Annual Report 2018
Key Figures
Daimler Group
€ amounts in millions
% change
2018
2017
18/17
Revenue
167,362
164,154 2
+2 1
Investment in property, plant and equipment
Research and development expenditure
Free cash flow of the industrial business
EBIT
Net profit
Earnings per share (in €)
Dividend per share (in €)
7,534
9,107
2,898
11,132
7,582
6.78
3.25
6,744
8,711
2,005
14,348 2
10,617 2
9.61 2
3.65
Employees (December 31)
298,683
289,321
1 Adjusted for the effects of currency translation, revenue increased by 4%.
2 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
+12
+5
+45
-22
-29
-29
-11
+3
Cover photo
The EQC (combined electricity consumption: 22.2 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures)1 will be the first
Mercedes-Benz model of the EQ brand on the road. With its seamless,
clear design and brand-typical color accents, it is the pioneer of avant-
garde electro-aesthetics. In terms of quality, safety and comfort, the
EQC is the Mercedes-Benz among electric vehicles. It convinces in the
sum of its characteristics, in particular with its impressive driving
dynamics and a range of up to 450 kilometers according to NEDC.1
1 Figures on electricity consumption and CO2 emissions are provisional
and were determined by an external technical service and are non-
binding. Figures for range are also provisional and non-binding. An EU
type approval and certificate of conformity with official figures are
not yet available. Deviations between the figures stated and the official
figures are possible.
Daimler’s Divisions >
Key Figures
Daimler Group
€ amounts in millions
% change
2018
2017
18/17
Revenue
167,362
164,154 2
+2 1
Investment in property, plant and equipment
Research and development expenditure
Free cash flow of the industrial business
EBIT
Net profit
Earnings per share (in €)
Dividend per share (in €)
7,534
9,107
2,898
11,132
7,582
6.78
3.25
6,744
8,711
2,005
14,348 2
10,617 2
9.61 2
3.65
Employees (December 31)
298,683
289,321
1 Adjusted for the effects of currency translation, revenue increased by 4%.
2 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
+12
+5
+45
-22
-29
-29
-11
+3
Cover photo
The EQC (combined electricity consumption: 22.2 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures)1 will be the first
Mercedes-Benz model of the EQ brand on the road. With its seamless,
clear design and brand-typical color accents, it is the pioneer of avant-
garde electro-aesthetics. In terms of quality, safety and comfort, the
EQC is the Mercedes-Benz among electric vehicles. It convinces in the
sum of its characteristics, in particular with its impressive driving
dynamics and a range of up to 450 kilometers according to NEDC.1
1 Figures on electricity consumption and CO2 emissions are provisional
and were determined by an external technical service and are non-
binding. Figures for range are also provisional and non-binding. An EU
type approval and certificate of conformity with official figures are
not yet available. Deviations between the figures stated and the official
figures are possible.
Daimler’s Divisions >
The Divisions and Brands
€ amounts in millions
Mercedes-Benz Cars
Revenue
EBIT
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
thereof capitalized
Unit sales
Employees (December 31)
Daimler Trucks
Revenue
EBIT
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
thereof capitalized
Unit sales
Employees (December 31)
Mercedes-Benz Vans
Revenue
EBIT
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
thereof capitalized
Unit sales
Employees (December 31)
Daimler Buses
Revenue
EBIT
Return on sales (in %)
Investment in property, plant and equipment
Research and development expenditure
thereof capitalized
Unit sales
Employees (December 31)
Daimler Financial Services
Revenue
EBIT
Return on equity (in %)
New business
Contract volume
Investment in property, plant and equipment
Employees (December 31)
2018
2017
2016
18/17
% change
93,103
7,216
7.8
5,684
6,962
2,269
94,3511
8,8431
9.41
4,843
6,642
2,388
2,382,791
145,436
2,373,527
142,666
89,284
8,112
9.1
4,147
5,671
2,008
2,197,956
139,947
38,273
2,753
7.2
1,105
1,295
40
517,335
82,953
13,626
312
2.3
468
666
176
421,401
26,210
4,529
265
5.9
144
199
41
30,888
18,770
26,269
1,384
11.1
71,927
154,072
64
14,070
35,7551
2,3831
6.7
1,028
1,322
45
470,705
79,483
13,1611
1,1471
8.71
710
565
310
401,025
25,255
4,5241
2811
6.21
94
194
30
28,676
18,292
24,5301, 2
1,970
17.7
70,721
139,907
43
13,012
33,187
1,948
5.9
1,243
1,265
57
415,108
78,642
12,835
1,170
9.1
373
442
238
359,096
24,029
4,176
249
6.0
97
202
11
26,226
17,899
20,660
1,739
17.4
61,810
132,565
37
12,062
-1
-18
.
+17
+5
-5
+0
+2
+7
+16
.
+7
-2
-11
+10
+4
+4
-73
.
-34
+18
-43
+5
+4
+0
-6
.
+53
+3
+37
+8
+3
+7
-30
.
+2
+10
+49
+8
1 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
2 At the Daimler Financial Services segment, the Group’s internal revenue and cost of sales have been adjusted by the same amount.
These adjustments have been fully eliminated in the reconciliation.
Daimler AG is one of the world’s most successful automotive companies. With its
divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses
and Daimler Financial Services, Daimler is one of the biggest suppliers of premium
cars and the world’s largest producer of trucks above 6 tons. Daimler Financial Services
provides financing, leasing, fleet management, investment products, brokerage of
insurance and credit cards, as well as innovative mobility services.
For more information: w daimler.com
Contents
C | The Divisions
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
D | Corporate Governance
Report of the Audit Committee
Declaration on Corporate Governance,
Corporate Governance Report
E | Non-Financial Report
Sustainability at Daimler
Environmental Issues
Employee Issues
Social Issues
Compliance
Statement on the Review of the
Non-Financial Report
F | Consolidated Financial
Statements
164
166
172
177
180
183
186
188
191
202
204
206
210
215
217
224
226
Chairman’s Letter
A | To Our Shareholders
The Board of Management
Report of the Supervisory Board
The Supervisory Board
Highlights of 2018
Daimler and the Capital Market
Objectives and Strategy
38
43
44
46
54
56
62
66
B | Combined Management Report
72
228
Consolidated Statement of Income
Consolidated Statement of Comprehensive
Income/Loss
229
Consolidated Statement of Financial Position 230
Consolidated Statement of Cash Flows
231
Consolidated Statement of Changes in Equity 232
Notes to the Consolidated Financial
Statements
234
G | Further Information
Responsibility Statement
Independent Auditor’s Report
Ten-Year Summary
Glossary
Index
Daimler Worldwide
332
334
335
342
344
345
346
74
79
85
91
99
Corporate Profile
Economic Conditions and Business
Development
Profitability
Liquidity and Capital Resources
Financial Position
Daimler AG
102
(condensed version according to HGB)
Sustainability and Integrity
105
Overall Assessment of the Economic Situation 118
119
Events after the Reporting Period
Remuneration Report
120
Takeover-Relevant Information
and Explanation
Risk and Opportunity Report
Outlook
140
143
158
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 to additional information within
the Annual Report
THE POWER OF
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 3
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 5
Daimler is committed to shaping a new era of mobility in which
the focus is on the CUSTOMER. We aim to completely fulfill our
customers’ changing requirements.
We are laying the groundwork for that with four components of our
strategy. They are our strong global CORE business, pioneering
innovations in the future-oriented areas of CASE (Connected,
Autonomous, Shared & Services, Electric), a flexible CULTURE
of cooperation, and the effective restructuring of our COMPANY.
By means of this 5C strategy, we intend to offer the best customer
experiences and to continue along our successful path — also to
the benefit of our employees, partners and investors.
Intuitive.
Emotive.
MBUX.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 7
Intuitive.
Emotive.
MBUX.
A unique customer experience for drivers and passengers. The new A-Class
from Mercedes-Benz is the first production model series to offer the MBUX
multimedia system (Mercedes-Benz User Experience), which heralds a new era
of Mercedes me connectivity. The system’s special feature is its ability to learn
by means of artificial intelligence. MBUX can be customized and adapts itself to
its user. Thanks to its intuitive operating concept, it creates an emotional bond
between the vehicle, the driver and the passengers. MBUX is standard equipment
also in the A-Class L Sedan, the model variant with a long wheelbase that was
developed exclusively for the Chinese market.
w daimler.com/case/connectivity/en
Electric.
Efficient.
eActros.
An innovation fleet for pilot customers. Mercedes-Benz presented its first
all-electric heavy-duty distribution truck back in 2016. Now it’s taking the
logical next step by putting the Mercedes-Benz eActros through a practical
use test on the road. Ten near-series-production vehicles are being tested
by a total of twenty customers under real-life conditions to check out their
suitability for daily use and their economy. The initial focus is on intra-urban
goods transport and delivery; the eActros can generally cover the necessary
ranges with ease. The long-term goal is to make quiet and locally emission-
free driving possible in cities with series-produced trucks.
w daimler.com/products/trucks/mercedes-benz/eactros.html
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 9
Electric.
Efficient.
eActros.
eActros — fine tuning in fleet testing
In cooperation with pilot customers, the near-series-production Mercedes-Benz
eActros is being developed further so that its technology and economics are optimally
adapted to daily use in the logistics sector. These heavy-duty electric trucks are being
tested in urban traffic by an innovation fleet consisting of vehicles ranging in weight
from 18 to 25 tons that are used for the distribution of various categories of goods by
companies in diverse sectors. The first ten pilot customers are testing the vehicles for
one year each in real-life operation. After that, the eActros fleet will be handed over to
ten other customers for further testing in daily use. With this project, Daimler Trucks is
responding to its customers’ tremendous interest and gaining comprehensive information.
The goal is to bring cost-efficient electric trucks for heavy-duty inner-city distribution
to series production and market maturity starting in 2021.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 11
Digital.
Connected.
Sprinter.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 13
Digital.
Connected.
Sprinter.
Fit for many different customers and uses. The new Sprinter is the first
customized complete system solution from Mercedes-Benz Vans to hit the road
for a wide variety of sectors. This large van also rings in the digital age in its
category and epitomizes Mercedes-Benz Vans’ evolution from a pure vehicle
manufacturer to a provider of holistic transportation and mobility solutions. Thanks
to its extensive connectivity, the Sprinter enables customers to take full advantage
of the connectivity services of Mercedes PRO as a platform for present and future
services, solutions, and digital services related to daily business. It also offers the
all-new MBUX (Mercedes-Benz User Experience) multimedia system. Thanks to its
more than 1,700 different variants, the third generation of this bestseller in the
van portfolio is equal to just about every transportation task.
w daimler.com/products/vans
Electric.
Intelligent.
EQ.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 15
Flipping the switch to meet new customer wishes. Intelligent electric
mobility combined with attractive design, outstanding driving pleasure,
great suitability for daily use and exemplary safety — that’s what the young
product and technology brand EQ stands for. It represents the Mercedes-Benz
brand’s values — emotion and intelligence — and offers all the essential aspects
of customer-oriented electric mobility. Above and beyond the electric vehicles
themselves, EQ offers a comprehensive electric mobility ecosystem of products,
services, technologies and innovations such as wallboxes and charging services.
The EQ brand will start its electric product offensive in mid-2019. By the year
2022, the entire portfolio of Mercedes-Benz Cars will include more than 130
electric variants.
w mercedes-benz.com/en/eq/about-eq
EQC — Starting the future
of mobility
Its time has come: The all-electric EQC (electricity consumption
combined: 22.2 kWh/100 km; CO2 emissions combined: 0 g/km,
preliminary figures)1 will hit the road in mid-2019. The first
series-produced EQ model is an all-round winner in terms of
comfort, quality, and everyday utility — it’s the Mercedes-Benz
of electric vehicles. This progressive crossover SUV is considered
the pioneer of an avant-garde electro-aesthetic, thanks to its
unique combination of design, functionality, and service. That’s
in addition to its impressive driving dynamics and an electric
operating range of up to 450 kilometers according to NEDC1.
w mercedes-benz.com/en
1 The figures for electricity consumption and CO2 emissions, which were
calculated by an external technical service, are provisional and non-binding.
The figures for the vehicle’s range are also provisional and non-binding.
An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the
official figures.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 17
Concept EQA — Electrifying the
compact class
The electric offensive at Mercedes-Benz is accelerating. That’s
demonstrated by the Concept EQA, the first all-electric EQ concept
car of the Mercedes-Benz brand in the compact segment. It
combines state-of-the-art electro-aesthetics with strong dynamics
and general long-distance capability in everyday use, based on an
architecture that has been exclusively developed for battery-electric
models. This electro-athlete has two electric motors with a system
capacity of more than 200 kW. It can be charged by means of induc-
tion or a wall box and is also prepared for fast-charging systems.
w mercedes-benz.com/en
Diverse.
Discerning.
Customers.
We focus on our customers, worldwide. Daimler operates all over the
globe, with a broad range of products and services covering all aspects
of mobility. Its portfolio thrills discerning Mercedes-Benz S-Class drivers,
urban owners of a smart fortwo, and Mercedes-AMG customers with
sporty ambitions, as well as the leisure-oriented drivers of a Mercedes-Benz
V-Class Marco Polo. The same goes for commercial customers such as
forwarding agents, bus companies, taxi operators and, last but not least,
the approximately 31 million well-connected users all over the world of our
innovative mobility services such as car2go, mytaxi and moovel. All of our
customers have a wide variety of requirements and opportunities, and Daimler
has the right products for each one of them. To make sure things stay that
way, Daimler aims not only to continue to be a leading automaker, but also
to develop into a leading provider of mobility services. In everything we do,
we focus on our customers’ wishes — that’s the basis of our future success.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 19
Diverse.
Discerning.
Customers.
Urban.
Electric.
eCitaro.
On course for the future — for our customers and society.
The all-electric Mercedes-Benz eCitaro is locally emission-free and
almost silent. This electric bus combines the platform of the bestselling
Mercedes-Benz city bus with innovative technologies. It is raising
electric mobility in city buses to a whole new level and captivating
customers with pioneering thermal management, energy efficiency,
and very practice-oriented operating ranges. Mercedes-Benz delivered
the first series-production models to customers in late 2018. Orders
for 20 and 15 eCitaros came from Hamburg and Berlin respectively in
2018. Thanks to its outstanding performance, the eCitaro already
complies with many requirements of transportation companies — and
its complete eMobility system is launching an innovation offensive
for electrifying local public transportation.
w mercedes-benz.com/en/mercedes-benz/vehicles/buses
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 21
Urban.
Electric.
eCitaro.
Inventive.
Intermodal.
moovel lab.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 23
Inventive.
Intermodal.
moovel lab.
A trendsetter for people and urban mobility. The moovel lab promotes
the innovation culture of the moovel Group. This Daimler Group company
aims to partner with cities and transportation operators to simplify mobility
and offer customers access to the right mobility options. The moovel lab
is the professional creative space for this process. The lab’s interdisciplinary
team addresses future-oriented issues of mobility in urban environments. It
generates new ideas, product prototypes, and approaches to dialogue among
professionals and the public. What do urban traffic areas look like around the
world? The moovel lab is working to answer this question in its project “The
Mobility Space Report: What the Street!?”. The project visualizes driving and
parking areas in 23 major cities on an interactive online platform and shows
how autonomous driving can redistribute these spaces.
w lab.moovel.com
w moovel-group.com/en w whatthestreet.moovellab.com
Automated.
Trailblazing.
Cascadia.
Pioneering work for the logistics sector. Daimler Trucks is taking
truck automation to the next level with the new Freightliner Cascadia.
It’s a world premiere, because this is the first partially automated
series-production truck on North American roads. It’s also the next step
toward highly automated trucks, which will allow even better safety and
performance. In addition, they will offer huge advantages for transport
companies and a sustainable future for the logistics sector. In the years
ahead, Daimler Trucks will invest €500 million in the development of
highly automated trucks in order to make them market-ready within a
decade. The centerpieces of partial automation are Active Drive Assist
(Mercedes-Benz Actros, FUSO Super Great) and Detroit Assurance 5.0
(Freightliner Cascadia). These systems already allow partially automated
driving in all speed ranges.
w freightliner.com/trucks/new-cascadia
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 25
Automated.
Trailblazing.
Cascadia.
Digital.
Interactive.
Sarah.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 27
Fulfilling and surpassing customers’ wishes. In early 2018,
Daimler Financial Services and its partner Soul Machines presented
the digital avatar “Sarah”. This machine will be able to support
customers just like a personal concierge in many situations. Through
a combination of artificial and emotional intelligence, Sarah will
respond to a variety of customer wishes by providing the right
information at the right time. This digital avatar is voice-controlled,
multilingual, and available everywhere at any time. It thus provides
an answer to the growing volume of online business, with more
and more purchasing decisions being made on digital platforms.
Sarah has already been used successfully in a pilot project
to answer customers’ frequently asked questions at a call center.
w daimler-financialservices.com/en/future-mobility/innovations/artificial-intelligence
Autonomous.
Modular.
URBANETIC
Innovation for cities, companies and commuters. Vision URBANETIC
from Mercedes-Benz Vans aims to abolish the distinction between
passenger transportation and goods transport. This autonomously driving
platform with battery-electric drive can be flexibly equipped with a cargo
module or the people-mover module. As a result, this revolutionary
concept can fulfill growing mobility demands and varied customer wishes —
sustainably, efficiently, and in line with demand. The fully connected Vision
URBANETIC is also meant to be part of an ecosystem in which logistics
companies, local public transportation operators and private customers
can communicate their mobility wishes digitally. This is how we intend to
reduce traffic flows, relieve the pressure on city centers and help to create
a better quality of life for city dwellers.
w mercedes-benz.com/en/mercedes-benz/vehicles/transporter/
vision-urbanetic-the-mobility-of-the-future
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 29
Worldwide.
Trailblazing.
Services.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 31
Worldwide.
Trailblazing.
Services.
Thrilling more and more users in a future-oriented market. About 31 million
customers are already using Daimler’s mobility services, which include car2go, the
pioneer of free-floating car sharing, as well as the multimodal app-based mobility
platform moovel, the taxi-hailing app mytaxi, the on-demand ride-sharing service
ViaVan, and numerous other services. The ability of these innovative mobility services
to attract new customers all over the world is proven by the significant increase in
user figures in 2018 compared with the prior year. In 2018, our mobility services
were used by customers in more than 130 cities in Europe, China, and North and
South America. Daimler has forged ahead with its transformation into a provider of
integrated mobility services and will continue to systematically expand its portfolio
to create the urban mobility of the future.
w daimler.com/sustainability/mobility-services
w car2go.com/DE/en
w moovel.com/en
w mytaxi.com/uk
Innovative.
Creative.
Lab1886.
Getting ideas quickly to customers and the market. Lab1886 is the global
innovation machine from Daimler. Since 2007, this “company builder” has been
successfully working like a startup to develop and commercialize new business
models. For example, it has created the flexible car-sharing service car2go,
the mobility app moovel, and Mercedes me, the digital entry into the world of
Mercedes-Benz. And it has demonstrated what it’s like to leave familiar paths
behind through its involvement with the unconventional idea of vertical mobility.
With its strategic investment in the Volocopter startup, Lab1886 has joined its
partner to open up the new market segment of the third mobility dimension.
In the future, the innovative urban air taxis from Volocopter may help to relieve
the pressure on inner-city traffic.
w mercedes-benz.com/en/mercedes-benz/next/lab1886
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 33
Connected.
Sustainable.
Factory 56.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 35
Connected.
Sustainable.
Factory 56.
Flexible vehicle production, a modern work environment, and Industry 4.0
under one roof. Mercedes-Benz Cars is building the automobile production line
of the future at the Sindelfingen plant. A completely new infrastructure will be
used in Factory 56. The hall will be fully provided with Wi-Fi, it will communicate
with its surroundings, and it will use digital tools. The 360-degree connectivity
will extend far beyond the production halls. It will include the suppliers, the teams
for development, design, and production, and the customers, who can already
use the Mercedes me app to gain insights into the production of their vehicles.
A new type of work organization will take the employees’ individual needs into
account. Sustainability and energy efficiency will also play a huge role, for example
through the use of renewable energy sources. At the beginning of the next decade,
Factory 56 will launch its series production of upper-range and luxury-class cars
and electric vehicles, as well as fully automated driverless vehicles.
w youtu.be/mlqYAEnqptQ
Shaping.
Future.
Daimler.
Focused, flexible, and even closer to customers. The mobility sector is
changing rapidly, and that’s why Daimler is restructuring itself with Project
Future, which is part of its 5C strategy. Three legally independent entities will be
created under the roof of Daimler AG. Mercedes-Benz AG and Daimler Truck AG
will take over the business operations of Mercedes-Benz Cars & Vans and of
Daimler Trucks & Buses respectively. Daimler Financial Services AG, which is
already a legally independent company, will be renamed Daimler Mobility AG.
This structure will sharpen our focus for the business success of the future
by strengthening our entrepreneurial operations and safeguarding synergies.
At the center of all of these changes are our customers’ needs. In its new
structure, Daimler will be able to offer its customers individualized mobility
solutions even more effectively all over the world.
w daimler.com/company/project-future.html
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C 37
38 CHAIRMAN’S LETTER
“Daimler is shaping a new era
of mobility that is all about
the customers. We aim to fully meet
their dynamic requirements.”
Mercedes-Benz EQC: electricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures1
1 Figures for electricity consumption and CO2 emissions are provisional, non-binding figures calculated by an external technical service.
Figures for vehicle range are also provisional and non-binding. An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the official figures.
CHAIRMAN’S LETTER 39
Stuttgart, February 2019
2018 was a year of strong headwinds for the entire automotive industry and
thus also for Daimler. They included the discussion about diesel engines,
the changeover to the new WLTP test method and the global trade dispute.
All of this is reflected in our financial results and our share price.
But especially in difficult times, it can be seen how good a team is. And we have
proven it: Daimler has a unique team. Together, we faced those headwinds,
while making substantial progress in key areas for the future. On behalf of the
entire Board of Management, I would like to thank each of our nearly 300,000
colleagues for their hard work and dedication last year.
Daimler sold more vehicles than ever before in 2018: a total of 3.4 million.
Revenue reached €167.4 billion, which is two percent more than in the previous
year. However, at 11.1 billion euros, EBIT was significantly lower than in 2017.
Net profit amounted to 7.6 billion euros. At the Annual Shareholders’ Meeting,
the Board of Management and the Supervisory Board will propose the distribu-
tion of a dividend of 3 euros and 25 cents per share.
How did the individual divisions contribute to these results?
Mercedes-Benz Cars sold 2.4 million cars, setting its eighth consecutive record
for unit sales. Mercedes-Benz maintained its position as the leading premium
brand. Business was particularly good in China: With an increase of eleven
percent, we were able to achieve strong growth there once again, although the
overall market contracted. We strengthened our entire portfolio – from the
compact cars to the SUVs. Our EQC, the first all-electric Mercedes-Benz, also
40 CHAIRMAN’S LETTER
had its world premiere. smart will focus entirely on electric drive by 2020,
following the changeover in the United States and Canada. Demand is there:
Sales of our smart electric smart doubled last year.
Mercedes-Benz Vans also achieved record unit sales, delivering a total of
421,000 vehicles, which is five percent more than in the prior year. We expect
the new Sprinter in particular to stimulate further growth. This is backed up
by major orders: The response to the Sprinter is extremely good. In the future,
we will deliver several thousand vehicles to Hymer each year. And Amazon
has placed an order for 20,000 of our vans.
Most of the major commercial-vehicle markets were on the upturn in 2018 –
Daimler Trucks made good use of that. We clearly passed the mark of 500,000
trucks sold and thus posted the best year in our history. Total unit sales rose
by ten percent. In Europe, we recorded a slight increase, and we grew significantly
in North America, Latin America and Asia. The highlight on the product side
was the presentation of the new Mercedes-Benz Actros. Our flagship heavy-duty
truck sets new standards for safety, efficiency and connectivity.
The eCitaro was the dominant topic at Daimler Buses last year. With this new
model, we are offering an effective solution for improving air quality in cities.
Series production started soon after its world premiere and the first of these buses
are already in use with customers. Overall, our buses’ sales curve showed a
clear upward trend last year.
Daimler Financial Services finances or leases 50 percent of all the vehicles
we sell. The division increased its new business slightly and its contract volume
significantly. For the first time, it had more than five million vehicles on its
books. Our mobility services also developed positively. They are already used by
31 million people worldwide – 13 million more than a year ago.
CHAIRMAN’S LETTER 41
What we achieved in Daimler’s core business last year – despite the difficult
environment – also gives cause for optimism for this year. The business
environment remains extremely challenging. That’s why we are continuing to
work hard on our efficiency. At the same time, we will continue to drive
forward the four key future fields of our industry: connectivity, autonomous
driving, sharing and electric mobility. What are our next steps here?
In the area of connectivity, we are continuously developing our MBUX
infotainment system for example. Most recently, we have optimized voice control
and introduced gesture control. New features can be directly experienced
by our customers via over-the-air updates. Connectivity offers enormous future
potential. And with MBUX, we have an excellent basis to utilize it.
We can build on a strong technological base also with autonomous driving.
We will launch a driverless shuttle service this year in San José, California. The
technology will make urban mobility even more convenient and road traffic
safer overall. Automated driving functions also offer enormous economic advan-
tages for our commercial-vehicle customers. We plan to put highly automated
trucks on the road within the next decade. With the new Actros, we are already
the world’s first manufacturer with a semi-automated truck in series production.
In the field of sharing, we will make further progress through the merger of our
mobility services with those of BMW. The new Berlin-based company will start
work this year. We are also expanding our portfolio at Daimler to include a pre-
mium ride-hailing service in China, which we are developing jointly with Geely.
At Daimler, we have gone all-out on the offensive with electric mobility.
This year, the EQC will be in the dealerships. This car is the start of a new electric
era at Mercedes-Benz. By 2022, we will electrify the entire product range:
A total of 130 electrified passenger car variants are planned. Our goal is clear:
42 CHAIRMAN’S LETTER
We want to offer our customers the best overall package also in an electric world.
In the commercial-vehicle segment, our electric portfolio is already unique in
its breadth. The first model series of our vans, trucks and buses with electric drive
are already in production and in use with customers. We have set our roadmap
to deliver electric mobility on a large scale. For example, we will purchase battery
cells worth 20 billion euros in the coming years. We are also expanding our
own global network for the production of batteries.
2019 is a year of change for Daimler: With your approval, we will restructure
our company. We are accelerating into the era of electric mobility. At the same
time, we are entering new dimensions in connectivity, autonomous driving and
mobility services. Each of these fields offers enormous opportunities for Daimler
in the future. Our team has the will and the skills to use them. We will be
delighted if you, our shareholders, continue accompanying us along this path.
Sincerely yours
Dieter Zetsche
A | TO OUR SHAREHOLDERS | CONTENTS 43
To Our
Shareholders
The automotive industry is undergoing profound
change. We are meeting this challenge –
strategically and structurally. Our goal is clear-
ly defined: We plan to continue to be a leading
vehicle manufacturer while developing into a
leading mobility provider. We are supporting
this transformation with a cultural and organi-
zational realignment. In everything we do,
we focus on the wishes of our customers - this
is the basis of our future success, and in this
way, we also offer excellent prospects for our
investors, partners and employees.
The Board of Management
Report of the Supervisory Board
The Supervisory Board
Highlights of 2018
Daimler and the Capital Market
Objectives and Strategy
44
46
54
56
62
66
The Board of Management
Daimler is on the right track and
we are rapidly progressing towards
the future. As one of the leading
vehicle manufacturers, we focus
consistently on our customers.
In order to completely fulfill their
requirements all over the world,
we are utilizing our four strategic
components: CORE, CASE, CULTURE
and COMPANY. In this way, we are
shaping the mobility of tomorrow —
to the benefit of our customers,
employees, partners and investors.
Ola Källenius | 49
Group Research & Mercedes-Benz
Cars Development,
Appointed until December 2022
Dieter Zetsche | 65
Chairman of the Board
of Management,
Head of Mercedes-Benz Cars,
Appointed until December 2019
Martin Daum | 59
Daimler Trucks and Buses,
Appointed until February 2022
B | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 45
Renata Jungo Brüngger | 57
Integrity and Legal Affairs,
Appointed until December 2023
Wilfried Porth | 60
Human Resources and Director
of Labor Relations,
Mercedes-Benz Vans,
Appointed until April 2022
Britta Seeger | 49
Mercedes-Benz Cars
Marketing & Sales,
Appointed until December 2024
Hubertus Troska | 58
Greater China,
Appointed until December 2020
Bodo Uebber | 59
Finance & Controlling,
Daimler Financial Services,
Appointed until December 2019
46 A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Report of the Supervisory Board
Dear Shareholders, Daimler’s 2018 financial year reflects our customers’ continuing interest in
our vehicles, as well as the upheaval and global challenges of the automotive industry. Digitization,
connectivity, electrification, automated and autonomous driving, changes in customer behavior,
mobility services, but also new regulatory requirements, are all changing the industry fast. Further-
more, burdens from the past, emissions issues and the current global trade disputes adversely
affected our earnings last year. Despite various challenges, Daimler’s success is unbroken and it
will pay out an adequate dividend to its shareholders. The technologies of the future and new
mobility models require extremely high investment. Daimler invests, researches and develops a lot,
and is therefore ideally prepared to play an important and leading role in the mobility of the future,
and in shaping it successfully.
Supervisory and advisory activities of the
Supervisory Board
The Supervisory Board of Daimler AG fully performed its tasks as
defined by the law, the Company’s Articles of Incorporation
and its own rules of procedure once again in the year 2018.
The Supervisory Board continually advised and supervised
the Board of Management in the management of the Company
and provided support with strategically important issues
relating to the Group’s further development.
The Supervisory Board examined whether the annual company
and consolidated financial statements, the combined
management report and other financial reporting, as well as
the non-financial report for Daimler AG and the Daimler
Group, which was prepared for the first time for financial year
2017, were in conformance with the applicable requirements.
In addition, it approved numerous business matters for which
its consent was required following careful reviews and
consultations. As well as approving the implementation of the
divisional structure with the creation of legally independent
entities in the context of “Project Future”, this also included
finance and investment planning, major equity measures
at companies of the Group, associated companies and joint
ventures, and the conclusion of contracts with particular
importance for the Group. The Board of Management informed
the Supervisory Board about a large number of further
measures and business transactions, and discussed them with
it intensively and in detail, including the measures in con-
nection with the administrative order of the German Federal
Motor Transport Authority to recall certain Mercedes-Benz
diesel vehicles and the ongoing talks held with the Federal
Ministry of Transport and Digital Infrastructure.
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the Group
and the divisions. It continually provided information to it on all
fundamental questions of corporate planning, including finance,
investment, sales and personnel planning, current developments
at the companies of the Group, the development of revenue,
the situation of the Company and the divisions, as well as on the
current status and the assessment of significant legal proceed-
ings. Furthermore, the Board of Management reported to the
Super visory Board continually on return on equity and the
Group’s liquidity situation, the development of sales and procure-
ment markets, the overall economic situation, and develop-
ments in the capital markets and the area of financial services.
Additional topics included the further development of the prod-
uct portfolio, securing the Group’s long-term competitiveness
and the ongoing implementation of measures for safeguarding
sustainable and future-oriented mobility. The Supervisory Board
also dealt in detail with the shareholder structure, the develop-
ment of the share price and the related background, and the
expected impact of strategic projects on the share price.
Daimler’s success is based on a profound and integrative auto-
motive expertise and strategic foresight. The 5C strategy con-
sisting of CORE, CASE, CULTURE, COMPANY and CUSTOMER,
which is explained on E pages 67 ff of this Annual Report,
is in the implementation phase. It sets the course for a locally
emission-free and electric future and focuses on employees
and customers. Daimler is making enormous investments in the
transformation of the radically changing automotive industry.
This, as well as global trade disputes, and emission and antitrust
issues, are adversely affecting the Group’s results of opera-
tions. The latter issues also affect the credibility of the entire
industry. Daimler feels an obligation to its customers and
shareholders to reshape future mobility with sustainable prod-
ucts and innovative services.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 47
Dr. Manfred Bischoff, Chairman of the Supervisory Board
To achieve this, the Supervisory Board emphatically supports the
reorganization of the Group, the so-called Project Future.
Daimler is acting proactively with this reorganization for five
main reasons: A sharper focus. The legally independent
business entities that we aim to create with their own decision-
making boards will have greater customer proximity and allow
more precise work in the markets. Strengthening entrepre-
neurial action. The new business entities will have greater
freedom and more scope to manoeuver. Gaining innovation/
cooperation partners. The legally separate business entities
will be attractive cooperation partners. Furthermore, the new
structure will offer greater scope to remain capable of action
in a dynamic competitive environment. There are no plans for
Daimler AG to divest individual business units. Enhancing
attractiveness in the capital market. The realignment will
enhance transparency of the individual parts of the Group and
thus the attractiveness of Daimler AG in the capital market.
Securing synergies. The realignment will preserve economies
of scale in purchasing and financing, for example. The shared
use of intellectual property rights, including the brands, will also
continue to be secured under the new structure.
Working culture and areas of Supervisory Board activity
In the year 2018, the Supervisory Board convened for nine
meetings. Participation in the meetings by the members of
the Supervisory Board was at a high level once again. During
the year under review, all members of the Supervisory Board
participated in significantly more than half of the meetings
of the Supervisory Board and of its committees of which they
are members. The work of the Supervisory Board featured
open and intensive exchanges of information and opinions. The
members of the Supervisory Board regularly prepared for
upcoming resolutions with the use of documentation provided
in advance by the Board of Management. Furthermore, the
members representing the employees and the members repre-
senting the shareholders regularly prepared the Supervisory
Board meetings in separate discussions, which were also attend-
ed by members of the Board of Management. The Supervisory
Board was intensively supported by its committees and the
members of the Supervisory Board discussed the measures and
business matters to be decided upon in detail with the Board
of Management. For the meetings, executive sessions were
regularly arranged so that topics could be discussed also in the
absence of the Board of Management.
The members of the Supervisory Board and of the Board of
Management came together for bilateral exchanges of opinions
also outside the regular meetings. The Board of Management
informed the Supervisory Board also with written reports about
the most important indicators of business development and
existing risks, and submitted the interim financial reports to the
Supervisory Board. The Supervisory Board was informed of
special occurrences also between the meetings.
48 A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
The members of the Supervisory Board independently attend
such courses of training and further training regarded as
necessary for the performance of their tasks, relating for exam-
ple to changes in the legal framework and new, future-
oriented technologies, in which they are supported by the Com-
pany. In a special onboarding program, new members of the
Supervisory Board have the opportunity to meet the members
of the Board of Management and senior executives with spe-
cialist responsibility for a bilateral exchange of opinions and
information on fundamental and current topics of the various
Board of Management areas, allowing them to gain an overview
of the topics relevant to the Daimler Group and of its gover-
nance structure.
In its meeting on January 31, 2018, which was attended by the
external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the annual
company and consolidated financial statements for 2017
and the dividend proposal to be made at the 2018 Annual Share-
holders’ Meeting. The Supervisory Board determined that
no objections were to be raised to their publication. The pre-
liminary key figures for the year 2017 and the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 1, 2018.
In the Supervisory Board meeting held on February 9, 2018,
the Supervisory Board decided to reappoint Renata Jungo
Brüngger as a member of the Board of Management of Daimler
AG with responsibility for “Integrity and Legal Affairs” for
further five years effective as of January 1, 2019. Subsequently,
it dealt with the annual company financial statements, the
annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group
for the year 2017, each of which had been issued with an unquali-
fied audit opinion by the external auditors, as well as with the
reports of the Audit Committee and the Supervisory Board, the
declaration on corporate governance combined with the
corporate governance report, the remuneration report, the non-
financial report, which was issued with the independent
auditor’s limited assurance in accordance with ISAE 3000, and
the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with
comprehensive documentation.
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors. The independent auditors
reported on the results of their audit and on the key audit
matters and the respective audit procedure including the con-
clusions drawn, as well as on the voluntary review of the
non-financial report within the framework of a limited assurance
engagement, and were available to answer questions and to
provide further information. Following the final results of the
review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the audit
carried out by the external auditors. It determined that no
objections were to be raised, approved the financial statements
and the combined management report as presented by the
Board of Management, and thus adopted the financial statements
of Daimler AG for the year 2017. On this basis, the Supervisory
Board consented to the proposal made by the Board of Manage-
ment on the appropriation of distributable profit. In addition,
the Supervisory Board approved the non-financial report, the
report of the Supervisory Board, the corporate government
statement combined with the corporate governance report, and
the remuneration report, as well as its proposed decisions
on the items of the agenda for the 2018 Annual Shareholders’
Meeting.
In its meeting on February 9, 2018, the Supervisory Board
approved a number of measures for which its consent was
required, in particular for the expansion of capacities at Beijing
Benz Automotive Co. Ltd for the further development of local
production of Mercedes-Benz vehicles. Furthermore, the Super-
visory Board dealt with matters pertaining to the remuneration
of the members of the Board of Management and, in connection
with the item of the agenda on corporate governance, approved
the memberships in other boards and further external second-
ary employments of the members of the Board of Management
that were presented in the meeting. Finally, the Supervisory
Board addressed current legal issues, in particular including
the question of whether, in connection with the antitrust inves-
tigations of truck manufacturers by the European Commission,
claims for compensation were to be made against former or
current members of the Board of Management. On the basis of
the reviews carried out so far and repeatedly updated by an
independent law firm, a further review by an independent legal
academic, as well as detailed discussions in the Supervisory
Board taking into account the welfare of the Company, the Super-
visory Board maintained its previous resolution, based on the
information available, that no such claims were to be made at
the present time. The Supervisory Board arranged for further
clarification of the facts of the case in order to secure the current
state of knowledge and obtained the expertise of an indepen-
dent legal academic, who came to the conclusion that the Super-
visory Board was fully complying with its obligations under
stock corporation law in this respect. At the end of July 2018, it
also discussed in this context the question of setting up an
independent special committee (E page 49). At the meeting
in December 2018, the Supervisory Board dealt once again
with the matter on the basis of new knowledge gained from fur-
ther clarification of the facts of the case (E page 50).
In the meeting in late March 2018, the Supervisory Board dealt
with the merger of the mobility services of Daimler with those
of BMW into a joint venture with equal shareholdings in the areas
of carsharing, ride hailing, parking, charging and multimodality,
and approved the plan.
In the Annual Shareholders’ Meeting on April 5, 2018, the can-
didates nominated by the Supervisory Board, Sari Baldauf and
Dr. Jürgen Hambrecht once again and Marie Wieck for the first
time, were elected to the Supervisory Board as representatives
of the shareholders. In the subsequent meeting of the Supervi-
sory Board, the representatives of the shareholders elected
Sari Baldauf once again as a member of the Nomination Com-
mittee and Dr. Jürgen Hambrecht once again as a member of
the Mediation Committee. Furthermore, the Supervisory Board
elected Dr. Jürgen Hambrecht once again as a member of the
Presidential Committee. Also in this meeting, the Supervisory
Board passed resolutions with regard to the employee repre-
sentatives elected with effect as of April 5, 2018: Michael Brecht
was elected Deputy Chairman of the Supervisory Board, Michael
Brecht and Ergun Lümali were elected as members of the Audit
Committee and Roman Zitzelsberger was elected as a member
of the Presidential Committee. In addition, the employee repre-
sentatives elected Roman Zitzelsberger as a member of the
Mediation Committee and the members of the Audit Committee
elected Michael Brecht as the Deputy Chairman of this
Committee.
Supervisory Board meeting held abroad
In late April 2018, the Supervisory Board convened for a two-day
meeting abroad in Hungary. In addition to discussing current
political conditions in Eastern Europe, the main focus was on
visiting the plant in Kecskemét. A regular meeting of the
Supervisory Board was also held as part of the meeting abroad.
Among other things, the Supervisory Board decided on the
future production of electric Mercedes-Benz vehicles at the
French plant in Hambach. Furthermore, the Supervisory Board
approved the transfer of pension obligations to pensioners
of Daimler AG to Daimler Pensionsfonds AG. On the recommen-
dation of the Audit Committee, the Supervisory Board also
resolved to make adjustments to the rules of procedure of the
Audit Committee with regard to the regular report to the
Audit Committee, which were prompted by the changed respon-
sibilities of the BPO (Business Practices Office) whistleblower
system. In addition, the Supervisory Board was informed about
the status of the review and the initiation of the first prepara-
tory measures to strengthen the divisional structure within the
framework of Project Future. Finally, the Supervisory Board
received detailed reports on current legal issues, also with regard
to inquiries, investigations, proceedings and administrative
orders in connection with diesel exhaust emissions.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 49
In a further meeting in early July 2018, the Supervisory Board
discussed in detail the settlement of the Toll Collect arbitration
proceedings and approved the conclusion of a settlement
agreement between the Federal Republic of Germany, Daimler
Financial Services AG, the other consortium partners (Deutsche
Telekom AG and Cofiroute S. A.), Toll Collect GbR and Toll Collect
GmbH to settle those arbitration proceedings.
In its meeting in late July 2018, following detailed prior discussion,
including preliminary discussions with shareholders and
employees, the Supervisory Board approved the implementation
of Project Future and thus a new divisional structure for the
Group with legally independent entities. In this meeting, the
Supervisory Board also discussed the course of business and
the results of the first half of the year in detail with the Board of
Management and obtained information on current legal issues.
In addition, the Supervisory Board also dealt with the question
of whether an independent special committee of the Supervi-
sory Board of Daimler AG should be set up to clarify any Board
of Management responsibility in connection with the European
Commission’s antitrust proceedings against truck manufacturers.
As the facts of the matter were to be assessed and decisions
were to be made by the Supervisory Board in its entirety, and in
view of the fact that all independent members of the Super-
visory Board had a special role in these discussions and that
advice on this matter was provided by an independent law
firm and another independent legal academic, it saw no reason
to form a special committee. Furthermore, in the opinion of
the Supervisory Board, no member of the Supervisory Board has
concrete indications of relevant circumstances or relationships
that could give rise to a material and not merely temporary
conflict of interest and that would therefore speak against
independence.
Strategy meeting of the Supervisory Board
At the beginning of the two-day strategy workshop in Böblingen
and Filderstadt in late September, the Supervisory Board dealt
with succession planning and decided on personnel changes.
Since the term of office of the Chairman of the Supervisory
Board is due to expire at the end of the Annual Shareholders’
Meeting in 2021, the Supervisory Board wanted to set the
course for a suitable succession at an early stage, in view of the
challenges of the transformation in the automotive industry,
and therefore passed a resolution announcing its intention to pro -
pose the election of Dr. Dieter Zetsche to the Supervisory
Board at the Annual Shareholders’ Meeting in 2021. In the event
of Dr. Dieter Zetsche’s election by the 2021 Annual Share-
holders’ Meeting, the Chairman of the Supervisory Board,
Dr. Manfred Bischoff, intends to recommend Dr. Dieter Zetsche
as his successor as Chairman of the Supervisory Board. In order
to comply with the two-year cooling-off period, Dr. Dieter
Zetsche will therefore resign from his position on the Board of
Management of Daimler AG and as Head of Mercedes-Benz
Cars at the end of the Annual Shareholders’ Meeting in 2019.
As a result, the Supervisory Board decided to appoint Ola Käl-
lenius as Chairman of the Board of Management of Daimler AG
for a new period of office of five years and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders’
Meeting in 2019. Starting at the same time, as successor to
Ola Källenius, Markus Schäfer will assume responsibility for
“Group Research and Mercedes-Benz Cars Development” on
the Board of Management of Daimler AG.
50 A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
In this meeting, the Supervisory Board also approved the
participation in the package of measures to improve air quality
in Germany. The Supervisory Board also discussed, among
other things, the current status of considerations regarding a
new remuneration model for the Board of Management to
take effect on January 1, 2019 (E page 125 ff ).
In addition to introductory discussions on the Daimler 5C strategy
and the Mercedes-Benz Cars strategy, the focus of the strat-
egy workshop was on three of the four areas of CASE: “Autono-
mous”, “Shared & Services” and “Electric.” The Supervisory
Board dealt with the electrification of the vehicle fleets and,
among other things, with battery and cell technology. Further-
more, it was informed about the portfolio of mobility services,
particularly in view of growing mobility requirements in urban
areas. In addition, the Supervisory Board was shown current
developments and solutions relating to the automated and
autonomous transportation of people and goods. Various vehicle
exhibits were also presented. In a constructive and open dia-
logue, the members of the Supervisory Board and the Board of
Management discussed with the executives responsible for
the topics presented how Daimler will prepare for new challenges
and what further developments are imminent. The changing
competitive environment was also discussed. In addition, the
Supervisory Board discussed the key financial indicators and
the targets for the Group and the divisions. At the same meet-
ing, the Supervisory Board was informed in detail about cur-
rent legal issues, such as the initiation by the European Com-
mission of a formal investigation into possible collusion on
emission reduction systems. In this respect, the Supervisory
Board dealt with Daimler’s internal processing of the matters
and, in consultation with an independent law firm, also with the
consequences for the further clarification and examination of
any Board of Management responsibilities that are closely related
to the progress of the proceedings.
Meeting on operational planning 2019/2020
On the day before the meeting in December 2018, the members
of the Supervisory Board had the opportunity to participate in
a product presentation. In the context of the actual meeting on
December 12, 2018, the Supervisory Board dealt with the
proposals to be made at the Annual Shareholders’ Meeting in
2019 for the election to the Supervisory Board of two mem-
bers representing the shareholders described on E page 52.
In addition, the Supervisory Board discussed key individual
topics of Project Future. During the further course of the meet-
ing, on the basis of comprehensive documentation, the Super-
visory Board discussed in detail and approved the operational
planning for the years 2019 and 2020, and, in this context,
discussed existing opportunities and risks as well as the Group’s
risk management.
The meeting also focused on information on current legal issues,
including inquiries, investigations, proceedings and adminis-
trative orders in connection with diesel exhaust emissions. The
question of possible claims for damages against former or
current members of the Board of Management in connection with
the European Commission’s antitrust proceedings against
truck manufacturers was also dealt with once again. The Super-
visory Board decided, after careful discussion of new knowl-
edge gained from the further clarification of the facts of the case
and after renewed consideration of the reasons for and against
the assertion of a claim and taking into account the welfare of the
Company, to maintain its current position that no claims for
compensation are to be made at the present time.
In addition, the Supervisory Board dealt with software documen-
tation, the technical compliance organization and the approval
process in vehicle development, and was provided with informa-
tion on the topic of sales of the future. The Supervisory Board
was also informed about the topic of personnel development and
the implementation of Leadership 2020. Other subjects dis-
cussed at the meeting were matters of corporate governance,
in particular the declaration of compliance with the German
Corporate Governance Code, and the review of the overall
requirement profiles for the Board of Management and the
Supervisory Board, including their fulfilment. Furthermore, the
Supervisory Board looked ahead to the main topics for the
2019 financial year. Finally in this meeting, it dealt with the fur-
ther development of the remuneration system, on the basis
of preparations by the Presidential Committee, and, against the
background of fundamental technological changes in the
automotive industry, decided on changes to the annual bonus
effective as of January 1, 2019. Details of the system of
Board of Management remuneration and changes to the annual
bonus are presented in the Remuneration Report.
E pages 120 ff
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 51
Corporate governance and declaration of compliance
During the year 2018, the Supervisory Board was continually
occupied with standards of good corporate governance.
In its meeting in December 2018, the Supervisory Board
approved the 2018 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of
the German Stock Corporation Act (AktG). With the exception
explained there, all the recommendations of the Code have
been complied with and continue to be complied with.
In accordance with good corporate governance, the members
of the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest – especially those that might arise due to
an advisory or board function for a customer, supplier or creditor
of Daimler, or for other third parties – to the entire Supervisory
Board.
There were no indications of any actual conflicts of interest in
the year 2018. In order to avoid individual potential conflicts
of interest, some members of the Supervisory Board did not
participate in discussions of certain items of the agendas in
the year 2018: Dr. Jürgen Hambrecht and Dr. Bernd Pischets-
rieder left the room during the Supervisory Board meetings for
the legal status reports in particular, when legal proceedings
in connection with diesel exhaust emissions were discussed. As
a result, in compliance with the goals of the Supervisory Board,
there were no potential conflicts of interest during the year
under review for at least half of the members representing the
shareholders and for at least 15 members of the entire Super-
visory Board.
In financial year 2018, as scheduled, the Supervisory Board once
again had an externally moderated efficiency review con-
ducted, thus complying with the requirements of its rules of
procedure and the German Corporate Governance Code for
the regular execution of an efficiency review. The results of the
efficiency review, which the Supervisory Board dealt with
intensively at its meeting on February 13, 2019, confirm the pro-
fessional, very good and very trusting cooperation within the
Supervisory Board and with the Board of Management. There
was no fundamental need for change, but individual sugges-
tions were made and are implemented.
Law for the equal participation of women and men in
management positions
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders’ side and to the employees’ side for that election.
As of December 31, 2018, the shareholders’ side of the Super-
visory Board of Daimler AG is composed of 30% women (the
members Sari Baldauf, Petraea Heynike and Marie Wieck) and
70% men. On the employees’ side, the proportions as of that
date are 30% women (the members Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer) and 70% men. The Supervisory
Board as a whole therefore also fulfills the statutory quota.
In its meeting on December 12, 2018, the Supervisory Board dis-
cussed the specific proposals for candidates to be elected at
the 2019 Annual Shareholders’ Meeting and decided, upon the
recommendation of the Nomination Committee, to propose
at the 2019 Annual Shareholders’ Meeting that Joe Kaeser and
Dr. Bernd Pischetsrieder be once again elected to the Super-
visory Board. If the proposed candidates are elected, the
statutory quota for women will remain fulfilled both on the
shareholder side and for the Supervisory Board as a whole,
provided there are no other changes.
For the composition of the Board of Management, the Supervi-
sory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020.
Corporate governance at Daimler is described in detail in
the declaration on corporate governance combined with the
corporate governance report on E pages 191 ff and in the
remuneration report on E pages 120 ff of this Annual Report.
52 A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
The work of the committees
The Presidential Committee convened five times last year. It
dealt primarily with personnel matters of the Board of Manage-
ment, remuneration questions and corporate governance issues.
As in previous years, compliance targets constituted part of
the individual target agreements of the members of the Board
of Management. Once again, additional non-financial targets
were also included as criteria in the target agreements. For the
past financial year, they were the further development and
permanent establishment and consideration of the corporate
values integrity and diversity with regard to increasing the pro-
portion of women in management positions, the maintenance
and enhancement of a high level of employee satisfaction and
of high product quality. Details of the changes to the remuner-
ation system for the Board of Management, which apply as of
January 1, 2019, are presented on E pages 125 ff.
The Audit Committee met six times in 2018. Details of those
meetings are provided in a separate report of that committee
on E pages 188 ff.
The Nomination Committee convened for two meetings in 2018.
In particular, the Committee prepared recommendations for
the Supervisory Board’s proposals to be made at the Annual
Shareholders’ Meeting in 2019 on the candidates for election
to the Supervisory Board. Among other things, and taking into
consideration all circumstances of each individual case, the
proposals are oriented towards the Daimler Group’s interests
and aim to fulfill the overall qualifications profile, including
expertise profile and diversity concept, for the entire Supervi-
sory Board.
There was no occasion to convene the Mediation Committee
during the reporting period.
Personnel changes in the Supervisory Board and the
Board of Management
Following the proposal of the Supervisory Board, the Annual
Shareholders’ Meeting on April 5, 2018 elected Sari Baldauf
and Dr. Jürgen Hambrecht once again and Marie Wieck for the
first time as members of the Supervisory Board representing
the shareholders, for the period until the end of the Annual Share-
holders’ Meeting that decides on ratification of board mem-
bers’ actions for financial year 2022. Effective at the end of the
Annual Shareholders’ Meeting on April 5, 2018, Andrea Jung
on the shareholders’ side and Valter Sanches and Jörg Spies on
the employees’ side stepped down from the Supervisory
Board. In the elections of the employee representatives held
before the Annual Shareholders’ Meeting, Raymond Curry
and Dr. Sabine Zimmer were elected as members of the Super-
visory Board for the first time in addition to the reelected
employee representatives. At the end of 2018, Wolfgang Nieke
stepped down from the Supervisory Board on the employees’
side and was replaced by Michael Häberle, a replacement mem-
ber elected for him.
In the Supervisory Board meeting on February 9, 2018, Renata
Jungo Brüngger was reappointed as a member of the Board
of Management Member with responsibility for “Integrity and
Legal Affairs,” effective as of January 1, 2019 for a period of
further five years.
In the Supervisory Board meeting in September 2018, the Super-
visory Board approved the resignation of Dr. Dieter Zetsche,
in consultation with the Supervisory Board, as a member of the
Board of Management of Daimler AG and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders’ Meet-
ing in 2019, as well as the appointment of Ola Källenius as
Chairman of the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars for a new term of office of five
years starting at the end of the Annual Shareholders’ Meeting
in 2019. It was also decided that Markus Schäfer would suc-
ceed Ola Källenius as Head of Group Research and Mercedes-
Benz Cars Development on the Board of Management of Daimler
AG with effect from that date.
In October 2018, Bodo Uebber, responsible for “Finance &
Controlling/Daimler Financial Services”, stated that he did not
wish to extend his current appointment, which expires in
December 2019.
In its meeting in December 2018, the members of the Super-
visory Board representing the shareholders decided, on the
basis of a recommendation by the Nomination Committee, to
propose the reelection to the Supervisory Board of Joe Kaeser
and Dr. Bernd Pischetsrieder at the Annual Shareholders’
Meeting in 2019.
In the Supervisory Board meeting on February 13, 2019, Harald
Wilhelm was appointed to the Board of Management of Daimler
AG for a period of 3 years with effect as of April 1, 2019. Bodo
Uebber will resign from the Board of Management of Daimler
AG with effect as of the end of the Annual Meeting 2019 and
with effect as of the same time, Harald Wilhelm will take over
the responsibility for “Finance & Controlling/Daimler Financial
Services”.
Furthermore, Britta Seeger was reappointed to the Board of
Management of Daimler AG as the member responsible for
“Mercedes-Benz Cars Marketing and Sales” for a further five
years effective as of January 1, 2020.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 53
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors, who reported on the
results of their audit and in particular on the key audit matters
and the respective audit procedure including the conclusions
drawn and the voluntary review of the non-financial statement
within the framework of a limited assurance engagement, and
who were available to answer supplementary questions and to
provide additional information. Following the final results of
the review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the
audit by the external auditors. It determined that no objections
were to be raised and approved the financial statements and
the combined management report as presented by the Board
of Management. The company financial statements of Daimler
AG for the year 2018 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the
Board of Management on the appropriation of distributable profit.
Furthermore, the Supervisory Board approved the non-finan-
cial report and the report of the Supervisory Board, the decla-
ration on corporate governance combined with the corporate
governance report, and the remuneration report. Due to the post-
ponement of the Annual Shareholders’ Meeting until May 22,
2019 in connection with Project Future, no proposed decisions
were approved for the items of the agenda of the 2019 Annual
Shareholders’ Meeting, apart from the proposal on the appro-
priation of profit.
Appreciation
The Supervisory Board thanks all the employees and the man-
agement of the Daimler Group for their committed contributions
in the challenging environment of the year 2018.
The Supervisory Board also thanks Andrea Jung, Valter Sanches,
Jörg Spies and Wolfgang Nieke, who closely supported the
Daimler Group through their committed work in the Supervisory
Board and who last year stepped down from the Supervisory
Board.
Stuttgart, February 2019
The Supervisory Board
Dr. Manfred Bischoff
Chairman
Audit of the company and consolidated financial
statements
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2018
were duly audited by KPMG AG, Wirtschaftsprüfungsgesell-
schaft, Berlin, and were given an unqualified audit opinion. The
same applies to the consolidated financial statements for 2018
prepared according to IFRS. On the basis of a voluntary review
of the contents of the non-financial report decided upon by
the Supervisory Board, the non-financial report for financial year
2018 was reviewed by KPMG AG Wirtschaftsprüfungsgesell-
schaft, Berlin, within the framework of a limited assurance
engagement and was issued with a limited assurance in accor-
dance with ISAE 3000.
In a meeting held on February 5, 2019 attended by the external
auditors, the Supervisory Board discussed, took note of and
approved the preliminary key figures of the annual company and
consolidated financial statements for 2018 and the proposal
on the appropriation of profit to be made at the 2019 Annual
Shareholders’ Meeting. The Supervisory Board determined
that no objections were to be made to their publication. The pre-
liminary key figures for the year 2018 as well as the proposal
on the appropriation of profit were announced at the Annual
Press Conference on February 6, 2019.
In the meeting held on February 13, 2019, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined management
report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the inde-
pendent auditors, as well as with the reports of the Audit Com-
mittee and the Supervisory Board, the corporate government
statement combined with the corporate governance report,
the remuneration report, the non-financial report issued with a
limited assurance in accordance with ISAE 3000, and the pro-
posal on the appropriation of profit. In preparation, the members
of the Supervisory Board had been provided with comprehen-
sive documentation including the Annual Report with the con-
solidated financial statements according to IFRS, the combined
management report for Daimler AG and the Daimler Group,
the declaration on corporate governance combined with the
corporate governance report, the remuneration report, the
non-financial report, the annual company financial statements
of Daimler AG, the proposal of the Board of Management on
the appropriation of profit, the audit reports of KPMG AG
Wirtschaftsprüfungsgesellschaft on the annual company finan-
cial statements of Daimler AG and the consolidated financial
statements, each including the combined management report,
and the Internal Control System (ICS), as well as drafts of the
reports of the Supervisory Board and of the Audit Committee.
54 A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
The Supervisory Board
Dr. Manfred Bischoff
Munich
elected until 2021
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
SMS Holding GmbH
Michael Brecht*
Gaggenau
elected until 2023
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council Daimler Group;
Chairman of the General Works Council Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
Dr. Paul Achleitner
Munich
elected until 2020
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG – Chairman
Bayer AG
Bader M. Al Saad
Kuwait
elected until 2022
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
Other supervisory board memberships/directorships:
Kuwait Investment Authority
Kuwait Fund for Economic Development (since March 5, 2018)
Sari Baldauf
Helsinki
elected until 2023
Former Executive Vice President and General Manager of the
Networks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
Vexve Holding Oy – Chairwoman
Nokia Oyj (since May 30, 2018)
Fortum Oyj – Chairwoman (until March 28, 2018)
Deutsche Telekom AG (until May 17, 2018)
Michael Bettag*
Nuremberg
elected until 2023
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
Dr. Clemens Börsig
Frankfurt am Main
elected until 2022
Former Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Linde AG
Linde Intermediate Holding AG (since September 25, 2018)
Linde plc (since October 22, 2018)
Emerson Electric Co.
Raymond Curry*
Detroit
(since April 5, 2018)
elected until 2023
Secretary-Treasurer United Auto Workers (UAW)
Dr. Jürgen Hambrecht
Ludwigshafen
elected until 2023
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
elected until 2021
Former Executive Vice President of the Executive Board of
Nestlé S.A.
Joe Kaeser
Munich
elected until 2019
Chairman of the Board of Management of Siemens AG
Other supervisory board memberships/directorships:
Allianz Deutschland AG
NXP Semiconductors N.V.
Ergun Lümali*
Sindelfingen
elected until 2023
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
Wolfgang Nieke*
Stuttgart
until December 31, 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (until December 31, 2018)
Dr. Bernd Pischetsrieder
Munich
elected until 2019
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in München
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
in München – Chairman
Tetra Laval Group
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 55
Retired from the Supervisory Board:
Andrea Jung
New York
retired on April 5, 2018
President and Chief Executive Officer of Grameen America, Inc.
Wolfgang Nieke*
Stuttgart
retired on December 31, 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (until December 31, 2018)
Valter Sanches*
Geneva
retired on April 5, 2018
General Secretary IndustriALL Global Union
Jörg Spies*
Stuttgart
retired on April 5, 2018
Chairman of the Works Council, Headquarters, Daimler AG
Committees of the Supervisory Board:
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff – Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Presidential Committee
Dr. Manfred Bischoff – Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Audit Committee
Dr. Clemens Börsig – Chairman
Michael Brecht*
Joe Kaeser
Ergun Lümali*
Nomination Committee
Dr. Manfred Bischoff – Chairman
Dr. Paul Achleitner
Sari Baldauf
Elke Tönjes-Werner*
Bremen
elected until 2023
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
Sibylle Wankel*
Frankfurt am Main
elected until 2023
General Counsel of the German Metalworkers’ Union
(IG Metall)
Other supervisory board memberships/directorships:
Siemens AG (until January 31, 2018)
Dr. Frank Weber*
Sindelfingen
elected until 2023
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Marie Wieck
Cold Spring/New York
(since April 5, 2018)
elected until 2023
General Manager IBM Blockchain
Dr. Sabine Zimmer*
Stuttgart
(since April 5, 2018)
elected until 2023
Manager Vocational Training Policies,
Germany, Daimler AG
Roman Zitzelsberger*
Stuttgart
elected until 2023
German Metalworkers’ Union (IG Metall), District Manager
Baden-Württemberg
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG (until July 25, 2018)
MTU Friedrichshafen GmbH (since March 23, 2018)
Rolls-Royce Power Systems AG (since March 23, 2018)
Elected as substitute member for Wolfgang Nieke,
moved up on January 1, 2019:
Michael Häberle*
Stuttgart
elected until 2023
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (since January 1, 2019)
* Representative of the employees
56 A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
Highlights of 2018
At the IAA Commercial Vehicles Show in Hanover in September 2018,
Daimler Trucks celebrates the launch of its new Mercedes-Benz Actros
flagship, with the special model “Edition 1” limited to 400 units, whose
numerous extras provide the driver with a very high level of comfort and
safety. Furthermore, selected design elements give the vehicle high
recognition value. The new Actros brings groundbreaking innovations that
pay off immediately. Operators and drivers alike benefit from extremely
levels of efficiency and comfort.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS 2018 57
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018 57
58 A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
Q1
World premiere of the new Sprinter
Mercedes-Benz Vans announces the digital age for our large
vans with the new edition of the bestseller. The third genera-
tion of the Sprinter represents the division’s development from
a pure vehicle manufacturer into a provider of integrated
transport and mobility solutions. With new connectivity services,
electric drive and individual hardware solutions for the load
compartment, the large van will make customers’ business much
more efficient in the future.
New Daimler trainee program secures tomorrow’s
executives
Mobility is changing. In order to actively shape this change,
outstanding talent is needed. “INspire – the Leaders’ Lab” is
Daimler’s new trainee program for university graduates and
young professionals with their first practical experience. In 24
months, the participants go through at least four – mainly
international – project assignments and numerous training units,
optimally preparing them for later management tasks.
Daimler has a new major shareholder
The Chinese entrepreneur Li Shufu acquires a 9.7% equity
interest in Daimler AG. Daimler is pleased to have gained Li
Shufu as another long-term investor who is convinced of
Daimler’s innovative strength, strategy and future potential.
Daimler Trucks revolutionizes truck production in Brazil
A type of truck assembly line that is completely new for the
Brazilian market is put into operation at the São Bernardo
do Campo plant. Hyper connectivity (real-time networking of
individuals, things and devices) and digital technologies for
systems and tools ensure a future-oriented production system.
Mercedes-Benz do Brasil has brought together the assembly
of light to heavy trucks and the associated parts logistics in a
completely new building.
Daimler and BMW Group agree to combine their
mobility services
Daimler AG and BMW Group plan to merge their existing
offerings for on-demand mobility in the areas of car sharing,
ride hailing, parking, charging and multimodality, and to
strategically expand them with the aim of becoming one of
the leading providers of mobility services. Each of the two
companies will hold 50% of the shares in the joint venture for
their combined mobility services. After all the involved anti-
trust authorities approve the transaction by December 2018,
it will be completed in January 2019.
World premiere of the new A-Class in Amsterdam
The A-Class is more mature and comfortable than ever before.
Technologically, it sets itself apart from the competition, and
not only with the new MBUX infotainment system. At the same
time, it offers a range of safety and driver-assistance systems
that were previously reserved for the luxury class. This applies
also to its appearance: the purist design with clear surfaces is
the next step in the design philosophy of sensual clarity.
Factory 56 – laying the foundation stone for one of the
world’s most advanced car production facilities
Mercedes-Benz Cars is building the car production of the
future at its Sindelfingen plant – digital, flexible and green: A
completely new infrastructure is to be used in Factory 56.
The hall is equipped with Wi-Fi throughout, communicates with
its surroundings and uses digital tools. A new form of work
organization takes employees’ individual needs into account.
Factory 56 also features sustainability and energy efficiency,
for example through the use of energy from renewable sources.
Series production in Factory 56 is to start at the beginning
of the next decade with cars and electric vehicles in the upper
and luxury classes, as well as self-driving cars.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018 59
Q2
Foundation stone for first “full-flex plant”
Mercedes-Benz Cars starts the construction of its first fully
flexible plant in Kecskemét, Hungary. The company is investing
a total of €1 billion in the new car plant and creating more
than 2,500 jobs. In this full-flex plant, widely differing vehicle
architectures can be produced flexibly on one assembly line,
from compact models to rear-wheel-drive sedans and with dif-
fering drive systems including electric drive. The plant in
Kecskemét comprises press shop, body shop, surface process-
ing and assembly. It is highly efficient and has CO2-neutral
energy supply.
One million world engines for Daimler Trucks
The Mercedes-Benz plant in Mannheim and Detroit Diesel
Corporation, a subsidiary of Daimler Trucks North America
(DTNA), together reach a special milestone in the international
powertrain network: Together, the two plants have produced
a total of 1,000,000 heavy-duty engines, underscoring the suc-
cess of the common platform strategy for the drivetrains of
Daimler Trucks.
Annual Shareholders’ Meeting approves dividend increase
to €3.65 per share (previous year: €3.25)
Approximately 6,000 shareholders attend the meeting at the
CityCube in Berlin on April 5, 2018. The resolutions proposed
by the management are all adopted by large majorities. The
total dividend payout reaches a new high of €3.9 billion and is
the highest dividend ever paid by a DAX 30 company.
Daimler strengthens its activities for the respect of
human rights
Daimler has developed a systematic approach to respecting
human rights, the Human Rights Respect System. With its
risk-oriented and systematic approach, it increases the effec-
tiveness of previous measures also along complex supply
chains. The company is thus taking another important step
towards making mobility sustainable, which also includes
the responsible procurement of raw materials.
Settlement on Toll Collect
Daimler Financial Services AG reaches an agreement with
Deutsche Telekom AG (consortium partner) and the German
Government on terminating the arbitration proceedings
regarding Toll Collect. This will allow a dispute lasting more
than 14 years to be settled. At the same time, Toll Collect
can make a new start without any burdens.
Daimler adjusts its earnings guidance
Daimler AG reassesses its earnings potential for the year 2018.
At Mercedes-Benz Cars, lower SUV sales and higher costs
are to be expected due to higher tariffs on vehicles imported
into the Chinese market from the United States. In addition,
the certification process according to the new WLTP (Worldwide
Harmonized Light Vehicles Test Procedure) standard will lead
to expenses in the second half of the year.
60 A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
Q3
World premiere of the all-electric eCitaro
It operates free of local emissions and almost noiselessly. It
combines the tried-and-tested platform of the bestselling
Mercedes-Benz city bus of all time with new technological
solutions and an independent design. The all-electric
Mercedes-Benz eCitaro raises electric mobility with city buses
to a new level and impresses with its innovative thermal
management with outstanding energy efficiency and range
security.
Milestone for new corporate structure
The Board of Management and the Supervisory Board approve
the structural further development of the company. Daimler
thus reaches an important milestone along the way to a new
Group structure. Three independent entities under the
umbrella of Daimler AG are to meet future challenges and sys-
tematically utilize the opportunities offered by the mobility
of the future. The shareholders will decide on the new structure
at the Annual Shareholders’ Meeting on May 22, 2019. The
separation can then take place in the fall of 2019.
Mercedes-Benz starts in the era of electric mobility
Mercedes-Benz celebrates the world premiere of the new
all-electric EQC in Stockholm (combined power consumption:
22.2 kWh/100 km; combined CO2 emissions: 0 g/km, pre-
liminary figures*). As a purely battery-powered vehicle, the EQC
stands for a convincing combination of comfort, quality and
suitability for everyday use. Visually, the crossover SUV is a
pioneer of avant-garde electric aesthetics.
* Figures for electricity consumption and CO2 emissions are provisional and
non-binding and have been determined by an external technical institution.
The range figures are also provisional and non-binding. EC type approval
and a certificate of conformity with official figures are not yet available.
Deviations are possible between the stated figures and the official figures.
World premiere of the new Actros in Berlin
Shortly before the 2018 IAA Commercial Vehicles trade fair,
Daimler Trucks presents the new flagship of the Mercedes-Benz
brand in Berlin. The new Actros raises safety for all road users,
efficiency for the operator and comfort for the driver to very
high levels. The most important and spectacular innovation is
Active Drive Assist. With Active Drive Assist, Daimler Trucks
is putting partially automated driving into series production.
Vision URBANETIC: needs-oriented,
efficient and sustainable
With its Vision URBANETIC, Mercedes-Benz Vans presents a
revolutionary mobility concept that goes far beyond previous
ideas of automated and autonomous vehicles. It removes the
distinction between passenger and goods transport and is
intended to facilitate the sustainable and efficient transport
of persons and goods in line with differing requirements.
Daimler Supervisory Board sets the course for the future
Manfred Bischoff’s appointment as Chairman of the Supervisory
Board will terminate at the end of the 2021 Annual Sharehold-
ers’ Meeting. The Supervisory Board intends to propose to the
Annual Shareholders’ Meeting that Dieter Zetsche be elected
to the Supervisory Board at that time. Manfred Bischoff will
recommend the election of Dieter Zetsche as his successor as
Chairman of the Supervisory Board. In order to comply with
the two-year cooling off period, Dieter Zetsche will resign from
the Board of Management at the end of the 2019 Annual
Shareholders’ Meeting. As a result, the Supervisory Board
decides to appoint Ola Källenius as Chairman of the Board
of Management and Head of the Mercedes-Benz Cars division
following the 2019 Annual Shareholders Meeting.
Daimler DigitalLife Day @IL for lawyers, data-protection
specialists and integrity and compliance managers
How do lawyers, data-protection specialists and integrity and
compliance managers approach digitization? More than 400
participants deal with this question at the Daimler DigitalLife
Day @IL (Integrity and Legal) in Ludwigsburg near Stuttgart.
Experts discuss with the audience issues such as big data, new
working methods, current developments in legal tech, artificial
intelligence and block chains. On three stages, under the
motto “#empower – #shape – #protect,” Integrity and Legal
Affairs continues its dialogue on the subject of digitization.
Daimler adjusts its earnings guidance
As a result of current developments, Daimler AG reassesses
its earnings potential for the year 2018. This is mainly due to
an increase in expected expenses in connection with ongoing
governmental proceedings and measures in various regions
relating to Mercedes-Benz diesel vehicles. In addition, Mercedes-
Benz Vans has posted lower unit sales due to delivery delays.
Furthermore, a recent ruling by the European Court of Justice
has led to provisions for risks being recognized for the
possible need to retrofit certain vehicles that are still equipped
with the previously used refrigerant R134a.
Daimler und Bosch: San José is to be a pilot city for
automated ride sharing
Daimler and Bosch announce an app-based, fully automated
and driverless (SAE level 4/5) ride-hailing service. In order
to test this service, it is planned that the metropolis of San José,
California, will become a pilot city during the second half of
2019. Daimler and Bosch plan to make the service available to
selected customers with automated Mercedes-Benz S-Class
vehicles. The pilot project will provide valuable insights for
optimally connecting fully automated vehicles with the users of
future mobility services.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018 61
Q4
#HiFive: Mercedes-AMG Petronas Motorsport wins the
Constructors’ Championship in Formula 1
For the fifth time in succession, Mercedes-AMG Petronas
Motorsport secures the Constructors’ World Championship in
FIA Formula 1 racing. In addition, they are delighted about
a fifth consecutive title double, as Lewis Hamilton wins the
Drivers’ Championship. The team has once again proven its
competitiveness and technical expertise, culminating in the
hybrid drive engine used in the Mercedes F1 W09 EQ Power.
Mercedes-Benz delivers the first all-electric eCitaro city
bus to Hamburg
Mercedes-Benz delivers the first series-produced model of
the all-electric eCitaro city bus to Hamburg. It is the first bus of
a major order for 20 vehicles from a German transportation
company. The Mercedes-Benz eCitaro is the first fully electric
city bus developed and manufactured in Germany. With its
quiet and locally emission-free operation, it is an important
factor for reducing emissions, especially in urban areas.
Daimler buys battery cells in a total volume of €20 billion
With extensive contracts for battery cells until the year 2030,
Daimler sets another important milestone for the electrification
of the future electric cars of the EQ product and technology
brand, as well as for electric vans, buses and trucks. Together
with the supply partners, this aims to ensure that the global
battery production network is supplied with the latest technol-
ogies today and in the future.
Daimler establishes Germany’s biggest corporate
pension fund
Daimler AG establishes a pension fund for its retirees. As
of January 2019, approximately 80,000 pensioners will receive
their benefits out of the company pension scheme directly
from Daimler Pensionsfonds AG. For this purpose, Daimler AG
has allocated assets of approximately €8.2 billion to the
pension fund. The pension fund is subject to the German Insur-
ance Supervision Act (Versicherungsaufsichtsgesetz) and is
regulated by the German Federal Financial Supervisory Author-
ity (Bundesanstalt für Finanzdienstleistungsaufsicht).
62 A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Daimler and the Capital Market
Global stock markets displayed considerably weaker performance in many regions in 2018. The
Daimler share price also decreased throughout 2018 and closed the year significantly lower than at
the end of 2017. In 2018, we continued to inform institutional investors, analysts, rating agencies
and private investors with a wide range of investor relations activities and comprehensive reporting
on the Group’s business development and prospects. Our refinancing benefited from a high level
of capital market liquidity and good ratings. The Board of Management and the Supervisory Board
will propose to the Annual Shareholders’ Meeting that a dividend of €3.25 (2017: €3.65) per share
be paid for the year 2018.
A.01
Development of Daimler’s share price and of major indices
End of 2018 End of 2017
18/17
% change
Daimler share price (in euros)
45.91
70.80
DAX 30
Euro STOXX 50
Dow Jones Industrial Average
Nikkei
STOXX Europe Auto Index
10,559
3,001
23,327
20,015
439
12,918
3,504
24,719
22,765
615
-35
-18
-14
-6
-12
-29
A.02
Key figures per share
Amounts in euros
Net profit
Dividend
Equity (December 31)
Xetra price at year end1
Highest1
Lowest1
1 Closing prices
2018
2017
18/17
% change
6.78
3.25
60.45
45.91
75.69
45.27
9.61
3.65
59.70
70.80
73.25
59.29
-29
-11
+1
-35
+3
-24
Most global stock markets significantly weaker
The positive sentiment on global stock markets at the beginning
of the year, which was largely a result of the tax reform in the
United States, led to all-time highs being recorded on several
important share indices in January 2018. As the year pro-
gressed, however, stock-market sentiment deteriorated notice-
ably. In particular, the US government’s announcement of
possible increases in import tariffs led to a great deal of uncer-
tainty on global markets. Most stock markets did make gains
once again between the end of March and mid-May, as the
expectation of good results for the first quarter of 2018
caused investors to regain confidence. After that, however,
sentiment was once again affected by unrest. In particular,
the worsening trade conflict and the possibility of punitive tar-
iffs led investors to adopt a more reserved position and to
sell off stocks. Investors also continued to monitor the political
situation in Italy. Additional strain was put on the markets
by an interest-rate increase implemented in the United States
by the Federal Reserve in June. Market volatility increased
from the beginning of July until the end of August, in part due
to tension between the United States and Turkey. Financial
markets also suffered further as a result of ongoing discussions
on the possible introduction of punitive tariffs, the high level
of structural government debt in Italy, and the faltering Brexit
negotiations. Concern about the global economy grew again
at the beginning of the fourth quarter, after which global stock
markets came under increasing pressure once again and
share prices decreased substantially across many sectors. Cycli-
cal stocks and not least shares in the automotive and supplier
industries were especially impacted by these developments.
The index of the most important equities in the euro zone, the
Euro STOXX 50, fell by 14% in 2018. The development of the
leading German share index, the DAX, was even weaker, with
a decrease of 18%. In Japan, the Nikkei index closed the year
at 20,015, which is 12% lower than a year earlier. In the United
States, the Dow Jones reached an all-time high of 26,774
in October, but was 6% below the prior-year level at the end
of 2018.
Daimler share price falls by 35%
On January 23, 2018, the Daimler share price reached €75.69,
which was its highest level for the year. Automotive stocks
were able to carry over their momentum from the previous year
at the beginning of 2018, but this changed in early February
in the wake of price corrections on the German stock market.
The Daimler share was significantly impacted by this develop-
ment. Investors were made to feel even more uneasy by the
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 63
2018, Bank of America Corporation notified us that its pro-
portion of the voting rights of Daimler shares rose above the
3.0% reporting limit to 3.30% on May 9, 2018.
The aforementioned and all other voting-rights notifications
are published on the Internet at w daimler.com/investors/
share/voting-rights.
Institutional investors hold a total of 60% of our equity capital
while private investors own 21%. Approximately 62% of our
capital is in the hands of European investors and around 16%
is held by US investors.
A.03
Daimler share price (high/low), 2018
In euros
10/18
11/18
12/18
80
75
70
65
60
55
50
45
40
1/18
2/18
3/18
4/18
5/18
6/18
7/18
8/18
9/18
A.04
Share price index
120
115
110
105
100
95
90
85
80
75
70
65
60
12/31/17
6/30/18
12/31/18
Daimler AG
STOXX Europe Auto Index
DAX
ongoing discussions concerning a ban on diesel vehicles
in several German cities, the growing trade conflict and the
possibility of punitive tariffs and retaliatory measures. One
major concern here was the tariffs placed on automobile imports
into the United States and China, which obviously have a
negative impact on earnings in the automotive industry, partic-
ularly in view of the global supplier and production networks
operated by automotive companies. Not even the sustained
positive development of new orders for trucks in the US could
help Daimler shares to gain lasting momentum in this environ-
ment. The temporary decrease in unit sales at Mercedes-Benz
Cars in connection with the certification process for the new
WLTP standard and higher tariffs imposed by the Chinese
government on automobile imports from the US also had a
negative effect on Daimler’s shares as the year proceeded.
The downward adjustment of anticipated earnings for 2018 put
further pressure on the Daimler share price during the year
under review. In a very weak stock-market environment, our
shares reached their lowest point of the year 2018 at €45.27
on December 27, and closed the year 2018 at €45.91. Although
investors recognize the long-term opportunities offered by
the industry’s high levels of investment in forward-looking
technologies, automotive stocks still remain low compared
with share prices in other sectors.
At the end of the year, Daimler had a market capitalization of
€49.1 billion (2017: €75.7 billion). With a fall of 35% during
the year 2018, the development of Daimler’s share price was
thus significantly weaker than that of the DAX (-18%) and
the STOXX Europe Auto Index (-29%). In the first few weeks of
2019, increases in share prices were again to be observed
on the world’s stock exchanges. Daimler’s shares were listed
at €51.66 at the end of January, which is 13% above the
closing price at the end of 2018.
Dividend of €3.25
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €3.25 per share for
financial year 2018 (2017: €3.65) at the Annual Shareholders’
Meeting on May 22, 2019. The total dividend will thus amount
to €3,477 million (2017: €3,905 million), which in relation to
the current share price, represents a very attractive dividend
yield.
A broad shareholder structure and a new major
shareholder
Daimler continues to have a broad shareholder base of approx-
imately 1.0 million shareholders (2017: 0.9 million). Shareholder
numbers increased slightly during the reporting year, parti-
cularly as a larger number of private investors purchased our
shares. Tenaciou3 Prospect Investment Limited, a company
controlled by the Chinese entrepreneur Li Shufu, who is also
the founder and CEO of Geely, became Daimler AG’s largest
individual shareholder in February 2018. Tenaciou3 Prospect
Investment Limited currently owns 9.7% of the company’s
shares. The Kuwait Investment Authority (KIA) currently owns
6.8% of the company’s stock, making it Daimler AG’s second-
largest single shareholder. The Renault-Nissan Alliance continues
to hold 3.1% of Daimler’s shares. BlackRock Inc., Wilmington,
continues to holds a stake above the 5% reporting limit pursuant
to Germany’s Securities Trading Act (WpHG). In December
2018, BlackRock notified us that its proportion of the voting
rights was 5.12% at December 17, 2018. In October 2018,
Harris Associates L. P., Wilmington, notified us that its proportion
of the voting rights was 4.93% on October 16, 2018. In May
64 A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
A.05
Key figures for Daimler shares
End of 2018 End of 2017
18/17
% change
0
0
-35
+11
Share capital
(in millions of euros)
Number of shares (in millions)
3,070
1,069.8
3,070
1,069.8
Market capitalization
(in billions of euros)
Number of shareholders
(in millions)
Weighting in share indices
DAX 30
Euro STOXX 50
Long-term credit ratings
S&P
Moody’s
Fitch
Scope
DBRS
49.1
1.0
4.67%
1.93%
A
A2
A-
A
A
75.7
0.9
6.79%
2.92%
A
A2
A-
A
A
A.06
Stock-exchange data for Daimler shares
ISIN
German Securities Identification Number
Stock exchange symbol
Reuters ticker symbol
Bloomberg ticker symbol
DE0007100000
710000
DAI
DAIGn.DE
DAI:GR
A.07
Shareholder structure as of December 31, 2018
By type of shareholder
Tenaciou3 Prospect
Investment Limited
Kuwait Investment Authority
Renault-Nissan
Institutional investors
Retail investors
9.7%
6.8%
3.1%
59.7%
20.7%
A.08
Shareholder structure as of December 31, 2018
By region
Germany
Europe, excluding Germany
USA
Kuwait
Asia
Rest of the world
32.4 %
29.2 %
16.4 %
6.8 %
11.8 %
3.4 %
With a weighting of 4.67% (2017: 6.79%), Daimler was ranked
eighth in the German share index DAX 30 at the end of 2018.
In the Euro STOXX 50 index, our shares had a weighting of
1.93% (2017: 2.92%), which put Daimler in 19th place. Daimler
shares are listed on the stock exchanges in Frankfurt and
Stuttgart. A total volume of 1,093 million shares were traded
in Germany in 2018 (2017: 942 million). A substantial number of
Daimler shares are also traded on multilateral trading platforms
and in the over-the-counter market.
Employee stock purchase plan implemented once again
Staff members entitled to purchase employee stock were able
to do so once again in March 2018. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 23.5%, the participation rate in the year
under review was once again significantly higher than in the
previous years (2017: 19.8%). A total of 41,900 employees
took part in the program (2017: 36,200), which is the highest
number since 2008. The total number of shares purchased
by employees also increased substantially once again, from
604,000 in 2017 to approximately 717,000 (of which just
under 64,700 were bonus shares) in the year under review. In
connection with the attendance bonus program, approximately
15,000 shares were additionally issued.
Annual Shareholders’ Meeting in the CityCube in Berlin
Our Annual Shareholders’ Meeting was held on April 5, 2018,
in the CityCube in Berlin. Some 6,000 shareholders (2018:
6,200) attended the meeting. A total of 55.71% (2017: 49.18%)
of equity capital was represented at the meeting (actual
attendees and shareholders who voted by absentee ballot).
A large majority of the shareholders approved each of the
items of the agenda proposed by the company’s management.
For example, the Annual Shareholders’ Meeting approved
the highest dividend payout to date, €3.65 per share (2018:
€3.25), which means the total dividend amounted to €3.9
billion. This was the highest total dividend payout of any DAX
30 company in 2018.
The Annual Shareholders’ Meeting also reelected Sari Baldauf,
the former Chairwoman of the Board of Directors of Fortum
Oyj, Finland, as a shareholder representative in the Supervisory
Board of Daimler AG. Dr. Jürgen Hambrecht, Chairman of the
Supervisory Board of BASF SE, was also reelected as a member
of the Supervisory Board of Daimler AG representing the
shareholders. Sari Baldauf and Jürgen Hambrecht were first
elected to the Supervisory Board of Daimler AG as represen-
tatives of the shareholders in 2008. Marie Wieck, General
Manager of IBM Blockchain, was elected by a large majority
to the Daimler AG Supervisory Board as a shareholder represen-
tative. The terms for the three elected Supervisory Board
members began after the conclusion of the Annual Shareholders’
Meeting in 2018 and will expire at the end of the Annual
Shareholders’ Meeting held in 2023. Important documents and
information related to the Annual Shareholders’ Meeting can
be found on the Internet at w daimler.com/investors/events/
annual-meetings/2018.
In the exhibition areas of the CityCube, Daimler presented
its technological expertise and a broad range of products and
services under the motto “CORE, CASE, CULTURE, COMPANY.”
The exhibition highlights showcased future mobility. Along with
the two-seat super sports show car Mercedes-AMG Project
ONE Vision and the elegant Vision Mercedes-Maybach 6 Cabriolet
show car, the presentation also featured electric commercial
vehicles such as the MB New Electric Truck, the MB Citaro
Hybrid city bus, the FUSO eCanter van, and the Vision Van. Also
on display were several car models featuring alternative
drive system concepts. A 1:2-scale model of the Volocopter
attracted a great deal of attention as well. The Volocopter
is an all-electric air taxi that is locally emission-free and very
quiet. It is equipped with 18 rotors, and plans also call for
automated operation in the medium term. The Volocopter can
be used to transport passengers as required through air
space in cities as an attractive supplement to public transport
services and has already been tested successfully in Dubai.
Daimler Financial Services presented its mobility services at
the Annual Shareholders’ Meeting. The presentation of our pro-
gram for the further development of our corporate culture,
Leadership 2020, showed how Daimler is responding to the
changes occurring with regard to products, customer expec-
tations and the working world. Some of our trainees were also
once again at the meeting to provide an insight into their work.
Continuation of comprehensive investor relations
activities
In 2018, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company’s business development. We organized
road shows for institutional investors and analysts in the
finance capitals of Europe, North America, Asia and Australia.
We also held many one-on-one meetings at investor confer-
ences. This was especially the case at the international motor
shows in Geneva and Paris. We reported on our quarterly
results in conference calls and webcasts. The presentations are
available on our website at w daimler.com/investors/events/
presentations. The talks with analysts and investors focused on
the latest earnings expectations for 2018, business devel-
opments and profitability in individual divisions and regions,
and our “Project Future.” Investors are also now focusing
more strongly on the transformation of the automotive industry
and the development of the technologies which Daimler
embraces in its CASE approach. In June, the top management
team at Daimler Trucks held a capital market event at the
headquarters of Daimler Trucks North America in Portland,
Oregon. During this event, the executives discussed the
strategies and objectives of global truck operations and
also presented two electric trucks for the US market – the
Freightliner eCascadia and the eM2 – at Portland International
Raceway. The audio/video recordings and charts and illustra-
tions from the event are available at w daimler.com/investors/
events/capital-market-days.
Awards once again for the Daimler Annual Report
Our 2017 Annual Report and its online version with numerous
additional features won prestigious international awards once
again in 2018 w annualreport2017.daimler.com.
The Annual Report received a Platinum Vision Award from the
League of American Communications Professionals LLC
(LACP). In addition, we were given a Silver Stevie Award for the
online version of the 2017 Annual Report, which also captured
Silver at the 2017 LACP Professionals Vision Awards.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 65
Website: easier to navigate, now with more service modules
We continued to develop our Investor Relations site at
w daimler.com/investors in 2018. Navigation pages for the
various site sections, information charts and download
modules all ensure more intuitive operation or get users to
their destination page more quickly. Visitors to the site
also no longer need to download several documents in order
to compare figures from different years, as interactive
diagrams now offer an overview directly at the website.
We have also optimized our content for search engines in
order to make it easier to find in web searches. In addition,
brief summaries in the search results make it easier for
users to decide which site they need or want to visit next.
Number of online shareholders reaches 100,000
Our shareholders continue to make good use of our range of
personalized electronic information and communication.
The increase in online shareholders was particularly high in
2018, as a total of 100,000 (2017: 95,000) shareholders
received the invitation to and agenda for the Daimler Annual
Shareholders’ Meeting by e-mail rather than by post. We
would like to thank those shareholders for helping to protect
the environment and cut costs. As was the case in the past,
those shareholders once again had the opportunity to win
attractive prizes in a lottery. Access to the e-service for
shareholders and additional information can be found at
w https://register.daimler.com.
Refinancing benefits from a high level of capital-market
liquidity and good ratings
The central banks’ monetary policy had a major effect on bond
markets in 2018. As a result of the high level of liquidity,
companies with investment-grade ratings saw their risk premiums
remain at a moderate level for the most part.
In 2018, the Daimler Group primarily covered its refinancing
needs by issuing bonds. A large proportion of those bonds
were sold as benchmark bond issuances (bonds with high
nominal volumes) in euro and US-dollar markets. In the
US capital market, for example, Daimler Finance North America
LLC issued bonds worth a total of $8.75 billion. In addition,
Daimler International Finance B. V. issued euro bonds in bench-
mark format with a total volume of €6.50 billion. In 2018,
Daimler AG also issued bonds in China (so-called Panda bonds)
worth a total of CNY 16.0 billion. Furthermore, many smaller
bonds were issued by the Daimler Group in a variety of curren-
cies and markets.
At the end of 2018, Daimler Group companies had issued
bonds that were still outstanding in a volume of €76.5 billion
(2017: €67.1 billion). Besides raising funds through the
issuance of bonds, Daimler also issued a small volume of
commercial paper in 2018.
During the year under review, Daimler issued asset-backed
securities (ABS) in the United States, Canada, China, Germany
and the United Kingdom. In the United States, the company
generated a refinancing volume of $7.6 billion through six trans-
actions in 2018; in Canada, a volume of CAD 1.0 billion was
generated in two transactions. In addition, Mercedes-Benz Bank
used the Silver Arrow Platform to sell ABS bonds to European
investors in an amount of €0.75 billion. In the United Kingdom,
a volume of GBP 0.4 billion was successfully placed with
investors, while in China, two ABS transactions were conducted
successfully with a total volume of CNY 16 billion.
66 A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Objectives and Strategy
The automotive industry is undergoing far-reaching changes at a highly dynamic pace. Four future-
oriented fields are set to radically change the nature of mobility: greater vehicle connectivity,
advances in automated and autonomous driving, the development of digital mobility and transport
services, and electric mobility. We are addressing this challenge - both strategically and structurally.
Our objective is clear: We intend to continue to be a leading vehicle manufacturer while developing
into a leading provider of mobility services. We are supporting this transformation by implementing
a cultural and organizational realignment. The measure of our success is always the satisfaction of
our customers, as we seek to inspire them with our products and services and to ensure that we
remain a partner they can trust.
Our objectives
Sustainable profitable growth
The foundation for profitable growth is formed by a forward-
looking product portfolio, strong brands and a global
presence. We want all of our businesses to be the leaders in
their respective segments. Our goal at Mercedes-Benz Cars
is to ensure that we play the leading role in the worldwide pre-
mium segment over the long term. We also aim to enhance
the smart brand’s role in urban and electric mobility. Daimler
Trucks seeks to further strengthen its leading position in the
global truck business. Mercedes-Benz Vans is striving to be the
number one brand in the premium van segment. Daimler Buses
plans to further strengthen its leading position in the segment
for buses above eight metric tons gross vehicle weight.
Daimler Financial Services seeks to maintain its position as
one of the leading captive providers of financial and mobility
services; it will continue to expand its mobility services and
continue growing, in part by means of cooperative ventures.
The success of our business operations today creates the finan-
cial foundation for investments in the future of our company.
We intend to achieve a 8 to 9% return on sales (EBIT in relation
to revenue) for the automotive business on a sustained basis.
This overall figure is based on the long-term return targets for
the individual divisions: 8 to 10% for Mercedes-Benz Cars, 8%
for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for
Daimler Buses. For Daimler Financial Services, we have set
a target of 17% for return on equity. We also want to be a leader
in sustainability, and we will accomplish this by incorporating
the environmental and social effects of our operations into our
business strategy. For us, sustainability means combining
business success with social responsibility, environmentally
compatible products and environmentally compatible
production.
A leader in innovation
We are setting the standards for the future-oriented fields of
Connected, Autonomous, Shared & Services and Electric
(CASE). We want to expand vehicle connectivity even further
and thus create added value for our customers. We also
seek to be a leader in the use of digital technologies, both in our
products and services and along the entire value chain. The
digitization of our core processes and the utilization of forward-
looking technologies are creating new business opportunities
that revolve around the mobility requirements of our customers.
We seek to play a leading role in automated and autonomous
driving at all our divisions. This will result in the creation of new
and attractive business models for private car customers,
fleet customers, and the public transport and commercial goods
transport sectors.
We are further expanding our strong portfolio in the field of
mobility services. With our broad customer base and presence
in all of the relevant mobility segments, we have already
established a strong foundation for future success. We remain
on course for growth through innovative mobility services
and strong cooperation partners. We want to offer our customers
the best drive system for their needs – everything from high-
tech combustion engines to hybrid and electric drive systems.
In the field of electric mobility, we are establishing an
ecosystem of products and services in order to make electric
vehicles at least as convenient and pleasant to use as those
with combustion engines. We also plan to become a leader in
the area of electric commercial vehicles. In addition, we con-
tinue to expand our strong position in relation to vehicle safety,
the security of our services and our use of customer data.
Inspiring our customers
We gain and maintain our customers’ trust with outstanding
products and services that inspire them. We create added value
with our strong brands, unique range of products and
customized services. Our innovative services and new service-
based business models set us apart from our competitors.
We handle customer data responsibly and we use this data to
anticipate new customer expectations.
The best team
Our goal is to further develop the Group and make it even more
successful. We seek to recruit the most talented individuals
by further promoting a passion for innovation and encouraging
our employees to take on additional responsibility. We have
adopted an employee-focused culture in order to ensure we
remain an attractive employer that can rely on the best team
in the automotive industry. We improve our employees’ skills
and qualifications and offer them opportunities for lifelong
learning. We promote and support diversity and inclusion. Integ-
rity is extremely important for our company, especially as
we are undergoing a phase of fundamental transformation.
Integrity guides our dealings with respect to the Group, its
employees, business partners and customers, and society as a
whole. We are convinced that conducting business responsibly
provides us with orientation, especially in times of major trans-
formation; it makes us more successful over the long term,
and it also benefits our society. E pages 116 ff
Five strategic components
We are utilizing five closely linked strategic components
to shape the biggest transformation in our company’s history.
Our 5C strategy focuses on
– Strengthening our global core business (CORE)
– Leading in new future fields (CASE)
– Adapting our corporate culture (CULTURE)
– Strengthening our customer- and market-focused structure
(COMPANY).
At the center of all our activities is our fifth and most important
C: the customer (CUSTOMER). Our processes and organization
focus on our customers – we work with and for our customers
to ensure we provide them with the best products for their
needs and the best solutions for their mobility requirements.
Strengthening our global core business (CORE)
Mercedes-Benz Cars will continue to implement its growth
strategy with the goal of further safeguarding its leading
position in the global premium segment. We seek to build trust
with our high quality and safety standards, and our innovative
and outstanding products and services are designed to inspire
our customers. We are pursuing three different technological
approaches as we move ahead on the road to emission-free
driving: the further improvement of ultra-modern combustion
engines, expanded hybridization, and locally emission-free
vehicles with batteries and fuel cells. The most important
lever for improving combustion engines is the full electrification
of the drivetrain with the belt-driven starter-generator or the
integrated starter-generator (ISG) combined with a 48-volt
electrical system. Systematic hybridization is an important
interim solution on the road to emission-free mobility. Our
global development network, technology centers and digital
hubs keep us close to our customers, our markets and new
technologies. Within the framework of our growth strategy,
we have expanded our production network in all regions and
improved our global competitiveness. With our lead plants,
which assume global manufacturing responsibility for specific
product groups, we ensure that we implement uniform
standards and consistently deliver the high quality of “Made by
Mercedes” worldwide. Our goal is to make our production
operations modular, flexible and digital, and greener. These
efforts focus on Factory 56, which is an ultramodern, flexible,
fully digitized and CO2-neutral assembly plant in Sindelfingen.
Plans call for the plant to go into operation early in the next
decade. With regard to sales, we focus on the utilization of direct
interfaces to our customers, as well as offering them the
best possible experience over our entire relationship. Depending
on our customers’ needs, we make use of physical and digital
channels for customer contact and communication, and also
combine these channels wherever appropriate. Our market
position in China plays a key role in safeguarding our market
leadership. We have already transformed China into the
biggest market for Mercedes-Benz cars, thanks to products that
are aligned with Chinese customers’ requirements and our fur-
ther expansion of local development and manufacturing activities.
Safeguarding the earnings performance of Mercedes-Benz
Cars is an ongoing task. That is why we have refined our “Fit
for Leadership” efficiency program and integrated it into
our organizational structure.“Fit for Leadership” is expected to
result in an additional €4 billion in earnings by 2025.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 67
Daimler Trucks continues to pursue its proven strategy, which
focuses on leadership in innovation, a global market presence
and global platforms. Here, everything always revolves around
the customer. In the important North American market, we
plan to further safeguard our market leadership in the segment
for heavy-duty Class 6 to 8 trucks, whereby the Freightliner
Cascadia has played a major role in the success we have
achieved so far. With its new Actros, Daimler Trucks is also
underscoring its strong position in the areas of safety, digital
cockpits, connectivity and efficiency, particularly in Europe.
Fuel efficiency is a key selling argument, and we work continu-
ously to improve it. With the new Mercedes-Benz Actros for
example, we have been able to reduce fuel consumption once
again compared with the predecessor model. Since 2017,
Daimler Trucks has been investing in its product program in
Brazil, as well as in vehicle connectivity and the modernization
of the two plants in São Bernardo do Campo and Juiz de Fora.
We are now well established in India with BharatBenz, and
we continue to expand our presence with products that feature
cutting-edge technologies, as well as with the production of
vehicles that are exported from India to more than 60 markets.
Investment in our development and manufacturing operations
in Turkey is geared toward the long term and is proceeding as
planned. Daimler Trucks has succeeded in standardizing major
assemblies and modules in many applications and regions. The
continuous renewal of the product portfolio across all regions
makes it all the more important for us to constantly refine our
platform strategy.
The full effect of the cost optimizations at Daimler Trucks
with the target of permanent savings of €1.4 billion is to be
achieved as of the year 2019. The continuous improvement of
efficiency will, however, remain an important lever for ensuring
that Daimler Trucks continues to be financially successful.
Mercedes-Benz Vans plans to keep growing in the future and
to develop from a vehicle manufacturer into a provider of
holistic transport and mobility services. Mercedes-Benz Vans
is utilizing three strategic components here: market strategies
for global growth, product strategies for the further expansion
of its product portfolio, and the adVANce future initiative
focusing on the development and commercialization of customer-
oriented, holistic transport and mobility solutions. Our new
Sprinter plant in North Charleston, South Carolina, now allows
us to serve the local market even faster and more flexibly.
Market potential in China and the increase in online retail sales
of goods are enabling further growth. Our product pipeline
is in outstanding shape with the new Mercedes-Benz X-Class –
the first premium pickup from Mercedes-Benz Vans – and the
new Sprinter. In order to make production even more efficient
and flexible, Mercedes-Benz Vans plans to completely digitize
its global manufacturing operations by 2025. With its adVANce
initiative, Mercedes-Benz Vans is looking far beyond vehicles
themselves and developing from a vehicle manufacturer into
a provider of holistic transport and mobility solutions for
passenger and goods transport applications. adVANce consists
of six components which in combination with the right van
offer a tailored solution for every sector. Here, Mercedes-Benz
Vans works closely with customers as early as the develop-
ment stage, analyses sector-specific requirements, and delivers
holistic solutions that increase the efficiency of customers’
value chains.
68 A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Daimler Buses plans to continue its global growth with the help
of its regional strategies and state-of-the-art products in the
city-bus and touring-coach segments. The new Citaro hybrid city
bus makes a convincing impression with an economical and
practical concept for operation in cities. Our new driver assis-
tance systems underscore our strength in the area of active
safety. Daimler Buses’ European production network, which has
manufacturing locations in Germany, France, Spain and the
Czech Republic, is being reorganized to make it more efficient
and more competitive. The Mannheim plant is being trans-
formed into the center of competence for city buses and electric
mobility, while the facility in Neu-Ulm will become the center
of competence for touring coaches and autonomous driving.
Innovations in the coming years will be shaped more by
additional technologies than by the launch of new model series.
For this reason, we are strengthening our development
expertise in the fields of electric mobility, connectivity and
autonomous driving. Through our own regional centers, the
production of school buses and touring coaches in India, and
the use of the Brazilian production facility as a hub for exports
to other countries in South America, Africa and Asia, Daimler
Buses continues to expand its international business operations,
particularly in emerging markets.
Occupying an outstanding position in the area of safety
technology and with highly efficient products, Daimler Buses
aims to offer a convincing holistic package of new and used
vehicles, service and maintenance contracts, financing plans
and new mobility services.
Daimler Financial Services plans to use its balancedSTRATEGY
to strengthen the foundation of its current success – the
financing of mobility – while also continuing to expand its opera-
tions as a provider of mobility services. The future importance
of mobility services will also be underscored when Daimler
Financial Services AG is renamed as Daimler Mobility AG in July
2019. Daimler Financial Services will continue to grow around
the world in its core business areas of financing, leasing and
insurance by offering customized services and by utilizing the
developments associated with increased vehicle connectivity.
About half of all the vehicles delivered by Daimler around the
globe today are either financed or leased by Daimler Financial
Services. At the end of 2018, the division was financing or
leasing more than 5.2 million cars and commercial vehicles
worldwide, and it plans to increase this figure in the future.
Daimler Financial Services supports the sales of Daimler vehicles
in approximately 40 countries. The division also aims to
achieve the highest possible degree of customer satisfaction
and to enhance customer loyalty in line with the motto
“Engaging customers for life.” To this end, we have created a
new divisional board of management position for customer
experience. Daimler Financial Services also plans to completely
digitize its business processes in order to become an even
faster and more efficient organization.
Leading in new future fields (CASE)
As a pioneer of automotive engineering, we seek to be the leader
in all CASE fields (Connected, Autonomous, Shared & Services,
Electric) and to generate additional potential by linking these
four fields. The individual divisions benefit here from develop-
ments throughout the Group in the areas of electric mobility,
driving and safety systems for automated and autonomous
driving, and digitization and connectivity. More detailed infor-
mation on CASE can be found in the “Innovation, Safety and
Environmental Protection” section in the Management Report.
E pages 107 ff
Connected
Mercedes-Benz Cars is forging ahead with the intelligent
connectivity of products, services and customers. Our cars are
part of the Internet of things and therefore offer customers
a broad range of services that simplify life and make vehicle
operation more intuitive and convenient. Our outstanding
and intuitive Mercedes-Benz User Experience (MBUX) control
system concept points the way forward in this respect. With
“smart ready to …” the smart brand is being expanded in order
to offer a range of digital services for urban mobility.
Connectivity will also be a crucial factor for success in the
logistics sector in the future. At Daimler Trucks as well,
connectivity is creating substantial added value and leading to
efficiency gains in the transport chain. Our goal is to create a
seamless transport logistics system with connected trucks and
technologies that ensure that all vehicles are ideally always
fully loaded, with no downtimes or waiting periods. With the
digital cockpit in the new Actros, we are combining our
extensive range of digital services with a convenient and intui-
tive operating concept.
Connectivity is an important component of the adVANce stra-
tegic initiative at Mercedes-Benz Vans. The digital@Vans
program brings together new digital solutions, thus underscoring
the transformation of Mercedes-Benz Vans into a provider
of holistic customer-focused transport and mobility services.
Connectivity at Daimler Buses also offers benefits for everyone
involved – for example, bus operators in terms of fleet
management and maintenance costs, bus drivers on their routes,
and passengers using the e-ticketing service. Daimler Buses
now brings together all of its current and future digital services
for buses on its OMNIplus ON digital portal.
Daimler Financial Services also aims to expand digital business
models in the area of financing and mobility services in the
context of its balancedSTRATEGY, and is using connectivity to
further develop its digital services. The financing business is
becoming more flexible with regard to how vehicles are used,
the application of use-based billing and the utilization of
flat rates for leasing (including insurance and maintenance).
Autonomous
Our approach to autonomous driving is based on the use of
comprehensive driving and safety systems, vehicle connectivity
and real-time digital maps. As we continue to develop auto-
mated and autonomous driving, we are relying on the one hand
on technical assistance systems and on the other on auto-
mated systems for transporting customers from A to B without
a driver. With the S-Class, we have underscored the excellent
position Mercedes-Benz Cars occupies in the area of technical
assistance systems. On the other hand, we are developing
automated systems to be used without a driver exclusively or
to be shared with others. Fully automated and driverless
systems give back to people the time they now need to spend
steering and operating the vehicle. In addition, autonomous
driving technology offers people without a driver’s license new
opportunities to enjoy mobility. In order to accelerate the
A.09
The five components of the strategy
Strengthening our global
core business
Financial foundation for
investments in CASE
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 69
Leading position in
new future-oriented fields
Connected, Autonomous,
Shared & Services, Electric
E
CO R
C
A
S
E
CUSTOMER
C
U
L
T
U
RE
Y
M PAN
O
C
Innovative
corporate culture
Forward-looking
structure
development of autonomous driving, we have launched a number
of partnerships, for example with HERE for high-resolution
digital maps and with Bosch for the joint development of tech-
nology for fully automated driving and driverless vehicles.
Daimler Trucks is underscoring its leading position in the area
of safety through the further development of tried-and-tested
safety technologies such as the fifth-generation Active Brake
Assist system and Sideguard Assist, which Mercedes-Benz
offers as a fully integrated system. With the new Actros and
the new Freightliner Cascadia, Daimler Trucks is the first
manufacturer to offer partially automated driving in series-
produced trucks.
Mercedes-Benz Vans is also actively positioning itself in the
area of automated and autonomous driving. With Vision
URBANETIC, Mercedes-Benz Vans has presented a mobility
concept that goes far beyond previous ideas regarding auto-
mated and autonomous vehicles. Vision URBANETIC eliminates
the separation between passenger and goods transport by
offering an autonomous driving platform that enables flexible
use for cargo or passenger transport as needed.
With its Mercedes-Benz Future Bus with CityPilot, Daimler
Buses has demonstrated the highly advanced stage its
research has reached in the area of partially automated driving
on a BRT (bus rapid transit) route near Amsterdam. BRT
systems are an important element of future urban mobility and
already enable efficient, fast and cost-effective public
transport in many cities around the world.
Daimler Financial Services plans to use the experience it has
gained as a vehicle fleet operator and a global provider of
mobility services as it moves ahead with the establishment of
automated and autonomous systems. The division will also
continue to play an important role in the design of the customer
interface and business model.
Shared & Services
Daimler Financial Services finances and develops shared
mobility. Customers should be able to enjoy mobility instantly
and at all times with mobility services tailored to their needs.
At the same time, mobility systems need to be sustainable in
order to ensure a good quality of life in cities. We continuously
invest in the expansion of a comprehensive mobility ecosystem
and the further development of our mobility services car
sharing, ride hailing and mobility-as-a-service. At the same time,
we are working both independently and with partners to
develop the core expertise for the business with fleets of
automated and autonomous vehicles. car2go is a leading
company for flexible car-sharing services. With regard to ride
hailing, the Daimler subsidiary mytaxi is one of the leading
providers in the app-based taxi service market in Europe, while
moovel offers our customers a platform that enables them to
optimally compare, combine, book and pay for various mobility
services. In order to enable the rapid scaling of on-demand
mobility, all car-sharing, ride-hailing, parking, charging and
multimodal services currently offered by Daimler Mobility
Services and the BMW Group will be merged and strategically
further expanded. Within the framework of a joint venture
known as ViaVan, Mercedes-Benz Vans and its strategic partner
70 A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Via are now offering flexible shuttle services and pooling
concepts in several European cities to complement local public-
transport systems. The ViaVan service, which was initially
launched in Amsterdam and then in London and Berlin as well,
generates real-time matches of passengers headed in the
same direction and then offers them transport in a single van.
This sustainably reduces traffic volumes in cities while
increasing mobility capacities.
We plan to continue growing in the business customer segment
as well. Our Mercedes-Benz Vans Mobility GmbH subsidiary is
expanding and fully digitizing its van rental services in Germany
and around the world. With CharterWay, Daimler Trucks has
been offering customized mobility and services for more than
two decades now. And the Mercedes me app allows Mercedes-
Benz Cars customers to share their A-Class with a predefined
group of users.
Electric
Mercedes-Benz Cars plans to significantly expand its range of
electric vehicles over the coming years. Daimler assumes that
by the year 2025, electric models will account for between 15
and 25% of Mercedes-Benz Cars’ unit sales. To that end, we
plan to launch more than 10 all-electric cars in all segments, from
the smart to the large SUV. We are investing approximately
€10 billion in the expansion of our electric fleet and more than
€1 billion in the development of battery production. We are
developing an independent modular and scalable electric-vehicle
platform that will enable us to offer a high degree of flexibility
in terms of variants and models. All of the electric vehicles and
electric mobility services offered to Mercedes-Benz Cars
customers have been consolidated under our new EQ brand,
which stands for “Electric Intelligence.” Together with partners,
we are investing in the establishment of a charging infrastructure,
especially on major highways in Europe. We have designed our
production network in a manner that allows us to manufacture
our electric vehicles alongside the corresponding vehicles
equipped with combustion engines on the same production lines
at all of our key plants worldwide. This ensures that we can
react with sufficient flexibility to any changes in demand for
electric vehicles. In line with producing electric vehicles, we
are also expanding the production of batteries.
Daimler Trucks is also focusing more strongly on vehicle
electrification. Increasing restrictions on vehicles with com-
bustion engines in cities, as well as more stringent emission
limits, are promoting the development of alternative drive sys-
tems for commercial vehicles as well. We are a leading truck
manufacturer and we also want to be a leader in truck electrifi-
cation. With the eCanter from FUSO, the FUSO Vision One,
two electric trucks from Freightliner, the Mercedes-Benz eActros
and the Saf-T Liner C2 school bus from Thomas Built Buses,
Daimler Trucks already has a very extensive portfolio of electric
commercial vehicles. The establishment of the E-Mobility
Group maximizes the effectiveness of our investments in this
strategically important technology. We plan to introduce
a globally standardized electric architecture and develop the
best solutions for truck batteries and charging and energy
management systems.
Mercedes-Benz Vans plans to electrify its commercial model
series over the coming years. The eVito has been available
to customers since November 2018 and the eSprinter is to
expand the electric product range starting in 2019. The use
of a standardized “off the rack” electric model for the tradesmen,
parcel delivery companies or passenger transport operators
will not work out over the long term. That is why Mercedes-
Benz Vans is setting its sights on customized holistic system
solutions created on the basis of expert consultations. In a dia-
logue between the customer and experts from Mercedes-
Benz Vans, the operating concepts are individually adapted to
the customer’s sector-related needs, vehicle fleet sizes and
driving profiles – or to the architectural requirements for creating
the customer’s own charging infrastructure on company
premises.
Daimler Buses is also focusing on the development of electric
drive systems. Its buses CO2 balance can be further improved
with battery operation and the use of other alternative drive
systems. The Citaro hybrid was followed in 2018 by the
eCitaro electric city bus. Plans now call for the production
facility in Mannheim to be expanded into the Daimler Buses
center for electric mobility. In addition, Daimler Buses operates
an eConsulting program that offers customers holistic advice
on converting public transport bus fleets to electric vehicles, and
also provides follow-up services for bus operating companies.
With car2go, Daimler Financial Services has been operating
a system for flexible car sharing with electric vehicles for about
seven years now. With 2,100 vehicles distributed across four
all-electric fleets in Stuttgart, Amsterdam, Madrid and Paris,
we are a leading provider of flexible car-sharing services with
electric vehicles. In this way, car2go offers millions of urban
residents a simple way to become acquainted with electrically
operated vehicles. Daimler Financial Services also supports easy
access to electric mobility through leasing plans and overall
packages for electric vehicles and accessories.
Adapting our corporate culture (CULTURE)
We are also addressing the cultural challenge associated with
the transformation of the automotive industry by adapting
our corporate culture accordingly. Together with our employees,
we have developed a new management culture within the
framework of the Leadership 2020 program. It builds on a value-
support interdisciplinary work that is independent of hier-
archical structures. To this end, we enable new teams to be put
together for limited periods of time in order to work on
specific projects (swarming). We also promote the development
of innovations through the use of modern techniques such as
scrumming and design thinking. We use co-creation approaches
to develop the best solutions together with our customers.
