernhard
Daimler Trucks and Buses

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration (50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration

Payment of PPSP 2009

Payment of PPSP 2010

Dividend equivalent PPSP 2010

Dividend equivalent PPSP 2011

Dividend equivalent PPSP 2012

Dividend equivalent PPSP 2013

Dividend equivalent PPSP 2014

Exercise of stock options 2004

Total

Retirement pension expense (service costs)

2,008

151

2,159

1,707

1,834

5,117

–

261

111

150

140

–

2,195

11,515

–

2,008

163

2,171

1,727

1,583

–

7,524

–

195

154

143

–

11,424

827

Total remuneration

13,674

14,422

715

805

590

653

744

–

2,243

401

3,449

779

163

942

670

564

–

2,770

–

4,241

380

5,563

Dr. Christine Hohmann-Dennhardt
Integrity & Legal

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

Wilfried Porth
HR & Labor Relations Director and
Mercedes-Benz Vans

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

715

799

590

556

–

1,301

–

2,100

758

852

633

584

–

1,442

–

2,294

715

808

608

637

1,693

–

105

–

3,203

223

4,234

758

851

652

564

–

3,009

–

4,462

220

5,533

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration (50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration

Payment of PPSP 2009

Payment of PPSP 2010

Dividend equivalent PPSP 2010

Dividend equivalent PPSP 2011

Dividend equivalent PPSP 2012

Dividend equivalent PPSP 2013

Dividend equivalent PPSP 2014

Exercise of stock options 2004

Total

Retirement pension expense (service costs)

Total remuneration

126

The total of “payments made” for financial year 2014
is calculated from:
– the base salary in 2014,
– the taxable non-cash benefits and other fringe benefits

in 2014,

– the half of the annual bonus payable in 2015 for 2014

at the value as of the end of the reporting period,

– the half of the share-based annual bonus paid in 2014 for 2012,
– the amount of the long-term share-based remuneration

(PPSP 2010) paid in 2014,

– the dividend equivalent of the current PPSP

(2011, 2012, 2013 and 2014) paid in 2014, and

– the retirement pension expense in 2014 (service costs in 2014).

The caps possible to ensure the total maximum amount shown
in the table of benefits granted in the year 2014 are imple-
mented with the payout of PPSP 2014, which constitutes the
last payment to be made of the components of remuneration
granted in 2014. For the year 2014, therefore, the possible cap
would take place in 2018, the year that PPSP 2014 is paid out.

Payments made

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration (50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration

Payment of PPSP 2009

Payment of PPSP 2010

Dividend equivalent PPSP 2010

Dividend equivalent PPSP 2011

Dividend equivalent PPSP 2012

Dividend equivalent PPSP 2013

Dividend equivalent PPSP 2014

Exercise of stock options 2004

Total

Retirement pension expense (service costs)

Total remuneration

Andreas Renschler1

Hubertus Troska
Greater China

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

755

511

1,266

623

672

2,284

–

117

–

298

4,173

423

5,862

595

–

642

742

715

603

1,318

590

–

837

–

1,569

272

3,159

758

431

1,189

652

–

1,231

–

2,063

314

3,566

Bodo Uebber
Finance & Controlling and
Daimler Financial Services

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development

Jan. 1 – Dec. 31,
2013

Jan. 1 – Dec. 31,
2014

In thousands of euros

Base salary

Taxable non-cash benefits and other fringe benefits

Total

Annual variable remuneration (50% of annual bonus, short-term)

Deferral (50% of annual bonus, medium-term)

Long-term variable remuneration

Payment of PPSP 2009

Payment of PPSP 2010

Dividend equivalent PPSP 2010

Dividend equivalent PPSP 2011

Dividend equivalent PPSP 2012

Dividend equivalent PPSP 2013

Dividend equivalent PPSP 2014

Exercise of stock options 2004

Total

Retirement pension expense (service costs)

Total remuneration

1 In 2014, Board of Management remuneration granted until January 28, 2014.

866

112

978

736

791

2,447

–

125

–

4,291

714

5,983

901

332

1,233

775

707

–

3,598

–

5,361

676

7,270

715

210

925

626

653

2,172

–

111

–

397

4,129

426

5,480

758

121

879

652

544

–

3,194

–

4,640

333

5,852

127

B | Combined Management Report | Remuneration Report
Remuneration of the Supervisory Board

Supervisory Board remuneration in 2014. 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 regulations for Supervisory Board remu-
neration approved by the Annual Shareholders’ Meeting in April
2014 and effective for the financial year beginning on January 1,
2014 specify that the members of the Supervisory Board
receive, in addition to the refund of their expenses and the cost
of any value-added tax incurred by them in performance
of their office, fixed remuneration of €120,000. The Chairman
of the Supervisory Board receives an additional €240,000
and the Deputy Chairman of the Supervisory Board receives an
additional €120,000. The members of the Audit Committee
are paid an additional €60,000, the members of the Presidential
Committee are paid an additional €48,000 and the members
of the other committees of the Supervisory Board are paid an
additional €24,000; an exception is the Chairman of the
Audit Committee, who is paid an additional €120,000. Payments
are made for activities in a maximum of three committees;
any persons who are members of more than three such commit-
tees receive payments for the three most highly paid func-
tions. Members of a Supervisory Board committee are only enti-
tled to remuneration for such membership if the committee
has actually convened to fulfill its duties in the respective year.

The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The individual
remuneration of the members of the Supervisory Board is
shown in table  B.53.

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 2014
was thus €3.6 million (2013: €3.0 million).

Loans to members of the Supervisory Board. No advances
or loans were made to members of the Supervisory Board
of Daimler AG in 2014.

B.53
Supervisory Board remuneration

Name

In euros

Dr. Manfred Bischoff

Erich Klemm1

Michael Brecht1

Dr. Paul Achleitner

Sari Baldauf

Dr. Clemens Börsig

Dr. Bernd Bohr

Dr. Jürgen Hambrecht

Petraea Heynike
Jörg Hofmann1

Andrea Jung

Joe Kaeser

Gerard Kleisterlee
Jürgen Langer1
Ergun Lümali1
Dr. Sabine Maaßen1
Wolfgang Nieke1

Dr. Bernd Pischetsrieder
Valter Sanches2
Jörg Spies1
Elke Tönjes-Werner1

Lloyd G. Trotter

Function(s) remunerated

Total in 2014

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
(each until 30 April, 2014)

Member of the Supervisory Board and the Audit Committee, Deputy Chairman of the Supervisory
Board, the Presidential Committee and the Audit Committee (each since May 1, 2014)

Member of the Supervisory Board and the Nomination Committee

Member of the Supervisory Board and the Audit Committee (Chairman of the Audit Committee
since April 9, 2014)

Member of the Supervisory Board (since April 9, 2014)

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

Member of the Supervisory Board

Member of the Supervisory Board and the Audit Committee (since April 9, 2014)

Member of the Supervisory Board (until April 9, 2014)

Member of the Supervisory Board

Member of the Supervisory Board (since May 1, 2014)

Member of the Supervisory Board and the Audit Committee (since May 1, 2014)

Member of the Supervisory Board

Member of the Supervisory Board (since April 9, 2014)

Member of the Supervisory Board

Member of the Supervisory Board (until April 9, 2014)

448,500

126,511

312,567

152,800

155,000

238,190

93,281

183,400

128,800

183,400

128,800

139,371

35,848

129,900

83,848

173,474

129,900

92,181

129,900

35,848

71,696

129,900

Dr. h. c. Bernhard Walter

Member of the Supervisory Board and Chairman of the Audit Committee (each until 9 April, 2014)

Dr. Frank Weber

Member of the Supervisory Board

1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation,

in accordance with the guidelines of the German Trade Union Federation.

2 Mr. Sanches has directed that his board remuneration is to be paid to the Hans-Böckler Foundation.

128

B | Combined Management Report | Remuneration Report | Takeover-Relevant Information and Explanation

Takeover-Relevant Information and Explanation.

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

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 pursu-
ant 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 (AktG), the members of the Board of
Management are appointed by the Supervisory Board for
a maximum period of office of five years. However, the Super-
visory Board of Daimler AG has decided generally to limit
the initial appointment of members of the Board of Management
to three years. Reappointment or the extension of a period
of office is permissible, in each case for a maximum of five years.

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 com-
prising at least two thirds of its members’ votes. If no such
majority is obtained, the Mediation Committee of the Super-
visory Board has to make a suggestion for the appointment
within one month of the vote by the Supervisory Board. 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 €3,070 million at December 31,
2014. It is divided into 1,069,837,447 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, 2014.

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 con-
ditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income up to a defined
target volume and to hold them for the duration of their
employment at the Daimler Group.

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, 2014. 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 the case of a

129

By resolution of the Annual Shareholders’ Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly
or in partial amounts, on one or several occasions, by up
to €1 billion by issuing new registered shares of no par value
in exchange for cash or non-cash contributions, and with
the consent of the Supervisory Board under certain conditions
and within defined limits to exclude shareholders’ subscription
rights (Approved Capital 2014). Approved Capital 2014 replaces
Approved Capital 2009, which was limited until April 7, 2014
and had not been utilized. No use has yet been made of Approved
Capital 2014.

The Board of Management was authorized by resolution
of the Annual Shareholders’ Meeting held on 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’ sub-
scription 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.

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 Corporation Act (AktG). Pursuant to Section 84 Subsec-
tion 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 Incor-
poration with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders’ Meeting; no use is made in the Arti-
cles 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 (AktG), amendments to the Articles of Incorporation
take effect upon being entered in the Commercial Register.

Authorization of the Board of Management to issue or
buy back shares. By resolution of the Annual Shareholders’
Meeting of April 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 purposes 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 (whose last exercise period expired on March 31,
2014, however). 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.

130

and supply of a small van, the use of an existing architecture
for compact cars, the joint development of components
for a new architecture for compact cars, the joint production
of Infiniti and Mercedes-Benz compact vehicles in a 50:50
joint venture in Mexico 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 of the company in question
or upon authorization to appoint a majority of the members
of its managing board. In the case of termination of coopera-
tion in the area of the development of small cars due to a
change of control in the early phase of the cooperation, the
party affected by the change of control would be obliged
to bear its share of the costs of the development of shared
components even if the development were terminated for
that party.

– An agreement with BAIC Motor Co., Ltd., relating to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate or exercise a put or call
option in the case that a third party acquires one third or more
of the voting rights in Daimler AG.

– An agreement relating to the establishment of a joint venture

with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its com petitors
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.

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 €2.5 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 con-

solidated subsidiaries for a total amount of €577 million,
which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.

– An agreement concerning the acquisition of a majority

(50.1%) of AFCC Automotive Fuel Cell Cooperation Corp.,
which has the purpose of further developing fuel cells
for automotive applications and making them marketable.
In the case of a change of control of Daimler AG, the agree-
ment provides for the right of termination by the other main
shareholder, Ford Motor Company. Control as defined
by this agreement is the beneficial ownership of the majority
of the voting rights and the resulting right to appoint
the majority of the members of the Board of Management.
– a cooperation agreement with Ford and Nissan concerning
the joint predevelopment of a fuel-cell system. In the event
of a change of control of one of the parties to the agreement,
the agreement provides for the right of termination for
the other parties. A change of control is deemed to occur
at a threshold of 50% of the voting rights of the company
in question or upon authorization to appoint the majority
of the members of its managing board.

– A master cooperation agreement on wide-ranging strategic
cooperation with Renault S. A., Renault-Nissan B.V. and
Nissan Motor Co., Ltd. in connection with cross-shareholdings.
The Renault-Nissan Alliance received an equity interest of
3.1% in Daimler AG and Daimler AG received equity interests
of 3.1% in each of Renault S. A. and Nissan Motor Co., Ltd.
In the case of a change of control of one of the parties to the
agreement, each of the other parties has the right to 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 its managing board. Under the
master cooperation agreement, several cooperation agree-
ments were concluded between Daimler AG on the one side
and Renault and/or Nissan on the other, which provide
for the right of termination for a party to the agreement in the
case of a change of control of another party. These agree-
ments primarily concern a new architecture for small cars,
the shared use and development of fuel-efficient diesel
and gasoline engines and transmissions, the development

131

B | Combined Management Report | Takeover-Relevant Information and Explanation Risk and Opportunity Report.

The Daimler Group’s divisions are exposed to a large number
of risks which are directly linked with business activities.
A risk is understood as the danger that events or actions prevent
the Group or one of its divisions from achieving its targets.
It is also important for the Daimler Group to identify opportuni
ties so that they can be utilized as part of Daimler’s business
activities, thus securing and enhancing the Daimler Group’s
competitiveness. An opportunity is understood as the possi
bility to surpass the planned targets as a result of events, devel
opments or actions. The divisions have direct responsibility
for recognizing and managing entrepreneurial risks and oppor
tunities at an early stage. As part of the strategy process,
risks related to the planned longterm development and oppor
tunities for further profitable growth are identified and inte
grated into the decisionmaking process. In order to identify
risks and opportunities at an early stage and to assess and
deal with them consistently, Daimler applies effective manage
ment and control systems, which are integrated into a risk
management system and an opportunity management system.
Opportunities and risks are not offset. The two systems are
described below.

B.54
Assessment of probability of occurrence and possible impact

Category

Possible impact

Low

Medium

High

€0 ≤

€500 million ≤

Impact

< €500 million

< €1 billion

≥ €1 billion

Risk and opportunity management system

The risk management system with regard to material risks
and existencethreatening 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 and continually identify, assess,
control, monitor and document material risks and risks
threatening Daimler’s existence, in order to secure the achieve
ment of corporate goals and to enhance risk awareness
at the Group.

Opportunity management system at the Daimler Group
is derived from the risk management system. The objective
of opportunity management is to recognize at an early stage
the possible opportunities arising in business activities as
a result of positive developments, and to utilize them as opti
mally as possible for the Group by taking appropriate measures.
Taking advantage of opportunities may lead to overachieve
planned goals.

Risk assessment in principal is carried out for a twoyear planning
period, although Daimler also identifies and monitors risks
related to a longer period in the discussions for the derivation
of mediumterm and strategic goals. Within the context of
the strategic and operational planning, relevant and feasible
opportunities are identified in addition to risks. Those oppor
tunities are considered that are possible but which have not
yet been included in the planning. The reporting of risks
and opportunities in the management report in principal refer
to a period of one year.

In the context of its operational planning, Daimler uses appropri
ate risk and opportunity categories to identify and assess
risks and opportunities for the divisions and operating units,
important associated companies, joint ventures, joint oper
ations and the corporate departments. The scope of consolida
tion for risk and opportunity management corresponds to
the scope of consolidation of the consolidated financial state
ments and goes even beyond if necessary.

132

Risk assessment takes place on the basis of the probability
of occurrence and the possible impact of the risk according
to the categories low, medium and high. These categories also
apply to the potential impact of opportunities, although an
analysis of the probability of occurrence is not conducted here.
When assessing the impact of a risk, the effect before mea
sures 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. Risk management is based on the principle of com
pleteness. This means that at the level of the individual entities,
all specific risks flow into the risk management process.
General uncertainties without clear indication of a possible
effect on earnings are monitored in the internal control system
(ICS). The assessment of the dimensions of the probability
of occurrence and possible impact is based on the categories
shown in table  B.54.

Quantification of each risk and opportunity category in
the Management Report summarizes the individual risks and
opportunities for each category. The category descriptions
include the explaination of important changes in comparison
to the prior year.

The tasks of the employees responsible for risk and opportunity
management include, in addition to identification and assess
ment, the development of measures and the initiation of such
measures where appropriate, whereby the goal of such
measures is to avoid, reduce or counteract risks. The utilization
or enhancement of an opportunity, and its partial or full imple
mentation, also require the application of specific measures.
The standard approach here is to assess the costeffectiveness
of the measures before they are implemented. The develop
ment of all the risks and opportunities of the individual entities
and of the related countermeasures that have been initiated
are continually monitored.

Corporate risk management regularly reports on the identified
risks and opportunities 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.

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 in the Management Report. To the
extent not otherwise presented, even in the case of simultane
ous occurrence of all individual risks in a risk category,
the Group does not expect any effect in this category of more
than €3 billion.

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
developed further and is an integral part of the accounting
and financial reporting process in all relevant legal entities
and corporate functions. The system includes principles and
procedures as well as preventive and detective controls.
Among other things, it is regularly checked that
– the Group’s uniform financial reporting, valuation and

accounting guidelines are continually updated and regularly
taught and adhered to;

– transactions within the Group are fully accounted

for and properly eliminated;

– issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;

– processes exist to guarantee the completeness

of financial reporting;

– processes exist for the segregation of duties and for

the “foureyes principle” (dual accountability) 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 Groupwide guidelines.
Random samples are regularly tested to assess the effectiveness
of the controls. Those tests constitute the basis for self
assessment of the appropriate magnitude and effectiveness
of the controls. The results of this selfassessment are
documented and reported in a global IT system. Any weaknesses
recognized 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.

133

B | Combined Management Report | Risk and Opportunity ReportThe 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 the Super
visory Board as well as to the Group Risk Management Commit
tee (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
process 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 Compliance, and is
chaired by the Board of Management Member for Finance &
Controlling and Daimler Financial Services. The Internal Audit
ing department contributes material findings 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, Groupwide,
and thorough control and risk management system.

– The GRMC regularly reviews the effectiveness and function

ality 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 corrective measures can be initiated as necessary
or appropriate to eliminate any system failings or weaknesses
exposed.

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 effective
ness, 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 management
system. If required, measures are then initiated in cooperation
with the relevant management. The external auditors audit the
system for the early identification of risks that is integrated
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.

Risks and opportunities

The following section describes in detail the risks and oppor
tunities that can have a significant influence on the profit
ability, cash flows and financial position of the Daimler Group.
In general, the reporting of risks and opportunities takes
place for the individual segments. If no segment is explicitly
mentioned, the risks and opportunities described relate
to all divisions.

In addition, risks and opportunities that are not yet known
about or classified as not material can influence profitability,
cash flows and financial position.

Industry and business risks and opportunities

The following section describes in detail the industry and
business risks of the Daimler Group. A quantification of these
risks and opportunities is shown in table  B.55.

Economic risks and opportunities. Economic risks and
opportunities constitute the framework for the risks and oppor
tunities listed in the following categories and are integrated
as premises into the quantification of these risks and opportuni
ties. Overall economic conditions have a significant influence
on automobile sales markets, and their development is one of
the Group’s major risks and opportunities.

With regard to the world economy, Daimler along with the
majority of economic research institutes anticipates a slight
acceleration of growth in 2015. Economic developments in
2014 are described in detail in the “Economic Conditions and
Business Development” section of this Management Report;
growth assumptions for 2015 are explained in the “Outlook”
section E see page 146

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 increase slightly compared with the prior
year and the opportunities for an improvement of the world
economy have declined slightly.

The development of the US economy will be decisively impacted
by how the planned exit from the expansive monetary policy is
further managed and whether – as hoped – investors and conum
ers boost the rate of growth. After such a long phase of very
low interest rates, an increase in interest rates could have a
profound effect on economic recovery and slow down
the pace of growth. This would also affect the housing market
and its recovery, along with other sectors. Although the
Federal Reserve could attempt to counteract any negative impact
through its monetary policy, it has little room to maneuver
here, which means the effectiveness of such possible measures
would be limited. Such an event would have significant con
sequences because the Daimler Group (and especially the
MercedesBenz Cars and Daimler Trucks divisions) generates a
considerable volume of its unit sales in the United States, and
diminished growth could also spread to other regions. However,
if investment activity in the United States is more dynamic than
previously assumed, this could result in substantially stronger
growth. The resulting increased employment and income
effects would boost the demand for the automotive divisions.

134

Due to the significant growth of the country’s importance
in recent years, an economic slump in China would present
a considerable risk for the world economy. The extremely
high level of debt in the economy as a whole and the high level
of investment in the construction industry have considerably
increased the risk of an abrupt adjustment in the real estate
market or a bankingsector crisis. China is now a key sales
market for the MercedesBenz Cars and MercedesBenz Vans
divisions in particular, which means any disruptions caused
by the abovementioned risks could result in lowerthanplanned
growth in unit sales. On the other hand, we see a further
opportunity in an even stronger development of the Chinese
economy. This could be triggered by the reform measures taking
rapid effect, accompanied by increased consumption.
Strong growth in overall economic consumption would create
additional opportunities for the divisions mentioned above.

Another risk is to be seen in a renewed weakening of growth
in major emerging markets. There were disappointing develop
ments already during 2013 and 2014, especially in major
economies such as India, Russia and Brazil, although other
countries such as Indonesia and Turkey also developed below
their possibilities. A combination of weak growth and high
interest rates increases the risk of a rising number of defaults,
especially in view of the substantial expansion of credit in
some cases over the past few years. 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 important
emerging economies. If structural reforms are quickly and consis
tently 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.

If there is no continuation of the required consolidation of state
budgets and reform efforts in the countries of the European
Monetary Union (EMU), this could cause renewed turmoil in the
financial markets, leading to increasing refinancing costs
through rising capitalmarket interest rates, and thus jeopardiz
ing the already fragile economic recovery. Further effects
could be triggered by the debate about a Greek exit, which
recently flared up again. This could lead to greater uncertainty
and volatility in the financial markets. The extremely low rate
of inflation harbors an additional risk in that a longlasting and
broadbased fall in prices would constitute a considerable
threat to the economic recovery of the EMU and make it even
more difficult for the debtridden countries in the euro zone
to finance their remaining debt. The European market continues
to be very important for Daimler across all divisions; for
the MercedesBenz Cars and MercedesBenz Vans divisions,
it is in fact still the biggest sales market. An opportunity
that is difficult to assess can be seen in a significantly improved
economic development in the euro zone. If countries such as
Italy and France implement reform measures more quickly and
decisively than has so far been assumed, economic growth
could also accelerate. That would benefit the development
of investment and demand for motor vehicles in the important
European market.

One risk of a significant obstacle to growth in Japan – namely
the second stage of the valueadded tax hike from 8% to 10%,
which had been planned for October 2015 – was eliminated
at the end of 2014 with the announcement that the tax increase
was to be postponed until 2017. Apart from that, the failure
of the country’s expansive monetary and fiscal policy and the
lack of structural reforms could trigger a growth slowdown
in Japan, although this should be regarded as only a regionally
limited risk. A slowdown of growth could lead to lower demand
for cars and trucks, which in turn could negatively affect the
MercedesBenz Cars and Daimler Trucks divisions, for which
Japan is an important sales market. A regionally limited oppor
tunity exists in the possibility of a distinct acceleration of eco
nomic growth in Japan. This could be caused by a significant
increase in investment activity, resulting from the targeted
structural reforms and the expansive monetary and fiscal policies
that have already been initiated. The MercedesBenz Cars
and Daimler Trucks divisions could then benefit from this positive
development.

B.55
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

High

Low

High

General market opportunities

Medium

Opportunities relating to leasing
and sales financing

Procurement market opportunities

Opportunities relating to the legal
and political framework

Low

135

B | Combined Management Report | Risk and Opportunity Report

The conflict between Russia and Ukraine has led to an
additional risk for the development of the world economy
since 2014. This risk has increased macroeconomic uncertainty
and had a negative effect on the business climate and con
sumer confidence. An escalation of the crisis and the resulting
tight ening of sanctions and countersanctions would have a
massive negative impact on the economy in Europe especially,
whereby the exact scope of this effect is very difficult to pre
dict. It is conceivable that such an escalation would negatively
impact oil prices as well through a higher risk premium, and
it would also dampen the mood, and demand, in markets that
depend on oil. Furthermore, the consequences of a possible
debt default by Russia or of failure to service due debts cannot
be predicted.

The conflict in Syria, which has heated up as a result of the
offensive of the “Islamic State” (IS), is threatening the stability
of the region, especially in neighboring Iraq. Although most
Iraqi oil production facilities are located in regions not controlled
by IS, concerns still remain that Iraqi oil deliveries could be
interrupted or that the armed conflict in Syria could spill over
into other areas. An abrupt increase in oil prices brought about
by an attack on oil refineries could endanger the recovery in
fragile European economies or in the United States, and could
also negatively affect emerging markets that depend on oil
imports. The effect on the world’s stock markets would also
be noticeable, and this could undermine investment and con
sumer confidence on a broad scale. However, if oil prices remain
on such a low level for a long time, this could present a
significant growth opportunity for the world economy due
to purchasing power.

Moreover, a toorapid rise in interest rates in the United States
would not only negatively affect the US economy but also lead
to a renewed selloff on stock markets in particularly sensitive
emerging markets. The tapering of bond purchases by the
US Federal Reserve already triggered unrest in the financial
markets in 2014. Longterm interest rates increased and
there were capital outflows and currency devaluations 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 possible decrease of liquidity in the US in 2015 leads
to more substantial effects, this could significantly reduce
GDP growth through the chain of cause and effect described
above, especially in the emerging markets. Increased volatility
in the financial markets would also dampen investor and
consumer confidence, with an impact on the global economy.
In addition, tensions resulting from exchange rate volatility
and possible manipulations carried out to preserve global
competitiveness could lead to an increase in protectionist
measures and a type of “devaluation race.” This would put
a substantial strain on world trade and threaten future growth.

General market risks and opportunities. The risks and
opportunities for the development of automotive markets
are strongly affected by the situation of the global economy
as described above.

The assessment of market risks and opportunities is
connected with assumptions and forecasts about the overall
development of markets in the various regions. The potential
effects of the risks on the development of the Daimler Group’s
unit sales are included in risk scenarios. The danger of wors
ening market developments or changed market conditions,
especially due to the macroeconomic environment and political
or economic uncertainties, generally exists for all divisions
of the Daimler Group. The only differences between the divisions
have to do with their varying regional focus of activities.
Markets and competitors are continuously analyzed and moni
tored; if necessary, specific marketing and sale programs
are implemented. Due to the competitive pressure in the auto
motive markets, Daimler regularly adapts production and
cost structures to the changing conditions. Clear strategies
have been formulated for all divisions. Each division consis
tently pursues the goal of growing profitably and increasing
its efficiency.

Some dealers and vehicle importers are in a difficult financial
situation. As a result, supporting actions may become neces
sary, whereby such actions would negatively impact the profit
ability, cash flows and financial position of the automotive
segments. For this reason, the financial situations of strategically
relevant dealerships are continually monitored.

In addition to these issues affecting all segments, segment
specific risks also exist. In the MercedesBenz Cars and
Daimler Trucks divisions, these include increasing competi-
tive and price pressure. A change within the framework
of a product’s lifecycle bears the risk of a negative volume effect
in relation to the anticipated sales volumes. In addition,
aggressive pricing policies, the introduction of new products
by competitors and price pressure related to the aftersales
business could make it impossible to enforce targeted prices.
To a lesser extent, the same also applies to sales volumes at
the divisions MercedesBenz Vans and Daimler Buses. 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 are also applied to safeguard
business in the area of aftersales. Daimler also operates various
programs to boost sales through the use of financial incen
tives. Corresponding measures taken to support the segments’
unit sales would adversely affect the projected earnings.

136

Further risks and opportunities at MercedesBenz Cars relate
to the development of the used-car market. As part of
the established residualvalue management process, certain
assumptions are made on the local and corporate levels
regarding the expected level of prices, on which basis the cars
returned in the leasing business are valued. If general market
developments lead to a negative or positive deviation from the
assumptions, there is a risk of lower residual values or an
opportunity of higher residual values of used cars. Depending
on the region and the current market situation, the measures
taken generally include continuous market monitoring as well
as, if required, pricesetting strategies or sales promotions
designed to regulate vehicle inventories. The quality of market
forecasts is verified by periodic comparisons of internal
and external sources. If necessary, the set residual values are
adjusted and refined with regard to methods, processes
and systems for determining such values.

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
participates in marketing expenses, especially for advertising
campaigns.

In general, there is also the possibility that the overall market,
or regional conditions, 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 devia
tions from planning premises – for example, if planned sales
support measures do not have to be fully utilized. Other oppor
tunities can be exploited through the creation of additional
production capacities at the divisions. The existing market
opportunities for the divisions 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 MercedesBenz Cars division sees a market
opportunity for sales of additional vehicles in various model
series. The possibility of higher unit sales of vehicles exists
in the Daimler Trucks segment as a result of improved market
developments or changed conditions in the market. Additional
market opportunities have also been identified by Daimler Buses.
The measures that could be taken by the Daimler Group to
utilize this potential opportunity include a combination of local
sales and marketing activities and central strategic product
and capacity planning.

The general marketrisk situation remains unchanged
compared to the prior year in terms of impact and probability
of occurrence. The assessment of the impact of opportunities
has been slightly lowered as compared to the previous year,
because current business activities have already exploited the
opportunities identified in the prior year.

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. The resulting risks for the Daimler Financial Services
segment are mainly due to borrowers’ worsening creditworthi
ness, so that receivables might not be recoverable in whole
or in part due to customers’ insolvency (default risk or credit
risk). Daimler counteracts credit risks by means of appropriate
market analyses, creditworthiness checks on the basis of
standardized scoring and rating methods, and the collateraliza
tion of receivables. Other risks connected with the leasing
and salesfinancing business involve the possibility of increased
refinancing costs due to potential changes in interest rates.
An adjustment of credit conditions for customers in the leasing
and salesfinancing 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 auto
motive divisions. Risks and opportunities could also arise from
a lack of matching maturities with the refinancing. The
risk of mismatching maturities is minimized by coordinating
the 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 appli cation of derivative financial instruments. Further
information on credit risks and the Group’s riskminimizing
actions is provided in E Note 32 of the Notes to the Conso
lidated Financial Statements. With regard to the leasing
business, the auto motive divisions also have a residual-value
risk resulting from the risks associated with the development
of usedvehicle prices.

Procurement market risks and opportunities. Procurement
market risks arise for the automotive divisions in particular
from fluctuations in prices of raw materials. There are also minor
risks that result from dependency on certain materials and
capacity bottlenecks caused by supplier delivery failures.
In general, the possible impact of risks related to the procure
ment market, especially resulting from increases in raw
material prices, has changed from “medium” to “high.” As was
the case in the previous year, only small opportunities are
anticipated in the rawmaterial markets.

During the reporting year, raw material prices developed
in a varied manner and were marked by a high level of volatil
ity. Due to almost completely unchanged macroeconomic
conditions, we expect to see price fluctuations with uncertain
and uneven trends in the near future. On the one hand, raw
material markets are strongly impacted by political crises and
uncertainties – combined with possible supply bottlenecks –
as well as by a volatile demand for specific raw materials. On the
other hand, this is offset by the notably less dynamic growth
of the Chinese industry and the renewed slightly belowaverage
growth of the world economy to date. 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 inter
national automotive markets. A drastic increase in raw
material prices would at least temporarily result in a consider
able reduction in economic growth.

137

B | Combined Management Report | Risk and Opportunity ReportDaimler 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
protects itself against the volatility of raw material prices by
entering into longterm supply agreements, which make
shortterm risks for material supplies and the effects of price
fluctuations more calculable. Furthermore, the Group makes
limited and targeted use of derivative pricehedging instruments
for certain metals in order to reduce the impact of price
fluctuations.

The Mercedes-Benz Cars segment faces risks in China in
particular, as the Chinese 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. The legislative process for addressing the period 2016–
2020 has not yet been concluded. Failure to meet the fleet target
could prevent new vehicles from being registered in the
country. For the year 2020, the current fiveyear plan stipulates
a new, very demanding target of 5.0 l/100 km (approximately
117 g CO2/km); discussions on the final version for the target are
now being conducted as part of the final phase of the legis
lative process.

Supplier risk management aims to identify suppliers’
potential financial difficulties at an early stage and to initiate
suitable countermeasures. Even though the crisis of recent
years is over, the situation of some of the suppliers remains
difficult due to the tough competitive pressure. This has
necessitated individual or joint support actions by vehicle manu
facturers to ensure their production and sales. In the context
of supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals
and made a corresponding internal assessment. On these dates,
the suppliers report key performance indicators to Daimler
and decisions are made concerning any required support actions.

Risks and opportunities related to the legal and political
framework. The risks and opportunities from the legal and
political framework also have a considerable impact on Daimler’s
future business success. Regulations concerning vehicles’
emissions, fuel consumption and safety play a particularly
important role. Complying with these varied and often
diverging regulations all over the world requires strenuous
efforts on the part of the automotive industry. We expect
to expend an even larger proportion of the research and devel
opment budget in the future to ensure the fulfillment of these
regulations. The probability of the occurrence of a risk increased
from low in the prior year to medium in the reporting year;
the assessment of possible impact remains unchanged at high.

Many countries have already implemented stricter
regulations to reduce vehicles’ emissions and fuel
consumption, or are now doing so.

Regulations concerning the CO2 emissions of new cars are
also quite demanding in the European Union. For 2015,
all new cars in Europe will have to meet a fleet CO2 average
of 129 g CO2/km following a transition period. The relevant
limit for Daimler depends on the portfolio of cars we sell in the
European Union and is derived from vehicle weight. For 2020,
new cars in Europe will have to meet a fleet CO2 average of
95 g CO2/km. The new regulation will apply to 100% of the fleet
in 2021 following a oneyear transition period. Daimler will have
to pay penalties if it exceeds its limits. The planned elimina
tion of the NEDC (New European Driving Cycle) and its replace
ment with the WLTP (Worldwide harmonized Light vehicles
Test Procedures) is also creating uncertainty, as there has been
no final decision on introduction dates, the conditions asso
ciated with the new test cycle, or the continuation of the fleet
targets. According to present knowledge, the WLTP will
make it difficult to achieve CO2 targets beginning in 2020.

