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 activities. Our goals are to be the leader in technology and innovation, to inspire our customers and to continue to grow profitably. In this way, we intend to continually increase our enterprise value. We plan to achieve our goals by focusing our activities on four strategic areas in the coming years.
Dieter Zetsche on the Full Year Results 2015
Technology leadership and innovation
We set standards for technology and innovation. We want our products from all the divisions to be industry leaders in terms of safety, autonomous driving with cars and commercial vehicles, and green technologies. We also seek to be the leader in the use of digital technologies, both in our products and services and as channels for maintaining contact with our customers. We utilize the potential generated by Group-wide research activities and predevelopment and, where possible, we make use of standardized systems and solutions.
Our leading brands in all the 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.
We work in teams whose diversity in terms of gender, nationality and age is of great importance. Our employees are proud to work at Daimler, and we are 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 is 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. (See Integrity and Compliance)
We intend to achieve an average return on sales (EBIT in relation to revenue) for the automotive business of 9 % on a sustained basis. This overall figure is based on the return targets for the individual divisions. 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 have set a target for return on equity of 17 %.
The “Mercedes-Benz 2020” growth strategy is designed to ensure that our Mercedes-Benz Cars division will play the leading role in the premium segment worldwide 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. Mercedes-Benz Vans aims to achieve further profitable growth with the help of its “Mercedes-Benz Vans goes global” strategy. 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 maintain its position as the best captive financial services provider; it will continue to grow in line with our automotive business and also in the area of mobility services.
In order to safeguard our profitability also under difficult market conditions, we are adapting our business system in a way that enables us to react quickly and flexibly to market fluctuations and create value as near to our markets as possible.
Sustainability is a fixed element of our philosophy. For us, sustainability means conducting business responsibly to ensure long-term success in harmony with the environment and society. (See Sustainability)
Four strategic focus areas
We plan to achieve our goals through four strategic focus areas. (See graphic A.09)
We will focus on
- strengthening our core business,
- growing globally,
- leading in technology
- pushing digitization.
Strengthening our core business
We are strengthening our core business with innovative first-class products, competitive structures, flexible processes and a customer-oriented organization. We are continuing the model offensive launched at Mercedes-Benz Cars in 2012 by developing additional models and attractive successor models in all segments. 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. In 2015, we expanded our product range with a Mercedes-Maybach model, the Mercedes-AMG GT, the CLA Shooting Brake, and the GLE coupe. The major highlight of 2016 will be the new E-Class, whose innovative assistance and safety systems will take the model a step further in the direction of autonomous driving. In the S-Class segment, the S-Class convertible presented at the Frankfurt Motor Show will be launched without a direct predecessor, and additional attractive models will then follow.
We continue to forge ahead with our vehicle architecture and module strategy. It allows 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. Comprehensive restructuring measures are helping to safeguard the future of our German plants. To this end, we have also reached far-reaching agreements with employee representatives in the areas of products, expertise, vertical integration and employment. In addition, plans call for the investment of €4.75 billion in our facilities in Germany over the next few years. We will also invest $1.3 billion in the expansion of our production operations in the United States. We will open a new plant in Mexico with our strategic partner Renault-Nissan and will begin producing Mercedes-Benz compact vehicles there in 2018. We continue to systematically enhance our brands through the creation of new products and the expansion of existing model series. Our “Best Customer Experience” initiative is designed to offer our customers the best experience among all automakers. All sales, service and financial services activities are aligned with each other throughout the entire duration of the customer relationship — right from the first contact. New sales formats such as mobile sales pavilions and Mercedes me stores create meeting points that enable us to establish contact with new customers as well. With our state-of-the-art digital product presentations, we are creating product experiences without having to maintain a stock of all product variants in our showrooms. We are also developing Mercedes me into a central platform and service brand.
The smart brand — with the smart fortwo, forfour and new smart convertible models that will be launched in 2016 — stands for outstanding urban mobility. The electric smart, whose new version will be launched in 2016, will help us enhance our position in the field of electric mobility.
Daimler Trucks relies on its technology leadership, global presence and the intelligent use of platforms. Our platform strategy 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. For example, we can offer innovative cutting-edge technologies to our core markets of Western Europe, North America and Japan, as well as traditional and proven technologies in markets such as Brazil, China and Russia. We are also in a position to supply markets in India, Africa and certain Asian countries with simpler and locally produced technologies. Thanks to this strategy and a broad range of products, Daimler Trucks occupies a very good position in the competitive field. On this basis, we continue to target sales of 700,000 units in the year 2020. In addition to growth, Daimler Trucks also prioritizes further increases in efficiency and the focus on its core business.