With our Incubator, which is an internal startup concept for
employee ideas, as well as our STARTUP AUTOBAHN initiative,
we are supporting the development and implementation of new
business ideas and innovations from employees and external
partners. We develop digital solutions at the digital units of our
divisions and at our digital hubs. We teach digital skills in order
to promote our employees’ enthusiasm for digital technologies
and to enable them to use such technologies effectively. We
also promote knowledge sharing through new event formats
and platforms such as our Social Intranet, blogs and com-
munities. In addition, we offer hands-on experience with digital
technologies during our DigitalLife Days and roadshows at our
locations. This is how we have cooperated with our employees
to create the foundation for the Daimler Group’s cultural
transformation.
Strengthening our divisional structure
( COMPANY)
In order to continue keeping pace with the highly dynamic
development of our business environment, we want to create
an organization and structure that will strengthen our focus
on markets and customers, boost our entrepreneurial activities,
and generate and safeguard synergies (COMPANY). With
Project Future, the Mercedes-Benz Cars and Mercedes-Benz
Vans divisions will be placed into Mercedes-Benz AG, and the
Daimler Trucks and Daimler Buses divisions will be placed into
Daimler Truck AG, making them more independent. Daimler
Financial Services AG, which is already a legally independent
company, is to be renamed as Daimler Mobility AG, probably
in July 2019. The division is already well known as the Group’s
provider of mobility services. Daimler AG will remain the
parent company and retain responsibility for governance, strat-
egy and control functions, as well as offering Group-wide
services. Responsibility for Group-wide financing will be retained
by Daimler AG as the Group’s management holding company,
which will be the only publicly listed company in the Group. The
next step is to obtain approval to implement the new structure
at the Annual Shareholders’ Meeting on May 22, 2019.
With legally independent business entities resulting from Project
Future, we are creating greater proximity to the customers
and facilitating more targeted work in the markets. This will
enable the individual divisions to react faster and more
precisely to new trends, technological leaps and unforeseen
market developments. By assigning greater responsibility
to the management in the new legal entities below Daimler AG,
we are also increasing the scope for entrepreneurial action
and our pace of innovation. At the same time, we want to ease
cooperation in specific areas in order to take account of ever
faster technological change. In addition, the new structure will
enhance transparency on the individual parts of the Group
and thus the attractiveness of Daimler AG in the capital market.
Within the Daimler Group, synergies will continue to be
systematically maintained and utilized.
With our strategic focus areas of CORE, CASE, CULTURE and
COMPANY, we have established the conditions needed to
ensure we can focus more consistently on the requirements of
the CUSTOMER. The goal of Daimler’s 5C strategy is to
prepare the company for the challenges and opportunities
associated with the new age of mobility, and to continue
to be a leading vehicle manufacturer while becoming a leading
provider of mobility services.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 71
A.10
Investment in property, plant and equipment
Amounts in billions of euros
Daimler Group
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Corporate
2017
2018 2019 – 2020
6.7
4.8
1.0
0.7
0.1
0.04
0.0
7.5
5.7
1.1
0.5
0.1
0.06
0.1
14.5
11.3
2.2
0.4
0.2
0.1
0.3
A.11
Research and development expenditure
Amounts in billions of euros
Daimler Group
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
2017
2018 2019 – 2020
8.7
6.6
1.3
0.6
0.2
9.1
7.0
1.3
0.7
0.2
18.3
14.0
2.9
0.9
0.4
Extensive investment in the Group’s future
In the coming years, we will continue to forge ahead with our
innovation offensive in order to implement our growth strategy
through the introduction of new products, innovative tech-
nologies and modern manufacturing capacities. The future-
oriented CASE fields (Connected, Autonomous, Shared &
Services and Electric) will play a key role here. We will invest
almost €15 billion in property, plant and equipment in 2019
and 2020, as well as more than €18 billion in research and
development projects. With this plan, we continue to
maintain a high level of investment in order to safeguard the
future of the Daimler Group. A.10 and A.11
Investment in property, plant and equipment will mainly be
applied to prepare for the production of our new models.
We will also use our investment to realign our manufacturing
facilities in Germany, to increase local production in the
growth markets and to expand our global production network
for electric vehicles and batteries.
Most of our expenses for research and development flow into
new products. Key projects include the successor generations
of the C-Class and the S-Class and new models in the compact
segment. Other focus areas at all of our automotive divisions
include innovative drive-system and safety technologies, vehicle
connectivity systems and the further development of auto-
mated and autonomous driving technologies. Our plans also call
for substantial funds to be invested in our comprehensive
electric mobility offensive at all of our automotive divisions.
Management
Report
Daimler once again achieved record unit sales and revenue in 2018,
and the Group’s EBIT also reached a high level of €11.1 billion despite
difficult economic conditions. On the basis of sound finances and a
strong core business, we are positioning our businesses for the future:
with outstanding vehicles and services, with forward-looking technol-
ogies and business models, with an innovative and flexible corporate
culture, and with an organization appropriate to the markets’ growing
dynamics.
B | COMBINED MANAGEMENT REPORT | CONTENTS 73
B | Combined Management Report
Corporate Profile
Business model
Portfolio changes and strategic partnerships
Important events
Performance measurement system
Financial performance measures
Corporate governance statement
Economic Conditions and Business
Development
The world economy
Automotive markets
Business development
Profitability
EBIT
Statement of income
Dividend
Net operating profit
Value added
Liquidity and Capital Resources
Principles and objectives of financial management
Cash flows
Contingent liabilities and other financial obligations
Investment
Refinancing
Credit ratings
Financial Position
Daimler AG
(condensed version according to HGB)
Profitability
Financial position, liquidity and capital resources
Risks and opportunities
Outlook
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102
103
104
104
Sustainability and Integrity
Sustainability at Daimler
Research and development
Innovation, safety and environmental protection
The workforce
Social responsibility
Integrity, compliance and legal responsibility
Overall Assessment of the
Economic Situation
Events after the Reporting Period
Remuneration Report
Principles of Board of Management remuneration
Further development of the remuneration system
effective as of January 1, 2019
Board of Management remuneration in
financial year 2018
Commitments upon termination of service
Remuneration of the Supervisory Board
Takeover-Relevant Information
and Explanation
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
Legal and tax risks
Non-financial 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
The workforce
Overall statement on future development
105
105
105
107
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74 B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Corporate Profile
Business model
Daimler can look back on a tradition covering more than 130
years – a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an unpar-
alleled range of premium automobiles, trucks, vans and buses.
Its product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler’s goal is to
continue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we
intend to play a major role in promoting and shaping that change.
With our strong core business we are creating the financial
foundation for our investments in the future-oriented fields of
Connected (connectivity), Autonomous (automated and auton-
omous driving), Shared & Services (flexible use) and Electric
(electric drive systems) – “CASE” for short. Innovations
from the future-oriented CASE fields enable us to safeguard
the attractiveness and profitability of our core business.
Daimler AG is the parent company of the Daimler Group and
its headquarters are in Stuttgart. The main business of Daimler
AG is the development, production and distribution of cars,
trucks and vans in Germany and the management of the Daimler
Group. The management reports for Daimler AG and for
the Daimler Group are combined in this management report.
B.01
Consolidated revenue by division
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
53.5%
21.8%
7.7%
2.6%
Daimler Financial Services
14.4%
With its strong brands, Daimler is active in nearly all the coun-
tries of the world. The company has production facilities in
Europe, North and South America, Asia and Africa. The global
networking of its research and development activities as well
as its production and sales locations gives Daimler considerable
advantages in the international competitive field and also
offers additional growth opportunities.
In 2018, Daimler increased its revenue by 2% to €167.4 billion.
The Group’s five divisions contributed to this total as follows:
Mercedes-Benz Cars 53%, Daimler Trucks 22%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Financial Services
14%. At the end of 2018, Daimler employed a total workforce of
more than 298,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These vehi-
cles range from compact models to a highly varied portfolio of
off-road vehicles, roadsters, coupes and convertibles, and
to the S-Class luxury sedans. The product range is rounded out
by the Mercedes me brand and the high-quality small cars
of the smart brand. In 2016, we introduced the new brand EQ
(“Electric Intelligence”), which consolidates all of our activities
related to electric mobility. The most important markets
for Mercedes-Benz Cars in 2018 were China with 28% of unit
sales, the United States (14%), Germany (14%), the other
European markets (28%), Japan (3%) and South Korea (3%). The
Mercedes-Benz Cars division is continuously refining its flexible
production network consisting of more than 30 locations on
four continents. In particular, we are preparing our worldwide
production network to meet the requirements of electric
mobility. We will manufacture our electric vehicles of the EQ
product and technology brand within the framework of normal
series production operations, on the same lines used to pro-
duce vehicles with conventional or hybrid drive systems. In the
future, our sites for the production of electric vehicles will
be our plants in Bremen, Sindelfingen and Rastatt, Germany;
Hambach, France; Tuscaloosa, Alabama, United States and
Beijing, China. In parallel, we will expand our global battery
network to nine plants at seven sites on three continents.
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 75
As the world’s largest manufacturer of trucks above 6 metric
tons gross vehicle weight, Daimler Trucks develops and pro-
duces vehicles in a global network under the brands Mercedes-
Benz, Freightliner, Western Star, FUSO and BharatBenz.
The division’s 26 production facilities are located in the NAFTA
region (14), Europe (7), Asia (3) and South America (2). In
China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a
joint venture with our Chinese partner Beiqi Foton Motor Co.,
Ltd., has been producing trucks under the Auman brand name
since 2012. Daimler Trucks’ product range includes light,
medium and heavy-duty trucks for long-distance, distribution
and construction-site haulage, as well as special vehicles
that are used mainly in municipal applications. Due to close
links in terms of production technology, the division’s
product range also includes buses of the Thomas Built Buses
and FUSO brands. Daimler Trucks sells and is testing locally
emission-free electric drive systems across the entire product
portfolio. Daimler Trucks’ most important sales markets in
2018 were the NAFTA region with 37% of unit sales, Asia with
32% and the EU 30 region (European Union, Switzerland and
Norway) with 17%.
Mercedes-Benz Vans is a global supplier of a complete range of
vans and related services. The division’s products range from
the Citan small van with a gross vehicle weight of 1.8 metric tons
to the Sprinter large van with a gross vehicle weight of up to
5 metric tons. The portfolio of Mercedes-Benz vans in the com-
mercial segment comprises the Sprinter large van, the Vito
mid-size van (marketed as the “Metris” in the United States)
and the Citan urban delivery van. In the segment for
private customers, Mercedes-Benz Vans offers the V-Class
full-size MPV and the Marco Polo travel vans and recreational
vehicles. With the launch of the Mercedes-Benz X-Class in
2017, we now also have a model series in the segment for mid-
size pickups. The eVito, eSprinter and Concept Sprinter
F-CELL demonstrate how systematically we are progressing with
the development of alternative drive systems. The Mercedes-
Benz Vans division has manufacturing facilities in Germany,
Spain, the United States, Argentina, China and Russia. The divi-
sion is active in the Chinese market through the Fujian Benz
Automotive Ltd. joint venture. The production of the Citan and
the Mercedes-Benz X-Class is part of the strategic alliance
with Renault-Nissan. The most important markets for vans at
present are in the EU 30 region, which accounts for 66% of
unit sales, the NAFTA region (12% of unit sales in the year under
review) and Asia (9%).
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the industry leader for buses above 8 metric tons
in its most important traditional core markets: the EU 30 region,
Brazil, Argentina and Mexico. The division’s product range
comprises city and inter-city buses, touring coaches and bus
chassis. The largest of the division’s 14 production plants
are located in Germany, France, Spain, Turkey, Argentina, Brazil,
Mexico and, since 2015, in India as well. In 2018, Daimler
Buses generated 70% of its revenue in the EU 30 region and
14% in Latin America (excluding Mexico). Whereas we mainly
sell fully equipped buses in Europe, our business in Latin
America, Mexico, Africa and Asia focuses on the production
and distribution of bus chassis.
B.02
Daimler Group structure 2018
Mercedes-Benz
Cars
Daimler Trucks
Mercedes-Benz
Vans
Daimler Buses
Daimler
Financial Services
Revenue
€93.1 billion
€38.3 billion
€13.6 billion
€4.5 billion
€26.3 billion
Employees
145,436
82,953
26,210
18,770
14,070
Brands
76 B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
The Daimler Financial Services division supports the sales
of the Daimler Group’s automotive brands in approximately 40
countries. Its product portfolio primarily consists of tailored
financing and leasing packages for customers and dealers. It
also includes the brokering of insurance and credit cards,
the provision of fleet management services and investment
products, as well as various mobility services such as car2go –
a leading provider of flexible car-sharing services, the moovel
mobility platform and the ride-hailing group with the mytaxi,
Beat, Clever Taxi and Chauffeur Privé brands. The total number
of users of our mobility services increased to 31.0 million in
2018. During the year under review, Daimler Financial Services
financed or leased approximately 50% of the vehicles sold by
Daimler. The division’s contract volume of €154.1 billion covers
more than 5.2 million vehicles.
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries,
holdings and partnerships. The statement of investments of
Daimler AG in accordance with Section 313 of the German
Commercial Code (HGB) can be found in E Note 40 of the
Notes to the Consolidated Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2018. We also focused on contin-
uously developing our business portfolio and improving our
competitiveness in our core business areas. Our activities
revolve around the strategic dimensions of Connected, Autono-
mous, Shared & Services and Electric (CASE), all of which
will play a major role in shaping the future of mobility. In order
to strengthen our position in these areas, we forged ahead
with our partnerships and made various investments during the
year under review. The most important projects are briefly
described below.
Daimler AG and the BMW Group combine their
mobility services
The BMW Group and Daimler AG intend to offer their custom-
ers a single source for sustainable urban mobility services
in the future. To this end, the two companies signed an agree-
ment in March 2018 to merge their mobility services business
units. The companies plan to combine and strategically expand
their existing on-demand mobility services in the areas of
ca sharing, ride hailing, parking, charging and multimodality.
Daimler AG and the BMW Group will each hold a 50% stake in
a joint venture comprising both companies’ mobility services.
The headquarters of the new, joint mobility services company
will be in Berlin. After the complex transaction has been com-
pleted on January 31, 2019, the new mobility services company
together with Daimler AG and the BMW Group will make a
joint announcement in the first quarter of 2019 regarding the
next steps to be taken. The partners plan to grow the new
business model sustainably and to enable the rapid scaling of
services. At the same time, the two companies will remain
competitors in their respective core businesses.
Electric mobility in China
Daimler and its long-standing partner BAIC Group expanded
their strategic cooperation in the new energy vehicle (NEV)
sector in March 2018. Through its acquisition of a 3.93% stake,
Daimler has become a shareholder in Beijing Electric Vehicle
Co., Ltd., (BJEV), which is a subsidiary of BAIC Group. The
closer cooperation with both BAIC and BJEV will enable Daimler
to gain an even better understanding of the needs of Chinese
customers in the NEV sector. The investment in BJEV marks a
further milestone in the close cooperation between Daimler
and BAIC in China and underscores Daimler’s commitment to
the further development of electric mobility in the country.
Settlement reached with the German federal government
to end Toll Collect arbitration proceedings
In 2002, Daimler Financial Services acquired a 45% interest
in the Toll Collect consortium, which operates an electronic
truck-toll system on highways in Germany. Daimler’s partners
in the consortium were Deutsche Telekom AG (45%) and
Cofiroute (10%). From the launch of the system to the end of
2017, Toll Collect generated more than €53 billion in revenue
for the German federal government, which used the money to
improve and expand Germany’s road infrastructure. A long-
standing arbitration proceeding between the Federal Republic
of Germany, Daimler Financial Services AG and Deutsche
Telekom AG in connection with delays to the system’s launch
was concluded through the conclusion of a settlement agree-
ment in July 2018. This settlement will now enable Toll Collect
to make a fresh start. Daimler has announced that it will not
participate in the new bidding process for truck-toll collection
in Germany. The current operating agreement ended on
August 31, 2018 and the Federal Republic of Germany acquired
the shares in Toll Collect GmbH as planned on September 1,
2018.
Acquisition of a stake in electric bus
manufacturer Proterra
Daimler Trucks is investing in the US company Proterra Inc.
The companies agreed to form a strategic partnership in
September 2018. Proterra is a leader in the segment for elec-
tric local-transport buses in the United States. Initial joint
projects will focus on the electrification of commercial vehicles
in general and the exploitation of synergies in the electrifica-
tion of school buses manufactured by Thomas Built Buses. The
cooperation gives both companies the opportunity to offer
reliable and economical new transport options with locally
emission-free electric drive technology in this growing seg-
ment. School buses are also an ideal application for electric
drive technology, since, like public-transit vehicles, most
school buses travel the same route or a similar route every day.
Important events
Board of Management and Supervisory Board of
Daimler AG approve further development of the divisional
structure of the Group
On July 26, 2018, the Board of Management and the Supervisory
Board granted their approval for the implementation of the
new corporate structure for Daimler AG. The related worldwide
audits of the organizational and tax implications have been
successfully completed. With the new structure, Daimler aims
to give its divisions greater entrepreneurial freedom, to
become even more market and customer-focused, and to make
it possible to enter into partnerships more easily and quickly.
Now that approval has been granted by the Board of Manage-
ment and the Supervisory Board, “Project Future” can now
be implemented. As the next step, the measures decided upon
require the approval of the shareholders. A draft proposal
for approval is to be presented to the Annual Shareholders’
Meeting of Daimler AG on May 22, 2019.
Daimler sets the course for the future
The regular term of office for the Chairman of the Supervisory
Board, Dr. Manfred Bischoff, is scheduled to end after the
conclusion of the Annual Shareholders’ Meeting in 2021. In
view of the challenges presented by the transformation of
the automotive industry, the Supervisory Board aims to prepare
a suitable process of succession at an early stage. The Super-
visory Board has therefore announced its intention to propose
to the shareholders at the Annual Shareholders’ Meeting in
2021 that Dieter Zetsche be elected as a member of the Super-
visory Board. Manfred Bischoff intends to recommend the
election of Dieter Zetsche as his successor as Chairman of the
Supervisory Board at the end of the Annual Shareholders’
Meeting in 2021. In order to ensure compliance with the two-
year cooling-off period, Dieter Zetsche will step down from
his position on the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars at the conclusion of the Annual
Shareholders’ Meeting in 2019. In view of this development,
the Supervisory Board of Daimler AG decided in its meeting on
September 26, 2018, to appoint Ola Källenius as Chairman
of the Board of Management of Daimler AG, effective at the con-
clusion of the 2019 Annual Shareholders’ Meeting, and also
to appoint Ola Källenius as the Head of the Mercedes-Benz Cars
division for a new term of five years.
Bodo Uebber, the member of the Board of Management of
Daimler AG with responsibility for Finance & Controlling and
Daimler Financial Services, informed the Chairman of the
Supervisory Board, Manfred Bischoff, on October 7 that he
will not seek an extension to his current term of office,
which expires in December 2019.
Performance measurement system
Value-based management
The performance measurement system used at Daimler is
designed to ensure that our investors’ interests and expectations
are taken into account within the framework of a value-based
management system. Value added shows the extent to which
the Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional value.
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 77
Value added is derived from the financial value drivers which,
due to their direct relationship to ongoing business operations,
are utilized as financial performance indicators for the periodic
assessment of the performance of the Group and its divisions.
In this sense, value added can be calculated as the difference
between operating profit and the cost of capital of the average
net assets. Alternatively, the value added of the industrial divi-
sions can be determined using the main value drivers of return
on sales (quotient of EBIT and revenue) and net assets’ produc-
tivity (quotient of revenue and net assets). B.03
The combination of return on sales and net assets’ productivity
results in the return on net assets (RONA). If RONA exceeds
the cost of capital, value is created for our shareholders. In the
case of Daimler Financial Services, return on equity rather
than return on sales is used to evaluate profitability. Using a
combination of return on sales and net assets’ productivity
within the context of a strategy of profitable revenue growth
provides a basis for the positive development of value added.
The required rate of return on net assets, and hence the cost
of capital, is derived from the minimum rates of return that
investors expect on their invested capital. The cost of capital
of the Group and of the industrial divisions comprises the
cost of equity as well as the costs of debt and net pension obli-
gations of the industrial business. The expected returns
on liquidity of the industrial business are considered with the
opposite sign. The cost of equity is calculated according to
the capital asset pricing model (CAPM), using the interest rate
for long-term risk-free securities (such as German government
bonds) plus a risk premium reflecting the specific risk of
an investment in Daimler shares. Whereas the cost of debt is
derived from the required rate of return for obligations the
Group enters into with external lenders, the cost of capital for
net pension obligations is calculated on the basis of discount
rates used in accordance with IFRS. The expected return on
liquidity is based on money market interest rates. The Group’s
cost of capital is the weighted average of the individually
required or expected rates of return. During the year under
review, the cost of capital amounted to 8% after taxes. For
the industrial divisions, the cost of capital amounted to 12%
before taxes; for Daimler Financial Services, a cost of equity
of 13% before taxes was applied. B.04
The quantitative development of value added and the
associated financial performance measures is explained in
the “Profitability” chapter. E pages 89 f
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
78 B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Financial performance measures
Profit measure
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions’ responsibility for profit and loss. The measure
of operating profit that is used at Group level is net operating
profit. It comprises EBIT as well as profit and loss effects for
which the divisions are not held responsible. The latter include
income taxes and other reconciliation items. B.19 page 89
Return on sales
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the industrial
divisions’ profitability. Return on sales is the quotient of EBIT
and revenue, whereby unit sales are the primary source of
revenue. The measure of profitability for Daimler Financial
Services is not return on sales but return on equity (quotient
of EBIT and equity).
Net assets
All assets, liabilities and provisions for which the industrial
divisions are responsible in day-to-day operations are allo-
cated to those divisions. Performance measurement at Daimler
Financial Services is implemented on an equity basis. Net
assets at Group level include the net operating assets of the
industrial divisions and the equity of Daimler Financial Ser-
vices, as well as assets and liabilities from income taxes and
other reconciliation items which cannot be allocated to
the divisions. Average annual net assets are calculated on the
basis of average quarterly net assets. E page 90
A change to net assets – for example as a result of invest-
ments – generally leads to the commitment or release of liquid
funds. Along with earnings, net assets thus also have a
direct effect on cash flows and therefore on the Group’s finan-
cial strength as well. Of particular importance for the financial
strength of the Daimler Group is the free cash flow of the
industrial business, which comprises the cash flows at the auto-
motive divisions and the cash flows from taxes and other
reconciliation items that cannot be allocated to the divisions.
B.04
Cost of capital
In percent
2018
2017
Group, after taxes
Industrial business, before taxes
Daimler Financial Services, before taxes
8
12
13
8
12
13
Key performance indicators
The most important financial indicators for measuring the
operating financial performance of the Daimler Group, in
addition to EBIT and revenue, are the free cash flow of the
industrial business, investment and expenditure for
research and development.
The most important performance indicator for the profitability
of the automotive divisions is return on sales; the most impor-
tant profitability performance indicator for Daimler Financial
Services is return on equity. The other most important perfor-
mance indicators for the divisions are revenue, investment
and expenditure for research and development.
With the 2018 Annual Report, we began using return on sales
rather than EBIT to forecast the profitability of the automotive
divisions, and return on equity rather than EBIT to forecast the
profitability of Daimler Financial Services. In this way, we have
established a connection between expectations for the current
financial year and the strategic return targets.
Along with the indicators of financial performance, we also use
various non-financial indicators to help us manage the Group.
Of particular importance in this respect are the unit sales of our
automotive divisions, which we use as the basis for our capac-
ity and human resources planning and workforce numbers.
Performance indicators that evaluate the implementation status
of future-oriented measures associated with the sustainable
and technological realignment of the Group, as well as other
non-financial performance indicators, are also used to deter-
mine the remuneration of our Board of Management members.
Important criteria for non-financial performance indicators
in the annual target achievement include integrity and compli-
ance, employee satisfaction and the high quality of our
products.
Details of the development of non-financial performance
indicators can be found in the chapters “Economic Conditions
and Business Development” and “Non-Financial Report.”
E pages 79 ff and 202 ff
Corporate governance statement
The Declaration on Corporate Governance pursuant to Section
289f and Section 315d of the German Commercial Code (HGB),
combined with the Corporate Governance Report, can be
found in this Annual Report on pages E 191 ff and can also
be viewed on the Internet at w daimler.com/corpgov/de.
Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 79
Economic Conditions and Business Development
The world economy
With real growth of more than 3% in the year under review, the
world economy displayed growth performance similar to 2017.
B.05 However, regional economic developments were more
heterogeneous compared to the synchronous upturn in 2017.
In addition, growth in global trade slowed noticeably at the
beginning of the year, a development that particularly impacted
export-dependent economies.
The industrialized countries as a whole were able to maintain
their dynamic rate of growth. The US economy played a major
role, as fiscal policies helped generate growth of nearly 3%,
which was once again higher than in the previous year. Signifi-
cantly increased investment by companies served as a key
driver of growth, while private consumption remained stable.
The economy of the European Monetary Union, in contrast,
was unable to continue the dynamic development of the previ-
ous year, and grew by just under 2%. This slowdown in growth
was mainly due to decreased foreign trade. Domestic demand,
on the other hand, was robust and continued to be supported
by the expansionary monetary policy of the European Central
Bank. According to preliminary estimates the German econ-
omy recorded growth of only 1.5%. Here as well, a slowdown in
exports and a weak period in the manufacturing sector pre-
vented stronger expansion of the economy. Against the back-
ground of the Brexit negotiations, the economy of the United
Kingdom grew only moderately by about 1.4%. Slower export
growth led to significantly lower growth rates than in the
previous year also in Japan.
Economic growth in China slowed somewhat due to lower credit
growth, a sluggish real estate market and the negative effects
of the trade dispute with the United States. Nevertheless, the
Chinese economy achieved the government’s growth target
with a rate of 6.6%. Taken together, the economies of all emerg-
ing markets in Asia grew at a rate similar to that of the previ-
ous year. Growth was particularly strong in India. Hopes for
accelerated growth in South America were not fulfilled. Although
the economies of South America began to recover in 2017, the
crisis in Argentina and disappointing developments in Brazil
have since slowed down the region’s economic growth. Growth
in Central and Eastern Europe was also weaker than in the
prior year, although this was primarily due to a cooling down of
the Turkish economy in the wake of the crisis in that country.
In aggregate, the large economies of Central Europe lost only a
little of their momentum, and growth of the Russian economy
actually accelerated a little. Oilprices were significantly higher
for several periodes during the year, which led to slightly higher
rates of economic growth in the Middle East. Despite all the
regional differences, the emerging markets as a whole recorded
real economic growth of just under 4.5%, thereby almost keep-
ing pace with the growth recorded in the prior year.
Currency exchange rates remained volatile in this heterogeneous
growth environment. Against the US dollar, the euro moved
between $1.25 and $1.12 during the year. At the end of the year,
the euro was approximately 5% weaker than at the end of 2017.
The range of fluctuation of the Japanese yen against the euro
was 137 to 125. By the end of the year, the euro had depreci-
ated against the yen by about 7%. The value of the British pound
against the euro was almost unchanged compared with a year
earlier. The euro appreciated against other key currencies such
as the Russian ruble, the Brazilian real and the Turkish lira
with double-digit increases compared with the end of 2017.
B.05
Economic growth
Gross domestic product, growth rates in %
2017
2018
6
5
4
3
2
1
0
-1
-2
Total
Europe
NAFTA
Asia
South
America
Source: IHS Global Insight, own calculations
80 B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Car sales in China fell slightly for the first time in decades.
This was due on the one hand to the discontinuation of the
government tax incentives that had supported car sales in pre-
vious years. On the other hand, the growing trade dispute
with the United States led to uncertainty among consumers,
causing them to postpone vehicle purchases in some cases.
The second half of the year was particularly weak, and full-year
sales ended up decreasing by approximately 4%.
Demand for cars in Japan remained more or less at the same
solid level as in the prior year. Sales in India increased slightly,
as the Indian car market continued its expansion of recent
years. The Brazilian car market continued to recover in the year
under review. The initial market volume was low in Brazil,
but the country recorded a double-digit increase in unit sales.
Demand for medium-duty and heavy-duty trucks developed
positively overall in markets relevant to our operations. The
North American market benefited from the strong growth of
the US economy and the vibrant development of corporate
investment. Sales of Class 6 to 8 trucks increased by just over
20%.
Despite the somewhat less dynamic overall economic develop-
ment in the EU30 region (European Union, Switzerland and
Norway), the truck market there remained robust, with sales
increasing moderately. Developments varied among the indi-
vidual markets. Demand for trucks rose slightly in Germany and
substantially in France, for example. However, sales in the
United Kingdom decreased relative to the previous year, as had
been expected. Total truck sales in the EU countries of Central
and Eastern Europe increased significantly. Despite disappoint-
ingly weak economic growth in Brazil, truck sales in that
country increased by nearly 50% from the low level of the pre-
vious year. The Turkish truck market recorded a significant
double-digit decrease in sales, primarily due to the country’s
economic difficulties. The Russian truck market lost most
of its momentum as the year progressed; the latest estimates
indicate that sales were only slightly above the prior-year level.
Developments in Daimler’s most important Asian markets
were varied. The Japanese market for light-, medium- and heavy-
duty trucks remained solid, with sales only slightly below
the previous year’s level. Demand for trucks in India recovered
from the negative effects of regulatory measures introduced
in the prior year, and the Indian market for medium-duty and
heavy-duty trucks recorded a significant double-digit increase
in sales as a result. The truck market in China developed better
than expected and roughly maintained the extraordinarily
high sales volume of 2017.
Automotive markets
Global demand for cars remained at a very high level in the
year under review, but actually decreased slightly by about 1%
compared with the previous year. The traditional sales markets
in Western Europe and the United States have now fully recov-
ered from the considerable volume losses suffered as a result
of the financial crisis and have recently been moving only side-
ways. The Chinese car market weakened noticeably as the year
progressed, with full-year demand declining slightly. The mar-
kets of the other emerging economies as a whole were close to
their prior-year level. B.06
Passenger car sales in the whole of Europe were at about the
prior-year level. Demand in Western Europe also remained at
the level of 2017. This easing up can be attributed in part to the
fact that the market volume had meanwhile regained a high
level. In addition, supply bottlenecks caused by the conversion
to the new test procedure for vehicle certification (Worldwide
Harmonized Light Vehicles Test Procedure – WLTP) had a nega-
tive impact on passenger car sales during the last four months
of the year. Demand in the German car market was no higher
than in the previous year, while demand in France increased by
approximately 3%. The UK car market, however, contracted at
a rate of about 7%. Total car sales in Eastern Europe remained
at about the prior-year level, thanks to a significant increase
in demand in the EU countries of Central and Eastern Europe,
as well as in Russia. Sales in Turkey were down sharply,
however, by more than 30%.
Thanks to a favorable overall economic environment, the market
volume for cars and light trucks in the United States remained
more or less unchanged at a very high level, with unit sales
totaling more than 17 million vehicles. The SUV trend continued
unabated, with sales of such vehicles rising significantly in
the year under review. Sales of traditional sedans, on the other
hand, once again decreased significantly.
B.06
Global automotive markets
Unit sales growth rates 2018 in %
(some numbers are preliminary)
Passenger cars
Commercial vehicles2
30
25
20
15
10
5
0
-5
Total
Europe
NAFTA1
Asia
South
America1
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
Source: German Association of the
Automotive Industry (VDA),
various institutions
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 81
Demand for vans continued to develop positively in the EU30
region in 2018. The market volume for mid-size and large vans
increased by 5% and demand for mid-size pickups rose by 7%.
The market for small vans was at the prior-year level. Also in
Germany, sales in the combined segment for mid-size and
large vans increased by 6%. The market for large vans in the
United States expanded slightly in the year under review.
Demand in the mid-size segment of the van market that we
serve in China increased slightly. Market volume for large vans
in Latin America rose significantly from the low level of the
prior year.
Market volume for buses in the EU30 region was slightly above
the high level of the previous year. The situation in Latin Amer-
ica (excluding Mexico) improved due to the market recovery in
Brazil, although growth in the region was slowed by a sharp
market contraction in Argentina. As a result of the ongoing dif-
ficult economic situation in Turkey, the market volume for
buses there once again decreased significantly compared with
the previous year.
Business development
Unit sales
Daimler increased its total unit sales in the year 2018 by 2%
to 3.4 million vehicles, thus achieving its growth target. The
Daimler Trucks (+10%), Mercedes-Benz Vans (+5%) and Daimler
Buses (+8%) divisions confirmed the forecasts made at the
beginning of the year. With an increase of 0.4%, unit sales at
Mercedes-Benz Cars were slightly higher than in the previous
year. The division therefore did not fully achieve the target
it had set at the beginning of the year.
The Mercedes-Benz Cars division sold a total of 2,382,800
vehicles in 2018 despite difficult overall conditions, thus setting
a new record (2017: 2,373,500). With unit sales of 2,252,800
(2017: 2,238,000) vehicles, the Mercedes-Benz brand was the
strongest-selling premium brand in the automobile industry
for the third year in succession. We are number one in the pre-
mium segment in Germany and several other key European
markets, as well as in the United States, South Korea, Canada
and Japan. In addition, we once again significantly improved
our position in China with a new sales record.
Our E-Class models were particularly successful. At 433,600
units (+9%), E-Class sales once again reached a new record
level. Our attractive range of sport-utility vehicles also per-
formed well on the market once again, with sales increasing
by 1% to 829,200 units. Due to the model change, sales of
C-Class vehicles decreased by 3% to 477,700. Sales of A- and
B-Class models were also affected by a model change in the
year under review, although the success of the new A-Class led
to total deliveries of 409,300 units (-3%). The S-Class was very
successful on the market in 2018. Our total sales in this seg-
ment increased by 6% to 83,800 units. With sales of 77,700
units (+7%), the S-Class Sedan remains the best-selling luxury
sedan in the world. B.07
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Unit sales increased in the volume
markets of Germany (+1%) and Spain (+3%), remained constant
in France, but decreased in the United Kingdom (-7%) and Italy
(-5%). The Mercedes-Benz Cars division continued its success
in China during the year under review. The division’s unit sales
in the country rose by 10% to 677,700 vehicles. We set new
records for unit sales also in other Asian markets – for example
in India (+1%), South Korea (+1%) and Thailand (+5%). At
392,600 units, total sales in the NAFTA region were lower than
the high level of the prior year. Sales decreased in the United
States (-3%) and Canada (-2%), while sales in Mexico increased
by 7%.
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018 (2017: 135,500). E pages 166 ff
B.07
Unit sales structure of Mercedes-Benz Cars
A-/B-Class
C-Class
E-Class
S-Class
SUVs*
Sports Cars
smart
* including GLA
Europe
NAFTA
Asia
Other markets
17%
20%
18%
4%
35%
1%
5%
41%
16%
39%
4%
82 B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
B.08
Unit sales structure of Daimler Trucks
EU30
Latin America
NAFTA
Asia
Other markets
17%
7%
37%
32%
7%
B.09
Market share1
in %
Mercedes-Benz Cars
European Union
thereof Germany
United States
China
Japan
Daimler Trucks
Medium- and heavy-duty
trucks EU30
thereof Germany
Heavy-duty trucks NAFTA
region (Class 8)
Medium-duty trucks NAFTA
region (Classes 6 and 7)
Medium- and heavy-duty
trucks Brazil
Trucks Japan
Medium- and heavy-duty
trucks India
Mercedes-Benz Vans
Mid-size and large vans EU30
thereof Germany
Small vans EU30
Large vans United States
Daimler Buses
Buses over 8 tons EU30
thereof Germany
Buses over 8 tons Brazil
2018
2017
18/17
Change in % points
6.2
10.5
1.8
2.9
1.6
20.6
36.5
38.8
37.8
27.9
19.3
7.0
15.3
25.2
3.1
8.3
29.0
49.3
51.6
6.3
10.5
2.0
2.6
1.7
21.0
36.4
40.0
39.3
27.6
19.6
9.1
16.7
27.3
3.1
7.5
28.4
51.6
52.5
-0.1
0.0
-0.2
+0.3
-0.1
-0.4
+0.1
-1.2
-1.5
+0.3
-0.3
-2.1
-1.4
-2.1
0.0
+0.8
+0.6
-2.3
-0.9
1 Based on estimates in certain markets.
Unit sales by Daimler Trucks in 2018 were significantly higher
than in the previous year. In total, we delivered 517,300 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
Built Buses and FUSO brands in the year under review (2017:
470,700). Daimler Trucks continues to be the world’s biggest
manufacturer of trucks above 6 tons. B.08 At 85,400 units,
our sales in the EU30 region increased slightly. Our Mercedes-
Benz brand remained the market leader in the medium-duty
and heavy-duty segments, with a share of 20.6% (2017: 21.0%).
Our sales in Turkey were very adversely affected by the con-
siderable economic uncertainty in the country. Unit sales in
Turkey totaled 5,000 trucks, a decrease of 57 % from the
prior year. B.09
In Latin America, however, we were able to significantly
increase our sales once again, to 38,200 units in the year under
review (2017: 30,500). The increase in sales in our main
Latin American market, Brazil, made a major contribution to
our improved performance in the region. Truck sales in Brazil
totaled 21,400 units, an increase of 60% from the low level of
the prior year. We were able to expand our market share
to 27.9% (2017: 27.6%) and achieved market leadership in the
medium- and heavy-duty segments with our Mercedes-Benz
trucks. Sales in Argentina decreased to 3,500 units in the year
under review (2017: 5,600).
The ongoing positive development of sales in the NAFTA
region played a major role in our overall sales growth in 2018.
We once again recorded a significant increase in sales in
the NAFTA region, to 189,700 units (2017: 165,000). We also
remained the market leader in Classes 6–8 with a market
share of 38.4% (2017: 39.8%).
We increased our sales in Asia by 11% to 164,700 trucks. Sales
in Japan totaled 44,000 units (2017: 44,800). Our FUSO brand
achieved a market share of 19.3% in Japan (2017: 19.6%). Unit
sales in Indonesia increased by 50% compared with the previous
year to 64,200 trucks (2017: 42,700). At 9,700 units, our sales
in the Middle East were substantially lower than the high figure
recorded in the previous year (2017: 23,600). In India, a signif-
icant increase in demand for medium- and heavy-duty trucks
had a positive impact on our sales and we sold 22,500 trucks
in that market in the year under review, an increase of 35%
from the previous year. Our market share with the BharatBenz
brand amounted to 7.0% (2017: 9.1%).
In China, the world’s biggest truck market, Daimler AG holds
a 50% interest in Beijing Foton Daimler Automotive Co. Ltd.
(BFDA), a joint venture with Beiqi Foton Motor Co. Ltd. Medium-
and heavy-duty trucks of the Auman brand have been pro-
duced there since 2012. At 103,400 units, sales of Auman trucks
were lower than the high figure recorded in the prior year
(2017: 112,400), which had been influenced by the favorable
economic development and in particular the implementation of
regulatory measures relating to truck fleet renewal. 596,700
Auman trucks have been sold since the joint venture was
launched. E pages 172 ff
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 83
Business at Daimler Financial Services continued to develop
positively in the year under review. As we had forecast in
Annual Report 2017, worldwide contract volume continued to
grow, reaching the new record level of €154.1 billion in 2018
(+10%). At €71.9 billion, new business remained slightly above
the level of the previous year, which is what we had antici-
pated at the beginning of 2018. Moderate growth was achieved
in Europe (+2%) and in the Americas region (+3%). However,
new business in the Africa and Asia-Pacific region (excluding
China) decreased by 3%, while a slight increase of 2% was
achieved in China. In the insurance business, we brokered
approximately 2.3 million policies in the year under review,
which corresponds to an increase of 8% compared with the
previous year. The total number of registered users of our
mobility services rose to approximately 31.0 million in the year
under review. car2go increased its number of registered
users to around 3.6 million and thus strengthened its position
as a leading company for flexible car sharing. The ride-hailing
group, which manages mytaxi, further expanded its position as
one of Europe’s leading provider of taxi apps in 2018, among
other things, by acquiring a majority stake in Chauffeur Privé.
The number of registered users of the ride-hailing group’s
services rose to 21.3 million, an increase of 92% from 2017. We
have also further developed the moovel app, with which cus-
tomers can find the best way of traveling using various modes
of transport, and can also directly book and pay for their jour-
neys. The number of registered moovel users in Germany and
the United States had risen to 6.2 million by the end of 2018
(2017: 3.7 million). At the end of 2018, Daimler Financial Services
had 395,000 contracts on the books with its Athlon and
Daimler Fleet Management brands (+3%). Total contract volume
amounted to €6.5 billion in 2018. E pages 183 ff
Mercedes-Benz Vans achieved record sales once again in 2018.
Unit sales of 421,400 vehicles surpassed the prior-year figure
by 5%. Whereas we mainly focus on commercial customers with
the Sprinter, Vito and Citan models, the V-Class is primarily
designed for private use. With the X-Class, our new mid-size
pickup, we are addressing diverse customers for both private
and commercial applications. In the EU30 countries, which com-
prise our core region, our unit sales of 278,300 vehicles were
slightly above the prior-year level (2017: 273,300), while our
market share in the region in the combined segment for mid-size
and large vans amounted to 15.3% (2017: 16.7%). We set a new
record in Germany with sales of 107,300 units (2017: 105,800).
Sales in the NAFTA region increased substantially, leading to
a new sales record of 38,700 units in the United States (2017:
34,200), where our market share for large vans also increased
to 8.3% (2017: 7.5%). Business development was very favorable
also in Latin America, where sales rose by 14% to 18,700 units
despite the difficult situation in Argentina. Unit sales in China
also increased significantly, by 22 % to the new record of
29,100 vans. This development was largely due to the success
of the Vito and the V-Class. At 206,300 units, global sales
of Sprinter models were slightly higher than in the prior year
(2017: 200,500). Vito sales were slightly down from the previ-
ous year at 108,300 units (2017: 111,800). The V-Class full-size
MPV performed successfully on the market; its total sales of
63,900 units exceeded the previous year’s figure by 8%. Sales
of the Mercedes-Benz Citan reached 26,300 units (2017:
26,100), while X-Class sales totaled 16,700 units in the year
under review (2017: 3,300). E pages 177 ff
Daimler Buses sold 30,900 buses and bus chassis worldwide
in financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market, and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
maintained its market leadership in its most important
traditional markets (EU30, Brazil, Argentina and Mexico). Due
to continued high demand for our fully equipped buses, sales
in the EU30 region amounted to 9,300 units, which was signifi-
cantly above the high figure recorded in the previous year
(8,700). Daimler Buses expanded its leading position in the EU30
region with a market share of 29.0% (2017: 28.4%). At 2,900
units, sales in Germany were 5% lower than in the prior year. At
300 units, sales in Turkey decreased significantly (2017: 400)
due to the ongoing difficult situation in the country. The situation
in Latin America (excluding Mexico) improved due to the
gradual market recovery in Brazil, although growth in the region
was negatively affected by the sharp market contraction in
Argentina. Sales of Mercedes-Benz chassis in Brazil rose by
22% to 8,800 units. We were able to maintain our leading
market position in Brazil with a market share of 51.6% (2017:
52.5%). In India, we continued along our growth path and
increased our sales volume to 1,600 units (2017: 900). In
Mexico, sales of 3,200 units (2017: 3,400) were significantly
lower than in the previous year. E pages 180 ff
84 B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Order situation
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Buses divisions produce vehicles predomi-
nantly to order, in accordance with customers’ specifications.
While doing so, we flexibly adjust the production capacities for
the individual models to changing levels of demand. Due in
particular to continued strong demand in China and the Euro-
pean markets, the number of orders placed with Mercedes-
Benz Cars during the year under review was once again at the
high level of orders received in the previous year. This was
driven on the product side primarily by the new E-Class, as
well as the continued strong success of our SUVs. Production
volume in 2018 and our order backlog at the end of the
year were of the prior-year magnitude. At Daimler Trucks, both
orders received and the order backlog at year-end were sig-
nificantly higher than a year earlier. This was primarily due to
strong demand in North America, growth in demand in
the EU30 region, and the market revival in Latin America. We
increased production volumes in response to the higher
demand.
Revenue
In the year 2018, Daimler increased its total revenue by 2% to
€167.4 billion; adjusted for currency-translation effects, revenue
grew by 4%. Our expectations from the beginning of the
year were thus fulfilled. The divisions Daimler Trucks (+7%) and
Daimler Financial Services (+7%) increased their business
volumes by significant margins. In the case of Daimler Trucks,
we had only expected a slight increase in business volume.
The Mercedes-Benz Vans division recorded a slight increase of
4%, whereas we had originally anticipated a significant increase
for this division. Revenue at Mercedes-Benz Cars almost reached
the expected magnitude of the prior year (-1%). Revenue at
Daimler Buses was at the level of the previous year, despite
higher unit sales and our expectation of significant growth.
This was partially due to the European touring coach segment.
In regional terms, Daimler achieved revenue growth as
follows: Europe (+0% to €68.5 billion), NAFTA region (+3% to
€48.0 billion) and Asia (+4% to €40.6 billion).
B.11
Revenue by division and region
2014
2015
2016
2017
2018
In millions of euros
2018
20171
18/17
% change
B.10
Consolidated revenue by region
In billions of euros
50
45
40
35
30
25
20
15
10
5
0
Germany
Europe
(without
Germany)
NAFTA region
Asia
Daimler Group
167,362
164,154
Divisions
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Regions
Europe
thereof Germany
NAFTA
thereof United States
Asia
thereof China
Other markets
93,103
38,273
13,626
4,529
26,269
68,496
24,802
47,952
41,152
40,627
19,790
10,287
94,351
35,755
13,161
4,524
24,5302
68,309
24,311
46,528
40,076
39,090
18,774
10,227
+2
-1
+7
+4
+0
+7
+0
+2
+3
+3
+4
+5
+1
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
2 The Group's internal revenue and cost of sales have been adjusted
by the same amount at the Daimler Financial Services segment.
These adjustments have been fully eliminated in the reconciliation.
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 85
Profitability
EBIT
The Daimler Group achieved EBIT of €11.1 billion in 2018
(2017: €14.3 billion) despite difficult general conditions. How-
ever, this did not meet the forecast made in the Management
Report for 2017 of EBIT at the prior-year level. B.12 B.13
The significant increase in EBIT at the Daimler Trucks division
was not able to offset the decreases in earnings at the other
divisions. In particular, the Mercedes-Benz Cars division posted
earnings significantly below its prior-year figure. The main
reasons were expenses in connection with ongoing governmen-
tal proceedings and measures relating to diesel vehicles
and advance expenditure for new technologies and vehicles.
At Daimler Trucks, increased unit sales in the NAFTA region
had a positive effect on earnings. Due in particular to the nega-
tive impact on earnings of the agreement to conclude the
Toll Collect arbitration proceedings, EBIT at Daimler Financial
Services was also significantly below the prior-year level.
Exchange-rate effects had an overall negative impact on oper-
ating profit.
The reconciliation of segment earnings to Group EBIT also
resulted in a significantly higher expense than in the previous
year.
In the Management Report for 2017, EBIT at the Mercedes-
Benz Cars division was forecasted to be at the prior-year level.
As the year 2018 progressed, in the context of our capital
market reporting, we adjusted that assessment gradually down-
wards to a forecast of EBIT significantly below the prior-year.
That was mainly caused by expenses in connection with ongoing
governmental proceedings and measures taken in various
regions with regard to Mercedes-Benz diesel vehicles. The
Daimler Trucks division met the forecast made in the Manage-
ment Report for 2017 of EBIT significantly above the prior-
year figure. At the beginning of the year 2018, we anticipated a
slight decrease in earnings for Mercedes-Benz Vans compared
with the previous year. As the year 2018 progressed, we
adjusted that assessment to significantly below the prior-year
level in the context of our capital market reporting. That was
mainly caused by higher expenses in connection with ongoing
governmental proceedings and measures taken with regard
to diesel vehicles and delivery delays. Daimler Buses posted
EBIT slightly below the prior-year level. It therefore did not
meet the forecast made in the Management Report for 2017 of
EBIT significantly above the prior-year level, due in particular
to decreasing demand in several markets. Daimler Financial
B.12
EBIT by segment
In millions of euros
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Reconciliation
Daimler Group2
2018
20171
18/17
% change
7,216
2,753
312
265
1,384
-798
8,843
2,383
1,147
281
1,970
-276
11,132
14,348
-18
+16
-73
-6
-30
-189
-22
1 The prior-year figures have been adjusted due to the effects
of the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes of the Consolidated Fi-nancial Statements.
2 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes.
The reconciliation of the Daimler Group’s EBIT to earnings before
income taxes is included in Note 34 of the Notes to the Con-
solidated Financial Statements.
B.13
Development of earnings
In billions of euros
EBIT
Net profit (loss)
16
14
12
10
8
6
4
2
0
2014
2015
2016
20171
2018
1 The prior-year figures have been adjusted due to the effects of the
first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Fi-nancial Statements.
86 B | COMBINED MANAGEMENT REPORT | PROFITABILITY
2014
2015
2016
2017
2018
B.14
Return on Sales
In %
12
9
6
3
0
Mercedes-Benz
Cars
Daimler
Trucks
Mercedes-Benz
Vans
Daimler
Buses
B.15
Return on Equity
Daimler Financial Services
In %
25
20
15
10
5
0
2014
2015
2016
20171
2018
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
B.16
Reconciliation of Group EBIT to profit before income taxes
In millions of euros
2018
20171
Group EBIT
11,132
14,348
Services was also unable to meet the forecast made in Annual
Report 2017 of earnings at the prior-year level, due to the
agreement reached to conclude the Toll Collect arbitration pro-
ceedings.
The Mercedes-Benz Cars division posted EBIT of €7,216 million
in 2018, which is significantly below its prior-year earnings
of €8,843 million. The division’s return on sales was 7.8% (2017:
9.4%). B.14
The negative earnings development reflects expenses in con-
nection with ongoing governmental proceedings and measures
relating to diesel vehicles. In addition, EBIT was also reduced
by advance expenditure for new technologies and vehicles, as
well as by weaker pricing. Unfavorable exchange-rate effects
and higher expenses for raw materials also affected earnings
adversely. On the other hand, a positive effect resulted from
the remeasurement at fair value (€111 million) of the investment
in Aston Martin Lagonda Global Holdings plc (Aston Martin).
In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall
(€425 million). On the other hand, EBIT was boosted in the prior
year by income of €183 million in connection with a new
investor in HERE.
The Daimler Trucks division achieved EBIT in the year 2018
of €2,753 million, which is significantly above the prior-year
figure of €2,383 million. The division’s return on sales was 7.2%
(2017: 6.7%). B.14
The positive development of earnings was primarily the result of
increased unit sales in the NAFTA region as well as further
efficiency enhancements. Higher expenses for exchange-rate
effects and expenses for raw materials affected EBIT nega-
tively. Additional costs, mainly resulting from supply-chain
constraints, also had a negative impact on earnings. In the pre-
vious year, EBIT was boosted by €267 million due to income
from the sale of real estate by Mitsubishi Fuso Truck and Bus
Corporation in Japan. In addition, expenses of €172 million
related to fixed-cost optimization were included in the prior
year.
Amortization of
capitalized borrowing costs2
Interest income
Interest expense
-15
271
-793
-13
214
-582
Mercedes-Benz Vans achieved EBIT in 2018 of €312 million,
significantly below the prior-year level (2017: €1,147 million).
The division’s return on sales was 2.3% (2017: 8.7%). B.14
Profit before income taxes
10,595
13,967
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
2 Amortization of capitalized borrowing costs is not included in
the internal performance measure EBIT, but is a component of
cost of sales.
The positive development of unit sales, especially in the NAFTA
region, China and Western Europe, had a positive impact on
EBIT. However, earnings were reduced by advance expenditure
for new technologies and future products and by expenses
for the Sprinter model change. Furthermore, EBIT was reduced
by expenses in connection with ongoing governmental pro-
ceedings and measures relating to diesel vehicles, by delivery
delays and by the remeasurement of assets in connection
with production capacities.
The Daimler Buses division’s EBIT of €265 million in 2018 was
slightly below the prior-year level (2017: €281 million). Its
return on sales decreased slightly to 5.9% (2017: 6.2%). B.14
Higher unit sales only partially offset the product-mix and
inflation-related cost increase.
Daimler Financial Services posted EBIT of €1,384 million
in 2018, significantly lower than in the previous year
(2017: €1,970 million). The division’s return on equity was
11.1% (2017: 17.7%). B.15
Due to the agreement reached to conclude the Toll Collect
arbitration proceedings, earnings were reduced by €418 million.
The increasing level of interest rates had a negative impact
on earnings. Rising cost of credit risks in individual markets
impacted earnings negatively in the still relatively stable
risk environment. Increased contract volume had a positive
impact on EBIT.
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 expenses of €757 million
(2017: €232 million). In both years, expenses connected
with legal proceedings are included. The increase was caused
by, among other things, higher expenses in connection with
the development of the divisional structure (“Project Future”).
In addition, the impairment of Daimler’s equity investment
in BAIC Motor Corporation Ltd. (BAIC Motor) by €150 million
impacted earnings negatively. On the other hand, the reversal
of the impairment of Daimler’s equity investment in BAIC
Motor of €240 million had a positive effect on earnings in the
year 2017.
The elimination of intra-group transactions resulted in
expenses of €41 million in 2018 (2017: €44 million).
The reconciliation of Group EBIT to profit before income taxes
is shown in table B.16.
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 87
Statement of income
The Group’s total revenue increased by 2.0% to €167.4 billion
in 2018; adjusted for exchange rate effects, it increased by
4.3%. The revenue growth primarily reflects an increase in sales
for our products at Daimler Trucks, as well as increased con-
tract volume at Daimler Financial Services. Further information
on the development of revenue is provided in the Business
Development section of this Combined Management Report.
B.17
Cost of sales amounted to €134.3 billion in 2018, increasing
by 3.6% compared with the previous year. The rise in cost of
sales was caused by higher business volumes and consequen-
tially higher material expenses. The higher material expenses
also reflect increased prices of raw materials. At Daimler
Financial Services, the higher interest-rate level led to higher
refinancing costs. In the prior year, cost of sales included
expenses for voluntary service activities and expenses for a
specific vehicle recall of €0.4 billion. Further information
on cost of sales is provided in E Note 5 of the Notes to the
Consolidated Financial Statements. B.17
Overall, gross profit in relation to revenue decreased from
21.0% to 19.8%.
Due to the growth in unit sales, selling expenses increased by
€0.1 billion to €13.1 billion. As a percentage of revenue, selling
expenses decreased slightly from 7.9% to 7.8%. B.17
General administrative expenses of €4.0 billion were above
the level of the previous year (2017: €3.8 billion). The increase
was mainly due to higher expenses for consulting services and
personnel. As a percentage of revenue, general administrative
expenses increased slightly to 2.4% (2017: 2.3%). B.17
Research and non-capitalized development costs increased
by €0.6 billion to €6.6 billion in 2018. They were mainly related
to the development of new models, advance expenditure for
the renewal of existing models, and the further development of
fuel-efficient and environmentally friendly drive systems, as
well as safety technologies, automated and autonomous driving
and the digital connectivity of our products. As a proportion
of revenue, research and non-capitalized development costs
increased from 3.6% to 3.9%. Further information on the
Group’s research and development costs is provided in the
Research and Development section of the Sustainability
chapter of this Combined Management Report. B.17
Other operating income of €2.3 billion is at the same level
as in previous year. In 2018, insurance compensation of
€0.2 billion is included. Income of €0.4 billion from the sale of
property, plant and equipment was included in 2017. Other
operating expense increased to €1.5 billion (2017: €1.0 billion),
mainly due to additions to other provisions. Further infor-
mation on the composition of other operating income and
expense is provided in E Note 6 of the Notes to the
Consolidated Financial Statements. B.17
88 B | COMBINED MANAGEMENT REPORT | PROFITABILITY
In 2018, our share of profit from equity-method investments
of €0.7 billion was significantly lower than the prior-year level
(2017: €1.5 billion). The decrease was on the one hand due to
the agreement reached with the German Federal Government
to conclude the Toll Collect arbitration proceedings. This agree-
ment had a negative impact on earnings of €0.4 billion in the
year 2018. Furthermore, in the year 2018, a negative impact
resulted from the impairment of €0.2 billion of the investment
in BAIC Motor (2017: positive impact from the reversal of
the impairment of €0.2 billion of the investment in BAIC Motor).
B.17
Other financial expense/income increased from an expense
of €0.2 billion to income of €0.2 billion. This improvement is
partly the result of the gain of €0.1 billion included in the year
2018 due to the measurement at fair value of the interest in
Aston Martin. Furthermore, income in connection with deriva-
tive financial transactions also improved. B.17
Net interest expense amounted to €0.5 billion (2017: €0.4 bil-
lion). Net expenses related to defined-benefit pension plans
improved primarily due to higher interest income resulting from
the extraordinary contribution of €3.0 billion to the pension
plan assets in 2017. Other interest expense increased mainly
because of higher refinancing costs. B.17
The tax expense of €3.0 billion (2017: €3.3 billion) stated under
income tax expense decreased only insignificantly despite the
reduction in profit before income taxes. The effective tax rate
for 2018 was 28.4% (2017: 24.0%). The prior year included high
income tax benefits resulting from the comprehensive tax
reform in the United States. Due to the reduction in the nation-
wide federal corporate income tax rate for US companies,
the future net tax liabilities of the US-subsidiaries of Daimler
had to be remeasured with the new tax rate, resulting in an
income tax benefit of €1.6 billion. Opposing the positive impact
from the US tax reform, tax expenses were recognized in
2017 in connection with the interpretation of tax laws. B.17
Net profit for the year 2018 of €7.6 billion (2017: €10.6 billion)
was significantly below the prior-year figure. Net profit of
€0.3 billion is attributable to non-controlling interests (2017:
€0.3 billion). Net profit attributable to the shareholders of
Daimler AG amounts to €7.2 billion (2017: €10.3 billion), repre-
senting a decrease in earnings per share to €6.78 (2017:
€9.61). B.17
The calculation of earnings per share is based on
an unchanged average number of outstanding shares
of 1,069.8 million.
B.17
Statement of income1
In millions of euros
Revenue4
Cost of sales4
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 income/expense, net
Interest income
Interest expense
Profit before income taxes
Income taxes
Net profit
thereof attributable to non-controlling interests
thereof attributable to shareholders of Daimler AG
Consolidated
Industrial Business2
2018
20173
2018
20173
Daimler Financial
Services
20173
2018
167,362
164,154
141,093
139,624
-134,295
-129,626
-111,589
-108,640
33,067
-13,067
-4,036
-6,581
2,330
-1,462
656
210
271
-793
10,595
-3,013
7,582
333
7,249
34,528
-12,951
-3,808
-5,938
2,259
-1,043
1,498
-210
214
-582
13,967
-3,350
10,617
339
10,278
29,504
-12,174
30,984
-12,210
-3,075
-6,581
2,137
-1,404
1,108
218
270
-788
9,215
-2,615
6,600
-2,815
-5,938
2,056
-1,000
1,497
-209
214
-577
12,002
-4,064
7,938
26,269
-22,706
3,563
24,530
-20,986
3,544
-893
-961
-
193
-58
-452
-8
1
-5
1,380
-398
982
-741
-993
-
203
-43
1
-1
0
-5
1,965
714
2,679
1 The columns “Industrial business” and “Daimler Financial Services” represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
4 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group’s internal
revenue and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 89
B.18
Dividend per share
2.45
3.25
3.25
3.65
3.25
In euros
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0
2014
2015
2016
2017
2018
B.19
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
2018
2017
18/17
% change
7,216
2,753
312
265
1,384
11,930
-3,169
-798
7,963
8,843
2,383
1,147
281
1,970
14,624
-3,468
-276
10,880
-18
+16
-73
-6
-30
-18
+9
-189
-27
1 Adjusted for tax effects on interest income/expense and
amortization of capitalized borrowing costs.
B.20
Value Added
In millions of euros
2018
2017
18/17
% change
Daimler Group
3,658
7,004
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
4,062
1,765
-91
117
-236
5,998
1,373
864
149
519
-48
-32
+29
–
-21
–
Dividend
In line with a sustainable dividend policy, Daimler sets the
dividend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. In the light of the
business development in 2018, the Board of Management and
the Supervisory Board will propose to the Annual Sharehold-
ers’ Meeting to be held on May 22, 2019, that a dividend per
share of €3.25 (2017: €3.65) be distributed for financial year
2018. This corresponds to a total dividend distribution of €3.5
billion to our shareholders (2017: €3.9 billion). B.18
Net operating profit
Table B.19 shows the reconciliation of the EBIT of the
divisions to net operating profit. In addition to the EBIT of
the divisions, net operating profit also includes earnings
effects for which the divisions are not accountable, such as
income taxes and other reconciliation items.
Value added
As described in the Performance Measurement System section
of the Corporate Profile chapter in chart B.03, the cost of
capital is the result of net assets and cost of capital expressed
as a percentage, which is subtracted from earnings in order
to calculate value added. Tables B.20 and B.21 show value
added and net assets for the Group and for the individual
divisions. Table B.22 shows how net assets are derived from
the consolidated statement of financial position.
The Group’s value added decreased by €3.3 billion to
€3.7 billion in 2018, representing a return on net assets of 14.8%
(2017: 22.5%). This was once again higher than the minimum
required rate of return of 8%. The significant decrease in value
added was mainly due to the development of the divisions’
EBIT. In addition, further negative effects resulted from the
increase in average net assets, mainly attributable to higher
investment in fixed assets and an increase in inventories.
Value added at Mercedes-Benz Cars of €4.1 billion was
significantly below the prior-year amount of €6.0 billion. This
was primarily due to the negative earnings development mainly
resulting from expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles.
In addition, EBIT was also reduced by advance expenditure
for new technologies and vehicles, weaker pricing, unfavorable
exchange-rate effects and higher expenses for raw materials.
A positive effect resulted from the remeasurement at fair value
of the investment in Aston Martin Lagonda Global Holdings
plc. In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall.
On the other hand, income in connection with a new investor in
HERE affected EBIT positively in the prior year. An additional
negative impact on value added resulted from the increase in
average net assets to €26.3 billion primarily caused by higher
investments in fixed assets.
90 B | COMBINED MANAGEMENT REPORT | PROFITABILITY
B.21
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
2018
2017
18/17
% change
26,289
23,705
8,240
3,355
1,233
12,466
51,583
1,066
1,707
-547
8,417
2,358
1,105
11,165
46,750
941
2,190
-1,435
+11
-2
+42
+12
+12
+10
+13
-22
+62
+11
Daimler Group
53,809
48,446
1 Total equity.
2 To the extent not allocated to the segments.
3 To the extent not allocated to Daimler Financial Services.
B.22
Net assets of the Daimler Group at year-end
In millions of euros
Net assets1
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 taxes1
Total equity
of Daimler Financial Services
2018
2017
18/17
% change
13,872
30,859
18,509
28,096
10,545
-14,604
-13,395
12,742
27,914
18,071
24,492
9,742
-14,031
-11,632
-31,832
-29,861
1,671
1,766
12,810
12,379
+9
+11
+2
+15
+8
-4
-15
-7
-5
+3
Daimler Group
56,531
51,582
+10
1 To the extent not allocated to Daimler Financial Services.
Daimler Trucks’ value added was significantly higher than in
the previous year at €1.8 billion (2017: €1.4 billion). This
increase was primarily the result of the positive development
of earnings due to higher unit sales in the NAFTA region as
well as further efficiency enhancements. Higher expenses for
exchange-rate effects, higher expenses for raw materials
as well as additional costs, mainly resulting from supply-chain
constraints affected EBIT negatively. In the previous year,
EBIT included income from the sale of real estate at Mitsubishi
Fuso Truck and Bus Corporation in Japan as well as expenses
related to fixed cost optimization. Average net assets level
remains nearly unchanged.
At Mercedes-Benz Vans, value added significantly decreased
by €1.0 billion to negative €0.1 billion. Despite a growth in unit
sales, especially in the NAFTA region, in China and in Western
Europe, EBIT was negatively impacted by advance expenditure
for new technologies and future products, expenses for the
Sprinter model change, costs in connection with ongoing govern-
mental proceedings and measures taken for diesel vehicles,
expenses due to delivery delays and for the remeasurement of
assets in connection with production capacities. The increase
in average net assets due to higher investments in fixed assets
and higher inventories led to a further deterioration of value
added.
The value added of the Daimler Buses division was lower than
in the previous year at €117 million (2017: €149 million). This
primarily reflects the development of earnings. The decrease in
earnings due to the product mix and the inflation-related cost
increase was partially offset by higher unit sales. The reduction
in value added was also caused by the increase in average net
assets.
Daimler Financial Services’ value added of minus €0.2 billion
was significantly under the prior-year level of plus €0.5 billion.
The division’s return on equity amounted to 11.1% (2017: 17.7%).
The development of value added primarily reflects the decrease
in earnings of €0.6 billion. Earnings were significantly reduced
by the agreement reached to conclude the Toll Collect arbitra-
tion proceedings. The higher interest-rate level impacted EBIT
negatively. Rising cost of credit risks in individual markets
negatively impacted earnings in the still relatively stable risk
environment. On the other hand, increasing contract volume
had a positive impact on EBIT. The rise in average equity also
led to a further negative effect on value added.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 91
Liquidity and Capital Resources
Principles and objectives of
financial management
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. We also take care that restrictions on
capital transactions and on the transfer of capital and curren-
cies are complied with.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this purpose,
the Group records the cash flows from operating and financial
activities in a rolling plan. The resulting financial requirements
are covered by the use of appropriate instruments for liquidity
management (e.g. bank credit, commercial paper and notes);
liquidity surpluses are invested in the money market or the capi-
tal market taking into account risk and return expectations.
The goal is to ensure the level of liquidity regarded as necessary
at optimal costs. Besides operational liquidity, Daimler main-
tains additional liquidity reserves, which are available in the short
term. Those additional financial resources include a pool of
receivables from the financial services business which are avail-
able for securitization in the capital market, as well as a con-
tractually confirmed syndicated credit facility.
Cash management determines the Group’s cash requirements
and surpluses. Via cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of Daimler in various
currencies. Most of the payments between Group companies
are made via internal clearing accounts, so that the number of
external cash flows is reduced to a minimum. Daimler has
established standardized processes and systems to manage its
bank accounts and internal cash-clearing accounts, and to
execute automated payment transactions.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the earnings of the divisions and
the Group. The Group’s overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Starting in 2019, exposure to currency risks will be determined
for each segment. The hedging strategy is specified at the
Group level and uniformly implemented in the segments. Deci-
sions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices, as
well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are legally separated from the Group’s assets
and are invested primarily in funds; pension assets are not
available for general business purposes. The funds are allocated
to different asset classes such as equities, fixed-interest secu-
rities, alternative investments and real estate, depending on
the expected development of pension obligations and with the
help of a risk-return optimization. The performance of asset
management is measured by comparing with defined reference
indices. Local custodians of the pension assets are responsible
for the risk management of the individual pension assets. “The
Global Pension and Healthcare Committee” limits these risks
by means of Group-wide binding guidelines. Additional informa-
tion on pension plans and similar obligations is provided
in E Note 22 of the Notes to the Consolidated Financial
Statements.
92 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.23
Condensed statement of cash flows1
In millions of euros
Cash and cash equivalents at beginning of period
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income and
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
Dividends received from equity-method investments
Income taxes paid
Cash used for/provided by operating activities
Additions to property, plant and equipment and intangible assets
Investments in and disposals of shareholdings
Acquisitions and sales of marketable debt securities
and similar investments
Other
Cash used for investing activities
Change in financing liabilities
Dividends paid
Other transactions with shareholders
Internal equity and financing transactions
Cash used for/provided by financing activities
Effect of foreign exchange rate changes on cash
and cash equivalents
Cash and cash equivalents at end of period
Consolidated
Industrial Business2
Daimler Financial
Services
2018
20173
2018
20173
2018
20173
12,072
10,595
6,305
10,981
13,967
5,676
9,515
9,215
6,177
8,751
12,002
5,521
2,557
1,380
128
2,230
1,965
155
-1,050
-1,960
-1,557
-2,028
507
68
-3,850
-884
1,694
-1,455
-1,597
1,259
-10,257 -11,412
-3,304
-1,609
877
1,380
-2,858
343
210
843
-3,879
-1,652
-3,738
-779
1,723
-7
1,208
1,067
1,304
-1,698
12,915
-1,264
-1,087
1,130
-112
-105
-29
-191
-510
129
-67
-10,250
-11,345
1,019
-386
842
-3,715
11,967
-2,817
-4,323
-190
76
-1,160
596
1
-164
-12,572
-13,619
-10,701 -10,158
-687
-417
-10,534
-10,025
14
-626
471
726
537
790
-9,921
-9,518
17,456
16,794
-4,220
-3,727
-10
–
62
–
13,226
13,129
505
708
-9,307
8,889
-4,215
-20
-5,127
-473
133
-868
149
15,853
12,072
12,799
435
791
-9,425
8,976
-3,723
-20
-6,233
-1,000
-778
9,515
-167
-431
-34
18
-614
8,567
-5
10
5,127
13,699
-16
3,054
-133
-61
102
-1
-93
7,818
-4
82
6,233
14,129
-90
2,557
1 The columns “Industrial business” and “Daimler Financial Services” represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The risk volume that is subject to credit risk management
includes all of Daimler’s worldwide creditor positions with
financial institutions, issuers of securities, and customers in the
financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our
liquidity management and from trading in derivative financial
instruments. The management of these credit risks is mainly
based on an internal limit system that reflects the creditworthi-
ness of the respective financial institution or issuer. The credit
risk with customers of our automotive business relates to con-
tracted dealerships and general agencies, other corporate
customers and retail customers. In connection with the export
business, general agencies that according to our creditwor-
thiness analyses are not sufficiently creditworthy are generally
required to provide collateral such as first-class bank guaran-
tees. The credit risk with end-customers in the financial services
business is managed by Daimler Financial Services on the
basis of a standardized risk management process. In this pro-
cess, minimum requirements are defined for the sales-financ-
ing and leasing business and standards are set for credit pro-
cesses as well as for the identification, measurement and
management of risks. Key elements for the management of
credit risks are appropriate creditworthiness assessments,
supported by statistical risk-classification methods, as well as
structured portfolio analysis and portfolio monitoring.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and joint
ventures, the risk from the cross-border financing of Group
companies in risk countries, and the risk from direct sales to
customers in those countries. Daimler has an internal rating
system that divides all countries in which it operates into risk
categories. With equity capital transactions of considerable
size in risk countries, the Group generally hedges against polit-
ical risks with the use of investment protection insurance
such as the German government’s investment guarantees. Risks
from cross-border receivables are partially protected with
the use of export credit insurance, letters of credit and bank
guarantees in favor of Daimler AG. In addition, a committee
sets and restricts the level of hard-currency credits granted to
financial services companies in risk countries.
Further information on the management of market-price risk,
credit-default and liquidity risk is provided in E Note 33 of
the Notes to the Consolidated Financial Statements.
Cash flows
Cash used for/provided by operating activities B.23
resulted in a cash inflow of €0.3 billion in 2018 (2017: cash out-
flow of €1.7 billion). The positive development was primarily
due to the prior-year cash outflow of €3.0 billion resulting from
the extraordinary contribution to the German pension plan
assets. This was supplemented by positive effects from the
leasing and sales-financing business. In addition, cash used
for/provided by operating activities reflects lower income taxes
paid, as well as a higher cash inflow due to dividends distrib-
uted by Beijing Benz Automotive Co., Ltd. Opposing effects were
due to the general business performance and the development
of working capital, reflecting in particular the stronger increase
in inventories. At Mercedes-Benz Cars and Mercedes-Benz
Vans, this resulted from the launch of new models and capacity
expansions in the NAFTA region, among other things. Further-
more, the temporary increase in inventories, due to delivery
delays was not fully reduced. The higher increase in inventories
at Daimler Trucks was partially due to higher sales expecta-
tions in the NAFTA region and in Europe.
Cash used for investing activities B.23 amounted to
€9.9 billion (2017: €9.5 billion). The change compared with the
prior year primarily resulted from increased investments in
property, plant and equipment. Opposing effects resulted from
lower cash outflows for the investments in shareholdings,
due to a prior year acquisition of an interest in LSH Auto Inter-
national Limited (LSHAI).
B.24
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 and
similar investments
Other adjustments
Free cash flow of the
industrial business
Dec. 31,
2018
Dec. 31,
2017
12,915
11,967
-9,307
-9,425
-505
-205
-435
-102
18/17
Change
+948
+118
-70
-103
2,898
2,005
+893
Cash provided by financing activities B.23 amounted to
€13.2 billion (2017: €13.1 billion). The slight increase was
primarily caused by higher net cash inflows from financing
liabilities in the context of refinancing the leasing and sales-
financing business, as well as by making use of good conditions
in the international money and capital markets. Opposing
effects resulted from the increased dividend payment to share-
holders of Daimler AG.
Cash and cash equivalents increased by €3.8 billion compared
with December 31, 2017, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities and similar investments, increased by
€3.3 billion to €25.4 billion.
The parameter used by Daimler to measure the financial capa-
bility of the Group’s industrial business is the free cash flow
of the industrial business B.24, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable debt
securities and similar investments included in cash flows
from investing activities are deducted, as those securities are
allocated to liquidity and changes in them are thus not a part
of the free cash flow.
Other adjustments relate to non-cash additions to property,
plant and equipment that are allocated to the Group as their
beneficial owner due to the form of their underlying lease
contracts. Furthermore, effects from the financing of dealer-
ships and effects from internal deposits within the Group
are adjusted. In addition, the calculation of the free cash flow
includes those cash flows to be shown under cash from
financing activities in connection with the acquisition or sale
of interests in subsidiaries without loss of control.
94 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.25
Net liquidity of the industrial business
In millions of euros
Dec. 31,
2018
Dec. 31,
2017
18/17
Change
Cash and cash equivalents
12,799
9,515
+3,284
Marketable debt securities
and similar investments
Liquidity
Financing liabilities
Market valuation
and currency hedges for
financing liabilities
Financing liabilities
(nominal)
Net liquidity
8,364
21,163
-4,771
8,894
18,409
-1,600
-530
+2,754
-3,171
-104
-212
+108
-4,875
16,288
-1,812
16,597
-3,063
-309
B.26
Net debt of the Daimler Group
In millions of euros
Dec. 31,
2018
Dec. 31,
2017
18/17
Change
Cash and cash equivalents
15,853
12,072
+3,781
Marketable debt securities
and similar investments
Liquidity
9,577
25,430
10,063
22,135
Financing liabilities
-144,902
-127,124
-486
+3,295
-17,778
Market valuation
and currency hedges for
financing liabilities
Financing liabilities
(nominal)
Net debt
-97
-229
+132
-144,999
-119,569
-127,353
-105,218
-17,646
-14,351
The free cash flow of the industrial business amounted to
€2.9 billion in 2018 and was significantly higher than the
prior-year figure of €2.0 billion; however, it did not exceed the
dividend payment for 2018 of €3.9 billion. The free cash
flow of the industrial business thus did not fully achieve all our
expected targets as stated in the Outlook section of Annual
Report 2017.
The €0.9 billion increase in the free cash flow to €2.9 billion
resulted primarily from the prior-year cash outflow for the
extraordinary contribution to the pension plan assets and the
lower income taxes paid in the current year. The increased
cash inflow also resulted from the dividends distributed by
Beijing Benz Automotive Co., Ltd. Furthermore, there were
lower cash outflows for the investments in shareholdings, due
to a prior year acquisition of an interest in LSHAI.
Opposing effects were due to the general business performance
and the development of working capital, reflecting in particular
the stronger increase in inventories. At Mercedes-Benz Cars
and Mercedes-Benz Vans, this resulted from the launch of new
models and capacity expansions in the NAFTA region, among
other things. Furthermore, the temporary increase in inventories,
due to delivery delays was not fully reduced. The higher
increase in inventories at Daimler Trucks was partially due to
higher sales expectations in the NAFTA region and in Europe.
In addition, higher investments in property, plant and equipment
affected the free cash flow of the industrial business.
In 2018, the free cash flow of the Daimler Group led to
a cash outflow of €10.2 billion (2017: €11.9 billion). Besides the
effects of the free cash flow of the industrial business, the
free cash flow of the Daimler Group is mainly affected by the
leasing and sales-financing business of Daimler Financial
Services.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 95
B.27
Investment in property, plant and equipment
In billions of euros
8
7
6
5
4
3
2
1
0
2014
2015
2016
2017
2018
B.28
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
2018
2017
18/17
% change
7,534
4.5
5,684
6.1
1,105
2.9
468
3.4
144
3.2
64
0.2
6,744
4.1
4,843
5.1
1,028
2.9
710
5.4
94
2.1
43
0.2
+12
+17
+7
-34
+53
+49
The net liquidity of the industrial business B.25 is
calculated as the total amount as shown in the statement of
financial position of cash, cash equivalents and the market-
able debt securities and similar investments included in liquid-
ity management, less the currency-hedged nominal amounts
of financing liabilities.
To the extent that the Group’s internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Compared with December 31, 2017, the net liquidity of the
industrial business remained almost unchanged at €16.3 billion.
The dividend payment to the shareholders of Daimler AG led
to a decrease in net liquidity, which was offset by the positive
free cash flow and positive exchange-rate effects.
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2017 by €14.4 billion to €119.6 billion.
B.26.
Contingent liabilities and other
financial obligations
At December 31, 2018, the best estimate for potential obliga-
tions from contingent liabilities is €0.8 billion (2017: €0.6 billion).
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet
at December 31, 2018. These financial obligations result from
non-cancelable long-term rental agreements and operating
leases, contractual commitments to acquire intangible assets,
property, plant and equipment and lease property, and irre-
vocable loan commitments.
Detailed information on contingent liabilities and other
financial obligations are provided in E Note 31 of the Notes
to the Consolidated Financial Statements.
96 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Investment
Refinancing
The funds raised by Daimler in the year 2018 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank, and the securitization of receivables
from customers in the financial services business (asset backed
securities).
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €60 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The monetary policy of the central banks also affected the
situation in the bond markets significantly in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit
ratings largely remained moderate.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark emissions (bonds with high nominal volumes) in
the US dollar and euro markets. B.30
In the Chinese market, Daimler placed seven so-called panda
bonds with a total volume of CNY 16.0 billion. In addition, a
large number of smaller bonds were issued in various currencies
and markets.
Daimler also issued small volumes of commercial paper in
2018.
In the context of our strategy of strengthening our core business
and with the transformation of the automotive industry, we
aim to make good use of the opportunities presented by the
global automotive markets. In this context, we always focus
on the dynamically changing wishes of our customers. We
therefore intend to play a major role in shaping the fundamental
technological change taking place in the automotive industry,
and to assume a leading role with the development of the future
areas of CASE (Connected, Autonomous, Shared & Services
and Electric). This requires substantial investment in innovative
products and new technologies, as well as in the expansion of
our worldwide production network. In 2018, we therefore once
again significantly increased our investment in property, plant
and equipment – as already announced in Annual Report 2017 –
from an already high level to €7.5 billion (2017: €6.7 billion).
At December 31, 2018, financial obligations of €4.3 billion
exist in connection with future investments in property, plant
and equipment.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €5.7 billion in 2018 was significantly above the
prior-year level (2017: €4.8 billion), primarily due to the ongoing
product offensive. The most important projects included the
successor generation of the current C-Class and the product
ramp-up of the new GLE sports utility vehicle. We also made
substantial investments in the reorganization of our German
production facilities as competence centers, in the expansion
of our international production network, and in the worldwide
production network for electric mobility. The main areas of
investment at Daimler Trucks in 2018 were successor genera-
tions for existing products, new products, global component
projects and the optimization of the worldwide production net-
work. Total investment in property, plant and equipment at
Daimler Trucks amounted to €1.1 billion (2017: €1.0 billion). At
the Mercedes-Benz Vans division, the focus of investment
was on production of the next-generation Sprinter in Germany
and the United States. The main investments at Daimler
Buses last year were in alternative drive systems, new products
and the modernization of the production network.
In addition to property, plant and equipment, we also invested
in associated companies and joint ventures in the reporting
period. Through targeted investments, we strengthened our
position especially in the area of mobility services and in the
development of a charging infrastructure for electric mobility.
Furthermore, we capitalized development costs of €2.5 billion
in 2018 (2017: €2.8 billion); this is presented under intangible
assets. E page 262
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 97
In 2018, asset-backed securities (ABS) were issued in the
United States, Canada, Germany, the United Kingdom and
China. In the United States, a total refinancing volume of USD
7.6 billion was generated in six transactions, and in Canada,
a volume of CAD 1.0 billion in two transactions. In addition,
Mercedes-Benz Bank sold an ABS bond worth €0.75 billion to
European investors via the Silver Arrow platform. In the
United Kingdom, GBP 0.4 billion was successfully placed with
investors. In China, two ABS transactions with a volume of
CNY 16.0 billion were successfully placed.
Bank credit was another important source of refinancing in
2018. Loans were provided by globally active banks as well
as by nationally operating banks. The lenders also included
supranational banks such as the European Investment Bank
and the Brazilian Development Bank.
In July 2018, Daimler successfully concluded negotiations
with a consortium of international banks for a new syndicated
credit facility with a volume raised from €9 billion to €11 billion.
With a term of five years, it grants Daimler additional financial
flexibility until 2023. The term can be extended to 2025.
Daimler does not intend to utilize the credit line.
At the end of 2018, Daimler had unutilized short- and long-term
credit lines totaling €26.8 billion (2017: €21.0 billion). They
include the credit facility arranged in July 2018 with a volume
of €11 billion.
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table B.29.
At December 31, 2018, they are mainly denominated in
the following currencies: 42% in euros, 25% in US dollars, 9%
in Chinese renminbi, 4% in British pounds, 3% in Canadian
dollars and 3% in Japanese yen.
At December 31, 2018, the total of financial liabilities shown
in the consolidated statement of financial position amounted to
€144.9 billion (2017: €127.1 billion).
Detailed information on the amounts and terms of financing
liabilities is provided in E Note 24 and 33 of the Notes to
the Consolidated Financial Statements. E Note 33 also pro-
vides information on the maturities of the other financial
liabilities.
B.29
Refinancing instruments
Average interest rates
Carrying values
Dec. 31,
2018
Dec. 31,
2017
Dec. 31,
2018
Dec. 31,
2017
in %
In millions of euros
Notes/bonds and
liabilities from
ABS transactions
Commercial paper
Liabilities to
financial
institutions
Deposits in the
direct banking
business
B.30
Benchmark issuances
Issuer
Daimler International
Finance B.V.
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Daimler International
Finance B.V.
Daimler International
Finance B.V.
Daimler International
Finance B.V.
Daimler International
Finance B.V.
Daimler Finance
North America LLC
2.24
1.13
1.88
2.64
88,942
2,835
78,110
1,045
3.73
3.09
39,400
34,555
0.58
0.42
11,774
11,460
Volume
Month of
emission
Maturity
€750 million
Jan/2018
Jan/2023
US$1,700 million
Feb/2018
Feb/2021
US$675 million
Feb/2018
Feb/2023
US$625 million
Feb/2018
Feb/2028
€500 million
Apr/2018
Apr/2020
€1,000 million
May 2018
May 2020
US$1,700 million
May 2018
May 2021
US$1,000 million
May 2018
May 2023
US$300 million
May 2018
Feb/2028
€1,000 million
May 2018
May 2022
€1,250 million
May 2018
Nov/2025
€1,500 million
Aug/2018
Aug/2021
€1,000 million
Aug/2018
Apr/2024
US$500 million
Aug/2018
Feb/2027
US$1,750 million
Nov/2018
Nov/2021
98 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
The Canadian agency DBRS confirmed its issuer rating and
senior debt rating of Daimler AG at A with stable trends in
a press release on November 29, 2018. The confirmation of
the ratings from the previous year was based on a solid
business risk assessment with commensurate financial risk.
The short-term ratings of Daimler AG and its financing compa-
nies were unchanged with all five rating agencies in 2018.
Credit ratings
In financial year 2018, the credit ratings of Daimler AG remained
unchanged with all the agencies we have engaged to provide
ratings. At the end of 2018, therefore, the outlook for Daimler AG
was assessed as “stable” by the five agencies listed below.
B.31
Moody’s Investors Service (Moody’s) affirmed its A2 long-term
rating for Daimler AG and its rated subsidiaries on February 9,
2018. Moody’s pointed out that Daimler’s credit metrics place
the Group solidly in the A2 rating category. The stable outlook
reflects Moody’s expectation that Daimler’s business setup has
the capacity to successfully meet the upcoming challenges in
the automobile markets.
On June 14, 2018, the European agency Scope Ratings (Scope)
affirmed its issuer rating of A on Daimler AG and its financing
subsidiaries. Scope emphasized our company’s track record in
recent years and expects that Daimler will continue to main-
tain the strong market positions held by Mercedes-Benz Cars
and Daimler Trucks. Furthermore, Scope assesses Daimler’s
financial risk profile as very strong.
On May 23, 2018, Fitch Ratings (Fitch) once again affirmed
its long-term issuer default rating for Daimler AG of A- with
a stable outlook. Fitch stated that the rating reflects Daimler’s
strong business profile and robust credit metrics. In addition,
Fitch pointed out the wide geographical and product diversifica-
tion of Daimler.
On December 19, 2018, S&P Global Ratings (S&P) also
affirmed its long-term corporate rating of A for Daimler AG and
underscored its leading position among the premium auto-
mobile and truck manufacturers. S&P assumes that Daimler will
be able to maintain its competitive position. In addition, S&P
anticipates the continuation of very good financial metrics. The
business risk of Daimler AG is assessed as “satisfactory” and
the financial risk as “minimal”.
B.31
Credit ratings
Long-term credit rating
S&P
Moody’s
Fitch
Scope
DBRS
Short-term credit rating
S&P
Moody’s
Fitch
Scope
DBRS
End of 2018 End of 2017
A
A2
A–
A
A
A-1
P-1
F2
S-1
A
A2
A–
A
A
A-1
P-1
F2
S-1
R-1 (low)
R-1 (low)
B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 99
Financial Position
The balance sheet total increased compared with December
31, 2017 from €255.3 billion to €281.6 billion; adjusted for
the effects of currency translation, the increase amounts to
€25.4 billion. Daimler Financial Services accounts for
€165.3 billion of the balance sheet total (2017: €150.0 billion),
equivalent to 59% of the Daimler Group’s total assets
(2017: 59%).
The increase in total assets is primarily due to the increased
volume of the financial services business, higher inventories,
and cash and cash equivalents. In addition, the higher volume
of capital expenditure led to an increase in intangible assets
and property, plant and equipment. On the liabilities side, the
increased refinancing requirement resulting from the port-
folio growth led to increased financing liabilities. Furthermore,
there was an increase in provisions and in trade liabilities.
Current assets accounted for 43% of the balance sheet total,
which was above the prior-year level (2017: 42%). Current
liabilities amounted to 35% of total equity and liabilities, which
was slightly above the prior-year level (2017: 34%).
Intangible assets of €14.8 billion (2017: €13.7 billion) include
€11.3 billion of capitalized development costs (2017: €10.3 bil-
lion), €2.0 billion of franchises, industrial property and similar
rights (2017: €2.0 billion) and €1.1 billion of goodwill (2017:
€1.1 billion). The Mercedes-Benz Car division accounts for 81%
(2017: 79%) and Daimler Trucks accounts for 8% (2017: 10%)
of development costs. Capitalized development costs amount
to €2.5 billion in 2018 (2017: €2.8 billion) and account for
28% of the Group’s total research and development expenditure
(2017: 32%). E page 262
Property, plant and equipment E page 263 increased
to €30.9 billion (2017: €28.0 billion). In 2018, €7.5 billion was
invested worldwide (2017: €6.7 billion), in particular at our
production and assembly sites for new products and technolo-
gies and for the expansion and modernization of production
facilities. The sites in Germany accounted for €4.4 billion of the
capital expenditure (2017: €4.0 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €146.2 billion (2017:
€133.1 billion). The increase adjusted for exchange-rate effects
of €12.3 billion was primarily caused by the higher level of new
business at Daimler Financial Services. The growth in business
operations with customers reflects the successful course
of business, especially in the NAFTA region, Asia and Western
Europe. The leasing and sales-financing business as a pro-
portion of total assets was at the prior-year level of 52%.
Equity-method investments of €4.9 billion (2017: €4.8 billion)
mainly comprise the carrying amounts of our equity interests
in Beijing Benz Automotive Co., Ltd., BAIC Motor Corporation
Ltd. and There Holding B.V.
See E Note 13 of the Notes to the Consolidated Financial
Statements for further information.
Inventories increased from €25.7 billion to €29.5 billion,
equivalent to 10% of total assets, and were thus at the prior-year
level. The increase applies to all automotive divisions and
relates primarily to finished goods and work in process. At
Mercedes-Benz Cars and Mercedes-Benz Vans, higher
inventories were in particular due to the launch of new models
and increased production capacity in the NAFTA region.
The increase during the year caused by delivery delays was not
fully reduced in the last quarter. In addition, inventories
increased at Daimler Trucks due among other things to the
expected positive sales development in the NAFTA region
and in Europe.
Trade receivables of €12.6 billion are above the prior-year
level of €12.0 billion. The Mercedes-Benz Cars division
accounts for 45% of these receivables (2017: 43%) and the
Daimler Trucks division accounts for 25% (2017: 24%).
100 B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Cash and cash equivalents increased compared with the end
of 2017 by €3.8 billion to €15.9 billion.
Marketable debt securities and similar investments
decreased compared with December 31, 2017 from €10.1 billion
to €9.6 billion. Those assets include the debt instruments
that are allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or better.
Other financial assets decreased by €1.1 billion to €5.7 billion.
They primarily consist of derivative financial instruments,
equity and debt instruments, investments in non-consolidated
subsidiaries, and loans and other receivables due from third
parties. The decrease is primarily attributable to lower positive
fair values of currency derivatives.
Other assets of €11.0 billion (2017: €9.1 billion) primarily com-
prise deferred tax assets and tax refund claims. The increase
in deferred tax assets is due among other things to effects from
the remeasurement of derivative financial instruments not
recognized in profit or loss.
Assets held for sale of €0.5 billion and liabilities held for sale
of €0.2 billion result from an agreement signed between
the Daimler Group and the BMW Group in March 2018 to merge
their business units for mobility services.
See E Note 3 of the Notes to the Consolidated Financial
Statements for further information.
B.32
Condensed statement of financial position1
In millions of euros
Assets
Intangible assets
Property, plant and equipment
Equipment on operating leases
Receivables from financial services
Equity-method investments
Inventories
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
thereof current
thereof non-current
Other financial assets
Other assets
Assets held for sale
Total assets
Equity and liabilities
Equity
Provisions
Financing liabilities
thereof current
thereof non-current
Trade payables
Other financial liabilities
Contract and refund liabilities
Other liabilities
Liabilities held for sale
Total equity and liabilities
Consolidated
Industrial Business²
Daimler Financial
Services
At December 31,
20173
2018
At December 31,
20173
2018
At December 31,
20173
2018
14,801
30,948
49,476
96,740
4,860
29,489
12,586
15,853
9,577
8,855
722
5,733
11,025
531
281,619
66,053
24,406
144,902
56,240
88,662
14,185
10,032
12,519
9,310
212
13,735
27,981
47,074
86,054
4,818
25,686
11,995
12,072
10,063
9,073
990
6,806
9,061
–
13,913
30,859
18,509
-90
4,651
28,096
10,545
12,799
8,364
8,362
2
-12,719
1,376
–
12,789
27,914
18,071
-109
4,670
24,492
9,742
9,515
8,894
8,893
1
-10,661
39
–
888
89
30,967
96,830
209
1,393
2,041
3,054
1,213
493
720
18,452
9,649
531
946
67
29,003
86,163
148
1,194
2,253
2,557
1,169
180
989
17,467
9,022
–
255,345
116,303
105,356
165,316
149,989
65,159
22,136
127,124
48,746
78,378
12,451
9,275
11,208
7,992
–
53,243
23,269
4,771
-20,993
25,764
13,395
5,888
12,146
3,591
–
52,780
21,110
1,600
-19,435
21,035
11,632
5,375
10,862
1,997
–
12,810
1,137
140,131
77,233
62,898
790
4,144
373
5,719
212
12,379
1,026
125,524
68,181
57,343
819
3,900
346
5,995
–
281,619
255,345
116,303
105,356
165,316
149,989
1 The columns “Industrial Business” and “Daimler Financial Services” represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to prior-year
figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 101
B.33
Balance sheet structure Daimler Group
In billions of euros
Assets
Non-current assets
Current assets
282
160
255
148
282
66
255
65
118
103
122
107
98
87
thereof liquidity
25
22
2017
2018
Equity and liabilities
Equity
Non-current liabilities
Current liabilities
Contract and refund liabilities of €12.5 billion are higher
than a year earlier (2017: €11.2 billion). They mainly comprise
deferred revenue from service and maintenance contracts
and extended warranties as well as obligations from sales trans-
actions in the scope of IFRS 15. Higher revenues from service
and maintenance contracts and extended warranties mainly led
to the increase in contract and refund liabilities.
Other liabilities of €9.3 billion (2017: €8.0 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase was primarily the result of higher deferred taxes.
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 page 230, the Consolidated Statement of Changes in
Equity E page 232 and the related notes in the Notes to the
Consolidated Financial Statements.
The Group’s equity increased compared with December 31,
2017 from €65.2 billion to €66.1 billion; adjusted for the effects
of currency translation, the increase amounts to €0.7 billion.
The increase in equity was mainly due to net profit of €7.6 billion
E page 88 and the effects of currency translation of
€0.2 billion. The increase was partially offset by the dividend of
€3.9 billion paid out to Daimler’s shareholders, the effect of
remeasurement of derivative financial instruments not recog-
nized in profit or loss of €1.3 billion, and actuarial losses from
defined benefit pension plans recognized in retained earnings
of €1.5 billion. Equity attributable to the shareholders of
Daimler AG increased to €64.7 billion (2017: €63.9 billion).
Equity increased by 1% and thus by a significantly lower pro-
portion than the increase in the balance sheet total of 10%.
Due to the effects described above, the Group’s equity ratio
of 22.2% was below the level at the end of 2017 (24.0%);
the equity ratio for the industrial business was 42.8% (2017:
46.4%). It is necessary to consider the fact that the equity
ratios at the end of 2017 and 2018 are adjusted for the paid
and proposed dividend payments.
Provisions increased from €22.1 billion to €24.4 billion;
as a proportion of the balance sheet total, they were at the prior-
year level at 9%. They primarily comprise provisions for pen-
sions and similar obligations of €7.4 billion (2017: €5.8 billion),
which mainly consists of the difference between the present
value of defined benefit pension obligations of €31.7 billion
(2017: €31.7 billion) and the fair value of the pension-plan assets
applied to finance those obligations of €25.5 billion (2017:
€27.2 billion). Provisions also relate to liabilities from income
taxes of €1.5 billion (2017: €1.6 billion), from product warran-
ties of €7.0 billion (2017: €6.7 billion) and for personnel and
social costs of €4.3 billion (2017: €4.4 billion), as well as other
provisions of €4.3 billion (2017: €3.6 billion).
Financing liabilities of €144.9 billion were significantly above
the prior-year level (2017: €127.1 billion). The increase of
€17.5 billion adjusted for exchange-rate effects was primarily due
to the refinancing of the growing leasing and sales-financing
business and the utilization of favorable interest terms for refi-
nancing. 53% of the financing liabilities were accounted for
by bonds, 27% by liabilities to financial institutions, 8% by depos-
its in the direct banking business and 9% by liabilities from
ABS transactions.
Trade payables increased to €14.2 billion due to the higher
volume of business (2017: €12.5 billion). The Mercedes-Benz
Cars division accounts for 60% (2017: 63%) of those payables
and the Daimler Trucks division accounts for 24% (2017: 20%).
Other financial liabilities of €10.0 billion (2017: €9.3 billion)
mainly consist of liabilities from residual-value guarantees,
liabilities from wages and salaries, deposits received and accrued
interest on financing liabilities. The increase was primarily
caused by higher negative fair values of derivative financial
instruments and by the liability caused by the Toll Collect
settlement.
102 B | COMBINED MANAGEMENT REPORT | DAIMLER AG
Daimler AG
Condensed version according to the German Commercial Code (HGB)
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
Daimler AG is the parent company of the Daimler Group and its
headquarters are in Stuttgart. Its principal business activities
comprise the development, production and distribution of cars,
vans and trucks in Germany and the management of the activi-
ties of the Daimler Group.
The vehicles are produced at the domestic plants of Daimler AG,
as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its
own sales-and-service network, which is organized in seven
regional centers for cars and seven for commercial vehicles,
through foreign sales subsidiaries and through third parties.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement,
primarily relating to intangible assets, provisions, financial
instruments, the leasing business and deferred taxes.
The main performance indicators for Daimler AG are unit sales,
revenue and net profit.
Profitability
The development of profitability was affected in financial
year 2018 by the increase in financial income of €1.4 billion to
€7.3 billion, as well as by the decrease in operating profit of
€2.3 billion to €-1.2 billion. B.34
Unit sales by Daimler AG in 2018 were slightly lower than in the
prior year and thus lower than our expectation as stated in
the Outlook section of last year’s Annual Report. Sales of cars
decreased by 4% to 1,791,000 units1. Due to starts of produc-
tion, sales decreased of the GLE-Class by 18% to 137,000 units1
and of the B-Class by 21% to 62,000 units1. Sales of 303,000
units1 of the C-Class were lower than in the previous year, par-
tially for lifecycle reasons (2017: 336,000 units1). The GLC-
Class was extremely successful in 2018, with a sales increase
of 18% to 293,000 units1. Truck sales increased by 6% to
112,000 units1 and van sales rose by 8% to 386,000 units1.
At €112.5 billion, revenue remained at the prior-year level
and in line with our expectations as stated in the Outlook
section of last year’s Annual Report. Revenue in the car business
decreased by 4% to €83.8 billion due to lower vehicle sales.
Along with higher unit sales, revenue in the commercial-vehicle
business increased again by 12% to €28.7 billion.
Cost of sales rose by 1% to €103.2 billion. The increase results
primarily from higher expenses for production materials and
purchased services. This was mainly due to higher expenses for
new products and technologies, expenses related to certifi-
cation according to the new WLTP (Worldwide Harmonized Light
Vehicles Test Procedure) standard and expenses for service
measures. Research and development expenses, which are
reported under cost of sales, were higher than in the previous
year at €8.1 billion (2017: €7.6 billion); as a proportion of
revenue, they amounted to 7.2% (2017: 6.8%). Research and
development expenses primarily related to the renewal and
expansion of the product portfolio, in particular electric vehicles
and the S-Class, C-Class, SUVs and the new Sprinter. In
addition, work is continuously being carried out on new engine
generations, alternative drive systems and the intensification
of the module strategy. At the end of the year, approximately
20,500 people were employed in the area of research and
development.
Selling expenses increased by €0.6 billion to €7.9 billion. This
was primarily due to higher expenses for freight, marketing
and sales systems. As a proportion of revenue, selling expenses
increased from 6.5% to 7.0%.
General administrative expenses of €2.3 billion were
higher than in the previous year (2017: €2.0 billion). They include
costs in connection with Project Future amounting to
€0.2 billion. As a proportion of revenue, general administrative
expenses amounted to 2.0% (2017: 1.8%).
The aforementioned functional costs include expenses in
the amount of €0.6 billion in connection with the transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG.
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
to subsidiaries of Daimler AG are not counted in unit sales.
Other operating expense, net amounted to €0.3 billion
(2017: €0.4 billion). Income from other periods increased, on the
other hand, expenses for legal proceedings had an impact.
B.34
Financial income increased by €1.4 billion to €7.3 billion. The
increase is primarily due to an increase of €4.6 billion in income
from investments in subsidiaries. On the other hand, financial
income was adversely affected by an increase of €3.2 billion in
interest expenses, primarily in connection with company
pensions. This was mainly due to significant higher interest
expenses as a result of the return on the special-purpose
assets, which was negative, unlike in the previous year, and
to expenses resulting from the proportionate transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG. In addition, the measurement of pension
obligations also contributed to higher interest expenses.
The income tax expense amounts to €1.1 billion (2017:
€2.0 billion). The lower operating profit led to a lower income
tax expense. Furthermore, the prior-year figure included
high tax expenses from other periods.
Net profit amounts to €5.0 billion (2017: €5.0 billion), and
was thus in line with the expectations stated in the Outlook
section of last year’s Annual Report.
The economic situation of Daimler AG is primarily deter-
mined by its business operations and those of its subsidiaries.
Daimler AG participates in the operating results of its sub-
sidiaries through profit distributions. The economic situation of
Daimler AG is therefore fundamentally the same as that of
the Daimler Group, which is described in the chapter Overall
Assessment of the Economic Situation. E page 118
Financial position, liquidity and capital
resources
The balance sheet total of €117.2 billion is €9.9 billion higher
than at the end of 2017. B.35
Non-current assets increased during the year by €12.4 billion
to €55.1 billion, reflecting the €11.9 billion increase in financial
assets, which resulted primarily from internal restructuring
within the Group as part of Project Future. Furthermore, property,
plant and equipment increased by €0.4 billion to €9.5 billion.
Investments in property, plant and equipment (excluding leased
assets, approximately €3.0 billion) mainly relate to investments
in the production of the new S-, A- and B-Class models and the
new Sprinter, as well as investments in engine and trans-
mission projects.
Inventories increased compared with December 31, 2017
by €1.0 billion to €10.5 billion. The increase is mainly related to
unfinished and finished products.
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 103
Receivables, securities and other assets decreased com-
pared with December 31, 2017 by €4.7 billion to €44.8 billion.
The main reason for this development was the lower level
of €5.4 billion in receivables due from subsidiaries, primarily
resulting from sales of receivables in foreign currencies in
the amount of €4.2 billion to a Group company during the year,
and the decrease of €0.4 billion in securities. However, other
assets increased by €1.0 billion. Cash and cash equivalents
rose by €4.6 billion to €6.4 billion.
Gross liquidity – defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits
presented under other assets – increased by €4.7 billion to
€14.3 billion on the balance sheet date. The main reason
for the increase in gross liquidity was the €4.6 billion increase
in cash and cash equivalents.
Cash provided by operating activities amounted to €13.8 bil-
lion in the 2018 financial year (2017: €7.2 billion). The increase
resulted in particular from higher dividends from subsidiaries
and lower receivables from the supply of goods and services to
Group companies. In addition, higher cash-effective contri-
butions were made to pension plan assets in the previous year.
Cash flows from investing activities resulted in a net cash
outflow of €14.7 billion in 2018 (2017: €6.5 billion). The increase
is primarily a reflection of restructuring within the Group in
the area of financial assets in connection with Project Future.
Positive effects resulted from acquisitions and sales of secu-
rities within the framework of liquidity management. Investments
in intangible assets and in property, plant and equipment
were at the prior-year level.
Cash flows from financing activities resulted in a net cash
inflow of €5.5 billion (2017: outflow of €0.6 billion). The inflow is
explained by higher liabilities from the Group’s internal trans-
actions in connection with central financial and liquidity manage-
ment. On the other hand, the decrease in external financing
liabilities resulted in higher cash outflows than in the previous
year. Cash flows from financing activities include the payment
of the dividend for the year 2017 in an amount of €3.9 billion.
B.34
Condensed income statement of Daimler AG
In millions of euros
Revenue
Cost of sales (including R&D expenditure)
Selling expenses
General administrative expenses
Other operating expense, net
Operating profit
Financial income
Income taxes
Net profit
2018
2017
112,491
-103,232
112,685
-101,874
-7,904
-2,304
-292
-1,241
7,318
-1,055
5,022
-7,312
-2,010
-355
1,134
5,866
-2,018
4,982
Transfer to retained earnings
-1,545
-1,077
Distributable profit
3,477
3,905
104 B | COMBINED MANAGEMENT REPORT | DAIMLER AG
Equity increased in 2018 by €1.1 billion to €43.2 billion.
This change primarily resulted from the net profit for 2018, of
which, in accordance with Section 58 Subsection 2 of the
German Stock Corporation Act (AktG), €1.5 billion was trans-
ferred to retained earnings. The equity ratio at December 31,
2018 was 36.9% (December 31, 2017: 39.2%). As stated in the
notes to the annual financial statements according to the
German Commercial Code (HGB), Daimler AG holds no treasury
shares at December 31, 2018.
Provisions increased compared with December 31, 2017 by
€2.4 billion to €16.4 billion. This resulted mainly from increased
provisions for pensions and similar obligations, increased
obligations in connection with sales transactions and warran-
ties, legal proceedings and higher personnel and social
provisions.
Provisions for pensions and similar obligations amounted
to €0.8 billion at December 31, 2018 (2017: net defined-benefit
plan asset of €3.5 billion). The change is primarily attributable
to the transfer of pension obligations of €6.9 billion for retired
employees and their surviving dependents to Daimler Pen-
sionsfonds AG. To cover these pension obligations, special-pur-
pose assets of €8.2 billion were transferred to Daimler
Pensionsfonds AG. Additionally, the measurement of the pension
obligations and the negative return on the special-purpose
assets led to an increase in the provision.
Liabilities increased by €6.1 billion to €56.4 billion. This
primarily reflects higher liabilities to subsidiaries and results in
particular from purchase-price obligations from the Group’s
internal restructuring in connection with Project Future. On the
other hand, there were decreases in bonds and notes and
liabilities to banks.
B.35
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
Net defined-benefit plan asset
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
Risks and opportunities
Dec. 31,
2018
Dec. 31,
2017
55,092
10,524
44,784
6,354
61,662
406
42,700
9,466
49,516
1,782
60,764
384
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as that of the Daimler
Group. Daimler AG generally participates in the risks of its sub-
sidiaries and associated companies in line with the percentage
of each holding. Risks and opportunities are described in the
Risk and Opportunity Report. E pages 143 ff Risks may addi-
tionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual obliga-
tions (in particular with regard to financing), as well as from
the impairment of investments in subsidiaries and associated
companies.
–
3,462
117,160
107,310
Outlook
3,070
3,070
11,480
25,182
3,477
43,209
838
15,595
16,433
7,210
49,232
56,442
1,076
11,480
23,637
3,905
42,092
–
13,981
13,981
6,499
43,838
50,337
900
117,160
107,310
Due to the interrelations between Daimler AG and its subsid-
iaries and the relative size of Daimler AG within the Group, we
refer to the statements in the Outlook chapter, which largely
reflect our expectations also for the parent company. We also
have adjusted the sensitivities for forecasting the unit sales,
revenue and net profit in accordance with the Group for Daimler
AG, effective with financial year 2019. E pages 158 ff Exclud-
ing the effect of the planned separation as part of Project Future,
we expect Daimler AG to achieve net profit in 2019 at the level
of financial year 2018. We anticipate a higher operating profit
and lower financial income. In 2019, we expect Daimler AG
to achieve unit sales and revenue slightly above the prior-year
levels.
Following the approval of Project Future at the 2019 Annual
Shareholders’ Meeting of Daimler AG, the car and van business
as well as the truck and bus business will be separated into
the legally independent entities Mercedes-Benz AG and Daimler
Truck AG. As a result, Daimler AG will not sell any vehicles in
the future. The remaining, significantly lower revenue will relate
to intra-Group charging for services. Mercedes-Benz AG and
Daimler Truck AG will each have a profit-and-loss-transfer agree-
ment with Daimler AG. We therefore expect net profit for
financial year 2019 to remain at the previous year’s level.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 105
Sustainability and Integrity
Sustainability at Daimler
Sustainability is one of the basic principles of our corporate
activities as well as a benchmark for our success as a company.
This approach means that we take advantage of the oppor-
tunities offered by sustainability for our business success while
including ecological and social impacts in these consider-
ations.
Additional information on “Sustainability at Daimler” can
be found in the “Non-Financial Report” section of this Annual
Report. E pages 202 ff The “Non-Financial Report” is also
available on the Internet at w daimler.com/nonfinancial-report.
The new Daimler Sustainability Report for financial year 2018
will be available on the Group’s website in late March 2019.
w daimler.com/sustainability
Research & development
Research and development as key success factors
Research and development have always played a key role
at Daimler. Gottlieb Daimler and Carl Benz invented the auto-
mobile more than 130 years ago. Today, we are shaping the
future of mobility. Our goal is to offer our customers fascinat-
ing products and customized solutions for needs-oriented,
safe and sustainable mobility. Our technology portfolio and
our key areas of expertise are focused on this objective.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles’ market
success. At the end of 2018, Daimler employed 25,600 men and
women at its research and development units around the
world (2017: 24,600). A total of 17,700 of those employees (2017:
16,800) worked at Group Research & Mercedes-Benz Cars
Development, 5,300 (2017: 5,300) at Daimler Trucks, 1,300
(2017: 1,300) at Mercedes-Benz Vans and 1,300 (2017: 1,200)
at Daimler Buses. Around 5,800 researchers and development
engineers (2017: 5,400) worked outside Germany.
Our international research and development network
With our global research and development network, we are pres-
ent in the key markets with direct proximity to our customers.
Our biggest facilities are in Sindelfingen and Stuttgart-Untertürk-
heim in Germany. Our most important research locations in
North America are the US R&D headquarters in Sunnyvale,
California (main facility); Long Beach, California; Portland, Ore-
gon; and Redford, Michigan. Our most important facilities in
Asia are in Bangalore, India; the Global Hybrid Center in Kawa-
saki, Japan; and our research and development center in
Beijing. Mercedes-Benz Research & Development India (MBRDI,
with headquarters in Bangalore) is Daimler’s largest research
and development center outside Germany. Activities at MBRDI
focus on digitization, simulations and data science. In Novem-
ber 2018, we announced plans to build a Research and Develop-
ment Tech Center China with a total investment of approxi-
mately €145 million. This new center will further expand our
presence in what is now our biggest single market. It will
also be our second major R&D site in Beijing, following the
Mercedes-Benz R&D Center, which was established in 2014.
The new R&D Tech Center is scheduled to begin operating in
2020.
In September, we opened our new Test and Technology Center
in Immendingen. We have invested more than €200 million
in this new Daimler research location, which is located at a for-
mer military site and covers a total area of 520 hectares.
The center brings together our global vehicle testing activities.
Among other things, we will use the facility to develop alter-
native drive systems such as hybrid and electric vehicles of the
EQ product and technology brand, and to test future assis-
tance systems and automated driving functions.
Along with our internal activities, we also maintain close
contacts with external research institutions. For example, we
work together with various renowned research institutes
around the world and participate in international exchange
programs for next-generation scientists.
We are open to cooperation – worldwide. Our partners include
promising startups such as what3words and Anagog, as well
as suppliers such as Bosch, or, in selected fields, competitors
such as BMW. Some of our Chinese partners are Baidu, Alibaba
and Tsinghua University. We operate digital hubs as develop-
ment centers around the world, for example in Berlin, Seattle,
Lisbon and Tel Aviv.
106 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
B.36
Research and development expenditure
In billions of euros
total
thereof capitalized
10
9
8
7
6
5
4
3
2
1
0
2014
2015
2016
2017
2018
B.37
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
2018
2017
18/17
% change
9,107
2,526
6,962
2,269
1,295
40
666
176
199
41
8,711
2,773
6,642
2,388
1,322
45
565
310
194
30
+5
-9
+5
-5
-2
-11
+18
-43
+3
+37
Targeted involvement of the supplier industry
In order to achieve our ambitious goals, we also cooperate very
closely with research and development units from the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly
bring new technologies to market maturity. Such cooperation is
all the more important in light of the increasing digitization
of processes throughout all stages of the value chain. Strong
partners from the supplier industry are also essential for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we aim
to ensure that the Group retains the key technological expertise
it needs in order to maintain the uniqueness of our brands
and to safeguard the future of the automobile in general.
New strategy for brands and patents: everything under
one roof
Without the protection and management of its patents, brands
and designs, Daimler could never have become as successful as
it is today. That is why we seek to effectively protect and
manage the Group’s intellectual property and the innovations
that inspire our customers around the globe. In this manner,
we also intend to ensure the successful continuation of our tra-
dition that goes back more than 130 years. We upheld this
tradition in 2018 by registering almost 1,900 new ideas for pat-
ents, with an increasing focus on the CASE technologies.
In addition to industrial property rights, which are intended to
safeguard our innovations for future mobility over the long
term, the unique visual aspects of our products are protected
with over 7,500 designs registered in 2018 (2017: 7,800).
Our portfolio of nearly 36,300 trademark rights worldwide
(2017: 35,800) also serves to protect the Mercedes-Benz
brand, our new EQ brand for electric mobility, and all our other
brands in each relevant market.