In Germany are considerations to change the taxation
of company cars in order to make it dependent on vehicle
emissions. This could cause fleet customers to switch
over to smaller and more fuelefficient cars.

Legislation in the United States on greenhouse gases and fuel
consumption stipulates that new car fleets in the United States
may only emit an average of 163 grams of CO2 per mile as of
2025 (approximately 100 grams CO2 per kilometer). These new
regulations will require an average annual reduction in CO2
emissions as of 2017 amounting to 5% for cars and 3.5% in the
beginning for SUVs and pickups (this rather lower rate applies
until 2022). This will impact the German premium manufacturers
and thus also the MercedesBenz Cars division harder than
the US manufacturers, for example. As a result of strong demand
for large, powerful engines in the United States as well as
Canada, financial penalties cannot be ruled out.

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.

138

Daimler gives these targets due consideration in its product
planning. The increasingly ambitious targets require significant
shares of plugin hybrids or cars with other types of electric
drive. The market success of these drive systems is greatly influ
enced by regional market conditions, for example the battery
charging infrastructure and state support. But as market condi
tions cannot be predicted with certainty, a residual risk exists.

Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive a type approval if their airconditioning
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. MercedesBenz 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 MercedesBenz Cars in the summer of 2012,
Daimler is not using the new refrigerant R1234yf in its vehicles
at the moment and has started with the development of safe
alternatives. At present, the Group does not assume that this
will result in any significant effects on its profitability, cash
flows or financial position.

Strict regulations for the reduction of vehicles’ emissions
and fuel consumption also create potential risks 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 greenhousegas emissions and fuel consumption
by heavyduty commercial vehicles. In China, legislation has
been drafted which is likely to affect 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 heavyduty commercial vehicles that
will probably have to be applied as of 2017. We have to assume
that the statutory limits will be very difficult to meet in some
countries. Very demanding regulations for CO2 emissions are also
planned, or else have been approved for light commercial
vehicles. This will present a longterm challenge for Mercedes-
Benz Vans especially, because the division primarily serves
the heavy segment of N1 vehicles. The European fleet of N1
vehicles may not emit an average of more than 175 g CO2/km
as of 2017 and not more than 147 g CO2/km as of 2020;
penalty payments may otherwise be imposed.

Daimler currently does not anticipate any additional risks
though worldwide statutory safety regulations due
to the Group’s longstanding strong focus on vehicle safety.

In addition to emission, consumption and safety regulations,
traffic-policy restrictions for the reduction of traffic jams,
noise and pollution are becoming increasingly important in cities
and urban areas of the European Union and other regions
of the world. Drastic measures are increasingly being taken,
such as general vehicleregistration restrictions like those
in Beijing, Guangzhou or Shanghai. These can have a dampening
effect on the development of unit sales, especially in the growth
markets. Pressure to reduce personal transport is also being
applied in European cities through increasing measures, such as
restrictions on vehicles in inner cities, congestion charges and
other types of roaduse fees. This stimulates demand for mobility
services including car sharing services. In order to utilize
the resulting opportunities, Daimler is present in the market
with the provision of mobility services (e.g. car2go, moovel).

Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and longterm 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
marketlaunch 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 agree-
ments, at least to the extent to which the European Union fails
to reach similar agreements with the markets in question.

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 China and the markets of developing countries
and emerging economies, 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. Furthermore, a tendency
of tightening the regulatory environment in general and
in particular with regard to competition law is to be observed.

Daimler has 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 the
production sites to local markets and consideration of, among
other things, logistical and other advantages result in opportu
nities in terms of utilizing those markets’ potential.

139

B | Combined Management Report | Risk and Opportunity ReportCompany-specific risks and opportunities

The following section deals with the companyspecific risks
and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table  B.56.

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 achieve
ment of the corporate goals, are the brand image, design and
quality of the products – and thus their acceptance by custom
ers – as well as technical features based on innovative research
and development. Convincing solutions, which for example
promote accidentfree driving or further improve our vehicles’
fuel consumption and emissions (e.g. dieselhybrid or electric
vehicles), are of key importance for safe and sustainable mobility.
Due to growing technical complexity, continually rising require
ments 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 various auto
motive 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 automotive segment’s
profitability. 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 connected
with high investment and can lead to a shortterm decline in
production volume during the initial production phase. In order
to achieve a very high level of quality, which is one of the key
factors for a customer’s decision to buy a product of the Daimler
Group, it is necessary to make investments in new products
and technologies that sometimes exceed the originally planned
scope. This cost overrun would then reduce the anticipated
earnings from the launch of a new model series or product gen
eration. These automotive segments are affected, which are
currently launching new products or that are planning to do so, in
some cases in conformance with specific regional conditions.

In principle, there is also a danger that due to problems with
or the failure of production equipment or a production
plant, it might not be possible to maintain the planned level
of production, and that would consequently generate costs.
Such risks mainly exist for the MercedesBenz Cars division.
As a precaution, spare parts are held available for the
production plants that are at risk.

Product components also have to be available at the right time.
Bottlenecks could also be caused by interruptions in the
supply chain. In order to avoid bottleneck situations, priority
is given to the regular maintenance of production equipment
and to avoid capacity bottlenecks by means of foresighted plan
ning. In addition, supply chains and the availability and quality
of products are continuously monitored within the context of
managing the entire value chain. Risks in this area are to be
avoided through the continuous modernization of production
equipment and facilities.

Warranty and goodwill claims can arise when the quality
of the 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 product
problems and product care. The Daimler Group works contin
ually and intensively to maintain product quality at a very high
level, even given the growing product complexity, in order
to avoid the danger of making corrections to end products and
to supply customers with the best possible products. Further
more, processes are implemented at the Daimler Group to regu
larly obtain customers’ opinions on the support provided so
that our service and customer satisfaction can be continuously
improved.

Production and technology risks continue to have a low proba
bility of occurrence due to preventive measures. However,
because of the continually high number of new product launches,
the potential impact of such risks remains on the same level.

Innovations and technology opportunities from the advanced
and futureoriented design of our product range are incorporated
into the strategic product planning of the automotive divisions.
Within the framework of a continuous process, it is constantly
reviewed whether the production level can be increased
by means of shift models, the worldwide production network,
investment projects or more flexible production equipment.
The opportunities reported on in the previous year and the
measures planned in that context for the optimization of
production capacities have been realized and continue to have
a positive effect in the area of production.

B.56
Company-specific risks and opportunities

Risk category

Production and technology risks

Information technology risks

Personnel risks

Probability
of occurrence

Impact

Opportunity category

Impact

Low

High

Production and technology opportunities

Medium Information technology opportunities

Medium

High

Personnel opportunities

–

Risks related to equity interests and joint ventures

Low

Medium Opportunities related to equity interests and joint ventures

Low

140

Information technology risks and opportunities. Information
technology plays a crucial role for the Daimler Group’s busi
ness processes. Storing and exchanging data in a timely, com
plete and correct manner is of key importance for a global
group such as Daimler. Appropriately secure IT systems and
a reliable IT infrastructure must be used in order to protect
information. Risks that could result in the interruption of busi
ness processes due to the failure of IT systems or which
could cause the loss or corruption of data are therefore identi
fied and evaluated over the entire lifecycles of applications
and IT systems. Daimler has defined suitable measures for risk
avoidance and limitation of damage. These measures are
continually adapted to changing circumstances. For example,
the Group minimizes potential interruptions of operating
routines in the data centers by means of mirrored data sets,
decentralized data storage, outsourced archiving, high
availability computers and appropriate emergency plans. An IT
security operations center coordinates potential danger
from cybercrime and hacker attacks. Daimler utilizes various
preventive and corrective measures in order to meet the
growing demands placed on the confidentiality, integrity and
availability of data. 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. The impact and probability of occur
rence of IT risks remain unchanged compared to the prior year.

Personnel risks and opportunities. Daimler’s success is
highly dependent on employees and their expertise. With their
ideas and suggestions, they are involved in their respective
activities and working processes and thus contribute consider
ably every day to 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 employees’ ideas
and suggestions for improvement.

Furthermore, work groups create processes and instruments
to produce new business ideas and to establish interdepart
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.

Competition for highly qualified staff and management is still
very intense in the industry and the regions in which we operate.
The future success of the Daimler Group also depends on the
magnitude to which we succeed over the long term in recruiting,
integrating and retaining executives, engineers and other spe
cialists. The human resources instruments take such personnel
risks into consideration, while contributing toward the recruit
ment and retention of staff with high potential and expertise and
ensuring transparency with regard to the resources of the
Daimler Group. One focus of human resources management
is the targeted personnel development and further training
of the workforce. Employees benefit for example from the range
of courses offered by the Daimler Corporate Academy and
from the transparency created by LEAD, the uniform worldwide
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 sufficient
number of qualified young persons with the potential to become
the next generation of highly skilled specialists and execu
tives. We address this issue by taking appropriate measures
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 materializes,
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. Due to upcoming collective
bargaining negotiations, the category of personnel risks displays
a higher possible impact and probability of occurrence as
compared to the prior year.

Risks and opportunities related to equity interests and
joint ventures. Cooperation with partners in associated
companies, joint ventures, joint operations and other types
of partnerships is of central importance for Daimler. Along
with ensuring better access to growth markets and new tech
nologies, equity interests and joint ventures help us exploit
synergies and improve cost structures and thus enable us to
successfully respond to competitive pressures in the auto
motive industry.

Daimler generally bears a proportionate share of the risks and
opportunities of its equity interests. The possible risks include
negative financial developments and delays in the setup of
development and production structures in equity interests and
joint ventures, all of which can negatively impact the achieve
ment of growth targets in the affected segments. Risks exist in
connection with equity interests in the segments Mercedes
Benz Cars, Daimler Trucks and MercedesBenz Vans. The cases
involved are subject to a continuous monitoring process so
that an equity interest can be promptly supported if required
and its profitability can be ensured. The recoverable value
of investments is also continually monitored.

The development of production capacities and the acquisition
of equity interests in the Chinese market are particularly exposed
to risks due to the uncertain nature of market development
in China. Efficient production processes are established to deal
with and reduce quality risks in the Chinese market. Further
more, dependencies between contracting parties and possible
changes to political and legal conditions in China must be
included in the local decisionmaking processes. In view of the
tense situation in Russia and Ukraine, the Group is also paying
closer attention to affected equity interests and joint ventures
in those countries.

141

B | Combined Management Report | Risk and Opportunity ReportFinancial risks and opportunities

The following section deals with the financial risks and
opportunities of the Daimler Group. Risks and opportunities
can have a negative or positive effect, respectively, on the
profitability, cash flows and financial position of the Daimler
Group. The probability of occurrence and possible impact
of these risks and opportunities is presented in table  B.57.

In principle, the Group’s operating and financial risk exposures
underlying the financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. currency
exposures), risks and opportunities exist equally, while with
the asymmetrical risk and opportunity profiles (e.g. credit and
country exposures), the risks outweigh the opportunities.

Daimler is generally exposed to risks and opportunities from
changes in marketprices such as currency exchange rates,
interest rates, commodity prices and share prices. Marketprice
changes can have a negative or positive influence on the
Group’s profitability, cash flows and financial position. Daimler
manages and monitors marketprice risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, whereby both marketprice
risks and opportunities are limited.

In addition, the Group is exposed to credit and countryrelated
risks. As part of the risk management process, Daimler
regularly assesses these risks by considering changes in key
economic indicators and market information. Pension plan
assets to cover retirement and healthcare benefits (market
sensitive investments including equities and interestbearing
securities) are not included in the following analysis.

Exchange rate risks and opportunities. The Daimler Group’s
global orientation implies that its business operations and
financial transactions are connected with risks and opportunities
of foreign exchange rates against the euro, especially for
the US dollar and other currencies such as currencies of growth
markets. An exchange rate risk or opportunity arises in busi
ness operations primarily when revenue is generated in a
currency different from that of the related costs (transaction
risk). This applies in particular to the MercedesBenz 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 division is also exposed to such
transaction risks, but to a lesser degree because of its world
wide production network. Currency risk exposures are succes
sively hedged against with suitable financial instruments
(predominantly currencyforwards and options) in accordance
with exchange rate expectations, which are constantly reviewed,
whereby both risks and opportunities are limited. Exchange
rate risks and opportunities also exist in connection with the
translation into euros of the net assets, revenues and
expenses of the companies of the Group outside the euro zone
(translation risk); these risks are not generally hedged.

B.57
Financial risks and opportunities

Risk category

Exchange rate risks

Interest rate risks

Commodity price risks

Credit risks

Country risks

Risks relating to pension plans

Risks from changes in credit ratings

Probability
of occurrence

Impact

Opportunity category

Impact

Low

High

Low

High

Low

Exchange rate opportunities

Interest rate opportunities

Commodity price opportunities

Credit opportunities

Country opportunities

Opportunities relating to pension plans

Opportunities from changes in credit ratings

High

Low

–

High

Low

142

Country risks. Daimler is exposed to country risks that primarily
result from crossborder financing for Group companies or
customers, as well as from investments in subsidiaries and joint
ventures. Country risks also arise from crossborder cash
deposits at financial institutions. The Group addresses these
risks by setting country limits (e.g. for crossborder financing
of customers and for hardcurrency portfolios from financial
services companies) and through investmentprotection insur
ance against political risks in highrisk countries. Daimler
also has an internal rating system that divides all countries
in which it operates into risk categories.

Further information on financial risks, risklimiting 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 pension plans. Daimler
has pension benefit obligations, and, to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pensions obligations
less plan assets constitutes the balance total or funded status
for these employee benefit plans. The valuation of the pension
obligations and the calculation of net pension expense are based
on certain assumptions. Even small changes in these assump
tions, such as a change in the discount rate, could have a negative
or positive effect on the funded status in the current financial
year or could lead to changes in the periodic net pension expense
in the following financial year. The market value of plan assets
is determined to a large degree by developments in the capital
markets. Unfavorable or favorable developments, especially
relating to equity prices and fixedinterest securities, could
reduce or increase the value of plan assets. The large majority
of the fixedinterest securities in the plan assets have an
investment grade rating; a large portion of these are government
bonds with very good ratings. Further information on the
pension plans and their risks is provided in E Note 22 of the
Notes to the Consolidated Financial Statements.

Interest rate risks and opportunities. Daimler employs a
variety of interestrate sensitive financial instruments to manage
the cash requirements of its business operations on a day
today basis. Most of these financial instruments are held in
connection with the financial services business of Daimler
Financial Services, whose policy is generally to perform a term
congruent refinancing. However, to a limited extent, the
funding does not match in terms of maturities and interest rates,
which gives rise to the risk of changes in interest rates. The
funding activities of the industrial business and the financial
services business are coordinated at Group level. Derivative
interest rate instruments such as interest rate swaps and forward
rate agreements are used to achieve the desired interest
rate maturities and asset/liability structures (asset and liability
management).

Equity price risks and opportunities. As of December 31,
2014, the only shares that Daimler holds are shares that
are classified as longterm investments (especially Nissan and
Renault) or that are included in the consolidated financial
statements using the equity method (primarily BAIC Motor and
Kamaz). The Group does not include these investments in
a market price risk analysis. For more information on equity
risks and opportunities, please see the section “Risks and
opportunities related to equity interests and joint ventures.”

Commodity price risks and opportunities. As already
described in the section on procurement market risks, the
Group’s business operations are exposed to changes in the
prices of consignments and raw materials. The Group addresses
these procurement risks by means of concerted commodity
and supplier risk management. To a minor degree, derivative
financial instruments are used to reduce the Group’s market
price risks related to the purchase of certain metals.

Liquidity risks. Because of the current capital resources and
the existing funding facilities, we do not present the liquidity
risk in table  B.57.

Credit risks. The Group is exposed to credit risks which result
primarily from its financial services activities and from the
operations of its vehicle business. Credit risks also arise from
the Group’s liquid assets. The following statements pertain
to risks arising from the Group’s liquid assets; risks related to
leasing and sales financing are addressed on E page 137.
Should defaults occur, this would negatively affect the Group’s
financial position, cash flows and profitability. In recent years,
the limit methodology for exposures with financial institutions
has been continually further developed in order to counteract
the diminished creditworthiness of the banking sector since the
financial crisis. In connection with investment decisions,
priority is placed on the borrower’s very high creditworthiness
and on balanced risk diversification. Most liquid assets
are held in investments with an external rating of A or better.

143

B | Combined Management Report | Risk and Opportunity ReportLegal risks. Various legal proceedings, claims and govern
ment investigations (legal proceedings) are pending against
Daimler AG and its subsidiaries on a wide range of topics,
including vehicle safety, emissions, fuel economy, financial
services, dealer, supplier and other contractual relationships,
intellectual property rights, warranty claims, environmental
matters, legal proceedings relating to competition law and share
holder litigation. Productrelated litigation involves claims
alleging faults in vehicles, some of which have been made as
class actions.

Adverse decisions in one or more of these proceedings
could require us to pay substantial compensatory and punitive
damages or undertake service actions, recall campaigns
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 proceedings for which
the Group has seen no requirement to recognize a provision.

Although the final result of any such litigation may influence
the Group’s earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely
to have a 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 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 and opportunities in con
nection with potential downgrades or upgrades to credit rat
ings by these rating agencies. Downgrades could have a negative
impact on the Group’s financing if such a downgrade leads
to an increase in the costs for external financing or otherwise
restrict the Group’s ability to obtain financing. A credit rating
downgrade could also damage the company’s reputation or
discourage investment in Daimler AG. A risk to the credit rating
of the Daimler Group could also arise if the earnings and cash
flows anticipated from the Group’s growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs
for the Group and also facilitate its access to financing sources
on the money and capital markets. If the positive development
of the Group should continue and its cash flow and profitability
should also develop positively, opportunities could arise for
an upgrade of the credit rating on the part of the rating agencies.

Risks from guarantees and legal risks

The Group remains exposed to risks from guarantees and legal
risks. 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.
The operation of the electronic tollcollection system is the
responsibility of the operator company, Toll Collect GmbH, in
which Daimler holds a 45% stake and which is included in
the consolidated financial statements using the equity method
of accounting. In addition to Daimler’s membership of the Toll
Collect consortium and its equity interest in Toll Collect GmbH,
risks also arise from guarantees that Daimler has assumed
with the other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of
Toll Collect GmbH toward the Federal Republic of Germany
in connection with the toll system and a call option of the
Federal Republic of Germany. Claims could be made under those
guarantees if toll revenue is lost for technical reasons, if
certain contractually defined performance parameters are not
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.

144

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, such as natural disas
ters or terrorist attacks, are possible, and these can disturb
production and business processes. This could adversely affect
consumer confidence and could cause production interrup
tions due to supplier problems and intensified security measures
at national borders. In this context, Daimler also considers
risks from earthquakes (especially in Asia), weatherrelated
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
protective measures are established and, if possible, insurance
coverage is obtained. Other smaller risks relate to project
and process risks as well as the implementation of organizational
changes and possible resource shortages. In order to avoid
or minimize these risks, measures are defined for each individual
case and must be implemented accordingly. Risks relating
to compliance are addressed in the risk management process
and continually monitored. Regular courses of training are
designed to prevent compliance violations. Further opportunities
that can have a positive impact on the Group’s net income
arise from efficiency programs at the divisions and, to a minor
extent, potential compensation payments for occured
natural disasters.

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
endanger the continued existence of the Group. But since consid
erable economic and industry risks still exist, setbacks on
the way to regularly achieving growth and profitability targets
cannot be completely ruled out. The aforementioned oppor
tunities represent both potentials and challenges for the Daimler
Group. By effectively and flexibly focusing the production pro
gram and sales activities on changing conditions, the divisions
of the Daimler Group strive to secure or surpass their respective
targets and plans. As far as it 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.

The Group’s overall risk and opportunity situation is the sum
of the individual risks and opportunities presented. The risk
situation of the Daimler Group has not changed significantly from
the prior year. Most of the opportunities cited last year were
effectively realized. The associated measures that have been
implemented continue to have a positive effect on the Group’s
earnings. Current planning takes identified opportunities into
account. Daimler is confident that due to the established risk
and opportunity management system, risks and opportunities
will continue to be recognized at an early stage in the future
and that the current risk situation can be successfully managed,
as well as opportunities effectively utilized.

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, cus
tomers and capital markets are interested in how the Group
reacts to the technological challenges of the future and how we
succeed in offering uptodate and technologically leading
products in the markets. As one of the fundamental principles
of entrepreneurial activity, Daimler places particular priority
on adherence to applicable law and ethical standards. In addi
tion, 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 in order to ensure risks that may arise in this context
with an impact on the reputation of the Daimler Group are
subject to wellregulated internal controls.

145

B | Combined Management Report | Risk and Opportunity ReportOutlook.

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 2014. This planning is based on the premises we set
regarding the economic situation and the development of the
automotive markets. It involves assessments made by Daimler,
which are based on relevant analyses by various renowned
economic research institutes, international organizations and
industry associations, as well as on the internal market
analyses of our sales companies. The prospects for our future
business development as presented here reflect the targets
of our divisions as well as the opportunities and risks presented
by the anticipated market conditions and the competitive
situation. We are constantly adjusting our expectations, however,
taking into account the latest forecasts on the development
of the world economy and of automotive markets, as well as our
recent business development. The statements made below
are based on the knowledge available to us in February 2015.

Our assessments for the year 2015 are based on the assump-
tion of stable economic conditions and the expectation 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 132 ff

The world economy

At the beginning of 2015, the world economy is on a path
of moderate growth. As in 2014, the upward trend this year
is likely to be primarily driven by the advanced economies.
The emerging economies are not expected to post an increase
in their overall growth rate, however.

The US economy should once again deliver a significant
contribution to global growth. The prospects there for private
consumption and investment are very favorable in view of
the positive development of the labor market and the upturn
in industrial production. If fiscal-policy friction can be avoided,
growth in economic output of about 3% is achievable for the
United States.

The economic outlook for Japan is much less favorable, however.
Although the second stage of the increase in value-added
tax that was originally planned for the fall was postponed, the
growth rate expected in 2015 is only about 1%.

The economy of the European Monetary Union (EMU) has not yet
accelerated significantly at the beginning of 2015. This has
been prevented by the dampening impact of low levels of lending,
continued worries about deflation and ongoing uncertainty
concerning the Ukraine conflict. Additional factors are the con-
siderable structural problems of large economies such as
France and Italy and the continuation of the sovereign-debt
problem. But due to the low price of crude oil, the significantly
weaker euro, ongoing favorable refinancing conditions and
the extremely expansive monetary policy of the European Central
Bank, growth in gross domestic product in the magnitude of
1% should be achieved. The German economy should probably
develop slightly better than the average for the EMU.

146

Economic developments in China continue to be of key impor-
tance for the world economy. It is still important that the
structurally necessary deceleration of economic growth takes
place as a controlled process. With assumed GDP growth of
between 6.5% and 7%, China’s economy would expand at a lower
rate than in 2014, but would still make the biggest individual
contribution to global growth. Only moderate improvements are
expected for other major emerging economies with the excep-
tion of those in Asia. The prospects for economic growth remain
rather weak in particular in South America and Eastern Europe.
A special case in this context is Russia, where economic
conditions have meanwhile deteriorated so seriously that most
analysts now anticipate a sharp recession in 2015.

In total, global economic output could expand by
approximately 3% in 2015.

With regard to the currencies important for our business,
we continue to anticipate sharp exchange-rate fluctuations
in 2015. Compared with average exchange rates in the year
2014 (USD/€: 1.33; GBP/€: 0.81), we expect the US dollar to
strengthen while the British pound should remain fairly stable
against the euro. With regard to the Japanese yen (average for
2014: 140 yen/euro) and exchange rates important to us of
various emerging markets, we anticipate increased volatility.

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 2015, we have hedged more
than 70% of the exchange-rate risks as of mid-February.

Automotive markets

As a result of the rather subdued economic outlook,
growth in global demand for cars of approximately 4%
is expected in 2015.

We once again expect China to deliver the biggest contribution
by far to the expansion of global car sales. Substantial growth
seems possible yet again for the world’s biggest car market.
The US market should also continue its solid development.
Although sales figures are meanwhile back to the pre-crisis level
and thus close to market saturation, slight growth is expected
once again in 2015. With sales of more than 16.7 million units,
more cars and light trucks should be sold than since the
year 2005.

A continued demand upturn is to be anticipated for Western
Europe. Due to the continuation of weak economic expansion,
however, only slight growth in demand for cars is expected,
although the market is currently at a relatively low level. The
growth rates forecast for the individual markets are more
uniform than in 2014, although the countries have significantly
different starting situations. The market of the United Kingdom
should expand again slightly from its already high level, while
little growth is to be expected in France despite the relatively
weak level of car sales in the previous year. The German car
market is also likely to expand at a comparatively low rate
to a volume of just over 3 million units.

The Japanese car market has been at an artificially high level
for several years due to various special effects. This is expected
to be corrected in 2015 with a moderate decrease in demand.

The major emerging markets are likely to show varying devel-
opments in 2015. A significant recovery of demand for cars
is anticipated in India. In Russia, however, a further significant
drop in sales of cars must be assumed due to the worsening
economic crisis there.

The world market for medium- and heavy-duty trucks is likely
to expand slightly in 2015 after the significant demand down-
turn in the previous year. However, market developments will
remain disparate at the regional level.

The NAFTA region once again promises to deliver the most
positive development. Most economic indicators suggest that
demand for trucks will remain strong there with expected
market growth in the magnitude of 10%. On the other hand,
prospects for the European market are significantly less
favorable due to the continuation of only hesitant economic
recovery. From today’s perspective, demand is expected to
remain only in the region of the relatively weak prior-year level.

Market conditions in Brazil are likely to remain difficult: Start-
ing from a low level, market volume is expected to decrease
again by roughly 10%. The Japanese market for light-, medium-
and heavy-duty trucks has shown strong growth in recent
years. But due to the economic slowdown, a slight market
contraction must be anticipated in 2015. In Indonesia, however,
market recovery and growth in a magnitude of 10% are
to be expected.

147

B | Combined Management Report | Outlook The severe recession in Russia will continue to depress the
market, so demand should fall sharply once again. In India,
however, a significant market recovery is expected due
to slightly improved economic prospects. The market outlook
for China is connected with uncertainty. The introduction
of the CN4 emission standards (similar to Euro IV) on January
1, 2015 is likely to depress demand. We currently anticipate
a market volume in 2015 of slightly below the previous year.

From a regional perspective, we expect the Asian markets to
make major contributions to our growth in unit sales in 2015.
In China, we are continuing the expansion of our sales organi-
zation and of local production capacities, thus creating the
right conditions for further growth. But unit sales will increase
also in North America as a result of our new models, and
we intend to profit to an above-average extent from the slight
revival of demand expected in Western Europe.

Overall, we expect a stable demand for vans in Europe in 2015.
That applies to medium-sized and large vehicles as well as
to small vans. For the United States, we expect moderate growth
in the market for large vans. In Latin America, we assume that
the market for large vans will stabilize following the significant
contraction in 2014. In China, we anticipate an ongoing revival
of demand in the market we address there.

We expect a slightly larger market volume for buses in Western
Europe in 2015 than in 2014. Demand for buses in Brazil is
likely to remain flat in 2015 following the significant decrease
in 2014.

Unit sales

Mercedes-Benz Cars will consistently follow its path of
growth in 2015 in the context of the “Mercedes-Benz 2020”
offensive. Overall, we intend to significantly increase our unit
sales and thus reach a new record. This is based on our cur-
rently very attractive and young model portfolio, which we will
expand with some additional new products in 2015. An impor-
tant contribution will come from the new C-Class, which is now
available in sedan and wagon versions in all markets. Further-
more, in the first seven months of 2015, we will launch four new
vehicles that have no predecessor model. The first automobiles
of our new and highly exclusive Mercedes-Maybach brand
are being delivered to customers already in February. They will
be followed by the fascinating sports car Mercedes-AMG GT,
the practical and stylish CLA Shooting Brake and the GLE Coupe,
a sporty SUV. Within the context of our product offensive,
we will also renew almost our entire range of SUVs in 2015,
thus stimulating additional demand.

We anticipate significant growth in unit sales in 2015 also
for the smart brand. The new fortwo and forfour models have
been available in Europe since November 2014. Both of
these products will be launched in all key markets in 2015 and
will therefore contribute to the positive development of unit
sales at Mercedes-Benz Cars. As we had lacked a four-seat smart
model in recent years, we are now able to address completely
new target groups with the smart forfour.

Daimler Trucks anticipates a significant increase in unit sales
in 2015. In Western Europe, demand is likely to be dampened
by the continuation of weak economic growth, leading to unit
sales in the magnitude of the previous year. But we believe
we will be able to defend our very good market position with
our fuel-efficient products, high customer acceptance and a
flexible production network. In Turkey, we anticipate significant
sales being brought forward to 2015 due to the introduction
of Euro VI emission regulations in 2016. In Brazil, the ongoing
lack of economic growth and less favorable financing condi-
tions are likely to dampen overall demand, so we have to expect
falling unit sales in that market. In the medium term, however,
Brazil will continue to be an important market for us. We are
therefore continuing to invest in our local products and our
production sites in São Bernardo do Campo and Juiz de Fora.
Furthermore, we will continue our optimization program in
Brazil, thus further increasing the efficiency of our facilities there.

In the NAFTA region, we assume that in line with the expected
market development, our unit sales will once again be higher than
in the previous year. The new and successful products should
safeguard our market leadership in the region. Unit sales in Asia
are also likely to develop positively overall. In Indonesia, one
of our main markets in Asia, we expect unit sales to recover after
the decrease in 2014. In India, the further expansion of our
dealer network should facilitate significant growth in unit sales.
In addition, the expanded range of FUSO vehicles produced
in India can be expected to stimulate additional sales growth
in Asia and Africa. In Japan, however, growth rates are likely
to decrease significantly.

Mercedes-Benz Vans plans to achieve significant growth
in unit sales in 2015. Above all in Europe, our core market, we
anticipate significant increases in sales of medium-sized
and large vans. This development is likely to be primarily driven
by the new products Vito and V-Class, which are now fully
available following their launch in 2014. In the context of our
“Mercedes-Benz Vans goes global” strategy for the division,
we will launch the Vito also in North and South America in 2015,
stimulating additional demand there. We aim to achieve further
growth in those markets also with the Sprinter, which we will
produce also in North America in the future. Furthermore,
we intend to expand our presence in China in the market seg-
ment we address there.

148

Daimler Buses assumes that it will be able to defend its
market leadership in its core markets for buses above 8 tons
with innovative and high-quality new products. For the year
2015, we anticipate a slight increase in total unit sales. This is
based on the assumption of a stable development of unit sales
in Europe and Latin America and rising unit sales in Mexico.

Daimler Financial Services aims to achieve further profitable
growth in the coming years. For the year 2015, we anticipate
significant growth in both new business and contract volume.
This will result from the growth offensives of the automotive
divisions, the specific targeting of younger customers, the expan-
sion of business especially in Asia, and the further develop-
ment of our online sales channels. We will continue to grow also
with the flexible car-sharing model, car2go, and will system-
atically expand our range of mobility services under the umbrella
of moovel.

On the basis of our assumptions concerning the develop-
ment of automotive markets and the divisions’ planning,
we expect the Daimler Group to achieve further significant
growth in total unit sales in 2015.

Revenue and earnings

We assume that the Daimler Group’s revenue will grow
significantly in 2015.

Without exception, our divisions currently benefit from a very
attractive and particularly competitive product range, which
has been expanded and consistently renewed in recent years.
We therefore assume that Daimler will profit to an above-
average extent from the slight revival of automotive markets
that we expect for 2015, and will be able to strengthen its
position in important markets. At Mercedes-Benz Cars, addi-
tional growth in 2015 will be driven above all by the new
C-Class, the extremely successful S-Class models, the new
GLA and CLA Shooting Brake compact models and the
new smart models fortwo and forfour. The other automotive
divisions are extremely well positioned with their products,
and Daimler Financial Services’ new business will profit from
the growth in unit sales of passengers cars and commercial
vehicles. The revenue growth we anticipate is therefore likely
to be supported by all divisions. In absolute terms, Mercedes-
Benz Cars and Daimler Trucks will deliver the biggest con-
tributions. In regional terms, we expect the highest growth
rates in Asia and North America, but our business volumes
should expand also in the other regions. In particular in China,
we are creating the right conditions for further growth with
new sales outlets and additional production capacities, and
we are expanding our production plants also in India and
North America.

The growth in unit sales and revenue that we anticipate
will have a positive impact on earnings in 2015. Additional
profit contributions will come from the efficiency programs
that we have implemented in all divisions.

With the programs “Fit for Leadership” at Mercedes-Benz Cars,
“Daimler Trucks #1” at Daimler Trucks, “Performance Vans”
at Mercedes-Benz Vans and “GLOBE 2013” at Daimler Buses,
we achieved total profit contributions of approximately
€4 billion by the end of 2014, by taking measures for sustained
improvements in cost structures as well as through additional
business activities. The full effect of these programs will be
reflected in 2015. In addition to these measures for improved
cost structures with short-term effects, we are taking mea-
sures in all divisions for the long-term structural optimization
of our business system. We are increasingly standardizing
and modularizing our production processes throughout the
Group, for example with the intelligent use of vehicle plat-
forms to achieve further cost advantages. These structural mea-
sures will have a positive impact on earnings already in 2015.

