Portfolio changes and strategic partnerships

By means of targeted investments and future-oriented partnerships, we strengthened our core business and utilized additional growth potential in 2015. At the same time, we focused on the continuous further development of our existing business portfolio, as well as on improving our competitiveness in our core business areas.

Entry into the digital map business

In August 2015, Audi, BMW and Daimler reached an agreement with the Nokia Corporation on the acquisition of its HERE subsidiary, which provides digital mapping and location-based services. This move will ensure the availability of HERE products and services as a permanently open, independent and value-added platform for cloud-based map and mobility services. Digital maps from HERE will serve as the foundation for the next generation of mobility and location-based services, which in turn will form the basis for new assistance systems and eventually fully automated vehicles. Such systems link highly precise digital map data with real-time vehicle data in a manner that enhances road safety and enables the introduction of innovative products and services. The three partners have acquired equal numbers of shares in HERE. The purchase price of €2.6 billion was financed by capital contributions from Audi, BMW and Daimler and partially by borrowing. Daimler’s capital contribution amounted to €0.7 billion. After receiving the approval of the antitrust authorities, the transaction was completed in December 2015.

Audi, BMW and Daimler plan for other investors to acquire shares in HERE and to reduce their own stakes in HERE from the current level of 33.3 %.

Expansion of the partnership with BAIC

Daimler and the Chinese automobile manufacturer BAIC Motor Corporation plan to intensify their cooperation in the area of financial services. To this end, Daimler AG and BAIC Motor Corporation signed an agreement in March 2015. In line with that agreement, BAIC Motor, which is the passenger car division of the BAIC Group, has acquired 35 % of Mercedes-Benz Leasing Co., Ltd (MBLC) within the framework of a capital increase. Daimler will retain its majority interest with 65 % of MBLC’s shares. The transaction was completed at the beginning of September 2015 after being approved by the relevant authorities. The expansion of financial services is an important factor for achieving growth in China in the future.

We once again expanded production capacities at Beijing Benz Automotive Co., Ltd. (BBAC) in 2015. Another SUV model for the Chinese market went into production there in October - the GLC - about six months after the start of production of the compact GLA. In 2015, we produced more than 200,000 vehicles locally at BBAC for the first time in one year.

Production joint venture with Nissan launched in Mexico

Daimler and the Renault-Nissan Alliance have intensified their cooperation five years after the launch of their strategic partnership. In September, the two companies laid the cornerstone for a new joint-venture production plant in Aguascalientes, Mexico, known as COMPAS (Cooperation Manufacturing Plant Aguascalientes), whose establishment had been agreed upon back in June 2014. The new plant is being constructed at a site in the direct vicinity of an existing Nissan facility. After the start of production, the new plant will be ramped up to an annual capacity of 300,000 units, which is expected to be achieved by 2021. Production is scheduled to begin with Infiniti models in 2017. The plant will start producing Mercedes-Benz brand vehicles in 2018. The partners will invest a total of $1 billion in the joint venture. Daimler and Renault-Nissan will also cooperate on the development of the next generation of premium compact cars for the Mercedes-Benz and Infiniti brands.

Daimler acquires an interest in Zonar Systems

In June 2015, Daimler Trucks North America (DTNA) acquired a minority interest in Zonar Systems Inc., which is one of the leading developers and suppliers of logistics, telematics and connectivity solutions. The investment is a key milestone along the way to completely connected vehicles and value-added services for truck fleet operators and drivers. DTNA and Zonar will work together to launch tailored applications for North American customers.

Reorganization of the sales system

Mercedes-Benz is restructuring its own sales organization in Germany for the requirements of the future. The objective is to ensure optimal customer care, to operate profitably on a sustainable basis, and thus to protect jobs. In this context, 63 of the total 158 Daimler-owned sales locations were sold in 2015. For 26 of the operations sold, the transfer of ownership took place on January 1, 2016. The other transactions will be concluded in 2016.

In addition, Daimler’s own sales-and-service centers, which had been organized in early 2015 as regional sales centers, eleven for cars and eleven for trucks, have now been transitioned into the planned target structure of seven regional sales centers for cars and seven for trucks as of January 1, 2016. We are thus consistently pursuing our strategy of a divisional orientation; by focusing on the respective business we are ensuring optimal customer care, the basis for secure jobs and adequate profitability.

We are continually optimizing our sales structures also in other markets.

Sale of Atlantis Foundries (Pty.) Ltd.

Daimler Trucks also continually works to improve its competitiveness. Within the framework of this strategy, a decision was made at the end of February to sell the division’s Atlantis Foundries business in South Africa. The new owner is an established supplier company that will continue to deliver cylinder crankcases to Daimler. The transaction was completed at the end of June 2015 after approval by the relevant authorities.

Efficiency programs take full effect

With the programs “Fit for Leadership” at Mercedes-Benz Cars, “Daimler Trucks #1” at Daimler Trucks, “Performance Vans” at Mercedes-Benz Vans and “GLOBE 2013” at Daimler Buses, we were able to achieve earnings contributions totaling approximately €4 billion by the end of 2014 as a result of measures taken for the sustained improvement of cost structures, as well as through additional business activities. As planned, those programs had their full effect in 2015. Further efficiency enhancements are currently being implemented in all divisions. In addition, we are taking fundamental measures for the long-term and structural optimization of the business system. For example, the “Fit for Leadership Next Stage” follow-up program was launched at Mercedes-Benz Cars in 2015. We are also continuing the standardization and modularization of production processes throughout the Group, making intelligent use of vehicle platforms in order to generate additional cost benefits, for example. In parallel, we are systematically moving ahead with digital connectivity at all divisions and along the entire value chain — from development and production to sales and service. Among other things, this approach gives us additional scope to become faster and more flexible and efficient, to the benefit of our customers. These long-term structural measures already had a positive impact on earnings in 2015 and will facilitate further efficiency gains in the coming years.

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