In today’s fast-paced digital world, it is no longer enough
simply to develop good ideas. For this reason, within the frame-
work of our “Project Future,” we have taken the opportunity
to consolidate under one roof all topics and tasks relating to our
patents, our strong brands, our copyrights and the licenses
we issue to contract manufacturers. The result is the establish-
ment of the Daimler Brand & IP Management GmbH & Co. KG
subsidiary. This organizational unit will focus exclusively in the
future on the management, utilization, protection and asser-
tion of all intellectual and other property rights at the Daimler
Group.
€9.1 billion for research and development
We want to continue helping shape mobility through our pio-
neering innovations in the coming years while moving ahead
with digitization throughout the entire Group. As announced in
our Annual Report 2017, we therefore slightly increased our
very high level of investment in research and development to
€9.1 billion in 2018 (2017: €8.7 billion). Of that amount, €2.5
billion (2017: €2.8 billion) was capitalized as development costs,
which represents a capitalization rate of 28% (2017: 32%).
The amortization of capitalized research and development expen-
diture totaled €1.5 billion during the year under review (2017:
€1.3 billion). With a rate of 5.4% (2017: 5.3%), research and
development expenditure also remained at a high level in com-
parison with revenue. Research in the year under review
focused on new vehicle models, extremely fuel-efficient and
environmentally friendly drive systems, new safety tech-
nologies, automated and autonomous driving and the digital
connectivity of our products.
The most important development projects at Mercedes-Benz
Cars focused on the successor models of the current S-Class
and C-Class, as well as on the EQ electric brand. We are also
investing in low-emission combustion engines, vehicle connec-
tivity, automated and autonomous driving, and the development
of new innovative safety technologies. Mercedes-Benz Cars
spent a total of €7.0 billion on research and development in the
year under review (2017: €6.6 billion). Daimler Trucks invested
€1.3 billion in research and development projects, as in the
previous year. The division’s most important projects were in
the areas of emission standards and fuel efficiency, as well
as customized products and technologies for important growth
markets. Forward-looking technologies for electric mobility,
connectivity, and automated and autonomous driving are also
becoming more important. R & D expenditure at Mercedes-
Benz Vans focused mainly on the new Sprinter generation and
the further development of the Vito and the V-Class. In addi-
tion, Mercedes-Benz Vans continued to forge ahead with the
electrification of its commercial model series. Daimler Buses
primarily focused its development activities on new products,
the fulfillment of future emissions standards and measures
to further reduce fuel consumption. Alternative drive systems,
in particular electrification technology and other forward-look-
ing projects related to automation functions and autonomous
driving also played a key role during the year under review.
B.36 B.37
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 107
Innovation, safety and environmental protection
New mobility is taking shape and is becoming a reality
The automotive industry is undergoing a profound transforma-
tion. As the inventor of the automobile and a provider of per-
sonal mobility solutions ranging from smart vehicles and the
broad range of Mercedes-Benz cars to vans, buses and trucks,
we seek to shape and lead this far-reaching transformation.
Our CASE corporate strategy focuses on the key fields decisive
for the future of mobility – connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use and
services (Shared & Services) and electric drive systems
(Electric). The combination of these four fields offers possibilities
for developing entirely new products and services for custom-
ers and making mobility as intuitive as possible. An autonomously
driving taxi that can be ordered using a smartphone offers a
good example of what we can expect to see here in the future.
In the meantime, our electric mobility offensive in the field
of cars is being consolidated under our new EQ technology and
product brand, which represents an important component
on the road to emission-free driving and an effective instrument
for achieving ever more ambitious global CO2 reduction
targets.
Connected: MBUX – Mercedes-Benz User Experience sets
standards
With regard to the key field of Connected, MBUX – Mercedes-
Benz User Experience – has been available for our customers
since the launch of the new A-Class. Thanks to artificial intelli-
gence, the all-new infotainment system has the ability to
learn; it can also be personalized and adjusts itself to users’
habits and preferences. It thus creates an emotive and
intuitive link between the vehicle and its driver. Its voice control
system with natural speech recognition can now be operated
in a more intuitive manner. The GLE will be the first model to
feature the Interior Assistant, which can recognize individual
hand and arm movements of the driver and the front passenger
and support their personal operating intentions and preferences.
The digital services from Mercedes me have long since begun
evolving into intelligent, personal and mobile assistants of
Mercedes-Benz drivers, and this fact is confirmed by the very
high customer activation rates for Mercedes me services.
Autonomous: From Stop-and-Go Assist to driverless cars
Connectivity also plays a key role in the development of auto-
mated driving functions. Today’s driving assistance systems
already use live traffic information and data obtained from car2x
communication systems. Our goals here extend far beyond
such applications, however. The 2017/2018 Mercedes-Benz
Intelligent World Drive demonstrated that learning-enabled
systems play a key role in the development of autonomous driv-
ing applications for real road traffic, in line with the given
conditions in a country. In the Mercedes-Benz Intelligent World
Drive, a test vehicle based on the current S-Class completed
a demanding study trip on five continents in order to “learn”
from automated test drives in real traffic conditions. Whether
it was crosswalks on Chinese highways, making right turns from
the left-hand lane in Melbourne, Australia, or pedestrian traffic
on different types of roads in South Africa – on every continent
the S-Class faced challenges that will have an influence on
the way future automated and autonomous vehicles operate.
The next phase will take place in the city of San Jose, Califor-
nia, where Bosch and Daimler are creating a system for fully
automated autonomous driving (SAE Levels 4/5) and setting the
stage for other important developments. In the second half
of 2019, Bosch and Daimler plan to begin offering customers
a ride-hailing service with fully automated Mercedes-Benz
S-Class vehicles on selected routes. Daimler Financial Services
AG will operate and manage the test fleet and the app-based
mobility service.
Shared & Services: ideas for new mobility
The pilot project for fully automated driving in San Jose will
also demonstrate how mobility services from Daimler that
are already established, such as car sharing (car2go), ride
hailing (mytaxi) and multimodal platforms (moovel), can be
intelligently linked and used to shape the future of mobility.
Those who wish to share their private vehicle with friends or
colleagues can use the ready-to-share app function for smart
cars and the Mercedes me car-sharing app for Mercedes-Benz
cars. Both apps offer holistic solutions that make it possible
for customers to allow access to the vehicle for a predefined
group of users. Friends, family members or colleagues can
then easily book and borrow the vehicle for a specific period.
In mid-July 2018, an attractive subscription model started
under the Mercedes me brand at first as a pilot project in various
German cities. We offer interested customers the possibility
to flexibly select and drive up to 12 different vehicles within a
one-year period. So instead of owning just one car, those
who use the service can switch cars in line with their changing
situations or activities; for example, they can drive a con-
vertible in the summer or use an E-Class wagon for family trips.
Services related to electric mobility are starting to play a
special role. With Mercedes me, EQ offers extensive services
for electric mobility today and in the future. Auxiliary climate
control is one of the most important new services and features
available in the EQ models from Mercedes-Benz. It ensures
that the vehicle interior is already at the desired temperature
upon departure. The system can be programmed directly via
MBUX or via the Mercedes me app.
The EQ-specific content in MBUX includes the display of range,
charge level and energy flow. Drive programs, charging current
and departure time can also be controlled and set via MBUX.
The MBUX display also has a special EQ tile via which numerous
EQ features can be accessed.
EQ-optimized navigation always bases its calculation on the
fastest route while also taking into account the shortest
charging time. The route planning system also responds dynam-
ically to changes, while EQ-optimized navigation ensures that
Mercedes-Benz customers can easily find charging stations. In
addition, Mercedes me Charge gives customers convenient
access to the charging stations of numerous providers, includ-
ing those outside the country the vehicle is registered in. In
this context, customers also benefit from an integrated payment
function with simple billing features.
108 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
addition to its fuel cell. Intelligent interplay between the
battery and the fuel cell, as well as short refueling times, make
the GLC F-CELL a dynamic and practical vehicle for long-
distance travel. Two tanks with a carbon-fiber outer layer in the
vehicle floor hold 4.4 kg of hydrogen. Thanks to 700-bar tank
technology, the hydrogen tank can be refilled within just three
minutes – as quickly as one is used to filling the tank of a
conventional car. With hydrogen consumption of approximately
1 kg/100 km, the GLC F-CELL achieves about 430 hydrogen-
powered kilometers1 in the NEDC; in hybrid mode, up to 51 km1
are added when the battery is fully charged. And driving
dynamics are ensured by an output of 155 kW.
The EQC (power consumption combined: 22.2 kWh/100 km;
CO2 emissions combined: 0 g/km, preliminary figures)2, which
is the first all-electric SUV from Mercedes-Benz, had its world
premiere in Stockholm in early September. The model will
go into series production in 2019, after which, additional EQ
models will be launched in quick succession.
smart is well on its way to becoming an all-electric brand
by 2020. The battery-electric smart models combine the agility
of the smart with locally emission-free driving – the ideal
combination for urban mobility.
We take a holistic view of electric mobility. In an effort to imple-
ment the recycling process chain and to safeguard future
raw-material supplies for electric mobility, Daimler AG is actively
involved in the research and development of new recycling
technologies. With the establishment of a wholly owned subsid-
iary Mercedes-Benz Energy GmbH, we are now focusing, for
example, on reusing batteries. After all, the lifecycle of a battery
does not have to end after it has done its job in a vehicle, as
the battery can be reused for stationary energy storage devices.
Battery systems that have yet to be installed in electric vehi-
cles and remain in stock as spare parts can also be used as
energy storage units. A large storage device consisting of
battery modules for electric vehicle applications went into
operation in Elverlingsen in the southern Westphalia region
of Germany at the end of June 2018. A total of 1,920 battery
modules are stored there as a “living spare parts depot” for
third-generation electric smart models.
Modern combustion engines remain indispensable
Combustion engines will continue to form the backbone of
global personal mobility for many years to come. This makes it
all the more important to further improve the efficiency and
environmental compatibility of combustion engines. As planned,
we continued and expanded our engine offensive in the year
under review. Our new highly efficient four and six-cylinder
engines are already available in diesel or gasoline versions in
numerous models.
Drivers of all vehicles with electric drive systems benefit from
an intelligent and networked variant of the Mercedes-Benz
wallbox, which makes charging easier and also offers a range
of additional functions that can be accessed via a new app.
Electric: Mercedes-Benz and smart focus on EQ
Mercedes-Benz is forging ahead with the electrification of
its vehicles. Plans call for electrification of the entire Mercedes-
Benz portfolio by 2022, which means that various electric
alternatives are to be offered in every segment – from compact
cars to large SUVs. Well over 130 electric vehicle variants are
currently planned. Depending on customer preferences and
the expansion of the public infrastructure, all-electric vehicles
should account for 15 to 25% of our total car sales by 2025.
To that end, we plan to launch more than ten all-electric cars.
Mercedes-Benz Cars is also a pioneer when it comes to the
introduction of the 48-volt electrical system. Integration of the
starter motor and generator and the electrification of auxiliary
assemblies are to gradually and systematically make their way
into the market to do more than just make cars more efficient,
as temporarily available torque (EQ boost) will also provide
additional thrust and enable “coasting” without CO2 emissions.
As the second pillar of its electrification strategy, Daimler is
currently launching new plug-in hybrid models from the C-Class
to the S-Class model series. Such hybrid variants are to be
made available also in the compact segment over the medium
term. Plug-in hybrids, which are marketed under the EQ Power
brand at Mercedes-Benz, represent a key technology on the
road to a locally emission-free future for the automobile. Such
vehicles offer customers the best of both worlds: They can be
driven in the all-electric mode in cities, while on long journeys,
customers benefit from the combustion engine’s range. We are
also now combining highly efficient diesel engines with plug-in
hybrid technology for the first time.
We have refined our intelligent drive management system in
order to further improve efficiency. The route-based operating-
mode strategy for hybrid and electric vehicles anticipates
the course of the road and the traffic situation. This also includes
radar-based recuperation, anticipatory route-based gear
shifting and operation strategy, and ECO Assist.
The third and fast-growing pillar on the road to emission-free
mobility is the all-electric drive system.
The GLC F-CELL is another fully electric vehicle (hydrogen
consumption combined: 0.34 kg/100 km, CO2 emissions com-
bined: 0 g/km, power consumption combined: 13.7 kWh/100
km)1. This SUV, which has been delivered to the first selected
customers since late 2018, can run on electricity as well as
hydrogen because it is equipped with a lithium-ion battery in
1 Information on fuel consumption, electricity consumption and CO2
emissions is provisional and has been determined by an external technical
service for the certification procedure in accordance with the provisions
of the WLTP test procedure; the figures are non-binding and have been
correlated with NEDC values. EU type approval and a certificate of con-
formity with official figures are not yet available. The figures given above
may deviate from the official figures.
2 Information on electricity consumption and CO2 emissions is provisional
and has been determined by an external technical service and is non-bind-
ing. Range figures are also provisional and non-binding. EU type approval
and a certificate of conformity with official figures are not yet available.
The figures given above may deviate from the official figures.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 109
Our “vision of accident-free driving”
Vehicle safety is one of our core areas of expertise and a
key component of our product strategy. Our vision of accident-
free driving will continue to motivate us to make mobility as
safe as possible for everyone in the future.
Starting with the new A-Class, which was launched in May
2018, our compact-class cars can be equipped with assistance
systems that provide cooperative support to the driver.
Such systems, which were previously only available in S-Class
vehicles, also include features that enable partially automated
driving. The high level of active safety achieved by our engineers,
which prevents accidents while simultaneously enhancing
comfort for drivers, is also demonstrated in the new GLE –
several Intelligent Drive functions in its Driving Assistance
Package are also leading the way beyond the SUV segment. For
example, the Stop-and-Go Assist system in the new GLE can
detect traffic jams early on, actively support the driver in stop-
and-go traffic up to a speed of approximately 60 km/h,
and also help create an emergency lane for rescue crews in the
event of an accident.
Good visibility means greater safety. MULTIBEAM LED head-
lights with Adaptive Highbeam Assist Plus are now available
throughout our entire product range. This assistance system can
control the LEDs in the headlamps individually and thus con-
tinuously adapt the range and shape of the light cone to the
given traffic situation. We are also currently testing the next
technological lighting leap in a small batch of Mercedes-
Maybach models being driven by customers: DIGITAL LIGHT.
This software-controlled light has high precision thanks to
its resolution of more than two million pixels, and is leading the
way in driver assistance, performance and communication.
Trucks and buses of the future
Our customers move the world: goods, people, ideas. Our
shared task at Daimler Trucks & Buses is to provide them with
the best possible support. We develop the vehicles and
services with which they can advance our society today and
tomorrow: efficiently, safely and reliably. To this end, we are
putting important new technologies into series production such
as electric drive systems and partially automated driving –
across brands, divisions and regions. In this way, we make goods
and passenger transportation even safer and more sustainable
worldwide, and our customers even more successful. We first
listen to our customers on the spot and then we develop the
right solutions.
Daimler Trucks: efficient and electric
The new Mercedes-Benz Actros had its world premiere in
September 2018. The Mercedes-Benz brand’s flagship truck
for long-distance haulage applications takes efficiency for
business owners, comfort for drivers and safety for all road
users and pedestrians to new levels. Fuel consumption has
been further reduced compared to the predecessor model. For
better aerodynamics, the truck features new, aerodynamically
improved wind deflectors and, above all, the world’s first mirror
camera in a series-production truck, which will replace large
exterior mirrors in the future. Thanks to its expanded map
material, the Predictive Powertrain Control (PPC) system for
cruise control and gear shifting can now also be used for
long-distance haulage on both secondary roads and major
highways.
The new Actros will also be offered with natural-gas drive in
the future. Significantly lower CO2 emissions when operating
on natural gas and a further significant improvement in the
CO2 balance when using biomethane, in addition to low noise
emissions and zero emissions of particulate matter from the
drive engine – with the new Actros NGT, Mercedes-Benz Trucks
offers the benefits of this alternative drive system.
Along with its efforts to increase the efficiency of conventional
drive systems, Daimler Trucks is also working on the devel-
opment of sustainable, all-electric, quiet and locally emission-
free commercial vehicles that offer outstanding benefits for
both customers and the environment. The company conducts
analyses to identify applications for which electric mobility
makes the most economic sense, in the interest of both the
company’s shareholders and its customers. The year 2018
marked the first time that Daimler Trucks unveiled all-electric
trucks across all its vehicle segments, ranging from the FUSO
eCanter in the light-duty segment to the Freightliner eM2 in the
medium-duty segment and the Mercedes-Benz eActros,
Freightliner eCascadia and FUSO Vision One in the heavy-duty
segment. The FUSO eCanter and the Mercedes-Benz eActros
are currently being tested under real conditions by customers
in the United States, Europe and Japan. In December 2018,
Freightliner delivered its first Freightliner eM2 to a customer in
the United States. The Freightliner eCascadia and eM2 are
especially geared toward the requirements of customers who
use electric commercial vehicles on predefined local distri-
bution haulage routes that generally do not change.
In June 2018, we consolidated all electrification activities for
trucks and buses in the E-Mobility Group. The E-Mobility Group
defines the strategy for all electric components and for com-
plete electric vehicles across all brands and divisions. It is also
developing a globally standardized electric architecture similar
to the successful global platform strategy used for conventional
drive systems and major components. The employees work at
many locations throughout the company’s worldwide network –
for example in Portland, Oregon, in the United States; in
Stuttgart, Germany; and in Kawasaki, Japan.
110 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Daimler Trucks: safe and automated
The new Mercedes-Benz Actros also sets new standards in
terms of safety and partially automated driving. Just four years
after the presentation of the automated Mercedes-Benz Future
Truck 2025, the company is now putting a partially automated
(Level 2) driver assistance system into a series-production
truck for the first time ever. This new system, which is known as
Active Drive Assist, enables partially automated driving in all
speed ranges for the driver in a series-produced truck. The new
features here are active lateral guidance and the combination
of longitudinal and lateral guidance, which is made possible by
the fusion of radar and camera information. Active Drive Assist
enables interplay between the Proximity Control Assist system
with its stop-and-go function and Active Lane Keeping Assist.
Although the driver is still responsible for monitoring the traffic
situation, the system provides significant relief to him or her
and makes an important contribution to increasing road safety.
Starting in 2019, Daimler Trucks offers partially automated
driving (Level 2) to its Freightliner customers in North America
under the product name Detroit Assurance 5.0. Level 2 func-
tions are also to be available for customers in Asia in the FUSO
Super Great in 2019.
The Mercedes-Benz Actros also features the latest generation
of the Active Brake Assist emergency braking system. Active
Brake Assist 5 supports the driver when there is a danger of a
rear-end collision or a collision with a person crossing the road,
approaching the truck or walking in the truck’s lane – with
automatic maximum braking if necessary. Active Brake Assist
5 also works with a combination of radar and a camera, which
allows it to monitor the space ahead of the vehicle and react
to persons on the road in an even more effective manner. Side-
guard Assist helps protect the most vulnerable road users –
cyclists and pedestrians. This system has been available since
the spring of 2018 in Mercedes-Benz Actros, Antos and
Arocs heavy-duty trucks, as well as in the Econic. It is also
now offered in Asia in the FUSO Super Great.
Daimler Trucks: reliable and connected
Commercial vehicles from Daimler Trucks & Buses need to be
reliable. Unnecessary downtime prevents customers from
conducting their business successfully, so vehicle reliability is
always the top priority. Before vehicles go into series pro-
duction, the company has already tested them over millions of
kilometers under the most difficult conditions around the
globe. Daimler also works continuously to increase the avail-
ability of its trucks and buses. Digitization and connectivity
play a decisive role here. Meanwhile, several hundred thousand
connected vehicles from Daimler are on the roads.
The Truck Data Center is the centerpiece of all the connectivity
solutions offered by Daimler Trucks. The Truck Data Center
receives data from the sensors and cameras in the truck and
analyzes this information for various applications. It also
serves as the interface for all connectivity services and is thus
responsible for the truck’s external communications as well.
This connectivity module forms the technological foundation for
the Fleetboard and Mercedes-Benz Uptime connectivity ser-
vices and the telematics solutions offered by Detroit Connect
for the Freightliner brand and by Truckonnect for FUSO. Like
a modern smartphone, the Truck Data Center uses Bluetooth,
the mobile-telephony network or GPS to communicate with
the traffic infrastructure, with other vehicles and with further
systems involved in the logistics process. The Truck Data
Center creates a permanent connection between vehicles from
Daimler Trucks and the cloud, and makes the division’s
trucks part of the Internet of things.
At the IAA Commercial Vehicles trade fair in September 2018,
Fleetboard unveiled the new customer interface that we plan
to offer to Fleetboard customers in the spring of 2019. The
improvement to the Fleetboard Cockpit involves the introduction
of a new, intuitive and web-based interface that clearly com-
bines all data from booked Fleetboard services. The refined and
free Fleetboard Driver app has been available for downloading in
the Apple App Store and the Google Play Store since July 2018.
With Mercedes-Benz Uptime, we are pursuing the clear goal
of permanently minimizing vehicle downtime and ensuring that
necessary downtime can be planned, to further increase
vehicle availability for customers. Constant communication by
all onboard connected systems generates several gigabytes
of data per truck every day, and this data can be used for vari-
ous vehicle diagnostics procedures. After collecting all of
the truck data, Mercedes-Benz Uptime can issue recommenda-
tions for service and repair center action to dealers within
240 seconds. This feature has, for example, substantially reduced
vehicle diagnostics times during initial service center tests
at the more than 1,500 Mercedes-Benz retail outlets in Europe
that have been certified to use Mercedes-Benz Uptime.
Similar connectivity solutions in the form of services from
Detroit Connect and Detroit Assurance are available for
Daimler Trucks customers in North America from Freight-
liner. FUSO now offers customers in Asia the Truckonnect
connectivity solution in its new Super Great truck.
Mercedes-Benz Vans: electric drive
Mercedes-Benz Vans plans to offer all its commercial van
model series with electric drive systems. The initial step was
taken with the launch of the mid-size eVito in November
2018. The eVito is the second all-electric production model
from Mercedes- Benz Vans; the first was the Vito E-Cell in
2010. With a range of 149-1891,2 kilometers, the mid-size van is
thus perfect for inner-city deliveries and other commercial
operations. The battery can be fully charged in about six hours.
In addition, customers can choose between two options with
regard to top speed: a maximum of 80 km/h for city traffic and
urban areas, while also conserving energy and increasing
the vehicle’s range, or a maximum of 100 km/h or 120 km/h if
required for driving on highways. The electric Vito for goods
transport will be followed by the eVito Tourer for passenger
transport and the eSprinter in 2019.
1 Range depends on vehicle configuration, specially on the selection of
maximum speed limitation. Electricity consumption and range have been
calculated on the basis of Commission Regulation (EC) No 692/2008.
2 Actual range also depends on individual driving style, road and traffic
conditions, ambient temperature, use of air-conditioning/heating etc., and
may deviate from the stated figures.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 111
Mercedes-Benz Vans: innovative solutions
More than ever before, Mercedes-Benz Vans is making the
choice of a drivetrain dependent on customer utility. In addition
to vehicle technology, system weight, charging/refueling
time, range and profitability are also taken into consideration.
Mercedes-Benz Vans is expanding its eDrive@VANs strategy
with the fuel cell. Based on the example of a semi-integrated
travel van, the Concept Sprinter F-CELL showcases the full
spectrum of the typical advantages of a fuel cell, from a long
range to locally emission-free mobility. These attributes are
also extremely well suited for other applications, such as long
courier trips or small intercity buses.
The eDrive@VANs strategy involves not only the electrification
of the vehicle fleet but also a customized overall system
solution for each individual fleet. This includes advice on vehicle
selection, assistance with tools such as the eVAN Ready app,
and an overview of the total cost of ownership. In addition, the
integration of an intelligent charging infrastructure concept
lays the foundation for conserving resources with a commercial
fleet while remaining economically competitive.
With Vision URBANETIC, Mercedes-Benz Vans is presenting
under autonomous@Vans a supplement to its electrification
solutions with a revolutionary mobility concept showing how
autonomous mobility might work in the future. Vision URBANETIC
removes the separation between passenger and goods trans-
port by utilizing an innovative body-switching approach that
enables the needs-based, sustainable and efficient movement
of people and goods. In this manner, Vision URBANETIC
meets the requirements of cities, companies from diverse sec-
tors, urban residents and travelers in an innovative way.
The concept reduces traffic flows, eases the strain on inner-city
infrastructure and helps improve the quality of life in cities.
E pages 28 f
digital@Vans bundles innovative solutions in the field of digiti-
zation. Under the web-based brand Mercedes PRO, Mercedes-
Benz Vans combines all digital services and solutions for the
daily requirements of its customers, from small businesses to
major clients. For example, Mercedes PRO optimizes commu-
nication between fleet managers, vehicles and drivers. In addi-
tion, it enables the online control of vehicles and the retrieval
of vehicle information such as location, fuel level or maintenance
intervals almost in real time.
Efficient and clean drive technology for buses
Daimler has already made tremendous advances in terms of
exhaust treatment technology for the bus sector. For example,
all Mercedes-Benz and Setra model series were made available
with Euro VI technology at a very early stage. Despite the
application of this significantly more sophisticated exhaust treat-
ment technology, use of the new Mercedes-Benz engines
has enabled us to achieve a further reduction in fuel consump-
tion for our already economical vehicles, with a simultaneous
increase in engine output.
The new Mercedes-Benz Tourismo touring coach reduces
fuel consumption primarily through optimized aerodynamics
and the all-new and lighter body. Lower fuel consumption
and emissions are achieved also as a result of optional equip-
ment such as Predictive Powertrain Control (PPC) and Eco
Driver Feedback (EDF).
The Mercedes-Benz Citaro NGT with the all-new M 936
natural-gas engine also helps to make public transportation in
cities more environmentally friendly. The Citaro NGT is also
even more efficient than its predecessor model – and the CO2
balance is even better when biomethane is used.
Depending on the vehicle’s use profile and specifications, the
new electrohydraulic steering system in the Mercedes-Benz
Citaro hybrid further improves on the fuel consumption of the
conventional Citaro, which is already highly efficient. Hybrid
drive is available for many model variants of the best-selling
Citaro city bus, including the natural gas-powered Citaro
NGT. The reductions in fuel consumption quickly pay off for
transport companies, and the environment and society
benefit from the decrease in emissions.
With the new all-electric Mercedes-Benz eCitaro, which had
its world premiere at the 2018 IAA Commercial Vehicles trade
fair, we now have in our portfolio a key component of environ-
mentally friendly local public transport with low-emission and
locally emission-free buses. E pages 20 f
Innovative safety and assistance systems for buses
With new safety and assistance systems, we are showing that
safety has top priority also for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns drivers of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist – the first active emergency
braking assist system for city buses – will be available as an
option for the entire Mercedes-Benz Citaro model family
and the Mercedes-Benz Conecto starting in 2019. Sideguard
Assist, a radar-based turning assistant with pedestrian detec-
tion for buses, supports bus drivers during right turns, which
can be dangerous in certain situations. Sideguard Assist
is available for all variants of the Mercedes-Benz Citaro and
Tourismo and all Setra ComfortClass 500 and TopClass
500 Setra touring coaches.
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective of
the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; but is an integral component
of a corporate strategy aimed at long-term value creation.
The environmental and energy-related guidelines approved by
the Board of Management define the environmental and
energy-related policy of the Daimler Group. This expresses our
commitment to integrated environmental protection that
begins with the underlying factors with an impact on the envi-
ronment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision making.
A vehicle’s environmental impact is largely determined during
the first stages of its development. The earlier we integrate
environmentally responsible product development (design for
the environment, DfE) into the development process, the more
efficiently we can minimize the impact on the environment.
E pages 206 ff
112 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Car CO2 emissions
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 + Iceland)
increased to 132 g/km (NEDC) (2017: 125 g/km).
The transition for the individual vehicles from NEDC to WLTP
as the legally stipulated CO2 emission measurement cycle has
led to a significant increase in our fleet emission figures. At
the same time, the shift in sales from diesel to gasoline engines
and a further increase in sales of larger SUVs and all-wheel-
drive vehicles have contributed to a higher CO2 figure for our
fleet.
Because all vehicle models will be certified in accordance
with the WLTP by September 2019, we expect only a slightly
lower CO2 figure for our fleet in 2019 despite further prog-
ress with reducing our vehicles fuel consumption. In 2020,
vehicle electrification measures should contribute to a
substantial decrease in fleet CO2 emissions.
More detailed information can be found in the “Non-Financial
Report” section of this Annual Report. E pages 206 ff
Plan for the future of diesel vehicles
Our plan for the future of diesel vehicles includes the develop-
ment of software updates for a total of well over three million
customer-owned vehicles in Europe, of which well over one
million are located in Germany. With the software updates, we
will reduce NOx emissions by 25 to 30% on average for
these vehicles. This will be verified with the measurement
cycle agreed upon with the authorities (WLTC 1, 2, 3).
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018, and by order of
the German Federal Motor Transport Authority (KBA), Daimler is
carrying out a mandatory recall of approximately 690,000 vehi-
cles in Europe (including approximately 280,000 in Germany).
The great majority of these vehicles were already covered by
the voluntary service measures announced in July 2017. The
measures are being taken in close cooperation with the German
certification authorities.
Daimler supports the German government’s concept for clean
air and safeguarding individual mobility. With an attractive
incentive program in the defined core regions, we are acceler-
ating the renewal of the country’s stock of vehicles. Daimler
is thus making a significant contribution to the federal govern-
ment’s concept of preventing any disadvantages for diesel
drivers.
Following the coalition decision in early October 2018, Daimler
announced that it would also participate in a hardware retrofit
program for diesel vehicles in the defined key regions as part
of the concept of the German federal government for clean
air and securing individual mobility. Against this background,
Daimler is prepared to cover the costs of hardware retrofitting
up to a maximum amount of €3,000 for Mercedes-Benz custom-
ers with Euro 5 diesel vehicles in the core regions. The retrofit
hardware must be developed and offered by a third-party sup-
plier and approved by the German Federal Motor Transport
Authority. It must specifically entitle customers also to drive
on roads on which there are driving bans in certain cities.
Daimler’s goal is to attain clarity in the interests of the custom-
ers about which third-party hardware solutions can be
offered and when.
Further information can be found in the “Non-Financial Report”
section of this Annual Report. E pages 206 ff
Resource conservation: consistently high recyclability
Evaluating the environmental compatibility of a vehicle requires
an analysis of the emissions and use of resources throughout
the entire lifecycle. During vehicle development, we also prepare
a recycling concept for every vehicle model. This concept
includes an analysis of the suitability of all components and
materials for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable. The key aspects of our activities in
this area are:
– the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
– the remanufacturing of used parts, and
– the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System)
Environmental protection in production
Daimler follows an integrated approach for its corporate
environmental protection measures. This approach begins
with the potential causes of environmental effects.
For this reason, we have established environmental manage-
ment systems at our manufacturing locations with the goal
of ensuring that we can produce our vehicles safely, efficiently
and at a high level of quality in an environmentally friendly
manner that complies with all legal stipulations. We also carry
out environmental risk assessments at all production facilities
in which the Group has a majority interest. We are striving for a
high level of air quality, climate protection and resource con-
servation (in terms of water consumption, waste management
and soil conservation), and we support this high level with the
help of Daimler Group’s standards.
Another important aspect is climate protection at our pro-
duction plants. Mercedes-Benz Cars is setting the course for
green production in Germany and Europe. Plans call for all
manufacturing facilities in Germany to be supplied with CO2-
neutral energy by 2022. The preparations for the exclusive
use of green electricity for a climate friendly production in
Europe are already well advanced. Our vehicle and powertrain
factories in Bremen, Rastatt, Sindelfingen, Berlin, Hamburg,
Kamenz, Kölleda and Stuttgart-Untertürkheim buy electricity or
operate their own power plants. In the future, 100% of purchased
electricity is to come from verified renewable sources such
as wind and water power. This corresponds to about three quar-
ters of the total electricity requirements of our German plants.
The remainder is generated in our own highly efficient gas-fired
combined heat and power plants. We intend to offset the
resulting CO2 emissions through qualified compensation proj-
ects. This also applies to all other energy purchases by
the plants, such as natural gas for heating buildings or fuel for
transport within the plant grounds.
More detailed information can be found in the Non-Financial
Report section of this Annual Report. E pages 206 ff
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 113
Diversity management
The statement “Diversity shapes our future” underscores
the importance of diversity management as a strategic factor
for success at Daimler. Diversity management enables us
to reflect the diversity of our customers, suppliers and investors
around the world.
Daimler’s nearly 300,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways of
life. We have committed ourselves to raising the proportion
of women in senior management at the Group to at least 20%
by the year 2020. The proportion of women in such positions
has continually risen in recent years to reach 18.8% at the end
of 2018 (2017: 17.6%). Our instruments for supporting the
targeted promotion of women include mentoring, special events
and training courses, and employee networks.
B.38
Employees at 12/31/2018
By region
Germany
Europe, excluding Germany
USA
Brazil
Japan
China*
Other
58.5%
14.3%
8.8%
3.5%
3.3%
1.5%
10.1%
* excluding non-consolidated associated companies and joint ventures
B.39
Employees by division
Employees (December 31)
% change
2018
2017
18/17
Daimler Group
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Group functions and services
298,683
145,436
289,321
142,666
82,953
26,210
18,770
14,070
11,244
79,483
25,255
18,292
13,012
10,613
+3
+2
+4
+4
+3
+8
+6
The workforce
Slight increase in the number of employees
At December 31, 2018, the Daimler Group employed a total
of 298,683 men and women (2017: 289,321). As was forecast
in Annual Report 2017, the number of employees increased
slightly (+3%). This increase was primarily a result of the positive
overall business situation. Workforce numbers increased at
all divisions in 2018. B.39
The number of employees in Germany increased
from 172,089 in 2017 to 174,663 in the year under review.
Whereas employee numbers rose in the United States to
26,310 (2017: 23,513) and in Brazil to 10,307 (2017: 9,800),
the number of employees in Japan remained close to the
prior-year level at 9,918 (2017: 10,016). B.38 Our consoli-
dated subsidiaries in China had a total of 4,424 employees
at the end of the year (2017: 4,099). At the end of the year
under review, Daimler AG employed a total of 149,797 men
and women (2017: 148,953).
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT
and development tasks, sales functions and certain location-
specific services, into shared service centers. Some of the
shared service centers are not consolidated because they do
not affect our financial position, cash flow or profitability;
those companies employed approximately 11,900 men and
women at the end of 2018.
The Group’s total workforce also does not include the employ-
ees of companies that we manage together with Chinese
partners; at December 31, 2018, they numbered approximately
19,900 people (2017: 19,900).
Human resources strategy
The key aims of our human resources strategy are to further
increase our appeal as an employer and to safeguard the com-
petitiveness of our workforce. Because our executives should
motivate their employees to achieve top performance, it is
crucial that we further develop our management culture and
establish outstanding leadership capabilities in our manage-
ment. In addition, we want to take on social responsibility and
let diversity flourish in our global company.
High attractiveness as an employer
Our activities and measures for enhancing our appeal as an
employer are designed to enable us to recruit and retain a
sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that promotes
outstanding performance and a high level of motivation and
satisfaction among our employees and management staff.
Today’s living and working conditions require working times to
be flexibly organized in accordance with individual needs.
Our approach is therefore to challenge our employees to achieve
top performance and to support their efforts to do so, rather
than focusing on their mere presence at work. For this reason,
we also seek to improve performance by helping employees
reconcile their professional and personal responsibilities.
114 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
In order to fulfill the requirements of legislation regarding
the equal participation of women and men in management
positions, the Board of Management has set targets for the
proportion of women at the two management levels below the
Board of Management and a deadline for achieving those
targets. In setting all targets, we have taken industry-specific
circumstances into consideration.
Further details are provided in the “Declaration on Corporate
Governance, Corporate Governance Report” section on
E pages 191 ff of this Annual Report.
Securing young talent
Daimler takes a holistic approach to securing young talent. This
begins with programs for children and teenagers (in our
Genius initiative, for example) and extends to a broad range of
activities such as social media campaigns, hackathons, com-
petitions and internships that offer young talents the possibility
to get in touch and interact with the company. After university
students graduate, we offer them attractive possibilities to join
our company directly or launch their careers at Daimler by
taking part in our global training programs.
Employee qualification
We provide our staff with training and continuing education
opportunities throughout their entire careers in order to
safeguard the long-term innovative capability and outstanding
performance of our workforce. Our range of qualification
measures includes practical training courses, e-learning courses,
seminars, workshops, specialist conferences and financial
support for employees who participate in a course of study
while continuing to work.
Health management and occupational safety
Healthy and motivated employees are important for our
competitiveness. We therefore promote the health and safety
of our employees through numerous programs that focus
on adequate protection measures, ergonomics, the provision
of medical care, nutritional advice, individual exercise courses
and much more. Our Health & Safety unit defines, coordinates
and monitors measures that promote and ensure occupational
health and safety at the company.
Further information on employee matters can be found in the
Non-Financial Report on E pages 210 ff of this Annual Report.
Social responsibility
The goals associated with our social commitment
Daimler operates all over the world. Achieving business success
while simultaneously shaping progress and contributing to
the improvement of the way we live together in society – for
us these goals go hand in hand and are of fundamental
importance. With this in mind, the activities related to our social
commitment are designed to achieve a sustained and visible
positive effect that promotes the common good.
In 2018, we spent approximately €66 million on donations
to non-profit institutions and the sponsorship of socially bene-
ficial projects. This does not include our foundations or
self-initiated projects.
DaimlerWeCare
“With our employees,” “For our locations,” “Worldwide” –
these three pillars form the foundation of our social commit-
ment. We encourage our employees to get involved in socially
beneficial projects and help improve the social environment in
the communities where we operate. We also aim to strengthen
communities, promote education, science, the arts and
culture, and nature conservation, and to support initiatives
such as Mobile Kids that improve road safety. B.40
With our employees
ProCent is a good example of how our employees take the
initiative when it comes to social commitment. In this program,
Daimler employees voluntarily donate the cent amounts of
their net salaries, and Daimler matches every cent donated. The
total amount then goes into a support fund for socially
beneficial projects, which can be nominated by the employees.
In 2018, approximately 230 projects were approved in a
volume of more than €2 million. Within the framework of this
initiative, sanitary facilities were renovated and the construc-
tion of a new biogas plant was financed at the Shangri-La Inter-
national School near Kathmandu, Nepal, for example.
“Social Days,” the “Day of Caring” and other hands-on cam-
paigns such as “Give a Smile” give our employees the opportu-
nity to participate in socially beneficial projects. During the
year under review, almost 1,300 employees in 43 different proj-
ects participated in the “Social Days.” Employees from our
IT department participated in a socially beneficial project at an
organic farm in the German state of Rhineland-Palatinate in
September 2018. Together with the “Lebenshilfe Bad Dürkheim
e.V.” charitable organization, these staff members helped
refurbish the farm’s facilities in order to safeguard the jobs the
farm offers to people with disabilities. All of these activities
are for a good cause, and they also strengthen the motivation
of our employees as well as social cohesion within the
company.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 115
B.40
Donations and sponsoring in 2018
Charity & Community
Arts & Culture
Education
Science & Technology &
Environment
Political dialogue
75%
6%
12%
6%
1%
The Daimler Fund in the Donors’ Association focuses on
structural problems related to research and teaching, as well as
on the engineering sciences and international and scientific
cooperation. Since 1993, it has helped establish 27 endowed
professorships/assistant professorships in Germany and
abroad.
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
Further information on social matters can be found in the
Non-Financial Report of this Annual Report. E pages 215 ff
For our locations
We conduct a wide variety of projects that not only support
social development at our locations but also specifically
improve the quality of life there. Among those that benefited
from our activities in 2018 were the various charitable organi-
zations in Stuttgart to which we donated 45 smart EQ vehicles
within the framework of the project “Im E-insatz für meine
Stadt” (“E-mobility for my city”) that we launched together with
the Stuttgart Civic Foundation. The vehicle donation was
intended to support civic engagement and locally emission-free
mobility for volunteer workers.
Worldwide
We initiate aid projects worldwide to help people determine the
course of their lives independently, on their own responsibility
and without material deprivation, and in this manner create a
better future for the generations to come. The “Water for Life”
cooperation project with Caritas International is an example
of an international charitable undertaking that extends across
three continents. The project is being carried out in semi-
desert regions in India, Brazil and Mozambique and supports
the sustainable utilization of existing water resources in order
to improve the living conditions of local populations. During
2018, we focused in particular on analyzing the results of the
project in Brazil and assessing the effectiveness of our fund-
ing activities there. Our project in Brazil helped families and
cooperatives adapt to difficult climatic conditions, test new
farming approaches and develop new marketing channels. On
the basis of our analyses, it is clear that the project is begin-
ning to bear fruit.
Funding through foundations
Our foundations support projects around the world related to
science, research, technology, education and sports. The
Laureus Sport for Good Foundation uses sports to bring people
together. It primarily enables socially disadvantaged children
and teenagers to discover their potential through sports, and
thus creates opportunities for a better future. There are now
over 150 Laureus projects under way in more than 40 countries.
These projects have helped more than two million children
worldwide. One example is the Boxgirls Kenya project, in which
young socially disadvantaged girls from poor Nairobi neighbor-
hoods are taught martial arts in order to help them overcome
trauma and strengthen their self-confidence.
The Daimler and Benz Foundation supports interdisciplinary
scientific dialog and research projects. The purpose of
the foundation is to examine and clarify the interrelationships
between humans, the environment and technology. The
foundation offers scholarships to outstanding young scientists,
and it also designs and implements innovative research
formats and organizes lecture series.
116 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Integrity, compliance and legal affairs
For Daimler, integrity, compliance and legal responsibility
are inseparable from our daily business activities. We are con-
vinced that only those who act responsibly can achieve
sustained success over the long term. For us, this involves more
than just obeying laws, as we also seek to align our activities
with shared principles and values.
Organizationally established at the highest level
Because of their strategic significance, we have combined
the responsibilities for integrity, compliance and legal affairs
within a single Board of Management area. This Board of
Management area supports the divisions and units in their
efforts to ensure that those issues remain an integral com-
ponent of their organizations. We view integrity and compliance
as firm elements of our corporate culture and daily business
activities that contribute to our company’s lasting success. The
basis for this is our Integrity Code, which defines guidelines
for our everyday business conduct, offers our employees orien-
tation, and helps them make the right decisions even in
difficult business situations. The Integrity Code is supplemented
by other in-house principles and guidelines.
A culture of integrity
Integrity is one of the four corporate values that form the
foundation of our business activities. For us, integrity means
acting in accordance with ethical principles. We therefore
aim not only to comply with all applicable laws, internal regula-
tions and voluntary commitments, but also to live in accordance
with our corporate values and not to shy away from making
difficult decisions or addressing critical issues. We expect all of
our employees and business partners to adhere to the prin-
ciples of our culture of integrity out of a sense of conviction.
During the year under review, we focused in particular on the
strategic further development of our culture of integrity, taking
recent developments in society into account as well. Imple-
mentation of the measures we derived as a result will begin in
2019. In 2018, we also designed and conducted a pilot survey
to assess the effectiveness of our integrity-related measures and
develop them further on this basis. Another survey to be
conducted in 2019 will build on our progress here and allow us to
target our activities toward specific groups and continuously
improve the programs we offer.
Integrity management organization
The task of Integrity Management is to support all departments
with the promotion and further development of the culture
of integrity at the Daimler Group. The unit’s experts for change
management, corporate responsibility management, training,
consulting and communication develop innovative and
employee-focused approaches and formats that are designed
to strengthen the culture of integrity. These experts also
support disseminators throughout the Group with their integ-
rity-related activities. The unit’s goal is to establish and
maintain a common understanding of integrity in order to reduce
risks and help ensure Daimler’s sustained success. The Head
of Integrity Management reports directly to the member of the
Board of Management responsible for Integrity and Legal
Affairs.
Integrity Code
Our Integrity Code forms the foundation of our business con-
duct. It is based on a shared understanding of values, which we
developed with our workforce in employee dialogs. It lays out
the principles governing our everyday business conduct. These
central principles include compliance with laws, as well as
fairness, responsibility, mutual respect, transparency and open-
ness. The Code is binding on all companies and employees
of the Daimler Group and is available in 23 languages. A guide is
available on the Group’s intranet to support the employees
in their application of the Code in everyday situations, providing
answers to frequently asked questions. w daimler.com/
documents/sustainability/integrity/daimler-integritycode.pdf
Requirements for executives
Our Integrity Code also defines requirements for executives and
managers, who are expected to serve as role models in terms
of ethical behavior and to provide employees with orientation.
For optimal support with the fulfillment of their responsibilities,
they participate in a web-based Integrity@Work training pro-
gram that includes a management module compulsory for all
management staff. It explains in detail the role of executives
and managers at Daimler with regard to integrity, compliance
and applicable law. Furthermore, selected seminars designed
to enhance the qualifications and skills of our management staff
also include modules that focus on integrity.
Integrity and compliance requirements are important criteria
for the target achievement of our executives. They are also
part of the agreed objectives for the remuneration of the Board
of Management. E pages 120 ff
Contact and advice center
Our “Infopoint Integrity” is available to our employees around
the world as a central contact and advice center. The Infopoint
team offers advice on integrity-related issues in the daily
working environment and puts employees in touch with the
right contact partner if necessary. A worldwide network of
local compliance and legal contact persons is also available to
our employees.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 117
Our Compliance Management System (CMS) serves as
the foundation
Our Compliance Management System (CMS) is designed to
prevent inappropriate or illegal behavior by Daimler and its
employees, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined
by our compliance and legal affairs organizations in a process
that also takes business requirements into account. Our CMS
consists of basic principles and measures for the promotion of
compliant behavior throughout the Group. It is based on
national and international standards and is applied on a global
scale at all units and majority holdings of Daimler AG. The
systematic minimization of compliance risks is extremely impor-
tant here, and for this reason we analyze and assess the
compliance risks of all our business units every year. These
analyses are based on centrally compiled information on all
business units; specific additional details are taken into account
if necessary. The results of the analyses form the basis of
our risk management. More detailed information on the Daimler
Compliance Management System can be found in the Non-
Financial Report section of this Annual Report.
E page 217 ff
In order to ensure an independent external assessment
of our Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with Audit Standard
980 of the Institute of Public Auditors in Germany. This
audit, which was based on the principles of appropriateness,
implementation and effectiveness, was already successfully
completed at the end of 2016.
Communication measures
We conduct an ongoing open dialog with our employees in
order to ensure that ethical behavior continues to be embedded
in the company’s daily business. We regularly address integrity
issues in our internal media and make a wide range of materials
available to our business units – for example brochures, films
and an app that provides information on integrity, compliance
and legal affairs. We also place great value on face-to-face
discussions. For this reason, we regularly conduct individually
designed dialog sessions with employees at all levels of the
hierarchy, as well as with external stakeholders. These sessions
are held both in Germany and at our locations abroad.
We use various event formats to get employees to think about
integrity by approaching the issue from different perspectives.
At these events, we also increase the participants’ awareness
of the importance of making ethical decisions. For example, we
present case studies that enable employees to experience and
discuss the relevance of integrity to daily business operations
from various viewpoints. We also have a network of integrity
contact persons who help the business units address specific
issues in a targeted manner. One of the things we focused on
in 2018 was dialog sessions that addressed the topic of techni-
cal integrity in the development departments of our various
divisions. We are also providing more support to our business
units with regard to ethical questions related to the respon-
sible use and management of data and the challenges associ-
ated with data-based business models.
Compliance and legal responsibility
Value-based compliance is an indispensable part of our daily
business activities at Daimler. For us, compliance means
acting in accordance with laws and regulations. Our objective
here is to ensure that all of our employees worldwide are
always able to carry out their work in a manner that is in com-
pliance with applicable laws, regulations, voluntary commit-
ments and our values, as set out in binding form in our Integ-
rity Code. Our compliance activities focus on complying
with all applicable anti-corruption regulations, the maintenance
and promotion of fair competition, adherence to legal and
regulatory stipulations regarding product development (tech-
nical compliance), respect for and the protection of human
rights, adherence to data protection laws, compliance with sanc-
tions and the prevention of money laundering. Our compliance
and legal organizations are designed to ensure that they can
advise and support all of our corporate units worldwide with
regard to their business operations, processes and services in
order to minimize legal and business risks.
118 B | COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
Overall Assessment of the Economic Situation
In the opinion of the Board of Management, the Daimler Group’s
economic situation continues to be generally satisfactory at
the time of publication of this Annual Report, although overall
conditions for our business are significantly less favorable.
This development was not without an influence on our financial
success. Nonetheless, we continued to pursue our strategy
with great determination and also with the corresponding allo-
cation of funds. We will continue to follow the course we have
set in a disciplined manner in order to remain competitive in
the long term and to grow profitably. Our goal is clear: We aim
to continue to be a leading vehicle manufacturer while evolving
into a leading provider of sustainable mobility.
In order to achieve that goal, we have prioritized five com-
ponents, which are closely interlinked. Within the framework of
our 5C strategy, we want to
– strengthen the global core business (CORE),
– lead in new fields of the future (CASE),
– adapt the corporate culture (CULTURE) and
– strengthen the divisional structure (COMPANY).
The focus of our activities is on our fifth and most important C:
our customers (CUSTOMER). We are aligning our processes
and our organization with a strong customer focus and aim to
develop the best product and mobility solutions for and with
the customers.
We succeeded in strengthening our core business also in the
year 2018: Daimler again set records for unit sales and revenue,
and the Group’s EBIT was at a high level despite difficult
conditions and special challenges in our business operations.
In the year under review, Daimler sold a total of 3.4 million cars
and commercial vehicles (2017: 3.3 million), Contributions to
this growth came primarily from the divisions Daimler Trucks
(+10 %), Mercedes-Benz Vans (+5 %) and Daimler Buses (+8 %).
The Mercedes-Benz Cars division also achieved record unit sales
with growth of 0.4% despite difficult conditions. Demand for
passenger cars of the Mercedes-Benz brand remained high;
however, the sales development was largely influenced by
lifecycle effects of various model series. Some additional factors
were increased tariffs in China on vehicles imported from the
United States, bottlenecks in the supply chain and the suspension
of deliveries of individual diesel models. Delays with vehicle
certification in some international markets also had an impact
on availability.
Daimler Financial Services’ business developed positively
once again in 2018. Worldwide contract volume continued to
grow and reached a new high of €154.1 billion (+10%).
On this basis, the Group’s revenue also increased, by 2% to the
record level of €167.4 billion. Adjusted for exchange-rate
effects, revenue grew by 4%.
The Daimler Group’s operating profit (EBIT) of €11.1 billion was
significantly lower than in the previous year (€14.3 billion).
The Daimler Trucks division increased its EBIT significantly, while
the other divisions posted partially significant decreases. In
the overall vehicle business, our EBIT of 6.9% did not reach the
target corridor of 8-9%. Also at Daimler Financial Services,
our return on equity of 11.1% was significantly below the target
of 17%. This was partially due to expenses from the settlement
reached in the Toll Collect arbitration proceedings.
We regard it as an ongoing task to strengthen the Group’s
earning power and secure it in view of future challenges.
At Mercedes-Benz Cars, we further developed Fit for Leadership
as an efficiency program and firmly established it in the
organization. With Fit for Leadership, we aim to achieve further
improvements in earnings of €4 billion by 2025. Comparable
programs are running also in the other divisions.
As a result of the positive development of earnings, we again
achieved a very good return on net assets of 14.8% (2017:
22.5%). We therefore once again substantially surpassed our
target of 8% for the minimum return on capital employed.
Despite the decrease compared with the previous year, value
added of €3.7 billion shows that we created significant
value also in the year under review (2017: €7.0 billion).
The fact that our key financial metrics remain very solid was
also confirmed by the rating agencies: Daimler AG’s credit ratings
remained unchanged with the five rating agencies we
commissioned in the 2018 financial year. At the end of 2018,
Daimler’s ratings were thus at a consistently high level with
a “stable” outlook.
The Group’s overall equity ratio and the equity ratio of the
industrial business reached 22.2% and 42.8% respectively in the
year under review (2017: 24.0% and 46.4%), and thus continued
to be at very solid levels. This also applies to the net liquidity of
the industrial business of €16.3 billion at the end of 2018,
which was almost unchanged from a year earlier. The free cash
flow of the industrial business – the parameter we use to
B | COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION 119
mobility services. In order to upscale rapidly for on-demand
mobility, the mobility services car sharing, ride hailing, parking,
charging and multimodality of today’s Daimler Mobility
Services and the BMW Group are to be merged and strategically
expanded. To successfully transition from vehicle producer
to full-range supplier of innovative mobility solutions, we must
adapt our company to face new challenges. In doing so, we
aim to combine the flexibility and risk culture of the digital
industry with the perfection and innovativeness of our company’s
strong traditions. Together with our workforce, we are therefore
developing a new and flexible corporate culture under the roof
of “Leadership 2020”. In addition, we are working in “Project
Future” on further focusing and strengthening the divisional
structure of the Daimler Group.
With the components CORE, CASE, CULTURE and COMPANY,
we are aligning the Group towards the customers’ requirements
(CUSTOMER). In this way, we are setting the course for a
successful future. This is precisely why we can continue to look
forward to the coming years with great confidence.
Events after the
Reporting Period
Since the end of the 2018 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2019 confirms
the statements made in the “Outlook” section of this Annual
Report.
measure financial strength – was €2.9 billion in 2018, which is
significantly higher than the prior-year figure of €2.0 billion.
However, it must be taken into consideration that the prior-year
figure was reduced by an extraordinary contribution of
€3 billion into the German pension plan assets of Daimler AG.
To be able to implement our growth strategy with new products,
innovative technologies and modern production capacities,
we once again increased the advance expenditure to secure our
successful future, from an already very high level by a total of
€1.2 billion to €16.6 billion in the year under review: €9,1 billion
for research and development (2017: €8.7 billion) and €7.5
billion for property, plant and equipment (2017: €6.7 billion). In
the application of these funds, we are increasingly concen-
trating on the CASE future fields of connectivity (Connected),
automated and autonomous driving (Autonomous), flexible use
and services (Shared & Services) and electric drive systems
(Electric). We intend to be leaders in each of these areas and
to utilize additional potential by linking up the four areas. To that
end, we plan to launch more than ten all-electric cars.
We see great growth opportunities in the area of electric
mobility in particular. By the year 2022, the entire Mercedes-
Benz portfolio is to be electrified. This means that at least
one electrified alternative will be offered in each segment –
from compact cars to large SUVs. Significantly more than 130
electrified vehicle variants are planned. As well as all-electric
models, this will include plug-in hybrid versions and models
with 48-volt technology. By 2025, depending on the development
of the public infrastructure and customer preferences, 15 to
25% of the cars we sell are to be all-electric. To that end, we plan
to launch more than ten all-electric vehicles on the market.
We are progressing with electrification also with our commercial
vehicles. The Group is focusing on areas of application in
which e-mobility is also economical. In 2018, Daimler Trucks
for the first time presented all-electric trucks to the public
across all segments: from the FUSO eCanter in the light-duty
segment to the Freightliner eM2 in the medium-heavy
segment and the Mercedes-Benz eActros, Freightliner eCascadia
and FUSO Vision One in the heavy-duty segment. Mercedes-
Benz Vans plans to offer all its commercial model series with
electric drive. The first was the mid-size eVito, which has
been available since November 2018. With the new, all-electric
Mercedes-Benz eCitaro, which had its world premiere at the
IAA Commercial Vehicles trade fair in 2018, we have added an
important component to our portfolio for environmentally
friendly local public transport with low-emission and locally
emission-free buses.
With the further development of autonomous driving, we rely
on the one hand on technical assistants and on the other hand
on automated systems that take customers from A to B with-
out a driver. Mercedes-Benz Cars has demonstrated its strong
position in the field of technical assistants with the S-Class.
On the other hand, we are developing automated systems that
can be used without a driver or can be shared with others.
Daimler Financial Services is continuously investing in the
development of a comprehensive mobility ecosystem. car2go
is a leading company for flexible car sharing. In the ride-hailing
segment, the Daimler subsidiary mytaxi is one of the leading
providers of app-based taxi services in Europe, and with
moovel, we offer our customers a platform with which they can
optimally compare, combine, book and pay for various
120 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration Report
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Man-
agement of Daimler AG, and explains both the level and the
structure of its members’ remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
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 applicable
law. The adequate combination of non-performance-related
and performance-related components of remuneration is designed
to create an incentive to secure the Group’s long-term suc-
cess. The fixed component of remuneration is paid as a base
salary; the variable components are intended to reflect, clearly
and directly, the joint performance of the members of the
Board of Management as a whole, as well as the long-term per-
formance of the Group. The interests of all stakeholders, in
particular those of the shareholders as the owners of the Com-
pany and those of the employees, are harmonized through the
focus on the Group’s long-term success.
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 appropri-
ateness, based on a horizontal and a vertical comparison. In
the horizontal comparison, the following aspects are given
particular attention in relation to a group of comparable com-
panies in Germany:
– the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
– the relative weighting of the components, that is, the rela-
tionship between the fixed base salary and the short-term
and long-term variable components;
– and the target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
The vertical comparison focuses on the ratio of Board of Manage-
ment remuneration to the remuneration of the senior execu-
tives and the entire workforce of Daimler AG in Germany, also
in terms of development over time. The Supervisory Board
has defined the group of senior executives for this purpose. It
consists of the Executive Vice Presidents and the management
level 1 of Daimler AG in Germany.
In the event of significant changes in the relationship between the
remuneration of the Board of Management and the comparison
groups the Supervisory Board establishes the causes, and in
the absence of objective reasons for the deviation adjusts the
remuneration of the Board of Management as necessary.
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management as well as on total remuneration limits. It also
decides on the relevant performance parameters and the respec-
tive targets that are to be used in the bonus calculations for
the upcoming financial year. Furthermore, individual targets and
compliance goals are decided upon for each member of the
Board of Management and additional non-financial goals related
to sustainability are drawn up for the Board of Management
as a whole. Both the individual goals, including the compliance
goals, and the non-financial goals for the Board of Manage-
ment as a whole are taken into consideration along with the
financial performance parameters after the end of the financial
year when the annual bonus is decided upon by the Supervi-
sory Board.
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets.
After the end of each year, the achievement of ‚both financial and
non-financial targets by the Board of Management as a whole is
measured in order to determine the amount of the annual bonus.
The degree of achievement of individual targets by members of
the Board of Management is used as the basis for measuring
target achievement for the Board of Management as a whole.
The Presidential Committee then calculates the annual bonus and
submits its proposal to the Supervisory Board for its approval.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 121
All members of the Supervisory Board and thus all members of
the Presidential Committee are obligated, pursuant to the pro-
cedural rules of the Supervisory Board and its committees, to
disclose any conflicts of interest to the Supervisory Board.
For its part, in its report to the Annual Meeting the Supervisory
Board informs of any conflicts of interest that have arisen and
of how they have been dealt with (cf. Report of the Supervisory
Board E page 46 ff of the Annual Report). In the case of
significant and not merely temporary conflicts of interest the
Supervisory Board member in question is required to resign.
Furthermore, the Supervisory Board has set targets for a mini-
mum number of independent members of the Supervisory
Board and of members without potential conflicts of interest.
Further details of the contents of and compliance with these
targets are provided in the Declaration on Corporate Gover-
nance, Corporate Governance Report on E page 191 ff of this
Annual Report.
The system of Board of Management remuneration in 2018
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the vari-
able component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 40% of the target remu-
neration. B.42
As before, only 50% of the annual bonus is paid out in the March
of the following financial year. The other 50% is paid out a year
later (deferral) with the application of a bonus-malus rule, depend-
ing on the development of the Daimler share price compared
with an automotive index (STOXX Europe Auto Index) E page
62 ff, which Daimler AG uses as a benchmark for the relative
share-price development. Both the delayed payout of the por-
tion of the annual bonus (with the use of the bonus-malus
rule) and the variable component of remuneration from the
PPSP with its link to additional, ambitious comparative param-
eters and to the share price reflect the recommendations of
the German Corporate Governance Code and give due consid-
eration to both positive and negative business developments.
B.42
Remuneration structure
Target remuneration consists of non-performance-related
and performance-related components:
base salary
(non-performance-related) approx. 30%
short- and medium-term
performance-related
components
approx. 30%
long-term performance-related
components
approx. 40%
B.43
Maximum limit of total remuneration1 2018
Chairman of the Board of Management
Members of the Board of Management
1.5 times the target
remuneration1
1.9 times the target
remuneration1
Base salary in 2018
+ target bonus = 100% of the 2018 base salary
+ PPSP value when granted for 2018
Target remuneration1 2018
Base salary in 2018
+ annual bonus for 2018
(50% paid out in 2019 + 50% in 2020)
+ PPSP payment for 2018 (in 2022) incl. dividend equivalent
payments
Total remuneration1 in 2018
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2018 in 2022.
1 Excluding fringe benefits and retirement benefit commitments in
all cases.
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
B.44
Base salary – fixed E page 121
base salary – fixed – oriented towards the area of responsibility
base salary
(non-performance-related) approx. 30%
paid out in twelve monthly
installments
As in the prior year, the maximum amounts of remuneration of
the members of the Board of Management were set for finan-
cial year 2018 at 1.9 times the target remuneration for its mem-
bers and 1.5 times the target remuneration for its Chairman.
The target remuneration consists of the base salary, the target
annual bonus and the grant value of the PPSP, excluding fringe
benefits and retirement benefit commitments. With the inclusion
of fringe benefits and retirement benefit commitments from
the respective financial year, the maximum limit of total remu-
neration increases by these amounts. The possible cap on
the amount exceeding the maximum limit takes place with the
payment of the PPSP issued in the relevant financial year, i.e.
for the year 2018, with payment of the PPSP in 2022. B.43
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 install-
ments. B.44
122 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.45
Annual bonus – short- and medium-term
performance-related remuneration E page 122
B.46
Annual bonus1 2018
dependent upon
short- and medium-term
performance-related
components
approx. 30%
annual bonus 2018 = target bonus × overall target achievement
target bonus
= 100% of
base salary
2018
target achievement EBIT
+/- target achievement for the
Board of Management as a whole
(derived from individual targets)
+/- target achievement for the
Board of Management as a whole:
non-financial targets
- non-achievement of individual
compliance targets
overall target achievement
time of payment of annual bonus 2018
50% of annual bonus = in March of the year after the reporting year (2019)
50% of annual bonus (deferral) = in March of the second year after the
amount paid out = 50% of annual bonus × “relative share performance”1
reporting year (2020)
1 Depending on the development of the Daimler share price compared with the
STOXX Europe Auto Index.
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler
Group (EBIT). For the past financial year, the annual bonus was
also linked to the target for the financial year determined by
the Supervisory Board (derived from the level of return targeted
for the medium term and the growth targets), the actual result
compared with the prior year, the combined performance of the
Board of Management members, additional non-financial
sustainability-related targets for the Board of Management as
a whole and, as a possible individual reduction component,
the non-achievement of compliance targets. With the actual-
actual comparison, achievement of EBIT at the prior-year
level constitutes target achievement of 100%. With the target-
actual comparison, the particularly ambitious definition of
the targeted EBIT that is oriented towards the competition con-
stitutes target achievement of 150%. B.45 B.46
Primary reference parameters:
– 50% relates to a comparison of actual EBIT in 2018 with EBIT
targeted for 2018.
– 50% relates to a comparison of actual EBIT in 2018 with
actual EBIT in 2017.
Amount with 100% target achievement (target annual
bonus):
In 2018, this is equivalent to the respective base salary.
EBIT target achievement
Range of possible target achievement:
0% – 200%
– 50% relates to a comparison
of actual EBIT in 2018 with
EBIT targeted for 2018
Target achievement for the
Board of Management as a whole
(derived from individual targets)
Range of possible target achievement:
-25% – +25%
Target achievement for the
Board of Management as a whole:
non-financial targets
Range of possible target achievement:
-10% – +10%
Non-achievement of individual
compliance targets
Range of possible target achievement:
-25% – 0%
Maximum target achievement
(total cap):
– 50% relates to a comparison
of actual EBIT in 2018 with
actual EBIT in 2017
Individual target agreements
in 2018
For 2018: Further develop-
ment and permanent estab-
lishment of the corporate
value of integrity; diversity
and the maintenance and
enhancement of a high level
of employee satisfaction and
product quality.
Compliance agreements in
2018
235% of the target bonus
1 May be subject to retention or repayment claims.
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.
Both primary performance parameters, each of which relates to
half of the bonus, can vary between 0% and 200%. For the pri-
mary performance parameter defining 50% of the annual bonus,
“comparison of actual EBIT in the financial year with the EBIT
targeted for the financial year,” the limits of the unchanged
possible range of 0 to 200% are defined as a deviation of +/- 3%
from prior-year revenue.
For the other primary performance parameter, which also relates
to half of the annual bonus, “comparison of actual EBIT in the
financial year with actual EBIT in the prior year,” the limits of the
unchanged possible range of 0 to 200% are defined as a devi-
ation of +/- 2% of the prior-year revenue.
In addition, the Supervisory Board uses individual target agree-
ments as a basis for measuring the target achievement for indi-
vidual Board of Management members and then uses this target
achievement value to measure the overall target achieve-
ment of the Board of Management as a whole. This overall target
achievement result can lead to an addition or reduction of up
to 25% from the degree of target achievement as measured on
the basis of the primary performance parameters. Only in excep-
tional cases may the Supervisory Board deviate from this
overall performance assessment and make individual additions
or deductions within the range described above. In addition,
on the basis of the sustainability-related non-financial targets
for the Board of Management as a whole, an amount of up
to 10% can be added or deducted, depending on the predefined
key figures/assessment basis. The non-financial targets
defined for 2018 were the further development and permanent
establishment of the corporate value of integrity, the promo-
tion of diversity in the sense of increasing the share of women
in management positions and the maintenance and enhance-
ment of a high level of employee satisfaction and product quality.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 123
B.47
Performance Phantom Share Plan (PPSP)
– long-term performance-related remuneration E page 123
B.48
PPSP 2018
dependent upon
Development of
performance factors
long-term performance-related
remuneration
approx. 40%
amount when granted in euros E page 123
price of Daimler shares when issued
= preliminary number
of phantom shares
(virtual shares)
three-year dividend entitlement
Development of the
Daimler share price
– 50% relates to the “return on sales” achieved
in a three-year comparison with the defined
group of competitors E page 124
Bandwidth of possible target achievement:
0% – 200%1
– 50% relates to the “relative share perfor-
mance”, i.e. the performance of Daimler’s
share in a three-year comparison with the
performance of the defined group of
competitors (index).
Bandwidth of possible target achievement:
0% – 200%
Price when issued and price at the end of the
plan period
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Maximum performance development (total cap):
2.5 times the amount granted
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000)
have been purchased (shares to be held until the end of the term of
service)
1 Maximum of 195% if, in the event of target achievement of 195% –
200%, the strategic return target of 9% has not been reached.
Also at the beginning of the plan, performance targets are set for
a period of three years (performance period). Depending on
the achievement of these performance targets with a possible
range of 0% to 200%, after three years the phantom shares
allocated at the beginning of the plan are converted into the final
number of phantom shares allocated.
After another plan year has elapsed (retention period), the amount
to be paid out is calculated from this final number of phantom
shares and the applicable share price at that time. The share
price relevant for the payout under this plan is also relevant
for allocating the preliminary number of phantom shares for the
plan newly issued in the respective year.
B.47 B.48
after expiry of third plan year
preliminary number of phantom shares × performance factor
= final number of phantom shares, dividend entitlement in fourth year
after expiry of fourth plan year
final number of phantom shares × Daimler share price at end of plan
= amount paid out
Time of payment of Performance Phantom Share Plan 2018
in February of the year 2022
As was the case in previous years, further qualitative targets
were agreed upon with the individual members of the Board of
Management with regard to the sustained implementation
and permanent establishment of the compliance management
system. The complete or partial non-achievement of individ-
ual compliance targets can be reflected by a deduction of up
to 25% from the individual target achievement. However, the
compliance targets cannot result in any increase in individual
target achievement, even in the case of full accomplishment.
In this context, agreements were reached with the members of
the Board of Management allowing for the partial reduction
or complete elimination of the annual bonus for any member
who clearly violates our Integrity Code. If it is not possible to
reduce a future bonus payment, or a payment that has yet to be
made, the Board of Management member in question will be
required to pay back the amount of the bonus reduction. The
Supervisory Board has the final decision on all such bonus
reductions.
The total amount to be paid out from the annual bonus is limited
to 2.35 times the base salary of the respective financial year.
The Performance Phantom Share Plan (PPSP) is a variable ele-
ment of remuneration with long-term incentive effects. At the
beginning of the plan, the Supervisory Board specifies a grant
value (absolute amount in euros) in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated
over a predefined long period of time, which results in the pre-
liminary number of phantom shares allocated.
124 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Performance parameters for Plan 2018:
– 50% relates to the Group’s return on sales in a three-year
comparison with a group of competitors comprising listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, GM, Honda, Hyundai, Isuzu, Kia, Mazda,
Nissan, Paccar, Subaru, Suzuki, Toyota, Volvo and Volkswa-
gen). For the measurement of success, the competitors’
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler’s return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average of
the competitors.
– Target achievement of 100% only occurs when the average
return on sales of the Daimler Group reaches 105% of the
revenue-weighted average return on sales of the group of
competitors. Maximum target achievement of 200% occurs
if Daimler’s return on sales exceeds 105% of the revenue-
weighted average of the competitors by 2 percentage
points or more. An additional limitation was implemented
starting with PPSP 2015: If a target achievement of
between 195% and 200% occurs, the maximum target
achievement calculated from the performance parameter
of return on sales compared to the group of competitors
will only be deemed to be 200% if the actual return on sales
for Daimler’s automotive business reaches at least the
strategic target for return on sales (currently 9%) in the third
year of the performance period. Otherwise, target achieve-
ment will be limited to 195%.
– Target achievement of 0% occurs if Daimler’s return on sales
is 2 percentage points or more lower. In the deviation
range of +/- 2 percentage points, target achievement var-
ies in proportion to the deviation.
– 50% relates to “relative share performance”, i.e. the perfor-
mance of Daimler’s share in a three-year comparison with
the performance of the defined group of competitors (index).
If the performance of Daimler’s share (in percent) is the
same as that of the index (in percent), target achievement is
deemed to be 100%. If the performance of Daimler’s share
(in percent) is 50 percentage points or more below (above) the
performance of the index, target achievement is deemed to be
0% (200%). In the deviation range of +/- 50 percentage points,
target achievement varies in proportion to the deviation.
Range of possible target achievement:
0 to 200%, that is, the plan has an upper limit. It may also be
zero.
Value upon allocation:
Determined annually by the Supervisory Board; for 2018,
approximately 1.4 times the base salary.
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant for the pay-
out. This share price is limited to 2.5 times the share price
at the beginning of the plan. In addition, the amount to be paid
out is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant for the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period.
The terms governing the PPSP include a provision that allows for
the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who clearly
violates the Integrity Code that applies to all employees and
Board of Management members, or any other professional obli-
gations, prior to the payout of the plan proceeds. The Supervi-
sory Board has the final decision on all such bonus reductions.
Guidelines for share ownership
As a supplement to these three components of remuneration,
“Stock Ownership Guidelines” exist for the Board of Manage-
ment. These guidelines require the members of the Board of
Management to invest a portion of their private assets in
Daimler shares over several years and to hold those shares
until the end of their Board of Management membership. The
number of shares to be held is set between 20,000 and
75,000. In fulfillment of the guidelines, up to 25% of the gross
remuneration out of each Performance Phantom Share Plan
is generally to be used to acquire ordinary shares in the Com-
pany, 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 Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Manage-
ment remuneration carried out by an external remuneration
expert at the end of 2018. The result was that the remunera-
tion system as described above was confirmed as being in
conformance with the requirements of applicable law. The
remuneration system was approved by the Annual Sharehold-
ers’ Meeting in 2014 with an approval ratio of 96.8%.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 125
B.49
Overview of the determination of the annual bonus from January 1, 2019
Financial targets
Strategic targets for the
operational result
— EBIT targeted/actual
comparison
Non-financial targets
— Employee targets
— Customer targets
— Diversity targets
— Integrity targets
— 50% payout after one year
— 50% deferral coupled with
share price perfor-
mance compared to
competitors
Transformation targets
— CASE ecosystem
— Digitalization/
Connectivity
— Electric driving/
Integrated services
— Autonomous driving
— Strategic/organizational/
structural contribution of
the Board of Management
0% – 200%
-10% – +10%
-25% – +25%
Maximally 235% (cap)
Further development of the remuneration
system effective as of January 1, 2019
Change to the annual bonus as a short-term and
medium-term component of the remuneration
At its meeting in December 2018, the Supervisory Board decided
to further develop the remuneration system for the Board of
Management in view of the fundamental technical changes in
our industry and the associated changes in the competitive
environment, as well as changing customer behavior, the need
for significant investments in new technologies, and the
expectations of our shareholders. The main focus was on the
implementation of the new corporate strategy: safeguarding
the Group’s future by expanding our business model as an auto-
maker and a provider of mobility services. In times of com-
prehensive transformation, it is especially important to align the
incentives in the remuneration system with the necessary
investments in the future. In this connection, further aims were
to achieve a higher degree of transparency, reduce the com-
plexity of the methods used and more precisely define the col-
lective non-financial aims and criteria. The implementation
will affect the short-term and medium-term remuneration com-
ponent, the annual bonus. Because the Supervisory Board
and the Board of Management consider it important to have a
uniform basic incentive structure, the Board of Management
has also decided to make a corresponding adjustment for all
management levels. As a result, the short-term and medium-
term variable remuneration component (the annual bonus) for
the Board of Management and for managers will be calculated
according to uniform goals/criteria and a uniform system start-
ing with the 2019 financial year. This uniform approach is
already being used to calculate the long-term variable remuner-
ation component (Performance Phantom Share Plan = PPSP).
B.49
B.50
Financial target
Achievement of EBIT target results in 150% and is determined by
ROS
target
×
Revenue
base 2018
×
Accumulated growth
factor revenue
200%
Target achievement
100%
0%
0% for
50% EBIT target
150% for
EBIT target
EBIT
Financial target
The financial target is oriented toward the operating result of
the Daimler Group (EBIT). The target value of EBIT for each
financial year is derived on the basis of the desired medium-term
return, which is set by the Supervisory Board and is especially
ambitious, oriented toward the competitive environment, and
derived from the growth targets. The starting point of the cal-
culation is the revenue of financial year 2018 (to date: financial
year 2013).
The range of possible target achievement is between 0% and
200%. The lower limit of this range is 50% of the EBIT target
value; the upper limit is approximately 117% of the EBIT target
value. If the actually achieved EBIT value is at or under the
lower limit of the range, the target achievement degree is always
0%. The total absence of a bonus is therefore possible. If the
actually achieved EBIT value is at or above the upper limit of the
range, the target achievement degree is always 200%. The
range of target achievement develops linearly within the range.
B.50
126 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.51
Integrity
B.52
Quality
Degree of target
achievement
Addition or
deduction
Integrity
indicator
Approval rate
of any question
Degree of target
achievement
Addition or
deduction
Excellent
Good
Average
Low
2.5%
2.0%
1.0%
-2.5%
81–100
71–80
61–70
≤ 60
≥ 75 %
≥ 65 %
≥ 60 %
Excellent
Good
Average
Low
2.5%
2.0%
1.0%
-2.5%
Quality KPIs
of all divisions
Target overachieved1
Target achieved1
Underperformed1
Target not achieved1
1 The amount to which the addition or deduction deviates from the
respective target value is defined according to the specific division
and product.
Non-financial targets
The non-financial targets, which are oriented toward sustain-
ability and are for the first time uniform at all management
levels, are divided into four categories. Each category is weighted
equally and receives an addition or a deduction of up to 2.5
percentage points to or from the degree of achievement of the
financial target. After the end of the financial year, the degree of
target achievement is calculated by comparing the target value
and the actual value. On this basis, an addition to or a deduc-
tion from the degree of financial target achievement of up to a
total amount of 10 percentage points is possible.
Specifically:
Achievement of the Group-level targets regarding the further
development and permanent establishment of integrity is
measured on the basis of certain standardized questions in
our global employee survey. This measurement is based on
the achieved approval rate of any question and the average
approval rate achieved across all questions (integrity indica-
tor). The relevant degree of target achievement at the Group
level (in %) is derived from these figures. B.51
Quality and/or customer satisfaction targets (quality KPIs of
all divisions) are defined by the individual divisions for each
financial year. With regard to vehicles, a comparison of the target
number and the actual number of claims during a predefined
period of time (MIS xx) is carried out. With regard to services,
this comparison is carried out by means of a customer satis-
faction index. The relevant degree of target achievement (in %)
at the Group level is derived as a weighted average of the indi-
vidual divisional degrees of target achievement (in %). B.52
The degree of the employees’ commitment to the company
(engaged employees) is calculated on the basis of their answers
to certain standardized questions in our global employee
survey. These answers, together with the response rate achieved
in the employee survey, are used to derive the degree of achieve-
ment (in %) of the targets defined at the Group level for the
maintenance and enhancement of a high degree of satisfaction
and motivation among the employees. B.53
A target for the proportion of women in executive positions
(Aspirational Guidelines) was defined at the Group level for a
period of several years on the basis of Daimler’s in-house
guidelines for the proportion of women in management posi-
tions (Gender Diversity Aspirational Guidelines), which go
beyond the legally obligatory targets. A comparison of the tar-
get figures with the actual figures at the end of a financial
year is used to derive the degree of target achievement (in %).
B.54
A higher degree of transparency will be achieved in the future,
thanks to the increased quantification of the non-financial tar-
gets and the publication of the degree of target achievement in
the Remuneration Report.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
B.53
Employee engagement
B.54
Diversity
Degree of target
achievement
Addition or
deduction
Engaged
employees
Response
rate
Degree of target
achievement
Addition or
deduction
Excellent
Good
Average
Low
2.5%
2.0%
1.0%
-2.5%
> 35%
> 30%
> 25%
< 25%
> 70%
> 65%
> 60%
< 60 %
Excellent
Good
Average
Low
2.5%
2.0%
1.0%
-2.5%
Gender Diversity
Aspirational Guidelines
Target overachieved ≥10 %
Target achieved < 10 %
Underperformed
Target not achieved
Transformation targets
Transformation targets will replace the previous shared perfor-
mance value for the Board of Management as a whole, which
was derived from the Board of Management members’ individual
target agreements and degrees of target achievement. Espe-
cially during the transformation phase, these transformation
targets will refer to quantitative as well as qualitative aspects
and will be assessed and evaluated correspondingly by the Super-
visory Board.
In order to take into account the implementation of the future-
oriented measures for the technological and sustainable
realignment of the Group, the divisions will annually define key
performance indicators and target values for the future-ori-
ented CASE fields — Connected, Autonomous, Shared & Services,
Electric. After the end of a financial year, a comparison of the
target values and the actual values will be conducted for each
division. The Supervisory Board will derive the Board of Man-
agement’s shared degree of target achievement from the divi-
sions’ degree of target achievement as well as the strategic,
organizational and structural contribution of the Board of Man-
agement as a whole, taking into account the economic environ-
ment and the competitive situation and positioning of the Group.
It will be possible to add or deduct 25 percentage points to/
from the degree to which the financial target has been achieved.
This criteria-based consideration of the future-oriented CASE
fields will be based on assessments of the success of product-
related, technical and economic activities/progress. Further-
more, it should be possible to assess the progress of sustain-
ability/Environment Social Governance (ESG) aspects and the
success of strategic M&A activities. The defined key perfor-
mance indicators are used for measuring the degree to which
the transformation targets have been achieved. They also sup-
port the corresponding activities, corrections or implementation
steps of the Group’s sustainability strategy (for example, invest-
ment volume, growth of revenue from digital services, activation
and connectivity rates of digital services, proportion of alterna-
tive drive systems, emission targets, development discipline,
development progress of products and digital services, number
of online contracts, proportion of digital self-services, revenue
from mobility services).
The description of the transformation criteria and the publication
of target achievement figures in the Remuneration Report will
ensure a higher degree of transparency in the future.
No change in the other components of the
remuneration system
The remainder of the remuneration system, in particular the
composition of the remuneration of the Board of Management
from the non-performance-related base salary, the annual
bonus as a short-term and medium-term variable component
with deferral and the long-term variable component PPSP
also remain unchanged, as does the relationship between the
individual components of the remuneration. The current
design of the PPSP, with the four-year duration of the plan, the
measurement of the success targets compared to a defined
and regularly monitored group of competitors that face the same
strategic challenges, and the linkage with the absolute devel-
opment of the share price, is already oriented toward the long-
term success of the company.
128 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.55
Annual bonus
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
50%(cid:31)
50%(cid:31)
medium-term
medium-term
(deferral)
(deferral)
50% (cid:31)
50% (cid:31)
short-term
short-term
235
200
175
150
125
100
75
50
25
0
Maximum 235% of the base salary
+10% of the base salary
+25% of the base salary
200% of the (cid:31)
base salary
50% medium-term
(deferral)
ACTUAL
62.5% of the base salary
+7.5% of the base salary
+10% of the base salary
50% short-term
45% of the base salary
Non-achievement of compliance
targets(cid:31)-25% - 0 % (not applied in 2018)
Joint performance (cid:31)
+/- 25%
Non-financial success parameters(cid:31)
+/- 10%
Financial success
parameters(cid:31)0% – 200%
1 Positive target achievement of the defined performance criteria “unit-sales
development, revenue development, transformation in future technologies,
change in the corporate culture (Leadership 2020)”.
B.56
PPSP 2014 (paid in 2018)
(long-term variable remuneration B.61)
Board of Management remuneration
in financial year 2018
Board of Management remuneration in 2018 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the Board
of Management of Daimler AG is calculated as the total of the
amounts of
– the base salary in 2018,
– the half of the annual bonus for 2018 payable in 2019 and
measured as of the end of the reporting period,
– the half of the medium-term share-based component of the
annual bonus for 2018 payable in 2020 with its value at
the end of the reporting period (entitlement depending on the
development of Daimler’s share price compared with the
STOXX Europe Auto Index),
– the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018, and
– the taxable non-cash benefits in 2018.
For both of the share-based components — the second 50% of
the annual bonus and the PPSP with a long-term orientation —
the amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and on the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
Maximum
theoretically 500%
of the grant value
The possible upper limits with regard to the annual bonus and
the PPSP are shown in tables B.55 and B.56.
With more than 250% target
achievement, the total cap¹ applies.
Maximum
250%
Maximum
200%
ACTUAL
100%
ACTUAL
108%
ACTUAL
117%
ACTUAL
126%
500
450
400
350
300
250
200
150
100
50
0
Grant value(cid:31)(from
which is derived
the preliminary
number of phantom
shares with the
share price(cid:31)at
beginning of plan)
Performance factor
0% - 200%(cid:31)(from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price(cid:31)
(share price in €)
Overall target
achievement
final number of(cid:31)
phantom shares (cid:31)
times share price (cid:31)
at end of plan(cid:31)
(amount paid out
in €)(cid:31)
1 Amount paid out including dividend-equivalent
payments of PPSP 2014.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 129
B.57
Board of Management remuneration in 2018
Base salary
Short and medium-term variable
remuneration (annual bonus)
Long-term variable
remuneration (PPSP)
Total
Short-term
Medium-term Number Value when granted
(2018: at share price
€70.13)
(2017: at share price
€67.49)
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2,048
2,008
640
1,978
640
1,978
37,915
39,315
–
92
832
677
832
812
832
812
832
812
832
812
832
812
967
947
–
90
260
667
260
800
260
800
260
800
260
800
260
800
302
932
–
90
260
667
260
800
260
800
260
800
260
800
260
800
302
932
–
–
14,896
15,446
14,896
15,446
14,896
15,446
15,573
16,148
14,896
15,446
14,896
15,446
17,807
18,464
2,659
2,653
–
–
1,045
1,043
1,045
1,043
1,045
1,043
1,092
1,090
1,045
1,043
1,045
1,043
1,249
1,246
5,987
8,617
–
272
2,397
3,054
2,397
3,455
2,397
3,455
2,444
3,502
2,397
3,455
2,397
3,455
2,820
4,057
8,007
7,784
2,502
7,667
2,502
7,667
145,775
151,157
10,225
10,204
23,236
33,322
In thousands of euros
Dr. Dieter Zetsche
Dr. Wolfgang Bernhard1
Martin Daum2
Renata Jungo Brüngger
Ola Källenius
Wilfried Porth
Britta Seeger
Hubertus Troska
Bodo Uebber
Total
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
The total remuneration of the Board of Management for the finan-
cial year 2018 amounts to €24.7 million (2017: €35.0 million).
Of that total, €9.5 million was fixed, that is, non-performance-
related remuneration (2017: €9.5 million), €5.0 million (2017:
€15.3 million) was short-term and medium-term variable per-
formance-related remuneration (annual bonus with deferral),
and €10.2 million was variable performance-related remunera-
tion granted in the financial year 2018 with a long-term incen-
tive effect (2017: €10.2 million). B.57
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2018 as shown
'in table B.58.
B.58
Taxable non-cash benefits and other fringe benefits
In thousands of euros
Dr. Dieter Zetsche
Dr. Wolfgang Bernhard1
Martin Daum2
Renata Jungo Brüngger
Ola Källenius3
Wilfried Porth
Britta Seeger
Hubertus Troska4
Bodo Uebber
2018
2017
195
–
121
93
161
88
164
494
164
167
9
235
108
95
146
366
470
107
Total
1,480
1,703
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
3 Including an anniversary bonus of €69,456.50.
4 For the fulfillment of disclosure obligations pursuant to Section
285 No. 9a of the German Commercial Code (HGB), this amount is
reduced by €182,254 for the financial year 2018 (2017: €197,508).
The corresponding fringe benefits were granted and borne by a
subsidiary and are thus not included in the remuneration to be dis-
closed in the annual financial statements of the parent company,
Daimler AG.
130 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Commitments upon termination of service
Retirement provision
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the “Daimler Pensions Plan”. This retirement
benefit system features the payment of annual contributions
by Daimler and is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to a
precautionary investment concept.
The Supervisory Board of Daimler AG has approved the applica-
tion of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base sal-
ary and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is
15%. This calculation takes into consideration the targeted level
of retirement provision for each Board of Management mem-
ber — also according to the period of membership — and the
resulting annual and long-term expense for the Company.
The contributions to the retirement provision are granted until
the age of 62. The benefit from the pension plan is payable to
surviving Board of Management members at the earliest at the
age of 62, irrespective of their age upon retirement. If a member
of the Board of Management retires due to disability, the bene-
fit is paid as a disability pension, even before the age of 62.
The Pension Capital system was used from the beginning of 2006
until the end of 2011. The pension agreements of active Board
of Management members that were valid until that time were
modified accordingly. All Board of Management members newly
appointed during that period were subject exclusively to the
Pension Capital system.
Under this system, each Board of Management member is cred-
ited with a capital component each year. This capital compo-
nent comprises an amount equal to 15% of the sum of the Board
of Management member’s fixed base salary and the total
annual bonus for the respective financial year on the balance
sheet date, multiplied by an age factor equivalent to a rate
of return of 6% until 2015 and 5% as of 2016 (Wolfgang Bernhard
and Wilfried Porth: 5% for all years). These contributions to
pension plans are granted only until the age of 60. The benefit
from the pension plan is payable to surviving Board of Man -
agement members at the earliest at the age of 60, irrespective
of their age upon retirement. If a member of the Board of
Management retires due to disability, the benefit is paid as a
disability pension, even before the age of 60.
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
– as a single amount;
– in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
– as an annuity with annual increases (Pension Capital 3.5% or
in accordance with applicable law; Daimler Pensions Plan in
accordance with applicable law).
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/reg-
istered partner or dependent children is/are entitled to the full
committed amount in the case of the Pension Capital system,
and to the credit amount reached plus an imputed amount until
the age of 62 in the case of the Daimler Pensions Plan. If a
Board of Management member passes away after retiring for
reason of age, in the case of payment of twelve annual install-
ments the heirs are entitled to the remaining present value. In
the case of a pension with benefits for surviving dependents,
the spouse/registered partner or dependent children is/are enti-
tled to 60% of the discounted terminal value (Pension Capital),
or the spouse/registered partner is entitled to 60% of the actual
pension (Daimler Pensions Plan).
Until the end of 2005, the pension agreements of Board of
Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the
corresponding hierarchical level applied to Wilfried Porth for
the period prior to his serving as a member of the Board of
Management. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
Payments of these retirement pensions start upon request when
the term of service ends at or after the age of 60, or are paid
as disability pensions if the term of service ends before the age
of 60 due to disability. The respective agreements provide for
3.5% annual increases starting when benefits are received (with
the exception that Wilfried Porth’s benefits are adjusted in
accordance with applicable law). The agreements include a pro-
vision by which a spouse of a deceased Board of Management
member is entitled to 60% of that member’s pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Departing Board of Management members with pension agree-
ments (pension commitments) modified as of the beginning
of 2006 receive, for the period between the end of the last con-
tract period and reaching the age of 60, payments in the
amounts of the pension commitments granted as described in
the previous section. These payments are made until the age of
60, possibly reduced due to other sources of income, and are
subject to the annual percentage increases described above in
the explanation of these pension agreements.
Departing Board of Management members are also provided
with a company car, in some cases for a defined period.
Service costs for pension obligations according to IFRS amounted
to €2.4 million in financial year 2018 (2017: €2.0 million). The
present value of the total defined benefit obligation according
to IFRS amounted to €86.0 million as of December 31, 2018
(December 31, 2017: €82.7 million). Taking age and period of
service into account, the individual entitlements, service
costs and present values are shown in the table. B.59
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 131
Early termination of service
The durations of the contracts of service of the members of
the Board of Management correspond to their terms of
appointment. E page 44 f
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus pro
rata for the period until the end of the contract of service or of
the Board of Management membership takes effect. Entitle-
ment to payment of the performance-related component of
remuneration with a long-term incentive effect (PPSP) that has
already been allocated is defined by the conditions of the
respective plans. To the extent that the payments described
above are subject to the provisions of the so-called severance
cap of the German Corporate Governance Code, their total
including fringe benefits is limited to double the annual remuner-
ation and may not exceed the total remuneration for the
remaining period of the service contract.
In the event of an early termination of the service contract,
both the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the
long-term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan.
Sideline activities of Board of Management members
The members of the Board of Management should accept man-
agement board or supervisory board positions and/or any
other administrative or honorary functions outside the Group only
to a limited extent. Furthermore, they require the consent of
the Supervisory Board before commencing any sideline activities.
This ensures that neither the time required nor the remunera-
tion paid for such activities leads to any conflict with the mem-
bers’ duties to the Group. Insofar as such sideline activities
are memberships of other statutory supervisory boards or com-
parable boards of business enterprises, they are disclosed in
the notes to the annual financial statements of Daimler AG, which
is published on our website. In general, Board of Management
members have no right to separate remuneration for board
positions held at other companies of the Group.
Loans to members of the Board of Management
In 2018, no advances or loans were made or abated to mem-
bers of the Board of Management of Daimler AG.
Payments made to former members of the Board of
Management of Daimler AG and their survivors
Payments made in 2018 to former members of the Board of
Management of Daimler AG and their survivors amounted to
€16.2 million (2017: €19.0 million). Pension provisions accord-
ing to IFRS for former members of the Board of Management
and their survivors amounted to €270.2 million as of December
31, 2018 (2017: €270.5 million).
B.59
Individual entitlements, service costs and present values for members of the Board of Management
In thousands of euros
Dr. Dieter Zetsche
Dr. Wolfgang Bernhard2
Martin Daum3
Renata Jungo Brüngger
Ola Källenius
Wilfried Porth
Britta Seeger
Hubertus Troska
Bodo Uebber
Total
Annual pension
(as regulated until 2005)
as of age 60
Service cost
(for pension, pension
capital and Daimler
Pensions Plan)
Present value1 of
obligations (for pension,
pension capital and
Daimler Pensions Plan)
1,050
1,050
–
–
–
–
–
–
–
–
156
156
–
–
–
–
275
275
–
–
–
46
244
102
251
245
257
248
292
282
248
122
244
238
886
690
1,481
1,481
2,422
1,973
42,023
42,738
–
–
3,261
2,860
1,290
938
2,971
2,651
11,270
10,280
1,467
1,072
5,285
4,909
18,387
17,263
85,954
82,711
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 2017: Dr. Bernhard pro rata until Feb. 10, 2017.
3 2017: Mr. Daum pro rata from March 1, 2017.
132 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Details of Board of Management remuneration in 2018
pursuant to the requirements of the German Corporate
Governance Code
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted for
the financial year and on the other hand the payments made
in or for the reporting year and the retirement pension expense
in or for the year under review in accordance with the recom-
mendations of Clause 4.2.5 paragraph 3 of the German Corpo-
rate Governance Code.
The total of “benefits granted” for financial year 2017 is calcu-
lated from
– the base salary in 2017,
– the taxable non-cash benefits and other fringe benefits in
2017,
– the half of the annual bonus paid in 2018 for 2017 at the
value for target achievement of 100%,
– the half of the share-based annual bonus payable in 2019
for 2017 at the value for target achievement of 100%,
– the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017 (payable in 2021), and
– the retirement pension expense in 2017 (service costs in
2017).
The total of “benefits granted” for financial year 2018
is calculated from
– the base salary in 2018,
– the taxable non-cash benefits and other fringe benefits
in 2018,
– the half of the annual bonus payable in 2019 for 2018 at the
value for target achievement of 100%,
– the half of the share-based annual bonus payable in 2020 for
2018 at the value for target achievement of 100%,
– the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018 (payable in 2022), and
– the retirement pension expense in 2018 (service costs in
2018).
B.60
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit1 for components of remuneration
granted in the reporting year
Excluding
– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31 Jan. 1 – Feb. 10
Jan. 1 – Dec. 31
2017
2018
min.
max.
2017
2018
min.
max.
2,008
2,048
2,048
2,048
167
195
195
195
2,175
2,243
2,243
2,243
1,004
1,004
1,024
1,024
2,653
4,661
–
2,659
4,707
–
0
0
0
2,407
2,407
7,000
0 11,814
–
–
6,836
6,950
2,243 14,057
10,224
10,344
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
92
9
101
46
46
–
92
46
239
348
–
–
–
–
–
–
–
–
–
–
1 Total limit = maximum amount 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 133
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit1 for components of remuneration
granted in the reporting year
Excluding
– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)
Martin Daum
Daimler Trucks & Buses
Renata Jungo Brüngger
Integrity & Legal Affairs
March 1 – Dec. 31
Jan. 1 – Dec. 31 Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
min.
max.
2017
2018
min.
max.
677
235
912
338
338
832
121
953
416
416
1,043
1,719
102
1,045
1,877
244
832
121
953
0
0
0
0
244
832
121
953
978
978
2,750
4,706
244
812
108
920
406
406
832
93
925
416
416
1,043
1,855
245
1,045
1,877
251
832
93
925
0
0
0
0
251
832
93
925
978
978
2,750
4,706
251
2,733
3,074
1,197
5,903
3,020
3,053
1,176
5,882
4,662
5,252
5,176
5,252
1 Total limit = maximum amount 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit1 for components of remuneration
granted in the reporting year
Excluding
– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)
Ola Källenius
Group Research &
Mercedes-Benz Cars Development
Wilfried Porth
HR and Labor Relations Director &
Mercedes-Benz Vans
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31 Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
min.
max.
2017
2018
min.
max.
812
95
907
406
406
832
161
993
416
416
1,043
1,855
248
1,045
1,877
257
832
161
993
0
0
0
0
257
832
161
993
978
978
2,750
4,706
257
812
146
958
406
406
832
88
920
416
416
1,090
1,902
282
1,092
1,924
292
832
88
920
0
0
0
0
292
832
88
920
978
978
2,750
4,706
292
3,010
3,127
1,250
5,956
3,142
3,136
1,212
6,043
5,176
5,252
5,271
5,347
1 Total limit = maximum amount 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
134 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit1 for components of remuneration
granted in the reporting year
Excluding
– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)
Britta Seeger
Mercedes-Benz Cars Marketing & Sales
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31 Jan. 1 – Dec. 31
Hubertus Troska
Greater China
Jan. 1 – Dec. 31
2017
2018
min.
max.
2017
2018
min.
max.
812
366
1,178
406
406
832
164
996
416
416
1,043
1,855
122
1,045
1,877
248
832
164
996
0
0
0
0
248
832
164
996
978
978
2,750
4,706
248
812
470
832
494
832
494
832
494
1,282
1,326
1,326
1,326
406
406
416
416
1,043
1,855
238
1,045
1,877
244
0
0
0
0
244
978
978
2,750
4,706
244
3,155
3,121
1,244
5,950
3,375
3,447
1,570
6,276
5,176
5,252
5,176
5,252
1 Total limit = maximum amount 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Retirement pension expense (service costs)
Total remuneration
Total limit1 for components of remuneration
granted in the reporting year
Excluding
– Taxable non-cash benefits and other fringe benefits
– Retirement pension expense (service costs)
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
min.
max.
947
107
966
164
966
164
966
164
1,054
1,130
1,130
1,130
473
473
483
483
1,246
2,192
690
1,249
2,215
886
0
0
0
0
886
1,136
1,136
3,288
5,560
886
3,936
4,231
2,016
7,576
6,095
6,171
1 Total limit = maximum amount 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 135
The total of “payments made” for financial year 2017
is calculated from
– the base salary in 2017,
– the taxable non-cash benefits and other fringe benefits
The total of “payments made” for financial year 2018
is calculated from
– the base salary in 2018,
– the taxable non-cash benefits and other fringe benefits
in 2017,
in 2018,
– the half of the annual bonus paid in 2018 for 2017 at the
– the half of the annual bonus payable in 2019 for 2018 at
value as of the end of the reporting period in financial year
2017,
the value as of the end of the reporting period,
– the half of the share-based annual bonus paid in 2018 for
– the half of the share-based annual bonus paid in 2017 for
2016 (deferral),
2015 (deferral),
– the value of the long-term share-based remuneration (PPSP
– the value of the long-term share-based remuneration (PPSP
2014) paid in 2018,
2013) paid in 2017,
– the dividend equivalent of the current PPSP (2015, 2016,
– the dividend equivalent of the current PPSP (2014, 2015,
2017 and 2018) paid in 2018, and
2016 and 2017) paid in 2017, and
– the retirement pension expense in 2018 (service costs in
– the retirement pension expense in 2017 (service costs in
2018).
2017).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for financial year 2017 are
implemented with the payout of PPSP 2017, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2017. For financial year 2017,
therefore, the possible cap would take place in 2021, the year
that PPSP 2017 is paid out.
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for reporting year 2018 are
implemented with the payout of PPSP 2018, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2018. For financial year 2018,
therefore, the possible cap would take place in 2022, the year
that PPSP 2018 is paid out.
B.61
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 2013
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Feb. 10
Jan. 1 – Dec. 31
2017
2018
2017
2018
2,008
167
2,175
1,978
2,175
6,181
–
152
121
133
128
–
10,868
–
13,043
2,048
195
2,243
640
1,349
–
3,463
–
138
149
144
138
6,021
–
8,264
92
9
101
90
892
2,472
–
–
–
–
–
–
3,454
46
3,601
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
136 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
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 2013
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
Martin Daum1
Daimler Trucks & Buses
Renata Jungo Brüngger1
Integrity & Legal Affairs
March 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
2017
2018
677
235
912
667
–
–
–
22
17
19
50
–
775
102
1,789
832
121
953
260
–
–
510
–
20
22
56
54
922
244
2,119
812
108
920
800
–
488
–
9
7
53
50
–
1,407
245
2,572
832
93
925
260
525
–
208
–
9
60
56
54
1,172
251
2,348
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2013
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
Ola Källenius1
Group Research &
Mercedes-Benz Cars Development
Wilfried Porth
HR and Labor Relations Director &
Mercedes-Benz Vans
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
2017
2018
812
95
907
800
846
457
–
18
48
53
50
–
2,272
248
3,427
832
161
993
260
525
–
402
–
55
60
56
54
1,412
257
2,662
812
146
958
800
846
2,472
–
64
50
56
52
–
4,340
282
5,580
832
88
920
260
525
–
1,448
–
58
62
59
57
2,469
292
3,681
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2013
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 137
Britta Seeger1
Mercedes-Benz Cars Marketing & Sales
Hubertus Troska
Greater China
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
2017
2018
812
366
1,178
800
–
123
–
2
2
5
50
–
982
122
2,282
832
164
996
260
–
–
56
–
3
6
56
54
435
248
1,679
812
470
1,282
800
846
2,472
–
61
48
53
50
–
4,330
238
5,850
832
494
1,326
260
525
–
1,385
–
55
60
56
54
2,395
244
3,965
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2013
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
Total remuneration
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Jan. 1 – Dec. 31
Jan. 1 – Dec. 31
2017
2018
947
107
1,054
932
1,005
2,956
–
73
58
63
60
–
5,147
690
6,891
967
164
1,131
302
624
–
1,656
–
66
71
67
65
2,851
886
4,868
138 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration of the Supervisory Board
Supervisory Board remuneration in 2018
The remuneration of the Supervisory Board is determined by the
Annual Shareholders’ Meeting of Daimler AG and is governed
by the Company’s Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders’ Meeting in March 2017 and effective for the finan-
cial year beginning on January 1, 2017 specify that the mem-
bers of the Supervisory Board receive, in addition to the refund
of their expenses and the cost of any value-added tax incurred
by them in performance of their office, fixed remuneration of
€144,000 after the conclusion of the financial year. The Chair-
man of the Supervisory Board receives an additional €288,000
and the Deputy Chairman of the Supervisory Board receives
an additional €144,000. The members of the Audit Committee
are paid an additional €72,000, the members of the Presiden-
tial Committee are paid an additional €57,600 and the members
of the other committees of the Supervisory Board are paid an
additional €28,800; an exception is the Chairman of the Audit
Committee, who is paid an additional €144,000. Additional
payments are made for activities in a maximum of three com-
mittees; any persons who are members of more than three
such committees receive additional payments for the three most
highly paid functions. Members of a Supervisory Board com-
mittee are only entitled to remuneration for such membership
in a financial year if the committee has actually convened to
fulfill its duties in this period.
In connection with the remuneration adjustment, all members
of the Supervisory Board have made a self-commitment to
purchase Company shares in the amount of 20% of their gross
annual salary (excluding committee remuneration and the
meeting fee) every year and to hold these shares until the end
of one year after they have left the Company’s Supervisory
Board (voluntary obligation in accordance with the “comply or
explain” principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory or
voluntary manner to the guidelines of the German Trade Union
Confederation on the transfer of supervisory board remunera-
tion to the Hans Böckler Foundation, or to the same extent is
subject to a transfer to the employer or claim to payment due
to a service or employment contract. In the event that a lower
amount of the Supervisory Board remuneration is transferred
or credited, the voluntary commitment applies to 20% of the
amount not transferred or credited. With this voluntary commit-
ment, the members of the Supervisory Board are expressing
their focus on and commitment to the long-term, sustainable
success of the Company.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
The individual remuneration of the members of the Supervisory
Board is shown in the following table. B.62
In financial year 2018, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency ser-
vices, except for the remuneration paid to the members of
the Supervisory Board representing the employees in accor-
dance with their contracts of employment.
The remuneration of all the activities of the members of the
Supervisory Board of Daimler AG in the year 2018 was thus
€4.2 million (2017: €4.2 million).
Loans to members of the Supervisory Board
No advances or loans were made or abated to members of the
Supervisory Board of Daimler AG in 2018.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 139
Function(s) remunerated
Total in 2018
B.62
Supervisory Board remuneration
Name
In euros
Dr. Manfred Bischoff
Michael Brecht1
Dr. Paul Achleitner
Bader M. Al Saad
Sari Baldauf
Michael Bettag1
Dr. Clemens Börsig
Raymond Curry2
Chairman of the Supervisory Board, the Presidential Committee and the
Nomination Committee
Deputy Chairman of the Supervisory Board, the Presidential Committee
and the Audit Committee
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
Member of the Supervisory Board and Chairman of the Audit Committee
Member of the Supervisory Board (since April 5, 2018)
Dr. Jürgen Hambrecht
Member of the Supervisory Board and the Presidential Committee
Petraea Heynike
Andrea Jung
Joe Kaeser
Ergun Lümali1
Wolfgang Nieke1
Dr. Bernd Pischetsrieder
Valter Sanches3
Jörg Spies1
Elke Tönjes-Werner1
Sibylle Wankel1
Dr. Frank Weber
Marie Wieck
Dr. Sabine Zimmer1
Roman Zitzelsberger1
Member of the Supervisory Board
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board and the Audit Committee
Member of the Supervisory Board and the Audit Committee
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board (since April 5, 2018)
Member of the Supervisory Board (since April 5, 2018)
Member of the Supervisory Board and the Presidential Committee
1 The employee representatives have stated that their board remuneration is to be transferred to the
Hans-Böckler Foundation, in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Curry has directed that he receive no remuneration whatsoever and that his corresponding board
remuneration is to be paid to the Hans-Böckler Foundation.
3 Mr. Sanches has directed that he receive no fixed component of remuneration and that his corresponding
board remuneration is to be paid to the Hans-Böckler Foundation.
533,800
435,200
183,800
152,800
184,900
153,900
302,300
113,515
214,800
153,900
40,779
229,200
230,300
153,900
153,900
40,779
40,779
153,900
153,900
153,900
113,515
113,515
213,700
140 B | COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Composition of share capital
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2018. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section
67 Subsection 2 of the German Stock Corporation Act (AktG),
only those persons registered as shareholders in the register
of shareholders are considered to be shareholders of the Com-
pany. With the exception of treasury shares, from which the
Company does not have any rights, all shares confer equal rights
to their holders. Each share confers the right to one vote and,
with the possible exception of any new shares that are not yet
entitled to a dividend, to an equal share of the profits in accor-
dance with the dividend payout approved by the Annual Share-
holders’ Meeting. The rights and obligations arising from the
shares are derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff, 118 ff and 186 of the German Stock
Corporation Act. There were no treasury shares at December
31, 2018.
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 fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans (PPSPs) of Executive Level 1 and eligible members
of the Board of Management are obliged by the Plans’ terms and
conditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income up to a defined
target volume and to hold them for the duration of their employ-
ment at the Daimler Group. For the other persons eligible for
PPSPs, this obligation no longer applies since payment of PPSP
2013 in February/March 2017.
Provisions of applicable law and of the Articles of Incorpo-
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section
84 of the German Stock Corporation Act, the members of the
Board of Management are appointed by the Supervisory
Board for a maximum period of office of five years. However,
the Supervisory Board of Daimler AG has decided generally
to limit the initial appointment of members of the Board of Man-
agement to three years. Reappointment or the extension of
a period of office is permissible, in each case for a maximum
of five years.
Pursuant to Section 31 Subsection 2 of the German Codetermi-
nation Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority compris-
ing at least two thirds of its members’ votes. If no such majority
is obtained, the Mediation Committee of the Supervisory
Board has to make a suggestion for the appointment within one
month of the vote by the Supervisory Board in which the
required majority was not reached. The Supervisory Board then
appoints the members of the Board of Management with a
majority of its members’ votes. If no such majority is obtained,
voting is repeated and the Chairperson of the Supervisory
Board then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
In accordance with Article 5 of the Articles of Incorporation, the
Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation
Act (AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required mem-
ber of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3
of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so.
B | COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION 141
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by
a resolution of an Annual Shareholders’ Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders’ Meeting – with the exception of elections – are
passed pursuant to Section 133 of the German Stock Corpo-
ration Act (AktG) and Article 16 Subsection 1 of the Articles of
Incorporation with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders’ Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. In accordance with Article 7
Subsection 2 of the Articles of Incorporation, amendments to
the Articles of Incorporation that only affect the wording can
be decided upon by the Supervisory Board. Pursuant to Section
181 Subsection 3 of the German Stock Corporation Act (AktG),
amendments to the Articles of Incorporation take effect upon
being entered in the Commercial Register.
Authorization of the Board of Management to issue or buy
back shares
By resolution of the Annual Shareholders’ Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes in
a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders’ Meeting. The shares can
be used, under the exclusion of shareholders’ subscription
rights, for, among other things, corporate mergers and acquisi-
tions or else can be sold for cash to third parties at a price
that is not significantly below the market price at the time of the
sale. The shares can also be used to service debt on con-
vertible bonds and/or bonds with warrants, or can be issued
to employees of the Company and employees and members
of executive bodies of affiliated companies pursuant to Section
15 ff of the German Stock Corporation Act (AktG). The Compa-
ny’s own shares can also be canceled.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Supervisory
Board to exclude shareholders’ subscription rights for shares
they acquire. The Company’s own shares in a volume of up to
5% of the share capital existing at the time of the resolution
of the Annual Shareholders’ Meeting can also be acquired with
the application of derivative financial instruments (put or call
options, forwards or a combination of these financial instru-
ments), whereby the terms of the derivatives may not exceed
18 months and must be terminated on March 31, 2020, at the
latest.
No use was made of this authorization to acquire the Company’s
own shares during the reporting period.
By resolution of the Annual Shareholders’ Meeting held on April
9, 2014, the Board of Management was authorized with the
consent of the Supervisory Board to increase the share capital
of Daimler AG in the period until April 8, 2019 by up to €1 bil-
lion by issuing new registered shares of no par value in exchange
for cash or non-cash contributions, and with the consent of the
Supervisory Board under certain conditions and
within defined limits to exclude shareholders’ subscription rights
(Approved Capital 2014). That Approved Capital 2014, of
which no use was made, was canceled by resolution of the Annual
Shareholders’ Meeting of April 5, 2018. Also by resolution of
that Annual Shareholders’ Meeting, the Board of Management
was authorized with the consent of the Supervisory Board to
increase the share capital of Daimler AG in the period until April
4, 2023, wholly or in partial amounts, on one or several occa-
sions, by up to €1 billion by issuing new registered shares of no
par value in exchange for cash or non-cash contributions, and
with the consent of the Supervisory Board under certain condi-
tions and within defined limits to exclude shareholders’ sub-
scription rights (Approved Capital 2018). Subscription rights can,
under these defined conditions, be excluded in the event of a
capital increase through non-cash contributions for the purpose
of an acquisition, and in the case of a capital increase through
cash contributions, if the issue price of new shares is not signif-
icantly below the market price at the time of the issue.
No use has yet been made of Approved Capital 2018.
By resolution of the Annual Shareholders’ Meeting held on April
1, 2015, the Board of Management, with the consent of the
Supervisory Board, is authorized to issue during the period until
March 31, 2020 convertible bonds and/or bonds with warrants
or a combination of those instruments (commercial paper) in
a total nominal amount of up to €10 billion with a maximum
term of ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no par
value in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms and
conditions of those convertible bonds or bonds with warrants.
The bonds may be issued in exchange for consideration in cash,
but also for consideration in kind, in particular for interests in
other companies. The respective terms and conditions may also
provide for mandatory conversion or an obligation to exercise
the option rights. The bonds can be issued once or several times,
wholly or in installments, or simultaneously in various tranches.
They can also be issued by companies affiliated with Daimler AG
pursuant to Section 15 ff of the German Stock Corporation Act
(AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board, to exclude shareholders’
subscription rights to the bonds. Subscription rights can,
under these defined conditions, be excluded when bonds are
issued in exchange for non-cash contributions, particularly
within the framework of a merger or acquisition, and when bonds
are issued in exchange for cash contributions, if the issue
price is not significantly below the theoretical market price of
the bonds at the time of the issue.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders’ Meeting of April 1, 2015 also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
No use has yet been made of this authorization to issue con-
vertible bonds and/or bonds with warrants.
142 B | COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
– An agreement between Daimler and Robert Bosch GmbH
related to the joint establishment and operation of EM-
motive GmbH for the development and production of electric
motors for automotive applications, which gave the Robert
Bosch Group the right to terminate the agreement and to
acquire the shares of the Daimler Group if Daimler should
become controlled by a competitor of Robert Bosch GmbH,
was terminated in January 2019. Robert Bosch GmbH is to
acquire the shares in the joint venture held by Daimler. The
conclusion of the transaction requires the approval of the
competition authorities, which is expected to be granted in
March 2019.
– An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V.
In the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question
to offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). A change of control of Daimler
AG occurs if one person gains control over Daimler AG, whereby
control is defined as (i) having control of more than 50% of
the voting rights, (ii) being able to control more than 50% of the
voting rights eligible to vote at the shareholders’ meetings
on all or nearly all matters, or (iii) the right to determine the
majority of the members of the Board of Management or
of the Supervisory Board. A change of control also occurs if
competitors of the HERE Group or certain possible com-
petitors of the HERE Group in the technology industry acquire
a shareholding of at least 25% of Daimler AG. If none of the
other parties acquire these shares, the agreement gives them
the right to dissolve There Holding B.V.
