Strategy

As the inventor of the automobile, we look back on a long automotive history that we have shaped to a great extent with groundbreaking innovations and outstanding vehicles. We aim to continue playing a pioneering role with the ongoing development of mobility. We are committed to making the mobility of the future safe and sustainable. Our activities are focused on our customers’ needs.

We want to inspire them with

  • exciting premium automobiles that set standards in the areas of design, safety, comfort, perceived value, reliability and environmental compatibility;
  • commercial vehicles that are the best in their respective competitive environments;
  • outstanding service packages related to those products; and
  • new, customer-oriented mobility solutions that utilize the possibilities of increasing digitalization.

Target system. (See graphic 3.02) Our overriding corporate goal is to achieve sustainable profitable growth and thus to increase the value of the Group. We strive to achieve the leading position in all our businesses. We aim to inspire our customers with our brands, products and services. With groundbreaking technologies, we demonstrate our pioneering position for sustainable drive systems and safety. We strengthen our global presence by securing our position in traditional markets and expanding in new markets. Operational excellence and efficiency along with inspired and high-performing people are the key to our future corporate success. At the same time, our entrepreneurial activities are guided by the principle of sustainability: in the areas of economics, corporate governance, environmental protection and safety, as well as in our relations with employees, customers and society in general. The four corporate values of passion, respect, integrity and discipline form the foundation of our actions and help us to achieve our goals. One key principle applies to everything we do: No business in the world is worth violating laws, regulations or ethical standards. For us, integrity and business success are two sides of the same coin. That is why we want to lead the competition also in terms of integrity. We are working hard to get there.

Daimler AR2012 Strategy

Clear claim to leadership in all businesses. With the “Mercedes-Benz 2020” growth strategy, our Mercedes-Benz Cars division strives to occupy the leading role for premium automobiles by the end of this decade. This means that we aim to be ahead of the competition in terms of brand image, product range, unit sales and profitability. On the way to achieving this goal, we want to sell more than 1.6 million cars of the Mercedes-Benz brand already in 2015. The smart brand will further extend its pioneering role in urban mobility and will lead its market segment for alternative drive systems. At Daimler Trucks, we want to further strengthen our position as number 1 in the global truck business and aim to expand to an annual unit-sales volume of more than 700,000 vehicles by the end of the decade. Daimler Buses has set itself the goal of further strengthening its leading position for buses above 8 metric tons gross vehicle weight, and Mercedes-Benz Vans is striving to achieve further profitable growth also outside its present market segments and markets with the strategic initiative, “Vans goes global.” Daimler Financial Services has targeted the position of best captive financial services provider and will continue to grow in line with our automotive business and additionally also in the area of mobility services.

Four strategic growth areas. We aim to achieve our goals through four strategic growth areas. (See graphic 3.03)

Daimler AR2012 Strategic growth

We will

  • further strengthen our core business,
  • grow in new markets,
  • take the lead with “green” technologies, and
  • lead the way with the development of new mobility concepts and services.

Strengthening the core business. A strong core business is the foundation for sustainable profitability and growth. In order to strengthen our core business, we are renewing and expanding our model range with a focus on the changing desires of our customers. At the same time, we are effectively developing our brands and taking measures to increase efficiency and competitiveness in all our businesses. We will also further extend our pioneering role for active and passive safety with both cars and commercial vehicles.

The Mercedes-Benz model range will be extended by a total of 13 new models by the year 2020. The CLS Shooting Brake kicked off this model offensive in the autumn of 2012. “The best or nothing” serves as an incentive to consolidate the top position of the Mercedes-Benz brand. The year 2013 will see the market launch of the new S-Class, with which we will underscore our claim to leadership in the areas of comfort and security with new technologies. With the new A-Class, we are aiming specifically at younger target groups. This objective is also served by our brand and corporate communication, in which we are increasingly applying digital media. As a result of our long-term initiative, “Customer Satisfaction #1,” we have achieved first place for customer satisfaction in many markets. The “Fit for Leadership” program, a key element of the Mercedes-Benz 2020 growth strategy, consists of two dimensions. In the short term, it is combining existing efficiency actions and will be supplemented with additional newly derived elements. The medium term dimension creates structures that will make our business system even more competitive. By the end of the year 2014, we want to achieve a sustained improvement in our cost structures of approximately €2 billion with this program.

At Daimler Trucks, we have been working for several years on uniform product platforms and modular systems for vehicles and components. At the same time, we have developed a global production network with great flexibility. With the new Antos, the first truck model series developed specifically for heavy-duty distribution transport, we are continuing our model offensive in the area of trucks and are once again setting trends in terms of economy, safety and comfort. The new Fuso Canter Eco Hybrid, which we now produce and distribute also in Europe, once again demonstrates our leading role with technologies for the reduction of fuel consumption and with alternative drive systems for commercial vehicles.