There will be opposing effects, however, from the ongoing
high expenditure for our model offensive, for innovative
technologies and for the expansion and modernization of
our worldwide production facilities.

The expansion of our international sales activities and the
restructuring of our sales-and-service centers in Germany
are also connected with substantial expenditure in 2015.

With regard to exchange rates, the US dollar is likely to
strengthen, which will be generally positive for us, but the
ongoing weakness of the Japanese yen and of the
currencies of major emerging economies will probably
continue to have a negative impact on our earnings.

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 once again in 2015.

For the individual divisions, we have set ourselves the following
targets for EBIT from the ongoing business in the year 2015:
– Mercedes-Benz Cars: significantly above the prior-year level,
– Daimler Trucks: significantly above the prior-year level,
– Mercedes-Benz Vans: significantly above the prior-year level,
– Daimler Buses: slightly below the prior-year level, and
– Daimler Financial Services: slightly above the prior-year level.

149

B | Combined Management Report | Outlook Free cash flow and liquidity

Investment

The anticipated development of earnings in the automotive
divisions will have a positive impact also on the free cash flow
of the industrial business in 2015. When comparing with
2014, it is necessary to consider that the free cash flow from
the industrial business was boosted in 2014 by a total amount
of €3 billion due to special effects from the sale of our shares
in Rolls-Royce Power Systems Holding GmbH and Tesla.
On the other hand, there were cash outflows of €2.5 billion
for the extraordinary contribution to the German pension
plan assets and of €0.3 billion for the settlement of a healthcare
plan in North America. In the year 2015, we expect a free
cash flow from the industrial business in a significantly higher
amount than the dividend payment in 2015 of €2.6 billion.
As we will continue and intensify our investment offensive, we
assume that the free cash flow will be significantly lower
than in 2014 (€5.5 billion).

For the year 2015, 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
markets also in the year 2015. We want to cover our funding
needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the direct
banking business and the securitization of receivables in the
financial services business; the focus will be on bonds and loans
from globally and locally active banks. In view of the very
good liquidity situation of the international capital markets
and our strong creditworthiness, we expect a continuation
of very attractive refinancing conditions in 2015. An additional
goal is to continue securing a high degree of financial flexibility.

Dividend

At the Annual Shareholders’ Meeting on April 1, 2015, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.45 per share (prior year:
€2.25). 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 aim to
achieve a sustainable dividend development also in the
coming years. In setting the dividend, our target is to distribute
approximately 40% of the net profit attributable to Daimler
shareholders.

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 slightly increase our already
very high investment in property, plant and equipment in the
year 2015. Above all, the Mercedes-Benz Cars and Daimler
Trucks divisions will account for this increase, whereas we expect
a lower volume of capital expenditure at the Mercedes-Benz
Vans division than in the previous year. In addition to capital
expenditure, we are developing our position in the emerging
markets by means of targeted financial investments in our
holdings. That includes the expansion of our car production
capacities in China, together with our partner BAIC.

At the Mercedes-Benz Cars division, the focus of capital
expenditure will be on renewing and expanding our product range.
The most important projects include the new E-Class family,
additional versions of the C-Class and the new SUVs. Sub-
stantial investment is planned also for the modernization and
expansion of our German production sites as competence
centers, as well as for the expansion of our international pro-
duction network. After completing its Euro VI product offensive,
Daimler Trucks will mainly invest in successor generations
of existing products, the expansion and modernization of the
plants, and new global component projects in 2015. At
Mercedes-Benz Vans, the focus will be on further developing
the existing model range, expanding the sales-and-service
organization and establishing production of the Sprinter in the
United States. Key projects at Daimler Buses are advance
expenditures for new models and product enhancements and
the new bus plant in India.

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 the fields
of autonomous driving or hybrid drive for example. In addition,
we intend to utilize the growth opportunities offered by world-
wide automotive markets with new and attractive products. In
order to achieve these goals, we will once again significantly
increase our expenditure for research and development in 2015.
Key projects at Mercedes-Benz Cars include the successor
generation of the E-Class and the new SUVs. In addition, we will
invest considerable amounts in new low-emission and fuel-
efficient engines, alternative drive systems and innovative safety
technologies. Research and development spending is likely
to rise also at Daimler Trucks in 2015. 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. Also at Mercedes-Benz
Vans and Daimler Buses, an important area of research
and development is to meet future emission standards and
to increase fuel efficiency. At Daimler Buses, alternative
drive systems also play an important role and at Mercedes-
Benz Vans the further development of engines.

150

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 euro zone; an increase in political tension in Eastern Europe;
a deterioration of our refinancing possibilities on the credit and financial
markets; events of force majeure including natural disasters, epidemics,
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 preferences towards smaller,
lower-margin vehicles; a possible lack of acceptance of our products or
services which limits our ability to achieve prices and adequately utilize our
production capacities; price increases for fuel or raw materials; disruption
of production due to shortages of materials, labor strikes or supplier insol-
vencies; a decline in resale prices of used vehicles; the effective imple-
mentation of cost-reduction and efficiency-optimization measures; the business
outlook for companies in which we hold a significant equity interest; the
successful implementation of strategic cooperations and joint ventures;
changes in laws, regulations and government policies, particularly those
relating to vehicle emissions, fuel economy and safety; the resolution of pending
official investigations and the conclusion of pending or threatened future
legal proceedings; and other risks and uncertainties, some of which we describe
under the heading “Risk and Opportunity Report” in this Annual Report.
If any of these risks and uncertainties materializes or if the assumptions under-
lying any of our forward-looking statements prove to be incorrect, the actual
results may be materially different from those we express or imply by such
statements. We do not intend or assume any obligation to update these
forward-looking statements since they are based solely on the circumstances
at the date of publication.

Workforce

Due to the generally very favorable business development
that we expect for 2015, production volumes will continue rising.
At the same time, the efficiency-enhancing measures we
have implemented at all divisions in recent years will now take
full effect. The medium- and long-term programs for structural
improvements of our business processes should facilitate further
efficiency progress. Against this backdrop, we assume that
we will be able to achieve our ambitious growth targets with
only slight workforce growth. Additional jobs are likely to
be created at companies that we operate together with Chinese
partners and whose employees are not included in the
figures for the Daimler Group.

Overall statement on future development

We have implemented our strategy consistently and with great
determination in recent years, and this is now beginning to
pay off. Our new vehicle models are extremely well received by
our customers. We are strengthening our market position
worldwide and increasing our presence in the growth markets.
The signs point towards growth in all divisions, and we are
on schedule with our efficiency improvements. Furthermore,
we are underscoring our technological leadership with pio-
neering innovations in the fields of safety, efficient drive systems
and autonomous driving. In recent years, we have created
the right conditions for further growth, and above all for profit-
able growth, and we will continue consistently to follow the
course we have taken.

For these reasons, we look to the year 2015 with great
confidence. Everything indicates that we will proceed along
our growth path. We anticipate significant increases in
unit sales, revenue and earnings from the ongoing business.

151

B | Combined Management Report | Outlook We thrill customers
with new products.

Daimler’s divisions performed very well in what was still a difficult market last year.

We consistently renewed our product range, and we were able to enter additional

markets and market segments with new models. At the same time, we further

improved the efficiency of our processes. In order to create the right conditions for

future growth, we modernized and expanded our worldwide production network.

152

C | The Divisions.

154 – 159

Mercedes-Benz Cars
– Unit sales and revenue at record levels
– “Fit for Leadership” successfully implemented
– New C-Class – dynamic and premium
– Impressive technology and design of new smart models
– Numerous awards for Mercedes-Benz
– Foundations laid for further growth in China
– “Best Customer Experience” pushed forward
– Extensive investment in worldwide production network
- World champions in Formula 1
– CO2 emissions reduced to an average of 129 g/km
– EBIT significantly above prior-year level at €5.9 billion

Daimler Buses
– Strong unit sales of complete buses
– Measures from “GLOBE 2013” growth and efficiency

168 – 170

program take effect

– Mercedes-Benz Citaro is best-selling bus of all time
– Numerous major international orders received
– EBIT significantly above prior-year level at €197 million

(2013: €124 million)

Daimler Financial Services
– 3.3 million vehicles financed or leased for

171 – 173

(2013: €4.0 billion)

the first time

Daimler Trucks
– Unit sales at highest level since 2006
– Far-reaching implementation of “Daimler Trucks #1”
– New products presented: Actros and Arocs heavy-duty
tractor units, Western Star 5700XE, FUSO Super Great V

160 – 164

– Number of automotive insurance policies higher

than ever before

– More than one million customers at moovel
– Expansion of digital sales channels
– Award received as one of best 25 international
employers worldwide
– EBIT significantly above prior-year level at €1.4 billion

– Strong fuel efficiency and very competitive running

(2013: €1.3 billion)

costs ensure high customer acceptance

– Record unit sales and renewed market leadership

in NAFTA region

– Further cooperation between MFTBC and Nissan Motor
– EBIT significantly above prior-year level at €1.9 billion

(2013: €1.6 billion)

Mercedes-Benz Vans
– Unit sales at record level
– Earnings development supported by measures from

165 – 167

“Performance Vans” program

– V-Class redefines the multipurpose vehicle
– New Vito sets standards in mid-size van segment
– “Mercedes-Benz Vans goes global” growth strategy

forms basis for long-term growth

– EBIT significantly above prior-year level at €682 million

(2013: €631 million)

153

C | The Divisions | Contents

Mercedes-Benz Cars.

Mercedes-Benz Cars celebrated yet another record year in 2014. Unit sales and revenue increased
once again and earnings were significantly higher than in the previous year. We also improved
our position in many markets. New models such as the C-Class, the GLA compact SUV, the S-Class
coupe and the Mercedes-Maybach further enhanced the appeal of the Mercedes-Benz brand.
In addition, the smart brand successfully entered a new era with its new fortwo and forfour models.
We expanded our production capacities around the world in the year under review, thereby
laying the foundations for future growth.

C.01
Mercedes-Benz Cars

Amounts in millions of euros

% change

2014

2013

14/13

EBIT

Revenue

Return on sales (in %)

Investment in property, plant and
equipment

Research and
development expenditure

thereof capitalized

Production

Unit sales

Employees (December 31)

5,853

73,584

8.0

4,006

64,307

6.2

3,621

3,710

4,025
1,035

1,754,115

1,722,561

129,106

3,808
1,063

1,588,658

1,565,563

96,895

+46

+14

-2

+6
-3

+10

+33

C.02
Unit sales by Mercedes-Benz Cars

in thousands

2014

2013

14/13

% change

Mercedes-Benz

1,630

1,467

thereof A-/B-/CLA-/GLA-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

thereof United States

China

Japan

154

472

363

329

125

342

1,723

669

272

391

344

293

384

357

332

323

1,566

640

280

363

319

239

+11

+23

-1

+75

-6

+10

-3

+23

+14

Record unit sales and revenue. The Mercedes-Benz Cars
division, comprising the Mercedes-Benz and smart brands
as well as the Mercedes-AMG and Mercedes-Maybach sub-
brands, once again accelerated its pace of growth in the year
under review. Unit sales rose by 10% to the new record level
of 1,722,600 vehicles. The increase in revenue was even more
substantial at plus 14% to €73.6 billion.  C.01 We also con-
tinually improved our profitability as the year progressed with
EBIT rising by 46% to €5.9 billion. Our very positive overall
business development was largely due to the launch of several
new and attractive products. The efficiency measures of
our “Fit for Leadership” program also had a positive impact
on earnings.

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 efficiency-boosting measures
and identifies additional efficiency potential. 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. By the end of 2014, Fit for Leadership
measures had achieved a sustainable cost-structure improve-
ment of approximately €2 billion. Beginning in 2015, these savings
will be fully reflected in our earnings. We have thus success-
fully completed the first phase of the program as planned. Sub-
stantial progress was made on the optimization of production
and the reduction of material costs and fixed costs, for example.
We systematically identified the technical and structural poten-
tial for optimization, and we also made a considerable impact
on material costs by applying new procedures for awarding
contracts to suppliers. The second phase of the program will
focus more strongly on long-term structural changes. Our goal
here is to further improve the competitiveness of Mercedes-
Benz Cars over the long term. This will require us to holistically
adjust the Mercedes-Benz Cars business system to changing
conditions, such as the globalization of sales and production
structures and changes in the product mix.

The new Mercedes-Benz S-Class coupe: breathtaking design and refined sportiness.

Record unit sales for Mercedes-Benz. Unit sales of the
Mercedes-Benz brand increased by 11% to 1,630,100 vehicles
in 2014. This is the fourth consecutive year in which the brand
has set a new record.  C.02 Despite difficult conditions in
several markets, the pace of growth increased slightly compared
with the previous year due to the launch of attractive new
models. We were able to improve our market position in China
in particular.

Mercedes-Benz also performed very well overall in a volatile
market environment in Europe. Growth was particularly strong
in Spain (+35%), the United Kingdom (+13%) and France (+9%).
Unit sales in Western Europe were up 6% from the prior year,
although they did fall slightly in Germany. We set a new record
in the United States with sales of 334,000 vehicles (+8%).
We continued to grow in China, where sales increased by 25%
to 275,000 units. We recorded significant increases in
unit sales also in Japan (+15%), India (+14%) and Brazil (+6%).

The main contributions to the growth in unit sales came from
the S-Class, our compact cars and the new C-Class models.
A total of 471,700 customers opted to buy a vehicle of the
A-Class, B-Class, CLA-Class or the new GLA-Class series during
the year under review, representing an increase of 23% over the
previous year. The sedans and wagons of the E-Class remained
very popular and unit sales of those models increased by 2%
to 252,300 vehicles. Total sales of 329,000 units in the E-Class
segment almost matched the high prior-year level. Mercedes-
Benz further improved its position in the global market for luxury
vehicles. A total of 125,100 vehicles in the S-Class segment
were sold in 2014 (+75%), more than ever before in the long and
successful history of that model series. Business with our
SUVs remained very positive, with sales rising to the new record
level of 341,500 vehicles (+6%). The C-Class performed
extremely well in the year of its model changeover. Unit sales
totaled 362,700 vehicles (+2%) despite the fact that the new
C-Class models did not become available in all core markets
until October 2014.

The new C-Class – dynamic and premium. Mercedes-Benz
sets the benchmark in the premium mid-range segment with its
all-new C-Class. The C-Class sets efficiency standards in its
class, thanks to an intelligent lightweight design concept, excel-
lent aerodynamics and new economical engines. Numerous
new assistance systems provide the highest levels of safety, while
a new chassis ensures exemplary ride and driving comfort as
well as agile handling. In terms of appearance, the new C-Class
adopts a progressive approach with its clear yet emotive
design and its high-class interior. Many other innovations and
appointment details underscore the sedan’s comfort and
refined sportiness. All in all, the perceived quality of the new
C-Class feels like an “upgrade to a higher class.”

The new C-Class sedan celebrated its successful launch
in Europe in March 2014. The model has been available also
as a wagon version since September 2014. The wagon
shines with a clear yet emotive and sporty design, innovative
technology, flexibility and greater cargo volume than the
predecessor model.

The new models have been extremely well received by our
customers and the trade press. A total of 219,400 new C-Class
vehicles were delivered to customers in 2014.

The new Mercedes-Benz GLA – an all-round talent. The
SUV from our new compact-model family combines superior
everyday driving performance with off-road mobility. Its
flexible interior and high-quality appointments showing loving
attention to detail clearly position the GLA as a premium
compact SUV. The new GLA rounds out the extensive range
of Mercedes-Benz SUVs, and is the fourth of a total of five
new compact models from the brand. Deliveries of the GLA to
customers began in March 2014. The fifth compact model,
the CLA Shooting Brake, will be available as of March 2015.

155

C | The Divisions | Mercedes-Benz CarsThe new S-Class coupe – stylistically self-assured with
refi ned sportiness. The new S-Class coupe, which has
been available since September 2014, combines the classic
pro portions of a large, sporty coupe with modern luxury and
forward-looking technology. As a worldwide fi rst, the S-Class
coupe can be optionally equipped with the MAGIC BODY
CONTROL suspension system, which features a curve tilting
function.

The B-Class: better than ever before. After sales of more
than 350,000 units of the B-Class since its market launch
in 2011, we have given the compact sports tourer a signifi cant
upgrade both inside and out. Five effi cient diesel models
with fuel consumption ranging from 3.6 to 5.0 l/100 km, four
effi cient gasoline models with fuel consumption ranging from
5.4 to 6.6 l/100 km, alternative drive systems (electrical and
natural gas), and the optional 4MATIC all-wheel drive system
ensure a unique selection in the model’s segment. The sports
tourer sets the standard in its class also with a drag coef-
fi cient of less than 0.25. The fi rst new B-Class models were
delivered in December 2014.

Mercedes-Maybach premieres. In November 2014, our
new Mercedes-Maybach sub-brand and the fi rst model from
this new and exceptionally exclusive brand – the Mercedes-
Maybach S 6001 – celebrated their world premiere simultane-
ously in the United States and China. Mercedes-Maybach
stands for prestigious exclusivity and is aimed at particularly
discerning customers. With the combination of the very
highest exclusivity, unparalleled comfort and state-of-the-art
technology, the new Mercedes-Maybach S 6001 represents
the absolute pinnacle of the top-of-the-line automobile segment.
The Mercedes-Maybach S 6001 also off ers a new dimension
in seat comfort and relaxation. Thanks to extensive noise-
insulation measures, this is the quietest production limousine
in the world for passengers in the rear.

Mercedes-AMG: driving performance for sports car
enthusiasts. The new Mercedes-AMG GT celebrated its world
premiere in September 2014. This model marks the entry of
the sports car and high-performance brand from Mercedes-
Benz Cars into a new top-class sports-car segment that it had
not previously occupied. This automobile, the second sports car
that Mercedes-AMG has developed entirely on its own, under-
scores the brand’s successful history. Entry into the compact
class and expansion of the model range to include additional
4MATIC and S models have enabled Mercedes-AMG to attract
new customer groups in both new and established markets.
Within the framework of the AMG Green Performance Strat-
egy, fl eet fuel consumption has been reduced by 35% over the
past fi ve years with the help of an extensive range of technical
modifi cations. New engine technologies and comprehensive
lightweight design have made the AMG models, which
already boast some of the lowest emissions in their respective
segments, even more effi cient than before.

New smart models – a new era begins. In July 2014, the
smart brand unveiled two completely new models to the
international media and the global public. The smart fortwo
retains its uncompromising “shortness” of 2.69 meters,
while the 3.49-meter forfour combines typical smart attributes
with a feeling of great roominess and clever cargo loading
options. The suspension system takes its cue from the technol-
ogy used in the larger Mercedes model series; its roughly
ten-centimeter wider track has led to a clear improvement in
handling compared with the predecessor model. The smart
fortwo’s turning circle of 6.95 meters is the best in the world,
while the forfour also boasts outstanding agility with a turning
circle of 8.65 meters. The two are thus ideally prepared for
the demands of urban driving. Customized infotainment options
and clever connectivity solutions leave nothing to be desired,
and the new smart models make a huge impression also with
a range of safety features that set new standards in the
brand’s market segment.

Nearly all aspects of the smart fortwo have been improved and it now promises even more fun in the city with many innovative details.

156

The new C-Class wagon is a lifestyle automobile that combines dynamic design, high-class interior and innovative technology.

They include a reinforced tridion safety cell, comprehensive
airbag solutions and assistance systems normally reserved
for premium vehicles. The new fortwo and forfour models have
been available in Europe since November 2014; additional
markets will follow in 2015.

Despite being in its last year prior to a model changeover,
smart was able to keep unit sales relatively stable at 92,500 cars
in the year under review (2013: 98,200). The smart fortwo
electric drive2 remained very successful in the electric-car
market.

Foundations laid for further growth in China. During the
reporting year, we created the conditions necessary for further
growth in China with the launch of nine new models, as well
as by strengthening our sales network and making extensive
investments in our local production and research locations.
The consolidation of marketing and sales activities under the roof
of a highly effective single organization, which began in 2013,
was successfully completed in the year under review. We also
added over 100 new sales outlets in more than 50 cities to
our sales network in China, which now comprises a total of nearly
450 dealerships. In order to ensure that we can staff our
growing sales organization with highly qualified employees,
we opened Mercedes-Benz’s biggest training center in the

world for car dealership staff in Shanghai in July 2014. In addition,
a new Mercedes-Benz Research & Development Center began
operating in Beijing in November 2014, and will enable us to meet
the requirements and expectations of our Chinese customers
more effectively. We intensified the cooperation with our Chinese
partner BAIC Motor Corporation during the year under review.
As a result, annual capacity at Beijing Benz Automotive Co., Ltd.
(BBAC) will be more than doubled to over 200,000 units by 2015.

Additional sales momentum has been generated in China
since September 2014 by the C-Class long-wheelbase version,
which is produced in and for China. This car was developed
especially for the Chinese market and offers rear passengers
about 80 millimeters more legroom. High-quality materials
and precisely defined details lend the interior a feeling of modern
luxury.

1 Mercedes-Maybach S 600: fuel consumption in l/100 km urban 16.9,
extra-urban 8.7, combined 11.7; CO2 emissions in g/km combined 274.
2 smart fortwo electric drive: electricity consumption in kWh/100 km 15.1;

CO2 emissions in g/km 0.0.

157

C | The Divisions | Mercedes-Benz CarsNumerous awards for Mercedes-Benz. The Mercedes-Benz
brand was once again the recipient of numerous awards in
2014. The brand was honored not only on the basis of traditional
criteria such as safety, comfort, value stability and environ-
mental compatibility, but also for its innovative spirit and the
fascinating design of its vehicles. For example, readers of
Auto Zeitung selected Mercedes-Benz models as the vehicles
with the best design in three categories. The GLA topped
the SUV category while the new C-Class took top honors among
sedans and was also voted the best vehicle overall. Readers
who participated in the voting for the AUTO BILD Design Award
chose models from Mercedes-Benz as Germany’s most
beautiful cars in five out of six categories. Among the winners
here was the new S-Class coupe; the C-Class was named
overall Design Champion in this competition as well. In the voting
for the World Luxury Car, 69 top journalists from 22 countries
selected the S-Class as the best luxury car in the world.
Mercedes-Benz was once again named the most valuable Euro-
pean brand and the most valuable premium automotive brand
in the world in the Interbrand rankings for Best Global Brands
2014. Mercedes-Benz is also the most innovative automobile

brand, according to a study conducted by the Center of Auto-
motive Management (CAM) and the Pricewaterhouse Coopers
(PwC) corporate consulting firm.

Best Customer Experience. The Best Customer Experience
program is designed to ensure completely personalized
service for customers – from the initial contact to advice, test
drives, purchases and aftersales services. Our goal here is
to make Mercedes-Benz even more attractive to new contem-
porary-minded target groups, while at the same time main-
taining the brand loyalty of established customers. To this end,
Mercedes-Benz utilizes a multichannel approach that flexibly
links a large number of different sales formats, thereby supple-
menting the services offered at traditional Mercedes-Benz
showrooms. In late 2013, the brand became the first premium
manufacturer to launch an online sales channel for new
vehicles. The system is operated in a pilot project in cooperation
with the Hamburg sales-and-service center. The pilot project
was extended to Warsaw at the beginning of 2014. An analysis
of the test-drive appointments made revealed that the online
sales channel mainly attracted young people.

Progressive and unmistakable: The new CLA Shooting Brake perfectly combines the emotion of a coupe with the intelligence of a shooting brake.

158

A sports car in its purest form: The new Mercedes-AMG GT offers racetrack performance with great everyday practicality for enthusiasts.

Formula 1 champions. Thanks to innovative hybrid technology
and an outstanding team effort, MERCEDES AMG PETRONAS
was able to win the 2014 Formula 1 Constructors’ Championship
by a wide margin. Our two drivers also dominated nearly every
race. Lewis Hamilton finished the season as the world champion
with Nico Rosberg taking second place. The hybrid drive in
the F1 W05 Hybrid championship car was the most efficient and
successful drive system in the competition. That was one
of the main reasons why the season was such a huge success
for MERCEDES AMG PETRONAS. In a total of 19 races, the
team captured 16 victories (11 of which were 1-2 finishes),
31 podium finishes and 18 pole positions. Because the new
Formula 1 regulations focus on fuel efficiency, we can now
use the knowledge we have gained with lightweight design and
hybrid technology in our race cars to further improve our
production vehicles.

Further reduction of CO2 emissions. Our new engines
and extremely fuel-efficient model variants once again enabled
us to substantially reduce the average CO2 emissions of the
cars we sold in the European Union in 2014 – this time from
134 grams per kilometer to 129 g/km. That achievement was
made possible in large part by our new compact-class models
and our efficient hybrid drive systems. Our goal is to reduce
the average CO2 emissions of our new-vehicle fleet in the Euro-
pean Union to 125 g/km by 2016. E see pages 109 f

An important component of Best Customer Experience
is the “Mercedes me” service brand, which was presented for
the first time in March 2014. “Mercedes me” allows easy
access to existing and future services from the brand and
is available around the clock at w www.mercedes.me.
The new service brand has already been launched in 15 countries
and is adapted to the local range of services in each market.
E see pages 30 f

Expansion of the global production network. In order to
meet the targets of our 2020 growth strategy, we are creating
additional capacities worldwide and continually refining our
flexible and highly efficient production network. The numerous
investment decisions that have been made regarding our
plants in Germany underscore their importance as centers of
expertise. For example, we invested more than €3 billion in
the modernization and restructuring of our car and engine plants
in Germany in 2014. We are also expanding our vehicle pro-
duction capacities in the United States and China. A new logistics
center is being built in Speyer, Germany, to enable us to effi-
ciently and flexibly manage the growing material flows in our
global production network. This center will serve as a hub for
delivery of components to our car plants in China, South Africa
and the United States. The new C-Class is our first model
to be manufactured on four different continents simultaneously.
It took only six months to launch production of the vehicle
first in Bremen and then in East London (South Africa), Tusca-
loosa (USA) and finally Beijing, where the long-wheelbase
version of the C-Class is built. As the lead plant, Bremen manages
the global production of the C-Class, including everything
from tooling strategies to training for staff from the international
manufacturing locations, as well as product quality specifica-
tions. This guarantees top quality from the very beginning at all
production facilities.

159

C | The Divisions | Mercedes-Benz CarsDaimler Trucks.

Daimler Trucks is consolidating its position as a technology leader. The year 2014 was marked
by the launch of numerous new models and groundbreaking technologies, with the biggest
highlight being the presentation of the autonomously driving Mercedes-Benz Future Truck 2025.
In the year under review, a strong product portfolio and positive market developments in the
NAFTA region and Japan resulted in the highest unit sales for Daimler Trucks since 2006. Our strategy,
which is based on the three pillars of technology leadership, global presence and intelligent
platforms, continues to pay off. It puts us in a strong competitive position in our core markets and
allows us to successfully expand into new markets and market segments. Our strategy thus
enabled us to overcome challenges in Europe and Latin America and to achieve successful results
in full-year 2014.

C.03
Daimler Trucks

Amounts in millions of euros

2014

2013

14/13

% change

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and
development expenditure
thereof capitalized

Production

Unit sales

Employees (December 31)

1,878

32,389

5.8

788

1,188
34

497,710

495,668

82,743

1,637

31,473

5.2

839

1,171
79

490,280

484,211

79,020

+15

-6

+1
-57

C.04
Unit sales by Daimler Trucks

in thousands

Total

Western Europe

thereof Germany

United Kingdom

France

NAFTA

thereof United States

Latin America (excluding Mexico)

thereof Brazil

Asia

thereof Japan

Indonesia

Additional information:

BFDA (Auman Trucks)

Total (including BFDA)

160

2014

2013

14/13

% change

496

161

142

167

595

484

135

118

163

103

588

-13

-14

-37

+19

+20

-21

-17

+14

-10

-4

Growth in unit sales, revenue and earnings. Daimler Trucks
was able to increase its unit sales by 2% to 495,700 units in 2014.
Revenue also rose, increasing to €32.4 billion (2013: €31.5
billion). At €1.9 billion, EBIT was well above the figure for the prior
year. The earnings figure includes charges of €149 million
related to workforce adjustments in Brazil and Germany as well
as charges from the impairment of the carrying amount of
the investment in Kamaz. The year under review was marked
by very different developments in individual regions. A poor
economic outlook and uncertainties associated with upcoming
elections negatively impacted unit sales especially in Latin
America and Indonesia. The truck market in Europe was notice-
ably affected by the introduction of the Euro VI emission
standards at the beginning of 2014. Moreover, sales in the region
were influenced by sluggish economic growth and the political
situation in Eastern Europe. The situation was completely differ-
ent in North America and Japan, as Daimler Trucks benefited
from high demand for commercial vehicles in both markets.
In addition, earnings were positively affected by the successful
measures implemented within the framework of the Daimler
Trucks #1 efficiency and growth program.

Daimler Trucks #1 on course to achieve its targets.
The Daimler Trucks #1 excellence program was successfully
continued during the year under review. More than 10,000
program initiatives had been implemented worldwide by the
end of 2014. The program target of €1.6 billion will be achieved
in 2015, when the measures will have been in effect for a
full year.

The goal of Daimler Trucks #1 is to improve the competitiveness
and profitability of Daimler Trucks on a sustained basis. All
units at the division have been working continually to increase
their unit sales and efficiency since the start of the program.
To this end, numerous measures have been defined and imple-
mented along the entire value chain in all regions. This has
enabled us to achieve substantial reductions in production,
material and fixed costs worldwide. Moreover, our product
offensive and the systematic development of new markets have
allowed us to exploit additional growth potential.

Powerhouse with the star: The Mercedes-Benz SLT – as an Actros or Arocs variant – can pull extra-heavy loads weighing up to 250 metric tons.

Division-wide strategic initiatives for utilizing global synergy
potential were also launched successfully during the year under
review. One result of Daimler Trucks #1 is our newly estab-
lished module management system, with which initial economies
of scale were achieved in pilot projects for multiple brands.
This development was supported by organizational consolidation
that has led to optimal coordination with the Development
and Procurement departments.

The systematic alignment of Daimler Trucks’ business activities
in Asia is also creating benefits. Our new Asia Business Model
has led to extensive cooperation between development, produc-
tion and sales units, which in turn has allowed us to exploit
synergy and growth potential at our Japanese and Indian subsid-
iaries. For example, Daimler Trucks is now benefiting more
from growth opportunities in the up-and-coming markets of
Southeast Asia and Africa by supplying them with medium-
and heavy-duty FUSO brand trucks made in India. With the start
of production of the left-hand-drive versions and the Euro IV
and Euro V versions, these vehicles can also be exported to the
Middle East and Latin America.

Outstanding product acceptance thanks to low total cost
of ownership. Daimler Trucks once again increased its unit
sales in 2014. At 495,700 units, sales were at their highest level
since 2006. The high degree of market acceptance for our
products is largely due to the fact that Daimler Trucks consis-
tently focuses on customer requirements – as evidenced
by an extremely competitive total cost of ownership, which
is the most important factor in our customers’ purchasing
decisions. Improving fuel efficiency is therefore a top priority
in all regions. The Euro VI Actros in Europe, the Freightliner
Cascadia Evolution in North America and the FUSO Super Great V
in Japan are all trendsetters for fuel economy.

The fact that Mercedes-Benz products are extremely popular
is demonstrated by our top position in the segment for medium-
and heavy-duty trucks in Western Europe, where despite
a difficult market environment, we were able to record a slight
increase in market share to 24.4% (2013: 24.1%). At 57,400 units,
sales in Western Europe were down 13% from the previous
year. The truck market in the region was negatively affected by
sluggish economic growth and the introduction of the Euro VI
emission standards at the beginning of 2014. The negative
development was particularly noticeable in the fourth quarter,
as unit sales in Q4 2013 had been boosted by purchases
brought forward prior to the introduction of Euro VI. At 33,900
units, sales in Eastern Europe were lower than in the prior
year. The increase in unit sales in Turkey to the record level of
22,200 vehicles could not offset declines in our other Eastern
European markets. The ongoing difficult political and economic
situation in Russia led to a substantial decline in sales in that
market.

161

C | The Divisions | Daimler TrucksSales success in North America: the Freightliner Cascadia Evolution with a highly efficient powertrain and low fuel consumption.

Our unit sales in Latin America fell significantly due to the
lack of economic growth in that region. In our main market there,
Brazil, sales declined by 17% to 32,200 units. Weak economic
growth significantly curbed procurement throughout the market.
In this difficult environment, we were able to increase the
market share of our medium- and heavy-duty Mercedes-Benz
trucks to 25.8% (2013: 24.7%). We will make major investments
in our production facilities and products in the coming years
in order to ensure we remain competitive in this strategically
important market and are able to react flexibly to future
changes.