– An agreement between Daimler AG and BMW AG, which con-
tains basic provisions for six joint ventures between Daimler
Mobility Services GmbH and group companies of BMW AG in
the field of mobility services (car sharing, ride hailing, park-
ing, charging, multimodal and a joint venture holding the com-
mon brand). A change of control is defined as the acquisition
by a third party of more than 50% of the voting rights or shares,
or the conclusion of a control agreement over Daimler AG
by a third party. As a result of a change of control, the other
party may initiate a shoot-out process, which is more pre-
cisely defined in the agreement.
Material agreements taking effect in the event
of a change of control
Daimler AG has concluded various material agreements, as listed
below, that include clauses regulating the possible event of a
change of control, as can occur as a result of a takeover bid:
– A non-utilized syndicated credit line for a total amount of €11
billion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
– Credit agreements with lenders for a total amount of €1.7 bil-
lion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
– Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €15 million, which the
lenders are entitled to terminate if Daimler AG becomes a
subsidiary of another company or comes under the control of
one person or several persons acting jointly.
– A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. In the case of a change of control of one of
the parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a third
party or several third parties acting jointly acquire, legally or
economically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to
appoint a majority of the members of its managing board.
Under the master cooperation agreement, several cooperation
agreements were concluded between Daimler AG on the one
side and Renault and/or Nissan on the other, which provide for
the right of termination for a party to the agreement in the
case of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the
shared use and development of fuel-efficient diesel and gaso-
line engines and transmissions, the development and supply
of a small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for
compact cars, and the joint production of Infiniti/Nissan and
Mercedes-Benz compact vehicles by a 50-50 joint venture
in Mexico. A change of control is deemed to occur at a thresh-
old of 50% of the voting rights of the company in question
or upon authorization to appoint a majority of the members of
its managing board. In the case of termination of cooperation
in the area of the development of small cars due to a change
of control in the early phase of the cooperation, the party
affected by the change of control would be obliged to bear its
share of the costs of the development of shared components
even if the development were terminated for that party.
– An agreement with BAIC Motor Co., Ltd. related to a jointly held
company for the production and distribution of cars of the
Mercedes-Benz brand in China, by which BAIC Motor Co., Ltd.
is given the right to terminate the agreement or exercise a
put or call option in the case that a third party acquires one
third or more of the voting rights in Daimler AG.
– An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competi-
tors acquires more than 25% of the equity or assets of Daimler
AG or becomes able to influence the decisions of its Board of
Management.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
Risk and Opportunity Report
The Daimler Group is exposed to a large number of risks that are
directly linked with the business activities of its divisions or
which result from external influences. A risk is understood as
the danger that events, developments or actions will prevent
the Group or one of its divisions from achieving its targets. At
the same time, it is important for the Daimler Group to identify
opportunities so that they can be utilized in the course of its
business activities, thus safeguarding and enhancing the
Group’s competitiveness. An opportunity is understood as the
possibility to safeguard or to surpass the planned targets of
the Group or a division as a result of events, developments or
actions. The divisions have direct responsibility for recogniz-
ing and managing business risks and opportunities at an early
stage. As part of the strategy process, risks related to the
planned long-term development and opportunities for further
profitable growth are identified and integrated into the deci-
sion-making process. In order to identify business risks and
opportunities at an early stage, to assess and manage them
consequently, effective management and control systems, which
are clustered into a risk and opportunity management system,
are applied. Risks and opportunities are not offset. The system
is described below.
B.63
Assessment of probability of occurrence/possible impact
Level
Low
Medium
High
Probability of occurrence
0% < Probability of occurrence ≤ 33%
33% < Probability of occurrence ≤ 66%
66% < Probability of occurrence < 100%
Level
Low
Possible impact
€0 <
Medium
€500 million ≤
High
Impact
Impact
Impact
< €500 million
< €1 billion
≥ €1 billion
Risk and opportunity management system
The risk management system with regard to existence-
threatening and other material risks is integrated into the
value-based management and planning system of the Daimler
Group. It is an integral part of the overall planning, manage-
ment and reporting process in the legal entities, divisions and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control,
monitor and report risks threatening Daimler’s existence and
other material risks, in order to support the achievement of
corporate targets and to enhance risk awareness at the Group.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportu-
nities arising in business activities as a result of positive
developments at an early stage, and to use in the best possible
way for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be secured
or overachieved. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
In the context of operative planning, risks and opportunities –
with consideration of appropriate risk and opportunity catego-
ries – are identified and assessed for a two-year planning period.
Furthermore, the discussions for the derivation of mid-term
and strategic targets in the context of strategic planning include
the identification and assessment of risks and opportunities
relating to a longer period. The reporting of risks and opportu-
nities in the Management Report generally relates to a period
of one year. Besides the reporting at specific times, risk and
opportunity management is established as a continuous task
within the Group. In addition to the regular reporting, there is
also an internal reporting obligation within the Group for mate-
rial risks arising unexpectedly. The central Group Risk Manage-
ment regularly reports the identified risks and opportunities to
the Board of Management and the Supervisory Board.
144 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels “Low”,
“Medium” and “High”. These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of
a risk or opportunity, its effect on EBIT is generally considered.
At Group level, risks and opportunities below €500 million are
classified as “Low”, between €500 million and €1 billion as
“Medium”, and above €1 billion as “High”. For the quantification
of each risk and opportunity category in the Management
Report, the individual risks and opportunities are summarized
for each category. The assessment of the dimensions proba-
bility of occurrence and possible impact is based on the levels
shown in table B.63 and is conducted before measures are
implemented. In addition to the quantifiable risks and opportu-
nities, risk management also considers qualitative risks and
opportunities, which primarily comprise those risks connected
with aspects presented in the non-financial report. In the con-
text of describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all identi-
fied risks enter the risk management process. The internal
control system (ICS) is responsible for the monitoring of gen-
eral uncertainties without any clear indication of a possible
effect on earnings.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
The tasks of the employees responsible for risk and opportunity
management include, besides the identification and assess-
ment of risks and opportunities, the definition of measures and
the initiation of such measures, if necessary. The objective of
such measures is to avoid, reduce or transfer risks. The utiliza-
tion or enhancement of an opportunity, and its partial or full
implementation, also require measures to be taken. The cost-
effectiveness of a measure is assessed before its implementa-
tion. The possible impact and probability of occurrence of all
identified risks and opportunities of the individual entities and
the related measures that have been initiated are continually
monitored. The management activities take place at the level
of the divisions based on individual risks and opportunities.
The internal control system with regard to the accounting
process has the objective of ensuring the correctness and
effectiveness of accounting and financial reporting. It is
designed in line with the internationally recognized framework
for internal control systems of the Committee of Sponsoring
Organizations of the Treadway Commission (COSO Internal
Control – Integrated Framework), is continually developed fur-
ther, and is an integral part of the accounting and financial
reporting processes in the relevant legal entities and corporate
functions. The system includes principles and procedures as
well as preventive and detective controls. Among other things,
it is regularly checked, if
– the Group’s uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
– transactions within the Group are accounted for and properly
eliminated;
– issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
– processes are established to guarantee the completeness of
financial reporting;
– processes are established for the segregation of duties and
for the “four-eyes principle” (dual accountability) in the con-
text of preparing financial statements, and authorization and
access rules exist for relevant IT accounting systems.
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and a definition of control
with the objective of identifying significant risks relating to the
processes of corporate accounting and financial reporting in the
main legal entities and corporate functions. The controls
required are then defined and documented in accordance with
Group-wide guidelines. Random samples are regularly tested
to assess the effectiveness of the controls. Those tests consti-
tute the basis for self-assessment of the appropriate magni-
tude and effectiveness of the controls. The results of this self-
assessment are documented and reported in a Group-wide
IT system. Identified weaknesses are eliminated with consider-
ation of their potential effects. At the end of the annual cycle,
the selected legal entities and corporate functions confirm the
effectiveness of the internal control and risk management
system with regard to the corporate accounting process. The
Board of Management and the Audit Committee of the Super-
visory Board are regularly informed about the main control
weaknesses and the effectiveness of the control mechanisms
installed. However, the internal control and risk management
system for the accounting process cannot ensure with abso-
lute certainty that material false statements in accounting are
avoided.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 145
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk man-
agement organization established at the Group. In this context,
the divisions, corporate functions and legal entities are
requested to report on concrete risks and opportunities at reg-
ular intervals. This information is passed on to Group Risk
Management, which processes the information and provides it
to the Board of Management and the Supervisory Board as
well as to the Group Risk Management Committee (GRMC). The
GRMC is composed of representatives of Accounting & Financial
Reporting, the Legal Department, Compliance, Technical
Compliance and Group Security, and is chaired by the Board of
Management Member for Finance & Controlling/Daimler
Financial Services. The internal auditing department contributes
material findings on the internal control and risk management
system.
Responsibility for operational risk management and for the risk
management processes lies directly with the divisions, corpo-
rate functions and legal entities.
Reports regarding the current risk situation and the effective ness,
functionality and appropriateness of the internal control and
risk management system are regularly presented to the Board
of Management and to the Audit Committee of the Supervisory
Board of Daimler AG. Furthermore, the responsible managers
regularly discuss risks and opportunities out of business oper-
ations with the Board of Management.
The Audit Committee of the Supervisory Board is responsible for
monitoring the internal control and risk management sys-
tem. The internal auditing department monitors whether the
statutory conditions and the Group’s internal guidelines con-
cerning the internal control and risk management system of the
Group are adhered to. If required, measures are initiated in
cooperation with the respective management. External auditors
audit the system for the early identification of risks which is
integrated in the risk management system for its general suit-
ability to identify risks threatening the existence of the Group;
in addition, they report to the Supervisory Board on any signifi-
cant weaknesses that have been recognized in the internal
control and risk management system.
Risks and opportunities
The following section describes risks and opportunities that can
have a significant influence on the profitability, cash flows and
financial position of the Daimler Group. In general, the reporting
of risks and opportunities takes place in relation to the individ-
ual segments. If no segment is explicitly mentioned, the risks and
opportunities described relate to all the automotive divisions.
In addition, risks and opportunities that are not yet known or
classified as not material can influence profitability, cash flows
and financial position.
Industry and business risks and opportunities
The following section describes industry and business risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table B.64.
Economic risks and opportunities
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group’s success.
Like the majority of economic research institutes, Daimler
expects the upswing of the world economy to continue in 2019,
although with less dynamism than in the two previous years.
Economic developments in 2018 are described in detail in the
“Economic Conditions and Business Development” section of
this Management Report; growth assumptions for 2019 are
explained in the “Outlook” section on E pages 79 ff and 158 ff.
Economic risks and opportunities are linked with assumptions
and forecasts concerning general developments. The relation -
ship between risks and opportunities at the beginning of the year
2019 seems to be somewhat less favorable than in the previ-
ous year.
The escalation of the trade conflict between the United States
and China continues to be one of the main risks. But the threat
of US tariffs on vehicles and parts imported from other markets,
including the European Union, could also affect existing global
value chains and have a negative impact on sales opportunities
and economic developments. Furthermore, there is a danger
that countries will implement increasingly protectionist measures
such as specific market-access barriers or industrial policy
instruments. Should these trade tensions spread and massively
affect global trade, there would be significant impacts on infla-
tion, business climate, consumer confidence and ultimately also
on global economic growth. On the other hand, unforeseen
trade facilitations could provide positive impulses and lead to
more trade and higher growth. In that case, the Daimler Group
could also benefit from preferential trade conditions.
146 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Within China, a slowdown could result in a major increase in non-
performing loans, which would then lead to turbulences in‚
the banking sector and financial markets. The aforementioned
risks could result in significant negative effects on units sales,
particularly for the Mercedes-Benz Cars division, for which China
is now the biggest individual sales market by a large margin.
On the other hand, triggered by the stimulus measures
announced by the Chinese government, growth in 2019 could
also turn out stronger than expected. The resulting higher
growth in overall economic consumption would offer additional
opportunities, especially for the Mercedes-Benz Cars division.
Pressure on the emerging markets could increase if more coun-
tries were affected by massive capital outflows and exchange-
rate losses, or if the currency crises in Argentina and Turkey turn
into significant banking crises. In such cases, global investors
would withdraw capital from emerging markets on a large scale,
which would probably force those countries with large foreign-
trade imbalances to make painful adjustments. Renewed finan-
cial-market turbulences and currency crises are possible con-
sequences and could have a massive impact on the economies
of affected countries. Lower growth in world trade and lower
raw-material prices (e.g. a drop in the oil price) than currently
forecast would also have a negative impact on growth for
exporters of raw materials. As Daimler is already very active in
those countries, or their markets play a strategic role, this
would have negative effects on the Group’s prospective unit
sales. However, import-dependent economies such as India
would benefit from lower raw-material prices. An excessive and
sudden rise in oil prices, for example as a result of geopolitical
tension, would increase inflationary pressure and cause central
banks to raise interest rates more rapidly, with negative effects
on sentiment indicators and consumer behavior.
In view of the ongoing positive economic situation in many parts
of the world, the opportunity exists that the world eco nomy
will actually grow at a higher rate than hitherto assumed in 2019.
A stronger increase in global demand would also support raw-
material prices and would have positive effects on raw-material
exporters in South America, the Middle East and Africa.
In the United States, economic and fiscal policy could turn out
to be more expansive than previously assumed. As the Daimler
Group generates a substantial proportion of its revenue in the
United States, especially in the Mercedes-Benz Cars, Daimler
Trucks and Daimler Financial Services divisions, these develop-
ments would have considerable consequences for the Group’s
success. Furthermore, stronger growth in the United States
would also have spillover effects on the rest of the world. The
disadvantages of such an expansionary fiscal policy are the
further worsening of the debt situation in the United States and
the risk that inflation will rise more significantly than currently
expected, due not least to rising wages and a labor market close
to full employment. This would force the Federal Reserve to
raise federal funds rates more sharply than expected by the
market, which would directly weaken domestic demand. As
a further consequence, increasing volatility in the financial
markets could adversely affect investor confidence, leading
to widespread sales of equities and thus triggering a chain
reaction on stock markets, with major market adjustments and
phases of exceptional volatility in global financial markets.
In Europe, the further development of relations between the
European Union and the United Kingdom represents a significant
risk. If the negotiated exit agreement is not approved by the
British parliament and as a result, there are neither further nego-
tiations nor a complete cancellation of Brexit, a disorderly
withdrawal in spring 2019 is at least possible. This would have a
massive impact on the UK economy and, probably to a lesser
extent, on the remaining EU member states, and would make
trading conditions more difficult. Furthermore, if financial-
market participants are not sufficiently prepared, noticeable
market distortions cannot be ruled out, which would have
significant negative effects on the real economy. Besides that,
increased political uncertainty in the euro zone, for example
as a result of developments in Italy, could adversely affect con-
sumption and investment decisions by households and compa-
nies. The European market continues to be very important for
Daimler across all divisions.
Due to China’s enormous importance as a growth driver for the
world economy in recent years, a downturn in the Chinese
economy would represent a considerable risk to the global
economy. The enormous rise in debt that has been observed
since the global financial crisis, especially in the corporate
sector, represents a significant risk. If the government’s
efforts to restrict credit growth in combination with the nega-
tive impact of US tariffs on imports from China lead to a more
significant growth slowdown than currently expected, this
would result in a perceptible cooling-off for the world economy.
B.64
Industry and business risks and opportunities
Risk category
General market risks
Risks relating to leasing
and sales financing
Procurement market risks
Risks relating to the legal
and political framework
Probability of occurrence
Impact
Opportunity category
Low
Low
Medium
Medium
High
Low
High
High
General market opportunities
Opportunities relating to leasing
and sales financing
Procurement market opportunities
Medium
Opportunities relating to the legal
and political framework
Low
Impact
Low
Low
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 147
Further risks are related to geopolitical tensions, terrorist
attacks or assassinations in Europe or other major economies,
which could adversely affect global trade and international
capital markets for a prolonged period.
General market risks and opportunities
The risks and opportunities for the economic development of
automotive markets are strongly affected by the cyclical situa-
tion of the global economy as described above. The assess-
ment of market risks and opportunities is linked to assump-
tions and forecasts about the overall development of markets
in the regions in which the Daimler Group is active. The possi-
bility of markets developing better or worse than assumed in
the planning, or of changing market conditions, generally exists
for all divisions of the Daimler Group.
Potential effects of the risks on the development of unit sales
are included in risk scenarios. The risks can cause changes in
the planned business activities, the related vehicle sales and
inventories, and the aftersales business. In particular, the par-
tially unstable macroeconomic environment as well as political
or economic uncertainty could be causes in this context. A ris-
ing oil price and volatile exchange rates can also lead to market
uncertainty and thus to falling demand. Differences between
the divisions exist due to the partly varying regional focus of
their activities. Discussions about the future of diesel technology
and the related uncertainties may result in a change in cus-
tomer demand which could negative affect on sales of diesel
vehicles and can lead to a possibly drop in earnings. The devel-
opment of markets, unit sales and inventories is continually
analyzed and monitored by the divisions; if necessary, specific
marketing and sales programs are implemented.
Volatilities with regard to market developments can also lead
to the overall market or regional conditions for the automotive
industry developing better than assumed in the internal fore-
casts and premises, and to business opportunities in the mar-
ket. Opportunities can also arise from an improvement in the
competitive situation or a positive development of demand for
the divisions. However, the existing market opportunities of the
divisions of the Daimler Group can only be utilized if production
can be aligned accordingly, and if this is enabled by regional
conditions. In addition, any gaps between demand and supply
have to be recognized and covered in good time. The measures
that could be initiated by the Daimler Group to utilize potential
opportunities include a combination of local sales and market-
ing activities, as well as central strategic product and capacity
planning.
As the target achievement of the Daimler Financial Services
division is closely connected with the business development in
the automotive divisions, the existing volume risks and
opportunities are reflected in the Daimler Financial Services
segment.
Due to the partly difficult financial situation of some dealer-
ships and vehicle importers, support actions might become
necessary to ensure the performance of the business partners.
The sources of these risks lie in the respective risk environment
as well as in the necessary infrastructure investments that
have been made for sales of new products. Supporting actions
can adversely affect the profitability, cash flows and financial
position of the automotive divisions. Further risks may result from
the dependency on certain dealerships. In certain circum-
stances, relationships with new business partners may have to
be developed. The financial situation of strategically relevant
dealerships and vehicle importers is continually monitored. If
required, payment conditions can be adjusted. Risks of this
kind exist for dealerships and vehicle importers of the divisions
Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans.
The successful product portfolio of the Daimler Group contrib-
utes to its advantageous positioning compared with the compet-
itors. Possibly rising competitive and price pressure above
all affect the segments Mercedes-Benz Cars and Daimler Trucks.
Aggressive pricing policies, the introduction of new products
by competitors, or pricing pressure in the aftersales business
can make it more difficult to achieve expected prices. This
might result in lower revenue, the failure to achieve the prod-
ucts’ planned profitability, or lower market shares. The extent
of such risks is related to the magnitude of a division’s sales
volume. Continuous monitoring of competitors is carried out in
order to recognize these risks at an early stage. Depending on
the situation, product-specific and possibly regionally different
measures are taken to support weaker markets. They include
the use of new sales channels, actions designed to strengthen
brand awareness and brand loyalty as well as sales and mar-
keting campaigns. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
Further risks at Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Financial Services relate to the development of used
vehicle markets and thus to the residual values of the vehicles
produced. In particular, the uncertainty existing in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evaluated.
If changing market developments lead to a negative deviation
from assumptions, there is a risk of lower residual values of
used cars. Depending on the region and the current market sit-
uation, the measures taken generally include continuous mar-
ket monitoring as well as, if required, price-setting strategies or
sales promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by periodic
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems. On
the other hand, opportunities can arise from a positive devel-
opment of residual values caused by a favorable market environ-
ment for used vehicles as well as reductions in discounts
granted on new vehicles.
148 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Financial Services companies that oper-
ate commercial fleet management and leasing management,
because most of those vehicles are not covered by manufac-
turers’ residual-value guarantees. Residual-value risk is taken
into account through a high level of diversification with regard
to brands, regions, customers and lease periods. Used-vehicle
prices are continually monitored both locally and centrally, so
that the residual-value risk from a drop in market prices can
be forecast in good time and suitable countermeasures may be
initiated.
Across all segments, the assessment of general market risks is
unchanged compared with the previous year. However, due
to increasing political and economic uncertainty, the impact of
market opportunities has decreased from “High” to “Low”.
Risks and opportunities relating to the leasing and sales-
financing business
In connection with the sale of vehicles, Daimler offers its cus-
tomers a wide range of financing possibilities – primarily of
leasing and financing the Group’s products. The resulting risks
for the Daimler Financial Services segment are mainly due to
borrowers’ worsening creditworthiness, so receivables might
not be recoverable in whole or in part because of customers’
insolvency (default risk or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods and the collateral-
ization of receivables, as well as an effective risk management
with a firm focus on monitoring both internal and macroeco-
nomic leading indicators. Other risks associated with the leasing
and sales-financing business involve the possibility of increased
refinancing costs due to changes in interest rates (interest
rate risk).
An adjustment of credit conditions for customers in the leasing
and sales-financing business caused by higher refinancing
costs could reduce the new business and contract volume of
Daimler Financial Services, also reducing the unit sales of the
automotive divisions. Risks and opportunities also arise from a
lack of matching maturities with refinancing. The risk of mis-
matching maturities is minimized by coordinating refinancing
with the periods of financing agreements, from the perspective
of interest rates as well as liquidity. Any remaining risks from
changes in interest rates are managed by the use of derivative
financial instruments. Further information on credit risks and
the Group’s risk-minimizing actions is provided in E Note 33
of the Notes to the Consolidated Financial Statements.
Possible residual-value risks for the automotive divisions and
the companies in the Daimler Financial Services division that
operate commercial fleet management and leasing manage-
ment are described in the section “General Market Risks and
Opportunities”.
The possible impact of the risks and opportunities and the
probability of occurrence of the risks relating to the leasing
and sales-financing business continue to be assessed as
“Low”.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppli-
ers and of capacity bottlenecks caused by supplier delivery
failures or by insufficient utilization of production capacities
at suppliers. Disagreements with suppliers regarding the agreed
pricing of supplies and the supplied quality can also lead to
procurement market risks. The risk situation relating to the
possible impact has not changed compared with the previous
year. However, the probability of occurrence has risen from
“Low” to “Medium” due to the threat of tariff increases on cer-
tain raw materials. Opportunities in the raw-material markets
continue to exist due to positive price developments for rele-
vant raw materials. Compared with the previous year, the impact
of those opportunities has increased from “Low” to “Medium”
as a result of more optimistic assumptions concerning the future
development of raw-material prices.
Raw-material prices continued to feature significant volatility
in 2018. Due to almost completely unchanged macroeconomic
conditions, price fluctuations are expected with uncertain and
uneven trends in the near future. On the one hand, raw-material
markets can be impacted by political crises and uncertainties –
combined with possible supply bottlenecks – as well as by vol-
atile demand for specific raw materials. Potential tariff increases
for certain raw materials as a result of increasing protectionist
tendencies worldwide can also have a negative impact on price
developments. Generally, the ability to pass on the higher costs
of commodities and other materials in the form of higher prices
for manufactured vehicles is limited because of strong compet-
itive pressure in the international automotive markets.
Supplier risk management aims to identify potential financial
bottlenecks for suppliers at an early stage and to initiate
suitable countermeasures. Although the crisis of recent years
is over, the situation of some of suppliers remains difficult due
to a high degree of competitive pressure. This has necessi-
tated individual or joint support actions by vehicle manufactur-
ers to safeguard their production and sales. In the context of
supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals and
made corresponding internal assessments. On those dates, the
suppliers report their key performance indicators to Daimler
and decisions can be made concerning any required support
actions.
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines, the
Mercedes-Benz Cars segment in particular is faced with the
risk that Daimler will require changed volumes of components
from suppliers. This could result in over- or underutilization
of production capacities for certain suppliers. If supplier can-
not cover their fixed costs, there is the risk that suppliers
could demand compensation payments. Necessary capacity
expansion at suppliers’ plants could also require cost-effective
participation.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 149
Strict regulations for the reduction of vehicles’ emissions and
fuel consumption create potential risks also for the Daimler
Trucks and Daimler Buses divisions, because it will be difficult
to fulfill the statutory requirements in some countries. This
applies above all to the markets of Japan, the United States,
China and Europe. The European Commission has developed
a method for determining the CO2 emissions of heavy commer-
cial vehicles, named VECTO, the application of which will
be mandatory for the most important vehicle categories as of
2019. The prescribed level of ambition cannot be achieved
with conventional technology alone. Daimler Trucks and Daimler
Buses will therefore have to apply the latest technologies in
order to fulfill these requirements.
Very demanding regulations for CO2 emissions are also planned
or have been approved for light commercial vehicles, which
will present a challenge for Mercedes-Benz Vans, especially in
the long term. This applies in particular to the markets of the
United States and Europe.
The position of the Daimler Group in key foreign markets could
also be affected by an increase in or changes to free-trade
agreements. If free-trade agreements are concluded without
the involvement of countries where Daimler produces or if
free-trade agreements are amended to make them substantially
stricter, the position of the Daimler Group could be signifi-
cantly impacted. At the same time, new free-trade agreements
could also result in opportunities for the Daimler Group
towards competitors in countries which are not parties to such
agreements or which do not produce in those countries.
The danger exists that individual countries will attempt to
defend or improve their competitiveness in the world’s markets
by resorting to interventionist and protectionist actions.
Industrial policy measures are intended to attract investment
into a country and increase local value creation along the
entire value chain. In addition, attempts are being made to limit
growth in imports through barriers to market access such
as by making certification processes more difficult, delaying
certification and imposing other complicated customs
procedures. These measures generally exacerbate uncertain-
ties in the planning process.
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction
of traffic jams, noise and emissions are becoming increasingly
important in cities and urban areas worldwide. In China for
example, limited access to vehicle registration is continuing
and is actually worsening. This development can have a
dampening effect on the development of unit sales, especially
in growth markets. Pressure to reduce personal transport
is increasingly being applied in European cities through discus-
sions of bans on vehicles, especially those with diesel engines.
Risks and opportunities relating to the legal
and political framework
The automotive industry is subject to extensive governmental
regulation worldwide. Legal and political framework have
a considerable impact on Daimler’s future business success.
Regulations concerning vehicles’ emissions, fuel consump-
tion and certification as well as tariff aspects play a partic-
ularly important role. Complying with these varied and often
diverging regulations all over the world requires strenuous efforts
on the part of the automotive industry. In the future, Daimler
expects to spend an even larger proportion of its research and
development budget to ensure compliance with these regula-
tions. The probability of occurrence of risks from the legal and
political framework has increased from “Low” to “Medium”.
This is mainly due to risks from more difficult certification pro-
cesses and delays in certification, as well as the threat of
increased tariffs. The potential impact of these risks remains
unchanged at “High”. The assessment of the possible impact
of the opportunities is also unchanged at “Low”.
Many countries and regions have already implemented stricter
regulations to reduce vehicles’ emissions and fuel con-
sumption or are currently preparing such laws. They relate for
example to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by the production facilities. Non-
compliance with regulations applicable in the various regions
might result in significant penalties and reputational risks and
might even mean that vehicles could not be or could no longer
be registered in the relevant markets. The cost of compliance
with these regulations is significant, especially for conventional
engines, and Daimler expects a further increase in costs in this
context.
The Mercedes-Benz Cars segment faces risks with respect to
regulations concerning the average fleet fuel consumption
and CO2 emissions of new vehicles, especially in the markets
of China, Europe and the United States. Daimler gives these
targets due consideration in its product planning. The increas-
ingly ambitious targets require significant proportions of actual
unit sales of plug-in hybrids or cars with other types of electric
drive. The ambitious statutory requirements will be difficult
to fulfill in some countries. The market success of these drive
systems is greatly influenced not only by customer acceptance
but also by regional market conditions, for example the charg ing
infrastructure and state support.
As the negative headlines on diesel engines and the implemen-
tation of driving bans on diesel vehicles unsettle customers,
this can result in lasting shifts in the drive-system portfolio
(fewer diesel and more gasoline engines). This would require
additional development and production measures in order to
meet the CO2 fleet limits applicable as of 2020.
The EU Commission is currently revising, amending or supple-
menting the framework conditions for the WLTP measurement
method, which was only introduced in September 2018. Some
of these changes are to come into force as early as 2019. This
will result in increased and additional WLTP testing and docu-
mentation costs. In the worst case, recertification could also
become necessary, which in turn could cause supply bottle-
necks.
150 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Cities are becoming connected and are increasingly seeking
partnerships with industry in order to cooperate on new
mobility solutions. This can create a demand for vehicles with
alternative drive systems, as well as for new mobility services
including car-sharing services. In order to utilize the resulting
opportunities, Daimler is present in the market with the provi-
sion of innovative mobility services.
In April 2018, the US Department of the Treasury’s Office of
Foreign Assets Control announced sanctions against various
individuals and companies. This may affect business activities
of the Daimler Group, in particular with sanctioned business
partners in Russia.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in
the process of product development. The great challenge of
the coming years will be to offer an appropriate range of
drive systems and the right product portfolio in each market.
Company-specific risks and opportunities
The following section describes company-specific risks and
opportunities of the Daimler Group. A quantification of these
risks and opportunities is shown in table B.65.
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group – and hence for the
achievement of corporate targets – are brand image, design
and quality, and thus the acceptance of products by custom-
ers, as well as technical features based on innovative research
and development. Convincing solutions, which for example
support accident-free driving or further improve the products’
fuel consumption and emissions, such as hybrid or electric
vehicles, are of key importance for safe and sustainable mobil-
ity. Innovations and technology opportunities for the progres-
sive and future-oriented design of the product range flow into
the strategic product planning of the automotive divisions.
However, due to increasing technical complexity, the continu-
ally rising extent of requirements in terms of emissions, fuel
consumption and safety, as well as meeting and steadily rais-
ing the Daimler Group’s quality standards, product launches
and manufacturing in the automotive divisions are also subject
to production and technology risks.
In the context of product launches, the required parts and equip-
ment components have to be available. To avoid restrictions
in this context, the related processes are continually evaluated
and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expansion,
construction and restructuring measures are carried out as
required. The execution of modernization activities and the
launch of new products are generally connected with high
investments. For example, stipulations, plant reconstruction
or delays in the ramp-up phase of an innovation or during a
product’s lifecycle can lead to inefficiencies in the production
process and as a consequence to a short-term reduction in
production volumes. In addition, the planned increase in bat-
tery production due to the increasing electrification of the
vehicle fleet means that initial technical problems cannot be
ruled out during the production of the various battery types.
Those automotive segments are affected which are currently
launching a new product or have planned a related production
ramp-up. In this context, it is also necessary to consider
dependencies on contractual and cooperation partners, as
well as possible changes in regional conditions, which have
to be included in the local decision-making process.
In principle, there is a danger that infrastructure problems,
reduced plant availability or the failure of production equip-
ment or production plants may cause internal bottlenecks
that would consequently generate costs. With the parallel fail-
ure of several production plants, the resulting effects could
accumulate. These risks mainly exist for the Mercedes-Benz
Cars segment. The production equipment is continually
maintained and modernized. As a precaution, spare parts are
held available as well as, if required, redundant machines
are purchased for the production plants that might be at risk.
Insufficient availability of vehicle components at the right time,
capacity restrictions in the production of batteries, interrup-
tions in the supply chain and possible interruptions in supply by
energy providers can lead to bottlenecks, especially at the
Mercedes-Benz Cars division. At the Daimler Trucks division,
there are further risks due to high utilization of production
capacity in connection with potential bottlenecks for compo-
nents for heavy-duty trucks. As a result of the expansion of
production in the Mercedes-Benz Vans segment, a temporary
increase in the workforce and additional shifts in the produc-
tion plants could become necessary. In order to avoid such
bottleneck situations, importance is placed upon being able
to compensate for capacity constraints through forward plan-
ning. In addition, supply chains and the availability and quality
B.65
Company-specific risks and opportunities
Risk category
Probability of occurrence
Impact
Opportunity category
Production and technology risks
Information technology risks
Personnel risks
Low
Low
Medium
Risks related to associated companies,
joint ventures and joint operations
Low
High
High
Low
Production and technology opportunities
Information technology opportunities
Personnel opportunities
Medium
Opportunities related to associated companies,
joint ventures and joint operations
Low
Impact
Low
–
–
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 151
Despite all precautionary measures, disturbances in informa-
tion processing and therefore negative impacts on the busi-
ness processes and on IT-based services cannot be completely
ruled out.
Due in particular to the changed risk situation relating to
cybercrime and hacker attacks, the possible impact of infor-
mation-technology risks has increased compared with the pre-
vious year from “Medium” to “High”.
Personnel risks and opportunities
The success of the Daimler Group is highly dependent on its
employees and their expertise. They are involved in their
respective activities and working processes with their ideas
and suggestions, and thus make significant contributions to
improvements and innovations every day.
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. Future success also depends on the extent to which
the Daimler Group succeeds over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise as well as
transparency with regard to the resources of the Daimler Group.
One focus of human resources management is the targeted
personnel development and further training of the workforce.
Employees benefit for example from the range of courses
offered by the Daimler Corporate Academy and from transpar-
ency in the context of performance management. In order to
remain successful as a company, management culture and
principles are being further developed in a Group-wide project.
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This issue is addressed by measures taken in
the area of generation management, which are intended to
counteract the effects of personnel bottlenecks by exerting an
influence on entrepreneurial activity and consequently on the
earnings of the Daimler Group.
Risks in the context of negotiations on collective bargaining
frameworks and the associated potential loss of production are
not to be expected to a large extent in Germany before 2020.
There is no segment-specific assessment of human-resources
risks because the described risks are not primarily related to
any specific business segment, but are valid for all segments in
the respective regions. Overall, the probability of occurrence
of personnel risks has increased compared to the previous year
from “Low” to “Medium”. Their possible impact remains
unchanged.
of products are continuously monitored within the context of
managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of safeguard-
ing production by securing the quantitative and qualitative
ability to deliver of the suppliers. Furthermore, by sourcing
components from other plants, potential bottlenecks can be
reduced and can lead to opportunities at the Daimler Trucks
division due to rising demand for heavy commercial vehicles.
Warranty and goodwill cases could arise in the Daimler Group
if the quality of the products does not meet the requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product
problems and product care. Quality problems with components
in vehicles from external suppliers can require technical
adjustments that can lead to considerable expenses. If such risks
occurred possible claims are examined and, if necessary, the
appropriate measures are initiated for the affected products. If
the high technical quality standards of purchased components
are not fulfilled, this can lead to Daimler asserting claims against
the respective supplier.
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared with the
previous year across all segments.
Information technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer bene-
fits and enterprise value. However, it also includes risks from
the increasing IT dependency of products and business and
production processes. In addition, specific risks exist due to
the use and availability of new technologies in connection with
digitization, which amongst others can affect the products,
their use, or business operations. In addition, risks from cyber-
crime and hacker attacks cannot be ruled out.
It is essential for the globally active group like Daimler that
information is available and can be exchanged in an up-to-date,
complete and correct form. Appropriately secured IT systems
and a reliable IT infrastructure must be used to protect informa-
tion. Risks must be identified and evaluated over the entire
lifecycle of applications and IT systems, and managed in line
with their criticality. Particular attention is paid to risks that
could result in the interruption of business processes due to the
failure of IT systems or which could cause the loss or corrup-
tion of data.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has defined various
preventive and corrective measures so that the related risks
are minimized and possible damage is limited. These measures
are continually adapted to changing circumstances. For exam-
ple, the Group minimizes potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and IT
systems designed for high availability. Emergency plans are
developed, employees are trained and sensitized, and further
technical and organizational precautions are taken in order
to maintain operating capability. Specific threats are analyzed
and countermeasures are coordinated at a central cyber secu-
rity center. The protection of products and services from dan-
ger caused by hacking and cybercrime is continually developed.
152 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risks and opportunities related to associated companies,
joint ventures and joint operations
Cooperation with partners in associated companies, joint ven-
tures and joint operations and other types of partnership is of
key importance for Daimler. Along with ensuring better access
to growth markets and new technologies, these shareholdings
and partnerships help to utilize synergies and improve cost
structures in order to successfully respond to the competitive
situation in the automotive industry. Through investments in
startups, Daimler promotes innovative approaches in many
areas of the Group.
The Daimler Group generally participates in the risks and
opportunities of associated companies, joint ventures and joint
operations in line with its ownership interest.
The remeasurement of an associated company, joint venture
or joint operation in relation to its carrying value can lead to risks
and opportunities for the segment to which it is allocated.
Furthermore, the business activities of an associated company,
joint venture or joint operation, or the disposal or acquisition
of an interest in such an entity, can result in financial obligations
or an additional financing requirement, but can also result in
potential opportunities, in connection with mobility services for
example. Such risks are also generally connected with startups
whose further development is not yet foreseeable. Risks from
associated companies, joint ventures or joint operations exist
in the Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Financial Services segments, as well as from
the associated companies, joint ventures and joint operations
directly allocated to the Group. All associated companies,
joint ventures and joint operations are subject to a monitoring
process so that, if required, decisions can be made on whether
or not measures can be promptly taken to support or ensure
their profitability. The recoverable value of investments is also
regularly monitored.
Risks and opportunities related to associated companies, joint
ventures and joint operations are unchanged compared with
the previous year.
Financial risks and opportunities
The following section deals with financial risks and opportunities
of the Daimler Group. Risks and opportunities can have a
negative or positive effect on the profitability, cash flows and
financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportunities
is presented in table B.66. The probability of occurrence
and impact of the financial risks and opportunities are essen-
tially unchanged from the previous year. Only the impact of
risks of limited access to the capital market have increased from
“Medium” to “High”.
In principle, the Group’s operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market price
changes can have a negative or positive influence on the
Group’s profitability, cash flows and financial position. Daimler
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financ-
ing activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
In addition, the Group is exposed to credit and country-related
risks, risks of restricted access to capital markets and risks
of early credit repayment requirements. As part of the risk man-
agement process, Daimler regularly assesses these risks by
considering changes in key economic indicators and market
information. Pension plan assets to cover retirement and
healthcare benefits (market-sensitive investments including
equities and interest-bearing securities) are not included in
the following analysis.
B.66
Financial risks and opportunities
Risk category
Exchange rate risks
Interest rate risks
Commodity price risks
Credit risks
Country risks
Risks of restricted access
to capital-market
Risks of early credit
repayment obligations
Risks relating to pension plans
Risks from changes in credit ratings
Probability of occurrence
Impact
Opportunity category
Low
Low
Low
Low
Low
Low
Low
Low
Low
High
Low
Low
Low
Low
High
Low
High
Low
Exchange rate opportunities
Interest rate opportunities
Commodity price opportunities
Credit opportunities
Country opportunities
Opportunities of restricted access
to capital-market
Opportunities of early credit
repayment obligations
Impact
High
Low
Low
–
–
–
–
Opportunities relating to pension plans
High
Opportunities from changes in credit ratings
Low
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 153
Exchange rate risks and opportunities
The Daimler Group’s global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations against the
euro of the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange
rate risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that
of the related costs (transaction risk). This applies in particular
to the Mercedes-Benz Cars division, as a major portion of its
revenue is generated in foreign currencies while most of its pro-
duction costs are denominated in euros. The Daimler Trucks
division is also exposed to such transaction risks, but to a lesser
degree because of its worldwide production network. Regularly
updated currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency for-
wards and options) in accordance with exchange rate expecta-
tions, which are continually reviewed, whereby both risks
and opportunities are limited. Any overcollateralization caused
by changes in exposure is generally reversed by suitable mea-
sures without delay. Exchange rate risks and opportunities also
exist in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the Group
outside the euro zone (translation risk); these risks are gener-
ally not hedged.
Interest rate risks and opportunities
Changes in interest rates can create risks and opportunities
for business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Financial Services. Term-congruent refi-
nancing is generally undertaken for the financial services busi-
ness. However, to a certain extent, the funding does not
match in terms of maturities and interest rates, which gives
rise to the risk of changes in interest rates. The funding activi-
ties of the industrial business and the financial services busi-
ness are coordinated centrally at Group level. Derivative inter-
est rate instruments such as interest rate swaps are used to
achieve the desired interest rate maturities and asset/liability
structures (asset and liability management).
Equity price risks and opportunities
The Group is subject to equity price risks in connection with its
listed associated companies and joint ventures. At December
31, 2018, the shares in listed companies that Daimler AG directly
holds are shares that are classified as long-term investments,
some of which are accounted for in the consolidated financial
statements using the equity method. The Group does not include
these investments in a market price risk analysis. The section
“Risks and opportunities related to associated companies, joint
ventures and joint operations” provides more information on
equity risks and opportunities.
Commodity price risks and opportunities
As already described in the section “Procurement market
risks and opportunities”, the Group’s business operations are
exposed to changes in the market prices of purchased parts
and raw materials. The Group addresses these procurement
risks by means of concerted commodity and supplier risk
management. Some of the derivative financial instruments are
used to reduce the Group’s market price risks related to the
purchase of certain metals.
Credit risks
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 148. Should defaults
occur, this would adversely affect the Group’s financial posi-
tion, cash flows and profitability. The limit methodology for
liquid funds deposited with financial institutions has been con-
tinually further developed in recent years. In connection with
investment decisions, priority is placed on the borrowers’ very
high creditworthiness and on balanced risk diversification.
Most liquid assets are held in investments with an external
rating of “A” or better.
Country risks
Daimler is exposed to country risks that primarily result from
cross-border financing or collateralization for Group compa-
nies or customers, from investments in subsidiaries, joint ven-
tures, and from cross-border trade receivables. Country risks
also arise from cross-border cash deposits with financial insti-
tutions. The Group addresses these risks by setting country
limits (e.g. for cross-border financing of customers and for hard-
currency portfolios from financial services companies) and
through investment-protection insurance against political risks
in high-risk countries. Daimler also has an internal rating
system that divides all countries in which it operates into risk
categories.
Risks of restricted access to capital markets
Daimler covers its refinancing needs, among other things, by
means of borrowing in the capital markets. Access to capital
markets in individual countries may be limited by government
regulations or by a temporary lack of absorption capacity. In
addition, pending legal proceedings as well as Daimler’s own
business policy considerations may temporarily prevent the
company from covering any liquidity requirements by means of
borrowing in the capital markets. The increased planned
refinancing volume compared with 2018 has also increased the
possible impact of the risk of limited access to the capital
market in 2019.
154 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Legal and tax risks
The Group continues to be exposed to legal and tax risks.
Provisions are recognized for those risks if and insofar as they
are likely to be utilized and the amounts of the obligations
can be reasonably estimated. No quantitative assessment of
these risks is carried out.
Legal risks
Regulatory Risks. The automotive industry is subject to
extensive governmental regulations worldwide. Laws in various
jurisdictions regulate occupant safety and the environmental
impact of vehicles, including emissions levels, fuel economy and
noise, as well as the emissions of the plants where vehicles
or parts thereof are produced. In case regulations applicable in
the different regions are not complied with, this could result
in significant penalties and reputational harm or the inability to
certify vehicles in the relevant markets. The cost of compli-
ance with these regulations is significant, and in this context,
Daimler expects a significant increase in such costs.
Risks from legal proceedings in general. Daimler AG and its
subsidiaries are confronted with various legal proceedings,
claims as well as government investigations and orders (legal
proceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, warranty claims, environmental matters, antitrust matters
(including actions for damages) as well as shareholder litiga-
tion. Product-related litigation involves claims alleging faults in
vehicles, some of which have been made as class actions. If
the outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory
and punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Some
of these proceedings may have an impact on the Group’s repu-
tation.
Risks from legal proceedings in connection with diesel
exhaust gas emissions – Governmental proceedings. Cur-
rently, Daimler is subject to governmental information requests,
inquiries, investigations, administrative orders and proceed-
ings relating to environmental, securities, criminal, antitrust and
other laws and regulations in connection with diesel exhaust
emissions.
Risks of early credit repayment obligations
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongo-
ing legal proceedings. It is to be expected that the resulting
refinancing requirement will have to be concluded at a higher
cost.
Further information on financial risks, risk-limiting measures and
the management of these risks is provided in E Note 33 of
the Notes to the Consolidated Financial Statements. Information
on the Group’s financial instruments is provided in E Note 32
of the Notes to the Consolidated Financial Statements.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations
less plan assets constitutes the carrying amount or funded
status of those employee benefit plans. The measurement
of pension obligations and the calculation of net pension
expense are based on certain assumptions. Even small changes
in those assumptions particularly change in the discount
rate have a negative or positive effect on the funded status
and Group equity in the current financial year, and lead to
changes in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined to
a large degree by developments in the capital markets. Unfa-
vorable or favorable developments, especially relating to
equity prices and fixed-interest securities, reduce or increase
the carrying value of plan assets. A change in the composition
of plan assets can also have a positive or negative impact
on the fair value of plan assets. The broad diversification of
investments, the selection of asset managers on the basis of
quantitative and qualitative analyses, and the ongoing moni-
toring of returns and risks contribute to a reduction in the
investment risk. The structure of pension obligations is taken
into consideration with the determination of the investment
strategy for the plan assets in order to reduce fluctuations of
the funded status. Further information on the pension plans
and their risks is provided in E Note 22 of the Notes to the
Consolidated Financial Statements.
Risks and opportunities from changes in credit ratings
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating agencies,
and thus to Daimler’s creditworthiness. Downgrades could
have a negative impact on the Group’s financing if such a down-
grade leads to an increase in the costs for external financing or
restricts the Group’s ability to obtain financing. A credit rating
downgrade could also discourage investors from investing in
Daimler AG. A risk to the credit rating of the Daimler Group can
also arise if the earnings and cash flows from the anticipated
Group’s growth cannot be realized.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 155
Several federal and state authorities and other institutions world-
wide have inquired about and/or are conducting investigations
and/or proceedings, and/or have issued administrative orders.
These particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or Daimler’s
interaction with the relevant federal and state authorities as
well as related legal issues and implications, including, but not
limited to, under applicable environmental, securities, criminal
and antitrust laws. These authorities include, amongst others,
the U.S. Department of Justice (“DOJ”), which has requested
that Daimler conduct an internal investigation, the U.S. Environ-
mental Protection Agency (“EPA”), the California Air Resources
Board (“CARB”) and other US state authorities, the U.S. Securi-
ties and Exchange Commission (“SEC”), the European Commis-
sion, with which Daimler has filed a leniency application and
which meanwhile has opened a formal investigation into possi-
ble collusion on clean emission technology, as well as national
antitrust authorities and other authorities of various foreign
states as well as the German Federal Financial Supervisory
Authority (“BaFin”), the German Federal Ministry of Transport
and Digital Infrastructure (“BMVI”) and the German Federal
Motor Transport Authority (“KBA”). The Stuttgart district attor-
ney’s office is conducting criminal investigation proceedings
against Daimler employees on the suspicion of fraud and crimi-
nal advertising, and, in May 2017, searched the premises of
Daimler at several locations in Germany. Further, Daimler com-
prehensively responded to the diesel emissions committee of
inquiry of the German Parliament in the previous legislative
period. Daimler continues to fully cooperate with the authorities
and institutions. Irrespective of such cooperation, it is possible
that further regulatory, criminal and administrative investiga-
tive and enforcement actions and measures relating to Daimler
and/or its employees will be taken or administrative orders will
be issued, such as subpoenas, i.e. legal instructions issued
under penalty of law in the process of taking evidence, or other
requests for documentation, testimony or other information,
further search warrants, a notice of violation or an increased
formalization of the governmental investigations, coordination
or proceedings, including the resolution of proceedings by way
of a settlement. Additionally, further delays in obtaining regula-
tory approvals necessary to introduce new or recertify existing
vehicle models could occur.
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz Diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary by a court of law. In the
course of its regular market supervision, KBA routinely con-
ducts further reviews of Mercedes-Benz vehicles. It cannot
be ruled out that in the course of further investigations, KBA
will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration
stop in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meantime
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions.
In January 2019, another vehicle manufacturer reached civil
settlements with US and state authorities, as well as with vehi-
cle customers. Although the manufacturer did not admit liability,
the authorities maintain the position that the manufacturer
included undisclosed Auxiliary Emission Control Devices (AECDs)
in its diesel vehicles, apparently including functionalities that
are common in diesel vehicles, and that certain of these AECDs
are illegal defeat devices. As part of these settlements, the
manufacturer will, among other things, pay civil penalties, under-
take a recall of affected vehicles, provide extended warranties,
undertake a nationwide mitigation project and make other pay-
ments. The manufacturer will furthermore provide payments
to current and former diesel vehicle owners as part of a class
action settlement.
In light of these matters and in light of the ongoing governmen-
tal information requests, inquiries, investigations, administrative
orders and proceedings, as well as our own internal investiga-
tions and the technical Compliance Management System (tCMS),
which is and continues to be implemented to address the
specific risks associated with the product development process
throughout the group and is designed particularly to also pro-
vide guidance – taking into account technical and legal aspects –
with regard to the complex interpretation of regulations, it can-
not be ruled out that authorities will reach the conclusion that
other passenger cars and/or commercial vehicles with the brand
name Mercedes-Benz or other brand names of the group have
impermissible functionalities and/or calibrations. Furthermore,
the authorities have increased scrutiny of Daimler’s processes
regarding running-change, field-fix and defect reporting as well
as other compliance issues. The inquiries, investigations, legal
actions and proceedings as well as the replies to the governmen-
tal information requests, the objection proceedings against
KBA’s administrative orders and our internal investigations are
still ongoing and open; hence, Daimler cannot predict the out-
come at this time. If these or other information requests, inqui-
ries, investigations, administrative orders and proceedings
result in unfavorable findings, an unfavorable outcome or other-
wise develop unfavorably, Daimler could be subject to signifi-
cant monetary penalties, fines, remediation requirements, fur-
ther vehicle recalls, further registration and delivery stops,
process improvements, mitigation measures and the early
termination of promotional loans, and/or other sanctions,
measures and actions, including further investigations and/or
administrative orders by these or other authorities and additional
proceedings. The occurrence of the aforementioned events in
whole or in part could cause significant collateral damage
including reputational harm. Further, due to negative determi-
nations or findings with respect to technical or legal issues
by one of the various governmental agencies, other agencies
could also adopt such determinations or findings, even if such
determinations or findings are not within the scope of such
authority’s responsibility or jurisdiction. Thus, a negative deter-
mination or finding in one proceeding carries the risk of being
able to have an adverse effect on other proceedings, also poten-
tially leading to new or expanded investigations or proceedings.
156 B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In addition, Daimler’s ability to defend itself in proceedings
could be impaired by unfavorable findings, results or develop-
ments in any of the information requests, inquiries, investiga-
tions, administrative orders, legal actions and/or proceedings
discussed above.
Risks from legal proceedings in connection with diesel
exhaust gas emissions – Court proceedings. A consumer
class-action lawsuit is pending in the United States in which
it is alleged that Daimler AG and MBUSA conspired with Robert
Bosch LLC and Robert Bosch GmbH (collectively, “Bosch”)
to deceive US regulators and consumers. A separate lawsuit was
filed in January 2019 by the State of Arizona alleging that
Daimler AG and MBUSA deliberately deceived consumers in
connection with the advertising of Mercedes-Benz diesel
vehicles. Another consumer class-action lawsuit against Daimler
AG and other companies of the Group containing similar
allegations was filed in Canada in April 2016. A similar class
action was filed in the United States in July 2017, but in
December 2017, the parties stipulated to dismiss that lawsuit
without prejudice. It may be filed again under specific con-
ditions. Furthermore, class actions have been filed in the United
States and Canada alleging anticompetitive behavior relating
to vehicle technology, costs, suppliers, markets, and other com-
petitive attributes, including diesel emissions control technol-
ogy. A securities class action lawsuit is pending in the United
States on behalf of investors in Daimler AG American Deposi-
tary Receipts which alleges that the defendants made materially
false and misleading statements about diesel emissions in
Mercedes-Benz vehicles. Daimler AG and the respective other
affected companies of the Group regard these lawsuits as
being without merit and will defend against the claims. Further
details please see E Note 30 of the Notes to the Consoli-
dated Financial Statements.
In Germany, lawsuits by customers alleging violations of war-
ranty and tort laws as well as lawsuits by investors alleging the
violation of disclosure requirements are pending. At the end
of December 2018, the regional court of Stuttgart published in
the claims register an investor’s motion to initiate a model
proceeding in accordance with the Act on Model Proceedings
in Capital Markets Disputes (KapMuG) alleging the violation
of ad hoc disclosure requirements. Currently, no model pro-
ceeding is pending. Daimler AG also regards these lawsuits
as being without merit and will defend against the claims.
If court proceedings have an unfavorable outcome for Daimler,
this could result in significant damages and punitive damages
payments, remedial works or other cost-intensive measures.
Court proceedings can in part also have an adverse effect on
the reputation of the Group.
Furthermore, Daimler’s ability to defend itself in the court pro-
ceedings could be impaired by unfavorable findings, results
or developments in any of the governmental proceedings dis-
cussed above.
Risks from other legal proceedings. Following the settlement
decision by the European Commission adopted on July 19, 2016
concluding the trucks antitrust proceedings, Daimler AG faces
customers’ claims for damages to a considerable degree.
Respective legal actions, class actions and other forms of legal
redress have been initiated in various states in and outside
of Europe and should further be expected. Daimler takes appro-
priate legal remedies to defend itself.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
It cannot be ruled out that the regulatory risks and risks from
legal proceedings discussed above individually or in the
aggregate may materially adversely impact our profitability and
financial position.
Although the final result of any such litigation may influence
the Group’s earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group’s financial position.
Further information on legal proceedings is provided in
E Note 30 of the Notes to the Consolidated Financial State-
ments.
Tax risks
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities – especially in the field of cross-border
transactions - may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group’s
net profit and cash flows.
Any changes or interventions by the fiscal authorities are con-
tinuously monitored by the tax department and measures are
taken if required.
Non-financial risks
As a company with worldwide activities, Daimler AG is at
the focus of public interest. In this context, the relevant stake-
holders’ perception is of crucial importance and can affect
the reputation of the entire Daimler Group see E page 202
»Non-Financial Report«. A key role in the public’s current
perception is played by the company’s approach to environmen-
tal, employee and social matters, fighting corruption and
bribery, and respecting human rights.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 157
how it succeeds in offering up-to-date and technologically
leading products in the markets, and how business operations
are conducted under the given conditions. Furthermore, the
secure handling of sensitive data is a precondition for main-
taining business relationships with customers and suppliers in
a trusting and cooperative environment.
Compared with the previous year, IT risks have increased from
the changed situation in relation to cyber crime and hacker
attacks. In addition, increasing trade-restrictive and protection-
ist tendencies worldwide have led to a higher probability of
occurrence of risks from political and legal frameworks and,
among other things, to a reduction in market opportunities.
However, the overall view of the Daimler Group’s risk and
opportunity situation remains essentially unchanged. No risks
are recognizable – neither on the balance sheet date nor at
the time of preparing the consolidated financial statements –
that either alone or in combination with other risks could
endanger the continued existence of the Group. As consider-
able economic and industry risks still exist, setbacks on the
way to sustainably achieving growth and profitability targets
cannot be ruled out. New competitors in the IT sector for
example and the Group’s current strategy, among other things
in connection with electric mobility, pose further challenges
for the Daimler Group and are connected with risks and oppor-
tunities. By effectively and flexibly focusing production and
sales activities on changing conditions, the divisions of the
Daimler Group strive to utilize the opportunities offered so
that they can fulfill or surpass their respective targets and
plans. As far as can be influenced by the Daimler Group and
provided that the required measures are financially viable, the
Group takes appropriate action to realize those opportunities.
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continually monitored and further developed.
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement
of the NEDC (New European Driving Cycle) with the new
measuring method WLTP (Worldwide Harmonized Light Vehicles
Test Procedure), the fleet CO2 average has worsened. In light
of today’s knowledge, this would make it more difficult to achieve
the CO2 targets as of 2020. Furthermore, there has been
some pressure in the past two years on diesel technology, which
is important for compliance with the challenging CO2 targets
in the EU, because of NOX levels exceeding the limits at some
measuring stations in cities. The current public focus on
vehicle emissions as well as possible certifications stops and
recalls jeopardize the reputation of the automotive industry
and in particular of the diesel engine, and could result in dam-
age to Daimler’s reputation. With the development of a new
generation of diesel engines, Daimler has developed a convinc-
ing technical solution for reducing NOX emissions in real
driving (real driving emissions (RDE)) and will successively intro-
duce this innovation throughout the product range. In general,
legal risks – for example in connection with antitrust investiga-
tions – as well as possible legal and social violations by part-
ners and suppliers can have a negative impact on the reputation
of the entire Daimler Group. As one of the fundamental princi-
ples of business activity, Daimler places particular priority –
also in the selection of partners and suppliers – on adherence
to applicable laws and ethical standards.
Overall assessment of the risk
and opportunity situation
The overall view of the Group’s risk and opportunity situation is
the sum of the described individual risks and opportunities of
all risk and opportunity categories for the divisions, the corpo-
rate functions and the legal entities.
As well as the risk categories described above, unpredictable
events such as natural disasters, political instability or terrorist
attacks can disturb production and business processes. Emer-
gency plans are therefore prepared to allow the resumption
of business operations as soon as possible. As far as possible,
and commensurate to the level of individual risks, precaution-
ary measures are taken and insurance policies are arranged.
Disruptions of business processes can also occur in connec-
tion with projects as a result of system changes. Risks relating
to compliance are also included in the risk management pro-
cess and are continually monitored. Regular training courses
are carried out to prevent compliance violations. In addition to
the described risks, other risks can occur that adversely affect
the public perception and therefore the reputation of the
Daimler Group. Public interest is focused on Daimler’s position
with regard to individual issues in the fields of sustainability,
integrity and social responsibility. Furthermore, customers,
business partners and capital markets are interested in how
the Group reacts to the technological challenges of the future,
158 B | COMBINED MANAGEMENT REPORT | OUTLOOK
Outlook
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board in December 2018.
That planning is based on the premises we set regarding the
economic situation and the development of automotive markets.
It involves assessments made by Daimler, which are based
on analyses by various renowned economic research institutes,
international organizations and industry associations, as well
as on the internal market analyses of our sales companies. The
prospects for our future business development as presented
here reflect the targets of our divisions as well as the opportuni-
ties and risks presented by the anticipated market conditions
and the competitive situation during the planning period. Against
this backdrop, we adjust our expectations for business devel-
opment to reflect updated forecasts for the development of the
various automotive markets. The statements made below are
based on the facts known to us at the beginning of 2019.
For forecasting the profitability of our divisions, as of Annual
Report 2018, we have changed over to using return on
sales instead of EBIT for the automotive divisions and return on
equity for Daimler Financial Services. This creates a link
between our expectations for the current financial year and our
strategic targets. Divisional return on sales and return on
equity will be forecast with the use of bandwidths. Furthermore,
we have adjusted the sensitivities for forecasting the unit
sales and revenue of the divisions and the Group, and for fore-
casting Group EBIT.
Our assessments for the year 2019 are based on the assumption
of generally stable economic conditions and the expectation
that the upward development of the global economy will continue.
We also assume that worldwide demand for motor vehicles
will be roughly of the magnitude of the previous year. The devel-
opment we have outlined is subject to various opportunities
and risks, which are explained in detail in the Risk and Oppor-
tunity Report. E pages 143 ff
The world economy
At the beginning of 2019, the world economy is displaying rather
weaker growth than in the previous year, but is generally con-
tinuing its solid development. We assume that this moderate
slowdown will continue as the year progresses. Growth pros-
pects for the industrialized countries in particular are rather less
positive than in the previous year, while the economies of the
emerging markets should develop at a similar rate overall.
Most economic indicators suggest that the economy of the Euro-
pean Monetary Union will experience a further slowdown in
growth in the year 2019. If domestic demand remains robust, a
lower contribution from foreign trade should lead to a growth
rate of only about 1.5%. Under these conditions, the European
Central Bank will continue to follow its announced course and
is unlikely to raise key interest rates; if it does, then probably not
before the fall of 2019. The outlook for the German economy
is also rather less positive and also here, we expect a further
growth slowdown to less than 1.5%. Because the exact proce-
dure and economic effects of the United Kingdom’s imminent
withdrawal from the European Union are still difficult to assess,
the British economy must also be expected to develop rather
moderately in 2019. But despite the high level of uncertainty, the
majority of analysts do not expect an economic slump.
In the United States, the leading indicators suggest that the
economy’s solid upswing should continue. However, growth
is likely to be somewhat weaker than in the previous year, as
the positive impetus from the tax cuts is coming to an end.
Thanks to stable domestic demand, moderate inflation and low
unemployment, the US Federal Reserve will probably be able
to maintain its course of slightly restrictive monetary policy with
further moderate interest-rate increases. All in all, total eco-
nomic output should grow by just below 2.5%.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 159
In North America, we assume that the truck market in weight
classes 6 to 8 will maintain the high level of the previous year.
Despite a certain weakening of overall economic growth, we
expect demand in the EU30 region (European Union, Switzerland
and Norway) to remain at the high level of 2018. In Brazil, the
market is expected to continue its recovery with a significant
increase in truck sales. However, the Turkish market is likely
to shrink again significantly due to the country’s economic
recession. We anticipate a slight increase in demand for trucks
in Russia.
The most important Asian markets from Daimler’s perspective
are likely to present a varied picture in 2019. In the Japanese
market for light-, medium- and heavy-duty trucks, we anticipate
a slight market decrease at an ongoing solid level. We expect
a stable development of the Indonesian truck market. In India,
following strong growth in 2018, demand for medium- and
heavy-duty trucks should remain at the same level in 2019. In
the Chinese market, a significant correction is to be expected
following the extremely high volume of the previous year.
In the EU30 region in 2019, we expect a market volume at the
prior-year level in the combined segment of mid-size and large
vans, as well as in the market for small vans and in the segment
of mid-size pickups. In the United States, demand for large vans
should be slightly stronger than in the previous year. The mar-
ket for large vans in Latin America should continue its recovery
in 2019. In China, we expect slight growth in the market we
address there for mid-size vans.
We expect slight growth in the market volume for buses in the
EU30 region. In Latin America (excluding Mexico), we assume
that the situation will improve due to the slight market recovery
in Brazil. But growth in Latin America continues to be held back
by the economic crisis in Argentina.
The growth prospects of the Japanese economy also remain
stable at a low level. A solid outlook for domestic demand
should mitigate external risks, so that growth in gross domes-
tic product (GDP) of just under 1% can again be expected.
In China, the gradual slowdown in growth of recent years is set
to continue this year. In particular, the uncertainties surround-
ing the trade conflict with the United States should continue
to have a negative impact. On the other hand, the announced
government stimuli should stabilize the economy. Overall, a
still solid increase in gross domestic product of just over 6% is
to be expected. While the economies of Central and Eastern
Europe are unlikely to match their robust growth of 2018, slight
acceleration of growth is anticipated for the South American
economic region. With GDP growth expected to be just below
2%, however, South America remains below its potential. The
ongoing comparatively low level of raw-material prices, espe-
cially of oil, is unlikely to deliver any support for the countries
of the Middle East; their growth rates will probably remain sig-
nificantly below average for this region at less than 2%. Overall,
the emerging markets should achieve economic growth in the
magnitude of 4 to 4.5% in 2019, as in the previous year, thus
developing along their long-term trend.
Overall, the world economy should grow in 2019 by rather less
than 3%. Although this is an ongoing solid rate of expansion, it
is significantly slower growth than in the previous year.
Automotive markets
In 2019, worldwide demand for cars should remain roughly at
the level of the previous year. The European market is likely
to be of the magnitude of 2018. In Western Europe, we expect
demand to remain more or less stable in view of the above-
average market level that has now returned, and Germany, the
region’s largest single market, should also display a stable
development at the prior-year level. The car market of Eastern
Europe is also expected to maintain its prior-year volume.
The Russian market should continue to develop comparatively
favorably with a slight increase, while a sharp decline is
expected in Turkey.
The US market for cars and light trucks is likely to contract
slightly from a high level. Following the weaker level of the pre-
vious year, the Chinese car market should stabilize in 2019
and maintain its volume at close to the prior-year level. Demand
in India, however, should grow moderately. In Japan, we
expect the market volume to remain more or less unchanged.
Demand for medium- and heavy-duty trucks should vary in
the regions relevant to us, but we anticipate the continuation
of favorable market conditions.
160 B | COMBINED MANAGEMENT REPORT | OUTLOOK
Unit sales
Mercedes-Benz Cars aims to continue along its growth path in
2019. We intend to slightly increase our total unit sales, thus
reaching a new record level. The basis for this, and for ongoing
sales success worldwide, is our attractive and innovative
model portfolio.
Mercedes-Benz intends to launch more than a dozen new and
upgraded automobiles in 2019. There should be a positive
impact on unit sales in particular from models such as the new
B-Class, the A-Class sedan and the eighth model in the com-
pact-car segment. We are also well positioned in 2019 in the
growing segment of sports utility vehicles. The new GLE and
the new GLS should make a contribution here, as well as the
popular and upgraded GLC. Mercedes-AMG should guarantee
our success in the high-performance segment once again in the
year 2019: More and more customers are fascinated by the
broad and appealing range of automobiles offered by our sports-
car and high-performance brand, which we are continuously
developing.
We are systematically expanding our worldwide production
network for electric mobility. Under the product and technol-
ogy brand EQ, which stands for “Electric Intelligence,” we
will offer not only vehicles but also services in connection with
electric mobility. By the year 2022, we want to electrify the
entire portfolio of Mercedes-Benz Cars. Our goal is to offer our
customers various electrified alternatives in each segment –
from the smart to the compact cars to the large SUVs. We plan
to have a total of more than 130 electrified models in our
portfolio by the year 2022. This will include all-electric vehicles,
plug-in hybrids and models with 48-volt technology. By the
year 2025, depending on the development of the public infra-
structure and on customer preferences, 15 to 25% of the
cars we sell are to be purely electric. To achieve that, we plan
to launch more than ten all-electric cars on the market.
Following the changeover in the United States and Canada, the
smart brand will be based solely on electric drive by the year
2020. The battery-electric smart models are making the entry
into electric mobility more attractive than ever. They combine
the agility of a smart with locally emission-free driving – the ideal
combination for urban mobility.
Daimler Trucks anticipates further growth in total unit sales in
2019, with a slight increase compared with the previous year.
In the NAFTA region, we expect to be able to increase our sales
again slightly compared with the previous year. In Brazil, we
expect our sales volumes to significantly exceed the previous
year’s low level. In the EU30 region, our sales should be
slightly above the prior-year level. In India, we once again antici-
pate a significant increase in unit sales for 2019. In Japan
and Indonesia, we expect to achieve approximately the same
sales volumes as in the previous year. After the considerable
economic uncertainty of the past year, we anticipate a slight
decrease in unit sales in Turkey.
Mercedes-Benz Vans plans to significantly increase its unit
sales in the year 2019. Growth is expected to be strong in the
United States. We anticipate slight growth in the EU30 region.
Sales growth in the year 2019 should be helped in particular by
the new Sprinter, which was launched in mid-2018.
Daimler Buses assumes it will be able to defend its market
leadership in its most important traditional core markets for
buses above 8 tons. We anticipate significant growth in total
unit sales in 2019. We assume that unit sales will increase
slightly in the EU30 region and significantly in India. Unit sales
in Latin America (excluding Mexico) are expected to be at the
prior-year level.
Daimler Financial Services aims to achieve ongoing growth
in the coming years. In 2019, we expect further growth in contract
volume and a slight increase in new business. We are opening
up new market potential through more flexible leasing and rental
products with the option of moving to new vehicles at shorter
intervals. We intend to generate additional growth by expanding
our online sales channels and with telematics-based products
for insurance and fleet management. We continue to see good
growth opportunities also in the mobility segment.
On the basis of our assumptions concerning the development
of automotive markets and the divisions’ planning, we expect the
Daimler Group to slightly increase its total unit sales in 2019.
Revenue and earnings
We assume that the revenue of the Daimler Group will also
increase slightly in 2019, as a result of the overall positive
development of unit sales in the automotive divisions. Exchange-
rate effects are likely to have a rather negative impact on the
development of revenue in the year 2019. This applies above all
to our business in China, as well as in various emerging mar-
kets and in the United Kingdom.
Our divisions have very attractive product ranges, which have
been expanded and systematically renewed in recent years. We
assume that Daimler will profit from this fact also under par-
tially difficult market conditions, and will be able to strengthen
or defend its position in major markets. At Mercedes-Benz
Cars, additional revenue growth should be ensured in 2019 above
all by the new A-Class and B-Class, and by the G-Class and
the GLE. On the other hand, expected exchange-rate develop-
ments and lifecycle effects for some car models as well
as a changed sales structure will have a dampening effect on
revenue. Overall, Mercedes-Benz Cars anticipates a slight
increase in revenue in 2019. Due to generally favorable market
conditions and positive sales expectations, the Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses divisions plan to
achieve significant revenue growth. Daimler Financial Services
anticipates a slight increase.
The growth in unit sales and revenue that we anticipate should
have a generally positive impact on earnings in 2018. We have
laid the foundations for a lasting high level of earnings with
various programs for improved profitability, which we already
implemented in the years 2013 to 2015. Since then, we have
continuously been taking further measures in all divisions for
B | COMBINED MANAGEMENT REPORT | OUTLOOK 161
the long-term and structural optimization of our business sys-
tem. At Mercedes-Benz Cars, for example, we aim to achieve
efficiency improvements in the context of the F4L (Fit for Lead-
ership) program in an amount of €4 billion by 2025. Daimler
Trucks is also working continuously on efficiency improvements.
In combination with the cost optimizations we have so far
planned and partially already implemented, we have achieved
profit-effective improvements for Daimler Trucks in an amount
of €1.4 billion, which will become fully effective in the year
2019.
We are standardizing and modularizing our production pro-
cesses throughout the Group. In this context, we are making
intelligent use of vehicle platforms, allowing us to achieve
further cost advantages. In parallel, we are pushing forward
with digital connectivity in all divisions and at all stages of
the value chain – from development to production to sales and
service. In this way, we are opening up additional scope to
become even faster, more flexible and more efficient – to the
benefit of our customers.
The return on equity expected at Daimler Financial Services on
the one hand takes into consideration significant positive effects
on assets and earnings from the planned merger of the mobil-
ity services of Daimler and BMW. On the other hand, we expect
the division’s earnings to be reduced by the normalization of
credit-risk costs and further investment in advancing digitization
and mobility services. Further growth in contract volume
should have a positive impact on earnings.
Free cash flow and liquidity
The generally moderate development of earnings in the auto-
motive divisions will affect the free cash flow of the industrial
business. There will be a negative effect from the continuing
high advance expenditure for new products and technologies.
In addition, there will be costs for Project Future for the imple-
mentation of the new Group structure. Under these conditions,
we assume that the free cash flow of the industrial business
should be slightly higher than in the previous year.
However, earnings will be reduced by the continuation of very
high expenditure: for our model offensive, for innovative
technologies (especially for reducing fuel consumption and for
electrification), for the digitization of our products and pro-
cesses, and for the expansion and modernization of our world-
wide production capacities. Furthermore, rising raw-material
prices are leading to a significant increase in material costs,
and exchange-rate effects are also likely to be negative overall.
Another factor is that for the year 2019, a mid-three-digit
million amount is planned at Group level for the implementation
of the new corporate structure “Project Future”. E page 71
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions,
we assume, however, that Group EBIT in 2019 will be slightly
above the level of the previous year. It will also include signifi-
cant positive effects on assets and earnings that we expect
at the Daimler Financial Services division from the merger of
its mobility services with those of the BMW Group.
For the year 2019, we aim to have liquidity available in a volume
appropriate to the general risk situation in the financial mar-
kets and to Daimler’s risk profile. When measuring the level of
liquidity, we give due consideration to possible refinancing
risks caused for example by temporary distortions in the finan-
cial markets. We continue to assume, however, that we will
have very good access to the capital markets and the bank mar-
ket also in the year 2019. We aim to cover our funding needs
in the planning period primarily by means of bonds, commercial
paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans from
globally and locally active banks. In view of our strong credit-
worthiness, we anticipate slightly less attractive conditions in
2019, despite the normalization of the liquidity situation on
international capital markets after the end of the central banks’
bond-buying programs in the United States and Europe. An
additional goal is to continue securing a high degree of financial
flexibility.
Dividend
At the Annual Shareholders’ Meeting on May 22, 2019, the
Board of Management and the Supervisory Board will propose
the payment of a dividend of €3.25 per share for the year
2018 (prior year: €3.65). This represents a total distribution of
€3.5 billion (prior year: €3.9 billion). In line with a sustainable
dividend policy, Daimler sets the dividend based on a distribution
ratio of 40% of the net profit attributable to Daimler shareholders.
The individual divisions have the following expectations for
returns in 2019:
Mercedes-Benz Cars: return on sales of 6% to 8%
Daimler Trucks: return on sales of 7% to 9%
Mercedes-Benz Vans: return on sales of 5% to 7%
Daimler Buses: return on sales of 5% to 7%
Daimler Financial Services: return on equity of 17% to 19%
At Mercedes-Benz Cars, positive effects will result from the
anticipated growth in unit sales. There will be negative effects,
however, from currency exchange rates and the continuation
of very high expenditure for new technologies and vehicles. In
addition, rising raw-material prices will lead to a significant
increase in material costs.
Daimler Trucks, Mercedes-Benz Vans and Daimler Buses should
profit from rising unit sales and the efficiency-enhancing
measures. A negative impact is likely also in these divisions from
the development of prices in the raw-material markets. Fur-
thermore, earnings at Daimler Trucks are likely to be impacted
by higher expenditure for new technologies and future Products.
162 B | COMBINED MANAGEMENT REPORT | OUTLOOK
Investment
Research and development
In order to achieve our ambitious growth targets, we will sys-
tematically expand our product range in the coming years.
At the same time, we want to be able to play a leading role in the
far-reaching technological transformation of the automotive
industry. This applies in particular to the increasing electrifica-
tion of our product portfolio and to the digital connectivity
of our products and processes along the entire value chain. By
intelligently connecting the constantly growing volumes of
data, we will create efficiency advantages, improve our product
quality and facilitate the ongoing flexibilization of the produc-
tion process. Against this background, we intend to maintain our
investment in property, plant and equipment at a very high
level, although there is likely to be a slight decrease in compar-
ison to the year 2018.
Investment in property, plant and equipment at Mercedes-
Benz Cars is likely to reach a similarly high level in 2019 as
in the previous year. This is primarily due to the ongoing prod-
uct offensive. The most important projects include the new
models of the compact class, the C-Class and the S-Class, the
new SUVs (GLE and GLS), and new engines and transmissions.
Substantial investment is planned also for the realignment of
our German production sites, for the expansion of our inter-
national production network, and for the worldwide production
network for electric mobility. Furthermore, the division is
making substantial investments in the technological CASE areas
of the future (Connected, Autonomous, Shared & Services,
Electric). Daimler Trucks will mainly invest in 2019 in new prod-
ucts and successor generations for existing products, global
component projects and the optimization of its worldwide pro-
duction network. At Mercedes-Benz Vans, the focus of
capital expenditure will be on production of the new Sprinter
in Düsseldorf, North Charleston and Argentina, and on the
further development of the V-Class and Vito. Key projects at
Daimler Buses are improvements in the production network
and advance expenditure for new models, in particular for an
electrically powered city bus.
With our research and development activities, our goal is to
further strengthen Daimler’s competitive position against
the backdrop of upcoming technological challenges. With new
and attractive products, we want to inspire our customers
and utilize the growth opportunities offered by worldwide auto-
motive markets. We are increasingly focusing on the strategic
areas for the future of connectivity, automated and autonomous
driving, flexible use and services, and electric drive (CASE).
We aim to occupy a leading position in these areas, both indi-
vidually and by linking them up intelligently. In order to achieve
our goals, we will maintain our total expenditure for research
and development in 2019 at the very high level of the previous
year. At Mercedes-Benz Cars, a large part of that expenditure
will flow into the renewal of the product portfolio. The division’s
most important projects are the successor models for the
C-Class, the S-Class and the new compact cars, as well as
the expansion of the model range of the EQ product and tech-
nology brand. We are also working hard on new, low-emission
combustion engines, electric mobility, the connectivity of
our vehicles, and innovative safety technologies for automated
and autonomous driving. The topics of electric mobility, con-
nectivity and automated driving will play an important role also
at Daimler Trucks. Other key areas are successor generations
for existing products, fuel efficiency and emission reductions, as
well as tailored products and technologies for important growth
markets. Key projects at Mercedes-Benz Vans are the successor
generation of the Sprinter and the further development of the
Vito and the V-Class. Furthermore, Mercedes-Benz Vans is push-
ing forward with the electrification of its commercial model
series. Another important topic is the connectivity of products
and processes, especially the innovative connectivity solution,
Mercedes PRO. The Daimler Buses division is focusing its
development activities on new products, compliance with future
emission standards and further reductions in fuel consump-
tion. An important role is also played by alternative drive systems,
especially electrification, and additional pioneering projects
relating to automation functions and autonomous driving.
The workforce
Due to the growth in unit sales and revenue we anticipate, pro-
duction volumes are likely to continue rising in 2019. At the
same time, the efficiency-enhancing measures we have imple-
mented in recent years at all divisions are now taking effect.
The medium- and long-term measures we have taken for struc-
tural improvements in our business processes should facilitate
further efficiency progress. Against this backdrop, we assume
that we will be able to achieve our growth targets with only
slight workforce growth. Additional jobs will be created in par-
ticular through the expansion of our international production
network, in the area of research and development, and in con-
nection with the technological areas of the future, especially
electric mobility and digitization. Companies that we operate
together with Chinese partners and whose employees are
not included in the figures for the Daimler Group are also likely
to recruit additional employees.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 163
Forward-looking statements
This document contains forward-looking statements that reflect our current
views about future events. The words “anticipate,” “assume,” “believe,”
“estimate,” “expect,” “intend,” “may,” “can,” “could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, acts of terrorism, political unrest, armed conflicts,
industrial accidents and their effects on our sales, purchasing, production
or financial services activities; changes in currency exchange rates and tariff
regulations; a shift in consumer preferences towards smaller, lower-margin
vehicles; a possible lack of acceptance of our products or services which lim-
its our ability to achieve prices and adequately utilize our production capaci-
ties; price increases for fuel or raw materials; disruption of production due to
shortages of materials, labor strikes or supplier insolvencies; a decline in
resale prices of used vehicles; the effective implementation of cost-reduction
and efficiency-optimization measures; the business outlook for companies
in which we hold a significant equity interest; the successful implementation
of strategic cooperation and joint ventures; changes in laws, regulations
and government policies, particularly those relating to vehicle emissions, fuel
economy and safety; the resolution of pending government investigations
or of investigations requested by governments and the conclusion of pending
or threatened future legal proceedings; and other risks and uncertainties,
some of which we describe under the heading “Risk and Opportunity Report”
in this Annual Report. If any of these risks and uncertainties materialize or
if the assumptions underlying any of our forward-looking statements prove to
be incorrect, the actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obliga-
tion to update these forward-looking statements since they are based solely
on the circumstances at the date of publication.
Overall statement on future development
Although the conditions for our business at the beginning of 2019
are less favorable than in the previous year, Daimler continues
to be on a stable growth path. In view of the challenging environ-
ment and the expected changes in mobility, we will continue
to implement our strategy consistently in the coming years. We
are focusing even more on our customers and thus creating
the basis for further growth.
– We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups, utilizing additional market
potential and strengthening our market position worldwide.
With the efficiency programs that have been implemented
in all divisions in recent years, we have improved our cost
structures on a sustained basis and thus laid the foundations
for a high level of profitability. We are currently taking fur-
ther measures in all divisions for the long-term and struc-
tural optimization of the business system. In this way, we are
strengthening our core business (CORE) and creating the
financial basis to invest in the future of the company.
– We have therefore significantly increased our advance
expenditure for new products and technologies in recent
years, and we will maintain this high level in 2019. We there-
fore intend to play a leading role also in the future, especially
in the strategic, future-oriented areas of connectivity, auto-
mated and autonomous driving, flexible use and services,
and electric drive, and by intelligently linking up those areas
(CASE).
– Together with the workforce, we are developing a new lead-
ership culture under the heading of “Leadership 2020” that
will allow us to successfully shape our future. In this way, we
are meeting the challenges of the digital world and creating
the basis for cultural changes at the Group (CULTURE).
– To enable us to react flexibly to the high dynamism of the
environment, markets, new competitors and technologies, we
need a structure that facilitates rapid and agile action. In the
context of Project Future, we aim to further focus Daimler’s
divisional structure, thus strengthening the future viability
of the various businesses (COMPANY). With Project Future,
we want to make Daimler even more agile and faster, so
that we can make even better use of market opportunities.
The shareholders’ approval for the implementation of the
new structure is to be obtained at the Annual Shareholders’
Meeting on May 22, 2019. With the four strategic areas for
action – CORE, CASE, CULTURE and COMPANY – we have
created the right conditions to focus even more consistently
on our customers’ requirements. Our goal is to continue to
be one of the leading vehicle manufacturers while evolving into
one of the leading providers of connected mobility. Along
this path, we once again reached some pioneering milestones
also in 2018. We therefore look to the year 2019 with confi-
dence. We expect both unit sales and revenue to be higher
than in the previous year, and should be able to achieve a
slight increase in earnings despite the high volume of expen-
diture to safeguard our future.
The Divisions
The divisions of the Daimler Group performed very well in their
markets in 2018, despite partially difficult conditions, thanks to
numerous new and innovative products and services. Overall, the
unit sales of our automotive divisions reached a record level, and
the Daimler Financial Services division was also able to increase
its contract volume significantly once again.
C | The Divisions
C | THE DIVISIONS | CONTENTS 165
Mercedes-Benz Cars
166 – 171
Daimler Buses
180 – 182
– Mercedes-Benz Cars achieves record unit sales once again
– A- and B-Class set new standards
– Extensive model upgrade for the C-Class
– Presentation of new GLE sports utility vehicle
– smart focuses on electric mobility
– Deepened partnership in China
– Expansion of global production network
– Mercedes wins drivers’ and constructors’ Formula 1
championships for the fifth time in succession
– EBIT of €7.2 billion (2017: €8.8 billion)
– Significant growth in unit sales
– Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
– Positive development of complete-bus business in Europe
– New all-electric Mercedes-Benz eCitaro
– Mercedes-Benz Citaro hybrid wins “Bus of the Year 2019”
– Digital service OMNIplus ON
– EBIT slightly below prior-year level at €265 million
(2017: €281 million)
Daimler Trucks
172 – 176
Daimler Financial Services
183 – 185
– Significant increase in unit sales
– Presentation of new electric truck for the North American
– Renewed growth in contract volume
– Further increase in number of automotive insurance
market
– First vehicles of the Mercedes-Benz eActros innovation fleet
handed over to customers
– Announcement of cooperation with Californian company
Proterra Inc.
– World premiere of new Actros with innovative safety systems
– New DTB Tech & Data Hub founded in Lisbon
– Fleetboard pushes forward with digitization of logistics sec-
tor
– EBIT significantly above prior-year level at €2.8 billion
(2017: €2.4 billion)
policies brokered
– New name: Daimler Mobility AG
– Expanded offer of innovative mobility services
– Cooperation with BMW
– Joint venture for premium ride hailing in China
– Further expansion of fleet-management activities
– Investment in used-car platform heycar
– Investment in artificial intelligence
– Top positions in employer rankings
– Toll Collect settlement
– EBIT significantly below prior-year level at €1.4 billion
(2017: €2.0 billion)
Mercedes-Benz Vans
177 – 179
– Unit sales at record level
– Growth driven by V-Class and Sprinter
– eDrive@Vans: eVito and eSprinter
– Market launch of the new Sprinter
– World premiere of Vision URBANETIC
– New Sprinter plant in the United States
– Future initiative adVANce in full swing
– EBIT significantly below prior-year level at €0.3 billion
(2017: €1.1 billion)
166 C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-Benz Cars
After setting new records in the prior year, Mercedes-Benz Cars performed well overall during
the year under review, despite significantly less favorable conditions. Unit sales reached a record
level once again, revenue was at the high level of the previous year, and EBIT also reached a high
level, despite high advance expenditure for our product offensive and new technologies, as well as
extraordinary expenses. During the year under review, we systematically forged ahead with our
model offensive. Important new models in 2018 were the new A-Class, the G-Class, the CLS and
the upgraded C-Class. We also presented the first production vehicle from our new EQ electric
mobility brand. In order to be able to continue meeting demand for our vehicles quickly and flexibly
in the future, we are systematically further developing our global production network with more
than 30 locations on four continents. The most recent example of that is the pioneering Factory 56
at our site in Sindelfingen.
C.01
Mercedes-Benz Cars
€ amounts in millions
2018
2017
18/17
% change
Revenue
EBIT
Return on sales (in %)
Investment in property, plant
and equipment
Research and development
expenditure
thereof capitalized
Production
Unit sales
Employees (December 31)
93,103
7,216
7.8
94,3511
8,8431
9.41
5,684
4,843
6,962
2,269
6,642
2,388
2,398,270 2,411,378
2,382,791 2,373,527
142,666
145,436
-1
-18
.
+17
+5
-5
-1
+0
+2
1 The prior-year figures have been adjusted due to the effects of
first-time adoption of IFRS 15 and IFRS 9.
C.02
Unit sales Mercedes-Benz Cars
in thousands
Mercedes-Benz
thereof A-/B-Class
C-Class
E-Class
S-Class
SUVs1
Sports cars
smart
Mercedes-Benz Cars
thereof Europe
thereof Germany
NAFTA
thereof United States
Asia
thereof China
1 Including the GLA
2018
2017
18/17
% change
2,253
2,238
409
478
434
84
829
19
130
2,383
983
324
393
327
921
678
420
493
398
79
823
25
136
2,374
1,014
320
403
338
859
619
+1
-3
-3
+9
+6
+1
-22
-4
+0
-3
+1
-3
-3
+7
+10
Ongoing high levels of unit sales, revenue and earnings
The Mercedes-Benz Cars division consists of the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands, as well as the smart brand and
the EQ product and technology brand for electric mobility. The
division performed well in a highly competitive environment
in the year under review, with unit sales totaling 2,382,800
vehicles (2017: 2,373,500). Mercedes-Benz Cars thus set a
new sales record, despite operating under difficult conditions.
Revenue of €93.1 billion was close to the previous year’s
high≈level. C.01 This development was in large part due to
the continued market success of our attractive sport-utility
vehicles, as well as the success of the E-Class. After reaching
a new record level in 2017, EBIT decreased to €7.2 billion in
the≈year under review (2017: €8,8 billion). This was the result
of various factors, which are described in detail in the Profit-
ability chapter. E pages 85 f
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Sales increases were recorded
in the volume markets Germany (+1%) and Spain (+3%), and the
high level of the prior year was maintained in France, while
unit sales decreased in the United Kingdom (-7%) and Italy (-5%).
The Mercedes-Benz Cars division remained very successful
in China during the year under review, with unit sales rising by
10% to 677,700 vehicles. We set new records for unit sales
also in other Asian markets, for example in India (+1%), South
Korea (+1%) and Thailand (+5%). At 392,600 units, total sales
in the NAFTA region were lower than the high level of the prior
year. Sales decreased in the United States (-3%) and Canada
(-2%), while sales in Mexico increased by 7%.
Mercedes-Benz posts record unit sales for the eighth
consecutive year
At 2,252,800 vehicles (+1%), unit sales by the Mercedes-Benz
brand were once again slightly higher than the record level
of the previous year. C.02 Mercedes-Benz is thus once again
the premium brand with the strongest unit sales in the auto-
motive industry. Mercedes-Benz is number one in the premium
segment in Germany and several other key European markets,
as well as in the United States, South Korea, Canada and Japan.
Furthermore, we significantly improved our position in China
once again in the year under review. Demand for Mercedes-Benz
C | THE DIVISIONS | MERCEDES-BENZ CARS 167
As a sport tourer, the new Mercedes-Benz B-Class places emphasis on sport: With more agile handling, it also offers more comfort and space.
brand cars remained high in 2018. The development of unit
sales of certain model series was significantly influenced by
lifecycle effects, however. That includes the model changes in
the compact class and the model upgrade for the high-volume
C-Class. The division also faced higher import duties on
vehicles sold in China but manufactured in the United States,
as well as suspensions of deliveries that were imposed on
some diesel models. Vehicle certification processes also took
longer than usual in some cases, and this had an impact on
availability.
Our E-Class models were particularly successful in 2018: At
433,600 units (+9%), E-Class sales once again reached a new
record level. Our attractive range of sport-utility vehicles also
performed well in the market again, with sales in this segment
increasing by 1% to 829,200 units. As was the case in the prior
year, this positive development was primarily due to the GLC
models, as well as high demand for our SUVs in China. Due to
the model change, sales of C-Class vehicles decreased by 3%
to 477,700 sedans, wagons, coupes and convertibles. Sales of
A- and B-Class models were also affected by a model change
in the year under review, although the success of the new
A-Class led to total deliveries – including the CLA and CLA
Shooting Brake – of 409,300 units (-3%). The S-Class was
very successful in the market, with sales in this segment increas-
ing by 6% to 83,800 units in 2018. Our Mercedes-Maybach
luxury brand played a major role in this positive development.
With sales of 77,700 units (+7%), the S-Class Sedan continues
to be the world’s the bestselling luxury sedan.
A- and B-Class set new standards
The new Mercedes-Benz A-Class, which has been available for
delivery to customers since May 2018, is as young and
dynamic as ever, but also more grown-up and comfortable than
ever before. The vehicle completely redefines modern luxury
in the compact class and revolutionizes interior design. The new
A-Class was the first Mercedes-Benz model to be equipped
with the all-new multimedia system MBUX (Mercedes-Benz User
Experience), which marks the dawn of a new era in Mercedes
me connectivity, featuring natural speech recognition (“Hey
Mercedes”) and artificial intelligence, both of which enable
the system to adapt itself to the habits and preferences of the
vehicle’s owner. The new A-Class also offers a number of
features and driving assistance systems that were previously
only available in luxury-class vehicles. For example, the car
can, for the first time, drive in partially automated mode in cer-
tain situations.
The new Mercedes-Benz B-Class was presented in Paris in
October 2018. The model has a more dynamic appearance
than its predecessor and displays greater agility on the road,
while offering more comfort. Its avant-garde interior, which
includes a distinctively designed instrument panel, makes for
a unique feeling of space. The MBUX multimedia system in
the B-Class is also a trailblazing feature – and thanks to state-
of-the-art driving assistance systems, the B-Class boasts
one of the highest levels of active safety in its segment.
Thanks in part to an additional underfloor SCR catalytic con-
verter, A- and B-Class models equipped with the OM 654 q
two-liter diesel engine are already certified in accordance with
the Euro 6d standard, which will not become mandatory
until 2020.
Relaunch of a bestseller: model update for the C-Class
The bestselling Mercedes-Benz model series, the C-Class,
was optimized extensively for its fifth year of production. The
exterior and interior were given a stylish makeover, and the
onboard network is completely new, as are several other fea-
tures and systems. The customer notices this directly with
the User Experience feature, which includes as an option a
fully digital instrument display and multimedia systems that
offer customized information and music. The assistance sys-
tems in the C-Class are also now on par with those featured
in the S-Class. The new C-Class series was launched with a
new generation of four-cylinder gasoline engines. Some of
the models come with an additional 48-volt system that includes
a belt-driven starter motor/generator (EQ Boost). This system
enables the implementation of additional functions that help to
further reduce fuel consumption while also enhancing agility
and comfort.
168 C | THE DIVISIONS | MERCEDES-BENZ CARS
The new CLS: the third generation of the original
In 2003, the Mercedes-Benz CLS created a new vehicle cate-
gory that for the first time combined the elegance and dynamism
of a coupe with the comfort and functionality of a sedan. With
the third generation of the CLS, which has been available for
delivery to customers since March 2018, Mercedes-Benz
is now building more strongly than ever on the trendsetting
model’s charisma and unique character. Like its predecessors,
the third-generation CLS stands for self-assured sportiness
in a highly emotive vehicle that offers impressive long-distance
comfort and thrills customers with its technology.
The G-Class: an icon reinvents itself
The G-Class, the luxury off-road vehicle from Mercedes-Benz,
has long been considered a design icon. Its external appearance
has not changed significantly since 1979. Then as now, iconic
elements have very specific functions – and also lend a unique
appearance to the new G-Class, which has been available for
delivery to customers since mid-2018. The new G-Class raises
the bar in all relevant areas, including on- and off-road per-
formance, comfort and telematics. The main goal of the devel-
opment engineers was to redefine handling attributes in both
on- and off-road driving. This goal was achieved, as the new
G-Class displays even better performance off-road, while
on-road it is significantly more agile, dynamic and comfortable
than its predecessor.
Mercedes-Benz GLE: an SUV trendsetter reconceived
The new Mercedes-Benz GLE, which was presented in Septem-
ber 2018, features numerous innovations. The E-ACTIVE BODY
CONTROL active suspension system on a 48-volt basis, for
example, is a world first, and the model’s driving assistance
systems take another step forward with Active Stop-and-Go
Assist. The interior offers even more space and comfort, and a
third seat row is available as an option. The infotainment
system has larger screens, a full-color head-up display with a
resolution of 720 × 240 pixels and the MBUX Interior Assistant,
which can recognize individual hand and arm movements
and support personal operating intentions. The exterior design
not only exudes presence and power, but also sets a new
benchmark for aerodynamics in the SUV segment. The models
equipped with the six-cylinder diesel engine are also already
certified in accordance with the Euro 6d standard, which will
not become mandatory until 2020. This was made possible
by, among other things, the use of an additional underfloor SCR
catalytic converter.
The Mercedes-Benz among electric vehicles
Mercedes-Benz first presented its new product and technology
brand for electric mobility at the Paris Motor Show in 2016. A
milestone is set to be achieved in mid-2019, when the EQC (elec-
tricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures)1 will become the first
Mercedes-Benz vehicle to be launched under the EQ brand name.
With its seamless and clear design and color highlights typical
of the brand, the EQC is a trailblazer when it comes to an
avant-garde electric appearance, even as it embodies the design
idiom of progressive luxury. In terms of quality, safety and
comfort, the EQC is the Mercedes-Benz among electric vehicles
and a car that makes a convincing impression in terms of
the sum of its attributes. The model also boasts highly dynamic
performance, thanks to two electric motors at the front and
the rear axle with a combined output of 300 kW. The sophisti-
cated operation strategy utilized for the ECQ enables an electric
range of up to 450 km according to the NEDC (provisional
figure). With Mercedes me, the EQ brand offers comprehensive
services that make electric mobility comfortable and practical
for everyone. To sum up, the EQC symbolizes the start of a new
mobility era at Daimler. Series production of the EQC will begin
in 2019 at the Mercedes-Benz plant in Bremen. Preparations
are already in full swing. The new EQC will be integrated into the
current production operations as an all-electric vehicle.
The new Mercedes-Benz GLE is not only dynamic and comfortable on the road, but is also more competent than ever before off the road.
C | THE DIVISIONS | MERCEDES-BENZ CARS 169
The new Mercedes-Benz CLS combines unique design with a luxurious interior and a comprehensive level of standard equipment.
The model is part of a comprehensive electric offensive, as
Daimler plans to offer more than ten all-electric models in
the car segment. In addition, the EQ brand offers a comprehen-
sive electric mobility ecosystem of products, services, tech-
nologies and innovations. E pages 14 ff
Market launch of the world’s first electric vehicle with a
fuel cell and plug-in hybrid technology
The Mercedes-Benz electric vehicle offensive also includes the
GLC F-CELL (hydrogen consumption combined: 0.34 kg/100 km,
CO2 emissions combined: 0 g/km, electricity consumption
combined: 13.7 kWh/100 km)2. This SUV can run on electricity
as well as hydrogen because it is equipped with a lithium-ion
battery with plug-in hybrid technology in addition to its fuel cell.
Intelligent interplay between the battery and the fuel cell, as
well as short refueling times, make the GLC F-CELL a dynamic
and practical vehicle for long-distance travel. The first
GLC F-CELL vehicles were delivered to selected customers in
November 2018.
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-Benz
S-Class with the exclusivity of a Maybach. The Mercedes-
Maybach brand’s first convertible was launched in the spring
of 2017 in a limited edition of 300 units. A preview of the form
the luxury brand might take in the future is offered by the con-
cept cars Vision Mercedes-Maybach 6 and Vision Mercedes-
Maybach 6 Cabriolet – a sensational coupe and a luxurious
convertible.
1 Figures for electricity consumption and CO2 emissions are provisional,
non-binding figures calculated by an external technical service. Figures for
vehicle range are also provisional and non-binding. An EU type-approval
certificate and a certificate of conformity with official figures are not yet
available. The figures given above may deviate from the official figures.
2 Figures for fuel consumption, electricity consumption and CO2 emissions
are provisional and non-binding. They were determined by an external
technical service for the certification process according to the provisions
of the WLTP test procedure and correlated with the NEDC values. An
EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from
the official figures.
170 C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-AMG: the sports-car and performance brand
The brand claim of “Driving Performance” reflects the two
core competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. The Mercedes-
AMG sports-car brand now enhances the fascination of
Mercedes-Benz with 70 models. The brand’s dynamic vehicles
especially attract young and sporty customers to the brand
with the three-pointed star. Mercedes-AMG models differ exten-
sively from their series-produced cousins in terms of both
engineering and appearance, thus strengthening the authentic-
ity and distinctive identity of the Mercedes-AMG brand. The
new AMG GT four-door coupe is the third vehicle developed by
Mercedes-AMG on its own. The model combines the impres-
sive racetrack dynamics of the two-door AMG GT sports car with
maximum suitability for everyday use – and enough space to
accommodate up to five people.
20 years of smart – electric, urban, unconventional
The smart brand celebrated its 20th birthday in 2018. “Reduce
to the max” was the motto of the smart brand when it began
its mission of radically changing the nature of urban mobility
back in 1998. Today, the brand is well on its way to making
the founders’ original vision a reality with all-electric drive sys-
tems. This fact is also demonstrated by Daimler’s announce-
ment at the Geneva Motor Show in March 2018 that all smart
electric drive models will be sold under the EQ product and
technology brand name in the future. The “smart forease” con-
cept car was presented at the Paris Motor Show in October
2018. This extroverted design without a roof and the systematic
focus on electric mobility clearly show that the electric future
of the smart brand will be extremely attractive.
The range of services offered for the smart brand is being
continuously expanded through the launch of “ready to” digital
services. One example here is “smart ready to drop.” This
service, which is linked to various cooperation partners in the
logistics industry, enables parcels to be delivered to the trunk
of a customer’s car and also allows for the pick-up of returns
using the same system. “smart ready to share” enables private
car sharing in closed groups – e.g. within a family, between
friends or at small companies – in an extremely user-friendly
manner with the help of an app that eliminates the need to
hand over keys to the next user. A new service here is “smart
ready to pack,” which employs a sophisticated algorithm to
tell shoppers while they’re still making their purchases whether
and how everything will fit into the smart’s trunk. The new
smart EQ control app has been available since August 2018. It
contains a large amount of information on the car, such as
the current charge level, and can control vehicle functions such
as the auxiliary climate control system.
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018.
Global production network – digital, flexible, green
Within the framework of its growth and modernization strategy,
the Mercedes-Benz Cars division is continuously developing
its flexible and efficient production network of more than 30
locations on four continents – all in line with the philosophy of
“digital,” “flexible” and “green.” “Factory 56” at the Mercedes-
Benz plant in Sindelfingen is an impressive example of this. A
key feature of Factory 56 involves all-round connectivity along
the entire value chain – from development and design to
suppliers, production and customers. The assembly hall stands
out through a particularly flexible production system that
utilizes state-of-the-art Industry 4.0 technologies. Factory 56
also creates a new modern world of work that focuses on
employees and takes their individual requirements more strongly
into account. Factory 56 will serve as a blueprint for all future
vehicle assembly operations at Mercedes-Benz Cars worldwide.
It obtains its energy from CO2-neutral sources that include a
photovoltaic system installed on the roof.
The global production network is also being systematically
aligned with electric mobility requirements. For example, elec-
tric vehicles from the EQ product and technology brand will
be manufactured in the future within the framework of normal
series production on the same lines used to produce vehicles
with conventional combustion or hybrid drive systems. At the
same time, we are expanding our global battery production
network, which currently extends across three continents.
Within the framework of its electric offensive, Mercedes-Benz
Cars is not only focusing on locally emission-free vehicles,
it is also consistently applying the emission-free approach to
production: Mercedes-Benz Cars plants in Germany are to
be supplied with CO2-neutral energy by 2022.
Expansion of activities in China
Sales of Mercedes-Benz brand cars in China totaled more than
658,300 units in the year under review (+11%), which means
China was the brand’s largest single market for the fourth con-
secutive year in 2018. More than 70% of the vehicles we sell
there were manufactured locally at facilities operated by Beijing
Benz Automotive Co., Ltd. (BBAC), the joint venture with
our local partner BAIC. In view of the further growth potential
offered by the Chinese market, Daimler and BAIC have
announced plans to jointly invest more than RMB 11.9 billion
(approx. €1.5 billion) in a second BBAC production facility
in Beijing. The expansion of localization will enable Daimler to
respond more effectively to increasing market demand by
offering local models especially tailored to Chinese customers’
needs, including electric vehicles from the Mercedes-Benz
EQ brand. The local presence of the Mercedes-Benz brand in
China is being continuously expanded with the help of a broad
range of products that currently encompasses seven locally
manufactured cars and vans. The all-electric EQC sport-utility
vehicle is to follow in 2019.
Best Customer Experience
“Best Customer Experience” (BCE) is a global sales and
marketing initiative that was launched by the Mercedes-Benz
Cars division in 2014. The initiative focuses on expansion
into new markets and market segments and the development of
inno vative products and services. Our goal here is to make the
Mercedes-Benz brand more attractive to new and also younger
target groups while also strengthening the brand loyalty of
established customers. To this end, the sales organization and
marketing activities are to be aligned more closely with cus-
tomer requirements, which are changing at an ever-faster pace
as a result of digitalization. Our “Customer Centricity” philoso-
phy puts the customer at the center of everything. The idea is to
ensure personal communication with the customer for every-
thing from the initial contact to advice, test drives, purchases
and aftersales services. Here, Mercedes-Benz is using the
omnichannel approach to offer customers various possibilities
to establish contact with the brand and flexibly utilize different
sales channels – all in line with customers’ personal preferences.
To this end, a variety of sales formats, new digital elements
and job profiles in the retail sector are now being linked. This
approach supplements the physical experience offered by
traditional Mercedes-Benz showrooms.
C | THE DIVISIONS | MERCEDES-BENZ CARS 171
The new Mercedes-Benz CLA Coupe features outstanding design and great automotive intelligence thanks to MBUX and augmented reality.
With the “She’s Mercedes” initiative, we are working to make the
brand with the star more appealing to women in particular
and to increase the proportion of female customers. Along with
community and inspiration platforms, the initiative also offers
training for sales staff and seeks to increase the number of
women in sales positions. She’s Mercedes was launched in 2015
and has since been implemented in more than 60 countries.
Mercedes me services are also available for our EQ models –
or in some cases were developed especially for them. They
include Mercedes me Charge for access to public charging
stations in Europe. In addition, the EQ Ready app helps drivers
decide whether it makes sense for them to switch to an
electric car or a hybrid model.
Mercedes me – digital premium services
Mercedes me is playing an important role in the further
development of the Mercedes-Benz brand, as this digital eco-
system has a direct impact on key factors that ensure success.
Mercedes me is meanwhile live in 44 countries, which means
it covers most of the world’s major automotive markets.
Mercedes me connect enables customers generally to connect
to their vehicles from anywhere and at any time. The average
activation rate of the Mercedes me connect service for new
Mercedes-Benz vehicles is over 90%, which shows how impor-
tant it is to Mercedes-Benz drivers that their cars are con-
nected and that drivers expect to enjoy all the digital services
and offerings that such a connection makes possible. High-
lights from the Mercedes me connect range of services include
the Live Traffic Information real-time traffic service (including
car-to-x communication), digital keys stored on smartphones,
and “Hey Mercedes” natural speech recognition with support
from artificial intelligence systems.
#HIGHFIVE: a year for the history books
The year 2018 was the most successful motorsports year in the
history of Daimler AG. Mercedes-AMG Petronas Motorsport
captured both the World Drivers’ Championship and the World
Constructors’ Championship in the Formula 1 racing series
for the fifth consecutive year. The team thus once again under-
scored its exceptional status and technical expertise, culmi-
nating in the hybrid drive system used in the Mercedes F1 W09
EQ Power. After announcing that it would pull out of the DTM
series after 30 years, Mercedes-AMG went on to take all three
DTM titles in 2018. With 11 Driver’s Championships, seven
Manufacturers’ Championships, 14 Team Championships and
190 first-place finishes, Mercedes-AMG is the most success-
ful brand in the history of DTM. Mercedes-AMG Customer Racing
can also look back on a very successful season in 2018, as
customer teams participated in more than 1,100 races and were
able to capture numerous victories and titles. Mercedes will
begin a new chapter in its motorsports history in December
2019, when the brand will join the Formula E electric motor-
sport series with the new Mercedes EQ Formula E team. Partici-
pation in the Formula E series will enable us to demonstrate
the performance capability of our intelligent battery-electric
drive systems in a motorsports setting as well, and it will also
add an emotive component to the EQ brand.
172 C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Trucks
2018 was a successful year for Daimler Trucks. In a mainly positive market environment, we
succeeded in significantly increasing unit sales, revenue and earnings to new record levels. We
increased our unit sales by double-digit rates in the NAFTA region, Indonesia, India and Brazil.
At the IAA Commercial Vehicles trade fair, we presented part of our broad portfolio of vehicles
with alternative drive systems: the all-electric eActros, the FUSO eCanter, the electric school
bus from Thomas Built Buses and the Actros NGT powered by natural gas. The newly launched
Actros is a pioneer for safety with Active Drive Assist, Active Brake Assist 5 and the
mirror-cam system.
C.03
Daimler Trucks
€ amounts in millions
Revenue
EBIT
Return on sales (in %)
Investment in property,
plant, and equipment
Research and development
expenditure
thereof capitalized
Production
Unit sales
Employees (December 31)
2018
2017
18/17
Change in %
38,273
2,753
7.2
35,7551
2,3831
6.7
1,105
1,028
1,295
40
524,846
517,335
82,953
1,322
45
476,325
470,705
79,483
+7
+16
.
+7
-2
-11
+10
+10
+4
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
C.04
Unit sales Daimler Trucks
In thousands
Total
EU30
thereof Germany
United Kingdom
France
NAFTA region
thereof United States
Latin America (excluding Mexico)
thereof Brazil
Asia
thereof Japan
Indonesia
For information purposes:
BFDA (Auman Trucks)
Total (including BFDA)
2018
2017
18/17
Change in %
517
85
33
8
9
190
161
38
21
165
44
64
103
621
471
82
32
9
8
165
140
31
13
149
45
43
112
583
+10
+4
+4
-11
+13
+15
+15
+25
+60
+11
-2
+50
-8
+6
New records for unit sales, revenue and EBIT
Daimler Trucks posted unit sales of 517,300 trucks in 2018,
a new record (2017: 470,700). The markets relevant for Daimler
Trucks generally developed positively. Economic uncertainty
in regions such as the Middle East, Turkey and Argentina had
a negative impact on unit sales. Revenue of €38.3 billion
was also significantly higher than in the previous year (2017:
€35.8 billion). Furthermore, the successful implementation
of our efficiency program helped us to achieve a new EBIT
record of €2.8 billion (2017: €2.4 billion).
Unit sales at new high
Daimler Trucks increased its total sales by 10% to 517,300
units. In the EU30 region (European Union, Switzerland and
Norway), our truck sales increased slightly to 85,400 units.
Our Mercedes-Benz brand maintained its market leadership in
the medium- and heavy-duty segment with a share of 20.6%
(2017: 21.0%). In early September, we presented the new Actros
with a number of new features. In addition to numerous
other innovations, the flagship from Mercedes-Benz puts par-
tially automated driving into series production with Active
Drive Assist, as well as the mirror-cam system, which replaces
the previous exterior mirrors. Sales in Germany also
developed positively with growth of 4% to 32,900 units.
Our sales in Turkey were substantially affected by considerable
economic uncertainty and at 5,000 trucks were 57% lower
than the previous year’s level. In Latin America, however, we
once again significantly increased our sales to 38,200 units
(2017: 30,500). There was a significant contribution from growth
in unit sales in Brazil, our main market in the region. With
sales there of 21,400 vehicles, we achieved an increase of 60%,
although from a low level. With our Mercedes-Benz brand
trucks, we increased our market share in the medium- and
heavy-duty segment to 27.9% (2017: 27.6%) and were thus
the market leader in Brazil. Sales in Argentina decreased in
the year under review to 3,500 units (2017: 5,600).
C | THE DIVISIONS | DAIMLER TRUCKS 173
Daimler Trucks: Well positioned worldwide with six brands – Freightliner, Western Star, Mercedes-Benz, FUSO, BharatBenz
and Thomas Built Buses (from left to right).
Active in the Chinese truck market
In China, the world’s biggest truck market, Daimler AG holds a
50% equity interest in Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA). The joint venture with Beiqi Foton Motor Co. Ltd.
has been producing medium- and heavy-duty trucks of the
Auman brand since the year 2012. Sales of 103,400 Auman
trucks were below the high prior-year level (2017: 112,400),
which, apart from the favorable economic development, was
influenced above all by regulatory measures for vehicle
replacement. Since the start of the cooperation, 596,700
Auman trucks have been sold.
The ongoing very positive development of unit sales in the
NAFTA region made a substantial contribution to our growth.
We once again significantly increased our unit sales to a total
of 189,700 trucks (2017:165,000). In classes 6-8, we continued
to be the market leader with a share of 38.4% (2017: 39.8%).
We have already delivered more than 83,200 units of the new
Freightliner Cascadia, our flagship in the North American
market. The medium-duty DD8 engine has been produced in
Detroit since the beginning of 2018, and with the introduction
of this engine, we are systematically continuing our global plat-
form strategy for the powertrain. The engine is also used in
the new Freightliner Econic SD. This special truck for municipal
applications, which in Europe is mainly used by waste dis-
posal companies, has been available also in the North American
market since April 2018.
In Asia, we increased our truck sales by 11% to 164,700 units.
In Japan, our total sales were approximately 44,000 units
(2017: 44,800). Our FUSO brand achieved a share of the over-
all Japanese truck market of 19.3% (2017: 19.6%). In Indonesia,
we increased our unit sales to 64,200 trucks, which is 50% more
than in 2017. Our sales of 9,700 trucks in the Middle East
were significantly lower than the high level of the previous year
(2017: 23,600). In India, our sales benefited from a significant
recovery of demand for medium- and heavy-duty trucks. With
sales of 22,500 units, we sold significantly more trucks
than in the year before (2017: 16,700). Our market share with
the BharatBenz brand was 7.0% (2017: 9.1%). In September
2018, we reached a major milestone with production of the
100,000th truck at the plant in Chennai. Since the start of
production in 2013, we have exported vehicles from Chennai
to more than 60 markets worldwide.
174 C | THE DIVISIONS | DAIMLER TRUCKS
Electrifying: The Freightliner eCascadia is in use with the first customers in North America as of 2019.
Expansion of our wide-ranging electric portfolio
At the Capital Market & Technology Days in Portland, we pre-
sented two new electric trucks for the North American market:
the Freightliner eCascadia as a heavy-duty all-electric truck
for long-distance applications and the Freightliner eM2 106 as
an all-electric version for the medium-duty segment. The
eCascadia is based on our Cascadia for heavy-duty haulage,
which is already successful in North America. The Freightliner
eM2 106 is used for the local distribution of foodstuffs as well
as for deliveries. In December 2018, the first Freightliner
eM2 was handed over to the customer Penske Truck Leasing
Corp. This means that Daimler Trucks is now testing electric
trucks with the first customers in all three segments: light-,
medium- and heavy duty. Together with the Saf-T-Liner C2
electric school bus from Thomas Built Buses, we have there-
fore presented an extensive range of electric commercial
vehicles in North America.