Mercedes-Benz Trucks | Trailer 2015
Mercedes-Benz Vans intends to strengthen its good market position in Western Europe with tailored and technologically leading products. For this purpose, the division is systematically further developing its proven models Sprinter, Vito and Citan, with which it primarily addresses commercial customers. The focus is on the product features that are especially important to customers: economy and safety. With the very successful V-Class multipurpose vehicle, the Marco Polo models and the Vito Tourer, Mercedes-Benz Vans is addressing additional target groups. New markets are to be developed with these models also in regional terms.
Mercedes-Benz Vans | Trailer 2015
Daimler Buses will focus over the next few years on achieving further growth and continual efficiency gains. Additional business volume will be generated through increased sales of highly attractive buses and bus chassis, as well as by a larger number of more extensive services for buses. Our new Mercedes-Benz Citaro NGT model is an urban regular-service bus powered by a highly efficient natural-gas engine.
Daimler Financial Services remains on course for growth. Approximately half of all newly delivered passenger cars from the Daimler Group worldwide are already financed or leased by Daimler Financial Services. The division currently finances 3.7 million cars and commercial vehicles worldwide, and plans to increase this figure in the future. At the same time, the division will expand its product range in the areas of financing, leasing, insurance and mobility 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 currently enjoys an excellent reputation as an attractive employer, which serves as further motivation for the company to maintain its employees’ high level of satisfaction and remain very appealing to external job applicants in the future.
Growing on a global scale
Growth in global demand for automobiles will take place mainly in Asia in the coming years. Although growth rates in China will be more moderate in the next few years, we expect China to permanently become the world’s largest automobile market over the next ten years. For Daimler, growing further on a global scale means improving our strong position in passenger car and commercial vehicle markets in Europe, North America and Japan, while also fully exploiting growth potential in Asia and various emerging markets.
In order to achieve Mercedes-Benz Cars’ sales targets, we are intensifying our local activities, particularly in China but also in Brazil and India. We manufacture the GLK SUV in China, and in late 2015 we began building its successor, the GLC, there as well. We also produce the long-wheelbase version of the E-Class, long and short versions of the C-Class and, since mid-2015, the GLA compact SUV in China. Beginning in mid-2016, the previous long-wheelbase version of the E-Class will be replaced with a successor model. We opened a new production plant for four-cylinder engines in China in late 2013, and this facility has been gradually expanded since then. As of year-end 2015, we and our partner BAIC had invested a total of €4 billion in the expansion of local car and engine production in China. In the electric-vehicle segment, 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. We are continuing our internationalization strategy for the research and development unit with the expansion of the R&D center in Beijing. Our dealership network in China is now just as extensive as the networks of our main competitors.
We have further expanded assembly capacity in India to include the compact CLA-Class, which means that seven of the nine volume models available in India are now assembled locally in Pune.
We will begin producing the C-Class and the GLA for the local market in Brazil in 2016. In Mexico, Daimler and the Renault-Nissan alliance have laid the foundation stone for a shared production plant in Aguascalientes. The first Mercedes-Benz vehicles should drive off the production lines there in 2018.
Our goal for Daimler Trucks is to safeguard the division’s strong position in Europe and North and South America, and to achieve significant growth in particular in the Asian markets with Daimler Trucks Asia. Daimler Trucks Asia consists of the two regional companies Mitsubishi Fuso Truck and Bus Corporation (MFTBC) and Daimler India Commercial Vehicles (DICV), which has been operating in India for several years. The consolidation of these two companies under a joint management system enables us to more effectively exploit market potential in the region and also generate synergies. At DICV in India, we build trucks of the BharatBenz brand as well as FUSO trucks for export to external markets. The FUSO trucks built in India are mainly aimed at price-sensitive markets in Asia and Africa.
Our activities in the field of medium-duty and heavy-duty trucks in China focus on cooperation with our partner Foton, with which we produce Auman-brand trucks in our joint venture Beijing Foton Daimler Automotive Co. Ltd. (BFDA).