Our market share of 37.2% in the NAFTA region (2013: 38.2%)
once again made us the undisputed market leader in the
segment for Class 6-8 trucks. Sales in the region rose to the
record level of 161,500 units, which represents an increase
of 19% over the previous year. The Freightliner Cascadia Evolu-
tion, which was added to the product range in 2013 and
is a benchmark for fuel efficiency, made a major contribution
to our sales success in the region. Our customers in North
America have come to increasingly appreciate the benefits
of a fully integrated heavy-duty powertrain from a single
source. Engines, axles and transmissions are all from Daimler
Trucks, which ensures optimally coordinated drive-system
components. The expansion of production of the DT12 trans-
mission to North America, which is planned for the end
of 2015, will mark yet another milestone in the further devel-
opment of our global and flexible production network.

162

The overall development of unit sales in Asia was positive
in 2014, but the situation varied greatly from region to region.
Whereas unit sales grew in Japan and India, they decreased
in Indonesia. Sales in Japan rose by 14% to 43,900 units.
The increase was particularly noticeable in the first quarter
of 2014, as many customers chose to purchase trucks before
the increase in VAT that went into effect on April 1, 2014.
This was followed by a period of very small increases in unit
sales. Nevertheless, the decline in sales that was anticipated
by some market observers did not materialize. We successfully
defended our market share and achieved an overall share of
the Japanese truck market of 20.1% (2013: 20.2%). We increased
our market share in Indonesia to 47.4% (2013: 46.9%). But
due to the sharply contracting market in that country, our sales
declined by 10% to 58,300 units. On the other hand, our
sales in India rose to 10,300 units in the year under review
(2013: 6,500) despite a slightly contracting market in that
country. Our attractive product portfolio in India, which already
comprises more than a dozen models, is sold through a net-
work of approximately 80 dealerships in the country. This sales
network is to be expanded further in 2015.

Daimler’s MFTBC commercial vehicle subsidiary expands
cooperation. Daimler’s Mitsubishi Fuso Truck and Bus
Corporation (MFTBC) commercial vehicle subsidiary in Japan
intensified its cooperation with Nissan Motor Co. Ltd (Nissan)
during the year under review. The two companies signed
a contract in October 2014 covering the delivery of vans. Nissan
will deliver the vans as complete vehicles, which will then
be sold to commercial FUSO brand customers in export markets.
Under the terms of the contract, Nissan is supplying its
NV350 Urvan to MFTBC, which began selling the model as the
FUSO Canter Van in the Middle East in late 2014. The new
agreement supplements an existing strategic partnership
between MFTBC and Nissan in Japan, in which MFTBC supplies
its light-duty truck platform to Nissan and receives Nissan’s
light-duty truck platform in return. In addition, MFTBC has been
supplying light-duty trucks to UD Trucks Corporation since
September 2014. These vehicles are also based on FUSO’s
light-duty truck platform and are marketed in Japan under
the name “Kazet.”

Sale of RRPSH shares. In the first quarter of 2014, the
Board of Management and the Supervisory Board of Daimler AG
made the decision to transfer the company’s 50% interest in
Rolls-Royce Power Systems Holding GmbH (RRPSH) to its joint
venture partner, Rolls-Royce Holdings plc (Rolls-Royce).
Following this decision, Daimler exercised a put option for its
stake in RRPSH that had been agreed on with Rolls-Royce
in 2011. The sale of Daimler’s shares in RRPSH was completed
in August 2014 and generated proceeds for Daimler of
€2.4 billion.

Expanded product range for the newest brand: BharatBenz presented the 4928TT and 4023TT semi-trailer tractors in 2014.

163

C | The Divisions | Daimler TrucksSuccessful cooperation with our partner in China. Daimler AG
has a 50% interest in Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA), a joint venture it operates with Beiqi Foton Motor Co,
Ltd. Production of medium- and heavy-duty Auman brand
trucks began in China in mid-2012. The partnership safeguards
Daimler Trucks’ presence in the important Chinese truck
market. Sales of Auman brand trucks declined for market reasons
by 4% to 99,200 units in 2014. More than 230,000 Auman
trucks have already been sold since the beginning of the joint
venture.

Strong presence with new products. Daimler Trucks
unveiled new models around the globe in 2014 following the
successful introduction of its Euro VI fleet in the previous
few years. The Euro VI offensive was concluded in the first
quarter of 2014 with the launch of the Actros and Arocs
(SLT) heavy-haulage vehicles. These customized trucks can
pull up to 250 metric tons and are often over 50 meters
long. The vehicles are built at the Mercedes-Benz plant in
Molsheim, France.

Successful IAA Commercial Vehicles. Daimler Trucks
presented numerous vehicle world premieres, an extensive
range of services and the spectacular Mercedes-Benz
Future Truck 2025 at the 65th IAA Commercial Vehicles show
in Hanover in September 2014. The Future Truck 2025 auto-
nomously driving vehicle is a key component of the transporta-
tion system of the future. The Future Truck 2025 conserves
resources, reduces emissions of all types, ensures the highest
degree of safety and improves connectivity on the road.
Radar sensors and camera systems make it possible for the
Future Truck 2025 to drive autonomously without any
need for communication with other vehicles or a control center.
Mercedes-Benz has combined all the necessary technology
in its highly intelligent Highway Pilot system, which is similar
to an airplane autopilot. Back in July 2014, we presented the
pioneering technologies in the Future Truck 2025 to the world
by sending the vehicle on its very first journey on a stretch
of autobahn near the city of Magdeburg. A detailed description
of the Future Truck and its world premiere is presented on
E pages 14 ff of this Annual Report.

The new Western Star 5700XE was presented in the fall
of 2014 and will be available to our North American customers
in 2015. Numerous new aerodynamic features reduce air
resistance and thus also improve fuel economy. The best fuel-
efficiency performance is achieved when the models are
equipped with an integrated powertrain from Daimler Trucks.
The interaction of the Detroit brand engine, axles and DT12
automatic transmission with a highly intelligent powertrain
management system ensures the highest efficiency.

The Future Truck 2025 presented at the IAA Commercial Vehicles
featured a new exterior and interior design, as well as numer-
ous product innovations. They include the new Blind Spot Assist
safety system, which Daimler will begin mass-producing
in the coming years. We are thus underscoring our leading role
in the area of active safety as we continue along the road to
accident-free driving. Blind Spot Assist’s radar sensors monitor
both sides of the truck and warn of the presence of other
road users that the driver cannot see.

Customer tests with the FUSO Canter E-Cell. FUSO is a
trailblazer in the field of “green” drive systems for light commer-
cial vehicles. The first fully electric light truck, which is being
produced in a small-batch series, is completely emission-free
and makes virtually no noise. This Canter E-Cell for the European
market is built at the plant in Tramagal, Portugal. The first
of these E-Cell trucks were delivered to customers for testing
in July 2014. The tests under normal operating conditions
are scheduled to run for one year. The handover of the vehicles
to Portuguese customers marked yet another highlight in
the anniversary year of the Tramagal plant, which began manu-
facturing trucks 50 years ago.

Our product range in Japan has been expanded to include
the new FUSO Super Great V heavy-duty truck. This vehicle also
sets standards for economy. Its lower fuel consumption is
made possible by an optimized 6R10 engine with tried-and-tested
and continually refined technology based on our Heavy-Duty
Engine Platform, as well as by a newly developed asymmetrical
turbocharger. The new Super Great V is also the only truck
whose full model range already beats by up to 5% the require-
ments of the FES fuel efficiency standards that will take
effect in Japan in 2015.

Daimler Trucks has launched new products in Europe, North
America and Japan, and the division’s product offensive is
successful also in emerging markets. In early 2014, we added
new semitrailers and a construction and mining truck to
the BharatBenz product range in India. The next highlight was
unveiled in the third quarter – the BharatBenz 3143, which
is scheduled to go into series production in the second half
of 2015. BharatBenz is the first Indian brand to offer trucks
in the segment with engines of over 400 horsepower, which has
so far been dominated by European brands. The vehicles
from the FUSO FI and FJ model series are another good example
of Daimler Trucks’ growing global presence. These medium-
and heavy-duty trucks from the Japanese brand are also manu-
factured by Daimler India Commercial Vehicles (DICV) in
Chennai. From there, they are exported to promising markets
in Southeast Asia and Africa.

164

Mercedes-Benz Vans.

Mercedes-Benz Vans set a new record for unit sales in 2014 and recorded double-digit growth
in both its core region of Western Europe and the United States. We successfully continued
our product offensive in the year under review and upgraded our products in the mid-size van
segment. Mercedes-Benz Vans sets benchmarks for customer focus, engineering, design and
sustainability with its new V-Class multipurpose vehicle, as well as with the Vito, which is tailored
to the needs of commercial customers. Thanks to our innovative products and further efficiency
improvements, Mercedes-Benz Vans was once again able to record an increase in earnings in the
year under review. We are continuing with our “Mercedes-Benz Vans goes global” growth strategy.

Unit sales, revenue and earnings above prior-year levels.
Mercedes-Benz Vans set a new sales record in 2014, with
deliveries rising by 9% to 294,600 units. At €10.0 billion, revenue
was also higher than in the previous year (2013: €9.4 billion).
EBIT of €682 million was 8% higher than in 2013. Earnings were
impacted by the very positive sales development, as well
as by the measures implemented within the framework of the
Performance Vans efficiency program. Those measures
included the introduction of more efficient production processes
following the ramp-up of new products, the optimization
of material use and the consistent utilization of the potential
offered by the European and North American van markets.
 C.05

Continued growth. Mercedes-Benz Vans sold 294,600 vehicles
worldwide in 2014. This figure marks a new sales record
and an increase of 9% from the prior year. Our Sprinter, Vito and
Citan vans are targeted mainly at commercial customers,
while the Viano and V-Class models are designed primarily for
private use. Unit sales in Western Europe, our most important
market, rose by 12% to 190,000 vans in the year under review.
The southern European markets experienced an especially
strong comeback last year. Mercedes-Benz Vans sold 20,700
units of the Citan city van in Western Europe in 2014 (2013:
17,700). Sales of mid-size and large vans rose by 12% to 169,400
units. Growth was particularly strong in our German home
market (+12%), where we also set a new sales record. Despite
a difficult market environment in Eastern Europe, Mercedes-Benz
Vans was able to increase its sales in that region to 30,800
units (+14%). This figure includes 6,700 Sprinter Classic models
that were built and sold in Russia. The success story of our
Sprinter continues in United States as well. With sales of 25,800
vehicles (2013: 22,800), we increased our market share in the
United States to the new record level of 8.9%. At 12,800 units,
sales in China were slightly above the prior-year level. Sales
in Latin America declined by 18% to 16,100 units due to the diffi-
cult economic situation in that region.

C.05
Mercedes-Benz Vans

Amounts in millions of euros

% change

2014

2013

14/13

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and
development expenditure
thereof capitalized

Production

Unit sales

Employees (December 31)

682

9,968

6.8

304

293
68

631

9,369

6.7

288

329
139

299,008

294,594

15,782

270,675

270,144

14,838

-11
-51

+10

C.06
Unit sales by Mercedes-Benz Vans

2014

2013

14/13

% change

Total

Western Europe

thereof Germany

Eastern Europe

United States

Latin America (excluding Mexico)

China

Other markets

294,594

190,019

79,898

30,758

25,832

16,063

12,837

19,085

270,144

169,175

71,520

26,876

22,802

19,580

12,705

19,006

+12

+14

+13

-18

165

C | The Divisions | Daimler Trucks | Mercedes-Benz Vans

We sold a total of 186,300 Sprinter vehicles worldwide during
the year under review; this marks an increase of 12% over the
previous year and a new record as well. Despite model change-
overs, we were still able to significantly surpass the previous
year’s sales figure in the segment for mid-size vans (including
the new V-Class) with sales of 86,000 units (2013: 80,900).
Demand for the Citan city van rose by 10% to 22,100 units in
the year under review.

The benchmark for multipurpose vehicles: the new
Mercedes-Benz V-Class. The new Mercedes-Benz V-Class –
the outstanding multipurpose vehicle with the three-pointed
star – marks yet another milestone in our global growth strategy.
With this vehicle, Mercedes-Benz Vans redefines the MPV
and sets new standards in the segment both aesthetically and
technologically. The model’s design follows the new design
idiom for Mercedes-Benz cars and ensures that the V-Class
stands out visually from the crowd as it communicates
a sense of modern luxury. This design convinced the panel
of judges for the Red Dot Award, which is one of the world’s
biggest competitions for design quality. The panel selected
the V-Class for its product-design award. The V-Class sets

itself apart from the competition also with its wide range
of assistance systems combining safety and comfort.
They include the Crosswind Assist and Attention Assist systems
as standard equipment and the optional Active Parking Assist.
A completely new feature is a state-of-the-art multimedia system
with a touchpad for operating all telematics functions. The
V-Class makes a big impression also with its generous space
and versatile seating and loading configurations. Access to
a second loading level is obtained through a separately opening
rear window for easy loading and unloading. In addition,
state-of-the-art turbo-diesel engines with extremely low fuel
consumption ensure optimal efficiency. The new V-Class
focuses on three customer groups: families, people who partici-
pate in a lot of leisure activities involving extensive sports
and outdoor equipment, and operators of luxury VIP shuttles
or hotel shuttles. The new V-Class celebrated its world premiere
in January 2014 and went into production in early March 2014
at our plant in Vitoria, Spain. The model has been available since
the end of May.

Extreme efficiency, exemplary safety and unique comfort: Mercedes-Benz redefines the multipurpose vehicle with the V-Class.

166

C | The Divisions | Mercedes-Benz Vans

The Mercedes-Benz Sprinter: the undisputed number one in its class.

The new Marco Polo: the perfect combination of leisure
and daily use. The all-new Marco Polo camper van lays down
a new marker in its segment and stands apart from its rivals
with cutting-edge design, maximum functionality and perfect
suitability for daily use. The camper van is equipped with
a kitchen, a wardrobe and extremely comfortable beds, and
can accommodate up to four people. With its compact body
and outstanding technology, the Marco Polo offers the same
dynamic, comfortable and economical ride as a Mercedes-
Benz passenger car. The model can also easily be driven into
any standard parking garage or car wash. Exemplary safety
is ensured by numerous innovative driver assistance systems.
The Marco Polo is very popular among customers, as evidenced
by the fact that it was voted Compact Camper Van of the Year
2015 by readers of the Promobil trade journal. This distinction
is awarded by the magazine every year.

The new Vito: The second global van from Mercedes-Benz
Vans. The second major product highlight at Mercedes-Benz
Vans in 2014 was the launch of the new Mercedes-Benz Vito,
which sets new standards in the mid-size van segment. At its
world premiere in Berlin at the end of July 2014, Mercedes-Benz
Vans presented the versatile van in the range of 2.5–3.2 metric
tons gross vehicle weight to the public for the first time. The new
Vito offers a whole range of outstanding features. For one
thing, it is the first vehicle in its class to be available with a choice
of three different drive systems (rear, front and all-wheel drive)
so that it can meet all customer requirements. The model also
boasts a high payload and efficient engines. A Vito equipped
with our BlueEFFICIENCY package achieves average fuel con-
sumption of only 5.7 liters per 100 kilometers – no competitor
can beat that. The Vito also features numerous innovative
safety and assistance systems including Crosswind Assist,
ATTENTION ASSIST, ADAPTIVE ESP and the Tire Pressure
Monitoring System, all of which come as standard equipment.
In addition, the Vito Tourer has allowed us to reposition our-
selves in the passenger-transport segment, for which we have
created our own model family with three equipment variants.
The new Vito went into production at our plant in Vitoria, Spain,

in mid-August 2014 and has been available on the market
since October. Mercedes-Benz Vans invested around €190 million
in the Vitoria plant to prepare it for the model changeover.
The money was spent mainly on the modernization and reorga-
nization of the plant’s body shop, paint shop and assembly
area. Following its application with the Sprinter, the division is
now utilizing its “Mercedes-Benz Vans goes global” strategy
with the Vito. As a result, the vehicle will be launched in North
and South America in 2015.

Long-term production strategy defined for next-generation
Sprinter. The Sprinter is ready for the future. In October 2014,
the company decided to invest a substantial amount of money
in the production of the new Sprinter generation. Mercedes-Benz
Vans – the only manufacturer of large vans in Germany – will
also produce the next generation of the Sprinter in Düsseldorf
and Ludwigsfelde. Mercedes-Benz Vans will invest a total
of €450 million in the modernization of the two plants in order
to safeguard their future competitiveness. The Mercedes-Benz
Sprinter is the global market leader in the large-van segment
and is delivered to customers in some 130 countries around the
world. This makes the Sprinter a key pillar of the “Mercedes-
Benz Vans goes global” growth strategy, which aims to exploit
additional sales potential in growth markets outside Europe.
Because of the sharply rising demand for large vans in the North
American market, Mercedes-Benz Vans has decided to
manufacture the next generation of the Sprinter in North
America as well.

167

Daimler Buses.

As the leading bus manufacturer in its core markets of Western Europe and Latin America,
Daimler Buses focuses on supplying innovative and environmentally responsible products that
meet its customers’ business requirements. Higher sales of complete buses and progress
made with additional efficiency measures led to a significant increase in earnings in 2014.
A decline in demand for bus chassis in Latin America due to difficult market conditions
in the region had a negative effect on unit sales, especially in the second half of the year.
During the year under review, we once again improved our product portfolio with some
important innovations.

C.07
Daimler Buses

Amounts in millions of euros

% change

2014

2013

14/13

197

4,218

4.7

105

182
11

31,485

33,162

16,631

124

4,105

3.0

187
3

34,467

33,705

16,603

+59

+38

-3
+267

-9

-2

EBIT

Revenue

Return on sales (in %)

Investment in property,
plant and equipment

Research and
development expenditure
thereof capitalized

Production

Unit sales

Employees (December 31)

C.08
Unit sales by Daimler Buses

2014

2013

14/13

% change

Total

Western Europe

thereof Germany

Mexico

Latin America (excluding Mexico)

Asia

Other markets

33,162

33,705

7,557

2,865

3,633

17,614

1,117

3,241

6,714

2,440

2,959

19,118

1,704

3,210

-2

+13

+17

+23

-8

-34

168

Earnings significantly above prior-year level. Sales of
33,200 buses and bus chassis worldwide by Daimler Buses
in 2014 did not quite match the prior-year figure (2013: 33,700).
Nevertheless, the division was able to significantly expand
its leading position in its core markets for buses with a gross
vehicle weight of over 8 metric tons.  C.07 Business with
complete buses in Western Europe improved considerably from
the previous year. At €4.2 billion, revenue was slightly above
the level of 2013 (€4.1 billion). Success with sales of complete
buses and further efficiency improvements resulted in a
substantial increase in EBIT to €197 million (2013: €124 million).
The earnings increase was largely due to the fact that mea-
sures associated with the GLOBE 2013 growth and efficiency
program had their full effect during the reporting year. The
division actually exceeded the GLOBE 2013 earnings improve-
ment target of €200 million.

Varied business development in core regions. In Western
Europe, the Daimler Buses brands Mercedes-Benz and Setra
offer not only a complete range of city buses, intercity buses and
coaches, but also bus chassis. Thanks to a significant improve-
ment in our complete bus business, sales in the region increased
by 13% to 7,600 units. Daimler Buses also further expanded
its leading position in Western Europe with its market share
reaching an all-time high of 34.4% (2013: 30.9%). This reflects
the very positive response to the new city-bus generation
Citaro and the new Setra TopClass 500 and ComfortClass 500.
High demand for our Mercedes-Benz buses had a very positive
effect on our sales in Germany, which rose by 17% to 2,900 units.
In addition, the coach segment was positively impacted by
the growing business of long-distance bus services. Our market
share in Germany expanded significantly to 57.1% (2013:
51.2%). In Turkey, we recorded sales of 700 units (2013: 1,200).
This market-related sales decline had been previously antici-
pated. The market in Latin America (excluding Mexico) deterio-
rated significantly due to the region’s difficult economic situa-
tion. Sales of Mercedes-Benz bus chassis in the region fell by 8%
to 17,600 units. Nonetheless, we were able to significantly
expand our leading position in Latin America to a market share
of 48.6% (2013: 41.6%). At 3,600 units, sales in Mexico were
significantly higher than in the previous year.

Upper picture: The Setra TopClass 500 is fitted with the TopSky Panorama glass roof and offers passengers exceptional space and comfort.
Lower picture: Plenty of space – the large-capacity articulated bus Mercedes-Benz CapaCity L offers a solution for urban traffic problems
with space for 191 passengers.

169

C | The Divisions | Daimler BusesSmooth urban traffic flows with bus rapid transit sustainable
mobility concept. Bus rapid transit systems attracted atten-
tion from around the globe during the 2014 World Cup in Brazil.
Such systems ensured smooth and efficient transport to and
from stadiums at nine of the 12 World Cup venues – but people
in Brazil also rely on them all year round. More than 170 BRT
systems are currently operating on all continents around the
world. For transport operators, the main advantages of BRT
systems are their low planning and construction costs and their
relatively short implementation times and great adaptability.
Daimler Buses therefore has a specialized team that helps cities
and customers design optimal BRT systems. For example,
a forum in Tokyo organized by Daimler Buses and Mitsubishi
Fuso Truck and Bus Corporation in October 2014 provided
customers, municipal authorities and the media with information
on bus rapid transit systems.

Major international contracts. The RATP Group, which
provides public transport services in the Paris metropolitan area,
opted to purchase 199 Mercedes-Benz Citaro buses following
a Europe-wide invitation to tender. The transport authority of the
city of Basel in Switzerland ordered 106 new Mercedes-Benz
Citaros as rigid and articulated versions. Singapore also likes the
best-selling city bus, as evidenced by the fact that the local
transport operator, SBS Transit, ordered 250 Mercedes-Benz
Citaros in the year under review. Daimler will deliver 105
Mercedes-Benz Conecto articulated buses to the IETT public
transport company in Istanbul. A total of 300 23-meter long
O500 UAD CapaChassis were delivered to São Paulo in 2014,
while Estrella Blanca in Mexico purchased 250 Mercedes-Benz
Paradiso 1200 touring coaches.

Cornerstone laid for bus plant in India. Following the
successful integration of its bus business into Daimler India
Commercial Vehicles (DICV) in 2013, the company laid the
cornerstone for a new bus plant in India during the year under
review. Daimler is investing approximately €50 million in
the new production facility, which is being built at the DICV
site in Chennai. The plant is scheduled to be completed
in the second quarter of 2015. Its product range will include
front-engine buses from the BharatBenz brand that are tailored
to the specific needs of the volume bus market in India.
Existing rear-engine chassis for the premium bus segment will
also be localized under the Mercedes-Benz brand name.

Mercedes-Benz and Setra present new products and
new brand messages. At the IAA Commercial Vehicles trade
fair, Mercedes-Benz and Setra not only unveiled numerous
new products and model variants, but also presented new brand
messages. The Citaro G articulated bus is now available
with the compact, horizontally installed OM 936 h six-cylinder
in-line engine. The Mercedes-Benz Travego premium high-
decker comes with the new Active Brake Assist 3 (ABA 3) system,
which enables it to initiate an automatic emergency braking
maneuver also when obstacles are stationary. Mercedes-Benz
presented its “The standard for buses” brand claim at the
IAA. The perfection, aesthetic appeal and fascination of buses
from the Setra brand are reflected in its new brand claim
“The Sign of Excellence.” Setra has expanded its ComfortClass
500 coach series to include two new vehicle lengths for high-
decker (HD) versions. The brand has also placed the Comfort-
Class 500 series in a whole new segment through the addition
of two middle-decker (MD) buses. This offers customers a cost-
effective and flexible entry into the premium coach program
of the Setra brand. Daimler Buses has also completed its Euro
VI-compliant chassis program with the addition of the three-
axle Mercedes-Benz OC 500 RF chassis for intercity buses and
coaches.

Mercedes-Benz Citaro and Setra TopClass 500 receive
international awards. During the year under review, the
Mercedes-Benz Citaro Euro VI city bus received the Green Bus
Award 2014 for the lowest fuel consumption in comparative
tests. The Citaro also beat its rivals in the International Bus &
Coach Competition (IBC). Meanwhile, the Setra TopClass 500
received the Red Dot Award Product Design 2014 from an inter-
national panel of experts, who cited the coach’s high-quality
interior as well as its comfort and elegance as the main reasons
for their selection. The TopClass 500 was named Coach of
the Year 2014 also in Madrid, where the award panel was par-
ticularly impressed by the design concept for the exclusive
long-distance coach, which combines the most modern luxury
features with great efficiency. In addition, the TopClass 500
won the International Bus Planner Sustainability Prize 2015 for
its intelligent Predictive Powertrain Control (PPC) system.

Mercedes-Benz Citaro is best-selling city bus of all time.
Mercedes-Benz delivered its 40,000th Citaro city bus during
the year under review, making the Citaro the best-selling
bus of all time. At the same time, sales of Mercedes-Benz mini-
buses passed the 20,000 mark. The 3,000th regular-service
Mercedes-Benz bus equipped with the economical Euro VI engine
generation was delivered in December 2014.

Mercedes-Benz CapaCity L – a new high-capacity articu-
lated bus – offers a solution for urban traffic problems.
Daimler Buses has responded to transport problems in large
cities with its new Mercedes-Benz CapaCity L, which is
21 meters long and can accommodate up to 191 passengers.
It thus provides ideal transport capacities for applications
in worldwide bus rapid transit (BRT) systems.

170

Daimler Financial Services.

The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 3.3 million in 2014. New records were also set for new
business and contract volume, and the number of brokered automotive insurance policies was
higher than ever before as well. The mobility subsidiary moovel, which provides services including
car2go flexible car-sharing, broke the one-million customer mark for the first time ever at the
end of the year under review. Daimler Financial Services was named one of the 25 best international
employers worldwide by the independent Great Place to Work institute.

C.09
Daimler Financial Services

Amounts in millions of euros

% change

2014

2013

14/13

EBIT

Revenue

New business

Contract volume

Investment in property,
plant and equipment

Employees (December 31)

1,387

15,991

47,912

98,967

8,878

1,268

14,522

40,533

83,539

8,107

+10

+18

+21

+10

Number of financed and leased vehicles reaches new
record. During the year under review, Daimler Financial
Services concluded 1.3 million new financing and leasing
contracts worth a total of €47.9 billion. The total value of
all new contracts therefore rose by 18%. More than 3.3 million
financed or leased vehicles were on the books at the end
of 2014; this corresponds to an 18% increase in contract volume
to €99.0 billion. Adjusted for exchange-rate effects, the
increase amounted to 12%. EBIT rose to a new high of €1,387
million (2013: €1,268 million).  C.09

New business in Europe up 11%. During the year under
review, Daimler Financial Services concluded approximately
690,000 new financing and leasing contracts worth €21.6
billion (+11%) in the Europe region. High rates of growth were
recorded in Turkey (+30%) and the United Kingdom (+14%).
In Germany, Mercedes-Benz Bank’s new business increased
by 8% to €9.9 billion; the volume of deposits in the direct
banking business totaled €10.8 billion at the end of the year
(-4%). Daimler Financial Services’ contract volume in
Europe rose by 8% to €40.4 billion.

Growth of 18% in the Americas. Daimler Financial Services was
able to record an increase over the high level of new business
of the previous year in the Americas region, where the company
brokered about 437,700 new financing and leasing contracts
worth €18.2 billion in 2014 (+18%). Strong growth was recorded
in the United States (+21%) and Brazil (+18%). Total contract
volume in the Americas rose by 25% to €43.1 billion. Adjusted
for exchange-rate effects, the increase amounted to 12%.

171

C | The Divisions | Daimler Buses | Daimler Financial Services

Upper picture: Online or in direct dialog – customers of Daimler Financial Services can gain information on financing
and leasing offers conveniently on all channels.
Lower picture: Everyone can find the right mode of transport for his or her needs with the new moovel app.

172

C | The Divisions | Daimler Financial Services

The moovel app was also successfully expanded in 2014.
With moovel, all registered customers can use the platform
to find the best transport option for their individual needs;
they can then book and purchase tickets directly with the moovel
app. The mytaxi service and the complete range of services
offered by the Deutsche Bahn railway company are fully inte-
grated into the moovel app. Train tickets are made available
in the app as QR codes, for example, so there is no longer any
need to print tickets. In September 2014, moovel acquired
Intelligent Apps GmbH, which offers the mytaxi taxi service app,
and also took over the mobility platform provider RideScout
LLC in the United States.

Daimler Financial Services among the world’s best employ-
ers. Daimler Financial Services is the first German company
to make it into the highly competitive ranking of the “25 World’s
Best Multinational Workplaces 2014.” The independent Great
Place to Work Institute compiles a ranking of the world’s most
attractive employers every year. The institute’s most recent
employee survey, whose results were used for the ranking,
found that nine out of ten staff members at Daimler Financial
Services think the company is a great place to work.

Toll Collect system expanded. The automatic system for
truck-toll collection on German autobahns and selected
highways continued to operate smoothly and reliably in 2014.
Approximately 818,000 onboard devices for automatic toll
collection were in operation at the end of the year, and a total
of 28.0 billion kilometers driven was recorded. Daimler Financial
Services holds a 45% equity interest in the Toll Collect con-
sortium. In December 2014, the German federal government
renewed the Toll Collect operating contract for another three
years and also commissioned Toll Collect to expand the system
to cover an additional 1,100 kilometers of federal highways in
Germany, as well as trucks with a gross vehicle weight of between
7.5 and 12 metric tons. The Federal Republic of Germany
has collected a total of €39 billion in tolls since Toll Collect
went into operation at the beginning of 2005.

New business in Africa & Asia-Pacific region up 44%. New
business in the Africa & Asia-Pacific region increased by 44%
on the previous year, to €8.1 billion. Business development was
especially strong in China (+128%), India (+66%) and South
Korea (+66%). At the end of 2014, contract volume in the region
totaled €15.4 billion, which corresponds to a 32% increase
over the previous year. Adjusted for exchange-rate effects, the
increase amounted to 24%.

More automotive insurance policies brokered than ever
before. In the year under review, Daimler Financial Services
set a new record by brokering approximately 1.4 million
automotive insurance policies, an increase of 10% over the prior
year. The demand for our insurance policies was particularly
dynamic in China, where six out of ten Mercedes-Benz cars were
once again delivered with an insurance policy brokered by
us. Our cooperation with major insurance companies offers
Mercedes customers the opportunity to receive attractive
insurance conditions for their vehicles and to have their auto-
mobiles repaired at authorized service centers if they are
damaged.

Stable business with fleet customers. In 2014, Daimler
Financial Services once again supported its fleet customers with
the financing and management of their vehicles and fleet.
Daimler Fleet Management had a total of 305,000 contracts with
clients in Europe on its books at the end of 2014, representing
an increase of 1% over the previous year. With 140,000 contracts,
new business was up by 6% compared with 2013. During the
first quarter of 2014, Daimler Fleet Management expanded its
range of services for fleet customers to include a new Corpo-
rate Carsharing program that allows employees to easily reserve
vehicles from their company’s fleet online for both business
and private use. The introduction of innovative products such
as the new xFleet customer reporting system and the Fleet
app for fleet managers and drivers of company cars is helping
Daimler Fleet Management expand its position as a provider
of integrated solutions for commercial customers.

moovel with more than a million customers. Daimler
Financial Services continued to develop its business operations
in the area of innovative mobility services in 2014. At the
end of the year, more than one million customers were registered
with the moovel Group for the first time – 86% more than in
2013. With the car2go brand, moovel is the clear market leader
for flexible short-term car rentals. In late November, a new
system was launched that allows car2go customers to use
a smartphone app to open any one of nearly 13,000 vehicles
that were available at 29 locations at the end of the year.
According to Mutabor Brand Report 2014, car2go is now number
four in the ranking of the most innovative mobility brands.
The car2go black brand introduced in 2014 is attracting new
customer groups. At the end of the year, it became possible
to rent and drive Mercedes-Benz B-Class vehicles from car2go
black not only within cities but also between the cities
Berlin, Frankfurt am Main, Hamburg, Stuttgart and Cologne.

173

We act responsibly
and sustainably.

Daimler’s Board of Management and Supervisory Board are committed

to the principles of good corporate governance. All of our activities are

based on responsible, transparent and sustainable management.

174

D | Corporate Governance.

Report of the Audit Committee

176 – 178

Integrity and Compliance
– Culture of integrity
– Compliance
– Antitrust law

179 – 180

Declaration by the Board of Management and the
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

181

Corporate Governance Report
182 – 189
– The main principles applied in our corporate governance
– Composition and mode of operation of the Board

of Management and of 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

D | Corporate Governance | ContentsReport of the Audit Committee.

Dear Shareholders,

On the basis of applicable law, the German Corporate Gover
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of financial reporting. In addition, it deals with
the annual audit and reviews the qualifications and independence
of the external auditors. Furthermore, it discusses the effec
tiveness and functional capabilities of the risk management
system, the internal control system, the internal auditing system
and compliance management.

After the external auditors are elected by the Annual Share
holders’ 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.

Several personnel changes occurred in the Audit Committee
in 2014. The longstanding Chairman of the Audit Committee,
Dr. Bernhard Walter, stepped down from the Supervisory Board
as of the end of the Annual Shareholders’ Meeting on April 9,
2014. Dr. Bernhard Walter had been a member of the Audit Com
mittee since 1998 and its Chairman since 2004. Dr. Bernhard
Walter passed away in January 2015 at the age of 72. With deep
appreciation and remembrance, the Audit Committee bids
farewell to its former Chairman, who had a major influence
on the Committee over many years with his great prudence
and experience.