Mercedes-Benz already presented an all-electric heavy-duty
distribution truck in 2016. In 2018, the first vehicles of the
Mercedes-Benz eActros innovation fleet were handed over to
customers. The first customers – Hermes, EDEKA, Transport-
beton and Meyer-Logistik – operate in various segments and
each of them is using an 18- or 25-ton truck based on the
series version in daily operations for test purposes. The German
Federal Ministry for the Environment (BMU) and Federal
Ministry for Economic Affairs and Energy (BMW) are sponsoring
the development and testing of the heavy-duty trucks in
short-radius distribution operations as part of the project Con-
cept ELV2 (Concept Electric Truck in Heavy Distribution Trans-
portation). As an alternative to electric trucks, Mercedes-Benz
Trucks also offers trucks powered by natural gas. In addition
to the Econic waste-disposal and delivery truck, the new Actros
NGT with natural-gas drive and automatic transmission has
also been available to order since 2018. Our first all-electric
light-duty truck, the FUSO eCanter, was launched in Tokyo,
New York and Berlin in 2017. Since the year 2018, more of the
FUSO eCanter trucks have been handed over to logistics
and municipalities in Berlin, London, Amsterdam and Lisbon,
so this model is now operating in six metropolises around
the world. The locally emission-free and nearly silent truck is in
series production in Tramagal, Portugal, for markets in Europe
and the United States. The trucks for the Japanese market are
produced at the Mitsubishi FUSO plant in Kawasaki. Our
FUSO brand already presented the all-electric FUSO Vision
One for the heavy-duty segment in 2017.
C | THE DIVISIONS | DAIMLER TRUCKS 175
In June 2018, the global E-Mobility Group Daimler Trucks &
Buses was founded. It defines the future strategy for our
electric components across brands and divisions, as well as
complete electric vehicles, and is working on a worldwide
uniform architecture. At the IAA Commercial Vehicles trade
fair, we announced our cooperation with the Californian
company, Proterra Inc. Proterra is a leader in the United States
in the business with electric buses for local transportation.
In connection with our equity interest in Proterra, it has been
agreed together to examine the electrification of selected
heavy-duty commercial vehicles from Daimler. As the first coop-
eration project, we are working on possible synergies with the
electrification of school buses from the Daimler brand Thomas
Built Buses, and the option to transfer Proterra’s proven bat-
tery technology and drivetrain to the North American school-bus
market.
New Actros with innovative safety systems
The world premiere of the new Actros took place in Berlin in
early September. The new Mercedes-Benz flagship features
many innovations. With Active Drive Assist, we are putting par-
tially automated driving into series production. The system
can support the driver with braking, accelerating and steering.
While the driver continues to be responsible for monitoring
the traffic situation, the system makes his or her work signifi-
cantly easier and delivers an important contribution to enhanc-
ing safety on the roads. The improved Active Brake Assist
helps to monitor the space in front of the vehicle and to react
to pedestrians and cyclists even better. The fifth-generation
brake assistant supports the driver with a combination of radar
and camera system if there is a danger of a front-end crash or
a collision with a pedestrian or cyclist, and initiates emergency
braking if necessary. Sideguard Assist, which has been avail-
able for heavy-duty trucks from Mercedes-Benz since 2016,
monitors not only the tractor unit but also the trailer or semi-
trailer and helps to avoid accidents. When there is a person or
object in the area monitored, the driver is warned visually
and also acoustically if there is a danger of a collision. The new
Actros differs from its predecessor also externally. The main
mirrors and wide-angle mirrors have been replaced by the mirror-
cam system as standard equipment in the new Actros. Two
cameras installed on the truck’s exterior and two monitors in
the cab not only improve aerodynamics, they also offer a
greatly improved view around the vehicle. The new Actros has
a digital driver’s workplace with high levels of operating and
display comfort. Two interactive monitors are standard equip-
ment and serve as central information sources. In addition to
driver-relevant basic information, assistance systems are also
visualized. It goes without saying that smartphones are fully
integrated. The Truck Data Center permanently connects the
vehicle with the Cloud and is the basis for all connectivity
solutions that help with the provision of transport services. Real-
time control of the truck via Fleetboard connected services
and the preventive service product Mercedes-Benz Uptime offer
the truck’s operator additional added value, through predictive
maintenance and low down times for example.
A good view: In the new Mercedes-Benz Actros, the driver benefits from the cab’s new, intuitively operated multimedia cockpit.
176 C | THE DIVISIONS | DAIMLER TRUCKS
Close to customers with automated and connected driving
We have further expanded our activities with automated trucks
and buses and established a research and development center
for automated driving in Portland, Oregon. The innovation site
cooperates closely with existing development centers in Stutt-
gart and India. In Brazil, as part of a development partnership
with a local manufacturer of agricultural machinery, Mercedes-
Benz do Brasil configured 18 Mercedes-Benz Axor trucks
specifically for automated use in sugar-cane harvesting. In order
to support the growth of expertise in new technologies as
well as global tech initiatives, a new “Daimler Trucks and Buses
Tech & Data Hub” has been established in Lisbon. The Tech &
Data Hub aims to acquire talented employees in various tech-
nology fields and to focus on new technologies and digital
services for the commercial-vehicle sector. At the plant in São
Bernardo do Campo, Brazil, a completely new type of truck
assembly line for Daimler Trucks for light- to heavy-duty trucks
and the related parts logistics went into operation in 2018.
And at the plant site in Iracemápolis, Brazil, we opened a new
truck and bus test center covering approximately 1.3 million
square meters, where vehicles will be tested on a wide variety
of road profiles.
Fleetboard pushes forward with digitization of logistics
At the IAA Commercial Vehicles trade fair in Hannover,
Fleetboard presented its new Fleetboard customer interface.
For trucking companies, the new, intuitive, web-based inter-
face combines all data from the booked Fleetboard services in
a clear format. Fleet managers and dispatchers can summarize
complex information in a tailored manner and while doing so are
helped to identify improvement potential. The system uses
push messages to proactively indicate when there is a need for
action, such as a route adjustment. The digital interface in
trucks has also been further developed. Vehicles with the new
interactive multimedia cockpit can be connected with the
Mercedes-Benz Truck App Portal and thus equipped with effi-
ciency-enhancing apps. The Mercedes-Benz Truck App Portal
offers an open platform on which customers and partners can
install their own apps. One app that will be available in the
portal is Fleetboard Driver. It is also available for smartphone
use in the Apple App Store and the Google Play Store. Fleet-
board Driver informs the truck driver in real time of relevant
vehicle data such as mileage and fuel level. In addition, it
provides a direct insight into driving and rest times as well
as information on optimization potential in relation to the
current driving style.
Since it was launched in 2000, Fleetboard has been ensuring that people and trucks are well connected.
C | THE DIVISIONS | MERCEDES-BENZ VANS 177
Mercedes-Benz Vans
Mercedes-Benz Vans continued along its course of growth during the year under review, achieving
a small increase in revenue and setting a new record for unit sales. Growth was mainly driven
by positive developments in the United States, China and Latin America. We also set a new sales
record in Germany. The launch of the new Sprinter and the first full year of availability of the
X-Class in the pickup segment enabled us to consistently forge ahead with our “Mercedes-Benz Vans
goes global” growth strategy. In addition, our future-oriented “adVANce” initiative has allowed
us to systematically move ahead with the transformation of Mercedes-Benz Vans from a vehicle
manufacturer into a supplier of holistic transportation and mobility solutions for cargo and
passengers. EBIT in 2018 was significantly lower than the previous year’s high level.
New record for unit sales
Mercedes-Benz Vans set a new sales record once again in finan-
cial year 2018, with an increase of 5% to 421,400 units. At
€13.6 billion, revenue was also higher than in the previous year
(2017: €13.2 billion). EBIT reached €312 million and was thus, as
expected, significantly lower than the high level achieved in 2017.
C.05
Mercedes-Benz Vans
€ amounts in millions
2018
2017
18/17
% change
Revenue
EBIT
Return on sales (in %)
Investment in property, plant
and equipment
Research and development
expenditure
thereof capitalized
Production
Unit sales
Employees (December 31)
13,626
312
2.3
468
666
176
13,1611
1,1471
8.71
710
565
310
440,314
421,401
26,210
405,129
401,025
25,255
+4
-73
.
-34
+18
-43
+9
+5
+4
1 The amounts have been adjusted due to the effects of first-time
adoption of IFRS 15 and IFRS 9.
C.06
Unit sales Mercedes-Benz Vans
Total
EU30
thereof Germany
NAFTA
thereof United States
Latin America
(excluding Mexico)
Asia
thereof China
Other markets
2018
2017
18/17
% change
421,401
278,269
107,267
50,851
38,741
18,735
38,779
29,068
34,767
401,025
273,297
105,781
44,815
34,158
16,378
33,641
23,801
32,894
+5
+2
+1
+13
+13
+14
+15
+22
+6
Continued growth
Mercedes-Benz Vans’ products continued to be very successful
in 2018. Our Sprinter, Vito and Citan vans are tailored mainly
to commercial customers, while the V-Class is designed primarily
for private use. The X-Class is targeted at a variety of private
and commercial customers.
Sales of 278,300 units in the EU30 region, our core market,
were slightly higher than in the previous year (273,300). We
set a new record in Germany, with 107,300 units sold
(2017: 105,800). Mercedes-Benz Vans continued to grow in
the NAFTA region, where sales rose by a significant 13% to
50,900 units. This included a new record of 38,700 units sold
in the United States (2017: 34,200). Mercedes-Benz Vans’
products were also very much in demand in Latin America. Unit
sales in Argentina increased by 14% to 18,700 units, despite
the difficult economic situation in that country. The Mercedes-
Benz Vans division continued its successful development in
China in 2018. Unit sales in China increased significantly, by
22 % to the new record of 29,100 vans. This development
was largely due to the success of the Vito and the V-Class.
At 206,300 units, global sales of Sprinter models were slightly
higher than in the previous year (2017: 200,500). Sales of
vans in the mid-size segment remained at the prior-year level,
totaling 172,200 units in 2018, whereas sales of Vito models
decreased slightly to 108,300 in the year under review (2017:
111,800). Sales of the V-Class full size MPV rose by 8% to
63,900 units. Meanwhile, sales of the Mercedes-Benz Citan
reached 26,300 units (2017: 26,100). Sales of the X-Class,
which we launched at the end of 2017, totaled 16,700 units
in the year under review (2017: 3,300).
World premiere of the new Sprinter
The new Mercedes-Benz Sprinter had its world premiere in
February 2018; the model then went into production at the
Düsseldorf and Ludwigsfelde plants at the beginning of March.
The new Sprinter was launched in Europe in June and then
178 C | THE DIVISIONS | MERCEDES-BENZ VANS
successively in additional markets. We also expanded our pro-
duction network in September 2018 with the opening of our
new plant in North Charleston and the start of production of
the new Sprinter there. In recent years, we have invested a
total of approximately €2.5 billion worldwide in Sprinter devel-
opment, the global production network for the model, and
sales and aftersales services.
As the first integrated connectivity system solution offered
by Mercedes-Benz Vans, the third generation of the Sprinter
represents the division’s development from a pure vehicle
manufacturer into a provider of holistic transport and mobility
solutions. With new connectivity services, an electric drive
system and customized hardware solutions for the cargo space,
the large van will make customers’ business much more effi-
cient in the connected world of the future. The first Mercedes
PRO fleet solutions were made available to commercial
Sprinter customers when the new model was launched in June
2018. Mercedes PRO is Mercedes-Benz Vans’ service brand
that offers services and digital solutions in a total of eight added-
value packages with 18 services. The technical basis for
Mercedes PRO services is a communication module that is
installed as standard in all Sprinter variants.
able to supply our customers in North America even faster and
more flexibly in the future, thus better utilizing the dynamic
potential of the North American market. The new plant in North
Charleston is therefore a central component of the “Mercedes-
Benz Vans goes global” growth strategy.
In addition to the investment in North Charleston, Mercedes-
Benz Vans invested approximately €450 million in the
lead plant of the global Sprinter production network, which
is located in Düsseldorf, Germany, as well as in the Sprinter
facility in Ludwigsfelde, Germany. Mercedes Benz Vans also
invested roughly US$150 million in Sprinter production
operations at the González Catán plant near Buenos Aires in
Argentina.
Numerous major contracts
In the first quarter of 2018, Mercedes-Benz Vans and the motor
home and travel van manufacturer Hymer announced plans
to establish a new comprehensive supply relationship. To this
end, an agreement was concluded for deliveries of more than
one thousand Sprinters each year, which will eventually make
Hymer the largest single customer for the new Sprinter in the
motor home and travel van sector.
Investment in the Sprinter production network
In preparation for the new generation of the Sprinter, Mercedes
Benz Vans made significant investments in its production
network; the division focused here on manufacturing operations
in the United States and Germany. After a construction period
of approximately two years, our new plant in North Charleston,
South Carolina, opened in September 2018. In view of the
anticipated high market potential for the new Sprinter in North
America, Mercedes-Benz Vans invested roughly $500 million
in the new plant in North Charleston, which includes a body shop,
a paint shop and a final assembly area. With the new ultra-
modern production site, we will be
During the opening ceremony for the plant in South Carolina,
Mercedes-Benz Vans also announced that it will manufacture
Sprinter vans in North Charleston for Amazon’s Delivery Ser-
vice Partner program. The program makes it possible for small
business owners to obtain customized delivery vehicles with
special leasing contracts at attractive conditions. The first
Sprinter built in North Charleston was delivered to a participant
in the Delivery Service Partner program. Amazon plans to
add 20,000 Sprinter vans from Mercedes-Benz to its delivery
fleet in the United States within the framework of the new
partnership. The online retailer will thus place the largest single
order ever received by Mercedes-Benz Vans.
The Mercedes-Benz eVito, the first model of the holistic electrification strategy eDrive@VANS, has been available since November 2018.
C | THE DIVISIONS | MERCEDES-BENZ VANS 179
More than 1,700 different variants and comprehensive connectivity make the new Mercedes-Benz Sprinter the perfect vehicle for
diverse transport requirements and sectors.
Full speed ahead for the future-oriented “adVANce” initiative
With its future-oriented “adVANce” initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for the trans-
portation of goods and passengers. The division is thus playing
a pioneering role in its sector. adVANce combines activities
in various areas and currently comprises six innovation fields:
digital@Vans, solutions@Vans, rental@Vans, sharing@Vans,
eDrive@Vans and autonomous@Vans. We are employing a cus-
tomer-oriented co-creation approach to incorporate our cus-
tomers into the development process at an early stage. Here, we
are combining our six innovation fields in order to develop
new business models and tailored solutions that are adapted to
our customers’ respective sectors. Mercedes-Benz Vans is
also adopting a new approach with eDrive@Vans, which utilizes
the way a van is used in each specific case as the key factor
for evaluating various drive system options. More specifically,
with eDrive@Vans, the choice of battery-electric drive or a
conventional combustion engine depends solely on which rep-
resents the best solution for a particular application. Fuel
cells will be added to the drive system portfolio over the medium
term. In order to meet as many transport needs as possible
while allowing many different sectors to enter the world of locally
emission-free electric mobility, the eSprinter is now ready to
join the eVito as the second model with battery-electric drive.
The eSprinter will be launched on the market sometime
in 2019. In the future, Mercedes-Benz Vans will expand its
eDrive@VANs strategy to include fuel cells. Based on the
example of a semi-integrated travel van, the Concept Sprinter
F-CELL showcases the full spectrum of typical advantages
of a fuel cell, from long range to locally emission-free mobility.
The Concept Sprinter F-CELL unites fuel cell and battery tech-
nology in a plug-in hybrid. The eDrive@VANs strategy involves
not only the electrification of the vehicle fleet but also a cus-
tomized overall system solution for each individual fleet. This
includes advice on vehicle selection, assistance with tools
such as the eVAN Ready app, and an overview of the total cost
of ownership.
Daimler, with Mercedes-Benz Vans, is part of the ZUKUNFT.DE
federal model project for electric mobility in Germany.
ZUKUNFT.DE is a German acronym that stands for customer-
friendly delivery operations, sustainability, flexibility and trans-
parency – all brought about by emission-free vehicle operation.
Among other things, the project includes the electrification
of last-mile parcel deliveries in urban environments. We are one
of 11 project partners that are cooperating closely with five
associated partners in this major joint project, which is receiv-
ing assistance from researchers and scientists and support
from the German Federal Ministry of Transport and Digital Infra-
structure. The project is scheduled to be completed by the
end of 2020.
With its Vision URBANETIC, Mercedes-Benz Vans has presented
a revolutionary mobility concept under the label autonomous@
Vans that goes far beyond previous ideas of autonomous vehi-
cles. Vision URBANETIC removes the separation between
passenger and goods transport and is set to enable the needs-
based, sustainable and efficient movement of people and
goods. As part of a holistic system solution, Vision URBANETIC
addresses future urban challenges and offers innovative
solutions. This visionary concept is based on an autonomously
driving, electrically powered chassis that can carry various
swap bodies for transporting either passengers or goods.
In 2017, the American startup Via and Mercedes-Benz Vans
established a joint venture known as ViaVan, whose ride-sharing
services are a part of sharing@Vans. The company’s innovative
technology uses an intelligent algorithm to combine the same or
similar routes and destinations requested by various passen-
gers into a single trip with one vehicle, which makes it possible
to avoid detours and delays for everyone. The app-based,
on-demand ride-sharing service was launched in Amsterdam in
March 2018. It was subsequently introduced successfully in
London, and then later in Berlin in September in cooperation with
the Berliner Verkehrsbetriebe (BVG) transportation company.
The new service is now also being used for the first time to help
optimize individual passenger transport at a company – ViaVan
was launched at the BASF site in Ludwigshafen, Germany, in
the year under review.
180 C | THE DIVISIONS | DAIMLER BUSES
Daimler Buses
In 2018, business developments at Daimler Buses were strongly influenced by the economic crises
in normally profitable key markets and the associated decrease in demand for buses. This situation
led to a downward adjustment of anticipated earnings during the year under review, with the division’s
full-year EBIT decreasing significantly compared with the previous year. At the same time, the
gradual recovery of the Brazilian economy, strong demand in the EU30 region and growth in India
led to a significant increase in global unit sales at Daimler Buses in 2018. As the market leader in
its most important traditional core markets, Daimler Buses focuses on innovative and pioneering city
buses and touring coaches. In 2018, Daimler Buses once again presented itself as a future-oriented
manufacturer with new products such as the eCitaro, digital services, a “future package” for our
production network and the implementation of the CASE strategy.
C.07
Daimler Buses
€ amounts in millions
Revenue
EBIT
Return on sales (in %)
Investment in property,
plant and equipment
Research and development
expenditure
thereof capitalized
Production
Unit sales
Employees (December 31)
2018
2017
18/17
% change
4,529
265
5.9
144
199
41
31,233
30,888
18,770
4,5241
2811
6.21
94
194
30
28,518
28,676
18,292
+0
-6
.
+53
+3
+37
+10
+8
+3
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
C.08
Unit sales Daimler Buses
Total
EU30
thereof Germany
Latin America
(excluding Mexico)
thereof Brazil
Mexico
Asia
Other markets
2018
2017
18/17
% change
30,888
28,676
9,284
2,902
8,687
3,057
13,681
12,740
8,778
3,236
3,172
1,515
7,201
3,440
2,348
1,461
+8
+7
-5
+7
+22
-6
+35
+4
Sales significantly above the prior-year level
Daimler Buses sold 30,900 buses and bus chassis worldwide in
financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
was able to maintain its market leadership in its most important
traditional core markets (EU30, Brazil, Argentina and Mexico).
At €4.5 billion, revenue was at the prior-year level (€4.5 billion),
while EBIT decreased slightly to €265 million (2017: €281 million).
Varied business developments in the core regions
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a complete range of city buses, intercity buses
and touring coaches, as well as bus chassis. Due to continued
high demand for our complete buses, sales in this region
amounted to 9,300 units, which was significantly above the high
number recorded in the prior year (2017: 8,700). Daimler Buses
maintained its leading market position in the EU30 region with
a market share of 29.0% (2017: 28.4%). At 2,900 units, sales
in Germany were 5% lower than in the previous year. Sales of
300 units in Turkey were significantly lower than in the prior
year (2017: 400) due to the country’s situation, which remains
difficult. The market situation in Latin America (excluding
Mexico) improved on account of the gradually recovering market
in Brazil, although growth in the region was negatively affected
by the sharp market contraction in Argentina. Sales of Mercedes-
Benz bus chassis in Brazil rose by 22% to 8,800 units. We
were able to maintain our leading market position in Brazil with
a market share of 51.6% (2017: 52.5%). In India, we continued
along our growth path and increased our sales volume to 1,600
units (2017: 900). At 3,200 units, sales in Mexico were
significantly lower than in the previous year (2017: 3,400).
C | THE DIVISIONS | DAIMLER BUSES 181
E-mobility in series maturity: The Mercedes-Benz eCitaro is not only a city bus, it is part of a complete e-mobility system from Daimler Buses.
New all-electric Mercedes-Benz eCitaro is an important
component of locally emission-free transport in cities
With the new all-electric Mercedes-Benz eCitaro, which had its
world premiere at the IAA Commercial Vehicles trade fair, we
now have in our portfolio a key component of environmentally
friendly local public transport with low-emission and locally
emission-free buses. The bus gets its energy from lithium-ion
batteries, and the charging technology it uses allows it to
adjust to the individual requirements of transport companies.
An innovative thermal management system ensures the
efficient use of energy and provides the basis for a practical
range. The bus can cover about one third of transport
operators’ relevant routes without intermediate recharging.
The first models have already been delivered to customers.
The Mercedes-Benz eCitaro also marks the launch of an inno-
vation offensive whose objective is the rapid and practical
electrification of local public transport with buses in cities and
large metropolitan areas. Because battery technology is
developing at a rapid pace, the eCitaro is already designed to
accommodate a transition to future battery technologies such
as more powerful lithium-ion batteries or the optional use of
solid-state batteries. Plans also call for the eCitaro’s range
to be increased through the use of a range extender in the form
of a fuel cell that generates electricity.
Holistic eMobility Consulting set to redefine urban bus
transportation
The new all-electric eCitaro city bus is part of Daimler
Buses’ overall eMobility system. In order to support our custom-
ers with the transition to electric bus fleets, our eMobility
Consulting team offers advice on request about different use
scenarios, taking into account bus route lengths, passenger
numbers, energy requirements, range calculations, charging
management and other aspects. In addition, our OMNIplus
service brand offers a tailored electric mobility service package
that includes onsite services at customers’ maintenance and
repair shops.
Redefining safety with innovative safety and driver assis-
tance systems
With new safety and assistance systems, we are demonstrating
that safety has top priority for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns the driver of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist – the first active emergency
braking assistance system for city buses – will be available
as an option for the entire Mercedes-Benz Citaro model
family and the Mercedes-Benz Conecto starting in 2019. The
new assistance system warns of a potential collision with
pedestrians or stationary or moving objects, and automatically
initiates braking if there is an imminent risk of collision.
Sideguard Assist, which is a radar-based turning assistant with
pedestrian detection for buses, supports bus drivers during
right turns, which can be dangerous in certain situations. Side-
guard Assist is available for all variants of the Mercedes-Benz
Citaro and Tourismo and all Setra ComfortClass 500 and Setra
TopClass 500 touring coaches.
182 C | THE DIVISIONS | DAIMLER BUSES
Efficiency, variability, comfort and safety, exciting design: The new Setra S 531 DT double-decker bus.
Digital service with OMNIplus ON
Daimler Buses now also offers digital services with its new
OMNIplus ON portal, which integrates existing and new services
into four pillars. OMNIplus On advance ensures maximum
fleet availability for bus operators, and its Uptime feature helps
increase vehicle operating times, for example. OmniPlus On
monitor combines telematics services that ensure efficient fleet
management operations. OMNIplus On drive supports bus
drivers with their departure checks, for example, and OMNIplus
On commerce allows bus companies to buy spare parts
quickly and directly around the clock in an online shop.
Numerous major orders for Daimler Buses – including the
first large orders for the all-electric eCitaro
Daimler Buses received a large number of major orders in
the year under review. The cities of Hamburg and Berlin ordered
20 and 15 Mercedes-Benz eCitaro models respectively in 2018.
The order from Berlin also included an option to purchase as
many as 950 Mercedes-Benz city buses. The framework
agreement for the option, which runs for several years, covers
the delivery of up to 600 articulated buses and a maximum
of 350 solo buses. During the year under review, we were also
able to gain major European orders in Poland (150 vehicles
for Kraków, Gdańsk and Bialystok), Spain (EMT Madrid: 270
Citaro buses with natural gas drive to be delivered between
2019 and 2020) and Austria (framework agreement with
Blaguss: 250 Setra touring coaches to be delivered between
2019 and 2022). We also received orders in Brazil, including
one for 121 city buses that will be used to renew the fleets
operated by various bus companies in Curitiba.
Award-winning products from Daimler Buses
The Mercedes-Benz Citaro hybrid, which is available with either
a diesel or a natural gas engine, was named “Bus of the Year
2019” by an independent jury. The selection criteria for the award
included profitability, innovation, quality and user-friendliness.
The Citaro Ü hybrid intercity variant made a big impression in
terms of sustainability and was presented with the “Sustain-
able Bus Award 2019” for inter-city buses. Four of our buses also
captured first place in the 2018 readers’ survey conducted
by the EuroTransportMedia (ETM) publishing company. The
awards here were in the categories City Bus (Mercedes-Benz
Citaro K), Inter-City Bus (Mercedes-Benz Citaro LE), Minibus
(Sprinter Minibus) and High-Deck Touring Coach (Setra Top-
Class HDH/DT).
New sales partner in North America
REV Coach LLC became the new sales partner for the Setra
brand in North America at the beginning of 2018. The company
took over from Motor Coach Industries International Inc.
(MCI) as the general sales agent for Daimler Buses in the North
American market. REV has also been responsible for Setra
customer service since July 2018.
BusStore pre-owned bus brand celebrates fifth anniversary
Launched in 2013, the BusStore brand combines and further
professionalizes all Mercedes-Benz and Setra activities in the
area of used buses. BusStore currently sells approximately
2,000 buses each year. During the year under review, we opened
new BusStore locations in Croatia, Hungary, Latvia and
Slovakia, which means that BusStore now operates a total of
19 outlets in Europe. We have also launched a pilot project
with BusStore Mexico in order to expand our international pre-
owned bus sales operations. In addition, plans now call for
BusStore locations to be established in other countries as well.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 183
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 5.2 million at the end of financial year 2018. Contract
volume developed positively, while EBIT was significantly lower than in the prior year, mainly as a
result of the agreement reached to end the Toll Collect arbitration proceedings. The combination
of sales financing with brokered automotive insurance policies continues to gain importance. The
division’s range of innovative mobility services was further expanded. Today, services such as
car2go, moovel and the ride-hailing group with its mytaxi, Beat, Clever Taxi and Chauffeur Privé
brands are used by 31.0 million customers all over the world. In 2018, we also announced plans
to establish a new joint venture for mobility services with BMW.
Half of all Daimler vehicles delivered to customers are
financed or leased
Daimler Financial Services concluded 2.0 million new financing
and leasing contracts worth a total of €71.9 billion in 2018.
The total value of all new contracts was thus slightly above the
prior-year level (+2%). About half of all new-vehicle sales by our
automotive divisions in 2018 were supported by sales financing
from Daimler Financial Services. In total, more than 5.2 million
financed or leased vehicles were on the books at the end of
2018 with a total contract volume of €154.1 billion; this repre-
sents a 10% increase compared with the end of 2017. EBIT
amounted to €1,384 million (2017: €1,970 million). C.09
Moderate increase in new business in Europe
Daimler Financial Services concluded 970,000 new financing
and leasing contracts worth €31.7 billion in the Europe region
(+2%). Especially high rates of growth were recorded in Poland
(+28%) and France (+21%). In Turkey, new business decreased
sharply (-37 %) due to the tense political and economic envi-
ronment in that country. In Germany, Mercedes-Benz Bank’s
new business increased by 3% to €13.2 billion. Daimler Finan-
cial Services’ total contract volume in Europe rose by 8% to
€64.2 billion.
Slight growth in the Americas
Daimler Financial Services brokered 483,000 new financing
and leasing contracts worth €22.5 billion in the Americas
region in 2018 (+3%). The volume of new business developed
very well in Brazil (+25%). Contract volume in the Americas
region of €56.1 billion at December 31, 2018 was clearly higher
than at the end of 2017 (+11%). Adjusted for exchange-rate
effects, contract volume increased by 8%.
Africa & Asia-Pacific region and China:
new business at prior-year level
New business in the Africa & Asia-Pacific region (excluding
China) decreased slightly compared with the previous year, by
3% to €8.2 billion. Business growth was especially strong in
Thailand (+24%). New business decreased significantly in India
(-10%) and South Africa (-13%). At the end of 2018, contract
volume in the Africa & Asia-Pacific region (excluding China)
totaled €18.3 billion, representing a 6% increase over the previ-
ous year. New business increased moderately in China, how-
ever, where 319,000 new leasing and financing contracts worth
€9.6 billion were concluded in 2018 (+2%). At the end of
2018, contract volume in China amounted to €15.4 billion – an
increase of 26% compared with the end of 2017.
Further growth in the insurance business
Daimler Financial Services brokered approximately 2.3 million
insurance policies in 2018 – an increase of 8% compared to the
prior year. Business developments were particularly positive in
China, Spain and Russia. More customized insurance solutions
are now needed in view of the trend toward greater flexibility in
vehicle use, for example in the areas of connectivity, telematics,
mobility services and flat rates for leasing contracts.
C.09
Daimler Financial Services
€ amounts in millions
% change
2018
2017
18/17
Revenue
EBIT
Return on equity (in %)
New business
Contract volume
Investment in property,
plant and equipment
26,269
1,384
11.1
71,927
154,072
24,5301
1,970
17.7
70,721
139,907
64
43
Employees (December 31)
14,070
13,012
+7
-30
.
+2
+10
+49
+8
1 This amount has been adjusted due to first-time adoption of
IFRS 15 and IFRS 9. The Group’s internal revenue and cost of sales
have been adjusted by the same amount at the Daimler Financial
Services segment. These adjustments have been fully eliminated in
the reconciliation.
184 C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Whether for leasing, financing, insurance or mobility services: The focus is always on the customer at Daimler Financial Services.
New name: Daimler Mobility AG
Daimler Financial Services AG plans to change its name to
Daimler Mobility AG in the second half of 2019. The Daimler
Financial Services division, which has approximately 14,070
employees, is already well known as the Daimler Group’s pro-
vider of mobility services, which include car2go, moovel
and the ride-hailing group with its mytaxi, Beat, Clever Taxi and
Chauffeur Privé brands. The renaming underscores the divi-
sion’s transformation into a provider of mobility services and is
one of the components of “Project Future”, which is designed
to strengthen the divisional structure of the Daimler Group.
Approximately 31.0 million customers currently make use of the
range of mobility services the division offers. Experts believe
the market for mobility services will generate hundreds of bil-
lions in revenue over the next decade, and Daimler Mobility AG
wants to play a key role in this development.
and directly pay for services provided by companies such as
car2go, mytaxi and local public transport operators. In
June 2018, moovel and the SSB transport company in Stuttgart
established the “SSB Flex” service, and in November 2018,
moovel and Rheinbahn teamed up to create the “Mobil in Düssel-
dorf” app. moovel is also one of the leading providers of
mobile ticketing solutions for public transport companies in the
United States. All in all, moovel North America offers 19 ser-
vices in 15 US cities. In October 2018, FASTLink DTLA – a non-
profit transportation management initiative – and moovel
North America announced plans to launch a new on-demand
ride-sharing pilot project in Los Angeles. The project, which
has been given the name FlexLA, will supplement the services
offered by the city’s public transit network. The number of
registered moovel app users in Germany and the United States
had risen to 6.2 million by the end of 2018 (2017: 3.7 million).
Mobility services remain on course for success
Daimler Financial Services once again expanded its range of
innovative mobility services in 2018. The number of registered
users of the car2go car-sharing service increased to 3.6 million,
enabling car2go to consolidate its position as a leading com-
pany for flexible car sharing. car2go also continuously further
developed its services during the year under review. For exam-
ple, the company introduced a new pricing model that enables
customers to rent cars at a lower rate on the outskirts of a
city, which also serves to further increase vehicle availability in
cities. In addition, car2go now offers customers greater flexibil-
ity by allowing them to extend their vehicle reservation period if
they need to keep a car longer than planned. car2go opened
its tenth North American location in Chicago in July 2018. During
the same month, the first smart convertibles were added to
the car2go fleet in Rome. At the beginning of 2019, a new Euro-
pean location was opened in Paris, which is served by a fleet
of 400 all-electric smart models.
The moovel app also underwent further development. moovel
enables customers in Germany to compare various mobility
and transport-system options and then choose the best way to
get from point A to point B. The app can also be used to book
The ride-hailing group behind mytaxi further strengthened
its position as one of the leading providers of taxi apps in
Europe in 2018, among other things, by acquiring a majority
stake in Chauffeur Privé. Ride-hailing group services which
were already available in the United Kingdom, Ireland, Greece,
Romania and France have now been extended to cover a
total of 12 European countries – and have also been launched
in fast-growing markets in Central and South America (Peru,
Columbia and Chile). A total of 390,000 drivers in more than
110 cities have now registered with the ride-hailing group’s
companies. The number of registered users of the ride-hailing
group’s services increased by 92% to 21.3 million in 2018.
mytaxi has also created its own scooter brand with the “hive”
e-scooter pilot project: Several hundred e-scooters are
available in Portugal’s capital, Lisbon, where they offer a genuine
alternative for local transport.
Cooperation with BMW
Daimler AG and the BMW Group are joining forces to offer their
customers sustainable urban mobility services from a single
source in the future. The authorities have now approved the
companies’ plan to establish the joint venture. After comple-
tion of the complex transaction on January 31, 2019, the new
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 185
mobility services company, Daimler AG and the BMW Group
will make a joint announcement in the first quarter of 2019
regarding the next steps to be taken. The headquarters of the
new joint mobility-services company will be located in Berlin.
Our goal is to jointly create a major global player for seamless
and intelligent connected mobility services. As a hub for
creativity and innovation, Berlin is exactly the right location for
our plans. The 50-50 joint venture will bring together the fol-
lowing services: an on-demand mobility and multimodal mobil-
ity platform, car sharing, ride hailing, parking, and charging
for electric vehicles.
Joint venture for premium ride-hailing services in China
Daimler Mobility Services and Geely Group Company will
establish a premium ride-hailing service in China, subject to the
approval of the regulatory authorities. The new company plans
to begin offering a ride-hailing service with premium vehicles in
several Chinese cities in 2019. The initial fleet will include
Mercedes-Benz S-Class, E-Class, V-Class and Maybach vehicles,
as well as premium models from the Geely electric fleet. The
50-50 joint venture will be headquartered in Hangzhou; each
partner will have an equal number of seats on the company’s
board of management.
Expansion of fleet management operations
Daimler Financial Services once again expanded its fleet
management activities in 2018. A total of 395,000 contracts
were on the books at Athlon and Daimler Fleet Management
in Europe at the end of 2018, which represents an increase of
3% compared with the prior year. The total fleet management
contract volume amounted to €6.5 billion. Plans now call for all
fleet management activities to eventually be con solidated
under the Athlon brand name. Athlon gained new interna-
tional customers in 2018 and strengthened its market posi-
tion as a provider of comprehensive fleet management
and mobility solutions for commercial customers. This devel-
opment also had a positive impact on sales of Mercedes-Benz
cars and vans. With “connect business,” Mercedes-Benz Con-
nectivity Services also offers cross-brand connectivity ser-
vices for telematics-based car fleet management in several
European countries.
heycar: Daimler invests in a used-vehicle platform
In September 2018, Daimler Financial Services announced it
had signed an agreement on the planned acquisition of an
interest in the heycar used-vehicle platform. This strategic
investment will allow Daimler Financial Services to further
expand a cross-brand platform for manufacturers, dealers,
automotive banks and customers that offers everything
from purchasing to financing and insurance – all from a single
source.
Investment in artificial intelligence
Daimler Financial Services has invested in the New Zealand
company Soul Machines in order to implement artificial and
emotional intelligence systems in future sales processes. The
start-up is a pioneer in the field of emotional intelligence
for use in machines and digital avatars. Daimler is the first
premium automobile manufacturer to invest in the develop-
ment of emotional intelligence application scenarios.
Outstanding results in employer rankings
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2018, independent surveys once again
showed that the company is a leader in numerous countries
around the world with regard to automobile customers’ and
dealers’ assessments of our service quality. The Great Place to
Work Institute recognizes global employers for their excep-
tional corporate culture. Last year, Daimler Financial Services
was one of two German companies to rank among the top 10
employers in the world in that survey. A total of approximately
7,000 companies with more than 5,000 employees partici-
pated. In the German survey, Daimler Financial Services finished
first out of about 800 companies, thus earning itself the title
of “Best employer in Germany in 2018” in the category of 2,001
to 5,000 employees.
Toll Collect agreement
In May 2018, Daimler Financial Services reached an agreement
with Deutsche Telekom AG (consortium partner) and the
German government on ending the arbitration proceedings
regarding Toll Collect. E page 76
Some 31 million customers worldwide use mobility services from Daimler Financial Services, with products such as car2go, moovel and mytaxi.
Corporate
Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance.
Our actions take place within the framework of responsible, trans-
parent and sustainable corporate governance.
D | CORPORATE GOVERNANCE | CONTENTS 187
D | Corporate Governance
Report of the Audit Committee
188 – 190
– Responsibilities and composition
– Meetings and participants
– Topics dealt with
Declaration on Corporate Governance,
Corporate Governance Report
191 – 201
– Declaration of compliance with the German
Corporate Governance Code
D & O insurance deductible for the
Supervisory Board
– Corporate government in practice
German Corporate Governance Code
Principles of our actions
Guidelines for behaving with integrity
What we expect of our business partners
Risk management at the Group
Accounting principles
– Composition and mode of operation of the
Board of Management
Board of Management
CASE Steering Committee
Diversity
– Composition and mode of operation of the
Supervisory Board and its Committees
Supervisory Board
Presidential Committee
Nomination Committee
Audit Committee
Mediation Committee
– Law for the equal participation of woman and men
in executive positions
– Overall requirements for the composition of the
Board of Management and the Supervisory Board
Board of Management
Supervisory Board
– Shareholders and the Shareholders’ Meeting
188 D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Report of the Audit Committee
Dear Shareholders,
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that body
in financial year 2018.
Responsibility
On the basis of applicable law, the German Corporate
Governance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals
primarily with questions of accounting, financial reporting and
non-financial reporting. In addition, it deals with the annual
audit and reviews the qualifications and independence of the
external auditors. Furthermore, it discusses the effectiveness
and functional capabilities of the risk management system, the
internal control system, the internal auditing system and
the compliance management system. After the external auditors
are elected by the Annual Shareholders’ Meeting, the Audit
Committee engages the external auditors to conduct the annual
audit and the auditors’ review of interim financial statements,
determines the important audit issues and negotiates the audit
fees with the external auditors. The Audit Committee also
commissions the external auditors to carry out a voluntary review
of the non-financial report within the framework of a limited
assurance engagement.
Equal representation
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit
Committee in financial year 2018. Both are independent and
have expertise in the field of financial reporting, as well as
special knowledge of and experience in the auditing of financial
statements and the application of methods of internal control.
During financial year 2018, the employees were represented on
the Audit Committee by Michael Brecht as the Deputy Chairman
of the Committee and by Ergun Lümali.
Meetings and participants
The Audit Committee met six times in financial year 2018. All
of these meetings were also attended by the Chairman of
the Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The other permanent participants at the meetings
were the Chairman of the Board of Management, the members
of the Board of Management responsible for Finance and
Controlling and for Integrity and Legal Affairs, and the external
auditors. The heads of specialist departments such as
Accounting, Internal Auditing, Group Compliance and Legal were
also present to report on individual items of the agenda.
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the aforementioned
members of the Board of Management, the external auditors
and, if required, the heads of the relevant specialist depart-
ments. Such individual discussions were mainly held to prepare
for the next committee meetings.
Reporting to the Supervisory Board
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following
Supervisory Board meetings.
Topics in 2018
In the meeting held on January 31, 2018, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2017, as well as with the proposal on the
appropriation of profits made by the Board of Management.
Following an in-depth review, the Audit Committee took
positive note of the presented figures and determined that no
objections were to be made to their proposed publication.
The Committee further recommended that the Supervisory
Board, which met immediately thereafter, adopt the same
view. The preliminary key figures and the proposal on the appro-
priation of profits were announced at the Annual Press
Conference on February 1, 2018.
In another meeting held on February 9, 2018, the Audit
Committee dealt with the annual financial statements, the
consolidated financial statements and the combined man-
agement report for Daimler AG and the Daimler Group for the
financial year 2017, each of which had been issued with an
unqualified auditor’s opinion by the external auditors, as well
as with the proposal on the appropriation of profits. During
the meeting, the Audit Committee focused in particular on the
key audit matters described in each audit opinion and on the
audit approach applied in each case, including the conclusions
drawn. The Audit Committee also reviewed and discussed
the non-financial report, which was prepared for the first time.
The external auditors reported on the results of their audit
and on the voluntary review of the non-financial report within
the framework of a limited assurance engagement, and
were also available to answer supplementary questions and to
provide additional information. The audit reports on the
annual company and consolidated financial statements (including
the combined management report) and the internal control
system (ICS), the report concerning the non-financial report,
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE 189
Dr. Clemens Börsig, Chairman of the Audit Committee
and important issues related to accounting were discussed with
the external auditors. In addition, the Audit Committee also
discussed the risk management system (RMS). Following an
in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the non-
financial report, the proposal on the appropriation of profits, and
the recommendation of the Board of Management to pay a
dividend of €3.65 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit
Committee for the financial year 2017.
In this meeting, the Audit Committee also discussed the report
on the total fees paid to the external auditors in financial
year 2017 for auditing and non-auditing services and defined
the framework of approval for engaging the external auditors
to provide non-audit services during the period January 1, 2018
to February 15, 2019. In this context, the Audit Committee
also reviewed the authorized external auditor services in accor-
dance with the appendix to the Audit Committee’s rules of
procedure and adopted a resolution to update the appendix.
The Audit Committee also decided to recommend to the
Supervisory Board, and subsequently to the Annual Shareholders’
Meeting, that KPMG AG Wirtschaftsprüfungsgesellschaft be
engaged to conduct the annual external audit and the external
auditors’ review of interim financial reports for financial year
2018 and also to conduct the external auditor’s review of interim
financial reports for financial year 2019 in the period leading
up to the Annual Shareholders’ Meeting in 2019. The Audit
Committee based this recommendation on the quality of
the annual audit and the results of the independence review,
for which no indications of partiality or a threat to indepen-
dence were found. Subject to the election of the proposed
external auditors by the Annual Shareholders’ Meeting,
the Audit Committee also discussed the proposal to be made
regarding the fees to be agreed upon with the external
auditors for financial year 2018. Finally, within the framework of
its responsibility, the Audit Committee dealt with the draft
agenda for the 2018 Annual Shareholders’ Meeting and the
annual audit plan for 2018 of the Internal Auditing department.
In the meetings during 2018 related to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditor’s
review of interim financial statements. In addition, the Committee
received reports from the Internal Auditing, Group Compliance
and Legal departments. The Board of Management reported
regularly to the Audit Committee on the current status of the
main legal proceedings, including the inquiries, investigations,
proceedings and administrative orders in connection with
diesel exhaust emissions. In addition, the Audit Committee
regularly dealt with notifications concerning possible
violations of rules submitted by employees and third parties
to the Group’s own whistleblower system BPO (Business
Practices Office).
The meeting of the Audit Committee in April 2018 took place
within the framework of the Supervisory Board meeting that
was held abroad in Budapest. Along with the interim financial
report for the first quarter of 2018, the Audit Committee also
dealt with the quarterly reports from the Group Compliance,
Legal and Internal Auditing departments. In addition, as a
result of changes made to the scope of responsibility of the BPO,
the Audit Committee dealt with amendments to be made to
its rules of procedure with regard to the regular report that must
be submitted to it. The Audit Committee also approved the
fees agreed upon with the external auditors for financial year
2018 after the Annual Shareholders’ Meeting made its
decision on April 5, 2018 regarding the election of the proposed
external auditors for the annual financial statements and the
consolidated financial statements.
In its meeting in June 2018, the Audit Committee was informed
about recent measures taken in connection with the admin-
istrative order issued by the German Federal Motor Transport
Authority for the recall of the Vito OM622 and about the
discussions held in May and June 2018 at the German Federal
Ministry of Transport and Digital Infrastructure. The Audit
Committee then discussed aspects of the Group’s risk manage-
ment system and dealt in particular with its changes and
190 D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
further development. It also discussed the methods and
processes of, and possible changes to, the internal control
system, which along with accounting also includes the
internal auditing function and the compliance management
system. In addition, the Committee was informed about
the Group’s legal system and the Group’s legal risk reporting. In
this meeting, the Committee also defined planning measures
and the key audit issues for the external audit of financial year
2018. The meeting was also used to discuss the results of
the internal quality analysis of the external audit for financial
year 2017.
In the same meeting in June 2018, the Audit Committee
addressed current financial accounting issues in detail, in
particular new regulations for financial reporting in accor-
dance with IFRS 16 (Leases), the draft paper from the European
Securities and Markets Authority (ESMA) regarding central
electronic reporting and its implications for Daimler AG and
accounting procedures for research and development costs.
The Committee also discussed the approach to be taken for the
creation and examination of the non-financial report for 2018.
Finally, the Audit Committee took note of a report on pension-,
refinancing- and tax-risk management and also discussed
with the Board of Management the annual report produced by
the Group’s Data Protection Officer.
In the meeting held in July 2018, the Audit Committee dealt
mainly with the second-quarter results, the risk report and
the quarterly reports from the Group Compliance, Legal and
Internal Auditing departments.
In the meeting held in October 2018, the Audit Committee
dealt with the interim financial report for the third quarter of
2018 and the quarterly reports from the Group Compliance
and Legal departments. In addition, the Committee conducted
its annual review of the authorized external auditor services
in accordance with the appendix to the Audit Committee’s rules
of procedure and also adopted a resolution to retain for
financial year 2019 the catalog updated at the beginning of 2018.
Finally, the Audit Committee agreed to raise the framework
of approval for engaging the external auditors to provide non-
audit services during the period January 1, 2018 to February
15, 2019.
Company and consolidated financial statements 2018
In the meeting held on February 5, 2019, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2018, as well as with the proposal on the appro-
priation of profits made by the Board of Management. Following
an in-depth review, the Audit Committee took positive note of
the presented figures and determined that no objections were
to be made to their proposed publication. The Committee
further recommended that the Supervisory Board, which met
immediately thereafter, adopt the same view. The preliminary
key figures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 6,
2019.
In another meeting on February 13, 2019, the Audit Committee
reviewed and discussed in detail the annual financial statements,
the consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group for
financial year 2018, each of which had been issued with an
unqualified auditor’s opinion by the external auditors, as well
as the proposal on the appropriation of profits and the non-
financial report, which was issued with a report in accordance
with ISAE 3000. At the meeting, the external auditors
reported on the results of their audit and focused in particular
on the key audit matters and on the audit approach applied in
each case, including the conclusions drawn. They also reported
on the voluntary review of the non-financial report within the
framework of a limited assurance engagement and were available
to answer supplementary questions and to provide additional
information. The audit reports on the annual financial statements
and consolidated financial statements (including the key
audit matters in the audit opinions) and on the internal control
system (ICS), the report concerning the non-financial report
for 2018 and important issues related to financial reporting were
discussed with the external auditors. The Audit Committee
also discussed the risk management system (RMS). Following
an in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the declaration
on corporate governance included in the corporate governance
report, the non-financial report and the recommendation of
the Board of Management to pay a dividend of €3.25 per share
entitled to a dividend. Furthermore, the Audit Committee
approved the Report of the Audit Committee for financial year
2018.
Efficiency review
As in previous years, the Audit Committee conducted a self-
evaluation of its own activities also in 2018 on the basis of
an extensive company-specific questionnaire. The results of
this efficiency review were once again very positive and were
presented and discussed in the meeting on February 13, 2019.
This did not result in any need for action with regard to the
Committee’s tasks, or with regard to the content, frequency or
procedure of its meetings.
Stuttgart, February 2019
The Audit Committee
Dr. Clemens Börsig
Chairman
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 191
Declaration on Corporate Governance,
Corporate Governance Report
The Declaration on Corporate Governance pursuant to Section 289f and Section 315d of the German
Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well as
with the Corporate Governance Report. The following statements thus apply to Daimler AG and
the Daimler Group insofar as not otherwise stated. The Declaration on Corporate Governance,
which is combined with the Corporate Governance Report, can also be viewed on the Internet at
w daimler.com/dai/gcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB is limited to determining whether such statements
have actually been provided.
Declaration by the Board of Management and the
Supervisory Board of Daimler AG pursuant to
Section 161 of the German Stock Corporation Act
(AktG) regarding the German Corporate Gover-
nance Code
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section of
the German Federal Gazette on April 24, 2017 in the Code
version dated February 7, 2017, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board), and will continue to observe the recommendations with
the aforesaid deviation. Since the issuance of the last
compliance declaration in December 2017, Daimler AG has
observed the recommendations of the German Corporate
Governance Code, with the aforementioned exception.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
As in previous years, the Directors’ & Officers’ liability insurance
(D&O insurance) also contains a provision for a deductible for
the members of the Supervisory Board, which is appropriate in
the view of Daimler AG. However, this deductible does not
correspond to the legally required deductible for members of the
Board of Management in the amount of at least 10% of the
damage up to at least one and a half times the fixed annual
remuneration. Since the remuneration structure of the Super-
visory Board is limited to function-related fixed remuneration
without performance bonus components, setting a deductible
for Supervisory Board members in the amount of 1.5 times
the fixed annual remuneration would have a disproportionate
economic impact when compared with the members of the
Board of Management, whose compensation consists of fixed
and performance bonus components.
Stuttgart, December 2018
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
For the Board of Management
Dr. Dieter Zetsche
Chairman
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
on our website at w daimler.com/dai/gcgc.
192 D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The main principles applied in our corporate
governance
German Corporate Governance Code
Beyond the legal requirements of German stock corporations,
codetermination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Governance Code (“Code”) with the exception
disclosed and justified in the declaration of compliance.
Daimler AG has also followed and continues to follow the sug-
gestions of the Code with just one exception: Deviating
from the suggestion in Clause 2.3.3, which stipulates that
companies should enable shareholders to view the Shareholders’
Meeting with modern communications media such as the
Internet, the Shareholders’ Meeting is not transmitted in its
entirety on the Internet, but only until the end of the report
by the Board of Management, in order to protect the character
of the Shareholders’ Meeting as a meeting attended by our
shareholders in person. An additional factor is that continuing
the broadcast after that point, in particular broadcasting
comments made by individual shareholders, could impair the
discussion between shareholders and management.
The principles guiding our conduct
Our business conduct is based on Group-wide standards that
go beyond the requirements of relevant legislation and the
German Corporate Governance Code. These standards are
based on our four corporate values integrity, respect, passion
and discipline. In order to achieve viable and thus sustainable
business success on this basis, our goal is to ensure that
our activities are in harmony with the environment and society.
This is due to the fact that we, as one of the world’s leading
automakers, also strive to be a leader in sustainability. We have
defined the most important principles in our Integrity Code,
which serves as a frame of reference for compliant and ethical
conduct in everyday activities for all employees at Daimler AG
and the Group.
Integrity Code
Our Integrity Code is based on a shared understanding of
values, which we developed together in a dialogue with Daimler
employees. The Code defines our principles of behavior in
daily business. This applies to interpersonal conduct within the
company as well as conduct toward customers and business
partners. These central principles include compliance with laws,
as well as fairness and responsibility, for example. In addition
to general principles of behavior, the Code includes requirements
and regulations concerning respect for and the protection of
human rights and dealing with conflicts of interest. It also pro-
hibits all forms of corruption. The Integrity Code applies to
all companies and employees at the Daimler Group worldwide.
The Integrity Code is available on the Internet at w daimler.
com/dai/caag.
We have also reached agreement on “Principles of Social
Responsibility” with the World Employee Committee. These
principles apply at Daimler AG and throughout the Group. In
the Principles of Social Responsibility, Daimler commits itself
to the principles of the UN Global Compact and thus to
internationally recognized human and workers’ rights, freedom
of association, sustainable protection of the environment
and the proscription of child labor and forced labor. Daimler
also commits itself to guaranteeing equal opportunities and
adhering to the principle of “equal pay for equal work.”
Expectations for our business partners
We also require our business partners to adhere to compliance
stipulations because we regard our business partners’ integrity
and behavior in conformity with regulations as an indispensable
prerequisite for trusting cooperation. When selecting our
direct business partners, we therefore pay close attention that
they comply with the law and follow ethical principles, and
that they pay the same attention themselves towards other
partners in the supply chain. For the expectations we place
on our business partners, see also w daimler.com/sus/obr.
Risk management at the Group
Daimler has a risk management system commensurate with
its size and position as a company with global operations,
E pages 143 ff of the Annual Report 2018. The risk manage-
ment system is one component of the overall planning,
controlling and reporting process. Its goal is to enable the
company’s management to recognize significant risks at
an early stage and to initiate appropriate countermeasures in a
timely manner. At least once a year, the Audit Committee
discusses the effectiveness and functionality of the risk manage-
ment system with the Board of Management. The Chairman
of the Audit Committee reports to the Supervisory Board on the
committee’s work at the latest in the meeting of the Super-
visory Board following each committee meeting. The Supervisory
Board also deals with the risk management system on the
occasion of the approval of the operational planning and the
audit of the annual company and consolidated financial
statements. In addition, the Board of Management regularly
informs the Audit Committee and the Supervisory Board of
the most important risks facing the Company and the Group as
a whole. The Chairman of the Supervisory Board has regular
contacts between Supervisory Board meetings with the Board
of Management, and in particular with the Chairman of the
Board of Management, to discuss not only the Group’s strategy
and business development but also the issue of risk man-
agement. The Internal Auditing department monitors adherence
to the legal framework and to Group standards by means of
targeted audits and initiates appropriate actions as required.
Accounting and the external audit
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of
the German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual company
financial statements and consolidated financial statements of
Daimler AG are audited by external auditors; interim financial
reports are reviewed by external auditors. The consolidated
financial statements and the Group management reports are
made publicly accessible via the Company’s website within 90
days from the end of the reporting year; the interim financial
reports are made publicly accessible in the same manner within
45 days from the end of the reporting period.
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders’ Meeting for the election of the external auditors for
the annual company financial statements, for the consolidated
financial statements and for the auditors’ review of interim
financial reports. At the Annual Shareholders’ Meeting on April
5, 2018, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 193
Information on the areas of responsibility and the curricula
vitae of the Board of Management members is posted on the
Daimler AG website at w daimler.com/dai/bom. The mem-
bers of the Board of Management and their areas of responsi-
bility are also listed on E pages 44 f of the Annual Report
2018.
D.01
Governance structure
Annual Shareholders’ Meeting
ratifies
the actions of
elects members
representing the
shareholders,
ratifies the
actions of
reports
Supervisory Board
20 members
appoints,
advises and
monitors
reports
reports
Board of Management
8 members
was elected to conduct the audit of the annual company financial
statements and consolidated financial statements, and the
external auditors’ review of interim financial reports, for financial
year 2018, as well as the external auditors’ review of interim
financial reports for financial year 2019 in the period leading
up to the Shareholders’ Meeting in 2019. Since 2014, the
responsible auditor commissioned to carry out the external audit
has been Dr. Axel Thümler. KPMG AG Wirtschaftsprüfungsgesell-
schaft has been conducting the audit of the annual company
financial statements and consolidated financial statements of
Daimler AG since the 1998 financial year.
Prior to issuing its recommendation to the Annual Shareholders’
Meeting, the Audit Committee of the Supervisory Board
obtained a declaration from the external auditors under consid-
eration. The external auditors were requested to state whether
any business, financial, personal or other relationships existed
between the external auditors and their bodies and audit
managers on the one hand, and the Company and the members
of its bodies on the other, which could justify concerns
regarding a conflict of interest. This statement also describes
the extent to which other services were performed for the
Daimler Group in the previous year or had been contractually
agreed upon for the following year.
The Audit Committee instructed the external auditors to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit or
the auditors’ review of interim financial statements, and of all
key findings and events relevant to the tasks of the Supervisory
Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditors stipulating that the
external auditors would inform the Audit Committee, and make
a note in the audit report, of any facts uncovered during the
annual audit that would reveal inaccuracies in the Board of
Management’s and the Supervisory Board’s declaration of
compliance with the German Corporate Governance Code.
Composition and mode of operation of the
Board of Management D.01
Daimler AG is obliged by the German Stock Corporation Act (AktG)
to apply a dual management system featuring strict personal
and functional separation between the Board of Management
and the Supervisory Board (two-tier board). Accordingly, the
Board of Management manages the company while the Super-
visory Board monitors and advises the Board of Management.
Board of Management
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2018. In accordance with German
law on the equal participation of women and men in executive
positions, the Supervisory Board has set a target for the propor-
tion of women on the Board of Management and a deadline
for achieving this target. The details are described in a separate
section: E page 197. With regard to the composition of the
Board of Management, the Supervisory Board has also adopted
a diversity concept that is embedded in an overall require-
ments profile. The details of this concept are also described in
a separate section: E page 198.
194 D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board, the
Board of Management determines the Group’s strategic focus,
defines the corporate goals, and makes decisions concerning
operational planning matters. The members of the Board of
Management must represent the interests of the Company
and share responsibility for managing the Group’s entire
business.
Irrespective of this overall responsibility, the individual members
of the Board of Management manage their allocated areas
on their own responsibility and within the framework of the
instructions approved by the entire Board of Management.
Specific issues defined by the Board of Management as a whole
are dealt with by the Board as a whole, which must approve all
related decisions. The Chairman of the Board of Management
coordinates the work of the Board of Management.
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler
AG, the annual consolidated financial statements, and the
combined management report of the Company and the Group,
as well as the separate combined non-financial report produced
for Daimler AG and the Group. Together with the Supervisory
Board, the Board of Management issues the declaration of
compliance with the German Corporate Governance Code each
year. It ensures that the provisions of applicable law, official
regulations and the Group’s internal guidelines are adhered to,
and works to make sure that the companies of the Group
comply with those rules and regulations. The Board of Man-
agement has also established an adequate compliance
management system that takes into account the Company’s
risk situation. The main features of this system are described
on E pages 217 ff of the Annual Report 2018. Such features
include the Company’s whistleblower system, the BPO
(Business Practices Office), which enables Daimler employees
and external whistleblowers to report misconduct anywhere
in the world. The tasks of the Board of Management also include
establishing and monitoring an appropriate and efficient risk
management system.
For certain types of transactions defined by the Supervisory
Board, the Board of Management requires the prior consent of
the Supervisory Board. At regular intervals, the Board of
Management reports to the Supervisory Board on the strategy
of the business units, corporate planning, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system and the
compliance management system. The Supervisory Board has
specified the information and reporting duties of the Board of
Management.
The Board of Management has also given itself a set of rules of
procedure, which can be seen on our website at w daimler.
com/dai/rop. Those rules describe, for example, the procedure
to be observed when passing resolutions and ways to avoid
conflicts of interest.
CASE Steering Committee
The Board of Management has formed a Steering Committee
consisting of Board of Management members to address the
future-oriented CASE topics of connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use
(Shared & Services) and electric drive systems (Electric). The
responsibilities of the Board of Management as a whole, in
particular those regarding the catalog of issues that require its
approval, as well as the areas of responsibility of individual
Board members, remain unchanged despite the creation of the
Committee.
The Steering Committee consists of the Chairman of the Board
of Management, who is also responsible for Mercedes-Benz
Cars, as well as the members of the Board of Management
responsible for Finance & Controlling/Daimler Financial
Services, Mercedes-Benz Cars Marketing & Sales, and Group
Research & Mercedes-Benz Cars Development. The Chairman
of the Board of Management is also the Chairman of the Steering
Committee. In line with the Committee’s structure as described
above, the members of the Steering Committee at December
31, 2018 were Dr. Dieter Zetsche (Chairman), Bodo Uebber,
Britta Seeger and Ola Källenius.
Within the framework of the strategic approach adopted by the
Board of Management, the Steering Committee defines the
management model and the strategic guidelines for CASE. The
Board of Management has defined rules of procedure for the
Steering Committee. The Committee can make changes to these
rules on its own authority, provided such changes do not
affect the steering model.
Along with the composition of the Steering Committee, the
responsibilities of its Chairman, the responsibility for the rules
of procedure and the options available for establishing other
CASE bodies below the Steering Committee, the rules of proce-
dure of the Steering Committee also define the structure and
format of Committee meetings and the adoption of resolutions,
as well as the rules on reporting to the Board of Management
of Daimler AG.
Diversity
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employ-
ees and the differences between them because such differ-
ences form the foundation for an effective and successful com-
pany. The aim of our activities is to bring together the right
people to tackle our challenges, create a work culture that pro-
motes the performance, motivation and satisfaction of our
employees and managers, and help attract new target groups to
our products and services. Our activities for shaping diversity
at Daimler focus on three areas: best mix, work culture and cus-
tomer interaction. With our specific measures, activities and
initiatives for everything from training formats for employees
and managers to workshops, conferences, guidelines and target
group-specific communication and awareness-raising measures,
our diversity management system makes a major contribution
to the further development of our corporate culture.
Targeted support for women on the basis of the best-mix principle
was a central component of our diversity management activities
even before the legislation on the equal participation of women
and men in executive positions went into effect. Such support
has also included and continues to include flexible working-time
arrangements, company nurseries and special mentoring
programs for women. In order to meet legal requirements, the
Board of Management has defined targets for the proportion
of women at the two management levels below the Board of
Management and a deadline for achieving those targets. The
details are described in a separate section. Independently of the
legal requirements, Daimler continues to affirm the goal it
already set itself in 2006 of increasing the proportion of women
in executive positions at the Group to 20% by 2020. At the end
of 2018, this proportion was 18.8% (2017: 17.6%).
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 195
Composition and mode of operation of the
Supervisory Board and its committees
between the meetings of the Supervisory Board – to the
Chairman of the Supervisory Board.
Supervisory Board
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Shareholders’
Meeting. The other half comprises members who are elected
by the Group’s employees who work in Germany. The members
representing the shareholders and the members representing
the employees are equally obliged by law to act in the Company’s
best interests.
Information on the curricula vitae of the members of the
Supervisory Board are posted on our website at w daimler.
com/dai/sb. Information on other mandates held by the
members of the Supervisory Board can also be found on
E pages 54 f of the Annual Report 2018.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal
participation of women and men in executive positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
described in a separate section: E page 197 of the Annual
Report 2018. With regard to its composition, the Supervisory
Board has also created an overall requirements profile
consisting of a skills profile and a diversity concept to be applied
to the entire Supervisory Board. Details of the overall
requirements profile are also described in a separate section:
E page 199 ff of the Annual Report 2018. Proposals by
the Supervisory Board of candidates for election by the Share-
holders’ Meeting as members representing the shareholders
of Daimler AG, for which the Nomination Committee makes
recommendations, aim to fulfill the overall requirements
profile of the Supervisory Board as a whole.
The members of the Supervisory Board attend on their own
responsibility courses of training and further training that
might be necessary for the performance of their tasks, and are
supported by the Company in doing so. Such courses may
address corporate governance, changes brought about by new
legislation, or the launch of new products and pioneering tech-
nologies, for example. New members of the Supervisory Board
are offered an “onboarding” program that gives them the
opportunity to exchange views with members of the Board of
Management and other executives on current issues related to
the various areas of responsibility of the Board of Management,
and thus to obtain an overview of important topics at the Group.
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Group. At
regular intervals, the Board of Management reports to the
Supervisory Board on the strategy of the business units, corpo-
rate planning, revenue development, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system, and the
compliance management system. The Supervisory Board has
retained the right of approval for transactions of fundamental
importance. Furthermore, the Supervisory Board has specified
the information and reporting duties of the Board of Manage-
ment to the Supervisory Board, to the Audit Committee and –
The Supervisory Board’s duties include appointing and, if
necessary, recalling the members of the Board of Management.
Initial appointments are usually made for a period of three
years. In accordance with German legislation on equal partici-
pation by women and men in executive positions, the Super-
visory Board has defined a target for the proportion of women
on the Board of Management and a deadline for achieving this
target. The details are described in a separate section:
E page 197 of the Annual Report 2018. With regard to the
composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded
in an overall requirements profile. The details of this concept
are also described in a separate section: E page 198 of the
Annual Report 2018.
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly, and
determines the total individual remuneration of each member
of the Board of Management with consideration of the ratio
of Board of Management remuneration to the remuneration of
the senior executives and the workforce as a whole, also with
regard to development over time. For this comparison, the Super-
visory Board has defined the senior executives by applying
Daimler’s internal terminology for the hierarchical levels and has
defined the workforce of Daimler AG in Germany as the relevant
workforce. Variable components of remuneration are generally
based on an assessment period that lasts several years and
is essentially future-oriented. Multi-year variable remuneration
components are not paid out until they become due. The
Supervisory Board has set upper limits for individual Board of
Management remuneration in total and with regard to its
variable components. Further information on Board of Manage-
ment remuneration can be found in the Remuneration Report
on E pages 120 ff of the Annual Report 2018.
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distrib-
utable profits. Following discussions with the external auditors
and taking into consideration the audit reports of the external
auditors and the results of the review by the Audit Committee,
the Supervisory Board states whether, after the final results of
its own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Annual Shareholders’ Meeting on the
results of its own review and on the manner and scope of its
supervision of the Board of Management during the previous
financial year. The Report of the Supervisory Board for the year
2018 is available on E pages 46 ff of the Annual Report 2018
and on the Internet at w daimler.com/dai/sb.
In 2018, the Supervisory Board once again commissioned an
external review of the separate combined Non-Financial
Report of Daimler AG and the Group within the framework of a
limited assurance engagement. The external auditors issued
a report concerning their limited assurance engagement on the
Non-Financial Report in accordance with ISAE 3000, which
the Supervisory Board then approved after reviewing the Non-
Financial Report and discussing it with the external auditors.
196 D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Nomination Committee
The Nomination Committee is composed of at least three mem-
bers, who are elected by a majority of the votes cast by the
members of the Supervisory Board representing the shareholders.
It consists solely of members representing the shareholders
and makes recommendations to the Supervisory Board concern-
ing persons to be proposed for election as members of the
Supervisory Board representing the shareholders at the Share-
holders’ Meeting. In doing so, the Nomination Committee
takes into consideration the requirements of German law on
equal participation of women and men in executive positions,
as well as the recommendations of the German Corporate Gov-
ernance Code. It also strives to ensure the fulfillment of the
overall requirements profile, including the skills profile, for the
entire Supervisory Board.
Audit Committee
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast by the members of the
Supervisory Board. The Chairman of the Supervisory Board is
not simultaneously the Chairman or a member of the Audit
Committee. The Chairman of the Supervisory Board attends
the meetings of the Audit Committee as a guest.
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence and
have expertise in the field of financial reporting, as well as
special knowledge and experience with regard to auditing and
methods of internal control. Furthermore, due to his earlier
work at Robert Bosch GmbH and his long-standing membership
of the Supervisory Board of Daimler AG, Dr. Clemens Börsig
is also very familiar with the automotive industry.
The Audit Committee deals with the supervision of the
accounting and its process as well as with the annual external
audit. At least once a year, it discusses with the Board of
Management the effectiveness and functionality of the internal
control and risk management system, the internal auditing
system and the compliance management system. It regularly
receives reports on the work of the Internal Auditing depart-
ment and the Compliance Organization. At least four times a
year, the Audit Committee receives a report from the whistle-
blower system BPO (Business Practices Office) on complaints
and information about any breaches of regulations or guide-
lines by high-level executives, as well as violations by other
employees of the regulations in a defined catalog of legal
provisions. It regularly receives information about the handling
of these complaints and notifications.
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. The Supervisory
Board meetings during the reporting year once again included
so-called executive sessions on a regular basis for discussions
of the Supervisory Board in the absence of the members of
the Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls
or video conferences. However, this is not the rule.
The Supervisory Board has formed four committees, which per-
form to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board. The committee chairpersons report to the entire
Supervisory Board on the committees’ work at the latest in the
meeting of the Supervisory Board following each committee
meeting. The Supervisory Board has issued rules of procedure
for each of its committees. Those rules of procedure can be
viewed on our website at w daimler.com/dai/rop. Information
on the current composition of these committees can be
viewed at w daimler.com/dai/sbc and is also available on
E page 55 of the Annual Report 2018.
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 by the members of
the Supervisory Board.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, whereby it takes into account the over-
all requirements profile it has defined to be filled, including
the diversity concept, as well as the Supervisory Board’s target
for the proportion of women on the Board of Management.
It submits proposals to the Supervisory Board on the design of
the remuneration system for the Board of Management and
on the appropriate total individual remuneration of its members.
In this context, it follows the relevant recommendations of
the German Corporate Governance Code. The Presidential
Committee is also responsible for the Board of Management
members’ contractual affairs. In addition, it decides on the
granting of approval for sideline activities of the members
of the Board of Management, reports to the Supervisory Board
regularly and without delay on consents it has issued, and
once a year submits to the Supervisory Board for its approval a
complete list of the sideline activities of each member of the
Board of Management.
In addition, the Presidential Committee consults and decides
on questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. It supports and
advises the Chairman of the Supervisory Board and his Deputy,
and prepares the meetings of the Supervisory Board within the
limits of its responsibilities.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 197
On December 8, 2016, the Supervisory Board passed a resolu-
tion stipulating that the target figure for the proportion of
women on the Board of Management of Daimler AG would
be 12.5%, while the deadline would be December 31, 2020.
At December 31, 2018, the eight-member Board of Management
included two women, Renata Jungo Brüngger and Britta
Seeger. This means that women account for 25% of the Board
of Management members.
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels below the Board of Manage-
ment, with a deadline of December 31, 2020. At the time of the
resolution, the proportion of women in the first and second
management levels below the Board of Management was 8.0%
and 12.4%, respectively. At December 31, 2018, the proportion
of women at the first management level below the Board of Man-
agement was 11.8%; at the second level it was 14.4%.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to a have proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Super-
visory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the
employees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board, the minimum ratio is to apply separately to the share-
holders’ side and to the employees’ side for that election.
At December 31, 2018, 30% of the shareholder representatives in
the Supervisory Board of Daimler AG were women (Sari Baldauf,
Petraea Heynike and Marie Wieck), while 70% were men. On that
date, 30% of the employee representatives on the Supervisory
Board were women (Elke Tönjes-Werner, Sibylle Wankel and Dr.
Sabine Zimmer), while 70% were men. In its meeting on
December 12, 2018, the Supervisory Board considered its
nominations for the election at the 2019 Shareholders’
Meeting and decided, upon the recommendation of the Nomi-
nation Committee, to propose at the 2019 Annual Share-
holders’ Meeting that Joe Kaeser and Dr. Bernd Pischetsrieder
be elected once again to the Supervisory Board. The legally
required gender ratio will be met both on the shareholder rep-
resentatives’ side and for the Supervisory Board as a whole
if these persons are elected to the Supervisory Board, provided
that no other changes occur.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their super-
visory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. All relevant information
here has been published in accordance with applicable law.
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the man-
agement report of the Company and the Group, and discusses
them with the external auditors. The Audit Committee makes a
proposal to the Supervisory Board on the adoption of the
annual company financial statements of Daimler AG, on the
approval of the annual consolidated financial statements,
and on the appropriation of profits. The Committee also makes
recommendations for the Supervisory Board’s proposal on
the election of external auditors, assesses those auditors’
suitability, qualifications and independence, and, after
the external auditors are elected by the Annual Shareholders’
Meeting, it engages them to conduct the audit of the annual
company and consolidated financial statements and to review
the interim reports, negotiates an audit fee, and determines
the focus of the annual audit. The external auditors report to
the Audit Committee on all accounting matters that might
be regarded as critical and on any material weaknesses of the
internal control and risk management system with regard to
accounting that might be discovered during the audit.
Finally, the Audit Committee approves permitted services
that are not directly related to the annual audit and which are
provided by the firm of external auditors or its affiliates to
Daimler AG or to companies of the Daimler Group.
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 share-
holders, each elected with a majority of the votes cast of the
shareholders’ and employees’ representatives, respectively.
It is formed solely to perform the functions laid down in Section
31 Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved. As in
previous years, the Mediation Committee did not have to take
any action in 2018.
Germany’s law on the equal participation of
women and men in executive positions
In accordance with German legislation on equal participation
by women and men in executive positions in both the private
and the public sector, the supervisory boards of listed companies
or companies subject to Germany’s system of codetermination
have to set a target for the proportion of women on their board
of management. The board of management of such a company
has to set a target for the proportion of women at the two man-
agement levels below that of the board of management. If
the proportions of women at the time when these targets are
set by the board of management and the supervisory board
are below 30%, the targets may not be lower than the proportions
already reached. At the same time that the targets are set,
the boards have to set periods for their achievement, which may
not be longer than five years.
198 D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Overall requirements profiles for the
composition of the Board of Management
and the Supervisory Board
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. For this reason, the Company is required
to describe these concepts in its declaration on corporate gov-
ernance, and to also explain the aims of the diversity
concepts, the manner in which they are implemented and the
results achieved with them in the financial year. The Super-
visory Board has combined the diversity concepts with the
requirements of German legislation on equal participation
of women and men in executive positions and the specific
targets for the composition of executive management bodies
as defined by the recommendations in the current version of the
German Corporate Governance Code. These combined
requirements are presented in the overall requirements profiles
for the composition of the Board of Management and the
Supervisory Board described below. The requirements profiles
also serve as the basis for long-term succession planning.
They are reviewed each year, also taking into account changes
that may have been made to the German Corporate Gover-
nance Code.
Board of Management
The requirements profile for the Board of Management of
Daimler AG aims for a Board of Management with excellent
leadership skills that is as diverse and mutually supportive
as possible. The Board of Management as a whole should
possess the knowledge, skills and experience required for the
proper execution of its tasks and be composed of members
whose varied personal backgrounds and experiences ensure that
the Board as a whole also embodies the desired management
philosophy. Decisions regarding appointments to specific posi-
tions on the Board of Management are always governed by
the Company’s interests under consideration of all circumstances
in each individual case.
The requirements profile for the Board of Management currently
includes in particular the following aspects, which are to be
taken into account to the greatest extent possible when making
decisions on appointments to the Board of Management:
– The members of the Board of Management should have
different educational and professional backgrounds, whereby
at least two members should have a technical background.
With Dr. Dieter Zetsche and Wilfried Porth, the Board of Man-
agement currently has two members who are engineers.
Bodo Uebber is an industrial engineer. Since taking over as
Head of Group Research & Mercedes-Benz Cars Development
on January 1, 2017, Ola Källenius has sustainably displayed the
expertise he acquired in various technical management
positions within the Group.
– In order to meet legal requirements on the equal representa-
tion of women and men in executive positions, the Super-
visory Board defined on December 8, 2016 a target of 12.5%
for the proportion of women on the Board of Management,
with a deadline of December 31, 2020. This means that of the
eight current members of the Board of Management, at least
one member must be a woman. The Board of Management
currently has two female members, Renata Jungo Brüngger
and Britta Seeger. This means the proportion of women on the
Board of Management is currently 25%.
– In accordance with the recommendations contained in the
current version of the German Corporate Governance Code,
the Supervisory Board has set an age limit for members of
the Board of Management. As a rule, 62 years of age serves
as orientation for age-related retirement. When it set this
age limit, the Supervisory Board deliberately decided in favor
of a flexible rule allowing the required scope for the appro-
priate assessment of the circumstances of each individual
case. Seven of the eight Board of Management members
are younger than the age limit. Dr. Dieter Zetsche was older
than the age limit when he began his current term of office
in January 2017. The Supervisory Board nevertheless reap-
pointed Dr. Zetsche as Chairman of the Board of Man-
agement. This decision was taken in the best interest of the
Group in that it enabled the continuation of leadership at
the top executive level that is needed to ensure the sustained
success of the Group.
– In addition, a sufficient generational mix among Board of
Management members is to be taken into account in
appointment decisions, whereby if possible at least three
members of the Board of Management should be 57
years of age or younger at the beginning of their respective
term of office. Five members of the Board of Management –
Renata Jungo Brüngger, Ola Källenius, Britta Seeger, Hubertus
Troska and Bodo Uebber – met this requirement as of
December 31, 2018.
– Decisions related to the composition of the Board of Man-
agement should also take into account internationality
in terms of varied cultural backgrounds or international
experience through assignments abroad lasting several
years, whereby if possible, at least one member of the Board
of Management should come from a country other than
Germany. Irrespective of the many years of international
experience of a large majority of members of the Board
of Management, this target is currently overachieved due to
the international origins of Renata Jungo Brüngger and Ola
Källenius.
– The rules of procedure of the Board of Management stipulate
that no member of the Board of Management may be a
member of more than three supervisory boards of listed
companies outside the Daimler Group or of similar boards
or committees at companies outside the Daimler Group that
have comparable requirements. This stipulation has been
met. The only listed company in which Hubertus Troska is a
member of a supervisory board or similar board outside
the Daimler Group is BAIC Motor Corporation Ltd. His other
board memberships are at joint ventures that fall within
his areas of responsibility.
The aspects described above are to be taken into consideration
when making Board of Management appointments. On the
basis of a target profile that takes into account specific qualifi-
cation requirements and the aforementioned criteria, the
Presidential Committee creates a shortlist of available candidates
whom it interviews. It then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. Decisions regarding appointments
to the Board of Management are always governed by the Com-
pany’s interests under consideration of all circumstances
in each individual case.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 199
Supervisory Board
In accordance with applicable law, the Supervisory Board is to
be composed so that its members together are knowledgeable
about the business sector in which the Company operates.
The requirements profile for the Supervisory Board of Daimler
AG also aims for a Supervisory Board as diverse and mutually
complementary as possible. The Supervisory Board as a whole
shall understand the Company’s business model and also
possess the knowledge, skills and experience needed to properly
execute its task of supervising and advising the Board of
Management, in particular, specialized knowledge in the areas
of finance, accounting, annual audits, risk management,
methods of internal control and compliance. In general, the
members of the Supervisory Board should complement
one another with regard to their specialist knowledge and
professional experience in such a manner as to ensure that
the Supervisory Board can utilize the most broadly based wealth
of experience and expertise possible when making decisions.
The Supervisory Board also views the diversity of its members
in terms of age, gender, internationality and other personal
attributes as an important foundation for effective cooperation.
The foundation for Supervisory Board decisions regarding
proposals on candidates for election at the Shareholders’
Meeting is always the Company’s interests under consideration
of all circumstances in each individual case.
The requirements profile for the Supervisory Board currently
includes the following aspects in particular:
– The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical training
or education program or possess specific technological
knowledge in fields such as information technology (including
digitization), chemistry, mechanical engineering or electrical
engineering. Decisions related to the composition of the
Supervisory Board should also take into account the fact that
it may be necessary for members to obtain new skills and
knowledge in order to be able to address product and market
developments. Irrespective of the specific knowledge in the
above-mentioned areas acquired by many members of the
Supervisory Board in other functions, Dr. Jürgen Hambrecht,
Dr. Bernd Pischetsrieder, Marie Wieck, Dr. Frank Weber and
Roman Zitzelsberger (three shareholder representatives
and two employee representatives) have relevant university
degrees, while another three employee representatives
have completed vocational training in the above-mentioned
fields or similar areas.
– The gender composition of the Supervisory Board meets
the legal requirement stipulating that at least 30% of the
members of the Supervisory Board must be women and
at least 30% must be men. The Supervisory Board currently
has three women who represent shareholders and three
women who represent employees. The proportion of women
is thus 30% among the shareholder representatives, the
employee representatives and the Supervisory Board as a
whole.
– The rules of procedure of the Supervisory Board stipulate that
candidates for election who are to hold the position for a
full term of office should generally not be over the age of 72
at the time of election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulating
a strict upper age limit and instead decided in favor of a
flexible general limit that leaves scope to appropriately assess
each individual case, keeps the range of potential Supervisory
Board candidates sufficiently broad, and allows reelection. In
deciding to propose Dr. Manfred Bischoff for reelection as
a shareholder representative on the Supervisory Board at the
Shareholders’ Meeting in 2016, it made use of this scope
after careful consideration and proper assessment. All other
members of the Supervisory Board and the candidates Joe
Kaeser and Dr. Bernd Pischetsrieder, who are to be proposed
for reelection at the 2019 Annual Shareholders’ Meeting,
will not have reached the age limit at the time of their election.
– A sufficient generational mix among Supervisory Board
members is also to be taken into account in appointment
decisions. At least eight members of the Supervisory
Board should be 62 years of age or younger at the time of
their election or reelection. Among the current members
of the Supervisory Board, all except Sari Baldauf, Petraea
Heynike, Dr. Manfred Bischoff, Dr. Clemens Börsig,
Dr. Jürgen Hambrecht and Dr. Bernd Pischetsrieder (i.e. 14
members) were 62 or younger when they were elected
for their current term of office.
– In order to ensure sufficient internationality, for example
by means of many years of international experience, the
Supervisory Board has set a target of a proportion of at least
30% of international members representing the shareholders,
and the resulting proportion of at least 15% of the entire Super-
visory Board. Irrespective of the many years of international
experience of a large majority of the shareholder represen-
tatives on the Supervisory Board, this target is currently
significantly overachieved with 30% for the entire Supervisory
Board due to the international origins of Bader Al Saad,
Sari Baldauf, Petraea Heynike, Marie Wieck and Dr. Paul
Achleitner on the shareholders’ side (50%) and Raymond
Curry on the employees’ side.
– At least half of the members of the Supervisory Board
representing the shareholders should have
· neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
· nor a business or personal relationship to the Company
or its boards
whose specific form could cause a conflict of interest.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not by
itself constitute a potential conflict of interest as defined by
the German Corporate Governance Code, the requirements
described here are deemed to be met by at least 15 members
of the Supervisory Board.
200 D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
As described in the report of the Supervisory Board on
E page 51 of the Annual Report 2018, there were individual
cases concerning two Supervisory Board members in
particular situations during the reporting period where there
might have been the appearance of a potential conflict of
interest at the time when Board of Management reports were
submitted to the Supervisory Board. The Supervisory Board
members in question in these cases refrained from being pres-
ent during the presentation of the Board of Management
report regarding the issue that might have been affected by
a potential conflict of interest.
As a result, in the case of at least half of the shareholder
representatives on the Supervisory Board and at least 15
members of the entire Supervisory Board, there were no
indications of a potential conflict of interest during the
reporting period based on the premise described above.
There were no indications for actual conflicts of interest
in the financial year 2018.
– In order to ensure the independent advice to, and supervision
of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate that
more than half of the members of the Supervisory Board
representing the shareholders are to be independent as
defined by the German Corporate Governance Code.
The Supervisory Board may not include more than two former
members of the Board of Management of Daimler AG or
anyone who is a member of a board of, or advises, a significant
competitor of the Daimler Group.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not in itself
call into question the independence of such an employee
representative as defined by the German Corporate Gover-
nance Code, at least 15 members of the Supervisory Board
are also deemed to be independent.
Under the premise described above, there are, in the view of
the Supervisory Board, no indications at present for any of
the members of the Supervisory Board that relevant relation-
ships or circumstances exist, in particular with the Company,
members of the Board of Management or other Supervisory
Board members, that could be construed as a substantial
and permanent conflict of interest that would compromise
their independence. No member of the Supervisory Board
is a member of a board of, or advises, a significant competitor.
With regard to Supervisory Board member Bader Al Saad,
the Supervisory Board takes the view that his membership
of the Executive Committee of the Board of Directors of
Kuwait Investment Authority does not compromise his inde-
pendence within the meaning of the German Corporate
Governance Code. The German Corporate Governance Code
does not contain a conclusive definition of independence,
but instead presents examples of circumstances that would
call the independence of a Supervisory Board member into
question. Within the meaning of the German Corporate Gov-
ernance Code, a Supervisory Board member is to be
considered non-independent if he or she has a personal or
business relationship with the Company, its governing
bodies, a controlling shareholder or a company affiliated
with a controlling shareholder that may cause a substantial
and not merely temporary conflict of interest. It is the
responsibility of the Supervisory Board to evaluate the
independence of its members on the basis of such criteria.
The Kuwait Investment Authority is not a controlling share-
holder of Daimler AG that could attain an effective majority
at an Annual Shareholders’ Meeting. No other discernible
circumstances exist that might call into question the inde-
pendence of Bader Al Saad.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, is a former member of the Board of Management.
– The rules of procedure of the Supervisory Board also define
a general time limit for Supervisory Board membership.
As a result, only candidates who have not yet been members
of the Supervisory Board for three full terms of office at
the time of their election should generally be nominated for
membership of the Supervisory Board for a full term of
office. This general length of service on the Supervisory Board
has not been exceeded by any current member, and the
candidates Joe Kaeser and Dr. Bernd Pischetsrieder, who
are nominated for reelection at the Annual Shareholders’
Meeting in 2019, also meet this requirement.
– Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and to partici-
pate in all courses of training and further training that might
be necessary for the performance of their tasks. Prior to
issuing its election proposals, the Supervisory Board deter-
mines whether the candidates in question will have sufficient
time available to perform their duties on the Supervisory
Board.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 201
– In order to ensure compliance with a current recommendation
in the German Corporate Governance Code, the rules of
procedure stipulate that no member of the Supervisory Board
who is also a member of the board of management of a
listed company may hold more than three memberships of
supervisory boards of listed companies (including his or
her membership of the Supervisory Board of Daimler AG) or
of bodies of other companies with similar requirements
outside of the group of his or her Board of Management
membership. One member of the Supervisory Board, Joe
Kaeser, is a member of the board of management of a listed
company, but has not exceeded the maximum number of
memberships.
In the case of Supervisory Board members who are not also
members of the board of management of a listed company,
the legal limit of membership of ten statutorily constituted
supervisory boards applies firstly, whereby chairmanship
of a supervisory board counts double. In order to ensure that
members of the Supervisory Board have sufficient time to
fulfill their mandate, members of the Supervisory Board of
Daimler AG who are not also members of the board of
management of a listed company shall, however, generally be
permitted membership of a maximum of eight supervisory
boards (including that of Daimler AG), whereby chairmanship
of a supervisory board counts double. This maximum
number was not exceeded by any member of the Supervisory
Board during the reporting year.
Proposals by the Supervisory Board of candidates for election
by the Shareholders’ Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall take
into consideration the aspects described above and aim to
fulfill the overall requirements profile for the Supervisory Board
as a whole. On the basis of a target profile that takes into
account specific qualification requirements and the aforemen-
tioned criteria, the Nomination Committee creates a shortlist
of available candidates with whom it conducts structured dis-
cussions in which it also determines whether the candidate
in question will have sufficient time available to perform his or
her duties on the Supervisory Board with due care. The
Nomination Committee then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. The foundation for Supervisory Board
decisions regarding election proposals to the Shareholders’
Meeting is always the Company’s interests under consideration
of all circumstances in each individual case.
Shareholders and the Shareholders’ Meeting
The shareholders exercise their membership rights, in particular
their information and voting rights, at the Shareholders’
Meeting. Each share in Daimler AG entitles its owner to one vote.
There are no multiple voting rights, preferred voting rights,
or maximum voting rights at Daimler AG. Documents and infor-
mation related to the Shareholders’ Meeting can be found on
our website at w daimler.com/ir/am. The Annual Shareholders’
Meeting is generally held within four months of the end of a
financial year. The Shareholders’ Meeting to be held on May 22,
2019 therefore constitutes an exception, which is necessitated
by the magnitude and complexity of “Project Future”, which is to
be presented at the meeting.
The Company facilitates the personal exercise of the share-
holders’ rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders’ voting instructions and who are available during
the Shareholders’ Meeting. Absentee voting is also possible.
It is possible to authorize the Daimler-appointed proxies and
give them voting instructions or to cast absentee votes by
using the e-service for shareholders.
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the
media and the interested public about the situation of the Group,
and inform them without delay about any significant changes
in its business. Within reasonable limits, the Chairman of the
Supervisory Board is also prepared to talk to investors about
specific Supervisory Board issues.
In addition to other methods of communication, we also make
extensive use of the Company’s website for our investor relations
activities. All of the important information disclosed in 2018,
including annual and interim reports, press releases, voting
rights notifications from major shareholders, presentations,
and audio recordings of analyst and investor events and confer-
ence calls, as well as the financial calendar, can be found at
w daimler.com/investors. All the dates of important disclosures
such as annual reports and interim reports and the dates of
the Annual Shareholders’ Meeting, the annual press conference
and the analyst conferences are announced in advance in
the financial calendar. The financial calendar can also be found
inside the rear cover of the Annual Report.
Non-
Financial
Report
On the following pages, we publish the non-financial report in accordance with
Sections 289b – 289e, 315b and c of the German Commercial Code (HGB).
This report applies to Daimler AG and to the Daimler Group. It contains the main
information on the aspects of environmental, employee and social matters,
combating corruption and bribery, and respect for human rights.
E | Non-Financial Report
E | NON-FINANCIAL REPORT | CONTENTS 203
Sustainability at Daimler
Our strategy
Sustainable corporate governance
Sustainability management in the supply chain
Environmental Issues
Climate protection
Clean air
Conservation of resources
Environmental protection in production
Mobility services
Employee Issues
Partnership with the employees
High attractiveness as an employer
A competitive workforce
Health management and safety at work
204
204
205
205
206
206
207
208
208
209
210
210
210
212
214
Social Issues
Stakeholder engagement
Political dialogue and representation of interests
Compliance
Our Compliance Management System
Anti-corruption compliance
Antitrust compliance
Technical compliance
Data compliance
Anti-financial-crime compliance
Human-rights compliance
Statement on the Review of the
Non-Financial Report
215
215
216
217
217
220
220
221
221
222
222
224
The information provided in this report is presented in conformity with the GRI
Standards of the Global Reporting Initiative, insofar as this complies with applicable
law. Some aspects are presented in accordance with internal guidelines and
definitions.
Information on our business model (E page 74 ff of Annual Report 2018) and on
non-financial risks connected with the aspects presented in this report (Risk
and Opportunity Report E pages 156, 157 of Annual Report 2018) is provided in
the Combined Management Report in the Annual Report 2018.
Further information on our sustainability activities can be found online at
w daimler.com/sustainability and in our annual Sustainability Report, which can
be downloaded there as a PDF data file.
204 E | NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
Sustainability at Daimler
Sustainability is one of the basic principles of our corporate strategy as well as a benchmark
for our success as a company. This approach means that we take advantage of the opportunities
associated with sustainability to enhance our business success, while including environmental
and social effects into our considerations.
Our strategy
We believe that a long-term sustainability strategy and effective
sustainability management are the preconditions for ensuring
that we continue to be one of the world’s leading automobile
manufacturers in the future. Sustainability is therefore firmly
established as a fundamental principle of our corporate strategy
at the implementation level.
In order to identify and prioritize the sustainability aspects
that are relevant to our strategy, we regularly conduct a multi-
stage materiality analysis. This analysis combines our own
assessments with those of our stakeholders, who include our
shareholders and creditors, employees, customers and
suppliers, as well as governments, environmental and human
rights organizations and other stakeholders from civil society.
Their opinions are also always requested whenever we decide
on measures for expanding and adjusting the sustainability
aspects of our strategy.
In the year under review, we conducted a regular internal
assessment of current developments, which confirmed the
prioritization of key areas of action that we had established
in 2017.
In 2018, we continued to define the concrete details of the
Sustainability Strategy 2030 that we had formulated in the
previous year. As a result, the areas of action that had been
defined in 2017 were even more sharply focused with regard
to comprehensibility and clarity. Our activities related to
sustainability concentrate on the following focal topics:
– Climate protection and air quality
– Resource conservation
– Livable cities
– Traffic safety
– Data responsibility
– Human rights
– Integrity, people and partnerships
These focal points determine the structure of our sustainability
management activities and our annual sustainability reporting.
In addition, when we identified the material aspects to be
addressed by this non-financial report, we took the focal topics
of our sustainability strategy as our starting point. However,
in some cases, we emphasize different aspects because of the
divergent requirements set by the standards and laws that
are relevant to this report.
With our strategy, we would like to help achieve the Sustain-
able Development Goals (SDGs) that were approved by the
United Nations in September 2015. Our areas of action and the
sustainability-related activities that underlie them support
the following SDGs in particular:
– SDG 8 — Decent Work and Economic Growth
By developing and implementing a risk-based management
approach to respecting and upholding human rights in
our own units and our supply chain, we support the imple-
mentation of decent work as defined by SDG 8.
– SDG 9 — Industry, Innovation and Infrastructure
Through the advanced development of automated and
autonomous driving and the expected benefits for safety and
climate protection, we demonstrate the long-term potential
of digital innovations.
– SDG 11 — Sustainable Cities and Communities
Daimler promotes sustainable mobility in urban areas
through its offerings in the areas of car sharing, ride hailing
and the multimodal linking of mobility services (Mobility as a
Service).
– SDG 12 — Responsible Consumption and Production
By significantly reducing the use of primary raw materials
for electric drive systems and reinforcing the material cycles
of primary raw materials that are needed for our e-drive
system, we are setting the course for sustainable production
models in line with this SDG.
– SDG 13 — Climate Change
Through our initiative “The Road to Emission-free Driving”
and the reduction targets it sets for our fleet emissions,
we are helping to protect the planet from the effects of climate
change.
E | NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER 205
We demand that our direct suppliers commit themselves to
observing our sustainability standards, communicating them
to their employees and to their upstream value chains, and
then checking to ensure that the standards are complied with.
We support them in these activities by providing them with
targeted information and training and qualification measures.
The central information platform for suppliers is our Daimler
Supplier Portal.
Further information is available at: w supplier.daimler.com
Supplier review
Our employees review new suppliers of production materials
to Global Procurement Trucks & Buses in high-risk countries
by means of sustainability-related on-site assessments. At
Mercedes-Benz Cars, new suppliers in less risk-prone countries
are also investigated by our procurement and quality employ-
ees, with a specific focus on their sustainability performance.
We also conduct a more thorough assessment where this
is necessary. The results of the assessment are discussed in
management committees and flow into decisions on whether
to award a contract.
To ensure that our direct suppliers comply with the sustain-
ability standards, we regularly conduct risk analyses. We
use regular database research and other measures to discover
any violations of our sustainability and compliance rules by
our current suppliers. We systematically follow up all reports of
violations. With the help of an online survey, we also question
our main suppliers about their sustainability management and
their communication of these requirements to their upstream
value chains. On the basis of the results, we define measures
to improve their sustainability performance.
We have established a complaint-management process that
enables individuals to draw attention to possible human rights
violations at suppliers. In this context, we work together
closely with the world employee committee. We bring together
all the available information and take action if the reports
are well-founded. The suppliers are requested to respond to the
accusations; after that, we assess the facts of the case and
take the necessary measures. This can lead to the termination
of a business relationship. However, it is not always productive
to end cooperation with a supplier immediately after a case of
misconduct. It often makes more sense to work together with
the supplier to improve the situation. This approach also bene-
fits the people at the location. In addition to the complaint-
management process, information on misconduct can always
be submitted to the BPO whistleblower system (E page 217)
established by Daimler.
Sustainable corporate governance
Our sustainability objectives and their management are part
of our corporate governance system and are also included in
the targets of our executives.
The Corporate Sustainability Board (CSB) is our central man-
agement body for all sustainability issues. The CSB is headed by
Renata Jungo Brüngger (the Board of Management member
responsible for Integrity and Legal Affairs) and Ola Källenius
(the Board of Management member responsible for Group
Research & Mercedes-Benz Cars Development). The opera-
tional work is done by the Corporate Sustainability Office
(CSO), which consists of representatives from the specialist
departments and the divisions.
Integrity, compliance and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions. We view integrity and values-based
compliance as firm elements of our corporate culture and our
daily business activities – elements that contribute to our com-
pany’s lasting success. The basis for this is our Integrity Code,
which defines guidelines for our everyday business conduct,
offers our employees orientation and helps them make the right
decisions even in difficult business situations. The Integrity
Code is supplemented by other in-house principles and guide-
lines.
The ten principles of the UN Global Compact provide a
fundamental guideline for our business operations. As a found-
ing member and part of the LEAD group, we are strongly
committed to the Global Compact. Our internal principles and
guidelines are founded on this international frame of reference
and other international principles, including the Core Labor
Standards of the International Labour Association (ILO), the
OECD Guidelines for Multinational Enterprises and the UN
Guiding Principles on Business and Human Rights.
Sustainability management in the supply chain
Our standards and requirements
Our Supplier Sustainability Standards, which are an integral
part of our conditions of business, define our requirements for
working conditions, human rights, environmental protection,
safety, business ethics and compliance. We urgently require our
direct suppliers of goods and services all over the world to
comply with these standards.
We expect our suppliers of production materials to operate
with an environmental management system that is certified
according to ISO 14001, EMAS or other comparable standards.
We also expect this of our suppliers of non-production mate-
rials on the basis of our risk assessments. With regard to animal
protection, we require our suppliers to comply with applicable
laws and regulations. We do not tolerate or support the unethi-
cal treatment of animals.
206 E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Environmental Issues
Protecting the environment is a primary corporate objective of our Group. Environmental protection
is not separate from other objectives at Daimler, but is an integral component of a corporate strategy
aimed at long-term value creation. The environmental and energy-related guidelines approved by
the Board of Management define the environmental and energy-related policy of the Daimler Group.
They also express our commitment to integrated environmental protection that addresses the
underlying factors with an impact on the environment, assesses the environmental effects of pro-
duction processes and products in advance, and takes these findings into account in corporate
decision-making.
Climate protection
Target
The Paris accord on climate protection aims to limit global
warming to significantly less than two degrees Celsius compared
with the preindustrial level. It requires a significant intensifi-
cation of measures, in particular more stringent CO2 targets for
all countries and sectors. We are in the process of deriving
specific targets for all of our business divisions regarding the
reduction of our products’ CO2 emissions. These targets
refer to the period until 2030 and will be binding on the Daimler
Group worldwide.
Our current reduction target for driving operation (tank-to-wheel)
is -44 % (2007 – 2021) for cars in the new-vehicle fleet in Europe.
We are steadily continuing our efforts to reach this target.
Measures
Our goal is to also safeguard mobility for the generations to
come. That is why we strive to offer our customers safe, efficient
and low-emission vehicles and services. A core element of our
approach here is to achieve a drive-system mix that is tailored
to the market requirements. Our “Road to Emission-free Driv-
ing” initiative defines the primary focal points for developing new,
extremely fuel-efficient and environmentally friendly drive-
system technologies at all of our automotive divisions:
– further development of our vehicles equipped with state-
of-the-art combustion engines in order to achieve significant
reductions in consumption and emissions,
– further efficiency increase through hybridization, and
– electric vehicles with battery and fuel-cell drive.
Due diligence processes
An environmental protection guideline passed by the Board
of Management formulates our approach: We develop products
that are especially environmentally friendly and energy-efficient
in their respective market segments. A vehicle’s environmental
impact is largely decided during the first stages of its devel-
opment. The earlier we integrate environmentally responsible
product development (Design for Environment, DfE) into the
development process, the more efficiently we can minimize the
impact on the environment. That is why continuous improve-
ments in environmental compatibility are a major requirement
in the creation of the product performance specifications. For
every vehicle model and every engine variant, we have require-
ment specifications that define the characteristics and target
values that must be achieved. These specifications include
requirements concerning fuel consumption and emissions limit
values for CO2 and nitrogen oxides. During the development pro-
cess we regularly monitor compliance with these specifications.
In a committee situated directly below the Board of Manage-
ment level, the managers responsible for each vehicle model
series evaluate the results of this monitoring process and
decide on any necessary corrective measures. If corrections are
needed, the managing body of the respective division is included
in the decision-making. If the situation continues to escalate,
the responsible member of the Board of Management is also
included.
The CO2 process in vehicle development
All of the divisions integrate all vehicle-related goals, including
those that are relevant to the environment, into their vehicle
development process according to a similar pattern. The chart
E.01 shows the Mercedes-Benz Development System (MDS)
as an example. In many markets there are fleet targets for the
fuel consumption and CO2 emissions of cars and light commer-
cial vehicles – in other words, overall targets for all the new
vehicles sold in a given market. The corresponding controlling
process for reaching the CO2 fleet consumption target for
Cars Europe (EU 28) is shown as an example.
The key factors for determining the target values for fuel con-
sumption and CO2 emissions are the technological possibilities,
the legal requirements including the fleet targets for fuel
consumption, and customer wishes. The body responsible for
complying with these goals and for transparency regarding
the target attainment level is the CO2 steering committee, which
is headed by the Board of Management member responsible
for Group Research and Mercedes-Benz Cars Development.
The fleet values for CO2 emissions are calculated on the basis
of the fuel economy numbers of the vehicles available on the
market and the fuel economy specifications and prognoses for
vehicles that are still in the development phase. These values
are combined with the sales forecasts in order to arrive at the
projected fleet values for CO2 emissions.
The actual values may deviate from the projected target values
because of various external factors such as alterations in the
sales structure, changes in the political framework conditions
or changes in the fuel consumption target values of the vehicles
that are still in the development phase. In case of a deviation,
the CO2 steering committee organizes an assessment of various
options and then decides on the measures to be initiated.
If the need for adjustment is especially urgent, the process is
escalated to the responsible managing body. From a strategic
standpoint, this process takes place over a period of approxi-
mately ten years.
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES 207
E.01
Vehicle product creation process for individual vehicles
Architecture
decision
Project
start
Concept
specifica-
tions
Initial
specifica-
tions
Approval of
specifications
Launch of
body-in-white
production
Launch of
production
test
J
I
H
G
F
E
D
C
B
Job
No. 1
A
Basic development of the overall
vehicle, validation modules
Vehicle-specific integration and validation
Concept suitability
Series production
suitability
Principle suitability
Functionality
Testworthiness
Series support
measures
Customer appeal
X
= Quality gate
Result
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 +Iceland)
increased to 132 (2017: 125) g/km (NEDC).
The transition from the NEDC to the WLTP as the legally stipu-
lated CO2 emission measurement cycle for individual vehicles
has led to a significant increase in our fleet emission values. At
the same time, the shift of sales from vehicles with diesel
engines to cars powered by gasoline engines, as well as a further
increase in sales of large SUVs and all-wheel-drive vehicles,
have contributed to a higher CO2 value for our fleet.
Because all vehicle models will have been certified in accor-
dance with the WLTP by September 2019, we expect only a
slightly lower CO2 value for our fleet in 2019, in spite of further
progress in reducing our vehicles’ fuel consumption. Our vehi-
cle electrification measures are expected to lead to a signifi-
cant decrease in our fleet’s CO2 emissions in 2020.
The new WLTP test cycle. Since September 2017, all of our
new car types in Europe have been certified according to the
Worldwide Harmonized Light Vehicles Test Procedure (WLTP).
This test procedure includes numerous changes compared to
the previous New European Driving Cycle (NEDC). The changes
include higher average and maximum speeds, more dynamic
handling, gliding inertial masses instead of inertia classes, a
smaller standstill share of total fuel consumption, and con-
sideration of special equipment and the quiescent current re-
quirement. Overall, these changes are leading to more real-
istic, but also higher, fuel economy values.
According to the legal requirements, until 2021 automakers
must calculate the CO2 emissions of their vehicle fleets in
Europe by using a predefined formula to convert the vehicles’
WLTP values back into NEDC values. This explains why every
new vehicle is certified according to the WLTP although the
European CO2 emission value of the automaker’s fleet is
still indicated as the NEDC value. The legislators want to ensure
the comparability of the automakers’ fleet values in the
period until 2022, when a new limit value will come into force.
We continue to work hard to meet all statutory CO2 require-
ments, including the very challenging EU limits for 2021.
However, reaching these fleet targets will depend not only on
offering appealing and highly efficient vehicles with electric
drives, but also on our customers’ actually deciding to buy those
models. In order to optimally position ourselves in this respect,
we are systematically changing over our product range to the
latest engine generations, and are also systematically electrify-
ing our portfolio with plug-in hybrids and all-electric vehicles.
Clean air
Target
In addition to climate protection, the improvement of inner-city
air quality will continue to be an important environmental con-
sideration in the future. Traffic still accounts for a considerable
share of nitrogen oxide pollution near roads. Our fundamental
goal is to fulfill emission requirements as far in advance as
possible and to reduce potential risks for human beings and the
environment.
Measures
Cutting-edge technologies are enabling us to steadily reduce
the pollutant emissions of our cars and commercial vehicles. In
doing so, we have set our sights not only on conventional
gasoline and diesel engines but also on hybrid vehicles that
combine conventional and electric drive technologies.
The introduction of the new diesel engine families consisting
of the OM654, the OM656 and the OM608, as well as the
increasing electrification of drive systems, will greatly help us
to reach the emission targets.
Our plan for the future of diesel engines also includes the
development of software updates for a total of more than three
million vehicles owned by customers – significantly more than
one million of which are in Germany. With the updates, we are
improving the NOX emission performance of our vehicles
under real driving conditions by an average of 25 to 30%. Verifi-
cation is with the use of the measuring cycles approved by
the authorities (WLTC 1, 2, 3).
208 E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018 and by order of the
German Federal Motor Transport Authority (KBA), Daimler
is carrying out a mandatory recall of approximately 690,000
vehicles in Europe (including approximately 280,000 in
Germany). The great majority of these vehicles were already
covered by Daimler’s program of voluntary service measures
announced in July 2017. These measures are being imple-
mented in close cooperation with Germany’s vehicle regis-
tration agencies.
Daimler supports the German federal government’s concept
for clean air and the safeguarding of individual mobility. By
means of an attractive incentive program in the defined priority
regions, we are accelerating the renewal of the vehicle fleet.
In this way, Daimler is making a significant contribution to the
German government’s concept in order to avoid any dis-
advantages for drivers of diesel-powered cars.
Following the coalition decision, in early October 2018, Daimler
also announced its intention to participate in a hardware retro-
fit program for diesel vehicles in the defined priority regions as
part of the German government’s concept for clean air and the
safeguading of individual mobility. Within this context, Daimler
is prepared to cover the cost of a hardware retrofitting up to
a maximum value of €3,000 for Mercedes-Benz customers with
Euro 5 diesel vehicles in the defined priority regions. The
retrofitting must be developed and offered by a third-party
supplier and approved by the German Federal Motor Transport
Authority (KBA). In addition, it must demonstrably authorize
entry into certain cities, including driving on roads affected by
the driving ban. Daimler’s aim is to promote the interests of
its customers by creating transparency as to which hardware
solutions third-party suppliers can offer, and when.
Increasing the mobility fund. We have significantly increased
our planned contribution to the “Immediate Action Program
for Clean Air,” which was agreed on at the National Forum Diesel
in August 2017. Together with BMW and Volkswagen, we
are now providing the automobile industry’s entire share of the
funding.
Local measures. With regard to the local measures, Daimler
is focusing in particular on Stuttgart. For example, we are sub-
sidizing our employees’ use of public transport, such as the
commuter train, streetcar and bus networks, to get to work.
Thanks to Daimler’s coverage of the costs, since January 2018
the Group’s employees have been able to use local public
transportation free of charge to travel between their homes and
workplaces in the Stuttgart region on particulate alert days.
In order to assess the effects of modern diesel engines in the
fleet and to factor in possible future driving bans, we have
commissioned a calculation of future air quality scenarios at
Neckartor in Stuttgart, together with the Robert Bosch com-
pany and in close cooperation with the Stuttgart city govern-
ment and the responsible federal state ministries. An advisory
committee of recognized experts and university professors
supported the study, which was conducted by the Aviso com-
pany. According to the scenarios of the study, the limits will
probably not be reached at Neckartor by 2020. But – depending
on the package of measures implemented – the limit of 40
micrograms per cubic meter of ambient air is expected to be
permanently met between 2020 and 2025.
Result
Mercedes-Benz vehicles powered by the new diesel engines
(OM 654, OM 656 and OM 608) emit between 40 and 60 milli-
grams of nitrogen oxide (NOX) on average – during thousands
of kilometers of driving on the road and under the conditions
specified by the Real Driving Emissions (RDE) test. These figures
are significantly lower than the current RDE emissions limit of
80 milligrams per kilometer multiplied by the correlation factor
2.1 (Level 1). The correlation factor was determined by an EU
regulation to cover the usually higher nitrogen-oxide emissions
in real operation for new vehicle types until the end of 2019.
The lower values are made possible by an innovative overall
package consisting of the engine and the exhaust aftertreatment
system. This package was launched with the new engine
generation in 2016 and is being continually enhanced. The very
good results have been repeatedly confirmed in road tests
by organizations such as DEKRA and TÜV, as well as by various
trade magazines.
Conservation of resources
Target
Evaluating the environmental compatibility of a vehicle
requires an analysis of the emissions and use of resources
throughout the entire lifecycle.
Measures and result
During the development process of a vehicle, we prepare a
recycling concept for each vehicle model in which all of its
components and materials are examined with a view to their
suitability for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable, pursuant to ISO 22 628. The key
aspects of our activities in this area are:
– the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
– the remanufacturing of used parts, and
– the workshop waste disposal system MeRSy (Mercedes-
Benz Recycling System).
Production-related environmental protection
Target
Our commitment to the environment is an integral component
of our corporate strategy. For this reason, we have established
environmental management systems at our manufacturing
locations with the goal of providing safe, efficient, environmen-
tally friendly services of guaranteed high quality that comply
with all legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group
has a majority interest in the ownership structure. Supported
by the use of Daimler Group standards, we strive to maintain
a high level of air quality control, climate protection and
resource conservation (in terms of water consumption, waste
management and soil conservation).
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES 209
E.02
Methodology for assessing environmental risks
Feedback to plant management and divisional management
Inspection of
documents
Interviews
Tours
s
a
e
r
a
c
i
p
o
T
Environmental management
Emissions into the atmosphere
Discharge into bodies of water
Waste management
Soil/groundwater contamination
Dealing with hazardous materials
Implementing
measures at the
plants
Measures
The environmental and energy-related guidelines approved by
the Board of Management define our environmental and
energy-related policy at the Daimler Group. The guidelines also
express our commitment to integrated environmental protec-
tion. That begins with the assessment of the causes of environ-
ment problems and takes into account the environmental
effects of production processes and products as early as the
planning and development phases.
Result
In this way, all the production locations are being visited and
assessed in five-year cycles according to well-established and
standardized procedures. The results are reported to the plant
and divisional managements, and the Group annually assesses
the implementation of the recommendations for minimizing
risks at the locations. In this way, we are striving to enforce the
high environmental standards to which we have committed
ourselves at all of our production locations around the world.
Environmental protection measures at our production locations
are coordinated across business units by three regional com-
mittees (Germany/Europe, North and South America and Asia)
that are centrally managed. These measures are regulated
in line with a corporate policy and organizational and technical
standards.
In 2018, we evaluated the production locations of the Detroit
Diesel Remanufacturing business area and a number of CKD
plants of MBC. The most important results were in the areas of
explosion protection and the proper storage of hazardous
substances.
The environmental measures are monitored by external audi-
tors (ISO 14001 certification, EMAS validation) and by internal
environmental risk assessments (the due diligence process).
We conduct training sessions through the respective local
organizations. The important content of our training sessions
includes water pollution control, wastewater treatment,
emergency management in case of environmentally relevant
malfunctions and the planning of plants and workplaces in
accordance with environmental protection principles.
Due diligence processes
In 1999, we developed a methodology for assessing environmen-
tal risks (environmental due diligence) as a tool for preventing
risks to the environment and complying with statutory require-
ments. We have applied this methodology throughout the
Group since 2000, both internally and also externally in connec-
tion with our acquisition plans. During this period we have
conducted three complete risk assessments at the Daimler
production plants of Mercedes-Benz Cars, Mercedes-Benz
Vans, Daimler Trucks and Daimler Buses.
The fourth round of environmental risk assessments began in
2014. A number of new risk aspects have been integrated
into the topic areas. Nonetheless, we have not changed the
methods or the tools, because we want these results to
be comparable with the results of the assessments that have
already been carried out. E.02
Mobility services
In addition to our products’ high level of environmental com-
patibility and our environmentally friendly and efficient produc-
tion processes, we also strive to provide innovative mobility
services on the road to emission-free driving. That is why we
have developed a range of pioneering mobility concepts and
are forging ahead with innovative approaches – from the car-
sharing provider car2go and the mobility platform moovel to
the taxi app mytaxi and our participation in the coach company
FlixBus and the Bus Rapid Transit (BRT) system. Recent addi-
tions to this list in 2018 were ViaVan, an on-demand ride-sharing
service with two locations in the UK; a partnership with
the Chinese ride-hailing service CaoCao, which has more than
17 million registered users; and the acquisition of an interest
in Turo, the US market leader for car sharing with private vehi-
cles, which already has five million users. The merger of
the German peer-to-peer car-sharing platform Croove, in which
Daimler already holds an interest, should ease the US com-
pany’s entry into the German market.