In order to fully utilize growth opportunities in the markets of the future in Africa, Asia and Latin America, we are positioning ourselves even closer to the pulse of the market in these regions with our new regional centers. They will concentrate on sales and aftersales for commercial vehicles of the Daimler brands. Following the opening of the first of six worldwide regional centers in Dubai in October last year, more regional centers will follow in the first quarter of 2016.
Within the framework of its “Mercedes-Benz Vans goes global” strategy, Mercedes-Benz Vans also plans to grow in new markets. In order to meet the rising demand for our Sprinter in North America and to improve our cost position over the long term, a new production plant is being established in Charleston in the US state of South Carolina. We also produce vans in Argentina as well as in Russia with our partner GAZ. Alongside the Sprinter, the Vito is meanwhile the second world van from Mercedes-Benz Vans. Following the market launch in Europe in 2014, the mid-size van was launched in October 2015 in Latin America and under the name Metris also in North America. For the Latin American market, the vehicle is also produced in Argentina. The joint venture Fujian Benz Automotive Corporation produces the models Vito, Viano and Sprinter for the Chinese market. In 2016, the Viano will be there replaced with the new V-Class, which should stimulate further growth. The entry into the worldwide volume segment of mid-size pickups before the end of the decade in cooperation with our strategic partner Renault-Nissan is to be seen as a further step in the global growth strategy.
Daimler Buses plans to grow in the emerging markets in the coming years. Extensive potential for growth exists in Latin America especially, and this potential can be utilized once the markets in the region begin to recover. In India, Daimler Buses has integrated its local business activities into the Daimler India Commercial Vehicles (DICV) organization and also started operations at a new plant in the country. Among other things, Daimler Buses has set itself the goal of moving into the premium bus segment in India.
The Daimler Financial Services division continues to expand its business activities in line with the growth strategies of the automotive divisions. The division offers leasing and financing models tailored to specific regions. China especially offers good opportunities for further substantial growth in the future. Daimler Financial Services supports the worldwide sales of Daimler vehicles in more than 40 countries, and will profit from the growing unit sales in those markets.
Maintaining our technology leadership
As a pioneer of automotive engineering, we continue to expand our leadership in the areas of drive system technology, safety, autonomous driving and the connectivity of our vehicles. Regardless of whether our customers travel long distances, along country roads, or mainly in cities — we offer the right drive system solution for every user profile. Our portfolio ranges from optimized internal combustion engines to hybrid drive and locally emission-free solutions. In 2015, we were able to reduce the average CO2 emissions of newly registered vehicles from Mercedes-Benz Cars in the European Union from 129 grams per kilometer to 123 g/km. This means we have achieved our 2016 target of 125 g/km ahead of schedule. Beginning in 2016, our new E-Class will also help us achieve a further significant reduction in fuel consumption and thus CO2 emissions, thanks to its lightweight design, improved aerodynamics and highly efficient combustion engines. Consistent hybridization is an important component of the drive-system strategy at Mercedes-Benz Cars. We plan to launch a total of ten plug-in hybrid models in the period of 2014 through 2017. Our new plug-in hybrid vehicles combine the highest levels of dynamic handling and comfort with the fuel consumption of a small car, and can drive up to 33 kilometers in purely electric mode — and thus locally emission free. Fuel consumption here ranges from 3.3 liters per 100 kilometers for the GLE 500 e 4MATIC (GLE 500 e 4MATIC: fuel consumption in l/100 km (combined): 3.3; CO2 emissions in g/km (combined): 78; electricity consumption in kWh/100 km: 16.0) to an outstanding 2.1 l/100 km in the most efficient model, the C 350 e (C 350 e: fuel consumption in l/100 km (combined): 2.4-2.1; CO2 emissions in g/km (combined): 54-48; electricity consumption in kWh/100 km: 11.3-11.0). Our activities in the area of alternative drive systems will focus on plug-in hybrids in the years ahead. However, we are also a leader for purely electric mobility. For example, 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. And we will launch the new smart electric drive in 2016. In the medium term, another battery-electric vehicle with a range of up to 500 kilometers will be available. We are also pushing forward with fuel-cell technology. In 2017, we will present the next vehicle generation on the basis of our GLC.
In order to improve the fuel efficiency of commercial vehicles as well, we are optimizing vehicles and powertrains at our Daimler Trucks division. The Predictive Powertrain Control cruise control system makes it possible for example to reduce diesel fuel consumption by as much as 5 %. The new generation of the OM 471 heavy-duty engine consumes up to 3 % less fuel than its predecessor. We conducted a field test with a comprehensively optimized truck that was not only equipped with the new engine but also featured an enhanced trailer as well as modified tires and other key components. The CO2 emissions produced by this vehicle were 12 to 14 % lower than those generated by its non-optimized counterpart.
