Four strategic focus areas for action

In order to achieve our strategic targets, we have laid down four strategic focus areas for the coming years in the framework of the Daimler target system:

Operational excellence and a high performance culture. Our goal is to develop, produce and sell superior products using processes with above-average efficiency. We establish clear structures and lean processes and use the opportunities of standardization and modularization for further productivity increases in all businesses. Under the roof of the Daimler excellence process, we have established processes in all our operations with which we align the Group with the four strategic focus areas and develop a shared culture of excellence. We have included the key elements of the excellence process in the programs currently running in our business operations, for example the GoFor10 program at Mercedes-Benz Cars, the Global Excellence initiative at Daimler Trucks, Captive #1 at Daimler Financial Services and Creating the Next at our Vans business unit. A good example of operational excellence at Daimler is the Mercedes-Benz plant in Sindelfingen, which was awarded J.D. Power’s Platinum Award as the manufacturing plant with the best quality in the world. At the Sindelfingen plant, we have been outstandingly successful in raising our productivity while simultaneously improving our quality. We have also made considerable progress in administrative areas in recent years. For example, we successfully concluded the new management model at the end of 2008. With this program, we improved administrative efficiency and achieved savings of €1.2 billion compared with the initial situation in the year 2004. Improving efficiency in all areas of the Group remains a key strategic focus in the future, especially against the backdrop of the global financial crisis.

Expansion of core business in traditional market segments and utilization of new opportunities on a regional basis. Superior products and customer services are crucial for us to continue growing in our traditional core segments. Notwithstanding the current unfavorable development of important sales markets, we are on the right track with our products, service and market strategies. In June 2008, Mercedes-Benz received two Gold Awards in the J.D. Power quality survey for the best vehicle quality in the respective segments for the E-Class and the CLK-Class. The excellent service quality of the Mercedes-Benz dealerships in Germany was confirmed several times by various organizations last year. This demonstrates the success of our long-term quality and customer-satisfaction offensive in the Mercedes-Benz Cars division. And at Daimler Trucks, the new Actros as »Truck of the Year 2009« received the award of With the brand pledge of “Trucks you can trust,” the business unit Mercedes-Benz Trucks Europe/Latin America stands for uncompromising quality, reliable products and services, and fair and personal customer relations. Two examples of the excellent customer response to our products are the DEKRA Environmental Prize 2008 awarded to the Mercedes-Benz city bus Citaro BlueTec Hybrid for its innovations and sustained contribution to better quality of life in urban areas, and the Sprinter van, which took first place in its category in the voting on “Commercial Vehicle of the Year.”

We intend to further enhance our position in the markets of the future with products whose character and marketing are tailored to the special requirements of each market. In India for example, we have entered into a Joint Venture with the Hero Group for the production of trucks and reached an agreement on the future production location. The joint venture between Daimler Buses and India’s Sutlej Motors already delivered its first luxury coaches to customers in the third quarter of 2008. In Russia, we intend to further extend our market position through the strategic Partnership with Kamaz. In this context, we have acquired a 10% equity interest in Kamaz, Russia’s leading manufacturer of heavy trucks.

Further development of innovative and customer-oriented services and technologies. We are working intensively on the development of innovative, customer-oriented technologies along the entire automotive value chain.

Because the demands placed on mobility will become increasingly varied, in the future it is unlikely that there will only one type of vehicle with one type of propulsion. In the context of our »Roadmap to Sustainable Mobility« we are therefore working in parallel on several drive technologies and are consistently further improving our vehicles with combustion engines. At the same time, we aim to continue improving the efficiency of Hybrid drive systems, while opening up the way to emission-free driving with fuel-cell and battery-powered vehicles. We also support the development, production and distribution of clean fuels for combustion engines as well as alternative energy sources for emission-free driving.

We are implementing this strategy in the form of concrete products on the car side with our “Road to the Future” initiative and with commercial vehicles with »Shaping Future Transportation« The most important milestones are BLUETEC diesel technology, our worldwide leading position for commercial vehicles with hybrid drive, BlueEFFICIENCY cars from Mercedes- Benz, our S 400 BlueHYBRID – the world’s most fuel-efficient luxury sedan with a gasoline engine, smart fortwo electric drive, and the innovative “DIESOTTO” engines designed to combine the economy of diesel engines with the low emissions of modern gasoline engines. They all demonstrate our innovative power for environmentally friendly mobility. However, we believe the key technology for mobility that is independent of fossil fuels and sustainable over the long term is the fuel cell. With more than 100 test vehicles and approximately 4 million test kilometers driven, we have the world’s largest fleet of fuel-cell vehicles on the road. In 2009, we are starting production of our first small series of emission-free vehicles, the Mercedes-Benz B-Class F-CELL and the smart fortwo electric drive.

By means of the broad setup of the group, we have the possibility to introduce our new technologies in all automobile activities.

Parallel to the technological development of our product range, we will expand the range of services we offer in connection with these products. In cooperation between Daimler Financial Services and the automotive divisions, we are developing new methods in order to utilize the promising business potential offered by the services sector. One example of this is Omniplus, a comprehensive, bus-specific range of services for our Mercedes-Benz and Setra omnibuses.

Development and innovation of new businesses in related areas. We will make targeted use of the results of the work done by our research and development departments, our attractive customer base and our strong brands to utilize new business potential also in related areas. However, a precondition for this is that the new business ideas are related to our core business and contribute to our profitable growth. The Business Innovation Team formed in 2007 has the task of developing new business ideas and supporting their implementation. One of the first key projects iscar2go, car2go, a new urban mobility concept. The pilot phase of car2go started in Ulm in October 2008.