The joint venture for mobility services planned by Daimler and
BMW is moving forward step by step. The authorities have now
approved the companies’ plan to establish the joint venture.
The merger of our on-demand mobility services in the areas of
car sharing, ride hailing, parking, charging and multi-modality
with the mobility services of BMW is intended to give additional
impetus to our activities for the expansion and improvement
of mobility services.
210 E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Employee Issues
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment
of our employees. More than 298,000 people promote our company’s success worldwide by
contributing their concepts and ideas to their tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore
more than just an ethical and legal requirement for us – without them, we would not be able to
conduct our business successfully.
General figures regarding the development of our workforce
numbers can be found in the Workforce section of the Manage-
ment Report. E pages 113 f
In order to recruit, develop and retain highly qualified staff, we
are continuously striving to further improve our attractiveness
as an employer. Because our executives and managers should
motivate their employees to achieve top performance, it is
crucial that we equip them with outstanding leadership skills.
In addition, we want to take on social responsibility and let
diversity flourish in our global company.
A professional HR organization and efficient operating
processes form the basis for the implementation of these over-
arching goals, from which we have derived key areas of
action. The main control tool we use is our HR Scorecard, which
uses key performance indicators concerning demographic
development, diversity and sick rates to provide information
about the sustainability of human resources measures and pro-
cesses in the individual areas of action.
E.03
HR Strategy 2025
Daimler – Best Team
We provide innovative & efficient HR solutions to…
Competitive
workforce
…attract, develop and retain
the right people
Forward-looking,
skilled leadership
…enable our management to
shape the framework of the future
Employer of choice
Profitability
…foster a diverse, empowering
and inspiring culture
…ensure continuous
competitiveness
1
0
11
00
01
10
011
110
100
0100
100
0101
10100
01111
00011
1000001
001111001
0
10
111
010
101
0
1
0
001
0
0
110
011
1001
0010
1100
1
10
01
101
1101
0010
Digitalization
0
11
10
00
011
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01
11
1011
10100
Operational Excellence in HR
And we act as one team
0
1
11
01
00
11
010
101
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1101
0001
10110
001001
111110
110100
101000101
0101111010
Vision
Mission
Strategic
pillars
Mission
Basis
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES 211
Partnership with the employees
High attractiveness as an employer
We want to work together with our employees as partners,
respect their interests and get them involved in the company by
continuously providing them with information and enabling
them to participate in decision-making processes. To achieve
these goals, we are guided not only by the International Labour
Organization’s (ILO) work and social standards but also by our
Principles of Social Responsibility. In these principles, we com-
mit ourselves, among other things, to respecting key employee
rights – from the provision of equal opportunities to the right
to receive equal pay for equal work. Violations of these princi-
ples can be reported to the whistleblower system BPO, which
addresses further investigations to the pertinent units.
Our employees also have the right to organize themselves
in labor unions. We also ensure this right in countries in which
freedom of association is not legally protected. We work
together constructively with the employee representatives and
the trade unions. Important partners here include the local
works councils, the European Works Council and the World
Employee Committee (WEC). We have signed collective bar-
gaining agreements for all of the employees at Daimler AG, and
this also applies to the majority of our employees throughout
the Group.
In a variety of committees, we regularly inform the employee
representatives about the economic situation and all of the
key changes at Daimler AG and the Group. We conclude agree-
ments with the respective workers’ representative bodies
concerning the effects of our decisions on the employees. In
Germany, comprehensive regulations to this effect are
contained in the Works Council Constitution Act. We notify our
employees about far-reaching changes early on.
One result of the ongoing dialogue between the corporate
management and the employees’ association was the renewal
of the company-wide “Safeguarding the Future of Daimler”
agreement in 2015. This accord, which is valid until 2020, en-
ables the company to respond to the “future plan” agreements
that have been reached at many of the locations of Daimler AG
with concrete investment commitments, flexible personnel
assignment models and the possibility of selectively increasing
staffing requirements. As a result, we can make use of market
opportunities and better absorb fluctuations in demand. The
company-wide agreement essentially protects all of the employ-
ees of Daimler AG in Germany from being laid off until the
end of 2020.
The expansion of this Safeguarding the Future agreement is
also an integral part of “Project Future” for restructuring
our Group, and it is being implemented in close cooperation
with the employee representatives. If Project Future is imple-
mented, Daimler AG’s Safeguarding the Future agreement will
be extended until 2029. As a result, terminations for opera-
tional reasons would be excluded on principle until December
31, 2029 for all employees who are affected by a transition
of operations resulting from the new Group structure and who
do not contest their transfer to the new organization.
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that enables
outstanding performance and a high level of motivation and
satisfaction among our employees and managers.
Attractive and fair remuneration
We remunerate work in accordance with the same principles
at all our affiliates around the world. Our Corporate Compensa-
tion Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum requirements for
the design of the remuneration systems. Internal audits are
conducted on a random basis to make sure these conditions and
requirements are met. In our desire to offer salaries and
benefits that are customary in the industry and the respective
markets, we also give consideration to local market conditions
within the specified framework. The salaries are determined on
the basis of the employees’ tasks and performance, and
in line with their qualifications and experience. In setting the
remuneration of the employees we are not guided by gender
or place of origin, but exclusively by the employee’s job and
responsibility.
In cases where Daimler AG and its Group companies have
signed collective bargaining agreements, they often also offer
voluntary benefits that are agreed upon with the respective
employees’ associations. These benefits primarily consist of
employer-funded retirement contributions as well as profit-
sharing agreements for the respective company. For example,
the eligible employees of Daimler AG will receive a profit
participation of €4,965 for 2018 (2017: €5,700). In addition,
our employees can avail themselves of a wide variety of sports
facilities and social amenities, ranging from daycare centers to
the counseling service for people in extreme situations.
In 2018 the Group spent:
– €18,329 billion on wages and salaries (thereof Daimler AG:
€11,569 billion),
– €3,332 billion on social welfare services (thereof Daimler AG:
€1,849 billion), and
– €0.8 billion on retirement benefits for a workforce
numbering 298,465 on average (thereof Daimler AG:
151,879 employees).
Modern working conditions
Working conditions are being increasingly influenced by
working hours, workplaces, the work environment, the level of
employee empowerment and a state-of-the-art management
culture. The length of our employees’ workweek is generally
regulated by the company or by a collective bargaining
agreement. In Germany, overtime is only performed within the
framework of a requirements planning forecast and has to
be approved by the employee representatives. In general, we
allocate working times in such a way that remuneration
remains stable even if the amount of work sometimes fluctuates.
This is made possible by a time-account system.
212 E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Flexible working arrangements
Today’s living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve
top performance and support their efforts to do so, rather than
focus on their mere presence at work. For this reason, we
also seek to improve performance by helping employees and
managers reconcile their professional and personal respon-
sibilities.
We also boost employees’ flexibility and self-determination by
giving them the opportunity for mobile working. An associated
company agreement has been in force at Daimler AG since
December 2016. The agreement gives employees the right to
mobile working if the task permits.
We also promote job sharing, in which two employees share
the same task or position and work together up to 60 hours per
week. This provides managers in particular with a means of
reconciling the needs of work and family.
Furthermore, company agreements at Daimler AG enable
employees to suspend their careers for several years for
a qualification program or a sabbatical or to provide home
care — with the promise that they can return to Daimler AG
afterwards.
We encourage all employees who take parental leave to sub-
sequently return to their jobs at the company because we
value their knowledge and experience. In Germany, we offer
about 705 places in daycare centers in close proximity to
our company locations as well as about 200 reserved places
at cooperating facilities. In addition, we cooperate with a
third party that assists employees in finding childcare providers.
In 2018, around 3,800 employees at Daimler AG availed
themselves of the opportunity to take parental leave. Moreover,
around 400 employees took advantage of the opportunity to
take off work for a prolonged period. At the end of 2018, more
than 250 employees were working in job-sharing positions at
the team, sub-department and departmental levels.
Leadership 2020 – further development of the
management culture
Our business is changing at a rapid pace. In order to remain
successful in the future, we are changing our management cul-
ture and the way we cooperate. This is why we launched the
Leadership 2020 initiative in 2016. Employees from more than
23 countries and all levels of management are currently
working on Daimler’s future management culture. Guidance is
provided by new management principles that, among other
things, make the company faster and more flexible and boost
its innovative potential. Procedures, processes and struc-
tures are being called into question and changed in eight “game
changers.” In its meetings, the Board of Management of
Daimler AG regularly discusses the initiative’s progress and
decides which measures need to be taken.
Successful employee survey
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees,
and what we need to do to improve the company in the future.
The survey conducted in 2018 was based on a completely
new concept. In September 2018, nearly 300,000 employees
in more than 50 countries were invited to participate in the
survey and send us their feedback. The Group-wide participation
rate of 80 percent was the highest rate posted to date for a
Group-wide employee survey at Daimler. This outstanding par-
ticipation rate underscores our employees’ interest and their
willingness to actively help shape the company’s further devel-
opment. 75% of our employees who participated in the survey
reported that they are satisfied or very satisfied with Daimler
as an employer and that they are proud to work at Daimler.
Our employees’ great loyalty to the company is also expressed
by the amount of time they have worked for Daimler. During
the year under review the average number of years our employ-
ees have worked for Daimler decreased slightly to 15.8 years
(2017: 16.1 years). In Germany, employees had worked for the
Group for an average of 19.4 years at the end of 2018
(2017: 19.5 years). The comparative figure for Daimler AG was
20.2 years (2017: 20.3 years). Daimler employees outside
Germany had worked for the Group for an average of 10.6 years
(2017: 11.0 years). In 2018, our labor turnover rate amounted
to 4.9% worldwide (2017: 5.1%).
A competitive workforce
We can only be successful if we have a skilled and high-per-
forming workforce. We therefore aim to continuously develop
our employees and make sure they stay competitive. We are
pursuing this goal by implementing measures in four overarch-
ing areas of action: diversity management, the securing of
young talent, qualification, and health management and occu-
pational safety.
Diversity management
Daimler promotes the diversity and heterogeneity of its
employees, because they serve as the basis of a high-perform-
ing company. As a result, diversity management is included
in our corporate strategy. The various skills and talents of our
workforce enable us as a global company to effectively
reflect the diversity of our customers, suppliers and investors
around the world.
Daimler’s more than 298,000 employees from over 160 coun-
tries provide the Group with a vibrant mixture of cultures and
ways of life. We utilize this diversity to put together optimized
teams. Most of our managers abroad come from the respective
regions. We promote the cultural diversity of our employees
with worldwide staff assignments, mentoring, intercultural skills
training and targeted recruiting measures. International candi-
dates account for more than one third of the people recruited
through our previous CAReer trainee program.
Our aim is to increase the share of women in management
positions to at least 20% by the year 2020. Currently more than
18% of our executives in middle and upper management are
women. For Daimler AG, we signed a company-wide agreement
for the advancement of women. It stipulates a target corridor
for the proportion of women in the total workforce, in vocational
training and in Level 4 and 5 management positions. In order
to achieve our goals, we have installed an ongoing internal
reporting and planning system.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES 213
E.04
Share of women
In percent
Share of women (worldwide)
Share of women (Daimler AG)
Share of women in Level 4 management
positions (Daimler AG)
Women in senior management positions
Levels 1–3 (worldwide)
Share of women at the second
management level below that of the
Board of Management (Daimler AG)
Share of women at the first management
level below that of the Board of
Management (Daimler AG)
Share of women on the Board of
Management
Share of women on the Supervisory Board
2018
2017
19.1
16.6
19.2
18.8
18.5
16.1
18.0
17.6
14.4
11.9
11.8
25.0
30.0
8.7
25.0
25.0
E.05
Accident figures1
Incidence of accidents
Number of accidents (worldwide)
3,152
2,766
2018
2017
Incidence of accidents
(worldwide, number of work-related
accidents that resulted in at least one lost
day per 1 million hours of attendance)
Rate
7.7
7.5
Accident downtime
(worldwide, number of lost days per 1 million
hours of attendance)
Number of deaths as a result of
work-related accidents
Number of employee deaths as a result of
work-related accidents2
Number of deaths of third-party employees
as a result of work-related accidents
113
106
1
1
0
1
0
1
1 Reporting rate of Daimler production locations (Mercedes-Benz
Cars, Daimler Trucks, Daimler Buses, Mercedes-Benz Vans)
worldwide: > 99%.
2 Tragically, an employee suffered a fatal work-related accident in
Germany in 2018.
The age differences at the company will rise in the future due
to the increase in the retirement age and the extension of
people’s working lives. The average age of our global workforce
in 2018 was 42.7 years (2017: 42.8). Our employees at Daimler
AG were 44.8 years old on average (2017: 44.7). Demographic
development will cause the average age to continue to rise
in the years ahead. However, the proportion of older employees
will decrease again over the long term because many baby
boomers will retire from the company. We consider this trans-
formation to be an opportunity, and we are adjusting the
framework conditions accordingly. Our generation management
system focuses on measures for maintaining the performance
and health of younger and older employees as well as for pro-
moting cooperation between people of different ages.
Once every quarter, the Board of Management discusses our
diversity management activities and the associated results.
We also hold discussions with external stakeholders as part of
our involvement in the Diversity Charter, of which we are a
founding member.
Securing young talent
Daimler takes a holistic approach to securing young talent. Our
STEM educational initiative, “Genius”, offers many activities
that get children and young people enthusiastic about technol-
ogy topics. Genius also helps teachers make their classes
varied and future-oriented by offering them practice-related
instructional materials, interactive technology workshops
and advanced training courses.
Along with technical and commercial apprenticeships and
courses of study at the Cooperative University, we also conduct
various activities that address young talents. We offer
extensive possibilities to personally interact with the company
via social media, hackathons, competitions and internships.
After completing their college degrees, graduates can directly
join our company or launch their careers at Daimler by taking
part in INspire, a series of varied international talent training
programs. Each one of our talent training programs offers
cross-unit insights, first-class training and personal coaching.
For example, “INspire – the Leaders’ Lab” is designed for
young professionals with initial practical experience who would
like to specifically prepare for management positions at the
company.
Daimler has offered an in-house trainee program called CAReer
since 2007. The talent training program “INspire – the Leaders’
Lab”, which replaced CAReer in 2018, is directed at participants
who are more focused on careers in management. In 2018 we
hired 23 trainees through our INspire program. About 48% of the
trainees were women and 40% were international participants.
In addition, 40 participants, including 24 women and 17 inter-
national candidates, began their CAReer program during the
transition period.
In Germany, we recruit most of the young talent we need
through our industrial-technical and commercial apprentice-
ships and the courses of study at the Cooperative State
University, which had more than 180 students in 2018.
214 E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
We had 8,061 trainees throughout the Group at the end of 2018
(2017: 8,097). Of this number, 4,009 were in a training program
at Daimler AG (2017: 4,409). During the year under review,
1,265 (2017: 1,278) young people began an apprenticeship at
Daimler AG; 1,191 (2017: 1,197) were hired after completing
their apprenticeships. The costs for vocational training for
Daimler AG totaled €124 million in 2018 (2017: €114 million).
Programs such as “Skilled Worker in Focus” and the team
leader development program ensure that employees are exten-
sively qualified according to uniform standards. The partici-
pants are given the opportunity to obtain good career prospects
and plan concrete development goals. Our company’s sus-
tained success is closely linked to the high quality of our man-
agers. That’s why we focus especially on the development
of talented young managers. We validate the young talents’
leadership potential at our PV44 in-house assessment center
and in the team leader development program, both of which
use a uniform standard for all of our locations. The Board of
Management member responsible for human resources regu-
larly receives reports about the measures and results of our
training activities and the development paths of our trainees.
Qualifications
We provide our staff with training and continuing education
opportunities for their professional and personal development
throughout their careers. At least once a year, employees
discuss qualification topics with their managers and agree on
appropriate measures. The company agreement on qualification
regulates continuing education at Daimler AG. This agreement
also stipulates that employees can leave the company for up
to five years in order to learn additional skills and guarantees
that they can return to the company. In 2018, around 430
employees availed themselves of this opportunity.
Our production locations are responsible for the qualification
of managers and specialized employees in manufacturing.
The Global Training unit safeguards and increases the skills of
our employees at the Mercedes-Benz sales organization. In
2018, more than 800 Mercedes-Benz trainers in over 80 coun-
tries instructed approximately 210,000 participants. A total
of 1.3 million training courses are held each year.
The Daimler Corporate Academy program helps the Group
develop a new management culture and world of work. In
2018, the Corporate Academy enabled a total of 65,800 spe-
cialized employees and managers worldwide to continue
their personal and professional development. At Daimler AG,
we spent €123 million on the training and qualification of
our employees in the year under review (2017: €121 million).
On average, every employee spent 3.2 days on qualification
courses in 2018 (2017: three days).
Health management and safety at
the workplace
We want to maintain our employees’ health and physical
well-being for the long term. To this end, the Daimler Group has
uniform preventive healthcare standards in place worldwide.
As part of Daimler AG’s health management approach, we
develop and implement anticipatory solutions that range from the
job-related “Daimler GesundheitsCheck” and the ergonomic
design of workstations to the IT system that makes it easier to
permanently reintegrate employees suffering from limitations
imposed by their health.
Our Health & Safety unit is responsible for occupational health
and safety, company health-promotion efforts, ergonomics,
counseling service and integration management. Health man-
agement and occupational safety are also governed by our
risk management systems. Our company health promotion is
aimed at motivating employees to develop healthy lifestyles
and reinforcing their sense of personal responsibility regarding
health issues. This objective is promoted worldwide with
the help of campaigns, counseling and qualification offerings, as
well as therapeutic and rehabilitation measures. All of our
plants in Germany have health centers on their premises or
cooperate with health centers located near the plants.
Occupational safety is firmly embedded at all levels of Daimler
and is addressed by an extensive portfolio of measures for
the prevention of work accidents, work-related illnesses and
occupational diseases. Our Center of Competence Safety
creates the associated Group-wide guidelines. We have stan-
dardized key occupational health and safety processes in
order to enable the creation and advancement of integrated
processes and systems. Every manager at Daimler is respon-
sible for ensuring that all internal guidelines and legal require-
ments for occupational health and safety are complied with.
Every organizational unit within the Daimler Group has to
approve and pursue occupational safety objectives on a regular
basis in accordance with our globally valid occupational health
and safety guidelines and occupational safety strategy and the
results of internal audits and reviews. The content and criteria
of our internal occupational safety management system corre-
spond to the standards of ISO 45001 and are regularly
updated.
The Board of Management receives a Health & Safety report at
regular intervals and is, among other things, given monthly
updates about the frequency of accidents. A Group crisis unit,
in which the Board of Management is also involved, enables
Daimler to respond quickly to various incidents such as serious
accidents and pandemics.
E | NON-FINANCIAL REPORT | SOCIAL ISSUES 215
Social Issues
As a global automotive company, we operate in an environment that is subject to a variety of
societal, social and political influencing factors. In order to ensure we can continue operating effec-
tively in the future, we need to make our company’s interests understandable to governments
and society, and must also address the concerns of groups within society. We therefore regularly
share information with our stakeholders and communicate our interests in an open and fair dialog
with governments and political representatives.
Stakeholder involvement
We consider it important to engage in a continuous dialog with
all of our interest groups so that we can bring together various
perspectives on our involvement with sustainability issues,
address future trends early on and share experiences. We also
want to engage in constructive discussions of controversial
themes at a very early stage. We always focus on conducting a
dialog that is successful and productive for both sides. In order to
conduct this kind of dialog, we need to identify our stakehold-
ers. We define our stakeholders as individuals and organizations
that have legal, financial, ethical or ecological expectations
regarding Daimler. One of the criteria for identifying and weight-
ing stakeholders is the extent to which a person or group is
affected by our company’s decisions or, conversely, is taken
into accout in such decisions. Our primary stakeholders are
our shareholders, creditors, employees, customers and suppli-
ers. However, we also communicate regularly with civil groups
such as NGOs, as well as associations, trade unions, the
media, analysts, municipalities, residents and neighbors in
the communities where we operate and representatives
of science and government. E.06
Dialog at the Group level
In order to implement the dialog with our stakeholders through-
out the Group, we have defined clear areas of responsibility,
communication channels and specific dialog formats. The pro-
active dialog with our stakeholders is initiated by experts
from the Integrity and Legal Affairs department and coordinated
by our corporate sustainability bodies.
One essential tool of the dialog with our stakeholders is the
Daimler Sustainability Dialogue, which has been held annually
in Stuttgart since 2008 and brings various stakeholder groups
together with members of our Board of Management and exec-
utive management. The participants attend a range of work-
shops, where they discuss issues related to sustainability and
work together to address them. The Daimler representatives
responsible for specific themes take up the impulses from the
discussions and work together with the stakeholders to incor-
porate these ideas into their work throughout the year. They
then report at the event in the following year on the progress
made in the interim. We held our eleventh Daimler Sustain-
ability Dialogue in Stuttgart during the year under review. The
evening before the event was devoted to sustainability issues
related to electric mobility. In a creative ideation workshop
called “Smart Cities,” experts from various units worked out
sustainable solutions to everyday urban problems. On the
main day of the event, about 200 stakeholders split up into eight
working groups to discuss themes such as data ethics, the
market penetration of electric vehicles and digitalization in the
work environment.
As a global company, we have set ourselves the goal of imple-
menting sustainability standards at our business units and
specialist departments around the world. To this end, we orga-
nize Daimler Sustainability Dialogue events in other countries
as well. Such dialog events have been held in China, Japan, the
United States and Argentina. During the year under review,
more than 200 stakeholders attended the sixth Daimler Sus-
tainability Dialogue in Beijing, where they discussed topics
relating to sustainable production, innovation, artificial intelli-
gence and integrity and legal affairs.
The Advisory Board for Integrity and Corporate Responsi-
bility has been an important source of input for sustainability
activities at Daimler since 2012. The board’s members – exter-
nal experts from the fields of science and business, as well
as from civic organizations – utilize an external point of view to
offer critical and constructive support for the integrity and
corporate responsibility process at Daimler. The board meets
at regular intervals and holds discussions with members of
the Board of Management and other Daimler executives. Its
members have extensive experience and possess a variety
of specialized knowledge regarding environmental and social
policy, various human rights and ethical issues, and the devel-
opment of transport, traffic and mobility. During the year under
review, the Advisory Board addressed, among other things,
the further development of our culture of integrity, electric mobil-
ity, mechanisms for dealing with complaints, mobility services
and data responsibility.
We also maintain contact with representatives from civic
organizations and other companies, and we participate in various
associations, committees and sustainability initiatives. The
most important initiatives here are the UN Global Compact and
Econsense — a German business forum for sustainable develop-
ment.
We also utilize online and print media, discussions with
experts, workshops and local and regional dialog events for
our dialog with stakeholders.
In addition to the formally structured dialog, we receive inquiries
from stakeholders concerning various sustainability-related
topics. These inquiries are addressed directly by specific spe-
cialist departments and units in a decentralized manner. This
approach brings our stakeholders closer to our business oper-
ations and enables specialized knowledge to be directly incor-
porated into the dialog. Individual inquiries from stakeholders
are also reported on in the meetings of our sustainability
bodies and committees and are thus taken into consideration in
the strategic decisions made by our sustainability management
organization. Our sustainability bodies also coordinate dialog
with our stakeholders on interdisciplinary issues.
216 E | NON-FINANCIAL REPORT | SOCIAL ISSUES
Dialog at the local and regional levels
We also engage in a dialog with the stakeholders at our loca-
tions. In connection with specific occasions and projects,
we address questions, concerns, criticism and suggestions made
by stakeholders and conduct an open-ended dialog with
them. We also stage proactive dialog and information events
on current topics. The results of all of our dialog measures
are incorporated into decision-making and decision-implemen-
tation processes at the company. A current example of this
approach involves the sustainable further development of the
Rastatt plant. The transformation process here focuses on
electric mobility and the associated need for additional factory
space. Together with officials of the city of Rastatt, we
searched for potential locations for a plant extension in the
vicinity of the current plant and took into account the sugges-
tions and recommendations made by stakeholder groups,
including nature preservation and environmental organizations,
property owners, tenants and leaseholders, neighboring com-
munities and municipal agencies. We also continue to keep the
public up to date with various dialog and information events,
including civic dialogs, meetings with affected individuals and
organizations, and plant tours.
Political dialog and representation of interests
As a company with global operations, we have to deal with a
wide range of political changes and decisions that impact our
business activities. In order to safeguard the future of the
Daimler Group, it is therefore important that we represent the
interests of our company in an open and trusting dialog with
governments, associations, organizations and various groups
in society. In line with this philosophy, such a dialog also
allows us to hear their concerns and consider their point of
view in our actions.
change. We focus here on issues such as vehicle safety, emis-
sion regulations, new mobility concepts and electric mobility.
Other important issues include trade policy, location-specific
matters and education and human resources policy.
Our management policy on Lobbying and Political Donations
governs, among other things, the use of lobbying instruments
and other methods for making our interests known in the politi-
cal realm. We represent the company’s interests through
dialog with decision-makers, including elected officials or poli-
ticians who have been nominated for office, government
officials, and representatives of political interest groups, trade
organizations, business associations and government agen-
cies. Participation in specialized government committees and
product sales to ministries, government agencies and diplo-
matic missions are part of our business operations and there-
fore not considered a component of lobbying.
Our central coordinating body for political dialog at the national
and international levels is the External Affairs and Public Policy
department, which falls under the responsibility of the Chairman
of the Board of Management. This department operates a
global network with offices in Berlin, Brussels, Beijing, Singapore,
Stuttgart and Washington and also has corporate represen-
tations in other key markets. In order to ensure that political
lobbying activities are coordinated, and also to avoid political
target groups being addressed in an uncoordinated manner,
employees in the External Affairs and Public Policy department
must be registered.
Also through the Group-wide Lobbyists Register, we want
to ensure that our political lobbying is carried out in accordance
with applicable regulations and ethical standards. The
register also helps us meet the registration requirements of
public institutions.
Our principles for political dialog and communicating our inter-
ests form the basis of responsible, reliable and open action
with the aim of harmonizing the company’s interests with the
interests of society at large. This also includes the idea of
maintaining neutrality when dealing with political parties and
representatives of interest groups. The aim of our discussions
with political decision-makers is to achieve greater planning
security and contribute our ideas to processes of social
We regard donations to political parties as an element of our
social responsibility and as a contribution to the democratic
process. We make these donations in strict conformity with
applicable law. All donations to political parties require a Board
of Management resolution. As in previous years, Daimler AG
made donations totaling €320,000 to political parties in 2018.
Of this total, the CDU and SPD each received €100,000,
and the FDP, CSU and Alliance 90/Green Party €40,000 each.
E.06
Examples of instruments of stakeholder dialog
Information
Dialogue
Participation
- Daimler Sustainability Report as well as
regional reports (such as the Daimler
China Sustainability Report)
- Sustainability newsletters and magazines
- Environmental declarations by the plants
- Press and public-relations work
- Corporate website
- Blogs and social media
- Social intranet and internal communication
- Plant tours, receptions, Mercedes-Benz
Museum
- Annual “Daimler Sustainability Dialogue”
- Stakeholder consultation in topic-related
(Germany/regions)
workgroups
- Local dialog with residents and
- Advisory Board for Integrity and Corporate
munic ipalities
Responsibility
- Internal dialog sessions on integrity and
- Peer review within the framework of
sustainability initiatives such as the UN
Global Compact
compliance
- Daimler Supplier Portal
- Membership of sustainability initiatives and
networks
- Collaboration in the BDI workgroup on
artificial intelligence
- Specialist conferences on societal topics
and debates
- Topic- and project-related discussions
- New dialog formats on future questions:
think tanks, hackathons, ideation challenge
E | NON-FINANCIAL REPORT | COMPLIANCE 217
Compliance
Values-based compliance is an indispensable part of day-to-day business at Daimler, and for us,
means acting in conformance with laws and regulations. Our objective is to ensure that all Daimler
employees worldwide are always able to carry out their work in conformance with applicable
laws, regulations, voluntary commitments and our values, as set out in binding form in our Integrity
Code. Our compliance activities focus on complying with all applicable anti-corruption regulations,
the maintenance and promotion of fair competition, adherence to legal and regulatory stipulations
regarding product development, respect for and the protection of human rights, adherence to
data protection laws, compliance with sanctions lists and the prevention of money laundering.
Our Compliance Management System
Our Compliance Management System (CMS) consists of
basic principles and measures intended to promote rule-based
behavior throughout the company. The CMS is based on
national and international standards and applies on a global
scale at all Daimler AG units and majority holdings. The
CMS consists of seven elements that build on one another.
E.07
Our compliance values and goals
Our Compliance Management System (CMS) is designed
to help Daimler and its employees avoid inappropriate or illegal
behavior, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined by
our compliance and legal organizations in a process that
also takes the company’s business requirements into account.
E page 116
Our compliance organization
Our compliance and legal organizations have set themselves
the goal of ensuring Group-wide conformance with laws
and regulations. Our compliance organization is structured in a
divisional and regional manner, while our legal organization
is structured regionally and along the value chain. These struc-
tures enable us to provide optimal support and advice to our
divisions. A contact person is made available to each function,
division and region. In addition, a global network of local con-
tact persons makes sure that our standards are met throughout
the Group and also helps local management at Daimler facili-
ties and sales companies implement our compliance program.
Compliance risks
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of
all our business units every year. These analyses are based on
centrally compiled information on all business units and take
specific additional details into account as needed. The results
of the analyses form the basis of our risk control.
Compliance program
Our compliance program comprises principles and measures
designed to reduce compliance risks and prevent violations
of regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance analyses, focus on the following aspects:
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail, or by filling out a special form. An external toll-
free hotline is also available in Brazil, the United States and
South Africa. Reports can be submitted anonymously if local
laws permit this. In Germany, reports to the BPO can also
be submitted via a neutral intermediary, who in this case is an
independent external attorney. The information provided to
the BPO enables us to learn about potential risks and specific
violations that pose a high risk to the company and its employ-
ees, and this in turn allows us to prevent damage to the company
and its reputation. A globally valid corporate policy aims to
ensure a fair and transparent approach that takes into account
the principle of proportionality for the affected parties,
while also giving protection to whistleblowers. In an effort to
increase trust in our whistleblower system and make it even
better known within the Group, we have established a continuous
communication process that includes the periodic provision
of information to employees about the type and number of
E.07
Daimler Compliance Management System (CMS)
I. Compliance Values
VII. Monitoring
& Improvement
II. Compliance
Targets
VI. Communication
& Training
III. Compliance
Organization
V. Compliance
Program
IV. Compliance
Risks
218 E | NON-FINANCIAL REPORT | COMPLIANCE
reported violations. We also supply information materials
such as country-specific information cards. In addition, we have
produced an instructional video in ten languages and we
repeatedly stage informational and dialog events at our locations
as well.
The BPO process was developed further during the year under
review. A risk-based initial assessment and standardized pro-
cesses enable more rapid identification and effective processing
of high-risk reports submitted to the BPO. The case categories
used by the BPO have been updated and new categories have
been added in order to incorporate the latest social and legal
developments into the BPO process. In the year under review,
89 new BPO cases were opened. A total of 101 cases were
closed, 60 of them “with merit,” which means the initial suspicion
was confirmed. Of these latter cases, five were categorized
as “corruption” and seven as “theft, breach of trust and enrich-
ment offenses of a significant magnitude or value.” Seven
cases fell under the category “damage exceeding €100,000.”
One case was in the category “physical injury.”
With regard to those cases that are closed “with merit,”
appropriate response measures are decided in line with the
principles of proportionality and fairness. Fairness, which is
the key principle in the overall process, applies to both whistle-
blowers and affected parties. In other words, affected parties
are not judged in advance and the assumption of innocence
applies until it has been proven that a violation has occurred.
Whistleblowers who contact the BPO are also protected.
They do not need to worry that their report might result in
negative consequences for themselves.
Personnel measures taken in 2018 included the issuing of
verbal and written warnings and final warnings, as well
as separation agreements and ordinary and extraordinary
terminations.
Compliance on the part of our business partners
We also require our business partners to adhere to clear com-
pliance requirements because we regard our business partners’
integrity and behavior in conformity with regulations as a pre-
condition for trusting cooperation. In the selection of our direct
business partners, we therefore ensure that they comply with
the law and observe ethical principles. In financial year 2018,
we completed the implementation of our globally standardized
process for the effective and efficient examination of all new
and existing business partners (Business Partner Due Diligence
Process). Our continuous monitoring here is designed to
ensure we can identify possible integrity violations by our busi-
ness partners. We also reserve the right to terminate cooper-
ation with, or terminate the selection process for, any business
partner who fails to comply with our standards. In addition,
we work with our procurement units to continuously improve our
processes for selecting and cooperating with suppliers; our
global Daimler Supplier Sustainability Standards apply here. On
the basis of these standards and our Integrity Code, a specific
Supplier Compliance Awareness Module was developed. This
module is distributed to our suppliers. It contains provisions
similar to those that can be found in the general Compliance
Awareness Module for sales partners, which was introduced
in 2016 and is designed to increase their awareness of com-
pliance requirements. See also w daimler.com/sus/obr.
Communication and training
Our extensive training courses are based on our Integrity Code.
The training program is planned on the basis of an annual
planning cycle that includes everything from a needs analysis
to the evaluation of the entire training process. Among other
things, the program covers the topics of integrity, compliance
(including corruption prevention and technical compliance),
data protection and antitrust law. Depending on the risk and
the target group, we use classroom training or digital learning
techniques such as web-based training courses.
Every employee who works at a majority-owned Daimler-
controlled company can participate in a web-based and target-
group oriented training program consisting of several mod-
ules – a basic module, a module specifically for managers, and
expert modules on antitrust law, data protection, technical
compliance, non-cash rewards for employees and function-
specific topics such as procurement and sales. This program
is being continuously expanded in line with the requirements of
specific target groups.
Office employees are required to complete modules relevant to
their role and function. The associated modules are assigned
to them automatically or in a centralized process. These training
modules are assigned when an employee is hired, promoted
or transferred to a position that involves an increased risk. This
approach ensures that personnel changes are properly
addressed. In general, the program must be repeated approxi-
mately every three years. Factory employees can complete
the web-based training program voluntarily.
The web-based training courses are supplemented by class-
room training sessions that are conducted by central or local
trainers. We provide our internal trainer network with modular
training documents and materials for methodical implementa-
tion, such as trainer guideline and explanatory videos that can
be used in a target group-specific manner in accordance with
the risks associated with the participants’ jobs. In 2018, a
total of approximately 220,000 employees from various levels
of the hierarchy participated in classroom and web-based
training programs.
We also offer our employees in the compliance and legal
organizations target group-specific qualification measures. In
addition, all new employees at these organizations receive a
comprehensive introduction in an onboarding program.
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the company
and also help our employees deal with specific issues that
can occur at work. The same is true of the Daimler app for integ-
rity, compliance and legal affairs. The app can be downloaded
and used by all employees with an iOS company-owned device.
Among other things, the app enables mobile access to informa-
tion on corruption prevention and antitrust law, and additional
topics will be added in the coming financial year.
E | NON-FINANCIAL REPORT | COMPLIANCE 219
Involvement of company management
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers’ independence from the business divisions. The
Chief Compliance Officer, the Group General Counsel and the
Vice President Legal Product & Technical Compliance report
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Audit Committee of the Super-
visory Board. They also report regularly to the Board of Manage-
ment of Daimler AG on matters such as the status of the
Compliance Management System and its further development,
the status of the whistleblower system and, if necessary, on
other topics. In addition, the Group General Counsel regularly
reports to the Antitrust Steering Committee and the Group
Risk Management Committee, to which the Chief Compliance
Officer and the Vice President Legal Product & Technical
Compliance also report.
Important non-financial reporting topics
Eliminating corruption, preventing cartel arrangements, ensuring
compliance with technical regulations, preventing money
laundering and the financing of terrorism, and complying with
sanctions – we introduced our Compliance Management Sys-
tem (CMS) in order to address exactly these issues, which are
extremely important to us. The Data Compliance Management
System that we are currently setting up is also based on the
Daimler CMS, as is our Group-wide approach to respecting and
upholding human rights.
Information and qualification measures are also offered to
individuals who perform supervisory and management func-
tions. Within the framework of the onboarding program for
new members of the Supervisory Board of Daimler AG, such
members were provided with information about the antitrust
compliance program and technical compliance management
during the year under review. In addition, the Group’s Chief
Compliance Officer reported to the Audit Committee of the
Supervisory Board on the status of the compliance manage-
ment system. In 2018, new members of the supervisory boards
of Daimler holdings were provided with information on various
issues relating to compliance, data protection and integrity. They
also participated in a “Know Your Responsibilities” onboarding
program to make them more aware of compliance-related
topics (for example anti-corruption policies) and the importance
of integrity at their companies. New members of executive
bodies at companies in which Daimler is the majority share-
holder are given a compact overview of key aspects of cor-
porate governance via the Corporate Governance Navigator,
which is a target group-focused module that supports them
in their new role by providing information on their tasks and
responsibilities, contact partners and units that deal with
central issues addressed by the Integrity and Legal Affairs
division and adjacent units.
In addition to our internal training measures, our training
program also includes special courses on integrity and compli-
ance (including corruption prevention) that are offered to our
business partners in line with their specific risks. The courses
are offered as web-based training or classroom training ses-
sions. Daimler informs its business partners about the courses
and invites them to participate.
Monitoring and improvements
Every year, we review the adequacy and effectiveness of our
Compliance Management System and adapt it to global devel-
opments, changed risks and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process
duration and quality. To determine these indicators, we check,
among other things, whether formal requirements are met
and all information is complete. In addition, we analyze the
knowledge gained through independent internal and external
assessments and participate in selected benchmark studies.
These activities are used to define any required improvement
measures, which are implemented by the responsible units
and departments and then monitored on a regular basis. The
relevant management bodies continuously receive reports
on these monitoring activities.
220 E | NON-FINANCIAL REPORT | COMPLIANCE
Anti-corruption compliance
Antitrust compliance
Daimler has committed itself to fighting corruption in its
own business activities. Along with complying with all applicable
laws, this also involves adhering to the rules of the OECD
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997) and the United
Nations Convention against Corruption (2003). As a founding
member of the UN Global Compact, Daimler also seeks to
ensure that not only the company itself but also its business
partners act in accordance with the principles of the compact.
The most important goals here are to fight corruption around
the world in order to enable fair competition, eliminate the
damage corruption does to society and thus improve conditions
for everyone. Our anti-corruption compliance program is
based on our comprehensive Compliance Management System.
The program is globally valid and primarily consists of an
integrated risk assessment process that takes into account
internal information such as a unit’s business model and
external information such as the Corruption Perceptions Index
from Transparency International, for example. Other program
components include risk-based measures for avoiding corrup-
tion in all business activities (e.g. reviews of business partners
and transactions) and measures to ensure that special care is
taken in contacts with authorities and public officials. Our
risk-minimization measures focus in particular on sales compa-
nies in high-risk countries and business relationships with
wholesalers and general agencies worldwide.
The responsibility for implementing and monitoring measures
lies with each company’s management, which cooperates
closely with the specialist units within Integrity and Legal Affairs.
Daimler places the same strict requirements on all of its activ-
ities around the world. In addition, we continuously improve
our methods and processes and use a variety of communication
and training measures to make our employees around the
world more aware of the importance of fighting corruption.
Further information on communication and training:
E page 218
Free and unfettered competition is one of the foundations of
our social and economic system. Such competition creates
growth and jobs and ensures that all of us as consumers have
access to modern products at fair prices. Our Group-wide
Antitrust Compliance Program is oriented to national and inter-
national standards. The program establishes a binding, globally
valid Daimler standard that defines how matters of competi-
tion law are to be assessed. The Daimler standard is based on
the standards of the European antitrust authorities and
courts. The objective of the Daimler standard is a uniform level
of compliance and advice in all countries and thus compliance
with all local and international antitrust laws.
By means of an advisory hotline set up by our Legal department,
as well as guidelines and practical support, we help our
employees around the world recognize situations that might be
critical from an antitrust perspective, and also act in compli-
ance with regulations in their daily work, especially when deal-
ing with competitors, cooperating with dealers and general
agencies around the world, and participating in business asso-
ciation committees.
In addition to Daimler’s Legal department and its specialist
advisers, the Group’s global units and their employees can turn
to legal advisers in local units, who also ensure that our
standards are consistently upheld. We also utilize a variety of
communication measures to make our employees aware of
the importance of competition and antitrust laws and issues.
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing, implementing and moni-
toring measures lies with each company’s management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides information on how to implement
the measures effectively. Units that face a higher potential risk
in particular must also systematically assess the adequacy
and effectiveness of locally implemented antitrust compliance
measures at regular intervals. In addition, our Legal and Cor-
porate Audit departments conduct additional monitoring activi-
ties at our company’s units, as well as random audits on the
basis of a predefined audit plan in order to ensure that antitrust
laws are complied with and internal processes are carried out
properly. This helps us continuously improve the effectiveness
of our Antitrust Compliance Program and adapt it to global
developments and new legal requirements. The associated
methods and processes are being constantly refined and
improved.
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschaft s-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with the 980 standard
of the Institute of Public Auditors in Germany. This audit, which
was based on the principles of appropriateness and effective
implementation, was successfully completed at the end of 2016.
Technical compliance
For us, technical compliance means adhering to technical
regulations, standards and laws while taking into account the
fundamental aims of these laws and regulations. In order to
address the specific risks associated with the product develop-
ment process, we combined the existing systems and addi-
tional measures and processes at all divisions of Daimler AG
into a technical Compliance Management System (tCMS).
The purpose of the tCMS is to ensure legal and regulatory con-
formity within the product development process and to provide
our employees with orientation and guidance through values,
structures and processes.
The technical Compliance Management System is managed
Group-wide by a unit independent of all divisions that consists
of employees with expertise in various fields, such as devel-
opment, legal affairs, integrity and compliance. The head of this
unit – the Vice President Legal Product & Technical Compli-
ance – reports directly to the member of the Daimler AG Board
of Management responsible for Integrity and Legal Affairs. Our
divisional structure enables us to optimally support and advise
our divisions. The unit’s tasks include the organization of the
technical Compliance Management System and its associated
governance elements and providing legal advice to the divisions.
In order to further strengthen the tCMS, dedicated units with
experts for technical compliance have been created in the
development departments at the Cars, Vans, Trucks and Buses
divisions. In addition, there is a network of technical compli-
ance contact partners within the development departments who
serve as a link between operating units and the compliance
organization. These partners support the development depart-
ments in matters of technical compliance. Complex questions
regarding technical compliance are evaluated and then decided
unanimously in an interdisciplinary process that takes into
account technical and legal criteria. Our “Infopoint Integrity” is
also available as a contact and advice center for topics related
to technical compliance, while our BPO whistleblower system is
available for reporting on technical compliance violations.
The Technical Integrity initiative, as part of the tCMS, aims
to ensure responsible behavior during the product development
process, particularly in situations where legal provisions may
be unclear. Together with the relevant development departments,
so-called commitment statements have been formulated in
order to support the employees in this process. These principles
have been discussed with employees at dialog sessions held
around the world. Various communications measures regarding
the commitment statements have been conveyed to all employ-
ees and anchored in selected training courses .
E | NON-FINANCIAL REPORT | COMPLIANCE 221
Development employees at all divisions have been sensitized
to issues relating to integrity, compliance and legal regulations
in the product development process through various commu-
nications measures such as “Tone from the Top” mailings and
posters, as well as through special training courses and dialog
sessions. Dialog sessions have also been held worldwide with
more than 750 managers from development and development-
related departments at the various divisions in order to ensure
that technical compliance and integrity are anchored in the
organization. In addition, more than 19,500 employees from the
development departments of all divisions worldwide took
part in classroom training courses on technical compliance in
the year under review.
The effectiveness of our tCMS is monitored annually in a
process that also results in the development of measures to
improve the system wherever necessary.
Data compliance
As a consequence of the European Union’s new General Data
Protection Regulation (GDPR), which went into effect on
May 25, 2018, we are consolidating all existing data protection
measures, processes and systems throughout the Group into
a single Data Compliance Management System. This system is
based on the Daimler Compliance Management System (CMS),
whose approach helps us meet the company’s accountability
requirement and the data controller’s obligation to demonstrate
the basis of the processing of personal data as described in
the GDPR.
The establishment of the Data Compliance Management System
was accompanied by the creation of a new Data Compliance
unit within the compliance organization. This unit defines the
program elements and controls their implementation through-
out the Group. At the same time, the Chief Officer Corporate
Data Protection and his team continue to perform the tasks
required by law to ensure compliance with data protection rules.
The Chief Officer Corporate Data Protection is independent
and reports directly to the Board of Management member for
Integrity and Legal Affairs. The Chief Officer Corporate Data
Protection informs and advises the data controllers and the
specialist departments, serves as a contact partner for com-
plaints regarding data protection, monitors compliance with
data protection rules, provides advice on the implementation
of data protection impact assessments and cooperates with
the regulatory authorities. We are currently realigning the exist-
ing network of local data protection coordinators and merging
this network into our compliance network.
Our Corporate Data Protection Policy creates Group-wide
standards for handling the data of employees, customers and
business partners. The internal processes necessitated by
the GDPR and the requirements of the Compliance Management
System are reflected in a new version of the Corporate Data
Protection Policy.
222 E | NON-FINANCIAL REPORT | COMPLIANCE
A key component of the Data Compliance Management System
is the Data Compliance Risk Assessment, which involves a
systematic analysis and evaluation of data protection risks at
all business units. These analyses are based on centrally
compiled information on all business units; specific additional
details are taken into account in line with the given risk assess-
ment. The results of the analyses form the basis of our risk
management and risk minimization activities. The analyses
enable us to adopt a risk-based approach for the further devel-
opment of our Data Compliance Management System.
The results of the annual Data Compliance Risk Assessment
serve as the basis for the formulation of measures that address
possible data protection risks. The elements of our data
compliance program include the provisions of the General Data
Protection Regulation (relating, for example, to information
obligations, the rights of data subjects and concepts for data
erasure), the stipulations of local data protection laws, commu-
nication and training measures and various data protection
consulting services. The responsibility for designing and imple-
menting measures lies with each company’s management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides support with implementation.
A monitoring plan is used to assess the effectiveness and
efficiency of the implementation of the various measures at the
business units. These reviews are used to define improvement
measures, which are implemented by the responsible units and
departments and then monitored on a regular basis.
Anti-financial crime compliance
Money laundering and the financing of terrorism pose con-
siderable sociopolitical risks. For this reason, the prevention
of money laundering and the implementation of anti-money
laundering measures have been defined as central compliance
goals in our Integrity Code. With our core business and our
global production and sale of vehicles, we and companies con-
trolled by the Group are subject to the provisions of the
German Money Laundering Act (GwG), which applies to “com-
mercial sellers of goods.” As a result, we are required to
implement Group-wide and thus worldwide measures to prevent
and combat money laundering and the financing of terrorism
(anti-money laundering – AML – and counter terrorist financing –
CTF – policies).
An integrated Group-wide compliance approach has been
implemented in the Anti-Financial Crime (AFC) department in
order to link prevention of the circumvention of supranational
and national sanctions with measures to prevent and combat
money laundering, organized crime and other criminal economic
activity and the financing of terrorism. This is important, as
these risks can not only have a negative impact on society; they
can also cause long-term damage to our reputation, as well as
financial damage that can negatively affect our companies and
our shareholders and stakeholders.
The organizational structure of the AFC specialist unit serves as
the central Group organization for promoting compliance
with the GwG across all divisions. This structure also brings
together under one roof our two Centers of Competence for
Preventing and Combating Money Laundering and the Financing
of Terrorism (CoC AML) and the Center of Competence for
Checks against Sanctions Lists (CoC CSL). The objective of the
sanctions compliance process is to ensure the performance of
systematic reviews to determine whether the names of affected
natural or juridical persons or organizations can be found on
any sanctions list around the globe (checks against sanctions
lists – CSL). The review thus involves checking supranational
sanctions lists such as those published by the United Nations
(UN) and the European Union (EU), as well as national sanc-
tions lists, in particular those published by the United States,
that may be applicable in certain situations.
As required by law, such reviews are conducted for customers
and business partners, for example in sales and procurement,
as well as for employees and strategic cooperation partners.
The provisions of data protection law are taken into account
when such checks against sanctions lists are performed.
Our integrated compliance approach aims to ensure that we
can effectively prevent and combat money laundering and
the financing of terrorism.
Human rights compliance
For Daimler, respect for human rights is a fundamental compo-
nent of responsible corporate governance. Respect for human
rights is therefore a key component of our Group-wide sustain-
ability strategy. We are committed to ensuring that human
rights are respected and upheld throughout our organization
and by our suppliers.
The following standards and guidelines in particular serve as a
frame of reference for our conduct and are of central impor-
tance for our due diligence obligations as defined by the HRRS:
– the UN Global Compact,
– the UN Guiding Principles on Business and Human Rights,
– the Universal Declaration of Human Rights,
– Germany’s National Action Plan on Business and Human
Rights, and
– the Core Labor Standards of the International Labour
Organization.
Our expectations, which are based on these standards
and guidelines, are clearly defined and described in our Integ-
rity Code and the Daimler Supplier Sustainability Standards.
The latter define our requirements with regard to working con-
ditions, human rights, environmental protection, safety,
business ethics and compliance, and are also part of our general
terms and conditions. We demand that our direct suppliers
worldwide commit themselves to observing our sustainability
standards, communicating them to their employees and to
upstream value chains, and checking to ensure that the stan-
dards are complied with. As a risk-based measure, we our-
selves perform checks in critical supply chains in order to ver-
ify compliance with our standards by further members of the
supply chain. These audits begin with the tier one supplier and
extend to the critical points in the supply chain, and even
down to the mines if necessary.
E | NON-FINANCIAL REPORT | COMPLIANCE 223
Identification of human rights risks in our supply chain
Since 2008 we have defined our expectations towards our
suppliers regarding sustainability in our Supplier Sustainability
Standards. Upholding human rights and in particular stipula-
tions concerning working conditions are key components of
these requirements. In order to meet our human rights due
diligence obligations even more systematically, we have devel-
oped risk classifications tailored to various product areas
(such as production materials and services). This enables us to
identify services and raw materials that may pose risks to
human rights, including minerals that are potentially associated
with conflicts. During the year under review, we started using
our analyses here as a basis for defining and implementing
measures that can also be applied beyond the level of our direct
suppliers if necessary.
Further Group-wide measures
Within our sales organization, we conduct individual audits of
potentially critical transactions in cooperation with the units
that are involved. During our ongoing training sessions, we also
inform our employees and make them aware of their obligation
to respect and safeguard human rights as described in our
Integrity Code. Employees and external parties can use various
channels, such as the BPO (Business Practices Office) whistle-
blower system and the World Employment Committee, to report
suspected human rights violations and obtain “access to rem-
edy” as defined by the third pillar of the UN Guiding Principles
on Business and Human Rights. w daimler.com/company/
corporate-governance/compliance/principles.html
E page 217
Involvement at the executive level
The responsibility for human rights issues lies with the Integ-
rity and Legal Affairs Board of Management function. The
member of the Board of Management responsible for Integrity
and Legal Affairs is regularly informed about human rights
activities. This is supplemented by regular reports submitted
to the Board of Management and the Corporate Sustainability
Board (CSB), as well as to the Procurement Council (PC) within
the framework of our sustainability strategy.
We are gradually expanding our Human Rights Respect System
(HRRS) in a process that also includes regular consultations
with external stakeholders. The HRRS, which orientates itself
on our Group-wide Compliance Management System (CMS),
utilizes a risk-based approach in its focus on Daimler majority
holdings (including our production locations) and our supply
chain.
Due diligence with the Human Rights Respect System
As a proactive risk management system, the HRRS is designed
to identify and avoid systemic risks and possible negative
effects of our business activities on human rights early on. The
HRRS thus primarily protects third parties and is aimed at
exerting its effect along our supply chain as well. It consists of
four steps that are to be applied to Daimler majority-owned
companies and the supply chain:
1. identification of potential human rights risks (risk
assessment),
2. definition, implementation and management of preventive
measures and countermeasures (program implementation),
3. monitoring of the effectiveness of the measures, in parti-
cular at higher-risk units and in supply chains that are at a
high risk of human rights violations (monitoring), and
4. periodic internal reporting on relevant issues, compliance
with external reporting requirements (reporting).
The HRRS also involves consultation and exchange with rights
holders (for example our employees and their representatives)
and external third parties such as civil society organizations
and local populations.
Identification of human rights risks at Daimler
majority holdings
The risk assessment is a two-step process. The first step
involves a categorization of the majority holdings on the basis
of predefined criteria, such as the risk situation in specific
countries and risks associated with specific business operations.
In the second step, units that display a heightened human
rights risk are subject to an on-site assessment. The modular
approach we employ here takes into account fundamental
human rights standards such as those defined in the Universal
Declaration of Human Rights and the Core Labour Standards
of the International Labour Organization (ILO).
During the reporting year, we made adjustments to our risk
assessment methods and also had external stakeholders verify
our risk assessment process. The feedback we receive from
stakeholders is used to further develop and improve the risk
assessment system. We are also currently developing an
effective approach to program implementation, monitoring and
reporting.
224 E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
Concerning a Limited Assurance Engagement
on the Non-Financial Group Reporting1
To the Supervisory Board of Daimler AG,
Stuttgart
We have performed an independent limited assurance
engagement on the separate combined non-financial Report
of Daimler AG, Stuttgart and the Group (further “Daimler”)
as well as the by reference qualified parts “Business model”,
“The workforce”, “Legal risks” and “Non-Financial risks”
(further “Report”) according to §§ 315b and 315c in conjunc-
tion with 289b to 289e German Commercial Code (HGB)
for the business year from January 1 to December 31, 2018.
Management’s Responsibility
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and 315c
in conjunction with 289b to 289e HGB.
This responsibility of the legal representatives includes the selec-
tion and application of appropriate methods to prepare the
Report and the use of assumptions and estimates for individual
sustainability disclosures which are reasonable under the
given circumstances. Furthermore, the responsibility includes
designing, implementing and maintaining systems and pro-
cesses relevant for the preparation of the Report in a way that
is free of – intended or unintended – material misstatements.
Independence and quality assurance on the part of the
auditing firm
We are independent from the company in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and have
fulfilled our additional professional obligations in accordance
with these requirements.
Our audit firm applies the national statutory provisions and
professional pronouncements for quality assurance, in particu-
lar the professional code for German Public Auditors and
Chartered Accountants (in Germany) and the quality assurance
standard of the German Institute of Public Auditors (Institut
der Wirtschaftsprüfer, IDW) regarding quality assurance require-
ments in audit practice (IDW QS 1).
Practitioner’s Responsibility
Our responsibility is to express a conclusion on the Report based
on our work performed within a limited assurance engagement.
We conducted our work in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised):
“Assurance Engagements other than Audits or Reviews of
Historical Financial Information” published by IAASB. This
Standard requires that we plan and perform the assurance
engagement to obtain limited assurance whether any matters
have come to our attention that cause us to believe that the
Report for the period from January 1 to December 31, 2018, has
not been prepared, in all material respects in accordance
with §§ 315b and 315c in conjunction with 289b to 289e HGB.
We do not, however, provide a separate conclusion for each
disclosure. In a limited assurance engagement the evidence
gathering procedures are more limited than in a reasonable
assurance engagement and therefore significantly less assur-
ance is obtained than in a reasonable assurance engagement.
The choice of audit procedures is subject to the auditor’s own
judgement.
Within the scope of our engagement, we performed amongst
others the following procedures:
– Inquiries of personnel on group level who are responsible
for the materiality analysis to get an understanding of the
process for identifying material topics and respective report
boundaries for Daimler
– A risk analysis, including a media search, of relevant informa-
tion about the sustainability performance of Daimler in the
reporting period
– Evaluation of the design and implementation of systems and
processes for the collection, processing and monitoring of
information on environmental, employee and social matters,
respect for human rights, and combating corruption and
bribery, including data consolida-tion
– Inquiries of personnel on group level who are responsible for
the collection of the infor-mation to concepts, due diligence
processes, results and risks, the conduction of internal con-
trols and the information consolidation
– Evaluation of selected internal and external documents
– Analytical evaluation of data and trends of quantitative
information which are reported by all sites on group level
– Evaluation of local data collection and reporting processes
and reliability of reported data via a sampling survey
in Kawasaki (Japan), Sindelfingen and Düsseldorf (both
Germany).
– Assessment of the overall presentation of the information
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR’S REPORT 225
Conclusion
Based on the procedures performed and the evidence obtained,
nothing has come to our attention that causes us to believe
that the Report of Daimler for the business year from January 1
to December 31, 2018 is not prepared, in all material respects,
in accordance with §§ 315b and 315c in conjunction with 289b
to 289e HGB.
Restriction of use/AAB clause
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Engagement Terms for Wirtschaftsprüfer and Wirtschafts-
prüfungsgesellschaften (Allgemeine Auftragsbedingungen für
Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in
the version dated January 1, 2017 w https://www.kpmg.de/
bescheinigungen/lib/aab_english.pdf. By reading and using
the information contained in this report, each recipient confirms
notice of provisions of the General Engagement Terms (includ-
ing the limitation of our liability for negligence to EUR 4 Mio as
stipulated in No. 9) and accepts the validity of the attached
General Engagement Terms with respect to us.
Stuttgart, February 13, 2019
KPMG AG
Wirtschaftsprüfungsgesellschaft
(Original German version signed by:)
Dr. Thümler
Wirtschaftsprüfer
(German Public Auditor)
Mokler
Wirtschaftsprüfer
(German Public Auditor)
1 Our engagement applied to the German version of the Report 2018. This
text is a translation of the Independent Assurance Report issued in the
German language, whereas the German text is authoritative.
Consolidated
Financial
Statements
The Consolidated Financial Statements presented as follows have been
prepared in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU). They also
comply with additional requirements set forth in Section 315e Sub-
section 1 of the German Commercial Code (HGB).
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS 227
F | 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
1. Significant accounting policies
2. Accounting estimates and
management judgments
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 and
similar deposits
16. Other financial assets
17. Other assets
18. Inventories
19. Trade receivables
20. Equity
228
229
230
231
232
234
234
252
254
256
257
258
258
258
259
262
263
264
265
268
270
270
271
272
273
274
21. Share-based payment
22. Pensions and similar obligations
23. Provisions for other risks
24. Financing liabilities
25. Other financial liabilities
26. Deferred income
27. Contract and refund liabilities
28. Other liabilities
29. Consolidated statement of cash flows
30. Legal proceedings
31. Contingent liabilities and other
financial obligations
32. Financial instruments
33. Management of financial risks
34. Segment reporting
35. Capital management
36. Earnings per share
37. Related party relationships
38. Remuneration of the members of the Board
of Management and the Supervisory Board
39. Auditor fees
40. Additional information
275
277
283
284
285
285
286
286
287
288
291
292
304
311
315
315
316
317
318
318
228 F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
F.01
In millions of euros
Revenue
Cost of sales
Gross profit
Selling expenses
General administrative expenses
Research and non-capitalized development costs
Other operating income
Other operating expense
Profit on equity-method investments, net
Other financial income/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
Note
2018
2017
(adjusted)1
4
5
5
5
5
6
6
13
7
8
8
9
36
167,362
-134,295
33,067
-13,067
164,154
-129,626
34,528
-12,951
-4,036
-6,581
2,330
-1,462
656
210
271
-793
10,595
-3,013
7,582
333
7,249
-3,808
-5,938
2,259
-1,043
1,498
-210
214
-582
13,967
-3,350
10,617
339
10,278
6.78
6.78
9.61
9.61
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 The reconciliation of Group EBIT to profit before income taxes is presented in Note 34.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS 229
Consolidated Statement of Comprehensive
Income/Loss1
Daimler
Group
Shareholders
of Daimler AG
Non-
controlling
interests
2018
2018
2018
Daimler
Group
Shareholders
of Daimler AG
2017
(adjusted)²
2017
(adjusted)²
Non-
controlling
interests
2017
7,582
234
7,249
214
333
20
10,617
-2,652
10,278
-2,584
339
-68
F.02
In millions of euros
Net profit
Currency translation adjustments
Equity instruments and debt instruments
Unrealized gains/losses (pre-tax)
Reclassifications to profit and loss (pre-tax)
Taxes on unrealized gains/losses
and on reclassifications
Equity instruments and
debt instruments (after tax)
Derivative financial instruments
Unrealized gains/losses (pre-tax)
Reclassifications to profit and loss (pre-tax)
Taxes on unrealized gains/losses
and on reclassifications
Derivative financial instruments (after tax)
Equity-method investments
Unrealized gains/losses (pre-tax)
Taxes on unrealized gains/losses
and on reclassifications
Equity-method investments (after tax)
-45
–
21
-24
-1,080
-722
537
-1,265
-3
-1
-4
-44
–
21
-23
-1,081
-722
537
-1,266
-3
-1
-4
Items that may be reclassified to profit/loss
-1,059
-1,079
Actuarial gains/losses
on equity-method investments (pre-tax)
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
-1
-1
-1
-1
-1,627
-1,625
171
171
-1,456
-1,457
-2,516
5,066
-1,454
-1,455
-2,534
4,715
-1
–
–
-1
1
–
–
1
–
–
–
20
–
–
-2
–
-2
-2
18
351
18
-1
-3
14
2,419
44
-735
1,728
25
–
25
-885
–
–
-108
-19
-127
-127
-1,012
9,605
17
-1
-3
13
2,423
44
-736
1,731
25
–
25
1
–
–
1
-4
–
1
-3
–
–
–
-815
-70
–
–
-106
-19
-125
-125
-940
9,338
–
–
-2
–
-2
-2
-72
267
1 See Note 20 for other information on comprehensive income/loss.
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
230 F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
F.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 and similar investments
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 and similar investments
Other financial assets
Other assets
Assets held for sale
Total current assets
Total assets
Equity and liabilities
Share capital
Capital reserves
Retained earnings
Other reserves
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
Contract and refund liabilities
Other liabilities
Total non-current liabilities
Trade payables
Provisions for income taxes
Provisions for other risks
Financing liabilities
Other financial liabilities
Deferred income
Contract and refund liabilities
Other liabilities
Liabilities held for sale
Total current liabilities
Total equity and liabilities
Note
2018
At December 31,
2017
(adjusted)1
10
11
12
13
14
15
16
9
17
18
19
14
15
16
17
20
22
23
24
25
9
26
27
28
23
24
25
26
27
28
14,801
30,948
49,476
4,860
51,300
722
2,763
4,021
1,115
13,735
27,981
47,074
4,818
46,600
990
3,204
2,844
1,203
160,006
148,449
29,489
12,586
45,440
15,853
8,855
2,970
5,889
531
25,686
11,995
39,454
12,072
9,073
3,602
5,014
–
121,613
281,619
106,896
255,345
3,070
11,710
49,490
397
64,667
1,386
66,053
7,393
628
7,734
3,070
11,742
47,553
1,504
63,869
1,290
65,159
5,767
1,046
7,143
88,662
78,378
2,375
3,762
1,612
5,438
10
117,614
14,185
823
7,828
56,240
7,657
1,580
7,081
2,346
212
2,370
2,347
1,668
3,833
10
102,562
12,451
560
7,620
48,746
6,905
1,528
7,375
2,439
–
97,952
281,619
87,624
255,345
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS 231
Consolidated Statement of Cash Flows1
F.04
In millions of euros
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
Dividends received from equity-method investments
Income taxes paid
Cash used for/provided by 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 shareholdings
Proceeds from disposals of shareholdings
Acquisition of marketable debt securities and similar investments
Proceeds from sales of marketable debt securities and similar investments
Other
Cash used for investing activities
Change in short-term financing liabilities
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
Dividends paid to non-controlling interests
Proceeds from the issue of share capital
Acquisition of treasury shares
Acquisition of non-controlling interests in subsidiaries
Cash provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2018
2017
(adjusted)²
10,595
6,305
-872
-178
-3,850
-884
1,694
-10,257
-1,609
877
1,380
-2,858
343
-7,534
-3,167
644
-780
363
-5,739
6,210
82
-9,921
2,637
71,137
-56,318
-3,905
-315
118
-50
-78
13,226
133
3,781
12,072
15,853
13,967
5,676
-1,507
-453
-1,455
-1,597
1,259
-11,412
-3,304
210
843
-3,879
-1,652
-6,744
-3,414
812
-1,105
418
-6,729
7,266
-22
-9,518
751
63,116
-47,073
-3,477
-250
114
-42
-10
13,129
-868
1,091
10,981
12,072
1 See Note 29 for other information on Consolidated Statements of Cash Flows.
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
232 F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity1
F.05
In millions of euros
Balance at January 1, 2017
First-time adoption of IFRS 15
First-time adoption of IFRS 9
Balance at January 1, 2017 (adjusted)3
Net profit
Other comprehensive income/loss
before taxes
Deferred taxes on other comprehensive
income
Total comprehensive income/loss
Dividends
Changes in the consolidated group
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests
in subsidiaries
Other
Share
capital
Capital
reserves
Retained
earnings2
Currency
translation
Equity
instruments/
debt
instruments
3,070
11,744
40,794
–
–
–
–
3,070
11,744
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5
-7
95
23
40,912
10,278
-106
-19
10,153
-3,477
-35
–
–
–
–
–
11,742
47,553
–
11,742
–
–
–
–
–
–
–
–
-32
–
2
47,555
7,249
-1,626
171
5,794
-3,905
–
–
–
–
46
49,490
2,842
–
–
2,842
–
-2,584
–
-2,584
–
–
–
–
–
–
–
258
258
–
258
–
214
–
214
–
–
–
–
–
–
53
–
–
53
–
16
-3
13
–
–
–
–
–
–
–
66
66
-28
38
–
-44
21
-23
–
–
–
–
–
–
472
15
Balance at December 31, 2017
3,070
11,742
47,553
Balance at January 1, 2018
First-time adoption of IFRS 9
Balance at January 1, 2018 (adjusted)3
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
Changes in ownership interests
in subsidiaries
Other
3,070
–
3,070
–
–
–
–
–
–
–
–
–
–
Balance at December 31, 2018
3,070
11,710
1 See Note 20 for other information on changes in equity.
2 Retained earnings also include items that will not be reclassified to the Consolidated Statement of Income.
Actuarial losses from pensions and similar obligations amount to 9,017 net of tax in 2018 (2017: €7,562 million net of tax).
3 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 233
Other reserves
items that
may be reclassified
in profit/loss
Share of
investments
accounted
for using the
equity method
Derivative
financial
instruments
-537
–
-23
-560
–
2,467
-736
1,731
–
–
–
–
–
–
–
1,171
1,171
–
1,171
–
-1,803
537
-1,266
–
–
–
–
–
–
-95
-16
–
–
-16
–
25
–
25
–
–
–
–
–
–
–
9
9
–
9
–
-3
-1
-4
–
–
–
–
–
–
5
Equity
attributable to
shareholders
of Daimler AG
Treasury
share
Non-
controlling
interests
Total
equity
In millions of euros
–
–
–
–
–
–
–
–
–
–
–
-42
42
–
–
–
–
–
–
–
–
–
–
–
–
-50
50
–
–
–
57,950
1,183
59,133
Balance at January 1, 2017
95
–
58,045
10,278
-182
-758
9,338
-3,477
-35
–
-42
42
5
-7
–
–
1,183
339
-73
1
267
-250
–
56
–
–
24
10
95
–
59,228
10,617
-255
-757
First-time adoption of IFRS 15
First-time adoption of IFRS 9
Balance at January 1, 2017 (adjusted)3
Net profit
Other comprehensive income/loss
before taxes
Deferred taxes on other comprehensive
income
9,605
Total comprehensive income/loss
-3,727
Dividends
-35
56
-42
42
29
3
Changes in the consolidated group
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests
in subsidiaries
Other
63,869
1,290
65,159
Balance at December 31, 2017
63,869
-26
63,843
7,249
-3,262
728
4,715
-3,905
–
-50
50
-32
46
64,667
1,290
-8
1,282
333
18
–
351
-315
80
–
–
-13
1
1,386
65,159
Balance at January 1, 2018
-34
65,125
7,582
-3,244
728
5,066
-4,220
80
-50
50
-45
47
First-time adoption of IFRS 9
Balance at January 1, 2018 (adjusted)3
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
Changes in ownership interests
in subsidiaries
Other
66,053
Balance at December 31, 2018
234 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
Daimler applies IFRS 15 for the first time for the financial year
beginning on January 1, 2018. First-time adoption has been
conducted retrospectively. The figures reported for the previous
year have been adjusted by the effects arising from the adop-
tion of IFRS 15.
Daimler uses the following practical expedients available under
IFRS 15 for retrospective first-time adoption:
– Contracts concluded until December 31, 2016 (in application
of previously relevant accounting standards) were not
reassessed under IFRS 15. Due to the application of this prac-
tical expedient, profit decreased especially in Q1 2017 in
comparison to full retrospective adoption. The impact on the
Group’s profitability, liquidity and capital resources or
financial position is assessed to be not material.
– Contracts that were modified before January 1, 2017 have
not been reassessed pursuant to the provisions of IFRS 15
for contract modifications. The application of this practical
expedient did not have any major impact on the Group’s
profitability, liquidity and capital resources or financial posi-
tion.
– At December 31, 2017, the amount of the transaction price
allocated to the remaining performance obligations is
not disclosed and an explanation of when that amount is
expected to be recognized as revenue is not given.
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 315e of the German Commercial Code
(HGB) and comply with the International Financial Reporting
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 Mercedes-
straße 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, 2019.
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, 2018.
IFRSs issued, EU endorsed and initially adopted in the
reporting period
Application of IFRS 15 Revenue from Contracts with Cus-
tomers. In May 2014, the IASB published the standard IFRS 15.
It replaces existing guidance for revenue recognition, including
IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalty Programmes. The new standard lays down
a comprehensive framework for determining in which amount
and at which date revenue is recognized. The new standard
specifies a uniform, five-step model for revenue recognition,
which is generally to be applied to all contracts with customers.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
First-time adoption of IFRS 15 particularly affects Daimler in
the following areas:
Contract liabilities. IFRS 15 includes guidance on the presentation
of contract fulfillment and contract obligations. These are
assets and liabilities from contracts with customers which arise
dependent on the relationship between the entity’s perfor-
mance and the customer’s payment. Therefore, a contract liability
is an entity’s obligation to transfer goods or services to a
customer for which the entity has received consideration (or
the amount is due) from the customer.
The guidance led to reclassifications in the Statement of
Financial Position from deferred income and other liabilities
into contract liabilities.
Contract liabilities occur at Daimler especially in the following
circumstances:
– deferred revenue for service and maintenance contracts
and for extended warranties, and
– advance payments received on contracts in the scope of
IFRS 15.
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some or
all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not
included in the transaction price.
This guidance led to reclassifications in the Statement of
Financial Position from provisions for other risks and other
financial liabilities into refund liabilities.
Refund liabilities occur at Daimler especially in the following
circumstances:
– obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
– sales with a right of return and residual-value guarantees.
Sale of vehicles for which the Group enters into a repurchase
obligation. IFRS 15 differentiates between three forms of
repurchase agreements: a forward (an entity’s obligation to
repurchase the asset), a call option (an entity’s right to
repurchase the asset) and a put option (an entity’s obligation
to repurchase the asset at the customer’s request). The
latter can lead to accounting changes since under IFRS 15,
such vehicle sales might necessitate the reporting of a sale
with the right of return. Such transactions have so far been
reported as operating leases.
Sale of vehicles with a residual-value guarantee. Under IFRS 15,
arrangements such as when an entity provides its customer
with a guaranteed minimum resale value that he receives on
resale do not constraint the customer in its ability to direct
the use of, and obtain substantially all of the benefits from the
asset. At contract inception of a sale with a residual-value
guarantee an entity therefore has to recognize revenue. However,
a potential compensation payment to the customer has to
be considered (revenue deferral). Such transactions have so far
been reported as operating leases.
Accounting of contract manufacturing. Under a contract manu-
facturing agreement, Daimler sells assets to a third-party
manufacturer from which Daimler buys back the manufactured
products after completion of the commissioned work. If the
sale of the assets is not accompanied by the transfer of control
to the third-party manufacturer, no revenue is recognized
under IFRS 15.
Date of recognition of sales incentives. Under IFRS 15,
obligations from sales transactions are presented by Daimler
as refund liabilities. Obligations from sales transactions
which have previously been accounted for as a provision might
necessitate earlier recognition as refund liabilities under
IFRS 15 due to different recognition principles.
Due to clarifications of IFRS 15 regarding the scope of application
and the accounting of licenses, income from licenses has
been reclassified from other operating income to revenue.
Table F.06 shows the effects of the application of IFRS 15
and IFRS 9 (as far as the effects relate to non-designated com-
ponents of derivatives) on the Consolidated Statement of
Income for the year 2017.
F.06
Effects from the application of IFRS 15 and IFRS 9
on the Consolidated Statement of Income
In millions of euros
Revenue
Cost of sales
Selling expenses
General administrative expenses
Other operating income
Other operating expense
Other financial income/expense, net1
Income taxes
Net profit
2017
-176
373
14
1
-565
-1
20
87
-247
1 Exclusively from the first-time adoption of IFRS 9. Resulting from
the deferral of profits and losses relating to non-designated
components of derivatives in other comprehensive income.
236 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The effects on the line items of the Consolidated Statement
of Financial Position at January 1, 2017 as well as at December 31,
2017 are presented in table F.07.
Basic and diluted earnings per share decrease by €0.23 in 2017.
Application of IFRS 9 Financial Instruments. Daimler applies
IFRS 9 initially for reporting periods beginning on and after
January 1, 2018. Initial application is made retrospectively. In
accordance with the transition requirements, Daimler chose
to present prior periods in accordance with IAS 39. As an excep-
tion, the transition for recognition of fair-value changes of
certain non-designated components of derivatives through other
comprehensive income is to be applied retrospectively to the
comparative figures.
Initial application of IFRS 9 leads to the following major
changes:
Financial assets. IFRS 9 introduces a comprehensive classification
model for financial assets that classifies financial assets into
three categories: financial assets at amortized cost, financial
assets at fair value through other comprehensive income and
financial assets at fair value through profit or loss. Under IAS
39, financial assets were classified as loans and receivables,
available-for-sale financial assets and financial assets at fair
value through profit or loss.
F.07
Effects from the application of IFRS 15 on the Consolidated
Statement of Financial Position
In millions of euros
Assets
Equipment on operating leases
Trade receivables
Receivables from financial services
Other financial assets
Deferred tax assets
Other assets
Total assets
Equity and liabilities
Total equity
Trade payables
Provisions for other risks
Other financial liabilities
Deferred tax liabilities
Deferred income
Contract and refund liabilities
Other liabilities
Total equity and liabilities
Dec. 31,
2017
Jan. 1,
2017
-640
5
267
5
-9
112
-260
-155
-23
-2,481
-2,247
-55
-6,274
11,208
-233
-260
-264
2
–
14
-35
63
-220
95
-1
-2,663
-1,955
4
-5,820
10,328
-208
-220
Financial assets that give rise to cash flows consisting only of
payments of principal and interest are classified in accordance
with Daimler’s business model for holding these instruments.
Financial assets that are held in a business model with the
objective to hold them until maturity and collect the contractual
cash flows are measured at amortized cost. These business
models are managed principally based on interest-rate structure
and credit risk. If the business model comprises the intention
to hold the financial assets to collect the contractual cash flows
but expects to sell these financial assets if this is necessary,
e.g. to fulfill a specific need for liquidity, then these instruments
are measured at fair value through other comprehensive
income. Financial assets that have only cash flows of principal
and interest but are not held within one of the business
models described above are measured at fair value through
profit or loss.
Financial assets that contain cash flows other than those of
principal and interest, such as interests in money-market
funds or derivatives including separated embedded derivatives,
are measured at fair value through profit or loss. For equity
instruments, IFRS 9 optionally allows measurement at fair value
through other comprehensive income. Daimler elects to
measure equity instruments at fair value through other compre-
hensive income on an instrument by instrument basis. When
these equity instruments are sold or written off, any unrealized
gains and losses on these equity instruments are reclassified
to retained earnings and not presented within profit or loss.
Under IAS 39 equity instruments were classified as available for
sale. Unrealized gains and losses and impairments were
shown in the statement of income when the instruments were
derecognized. These equity instruments are shown within
other financial assets.
Trade receivables and receivables from financial services are
non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They were
categorized as loans and receivables under IAS 39 and
therefore measured at amortized cost. All of these instruments
are categorized as measured at amortized cost using the
effective interest rate method.
Marketable debt securities are non-derivative financial
assets that were not classified in any of the other categories
and therefore were categorized as available for sale under
IAS 39 and measured at fair value through other comprehensive
income. Within marketable debt securities and similar invest-
ments, except for interests in money-market funds, marketable
debt securities are categorized as measured at fair value
through other comprehensive income under IFRS 9, while
similar investments are measured at amortized cost.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 237
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
b) the time value of money; and
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the expected
life of each financial asset. For receivables from financial
services, expected credit losses are mainly calculated with
a statistical model using three major risk parameters:
probability of default, loss given default and exposure at default.
Under IAS 39, the amount of the loss on loans and receivables
was the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding
expected future credit losses not yet incurred), discounted at
the financial asset’s original effective interest rate. For
available-for-sale financial assets, an amount previously recog-
nized in other comprehensive income equal to the difference
between cost of acquisition (net of any principal repayments and
amortization) and the current fair value less any impairment
loss on that financial asset previously recognized in profit or loss
was recognized in the statement of income.
The estimation of these risk parameters incorporates all available
relevant information, not only historical and current loss data,
but also reasonable and supportable forward-looking information
reflected by the future expectation factors. This information
includes macroeconomic factors (e.g., gross domestic product
growth, unemployment rate, cost performance index) and
forecasts of future economic conditions. For receivables from
financial services, these forecasts are performed using a
scenario analysis (base case, adverse and optimistic scenarios).
Impairment model based on expected credit losses. IFRS 9 intro-
duces the expected credit loss impairment approach to be
applied on all financial assets (debt instruments) at amortized
cost or at fair value through other comprehensive income.
Under IAS 39, these instruments were assessed to determine
whether there has been objective evidence of impairment.
Objective evidence may exist for example if a debtor is facing
serious financial difficulties or there is a substantial change
in the debtor’s technological, economic, legal or market environ-
ment. For quoted equity instruments, a significant or prolonged
decline in fair value was additional objective evidence of possible
impairment. Incurred losses were recognized as an impairment
of financial assets. Under IFRS 9 the new approach takes projec-
tions of the future into consideration. The expected credit-loss
approach uses three stages for allocating impairment losses:
Stage 1: expected credit losses within the next twelve months
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
Stage 2: expected credit losses over the lifetime – not credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved to
stage 2 and measured at lifetime expected credit loss, which is
defined as the expected credit loss that results from all possible
default events over the expected life of a financial instrument.
Stage 3: expected credit losses over the lifetime – credit
impaired
If a financial asset is defined as credit-impaired or in default, it
is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information.
A financial asset is migrated to stage 2 if the asset’s credit
risk has increased significantly compared to its credit risk at
initial recognition. The credit risk is assessed based on the
probability of default. For trade receivables, the simplified
approach is applied whereby expected credit losses for all
trade receivables are initially measured over the lifetime of
the instrument.
238 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.08
First-time adoption effects of IFRS 9 on equity
In millions of euros
Retained earnings
Balance at December 31, 2017 according to IAS 39
Change in credit risk for financial instruments
47,553
-52
Reclassification of impairments of equity
instruments recognized through profit
or loss under IAS 39
Adjustments from measurement of equity instruments
recognized through profit or loss
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
38
16
1
-1
Balance at January 1, 2018 according to IFRS 9
47,555
Reserves for available-for-sale financial assets
Balance at December 31, 2017 according to IAS 39
Reclassification in reserve for equity instruments
recognized at fair value through other
comprehensive income (after deferred taxes)
Reclassification in reserve for debt instruments
recognized at fair value through other
comprehensive income (after deferred taxes)
Balance at January 1, 2018 according to IFRS 9
Reserves for equity instruments recognized at
fair value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Reclassification of impairments of equity instruments
recognized through profit or loss under IAS 39
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
Reserves for debt instruments recognized at fair
value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Change in credit risk for debt instruments
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
66
-44
-22
–
–
44
-38
6
12
–
22
4
2
-2
26
Non-controlling interests after taxes
Balance at December 31, 2017 according to IAS 39
Change in credit risk for financial instruments
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
1,290
-11
3
1,282
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be
rare and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this does
not result in derecognition of the contract, then the gross car-
rying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Derivative financial instruments and hedge accounting. Embedded
derivatives are principally separated from the host contract
and recognized separately. However, embedded derivatives are
not separated from the host contract, if that host contract is a
financial asset, if Daimler chooses to measure a hybrid contract
at fair value through profit or loss or if an analysis shows
that the economic characteristics and risks of embedded
derivatives are closely related to those of the host contract.
Under IAS 39, embedded derivatives were also separated if the
host contract was a financial asset which was not measured
at fair value through profit or loss, or the economic character-
istics and risks of the embedded derivative were not closely
related to those of the host contract.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. The documentation of the
hedging relationship includes the objectives and strategy of risk
management, the type of hedging relationship, the nature of
the risk being hedged, the identification of the eligible hedging
instrument and the eligible hedged item, as well as an
assessment of the effectiveness requirements comprising the
risk mitigating economic relationship, the absence of deterio-
rating effects from credit risk and the appropriate hedge ratio.
Under IAS 39, the documentation of the hedging relationship
also included a description of the method used to assess hedge
effectiveness. Furthermore, IAS 39 included requirements
for the retrospective and prospective an assessment of hedge
effectiveness with appropriate compliance with a corridor
for offsetting risks from changes in the fair value or cash flows
with regard to the hedged risk. Hedges were assessed as
highly effective and were regularly assessed as to determine
whether they were highly effective during the entire period
for which they were designated.
Under IFRS 9, for cash flow hedges of volatile prices in highly
probable forecast procurement transactions, designation can
be made for separable risk components of these non-financial
hedged items. Daimler can apply this possibility to facilitate
future hedge accounting and thereby reduce ineffectiveness of
hedge relationships for commodities. The option to separate
risk components for these transactions was not available under
IAS 39.
Under IFRS 9, amounts recognized in other comprehensive
income as effective hedging gains or losses from hedging
instruments are removed from the reserves for derivative
financial instruments and directly included in the initial
cost or carrying amount of the hedged item at initial recognition
if a hedged
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 239
F.09
Measurement categories of financial instruments
Measurement categories
according to IAS 39
Measurement categories
according to IFRS 9
In millions of euros
Financial assets
Receivables from financial services
Loans and receivables
Loans and receivables
Loans and receivables
Measured at cost
Measured at cost
Measured at cost
Trade receivables
Cash and cash equivalents
Marketable debt securities and
similar investments
Marketable debt securities
recognized at fair value through
other comprehensive income
Marketable debt securities
recognized at fair value through
profit or loss
Similar investments
measured at cost
Other financial assets
Equity instruments and
debt instruments
Equity instruments recognized
at fair value through other
comprehensive income
Equity instruments and
debt instruments recognized
at fair value through profit or loss
Classified as available-for-sale
instruments
Recognized at fair value through
other comprehensive income
Classified as available-for-sale
instruments
Classified as available-for-sale
instruments
Recognized at fair value through
profit or loss
Measured at cost
200
200
Classified as available-for-sale
instruments
Recognized at fair value through
other comprehensive income
173
173
Classified as available-for-sale
instruments
Recognized at fair value through
profit or loss
Financial assets recognized
at fair value through profit or loss
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
Other receivables and financial assets
Loans and receivables
Measured at cost
Financial liabilities
Financing liabilities
Trade payables
Financial liabilities
recognized at fair value through
profit or loss
Measured at cost
Measured at cost
Measured at cost
Measured at cost
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
Other financial liabilities
Measured at cost
Measured at cost
Carrying
amount
according
to IAS 39
at Dec. 31,
2017
Carrying
amount
according
to IFRS 9
at Jan. 1,
2018
86,054
11,995
12,072
85,998
11,999
12,072
6,733
6,733
3,130
3,130
211
227
82
3,172
82
3,168
123,822
123,782
127,124
127,121
12,451
12,451
111
8,468
111
8,471
148,154
148,154
forecast transaction results in the recognition of a non-financial
asset or non-financial liability. No respective adjustment of
initial cost of acquisition was made under IAS 39.
spread. It was possible to separate the time value of the
options also under IAS 39, but was subject to the recognition
of changes in fair value through profit or loss.
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from the
reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects profit
or loss. The ineffective portions of fair value changes are
recognized directly in profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components’ fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the fair value of options or cross currency basis
Table F.08 shows the effects on the components of equity
from first-time adoption of IFRS 9.
The original measurement categories and carrying amounts
of financial instruments according to IAS 39 as well as the new
measurement categories and carrying amounts of financial
instruments according to IFRS 9 are summarized in table F.09.
Table F.10 shows the reconciliation of the carrying amounts
of financial instruments according to IAS 39 at December 31,
2017 to the carrying amounts according to IFRS 9 at January 1,
2018.
240 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.10
Reconciliation of carrying amounts (IAS 39 to IFRS 9)
In millions of euros
Financial instruments measured at cost
Receivables from financial services
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
Other receivables and financial assets
Available-for-sale financial assets
Marketable debt securities and similar investments
Equity instruments recognized at fair value
Financial assets recognized at fair value
through other comprehensive income
Marketable debt securities and similar investments
Equity instruments
Financial assets recognized at fair value
through profit or loss
Marketable debt securities and similar investments
Equity instruments and debt instruments
Application of IFRIC 23 Uncertainty over Income Tax
Treatments. In October 2018, IFRIC 23 Uncertainty over Income
Tax Treatments was endorsed by the EU. IFRIC 23 has to be
applied to annual reporting periods beginning on or after Janu-
ary 1, 2019. Early adoption is permitted. Daimler has chosen
to apply IFRIC 23 at December 31, 2018. The application does
not have any material impact on the Group’s profitability,
liquidity and capital resources and financial position as the
former Daimler accounting policy was very close to IFRIC 23.
IFRSs issued, EU endorsed and not yet adopted
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement
Contains a Lease and other interpretations. IFRS 16 abolishes
for lessees the previous classification of leasing agreements as
either operating or finance leases. Instead, IFRS 16 introduces
a single lessee accounting model, requiring lessees to recognize
assets for the right to use as well as leasing liabilities for the
outstanding lease payments. This means that leases that were
previously not reported in the Statement of Financial Position
will have to be reported in the future – very similar to the current
accounting of finance leases.
Carrying amount
according to IAS 39
at Dec. 31, 2017
Reclassification
effects
Remeasurement
effects
Carrying amount
according to IFRS 9
at Jan. 1, 2018
86,054
11,995
12,072
–
3,172
113,293
10,063
384
10,447
–
–
–
–
–
–
–
–
–
200
–
200
-10,063
-384
-10,447
6,733
173
6,906
3,130
211
3,341
-56
4
–
–
-4
-56
–
–
–
–
–
–
–
16
16
85,998
11,999
12,072
200
3,168
113,437
–
–
–
6,733
173
6,906
3,130
227
3,357
According to IFRS 16 a lessee may elect, for leases with a lease
term of 12 months or less (short-term leases) and for leases
for which the underlying asset is of low value, not to recognize a
right-of-use asset and a lease liability. Daimler will apply both
recognition exemptions. The lease payments associated with
those leases are recognized as an expense on either a straight-
line basis over the lease term or another systematic basis.
Right-of-use assets are measured at cost less any accumulated
depreciation and if necessary any accumulated impairment.
The cost of a right-of-use asset comprise the present value of
the outstanding lease payments, any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying asset. In
this context, Daimler also applies the practical expedient that
the payments for non-lease components are generally recognized
as lease payments. If the lease transfers ownership of the
underlying asset to the lessee at the end of the lease term or if
the cost of the right-of-use asset reflects that the lessee will
exercise a purchase option, the right-of-use asset is depreciated
to the end of the useful life of the underlying asset. Otherwise
the right-of-use asset is depreciated to the end of the lease term.
Lease liabilities, which are assigned to financing liabilities are
measured initially at the present value of the lease payments
less any lease payments made before that date. Subsequent
measurement of a lease liability includes the increase of the
carrying amount to reflect interest on the lease liability and
reducing (by not affecting net income) the carrying amount
to reflect the lease payments made.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 241
According to IFRS 16 the depreciation of the right-of-use is
recognized within functional costs. The interest due on the lease
liability is a component of interest expense. The lease expenses
of leases classified according to IAS 17 as operating leases are
fully recognized within functional costs.
Lease accounting for lessors has been taken over almost
identically from IAS 17 into IFRS 16.
IFRS 16 is to be applied to annual reporting periods beginning
on or after January 1, 2019; early adoption is permitted if
IFRS 15 is already applied. Daimler will apply IFRS 16 for the
first time for the financial year beginning on January 1, 2019.
In compliance with the transition regulations, Daimler will not
adjust the prior-year figures and will present the accumulated
transitional effects in retained earnings.
Daimler as lessee will use following practical expedients of
IFRS 16 at the date of initial application:
– With leases previously classified as operating leases according
to IAS 17 the lease liability will be measured at the present
value of the outstanding lease payments, discounted by the
incremental borrowing rate at January 1, 2019. The respective
right-of-use asset is generally recognized at an amount equal
to the lease liability;
– An impairment review is not performed. Instead, a right-of-use
asset is adjusted by the amount of any provision for onerous
leases recognized in the Statement of Financial Position at
December 31, 2018;
– Regardless of their original lease term, leases for which the
lease term ends latest on December 31, 2019 are recognized
as short-term leases;
– At the date of initial application, the measurement of a
right-of-use asset excludes the initial direct costs; and
– Hindsight is considered when determining the lease term
if the contract contains options to extend or terminate the
lease.
Based on the Group-wide preparations for implementation of
IFRS 16, the effect of the first-time application of IFRS 16 will
be that right-of-use assets and lease liabilities will probably be
recognized at an amount of €3.5 billion in the Consolidated
Statement of Financial Position. At the date of initial application,
retained earnings will be adjusted only insignificantly. In
the year 2019, we do not expect the effect on Group EBIT to be
material.
IFRSs issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on or after
January 1, 2021. Early adoption is permitted. Daimler currently
does not expect any material impacts on the Group’s profitability,
liquidity and capital resources or financial position due to the
application of IFRS 17. Early adoption is not currently planned.
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the Consolidated Financial Statements.
Presentation
Presentation in the Consolidated Statement of Financial Position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The Consolidated Statement of Income is presented using the
cost-of-sales method.
Measurement
The Consolidated Financial Statements have been prepared on
the historical-cost basis with the exception of certain items
such as financial assets measured at fair value through profit
or loss, derivative financial instruments, hedged items, and
pensions and similar obligations. The measurement models
applied to those exceptions are described below.
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.
242 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The financial statements of consolidated subsidiaries which are
included in the Consolidated Financial Statements are
generally prepared as of the reporting date of the Consolidated
Financial Statements. The financial statements of Daimler AG
and its subsidiaries included in the Consolidated Financial
Statements are prepared using uniform recognition and
measurement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from
transactions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Foreign currency translation
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated using period-end exchange
rates; gains and losses from this measurement are recognized
in profit and loss (except for gains and losses resulting from
the translation of equity instruments measured at fair value
through other comprehensive income, which are recognized
in other comprehensive income/loss).
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 change of
control are accounted for as an equity transaction between
owners.
Assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The com-
ponents of equity are translated using historical rates. The
statements of income and cash flows are translated into euros
using average exchange rates during the respective periods.
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 is necessary to
differentiate whether a joint operation or a joint venture exists.
In a joint venture, the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
For joint ventures, the equity method has to be applied. A
joint operation exists when the jointly controlling parties have
direct rights to the assets and obligations for the liabilities.
In this case, the prorated assets and liabilities and the prorated
income and expenses are generally to be recognized
(proportionate consolidation).
The exchange rates of the US dollar, the British pound, the
Japanese yen and the Chinese renminbi – the most significant
foreign currencies for Daimler – are as shown in table F.11.
Hyperinflation
To determine whether a country is to be considered as in
hyperinflation, the Daimler Group refers to the list published by
the International Practices Task Force (IPTF) of the Center
of the Audit Quality or other relevant international publications.
If a country is in hyperinflation, IAS 29 Financial Reporting in
Hyperinflationary Economies has to be applied from the beginning
of the respective reporting period, i.e. from January 1 of the
respective reporting year.
As a consequence of the assessment that Argentina is in
hyperinflation, we apply IAS 29 to our Argentinian business since
January 1, 2018. This application does not have a material
impact on the Group’s profitability, liquidity and capital resources
and financial position.
Joint operations that have no significant impact on the
Consolidated Financial Statements are generally accounted for
using the equity method.
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group’s proportionate share of the
results of operations is included in Daimler’s Consolidated
Financial Statements with a one to three-month time lag.
Significant events or transactions are accounted for
without a time lag, however (see E Note 13).
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group
and the fair presentation of financial position, liquidity and
capital resources, and profitability are generally measured
at amortized cost in the Consolidated Financial Statements.
Accounting policies
Revenue recognition
Revenue from sales of vehicles, service parts and other related
products is recognized when control of the goods is trans-
ferred to the customer. This generally occurs at the time the
customer takes possession of the products.
Generally, payment from sales of vehicles, service parts
and other related product is made when the customer obtains
control of these products.
Dealers may finance their vehicle inventory by dealer inventory
financing provided by Daimler Financial Services. Furthermore
end-customers may be credit financed by Daimler Financial
Services. Receivables from sales financing with end-customers
and dealers are presented in receivables from financial services.
Further information is provided in E Note 14.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 243
F.11
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 € =
2018
CNY
1 € =
USD
1 € =
GBP
1 € =
JPY
1 € =
2017
CNY
1 € =
1.1450
0.8945
125.8500
7.8751
1.1993
0.8872
135.0100
7.8044
1.2292
1.1918
1.1629
1.1414
0.8834
0.8762
0.8924
0.8867
133.1700
130.0900
129.6100
128.8200
7.8154
7.6035
7.9151
7.8953
1.0648
1.1021
1.1746
1.1776
0.8601
0.8611
0.8978
0.8875
121.0100
122.5800
130.3500
132.9100
7.3353
7.5597
7.8340
7.7899
Revenue recognition from the sale of vehicles for which the
Group enters into a repurchase obligation is dependent on the
form of the repurchase agreement:
– Sales of vehicles in the form of a forward (an entity’s
obligation to repurchase the asset) and a call option (an
entity’s right to repurchase the asset) are reported as
operating leases.
– Sales of vehicles including a put option (an entity’s obligation
to repurchase the asset at the customer’s request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether the customer has a
significant economic incentive to exercise his right. Amongst
others, these are the relation between repurchase price and
the expected future market value (at the time of repurchase)
of the asset, or historical return rates.
Arrangements such as when Daimler provides customers with
a guaranteed minimum resale value that they receive on resale
(residual-value guarantee) do not constraint the customers in
their ability to direct the use of, and obtain substantially all
of the benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has to be
recognized. However, a potential compensation payment to the
customer has to be considered (revenue deferral).
Under a contract manufacturing agreement, Daimler sells
assets to a third-party manufacturer from which Daimler buys
back the manufactured products after completion of the
commissioned work. If the sale of the assets is not accompanied
by the transfer of control to the third-party manufacturer,
no revenue will be recognized under IFRS 15.
The Group offers extended, separately priced warranties for
certain products as well as service and maintenance
contracts. Revenue from these contracts is deferred insofar as
a customer has made an advance payment and is generally
recognized over the contract period in proportion to the costs
expected to be incurred based on historical information. A
loss on these contracts is recognized in the current period if the
sum of the expected costs for services under the contract
exceeds unearned revenue. Usually those contracts are paid in
advance or in equal instalments over the contract term.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group allocates revenue to
the various elements based on their estimated relative stand-
alone selling prices. To determine stand-alone selling prices,
Daimler primarily uses price lists with consideration of average
price reductions granted to its customers.
Vehicles may be initially sold to non-Group dealers. Subsequently
a customer decides to enter into a leasing contract with
Daimler Financial Services regarding such a vehicle. The vehicle
is therefore sold by the non-Group dealer to Daimler Financial
Services and a leasing contract is entered into with the customer.
When control of the vehicle is transferred to the non-Group
dealer Daimler recognizes revenue from the sale of the vehicle.
The incremental cost of obtaining contracts is recognized
as an expense when incurred if the amortization period would
be no longer than one year.
Daimler does not adjust the promised amount of consideration
for the effects of a significant financing component if at
contract inception it is expected that the period between the
transfer of a promised good or service to a customer and
payment by the customer is no longer than one year.
244 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 obligations and interest on supple-
mentary income tax payments or reimbursements are also
presented in this line item.
For the segment Daimler Financial Services interest income
and expense and gains or losses from derivative financial
instruments from financial services business are disclosed
under revenue and cost of sales respectively.
Income taxes
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, however, excluding interest
expenses and interest refunds and penalties on the under-
payment of taxes. For the case it is probable that amounts
declared as expenses in the tax returns might not be
recognized (uncertain tax positions), a provision for income
taxes is recognized. The amount is based on the best
estimate of the expected tax payment (expected value or
most likely amount). Tax refund claims from uncertain
tax positions are recognized when it is predominantly likely
and thus reasonably expected that they can be realized.
Only in the case of tax loss carryforwards or unused tax credits,
no provision for taxes or tax claim is recognized for these
uncertain tax positions. Instead, the deferred tax assets for the
unused tax loss carryforwards or tax credits are to be
adjusted.
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services busi-
ness at Daimler Financial Services. The revenue from the
rental and leasing business results from operating leases and
is recognized on a straight-line basis over the periods of the
contracts. In addition, sales revenue is generated at the end of
lease contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is recognized
using the effective interest method.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates which are
reported as follows:
– Revenue is recognized net of sales reductions such as
cash discounts and sales incentives granted.
– When loans are issued below market rates, related receivables
are recognized at present value (using market rates) and
revenue is reduced for the interest incentive granted.
– 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.
Research and non-capitalized development costs
Expenditure for research and development that does not
meet the conditions for capitalization according to IAS 38
Intangible Assets is expensed as incurred.
Borrowing costs
Borrowing costs are expensed as incurred unless they are
directly attributable to the acquisition, construction or production
of a qualifying asset and are therefore part of the cost of
that asset. Depreciation of the capitalized borrowing costs is
presented within cost of sales.
Government grants
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in earnings
over the life of a depreciable asset as a reduced depreciation
expense. Government grants which compensate the Group for
expenses are recognized as other operating income in the
same period as the expenses themselves.
Profit/loss on 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 on equity-method
investments. This item also includes losses on the impair-
ment of an investment’s carrying amount and/or gains on the
reversal of such impairments.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 245
Goodwill
For acquisitions, goodwill represents the excess of the con-
sideration transferred over the fair values assigned to the iden-
tifiable assets proportionally acquired and liabilities assumed.
Goodwill is accounted for at the subsidiaries in the functional
currency of those subsidiaries.
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree’s identifiable assets, which are measured
at fair value.
Property, plant and equipment
Property, plant and equipment are measured at acquisition or
manufacturing costs less accumulated depreciation. If
necessary, accumulated impairment losses are recognized.
The costs of internally produced equipment and facilities include
all direct costs and allocable overheads. Acquisition or
manufacturing costs include the estimated costs, if any, of
dismantling and removing the item and restoring the site.
Property, plant and equipment are depreciated over the useful
lives as shown in table F.12.
F.12
Useful lives of property, plant and equipment
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
10 to 50 years
6 to 25 years
3 to 30 years
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 cor-
responding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and
interests in joint arrangements are not recognized if the Group
is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Earnings per share
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years 2018 and 2017 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Intangible assets
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets with indefinite useful lives are reviewed annu-
ally to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets other than development costs with finite use-
ful lives are generally amortized on a straight-line basis over
their useful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed at
least at each year-end. Changes in expected useful lives are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is recorded
in functional costs.
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized on
a straight-line basis over the expected product life cycle (a maxi-
mum of ten years). Amortization of capitalized development
costs is an element of manufacturing costs and is allocated to
those vehicles and components by which they were generated
and is included in cost of sales when the inventory (vehicles) is
sold.
246 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Leasing
Leasing includes all arrangements that transfer the right to
use a specified asset for a stated period of time in return for a
payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of property,
plant and equipment and a lessor of its products. It is evaluated
on the basis of the risks and rewards of a leased asset whether
the ownership of the leased asset is attributed to the lessee
(finance lease) or to the lessor (operating lease).
Daimler as lessee
In the case of an operating lease, the lease payments or
rental payments are expensed on a straight-line basis in the
Consolidated Statement of Income.
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated
depreciation and other accumulated impairment losses.
Depreciation is on a straight-line basis; residual values
of the assets are given due consideration. Payment obligations
resulting from future lease payments are discounted and
disclosed under financing liabilities.
Sale and lease back
The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
Daimler as lessor
Operating leases relate to vehicles that the Group produces
itself and leases to third parties. Additionally an operating
lease may have to be reported with sales of vehicles for which
the Group enters into a repurchase obligation:
– Sales of vehicles in the form of a forward (an entity’s obligation
to repurchase the asset) and a call option (an entity’s right
to repurchase the asset) are reported as operating leases.
– Sales of vehicles including a put option (an entity’s obligation
to repurchase the asset at the customer’s request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether a customer has a significant
economic incentive to exercise his right at contract inception.
Amongst others these are the relation between repurchase
price and the expected future market value (at the time of
repurchase) of the asset or historical return rates.
In case of accounting as an operating lease these vehicles are
capitalized at (depreciated) cost of production under leased
equipment in the vehicle segments and are depreciated over
the contract term on a straight-line basis with consideration
of the expected residual values. Changes in the expected residual
values lead either to prospective adjustments of the scheduled
depreciation or to an impairment loss if necessary.
Operating leases also relate to vehicles, primarily Group
products that Daimler Financial Services acquires from non-
Group dealers or other third parties and leases to end
customers. These vehicles are presented at (amortized) cost
of acquisition under leased equipment in the Daimler
Financial Services segment. If these vehicles are Group
products and are subsidized, the subsidies are deducted
from the cost of acquisition. After revenue is received from
the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent resale
on the basis of the separate leasing contracts. The revenue
received from the sale of Group products to the dealers is
estimated by the Group as being of the magnitude of the
respective addition to leased equipment at Daimler Financial
Services. In 2018, additions to leased equipment from
these vehicles at Daimler Financial Services amounted to
approximately €13 billion (2017: approximately €13 billion).
In the case of finance leases, the Group presents the
receivables under receivables from financial services in an
amount corresponding to the net investment of the lease
agreements. The net investment of a lease agreement is the
gross investment (future minimum lease payments and non-
guaranteed residual value) discounted at the rate upon which
the lease agreement is based.
Equity-method investments
On the date of acquisition, a positive difference between cost
of acquisition and Daimler’s share of the fair values of the
identifiable assets and liabilities of the associated company or
joint venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying amount of the
equity-method investment. If an equity interest in an existing
associated company is increased without change in significant
influence, goodwill is determined only for the additionally
acquired interest; the previous investment is not remeasured
at fair value.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 247
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by management and which is valid at the date when
the impairment test is conducted. This planning is based
on expectations regarding future market share, the general
development of respective markets as well as the products’
profitability. The multi-year planning comprises a planning
horizon until 2025 and therefore mainly covers the product
life cycles of our automotive business. The rounded risk-adjusted
interest rates used to discount cash flows, which are calculated
for each cash-generating unit, are unchanged from the previous
year at 8% after taxes for the cash-generating units of the
automotive business. For the cash-generating unit Daimler
Financial Services Classic, a risk-adjusted interest rate of
9% after taxes is applied (unchanged from the previous year).
Whereas the discount rate for the cash-generating unit
Daimler Financial Services Classic represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the automotive business is based on the weighted average
cost of capital (WACC). These are calculated based on the
capital asset pricing model (CAPM) taking into account current
market expectations. In calculating the risk-adjusted interest
rate for impairment test purposes, specific peer group informa-
tion is used for beta factors, capital-structure data and
cost of debt. Periods not covered by the forecast are taken into
account by recognizing a residual value (terminal value),
which does not consider any growth rates. In addition, several
sensitivity analyses are conducted. These show that even
in the case of more unfavorable premises for main influencing
factors with respect to the original planning, no need for
impairment exists. If value in use is lower than the carrying
amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depre-
ciation) had no impairment loss been recognized in prior years.
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals of
equity-method investments. If such indications exist, the
Group determines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable amount
of an investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater
of fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an
impairment reversal. If such an assessment is made, the recover-
able amount is remeasured. The amount of an impairment
reversal is limited to the amount by which an asset has been
impaired.
Gains or losses (to be eliminated) from transactions with
companies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments’ carrying amounts. Deconsolidation effects from
the contribution of interests in subsidiaries to investments
which are measured using the equity method are also subject
to elimination adjustments to the carrying amount of the
investment.
Impairment of non-current non-financial assets
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is an
indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset generates
cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). Good-
will and other intangible assets with indefinite useful lives
are tested at least annually for impairment; this takes place at
the level of the cash-generating units. If the carrying amount
of an asset or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the difference.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments. At Daimler Financial
Services, impairment tests are carried out below the segment
level. There is a differentiation between the two cash-generating
units Daimler Financial Services Classic (typical financial
services business) and Daimler Financial Services Mobility
(innovative mobility services). The material assets of the
cash-generating unit Daimler Financial Services Mobility have
been classified as assets held for sale due their intended
contribution into a joint venture. Therefore, no separate testing
for impairment was necessary.
248 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
This reversal is restricted to the impairment loss previously
recognized for the assets or disposal group concerned. The
Group generally discloses these assets or disposal groups
separately in the Consolidated Statement of Financial Position.
Inventories
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable value
is the estimated selling price less estimated costs of comple-
tion and estimated costs to sell. The acquisition or manufacturing
costs of inventories are generally based on the specific
identification method and include costs incurred in acquiring
the inventories and bringing them to their existing location
and condition. Costs for large numbers of inventories that are
interchangeable are allocated under the average cost formula.
In the case of manufactured inventories and work in progress,
acquisition or manufacturing cost also includes production
overheads based on normal capacity.
Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments in the form of financial
assets and financial liabilities are generally presented sepa-
rately. Financial instruments are recognized as soon as Daimler
becomes a party to the contractual provisions of the financial
instrument. In the case of purchases or sales of financial assets
through the regular market, Daimler uses the transaction date
as the date of initial recognition or derecognition.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IFRS 9 Financial Instruments (financial assets
measured at amortized cost, financial assets measured at fair
value through other comprehensive income and financial
assets measured at fair value through profit or loss). Transaction
costs directly attributable to acquisition or issuance are
considered by determining the carrying amount if the financial
instruments are not measured at fair value through profit or
loss.
Financial assets
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets, financial investments and
marketable securities and similar investments and financial
investments. The classification of financial instruments is based
on the business model in which these instruments are held
and on their contractual cash flows.
The determination of the business model is made at the
portfolio level and is based on management’s intention and
past transaction patterns. Assessments of the contractual
cash flows are made on an instrument by instrument basis.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include financial
assets with cash flows other than those of principal and interest
on the nominal amount outstanding. Further financial assets
that are held in a business model other “hold to collect” or “hold
to collect and sell” are included here.
In addition, derivatives, including embedded derivatives sepa-
rated from the host contract, which are not classified as
hedging instruments in hedge accounting, as well as financial
assets acquired for the purpose of selling in the near term
that are classified as held for trading, are included here. Gains
or losses on these financial assets are recognized in profit
or loss.
Financial assets at amortized cost. Financial assets at amortized
cost are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding and which are held with
the aim of collecting the contractual cash flows, such as receiv-
ables from financial services, trade receivables or cash and
cash equivalents (business model “hold to collect”). Cash and
cash equivalents consist primarily of cash on hand, checks
and demand deposits at banks, as well as debt instruments and
certificates of deposits with a remaining term when acquired
of up to three months, which are not subject to any material
value fluctuations. Cash and cash equivalents correspond with
the classification in the Consolidated Statement of Cash Flows.
After initial recognition, financial assets at amortized cost are
subsequently carried at amortized cost using the effective
interest method less any loss allowances. Gains and losses are
recognized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or derecog-
nized. Interest effects on the application of the effective
interest method are also recognized in profit or loss as well as
effects from foreign currency translation.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 249
Financial assets at fair value through other comprehensive income.
Financial assets at fair value through other comprehensive
income are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding which are held to collect the
contractual cash flows as well as sell the financial, e.g. to
achieve a defined liquidity target (business model “hold to collect
and sell”). This category also includes equity instruments not
held for trading for which the option to present changes in the
fair value of the instrument within other comprehensive
income has been applied.
After initial measurement, financial assets at fair value through
other comprehensive income are measured at fair value,
with unrealized gains or losses being recognized in other com-
prehensive income/loss. Except for equity instruments a
loss allowance is recognized for expected losses in profit or loss.
Upon disposal of financial assets, the accumulated gains
and losses recognized in other comprehensive income/loss
resulting from measurement at fair value are recognized in
profit or loss. Interest earned on financial assets at fair value
through other comprehensive income is generally reported
as interest income using the effective interest method. Changes
in the fair value of equity instruments measured at fair value
through other comprehensive income are not recycled to profit
or loss. Dividends are recognized in profit or loss when the
right of payment has been established.
Impairment of financial assets
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guarantees
other than those to be measured at fair value through profit
or loss reflecting expected losses for these instruments. The
same method is used for the impairment of non-revocable
loan commitments and financial guarantees. Expected credit
losses are allocated using three stages:
Stage 1: expected credit losses within the next twelve months
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
Stage 2: expected credit losses over the lifetime – not credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved
to stage 2 and measured at lifetime expected credit loss, which
is defined as the expected credit loss that results from all
possible default events over the expected life of a financial
instrument.
Stage 3: expected credit losses over the lifetime – credit
impaired
If a financial asset is defined as credit-impaired or in default,
it is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information or the probability of default.
A financial asset is migrated to stage 2 if the asset’s credit risk
has increased significantly compared to its credit risk at initial
recognition. The credit risk is assessed based on the probability
of default. For trade receivables, the simplified approach is
applied whereby all trade receivables are allocated to stage 2
initially. Hence, no determination of significant increases in
credit risk is necessary.
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
250 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
b) the time value of money; and
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Expected credit losses are measured as the probability-weighted
present value of all cash shortfalls over the expected life
of each financial asset. For receivables from financial services,
expected credit losses are mainly calculated with a statistical
model using three major risk parameters: probability of default,
loss given default and exposure at default.
The estimation of these risk parameters incorporates all
available relevant information, not only historical and current
loss data, but also reasonable and supportable forward-
looking information reflected by the future expectation factors.
This information includes macroeconomic factors (e.g.,
gross domestic product growth, unemployment rate, cost
performance index) and forecasts of future economic
conditions. For receivables from financial services, these fore-
casts are performed using a scenario analysis (base case,
adverse and optimistic scenarios). The impairment amount for
trade receivables is predominantly determined on a collective
basis.
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be rare
and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this
does not result in derecognition of the contract, then the gross
carrying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is presented in the Consolidated Statement of
Financial Position provided that an enforceable right currently
exists to offset the amounts involved, and there is an intention
either to carry out the offsetting on a net basis or to settle a
liability when the related asset is sold.
Financial liabilities
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities and
other liabilities.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured at
amortized cost using the effective interest method.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting are classified
as held for trading. Gains or losses on liabilities held for trading
are recognized in profit or loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or refi-
nancing activities. These are mainly interest rate risks, currency
risks and commodity price risks.
Embedded derivatives are principally separated from the host
contract and recognized separately. However, embedded
derivatives are not separated from the host contract if that host
contract is a financial asset, if Daimler chooses to measure
a hybrid contract at fair value through profit or loss, or if an
analysis shows that the economic characteristics and risks
of embedded derivatives are closely related to those of the host
contract.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 251
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment are hedged. In a cash flow
hedge, the variability of cash flows to be received or paid from
expected transactions related to a recognized asset or
liability or a highly probable forecast transaction is hedged. The
documentation of the hedging relationship includes the
objectives and strategy of risk management, the type of hedging
relationship, the nature of the risk being hedged, the identi-
fication of the eligible hedging instrument and the eligible hedged
item, as well as an assessment of the effectiveness require-
ments comprising the risk mitigating economic relationship, the
absence of deteriorating effects from credit risk and the
appropriate hedge ratio. Hedging transactions are regularly
assessed to determine whether the effectiveness require-
ments are met while they are designated.