Predictive Powertrain Control (PPC) - Mercedes-Benz Trucks
In Europe, we want to reduce the fuel consumption of our truck fleet by an average of 20 % over the period of 2005 to 2020. We are confident that we will achieve this ambitious goal and took a further step in that direction with the introduction of the new generation of the OM471 heavy-duty truck engine in 2015.
Mercedes-Benz Trucks presents latest engine generation OM 471
The Freightliner Cascadia Evolution is currently the most fuel-efficient heavy-duty truck on the North American market. 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. A series of customer tests with the emission-free FUSO Canter E-CELL resulted in operating costs that were 64 % lower than those for a conventional diesel truck. We thus already have an effective and reliable concept in place today that will enable us to meet the requirements for urban delivery vehicles and address the challenges that will be brought by more restrictive emission standards in metropolitan areas in the future.
FUSO | New Canter E-CELL | Zero Emission Truck
We have also achieved fuel savings of as much as 8 % with our new Euro VI bus models. Use of the second-generation OM471 heavy-duty engine in the new Mercedes-Benz Travego has led to a further reduction in fuel consumption and CO2 emissions of approximately 4 %. Daimler Buses is also focusing more on alternative drive systems. The Mercedes-Benz Citaro NGT is a new urban regular-service bus equipped with a natural-gas engine. The model stands out through its low-noise operation and lower CO2 emissions, both of which are very important considerations in congested cities. The CO2/km emissions of the Citaro NGT are between 15 % and 20 % lower than those of the predecessor model. Daimler Buses also plans to launch the Citaro E-CELL with a battery-electric drive and a new model with fuel cells in the segment for locally emission-free vehicles before the end of the decade.
We continue to safeguard our leading position with regard to safety and assistance systems in all our automotive divisions. In parallel, we are developing autonomous driving to series maturity for cars and commercial vehicles.
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 E-Class, which will become available in the spring of 2016, marks a major step forward on the path to autonomous and connected driving. The new Intelligent Drive next Level system enables the vehicle to follow traffic ahead in its lane at speeds of up to 210 km/h. At speeds up to 130 km/h, the system can intervene even without clearly visible lane markings and thus ease the burden on drivers, especially in congested and slow-moving traffic. Active Brake Assist can detect traffic approaching from the side at an intersection, as well as traffic jams and pedestrians in danger zones in front of the car. The system can warn drivers of an impending collision and automatically initiate an emergency braking maneuver if necessary. The S 500 INTELLIGENT DRIVE research car and the Future Truck 2025 are both milestones on the road to fully autonomous driving, which we want to make a reality in a series-production car by the end of this decade. In September 2015, we became the first automaker to receive official permission to test autonomously driving vehicles on public roads in California in the United States.
First PLUG-IN HYBRID with a star: S 500 PLUG-IN HYBRID
In May 2015, Daimler Trucks received the world’s first permit for an autonomously driving truck on public roads for the Freightliner Inspiration Truck in the US state of Nevada. And since October 2015, the first autonomously driving series-produced truck, a Mercedes-Benz Actros with Highway Pilot, has been undergoing road tests in Germany. Autonomous driving offers many advantages in particular for transporting goods by road. It increases safety, as well as efficiency as a result of optimal gear shifting, braking and accelerating.
Inspiration Truck - The Next Freightliner Milestone
We are underscoring our leading position in the field of safety also with new assistance systems and with the further development of the emergency-braking and lane-keeping assistants. And in the near future, we will launch the turning assistant on the market. It can recognize pedestrians, cyclists and stationary obstacles, thus preventing accidents in urban traffic and saving lives.
Moving ahead with digitization
Digitization is changing the way we do things in a major way. It is altering our products and services, our communication with customers and the manner in which we create value at Daimler. Digitization is also paving the way for new mobility concepts. In order to remain on top as this transformation proceeds, we are moving ahead with digitization at all levels and along the entire value chain, while continuing to focus on our customers. Our activities involve enhancing the connectivity of our products, developing customer-focused digital services and increasing digital communication with customers — starting with the initial contact and extending through the entire relationship. This approach offers our customers many benefits. For example, connecting sales and production processes enables us to respond to customer preferences more quickly, individually and flexibly. We are also using digitization to make our internal processes more efficient and to improve their quality, while eliminating the need for our employees to perform certain types of heavy physical labor.
