Objectives and Strategy

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

Daimler Corporate Movie 2015

Four objectives

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

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

Dr. Dieter Zetsche | Full Year Results 2014

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

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

The “Mercedes-Benz 2020” growth strategy is designed to ensure that our Mercedes-Benz Cars division will be playing the leading role in the premium segment by the end of the decade. We also plan to further enhance the smart brand’s pioneering role in urban mobility. In addition, we want to further strengthen Daimler Trucks’ position as the leading truck manufacturer in the global truck business. With the help of its “Mercedes-Benz Vans goes global” strategy, Mercedes-Benz Vans is aiming to achieve further profitable growth outside its established markets and segments as well. Daimler Buses will further strengthen its leading position in the segment for buses above eight metric tons gross vehicle weight. Daimler Financial Services plans to position itself as the best captive financial services provider and will continue to grow in line with our automotive business, as well as in the area of mobility services.

In order to safeguard our profitability under difficult market conditions as well, we are adapting our business system in a way that will enable us to react quickly and flexibly to market fluctuations and create value as close to our markets as possible.

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

Four strategic growth areas

We plan to achieve our goals in four strategic growth areas. (See graphic A.09)

Daimler AR2014 A.09 Strategic growth

We will

  • further strengthen our core business,
  • continue growing in new markets,
  • take the lead with green technologies and safety, and
  • push forward decisively with the development of connectivity and new mobility concepts.

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

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

Mercedes-AMG GT | Trailer

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

In order to achieve sustained profitable growth, we have supplemented the “Mercedes-Benz 2020” growth strategy with the “Fit for Leadership” program. Fit for Leadership has improved our cost structure by a total of €2 billion over the last two years. However, Fit for Leadership also includes a structural component that’s designed to gear our business system toward growth and make it more flexible and competitive. Along with the module strategy and the reorganization of the international production network, this will also be achieved by the restructuring of the sales organization in Germany.

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

smart fortwo & forfour | World Premiere [Trailer]

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

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

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

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

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

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

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

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

We will begin manufacturing the C-Class and the GLA for the local market in Brazil in 2016. Daimler Trucks is investing in the modernization of its product range in Brazil in order to further improve its strong market position over the medium term. Our two production plants (São Bernardo do Campo and Juiz de Fora) are also being modernized.

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

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

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

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

Leading in “green” technologies and safety. Our goal as a pioneer of automotive engineering is to make the future of mobility safe and sustainable. Different mobility needs require the use of different drive-system solutions. Our portfolio here ranges from optimized internal combustion engines to hybrid drives and locally emission-free driving solutions. In 2014, we were able to reduce the CO2 emissions of newly registered vehicles from Mercedes-Benz Cars in the European Union to an average of 129 g/km. Our overall objective is to reduce the CO2 emissions of our new car fleet in the European Union to an average of 125 g/km by 2016.

Certain new C-Class models consume approximately 30% less fuel than their predecessors. The S 500 PLUG-IN HYBRID (S 500 PLUG-IN HYBRID Fuel consumption in l/100 km (combined): 2.8 CO2 emissions in g/km (combined): 65 Electricity consumption in kWh/100 km: 13.5) combines the performance of an eight-cylinder engine with the fuel economy of a small car and can drive up to 33 km completely emission-free. Consistent hybridization is an important component of the drive-system strategy at Mercedes-Benz Cars. We plan to launch a total of ten new plug-in hybrid models in the period 2014–2017. We expanded our range of series-produced electric vehicles in 2014 to include the new electric B-Class for the United States and Europe. The Denza brand gives us an electric vehicle exclusively for the Chinese market. Together with Ford and our strategic cooperation partner, Nissan, we continue to move ahead with the commercialization of fuel cell vehicles. In the fall of 2014, a B-Class F-CELL (B-Class F-CELL Hydrogen consumption in kg/100 km: 0.97 CO2 emissions in g/km: 0.0) from the current Mercedes-Benz fuel cell fleet demonstrated that fuel cell vehicles are suitable for mass production, as the model was driven for 300,000 kilometers under normal conditions, thereby setting a new endurance record. We are cooperating with leading industrial companies on the expansion of the hydrogen filling station network in Germany in order to set up the infrastructure needed for fuel cell vehicles.

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

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

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

Mercedes-Benz Future Truck 2025 | World Premiere

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

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

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

Extensive investment in the future of the company

In the coming years, we will continue to move ahead systematically with our investment offensive in order to implement our growth strategy through the introduction of new products, new technologies and state-of-the-art manufacturing capacities. We will therefore invest approximately €11 billion in property, plant and equipment in 2015 and 2016, as well as more than €13 billion in research and development projects. (See graphics/tables A.10 to A.13)

 

Daimler AR2014 A.10 Investment 2015 2016

 

A.11

Investment in property, plant and equipment
  2013 actual 2014 actual 2015 – 2016
Amounts in billions of euros      
       
Daimler Group 5.0 4.8 11.1
Mercedes-Benz Cars 3.7 3.6 8.1
Daimler Trucks 0.8 0.8 2.3
Mercedes-Benz Vans 0.3 0.3 0.5
Daimler Buses 0.1 0.1 0.2
Daimler Financial Services 0.02 0.02 0.03
Daimler AR2014 A.12 Research and development 2015 2016

A.13

Research and development expenditure
  2013 actual 2014 actual 2015 – 2016
Amounts in billions of euros      
       
Daimler Group 5.5 5.7 13.3
Mercedes-Benz Cars 3.8 4.0 9.7
Daimler Trucks 1.2 1.2 2.4
Mercedes-Benz Vans 0.3 0.3 0.8
Daimler Buses 0.2 0.2 0.4

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

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