Changes in the fair value of derivative financial instruments that
are designated in a hedge relationship are recognized peri-
odically in either profit or loss or other comprehensive income,
depending on whether the derivative is designated as a hedge
of changes in fair value or cash flows. Changes in fair value of
non-designated derivatives are recognized in profit or loss.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For
cash flow hedges, fair value changes in the effective portion of
the hedging instrument are recognized after tax in other
comprehensive income.
Under IFRS 9, for cash flow hedges of volatile prices in procure-
ment transactions expected with a high degree of probability,
designation can be made for separable risk components of these
non-financial hedged items. Daimler can apply this possibility
to facilitate future hedge accounting and thereby reduce the inef-
fectiveness of hedge relationships for commodities.
Under IFRS 9, with cash flow hedges, amounts recognized in
other comprehensive income as effective hedging gains
or losses from hedging instruments are removed from the
reserves for derivative financial instruments and directly
included in the initial cost or carrying amount of the hedged
item at initial recognition if a hedged forecast transaction
results in the recognition of a non-financial asset or non-finan-
cial liability.
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from
the reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects
profit or loss.
The ineffective portions of fair value changes are recognized
directly in profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components’ fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the time value of options or cross currency basis
spreads.
Hedge relationships are to be discontinued prospectively if a
particular hedge relationship ceases to meet the qualifying
criteria for hedge accounting under IFRS 9. Instances that require
discontinuation of hedge accounting are, among others, loss
of the economic relationship between the hedged item and the
hedging instrument, disposal or termination of the hedging
instrument, or a revision of the documented risk management
objective of a particular hedge relationship. Accumulated
hedging gains and losses from cash flow hedges are retained
and are reclassified from equity as described at maturity if
the hedged future cash flows are still expected to occur. Other-
wise, accumulated hedging gains and losses are immediately
reclassified to profit or loss.
If derivative financial instruments do not or no longer qualify for
hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative financial
instruments are classified as held for trading and are measured
at fair value through profit or loss.
Pensions and similar obligations
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valu-
ation of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the Consolidated Statement of
Financial Position or on the Consolidated Statement of
Comprehensive Income/Loss.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest
expense or income is recognized in profit and loss under
interest expense or interest income in the Consolidated
Statement of Income. The other expenses resulting from pension
obligations and other post-employment benefit obligations
(medical care), which mainly result from entitlements acquired
during the year under review, are taken into consideration in
the functional costs in the Consolidated Statement of Income.
252 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The discount factors used to calculate the present values of
defined benefit pension obligations are to be determined –
with maturities and currencies matching the pension payments –
by reference to market yields at the end of the reporting
period on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount factors
are estimated by extrapolating current market rates along the
yield curve.
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some
or all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not included
in the transaction price.
Refund liabilities occur at Daimler especially in the following
circumstances:
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when the
curtailment or settlement occurs.
– obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
– sales with the right of return and residual-value guarantees.
Share-based payment
Share-based payment comprises cash-settled liability awards.
Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and the
dividend equivalent paid during the period, and is included in
the functional costs.
Presentation in the Consolidated Statement of Cash Flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activi-
ties.
2. Accounting estimates and
management judgments
In the Consolidated Financial Statements, to a certain degree,
estimates and management judgments have to be made which
can affect the amounts and reporting of assets and liabilities,
the reporting of contingent assets and liabilities on the balance
sheet date, and the amounts of income and expense reported
for the period. The major items affected by such estimates and
management judgments are described as follows. Actual
amounts may differ from the estimates. Changes in the estimates
and management judgments can have a material impact on
the Consolidated Financial Statements.
Provisions for other risks
A provision is recognized when a liability to third parties has
been incurred, an outflow of resources is probable and the
amount of the obligation can be reasonably estimated. The
amount recognized as a provision represents the best
estimate of the obligation at the reporting date. Provisions
with an original maturity of more than one year are dis-
counted to the present value of the expenditures expected to
settle the obligation at the end of the reporting period. If
the criteria of the regulations on recognition and measurement
of provisions are not fulfilled and the possibility of a cash
outflow upon settlement is not unlikely, the item is to be pre-
sented as a contingent liability, insofar as it is adequately
measurable. The amount disclosed as a contingent liability
represents the best estimate of the possible obligation at
the reporting date. Provisions and contingent liabilities are
regularly reviewed and adjusted as further information
becomes available or circumstances change.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based on
historical experience.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group has
a detailed formal plan that has either commenced imple-
mentation or been announced.
Contract and refund liabilities
Contract liabilities. A contract liability is an entity’s obligation
to transfer goods or services to a customer for which the entity
has received consideration (or the amount is due) from the
customer.
Contract liabilities occur at Daimler especially in the following
circumstances:
– deferred revenue for service and maintenance contracts
and for extended warranties, and
– advance payments received on contracts in the scope of
IFRS 15.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold or when new warranty programs are
initiated. Based on historical warranty claim experience,
assumptions have to be made on the type and extent of
future warranty claims and customer goodwill, as well as
on possible recall campaigns for each model series. These
assessments are based on experience of the frequency
and extent of vehicle faults and defects in the past. In addition,
the estimates also include assumptions on the amounts
of potential repair costs per vehicle and the effects of possible
time or mileage limits. The provisions are regularly adjusted
to reflect new information.
Further information on provisions for other risks is provided
in E Note 23.
Legal proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on a
wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date
as a result of an event in the past, and whether a future cash
outflow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings,
also with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or
potential litigation will have to be adjusted due to future devel-
opments. Changes in estimates and premises can have a
material effect on the Group’s future profitability. It is also
possible that provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could have a
material effect on Daimler’s operating results and cash flows
for a particular reporting period, Daimler believes that it
should not materially affect the Group’s financial position.
Further information on liability and litigation risks is provided
in E Note 30.
Recoverable amounts of cash-generating units and
equity-method investments
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods. The
estimates include assumptions regarding future market
share and the growth of the respective markets as well as regard-
ing the products’ profitability. On the basis of the impairment
tests carried out in 2018, the recoverable amounts are substan-
tially larger than the net assets of the Group’s cash-generating
units.
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity method
financial investment. The determination of the recoverable
amount is based on assumptions regarding future business
developments for the determination of the expected future
cash flows of that financial investment. See E Note 13 for
the presentation of carrying amounts and fair values of
equity-method financial investments in listed companies.
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are deter-
mined either by qualified estimates or by publications provided
by expert third parties; qualified estimates are based, as
far as publicly available, on external data with consideration of
internally available additional information such as historical
experience of price developments and recent sale prices.
The residual values thus determined serve as a basis for
depreciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to impairment. If depreciation
is prospectively adjusted, changes in estimates of residual
values do not have a direct effect but are equally distributed
over the remaining periods of the lease contracts.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into
consideration in this context, including historical loss experience,
the size and composition of certain portfolios, current eco-
nomic events and conditions and the estimated fair values and
adequacy of collaterals. In addition to historical and current
information on losses, appropriate and reliable forward-looking
information on factors is also included. This information
includes macroeconomic factors (e.g. GDP growth, unemploy-
ment rate, cost-performance index) and forecasts of future
economic conditions. For receivables from financial services,
these forecasts are determined using a scenario analysis
(baseline scenario, optimistic and pessimistic scenario). Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group’s net profit. See also E Notes 14 and 33 for further
information.
254 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pensions and similar obligations
The calculation of provisions for pensions and similar obligations
and the related pension cost are based on various actuarial
valuations. The calculations are subject to various assumptions
on matters such as current actuarially developed probabilities
(e.g. discount factors and cost-of-living increases), future fluc-
tuations with regard to age and period of service, and expe-
rience with the probability of occurrence of pension payments,
annuities or lump sums. As a result of changed market or
economic conditions, the probabilities on which the influencing
factors are based, may differ from current developments. The
financial effects of deviations of the main factors are calculated
with the use of sensitivity analyses. See E Note 22 for
further information.
Income taxes
The calculation of income taxes of Daimler AG and its subsidiar-
ies is based on the legislation and regulations applicable in
the various countries. Due to their complexity, the tax items
presented in the Consolidated Financial Statements are
possibly subject to different interpretation by taxpayers on the
one hand and local tax authorities on the other hand. For
the calculation of deferred tax assets, assumptions have to
be made regarding future taxable income and the time of
realization of the deferred tax assets. In this context, Daimler
takes into consideration, among other things, the projected
earnings from business operations, the effects on earnings of
the reversal of taxable temporary differences, and realizable
tax strategies. As future business developments are uncertain
and are sometimes beyond Daimler’s control, the assumptions
to be made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On
each balance sheet date, Daimler carries out impairment tests
on deferred tax assets on the basis of the planned taxable
income in future financial years; if Daimler assesses that the
probability of future tax advantages being partially or
fully unrealized is more than 50%, the deferred tax assets are
impaired. Further information is provided in E Note 9.
3. Consolidated Group
Composition of the Group
Table F.13 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 approxi-
mately 1% of the Group’s revenue and net profit.
A detailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in E Note 40.
Structured entities
The structured entities of the Group are rental companies,
asset-backed-securities (ABS) companies and special funds. The
purpose of the rental companies primarily is the acquisition,
renting and management of assets. The ABS companies are
primarily used for the Group’s refinancing. The assets trans-
ferred to structured entities usually result from the Group’s
leasing and sales financing business. Those entities refinance
the purchase price by issuing securities. The special funds are
set up in particular in order to diversify the capital investment
strategy.
At the reporting date, the Group has business relationships with
18 (2017: 24) controlled structured entities, of which 18 (2017:
22) are fully consolidated. In addition, the Group has relationships
with 7 (2017: 6) non-controlled structured entities. The uncon-
solidated structured entities are not material for the Group’s
profitability, liquidity and capital resources and financial
position.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
Equity-method investments
In May 2017, Daimler acquired for a purchase price of €0.3 billion
an interest of 15% in LSH Auto International Limited (LSHAI),
which is responsible for the Mercedes-Benz retail business of
Lei Shing Hong Group. LSHAI, a subsidiary of Lei Shing Hong
Group, is one of the biggest Mercedes-Benz dealers worldwide.
In January 2017, There Holding B.V. sold an equity interest
of 15% in HERE International B.V. to Intel Holdings B.V. and
recognized a gain of €183 million in connection with the
sale. Information on further transactions is explained in
E Note 13.
Assets and liabilities held for sale
In March 2018, the Daimler Group and the BMW Group signed
an agreement to merge their business units for mobility
services. The partners intend to offer their customers a holistic
ecosystem of intelligent, seamlessly connected mobility
services, available at the tap of a finger. To this end, the partners
will combine and strategically expand their existing on-
demand mobility offering in the areas of car sharing, ride hailing,
parking, charging and multimodality in joint ventures. At
December 31, 2018, the assets and liabilities held for sale are
presented separately in the Consolidated Statement of
Financial Position. The disposal group’s assets amounted to
€531 million and its liabilities amounted to €212 million.
Following approval by the relevant competition authorities, the
transaction was completed in January 2019. In the first quarter
of 2019, the transaction will produce a significant positive
earnings effect (approximately €0.7 billion) and a cash outflow
(approximately €0.7 billion) at the segment Daimler Financial
Services.
F.13
Composition of the Group
Consolidated subsidiaries
Germany
International
Unconsolidated subsidiaries
Germany
International
Joint operations accounted for
using proportionate consolidation
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,
associated companies and
material other investments accounted
for at (amortized) cost
Germany
International
At December 31,
2017
2018
376
70
306
126
36
90
1
–
1
3
1
2
16
4
12
16
4
12
32
13
19
570
363
64
299
119
41
78
1
–
1
3
1
2
16
5
11
14
3
11
32
16
16
548
256 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.14
Revenue
In millions of euros
2018
Europe
NAFTA
Asia
Other markets
Revenue according to IFRS 15
Other revenue
Total revenue
In millions of euros
2017
Europe
NAFTA
Asia
Other markets
Revenue according to IFRS 15
Other revenue
Total revenue
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Services
Total
segments
Recon-
ciliation
Daimler
Group
36,902
18,488
30,859
3,950
90,199
2,904
93,103
10,775
16,622
6,503
3,661
37,561
712
38,273
8,937
1,666
844
1,130
12,577
1,049
13,626
2,851
255
227
777
4,110
419
4,529
4,269
5,366
230
203
10,068
16,201
26,269
63,734
42,397
38,663
9,721
154,515
21,285
175,800
-3,810
-903
-19
-187
-4,919
-3,519
-8,438
59,924
41,494
38,644
9,534
149,596
17,766
167,362
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Services1
Total
segments
Recon-
ciliation1
Daimler
Group
37,607
19,721
30,249
4,364
91,941
2,410
94,351
10,727
14,767
6,111
3,323
34,928
827
35,755
8,684
1,498
860
1,010
12,052
1,109
13,161
2,861
299
159
835
4,154
370
4,524
3,827
5,229
218
176
9,450
15,080
24,530
63,706
41,514
37,597
9,708
152,525
19,796
172,321
-3,582
-871
-20
-192
-4,665
-3,502
-8,167
60,124
40,643
37,577
9,516
147,860
16,294
164,154
1 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group’s internal revenue
has been adjusted. This adjustment has been fully eliminated in the reconciliation.
Revenue that is expected to be recognized within three years
related to performance obligations that are unsatisfied (or
partially unsatisfied) amounted to €7,642 million at December 31,
2018. This revenue is mainly derived from long-term service
and maintenance contracts and extended warranties. It does
not include performance obligations from customer contracts
that have original expected durations of one year or less. Long-
term performance obligations of minor importance to the
overall contract value of a bundled contract are not considered
in assessing the original duration of that bundled contract.
Revenue by segment F.100 and region F.102 is presented
in E Note 34.
4. Revenue
Revenue disclosed in the Consolidated Statement of Income
includes revenue from contracts with customers and other
revenue not in the scope of IFRS 15.
Revenue from contracts with customers (revenue according
to IFRS 15) is disaggregated by the two categories – type of
products and services and geographical region – and presented
in table F.14. The category type of products and services
corresponds to the reportable segments.
Other revenue primarily comprises revenue from the rental and
leasing business (IAS 17), interest from the financial services
business at Daimler Financial Services in an amount of €5,188
million (2017: €4,613 million) and effects from currency
hedging.
Revenue according to IFRS 15 includes revenue that was
included in the contract liabilities at December 31, 2017 in an
amount of €3,583 million (2017: €2,481 million) and revenue
from performance obligations fully (or partially) satisfied in previ-
ous periods in an amount of €434 million (2017: €458 million).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 257
F.15
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
F.16
Average number of employees
Mercedes-Benz Cars1
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
Other
2018
2017
-117,508
-113,707
-8,567
-7,936
-2,747
-2,187
-382
-5,091
-500
-5,296
-134,295
-129,626
2018
2017
146,240
143,586
82,905
26,223
18,506
13,739
10,852
80,155
24,823
17,978
12,621
10,367
298,465
289,530
1 Including proportionally 1,856 employees from proportionately
consolidated companies in 2018 (2017: 1,203).
5. Functional costs
Cost of sales
Items included in cost of sales are shown in table F.15.
Amortization expense of capitalized development costs in the
amount of €1,538 million (2017: €1,310 million) is presented in
expense of goods sold.
Selling expenses
In 2018, selling expenses amounted to €13,067 million (2017:
€12,951 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
General administrative expenses
General administrative expenses amounted to €4,036 million in
2018 (2017: €3,808 million). They consist of expenses which
are not attributable to production, sales or research and devel-
opment functions, and comprise personnel expenses, deprecia-
tion and amortization of fixed and intangible assets, and other
administrative costs.
Research and non-capitalized development costs
Research and non-capitalized development costs were €6,581
million in 2018 (2017: €5,938 million) and primarily comprise
personnel expenses and material costs.
Optimization programs
In the year 2018, optimization programs did not result in any
material expenses. In the year 2017, at the Daimler Trucks seg-
ment, expenses of €172 million were incurred in connection
with the optimization of fixed costs, especially at the Mercedes-
Benz brand. The cash outflows occurred mainly in 2018.
Personnel expenses and average number of employees
Personnel expenses included in the Consolidated Statement of
Income amounted to €22,432 million in 2018 (2017: €22,186
million). The personnel expenses are composed of wages and
salaries in the amount of €18,329 million (2017: €18,188 mil-
lion), social contributions in the amount of €3,332 million (2017:
€3,292 million) and expenses from pension obligations in the
amount of €771 million (2017: €706 million). The average num-
bers of people employed are shown in table F.16.
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 E Note 38.
258 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.17
Other operating income
In millions of euros
Income from costs recharged to third parties
Government grants and subsidies
Gains on sales of property,
plant and equipment
Rental income not relating to sales financing
Income associated with
optimization programs
Other miscellaneous income
2018
2017
821
102
140
159
–
1,108
2,330
761
107
385
149
133
724
2,259
6. Other operating income and expense
The composition of other operating income is shown in table
F.17.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems. In the year 2018,
other miscellaneous income contains insurance compensation
of €219 million.
In the year 2017, gains on sales of property, plant and equipment
included gains of €267 million from the sale of real estate
by Mitsubishi Fuso Truck and Bus Corporation at the Kawasaki
site in Japan.
F.18
Other operating expense
In millions of euros
Losses on sales of property,
plant and equipment
Other miscellaneous expense
2018
2017
The composition of other operating expense is shown in table
F.18.
-106
-1,356
-1,462
-117
-926
-1,043
Other miscellaneous expense primarily comprises changes in
other provisions. Compared with the prior year, it includes
higher expenses related to legal proceedings.
7. Other financial income/expense, net
Table F.19 shows the components of other financial income/
expense, net.
In 2018, the measurement at fair value of the minority interest
in Aston Martin Lagonda Global Holdings plc in other financial
assets resulted in a gain of € 111 million, which has been
assigned to the segment earnings of Mercedes-Benz Cars. The
measurement was carried out in connection with the initial
public offering, which took place at the beginning of October
2018.
8. Interest income and interest expense
Table F.20 shows the components of interest income and
interest expense.
F.19
Other financial income/expense, net
In millions of euros
Income and expense from compounding
and effects from changes in discount rates of
provisions for other risks
Miscellaneous other financial
income/expense, net
F.20
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
2018
2017
-31
241
210
-61
-149
-210
2018
2017
3
268
271
-133
-660
-793
2
212
214
-211
-371
-582
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 259
2018
2017
2,932
7,663
6,483
7,484
10,595
13,967
2018
2017
-1,116
-1,127
125
-895
-3,013
-2,024
-1,985
-425
1,084
-3,350
2018
2017
-770
-510
-260
659
1,059
-400
9. Income taxes
Profit before income taxes is comprised as shown in table
F.21.
Profit before income taxes in Germany includes profit/loss
on equity-method investments if the equity interests in those
companies are held by German companies.
Table F.22 shows the components of income taxes.
The current tax expense includes tax benefits at German and
foreign companies of €529 million (2017: tax expenses of €268
million) recognized for prior periods.
F.21
Profit before income taxes
In millions of euros
German companies
Non-German companies
F.22
Components of income taxes
The deferred tax expense/benefit is comprised of the compo-
nents shown in table F.23.
In millions of euros
For German companies, in 2018 and 2017, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year’s federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes in
both years amounted to 29.825%.
Current taxes
German companies
Non-German companies
Deferred taxes
German companies
Non-German companies
For non-German companies, the deferred taxes at period-end
were calculated using the tax rates of the respective countries.
Table F.24 shows a reconciliation of expected income tax
expense to actual income tax expense determined using the
unchanged applicable German combined statutory tax rate of
29.825%.
The law signed in 2017 by the President of the United States of
America for a comprehensive tax reform (“H.R. 1/Tax Cuts
and Jobs Act”), includes the reduction of the nationwide federal
corporate income tax rate for US-companies from 35% to 21%,
starting on January 1, 2018. At year-end 2017, the reduction of
the federal corporate income tax rate required the remeasure-
ment of the deferred tax liabilities and deferred tax assets of the
US-subsidiaries of Daimler. The resulting tax benefit of €1,626
million is included in the line item tax law changes.
F.23
Components of deferred tax expense
In millions of euros
Deferred taxes
due to temporary differences
due to tax loss carryforwards
and tax credits
F.24
Reconciliation of expected income tax expense
to actual income tax expense
In 2018 and 2017, the Group impaired deferred tax assets of
foreign subsidiaries. The resulting tax expenses are included in
the line item change of valuation allowance on deferred tax
assets.
In millions of euros
2018
2017
Expected income tax expense
-3,160
-4,166
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German compa-
nies and tax-free results of our equity-method investments.
Furthermore, in 2017, the line item also includes tax expenses
in connection with the interpretation of tax laws.
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
326
37
11
-101
14
-140
-54
52
1,585
-171
-632
36
Actual income tax expense
-3,013
-3,350
260 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.25
Deferred tax assets and liabilities
In millions of euros
Deferred tax assets
Deferred tax liabilities
Deferred tax assets, net
F.26
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
Miscellaneous assets, mainly other
financial assets
Tax loss carryforwards and
unused tax credits
Provisions for pensions and similar
obligations
Other provisions
Liabilities
Deferred income
Miscellaneous liabilities
Valuation allowances
thereof on temporary differences
thereof on tax loss carryforwards and
tax credits
Deferred tax assets, gross
Development costs
Other intangible assets
Property, plant and equipment
Equipment on operating leases
Inventories
Receivables from financial services
Miscellaneous assets
Provisions for pensions and
similar obligations
Other provisions
Miscellaneous liabilities
Deferred tax liabilities, gross
Deferred tax assets, net
At December 31,
2017
2018
4,021
-3,762
259
2,844
-2,347
497
At December 31,
2017
2018
30
154
1,808
1,017
341
47
134
1,662
977
405
4,837
5,549
1,538
1,813
592
1,692
2,092
1,084
2
15,187
-1,299
-213
-1,086
13,888
-3,352
-115
-1,757
-5,092
-78
-793
-321
-1,572
-233
-316
671
1,875
1,621
878
2
15,634
-1,291
-194
-1,097
14,343
-3,060
-127
-1,575
-4,387
-55
-721
-382
-3,082
-150
-307
-13,629
-13,846
259
497
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority and if there is the right to set
off current tax assets against current tax liabilities. In the pre-
sentation of deferred tax assets and liabilities in the Consoli-
dated Statement of Financial Position, no difference is made
between current and non-current. In the Consolidated State-
ment of Financial Position, deferred tax assets and liabilities
are presented as shown in table F.25.
In respect of each type of temporary difference and in respect of
each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table F.26.
The development of deferred tax assets, net, is shown in table
F.27.
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments),
the expense for income taxes is comprised as shown in table
F.28.
In the Consolidated Statement of Financial Position, the
valuation allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €8 million
compared to December 31, 2017. This is primarily a result of the
additional valuation allowances of €101 million recognized
in net profit. Furthermore, a decrease in the valuation allowance
was recognized in equity, amongst others due to currency
translation.
At December 31, 2018, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€904 million). €35 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carryfor-
wards which expire at various dates from 2019 through 2020,
€160 million relates to tax loss carryforwards which expire at
various dates from 2021 through 2023, €50 million relates to
tax loss carryforwards which expire at various dates from 2024
through 2028 and €659 million relates to tax loss carryfor-
wards which can be carried forward indefinitely. Furthermore,
the valuation allowance primarily relates to temporary differ-
ences at non-German companies as well as net operating
losses for state and local taxes at the US-companies. Daimler
believes that it is more likely than not that those deferred
tax assets cannot be utilized. In 2018 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €127 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler’s current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group
did not recognize deferred tax liabilities on retained earnings
of non-German subsidiaries of €28,514 million (2017: €28,692
million) which are intended to be reinvested. If those earnings
were paid out as dividends, an amount of 5% would be taxed
under German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences might
arise if the dividends first have to be distributed by a non-German
subsidiary to a non-German holding company. Normally, the
distribution would lead to an additional income tax expense. It
is not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of juris-
dictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed for all
open tax years.
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
F.27
Change of deferred tax assets, net
In millions of euros
Deferred tax assets, net
as of January 1
Deferred tax expense/benefit in the
financial statement of income
Change in deferred tax expense/benefit
on equity instruments/debt instruments
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
2018
2017
497
-770
363
659
21
-3
537
-735
171
-197
259
-19
232
497
1 The other changes primarily relate to effects from
currency translation.
F.28
Tax expense in equity
In millions of euros
Income tax expense in the consolidated
financial statement of income
Income tax expense/benefit recorded
in other reserves
2018
2017
-3,013
-3,350
728
-2,285
-757
-4,107
262 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Intangible assets
Intangible assets developed as shown in table F.29.
At December 31, 2018, goodwill of €433 million (2017: €455
million) relates to the Daimler Financial Services segment,
goodwill of €418 million (2017: €418 million) relates to the
Daimler Trucks segment and goodwill of €168 million (2017:
€180 million) relates to the Mercedes-Benz Cars segment.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2018: €4,029
million; 2017: €5,086 million). In addition, other intangible
assets with a carrying amount of €270 million (2017: €255 mil-
lion) are not amortizable. These non-amortizable intangible
assets are distribution rights in the vehicle segments with
indefinite useful lives as well as trademarks in the Daimler
Trucks segment with indefinite useful lives. The Group plans to
continue to use these assets unchanged.
Table F.30 shows the line items of the Consolidated Statement
of Income in which total amortization expense for intangible
assets is included.
F.29
Intangible assets
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business combinations
Other additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions due to business combinations
Other additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2018
Amortization/impairment
Balance at January 1, 2017
Additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2018
Carrying amount at December 31, 2017
Carrying amount at December 31, 2018
Development
costs
(internally
generated)2
Other
intangible
assets
(acquired)
Goodwill
(acquired)
1,481
9
1
–
-34
-71
1,386
–
1
–
–
-31
1,356
293
–
–
–
-22
271
–
–
–
3
274
1,115
1,082
13,963
–
2,779
–
-524
-26
16,192
–
2,535
–
-282
6
18,451
5,136
1,323
–
-521
-26
5,912
1,553
–
-277
6
7,194
10,280
11,257
4,384
16
755
–
-396
-140
4,619
–
640
–
-432
57
4,884
2,301
445
–
-368
-99
2,279
476
–
-373
40
2,422
2,340
2,462
Total
19,828
25
3,535
–
-954
-237
22,197
–
3,176
–
-714
32
24,691
7,730
1,768
–
-889
-147
8,462
2,029
–
-650
49
9,890
13,735
14,801
1 Primarily changes from currency translation.
2 Including capitalized borrowing costs on development costs of €41 million (2017: €47 million).
Amortization amounted to €15 million (2017: €13 million).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 263
11. Property, plant and equipment
Property, plant and equipment developed as shown in table
F.31.
In 2018, government grants of €51 million (2017: €50 million)
were deducted from property, plant and equipment.
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a car-
rying amount at December 31, 2018 of €335 million (2017:
€320 million). In 2018, additions to and depreciation expense
on assets under finance lease arrangements amounted to
€17 million (2017: €204 million) and €33 million (2017: €34 mil-
lion), respectively.
F.30
Amortization expense for intangible assets
in the Consolidated Statement of Income
In millions of euros
Cost of sales
Selling expenses
General administrative expenses
Research and non-capitalized
development costs
Other operating expense
2018
2017
1,820
1,585
85
57
66
1
89
45
48
1
2,029
1,768
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
F.31
Property, plant and equipment
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business acquisitions
Other additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions due to business acquisitions
Other additions
Reclassifications
Disposals
Other changes1
16,756
–
562
559
-415
-475
16,987
–
309
612
-336
84
25,624
–
1,032
985
-1,173
-504
25,964
–
888
988
-634
-30
26,348
–
1,752
803
-796
-709
27,398
–
1,932
1,536
-661
172
30,377
20,618
2,035
1
-640
-549
21,465
2,273
11
-540
129
3,489
–
3,603
-2,347
-123
-152
4,470
–
4,341
-3,136
-104
96
5,667
–
–
–
–
–
–
–
–
–
–
–
17,675
23,338
9,334
9,501
5,933
7,039
4,470
5,667
Balance at December 31, 2018
17,656
27,176
Depreciation/impairment
Balance at January 1, 2017
Additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2018
Carrying amount at December 31, 2017
Carrying amount at December 31, 2018
1 Primarily changes from currency translation.
8,749
352
-1
-201
-156
8,743
385
1
-175
-39
8,915
8,244
8,741
16,469
1,534
–
-1,084
-289
16,630
1,633
-12
-558
-18
Total
72,217
–
6,949
–
-2,507
-1,840
74,819
–
7,470
–
-1,735
322
80,876
45,836
3,921
–
-1,925
-994
46,838
4,291
–
-1,273
72
49,928
27,981
30,948
264 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Equipment on operating leases
The development of equipment on operating leases is shown in
table F.32.
At December 31, 2018, equipment on operating leases with a
carrying amount of €9,804 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2017: €8,684 million) (see also E Note 24).
Minimum lease payments
Non-cancelable future lease payments to Daimler for equipment
on operating leases are due as presented in table F.33.
F.32
Equipment on operating leases
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business acquisitions
Other additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions due to business acquisitions
Other additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2018
Depreciation/impairment
Balance at January 1, 2017
Additions
Reclassifications
Disposals
Other changes1
Balance at December 31, 2017
Additions2
Reclassifications
Disposals
Other changes1
Balance at December 31, 2018
Carrying amount at December 31, 2017
Carrying amount at December 31, 2018
1 Primarily changes from currency translation.
2 Comprises impairments of €133 million.
F.33
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 five years
57,030
–
24,856
–
-19,643
-3,445
58,798
–
24,854
–
-21,101
980
63,531
10,353
7,936
–
-5,902
-663
11,724
8,567
–
-6,431
195
14,055
47,074
49,476
At December 31,
2017
2018
8,376
9,898
62
7,922
8,607
71
18,336
16,600
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 265
13. Equity-method investments
Table F.34 shows the carrying amounts and profits/losses
from equity-method investments.
Table F.35 presents key figures on interests in associated
companies accounted for using the equity method in the
Group’s Consolidated Financial Statements.
F.34
Summarized carrying amounts and profits/losses from equity-method investments
In millions of euros
At December 31, 2018
Equity investment1
Equity result1
At December 31, 2017
Equity investment1
Equity result1
1 Including investor-level adjustments.
Associated
companies
Joint
ventures
Joint
operations
4,230
1,050
4,282
1,541
604
-397
500
-42
26
3
36
-1
Total
4,860
656
4,818
1,498
F.35
Key figures on interests in associated companies accounted for using the equity method
BBAC
BAIC Motor3
THBV (HERE)
Others
Total
In millions of euros
At December 31, 2018
Equity interest (in %)
Stock market price1
Equity investment2
Equity result2
Dividend payment to Daimler4
At December 31, 2017
Equity interest (in %)
Stock market price1
Equity investment2
Equity result2
Dividend payment to Daimler5
49.0
–
2,353
1,247
1,024
49.0
–
2,130
1,143
1,134
9.6
353
650
-107
10
10.1
832
777
290
29
29.6
–
522
-101
–
33.3
–
732
121
–
705
11
643
-13
4,230
1,050
4,282
1,541
1 Proportionate stock market prices.
2 Including investor-level adjustments.
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler’s Consolidated Financial Statements
with a three-month time lag.
4 The dividend from BBAC of €1,024 million was partly paid out in the year 2018. The payment was €930 million.
5 The dividend from BBAC of €1,134 million was partly paid out in the year 2017 with an amount of €768 million.
The remaining amount of €346 million was paid out in the year 2018.
266 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BBAC
Beijing Benz Automotive Co., Ltd. (BBAC) produces and distri-
butes Mercedes-Benz passenger cars and spare parts in China.
The investment and the proportionate share in the results of
BBAC are allocated to the Mercedes-Benz Cars segment.
The remainder of the dividend which was approved by the
shareholders of Beijing Benz Automotive Co., Ltd. (BBAC) in the
second quarter of 2017 was paid out in the first quarter of
2018 and led to a cash inflow of €346 million.
In the second quarter of 2018, the shareholders of BBAC
approved the payout of a dividend for the 2017 financial year.
The amount of €1,024 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The first
part of the dividend was paid in the third quarter and led to a
cash inflow of €495 million. A further portion of the dividend
was paid in the fourth quarter of 2018 and led to a cash inflow
of €435 million. Daimler plans to contribute additional equity
of in total €0.4 billion in accordance with its shareholding ratio
in the years 2019 to 2020.
BAIC Motor
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger car
division of BAIC Group, one of the leading automotive companies
in China. Directly or via subsidiaries, BAIC Motor is engaged
in the business of researching, developing, manufacturing, sell-
ing, marketing and servicing automotive vehicles and related
parts and components and all related services. Due to Daimler’s
representation on the board of directors of BAIC Motor and
other contractual arrangements, Daimler classifies this invest-
ment as an investment in an associate, to be accounted for
using the equity method; in the segment reporting, the invest-
ment’s carrying amount and its proportionate share of profit or
loss are presented in the reconciliation of total segment’s
assets to Group assets and total segments’ EBIT to Group EBIT,
respectively.
On May 3, 2018, BAIC Motor issued new shares at the Hong
Kong Stock Exchange. As a result, Daimler’s interest in BAIC
Motor was diluted from 10.08% to 9.55%. The dilution did not
lead to any material earnings effects at Daimler. Daimler con-
tinues to exercise significant influence on BAIC Motor.
As a result of the significantly reduced stock-exchange price
of BAIC Motor in 2018, Daimler assessed if there is any objective
indication of an impairment of its investment in BAIC Motor.
This assessment did indicate a need for an impairment in the
amount of €150 million in the fourth quarter of 2018. In the
first quarter of 2017, a gain of €240 million was included due to
the reversal of an impairment. The gain in 2017 was a result
of the increased stock-exchange price. Both the gain and the loss
are included in the line item profit/loss on equity-method
investments, net.
THBV (HERE)
There Holding B.V. (THBV) holds an interest in HERE Interna-
tional B.V. (HERE). HERE is one of the biggest manufacturers of
digital roadmaps for navigation systems worldwide. Future
expected high resolution maps will be one of the fundamentals
for future autonomous driving. THBV is accounted for in the
Consolidated Financial Statements of Daimler AG as an associ-
ated company using the equity method, and is allocated to the
Mercedes-Benz Cars segment.
On January 31, 2017, the sale of a 15% shareholding in HERE
between THBV and Intel Holdings B.V. (Intel) has been com-
pleted. As a result, THBV now only has a significant influence
on its former 100% subsidiary HERE. Therefore, as of Febru-
ary 1, 2017, HERE is no longer fully consolidated in the financial
statements of THBV, but is presented as an associated com-
pany using the equity method. The change in the consolidation
method led to the remeasurement of the HERE shares at fair
value in the first quarter of 2017. The income of €183 million
from this transaction that is attributable to Daimler is included
in profit/loss on equity-method investments in the first quarter
of 2017.
In December 2017, the former THBV shareholders Daimler,
Audi and BMW signed agreements on the sale of shares in
THBV to Robert Bosch Investment Nederland B.V. and to Conti-
nental Automotive Holding Netherlands B.V. Those transac-
tions were concluded on February 28, 2018. Each of the two
buyers acquired a share of 5.9% of THBV. The sale of shares
was carried out in equal parts by Daimler, Audi and BMW. As a
result, Daimler’s equity interest decreased from 33.3% to
29.4%. The effect on earnings was not material for Daimler.
In the first quarter of 2018, the shareholders of THBV decided
on a payback from the capital reserve. The amount of €96
million attributable to Daimler was paid out and decreased the
carrying amount of the investment accordingly.
THBV carried out capital increases in the second and fourth
quarter of 2018. Daimler participated in the capital increases
with in total €62 million, whereby the equity interest attributable
to Daimler gradually increased by 0.2% to 29.6%. The capital
contributions increased the carrying amount of the investment
accordingly.
Table F.36 shows summarized IFRS financial information after
purchase price allocation for the significant associated com-
panies which were the basis for equity-method accounting in
the Group’s Consolidated Financial Statements.
Other minor equity-method investments
In the second quarter of 2018, the result of joint ventures
accounted for using the equity method includes an expense of
€418 million for Toll Collect, primarily related to the settle-
ment of the arbitration proceedings. The result is allocated to
the Daimler Financial Services segment. Further information
is provided in E Note 30.
The equity-method result of joint ventures in 2017 includes
impairments of investments of €125 million.
Table F.37 shows summarized aggregated financial informa-
tion for the other minor equity-method investments after pur-
chase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in E Notes 3 and 37.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 267
F.36
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
In millions of euros
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/loss
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)
2018
BBAC1
2017
BAIC Motor2
THBV3 (HERE)
2018
2017
2018
2017
17,433
2,570
–
7
15,373
2,350
–
23
20,085
1,802
–
–
2,577
2,373
1,802
5,458
7,156
967
6,625
4,558
7,058
741
6,335
13,825
10,753
3,545
10,663
18,510
1,649
–
103
1,752
13,089
10,140
3,077
10,954
–
-337
–
-7
-344
1,763
2
–
1
71
-151
513
2
364
1,906
289
–
–
5,022
4,540
10,370
9,198
1,764
2,195
Equity (excluding non-controlling interests) attributable to the Group
Unrealized profit (-)/loss (+) on sales to/purchases from
Equity-method goodwill
Other
2,461
-107
–
-1
2,224
-93
–
-1
Carrying amount of equity-method investment
2,353
2,130
1 BBAC:
738
-8
–
-80
650
712
-9
70
4
777
522
732
–
–
–
–
–
–
522
732
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
Daimler recognizes its proportionate share of profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Figures for the 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.
Revenue at THBV relates to HERE; revenue for the year 2017 is solely for the month of January until the change in the consolidation of HERE at THBV.
F.37
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
2017
2018
2018
Joint ventures
2017
33
–
-6
27
61
–
-1
60
1
–
-1
0
-28
–
–
-28
268 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Receivables from financial services
Table F.38 shows the components of receivables from finan-
cial services.
Types of receivables
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group’s
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily, used vehicles traded
in by dealers’ customers or real estate such as dealers’ show-
rooms.
Receivables from finance-lease contracts consist of receivables
from leasing contracts for which all substantial risks and
rewards incidental to the leasing objects are transferred to the
lessee.
Maturities of the finance-lease contracts are shown in table
F.39.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for operat-
ing activities in the Consolidated Statement of Cash Flows.
Loss allowances
The development of loss allowances for receivables from finan-
cial services due to expected credit losses at December 31,
2018 under IFRS 9 is shown in table F.40. Changes in the
loss allowances for receivables from financial services at
December 31, 2017 under IAS 39 are shown in table F.41.
The carrying amounts of receivables from financial services
based on modified contracts that are shown in stage 2 and 3,
amounted to €184 million at December 31, 2018. In addition,
carrying amounts of €127 million in connection with contractual
modifications were reclassified from stage 2 and 3 into stage 1.
F.38
Receivables from financial services
In millions of euros
Sales financing with customers
Sales financing with dealers
Finance-lease contracts
Gross carrying amount
Loss allowances
Net carrying amount
F.39
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
Loss allowances
Net carrying amount
Current Non-current
At December 31, 2018
Total
Current Non-current
At December 31, 2017
Total
18,452
18,549
8,976
45,977
-537
30,029
3,782
18,038
51,849
-549
45,440
51,300
48,481
22,331
27,014
97,826
-1,086
96,740
16,363
16,065
7,430
39,858
-404
28,635
3,061
15,370
47,066
-466
44,998
19,126
22,800
86,924
-870
39,454
46,600
86,054
At December 31, 2018
< 1 year
1 year up
to 5 years
> 5 years
Total
< 1 year
1 year up
to 5 years
At December 31, 2017
> 5 years
Total
9,389
704
10,093
-1,117
8,976
-140
8,836
16,583
2,716
19,299
-1,672
17,627
-212
17,415
437
14
451
-40
411
-2
409
26,409
3,434
29,843
-2,829
27,014
-354
26,660
7,779
602
8,381
-951
7,430
-132
7,298
14,050
2,525
16,575
-1,500
15,075
-152
14,923
321
12
333
-38
295
-2
293
22,150
3,139
25,289
-2,489
22,800
-286
22,514
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 269
F.40
Development of loss allowances for receivables from financial services due to expected credit losses (according to IFRS 9)
12-month expected
credit loss
At December 31, 2018
Lifetime expected
credit loss
Total
not credit
impaired
credit
impaired
(Stage 1)
(Stage 2)
(Stage 3)
361
197
-25
-33
-160
–
73
-28
-4
8
389
152
59
148
-17
-122
–
-47
51
-30
1
195
413
130
237
-116
-160
–
-26
-23
34
13
502
F.41
Development of the loss allowances for receivables
from financial services (according to IAS 39)
In millions of euros
Balance at January 1
Additions
Utilization
Reversals
Currency translation and other changes
Balance at December 31
870
56
926
386
360
-166
-442
–
–
–
–
22
1,086
2017
1,054
480
-265
-299
-100
870
In millions of euros
Balance at December 31 according to IAS 39
Effect of initial application of IFRS 9
Balance at January 1 according to IFRS 9
Additions
Change in remeasurement
Utilization
Reversals
Change in models/risk parameters
Transfer to stage 1
Transfer to stage 2
Transfer to stage 3
Currency translation and other changes
Balance at December 31 according to IFRS 9
Credit risks
Information on credit risks included in receivables from finan-
cial services at December 31, 2018 under IFRS 9 is shown in
table F.42 and at December 31, 2017 under IAS 39 in table
F.43.
Longer overdue periods regularly lead to higher allowances.
At the beginning of the contracts, collaterals of usually at least
100% of the carrying amounts were agreed, which are backed by
the vehicles based on the underlying contracts. Over the con-
tract terms, the value of the collaterals is comprised in the
calculation of the risk provisioning, so the carrying amounts of
the credit impaired contracts are primarily backed by the
underlying vehicles.
Further information on financial risks and nature of risks is pro-
vided in E Note 33.
At December 31, 2018, receivables from financial services with
a carrying amount of €8,106 million (December 31, 2017:
€6,049 million) were pledged as collateral for liabilities from
ABS transactions (see also E Note 24).
270 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.42
Credit risks included in receivables from financial services (according to IFRS 9)
In millions of euros
Gross carrying amount
thereof
not past due
past due 30 days and less
past due 31 to 60 days
past due 61 to 90 days
past due 91 to 180 days
past due more than 180 days
F.43
Credit risks included in receivables from
financial services (according to IAS 39)
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
Net carrying amount
12-month expected
credit loss
At December 31, 2018
Lifetime expected
credit loss
Total
not credit
impaired
credit
impaired
(Stage 1)
(Stage 2)
(Stage 3)
90,754
5,798
1,274
97,826
89,967
770
8
3
3
3
4,295
819
448
232
4
–
405
44
121
84
209
411
94,667
1,633
577
319
216
414
15. Marketable debt securities and
similar investments
The marketable debt securities and similar investments with a
carrying amount of €9,577 million (2017: €10,063 million) are
part of the Group’s liquidity management and comprise financial
instruments recognized at fair value through other comprehen-
sive income, fair value through profit and loss or recognized at
amortized cost.
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as current
assets.
Further information on marketable debt securities and similar
investments is provided in E Note 32.
16. Other financial assets
The line item other financial assets presented in the Consoli-
dated Statement of Financial Position at December 31, 2018
according to IFRS 9 is comprised as shown in table F.44.
Table F.45 shows the corresponding amounts at December
31, 2017 according to IAS 39.
Financial assets measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
At December 31, 2018, receivables with a carrying amount of
€511 million (2017: €511 million) were pledged as collateral for
liabilities (see also E Note 24).
Further information on other financial assets is provided in
E Note 32.
2017
81,474
2,046
315
136
43
105
2,645
1,935
86,054
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 271
17. Other assets
Non-financial other assets are comprised as shown in table
F.46.
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
F.44
Other financial assets (according to IFRS 9)
In millions of euros
Equity instruments and debt instruments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
F.45
Other financial assets (according to IAS 39)
In millions of euros
Available-for-sale financial assets
thereof equity instruments recognized at fair value
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
F.46
Other assets
In millions of euros
Current
At December 31, 2018
Total
Non-current
–
–
–
524
91
2,355
2,970
748
364
384
509
18
1,488
2,763
748
364
384
1,033
109
3,843
5,733
Current
At December 31, 2017
Total
Non-current
–
–
–
1,235
54
2,313
3,602
1,173
171
1,002
1,144
28
859
3,204
1,173
171
1,002
2,379
82
3,172
6,806
Current
At December 31, 2018
Total
Non-current
Current
At December 31, 2017
Total
Non-current
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
981
3,152
–
229
712
815
254
136
27
254
126
318
5,889
1,115
1,235
3,288
27
483
838
1,133
7,004
510
2,832
–
274
632
766
249
263
68
211
112
300
5,014
1,203
759
3,095
68
485
744
1,066
6,217
272 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.47
Inventories
In millions of euros
Raw materials and
manufacturing supplies
Work in progress
Finished goods, parts and
products held for resale
Advance payments to suppliers
F.48
Trade receivables
In millions of euros
Gross carrying amount
Loss allowances
Net carrying amount
At December 31,
2017
2018
3,130
4,674
21,351
334
29,489
2,655
3,373
19,361
297
25,686
At December 31,
2017
2018
12,826
-240
12,586
12,295
-300
11,995
18. Inventories
Inventories are comprised as shown in table F.47.
The amount of write-down of inventories to net realizable value
recognized as an expense in cost of sales was €333 million in
2018 (2017: €328 million). Inventories that are expected to be
recovered or settled after more than twelve months amounted
to €1,047 million at December 31, 2018 (December 31, 2017:
€954 million) and are primarily spare parts.
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars at Mercedes-
Benz Cars and Mercedes-Benz Vans included in inventories at
Daimler AG were pledged as collateral to the Daimler Pension
Trust e.V. in an amount of €952 million at December 31, 2018
(December 31, 2017: €1,033 million).
In addition, inventories with a carrying amount of €367 million
at December 31, 2018 (December 31, 2017: €419 million)
were pledged as collateral for liabilities from ABS transactions
(see also E Note 24).
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €21 million at December 31, 2018 (December 31, 2017: €51
million). Those assets are utilized in the context of normal
business operations.
F.49
Development of loss allowances for trade receivables
due to expected credit losses (according to IFRS 9)
In millions of euros
Balance at December 31 according to IAS 39
Effect of initial application of IFRS 9
Balance at January 1 according to IFRS 9
Additions
Change in remeasurement
Utilization
Reversals
Change in models/risk parameters
Transfer to stage 2
Transfer to stage 3
Currency translation and other changes
Balance at December 31 according to IFRS 9
Lifetime expected credit loss
At December 31, 2018
Total
not credit
impaired
credit
impaired
(Stage 2)
(Stage 3)
168
45
1
-19
-57
–
2
-1
-14
125
128
60
5
-18
-36
–
-2
1
-23
115
300
-4
296
105
6
-37
-93
–
–
–
-37
240
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
19. Trade receivables
Trade receivables are comprised as shown in table F.48.
At December 31, 2018, €29 million of the trade receivables
mature after more than one year (December 31, 2017:
€38 million).
Trade receivables are receivables from contracts with custom-
ers in scope of IFRS 15.
Loss allowances
The development of loss allowances due to expected credit
losses for trade receivables at December 31, 2018 under IFRS 9
is shown in table F.49. Changes in the loss allowances
for trade receivables at December 31, 2017 under IAS 39 are
shown in table F.50.
Credit risks
Information on credit risks included in trade receivables
at December 31, 2018 under IFRS 9 is shown in table F.51
and at December 31, 2017 under IAS 39 in table F.52.
Further information on financial risk and types of risk is
provided in E Note 33.
F.50
Development of loss allowances
for trade receivables (according to IAS 39)
In millions of euros
Balance at January 1
Charged to costs and expenses
Utilization
Currency translation and other changes
Balance at December 31
2017
340
63
-107
4
300
F.51
Credit risks included in trade receivables (according to IFRS 9)
In millions of euros
Gross carrying amount
thereof
not past due
past due 30 days and less
past due 31 to 60 days
past due 61 to 90 days
past due 91 to 180 days
past due more than 180 days
Lifetime expected credit loss
At December 31, 2018
Total
not credit
impaired
credit
impaired
(Stage 2)
(Stage 3)
12,463
10,456
1,315
190
115
142
245
363
112
36
3
1
73
138
12,826
10,568
1,351
193
116
215
383
F.52
Credit risks included in trade receivables
(according to IAS 39)
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
Net carrying amount
At December 31,
2017
7,725
1,228
164
61
70
103
1,626
2,644
11,995
274 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders’ Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
This authorization to issue convertible and/or warrant bonds
has not yet been utilized.
Treasury shares
By resolution of the Annual Shareholders’ Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to
acquire treasury shares in a volume up to 10% of the share
capital issued as of the day of the resolution to be used
for all legal purposes. The shares can be used, amongst other
things excluding shareholders’ subscription rights, for
business combinations or to acquire companies or to be sold
to third parties for cash at a price that is not significantly
lower than the stock-exchange price of the Company’s shares.
The acquired shares can also be used to fulfill obligations
from issued convertible bonds and/or bonds with warrants and
to be issued to employees of the Company and employees
and board members of the Company’s affiliates pursuant to
Sections 15 et seq. of the German Stock Corporation Act (AktG).
The treasury shares can also be canceled.
The Board of Management is further authorized, with the con-
sent of the Supervisory Board, to exclude shareholders’ sub-
scription rights in other defined cases. In a volume up to 5% of
the share capital issued as of the day of the resolution of the
Annual Shareholders’ Meeting, the Company was also autho-
rized to acquire treasury shares also by using derivatives (put
options, call options, forward purchases or a combination of
these instruments), whereby the term of a derivative must not
exceed 18 months and must not end later than March 31, 2020.
The authorization to acquire treasury shares was not exercised
in the reporting period.
As was the case at December 31, 2017, no treasury shares are
held by Daimler AG at December 31, 2018.
Employee share purchase plan
In 2018, 0.7 million Daimler shares representing €2.1 million
or 0.07% of the share capital were purchased for a price of €50
million and reissued to employees (2017: 0.6 million Daimler
shares representing €1.7 million or 0.06% of the share capital
were purchased for a price of €42 million).
Capital reserves
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise of
the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership inter-
ests in consolidated entities and directly attributable related
transaction costs.
20. Equity
See also the Consolidated Statement of Changes in Equity
F.05.
Share capital
The share capital (authorized capital) is divided into no-par-value
shares. All shares are fully paid up. Each share confers the
right to one vote at the Annual Shareholders’ Meeting of Daimler
AG and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal portion of the
profits as defined by the dividend distribution decided upon
at the Annual Shareholders’ Meeting. Each share represents a
proportionate amount of approximately €2.87 of the share
capital.
Since January 1, 2017, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2018 is 1,070 million, unchanged from December 31, 2017.
Approved capital
The Annual Shareholders’ Meeting held on April 5, 2018
authorized the Board of Management, with the consent of the
Super visory Board, to increase the share capital of Daimler AG
in the period until April 4, 2023 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2018).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of Man-
agement was authorized with the consent of the Super visory
Board to exclude shareholders’ subscription rights under certain
conditions and within defined limits.
Approved Capital 2014, which had not been utilized, was can-
celled when the resolution for a new Approved Capital 2018
took effect. Approved Capital 2018 has not yet been utilized.
Conditional capital
By resolution of the Annual Shareholders’ Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to
issue convertible and/or warrant bonds or a combination
of these instruments (“bonds”) with a total face value of up to
€10.0 billion and a maturity of no more than ten years. The
Board of Management is allowed to grant the holders of these
bonds conversion or warrant rights for new registered no-
par-value shares in Daimler AG with an allocable portion of the
share capital of up to €500 million in accordance with the
details defined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-cash
contributions, in particular for shares in other companies. The
terms and conditions of the bonds can include warranty
obligations or conversion obligations. The bonds can be issued
once or several times, wholly or in installments, or simultane-
ously in various tranches as well by affiliates of the Company
within the meaning of Sections 15 et seq. of the German
Stock Corporation Act (AktG). Among other things, the Board
of Management was authorized to exclude shareholders’ sub-
scription rights for the bonds under certain conditions and
within defined constraints with the consent of the Supervisory
Board.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 275
Retained earnings
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler’s Consolidated
Financial Statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earn-
ings. Within the reporting period effects of first time adoption
for hyperinflation in Argentina were included in the line item
“Other” of Consolidated Statement of Changes in Equity.
Dividend
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2018, the Daimler management
will propose to the shareholders at the Annual Shareholders’
Meeting to pay out €3,477 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€3.25 per no-par-value share entitled to a dividend (2017:
€3,905 million and €3.65 per no-par-value share entitled to a
dividend respectively).
Other reserves
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on financial assets, derivative financial instru-
ments and equity-method investments.
Table F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
21. Share-based payment
At December 31, 2018, the Group has the 2015-2018 Perfor-
mance Phantom Share Plans (PPSP) outstanding. The PPSP
are cash-settled share-based payment instruments and are
measured at their respective fair values at the balance sheet
date. The PPSP are paid out at the end of the stipulated hold-
ing period; earlier, pro-rated payoff is possible in the case of
benefits leaving the Group only if certain defined conditions
are met. PPSP 2014 was paid out as planned in the first quarter
of 2018.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period of one
year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual
bonus, which depends on this development, is measured by
using the intrinsic value at the reporting date.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the Consolidated
Statement of Income and Consolidated Statement of Financial
Position are shown in table F.53.
Table F.54 shows expenses in the Consolidated Statement
of Income resulting from the rights of current members of the
Board of Management.
The details shown in table F.54 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2018 can be found in the
Remuneration Report. E Management Report from page 120
F.53
Effects of share-based payment
In millions of euros
PPSP
Medium-term
component of
annual bonus of
the members
of the Board
of Management
Expense
2017
2018
Provision
At December 31,
2018
2017
-13
-98
112
191
-2
-15
-7
-105
10
122
13
204
276 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.54
Expenses in the Consolidated Statement of Income resulting from share-based payments of current members of the Board of Management
In millions of euros
PPSP
Medium-term component
of the annual bonus
In millions of euros
PPSP
Medium-term component
of the annual bonus
In millions of euros
PPSP
Medium-term component
of the annual bonus
Dr. Dieter Zetsche
2017
2018
Martin Daum1
2017
2018
Renata Jungo Brüngger
2017
2018
-0.4
-0.5
-3.9
-1.8
-0.2
-0.2
-0.8
-0.7
-0.2
-0.2
-0.8
-0.7
Ola Källenius
2017
2018
Wilfried Porth
2017
2018
Britta Seeger2
2017
2018
-0.1
-0.2
-1.2
-0.7
-0.1
-0.2
-1.6
-0.7
-0.3
-0.2
-0.4
-0.8
Hubertus Troska
2017
2018
Bodo Uebber
2017
2018
Dr. Wolfgang Bernhard3
2017
2018
-0.1
-0.2
-1.6
-0.7
-0.2
-0.2
-1.9
-0.9
–
–
-0.2
–
1 Appointed to the Board of Management as of March 1, 2017.
2 Appointed to the Board of Management as of January 1, 2017.
3 Appointment to the Board of Management ended on February 10, 2017. Amounts are included pro rata for 2017.
Performance Phantom Share Plans
In 2018, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used in previous years, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During
the four-year period between the allocation of the preliminary
phantom shares and the payout of the plan at the end of
the term, the phantom shares earn a dividend equivalent in
the amount of the actual dividend paid on ordinary Daimler
shares. The amount of cash paid to eligible employees at the
end of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler’s ordinary
shares (calculated as an average price over a specified period
at the end of the four–year plan period). The vesting period is
therefore four years. For the existing plans, the quoted price of
Daimler’s ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. Fur-
thermore, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares. The limi-
tation of the payout for the members of the Board of Manage-
ment also includes the dividend.
The number of phantom shares that vest of the PPSPs granted
in 2014 to 2018 is based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
return on sales (RoS) compared with the average RoS of a
competitor group. In addition, beginning with plan PPSP 2018,
the average RoS of the competitor group is revenue-weighted.
Special rules apply for the members of the Board of Manage-
ment: Daimler’s RoS must be not equal to but higher than
that of the competitors in order to achieve the same target
achievement as the other plan participants. For the PPSP
granted in 2015 and until 2018, an additional limit on target
achievement was agreed upon for the reference parameter
RoS for the members of the Board of Management. In the case
of target achievement between 195% and 200%, an additional
comparison is made on the basis of the RoS achieved in abso-
lute terms. If the actual RoS for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.
The Group recognizes a provisi‚on for awarding the PPSP in the
Consolidated Statement of Financial Position. Since payment per
vested phantom share depends on the quoted price of Daimler’s
ordinary shares, that quoted price essentially represents the fair
value of each phantom share. The proportionate remuneration
expenses from the PPSP recognized in the individual years are
measured based on the price of Daimler ordinary shares and the
estimated target achievement.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 277
22. Pensions and similar obligations
Table F.55 shows the composition of provisions for pension
benefit plans and similar obligations.
At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution
pension obligations, specific to the various countries.
In addition, healthcare benefit obligations are recognized
outside Germany.
Defined benefit pension plans
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension plans
provided by Daimler generally vary according to the economic,
tax and legal circumstances of the country concerned. Most
of the defined benefit pension plans also provide benefits in
the case of invalidity and death.
The Group’s main German and non-German pension plans are
described below.
German pension plans and pension plan assets
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year or on their respective income, and for executives
it depends on their respective income. For the commitments
to retirement benefits made until 2011, the contributions
continue to be converted into capital components and credited
to the individual pension account with the application of
fixed factors related to each employee’s age. The conversion
factors include a fixed value increase. The pension plans
were newly structured for new entrants in 2011 to reduce the
risks associated with defined benefit plans. New entrants
now benefit from value increases of the contributions through
an investment fund with a special lifecycle model. The Com-
pany guarantees at a minimum the value of the contributions
paid in. Pension payments are made either as a life annuity,
twelve annual installments, or a single lump sum.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees’ wage-tariff classification
upon transition into the benefit phase and which foresee a
life annuity.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by funds assets. Contractual
trust arrangements (CTA) exist between Daimler AG as well
as some subsidiaries in Germany and the Daimler Pension Trust
e.V. The Daimler Pension Trust e.V. acts as a collateral trust
fund.
Effective December 13, 2018, Daimler AG transferred certain
defined benefit obligations and plan assets of retired employees
to Daimler Pensionsfonds AG (pension fund), which was estab-
lished in June 2018. The transfer has no impact on the Group’s
profitability, liquidity and capital resources or financial posi-
tion. In the future, these benefits will be administrated by that
non-insurance-like pension fund, which falls under the scope
of the Act on the Supervision of Insurance Undertakings and is
therefore subject to the oversight of the Federal Financial
Supervisory Agency (BaFin). Insofar as in the future, BaFin rules
that a deficit has occurred in the pension fund, a supplemen-
tary contribution will be required from Daimler AG.
In Germany, there are normally no statutory or regulatory
minimum funding requirements.
Non-German pension plans and pension plan assets
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets funds.
Risks from defined benefit pension plans and pension
plan assets
The general requirements with regard to retirement benefit
models are laid down in the Pension Plan Design Policy, which
has Group-wide validity. Accordingly, the committed benefits
are intended to contribute to additional financial security
during retirement and in the case of death or invalidity, to be
capable of being planned and fulfilled by the respective
company of the Group and to have a low-risk structure. In
addition, a committee exists that approves new pension
plans and amendments to existing pension plans as well as
guidelines relating to company retirement benefits.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most of
the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
F.55
Composition of provisions for pensions
and similar obligations
In millions of euros
December 31,
2017
2018
Provision for pension benefits
6,298
4,625
Provision for other post-employment
benefits
1,095
7,393
1,142
5,767
278 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and quali-
tative analyses, and the continual monitoring of performance
and risk help to reduce associated investment risk. The
Group regularly makes additional contributions to the plan
assets in order to cover future obligations from defined
benefit pension plans. Furthermore, in 2017, the Group made
an extraordinary contribution of €3.0 billion into the German
pension plan assets, in order to sustainably strengthen them.
As 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.
Reconciliation of the net obligation from defined benefit
pension plans
The development of the relevant factors is shown in table
F.56.
Composition of plan assets
Plan assets and income from plan assets are used solely to pay
pension benefits and to administer the plans. The composition
of the Group’s pension plan assets is shown in table F.57.
Market prices are available for equities and bonds due to their
listing in active markets. Most of the bonds have investment
grade ratings. They include government bonds of very good
creditworthiness.
The investment strategy is reviewed regularly and adjusted if
deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed of
representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 279
F.56
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
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 changes¹
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 / losses (-)
Actual result on plan assets
Contributions by the employer
Contributions by plan participants
Pension benefits paid
Currency exchange-rate changes and
other changes¹
Fair value of plan assets
at December 31
December 31, 2018
German
Plans
Non-German
Plans
Total
December 31, 2017
German
Plans
Non-German
Plans
Total
31,744
27,746
3,998
31,173
26,982
4,191
700
616
60
175
-228
-32
-85
-76
-1,385
600
481
55
202
75
-17
260
-71
-1,211
71
-8
100
135
5
-27
-303
-15
-345
-5
-174
79
687
648
58
-23
1,076
2
1,055
-117
-973
-787
591
495
54
-13
419
-55
351
–
-744
17
96
153
4
-10
657
57
704
-117
-229
-804
31,645
27,852
3,793
31,744
27,746
3,998
27,215
529
-1,781
-1,252
696
60
24,197
426
-1,551
-1,125
585
55
-1,323
-1,171
66
-9
3,018
23,384
20,315
3,069
103
-230
-127
111
5
-152
75
489
996
1,485
3,692
58
-910
-494
377
541
918
3,596
54
-702
16
112
455
567
96
4
-208
-510
25,462
22,532
2,930
27,215
24,197
3,018
Funded status
thereof recognized in other assets
thereof recognized in provisions for pensions
and similar obligations
-6,183
115
-5,320
–
-6,298
-5,320
-863
115
-978
-4,529
96
-3,549
–
-980
96
-4,625
-3,549
-1,076
1 Including reclassifications to provisions for other risks in 2017.
280 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.57
Composition of plan assets
In millions of euros
Energy, commodities and utilities
Financials
Healthcare
Industrials1
Consumer goods
Technology and telecommunication
Others
Equities
Government bonds
Corporate bonds
Securitized bonds
Bonds
Other exchange-traded instruments
Total exchange-traded instruments
Alternative investments2
Real estate
Other non-exchange-traded instruments
Cash and cash equivalents
Total non-exchange-traded instruments
Fair value of plan assets
thereof fair value of own transferable financial
instruments
thereof fair value of self-used plan assets
At December 31, 2018
German
Plans
Non-German
Plans
926
896
442
1,902
855
924
–
5,945
4,308
8,924
29
13,261
16
19,222
340
388
260
2,322
3,310
22,532
–
–
109
158
100
81
163
158
52
821
868
822
20
1,710
3
2,534
158
98
91
49
396
2,930
–
–
Total
1,035
1,054
542
1,983
1,018
1,082
52
6,766
5,176
9,746
49
14,971
19
21,756
498
486
351
2,371
3,706
25,462
–
–
1 Including the shares in Renault and Nissan in the amount of €1,528 (in 2017: €2,010) million.
2 Alternative investments mainly comprise private equity.
F.58
Pension cost
In millions of euros
Current service cost
Past service cost,
curtailments and settlements
Net interest expense
Net interest income
2018
German
Plans
Non-German
Plans
-600
71
-55
–
-584
-100
5
-35
3
-127
Total
-700
76
-90
3
-711
At December 31, 2017
German
Plans
Non-German
Plans
831
1,027
440
2,440
942
932
–
6,612
3,844
8,556
30
12,430
1
19,043
388
436
378
3,952
5,154
24,197
–
50
128
166
107
95
207
195
46
944
814
929
16
1,759
4
2,707
124
101
40
46
311
3,018
–
–
2017
German
Plans
Non-German
Plans
-591
–
-118
–
-709
-96
117
-43
2
-20
Total
959
1,193
547
2,535
1,149
1,127
46
7,556
4,658
9,485
46
14,189
5
21,750
512
537
418
3,998
5,465
27,215
–
50
Total
-687
117
-161
2
-729
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 281
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2018, the total cost from defined contri-
bution plans amounted to €1.6 billion (2017: €1.6 billion). Of
those payments €1.5 billion (2017: €1.5 billion) were related to
governmental pension plans.
Multi-employer plans
Multi-employer pension plans are classified at the Daimler
Group as not material at December 31, 2018.
Until October 2017, a pension plan in the NAFTA region was
included therein, for which the information required to use
accounting for defined benefit plans was available for the first
time in 2017. The company withdrew from the plan at the
end of November 2017. The settlement of the plan resulted in
a gain for Daimler Trucks of €117 million. The EBIT effect
was presented in cost of sales in the Consolidated Statement of
Income. The present value of future financial obligations was
presented in provisions for other risks at December 31, 2017.
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment
health care benefits with defined entitlements, which have to
be accounted for as defined benefit plans. Table F.62
shows key data for other post-employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
Pension cost
The components of pension cost included in the Consolidated
Statement of Income are shown in table F.58.
Measurement assumptions
The measurement date for the Group’s defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group’s net periodic pension cost is
generally January 1. The assumptions used to calculate the
defined benefit obligations vary according to the economic con-
ditions of the countries in which the pension plans are situated.
Calculation of the defined benefit obligation uses life expec-
tancy for the German plans based first on the 2018 G mortality
tables of K. Heubeck as of December 31, 2018. The tables
reflect the latest statistics of the statutory pension insurance
system and of the Federal Statistical Office. The effect
resulting from the change of the mortality tables amounts to
€202 million at December 31, 2018 and is disclosed in the
valuation losses from changes in demographic assumptions.
Comparable country-specific calculation methods are used
for non-German plans.
Table F.59 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table F.60.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed due to
correlation effects. With a change in the parameters, the
sensitivities shown cannot be used to derive a linear develop-
ment of the defined benefit obligation.
For the calculation of the sensitivity of life expectancy,
by means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is achieved.
Effect on future cash flows
Daimler currently plans to make contributions of €0.7 billion
to its pension plans for the year 2019; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€0.9 billion in 2019.
The weighted average duration of the defined benefit
obligations is shown in table F.61.
282 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.59
Significant factors for the calculation of pension benefit obligations
In percent
Discount rates
Expected increase in cost of living1
German plans
At December 31,
Non-German plans
At December 31,
2018
2017
2018
2017
1.8
1.8
1.8
1.7
4.4
–
3.7
–
1 For German plans, expected increases in cost of living may affect – depending on the design of the pension plan – the obligation to the Group’s
active employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living do not have a material
impact on the amount of the obligation.
F.60
Sensitivity analysis for the present value of defined benefit pension obligation
In millions of euros
Sensitivity for discount rates
Sensitivity for discount rates
Sensitivity for expected increases
in cost of living
Sensitivity for expected increases
in cost of living
Sensitivity for life expectancy
Sensitivity for life expectancy
+ 0.25%
- 0.25%
+ 0.10%
- 0.10%
+ 1 year
- 1 year
December 31, 2018
German
Plans
Non-German
Plans
-1,047
1,115
83
-82
393
-345
-127
137
15
-13
71
-72
December 31, 2017
German
Plans
Non-German
Plans
-1,045
1,113
90
-89
417
-366
-139
195
19
-18
70
-71
Total
-1,184
1,308
109
-107
487
-437
Total
-1,174
1,252
98
-95
464
-417
F.61
Weighted average duration of
the defined benefit obligations
In years
German plans
Non-German plans
F.62
Key data for other post-employment benefits
In millions of euros
Present value of defined benefit
obligations
Fair value of
reimbursement rights
Funded status
Net periodic cost for other
post-employment benefits
2018
2017
16
16
16
17
2018
2017
1,095
1,142
27
-1,068
68
-1,074
-66
-71
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 283
23. Provisions for other risks
The development of provisions for other risks is summarized in
table F.63.
Product warranties
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The
provision for these product warranties covers expected costs
for legal and contractual warranty claims as well as expected
costs for goodwill concessions and recall campaigns. The
utilization date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties is principally expected within a period until 2021.
Personnel and social costs
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans.
The additions recorded to the provisions for profit sharing and
management bonuses in the reporting year usually result
in cash outflows in the following year. The cash outflow for
non-current provisions for personnel and social costs is
primarily expected within a period until 2029.
F.63
Provisions for other risks
In millions of euros
Balance at December 31, 2017
thereof current
thereof non-current
Additions
Utilizations
Reversals
Compounding and effects from changes in discount rates
Currency translation and other changes
Balance at December 31, 2018
thereof current
thereof non-current
Other
Provisions for other risks include in particular expected costs
in connection with liability and litigation risks as well as risks
from legal proceedings. Provisions for other risks also include
expected costs for other taxes, provisions for environmental
protection as well as obligations from outstanding commission,
for example to trade representatives, under the prerequisite
that no revenue has been realized with the recipient of the com-
mission under IFRS 15. They also include provisions for antici-
pated losses on contracts and various other risks which cannot
be allocated to any other class of provision.
Further information on other provisions for other risks is
provided in E Notes 5 and 30.
Product
warranties
Personnel and
social costs
Other
Total
6,716
3,154
3,562
3,665
-2,931
-420
20
-7
7,043
3,080
3,963
4,425
2,209
2,216
2,113
-2,049
-113
-8
-107
4,261
1,971
2,290
3,622
2,257
1,365
2,141
-1,196
-362
19
34
4,258
2,777
1,481
14,763
7,620
7,143
7,919
-6,176
-895
31
-80
15,562
7,828
7,734
284 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Financing liabilities
The composition of financing liabilities is shown in
table F.64.
Liabilities from finance leases relate to leases of property, plant
and equipment which transfer substantially all risks and
rewards to the Group as lessee. Future minimum lease payments
under finance leases amounted to €477 million at December 31,
2018 (2017: €496 million). The reconciliation of future mini-
mum lease payments from finance lease arrangements to the
corresponding liabilities is shown in table F.65.
F.64
Financing liabilities
In millions of euros
Notes/bonds
Commercial paper
Liabilities to financial institutions
Deposits in the direct banking business
Liabilities from ABS transactions
Liabilities from finance leases
Loans, other financing liabilities
At December 31, 2018
At December 31, 2017
Current
Non-current
Total
Current
Non-current
Total
15,090
2,835
21,068
9,677
6,782
27
761
61,400
–
18,332
2,097
5,670
320
843
76,490
2,835
39,400
11,774
12,452
347
1,604
13,785
1,045
17,583
9,450
6,214
27
642
53,288
–
16,972
2,010
4,823
325
960
67,073
1,045
34,555
11,460
11,037
352
1,602
56,240
88,662
144,902
48,746
78,378
127,124
F.65
Reconciliation of minimum lease payments to liabilities from finance lease arrangements
In millions of euros
Maturity
within one year
between one and five years
later than five years
Future minimum
lease payments
Interest included in future
minimum lease payments
at December 31,
2017
2018
at December 31,
2017
2018
Liabilities from finance
lease arrangements
at December 31,
2017
2018
38
162
277
477
39
150
307
496
11
56
63
130
12
61
71
144
27
106
214
347
27
89
236
352
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 285
25. Other financial liabilities
26. Deferred income
The composition of other financial liabilities is shown in
table F.66.
The composition of deferred income is shown in table F.67.
Financial liabilities measured at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
Further information on other financial liabilities is provided
in E Note 32.
F.66
Other financial liabilities
In millions of euros
Derivative financial instruments
used in hedge accounting
Financial liabilities recognized at fair
value through profit or loss
Liabilities from residual value guarantees
Liabilities from wages and salaries
Accrued interest expenses
Deposits received
Other
Miscellaneous other financial liabilities
F.67
Deferred income
In millions of euros
Deferral of sales revenue received from sales
with residual-value guarantees
Deferral of advance rental payments received
from operating lease arrangements
Other deferred income
At December 31, 2018
At December 31, 2017
Current
Non-current
Total
Current
Non-current
Total
633
51
1,149
1,267
1,105
504
2,948
6,973
7,657
461
5
943
25
–
542
399
1,909
2,375
1,094
56
2,092
1,292
1,105
1,046
3,347
8,882
10,032
168
62
1,091
1,292
905
495
2,892
6,675
6,905
528
49
998
25
–
539
231
1,793
2,370
696
111
2,089
1,317
905
1,034
3,123
8,468
9,275
At December 31, 2018
At December 31, 2017
Current
Non-current
Total
Current
Non-current
Total
391
890
299
584
929
99
1,580
1,612
975
1,819
398
3,192
462
824
242
671
900
97
1,528
1,668
1,133
1,724
339
3,196
286 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.68
Contract and refund liabilities
In millions of euros
Service and maintenance contracts
and extended warranties
Other contract liabilities
Contract liabilities
Obligations from
sales transactions
Other refund
liabilities
Refund liabilities
Contract and
refund liabilities
thereof long-term
thereof short-term
F.69
Other liabilities
In millions of euros
Income tax liabilities
Other tax liabilities
Miscellaneous other liabilities
27. Contract and refund liabilities
Table F.68 shows the composition of contract and refund
liabilities.
Obligations from sales transactions should, in principle, be
regarded as short-term. Due to the short maturities of
these financial instruments, it is assumed that their fair values
are equal to the carrying amounts.
28. Other liabilities
Table F.69 shows the composition of other liabilities.
At December 31,
2017
2018
5,868
1,167
7,035
5,303
1,002
6,305
4,931
4,489
553
5,484
414
4,903
12,519
11,208
5,438
7,081
3,833
7,375
At December 31, 2018
At December 31, 2017
Current
Non-current
Total
Current
Non-current
Total
272
1,905
169
2,346
8
1
1
10
280
1,906
170
2,356
413
1,871
155
2,439
9
1
–
10
422
1,872
155
2,449
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 287
29. Consolidated Statement of Cash Flows
Cash used for/provided by operating activities
Changes in other operating assets and liabilities are shown in
table F.70.
The change of provisions in comparison to the prior year pri-
marily resulted from provisions for pensions and similar
obligations in the prior year in connection with an extraordinary
contribution to the German pension plan assets. Opposing
effects were related to provisions for warranties and customer
goodwill obligations as well as provisions for personnel and
welfare expenses. The change of miscellaneous other assets
and liabilities in comparison to the prior year was strongly
influenced by a lower increase in liabilities from service and
maintenance contracts as well as a lower increase in liabilities
from price reductions. An additional decreasing effect was
caused by liabilities from advance payments received. Further-
more, the reporting year was affected by the payment of the
first tranche in connection with the agreement reached to con-
clude the Toll Collect arbitration proceedings.
Table F.71 shows cash flows included in cash used
for/ provided by operating activities.
The line item other non-cash expense and income within the
reconciliation of profit before income taxes to cash used
for/provided by operating activities in the reporting year and
in the prior year primarily comprised the Group’s share in
the profit/loss of companies accounted for using the equity
method (see E Note 13).
Cash provided by financing activities
Cash provided by financing activities includes cash flows from
hedging the currency risks of financial liabilities. In 2018, cash
provided by financing activities included payments for the
reduction of outstanding finance lease liabilities of €37 million
(2017: €39 million).
Table F.72 includes changes in liabilities arising from financ-
ing activities, divided into cash and non-cash components.
F.70
Changes in other operating assets and liabilities
In millions of euros
Provisions
Financial instruments
Miscellaneous other assets and liabilities
F.71
Cash flows included in cash used for/
provided by operating activities
In millions of euros
Interest paid
Interest received
Dividends received from
equity-method investments
Dividends received from other
shareholdings
2018
2017
742
-36
171
877
-1,425
-128
1,763
210
2018
2017
-678
257
1,380
49
-304
187
843
52
F.72
Changes in liabilities arising from financing activities
In millions of euros
Cash flows
Obtaining or losing control of subsidiaries
Changes in foreign exchange rates
Fair value changes
Other changes
2018
2017
17,456
16,794
–
411
-256
16
–
-7,135
-119
-325
288 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. Legal proceedings
Daimler AG and its subsidiaries are confronted with various
legal proceedings, claims as well as governmental investigations
and orders (legal proceedings) on a large number of topics,
including vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, environmental
matters, antitrust matters (including actions for damages)
and shareholder matters. Legal proceedings relating to products
deal with claims on account of alleged vehicle defects. Some
of these claims are asserted by way of class action suits. If the
outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory and
punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Legal
proceedings may have an impact on the Group’s reputation.
Diesel emission behavior: Class action and other lawsuits
in the United States and Canada
As already reported, several consumer class-action lawsuits
were filed against Mercedes-Benz USA, LLC (MBUSA) in federal
courts in the United States in early 2016. The main allegation
was the use of devices that impermissibly impair the effective-
ness of emission control systems in reducing nitrogen-oxide
(NOX) emissions and which cause excessive emissions from
vehicles with diesel engines. In addition, plaintiffs alleged
that consumers were deliberately deceived in connection with
the advertising of Mercedes-Benz diesel vehicles. Those
consumer class actions were consolidated into one class action
pending against both Daimler AG and MBUSA in the US Dis-
trict Court for the District of New Jersey, in which the plaintiffs
asserted various grounds for monetary relief on behalf of a
nation-wide class of persons or entities who owned or leased
certain models of Mercedes-Benz diesel vehicles as of
February 18, 2016. Daimler AG and MBUSA moved to dismiss
the lawsuit in its entirety. By order dated December 6, 2016,
the court granted Daimler AG’s and MBUSA’s motion to dismiss
and dismissed the lawsuit without prejudice, based on plain-
tiffs’ failure to allege with sufficient specificity the advertising
that they contended had misled them. Plaintiffs subsequently
filed an amended class action complaint in the same court
making similar allegations. The amended complaint also adds
as defendants Robert Bosch LLC and Robert Bosch GmbH
( collectively; “Bosch”), and alleges that Daimler AG and MBUSA
conspired with Bosch to deceive US regulators and consum-
ers. On February 1, 2019, the Court granted in part and denied in
part Daimler AG and MBUSA’s subsequent motion to dismiss.
The case is ongoing as the Court’s decision merely addressed
certain legal aspects of plaintiffs’ claims and did not decide
whether the plaintiffs can ultimately prove their claims, whether
the plaintiffs’ allegations are true, or whether their claims
have merit. Daimler AG and MBUSA view the lawsuit as being
without merit and will defend against the claims.
On January 8, 2019, the Arizona State Attorney General filed
a civil complaint in Arizona state court against Daimler AG and
MBUSA making similar allegations that Arizona consumers
were deliberately deceived in connection with the advertising of
Mercedes-Benz diesel vehicles. The state seeks monetary
penalties for violation of Arizona’s consumer protection laws.
Daimler AG and MBUSA view this lawsuit as being without
merit.
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations
was filed in Canada in April 2016. On June 29, 2017, the court
granted a procedural motion to certify certain issues for
class treatment, and on March 12, 2018 the court ordered the
parties to send a notice to the class by May 18, 2018, inform-
ing class members that the litigation is ongoing and they will
be bound by the outcome. That notice was sent, and class
members had until July 20, 2018 to opt out of the class to avoid
being bound by subsequent rulings in the case. Daimler
also regards this lawsuit as being without merit and will defend
against the claims.
On July 14, 2017, an additional class action was filed in the
Superior Court of California, Los Angeles County, against
Daimler AG and other companies of the Group, alleging claims
similar to the existing US class action. That action was
removed to federal court and, on October 31, 2017, was trans-
ferred to the District of New Jersey. On December 21, 2017
the parties stipulated to dismiss, without prejudice, that lawsuit.
It may be filed again under specific conditions, but Daimler
also regards this lawsuit as being without merit.
Diesel emission behavior: Governmental proceedings
Furthermore, several state and federal authorities and other
institutions worldwide have inquired about and/or are conduct-
ing investigations and/or administrative proceedings and/or
have issued administrative orders. These particularly relate to
test results, the emission control systems used in Mercedes-
Benz diesel vehicles and/or Daimler’s interaction with the rele-
vant state and federal authorities as well as related legal
issues and implications, including, but not limited to, under
applicable environmental, securities, criminal and antitrust
laws. These authorities and institutions include, among others,
the U.S. Department of Justice (DOJ), which in April 2016
requested that Daimler AG review its certification and admis-
sions processes related to exhaust emissions of diesel
vehicles in the United States by way of an internal investigation
in cooperation with the DOJ, the U.S. Environmental Protection
Agency (EPA), the California Air Resources Board (CARB)
and other US state authorities, the U.S. Securities and Exchange
Commission (SEC), the European Commission, with which
Daimler AG has filed a leniency application and which meanwhile
has opened a formal investigation into possible collusion on
clean emission technology, as well as national antitrust author-
ities and other authorities of various foreign states as well
as the German Federal Financial Supervisory Authority (BaFin),
the German Federal Ministry of Transport and Digital Infra-
structure (BMVI) and the German Federal Motor Transport
Authority (KBA), the diesel emissions committee of inquiry of
the German Parliament of the previous legislative period
and the Stuttgart district attorney’s office. The Stuttgart district
attorney’s office is conducting criminal investigation proceed-
ings against Daimler employees concerning the suspicion of
fraud and criminal advertising, and, in May 2017, searched the
premises of Daimler at several locations in Germany.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 289
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary, also by a court of law.
In the course of its regular market supervision, KBA routinely
conducts further reviews of Mercedes-Benz vehicles. It
cannot be ruled out that in the course of further investigations
KBA will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration stop
in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meanwhile
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions. As the aforementioned inquiries, investigations,
administrative proceedings and the replies to these related
information requests, the objection proceedings against the
administrative orders as well as Daimler’s internal investiga-
tions are ongoing, we rely on IAS 37.92 in not disclosing any
further information on whether or not, or to what extent,
provisions have been recognized and/or contingent liabilities
have been disclosed.
Antitrust law proceedings (including actions for damages)
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anti-
competitive behavior relating to vehicle technology, costs, sup-
pliers, markets, and other competitive attributes, including
diesel emissions control technology, since the 1990s. On Octo-
ber 4, 2017, all pending US class actions were centralized in
one proceeding by the Judicial Panel on Multidistrict Litigation
and transferred to the U.S. District Court for the Northern
District of California. On March 15, 2018, plaintiffs in the US
class action amended and consolidated their complaints
into two pleadings, one on behalf of consumers and the other
on behalf of dealers. On June 1, 2018, the court dismissed
Mercedes-Benz U.S. International, Inc., Mercedes-Benz Vans,
LLC, and Daimler North America Corp., pursuant to the
parties’ stipulation. Daimler AG and MBUSA remain parties in
the case, regard the US and Canadian lawsuits as being
without merit, and will defend against the claims.
In this context, Daimler AG may disclose that it filed an applica-
tion for immunity from fines (leniency application) with the
European Commission some time ago. In late October 2017, the
European Commission conducted preannounced inspections
with Daimler in Stuttgart (as well as further inspections with
other manufacturers) in order to further clarify the facts of
the case. In the third quarter of 2018, the European Commission
opened a formal investigation into possible collusion on clean
emission technology. At present, Daimler does not expect this
unquantifiable contingent liability to have any material impact
on its profitability, cash flow and financial situation.
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust pro-
ceedings, Daimler AG faces customers’ claims for damages to
a considerable degree. Respective legal actions, class actions
and other forms of legal redress have been initiated in various
states in and outside of Europe and should further be expected.
Daimler is taking appropriate legal remedies to defend itself. In
accordance with IAS 37.92, no further information is disclosed
with respect to whether, or to what extent, provisions have been
recognized and/or contingent liabilities have been disclosed,
so as not to prejudice Daimler AG’s position.
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
is cooperating in full with the authority. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler AG’s position.
Class-action lawsuits Takata airbag inflators
As already reported, in August 2016, Mercedes-Benz Canada
(MB Canada) was added as a defendant to a putative nation-
wide class action pending in Ontario Superior Court. The main
allegation in the matter is that MB Canada, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, was allegedly negligent in selling
such vehicles, purportedly not recalling them quickly enough,
and failing to provide an allegedly adequate replacement
airbag inflator. In addition, on June 28, 2017, Takata entities along
with Daimler AG and MBUSA were named as defendants in
a U.S. nation-wide class action, which was filed in New Jersey
federal court and includes allegations that are similar to the
Canadian action. In the third quarter of 2017, the New Jersey
lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multi-district
litigation proceedings. Then, on March 14, 2018, Daimler AG
and MBUSA were named as defendants in two additional US
nation-wide class action complaints, one filed in Georgia
federal court, and the other filed into the multi-district litigation
proceedings pending in Florida. The allegations in these new
complaints are similar to those in the Canadian and New Jersey
actions. The U.S. cases have been centralized in one proceed-
ing by the Judicial Panel on Multidistrict Litigation and transferred
to the U.S. District Court for the Southern District of Florida,
which is overseeing litigation against Takata and other manufac-
turers of automobiles. The previously reported lawsuit filed
by the State of New Mexico, which also made similar claims
against MBUSA and many other companies that sold vehicles
equipped with Takata airbag inflators, was dismissed without
prejudice on June 22, 2017. It may, however, be filed again
under specific conditions. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz
vehicles as being without merit, and the Daimler Group affili-
ates respectively affected will further defend themselves
against the claims.
290 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Refrigerant
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive new type approvals if their air-condition-
ing units are filled with a refrigerant that meets certain criteria
with regard to climate friendliness. For vehicles produced
on the basis of type approvals granted previously, the directive
allowed a period of transition until December 31, 2016.
Mercedes-Benz vehicles fully comply with the legal requirements
in force since January 1, 2017 through the application of CO2
air-conditioning and the refrigerant R1234yf in combination with
safety devices that are used as necessary depending on each
vehicle’s configuration. In December 2016, the EU Commission
initiated infringement proceedings against the Federal Republic
of Germany in the European Court of Justice (ECJ). The Com-
mission saw a contravention by the German authorities of the
European type-approval frame directive and of the directive
on emissions from air-conditioning systems in motor vehicles.
In March 2017, Germany’s Federal Motor Transport Authority
issued Daimler AG with an injunction requiring to retrofit such
vehicles in which, in the first half of 2013 and for reasons of
safety, the previously used refrigerant R134a had been used.
Daimler AG considered the request to be unfounded and had
filed an objection to the injunction. On October 4, 2018, the ECJ
ruled in the infringement proceedings that the Federal Republic
of Germany had contravened European Union law, inter alia, by
not ordering the changeover of the relevant vehicles within the
period specified by the Commission. Subsequently, Daimler AG
has withdrawn the objection, and will carry out the requested
retrofit of the affected vehicles. A provision was already recog-
nized in the third quarter of 2018 for the retrofitting of the
vehicles still operating with the previously used refrigerant
R134a. No other significant risks are expected in this respect.
Toll Collect
In 2002, our subsidiary Daimler Financial Services AG, together
with Deutsche Telekom AG and Compagnie Financière et
Industrielle des Autoroutes S.A.(Cofiroute) entered into a con-
sortium agreement for the purpose of jointly operating a
system for the electronic collection of tolls for commercial
vehicles using German highways under a contract with the
Federal Republic of Germany (operating agreement) through
the project company Toll Collect GmbH. Until August 31,
2018, Daimler Financial Services AG and Deutsche Telekom AG
each held a 45% equity interest in the project company Toll
Collect GmbH, and Cofiroute S.A. held the remaining 10%. The
consortium continues to hold the equity interest in Toll
Collect GbR.
The Federal Republic of Germany declared its acceptance of the
offer to take over all shares in Toll Collect GmbH on August 31,
2018 and acquired the company as scheduled on September 1,
2018. According to the operating agreement, the toll collection
system had to be operational not later than August 31, 2003.
After a delay of the launch date, the system was largely
introduced on January 1, 2005. The final operating permit was
granted on July 4, 2018, in connection with the settlement
of the pending arbitration proceedings. The Federal Republic of
Germany had initiated arbitration proceedings against Daimler
Financial Services AG, Deutsche Telekom AG and Toll Collect
GbR in September 2004. In the first half of 2017, the share-
holders Deutsche Telekom AG and Daimler Financial Services
AG asserted counterclaims relating to breaches of duty by
the Federal Republic of Germany with regard to the delay in the
start of the toll system. Toll Collect GmbH had also initiated
an arbitration proceeding against the Federal Republic of Ger-
many in order to recover the advance payments withheld by
the Federal Republic of Germany of €8 million per month since
June 2006, as well as other remuneration in dispute.
On July 4, 2018, through its subsidiary Daimler Financial
Services AG, Daimler AG together with Deutsche Telekom AG
notarized a settlement agreement (hereinafter: settlement)
with the Federal Republic of Germany which settles all arbitra-
tion proceedings in connection with the involvement in the
Toll Collect consortium, which have been ongoing since 2004.
On July 6, 2018, the arbitral tribunal issued an award on agreed
terms terminating the arbitration proceedings on the basis of
the settlement.
The settlement agreement is composed of different elements.
One material element is a cash payment (hereinafter: settle-
ment payment) by Toll Collect GbR of €1.1 billion that has to be
transferred in three tranches until 2020 and equally divided
between Daimler Financial Services AG and Deutsche Telekom
AG. The first tranche in the amount of €400 million was paid
to the Federal Republic of Germany on August 1, 2018, equally
divided between Daimler Financial Services AG and Deutsche
Telekom. The settlement takes into account claims of Toll Collect
GmbH with regard to the remuneration pursuant to the oper-
ating agreement withheld monthly by the Federal Republic of
Germany since June 2006. It also takes into account penalty
payments for delays already settled by the shareholders of Toll
Collect GbR and related interest. Further elements of the settle-
ment agreement relate to the determination of the purchase
price for the shares in Toll Collect GmbH on August 31, 2018
as well as the obligation to achieve a certain quality regarding
the collection of tolls. Should this quality parameter not be
achieved, the settlement payment to the Federal Republic of
Germany will be increased by €50 million. On November 15,
2018, Daimler Financial Services AG and Deutsche Telekom AG
have received the written confirmation from the Federal Repub-
lic of Germany that the quality parameters have been reached.
Overall, the total settlement payments to the Federal Republic
of Germany amount to €3.2 billion.
In the second quarter of 2018, the profit/loss on equity-method
investments includes expenses of €418 million in connection
with Toll Collect. The EBIT of the Daimler Financial Services seg-
ment is reduced in particular due to the existing 50% obligation
of Daimler Financial Services AG to pay €550 million to Toll
Collect GbR, which is partially offset by provisions recognized
in previous years.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 291
All known and unknown claims from the toll agreement that
arose until March 31, 2018 are settled under the settlement
provided that the related damage occurred before March 31,
2018.
Failure to comply with various obligations under the operating
agreement during the period from April 1, 2018 until the end
of the operating agreement on August 31, 2018 may result in
contract penalties, additional revenue reductions and damage
claims. However, contract penalties and revenue reductions
are capped at €100 million per operating year (increasing by
3% per financial year). At present, no respective facts are
known.
Irrespective of the settlement, the guarantees relating to the
completion and operation of the toll collection system as
stated in the operating agreement or other additional agree-
ments and the responsibility to fulfill all relevant obligations
from April 1, 2018 until the end of the operating agreement on
August 31, 2018 remain unchanged. At present, no respective
facts are known.
Guarantees, which are subject to specific triggering events are
described below:
– Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH. In
September 2018 Daimler AG was released of this guarantee
obligation.
– Equity capitalization. The consortium members have agreed
within the settlement to ensure that Toll Collect GmbH
disposes of a minimum equity of €50 million and a minimum
liquidity of €10 million as of August 31, 2018. The minimum
equity and the minimum liquidity have been confirmed
on December 17, 2018, with the authorization of Toll Collect
GmbH financial statements as of August 31, 2018. Should
damage claims, reductions of compensation or other events
that take place after March 31, 2018 lead subsequently to
a decrease of Toll Collect GmbH’s equity below the minimum
contractually agreed, the members of the consortium are
obliged to financially ensure that the minimum equity of Toll
Collect GmbH is achieved anew.
– Cofiroute’s risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG are
jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
Accounting estimates and management judgments
The Group recognizes provisions in connection with pending or
threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized in
the Group’s consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connection
with legal proceedings are disclosed in the Group’s consoli-
dated financial statements. Risks resulting from legal proceed-
ings sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such proceed-
ings have ended. The Group may also become liable for pay-
ments in legal proceedings for which no provisions were recog-
nized and/or contingent liabilities were disclosed. Uncertainty
exists with regard to the amounts or due dates of possible
cash outflows. Although the final result of any such proceedings
could materially affect Daimler’s operating results and cash
flows for a particular reporting period, Daimler believes that it
should not exert a sustained influence on the Group’s financial
position.
31. Contingent liabilities and other
financial obligations
Contingent liabilities
At December 31, 2018, the best estimate for obligations from
contingent liabilities was €761 million (2017: €589 million).
Some contingent liabilities are not quantifiable. This applies in
particular to the assessment of the legal risks arising from
the class-action lawsuits mentioned in E Note 30.
Information about the settlement contract of Daimler Financial
Services AG and Deutsche Telekom AG with the Federal
Republic of Germany about the termination of legal disputes in
connection with the involvement in the Toll Collect toll con-
sortium and the guarantees involved is provided in E Note 30.
Other financial obligations
The Group has other financial obligations resulting from
non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts par-
tially include renewal or purchase options and price-escalation
clauses. In 2018, Daimler recognized as expenses payments
from operating leases of €621 million (2017: €563 million). Table
F.73 provides an overview of when future minimum lease
payments under non-cancelable long-term rental and lease
agreements fall due (nominal amounts).
Furthermore, other financial obligations exist from the acqui-
sition of intangible assets, property, plant and equipment
and lease property of €5,048 million (2017: €4,876 million).
In addition, the Group had issued irrevocable loan commit-
ments at December 31, 2018. These loan commitments
had not been utilized as of that date. Further information with
respect to these commitments is disclosed in E Note 33.
F.73
Future minimum lease payments under non-cancelable
long-term rental and lease agreements (nominal amounts)
In millions of euros
Maturity
not later than one year
later than one year and
not later than five years
later than five years
December 31,
2018
2017
780
698
1,645
1,375
3,800
1,421
890
3,009
292 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. Financial instruments
Carrying amounts and fair values of financial instruments
Table F.74 and table F.75 show the carrying amounts and
fair values of the respective classes of the Group’s financial
instruments at December 31, 2018 according to IFRS 9 and at
December 31, 2017 according to IAS 39.
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. Given the varying influencing factors,
the reported fair values can only be viewed as indicators of
the prices that may actually be achieved on the market.
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
Receivables from financial services
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respec-
tive carrying amounts, because the agreed upon interest rates
and those available in the market do not significantly differ.
The fair values of receivables from financial services with fixed
interest rates are determined on the basis of discounted
expected future cash flows.
The discounting is based on the current interest rates at which
similar loans with identical terms could have been obtained
at December 31, 2018 and December 31, 2017.
F.74
Carrying amounts and fair values of financial instruments (according to IFRS 9)
In millions of euros
Financial assets
Receivables from financial services
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Measured at cost
Other financial assets
Equity instruments and debt instruments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Other financial assets recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Other receivables and financial assets
Financial liabilities
Financing liabilities
Trade payables
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
At December 31, 2018
Carrying amount
Fair value
96,740
12,586
15,853
9,577
5,855
3,059
663
748
364
384
109
1,033
3,177
97,144
12,586
15,853
9,577
5,855
3,059
663
748
364
384
109
1,033
3,177
139,823
140,227
144,902
14,185
144,933
14,185
56
1,094
8,882
56
1,094
8,882
169,119
169,150
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 293
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
Other financial assets measured at fair value through profit or
loss include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
Marketable debt securities and similar investments,
other financial assets
At December 31, 2018, marketable debt securities are measured
at fair value through other comprehensive income or at fair
value through profit or loss. Similar investments are measured
at amortized cost and are not included in the measurement
hierarchy, as their carrying amount is a reasonable approxima-
tion of fair value.
Equity Instruments are measured at fair value through other
comprehensive income or at fair value through profit or loss.
The fair values of the equity instruments measured through
other comprehensive income are included in table F.74 and
comprise BAIC BluePark New Energy Technology Co., Ltd as
well as further investments not material on an individual basis.
Daimler does not generally intend to sell its equity instruments
which are presented at December 31, 2018.
Marketable debt securities and equity instruments measured
at fair value were measured using quoted market prices at
December 31, 2018. If quoted market prices were not available
for these debt and equity instruments, the fair value measure-
ment is based on inputs that are either directly or indirectly
observable in active markets.
– derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms of
the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using option pricing models using
market data.
– derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
– derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices with
consideration of forward premiums and discounts.
Other financial receivables and assets are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
F.75
Carrying amounts and fair values of financial instruments (according to IAS 39)
In millions of euros
Financial assets
Receivables from financial services
Trade receivables
Cash and cash equivalents
Marketable debt securities
Available-for-sale financial assets
Other financial assets
Available-for-sale financial assets
thereof equity instruments measured at fair value
thereof equity instruments measured at cost
Financial assets recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Other receivables and financial assets
Financial liabilities
Financing liabilities
Trade payables
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
At December 31, 2017
Carrying amount
Fair value
86,054
11,995
12,072
86,543
11,995
12,072
10,063
10,063
1,173
171
1,002
82
2,379
3,172
1,173
171
1,002
82
2,379
3,172
126,990
127,479
127,124
12,451
111
696
8,468
148,850
128,437
12,451
111
696
8,468
150,163
294 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financing liabilities
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS trans-
actions are calculated as present values of the estimated
future cash flows. Market interest rates for the appropriate
terms are used for discounting.
Trade payables
Due to the short maturities of these financial instruments, it is
assumed that their fair values are equal to the carrying
amounts.
Refund liabilities (IFRS 15)
Refund liabilities include obligations from sales transactions
that qualify as financial instruments. Further information is
provided in E Note 27.
Other financial liabilities
Financial liabilities measured at fair value through profit or
loss comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instru-
ments as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt secu-
rities and similar investments, other financial assets.
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Offsetting of financial instruments
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement) of
the International Swaps and Derivatives Association (ISDA)
and other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in
the Consolidated Statement of Financial Position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Table F.76 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements as
well as the possible financial effects of netting in accordance
with the master netting arrangements.
Measurement hierarchy
Table F.77 and table F.78 provide an overview of the
classification into measurement hierarchies of financial assets
and liabilities measured at fair value (according to IFRS 13)
at December 31, 2018 according to IFRS 9 and at December 31,
2017 according to IAS 39.
At the end of each reporting period, Daimler reviews the
necessity of reclassification between the measurement
hierarchies.
The increase in equity and debt instruments recognized at fair
value through profit or loss included in Level 1 relates primarily
to the fair value measurement of the minority interest in Aston
Martin Lagonda Global Holdings plc. Further information is
provided in E Note 7.
For the determination of the credit risk from derivative financial
instruments, which are allocated to Level 2 measurement
hierarchy, portfolios managed on basis of net exposure are
applied.
F.76
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
At December 31, 2018 (IFRS 9)
At December 31, 2017 (IAS 39)
Gross and net
amounts of
financial instru -
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
Gross and net
amounts of
financial instru -
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
Net amounts
Net amounts
1,142
1,150
-574
-574
568
576
2,461
807
-566
-566
1,895
241
In millions of euros
Other financial assets1
Other financial liabilities2
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 295
F.77
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IFRS 9)
In millions of euros
Financial assets recognized at fair value
Marketable debt securities
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Equity instruments and debt instruments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
Other financial assets recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Financial liabilities recognized at fair value
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Total
8,914
5,855
3,059
748
364
384
109
1,033
10,804
56
1,094
1,150
At December 31, 2018
Level 33
Level 22
Level 11
5,812
2,753
3,059
338
208
130
–
–
6,150
–
–
–
3,102
3,102
–
304
128
176
109
1,033
4,548
56
1,094
1,150
–
–
–
106
28
78
–
–
106
–
–
–
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
F.78
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IAS 39)
In millions of euros
Financial assets measured at fair value
Financial assets available-for-sale
thereof marketable debt securities
thereof equity instruments measured at fair value
Financial assets measured at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Liabilities measured at fair value
Financial liabilities measured at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Total
Level 11
At December, 31 2017
Level 33
Level 22
10,234
10,063
171
82
2,379
12,695
111
696
807
6,721
6,615
106
–
–
6,721
–
–
–
3,513
3,448
65
82
2,379
5,974
111
696
807
–
–
–
–
–
–
–
–
–
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
296 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.79
Measurement hierarchy of financial assets and liabilities not measured at fair value
In millions of euros
Fair values of financial assets
measured at cost
Total
At December 31, 2018
(IFRS 9)
Level 33
Level 22
Level 11
At December 31, 2017
(IAS 39)
Level 33
Level 22
Total
Level 11
Receivables from financial services
97,144
–
97,144
–
86,543
–
86,543
Fair values of financial liabilities
measured at cost
Financing liabilities
thereof bonds
thereof liabilities from ABS transactions
thereof other financing liabilities
144,933
76,468
12,474
55,991
62,961
62,862
99
–
81,972
13,606
12,375
55,991
–
–
–
–
128,437
68,422
11,081
48,934
58,496
57,715
781
–
69,941
10,707
10,300
48,934
–
–
–
–
–
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
Table F.79 shows into which measurement hierarchies
(according to IFRS 13) the fair values of the financial assets and
liabilities are classified which are not measured at fair value
in the Consolidated Statement of Financial Position.
Measurement categories
The carrying amounts of financial instruments presented at
December 31, 2018 according to IFRS 9 measurement
categories and at December 31, 2017 according to IAS 39
measurement categories are shown in table F.80 and
F.81.
The table F.80 and table F.81 do not include the carrying
amounts of derivative financial instruments used in hedge
accounting as these financial instruments are not assigned to
an IFRS 9 or IAS 39 measurement category. In addition table
F.81 does not include cash and cash equivalents as these
financial instruments are not assigned to an IAS 39 measure-
ment category.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 297
F.80
Carrying amounts of financial instruments presented
according to IFRS 9 measurement categories
F.81
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
At December 31,
2018
At December 31,
2017
In millions of euros
Assets
Receivables from financial services1
Trade receivables
Cash and cash equivalents
Marketable debt securities
and similar investments
Other receivables and
financial assets
Financial assets measured
at (amortized) cost
Marketable debt securities
and similar investments
Equity and debt instruments
Financial assets measured at fair value
through other comprehensive income
Marketable debt securities
and similar investments
Equity and debt instruments
Other financial assets measured
at fair value through profit or loss
Financial assets measured
at fair value through profit or loss2
Liabilities
Trade payables
Financing liabilities3
Other financial liabilities4
Financial liabilities
measured at (amortized) cost
Financial liabilities measured at
fair value through profit or loss2
In millions of euros
Assets
Receivables from financial services1
Trade receivables
Other receivables and financial assets
Loans and receivables
Marketable debt securities
Other financial assets
Available-for-sale financial assets
Financial assets measured at
fair value through profit or loss2
Liabilities
Trade payables
Financing liabilities3
Other financial liabilities4
Financial liabilities measured at (amortized) cost
Financial liabilities measured at
fair value through profit or loss2
63,540
11,995
3,172
78,707
10,063
1,173
11,236
82
12,451
126,772
8,327
147,550
111
1 This does not include lease receivables of €22,514 million as of
December 31, 2017 as these are not assigned to an IAS 39 mea-
surement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
3 This does not include liabilities from finance leases of €352 million
as of December 31, 2017 as these are not assigned to an IAS 39
measurement category.
4 This does not include liabilities from financial guarantees of €141
million as of December 31, 2017 as these are not assigned to an
IAS 39 measurement category.
70,080
12,586
15,853
663
3,177
102,359
5,855
364
6,219
3,059
384
109
3,552
14,185
144,555
8,758
167,498
56
1 This does not include lease receivables of €26,660 million
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
3 This does not include liabilities from finance leases of €347 million
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
4 This does not include liabilities from financial guarantees of
€124 million as of December 31, 2018 as these are not assigned to
an IFRS 9 measurement category.
298 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.82
Net gains/losses (according to IFRS 9)
In millions of euros
Equity and debt instruments recognized
at fair value through profit or loss
Other financial assets and financial
liabilities recognized at fair value
through profit or loss1
Equity instruments recognized at fair value
through other comprehensive income
Other financial assets recognized at fair value
through other comprehensive income
Financial assets measured at (amortized) cost
Financial liabilities measured at (amortized) cost
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
F.83
Net gains/losses (according to IAS 39)
In millions of euros
Financial assets and liabilities recognized
at fair value through profit or loss1
Available-for-sale financial assets
Loans and receivables
Financial liabilities measured at (amortized) cost
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
2018
136
240
2
-17
-469
105
2017
152
27
-542
-50
F.84
Total interest income and total interest expense
(according to IFRS 9)
In millions of euros
Total interest income
thereof from financial assets and liabilities
measured at (amortized) costs
thereof from financial assets measured at fair value
through other comprehensive income
Total interest expense
thereof from financial assets and liabilities
measured at (amortized) costs
thereof from financial assets measured at fair value
through other comprehensive income
2018
5,189
5,100
89
-3,171
-3,171
–
Net gains or losses
Table F.82 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2018 according to IFRS 9.
Net gains/losses on equity and debt instruments recognized
at fair value through profit or loss primarily comprise gains
and losses attributable to changes in the fair values of these
instruments, among others the fair value change of our
equity interest in Aston Martin Lagonda Global Holdings plc.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss primarily
comprise gains and losses attributable to changes in their
fair values.
Net gains/losses on equity instruments measured at fair
value through other comprehensive income primarily comprise
dividend payments.
Net gains/losses on other financial assets measured at
fair value through other comprehensive income are primarily
attributable to the effects of currency translation.
Net gains/losses on financial assets measured at (amortized)
cost primarily comprise impairment losses (including reversals
of impairment losses) of €407 million that are charged to cost
of sales, selling expenses and other financial income/expense,
net. Foreign currency gains and losses are also included. On
the other hand impairment losses (excluding reversals of
impairment losses) amounted to €630 million at December 31,
2017 according to IAS 39.
Net gains/losses on financial liabilities measured at
( amortized) cost primarily comprise the effects of currency
translation.
Table F.83 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2017 according to IAS 39.
Total interest income and total interest expense
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair
value through profit or loss at December 31, 2018 according
to IFRS 9 are shown in table F.84.
Total interest income and total interest expense for financial
assets or financial liabilities that were not measured at
fair value through profit or loss amounted €4,572 million and
€2,415 million respectively at December 31, 2017 according
to IAS 39.
See E Note 1 for qualitative descriptions of accounting
for and presentation of financial instruments (including
derivative financial instruments).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 299
F.85
Amounts for the transactions designated as hedging instruments (according to IFRS 9)
In millions of euros
Carrying amount of the hedging instrument
Other financial assets current
Other financial assets non-current
Other financial liabilities current
Other financial liabilities non-current
Financial liabilities current
Fair value changes3
Foreign
currency risk
Hedges of net
investments
in foreign
operations
Cash flow
hedges1
December 31, 2018
Interest
rate risk
Commodity
risk
Cash flow
hedges1
Fair Value
hedges2
Cash flow
hedges1
366
86
425
161
–
-1,021
–
–
–
–
25
1
58
59
15
41
–
-18
57
364
163
237
–
122
43
–
30
22
–
-41
1 Includes the following instrument types: currency forwards, currency options, currency swaps, commodity forwards.
2 Includes the following instrument types: interest rate swaps, cross currency interest rate swaps.
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
Information on derivative financial instruments
F.86
Fair values of hedging instruments (according to IAS 39)
Use of derivatives
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities. These are mainly interest rate risks, currency risks
and commodity price risks, which were defined as risk catego-
ries according to IFRS 9. For these hedging purposes, the
Group mainly uses currency forward transactions, cross cur-
rency interest rate swaps, interest rate swaps, options and
commodity forwards.
Table F.85 shows the amounts for the transactions
designated as hedging instruments at December 31, 2018
according to IFRS 9.
In millions of euros
Fair value hedges
Cash flow hedges
Hedges of net investments
in foreign operations
F.87
Fair value hedges (according to IFRS 9)
At December 31, 2017
-68
1.751
-180
2018
Interest rate risk
Table F.86 shows the fair values of hedging instruments at
December 31, 2017 according to IAS 39.
In millions of euros
Fair value hedges
The Group uses fair value hedges primarily for hedging interest
rate risks.
The amounts of the items hedged with fair value hedges
at December 31, 2018 according to IFRS 9 are included in
table F.87.
Carrying amounts of the hedged items
Financing liabilities current
Financing liabilities non-current
thereof hedge adjustments
Financing liabilities current
Financing liabilities non-current
Fair value changes of the hedged items1
Accumulated amount of hedge adjustments
from inactive hedges remaining in the statement
of financial position
14,217
29,086
-72
100
-121
23
1 Fair value changes of the hedged items used for recognizing hedge
ineffectiveness.
300 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.88
Ineffectiveness of fair value hedges (according to IFRS 9)
F.89
Net gains/losses from fair value hedges (according to IAS 39)
In millions of euros
Cost of sales
Interest expense
2018
Interest rate risk
–
2
In millions of euros
Net gains/losses from
hedging instruments
Net gains/losses from
underlying transactions
2017
-329
349
The amounts relating to hedge ineffectiveness for
items designated as fair value hedges at December 31, 2018
according to IFRS 9 are shown in table F.88.
Net gains and losses on these hedging instruments and
the changes in the value of the underlying transactions at
December 31, 2017 according to IAS 39 are shown in
table F.89.
Cash flow hedges and hedges of net investments
in foreign operations
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
The amounts related to items designated as cash flow
hedges and as hedges of net investments in foreign operations
at December 31, 2018 according to IFRS 9 are shown in
table F.90.
The gains and losses on items designated as cash flow
hedges at December 31, 2018 according to IFRS 9 as well as
the amounts relating to hedge ineffectiveness are included
in table F.91.
Net profit at December 31, 2017 according to IAS 39 includes
net losses (before income taxes) of €11 million attributable to
the ineffectiveness of derivative financial instruments entered
into for hedging purposes (hedge ineffectiveness).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 301
F.90
Cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
In millions of euros
Fair value changes of the hedged items1
Thereof hedges of net investments in foreign operations
Balance of the reserves for derivative financial instruments (before taxes)
Continuing hedges
Thereof hedges of net investments in foreign operations
Discontinued/terminated hedges
Thereof hedges of net investments in foreign operations
1 Fair value changes of the hedged items used for recognizing hedge ineffectiveness.
2018
Foreign
currency
risk
Interest
rate risk
Commodity
risk
1,024
-1
-91
4
-311
-270
83
-4
-4
39
9
–
F.91
Gains and losses on cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
In millions of euros
Gains and losses recognized in other
comprehensive income1
Hedge ineffectiveness recognized in the
Statement of Income
Line item in the
Statement of Income
in which the hedge
ineffectiveness is included
Reclassification of hedge effectiveness
from other comprehensive income to the
Statement of Income
For hedges for which the hedged future cash
flows are no longer expected to occur
For hedges that have been
transferred because the hedged
item has affected profit or loss2
Line item in the
Statement of Income
in which the reclassification
is included
-1,072
1
-31
1
Revenues
Cost of sales
-8
-605
–
72
Revenues
Cost of sales
Foreign
currency
risk
82
–
Other
financial
income/
expense, net
–
-91
Other
financial
income/
expense, net
2018
Interest
rate risk
Commodity
risk
-70
–
53
–
-40
-1
Cost of sales
Interest
expense
Cost of sales
–
55
1
-63
-1
-73
Cost of sales
Interest
expense
Cost of sales
1 The amount in other financial income/expense, net includes €1 million for hedges of net investments in foreign operations.
2 The amount in other financial income/expense, net includes minus €10 million for hedges of net investments in foreign operations.
302 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.92
Reconciliation of reserves for derivative financial instruments
(according to IFRS 9)
In millions of euros
Balance at January 1, 2018
Changes in fair values (before taxes)
Foreign currency risk
Interest rate risk
Commodity price risk - inventory purchases
Reclassification to profit and loss (before taxes)
Foreign currency risk
Interest rate risk
Reclassification to cost of acquisition
of non-financial assets (before taxes)
Foreign currency risk – procurement
Commodity price risk – inventory purchases
Other
Taxes on changes in fair values
and reclassifications
Balance at December 31, 2018
F.93
Reclassifications of pre-tax gains/losses from equity
to the Statement of Income (according to IAS 39)
In millions of euros
Revenue
Cost of sales
Interest income
Interest expense
2018
1,171
-1,081
-1,023
-18
-40
-641
-634
-7
-81
-63
-18
–
537
-95
2017
-6
34
–
-1
27
Table F.92 shows the reconciliation of the reserves for
derivative instruments in 2018 according to IFRS 9.
The reserves for derivative instruments include reserves
for hedge costs of minus €11 million at December 31, 2018
(minus €34 million at January 1, 2018).
Unrealized pre-tax gains/losses on the measurement
of derivatives, which are recognized in other comprehensive
income, amounted to €2,525 million at December 31, 2017
according to IAS 39.
Table F.93 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the Consolidated State-
ment of Income in 2017 according to IAS 39.