Following the departure of Dr. Bernhard Walter on April 9,
2014, in its constitutive meeting after the Annual Shareholders’
Meeting, the newly elected Supervisory Board elected
Joe Kaeser as a member of the Audit Committee representing
the share holders. Subsequently, the members of the Audit
Committee elected Dr. Clemens Börsig, a member of the Audit
Committee since 2007, as the new Chairman of the Committee.

On April 30, 2014, Erich Klemm stepped down from the Super
visory Board and thus also from his position as Deputy Chairman
of the Audit Committee. Effective as of May 1, 2014, the
Supervisory Board elected Dr. Sabine Maassen to the Audit
Committee as a member representing the employees. Further
more, the members of the Audit Committee elected Michael
Brecht as the Deputy Chairman of the Committee. As a result,
the Audit Committee was fully and properly constituted.

As independent members of the Audit Committee, both the
Chairman of the Committee, Dr. Clemens Börsig, and Joe Kaeser
have expertise in the field of financial reporting, as well as
special knowledge and experience in the application of accoun
ting principles and methods of internal control. The same
applied to Dr. Bernhard Walter, who was the Chairman of the
Audit Committee until April 9, 2014.

The six meetings of the Audit Committee in 2014 were attended
by, in addition to the members of the Committee, the Chairman
of the Supervisory Board, the Chairman of the Board of Manage
ment, 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 appropriate items of the
agenda. In addition, the Chairman of the Audit Committee
held regular individual discussions, for example with the external
auditors, the members of the Board of Management respon
sible for Finance and Controlling and for Integrity and Legal
Affairs, and, if required, the heads of the specialist depart
ments. The Chairman of the Audit Committee informed the
Supervisory Board about the activities of the Committee
and about the contents of its meetings and discussions in the
following Supervisory Board meetings.

In a meeting 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 appropri
ation of profits made by the Board of Management. The
preliminary key figures and the proposal on the appropriation
of profits were published at the Annual Press Conference
on February 6, 2014.

176

Dr. Clemens Börsig, Chairman of the Audit Committee.

In another meeting in February 2014 the Audit Committee
reviewed and discussed in detail the annual company financial
statements, the annual consolidated financial statements and
the combined management report for Daimler AG and the
Daimler Group for the year 2013, each of which had been issued
with an unqualified audit opinion by the external auditors, as
well as the proposal on the appropriation of profits. Following
an intensive review and discussion, the Audit Committee
recommended that the Supervisory Board approve the annual
financial statements and the combined management report,
and on this basis adopt the recommendation of the Board of
Management to pay a dividend of €2.25 per share entitled
to a dividend. Furthermore, the Audit Committee approved the
Report of the Audit Committee for the year 2013. Also in this
meeting, the Audit 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 also decided
to recommend to the Supervisory Board, and subsequently
to the Annual Shareholders’ Meeting, that KPMG be engaged
to conduct the annual external audit and the external auditors’
review of interim financial reports for financial year 2014;
the results of the independence review and the discussion of
the quality of the external audit were taken into consideration.
Subject to the outcome of voting by the Annual Shareholders’
Meeting, the Committee also discussed the proposal for the
fees to be agreed upon with the external auditors for financial
year 2014. Finally, the Audit Committee dealt with the draft
agenda for the 2014 Annual Shareholders’ Meeting and with
the annual audit plan of the Internal Auditing department
for the year 2014.

In the meetings during 2014 relating to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditors’
review of interim financial statements. Each quarter, the
Committee also dealt with notifications concerning possible
violations of rules submitted by employees and third parties
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. In addition, the Committee received reports
from the Group Compliance, Legal and Corporate Audit
departments.

In its meeting in early June 2014, the Audit Committee discussed
the Group’s internal control and risk management system,
and dealt in particular with its changes and further develop-
ment. As well as the area of financial reporting, the internal
control system also includes the functions of internal auditing
and compliance management. Furthermore, the Committee
received a report on the non-auditing services provided by the
external auditors. In this meeting, the important audit issues
for the external audit of the reporting period and the framework
of approval for engaging the external auditors to provide non-
audit services were also determined. In addition, this meeting
was used to analyze the external audit for the year 2013.

Also in the meeting in June 2013, the Audit Committee dealt
with new developments in accounting and financial reporting
and other audit-relevant areas. Furthermore, the Committee
was informed in detail about the Group’s legal system and legal
risk reporting, and received a report on the current status
of financial market regulation and its impact on Group Treasury.

177

D | Corporate Governance | Report of the Audit Committee In the meeting held in July 2014, the Audit Committee received
the annual report from the Group’s Data Protection Officer and
was informed about the main topics and current developments
in the field of data protection. In its meeting in October 2014,
the Committee dealt with a report on the implementation of the
EU Audit Directive and after discussing a proposal by the
Board of Management on that subject, made a recommendation
to the Supervisory Board to restructure the realestate
portfolio in Germany.

In a meeting in early February 2015, the Audit Committee
dealt with the preliminary figures of the annual company financial
statements and the annual consolidated financial statements
for the year 2014, as well as with the proposal on the appro
priation of profits made by the Board of Management. The
preliminary key figures and the proposal on the appropriation
of profits were published at the Annual Press Conference
on February 5, 2015.

In another meeting in midFebruary 2015, 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
2014, which had been issued with an unqualified audit opinion
by the external auditors, as well as with the proposal on the
appropriation of profit; thereby the external auditors reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
The audit reports on the company and consolidated financial
statements and on the internal control system (ICS), the report
on the risk management system for the year 2014, the Annual
Report 2014 and important issues related to financial reporting
were discussed with the external auditors. Following an inten
sive review and discussion, the Audit Committee recommended
that the Supervisory Board approve the annual financial state
ments and the combined management report, and on this basis
as before adopt the recommendation of the Board of Manage
ment to pay a dividend of €2.45 per share entitled to a dividend.
Furthermore, the Audit Committee approved the Report of
the Audit Committee for the year 2014.

Also in this meeting, the Audit Committee discussed the report
on the fees paid to the external auditors in the year 2014 for
auditing and nonauditing services. Taking into consideration the
results of the independence review, the Audit Committee
decided to recommend to the Supervisory Board, and subse
quently to the Annual Shareholders’ Meeting, that KPMG be
engaged to conduct the annual external audit and the external
auditors’ review of interim financial reports for financial year
2015. Amongst other things, the Audit Committee based this
recommendation on the very good results of the analysis of
the quality of the external audit of financial year 2013 carried out
by the Audit Committee in May 2014. Subject to the election
of the proposed external auditors by the Annual Shareholders’
Meeting, the Committee approved the fees to be agreed upon
with the external auditors for the year 2015. Finally, within the
framework of its responsibility, the Audit Committee dealt
with the draft agenda for the 2015 Annual Shareholders’ Meeting
and the annual audit plan for 2015 of the Internal Auditing
department.

As in previous years, the Audit Committee once again conducted
a selfevaluation of its own activities in 2014. The positive
results of this efficiency review were presented and discussed
in the meeting in midFebruary 2015. 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 2015

The Audit Committee

Dr. Clemens Börsig
Chairman

178

D | 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. Integrity
is a permanent component of our corporate culture. The further
devel opment and permanent establishment of integrity is
therefore also a component of the target agreements for Board
of Management remuneration. Our business activities are also
strongly guided by the ten principles of the UN Global Compact,
of which Daimler is a founding member. We are also a member
of the Global Compact LEAD Group.

We employ a broad range of measures that enable us to conduct
a dialogue with our employees in order to foster a culture
of integrity at the company. The regular exchange of opinions
on questions of integrity brought about by this dialogue is
an integral component of our everyday working life.

The most important result of our dialogue is our Integrity
Code. The Code, which is based on a shared understanding
of values that is derived from our dialogue with employees,
lays out the principles for our everyday business conduct. Such
principles include fairness, responsibility, mutual respect,
transparency, openness, legal compliance and the honoring
of rights. The Code is valid throughout the Group and is
available in 22 languages. An intranet guide has been prepared
for the application of the Code in everyday situations, pro-
viding answers to the most frequently asked questions. A team
of experts is also available to answer questions on all aspects
of the Code.

Training and communication. In September 2014, we intro-
duced an online game known as “Monster Mission.” The game
increases employee awareness of the principles contained
in the Integrity Code by simulating typical everyday decision-
making situations, and leads players to examine specific
integrity-related issues. Employees from all over the globe can
access the game anytime via the intranet and the extranet.
The Integrity Code also forms the basis for the range of training
courses we offer on integrity and compliance. Depending on
the risk and the target group, we use classroom training or web-
based training sessions. In this way we are helping to per-
manently anchor ethical and compliant behavior at the Group.

In 2013, we rolled out a new course of web-based training
for more than 100,000 employees that clearly communicates
our principles of behavior and our shared understanding
of values. Just under 40,000 additional employees from various
levels of the hierarchy completed a comprehensive web-
based training program on integrity, compliance and legal
issues in 2014.

Managers as a role model. Our Integrity Code also 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. All manager-training semi-
nars also include modules that address the topic of integrity.
In addition, integrity and compliance are important criteria in the
annual target agreements and in assessing the target achieve-
ment 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. In 2014, the Board once
again met three times to exchange information and opinions
on current topics with representatives of the Company.

An expert dialogue that extends beyond Daimler. In 2014,
we held two specialist conferences in order to promote a
dialogue with society on key issues related to integrity. First,
various stakeholder groups attended the “Automobile on
the Data Highway” conference organized by the Corporate Data
Protection department. At the conference, guests from the
worlds of business and industry, science, politics and public
administration, as well as representatives of various media
companies and associations, discussed the various aspects
of data protection with speakers and other representatives
from Daimler. The participants all agreed that this dialogue should
be continued. At the “Responsible Sponsorship” conference,
experts from business and industry, the political realm, the
scientific community and the world of sports spoke with special-
ists from Daimler about integrity in sponsorship.

Many of the participants at these conferences asked us about
our experience with issues related to compliance. For this
reason, we decided to offer a practical seminar on compliance –
the Daimler Compliance Academy. The first seminar took
place in April 2014 in Germany.

179

Whereas previous external training programs were designed
solely for business partners and suppliers, the Academy marks
the first time we’ve offered a seminar for compliance officers
from companies active in all different sectors. The seminar also
seeks to create a platform for exchanging experiences related
to compliance trends and challenges.

Whistleblower system. Our whistleblower system BPO
(Business Practices Office) serves as a valuable source
of information on possible risks and specific violations of rules.
It’s therefore an important instrument for good corporate
governance, and it also helps prevent damage to our Company’s
reputation.

Compliance

Compliance is an essential element of integrity culture at
Daimler. For us, it is only natural that we adhere to all relevant
legis lation, 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 (through
our internal audits as well), and we adjust it to worldwide devel-
opments, changed risks and new legal requirements. In this
way, we continuously improve its efficiency and effectiveness.
In 2014, for example, we developed new processes for exam-
ining and complying with international sanctions and we also
expanded measures for preventing money laundering in goods
trading and the inadvertent financing of terrorist organizations.

Analysis of compliance risks. In 2014, we once again assessed
the compliance risks of all our business units. Both qualitative
and quantitative indicators were assessed, including the respec-
tive 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. The responsibility for implementing and monitoring
these measures lies within the management of each busi-
ness unit, which cooperates closely with the Group Compliance
department.

Strengthening our worldwide structures. Our Compliance
Organization is structured along the lines of our divisions.
This structure has proved its worth and enables us to offer
effective support and advice to the divisions. Among other
things, the organization consists of divisional and regional com-
pliance officers. In addition, local compliance managers
throughout the world make sure that our standards are observed.
In order to guarantee the divisional and regional compliance
officers’ independence from the divisions, the officers report
directly to the Chief Compliance Officer. The latter reports
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Chairman of the Supervisory Board.

We offer specific training courses to ensure compliance staff
members remain up to date on the repeated changes made
to laws and regulations. All new compliance employees also
receive comprehensive orientation through a practical com-
pliance seminar.

180

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. The prerequisites for the
acceptance of a whistleblower system are that it is organized
in a fair manner, that it follows the principle of proportionality,
and that the whistleblowers and the other parties involved are
equally protected. We laid down these criteria in a corporate
policy with worldwide validity in 2013. Since February 1, 2012,
we have also commissioned an independent lawyer as a
neutral intermediary in Germany. This intermediary also accepts
information on violations of rules and, due to his or her pro-
fessional duty of discretion, is obliged to maintain confidentiality.

Cooperation with our business partners. We regard our
business partners’ integrity and behavior in conformance with
regulations as an indispensable precondition for trusting
cooperation. In the selection of our direct business partners,
we ensure that they comply with the law and observe ethical
principles. We offer our business partners target group-focused
training programs in line with the specific risks they face.
In addition, we have clearly formulated the expectations we have
of our business partners in the brochure “Ethical Business.
Our Shared Responsibility.” We reserve the right to terminate
our cooperation with business partners who fail to conform
to our standards.

Antitrust law

Our Group-wide antitrust-compliance program, which is oriented
towards national and international standards, helps us to
ensure adherence to antitrust laws in our business operations.
By assessing qualitative and quantitative factors, we system-
atically analyze the antitrust risks of all our business units. The
results of this analysis form the basis for our risk management
and for the definition of the measures to be taken to counteract
any risks related to antitrust law. We help our employees
to recognize situations that might be critical from an antitrust
perspective and to act in compliance with regulations in their
daily work by means of training courses as well as written advice
and practical examples. Our employees also have access at
all times to an advisory hotline especially established by the Legal
department for questions on antitrust and cartel matters.
Our antitrust-compliance program defines a binding Daimler
standard on how matters of competition law are to be assessed
internally. In this context, we focus in particular on the strict
standards of the European antitrust authorities and courts.
Our standard is the basis for effective implementation of the
program and allows us, guided and supported by our Legal
department, to ensure a uniform level of compliance and advice
throughout the Group. We regularly review our antitrust
compliance program in order to continually adapt it to worldwide
developments, new legal requirements and changing risks,
and to constantly improve its effectiveness.

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.

Specific objectives for the composition of the Supervisory
Board (Clause 5.4.1 Paragraph 2). The Supervisory Board
has limited its target objective for its composition regarding
the number of independent members of the Supervisory
Board and in consideration of potential conflicts of interest
to the appointments for the shareholders’ side in the light
of the German Co-Determination Act and due to the lack of
influence on the appointments for the employee side.

The deviation from clause 4.2.3 Pargraph 2 sentence 6, which
was declared as a precautionary measure in the compliance
declaration of December 2013, (maximum amounts for the over-
all remuneration and variable remuneration components
of the Board of Management) ceased to apply effective from
January 1, 2014, when the members of the Board of Man-
agement approved the inclusion of the upper limits specified
in clause 4.2.3 Paragraph 2 sentence 6 of the Code in their
current service agreements.

Stuttgart, December 2014

For the Supervisory Board
Dr. Manfred Bischoff
Chairman

For the Board of Management
Dr. Dieter Zetsche
Chairman

Daimler AG satisfies the recommendations of the German
Corporate Governance Code Commission in the Code version
dated June 24, 2014, since their publication by the Federal
Ministry of Justice in the official section of the Federal Gazette
on September 30, 2014 with the exception of Clause 3.8
Paragraph 3 (D & O insurance deductible for the Supervisory
Board) and one deviation from Clause 5.4.1 Paragraph 2
(concrete objectives for the composition of the Supervisory
Board), which was declared as a precautionary measure,
and will continue to observe the recommendations with the
aforesaid deviations. Since the issuance of the last compliance
declaration in December 2013, Daimler AG has observed the
recommendations of the German Corporate Governance Code
in the version dated May 13, 2013 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 in the last
compliance declaration for the period until December 31, 2013.

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. How-
ever, 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.

181

D | Corporate Governance | Integrity and Compliance | Declaration of compliance Corporate Governance Report.

Good corporate governance is a reflection of the responsible management of a company.
The Board of Management and the Supervisory Board aim to align the Group’s management
and supervision with nationally and internationally recognized standards in order to secure
sustainable value creation at 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. These were neither altered nor supplemented
during the year under review. The Government Commission for
the German Corporate Governance Code merely refined in
the Code appendix the description of the recommended sample
charts for depicting board of management remuneration and
then published this revised description in the German Federal
Gazette on September 30, 2014.

There is no statutory duty to follow the standards contained
in the recommendations and suggestions of the Code. However,
according to the principle of comply or explain, the Board
of Management and the Supervisory Board of Daimler AG are
obliged by Section 161 of the German Stock Corporation Act
(AktG) to make a declaration of compliance with regard to the
recommendations of the German Corporate Governance
Code and to disclose and justify any deviations from the Code’s
recommendations. With the exceptions disclosed and justified
in the declaration of compliance of December 2014, Daimler AG
has followed and continues to follow the recommendations
of the German Corporate Governance Code. The declaration of
compliance is printed on E page 181 of this Annual Report
and can also 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 current German
Corporate Governance Code are also available there.

Daimler AG has followed and continues to follow the suggestions
of the Code with just one exception: Deviating from the sug-
gestion in Clause 2.3.4, the Annual Shareholders’ Meeting is not
transmitted in its entirety on the Internet, but only until the
end of the report by the Board of Management, in order to protect
the character of the Annual Shareholders’ Meeting as a meet-
ing attended by our shareholders in person. An additional factor
is that continuing the broadcast after that point, in particular
broadcasting comments made by individual shareholders, could
impair the discussion between shareholders and management,
and might also be construed as an unjustified infringement
of shareholders’ privacy rights. When considering this matter, the
interests of transmission do not automatically take prece-
dence 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.

The principles guiding our conduct. Additional relevant
principles of corporate governance that go beyond the legal
requirements but are applied throughout the Group are our
Standards of Business Conduct. They are composed of several
documents and policies and are based on the company values
of passion, respect, integrity and discipline. These standards
serve as a frame of reference at Daimler that helps ensure
behavior in conformance with applicable regulations and the
principles of integrity.

Integrity Code. The Integrity Code defines the principles
of behavior and guidelines for everyday conduct at Daimler.
This applies to interpersonal conduct within the company
as well as conduct toward customers and business partners.
Fairness, responsibility and compliance with legislation
are key principles in this context. The Integrity Code is based
on a shared understanding of values, which was developed
together with the Daimler employees. In addition to general
principles of behavior, it includes requirements and regula-
tions concerning the protection of human rights, dealing with
conflicts of interest and preventing all forms of corruption.

182

The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler AG,
and the annual consolidated financial statements and the
management 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 compliance. The Supervisory Board has specified the infor-
mation 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 viewed 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.

D.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

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 association 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/iac.

Business Partner Brochure. For Daimler, ethical conduct
is a prerequisite for trusting cooperation. We have formulated
our ethical principles and the expectations we have of our
business partners in the brochure “Ethical Business. Our Shared
Responsibility.” More than 63,000 external partners have
received the brochure worldwide – for example, all suppliers,
joint-venture partners, dealers, and marketing and sponsoring
partners. The Business Partner Brochure is also available
on the Internet at w daimler.com/dai/iac.

Composition and mode of operation of the
Board of Management, the Supervisory Board
and its committees  D.01

Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict
separation between the Board of Management and the Super-
visory Board (two-tier board). Accordingly, the Board of
Management manages the company while the Supervisory
Board monitors and advises the Board of Management.
No person may be a member of the two boards at the same time.

Board of Management. The Board of Management of
Daimler AG had seven members at December 31, 2014 and
was expanded to eight members as of Janaury 1, 2015.
Information on their areas of responsibility and their curricula
vitae are posted on our website at w daimler.com/dai/bom.
The members of the Board of Management and their areas of
responsibility are also listed on E pages 44 f of this Annual
Report. No member of the Board of Management is a member
of more than three supervisory boards of listed companies
outside the Daimler Group or of similar boards or committees
with comparable requirements of companies outside the
Daimler Group.

The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board,
the Board of Management determines the Group’s strategic
focus, defines the corporate goals and makes decisions concern-
ing operational planning issues. The members of the Board
of Management must represent the interests of the Company
and share responsibility for managing the Group’s entire
business. Irrespective of this overall responsibility, the indi-
vidual members of the Board of Management manage
their allocated areas on their own responsibility and within
the framework of their instructions. Affairs of fundamental
or great importance that affect the areas of responsibility of
several Board of Management members are handled by the
Board as a whole, which must approve all associated decisions.
The Chairman of the Board of Management coordinates
the work of the Board of Management.

183

D | Corporate Governance | Corporate Governance ReportThe Board of Management has committed to diversity manage-
ment as a strategic factor of success that safeguards the
future of the company, with the signed statement: Promote
diversity. Create links. Shape the future.

When making appointments to executive positions at the
Group, the Board of Management thus gives due consideration
to the issue of diversity, with regard for example to the criteria
of age, internationality and gender. The management of teams
with a varied makeup requires a conscious approach to the
teams’ inherent diversity. A key element of our approach here
is therefore to make managers more aware of the importance
of diversity. For this purpose, we also use mentoring programs,
communication activities, conferences, workshops and
e-learning tools. By continually addressing diversity manage-
ment issues, we help further develop our corporate culture.

A key area of action is the targeted promotion of women,
by means for example of flexible working-time arrangements,
company nurseries and special mentoring programs for
women. The proportion of women in executive positions was
14.1% at the end of 2014 (2013: 12.7%) and is to be increased
to 20% by 2020.

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
transactions of fundamental importance. Furthermore, the
Supervisory 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
Supervisory Board – to the Chairman of the Supervisory Board.

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’ appro-
priate specialist qualifications, with due consideration
of the Group’s international operations, but also to diversity.
This applies in particular to age, nationality, gender and
other personal characteristics.

On December 11, 2014, the German federal cabinet decided
on a revised draft of legislation for equal participation by women
and men in executive positions. The new law is to take effect
as soon as possible but the legislative procedure has not yet
been concluded. According to the draft bill, the management
boards of listed companies or companies subject to Germany’s
system of codetermination will have to set a target for the
proportion of women at both levels below the management
board by June 30, 2015 at the latest. If the proportion of
women at the time when this target is set is below 30%, the
target may not be lower than the proportion already reached.
At the same time, a period is to be set for the achievement
of the target. The first period may not be longer than two years.
The Board of Management will pass a resolution on this
target after the new law takes effect.

The draft of legislation of December 11, 2014 for equal partic-
ipation by women and men in executive positions calls for the
supervisory boards of listed companies or companies subject
to German law on codetermination to set a target for the propor-
tion of women in the management board by June 30, 2015
at the latest. If the proportion of women at the time when this
target is set is below 30%, the target may not be lower than
the proportion already reached. At the same time, a period is
to be set for the achievement of the target. The first period
may not be longer than two years. Since January 1, 2015, the
Board of Management has had eight members again. It has
one female member, Dr. Hohmann-Dennhardt, so the current
proportion is 12.5%. The Supervisory Board will pass a reso-
lution on a target for women in the Board of Management after
the new law takes effect.

Supervisory Board. In accordance with the German Code-
termination Act (MitbestG), the Supervisory Board of Daimler AG
comprises 20 members. Half of them are elected by the
shareholders at the Annual Meeting. The other half comprises
members who are elected by the Company’s employees
who work in Germany. Information on the individual members
of the Supervisory Board is available on the Internet at
w daimler.com/dai/supervisoryboard and on E pages 52 f
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 also decides on the system of remuner-
ation for the Board of Management, reviews it regularly and
determines the individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the senior
executives and the workforce as a whole, also with regard
to development over time. For this comparison, the Supervisory
Board has defined the senior executives by applying Daimler’s
internal terminology for the hierarchical levels and has defined
the workforce of Daimler AG in Germany as the relevant work-
force. For the individual Board of Management remuneration in
total and with regard to its variable components, the Super-
visory Board has set upper limits taking effect as of January 1,
2014. Further information on Board of Management remuner-
ation can be found in the Remuneration Report of this Annual
Report. E pages 118 ff

184

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 inde-
pendent 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

through many years of international experience, the Super-
visory Board set a target in 2010 of a proportion of at least
40% of international members representing the shareholders,
and the resulting proportion of the entire Supervisory Board
of at least 20%. Until the Annual Shareholders’ Meeting held
in 2014, this target was significantly overachieved, irrespec-
tive of the many years of international experience of a great
majority of the members representing the shareholders,
due to the international origins of Dr. Paul Achleitner, Sari
Baldauf, Petraea Heynike, Andrea Jung, Gerard Kleisterlee
and Lloyd G. Trotter on the shareholders’ side (60%) and
Valter Sanches on the employers’ side, resulting in an inter-
national proportion of more than 30% for the entire Super-
visory Board. Following the end of the Annual Shareholders’
Meeting on April 9, 2014, two members on the share-
holders’ side with international origins stepped down from
the Supervisory Board: Gerard Kleisterlee and Lloyd G.
Trotter. As a result, the proportion of Supervisory Board mem-
bers representing the shareholders with international origins
decreased to 40% on the shareholders side and 20% of the
entire Supervisory Board. As a precautionary measure and
in order to maintain flexibility with future appointments,
the Supervisory Board has decided to adjust the target for
its own composition with regard to securing appropriate
internationality, for example through many years of interna-
tional experience, to at least 30% international members
representing the shareholders and a resulting proportion
of 15% of the entire Supervisory Board. Irrespective of
the many years of international experience of a great majority
of the members representing the shareholders, the new
target is currently significantly overachieved due to the inter-
national origins of Dr. Paul Achleitner, Sari Baldauf, Petraea
Heynike and Andrea Jung on the shareholders’ side (40%) and
Valter Sanches on the employers’ side, resulting in an
international proportion of more than 20% for the entire
Supervisory Board.

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 Supervisory Board approves the financial statements
and the management reports. Upon being approved, the
annual company financial statements are adopted. The Super-
visory 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 2014 is available on E pages 46 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 proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
w daimler.com/dai/rop.

Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employees
and of the members representing the shareholders with the
members of the Board of Management. 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
experience 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 shareholders of Daimler AG, for which the Nomination
Committee makes recommendations, take not only the require-
ments 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 impor-
tant to Daimler, expertise in the management of technologies
and experience in certain management functions. Other impor-
tant 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.

185

D | Corporate Governance | Corporate Governance Report– At least half of the members of the Supervisory Board

– With regard to appropriate participation of women and

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.
As described in the report of the Supervisory Board on
E page 49 of this Annual Report, there was one isolated
individual case in a particular situation during the reporting
period where there might have been the appearance of a
potential conflict of interest during a specific vote. As a highly
precautionary measure, the Supervisory Board member
in question in these cases refrained from taking part in the
discussions and the voting process regarding the issue
that may have led to a conflict of interest. With this exception,
there were no instances of a potential conflict of interest
that might have affected a shareholder representative on the
Supervisory Board.

– 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 signi-
ficant competitor of the Daimler Group. At present, there are
no indications for any of the members of the Supervisory
Board representing the shareholders that relevant relationships
or circumstances exist that would compromise their inde-
pendence. In particular, this is not the case with their relation-
ships or circumstances vis-a-vis the Company, the Board of
Management or other Supervisory Board members. No mem-
ber of the Supervisory Board is a member of a board of,
or advises, a significant competitor.

– The rules of procedure of the Supervisory Board stipulate
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 ensure a broad range
of potential Supervisory Board candidates and also to allow
reelection. None of the members of the Supervisory Board
currently in office who were proposed and elected for
a full period of office exceeded the applicable general age
limit at the time of his or her election.

on the basis of the Daimler Group’s targets, the Supervisory
Board has resolved that at least 20% of all members of
the Supervisory Board are to be 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, Dr. Sabine Maaßen
and Elke Tönjes-Werner, the proportion of women on the
entire Supervisory Board is 25%. The draft of legislation for
equal participation by women and men in executive posi-
tions of December 11, 2014 calls for the supervisory boards
of listed companies subject to German law on parity code-
termination to have a binding gender ratio of at least 30%
women for new appointments as of 2016. The ratio is to
apply to the entire supervisory board. If the side of the super-
visory board representing the shareholders or the side
representing the employees objects to the chairman of the
supervisory board about the application of the ratio to
the entire supervisory board, the minimum ratio is to apply
separately to the shareholders’ side and to the employees’
side for that election. If the draft legislation becomes law, the
target set by the Supervisory Board for appropriate partic-
ipation by women will be replaced by the requirements of
the new law.

The Chairman of the Supervisory Board, Dr. Manfred Bischoff,
is a former member of the Board of Management. After
stepping down from the Board of Management in December
2003, he was first elected to the Supervisory Board after
a cooling-off period of more than two years in April 2006, and
was first elected as the Chairman of the Supervisory Board
after a cooling-off period of more than three years in April 2007.
One member of the Supervisory Board is a member of the
board of management of a listed company. Excluding his mem-
bership of that company’s board of management, he is a
member of no more than three supervisory boards of listed
companies or similar company boards or committees with
comparable requirements, including his membership of the
Supervisory Board of Daimler AG. No member of the Super-
visory Board is a member of a board of, or advises, a significant
competitor. The members of the Supervisory Board attend
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 Super-
visory 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.

186

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 Medi
ation 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. These rules of procedure
can be viewed 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 53 of this Annual Report.

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.

Presidential Committee. The Presidential Committee is
composed of the Chairman of the Supervisory Board, his Deputy,
and two other members, who are elected by a majority of the
votes cast on the relevant resolution of the Supervisory Board.

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.

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 Manage
ment and on the appropriate total individual remuneration
of its members. In this context, it follows the relevant recom
mendations of the German Corporate Governance Code.
The Presidential Committee also decides on the granting of
approval for sideline activities of the members of the Board
of Management, reports to the Supervisory Board regularly and
without delay on consents it has issued and once a year
submits to the Supervisory Board for its approval a complete
list of the sideline activities of each member of the Board
of Management.

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 prepares
the meetings of the Supervisory Board.

The Chairman of the Audit Committee, Dr. Clemens Börsig,
fulfills the criteria for independence. Dr. Clemens Börsig and
the new member of the Audit Committee, Joe Kaeser, have
expertise in the field of financial reporting and special knowledge
and experience in the application of accounting principles
and internal methods of control. Dr. h.c. Bernhard Walter, the
Chairman of the Audit Committee until he stepped down
from the Supervisory Board in April 2014, also fulfilled the
requirements of independence and of expertise and long
experience in the stated fields. With great sadness and gratitude,
the Supervisory Board bids farewell to Dr. Walter, who
passed away in January 2015.

The Audit Committee deals with the supervision of the account
ing process and the annual external audit, the risk and com
pliance management system, and the internal control and audit
ing 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 on complaints and information about any breaches of
guidelines or criminal offenses on the part of highlevel
executives. It regularly receives information about the handling
of these complaints and notifications.

187

D | Corporate Governance | Corporate Governance ReportThe Audit Committee discusses with the Board of Manage-
ment the interim reports on the first quarter, first half and first
nine months of the year before they are published. On the
basis of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the manage-
ment 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 commissioned to carry out the external audit, is
Dr. Axel Thümler. The Audit Committee makes a proposal
to the Supervisory Board on the adoption of the annual company
financial statements of Daimler AG, on the approval of the
annual consolidated financial statements and on the appropria-
tion 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 conso-
lidated financial statements and to review the interim reports,
negotiates an audit fee, and determines the focus of the
annual audit. The external auditors report to the Audit Committee
on all accounting matters that might be regarded as critical
and on any material weaknesses of the internal control and risk
management system with regard to accounting that might
be discovered during the audit.

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 composed
of the Chairman of the Supervisory Board and his Deputy,
as well as one member of the Supervisory Board representing
the employees and one member of the Supervisory Board
representing the 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 Code-
termination Act (MitbestG). Accordingly, the Mediation Commit-
tee 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 Manage-
ment member of two thirds of the members of the Supervisory
Board is not achieved.

188

Shareholders and the Annual Shareholders’ Meeting

The Company’s shareholders exercise their membership rights,
in particular their information and voting rights, at the Share-
holders’ Meeting. Each share in Daimler AG entitles its owner
to one vote. There are no multiple voting rights, preferred
stock, or maximum voting rights at Daimler AG. Documents and
information relating to the Annual 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 per-
sonal exercise of the shareholders’ rights and proxy voting
in a variety of ways, such as by appointing proxies who are strictly
bound by the shareholders’ voting instructions and who
can be contacted also during the Annual 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 ratifi-
cation of the actions of the members of the Board of Manage-
ment and of the Supervisory Board, the election of the external
auditors, the election of the members of the Supervisory
Board representing the shareholders and the remuneration
of the Supervisory Board. The Annual Meeting also makes other
decisions, especially on amendments to the Articles of Incor-
poration, capital measures and the approval of certain inter-
company agreements. Shareholders can submit counter-
motions on resolutions proposed by the Board of Management
and the Supervisory Board and, within the provisions of appli-
cable law, can challenge resolutions passed by the Annual Share-
holders’ Meeting in a court of law.

The influence of the Annual 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 our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the
media and the interested public about the situation of the Group,
and inform them without delay about any significant changes
in its business.

In addition to other methods of communication, we also make
extensive use of the Company’s website. All of the important
information disclosed in 2014, including annual and interim
reports, press releases, voting rights notifications from major
shareholders, presentations, and audio recordings of analyst
and investor events and conference calls, as well as the financial
calendar, can be found at 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 financial
calendar is also printed inside the back cover of this Annual
Report. Disclosures are made in English as well as in German.

