Annual Report 2016

Chairman’s Letter

“To shape the future of mobility from a leading position, we started the biggest transformation in our companyʼs history in our best year to date.” 

(cc) Gregor Fischer I re:publica 2013
Dear Shareholders

For your company, 2016 was the best year in its history of more than 130 years. Never before have more customers decided in favor of a vehicle from the Daimler Group: more than three million altogether. Revenue of 153.3 billion euros was three percent higher than in the previous year. We increased our EBIT adjusted for special items by 3 percent to 14.2 billion euros. On that basis, the return on sales in the automotive business was 9.4 percent. The bottom line is net profit of 8.8 billion euros. At the Annual Shareholders’ Meeting, the Board of Management and the Supervisory Board will propose the distribution of a dividend of 3 euros and 25 cents per share.

These good figures are the result of the tremendous commitment of our 282,000 employees. I would like to thank them wholeheartedly on behalf of the entire Board of Management.

Let’s have a look at the development of the individual divisions.

At Mercedes-Benz Cars, we sold 2.2 million cars – that’s an increase of ten percent compared with the previous year and a new record. We are especially pleased that we achieved our target for 2020 already in 2016: Mercedes is once again at the top of premium segment also in terms of unit sales. Our strong products are an important reason for this dynamic sales performance. In 2016, we continued our model offensive – above all with the new E-Class. We made particular progress in China. Our development in Europe was also very positive. With all of this success, a crucial point is that we achieved our profitability target of ten percent return on sales.

Daimler Trucks defended its position in a difficult market environment last year. As the world’s biggest manufacturer of trucks above six tons, we maintained our strong position in our core markets. But the positive impetus from Europe did not offset the negative development in Latin America, the NAFTA region and parts of Asia, so the division’s total unit sales decreased. The new Freightliner Cascadia, which we presented in September, should help us to consolidate our strong market position in North America. The year’s highlight at Daimler Trucks was the IAA Commercial Vehicles trade fair in Hanover, where we demonstrated our leading techno­logical role – also in the field of electric mobility.

Daimler Buses’ business was also affected by the difficult economic situation in Latin America. Nonetheless, we achieved a pleasing return on sales while defending, and in some cases strengthening, our market leadership in the markets important to us.

Mercedes-Benz Vans set new records for unit sales and earnings. Growth was primarily driven by the V-Class and Vito models. Both are now available also in China. The division’s profit margin was also very satisfactory: Adjusted for special items, it was over ten percent. In 2017, we will close one of the last gaps in our portfolio: The X-Class, our new premium pickup, will be in the dealerships.

Daimler Financial Services posted another record year. Its return on equity was above the targeted level. For the first time, the number of vehicles on its books passed the mark of four million. The value of all financed or leased vehicles increased by almost 16 billion euros, partially due to the acquisition of the leasing specialist Athlon. With this investment, DFS is strengthening its position in the European fleet business.

The basis for all this success is the ability to reinvent ourselves time and again. In order to shape the future of mobility from a leading position, we started the biggest transformation in our company’s history in our best year to date; because the automotive industry is facing several fundamental changes. Connectivity, autonomous driving, sharing and electric mobility – each of these topics has the potential to turn our industry upside down. Our ambition is clear: Daimler aims to lead in all four areas.

We have set the right course to do so. At Mercedes-Benz Cars, we will launch more than ten new electric cars by 2025. We are starting this year with the electric smart models. In addition, with the “EQ” brand, we are creating a complete electric-mobility ecosystem – from inductive charging to home energy storage. And we are also electrifying our commercial vehicles: Production of the eCanter light-duty electric truck already started this year. By 2020, we will have developed a heavy-duty truck as far as series maturity with a range suitable for urban delivery. On the way towards the public transport of the future, we will launch an electric bus in 2018. Daimler will invest a total of ten billion euros in electric vehicles in the coming years.

But our concept of the mobility of the future goes far beyond the drive system. A key element is autonomous driving. We intend to strengthen our leading position in this field. We will also utilize the enormous potential offered by vehicles’ digital connectivity. The car of tomorrow isn’t just an office, but also a fitness coach and a personal assistant. Our vision of the truck of the future is that it’s fully loaded, hardly ever stuck in a traffic jam and nearly always in use. At the same time, we are developing from being a van manufacturer into a provider of complete transport systems.

And we plan to further develop our mobility platforms at Daimler Financial Services. mytaxi is the biggest app-based taxi network in Europe. In the future, we intend to enter additional markets. car2go is the worldwide market leader for flexible car sharing. We plan to double the use of those cars and to launch new electric fleets in the coming years.

In order to forge ahead successfully with all of this, we are also reinventing our corporate culture; for example with faster decision making and more flexible forms of cooperation. And we are on the right track: I have never experienced such a positive and optimistic atmosphere at Daimler before.

At the same time, we are working continuously on establishing integrity and compliance even more firmly at the Group. In the past financial year, we were involved in some legal proceedings, in which we fully cooperated with the relevant authorities.

Although a number of political risks exist, the economic conditions suggest that 2017 will be a good year. Against this backdrop, we plan to increase our unit sales once again. Daimler Financial Services also aims to achieve further growth.

The future of mobility offers us plenty of opportunities. Daimler has the ideal strategy, the right products and technologies, and above all the right team to utilize those opportunities. We look forward to continuing this journey with you, our shareholders.

Sincerely yours,

Dieter Zetsche

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