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table F.94 at December 31, 2018
according to IFRS 9 and in table F.95 at December 31, 2017
according to IAS 39.
At December 31, 2018, Daimler utilized derivative instruments
with a maximum maturity of 34 months (2017: 39 months)
as hedges for currency risks arising from future transactions.
Nominal values of derivative financial instruments
Table F.94 and table F.95 show the nominal values of
derivative financial instruments at December 31, 2018 according
to IFRS 9 and at December 31, 2017 according to IAS 39
entered into for the purpose of hedging currency risks, interest
rate risks and commodity price risks that arise from the
Group’s operating and/or financing activities.
The average prices for derivative financial instruments classified
by risk categories for the main risks at December 31, 2018
according to IFRS 9 are included in table F.96.
Hedging transactions for which the effects from the measure-
ment of the hedging instrument and the underlying transaction
to a large extent offset each other in the Consolidated State-
ment of Income mostly do not classify for hedge accounting.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Explanations of the hedging of exchange rate risks,
interest rate risks and commodity price risks can be found in
E Note 33 in the sub-item finance market risk.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 303
F.94
Nominal values of derivative financial instruments (according to IFRS 9)
In millions of euros
Foreign currency risk
Interest rate risk
Fair value hedges
Cash flow hedges
Commodity risk
F.95
Nominal values of derivative financial instruments (according to IAS 39)
In millions of euros
Hedging of currency risks from receivables/liabilities
Forward exchange contracts
thereof cash flow hedges
Cross currency interest rate swaps
thereof cash flow hedges
thereof fair value hedges
Hedging of currency risks from forecasted transactions
Forward exchange contracts and currency options
thereof cash flow hedges
Hedging of currency risks of net investments in foreign operations
Currency swaps
thereof hedging of net investments in foreign operations
Hedging of interest rate risks from receivables/liabilities
Interest rate swaps
thereof cash flow hedges
thereof fair value hedges
Hedging of commodity price risks from forecasted transactions
Forward commodity contracts
thereof cash flow hedges
Total nominal values of derivative financial instruments
thereof cash flow hedges
thereof fair value hedges
At December 31, 2018
Maturity of nominal amounts
<1 year
1 year up to
5 years
>5 years
Total
29,063
15,926
6,173
9,753
285
9,935
36,602
24,763
11,839
215
–
12,055
12,055
–
–
38,998
64,583
42,991
21,592
500
Nominal values
At December 31, 2017
Maturity
≤1 year
Maturity
>1 year
6,267
3,380
5,811
3,238
1,676
6,259
3,380
2,153
1,559
361
8
–
3,658
1,679
1,315
45,996
45,542
30,506
30,061
15,490
15,481
–
–
–
–
–
–
49,934
9,694
35,731
742
649
108,750
62,503
37,407
2,395
1,485
572
495
403
41,808
36,888
933
47,539
8,209
35,159
247
246
66,942
25,615
36,474
304 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.96
Average prices of hedging instruments for the major risks
(according to IFRS 9)
At December 31, 2018
Foreign currency risk
USD per €
CNY per €
GBP per €
Interest rate risk
Fair value hedges
Average rate – €
Average rate – USD
Cash flow hedges
Average rate – €
Average rate – USD
Commodity risk
Platinum (in € per troy ounce)
Aluminum (in € per ton)
Palladium (in € per troy ounce)
1.18
8.37
0.88
-0.82%
0.46%
-0.59%
-0.07%
819
1,606
688
33. Management of financial risks
General information on financial risks
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An
equity price risk results from investments in listed companies.
In addition, the Group is exposed to credit risks from its
leasing and financing activities and from its operating business
(trade receivables). Furthermore, the Group is exposed to
liquidity and country risks relating to its credit and market risks
or a deterioration of its operating business or financial
market disturbances. If these financial risks materialize, they
could adversely affect Daimler’s profitability, liquidity and
capital resources and financial position.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group’s risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its operating business or refinancing activi-
ties. Without these derivative financial instruments, the Group
would be exposed to higher financial risks (additional information
on financial instruments and especially on the volumes of the
derivative financial instruments used is included in E Note 32).
Daimler regularly evaluates its financial risks with due consider-
ation of changes in key economic indicators and up-to-date
market information.
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and
other post-employment healthcare benefits are not included
in the following quantitative and qualitative analysis. See
E Note 22 for additional information on Daimler’s pension
and other post-employment benefits.
Credit risk
Credit risk is the risk of economic loss arising from counter-
party’s failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthiness
as well as concentration risks.
The maximum risk positions of financial assets which are gen-
erally subject to credit risk are equal to their carrying amounts
(without consideration of collateral, if available). There is also
a risk of default from irrevocable loan commitments which had
not been utilized as of that date, as well as from financial guar-
antees. The maximum risk position in these cases is equal to the
expected future cash outflows. Table F.97 shows the maxi-
mum risk positions.
Liquid assets
Liquid assets consist of cash and cash equivalents and market-
able debt securities and similar investments. With the invest-
ment of liquid assets, banks and issuers of securities are selected
very carefully and diversified in accordance with a limit system.
Liquid assets are mainly held at financial institutions within and
outside Europe with high creditworthiness, as bonds issued
by German federal states and as money market funds. In con-
nection with investment decisions, priority is placed on the
borrower’s very high creditworthiness and on balanced risk
diversification. The limits and their utilizations are reassessed
continuously. In this assessment, Daimler also considers the
credit risk assessment of its counterparties by the capital mar-
kets. In line with the Group’s risk policy, most liquid assets
are held in investments with an external rating of “A” or better.
Liquid assets are thus not subject to a material credit
risk and are allocated to stage 1 of the impairment model
(see E Note 1).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 305
F.97
Maximum risk positions of financial assets,
irrevocable loan commitments and financial guarantees
see also
Note
Maximum
risk position
2018
Maximum
risk position
2017
In millions of euros
Liquid assets
Receivables from
financial services
Trade receivables
Derivative financial
instruments used in
hedge accounting
(assets only)
Derivative financial
instruments not used in
hedge accounting
(assets only)
Other receivables and
financial assets
Irrevocable loan
commitments
Financial guarantees
25,430
22,135
14
19
96,740
12,586
86,054
11,995
16
1,033
2,379
16
16
109
82
3,177
3,172
2,051
672
1,894
667
In determining expected credit losses, existing collateral is
generally given due consideration. The actual credit risk is
limited by the fair value of collateral (e.g. financed vehicles).
If, in connection with contracts, a worsening of payment behav-
ior or other causes of a credit risk are recognized, collection
procedures are initiated by claims management to obtain the
overdue payments of the customer, to take possession of
the asset financed or leased or, alternatively, to renegotiate the
impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment of
local management, indicate that repayment will probably con-
tinue and that the total proceeds expected to be derived from
the renegotiated contract exceed the expected proceeds to
be derived from repossession and remarketing. For receivables
from financial services, significant modifications of financial
assets only occurred in rare cases and immaterial volume.
The allowance ratio slightly increased compared to the low
level of the previous year.
Further details of receivables from financial services and the
balance of the recorded impairments are provided in
E Note 14.
Receivables from financial services
Daimler’s financing and leasing activities are primarily focused
on supporting the sales of the Group’s automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its credit
risk irrespective of whether it is related to a financing contract
or to an operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Daimler Finan-
cial Services refer to the entire financing and leasing business,
unless specified otherwise.
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases in
the Group’s Consolidated Financial Statements. Overdue lease
payments from operating lease contracts are recognized in
receivables from financial services.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes, the
definition of financing products offered, the evaluation of cus-
tomer quality, requests for collateral as well as the treatment
of unsecured loans and non-performing claims. The limitation
of concentration risks is implemented primarily by means of
global limits, which refer to single customer exposures. As of
December 31, 2018, exposure to the biggest 15 customers did
not exceed 3.8% (2017: 4.0%) of the total portfolio.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of collat-
eral generally depends on the amount of the financed assets.
The financed vehicles usually serve as collateral. Furthermore,
Daimler Financial Services mitigates the credit risk from
financing and lease activities, for example through advance
payments from customers.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate custom-
ers are evaluated using internal rating instruments. Both evalu-
ation processes use external credit bureau data if available.
The scoring and rating results as well as the availability of secu-
rity and other risk mitigation instruments, such as advance
payments, guarantees and, to a lower extent, residual debt
insurances, are essential elements for credit decisions.
Following the impairment model expected credit losses from
receivables from financial services (see E Note 1) are calcu-
lated with a statistical model using three major risk parame-
ters: probability of default, loss given default and exposure at
default.
306 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. In order to identify credit
risks, Daimler assesses the creditworthiness of the custom-
ers. Daimler manages its credit risk from trade receivables using
appropriate IT applications and databases on the basis of
internal guidelines which have to be followed globally.
A significant part of the trade receivables from each country’s
domestic business is secured by various country-specific types
of collateral. This collateral includes conditional sales, guaran-
tees and sureties as well as mortgages and advance payments
from customers.
For trade receivables from export business, Daimler also evalu-
ates each general distribution company’s creditworthiness by
means of an internal rating process and its country risk. In this
context, the year-end financial statements and other relevant
information on the general distribution companies such as pay-
ment history are used and assessed.
Other receivables and financial assets
With respect to other receivables and financial assets included
in other financial assets in 2018 and 2017, Daimler is exposed
to credit risk only to a small extent.
Irrevocable loan commitments
The Daimler Financial Services segment in particular is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2018, irrevocable loan
commitments amounted to €2,051 million (2017: €1,894 mil-
lion). These loan commitments had a maturity of less than one
year and are not subject to a material credit risk.
Financial guarantees
The maximum potential obligation resulting from financial
guarantees amounts to €672 million at December 31, 2018
(2017: €667 million) and includes liabilities recognized
at December 31, 2018 in the amount of €124 million (2017:
€141 million). Financial guarantees principally represent
contractual arrangements. These guarantees generally pro-
vide that in the event of default or non-payment by the
primary debtor, the Group will be required to settle such finan-
cial obligations.
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
Liquidity risk
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
– credit insurances,
– first-class bank guarantees and
– letters of credit.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
In line with the impairment model (see E Note 1), the simpli-
fied approach is applied for impairments of trade receivables,
whereby expected credit losses until maturity for these trade
receivables are recognized with the initial recognition.
Further information on trade receivables and the status of
impairments recognized is provided in E Note 19.
Derivative financial instruments
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its operational busi-
ness or refinancing activities. Daimler manages its credit risk
exposure in connection with derivative financial instruments
through a limit system, which is based on the review of each
counterparty’s financial strength. This system limits and diver-
sifies the credit risk. As a result, Daimler is exposed to credit
risk only to a small extent with respect to its derivative finan-
cial instruments. In accordance with the Group’s risk policy,
most derivatives are contracted with counterparties which
have an external rating of “A” or better.
Daimler manages its liquidity by holding adequate volumes of
liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating busi-
ness. Additionally, the possibility to securitize receivables of
financial services business (ABS transactions) also reduces the
Group’s liquidity risk. Liquid assets comprise cash and cash
equivalents and marketable debt securities and similar invest-
ments. The Group can dispose of these liquid assets at short
notice.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. Bank credit facilities are
also used to cover financing requirements. Potential down-
grades of Daimler’s credit ratings could have a negative impact
on the Group’s financing. In July 2018, Daimler successfully
concluded negotiations with a consortium of international banks
for a new syndicated credit facility with a volume raised from
€9 billion to €11 billion. With a term of five years, it grants Daim-
ler additional financial flexibility until 2023. The term can be
extended to 2025. Daimler does not intend to utilize the credit
facility.
In addition, customer deposits at Mercedes-Benz Bank are
used as a further source of refinancing.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 307
The funds raised are used to finance working capital and capi-
tal expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease
and financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
At December 31, 2018, liquidity amounted to €25.4 billion
(2017: €22.1 billion). In 2018, significant cash inflows resulted
from the operations of the industrial business. One cash
inflow of €1.3 billion resulted from the dividend distributed by
Beijing Benz Automotive Co. Ltd. Cash outflows resulted in
particular from the portfolio growth of the leasing and sales
finance activities at Daimler Financial Services, from the
intensified investment offensive as well as from income taxes
paid. Cash inflows and outflows in connection with the cash
flow of the financing activities were also effective.
Table F.98 provides an overview of how the future liquidity
situation of the Group can be affected by the cash flows from
liabilities, financial guarantees and irrevocable loan commit-
ments as of December 31, 2018.
Information on the Group’s financing liabilities is also provided
in E Note 24.
Country risk
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respec-
tive country, e.g. resulting from sovereign measures such
as expropriation or interdiction of foreign currency transfers.
Daimler is exposed to country risk mainly resulting from cross-
border funding or collateralization of Group companies and
customers, from investments in subsidiaries, associated com-
panies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise from
cross-border cash deposits at financial institutions.
From an operating point of view, the management of the Group’s
liquidity exposures is centralized by a daily cash pooling
process. This process enables Daimler to manage its liquidity
surplus and liquidity requirements according to the actual
needs of the Group and each subsidiary. The Group’s short-term
and mid-term liquidity management takes into account the
maturities of financial assets and financial liabilities and esti-
mates of cash flows from the operating business.
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler’s risk-oriented country exposure management; it
assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
F.98
Liquidity runoff for liabilities and financial guarantees1
In millions of euros
Financing liabilities2
Derivative financial instruments3
Trade payables4
Miscellaneous other financial liabilities
excluding accrued interest and
liabilities from financial guarantees
Irrevocable loan commitments of the Daimler Financial
Services segment and of Daimler AG5
Financial guarantees6
Total
2019
2020
2021
2022
2023
≥ 2024
154,155
59,451
35,991
24,616
8,585
5,578
19,934
575
540
14,185
14,169
62
14
-47
1
-50
1
9
–
61
–
7,653
5,744
923
394
242
122
228
2,051
672
2,051
672
–
–
–
–
–
–
–
–
–
–
179,291
82,627
36,990
24,964
8,778
5,709
20,223
1 The amounts were calculated as follows:
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can be
required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods, this
may also include negative cash flows from derivatives with an overall positive fair value.
4 The cash outflows of trade payables are undiscounted.
5 The maximum available amounts are stated.
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
308 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Finance market risks
The global nature of its businesses exposes Daimler to signifi-
cant market risks resulting from fluctuations in foreign currency
exchange rates and interest rates. In addition, the Group is
exposed to market risks in terms of commodity price risk asso-
ciated with its business operations, which the Group hedges
for certain metals partially through derivative financial instru-
ments. The Group is also exposed to equity price risk in con-
nection with its investments in listed companies.
Daimler manages market risks to minimize the impact of fluc-
tuations in foreign exchange rates, interest rates and commod-
ity prices on the results of the Group and its segments. The
Group calculates its overall exposure to these market risks to
provide the basis for hedging decisions, which include the
selection of hedging instruments and the determination of hedg-
ing volumes and the corresponding periods. Starting in 2019,
exposure to currency risks will be determined for each segment.
The hedging strategy is specified at the Group level and uni-
formly implemented in the segments. Decisions regarding the
management of market risks resulting from fluctuations in
foreign exchange rates, interest rates (asset-/liability manage-
ment) and commodity prices are regularly made by the rele-
vant Daimler risk management committees. Exposures are the
basis of the hedging strategies and are updated regularly.
As part of its risk management system, Daimler employs value
at risk analyses. In performing these analyses, Daimler quantifies
its market risk due to changes in foreign currency exchange
rates and interest rates and certain commodity prices on a
regular basis by predicting the potential loss over a target time
horizon (holding period) and confidence level.
The value at risk calculations employed:
– express potential losses in fair values, and
– assume a 99% confidence level and a holding period of five
days.
Daimler calculates the value at risk for exchange rate and inter-
est rate risk according to the variance-covariance approach.
The value at risk calculation method for commodity hedging
instruments is based on a Monte Carlo simulation.
When calculating the value at risk by using the variance-covari-
ance approach, Daimler first computes the current market
value of the Group’s financial instruments portfolio. Then the
sensitivity of the portfolio value to changes in the relevant
market risk factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on volatilities and correlations of these market risk fac-
tors, which are obtained from the RiskMetrics™ dataset, a
statistical distribution of potential changes in the portfolio value
at the end of the holding period is computed. The loss which is
reached or exceeded with a probability of only 1% can be
derived from this calculation and represents the value at risk.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over the
holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
risk can be determined based on this distribution as the port-
folio value loss which is reached or exceeded with a probability
of 1%.
Oriented towards the risk management standards of the inter-
national banking industry, Daimler maintains its financial con-
trolling unit independent of operating Corporate Treasury and
with a separate reporting line.
Exchange rate risk
Transaction risk and currency risk management. The global nature
of Daimler’s businesses exposes cash flows and earnings to
risks arising from fluctuations in exchange rates. These risks
primarily relate to fluctuations between the euro and the US
dollar, the Chinese renminbi, the British pound and other cur-
rencies such as currencies of growth markets. In the operating
vehicle business, the Group’s exchange rate risk primarily
arises when revenue is generated in a currency that is different
from the currency in which the costs of generating the revenue
are incurred (transaction risk). When the revenue is converted
into the currency in which the costs are incurred, it may be
inadequate to cover the costs if the value of the currency in
which the revenue is generated declined in the interim relative
to the value of the currency in which the costs were incurred.
This risk exposure primarily affects the Mercedes-Benz Cars
segment, which generates a major portion of its revenue in for-
eign currencies and incurs manufacturing costs primarily in
euros. The Daimler Trucks segment is also subject to transac-
tion risk, but to a lesser extent because of its global production
network. The Mercedes-Benz Vans and Daimler Buses seg-
ments are also directly exposed to transaction risk, but also
only to a minor degree compared to the Mercedes-Benz Cars
segment. In addition, the Group is indirectly exposed to trans-
action risk from its equity-method investments.
The Group’s currency exposure is reduced by natural hedging
to the extent that currency exposures of the operating busi-
nesses of individual segments offset each other partially at
Group level, thereby reducing overall currency exposure. These
natural hedges eliminate the need for hedging to the extent of
the matched exposures. To provide an additional natural hedge
against any remaining transaction risk exposure, Daimler gen-
erally strives to increase cash outflows in the same currencies
in which the Group has a net excess inflow.
In order to mitigate the impact of currency exchange rate fluc-
tuations for the operating business (future transactions), Daimler
continually assesses its exposure to exchange rate risks and
hedges a portion of those risks by using derivative financial
instruments. Daimler’s Foreign Exchange Committee (FXCo)
manages the Group’s exchange rate risk and its hedging trans-
actions through currency derivatives. The FXCo consists of rep-
resentatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign currency
exposures from Daimler’s subsidiaries and operative units and
implements the FXCo’s decisions concerning foreign currency
hedging through transactions with international financial insti-
tutions. Any over-hedge caused by changes in exposure is gen-
erally reversed by taking suitable measures without delay.
Risk Controlling regularly informs the Board of Management of
the actions taken by Corporate Treasury based on the FXCo’s
decisions.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 309
F.99
Value at risk for exchange rate risk, interest rate risk and commodity price risk
Period-end
High
Low
Average
Period-end
High
Low
Average
2018
2017
In millions of euros
Exchange rate risk
(from derivative financial instruments)
Interest rate risk
Commodity price risk
(from derivative financial instruments)
568
26
14
695
45
23
568
26
14
633
36
18
779
43
14
877
48
25
779
43
14
815
46
17
The Group’s targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to limit risks for the Group from unfavorable move-
ments in exchange rates while preserving some flexibility to
participate in favorable developments. Based on this reference
model and depending on the market outlook, the FXCo deter-
mines the hedging horizon, which usually varies from one to five
years, as well as the average hedge ratios. Reflecting the
character of the underlying risks, the hedge ratios decrease with
increasing maturities. At year-end 2018, foreign exchange
management showed an unhedged position in the automotive
business for the underlying forecasted cash flows in US dollars
in calendar year 2019 of 29%, for the underlying forecasted
cash flows in Chinese renminbi in calendar year 2019 of 30%, as
well as for the underlying forecasted cash flows in British
pounds in calendar year 2019 of 33%.
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts held.
The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange con-
tracts and currency options. Daimler’s guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the exchange
rate risk inherent in these derivative financial instruments.
Table F.99 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2018 and
2017 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included in
the following value at risk presentation. See also table F.94
at December 31, 2018 according to IFRS 9 and table F.95
at December 31, 2017 according to IAS 39 for the nominal vol-
umes on the balance sheet date of derivative currency instru-
ments entered into to hedge the currency risk from forecasted
transactions.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is applied. In addition, the respective
volume and currency of the hedge and the underlying transaction
as well as maturity dates are matched. The Group ensures an
economic relationship between the underlying transaction and
the hedging transaction by ensuring consistency of currency,
volume and maturity. In the case of options for currency hedg-
ing, the option premium is not designated into the hedge
relationship, but the hedging costs are deferred in other com-
prehensive income and recognized in profit or loss at the due
date of the underlying transaction. The effectiveness of the hedge
is assessed at the beginning and during the economic relation-
ship. Possible sources of ineffectiveness of the hedge relation-
ship are:
– Effects of the credit risk on the fair value of the used deriva-
tive instrument which is not reflected in the change of the
hedged currency risk.
– Changes in the timing of the hedged transactions.
In the course of focusing on the divisional perspective the
designation of hedge relationships primarily for foreign currency
risk from future vehicle sales will be subject to a further
differentiation by Mercedes-Benz Cars/Mercedes-Benz Vans
as well as Daimler Trucks/Daimler Buses starting with 2019.
Until year-end 2018, the designation of these hedge relationships
for a specific currency and maturity has no further differentia-
tion in respect of the entire volume of expected vehicle sales by
segments. Accordingly, as of January 1, 2019, the documentation
required under IFRS with regards to this further differentiation
of expected cash flows (i.e. the risk management objectives)
will also be revised for the major part of the already designated
hedge relationships for foreign currency risk although there is
no change in the overall Group risk management strategy. This
results in a formal discontinuation of existing hedge relation-
ships as described in the methods applied in preparation of the
financial statements and immediate redesignation of new hedge
relationships according to the revised differentiation. The accu-
mulated hedging gains/losses in equity as of December 31,
2018, subject to redesignation remain in the other reserves for
derivative financial instruments because the hedged future
cash flows are still expected to occur. Daimler does not expect
any material impacts on the Group’s profitability, liquidity and
capital resources or financial position.
In 2018, the development of the value at risk from foreign
currency hedging was mainly driven by decreases in foreign
currency rate volatilities and hedge volumes.
310 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments.
Daimler coordinates the funding activities of the automotive
and financial services businesses at the Group level.
Table F.99 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2018 and 2017
portfolios of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
In this respect, the table shows the interest rate risk regard-
ing the unhedged position of interest rate sensitive financial
instruments. The average values have been computed on an
end-of-quarter basis.
In the course of 2018, changes on the value at risk of interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is generally applied. The respective
volumes, interest curves and currencies of the hedged item and
the hedging instrument as well as maturity dates are matched.
In the case of combined derivative financial instruments
for interest currency hedges, the cross currency basis spread is
not designated into the hedge relationship, but deferred as a
hedging cost in other comprehensive income and recognized in
profit or loss pro rata over the hedge term. The Group ensures
an economic relationship between the underlying transaction
and the hedging instrument by ensuring consistency of interest
rates, maturity terms and nominal amounts. The effectiveness of
the hedge is assessed at the beginning and during the econo-
mic relationship using the hypothetical derivative method. Pos-
sible sources of ineffectiveness of the hedge relationship are:
– Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged interest rate risk.
– Changes in the parameters of the underlying hedged trans-
actions.
The Group’s investments in liquid assets or refinancing activities
generally are not allowed to result in currency risk. Transaction
risks arising from liquid assets or payables in foreign currencies
that result from the Group’s investment or refinancing on
money and capital markets are generally hedged against cur-
rency risks at the time of investing or refinancing in accor-
dance with Daimler’s internal guidelines. The Group uses
appropriate derivative financial instruments (e.g. cross cur-
rency interest rate swaps) to hedge against currency risk.
Since currency risks arising from the Group’s investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
Effects of currency translation. For purposes of Daimler’s Con-
solidated Financial Statements, the income and expenses
and the assets and liabilities of subsidiaries located outside the
euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause transla-
tion effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities of
the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group’s equity position reflects changes in book
values caused by exchange rates. In general, Daimler does not
hedge against exchange rate translation risk.
Interest rate risk
Daimler uses a variety of interest rate sensitive financial instru-
ments to manage the liquidity needs of its day-to-day opera-
tions. A substantial volume of interest rate sensitive assets and
liabilities results from the leasing and sales financing business
operated by the Daimler Financial Services segment. The
Daimler Financial Services companies enter into transactions
with customers that primarily result in fixed-rate receivables.
Daimler’s general policy is to match funding in terms of maturi-
ties and interest rates wherever economically feasible. How-
ever, for a limited portion of the receivables portfolio in selected
and developed markets, the Group does not match funding
in terms of maturities in order to take advantage of market
opportunities. As a result, Daimler is exposed to risks due to
changes in interest rates.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate Treasury
department manages the interest rate risk relating to Daimler’s
leasing and financing activities by setting targets for the interest
rate risk position. The Treasury Risk Management department
and the local Daimler Financial Services companies are jointly
responsible for achieving these targets. As separate functions,
the Treasury Controlling and the Daimler Financial Services
Controlling & Reporting department monitors target achieve-
ment on a monthly basis. In order to achieve the targeted inter-
est rate risk positions in terms of maturities and interest rate
fixing periods, Daimler also uses derivative financial instru-
ments such as interest rate swaps. Daimler assesses its inter-
est rate risk position by comparing assets and liabilities for
corresponding maturities, including the impact of the relevant
derivative financial instruments.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 311
Commodity price risk
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw mate-
rial price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
For precious metals, central commodity management shows
an unhedged position of 39% of the forecasted commodity
purchases at year-end 2018 for calendar year 2019. The corre-
sponding figure at year-end 2017 was 38% for calendar year
2018.
Table F.99 shows the period-end, high, low and average value
at risk figures of the commodity price risk for the 2018 and
2017 portfolio of derivative financial instruments used to hedge
raw material price risk. Average exposure has been computed
on an end-of-quarter basis. The transactions underlying the
derivative financial instruments are not included in the value at
risk presentation. See also table F.94 at December 31, 2018
according to IFRS 9 and table F.95 at December 31, 2017
according to IAS 39 for the nominal values of derivative com-
modity price hedges at the balance sheet date.
In 2018, the value at risk of commodity derivatives was close
to the previous year’s level due to offsetting developments of
volatilities and hedge volume.
Hedge accounting. When designating currency derivative finan-
cial instruments, Daimler generally applies a hedge ratio of 1.
The respective volumes and parameters relevant for the valua-
tion of the hedged item and the hedging instrument as well as
maturity dates are matched. The Group ensures an economic
relationship between the hedged item and the hedging instru-
ment by ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. Effectiveness is assessed at
initial designation and during the hedge term. Possible sources
of ineffectiveness of the hedge relationship are:
– Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged commodity price risk.
– Changes in the timing of the hedged transactions.
Equity price risk
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, some of
which are accounted for using the equity method, such as BAIC
Motor. These investments are not included in a market risk
assessment of the Group.
34. Segment reporting
Reportable segments
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately, according to nature of products and
services provided, brands, distribution channels and profile
of customers.
The vehicle segments develop and manufacture passenger cars,
trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products will be marketed under the EQ
brand. Daimler Trucks distributes its trucks under the brand
names Mercedes-Benz, Freightliner, Western Star, FUSO and
BharatBenz. Furthermore, buses under the brands Thomas
Built Buses and FUSO are included in the Daimler Trucks range
of products. The vans of the Mercedes-Benz Vans segment
are primarily sold under the brand name Mercedes-Benz and
also under the Freightliner brand. Daimler Buses sells com-
pletely built-up buses under the brand names Mercedes-Benz
and Setra. In addition, Daimler Buses produces and sells bus
chassis. The vehicle segments also sell related spare parts and
accessories.
The Daimler Financial Services segment supports the sales of
the Group’s vehicle segments worldwide. Its product portfolio
primarily comprises tailored financing and leasing packages for
end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services such
as fleet management in Europe, which primarily takes place
through the Athlon brand. Furthermore, Daimler Financial Ser-
vices is active in the area of innovative mobility services.
Management and reporting system
The Group’s management reporting and controlling systems
principally use accounting policies that are the same as those
described in E Note 1 in the summary of significant account-
ing policies according to IFRS.
The Group’s management reporting and controlling systems
measure of segment profit or loss is referred to as “EBIT.”
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
on equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized bor-
rowing costs is included in cost of sales, it is not included
in EBIT.
312 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Segment assets principally comprise all assets. The vehicle
segments’ assets exclude income tax assets, assets from
defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The
vehicle segments’ liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other post-
employment benefit plans, and certain financial liabilities
(including financing liabilities).
Daimler Financial Services’ performance is measured on the
basis of return on equity, which is the usual procedure in the
banking business.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs, goodwill or
finance leases.
Depreciation and amortization may also include impairments
insofar as they do not relate to goodwill impairment according
to IAS 36.
Amortization of capitalized borrowing costs is not included in
the amortization of intangible assets or depreciation of prop-
erty, plant and equipment since it is not considered as part of
EBIT.
The residual value risks associated with the Group’s operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms
vary by vehicle segment and geographic region.
Reconciliation
Reconciliation includes corporate items for which headquar-
ters are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
F.100
Segment information
In millions of euros
2018
External revenue
Intersegment revenue
Total revenue
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Services
Total
Segments
Recon-
ciliation
Daimler
Group
89,467
3,636
93,103
36,456
1,817
38,273
12,842
784
13,626
4,421
108
4,529
24,176
167,362
–
167,362
2,093
8,438
26,269
175,800
-8,438
-8,438
–
167,362
Segment profit/loss (EBIT)
thereof profit/loss on
equity-method investments
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
7,216
2,753
1,108
-7
43
-9
312
44
-11
265
1,384
11,930
-798
11,132
1
-2
-452
744
-88
656
-3
-32
1
-31
Segment assets
thereof carrying amounts
of equity-method investments
76,352
23,558
9,868
3,780
165,316
278,874
2,745
281,619
2,928
512
241
8
209
3,898
962
4,860
Segment liabilities
48,047
15,069
6,330
2,502
152,506
224,454
-8,888
215,566
Additions to non-current assets
16,494
2,460
1,633
431
14,431
35,449
51
35,500
thereof investments in
intangible assets
thereof investments in property,
plant and equipment
Depreciation and amortization of
non-current assets
thereof amortization of intangible assets
thereof depreciation of property,
plant and equipment
2,553
86
5,684
1,105
6,105
1,437
1,622
267
3,138
798
368
468
599
185
255
56
144
235
20
75
103
3,166
64
7,465
6,236
104
14,797
2,013
24
4,290
1
69
90
1
1
3,167
7,534
14,887
2,014
4,291
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 313
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of the
segments if such items are not indicative of the segments’ per-
formance, since the related results of operations may be dis-
torted by the amount and the irregular nature of such events.
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
expenses in connection with ongoing governmental proceed-
ings and measures relating to diesel vehicles affected EBIT
negatively. In addition, impairments of €133 million impacted
EBIT negatively. In the year 2017, EBIT was boosted by income
of €183 million in connection with a new investor in HERE. On
the other hand, EBIT was reduced by expenses totaling €425
million for voluntary service activities for diesel vehicles and a
specific vehicle recall. The optimization programs led to a cash
inflow of €203 million in the year 2017.
Information related to geographic areas
With respect to information about geographical regions, reve-
nue is allocated to countries based on the location of the
customer; non-current assets are presented according to the
physical location of these assets.
Table F.100 presents segment information as of and for the
years ended December 31, 2018 and 2017.
Daimler Trucks
In the reporting year, there were in sum no significant non-
cash issues at the Daimler Trucks segment. In 2017, the sale
of real estate by Mitsubishi Fuso Truck and Bus Corporation in
Japan increased earnings by €267 million. On the other hand,
expenses of €172 million for fixed-cost optimizations affected
EBIT negatively. The optimization programs led to a cash out-
flow of €120 million (2017: €17 million).
Mercedes-Benz Cars
In the year 2018, the Mercedes-Benz Cars segment’s earnings
include positive effects from the remeasurement at fair value
of €111 million of the investment in Aston Martin Lagonda Global
Holdings plc (Aston Martin). On the other hand,
Mercedes-Benz Vans
In the reporting year, EBIT at the Mercedes-Benz Vans segment
was reduced by expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles
and by remeasurement of assets in connection with production
capacities.
In millions of euros
2017 (adjusted)1
External revenue
Intersegment revenue
Total revenue
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Services2
Total
Segments
Recon-
ciliation2
Daimler
Group
90,641
3,710
94,351
34,196
1,559
35,755
12,595
566
13,161
4,412
112
4,524
22,310
164,154
–
164,154
2,220
8,167
24,530
172,321
-8,167
-8,167
–
164,154
Segment profit/loss (EBIT)
thereof profit/loss on
equity-method investments
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
8,843
2,383
1,147
281
1,970
14,624
-276
14,348
1,198
-3
-33
-17
43
-5
3
-2
1
-4
1,242
256
1,498
-61
–
-61
Segment assets
69,978
21,758
8,744
3,563
149,989
254,032
1,313
255,345
thereof carrying amounts
of equity-method investments
2,930
491
180
9
148
3,758
1,060
4,818
Segment liabilities
44,761
13,897
5,804
2,460
137,610
204,532
-14,346
190,186
Additions to non-current assets
15,815
2,308
2,000
299
14,896
35,318
thereof investments in
intangible assets
thereof investments in property,
plant and equipment
Depreciation and amortization of
non-current assets
thereof amortization of intangible assets
thereof depreciation of property,
plant and equipment
2,668
97
4,843
1,028
5,326
1,230
1,540
291
2,832
791
525
710
447
84
198
33
94
247
18
75
90
43
3,413
6,718
5,979
131
13,539
1,754
24
3,920
23
1
26
86
1
1
35,341
3,414
6,744
13,625
1,755
3,921
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group’s internal revenue
and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
314 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.101
Reconciliation to Group figures
In millions of euros
2018
2017
(adjusted)1
Total of segments’ profit (EBIT)
11,930
14,624
profit/loss on equity-method
investments2
Other corporate items
Eliminations
Group EBIT
Amortization of capitalized
borrowing costs3
Interest income
Interest expense
-88
-669
-41
256
-488
-44
11,132
14,348
-15
271
-793
-13
214
-582
Daimler Buses
In the reporting year, there were no significant non-cash issues
at the Daimler Buses segment.
Daimler Financial Services
In the year 2018, the agreement reached to conclude the Toll
Collect arbitration proceedings reduced earnings at the
Daimler Financial Services segment by €418 million. The inter-
est income and interest expense of Daimler Financial Services
are included in revenue and cost of sales, and are presented in
E Notes 4 and 5.
Reconciliation
Reconciliation of the segment amounts to the respective items
included in the Consolidated Financial Statements is shown in
table F.101.
Profit before income taxes
10,595
13,967
Total of segments’ assets
278,874
254,032
In 2018, the line item Other corporate items includes, amongst
other things, higher expenses in connection with “Project
Future”.
Revenue and non-current assets by region
Revenue from external customers and non-current assets by
region are shown in table F.102.
Carrying amount of equity-method
investments4
Income tax assets5
Unallocated financial assets
(including liquidity) and assets
from pensions and similar
obligations5
Other corporate items and
eliminations
Group assets
Total of segments’ liabilities
Income tax liabilities5
Unallocated financial liabilities
and liabilities from pensions
and similar obligations5
Other corporate items and
eliminations
Group liabilities
962
4,227
1,060
2,657
21,563
20,133
-24,007
-22,537
281,619
255,345
224,454
204,532
2,556
891
12,041
6,556
-23,485
-21,793
215,566
190,186
1 Information on adjustments to prior-year figures is disclosed in
Note 1 of the Notes to the Consolidated Financial Statements.
2 In the year 2018, this mainly comprises the impairment of
Daimler’s equity investment in BAIC Motor of €150 million.
In the year 2017, the reversal of the impairment of Daimler’s
equity investment in BAIC Motor of €240 million is included.
3 Amortization of capitalized borrowing costs is not considered
in the internal performance measure “EBIT” but is included in
cost of sales.
4 This mainly comprises the carrying amount of the investments in
BAIC Motor and LSHAI.
5 Unless allocated to Daimler Financial Services.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 315
F.102
Revenue and non-current assets by region
In millions of euros
Europe
thereof Germany
NAFTA region
thereof United States
Asia
thereof China
Other markets
2018
68,496
24,802
47,952
41,152
40,627
19,790
10,287
Revenue
2017
(adjusted)1
2018
Non-current assets
2017
(adjusted)1
68,309
24,311
46,528
40,076
39,090
18,774
10,227
63,559
45,281
27,095
24,239
2,807
219
1,764
95,225
58,943
42,547
25,510
22,623
2,509
166
1,828
88,790
167,362
164,154
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
35. Capital management
“Net assets” and “value added” represent the basis for capital
management at Daimler. The assets and liabilities of the seg-
ments in accordance with IFRS provide the basis for the deter-
mination of net assets at Group level. The vehicle segments
are accountable for the operational net assets; all assets, lia-
bilities and provisions which they are responsible for in day-to-
day operations are therefore allocated to them. Performance
measurement at Daimler Financial Services is on an equity basis,
in line with the usual practice in the banking business. Net
assets at Group level additionally include assets and liabilities
from income taxes as well as other corporate items and
eliminations.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table F.103.
The cost of capital of the Group’s average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the cost
of capital, are derived from the minimum rates of return that
investors expect on their invested capital. The Group’s cost of
capital comprises the cost of equity as well as the costs of
debt and pension obligations unless these are allocated to
Daimler Financial Services; in addition, the expected returns
on liquidity and on the plan assets of the pension funds which
are not allocated to Daimler Financial Services are considered
with the opposite sign. In the reporting period, the cost of
capital used for our internal capital management amounted to
8% after taxes.
The objective of capital management is to increase value added,
among other things, by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
F.103
Average net assets
In millions of euros
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services1
Net assets of the segments
Equity-method investments2
Assets and liabilities from income taxes3
Other corporate items and eliminations3
Net assets Daimler Group
2018
2017
26,289
23,705
8,240
3,355
1,233
12,466
51,583
1,066
1,707
-547
53,809
8,417
2,358
1,105
11,165
46,750
941
2,190
-1,435
48,446
1 Equity.
2 Unless allocated to the segments.
3 Unless allocated to Daimler Financial Services.
for instance by optimizing working capital which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between
equity and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
36. Earnings per share
The calculation of basic and diluted earnings per share is based
on net profit attributable to shareholders of Daimler AG. Fol-
lowing the expiration of the stock option plan in 2014, dilutive
effects no longer exist. The profit attributable to shareholders
of Daimler AG (basic and diluted) amounts to €7,249 million
(2017: €10,278 million). The weighted average number of shares
outstanding (basic and diluted) amounts to 1,069.8 million
(2017: 1,069.8 million).
316 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37. Related party relationships
Related parties are deemed to be associated companies, joint
ventures and unconsolidated subsidiaries, as well as persons
who exercise a significant influence on the financial and busi-
ness policy of the Daimler Group. The latter category includes
all persons in key positions and their close family members.
At the Daimler Group, those persons are the members of the
Board of Management and of the Supervisory Board.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies and joint
ventures and are shown in table F.104.
Associated companies
A large proportion of the Group’s sales of goods and services
with associated companies as well as of its receivables relates
to business relations with LSH Auto International Limited
(LSHAI) and with Beijing Benz Automotive Co., Ltd. (BBAC),
both allocated to Mercedes-Benz Cars. In 2017, Daimler had
acquired a 15% stake in LSHAI.
The purchases of goods and services shown in table F.104
were primarily from LSHAI as well as from MBtech Group
GmbH & Co. KGaA (MBtech), which is allocated to Mercedes-
Benz Cars. MBtech provides engineering and services for
research and development, production of components, mod-
ules, components systems as well as consulting and planning
along the development process in the automotive sector.
In September 2018, Daimler sold the remaining 35% stake in
MBtech to the technology company AKKA Technologies SA.
Joint ventures
In business relationships with joint ventures, significant sales
of goods and services took place with Fujian Benz Automotive
Co., Ltd. (FBAC), which is allocated to Mercedes-Benz Vans,
and with DAIMLER KAMAZ RUS OOO, a company established
with the associated company Kamaz PAO, and allocated to
Daimler Trucks.
Shenzhen DENZA New Energy Automotive Co. Ltd. (DENZA)
is allocated to the Mercedes-Benz Cars segment. Daimler has
provided guarantees in a total amount of RMB 1,115 million
(approximately €142 million) to external banks which provided
two loans to DENZA. At December 31, 2018, loans amounting
to RMB 615 million (approximately €78 million) were utilized.
In addition, Daimler has provided a shareholder loan of RMB
250 million (approximately €32 million) to DENZA, which is
fully utilized. In the second half of 2018, Daimler contributed
capital of RMB 400 million (approximately €50 million) in
accordance with its shareholding ratio. In 2017, there was
already a capital increase of RMB 500 million (approximately
€63 million).
E Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as well as
significant transactions in the years 2018 and 2017.
Contributions to plan assets
In 2018 and 2017, the Group made contributions of €696 mil-
lion and €3,692 million to its external funds to cover pension
and other post-employment benefits. See also E Note 22 for
further information.
Board members
Throughout the world, the Group has business relationships with
numerous entities that are customers and/or suppliers of the
Group. Those customers and/or suppliers include companies
that have a connection with some of the members of the Board
of Management or of the Supervisory Board and close family
members of those board members of Daimler AG or of its sub-
sidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also pur-
chase goods and services from Daimler AG or its subsidiaries as
customers. When such business relationships exist, transactions
are concluded on the basis of customary market conditions.
See E Note 38 for information on the remuneration of board
members.
F.104
Transactions with related parties
In millions of euros
Associated companies
thereof LSHAI1
thereof BBAC
Joint ventures
Sales of goods
and services
and other income
Purchase of goods
and services
and other expense
Receivables
At December 31,2
Payables
At December 31,3
2018
2017
2018
2017
2018
2017
2018
2017
13,475
8,011
4,850
997
9,507
5,177
3,933
946
855
647
64
100
703
298
80
75
2,679
981
1,571
208
2,827
1,075
1,673
183
131
30
85
444
253
127
65
115
1 Since the equity interest in LSHAI was acquired in May 2017, business relations with LSHAI are reported from June 2017 onward.
2 After write-downs totaling €53 million (2017: €52 million).
3 Including liabilities from default risks from guarantees for related parties.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 317
F.105
Remuneration of the members of the Board of Management
and the Supervisory Board
2018
20171
In millions of euros
Remuneration of the Board of
Management
Fixed remuneration
(base salary)
Short-term variable
remuneration
(50% of annual bonus)
Mid-term variable remuneration
(50% of annual bonus, “deferral”)
Variable remuneration with
a long-term incentive effect (PPSP)
Post-employment benefits
(service cost)
Termination benefits
Remuneration of the Supervisory Board
9.5
2.5
1.9
1.6
2.4
–
17.9
4.2
22.1
9.5
7.7
7.0
12.4
2.0
–
38.6
4.2
42.8
1 Including the Board of Management remuneration paid to
Dr. Wolfgang Bernhard until February 10, 2017.
38. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board of Man-
agement and the Supervisory Board who were active as of
December 31, 2018, affected net profit for the year ended
December 31 as shown in table F.105.
Expenses for variable remuneration of the Board of Manage-
ment with a long-term incentive effect, as shown in table
F.105, result from the ongoing measurement at fair value
at each balance sheet date of all rights granted and not yet
due under the Performance Phantom Share Plans (PPSP), i.e.
for the plans of the years 2015-2018. In 2018, the active
members of the Board of Management were granted 145,775
(2017: 151,157) phantom shares in connection with the PPSP;
the fair value of these phantom shares at the grant date was
€10.2 million (2017: €10.2 million). See E Note 21 for addi-
tional information on share-based payment of the members of
the Board of Management.
According to Section 314 Subsection 1 Number 6a of the Ger-
man Commercial Code (HGB), the overall remuneration
granted to the members of the Board of Management, exclud-
ing service cost resulting from entitlements to post-employ-
ment benefits, amounted to €24.7 million (2017: €35.0 million).
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activities, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accor-
dance with their contracts of employment, no remuneration
was paid in 2018 for services provided personally beyond
board and committee activities, in particular for advisory or
agency services.
No advance payments or loans were made or abated to
members of the Board of Management or to the members of
the Supervisory Board of Daimler AG in 2018.
The payments made in 2018 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €16.2 million (2017: €19.0 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €270.2 million as of December 31, 2018
(2017: €270.5 million).
Information regarding the remuneration of the members of the
Board of Management and of the Supervisory Board is disclosed
on an individual basis in the Remuneration Report, which is
part of the combined Management Report. E Management
Report from page 120
318 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.106
Auditor fees
In millions of euros
Audit services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Other attestation services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Tax services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Other services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
2018
2017
46
23
10
8
2
1
8
6
44
21
9
7
1
1
6
5
66
60
39. Auditor fees
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders’ Meeting held on April 5, 2018. Table F.106
shows the fees for services provided by KPMG AG Wirtschafts-
prüfungsgesellschaft and the companies of the worldwide
KPMG network to Daimler AG and all subsidiaries as well as
joint operations that are included in the Group’s Consolidated
Financial Statements for the respective reporting period.
Audit services relate to the audit of Daimler Group’s Consolidated
Financial Statements and the year-end financial statements,
as well as to all services required for the audit including the
reviews of interim financial statements, the accounting-related
audit of the internal control system, and accounting-related
reviews of the introduction of IT systems and processes.
Other attestation services comprise attestation services required
by law or by contractual agreement, or voluntarily assigned
services. In addition to reviews of non-accounting-related IT
systems and processes, they also include audits in connection
with compliance management systems, issuance of comfort
letters, and non-financial disclosures and reports.
Tax services primarily relate to value-added tax advisory.
Other services were performed mainly for non-accounting-
relevant processes and M&A activities.
40. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of Daimler
AG have issued a declaration pursuant to Section 161 of the
German Stock Corporation Act (AktG) and have made it perma-
nently available to their shareholders on Daimler’s website at
w https://www.daimler.com/documents/company/
corporate-governance/declarations/daimler-declaration-en-
12-2018.pdf.
Information on investments
The statement of investments of the Daimler Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Commercial
Code (HGB) is presented in table F.107 In general coopera-
tions without an equity interest are not reported. Information
on equity and earnings and information on investments pursu-
ant to Section 313 Subsection 2 No. 4 of the German Commer-
cial Code is omitted insofar as, pursuant to Section 313 Sub-
section 3 Sentence 4 of the HGB, such information is of minor
relevance for a fair presentation of the profitability, liquidity
and capital resources or financial position of the Daimler Group.
In addition, the statement of investments indicates which
consolidated companies make use of the exemption pursuant to
Section 264 Subsection 3 of the HGB and/or Section 264b of
the HGB. The Consolidated Financial Statements of Daimler AG
release those subsidiaries from the requirements that would
otherwise apply.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 319
Domicile, Country
Capital share
in %1
Footnote
F.107
Name of the Company
I. Consolidated subsidiaries
Athlon Beheer International B.V.
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Athlon Car Lease Italy S.R.L.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.o.
Athlon Car Lease Portugal, lda
Athlon Car Lease Rental Services B.V.
Athlon Car Lease Rental Services Belgium N.V.
Athlon Car Lease S.A.S.
Athlon Car Lease Spain, S.A.
Athlon Dealerlease B.V.
Athlon France S.A.S.
Athlon Germany GmbH
Athlon Mobility Consultancy B.V.
Athlon Mobility Consultancy N.V.
Athlon Rental Germany GmbH
Athlon Sweden AB
Athlon Switzerland AG
AutoGravity Corporation
Banco Mercedes-Benz do Brasil S.A.
Almere, Netherlands
Almere, Netherlands
Machelen, Belgium
Almere, Netherlands
Rome, Italy
Almere, Netherlands
Warsaw, Poland
Oeiras, Portugal
Almere, Netherlands
Machelen, Belgium
Le Bourget, France
Alcobendas, Spain
Almere, Netherlands
Le Bourget, France
Düsseldorf, Germany
Amsterdam, Netherlands
Machelen, Belgium
Düsseldorf, Germany
Malmö, Sweden
Schlieren, Switzerland
Irvine, USA
São Paulo, Brazil
Brooklands Estates Management Limited
Milton Keynes, United Kingdom
Campo Largo Comercio de Veículos e Peças Ltda.
car2go Canada Ltd.
car2go China Co., Ltd.
car2go Deutschland GmbH
car2go Europe GmbH
car2go Group GmbH
car2go Iberia S.L.U.
car2go Italia S.R.L.
car2go N.A. Holding Inc.
car2go N.A. LLC
car2go Nederland B.V.
car2go Österreich GmbH
CARS Technik & Logistik GmbH
Campinas, Brazil
Vancouver, Canada
Beijing, China
Leinfelden-Echterdingen, Germany
Leinfelden-Echterdingen, Germany
Leinfelden-Echterdingen, Germany
Madrid, Spain
Milan, Italy
Wilmington, USA
Wilmington, USA
Utrecht, Netherlands
Vienna, Austria
Wiedemar, Germany
CLIDET NO 1048 (Proprietary) Limited
Centurion, South Africa
Conemaugh Hydroelectric Projects, Inc.
DA Investments Co. LLC
DAF Investments, Ltd.
Daimler Australia/Pacific Pty. Ltd.
Daimler Brand & IP Management GmbH & Co. KG
Daimler Brand & IP Management Verwaltung GmbH
Daimler Buses North America Inc.
Daimler Canada Finance Inc.
Daimler Canada Investments Company
Wilmington, USA
Wilmington, USA
Wilmington, USA
Melbourne, Australia
Stuttgart, Germany
Stuttgart, Germany
Oriskany, USA
Montreal, Canada
Halifax, Canada
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
5
5, 7
5
320 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler Capital Services LLC
Daimler Ceská republika Holding s.r.o.
Daimler Colombia S. A.
Wilmington, USA
Prague, Czech Republic
Bogota D.C., Colombia
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Singapore, Singapore
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
Mexico City, Mexico
Daimler Export and Trade Finance GmbH
Daimler Finance North America LLC
Berlin, Germany
Wilmington, USA
Daimler Financial Services Africa & Asia Pacific Ltd.
Singapore, Singapore
Daimler Financial Services AG
Stuttgart, Germany
Daimler Financial Services India Private Limited
Chennai, India
Daimler Financial Services Investment Company LLC
Wilmington, USA
Daimler Financial Services México, S. de R.L. de C.V.
Mexico City, Mexico
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Mexico City, Mexico
Daimler Fleet Management GmbH
Daimler Fleet Management Singapore Pte. Ltd.
Stuttgart, Germany
Singapore, Singapore
Daimler Fleet Management South Africa (Pty.) Ltd.
Centurion, South Africa
Daimler Fleet Management UK Limited
Milton Keynes, United Kingdom
Daimler Fleet Services A.S.
Daimler FleetBoard GmbH
Daimler Greater China Ltd.
Daimler Grund Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Daimler Insurance Services GmbH
Daimler Insurance Services Japan Co., Ltd.
Istanbul, Turkey
Stuttgart, Germany
Beijing, China
Schönefeld, Germany
Chennai, India
Wilmington, USA
Stuttgart, Germany
Tokyo, Japan
Daimler Insurance Services UK Limited
Milton Keynes, United Kingdom
Daimler International Finance B.V.
Daimler International Nederland B.V.
Daimler Investments US Corporation
Daimler Manufactura, S. de R.L. de C.V.
Daimler Mexico, S.A. de C.V.
Daimler Mobility Services GmbH
Daimler Motors Investments LLC
Daimler Nederland B.V.
Daimler Nederland Holding B.V.
Daimler North America Corporation
Daimler North America Finance Corporation
Utrecht, Netherlands
Utrecht, Netherlands
Wilmington, USA
Mexico City, Mexico
Mexico City, Mexico
Leinfelden-Echterdingen, Germany
Wilmington, USA
Utrecht, Netherlands
Utrecht, Netherlands
Wilmington, USA
Newark, USA
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Beijing, China
Daimler Parts Brand GmbH
Daimler Re Brokers GmbH
Stuttgart, Germany
Bremen, Germany
Daimler Re Insurance S.A. Luxembourg
Luxembourg, Luxembourg
Daimler Real Estate GmbH
Daimler Retail Receivables LLC
Berlin, Germany
Farmington Hills, USA
DAIMLER SERVICIOS CORPORATIVOS MEXICO S. DE R.L. DE C.V.
Mexico City, Mexico
Daimler South East Asia Pte. Ltd.
Daimler Truck AG
Daimler Truck and Bus Australia Pacific Pty. Ltd.
Daimler Trucks & Buses US Holding Inc.
Singapore, Singapore
Stuttgart, Germany
Mulgrave, Australia
Wilmington, USA
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
65.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
74.90
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
5
5
5
4
5
5
5
5
5
5
5
5
Name of the Company Domicile, Country Capital share in %1Footnote F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 321
Daimler Trucks and Buses (China) Ltd.
Daimler Trucks Canada Ltd.
Daimler Trucks Korea Ltd.
Daimler Trucks North America LLC
Daimler Trucks Remarketing Corporation
Daimler Trucks Retail Trust 2018-1
Daimler Trust Holdings LLC
Daimler Trust Leasing Conduit LLC
Daimler Trust Leasing LLC
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans USA, LLC
Beijing, China
Mississauga, Canada
Seoul, South Korea
Wilmington, USA
Portland, USA
Wilmington, USA
Farmington Hills, USA
Wilmington, USA
Farmington Hills, USA
Milton Keynes, United Kingdom
Hong Kong, China
Wilmington, USA
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Mexico City, Mexico
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Schönefeld, Germany
Daimler Vorsorge und Versicherungsdienst GmbH
Berlin, Germany
Daiprodco Mexico S. de R.L. de C.V.
Mexico City, Mexico
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
Detroit, USA
Detroit, USA
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Toluca, Mexico
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
San Juan Ixtacala, Mexico
Deutsche Accumotive GmbH & Co. KG
Kirchheim unter Teck, Germany
EHG Elektroholding GmbH
EvoBus (Schweiz) AG
EvoBus (U.K.) Ltd.
EvoBus Austria GmbH
EvoBus Belgium N.V.
EvoBus Ceská republika s.r.o.
EvoBus Danmark A/S
EvoBus France S.A.S.U.
EvoBus GmbH
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus Nederland B.V.
EvoBus Polska Sp. z o.o.
EvoBus Portugal, S.A.
EvoBus Sverige AB
Freightliner Custom Chassis Corporation
Friesland Lease B.V.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 4 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 6 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 7 OHG
Stuttgart, Germany
Kloten, Switzerland
Coventry, United Kingdom
Wiener Neudorf, Austria
Kobbegem-Asse, Belgium
Prague, Czech Republic
Koege, Denmark
Sarcelles, France
Stuttgart, Germany
Sámano, Spain
Bomporto, Italy
Nijkerk, Netherlands
Wolica, Poland
Mem Martins, Portugal
Vetlanda, Sweden
Gaffney, USA
Drachten, Netherlands
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
100.00
100.00
100.00
100.00
100.00
0.00
100.00
100.00
100.00
100.00
67.55
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.11
100.00
100.00
100.00
100.00
100.00
100.00
100.00
3
5
5
5
5
5
5, 7
5, 7
5, 7
5, 7
5, 7
5, 7
5, 7
Name of the Company Domicile, Country Capital share in %1Footnote 322 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Beta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Delta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Epsilon OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 4 OHG
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
Schönefeld, Germany
Hailo Network Iberia S.L.
Hailo Network IP Limited
Intelligent Apps GmbH
Interleasing Luxembourg S.A.
Madrid, Spain
London, United Kingdom
Hamburg, Germany
Windhof, Luxembourg
Invema Assessoria Empresarial Eireli
São Bernardo do Campo, Brazil
Koppieview Property (Pty) Ltd
LBBW AM – Daimler Re Insurance
Zwartkop, South Africa
Luxembourg, Luxembourg
LBBW AM – MBVEXW
LEONIE CORP DVB GmbH
LEONIE FS DVB GmbH
LEONIE FSM DVB GmbH
LEONIE PV DVB GmbH
LEONIE TB DVB GmbH
Li-Tec Battery GmbH
Mascot Truck Parts Canada Ltd (2017)
Mascot Truck Parts USA LLC
MBarc Credit Canada Inc.
MDC Power GmbH
MDC Technology GmbH
Stuttgart, Germany
Stuttgart, Germany
Stuttgart, Germany
Stuttgart, Germany
Stuttgart, Germany
Stuttgart, Germany
Kamenz, Germany
Mississauga, Canada
Wilmington, USA
Mississauga, Canada
Kölleda, Germany
Arnstadt, Germany
Mercedes AMG High Performance Powertrains Ltd
Brixworth, United Kingdom
Mercedes pay AG
Mercedes pay S.A.
Mercedes-AMG GmbH
Zug, Switzerland
Luxembourg, Luxembourg
Affalterbach, Germany
Mercedes-Benz – Aluguer de Veículos, Unipessoal Lda.
Mem Martins, Portugal
Mercedes-Benz (China) Ltd.
Mercedes-Benz (Thailand) Limited
Beijing, China
Bangkok, Thailand
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
Yangzhou, China
Mercedes-Benz Accessories GmbH
Mercedes-Benz AG
Mercedes-Benz Antwerpen N.V.
Mercedes-Benz Argentina S.A.
Mercedes-Benz Asia GmbH
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2016-2
Mercedes-Benz Auto Lease Trust 2016-B
Stuttgart, Germany
Stuttgart, Germany
Antwerp, Belgium
Buenos Aires, Argentina
Stuttgart, Germany
Utrecht, Netherlands
Melbourne, Australia
Beijing, China
Wilmington, USA
Wilmington, USA
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
79.35
100.00
100.00
100.00
0.00
0.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
0.00
0.00
5, 7
5, 7
5, 7
5, 7
5, 7
5, 7
5, 7
5, 7
3
3
5
5
5
5
5
5
5
5
5
5
5
5
3
3
Name of the Company Domicile, Country Capital share in %1Footnote F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 323
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Lease Trust 2018-A
Mercedes-Benz Auto Lease Trust 2018-B
Mercedes-Benz Auto Receivables Trust 2015-1
Mercedes-Benz Auto Receivables Trust 2016-1
Mercedes-Benz Auto Retail Trust 2018-1
Mercedes-Benz Bank AG
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank Rus OOO
Wilmington, USA
Wilmington, USA
Wilmington, USA
Wilmington, USA
Wilmington, USA
Wilmington, USA
Stuttgart, Germany
Salzburg, Austria
Warsaw, Poland
Moscow, Russian Federation
Mercedes-Benz Bank Service Center GmbH
Berlin, Germany
Mercedes-Benz Banking Service GmbH
Saarbrücken, Germany
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Bordeaux S.A.S.
Brussels, Belgium
Begles, France
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Budapest, Hungary
Mercedes-Benz Brooklands Limited
Milton Keynes, United Kingdom
Mercedes-Benz Canada Inc.
Mercedes-Benz Capital Rus OOO
Mercedes-Benz Cars Ceská republika s.r.o.
Mercedes-Benz Cars Nederland B.V.
Mercedes-Benz Cars UK Limited
Mercedes-Benz CharterWay S.A.S.
Mercedes-Benz CharterWay S.r.l.
Toronto, Canada
Moscow, Russian Federation
Prague, Czech Republic
Utrecht, Netherlands
Milton Keynes, United Kingdom
Montigny-le-Bretonneux, France
Trent, Italy
Mercedes-Benz Compañía Financiera Argentina S.A.
Buenos Aires, Argentina
Mercedes-Benz Connectivity Services GmbH
Mercedes-Benz Corretora de Seguros Ltda
Mercedes-Benz CPH A/S
Stuttgart, Germany
São Paulo, Brazil
Horsholm, Denmark
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Budapest, Hungary
Mercedes-Benz Danmark A/S
Mercedes-Benz Dealer Bedrijven B.V.
Copenhagen, Denmark
The Hague, Netherlands
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
São Paulo, Brazil
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz Drogenbos N.V.
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Finance Co., Ltd.
São Bernardo do Campo, Brazil
Drogenbos, Belgium
Alcobendas, Spain
Tokyo, Japan
Mercedes-Benz Financial Services Australia Pty. Ltd.
Melbourne, Australia
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Salzburg, Austria
Brussels, Belgium
Mercedes-Benz Financial Services Canada Corporation
Mississauga, Canada
Mercedes-Benz Financial Services Ceská republika s.r.o.
Prague, Czech Republic
Mercedes-Benz Financial Services España, E.F.C., S.A.
Alcobendas, Spain
Mercedes-Benz Financial Services France S.A.
Montigny-le-Bretonneux, France
Mercedes-Benz Financial Services Hong Kong Ltd.
Hong Kong, China
Mercedes-Benz Financial Services Italia SpA
Rome, Italy
Mercedes-Benz Financial Services Korea Ltd.
Seoul, South Korea
Mercedes-Benz Financial Services Nederland B.V.
Utrecht, Netherlands
Mercedes-Benz Financial Services New Zealand Ltd
Auckland, New Zealand
3
3
3
3
3
3
5
5
5
0.00
0.00
0.00
0.00
0.00
0.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.98
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
95.01
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
100.00
80.00
100.00
100.00
Name of the Company Domicile, Country Capital share in %1Footnote 324 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Mercedes-Benz Financial Services Portugal –
Sociedade Financeira de Crédito S.A.
Mem Martins, Portugal
100.00
Mercedes-Benz Financial Services Rus OOO
Moscow, Russian Federation
Mercedes-Benz Financial Services Schweiz AG
Schlieren, Switzerland
Mercedes-Benz Financial Services Slovakia s.r.o.
Bratislava, Slovakia
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Centurion, South Africa
Mercedes-Benz Financial Services Taiwan Ltd.
Taipei, Taiwan
Mercedes-Benz Financial Services UK Limited
Milton Keynes, United Kingdom
Mercedes-Benz Financial Services USA LLC
Wilmington, USA
Mercedes-Benz Finans Danmark A/S
Copenhagen, Denmark
Mercedes-Benz Finans Sverige AB
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Försäljnings AB
Mercedes-Benz France S.A.S.
Mercedes-Benz Fuel Cell GmbH
Mercedes-Benz Grand Prix Ltd.
Mercedes-Benz Hellas S.A.
Mercedes-Benz Hong Kong Limited
Mercedes-Benz India Private Limited
Mercedes-Benz Insurance Broker S.R.L.
Malmö, Sweden
Istanbul, Turkey
Istanbul, Turkey
Malmö, Sweden
Montigny-le-Bretonneux, France
Kirchheim unter Teck, Germany
Brackley, United Kingdom
Kifissia, Greece
Hong Kong, China
Pune, India
Voluntari, Romania
Mercedes-Benz Insurance Services Nederland B.V.
Utrecht, Netherlands
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Investment Company LLC
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Japan Co., Ltd.
Mercedes-Benz Korea Limited
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Mercedes-Benz Leasing Co., Ltd.
Taipei, Taiwan
Wilmington, USA
Rome, Italy
Tokyo, Japan
Seoul, South Korea
Bangkok, Thailand
Beijing, China
Mercedes-Benz Leasing do Brasil Arrendamento Mercantil S.A.
Barueri, Brazil
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Manufacturing (Thailand) Limited
Stuttgart, Germany
Zagreb, Croatia
Bucharest, Romania
Budapest, Hungary
Warsaw, Poland
Taipei, Taiwan
Stuttgart, Germany
Ludwigsfelde, Germany
Puchong, Malaysia
Wilmington, USA
Bangkok, Thailand
Mercedes-Benz Manufacturing Hungary Kft.
Kecskemét, Hungary
Mercedes-Benz Manufacturing Poland Sp. z o.o.
Mercedes-Benz Master Owner Trust
Mercedes-Benz Mechelen N.V.
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mercedes-Benz Minibus GmbH
Liegnitz, Poland
Wilmington, USA
Mechelen, Belgium
Mexico City, Mexico
Dortmund, Germany
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Stuttgart, Germany
100.00
100.00
75.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
100.00
65.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
0.00
100.00
100.00
100.00
100.00
5
5
5
3
5
5
Name of the Company Domicile, Country Capital share in %1Footnote F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 325
Mercedes-Benz New Zealand Ltd
Mercedes-Benz Österreich GmbH
Mercedes-Benz Paris SAS
Auckland, New Zealand
Salzburg, Austria
Port-Marly, France
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Prague, Czech Republic
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Azuqueca de Henares, Spain
Mercedes-Benz Parts Logistics UK Limited
Milton Keynes, United Kingdom
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Polska Sp. z o.o.
Mercedes-Benz Portugal, S.A.
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Renting, S.A.
Shanghai, China
Warsaw, Poland
Mem Martins, Portugal
Prague, Czech Republic
Alcobendas, Spain
Mercedes-Benz Research & Development North America, Inc.
Wilmington, USA
Mercedes-Benz Retail Group UK Limited
Milton Keynes, United Kingdom
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail, Unipessoal Lda.
Madrid, Spain
Mem Martins, Portugal
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Centurion, South Africa
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Russia AO
Mercedes-Benz Schweiz AG
Mercedes-Benz Service Leasing S.R.L.
Rome, Italy
Bucharest, Romania
Moscow, Russian Federation
Schlieren, Switzerland
Bucharest, Romania
Mercedes-Benz Services Correduria de Seguros, S.A.
Alcobendas, Spain
Mercedes-Benz Services Malaysia Sdn Bhd
Petaling Jaya, Malaysia
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sverige AB
Mercedes-Benz Taiwan Ltd.
Istanbul, Turkey
Sosnowiec, Poland
Pretoria, South Africa
Malmö, Sweden
Taipei, Taiwan
Mercedes-Benz Trucks Ceská republika s.r.o.
Prague, Czech Republic
Mercedes-Benz Trucks España S.L.U.
Mercedes-Benz Trucks Molsheim
Mercedes-Benz Trucks Nederland B.V.
Alcobendas, Spain
Molsheim, France
Utrecht, Netherlands
Mercedes-Benz Trucks UK Limited
Milton Keynes, United Kingdom
Mercedes-Benz Türk A.S.
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz USA, LLC
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz V.I. Paris Ile de France SAS
Istanbul, Turkey
Vance, USA
Warsaw, Poland
Wilmington, USA
Genas, France
Wissous, France
Mercedes-Benz Vans Australia Pacific Pty. Ltd.
Mulgrave, Australia
Mercedes-Benz Vans Ceská republika s.r.o
Prague, Czech Republic
Mercedes-Benz Vans España, S.L.U.
Mercedes-Benz Vans Mobility GmbH
Madrid, Spain
Berlin, Germany
Mercedes-Benz Vans Nederland B.V.
Utrecht, Netherlands
Mercedes-Benz Vans UK Limited
Mercedes-Benz Vans, LLC
Mercedes-Benz Versicherung AG
Mercedes-Benz Vertrieb NFZ GmbH
Milton Keynes, United Kingdom
Wilmington, USA
Stuttgart, Germany
Stuttgart, Germany
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
66.91
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
5
5
5
Name of the Company Domicile, Country Capital share in %1Footnote 326 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wholesale Receivables LLC
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
MITSUBISHI FUSO TRUCK EUROPE –
Sociedade Europeia de Automóveis, S.A.
Mitsubishi Fuso Truck of America, Inc.
moovel Group GmbH
moovel North America Inc.
moovel North America, LLC
Multifleet G.I.E
myTaxi Iberia SL
mytaxi Network Ireland Ltd.
mytaxi Network Ltd.
P.T. Mercedes-Benz Indonesia
PT Daimler Commercial Vehicles Indonesia
PT Mercedes-Benz Distribution Indonesia
Renting del Pacífico S.A.C.
Stuttgart, Germany
Ho Chi Minh City, Vietnam
Warsaw, Poland
Braine-L'Alleud, Belgium
Wavre, Belgium
Wemmel, Belgium
Wilmington, USA
Toronto, Canada
Kawasaki, Japan
Tramagal, Portugal
Logan Township, USA
Stuttgart, Germany
Wilmington, USA
Wilmington, USA
Le Bourget, France
Barcelona, Spain
Dublin, Ireland
London, United Kingdom
Bogor, Indonesia
Jakarta, Indonesia
Jakarta, Indonesia
Lima, Peru
Sandown Motor Holdings (Pty) Ltd
Bryanston, South Africa
SelecTrucks of America LLC
SelecTrucks of Toronto, Inc.
Setra of North America, Inc.
Silver Arrow Australia Trust 2017-1
Silver Arrow Canada GP Inc.
Silver Arrow Canada LP
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o CITIC TRUST CO., LTD.
SILVER ARROW CHINA 2018-1 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
SILVER ARROW CHINA 2018-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
Silver Arrow Lease Facility Trust
Silver Arrow S.A.
smart France S.A.S.
smart Vertriebs gmbh
Special Lease Systems (SLS) B.V
Star Assembly SRL
Starexport Trading S.A.
Sterling Truck Corporation
Sumperská správa majetku k.s.
Thomas Built Buses of Canada Limited
Thomas Built Buses, Inc.
Transcovo SAS
Transopco France SAS
Portland, USA
Mississauga, Canada
Oriskany, USA
Melbourne, Australia
Mississauga, Canada
Mississauga, Canada
Beijing, China
Beijing, China
Beijing, China
Wilmington, USA
Luxembourg, Luxembourg
Hambach, France
Berlin, Germany
Almere, Netherlands
Sebes, Romania
São Bernardo do Campo, Brazil
Portland, USA
Prague, Czech Republic
Calgary, Canada
High Point, USA
Paris, France
Paris, France
5
7
3
3
3
3
3
3
5
7
100.00
70.00
100.00
100.00
100.00
100.00
100.00
100.00
89.29
100.00
100.00
100.00
100.00
100.00
50.10
100.00
100.00
100.00
100.00
100.00
100.00
100.00
62.62
100.00
100.00
100.00
0.00
100.00
100.00
0.00
0.00
0.00
0.00
0.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
66.84
100.00
Name of the Company Domicile, Country Capital share in %1Footnote
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 327
Trona Cogeneration Corporation
Ucafleet S.A.S
Wilmington, USA
Le Bourget, France
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
Western Star Trucks Sales, Inc
Zuidlease B.V.
II. Unconsolidated subsidiaries2
Portland, USA
Sittard, Netherlands
Achtzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
AEG Olympia Office GmbH
Stuttgart, Germany
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Berlin, Germany
Beat Chile SpA
Beat Ride App Colombia Ltda.
Beat Ride App S.A.
car2go Belgium SPRL
car2go Danmark A/S
car2go Sverige AB
Santiago, Chile
Bogota D. C., Colombia
Mexico City, Mexico
Brussels, Belgium
Copenhagen, Denmark
Stockholm, Sweden
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Buenos Aires, Argentina
Clever Tech S.R.L.
Clever Tech Sud S.R.L.
Cúspide GmbH
Daimler AG & Co. Anlagenverwaltung OHG
Daimler Automotive de Venezuela C.A.
Daimler Commercial Vehicles (Thailand) Ltd.
Daimler Commercial Vehicles Africa Ltd.
Bucharest, Romania
Bucharest, Romania
Stuttgart, Germany
Schönefeld, Germany
Valencia, Venezuela
Bangkok, Thailand
Nairobi, Kenya
Daimler Commercial Vehicles MENA FZE
Dubai, United Arab Emirates
DAIMLER FINANCIAL SERVICES AUSTRALIA PTY LTD
Melbourne, Australia
Daimler Financial Services UK Trustees Ltd.
Milton Keynes, United Kingdom
Daimler Gastronomie GmbH
Esslingen am Neckar, Germany
Daimler Group Services Berlin GmbH
Berlin, Germany
Daimler Group Services Madrid, S.A.U.
San Sebastián de los Reyes, Spain
Daimler Innovation Technology (China) Co., Ltd.
Beijing, China
Daimler International Assignment Services USA, LLC
Wilmington, USA
Daimler Ladungsträger GmbH
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Parts Logistics Australia Pty. Ltd.
Daimler Pensionsfonds AG
Daimler Protics GmbH
Sindelfingen, Germany
Stuttgart, Germany
Mulgrave, Australia
Stuttgart, Germany
Leinfelden-Echterdingen, Germany
Daimler Purchasing Coordination Corp.
Wilmington, USA
DAIMLER TRUCK AND BUS HOLDING AUSTRALIA PACIFIC PTY LTD
Melbourne, Australia
Daimler Trucks and Buses Southern Africa (Pty) Ltd
Zwartkop, South Africa
Daimler Trucks Asia Taiwan Ltd.
Daimler TSS GmbH
Daimler UK Share Trustee Ltd.
Daimler UK Trustees Limited
Taipei, Taiwan
Ulm, Germany
Milton Keynes, United Kingdom
Milton Keynes, United Kingdom
Daimler Unterstützungskasse GmbH
Stuttgart, Germany
Deutsche Accumotive Verwaltungs-GmbH
Kirchheim unter Teck, Germany
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
DTB Tech & Data Hub, Unipessoal Lda
Tramagal, Portugal
5
7
6
100.00
65.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
72.85
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Name of the Company Domicile, Country Capital share in %1Footnote 328 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EvoBus Reunion S. A.
EvoBus Russland OOO
Familonet GmbH
FLINC GmbH
Le Port, France
Moscow, Russian Federation
Hamburg, Germany
Darmstadt, Germany
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
Stuttgart, Germany
LAB1886 GmbH
Lab1886 USA LLC
Lapland Car Test Aktiebolag
Legend Investments Ltd.
LEONIE DMS DVB GmbH
Stuttgart, Germany
Wilmington, USA
Arvidsjaur, Sweden
Milton Keynes, United Kingdom
Stuttgart, Germany
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Neuhausen auf den Fildern, Germany
MBition GmbH
Berlin, Germany
Mercedes-Benz Adm. Consorcios Ltda.
São Bernardo do Campo, Brazil
Mercedes-Benz CarMesh GmbH
Mercedes-Benz Cars & Vans Brasil –
Indústria e Comércio De Veículos Ltda.
Mercedes-Benz Cars Middle East FZE
Berlin, Germany
São Bernardo do Campo, Brazil
Dubai, United Arab Emirates
Mercedes-Benz Consulting GmbH
Leinfelden-Echterdingen, Germany
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Maastricht, Netherlands
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Energy Americas LLC
Mercedes-Benz Energy GmbH
Mercedes-Benz Europa NV/SA
Mercedes-Benz ExTra LLC
Mercedes-Benz Formula E Limited
Mercedes-Benz G GmbH
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Hungária Kft.
Mercedes-Benz IDC Europe S.A.S.
New Cairo, Egypt
Wilmington, USA
Kamenz, Germany
Woluwe-Saint-Lambert, Belgium
Wilmington, USA
Brackley, United Kingdom
Raaba, Austria
Cebu City, Philippines
Budapest, Hungary
Valbonne, France
Mercedes-Benz Manufacturing Rus Ltd
Moscow, Russian Federation
Mercedes-Benz Museum GmbH
Mercedes-Benz Project Consult GmbH
Stuttgart, Germany
Stuttgart, Germany
Mercedes-Benz Research & Development Tel Aviv Ltd.
Tel Aviv, Israel
Mercedes-Benz Research and Development India Private Limited
Bangalore, India
Mercedes-Benz Retail Belgium NV/SA
Woluwe-Saint-Lambert, Belgium
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Solihull Ltd.
Bratislava, Slovakia
Milton Keynes, United Kingdom
Mercedes-Benz Srbija i Crna Gora d.o.o.u likvidaciji
Novi Beograd, Serbia
Mercedes-Benz Subscription Services USA LLC
Mercedes-Benz Trucks Belgium Luxembourg NV/SA
Wilmington, USA
Brussels, Belgium
Mercedes-Benz Trucks Center Sint-Pieters-Leeuw NV/SA
Sint-Peters-Leeuw, Belgium
Mercedes-Benz Trucks France S.A.S.U
Montigny-le-Bretonneux, France
Mercedes-Benz Trucks Italia S.r.l.
Rome, Italy
Mercedes-Benz Trucks MENA Holding GmbH
Stuttgart, Germany
MERCEDES-BENZ TRUCKS POLSKA SPÓŁKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
Warsaw, Poland
Mercedes-Benz Trucks Schweiz AG
Mercedes-Benz Vans Mobility S.L.
Schlieren, Switzerland
Alcobendas, Spain
Mercedes-Benz Vehículos Comerciales Argentina SAU
Buenos Aires, Argentina
96.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
4
Name of the Company Domicile, Country Capital share in %1Footnote F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 329
Mercedes-Benz Venezuela S.A.
Mercedes-Benz.io GmbH
Mercedes-Benz.io Portugal Unipessoal Lda.
Valencia, Venezuela
Stuttgart, Germany
Lisbon, Portugal
MercedesService Card Beteiligungsgesellschaft mbH
Kleinostheim, Germany
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Toyama, Japan
Monarch Cars (Tamworth) Ltd.
Milton Keynes, United Kingdom
Montajes y Estampaciones Metálicas, S.L.
Esparraguera, Spain
mytaxi Austria GmbH
MYTAXI ITALIA S.R.L.
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
mytaxi Portugal Unipessoal LDA
mytaxi Sweden AB
myTaxi UG
myTaxi UK Ltd.
myTaxi USA Inc.
Vienna, Austria
Milan, Italy
Warsaw, Poland
Lisbon, Portugal
Stockholm, Sweden
Hamburg, Germany
London, United Kingdom
New York, USA
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
Stuttgart, Germany
ogotrac S.A.S.
PABCO Co., Ltd.
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
R.T.C. Management Company Limited
RepairSmith, Inc.
Reva SAS
Ring Garage AG Chur
Paris, France
Ebina, Japan
Schönefeld, Germany
Banbury, United Kingdom
Manhattan Beach, USA
Cunac, France
Chur, Switzerland
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Stuttgart, Germany
SelecTrucks Comércio de Veículos Ltda
SportChassis LLC
Star Egypt For Import LLC
Star Transmission srl
STARKOM d.o.o.
T.O.C (Schweiz) AG
Taxibeat Ltd. UK
Taxibeat Peru S.A.
Taxibeat Teknoloji Hizmetleri A.S.
Transopco GmbH
Transopco Portugal Unipessoal Lda.
Transopco UK Ltd.
trapoFit GmbH
Mauá, Brazil
Clinton, USA
New Cairo, Egypt
Cugir, Romania
Maribor, Slovenia
Schlieren, Switzerland
London, United Kingdom
Lima, Peru
Istanbul, Turkey
Zug, Switzerland
Lisbon, Portugal
London, United Kingdom
Chemnitz, Germany
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
Stuttgart, Germany
100.00
100.00
100.00
51.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
88.89
100.00
100.00
100.00
100.00
100.00
0.00
99.50
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
7
3
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
Aguascalientes, Mexico
54.01
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
Burnaby, Canada
EM-motive GmbH
Hildesheim, Germany
North America Fuel Systems Remanufacturing LLC
Kentwood, USA
50.10
50.00
50.00
Name of the Company Domicile, Country Capital share in %1Footnote 330 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Daimler Kamaz Trucks Holding GmbH
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
IONITY Holding GmbH & Co. KG
MB Service Japan Co., Ltd.
Polomex, S.A. de C.V.
SelecTrucks of Atlanta LLC
SelecTrucks of Houston LLC
SelecTrucks of Houston Wholesale LLC
Beijing, China
Vienna, Austria
Munich, Germany
Fuzhou, China
Munich, Germany
Hitachi, Japan
Garcia, Mexico
McDonough, USA
Houston, USA
Houston, USA
SelecTrucks of Omaha LLC
Council Bluffs, USA
Shenzhen DENZA New Energy Automotive Co. Ltd.
Shenzhen, China
TASIAP GmbH
Toll Collect GbR
ViaVan Technologies B.V.
Wagenplan B.V.
VI. Associated companies accounted for using the equity method
BAIC Motor Corporation Ltd.
Beijing Benz Automotive Co., Ltd.
BlackLane GmbH
FlixMobility GmbH
FUSO LAND TRANSPORT & Co. Ltd.
KAMAZ PAO
Stuttgart, Germany
Berlin, Germany
Amsterdam, Netherlands
Almere, Netherlands
Beijing, China
Beijing, China
Berlin, Germany
Munich, Germany
Kawasaki, Japan
Naberezhnye Chelny, Russian Federation
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
Yokohama, Japan
LSH Auto International Limited
Hong Kong, China
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
Okayamashi, Japan
P.T. Krama Yudha Tiga Berlian Motors
Jakarta, Indonesia
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
Jakarta, Indonesia
Taxify OÜ
There Holding B.V.
Toll4Europe GmbH
Verimi GmbH
Via Transportation Inc.
Tallinn, Estonia
Rijswijk, Netherlands
Berlin, Germany
Frankfurt am Main, Germany
New York, USA
VII. Joint operations, joint ventures, associated companies and substantial other investments accounted
for at (amortized) cost2
Abgaszentrum der Automobilindustrie GbR
BDF IP Holdings Ltd.
Beijing Mercedes-Benz Sales Service Co., Ltd.
ChargePoint Inc.
COBUS Industries GmbH
Weissach, Germany
Burnaby, Canada
Beijing, China
Campbell, USA
Wiesbaden, Germany
Esslinger Wohnungsbau GmbH
Esslingen am Neckar, Germany
European Center for Information and Communication Technologies –
EICT GmbH
Berlin, Germany
EvoBus Hungária Kereskedelmi Kft.
Gottapark, Inc.
Budapest, Hungary
San Francisco, USA
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Berlin, Germany
50.00
50.00
25.10
50.00
25.00
33.40
26.00
50.00
50.00
50.00
50.00
50.00
60.00
45.00
50.00
50.00
9.55
49.00
29.64
5.62
21.67
15.00
43.83
15.00
50.00
30.00
32.28
9.69
29.56
15.00
15.15
12.28
25.00
33.00
51.00
5.55
40.82
26.57
25.00
33.33
18.09
18.37
7
4, 7
7
Name of the Company Domicile, Country Capital share in %1Footnote F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 331
H2 Mobility Deutschland GmbH & Co. KG
hap2U SAS
inpro Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
Laureus World Sports Awards Limited
MercedesService Card GmbH & Co. KG
MFTB Taiwan Co., Ltd.
Momenta Global Limited
National Automobile Industry Company Ltd.
Omuta Unso Co., Ltd.
Berlin, Germany
Pontcharra, France
Berlin, Germany
London, United Kingdom
Kleinostheim, Germany
Taipei, Taiwan
Grand Cayman, Cayman Islands
Jeddah, Saudi Arabia
Ohmuta, Japan
PDB – Partnership for Dummy Technology and Biomechanics GbR
Ingolstadt, Germany
Proterra Inc.
Rally Bus Corp.
REV Coach LLC
smart-BRABUS GmbH
STARCAM s.r.o.
tiramizoo GmbH
Toyo Kotsu Co., Ltd.
Turo Inc.
VfB Stuttgart 1893 AG
Volocopter GmbH
what3words Ltd.
Zonar Systems, Inc.
Burlingame, USA
New York, USA
Wilmington, USA
Bottrop, Germany
Most, Czech Republic
Munich, Germany
Sannoseki, Japan
San Francisco, USA
Stuttgart, Germany
Bruchsal, Germany
Hinxworth, United Kingdom
Seattle, USA
7
2.90
34.59
20.00
50.00
51.00
33.40
5.10
26.00
33.51
20.00
5.12
12.33
20.00
50.00
51.00
20.84
28.20
5.17
11.75
10.17
12.23
19.42
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances.
4 In liquidation.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
7 Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability.
Furthermore, Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability in MOST Cooperation GbR,
Karlsruhe (Germany).
Name of the Company Domicile, Country Capital share in %1Footnote
Further
Information
G | FURTHER INFORMATION | CONTENTS 333
G | Further information
Responsibility Statement
Independent Auditor’s Report
Ten-Year Summary
Glossary
Index
Daimler Worldwide
334
335
336
338
339
340
334 G | FURTHER INFORMATION | RESPONSIBILITY STATEMENT
Responsibility Statement
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the Group
management report, which has been combined with the
management report for Daimler AG, includes a fair review of
the development and performance of the business and
the position of the Group, together with a description of the
principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, February 13, 2019
Dieter Zetsche
Martin Daum
Renata Jungo Brüngger
Ola Källenius
Wilfried Porth
Britta Seeger
Hubertus Troska
Bodo Uebber
G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT 335
Independent Auditor’s Report
To: Daimler AG, Stuttgart
Report on the Audit of the Consolidated
Financial Statements and of the Combined
Management Report
Audit opinions
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position
as of December 31, 2018, and the consolidated statement of
income, consolidated statement of comprehensive income/
loss, consolidated statement of changes in equity and consoli-
dated statement of cashflows for the financial year from
January 1 to December 31, 2018, as well as notes to the con-
solidated financial statements, including a summary of
significant accounting policies. In addition, we have audited
the combined management report of Daimler AG for the
financial year from January 1 to December 31, 2018.
In our opinion, on the basis of the knowledge obtained in the
audit
– the accompanying consolidated financial statements comply,
in all material respects, with the IFRSs as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB (Handels-
gesetzbuch: German Commercial Code) and, in compliance
with these requirements, give a true and fair view of the
assets, liabilities, and financial position of the Group as of
December 31, 2018, and of its financial performance for
the financial year from January 1 to December 31, 2018, and
– the accompanying combined management report as a whole
provides an appropriate view of the Group’s position. In all
material respects, this combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development.
Pursuant to Section 322 paragraph 3 sentence 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated financial
statements and of the combined management report.
Basis for the Opinions
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accordance
with Section 317 HGB and the EU Audit Regulation No.
537/2014 (referred to subsequently as “EU Audit Regulation”)
and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut
der Wirtschaftsprüfer (Institute of Public Auditors in Germany;
IDW). We performed the audit of the consolidated financial
statements in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under
those requirements, principles and standards are further
described in the “Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined
Management Report” section of our auditor’s report. We are
independent of the group entities in accordance with the
requirements of European law and German commercial and
professional law, and we have fulfilled our other German
professional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 paragraph
2 letter f) of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under Article 5
paragraph 1 of the EU Audit Regulation. We believe that the
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions on the consolidated financial
statements and on the combined management report.
Key Audit Matters in the Audit of the
Consolidated Financial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2018. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our opinion thereon, we do not provide
a separate opinion on these matters.
336 G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT
Impairment Risk on Operating Leases
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
E Note 1 “Significant accounting policies” and E Note 2
“Accounting estimates and management judgments”. Further
information on the operating leases can be found in the notes
to the consolidated financial statements in E Note 12
“ Equipment on operating leases” and in the comments in the
combined management report in the section entitled
“ Industry and business risks and opportunities”.
The Risk for the Consolidated Financial Statements
The balance sheet caption “Equipment on operating leases”
(€49,476 million) comprises motor vehicles on operating
leases. The impairment risk with regard to these vehicles is
primarily dependent on the residual value achievable at
the end of the lease. These future residual values depend on
the situation in the used-vehicle markets prevailing when
the vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The risk
for the financial statements is that any impairment losses will
not be recognized or that the amounts recognized will be
inadequate.
Our Audit Approach
We audited the recoverability of the balance sheet caption
“Equipment on operating leases” based on Daimler’s internal
portfolio allocation. The main focus of our risk-oriented audit
approach was addressed to those vehicles with an enhanced
impairment risk. We investigated and assessed the indications
assumed by the group for a possible requirement for the
recognition of an impairment loss and checked the calculation
of the write-downs determined by Daimler. We appraised
Daimler’s assessment with regard to the residual values that
can be achieved at the end of the term of the leases. We
also included vehicles with diesel technology in this appraisal.
In this connection, we in particular critically reviewed the
main influencing factors, such as the expected number of
returns from leasing, the current marketing results in order
to assess the accuracy of the estimates and future vehicle
model changes. For significant markets we furthermore
also audited the consistency of the assumptions made by
Daimler with residual value forecasts by independent
expect third parties.
Our Observations
The assumptions and assessments providing the basis for
the assessment of the recoverability of the statement of
financial position caption “equipment on operating leases”
and the recorded impairment losses are appropriate.
Loss Allowances on Receivables from Financial
Services
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
E Note 2 “Accounting estimates and management judge-
ments”. Further information on allowances on receivables from
financial services can be found in the notes to the consolidated
financial statements in E Note 1 “Significant Accounting Poli-
cies”, in E Note 14 “Receivables from financial services ”,
in E Note 33 “Management of financial risks” and in the
comments in the combined management report in the section
entitled “Industry and business risks and opportunities”.
The Risk for the Consolidated Financial Statements
The receivables from financial services (€96,740 million)
resulting from the financing and leasing activities of the Group
include receivables from sales financing with customers,
receivables from sales financing with dealers and receivables
from finance lease contracts. The allowances on these receiv-
ables amounted at the balance sheet date to € 1,086 million.
The calculation of the loss allowances is based since the finan-
cial year 2018 on expected credit losses and therefore also
includes expectations regarding the future. Recognition of the
expected credit losses is carried out by means of a three-
parameter procedure for the determination of loss allowances.
Hereby, the following is among other things taken into
account: various factors determining the value, such as the
determination of statistical default probabilities and loss
rates, the possible receivable amount on default, the parameter
transfer criteria that are related to a significant change in
the default risk of borrowers, and the calculation of future cash-
flows. Furthermore, macroeconomic scenarios flow into
the calculation, the identification of which to a high degree
includes discretionary judgments and uncertainties.
The risk for the financial statements is that the credit-
worthiness of customers and future cashflows is misjudged
or that the calculation of the risk provision parameter
is incorrect so that allowances are not recognized or are
insufficient.
Our Audit Approach
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the ‘associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, interrogations, review of guidelines and working instruc-
tions, checking the defined methods and their implementation
and checking and walking through the validation process and
the validation reports based on samples.
We audited the appropriateness and effectiveness of the
internal control system with regard to the risk classification
process and risk models and the identification of the factors
determining the value and the loss allowances, also by
rechecking the calculations. To this end, we also evaluated the
relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the IT systems
affected and related interfaces to ensure the completeness
and correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing. The
main focus of our audit was the evaluation of the methodical
approach in the determination of risk categories, default prob-
abilities and loss rates that are derived from historical data.
We obtained an understanding of this based on a risk-oriented
selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler
Financial Services and evaluated the adjustments of the param-
eters to the current market situation. In this connection, we
furthermore audited the data supporting the validations on the
basis of samples. In addition, we satisfied ourselves in con-
junction with a conscious sample of audits of individual cases
that the risk classification is correct and that the amount of
the calculated specific allowance is appropriate.
Our Observations
The methodical approach, the procedures and the processes
to calculate the impairment losses and the assumptions and
risk parameters flowing into the measurement are appropriate
to identify the credit risks in good time and to determine the
recognition of adequate impairment losses.
G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT 337
Measurement of the Provision for
Product Warranties
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in E Note 2 “Accounting estimates and management judge-
ments”. Further information on the guarantees and product
warranties can be found in the notes to the consolidated finan-
cial statements E Note 23 “Provisions for other risks” and
in the comments in the combined management report in the
section entitled “Company-specific risks and opportunities –
Warranty and goodwill cases”.
The Risk for the Consolidated Financial Statements
The provision for product warranties amounts to €7,043 million
and is included in the provisions for other risks.
Daimler faces various claims under product guarantees, or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature and
volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for the
consolidated financial statements is that the provision is
not properly measured.
Our Audit Approach
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provision. These
include primarily assumptions on expected susceptibility to and
the course of damage, and in addition the monetary value
of the damage per vehicle based on actual warranty, guarantee
and goodwill losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guarantee and
goodwill costs. We also checked that updated assessments of
the future repair costs and procedures were taken into account.
We obtained an understanding for the underlying numbers of
vehicles through the actual unit sales.
Our Observations
The calculation methods and the assumptions made are
appropriate.
338 G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT
Accounting Treatment of Legal Proceedings
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in E Note 2 “Accounting estimates and management judge-
ments”. Further information on the legal proceedings can
be found in the notes to the consolidated financial statements
E Note 23 “Provision for other risks” and E Note 30
“Legal proceedings” and in the comments in the combined
management report in the section entitled “Risks from
guarantees, legal and tax risks – legal risks”
The Risk for the Consolidated Financial Statements
Daimler is confronted by various legal proceedings, claims and
governmental investigations and directives (legal proceedings)
on a wide range of topics, including for example vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
product warranties, environmental matters, antitrust matters
(including actions for damages) and shareholder matters. Legal
proceedings relating to products deal with claims on account
of alleged vehicle defects. Some of these claims are asserted by
way of class action suits. If the outcome of such legal proceed-
ings is detrimental to Daimler AG, the Company may be required
to pay substantial compensatory and punitive damages or to
undertake service actions, recall campaigns, monetary penal-
ties or other costly actions.
Whether the recognition of a provision and, if so, in what amount
it is necessary on account of legal proceedings is dependent
to a high degree on discretionary estimates and assumptions by
the legal representatives. In view of this and the monetary
amounts involved with regard to the risks, the following legal
proceedings of Daimler are in our opinion of particular impor-
tance.
a) Diesel emission behavior – administrative proceedings
Several state and federal authorities and further institutions
worldwide have made inquiries and/or have carried out
investigations and/or proceedings and/or have issued direc-
tives. The inquiries and investigations cover test results,
the emission control systems in Mercedes-Benz diesel vehicles
and/or the interaction of the Company with the relevant
state and federal authorities as well as related legal issues and
implications, including, but not limited to, those under appli-
cable environmental, securities and criminal and antitrust laws.
b) Diesel emission behavior – class action and other suits in
USA and Canada
The use of devices that impermissibly impair the effectiveness
of emission control systems in reducing nitrogen-oxide (NOX)
emissions and which are supposed to cause excessive emissions
from vehicles with diesel engines is alleged in consumer class
action suits in the USA and Canada and in a suit of the State of
Arizona. In addition, the plaintiffs claim that consumers
were deliberately misled in connection with the advertising for
Mercedes-Benz diesel vehicles. Furthermore, it is alleged in
one of these class action suits that Daimler had conspired with
a component supplier in order to deceive U.S. supervisory
authorities and consumers.
c) Antitrust proceedings (including damage suits)
Following the imposition of a fine by the European Commission
against Daimler AG and other truck manufacturers in July 2016,
truck customers have raised damage claims against Daimler AG.
Since July 25, 2017, several class action suits have been filed
in the USA and in Canada against Daimler AG and other auto-
mobile manufacturers and several of their North American sub-
sidiaries. The plaintiffs claim to have suffered losses because
it is alleged that the defendants have engaged since the nine-
teen-nineties in anticompetitive behavior with regard to motor
vehicle technology, costs, suppliers, markets and other anti-
competitive matters, including diesel exhaust cleansing tech-
nology. On October 4, 2017, all pending U.S. class actions were
centralized in one proceeding. On March 15, 2018, the plain-
tiffs in the U.S. class action suits expanded and consolidated
their claims in two briefs, one of which was in the name
of the consumers and the other in the name of the dealers.
Daimler AG already filed an application for immunity (“leniency
application”) some time ago with the European Commission
in this connection. In the third quarter of 2018, the European
Commission instituted a formal investigation into possible
collusion regarding emission reduction systems.
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
and assumptions by the legal representatives.
The risk for the consolidated financial statements is that provi-
sions for legal proceedings are not set up or are inadequate.
Our Audit Approach
Our audit procedures comprised firstly an evaluation of the
process established by the Company to ensure the recording,
the estimation of the outcome of the proceedings and the
reflection in the annual financial statements of the legal pro-
ceedings. Secondly, we held discussions with the internal
legal department and with further departments familiar with the
matters under dispute and the Company’s external advisors
and attorneys, in order to obtain explanations on the develop-
ments and the reasons that had led to the respective estima-
tions. In addition, we reviewed the underlying documents and
minutes. As of the reporting date, assessments were available
from external attorneys, which support the assessment of the
risks by the legal representatives.
Finally, we evaluated the appropriateness of the description
of the aforementioned legal proceedings in the notes to the
consolidated financial statements.
Our Observations
The discretionary assessments and assumptions are appro-
priate.
Other Information
The legal representatives are responsible for the other
information. The other information comprises:
– the separate non-financial report included in the annual
report and the corporate governance statement, and
– the remaining parts of the annual report, with the exception
of the audited consolidated financial statements and
combined management report and our auditor’s report.
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other
information, and consequently we do not express an opinion or
any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider whether the
other information
– is materially inconsistent with the consolidated financial
statements, with the combined management report or our
knowledge obtained in the audit, or
– otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.
As instructed, we have performed a separate business
management review of the separate non-financial statement.
Please refer with regard to the nature, scope and results of
this business management review to our audit opinion dated
February 13, 2019.
G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT 339
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated Financial
Statements and the Combined Management Report
The legal representatives are responsible for the preparation
of the consolidated financial statements that comply, in all mate-
rial respects, with IFRSs as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
Section 315e paragraph 1 HGB and that the consolidated
financial statements, in compliance with these requirements,
give a true and fair view of the assets, liabilities, financial
position, and financial performance of the Group. In addition,
the legal representatives are responsible for such internal
control as they have determined necessary to enable the prepa-
ration of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the legal
representatives are responsible for assessing the Group’s
ability to continue as a going concern. They are also responsible
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is
an intention to liquidate the Group or to cease operations, or
there is no realistic alternative but to do so.
Furthermore, the legal representatives are responsible for the
preparation of the combined management report that, as a
whole, provides an appropriate view of the Group’s position and
is, in all material respects, consistent with the consolidated
financial statements, complies with German legal requirements,
and appropriately presents the opportunities and risks of
future development. In addition, the legal representatives are
responsible for such arrangements and measures (systems)
as they have considered necessary to enable the preparation
of a combined management report that is in accordance with
the applicable German legal requirements, and to be able to
provide sufficient appropriate evidence for the assertions in
the combined management report.
The supervisory board is responsible for overseeing the
Group’s financial reporting process for the preparation of
the consolidated financial statements and the combined
management report.
340 G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT
Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or
error, and whether the combined management report as a whole
provides an appropriate view of the Group’s position and, in
all material respects, is consistent with the consolidated finan-
cial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropriately
presents the opportunities and risks of future development,
as well as to issue an auditor’s report that includes our opinions
on the consolidated financial statements and on the combined
management report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Section
317 HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
(IDW) and supplementary compliance with the ISAs will always
detect a material misstatement. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this combined
management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also
– identify and assess the risks of material misstatement of
the consolidated financial statements and of the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
– obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the combined management report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the
effectiveness of these systems.
– evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made
by management and related disclosures.
– conclude on the appropriateness of the use by the legal
representatives of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as
a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor’s
report to the related disclosures in the consolidated financial
statements and in the combined management report or,
if such disclosures are inadequate, to modify our respective
opinions. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
– evaluate the overall presentation, structure and content of
the consolidated financial statements, including the dis-
closures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSs as
adopted by the EU and the additional requirements of German
commercial law pursuant to Section 315e paragraph 1 HGB.
– obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely respon-
sible for our opinions.
– evaluate the consistency of the combined management
report with the consolidated financial statements, its confor-
mity with (German) law, and the view of the Group’s
position it provides.
– perform audit procedures on the prospective information
presented by the legal representatives in the combined
management report. On the basis of sufficient appropriate
audit evidence, we evaluate, in particular, the significant
assumptions used by the legal representatives as a basis for
the prospective information, and evaluate the proper deri-
vation of the prospective information from these assumptions.
We do not express a separate opinion on the prospective
information and on the assumptions used as a basis. There
is a substantial unavoidable risk that future events will
differ materially from the prospective information.
G | FURTHER INFORMATION | INDEPENDENT AUDITOR’S REPORT 341
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement
that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on
our independence, and where applicable, the related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s
report unless laws or other legal regulations preclude
public disclosure of the matter.
Other Legal and Regulatory Requirements
Further Information pursuant to Article 10 of the EU Audit
Regulation
We were elected as group auditor by the annual general meet-
ing on April 5, 2018. We were engaged by the supervisory
board on April 26, 2018. We have been the group auditor of the
Daimler AG without interruption since the financial year 1998.
We declare that the opinions expressed in this auditor’s
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
Stuttgart, February 13, 2019
KPMG AG
Wirtschaftsprüfungsgesellschaft
Becker
Wirtschaftsprüfer
Dr. Thümler
Wirtschaftsprüfer
342 G | FURTHER INFORMATION | TEN-YEAR SUMMARY
Ten-Year Summary
G.01
€ amounts in millions
From the statements of income
Revenue
Personnel expenses1
Research and development expenditure2
thereof capitalized
EBIT1
Operating margin (%)1
Profit (loss) before income taxes1
Net operating profit (loss)1
as % of net assets (RONA)1, 3
Net profit (loss)1
Net profit (loss) per share (€)1
Diluted net profit (loss) per share (€)1
Total dividend
Dividend per share (€)
2009
2010
2011
2012
2013
2014
2015
2016
20174
2018
78,924
13,928
4,181
1,285
-1,513
-1.9
-2,298
-2,102
-6.6
-2,644
-2.63
-2.63
0
0.00
97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,154 167,362
19,607
16,454
17,424
18,002
21,141
20,949
18,753
22,186
22,432
4,849
1,373
7,274
7.4
6,628
5,120
17.5
4,674
4.28
4.28
1,971
1.85
5,634
1,460
8,755
8.2
8,449
6,240
19.9
6,029
5.32
5.31
2,346
2.20
5,644
1,465
8,820
7.7
8,116
7,302
19.6
6,830
6.02
6.02
2,349
2.20
5,489
1,284
5,680
1,148
6,564
1,804
7,572
2,315
8,711
2,773
9,107
2,526
10,815
10,752
13,186
12,902
14,348
11,132
9.2
8.3
8.8
8.4
8.7
6.7
10,139
10,173
12,744
12,574
13,967
10,595
9,173
22.6
8,720
6.40
6.40
2,407
2.25
7,678
18.8
7,290
6.51
6.51
2,621
2.45
9,007
20.1
8,711
7.87
7.87
3,477
3.25
9,007
10,880
19.1
22.5
8,784
10,617
7.97
7.97
3,477
3.25
9.61
9.61
3,905
3.65
7,963
14.8
7,582
6.78
6.78
3,477
3.25
From the statements of financial position
Property, plant and equipment
15,965
17,593
19,180
20,599
21,779
23,182
24,322
26,381
27,981
Leased equipment
Other non-current assets1
Inventories
Liquid assets
Other current assets
Total assets1
Shareholders’ equity1
thereof share capital
Equity ratio Group (%)1
Equity ratio industrial business (%)1
Non-current liabilities1
Current liabilities1
Net liquidity industrial business
Net assets (average)1, 3
30,948
49,476
79,582
29,489
15,853
18,532
19,925
22,811
26,058
28,160
33,050
38,942
46,942
47,074
40,044
41,309
45,023
48,947
48,138
56,258
62,055
67,613
73,394
12,845
14,544
17,081
17,720
17,349
20,864
23,760
25,384
25,686
9,800
10,903
9,576
10,996
11,053
9,667
9,936
10,981
12,072
31,635
76,271
128,821 135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,345 281,619
38,742
58,151
34,461
46,614
65,687
42,039
69,138
31,556
31,827
37,953
41,337
39,330
43,363
44,584
54,624
59,133
65,159
66,053
3,045
3,058
3,060
3,063
3,069
3,070
3,070
24.7
42.6
26.5
45.8
26.3
46.4
22.7
39.8
24.3
43.4
22.1
40.8
23.6
44.2
49,456
44,738
51,940
65,016
66,047
78,077
85,461
47,538
53,139
54,855
58,716
59,108
66,974
77,081
3,070
22.9
3,070
24.0
3,070
22.2
44.7
46.4
42.8
99,398 102,562 117,614
87,624
84,457
97,952
7,285
11,938
11,981
11,508
13,834
16,953
18,580
19,737
16,597
31,778
29,338
31,426
37,521
40,648
40,779
44,796
47,054
48,446
16,288
53,809
G | FURTHER INFORMATION | TEN YEAR-SUMMARY 343
€ amounts in millions
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
From the statements of cash flows
Investments in property, plant and equipment
Depreciation and amortization
2,423
3,264
Cash provided by (used for) operating activities
10,961
3,653
3,364
8,544
4,158
3,575
-696
Cash provided by (used for) investing activities
-8,950
-313
-6,537
4,827
4,067
-1,100
-8,864
Cash provided by (used for) financing activities
Free cash flow of the industrial business
1,057
2,706
-7,551
5,432
5,842
11,506
989
1,452
4,975
4,368
3,285
-6,829
3,855
4,842
4,844
4,999
-1,274
-2,709
2,274
5,479
5,075
5,384
222
5,889
5,478
3,711
-9,722
-14,666
6,744
5,676
-1,652
-9,518
7,534
6,305
343
-9,921
9,631
3,960
12,009
13,129
13,226
3,874
2,005
2,898
From the stock exchanges
Share price at year-end (€)
37.23
50.73
33.92
41.32
62.90
68.97
77.58
70.72
Average shares outstanding (in millions)
1,003.8
1,050.8
1,066.0
1,066.8
1,068.8
1,069.8
1,069.8
1,069.8
70.80
45.91
1,069.8 1,069.8
Average diluted shares outstanding
(in millions)
1,003.8
1,051.5
1,067.1
1,067.1
1,069.1
1,069.8
1,069.8
1,069.8
1,069.8 1,069.8
Ratings
Credit rating, long-term
S&P
Moody’s
Fitch
DBRS
Scope
BBB+
BBB+
BBB+
A3
A3
BBB+
BBB+
A3
A-
A-
A3
A-
A-
A3
A-
A-
A3
A-
A-
A3
A-
A
A3
A-
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
–
–
–
–
–
–
–
–
A
A2
A-
A
A
A
A2
A-
A
A
Average annual number of employees
258,628 258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530 298,465
1 The figures for the year 2012 have been adjusted, primarily due to effects arising from application of the amended version of IAS 19.
2 The figure for the year 2013 has been adjusted due to reclassifications within functional costs.
3 In the context of fine tuning the performance measurement system, the definition of net assets has been adjusted with retroactive effect as of 2015.
4 Several figures for the year 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9.
344 G | FURTHER INFORMATION | GLOSSARY
Glossary
CASE
Four strategic fields for the future of mobility: connectivity
(Connected), automated and autonomous driving (Autonomous),
flexible use and services (Shared & Services), and electric
drive systems (Electric).
Fair value
The amount for which an asset or liability could be exchanged
in an arm’s length transaction between knowledgeable
and willing parties who are independent of each other.
Compliance
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary com mitments, as well as
the related internal guidelines and policies in connection with
all activities of the Daimler Group.
Consolidated Group
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany’s Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors’ required rate of
return. E page 78
CSR – corporate social responsibility
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
EBIT
Earnings before interest and taxes are the measure
of operating profit before taxes. E pages 85 ff
Equity method
Accounting and valuation method for share holdings
in associated companies and joint ventures.
EU30
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
Goodwill
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately or
together depending on the type of vehicle and driving situation.
IFRS – International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies’ external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code
The “Integrity Code” has been in effect since November 2012.
It defines the principles of behavior and guidelines for every-
day conduct that are applicable at Daimler. Fairness, responsi-
bility and compliance with legislation are key principles in
this context.
INTELLIGENT DRIVE
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
Lithium-ion batteries
They are at the heart of the current gneration of electric
vehicles.Compared with conventional batteries, lithium-ion
batteries are considerably smaller and feature significantly
higher power density, short charging times and long lives.
NEDC – New European Driving Cycle
A measuring method used in Europe for the objective
assessment of vehicles’ fuel consumption, which is gradually
being replaced by WLTP since September 2017.
Rating
An assessment of a company’s creditworthiness issued
by a rating agency.
G | FURTHER INFORMATION | INDEX 345
Index
RDE
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
E page 207
Ride hailing
The app-based provision of rides in cars driven by taxi drivers,
licensed rental car drivers or private drivers.
ROE – return on equity
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT and
shareholders’ equity.
ROS – return on sales
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT and
revenue.
Truck weight classes
Europe: up to 6 tons (light-duty)
over 6 tons (medium- and heavy-duty)
NAFTA: classes 6 and 7; 8.9-15 tons (medium-duty)
class 8; over 15 tons (heavy-duty)
Value added
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
E pages 89 f
Value at risk
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
WLTP – Worldwide Harmonized Light Vehicles Test
Procedure
A test method which, compared to the previous NEDC, considers
additional factors such as higher average and top speed,
more dynamic driving behavior etc. Overall, this method leads
to more realistic but also higher figures for fuel consumption.
Annual Shareholders’ Meeting
Bonds
Capital expenditure
CASE
Cash flows
CO2 reductions
Connectivity
Compliance
Consolidated Group
Corporate governance
Digitization
Dividend
Earnings per share (EPS)
EBIT
Electric mobility
Financial income
Income taxes
Independent auditor’s report
Innovations
Integrity
Integrity Code
Investor Relations
Mobility services
Net assets
Net profit
Pension obligations
Portfolio changes
Production
Profitability
Ratings
Remuneration system
Revenue
ROE – return on equity
ROS – return on sales
Segment reporting
Shareholders’ equity
Shares
Strategy
Sustainability
Unit sales
Value added
Workforce
64
65, 96 f
96 ff, 162
68, 107 ff
93 ff, 119, 161 f, 231
206 ff
12 f, 68
116 ff, 217 ff
241 f
46 ff, 186 ff
12 f, 26 f, 34 f, 66
63, 89
62 ff, 315
85 ff
8 ff, 14 ff, 66, 70, 108
88, 258
88, 259 ff
335 ff
22 f, 32 f, 66 ff
116 ff, 217
116
65
30 f, 184 f
90
88, 228
91, 277 ff
76 f
74 ff
85 ff, 228
98
120 ff
84, 256 f
86
78, 118, 166, 172, 177, 180
311 ff
99 ff, 232
62 ff, 140f
66 ff
105 ff, 202 ff
81 ff, 166, 172, 177, 180
77 f, 89 f
113ff, 215
346 G | FURTHER INFORMATION | DAIMLER WORLDWIDE
Daimler Worldwide
G.02
Europe
Production locations
Sales outlets
Revenue (in millions of euros)
Employees
NAFTA region
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
16
–
39,239
126,488
2
–
19,014
10,293
1
–
917
792
1
–
1,358
3,948
2
–
30,845
3,664
–
–
1,593
251
8
–
11,435
36,020
14
–
16,634
23,588
2
–
1,964
8,234
–
–
984
392
4
–
6,522
14,398
–
–
746
321
3
–
9,922
22,312
1
–
1,711
1,527
1
–
514
2,091
–
–
272
124
–
–
845
47
–
–
355
109
7
–
3,268
16,028
1
–
256
518
3
–
652
1,644
1
–
71
57
2
–
227
488
–
–
58
35
–
3,830
–
–
–
1,433
–
–
–
661
–
–
–
354
–
–
–
2,444
–
–
–
252
–
–
–
51
11,595
9,365
–
4
11,548
2,099
–
2
256
333
–
1
367
162
–
10
2,211
1,884
–
2
292
227
Note: Unconsolidated revenue of each division (segment revenue).
Internet, Information, Financial Calendar
Information on the Internet
Specific information on our shares and earnings development can
be found on our website w daimler.com in the “Investors” section.
The Group’s annual and interim reports and the company financial
statements of Daimler AG can be accessed there. You can also find
topical reports, presentations, an overview of various key figures,
information on our share price and other services.
w daimler.com/investors
Publications for our shareholders:
Annual Report
(German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
The aforementioned publications can be requested from:
Daimler AG,
Investor Relations, HPC F343
70546 Stuttgart, Germany
Phone +49 711 17 92285
Fax +49 711 17 92287
order.print@daimler.com
w daimler.com/ir/reports
daimler.com/downloads/en
Financial Calendar 2019:
Interim Report Q1 2019
April 26, 2019
Annual Shareholders’ Meeting 2019
May 22, 2019
Interim Report Q2 2019
July 24, 2019
Interim Report Q3 2019
October 24, 2019
As changes to the above dates cannot
be ruled out, it is advisable to check on our
website a short time in advance.
w daimler.com/ir/calendar
Picture credits
Pages 32/33: Copyright Volocopter GmbH
All other pictures: Copyright Daimler AG
Daimler AG
70546 Stuttgart
Phone +49 711 17 0
Fax
www.daimler.com
+49 711 17 22244
Investor Relations
Phone +49 711 17 95277
+49 711 17 92261
+49 711 17 95256
+49 711 17 94075
Fax
ir.dai@daimler.com
The paper used for this Annual Report was
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responsibly and comply with the regulations
of the Forest Stewardship Council.
Daimler AG
Mercedesstraße 137
70327 Stuttgart
Germany
www.daimler.com