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 Conso-
lidated Financial Statements. E See Note 1 of the Notes to
the Consolidated 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 Commercial Code (HGB). Both sets of financial state-
ments are audited by a firm of accountants elected by the
Annual Shareholders’ 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.

Directors’ Dealings

As of December 31, 2014, the members of the Board of Manage-
ment held a total of 0.26 million shares or options on shares
of Daimler AG (0.025% of the shares issued). At the same date,
members of the Supervisory Board held a total of 0.02 million
shares or options on shares of Daimler AG (0.002% of the shares
issued).

Members of the Board of Management and the Supervisory 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, are obliged to notify the
Bundesanstalt für Finanzdienstleistungsaufsicht (the German
financial services supervisory authority) and Daimler AG
of any transactions involving shares of Daimler AG or related
financial instruments, so-called directors’ dealings. Daimler AG
is obliged to disclose such transactions without delay after
being notified of them. No transactions as defined by Section 15a
of the German Securities Trading Act (WpHG) took place
in 2014. Current information is published on our website at
w daimler.com/dai/dd/en.

Risk management and financial reporting

Risk management at the Group. Daimler has a risk
management system commensurate with its size and position
as a company with global operations. E see pages 132 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 operational planning. The Audit Committee discusses at
least once a year the effectiveness and functionality of the
risk management system with the Board of Management and the
external auditors. In addition, the Audit Committee regularly
deals with the risk report. The Chairman of the Supervisory Board
has regular contacts with the Board of Management to discuss
not only the Group’s strategy and business development but also
the issue of risk management. The Corporate Audit depart-
ment monitors adherence to the legal framework and Group
standards by means of targeted audits and initiates appro-
priate actions as required.

189

D | Corporate Governance | Corporate Governance ReportWe have a sound
financial basis.

The Consolidated Financial Statements presented as follows have been prepared in

accordance with the International Financial Reporting Standards (IFRS), as adopted

by the European Union (EU). They also comply with additional requirements set forth

in Section 315a (1) of the German Commercial Code (HGB).

190

E | Consolidated Financial Statements.

E | Consolidated Financial Statements | Contents

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
1. Significant accounting policies
2. Accounting estimates and assessments
3. Consolidated Group
4. Revenue
5. Functional costs
6. Other operating income and expense
7. Other financial income/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. Equity-method investments
14. Receivables from financial services
15. Marketable debt securities
16. Other financial assets
17. Other assets
18. Inventories
19. Trade receivables
20. Equity
21. Share-based payment

192

193
194
195
196

198
198
209
211
212
212
214
214
214
215
218
220
220
221
226
228
228
229
229
230
230
232

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

234
241
242
243
243
243
244
244

245
248
256
264
269
269
270

271
272
272

191

Consolidated Statement of Income.

E.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

Profit/loss on equity method investments, net

Other financial expense, net

Interest income

Interest expense
Profit before income taxes2
Income taxes

Net profit

thereof profit attributable to
non-controlling interests

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

2014

20131

2014

20131

2014

20131

113,881

-88,091

25,790

-11,103

-2,693

-4,532

1,676

-1,139

912

445

145

-707

8,794

-2,387

6,407

103,460

-80,552

22,908

-10,589

-2,660

-4,205

1,467

-380

3,344

-342

212

-878

8,877

-874

8,003

15,991

-13,597

2,394

-431

-636

–

-21

-15

–

-8

1,379

-496

883

14,522

-12,303

2,219

-461

-528

–

-19

-7

–

-6

1,262

-545

717

129,872

-101,688

28,184

-11,534

-3,329

-4,532

1,759

-1,160

897

458

145

-715

10,173

-2,883

7,290

328

6,962

117,982

-92,855

25,127

-11,050

-3,188

-4,205

1,530

-399

3,345

-349

212

-884

10,139

-1,419

8,720

1,878

6,842

6.51

6.40

1 Information related to reclassification within functional expenses is presented in Note 1.
2 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.

The accompanying notes are an integral part of these consolidated financial statements.

192

Consolidated Statement of Comprehensive
Income/Loss1.

E.02

In millions of euros

Net profit

Unrealized gains/losses from
currency translation adjustments

Unrealized gains/losses from financial assets
available-for-sale

Unrealized gains/losses (pre-tax)

Reclassifications to profit and loss (pre-tax)

Taxes on unrealized gains/losses
and on reclassifications

Unrealized gains/losses from financial assets
available-for-sale (after tax)

Unrealized gains/losses from derivative
financial instruments

Unrealized gains/losses (pre-tax)

Reclassifications to profit and loss (pre-tax)

Taxes on unrealized gains/losses
and on reclassifications

Unrealized gains/losses from derivative
financial instruments (after tax)

Unrealized gains/losses from equity-method
investments

Unrealized gains/losses (pre-tax)

Reclassifications to profit and loss (pre-tax)

Taxes on unrealized gains/losses
and on reclassifications

Unrealized gains/losses from equity-method
investments (after tax)

Items that may be reclassified to profit/loss

Actuarial gains/losses on equity-method
investments (pre-tax)

Taxes on actuarial gains/losses on equity-method
investments

Actuarial gains/losses on equity-method investments
(after tax)

Actuarial gains/losses from pensions and similar
obligations (pre-tax)

Taxes on actuarial gains/losses from pensions
and similar obligations

Actuarial gains/losses from pensions and similar
obligations (after tax)

Items that will not be reclassified to profit/loss

Other comprehensive income/loss, net of taxes

Total comprehensive income

Daimler
Group

Shareholders
of Daimler AG

Non-
controlling
interests

Daimler
Group

Shareholders
of Daimler AG

Non-
controlling
interests

2014

2013

7,290

6,962

1,800

1,744

328

8,720

6,842

1,878

-1,531

-1,485

-46

205

–

-6

199

205

–

-6

199

-2,433

-253

-2,432

-253

800

-1,886

-1,885

–

124

–

-5,378

1,682

-3,696

-3,572

3,718

-3,696

-3,627

3,335

–

-1

–

-1

–

383

-1

-6

1,388

-248

-338

802

-21

-56

-685

-1

–

-1

-6

1,389

-248

-338

803

-61

-43

-11

-666

-1

–

-1

1,491

-372

1,119

1,118

433

9,153

-372

1,119

1,118

452

7,294

1 See Note 20 for other information on comprehensive income/loss.

The accompanying notes are an integral part of these consolidated financial statements.

–

-1

–

-1

–

-13

-19

–

-19

1,859

193

E | Consolidated Financial Statements | Consolidated Statement of Income | Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position.

E.03

In millions of euros

Assets
Intangible assets
Property, plant and equipment
Equipment on operating leases
Equity-method investments
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
Total equity and liabilities

Consolidated

Industrial Business
(unaudited additional
information)

Daimler Financial Services
(unaudited additional
information)

Note

At December 31,
2013

2014

At December 31,
2013

2014

At December 31,
2013

2014

10
11
12
13
14
15
16
9
17

18
19
14

15
16
17

23
24
25
9
26
27

23
24
25
26
27

9,367
23,182
33,050
2,294
34,910
1,374
3,634
4,124
555
112,490
20,864
8,634
26,769
9,667
5,260
2,353
3,598
77,145
189,635

3,070
11,906
28,487
202
–

43,665
919
44,584

12,806

851
6,712
50,399
2,644
1,070
3,581
14
78,077
10,178
757
7,267
36,290
8,062
2,413
2,007
66,974
189,635

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
70,441
168,518

3,069
11,850
27,628
133
–

42,680
683
43,363

9,869

823
5,270
44,746
1,701
892
2,728
18
66,047
9,086
517
6,619
32,992
6,575
1,868
1,451
59,108
168,518

9,202
23,125
14,374
2,264
-49
6
-1,140
3,610
-2,178
49,214
20,004
7,824
-25
8,341
5,150
-7,099
772
34,967
84,181

36,967

12,630

850
6,590
10,325
2,231
-1,618
3,101
14
34,123
9,852
679
6,830
-13,518
6,198
1,674
1,376
13,091
84,181

9,289
21,732
13,207
3,419
-29
6
-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
15
31,816
8,778
438
6,230
-12,218
4,797
1,351
1,189
10,565
79,148

165
57
18,676
30
34,959
1,368
4,774
514
2,733
63,276
860
810
26,794
1,326
110
9,452
2,826
42,178
105,454

7,617

176

1
122
40,074
413
2,688
480
–
43,954
326
78
437
49,808
1,864
739
631
53,883
105,454

99
47
14,953
13
27,798
1,660
4,290
481
2,349
51,690
701
595
23,015
1,208
103
9,388
2,670
37,680
89,370

6,596

143

–
118
31,204
126
2,192
445
3
34,231
308
79
389
45,210
1,778
517
262
48,543
89,370

The accompanying notes are an integral part of these consolidated financial statements.

194

E | 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)

2014

2013

2014

2013

2014

2013

E.04

In millions of euros

Profit before income taxes

Depreciation and amortization/impairments

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 provided by/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 and financing transactions

10,173

4,999

-850

-1,053

-2,768

-606

853

-8,065

-2,819

1,032

-2,170

-1,274

-4,844

-1,463

209

-172

3,098

-3,341

3,834

-30

-2,709

2,129

37,354

-34,650

-2,407

-158

-26

-10

–

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

–

Cash provided by/used for financing activities

2,274

3,855

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

323

-1,386

-254

11,053

10,996

9,667

11,053

1 See Note 28 for other information on consolidated statements of cash flows.

The accompanying notes are an integral part of these consolidated financial statements.

8,794

4,964

-898

-1,053

-2,734

-430

845

-914

-24

819

-1,830

7,539

-4,821

-1,443

194

-91

3,098

-3,281

3,476

-19

-2,887

722

13,711

-11,858

-2,407

-156

-26

-10

–

-6,491

-6,486

330

-1,504

9,845

8,341

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

-454

15,302

-10,643

-2,349

-268

-24

-73

-4,978

-3,382

-206

-42

9,887

9,845

1,379

1,262

–

-34

-176

-7,151

-2,795

213

-340

-8,813

-23

-20

-81

–

-60

358

-11

178

–

-117

-5,601

-2,727

290

-265

-7,028

-19

-38

-5

-494

467

-62

1,407

23,643

-22,792

1,299

22,300

-21,344

–

-2

–

6,491

8,760

-7

118

1,208

1,326

–

-1

–

4,978

7,237

-48

1,109

1,208

195

Consolidated Statement of Changes in Equity1.

E.05

In millions of euros

Balance at January 1, 2013

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

Balance at January 1, 2014

Net profit

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

Dividends

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

Other

Share
capital

Capital
reserves

Retained
earnings2

Currency
translation

Financial
assets
available
for sale

3,063

12,026

–

–23

–227

11,850

–

11,906

22,017

6,842

1,490

–372

7,960

–2,349

–

27,628

6,962

-5,378

1,682

3,266

-2,407

–

516

–

–1,485

–

–1,485

–

–969

-969

–

1,744

–

1,744

–

234

–

–6

–

261

–

205

-6

199

–

28,487

775

460

Balance at December 31, 2013

3,069

11,850

Balance at December 31, 2014

3,070

1 See Note 20 for other information on changes in equity.
2 Retained earnings also include items that will not be reclassified to profit or loss. Actuarial losses from pensions and similar obligations amount to

€8,892 million net of tax in 2014 (2013: €5,196 million net of tax).

The accompanying notes are an integral part of these consolidated financial statements.

196

E | 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

–

1,141

-338

803

–

853

–

-2,685

800

-1,885

–

-1,032

-1

–

-43

-11

–

-12

–12

–

–1

Equity
attributable to
shareholders
of Daimler AG

Treasury
share

Non-
controlling
interests

Total
equity

–

-24

–

–26

–

37,905

6,842

1,211

-759

7,294

-2,349

-24

-23

-227

42,680

6,962

-6,103

2,476

3,335

-2,407

-26

43,665

1,425

1,878

-6

-13

1,859

-269

–

-2,433

683

328

–

383

-158

–

-9

919

In millions of euros

39,330

Balance at January 1, 2013

8,720

1,205

-772

Net profit

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

9,153

Total comprehensive income/loss

-2,618

Dividends

-24

Share-based payment

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

-2,456

Changes in ownership interests in subsidiaries

-133

Other

43,363

Balance at December 31, 2013

43,363

Balance at January 1, 2014

7,290

-6,048

2,476

3,718

Net profit

Other comprehensive income/loss before taxes

Deferred taxes on other comprehensive income

Total comprehensive income/loss

-2,565

Dividends

-26

Capital increase/Issue of new shares

Acquisition of treasury shares

Issue and disposal of treasury shares

Other

44,584

Balance at December 31, 2014

197

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 13, 2015.

Basis of preparation

Applied IFRSs. The accounting policies applied in the
consolidated financial statements comply with the IFRSs
required to be applied in the EU as of December 31, 2014.

IFRSs issued, EU endorsed and initially adopted in the
reporting period. 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. Daimler
applies the new consolidation standards as of the mandatory
effective date for IFRS users in the EU of January 1, 2014 on a
retrospective basis.

IFRS 10 Consolidated Financial Statements supersedes consol-
idation rules in IAS 27 Consolidated and Separate Financial
Statements as well as SIC-12 Consolidation – Special Purpose
Entities. IFRS 10 establishes a single consolidation model
based on control that applies to all entities. According to the
new model, control exists if the parent company has the power
of decision over the subsidiary based on voting rights or other
rights, if it participates in positive and negative variable returns
from the subsidiary, and if it can affect these returns by its power
of decision. The Group companies were analyzed based on
the new control concept. As a result, two companies were reclas-
sified. These companies are exclusively companies with sub-
ord inate importance for the Group and for the presentation of
a true and fair view of its profitability, liquidity and capital
resources and financial position due to their inactive or minor
business activities. Therefore, these companies are not con-
solidated and hence have no effect on the consolidated 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. Interests in a joint venture
are to be accounted for as an investment using the equity
method. This does not affect Daimler due to the fact that joint
ventures were already accounted for using the equity method
in the past. A joint operation exists if the parties that have joint
control have rights to the assets and obligations for the liabili-
ties. In this case, the proportionate assets, liabilities, revenues
and expenses have to be recognized. As of the reporting date,
six joint operations exist, which have no material effect on the
consolidated financial statements.

198

IFRS 12 Disclosure of Interests in Other Entities provides
guidance on disclosure requirements for interests in other
entities by combining existing disclosure requirements
from several standards in IFRS 12. See Notes 3 and 13 for
further information on extended disclosure requirements.

All other IFRSs with mandatory initial application in
the EU as of January 1, 2014 had no significant impact
on the consolidated financial statements.

IFRSs issued but neither EU endorsed nor yet adopted.
In July 2014, the IASB published IFRS 9 Financial Instruments,
which shall supersede IAS 39. IFRS 9 deals with the classifi-
cation, recognition and measurement (including impairment) of
financial instruments as well as with regulations for general
hedge accounting. With IFRS 9, additional notes will be required,
as specified by the revised IFRS 7 Financial Instruments –
Disclosures. Subject to being endorsed by the EU, application
of IFRS 9 is mandatory for reporting periods beginning on or
after January 1, 2018. Early adoption is permitted. Investigation
of the effects on the consolidated financial statements of
adopting IFRS 9 has not yet been completed.

In May 2014, the IASB published IFRS 15 Revenue from Contracts
with Customers. It replaces existing guidance for revenue
recognition, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
The new standard defines a comprehensive framework for
determining whether, in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. Disclosure require-
ments are also extended. Subject to being endorsed by the
EU, application of IFRS 15 is mandatory for reporting periods
beginning on or after January 1, 2017. Early adoption is per-
mitted. Investigation of the effects on the consolidated financial
statements of adopting IFRS 15 has not yet been completed.

Subject to EU endorsement of these standards, which are
then to be adopted in future periods, Daimler does not currently
plan to apply these standards earlier. Other IFRSs issued but
not EU endorsed are not expected to have a significant impact
on the Group’s profitability, liquidity and capital resources
or financial position.

Presentation. Presentation in the consolidated statement
of financial position differentiates between current and
non-current assets and liabilities. Assets and liabilities are
classified as current if they are expected to be realized
or settled within one year or within a longer and normal operating
cycle. Deferred tax assets and liabilities as well as assets
and provisions for pensions and similar obligations are generally
presented as non-current items.

The consolidated statement of income is presented using
the cost-of-sales method.

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 profitability,
liquidity and capital resources and financial position, unaudited
information with respect to the Group’s industrial and financial
services business activities (Daimler Financial Services) is
provided in addition to the audited consolidated financial state-
ments. Such information, however, is not required by IFRS
and is not intended to, and does not represent the separate IFRS
profitability, liquidity and capital resources and financial
position of the Group’s industrial or financial services business
activities. Eliminations of the effects of transactions between
the industrial and financial services businesses have generally
been allocated to the industrial business columns.

Reclassifications within functional costs. In the course
of the organizational focus of the divisions on their customers
and markets, corporate functions in each country are being
streamlined and functional departments are being aligned more
closely with the needs of the divisions. In this context,
Daimler has reviewed the allocation of the cost centers in the
headquarters functions to the individual functional costs.
As a result, amongst other changes, IT services and personnel
expenses have been reclassified from general administrative
expenses to the other functional costs.

199

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Table  E.06 shows the effects of the retrospective change
of the allocation to the individual functional costs on the
consolidated statement of income in 2013.

Table  E.07 shows the effects on the consolidated statement
of income in 2014 if the original allocation of the cost
centers to the individual functional costs had been retained.

There are no effects on net profit, basic and diluted earnings
per share or Group equity.

E.06
Effects of reclassifications within functional costs

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized
development costs

2013
disclosed

Reclassifi-
cations

2013
changed

92,457

10,875

3,865

398

175

-677

92,855

11,050

3,188

4,101

104

4,205

E.07
Effects of retention of original presentation of functional costs

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized
development costs

2014
changed

Reclassifi-
cations

2014
previous
classifi-
cation

101,688

11,534

3,329

-461

-204

787

101,227

11,330

4,116

4,532

-122

4,410

Measurement. The consolidated financial statements have
been prepared on the historical cost basis with the exception
of certain items such as available-for-sale financial assets,
derivative financial instruments, hedged items, and pensions
and similar obligations. The measurement models applied
to those exceptions are described below.

Principles of consolidation. The consolidated financial
statements include the financial statements of Daimler AG
and the financial statements of all subsidiaries, including
structured entities which are directly or indirectly controlled
by Daimler AG. Control exists if the parent company has
the power of decision over a subsidiary based on voting rights
or other rights, if it participates in positive and negative
variable returns from a subsidiary, and if it can affect these
returns by its power of decision.

Structured entities which are controlled also have to be con-
solidated. Accordingly, the assets and liabilities remain in
the consolidated statement of financial position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls the
entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.

The financial statements of consolidated subsidiaries which
are included in the consolidated financial statements are
generally prepared as of the reporting date of the consolidated
financial statements. The financial statements of Daimler AG
and its subsidiaries included in the consolidated financial state-
ments are prepared using uniform recognition and measure-
ment principles. All intercompany assets and liabilities, equity,
income and expenses as well as cash flows from transactions
between consolidated entities are entirely eliminated in the
course of the consolidation process.

Business combinations are accounted for using the purchase
method.

Changes in equity interests in Group subsidiaries that reduce
or increase Daimler’s percentage ownership without loss
of control are accounted for as an equity transaction between
owners.

200

Investments in associated companies, joint ventures or
joint operations. An associated company is an entity over
which the Group has significant influence. Significant influence
is the power to participate in the financial and operating policy
decisions of the investee. Associated companies are generally
accounted for using the equity method.

For entities over which Daimler has joint control together with
a partner (joint arrangements), it has to be decided if a joint
operation or a joint venture exists. In a joint venture, the parties
that have joint control of the arrangement have rights to
the net assets of the arrangement. For joint ventures, the equity
method has to be applied. A joint operation exists when the
jointly controlling parties have direct rights to the assets and
obligations for the liabilities. In this case, the prorated assets
and liabilities and the prorated income and expenses are gener-
ally to be recognized. As the joint operations recognized
at the end of the reporting period have no significant impact
on the consolidated financial statements, they continue
to be accounted for using the equity method.

In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group’s proportionate share of the
results of operations is included in Daimler’s consolidated
financial statements with a one to three-month time lag. Adjust-
ments are made for all significant events or transactions
that occur during the time lag (see also Note 13).

Subsidiaries measured at amortized cost. Subsidiaries,
associated companies, joint ventures and joint operations
whose business is non-active or of low volume and that are
not material for the Group and the fair presentation of financial
position, liquidity and capital resources, and profitability
are generally measured at amortized cost in the consolidated
financial statements.

Foreign currency translation. Transactions in foreign currency
are translated at the relevant foreign exchange rates prevailing
at the transaction date. In subsequent periods, assets and
liabilities denominated in foreign currency are translated into
euros using period-end exchange rates; gains and losses
from this measurement are recognized in profit and loss (except
for gains and losses resulting from the translation of available-
for-sale equity instruments, which are recognized in other com-
prehensive income/loss).

Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into euros
using period-end exchange rates. The translation adjustments
are presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.

The exchange rates of the US dollar, the British pound,
the Japanese yen, the Chinese renminbi and the Russian ruble
– the most significant foreign currencies for Daimler – were
as shown in table  E.08.

E.08
Exchange rates

Average exchange
rate on December 31

Average exchange rates
during the respective period

First quarter

Second quarter

Third quarter

Fourth quarter

USD

1 € =

GBP

1 € =

JPY

1 € =

CNY

1 € =

2014

RUB

1 € =

USD

1 € =

GBP

1 € =

JPY

1 € =

CNY

1 € =

2013

RUB

1 € =

1.2141

0.7789

145.2300

7.5358

72.3370

1.3791

0.8337

144.7200

8.3491

45.3246

1.3696

1.3711

1.3256

1.2498

0.8279 140.8000

8.3576

48.0425

0.8147 140.0000

8.5438

47.9415

0.7938 137.7500

8.1734

48.0583

0.7891 142.7500

7.6824

59.7160

1.3206

1.3062

1.3242

1.3610

0.8511

121.7900

0.8506

129.0700

0.8545

131.0200

0.8407

136.4800

8.2209

8.0376

8.1111

8.2903

40.1518

41.3464

43.4394

44.2920

201

E | 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 recognized
net of sales reductions such as cash discounts and sales incen-
tives granted.

Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.

Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services business
at Daimler Financial Services. The revenue from the rental
and leasing business results from operating leases and is recog-
nized on a straight-line basis over the periods of the contracts.
In addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles. Revenue
from receivables from financial services is recognized using
the effective interest method. When loans are issued below
market rates, related receivables are recognized at present
value and revenue is reduced for the interest incentive granted.
If subsidized leasing fees are agreed upon in connection
with finance leases, revenue from the sale of a vehicle is reduced
by the amount of the interest incentive granted.

The Group offers extended, separately priced warranties
for certain products. Revenue from these contracts is deferred
and recognized over the contract period in proportion to the
costs expected to be incurred based on historical information.
In circumstances in which there is insufficient historical
information, income from extended warranty contracts is recog-
nized 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.

Research and non-capitalized development costs. Expen-
diture 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, construc-
tion 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 recognized
as other operating income in the same period as the expenses
themselves.

Profit/loss from equity-method investments. This item
includes all income and expenses in connection with investments
accounted for using the equity method. In addition to the
prorated profits and losses from financial investments, it also
includes profits and losses resulting from the sale of equity
interests or the remeasurement of equity interests following
a loss of significant influence. Daimler’s share of dilution
gains and losses occurring if the Group or other owners do not
participate in capital increases of companies in which shares
are held and accounted for using the equity method are also
included in profit/loss from equity-method investments.
This item also includes losses and/or gains on the impairment
of investments’ carrying amounts or on the reversal of such
impairments.

Other financial income/expense, net. Other financial
income/expense, net includes all income and expense from
financial transactions which are not included in interest
income and/or interest expense, and for Daimler Financial
Services are not included in revenue and/or cost of sales.
For example, expense from the compounding of interest on
provisions for other risks is recorded in this line item.

Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.

Interest income and interest expense. Interest income
and interest expense include interest income from investments
in securities, cash and cash equivalents as well as interest
expense from liabilities. Furthermore, interest and changes in
fair values related to interest rate hedging activities as well
as income and expense resulting from the allocation of premiums
and discounts are included. The interest components of
defined benefit pension obligations and other similar obligations
as well as of the plan assets available to cover these obliga-
tions are also presented in this line item.

202

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 in 2013 additionally reflect the potential
dilution that would occur if all stock option plans were exercised.
No stock options existed at December 31, 2014.

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 impairment
whenever there is an indication that the intangible asset may
be impaired. The amortization period for intangible assets
with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.

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.

An exception to the aforementioned principles is made
for Daimler Financial Services. In this case, interest income
and expense and gains or losses from derivative financial
instruments are disclosed under revenue and cost of sales
respectively.

Income taxes. Income taxes are comprised of current income
taxes and deferred taxes.

Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In
addition, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for
periods not yet finally assessed including interest expense and
penalties on the underpayment of taxes. For the case that
amounts included in the tax return might not be realized (uncer-
tain tax positions), a provision for income taxes is recognized.
The amount is based on the best possible assessment of the
expected tax payment. Tax refund claims from uncertain
tax positions are recognized when it is predominantly likely
and thus reasonably expected that they can be realized.
Only in the case of tax loss carryforwards or unused tax credits,
no provision for taxes or tax claim is recognized for these
uncertain tax positions. Instead the deferred tax assets
for the unused tax loss carryforwards or tax credits are
to be adjusted.

Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.

Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a corre-
sponding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and interests
in joint arrangements are not recognized if the Group is able
to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.

203

E | Consolidated Financial Statements | Notes to the Consolidated Financial StatementsGoodwill. 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.

Property, plant and equipment. Property, plant and equipment
are measured at acquisition or manufacturing costs less
accumulated depreciation. If necessary, accumulated impair-
ment losses are recognized.

The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.

Property, plant and equipment are depreciated over the useful
lives as shown in table  E.09.

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).

E.09
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

Daimler as lessee. In the case of an operating lease, the lease
payments or rental payments are immediately expensed.

Assets carries as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated depre-
ciation and other accumulated fair-value impairments. Depreci-
ation is on a straight-line basis; residual values of the assets
are given due consideration. Payment obligations resulting
from future lease payments are discounted and disclosed
under financing liabilities.

Sale and lease back. The same accounting principles apply
to assets if Daimler sells such assets and leases them back
from the buyer.

Daimler as lessor. Operating leases relate to vehicles that
the Group produces itself and leases to third parties or vehicles
that the Group sells and guarantees to buy back or guarantees
a residual value. These vehicles are capitalized at (depreciated)
cost of production under leased equipment in the industrial
business and are depreciated over the contract term on a
straight-line basis with consideration of the expected residual
values. Changes in the expected residual values lead either to
prospective adjustments of the scheduled depreciation or to an
impairment if necessary.

Operating leases also relate to Group products that Daimler
Financial Services acquires from non-Group dealers or other
third parties and leases to end customers. These vehicles
are presented at (depreciated) cost of acquisition under leased
equipment in the Daimler Financial Services segment. If these
vehicles are subsidized, the subsidies are deducted from the cost
of acquisition. After revenue is received from the sale to inde-
pendent dealers, these vehicles generate revenue from lease pay-
ments and subsequent resale on the basis of the leasing
contracts. The revenue received from the sale of these vehicles
to the dealers is estimated by the Group as being of the mag-
nitude of the addition to leased equipment at Daimler Financial
Services. In 2014, additions to leased equipment at Daimler
Financial Services amounted to approximately €9 billion (2013:
approximately €8 billion).

In the case of finance leases, the Group presents the receivables
in amount of the net investment of the lease agreements
under receivables from financial services. The net investment
of a lease agreement is the gross investment (future minimum
lease payments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.

204

Equity-method investments. On the date of acquisition,
a positive difference between cost of acquisition and Daimler’s
share of the fair values of the identifiable assets and liabilities
of the associated company or joint venture are determined and
recognized as investor level goodwill. The goodwill is included
in the carrying amount of the equity-method investment. With
step acquisition of an equity interest by which significant
influence or joint control is achieved for the first time, the invest-
ment is generally accounted for on the basis of IFRS 3 Business
Combinations. This means that the previously held equity
interest is remeasured on the date of acquisition; any resulting
gain or loss is recognized through profit and loss. If an equity
interest in an existing associated company is increased without
any resulting change in significant influence, goodwill is deter-
mined only for the additionally acquired interest; the previous
investment is not remeasured at fair value.

Daimler reviews on each balance-sheet date whether there
is any objective indication of impairments of equity-method
investments. If such indications exist, the Group determines the
impairment loss to be recognized. If the carrying amount
exceeds the recoverable amount of an investment, the carrying
amount is written down to the recoverable amount. The recov-
erable amount is the greater of fair value less costs to sell and
value in use. An impairment or impairment reversal is recog-
nized in the consolidated statement of income under income/
loss on equity-method investments; this also includes any
gains and/or losses on the sale of equity-method investments.

Interim gains or losses (to be eliminated) from transactions
with companies accounted for at-equity are recognized
through profit and loss with corresponding adjustments of
the investments’ carrying amounts.

Impairment of non-current non-financial assets. Daimler
assesses at each reporting date whether there is an indi-
cation 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
is conducted. This planning is based on expectations regarding
future market share, the growth of the respective markets
as well as the products’ profitability. The multi-year planning
comprises a planning horizon until 2021 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 generally
does not consider any growth rates. In addition, several
sensitivity analyses are conducted. These show that even in
case of more unfavorable premises for main 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.

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.

205

E | Consolidated Financial Statements | Notes to the Consolidated Financial StatementsNon-current assets held for sale and disposal groups.
The Group classifies non-current assets or disposal groups
as held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is
reversed, this reversal is restricted to the impairment loss
previously recognized for the assets or disposal group
concerned. The Group generally discloses these assets or
disposal groups separately in the consolidated statement
of financial position.

Inventories. Inventories are measured at the lower of 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 inventories
and bringing them to their existing location and condition.
Costs for large numbers of inventories that are interchangeable
are allocated under the average cost formula. In the case
of manufactured inventories and work in progress, cost also
includes production overheads based on normal capacity.

Financial instruments. A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial 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 con-
tractual provisions of the financial instrument. In the case of
purchases or sales of financial assets through the regular
market, Daimler uses the transaction date as the date of initial
recognition or derecognition.

Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable
to acquisition or issuance are considered by determining
the carrying amount if the financial instruments are not mea-
sured at fair value through profit or loss.

Financial assets. Financial assets primarily comprise
receivables from financial services, trade receivables,
receivables from banks, cash on hand, derivative financial
assets and marketable securities and investments.

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 instruments
in hedge accounting, as well as shares and marketable debt
securities acquired for the purpose of selling in the near term
are classified as held for trading. Gains or losses on these
financial assets are recognized in profit or loss.

Loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that
are not quoted in an active market, such as receivables from
financial services or trade receivables. After initial recognition,
loans and receivables are subsequently carried at amortized
cost using the effective interest method less any impairment
losses. Gains and losses are recognized in the statement
of income when the loans and receivables are impaired or derec-
ognized. Interest effects on the application of the effective
interest method are also recognized in profit or loss.

Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial papers.

After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income
using the effective interest method. Dividends are recognized
in profit or loss when the right of payment has been established.

206

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 measured at fair value through profit or loss are assessed
to determine whether there is objective evidence of impair-
ment. Objective evidence may exist for example if a debtor is
facing serious financial difficulties or there is a substantial
change in the debtor’s technological, economic, legal or market
environment. For quoted equity instruments, a significant or
prolonged decline in fair value is additional objective evidence
of possible impairment. Daimler has defined criteria for the
significance and duration of a decline in fair value. A decline
in fair value is deemed significant if it exceeds 20% of the
carrying amount of the investment; a decline is deemed prolonged
if the carrying amount exceeds the fair value for a period
longer than nine months.

Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted
at the original effective interest rate of the financial asset.
The amount of the impairment loss is recognized in profit or loss.

If, in a subsequent reporting period, the amount of the
impairment loss decreases and the decrease can be attributed
objectively to an event occurring after the impairment was
recognized, the impairment loss recorded in prior periods is
reversed and recognized in profit or loss.

In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance lease
receivables and trade receivables) is recorded using allowance
accounts. The decision to account for credit risks using an
allowance account or by directly reducing the receivable depends
on the estimated probability of the loss of receivables.

Available-for-sale financial assets. If an available-for-sale financial
asset is impaired, the difference between its cost (net of
any principal payment and amortization) and its current fair
value (less any impairment loss previously recognized in the
statement of income) is reclassified from other comprehensive
income/loss to the statement of income. Reversals with
respect to equity instruments classified as available for sale are
recognized in other comprehensive income/loss. Reversals
of impairment losses on debt instruments are recognized
through the statement of income if the increase in fair value of
the instrument can be objectively attributed to an event occur-
ring after the impairment losses were recognized in the conso-
lidated 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.

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.

207

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Pensions and similar obligations. The measurement of
defined benefit plans for pensions and other post-employment
benefit obligations (medical care) in accordance with IAS 19
Employee Benefits is based on the projected unit credit method.
Plan assets invested to cover defined benefit pension obliga-
tions and other post-employment benefit obligations (medical
care) are measured at fair value and offset against the corre-
sponding obligations. For the valuation of defined benefit plans,
differences between actuarial assumptions used and actual
developments as well as changes in actuarial assumptions
result in actuarial gains and losses, which have a direct impact
on the conso lidated statement of financial position or on the
consolidated statement of income.