With our “Daimler Trucks #1” excellence program, we aim to sustainably secure our profitability targets by the end of 2014. In this context, we are on the one hand concentrating on increasing the efficiency of the operating units. On the other hand, we want to improve the interaction between the various business units and functions by means of interdepartmental initiatives, thus better utilizing the potential of our global positioning. The sustained earnings improvement targeted with Daimler Trucks #1 is €1.6 billion, which we intend to realize by the end of 2014.

Mercedes-Benz Vans will support the planned worldwide growth with new products and new technologies. There will be an important contribution in this respect from the new Citan city van, with which the Mercedes-Benz brand will penetrate the small-van segment. In the United States, we intend to continue our growth with the Sprinter, which we sell there under both the Mercedes-Benz and the Freightliner brands.

The Daimler Buses division is strengthening its competitive position with new products and economical engines. The new Setra ComfortClass 500 coach sets new standards for economy, quality and comfort, with the added attraction of a unique safety concept. In addition, Daimler Buses is working to secure its long-term profitability, through the reorganization of its European sales structure for example.

Daimler Financial Services is also focused on growth - and in different ways: The division will continue increasing its business volumes along with the model and market offensives for cars and commercial vehicles. At the same time, it will further expand its product offering in the field of vehicle financing, as well as with mobility services and insurance.

Growing in new markets. Growth in global automotive demand will mainly take place in the markets outside Europe, North America and Japan in the coming years. Although we continue to strengthen our position in those traditional markets, we also aim to expand in other regions, especially in Brazil, Russia, India and China, the so-called BRIC countries. In order to achieve Mercedes-Benz Cars’ sales targets, we are intensifying our activities above all in China. That is where versions of the new compact-car series will be produced in the future and a new engine plant for four-cylinder engines will be opened in 2013. At the same time, we are expanding our sales network in China and reorganizing the distribution system. With medium and heavy trucks, we are focusing on the cooperation with our partner Foton in China. Mercedes-Benz Vans produces the Vito, Viano and Sprinter models for the Chinese market in cooperation with Fujian Benz Automotive Corporation. In Brazil, Daimler Trucks is optimizing its production capacities and further extending its strong market position with new truck models. In Russia, the biggest European truck market, we are continuing our expansion in cooperation with our partner Kamaz. Mercedes-Benz Vans’ Sprinter will be produced in Russia under a license agreement with truck manufacturer GAZ as of the year 2013. In India, Daimler Trucks has started production of the first trucks under the new BharatBenz brand. By the year 2014, BharatBenz will have launched a total of 17 truck models in weight classes above 6 metric tons. This will allow Daimler to satisfy the rising demand for robust and reliable trucks. Daimler Buses is active in India with our partner Sutlej in the field of coaches. Daimler Financial Services has established a new company in Malaysia. In 2012, we were the first automobile manufacturer to offer leasing on a large scale for cars and commercial vehicles in China; we established an additional company for this purpose. We are also expanding our market position in other new growth markets in addition to the BRIC countries.

Leading with green technologies. As a pioneer of automotive engineering, our goal is to make the future of mobility safe and sustainable. Varying mobility requirements call for different drive solutions. Our portfolio of solutions ranges from the optimization of internal-combustion engines to hybrid drive and locally emission-free driving. Already in the year 2012, we were able to reduce the CO2 emissions of newly registered vehicles from Mercedes-Benz Cars in the European Union to an average of 140 grams per kilometer. By the year 2016, we aim to reduce the CO2 emissions of our new car fleet in the European Union to an average of 125 g/km. Worldwide, we are the first automobile manufacturer to use lithium-ion batteries in a series-produced car with hybrid drive. With nine different models, we have the biggest product portfolio of electric vehicles – from light motorcycles to cars, light trucks, vans and buses. Our fuel-cell vehicles have already clocked up more than 9 million kilometers in customer use – this depth of experience with fuel cells is unique in the automotive industry. The Actros is the most economical truck in its market segment and Daimler leads the world with hybrid-drive trucks.

Pioneering with the development of new mobility concepts and services. More than half of the world’s population already lives in cities, and this proportion is rising. Digital technologies are changing our products, our brand and corporate communication, and our working life. In parallel, customers are increasingly demanding individual, needs-oriented and convenient mobility solutions. This is creating new business potential for Daimler, which we intend to effectively utilize with new and innovative products and services. For some groups of customers, who for various reasons do not own a car themselves, the flexible use of a vehicle is important nonetheless. We are reacting to this by offering mobility solutions for private, business and public applications such as car2go, CharterWay, Bus Rapid Transit (BRT) and the “moovel” mobility platform. We will significantly expand the car2go business in the coming years. By the end of 2012, approximately 270,000 customers had registered in 18 cities of Europe and North America. With the “moovel” integrated mobility platform, we offer customers the possibility to optimally combine various private and public mobility services, with combined billing via a pay system planned for the future. We have already gone live with “moovel” in Stuttgart and Berlin. In order to further expand our range of mobility services, we are entering into strategic partnerships with various mobility service providers, which we will successively integrate into our mobility platform.