We continue to roll out connected vehicles at Mercedes-Benz Cars. Mercedes me connect is now available in nearly all model series and customers can access their vehicle online at any time and from any location. Mercedes me is our digital platform that brings together mobility, financing and other services (connect, assist, move and finance), and also provides information and news about the Mercedes-Benz brand (inspire).
We are extending our range of digital services also at Daimler Trucks. Connectivity will be a crucial factor for success in the logistics sector in the future. Our goal is to be the leading commercial vehicle manufacturer in terms of connectivity so that our products become part of an overall logistics system. We are further expanding our Detroit Connect telematics services in North America in cooperation with our strategic partner Zonar Systems. We are further developing FleetBoard in Europe, South Africa and Brazil, where the system is now included in half of all our new trucks. The Mercedes-Benz Vans and Daimler Buses divisions are also developing integrated transport solutions and improving their fleet management systems.
Digital technologies also offer us the opportunity to develop new and innovative mobility concepts for private, business and public transport applications. Examples here include car2go, CharterWay, Bus Rapid Transit (BRT) and the “moovel” mobility platform. car2go, which is our biggest business for private mobility services and is managed by Daimler Financial Services, is being further expanded around the world and linked with the moovel range of services. By the end of 2015, car2go was established at 31 locations in Europe and North America and had well over a million customers. car2go is also one of the biggest car-sharing companies for electric vehicles, with all-electric fleets at four locations. moovel offers our customers the opportunity to optimally combine various private and public mobility services and book them through a payment system.
Digitization along the entire value chain allows us to shorten development times, design production processes more flexibly and utilize marketing and sales channels in a more direct manner. For example, the development time for the Concept IAA (Intelligent Aerodynamic Automobile) presented at the Frankfurt Motor Show in 2015 was shortened from one and a half years to less than ten months.
IAA 2015 | Highlight CONCEPT Car
Industry 4.0 will digitize factories through the use of systems for augmented reality, virtual assembly or human-robot cooperation. The amount of monotonous and strenuous work will be reduced as a result. The intelligent use of continually increasing volumes of data, along with the networking of all points in the value chain, will enhance efficiency, improve quality, increase speed and make the entire production process even more flexible. It is also no longer possible to imagine marketing and customer-oriented communication without digitization. Our social media channels are already widespread and successful, for example. Concepts such as the lifestyle configurator, temporary pop-up stores and extra online sales channels help us directly address our customers in an innovative manner — and gain new customers as well.
Industry 4.0: Digitalisation at Mercedes-Benz
The further digitization of core processes and the comprehensive expansion of digital services are also important goals for the next few years at Daimler Financial Services.
New ways of thinking and acting are required if the digital transformation at our company is to be successful. We want to get our employees enthusiastic about digital technologies and strengthen our culture of innovation. We are addressing digitization issues with the help of new innovation formats. We are changing our structures and processes in order to ensure we can optimally exploit the opportunities offered by digitization. Our goal is to successfully combine the speed and risk-taking culture of the digital sector with our company’s perfection and innovative capability. For us, digitization is just as important as a strong core business and leadership in technology.
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, innovative technologies and state-of-the-art manufacturing capacities. A large amount of our investment will be used for the digitization of processes and products throughout the entire company. We will therefore invest approximately €14 billion in property, plant and equipment in 2016 and 2017, as well as €14.5 billion in research and development projects. With this plan, we are once again substantially increasing our investment in order to safeguard the future of our company. (See A.10 to A.13)
A.11 Investment in property, plant and equipment
|2014 actual||2015 actual||2016 – 2017|
|Amounts in billions of euros|
|Daimler Financial Services||0.02||0.03||0.05|
A.13 Research and development expenditure
|2014 actual||2015 actual||2016 – 2017|
|Amounts in billions of euros|
The investment in property, plant and equipment will mainly be used to prepare for the production of our new models, to modernize and realign our manufacturing facilities in Germany, to expand local production in growth markets and to enhance and restructure our sales organization. (See Other financial commitments)
Most of our outlay for research and development is used for new products, innovative drive and safety technologies, vehicle connectivity systems and the further development of autonomous driving 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 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)