The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets
(net pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest expense
or income is recognized in profit and loss under interest
expense or interest income in the consolidated statement of
income. The other expenses resulting from pension obligations
and other post-employment benefit obligations (medical care),
which mainly result from entitlements acquired during
the year under review, are taken into consideration in the
functional costs in the consolidated statement of income.

The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
by reference to market yields at the end of the reporting period
on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount
factors are estimated by extrapolating current market rates
along the yield curve.

Gains or losses on the curtailment or settlement of a defined
benefit plan are recognized when the curtailment or settlement
occurs.

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 relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair
value of a recognized asset or liability or an unrecognized firm
commitment is hedged. In a cash flow hedge, the variability
of cash flows to be received or paid from expected transactions
related to a recognized asset or liability or a highly probable
forecast transaction are hedged. The documentation of the hedg-
ing relationship includes the objectives and strategy of risk
management, the type of hedging relationship, the nature of the
risk being hedged, the identification of the hedging instrument
and the hedged item, as well as a description of the method used
to assess hedge effectiveness. Hedging transactions are
expected to be highly effective in achieving offsetting risks
from changes in fair value or cash flows and are regularly
assessed to determine that they have actually been highly
effective throughout the financial reporting periods for which
they are designated.

Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other compre-
hensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For cash
flow hedges, fair value changes in the effective portion of
the hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the statement
of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.

If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for
hedge accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.

208

Provisions for other risks. A provision is recognized when
a liability to third parties has been incurred, an outflow
of resources is probable and the amount of the obligation can
be reasonably estimated. The amount recognized as a provi-
sion 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.

Share-based payment. Share-based payment comprises
cash-settled liability awards.

Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.

Presentation in the consolidated statement of cash flows.
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash 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 equity-
method investments. In the context of impairment tests
for non-financial assets, estimates have to be made to determine
the recoverable amounts of cash-generating units. Assump-
tions have to be made in particular with regard to future cash
inflows and outflows for the planning period and the following
periods. The estimates include assumptions regarding future
market share and the growth of the respective markets as well
as regarding the products’ profitability. On the basis of the
impairment tests carried out in 2014, the recoverable amounts
are substantially larger than the net assets of the Group’s
cash-generating units.

When objective evidence of impairment is present, estimates
and assessments also have to be made to determine the
recoverable amount of an equity method financial investment.
The determination of the recoverable amount is based on
assumptions regarding future business developments for the
determination of the expected future cash flows of that
financial investment. See Note 13 for the presentation of carry-
ing amounts and fair values of equity-method financial
investments in listed companies.

Recoverable amount of equipment on operating leases.
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions have to
be made regarding the future supply of and demand for vehicles,
as well as the development of vehicle prices. Those assumptions
are determined either by qualified estimates or by publications
provided by expert third parties; qualified estimates are based,
as far as they are publicly available, on external data with con-
sideration 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 depreciation; changes in residual values lead
either to prospective adjustments of the systematic deprecia-
tion or, in the case of a significant drop in expected residual
values, to impairment. If systematic depreciation is prospec-
tively adjusted, changes in estimates of residual values do not
have a direct effect but are equally distributed over the remain-
ing periods of the lease contracts.

209

E | Consolidated Financial Statements | Notes to the Consolidated Financial StatementsCollectability 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 adequacy
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
information.

Product warranties. The recognition and measurement
of provisions for product warranties is generally connected
with estimates.

The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold, upon lease inception, or when new
warranty programs are initiated. Based on historical warranty
claim expe rience, 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 assump-
tions 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. It is also possible that provisions
accrued for some legal proceedings may turn out to be
insufficient once such proceedings have ended. Daimler may
also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on
Daimler’s operating results and cash flows for a particular report-
ing period, Daimler believes that it should not materially
affect the Group’s financial position.

Pensions and similar 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.

210

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, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal
of taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are some-
times beyond Daimler’s control, the assumptions to be made
in connection with accounting for deferred tax assets are
connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the prob-
ability of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired.
Further information is provided in Note 9.

3. Consolidated Group

Composition of the Group. Table  E.10 shows the
composition of the Group.

The aggregate balance sheet totals of the subsidiaries,
associated companies, joint ventures and joint operations
accounted for at amortized cost whose business is non-active
or of low volume and which are not material for the Group
and the fair presentation of its profitability, liquidity and capital
resources and financial position would amount to approxi-
mately 1% of the Group’s balance sheet total; the aggregate
revenues and the aggregate net profit would amount
to approximately 1% of the Group’s revenue and net profit.

A detailed list of the companies included in the consolidated
financial statements and of the equity investments of Daimler AG
pursuant to Sections 285 und 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in Note 39.

Acquisitions and disposals of consolidated subsidiaries.
The increase in the number of consolidated subsidiaries also
includes additions due to the Group’s internal restructuring,
which had no effect on the balance sheet total or on net profit.

Structured entities. The structured entities of the Group
are rental companies and asset-backed-securities (ABS) com-
panies. The purpose of the rental companies primarily is the
acquisition, renting and management of assets. The ABS com-
panies are primarily used for the Group’s refinancing. The
assets transferred to structured entities usually result from the
Group’s leasing and sales financing business. Those entities
refinance the purchase price by issuing securities.

At the reporting date, the Group has business relationships with
18 controlled structured entities, of which 16 are fully consoli-
dated. In addition, the Group has relationships with 5 non-con-
trolled structured entities. The unconsolidated structured
entities are not material for the Group’s profitability, liquidity
and capital resources and financial position.

E.10
Composition of the Group

Consolidated subsidiaries

Germany

International

Unconsolidated subsidiaries

Germany

International

Subsidiaries accounted for using
the equity method

Germany

International

Joint operations accounted for
using the equity method

Germany

International

Joint ventures accounted for using
the equity method

Germany

International

Associated companies accounted for using
the equity method

Germany

International

Joint operations, joint ventures and associated
companies accounted for at (amortized) cost

Germany

International

At December 31,
2013

2014

327

267

–

320

271

–

470

474

211

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Acquisitions and disposals of equity-method investments

Acquisitions and disposals in the year 2013

Disposals in the year 2014

RRPSH. In the first quarter of 2014, the Board of Management
and the Supervisory Board of Daimler AG decided to sell the
50% equity interest in Rolls-Royce Power Systems Holding GmbH
(RRPSH) to the partner Rolls-Royce Holdings plc (Rolls-Royce).
For that purpose, Daimler exercised a put option on its stake
in RRPSH that had been agreed upon with Rolls-Royce in 2011.
The transaction was closed in the third quarter of 2014 and
the agreed purchase price of €2,433 million was received.
The gain on the sale amounted to €1,006 million. In addition,
the measurement of the put option resulted in an expense
of €118 million in the first quarter of 2014 (2013: €60 million).

Tesla. In the fourth quarter of 2014, the Group sold its 4%
equity interest in Tesla Motors, Inc. (Tesla) and prematurely
terminated the related hedging instrument. In the second
quarter of 2014, the remeasurement of the Tesla shares after
the end of Daimler’s significant influence on Tesla led to
a non-cash gain of €718 million. An expense of approximately
€124 million and a cash inflow of €625 million resulted
from the hedging instrument and the sale of the equity interest.
A gain of €594 million resulted in total.

E.11
Revenue

In millions of euros

Sales of goods

Rental and leasing business

Interest from the financial services
business at Daimler Financial Services

Sales of other services

E.12
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

2014

2013

114,013

12,245

103,594

10,966

3,180

434

3,040

382

129,872

117,982

2014

2013

-91,574

-5,049

-83,377

-4,376

-1,443

-1,578

-433

-3,189

-101,688

-416

-3,108

-92,855

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). At the same time, BAIC Motor increased its equity
interest in the joint venture Beijing Benz Automotive Co., Ltd.
(BBAC) by 1% to 51%; Daimler increased its equity interest in
the jointly owned sales company Beijing Mercedes-Benz Sales
Service Co., Ltd. also by 1% to 51%.

EADS. In 2013, Daimler sold its equity interest in the European
Aeronautic Defence and Space Company EADS N.V. (since
January 2, 2014: Airbus Group N.V.) and lost its significant
influence on that company.

See Note 13 for further information on the associated
companies accounted for using the equity method.

4. Revenue

Table  E.11 shows the composition of revenue at Group level.

Revenue by segment  E.87 and region  E.89 is presented
in Note 33.

5. Functional costs

Cost of sales. Items included in cost of sales are shown
in table  E.12.

Amortization expense of capitalized development costs in
the amount of €1,212 million (2013: €1,134 million) is presented
in expense of goods sold.

Selling expenses. In 2014, selling expenses amounted
to €11,534 million (2013: €11,050 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 €3,329 million in 2014 (2013: €3,188
million) and comprise expenses which were not attributable
to production, sales or research and development functions,
including personnel expenses, depreciation and amortization
on fixed and intangible assets, and other administrative costs.

Research and non-capitalized development costs.
Research and non-capitalized development costs were €4,532
million in 2014 (2013: €4,205 million) and primarily comprise
personnel expenses and material costs.

Optimization programs. Measures and programs with
implementation costs that materially impacted EBIT of the
segments are briefly described below.

212

E.13
Optimization programs

In millions of euros

Mercedes-Benz Cars

EBIT

Cash flow
Provisions for optimization programs1

Daimler Trucks

EBIT

Cash flow
Provisions for optimization programs1

Mercedes-Benz Vans

EBIT

Cash flow
Provisions for optimization programs1

Daimler Buses

EBIT

Cash flow
Provisions for optimization programs1

2014

2013

-81

-5

–

-165

-170

-17

-1

–

-14

-25

–

-116

-50

–

-39

1 Amounts of provisions for optimization programs as of December 31.

E.14
Income and expenses associated with optimization programs

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized development costs

Other operating expenses

Other operating income

2014

2013

-95

-33

-43

-13

-93

–

-71

-14

-50

-13

-10

-277

-155

In the course of the organizational focus on the divisions,
Daimler started a restructuring program for its sales organization
in Germany in 2014. Selected sales-and-service centers and
outlets are being combined into car and commercial vehicles
outlets in order to steadily increase the profitability of
Daimler’s own dealer activities in the highly competitive German
market. In addition, the restructuring program includes the
plan to sell selected operations of the Group’s current sales
network, primarily by the end of 2015. Due to their minor
impact on the Group’s profitability, liquidity and capital resources
and financial position, assets and liabilities held for sale are
not presented separately in the consolidated statement of finan-
cial position. At December 31, 2014, this disposal group’s
assets amounted to €300 million and its liabilities amounted
to €27 million. Measurement at fair value less cost to sell
led to an impairment of property, plant and equipment in an
amount of €93 million, which affected all automotive
segments, but mainly the Mercedes-Benz Cars segment.

For these restructuring measures, the Group anticipates further
negative effects on earnings of up to €0.5 billion in 2015
and 2016.

Moreover, in January 2013, Daimler Trucks announced work-
force adjustments as part of its goal of increasing its profitability
by stronger utilization of efficiencies. In the administrative
area in Brazil, a voluntary redundancy program was launched
in the first quarter of 2013 leading to a reduction of approxi-
mately 1,000 jobs. In April 2014, Daimler Trucks announced
the continuation of the workforce adjustments in Brazil with
the start of a voluntary program that led to a reduction of about
1,500 jobs in 2014, mostly in the production area. These
workforce adjustments also affected Daimler Buses to a small
extent.

In addition, in non-productive areas in Germany, a reduction
of approximately 800 jobs is planned for which a program
was started in May 2013, based on socially acceptable voluntary
measures, that was continued in 2014.

The Group anticipates further expenses of up to €50 million
in 2015 for these optimization programs at Daimler Trucks.

Finally, EBIT at Daimler Buses in 2013 included expenses
related to the optimization measures started in Western
Europe and North America in 2012. This optimization program
was successfully completed by the end of 2013.

Table  E.13 shows the effects of the optimization programs
on the key figures of the segments.

In addition to the impairments of property, plant and equipment
mentioned above, the expenses listed in table  E.13 primarily
relate to personnel measures and are included in the line
items within the consolidated statement of income as shown
in table  E.14.

Cash effects resulting from the optimization programs
are mainly expected until the end of 2017.

213

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Personnel expenses and average number of employees.
Personnel expenses included in the consolidated statement
of income amounted to €19,607 million in 2014 (2013: €18,753
million). The average numbers of people employed are shown
in table  E.15.

6. Other operating income and expense

The composition of other operating income is shown
in table  E.16.

Due to the organizational focus of the divisions on their
customers and markets, the numbers of employees previously
reported under sales and marketing are included in the
respective divisions in 2014. This does not apply, however,
to the Group’s own sales-and-service centers in Germany
and the logistics center in Germersheim, whose employees are
included under group functions and services as of 2014.
The employees previously shown under Other are also included
herein.

Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.

Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.

The composition of other operating expense is shown
in table  E.17.

Information on the total remuneration of the current and
former members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.

Further information on the impairment of property, plant and
equipment is provided in Note 5.

Other miscellaneous expense includes losses from disposals
of current assets, changes in other provisions (partially in
connection with legal proceedings) and additional miscellaneous
items. The line item includes an addition of €600 million to the
provision for EU Commission antitrust proceedings concerning
European commercial vehicle manufacturers.

7. Other financial income/expense, net

Table  E.18 shows the components of other financial
income/expense, net.

In 2014, miscellaneous other financial income/expense,
net includes income from the disposal of the 50% equity interest
in RRPSH of €1,006 million (2013: €0 million) as well as
income from the disposal of the Tesla shares of €88 million
(2013: €0 million). It also includes expenses of €118 million
(2013: €60 million) from the measurement of the RRPSH put
option and of €212 million (2013: €23 million) from hedging
the Tesla share price. In 2013, a loss of €140 million on the sale
of the remaining EADS shares is disclosed.

8. Interest income and interest expense

Table  E.19 shows the components of interest income
and interest expense.

E.15
Average number of employees

Mercedes-Benz Cars

Daimler Trucks

Mercedes-Benz Vans

Daimler Buses

Daimler Financial Services

Group functions and services

Sales and marketing

Other

E.16
Other operating income

In millions of euros

2014

2013

128,883

83,343

16,147

16,419

8,594

26,471

–

97,003

80,186

15,073

16,557

7,937

–

52,151

6,477

279,857

275,384

2014

2013

Income from costs recharged to third parties

1,039

Government grants and subsidies

Gains on sales of property, plant and equipment

Rental income, not relating to sales financing

Reimbursements under insurance policies

Other miscellaneous income

487

1,759

840

486

1,530

E.17
Other operating expense

In millions of euros

Losses on sales of property, plant and equipment

Impairment on property, plant and equipment

Other miscellaneous expenses

2014

2013

-120

-93

-947

-1,160

-88

–

-311

-399

214

9. Income taxes

Profit before income taxes is comprised as shown
in table  E.20.

E.18
Other financial income/expense, net

In millions of euros

Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in
those companies are held by German companies.

Expense from compounding of provisions and effects
of changes in discount rates1

Miscellaneous other financial income/expense, net

2014

2013

-353

811

458

-95

-254

-349

Table  E.21 shows the components of income taxes.

The current tax expense includes tax benefits at German
and foreign companies of €53 million (2013: €1,038 million)
recognized for prior periods.

The deferred tax expense is comprised of the components
shown in table  E.22.

For German companies, in 2014 and 2013, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year’s federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%. For non-German com-
panies, the deferred taxes at period-end were calculated using
the tax rates of the respective countries.

Table  E.23 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.

In 2014 and 2013, 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.

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, the line item includes tax-free gains realized on
the sale of RRPSH in 2014 and on the sale and remeasurement
of EADS shares in 2013 as well as non-deductible expenses
in connection with the EU commission’s ongoing antitrust pro-
ceedings concerning European commercial vehicle manu-
facturers in 2014. Furthermore, in 2013, the line item also
includes tax benefits relating to tax assessments of prior
years. The tax benefits relating to tax assessments of prior
years consist of the current tax benefits recognized for
prior periods as well as partly offsetting deferred tax expenses
recognized for prior periods.

1 Excluding the expense from compounding provisions for pensions and

similar obligations.

E.19
Interest income and interest expense

In millions of euros

Interest income

Net interest income on the net assets of 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

E.20
Profit before income taxes

In millions of euros

German companies

Non-German companies

E.21
Components of income taxes

In millions of euros

Current taxes

German companies

Non-German companies

Deferred taxes

German companies

Non-German companies

E.22
Components of deferred tax expense

In millions of euros

2014

2013

142

145

-350

-365

-715

210

212

-355

-529

-884

2014

2013

2,960

7,213

5,630

4,509

10,173

10,139

2014

2013

-1,125

-1,395

242

-605

202

-1,007

-180

-434

-2,883

-1,419

2014

2013

Deferred taxes

due to temporary differences

due to tax loss carryforwards and tax credits

-363

-44

-319

-614

-710

215

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities.
In the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets and
liabilities are presented as shown in table  E.24.

In respect of each type of temporary difference and in respect
of each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table  E.25.

The development of deferred tax assets, net, is shown
in table  E.26.

Including the items recognized in other comprehensive
income/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown
in table  E.27.

In the consolidated statement of financial position, the valuation
allowances on deferred tax assets, which are mainly attribut-
able to foreign companies, decreased by €163 million compared
to December 31, 2013. On the one hand, this is a result of
the reversal of valuation allowances of €276 million recorded
in net profit. On the other hand, an increase of the valuation
allowance was recognized in equity, mainly due to currency
translation.

At December 31, 2014, the valuation allowance on deferred tax
assets relates, among other things, to corporate income
tax loss carryforwards (€484 million), tax loss carryforwards
in connection with capital losses (€10 million) and tax credits
(€11 million). €20 million of the deferred tax assets for corporate
income tax loss carryforwards adjusted by a valuation allow-
ance relates to tax loss carryforwards which expire at various
dates from 2018 through 2019, €152 million relates to tax
loss carryforwards which expire at various dates from 2020
through 2024, €49 million relates to tax loss carryforwards
which expire at various dates from 2025 through 2034 and
€263 million relates to tax loss carryforwards which can
be carried forward indefinitely. The deferred tax assets on loss
carryforwards connected with capital losses were partly
reduced by valuation allowances because the carryforward
periods of those losses are limited and can only be utilized
with future capital gains. The tax loss carryforwards connected
with capital losses expire at the end of 2016. Of the tax credit
carryforwards adjusted by a valuation allowance, €5 million expire
at various dates from 2015 through 2018 and €4 million expire
at various dates from 2020 through 2034; €2 million relates
to tax credits which can be carried forward indefinitely.

E.23
Reconciliation of expected income tax expense
to actual income tax expense

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

E.24
Deferred tax assets and liabilities

In millions of euros

Deferred tax assets

Deferred tax liabilities

Deferred tax assets, net

E.25
Split of tax assets and liabilities before offset

In millions of euros

Intangible assets

Property, plant and equipment

Equipment on operating leases

Inventories

Receivables from financial services

Other financial assets

Tax loss carryforwards and unused tax credits

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

Provisions for pensions and similar obligations

Other provisions

Other

Deferred tax liabilities, gross

Deferred tax assets, net

216

2014

2013

-3,034

-3,024

-91

-21

276

-44

-2,883

-51

-10

143

1,546

-77

-1,419

At December 31,
2013

2014

4,124

-1,070

3,054

1,829

-892

937

At December 31,
2013

2014

327

1,273

752

275

4,349

3,323

958

2,313

1,384

1,186

315

16,507

-918

15,589

-2,162

-73

-1,639

-6,053

-50

-736

-352

-189

-872

-177

-232

-12,535

3,054

367

1,131

603

275

3,406

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

-1,604

-159

-260

-11,850

937

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 2014 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
€466 million for those subsidiaries. Daimler believes it is more
likely than not that future taxable income will be sufficient
to allow utilization of the deferred tax assets. Daimler’s current
estimate of the amount of deferred tax assets that is considered
realizable may change in the future, necessitating higher or
lower valuation allowances.

The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group
did not recognize deferred tax liabilities on retained earnings
of non-German subsidiaries of €21,242 million (2013: €16,419
million). If earnings are paid out as dividends, an amount of 5%
would be taxed under German taxation rules and, if applicable,
with non-German withholding tax. Additionally, income tax conse-
quences may arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding company.
Normally, the distribution would lead to an additional income
tax expense. It is not practicable to estimate the amount of tax-
able temporary differences for these undistributed foreign
earnings.

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.

E.26
Change of deferred tax assets, net

In millions of euros

Deferred tax assets, net as of January 1

Deferred tax expense

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.

E.27
Tax expense in equity

In millions of euros

Income tax expense

Income tax expense/benefit
recorded in other reserves

2014

2013

937

-363

2,465

-614

-6

800

-338

1,682

3,054

-372

-198

937

2014

2013

-2,883

-1,419

2,476

-407

-772

-2,191

217

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Table  E.29 shows the line items of the consolidated
statement of income in which total amortization expense
for intangible assets is included.

At December 31, 2014, intangible assets include capitalized
borrowing costs on qualified assets according to IAS 23
in the amount of €58 million (2013: €60 million), which related
only to capitalized development costs. In 2014, borrowing
costs in the amount of €7 million (2013: €17 million) were capital-
ized; amortization amounted to €9 million (2013: €4 million).
The base for the calculation of borrowing costs was an average
cost of debt of 0.7% (2013: 0.9%).

10. Intangible assets

Intangible assets developed as shown in table  E.28.

At December 31, 2014, goodwill of €421 million (2013:
€392 million) relates to the Daimler Trucks segment
and of €192 million (2013: €188 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, 2014: €1,935
million; 2013: €1,913 million). In addition, other intangible
assets with a carrying amount at December 31, 2014 of €264
million (2013: €275 million) are not amortizable. Other non-
amortizable intangible assets are trademarks with indefinite
useful lives, which relate to the Daimler Trucks segment as
well as distribution rights of Mercedes-Benz Cars with indefinite
useful lives. The Group plans to continue to use these assets
unchanged.

E.28
Intangible assets

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2013

Additions due to business combinations

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013

Additions due to business combinations

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2014

Amortization/impairment

Balance at January 1, 2013

Additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013

Additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2014

Carrying amount at December 31, 2013

Carrying amount at December 31, 2014

1 Primarily changes from currency translation.
2 Including capitalized borrowing costs on development costs.

218

Development
costs
(internally
generated)2

Other intangible
assets
(acquired)

Goodwill
(acquired)

1,002

–

-61

941

–

1,017

273

–

-13

260

–

277

681

740

11,319

–

1,301

–

-678

-42

11,900

–

1,155

–

-912

12,153

4,159

1,138

–

-667

-40

4,590

1,221

–

-911

4,908

7,310

7,245

2,609

–

682

–

-123

-139

3,029

315

–

-231

3,251

1,613

242

–

-116

-107

1,632

286

–

-139

1,869

1,397

1,382

Total

14,930

–

1,983

–

-801

-242

15,870

1,470

–

-1,143

158

16,421

6,045

1,380

–

-783

-160

6,482

1,507

–

-1,050

115

7,054

9,388

9,367

E.29
Amortization expense for intangible assets
in the consolidated statement of income

In millions of euros

Cost of sales

Selling expenses

General administrative expenses

Research and non-capitalized development costs

2014

2013

1,344

1,319

1,507

1,380

E.30
Property, plant and equipment

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2013

Additions due to business acquisitions

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013

Additions due to business acquisitions

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2014

Depreciation/impairment

Balance at January 1, 2013

Additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013
Additions2

Reclassifications

Disposals
Other changes1

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

14,941

20,760

20,282

–

218

199

-76

-447

14,835

–

228

238

-158

253

15,396

7,968

258

–

-32

-150

8,044

420

–

-118

108

–

1,181

918

-945

-339

21,575

–

833

1,239

-930

362

23,079

14,237

1,070

–

-875

-207

14,225

1,210

108

-825

241

–

1,853

536

-700

-463

21,508

–

1,415

568

-1,066

461

22,886

15,438

1,664

–

-625

-335

16,142

1,861

-108

-970

352

2,260

–

1,833

-1,666

-27

-127

2,273

–

2,267

-2,036

-32

2,521

–

-1

Balance at December 31, 2014

8,454

14,959

17,277

Carrying amount at December 31, 2013

Carrying amount at December 31, 2014

6,791

6,942

7,350

8,120

5,366

5,609

2,272

2,511

1 Primarily changes from currency translation.
2 Includes impairments of property, plant and equipment of €93 million in connection with the planned disposal of selected sites

of the Group’s own sales network.

Total

58,243

–

5,085

-13

-1,748

-1,376

60,191

–

4,743

-2,186

1,125

63,882

37,644

2,992

–

-1,532

-692

38,412

3,501

–

-1,913

700

40,700

21,779

23,182

219

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

E.31
Equipment on operating leases

In millions of euros

Acquisition or manufacturing costs

Balance at January 1, 2013

Additions due to business combinations

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013

Additions due to business combinations

Other additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2014

Depreciation/impairment

Balance at January 1, 2013

Additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2013

Additions

Reclassifications

Disposals
Other changes1

Balance at December 31, 2014

Carrying amount at December 31, 2013

Carrying amount at December 31, 2014

1 Primarily changes from currency translation.

11. Property, plant and equipment

Property, plant and equipment developed as shown
in table  E.30.

In 2014, government grants of €47 million (2013: €34 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 €238 million
(2013: €262 million). In 2014, additions to and depreciation
expense on assets under finance lease arrangements
amounted to €19 million (2013: €17 million) and €40 million
(2013: €67 million), respectively.

12. Equipment on operating leases

The development of equipment on operating leases is shown
in table  E.31.

At December 31, 2014, equipment on operating leases with
a carrying amount of €4,367 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 (2013: €5,084 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  E.32.

32,345

–

15,953

-12,458

-975

34,878

–

18,052

-9

-14,479

2,486

40,928

6,287

4,376

–

-3,733

-212

6,718

5,049

–

-4,341

452

7,878

28,160

33,050

E.32
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,
2013

2014

5,742

5,990

11,780

4,877

4,692

112

9,681

220

13. Equity-method investments

Table  E.33 shows the carrying amounts and profits/losses
from equity-method investments.

Table  E.34 presents key figures on interests in associated
companies accounted for using the equity method in the
Group’s consolidated financial statements.

E.33
Summarized carrying amounts and profits/losses from equity-method investments

Associated
companies

Joint
ventures

Joint
operations

Subsidiaries

Total

In millions of euros

At December 31, 2014
Equity investment1
Equity result1

At December 31, 2013
Equity investment1
Equity result1

1 Including investor-level adjustments.

1,795

864

3,029

3,469

448

358

-130

2,294

897

3,432

3,345

E.34
Key figures on interests in associated companies accounted for using the equity method

EADS

RRPSH

BBAC

BAIC Motor

Kamaz

Others

Total

In millions of euros

At December 31, 2014

Equity interest (in %)
Stock market price1
Equity investment2
Equity result2

Dividends to Daimler

At December 31, 2013

Equity interest (in %)
Stock market price1
Equity investment2
Equity result2

Dividends to Daimler

1 Proportionate stock market prices.
2 Including investor-level adjustments.

–

3.397

–

50.0

–

1.494

49.0

–

852

133

–

49.0

–

640

101

10.1

730

686

12.0

–

595

–

15.0

–32

15.0

121

155

–

186

716

–

145

–86

–

1,795

864

–

3.029

3.469

–

221

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Airbus Group N.V. (formerly EADS). The Group reported its
investment in and its proportionate share in the profits and
losses of the European Aeronautic Defence and Space Company
EADS N.V. (EADS), a global leader in aerospace, defense and
related services, in the reconciliation of total segments’ assets
to Group assets and total segments’ EBIT to Group EBIT,
respectively, in the segment reporting.

RRPSH/RRPS (formerly Tognum AG). Rolls-Royce Power
Systems Holding GmbH (RRPSH) and its subsidiary Rolls-Royce
Power Systems AG (RRPS) operate in development, manu-
facturing, distribution and service, in particular in the fields
of reciprocating engines, energy generation and other
engines and related components. RRPSH and its subsidiary
procure engines, other parts and services from Daimler AG.

On September 25, 2012, the dependent company RRPS,
formerly Tognum AG (Tognum) and the controlling company
RRPSH concluded a control and profit and loss transfer
agreement, resulting in Tognum subordinating the management
of its company under the control of RRPSH and committing
to transfer its entire profits to RRPSH. On November 15, 2012,
Tognum’s shareholders’ meeting approved the control and
profit and loss transfer agreement, which was then entered in
the commercial register on December 19, 2012.

On January 1, 2013, Rolls-Royce assumed, as contractually
agreed, control over RRPSH and RRPSH was included as
a subsidiary in the consolidated financial statements of Rolls-
Royce. Daimler continued 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
(a “squeeze-out“ under German takeover law) took effect
in March 2013 and RRPSH has held 100% of Tognum’s shares
since then.

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 German 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.

In 2011, Rolls-Royce granted Daimler the right to exercise
a put option on the shares it held in RRPSH at a price which
generally hedged Daimler’s investment in RRPSH. Starting
on January 1, 2013, the put option had a duration of six years.
On December 31, 2013, the value of this option was €118
million. The option was recognized as an asset to be measured
at fair value through profit or loss. The change in the fair value
of the option during 2013 resulted in an expense of €60 million,
which was recognized in other financial expense, net. The
carrying amount of this option, which was presented under
other financial assets, as well as changes in its fair value
were recognized in the segment reporting as corporate items
in the reconciliation to Group figures. Further details of the
put option are provided in Note 31.

At December 31, 2012 Daimler disclosed an equity interest
of approximately 14.9% in EADS. Because of the agreed
participation rights in the Supervisory Board, Daimler was able
to exercise significant influence on EADS. The 14.9% interest
in EADS was held by a subsidiary of Daimler which in 2007 issued
equity interests to investors in exchange for cash. As a result
of that transaction, the Group reported a non-controlling inter-
est in its consolidated statement of financial position repre-
senting the investor’s ownership (“Dedalus-investors”) of the
consolidated subsidiary that issued the equity interest. At
December 31, 2012, the amount reported as non-controlling
interest reflected the investor’s 50% share in the net assets
of that subsidiary.

On March 27, 2013, the Extraordinary Shareholders’ Meeting
of EADS approved the new management and shareholder
structure. Subsequently, the shareholders’ pact concluded
in 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 that loss and
of the transfer of the EADS shares to the Dedalus investors,
the EADS shares were remeasured through profit or loss at the
then higher stock-market price of EADS shares on April 2,
2013. Overall, this resulted in income of €3,356 million, which
was recognized in Group EBIT in 2013. Of that amount,
€1,669 million was allocable to Daimler shareholders and
€1,687 million was allocable to the Dedalus investors. The
income of €3,356 million was disclosed within equity-method
investments and was 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 was 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.

222

In March 2014, Daimler decided to sell its 50% equity interest
in the investment in RRPSH to its partner Rolls-Royce. For
that purpose, Daimler exercised the put option on its stake in
RRPSH that was agreed upon with Rolls-Royce in 2011. The
carrying amount of the equity interest of €1,415 million, which
was allocated to the Daimler Trucks segment, was reclassified
to assets held for sale. Measurement using the equity method
was ended. The proportionate share in the results of RRPSH
was allocated to the Daimler Trucks segment. In mid-April 2014,
the sale price of €2,433 million was agreed upon. The trans-
action was consummated on August 26, 2014, when antitrust
law and foreign-trade law approvals had been obtained; the
board members and management representatives from Daimler
in RRPSH companies resigned. The proceeds of the sale of
€1,006 million are classified as other financial result and, in the
segment reporting, are presented in the reconciliation of
total segments’ EBIT to Group EBIT.

BBAC. Beijing Benz Automotive Co., Ltd. (BBAC) was founded
by Daimler Greater China Ltd. (DGRC), Daimler AG und BAIC
Motor Corporation Ltd. (BAIC Motor) as a joint venture. BBAC
produces and distributes Mercedes-Benz passenger cars and
spare parts in China. In 2013, Daimler participated in a capital
increase and made a payment of approximately €160 million.
The Chinese partner BAIC Motor participated with the same
amount. On November 18, 2013, BAIC Motor increased its
stake in BBAC by 1% to 51% by way of a capital increase in which
Daimler did not participate. As a result of this transaction,
Daimler’s equity interest in BBAC decreased to 49% and the
Group classified the investment in BBAC as an associated
company; the company had been accounted for as a joint venture
until the end of the third quarter of 2013. The effect of the
change of status of BBAC was not material; the investment in
BBAC continues to be accounted for using the equity method.
The investment and the proportionate share in the results
of BBAC are allocated to the Mercedes-Benz Cars segment.

In addition, Daimler plans to contribute equity of €0.3 billion
according to its shareholding ratio to BBAC in 2015.
Additional funds needed by BBAC to finance its investment
will be directly raised in the capital markets by BBAC.