car2go

In the area of innovative services, we offer the new sale&care product for the smart fortwo electric drive and create service brands such as “TruckWorks” for commercial vehicles as well as “My Service” and “mbrace2” for cars. Furthermore, we offer communication systems such as COMAND Online, making cars into mobile communication centers. Within the framework of “Digital Life,” we combine the areas of working life, corporate and brand communication, customer and product with new business opportunities. In this way, we are working on automotive concepts to shape the future of mobility while promoting growth in all segments, markets and businesses.

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

Portfolio changes and strategic cooperations. By means of targeted investment and future-oriented partnerships, we strengthened our core business, pushed forward with new technologies and utilized additional growth potential in 2012. At the same time, we focused on the continuous further development of our existing business portfolio.

In February 2012, Daimler and Chinese partner Beiqi Foton Motor Co., Ltd. received the business license for the Beijing Foton Daimler Automotive Co., Ltd. (BFDA) joint venture. Through BFDA, Daimler’s truck division will participate in the Chinese market for medium and heavy trucks. Foton is contributing its existing business with medium and heavy trucks of the Auman brand, production facilities and the sales and service network. The joint venture will also benefit from Foton’s knowledge of markets in China and the whole of Asia. This will enable BFDA to push forward faster with the development of business in the entire region. The first jointly produced truck under the Auman brand already rolled off the assembly line in the third quarter of 2012. Furthermore, BFDA plans to set up an engine plant.

In April 2012, the antitrust authorities approved the acquisition by AKKA Technologies S.A. of a stake in MBtech Group. As already agreed in December 2011, AKKA Technologies was then able to buy a 65% interest in MBtech Group, which was previously wholly owned by Daimler. An agreement on this transaction was signed by Daimler and AKKA Technologies on December 7, 2011. With an interest of 35%, Daimler remains a long-term and strategic shareholder as well as an important client of MBtech. AKKA Technologies’ entry at MBtech has created one of the biggest European engineering consultancies for the automotive, aerospace, transport and energy industries.

In September 2012, Daimler and Renault-Nissan confirmed that the German-French-Japanese partnership now includes two additional shared projects in the field of fuel-efficient drive systems. In one of the projects, the two companies are jointly developing a new family of four-cylinder gasoline engines. These turbo engines with direct fuel injection will offer the latest technology in a compact form. The goal is to significantly reduce fuel consumption combined with even lower emissions. The new engines are to be produced jointly and will be used in Daimler and Renault-Nissan vehicles as of the year 2016. In the other project, Daimler will grant Nissan a license to produce automatic transmissions incorporating the latest technology for Nissan and Infiniti vehicles as of 2016. The Nissan subsidiary Jatco plans to produce these new transmissions in Mexico. Already in January 2012, it was announced that Daimler and Nissan intend to jointly produce Mercedes-Benz four-cylinder gasoline engines at Nissan’s powertrain plant in Decherd, Tennessee. Production will start in 2014. The engines will be used in both Mercedes-Benz and Infiniti models.

In December 2012, Daimler AG reduced its equity interest in the European Aeronautic Defence and Space Company (EADS) in economic terms from 14.9% to 7.5%. The sale of 61.1 million EADS shares resulted in proceeds of €1.7 billion, which had a corresponding positive impact on our free cash flow. Those proceeds will be used for the global growth of our divisions, for our products, and to strengthen our technologically leading position. The reduction of our equity interest in EADS took place in the context of optimizing the company’s shareholder structure: State influence is now limited to 30%. In this context, the other private-sector shareholders in the Dedalus investor consortium also sold their EADS shares, while the public-sector Dedalus investors continue to hold their shares. The voting rights of the Dedalus consortium are to be exercised by Daimler until the extraordinary shareholders’ meeting of EADS on March 27, 2013. As part of the focus on our core business of producing motor vehicles and providing mobility services, we generally intend to further reduce our interest in EADS. No decision has yet been made on when or how that will occur.

Also in December 2012, Daimler established a new, integrated car distribution company in China, thus taking an important step in the implementation of our growth strategy. Beijing Mercedes-Benz Sales Service Co., Ltd. is a 50:50 joint venture with our strategic partner Beijing Automotive Group (BAIC). The new company combines the functions of sales and marketing, aftersales, dealer network development, used-car and fleet-car sales, and dealer and workshop training for Mercedes-Benz cars in China in an integrated organization. Previously, there were two separate sales channels: one for imported and one for locally produced vehicles. Already in mid-2012, Daimler had also increased its interest in the import company, Mercedes-Benz (China) Ltd., from 51% to 75% – an important step on the way to an integrated distribution company.