Chairman's Letter

1.1 chairmans letter

2015 was an extremely successful year for your company. We achieved a lot. In Formula 1, for example, we won both the drivers’ championship and the constructors’ title. Some people might think, “Great, but you already did that the year before.” That’s right. And that’s exactly what it’s about. Getting to the top is hard – staying at the top is even harder. But that is our ambition – in motorsport and in our core business: We want to be in the lead on a sustained basis.

Our numbers show that we have the potential to do that: 2.9 million customers decided in favor of a vehicle from the Daimler Group last year – an absolute record. And at 149.5 billion euros, our revenue was higher than ever before as well. EBIT from the ongoing business increased by 36 percent to 13.8 billion euros. The bottom line is a net profit of 8.7 billion euros. At the Annual Shareholders’ Meeting, the Board of Management and the Supervisory Board will therefore propose the distribution of the highest dividend in our company’s history.

How did the individual divisions contribute to these outstanding results?

Mercedes-Benz Cars played a large part. With sales of more than two million vehicles, we set our fifth consecutive record for unit sales. This means that we were once again the world’s strongest-growing premium brand. For the first time, China was the most important market for Mercedes-Benz. Our multitude of models is the key to this success. The main drivers of the sales growth were the C-Class, our SUVs and the compact cars. In addition, we achieved our profitability target of a ten-percent return on sales in 2015.

Daimler Trucks reached a major milestone in 2015 with sales of more than 500,000 vehicles. In regional terms, the development of the truck business was very varied. The decrease in unit sales in the weak Latin American market was offset by an exceptionally strong performance in North America. We underscored our role as the leading truck manufacturer with milestones in the field of autonomous driving. In Nevada, we received the very first road approval for a truck driving autonomously. We also tested the first autonomous series-production truck on a German autobahn.

At Mercedes-Benz Vans, the Sprinter in particular gave us reason to celebrate. The bestseller not only had its twentieth anniversary in 2015, it also set a new sales record. Another highlight was the market launch of the Vito in North and South America. In total, we increased our unit sales of all van models by nine percent last year.

Daimler Buses performed well in a difficult market environment, although we did not quite match the unit sales of the previous year. In the future, we intend to profit from the growth potential of the Indian market, and we have already charted the course: After a construction period of just two years, series production started in fall last year at our new bus plant in Chennai.

Daimler Financial Services posted record levels of new business and contract volume. Meanwhile, we finance or lease nearly half of all the vehicles we sell.

All of this success was made possible by our 284,000 employees and their untiring efforts. On behalf of the entire Board of Management, I would like to thank them for their excellent work.

There is every indication that 2016 will also be a good year. Although the world economy is growing only moderately and there are many challenges ahead of us, the year is an opportunity for further improvement.

Against this backdrop, the product offensive at Mercedes-Benz enters the next phase. With the new E-Class, we have already had the year’s most important premiere. The most intelligent business sedan sets new standards for interior design and autonomous driving. Another major feature of the year 2016 will be our “Dream Cars.” Spread over the year, we will present a whole range of highly emotive automobiles. In addition, the products that we launched in 2015 will have their full market impact this year.

For our commercial vehicles, a special focus in 2016 is the IAA Commercial Vehicles Show in Hanover, where we will once again demonstrate our technology leadership in the areas of connectivity, safety and efficiency. We will also expand our global presence. Last October, the first of six international regional centers was opened in Dubai. These centers will enhance our proximity to customers and allow us to fully utilize the potential of new growth markets in the future. We will also expand our platform strategy. For example, we will launch our medium-duty engine family also in the NAFTA region in 2016.

Our course for the years ahead is clear: We will further strengthen our core business, grow worldwide, lead in terms of technology, and push forward with the digitization of our products and services and along our entire value chain. For this purpose, we will significantly increase our budget for research and development and our capital expenditure in the next two years. We will do that on the basis of sound finances and with the goal of sustainably strengthening our future competitiveness. We need to safeguard the level of profitability we have achieved over the long term and generally make the Group more robust.

As you can see, Daimler is moving at high speed in the right direction. We look forward to continuing this journey with you, our shareholders.

Sincerely yours,

Dieter Zetsche

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