BAIC Motor. BAIC Motor Corporation Ltd. (BAIC Motor)
is the passenger car division of BAIC Group, one of the leading
automotive companies in China. Directly or via subsidiaries,
BAIC Motor is engaged in the business of researching, developing,
manufacturing, selling, marketing and servicing auto motive
vehicles and related parts and components and all related
services. On November 18, 2013, BAIC Motor issued new
shares to Daimler representing a 12% equity interest in BAIC
Motor for a purchase price of €627 million including trans-
action costs. Due to Daimler’s representation on the board of
directors of BAIC Motor and other contractual arrangements,
the Group classifies this investment as an investment in an asso-
ciate, to be accounted for using the equity-method; in the
segment reporting, the investment’s carrying amount and its
proportionate share of profit or loss are presented in the
reconciliation of total segment’s assets to Group assets and total
segments’ EBIT to Group EBIT, respectively. In December 2013
and in June 2014, the shareholders of BAIC Motor decided
to pay a dividend. The portions of €23 million and €10 million
attributable to Daimler decreased the investments carrying
amounts accordingly. The effects on the consolidated financial
statements resulting from allocating the purchase price to
the identifiable assets and liabilities are not material.

On December 19, 2014, BAIC Motor successfully placed its
equity securities for trading on the Hong Kong Stock Exchange,
also with the issue of new shares. As a result, Daimler’s
interest in BAIC Motor was diluted from 12.0% to 10.1%. Daimler
continues to classify this investment as an investment
in an associate, to be accounted for using the equity-method.
The effect of dilution was not material.

Kamaz. Daimler and the Russian truck manufacturer Kamaz
OAO (Kamaz) have signed a license agreement to produce Axor
and Atego driver’s cabs as well as delivery contracts for cabs,
engines and axles for trucks and buses of the Russian company
within the framework of their strategic partnership. Resulting
from its agreed representation on the board of directors of Kamaz
and its significant contractual rights as a minority shareholder,
the Group can exercise significant influence on Kamaz. Therefore,
the Group accounts for its equity interest in Kamaz using
the equity method; the investment and the proportionate share
in the profit and loss of Kamaz are allocated to the Daimler
Trucks segment.

In 2010, the Group and the European Bank for Reconstruction
and Development (EBRD) agreed to increase their strategic
investment in Kamaz. Daimler increased its equity interest
in Kamaz to 15%. Of that interest, 4% was legally held by EBRD,
but Daimler was deemed to be the economic owner of those
shares due to the equity-method measurement. In October
2014, Daimler agreed with EBRD to take over the remaining 4%
interest. With this step, Daimler has raised its investment
in Kamaz to 15% also in legal terms.

In 2014, the Group recognized an impairment loss of €30 million
with respect to its investment in Kamaz. The loss is included
in the line item profit/loss on equity-method investments, net.

223

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Table  E.35 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group’s consolidated financial statements

E.35
Summarized IFRS financial information on significant associated companies
accounted for using the equity method

In millions of euros

Information on the statement of income

Revenue

Profit/loss from continuing operations after taxes

Profit/loss from discontinued operations after taxes

Other comprehensive income/loss

Total comprehensive income

Information on the statement of financial position and
reconciliation to equity-method carrying amounts

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Equity (including non-controlling interest)

Equity (excluding non-controlling interests)
attributable to the Group

Unrealized profit (-)/loss (+) on sales to/purchases from

Goodwill

Other

Carrying amount of equity-method investment

1 BBAC:

2014

5,767

310

–

310

3,314

2,648

584

3,484

1,894

928

-76

–

852

BBAC1
2013

BAIC Motor2
2013

2014

Kamaz3
2013

4,490

192

–

192

2,048

740

214

1,168

1,406

689

-49

–

640

5,211

384

–

384

10,127

4,314

1,784

6,586

6,071

594

–

686

1,667

359

–

359

8,268

4,001

2,539

4,405

5,325

533

–

-15

595

2,124

2,620

–

-5

595

685

210

476

594

–

-22

–

100

971

1,016

289

673

1,025

150

–

-1

155

Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.

2 BAIC Motor:

Figures for the statement of income relate for the year 2014 to the period of January 1 to September 30
(for the year 2013 to the period of January 1 to December 31).
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate for the year 2014 to the balance sheet date
September 30 (for the year 2013 to the balance sheet date December 31).
Figures for BAIC Motor are based on local GAAP.

3 Kamaz:

Figures for the statement of income relate to the period from October 1 to September 30.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date September 30.
In order to consolidate the company without a time lag, adjustments are made as of December 31, which are included in line item Other.

224

Other minor equity-method investments. The Group’s
investment in Tesla Motors, Inc. (Tesla) was included in other
minor equity-method investments in associated companies.
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 interest in Tesla amounted to 4% at December 31, 2013;
the fair value and carrying amount of the investment were
€531 million and €13 million at that time. Due to its represen-
tation on the board of directors, participation in decision-
making processes and jointly conducted projects, the Group
was able to exercise significant influence on Tesla. Therefore,
the Group accounted for its equity interest in Tesla using the
equity method. Since the annual shareholders’ meeting of
Tesla on June 3, 2014, no representative of Daimler has been
a member of the Board of Directors. Therefore, Daimler’s
significant influence on Tesla ended on the day of the annual
shareholders’ meeting. After that, the equity interest was
recognized until it was sold as a financial asset available for sale
at fair value based on the stock-market price. The difference
between the first-time fair value measurement on June 3, 2014
using the stock-market price and the carrying amount measured
by applying the equity method resulted in a non-cash gain of
€718 million affecting Group EBIT in the second quarter of 2014.
The gain was presented under equity-method investments.
On December 31, 2013 the carrying amount was assigned to the
Mercedes-Benz Cars segment. The investment was sold in
the fourth quarter of 2014. The gain on the remeasurement and
sale of the Tesla shares is presented in the segment reporting
in the reconciliation of total segments’ EBIT to Group EBIT. Further
information is provided in Note 33.

In addition, the equity-method profits and losses of other minor
investments mainly contain startup losses at several com-
panies in the area of alternative drive systems (2014: €34 million;
2013: €205 million), which are allocated to the Mercedes-Benz
Cars segment. Impairments of investments of €30 million
(2013: €174 million) are included in those amounts.

In 2012, an impairment loss was recognized on the investment
in the joint venture Fujian Benz Automotive Co. Ltd. (FBAC);
in the second quarter of 2014, the impairment was reversed
based on improved profit expectations, leading to a gain
of €61 million. FBAC received a capital increase of €24 million
in the third quarter of 2014. The investment and the propor-
tionate share in the profits and losses of FBAC are allocated
to the Mercedes-Benz Vans segment.

In the first quarter of 2014, a capital increase of €34 million took
place at the joint venture Shenzen BYD Daimler New Tech-
nology Co. Ltd. (SBDNT). On April 4, 2014, Daimler provided
a joint and separate liability guarantee to external banks
which agreed to provide a syndicated loan facility to SBDNT.
The guarantee provided by Daimler amounts to maximum
of CNY 750 million (approximately €100 million) and equates
to the Group’s share in the loan granted to SBDNT based
on its 50% equity interest in SBDNT. The carrying amount of the
investment in SBDNT is allocated to the Mercedes-Benz
Cars segment.

In March 2014, Daimler acquired the 50.1% of the shares
in Li-Tec Battery GmbH (Li-Tec), which had previously
been held by Evonik Degussa GmbH (Evonik), and therefore
became the sole owner of the company. The effects
on the consolidated financial statements are not material.

Daimler does not recognize losses in relation with equity-
method investments of €60 million (2013: €0 million)
as Daimler is not obliged to compensate these losses.

Table  E.36 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.

Further information on equity-method investments is provided
in Notes 3 and 36.

E.36
Summarized aggregated financial information on minor
equity-method investments

In millions of euros

Summarized aggregated financial information (pro rata)

Profit/loss from continuing operations after taxes

Profit/loss from discontinued operations after taxes

Other comprehensive income/loss

Total comprehensive income/loss

Associated companies
2013

2014

Joint ventures
2013

2014

–

-9

–

-2

-11

-85

–

-84

-25

–

-25

225

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements14. Receivables from financial services

Table  E.37 shows the components of receivables from
financial services.

Types of receivables. Receivables from sales financing with
customers include receivables from credit financing for
customers who purchased their vehicle either from a dealer
or directly from Daimler.

Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group’s
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded
in by dealers’ customer or real estate such as dealers’ show-
rooms.

Current Non-current

At December 31, 2014
Total

Current Non-current

At December 31, 2013
Total

10,307

11,786

5,084

27,177

-408

26,769

22,852

2,203

10,368

35,423

-513

34,910

33,159

13,989

15,452

62,600

-921

61,679

9,065

9,781

4,545

23,391

-390

23,001

17,599

1,723

8,928

28,250

-481

27,769

26,664

11,504

13,473

51,641

-871

50,770

At December 31, 2014

< 1 year

1 year up
to 5 years

> 5 years

Total

< 1 year

1 year up
to 5 years

At December 31, 2013

> 5 years

Total

5,145

483

5,628

-544

5,084

-159

4,925

9,104

1,744

10,848

-995

9,853

-208

9,645

571

617

-102

515

-5

510

14,820

2,273

17,093

-1,641

15,452

-372

15,080

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

E.37
Receivables from financial services

In millions of euros

Sales financing with customers

Sales financing with dealers

Finance-lease contracts

Gross carrying amount

Allowances for doubtful accounts

Carrying amount, net

E.38
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

226

Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.

At December 31, 2014, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €365 million (December 31, 2013: €455 million).

Maturities of the finance lease contracts are shown
in table  E.38.

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.

E.39
Changes in the allowance account for receivables from financial services

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

2014

2013

871

421

-208

-166

921

938

405

-273

-137

-62

871

E.40
Credit risks included in receivables from financial services

At December 31,
2013

2014

58,142

47,264

1,517

330

116

2,080

1,457

1,479

266

173

2,015

1,491

61,679

50,770

Allowances. Changes in the allowance account for receivables
from financial services are shown in table  E.39.

In millions of euros

The total expense from the impairment of receivables
from financial services amounted to €433 million in 2014
(2013: €416 million).

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

Credit risks. Table  E.40 provides an overview of credit
risks included in receivables from financial services.

Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.

Further information on financial risks and nature of risks
is provided in Note 32.

At December 31, 2014, receivables from financial services with
a carrying amount of €3,068 million (2013: €3,007 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 a non-
automotive asset that was subject to finance lease contracts
in 2014. This resulted in a cash inflow of €69 million (2013:
€48 million). The pre-tax income from this transaction in 2014
amounted to €45 million (2013: €11 million), and was allocated
to the EBIT of the Daimler Financial Services segment.

227

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

15. Marketable debt securities

16. Other financial assets

The marketable debt securities with a carrying amount of
€6,634 million (2013: €7,066 million) are part of the Group’s
liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those
securities are presented as current assets.

At December 31, 2014, a pool of marketable debt securities
with a carrying amount of €204 million (2013: €204 million)
was pledged as collateral, almost exclusively for liabilities
to financial institutions.

Further information on marketable debt securities is provided
in Note 31.

The line item other financial assets presented in the
consolidated statement of financial position is comprised
of the classes shown in table  E.41.

In 2014, equity instruments measured at cost with a carrying
amount of €1 million were sold (2013: €37 million). The gains
realized on the sales were €5 million in 2014 (2013: €15 million).
As of December 31, 2014, the Group did not generally intend
to dispose of any of the reported equity instruments.

Financial assets recognized at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.

At December 31, 2014, receivables with a carrying amount
of €302 million (2013: €198 million) were pledged as collateral
for liabilities from ABS transactions (see also Note 24).

As of December 31, 2013, other receivables and financial
assets included a loan (including accumulated interest)
to Chrysler LLC of US $2.2 billion, which was fully impaired.
It was derecognized in 2014.

Further information on other financial assets is provided
in Note 31.

E.41
Other financial assets

In millions of euros

Current

At December 31, 2014
Total

Non-current

Current

At December 31, 2013
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

–

574

1,737

2,353

2,269

1,647

622

722

588

3,634

2,269

1,647

622

1,296

2,325

5,987

–

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

228

17. Other assets

Non-financial other assets are comprised as shown
in table  E.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  E.43.

The amount of write-down of inventories to net realizable
value recognized as expense in cost of sales was €391 million
in 2014 (2013: €311 million). Inventories that are expected
to be turned over after more than twelve months amounted
to €977 million at December 31, 2014 (2013: €798 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 €609 million at December 31, 2014 (2013: €627 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 €91 million at December 31, 2014 (2013: €60 million). Those
assets are utilized in the context of the normal business cycle.

E.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, 2014
Total

Non-current

Current

At December 31, 2013
Total

Non-current

517

2,190

–

175

294

422

3,598

146

130

136

555

557

2,212

321

424

558

650

1,686

–

138

296

347

4,153

3,117

108

104

147

116

531

685

1,707

108

242

443

463

3,648

E.43
Inventories

In millions of euros

At December 31,
2013

2014

Raw materials and manufacturing supplies

Work in progress

2,409

2,936

2,011

2,275

Finished goods, parts and products held for resale

15,412

13,028

Advance payments to suppliers

107

20,864

17,349

229

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

19. Trade receivables

20. Equity

Trade receivables are comprised as shown in table  E.44.

At December 31, 2014, €78 million of the trade receivables
mature after more than one year (2013: €116 million).

Allowances. Table  E.45 shows changes in the allowance
account for trade receivables.

The total expense from the impairment of trade receivables
amounted to €130 million in 2014 (2013: €105 million).

Credit risks. Table  E.46 provides 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.

E.44
Trade receivables

In millions of euros

Gross carrying amount

Allowances for doubtful accounts

Net carrying amount

At December 31,
2013

2014

9,046

-412

8,634

8,200

-397

7,803

E.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

2014

2013

397

-66

412

402

-59

-12

397

See also the consolidated statement of changes in equity
 E.05.

Share capital. 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 applicable, with the exception of any
new shares potentially not entitled to dividends, to an equal
portion of the profits as defined by the dividend distribution
decided upon at the Annual Shareholders’ Meeting. Each share
represents a proportionate amount of approximately €2.87
of the share capital. See  E.47 for the development of shares
issued or outstanding.

Approved capital. The Annual Shareholders’ Meeting held on
April 9, 2014, once again authorized the Board of Management,
with the consent of the Supervisory Board, to increase the
share capital of Daimler AG in the period until April 8, 2019 by
a total of €1.0 billion in one lump sum or by separate partial
amounts at different times by issuing new, registered no-par-value
shares in exchange for cash and/or non-cash contributions
(Approved Capital 2014). The new shares are generally to be
offered to the shareholders for subscription (also by way
of indirect subscription pursuant to Section 186 Subsection 5
Sentence 1 of the German Stock Corporation Act (AktG)).
Among other things, the Board of Management was authorized
with the consent of the Supervisory Board to exclude
shareholders’ subscription rights under certain conditions
and within defined limits.

Approved Capital 2014 replaces Approved Capital 2009,
which was limited until April 7, 2014 and had not been utilized.
Approved Capital 2014 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.

230

Stock option plan. The Stock option plan initiated in 2004
expired on March 31, 2014. Of the 0.2 million options granting
subscription rights to new shares representing €0.6 million
of the share capital remaining from this plan on December 31,
2013, 0.1 million options granting subscription rights to
new shares representing €0.2 million of the share capital were
exercised in 2014. The remaining options that had not been
exercised by March 31, 2014 expired on that date.

Treasury shares. By resolution of the Annual Shareholders’
Meeting held 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 companies,
or for disposal in other ways than through the stock exchange
or by offering them to all shareholders. This authorization
was not exercised in the reporting period.

As was the case at December 31, 2013, no treasury shares
are held by Daimler AG at December 31, 2014.

Employee share purchase plan. In 2014, 0.4 million Daimler
shares representing €1.1 million or 0.04% of the share capital
were purchased for a price of €26 million and reissued
to employees (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).

Capital reserves. Capital reserves primarily comprise premiums
arising on the issue of shares as well as expenses relating
to the exercise of stock option plans and the issue of employee
shares, effects from changes in ownership interests in con-
solidated entities and related transaction costs.

Retained earnings. Retained earnings comprise the
accumulated net profits and losses of all companies included
in Daimler’s consolidated financial statements, less any
profits distributed. In addition, the effects of remeasuring
defined benefit plans as well as the related deferred taxes
are presented within retained earnings.

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
company only) in accordance with the German Commercial
Code (HGB). For the year ended December 31, 2014, the
Daimler management will propose to the shareholders at the
Annual Shareholders’ Meeting to pay out €2,621 million
of the distributable profit of Daimler AG as a dividend to the
shareholders, equivalent to €2.45 per no-par-value share
entitled to a dividend (2013: €2,407 million and €2.25
per no-par-value share entitled to a dividend respectively).

Other reserves. Other reserves comprise accumulated
unrealized gains/losses from currency translation of the financial
statements of the consolidated foreign companies and accu-
mulated unrealized gains/losses on the measurement of financial
assets available-for-sale, derivative financial instruments and
equity-method investments.

Table  E.02 shows the details of changes in other reserves
in other comprehensive income/loss.

In the line item unrealized gains/losses from equity-method
investments, the amounts for 2014 include unrealized gains
from currency translation of €11 million before taxes and after
taxes (amounts attributable to shareholders of Daimler AG
only). In 2013, the line item includes the following components
(amounts attributable to shareholders of Daimler AG only):
unrealized losses from currency translation of €80 million before
and after taxes, unrealized losses from financial assets avail-
able-for-sale of €41 million before taxes and €38 million after
taxes, and unrealized gains from derivative financial instru-
ments of €153 million before taxes and €107 million after taxes.

E.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

E.47
Development of shares issued

In millions of shares

At December 31,
2013

2014

5,270

5,536

969

151

1,258

2,106

8,634

554

113

803

1,464

7,803

2014

2013

Shares outstanding/issued on January 1

1,070

1,068

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

231

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

21. Share-based payment

As of December 31, 2014, the Group has the 2011–2014
Performance Phantom Share Plans (PPSP) outstanding. The
PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined con-
ditions are met. PPSP 2010 was paid out as planned in the first
quarter of 2014.

Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period
of one year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual bonus,
which depends on this development, is measured by using
the intrinsic value at the reporting date.

In 2014, rights from Stock Option Plan (SOP) 2004 also existed.
The exercisable stock options granted in 2004 were equity-
settled share-based payment instruments and were measured
at fair value at the date of grant. The unexercised rights
from Stock Option Plan 2004 expired on March 31, 2014.

E.48
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

2014

Expense
2013

Provision
at December 31,
2013

2014

-173

–

-6

-179

-250

-2

-7

-259

363

–

375

344

–

355

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 balance
sheet date. The options were exercised completely in 2013.

The pre-tax effects of share-based payment arrangements
for the executive managers of the Group and the members
of the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table  E.48.

Table  E.49 shows expenses in the consolidated statement
of income resulting from the rights of current members
of the Board of Management.

The details shown in table  E.49 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 2014 can be found in the
Remuneration Report. E Management Report from page 118

Performance Phantom Share Plans. In 2014, the Group
adopted a Performance Phantom Share Plan (PPSP),
similar to those used from 2005 to 2013, under which eligible
employees are granted phantom shares entitling them to
receive cash payments after four years. During the four-year
period between the allocation of the preliminary phantom
shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The amount of cash paid to eligible employees at the end
of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler’s ordinary
shares (calculated as an average price over a specified period
at the end of the four–year plan period). The vesting period
is therefore four years. For the plans granted as of 2009,
the quoted price of Daimler’s ordinary shares to be used for
the payout is limited to 2.5 times the Daimler share price
at the date of grant. For the plans granted as of the beginning
of 2012, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares.
The limitation of the payout for the members of the Board
of Management also includes the dividend equivalents
paid out after January 1, 2014.

232

Stock Option Plans. In April 2000, the Annual Shareholders’
Meeting approved the Daimler Stock Option Plan (SOP), which
granted stock options for the purchase of Daimler ordinary
shares to eligible employees. Options granted under the SOP
were exercisable at a reference price per Daimler ordinary
share, which was determined in advance, plus a 20% premium.
The options became exercisable in equal installments at
the earliest on the second and third anniversaries of the date
of grant. All unexercised options expired ten years after
the date of grant. If the market price per Daimler ordinary share
on the date of exercise was at least 20% higher than the
reference price, the holder was entitled to receive a cash pay-
ment equal to the original exercise premium of 20%. No new
stock options were granted after 2004. The last SOP plan 2004
expired on March 31, 2014. All unexercised rights expired.

In the event of exercise, the Group generally issued ordinary
shares.

Determination of the number of phantom shares that vest
of the existing PPSP 2011 to 2013 is based on return
on net assets derived from internal targets and return on sales
compared with benchmarks oriented towards competitors.

The number of phantom shares that vest of the PPSP granted
in 2014 will be based on the relative share performance, which
measures the development of the price of a share price index
based on a competitor group including Daimler, and the return
on sales (RoS) compared with benchmarks oriented towards
competitors. Special rules apply for the members of the Board
of Management: Daimler’s RoS must be not equal to but
higher than that of the competitors in order to achieve the same
target achievement as the other plan participants.

The Group recognizes a provision for awarding the PPSP in
the consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler’s ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the
individual years are determined on the price of Daimler ordinary
shares and the estimated target achievement.

E.49
Expenses in the consolidated statement of income resulting from
share-based payments to current members of the Board of Management

In millions of euros

Dr. Dieter Zetsche
2013

2014

Dr. Wolfgang Bernhard Dr. Christine Hohmann-Dennhardt
2013
2014

2014

2013

Wilfried Porth
2013

2014

PPSP

SOP

Medium-term component
of the annual bonus

-6.1

–

-1.8

-10.9

-1.6

-1.9

-2.5

–

-0.7

-4.2

–

-0.6

-2.3

–

-0.7

-2.5

–

-0.6

-2.5

–

-0.7

-4.4

–

-0.7

In millions of euros

Andreas Renschler1
2013

2014

Hubertus Troska
2013

2014

Bodo Uebber
2013

2014

Prof. Dr. Thomas Weber
2013

2014

PPSP

SOP

Medium-term component
of the annual bonus

-0.2

–

-0.1

-4.9

–

-0.7

-1.6

–

-0.7

-2.2

–

-0.6

-2.9

–

-0.8

-5.2

–

-0.8

-2.6

–

-0.7

-4.6

-0.1

-0.7

1 Stepped down from the Board of Management as of January 28, 2014. Amounts are included pro rata for 2014.

233

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Table  E.50 shows the development of the stock options
issued.

22. Pensions and similar obligations

The weighted average share price of Daimler ordinary shares
during the exercise period was €66.40 (2013: €48.83).

The stock options issued to active members of the Board of
Management were exercised completely in 2013. The members
of the Board of Management Dr. Dieter Zetsche and Prof. Dr.
Thomas Weber each exercised 0.1 million options. The depart-
ing board member Andreas Renschler, who stepped down
from the Board of Management as of January 28, 2014, exercised
fewer than 0.1 million stock options in 2013. The average
exercise price was €43.57 per share. The members of the
Board of Management Dr. Wolfgang Bernhard, Dr. Christine
Hohmann-Dennhardt, Wilfried Porth, Hubertus Troska
and Bodo Uebber had no outstanding or exercisable option
rights in the year 2013.

Table  E.51 shows the composition of provisions for pension
benefit plans and similar obligations.

At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution
pension obligations, specific to the various countries.
In addition, healthcare benefit obligations are recognized
outside Germany.

Defined benefit pension plans

Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension
plans provided by Daimler generally vary according to the
economic, tax and legal circumstances of the country
concerned. Most of the defined benefit pension plans also
provide benefits in the case of invalidity and death.

The Group’s main German and non-German pension plans
are described below.

E.50
Development of the stock options issued

Balance at beginning of year

Exercised

Disposals/Forfeited

Outstanding at end of year

Exercisable at end of year

Number of
stock options
in millions

2014
Average
exercise price in
euros per share

Number of
stock options
in millions

2013
Average
exercise price in
euros per share

0.2

-0.1

–

43.57

–

2.7

-2.2

-0.3

0.2

42.24

42.62

37.33

43.57

234

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,
to which the company makes annual contributions. The amount
of the contributions for employees paid according to wage-
tariff agreements depends on the tariff classification in the
respective year, and for executives it depends on their respective
income. For the commitments to retirement benefits made
until 2011, the contributions continue to be converted into capital
components and credited to the individual pension account
with the application of fixed factors related to each employee’s
age. The conversion factors include a fixed value increase.
The pension plans were newly structured for new entrants
in 2011 to reduce the risks associated with defined benefit plans.
New entrants now benefit from value increases of the contri-
butions through an investment fund with a special lifecycle model.
The company guarantees at a minimum the value of the con-
tributions paid in. Pension payments are made either as a life
annuity, 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.

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 obli-
gations result at the Daimler Group in particular from changes
in financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.

The fair value of plan assets is predominantly determined by the
situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and qualitative
analyses, and the continual monitoring of performance and
risk help to reduce associated investment risk. The Group regu-
larly makes additional contributions to the plan assets in order
to cover future obligations from defined benefit pension plans.
In addition, the Group made an extraordinary contribution
of €2.5 billion in 2014 to sustainably strengthen the German
plan assets.

As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.

As a general principle, it is the Group’s objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.

Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-term
outsourced funds. Contractual trust arrangements (CTA) exist
between Daimler AG as well as some subsidiaries in Germany and
the Daimler Pension Trust e.V. The Daimler Pension Trust e.V.
acts as a collateral trust fund.

E.51
Compositions of provisions for pension benefit plans
and similar obligations

In Germany, there are no statutory or regulatory minimum
funding requirements.

In millions of euros

Provision for pension benefits

Provision for other post-employment benefits

Non-German plans. Significant plans exist primarily in the
United States and Japan. They comprise plans relating
to final salaries as well as plans relating to salary based com-
ponents. Most of the obligations outside Germany from
defined benefit pension plans are funded by assets outplaced
into long-term investment funds.

Risks from defined benefit pension plans. 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 retire-
ment benefits.

December 31,
2013

2014

11,619

1,187

12,806

8,624

1,245

9,869

235

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Reconciliation of the net obligation from defined benefit
pension plans. The development of the relevant factors is
shown in table  E.52.

Composition of plan assets. Plan assets and income from
plan assets are used solely to pay pension benefits and
to administer the plans. The composition of the Group’s pension
plan assets is shown in table  E.53.

E.52
Present value of defined benefit pension obligations and fair value of plan assets

German
plans

2014
Non-German
plans

Total

German
plans

2013
Non-German
plans

Total

23,230

20,310

2,920

23,943

20,698

3,245

527

822

168

5,867

-32

6,003

-841

307

437

679

5,629

-41

5,687

-697

143

238

316

-144

301

548

755

-14

-1,136

121

-1,029

–

-829

-214

453

635

-71

-892

121

-842

–

-691

120

-244

–

-187

–

-138

-219

30,127

26,496

3,631

23,230

20,310

2,920

14,668

12,588

2,080

14,207

12,143

2,064

533

761

1,294

3,111

-773

224

429

571

1,000

2,975

-650

-11,546

-10,523

–

104

190

294

136

-123

217

2,608

-1,023

464

262

726

537

-763

-96

381

199

580

448

-641

14,668

12,588

-8,562

-7,722

–

-11,619

-10,523

-1,096

-8,624

-7,722

146

-122

-102

2,080

-840

-902

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 gains (-)/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

Pension benefits paid

Currency exchange-rate changes and other changes

Funded status

thereof recognized in other assets

thereof recognized in provisions for pensions
and similar obligations

236

Fair value of plan assets at December 31

18,581

15,973

Market prices are available for equities and bonds due
to their listing in active markets. Most of the bonds
have investment grade ratings. They include government
bonds of very good creditworthiness.

The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. Several pension plans use dedicated liability driven
investment approaches to take the structure of pension obliga-
tions into account in the investment process.

E.53
Composition of pension plan assets

In millions of euros

Energy, commodities and utilities

Financials

Healthcare

Industrials

Consumer goods

Information technology and telecommunication services

Others

Equities

Government bonds in EUR

Government bonds in USD

Government bonds in other currencies

Government bonds

Corporate bonds in EUR

Corporate bonds in USD

Corporate bonds in other currencies

Corporate bonds

Securitized bonds

Bonds
Other exchange-traded instruments1

Total exchange-traded instruments
Alternative investments2

Real estate
Other non-exchange-traded instruments1

Cash and cash equivalents

Total non-exchange-traded instruments

Plan assets at December 31

thereof fair value of own transferable
financial instruments

thereof fair value of self-used plan assets

German
plans

2014
Non-German
plans

718

925

367

416

788

650

–

3,864

3,853

555

–

4,408

2,241

1,521

3,806

8,219

-5

12,078

567

410

-154

3,072

3,895

15,973

114

172

167

128

826

414

443

858

404

156

566

1,473

2,300

107

104

308

2,608

–

Total

832

1,097

461

503

955

778

4,690

3,854

969

443

5,266

2,247

1,925

200

4,372

9,692

-4

14,378

674

514

-123

3,138

4,203

18,581

1 Includes derivative financial instruments which could have a negative fair value at the balance sheet date.
2 Alternative investments mainly comprise private equity.

German
plans

2013
Non-German
plans

Total

839

995

387

479

865

636

4,289

4,084

936

329

5,349

886

829

233

1,948

1,066

8,363

737

861

322

408

732

538

–

3,598

4,078

628

–

4,706

885

574

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

255

191

447

1,147

1,842

238

2,080

–

237

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Pension cost. The components of pension cost included
in the consolidated statement of income are shown in table
 E.54.

Table  E.55 shows the line items within the consolidated
statement of income in which the net periodic pension cost
is included.

Measurement assumptions. The measurement date for the
Group’s defined benefit pension obligations and plan assets
is generally December 31. The measurement date for the Group’s
net periodic pension cost is generally January 1. The assump-
tions used to calculate the defined benefit obligations vary
according to the economic conditions of the countries in which
the pension plans are situated.

Calculation of the defined benefit obligation uses life expectancy
for the German plans is based on the 2005 G mortality tables
of K. Heubeck. For Non-German plans, comparable country-
specific calculation methods are used.

Table  E.56 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.

Discount rates for German and non-German pension plans
are determined annually as of December 31 on the basis
of high-quality corporate bonds with maturities and currencies
matching those of the pension payments.

Sensitivity analysis. An increase or decrease in the
main actuarial assumptions would affect the present value
of the defined benefit pension obligations as shown
in table  E.57.

The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed
due to correlation effects. With a change in the parameters,
the sensitivities shown cannot be used to derive a linear
development of the defined benefit obligation.

For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
was achieved.

Effect on future cash flows. Daimler currently plans to make
contributions of €0.7 billion to its pension plans for the
year 2015; the final amount is usually set in the fourth quarter
of a financial year. In addition, the Group expects to make
pension benefit payments of €0.9 billion in 2015.

The weighted average duration of the defined benefit
obligations is shown in table  E.58.

E.54
Pension cost

In millions of euros

Current service cost

Past service cost, curtailments and settlements

Net interest expense

Net interest income

German
plans

2014
Non-German
plans

-437

-19

-250

–

-706

-90

-3

-42

-132

Total

-527

-22

-292

-838

German
plans

2013
Non-German
plans

-453

–

-253

–

-706

-95

–

-40

-133

Total

-548

–

-293

-839

238

E.55
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

2014

2013

-318

-106

-51

-74

-292

-838

-313

-121

-43

-71

-293

-839

E.56
Significant factors for the calculation of pension benefit obligations

In percent

Discount rates
Expected increase in cost of living1

German plans
At December 31,
2013

2014

Non-German plans
At December 31,
2013

2014

1.9

1.8

3.4

1.8

3.9

–

4.5

–

1 For German plans, expected increases in cost of living may affect – depending on the design of the pension plan – the obligation

to the Group’s current employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.

E.57
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

+ 0.25%

- 0.25%

+ 0.10%

- 0.10%

+ 1 year

- 1 year

At December 31, 2014
Non-German
plans

German
plans

-1,080

1,140

110

-120

480

-500

-130

130

-10

Total

-1,210

1,270

120

-130

520

-540

At December 31, 2013
Non-German
plans

German
plans

-720

760

-90

350

-380

-80

100

-10

Total

-800

860

100

-100

360

-390

E.58
Weighted average duration of the defined
benefit obligations

in years

German plans

Non-German plans

2014

2013

239

E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements

Defined contribution pension plans

Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2014, the total cost from defined contri-
bution plans amounted to €1.4 billion (2013: €1.3 billion). Of
those payments, €1.3 billion (2013: €1.2 billion) was related to
governmental pension plans.

E.59
Key data for other post-employment benefits

In millions of euros

2014

2013

Present value of defined benefit obligations

1,193

1,258

Fair value of plan assets and
reimbursement rights

Funded status

Net periodic cost for other
post-employment benefits

-1,106

121

-1,137

-51

-92

Multi-employer plans. Daimler participates in some collectively
bargained defined benefit pension plans maintained by more
than one employer. The Group presents several of these plans
in its consolidated financial statements as defined contribution
plans because the information required to use defined benefit
accounting is not available in a timely manner or in sufficient
detail. The Group cannot exercise direct control over such
plans and the plan trustees have no legal obligation to share
information directly with participating employers. Higher
contributions by the Group to such a pension plan could be
required in particular when an underfunded status exceeds
a specific level. Exit from such a plan can lead to the companies
involved having to offset the potential future shortfall relating
to their share of the plan. Furthermore, the possibility exists
that Daimler can be liable for other participants’ obligations.
At December 31, 2014, the Group does not anticipate significant
costs from the existing collective plans of multiple employers;
no exit from any of these plans is intended.