Consistent implementation of Global Excellence program

Since 2005, Daimler Trucks has supported its strategic focus with the four initiatives of its Global Excellence optimization program. The improvements made to date are based primarily on the successful implementation of initiatives titled “Management of Cycles” and “Operational Excellence.” The instruments introduced in the past to increase the flexibility of our plants (e.g. working-time accounts, temporary workers, and the arrangement of processes and facilities to handle varying production volumes) helped us to adjust production to declining demand, particularly in the fourth quarter.

As was announced in the prior year, our Global Excellence program focused in 2008 on the implementation of the two initiatives, “Growth and Market Penetration” and “Future Product Generations and Technologies.” A key component in the further expansion of Daimler Trucks’ strong global presence as the world’s largest truck manufacturer is the penetration of new markets with above-average growth opportunities such as India, China, and Russia.

Important milestones of this initiative were the Indian authorities’ approval in March 2008 of Joint Venture »Daimler Hero Commercial Vehicles Ltd.« between Daimler Trucks and the Indian company Hero Group, as well as the decision made in July to establish a new production facility in Chennai .

In August 2008, a letter of intent was signed on the planned 50:50 joint venture between Beiqi Foton Motor Co. and Daimler AG for the joint production of heavy and medium-duty commercial vehicles in China. The agreement is subject to the approval of various government authorities.

In December 2008, Daimler AG entered into a strategic partnership with Russian truck manufacturer Kamaz and secured a 10% equity interest in the company. Daimler agreed to pay US $250 million in December 2008 and to make a one-time payment of up to US $50 million in 2012 if the business development of Kamaz is sufficiently positive. The cooperation with Kamaz will enable Daimler Trucks to enter the Russian volume market, which is one of the world’s largest regional truck markets with total sales of approximately 150,000 vehicles weighing over 6 tons in 2008.