Objectives and Strategy

For more than 130 years, we have been moving people and goods all over the world - safely, efficiently, comfortably and with innovative technologies that have always kept us a step ahead of the competition. Building outstanding and fascinating vehicles is what we do best. It’s what drives us, and it will continue to drive us forward into the future. The environment in which we operate is changing in a highly dynamic way. Sustainability and climate protection in particular are among the most urgent issues of our time. We accept this responsibility. Our goal is to set standards for sustainable mobility - now and in the future.

Our strategy

We firmly believe that individual mobility will be a basic human need in the coming decade as well, and that the market for sustainable automobiles in the luxury segment will continue to grow. Demand for goods transport services remains a key pillar of the economy and our prosperity, and this demand can be expected to increase even further around the globe for years to come. The markets for financial services and the demand for fleet management services and digital mobility solutions are also likely to develop positively in the future. We are committed to the principles of sustainability and in particular of climate protection, and are therefore setting our course for CO2-neutral mobility.

Purpose

The basis of our strategy is our purpose - the spirit and purpose that guide all of our decisions and actions. What is our DNA, what makes us who we are, why are we as a company active in the market?

We have answered these questions for all of our divisions. Mercedes-Benz Cars’ motto is “First Move the World.” Daimler Trucks & Buses is there “For All Who Keep the World Moving,” and Daimler Mobility makes it clear that “We Move You.” Daimler itself is the connecting element that holds these businesses together, as symbolized by the word “move.”

We have derived specific goals from our aspiration. We seek to make mobility and the transport of goods more sustainable, and we plan to continue growing in our core business. We are implementing electric drive systems at all of our divisions as a priority, and we continue to pursue automated and autonomous driving and mobility services that benefit customers and make us more profitable. We are moving forward with digitization measures and exploiting the potential they offer. All of these activities are geared toward ensuring that we achieve our financial targets.

Sustainability and climate protection

Sustainability is an integral part of our corporate strategy. The implementation of a sustainable corporate strategy is the only way we can ensure our continued success over the long term. In line with this approach, we plan to work towards offering CO2-neutral mobility over the next 20 years. We also intend to decouple resource consumption from growth in our business volumes, provide mobility and traffic management solutions that make cities more livable, implement measures that increase safety on the road, continue to utilize data responsibly, and assume responsibility for upholding human rights along the entire value chain. Achieving success in all these areas requires a clear commitment to a culture of integrity, as well as future-oriented cooperation with our workforce and our partners in industry, government and society at large. A central sustainability management system enables the effective planning of ambitious goals and the monitoring of their achievement.

In our view, climate protection will be the biggest challenge over the coming years. Our “Ambition 2039” strategy for Mercedes-Benz passenger cars clearly demonstrates our commitment to climate protection. Our goal here is to become CO2-neutral by 2039. More specifically, this means we plan to achieve Group-wide CO2-neutral production in Europe as of 2022, attain a sales structure in which plug-in hybrids and all-electric drive systems account for more than 50 % of our portfolio by 2030, and - within less than three product lifecycles - offer a CO2-neutral new car fleet to our customers.

Ambition 2039: Our path to sustainable mobility

The new Factory 56 assembly hall at the Mercedes-Benz plant in Sindelfingen was planned as a CO2-neutral facility from the very beginning. In addition, our new plant in Jawor, Poland, uses wind power for sustainable manufacturing operations. A holistic view of the CO2-reduction issue also needs to take the recycling of raw materials into account. Mercedes-Benz cars’ materials are 85 % recyclable.

The Car Factory of the Future: Factory 56

Our goal at Mercedes-Benz Vans is that vans targeted at private customers are to be CO2-neutral over the entire lifecycle by the year 2039. With vans used by commercial customers, we intend only to offer new vehicles that are CO2-neutral in driving operation (tank-to-wheel) in the major markets Europe, Japan and the NAFTA region.

Daimler Trucks & Buses is also committed to climate protection. The main challenge we face in the truck and bus sector involves reconciling the higher costs of electric drive systems with the focus on costs that is prevalent in the transport industry. Daimler Trucks & Buses plans to become CO2-neutral with regard to driving operation (tank-to-wheel) by launching new trucks and buses in the major markets of Europe, Japan and the NAFTA region between now and 2039. Plans also call for all Daimler Trucks & Buses facilities in Europe to achieve CO2-neutral production by 2022, at which point all the energy they use should be generated from renewable sources. The planning and following up of targets at Daimler are ensured by a central sustainability management system.

Daimler ar2019 A.09 move perform transform

Markets and growth

Our goal is to safeguard and expand the leading positions that our divisions occupy in their respective segments. Individual and self-determined mobility is likely to remain our primary business model for the car segment over the coming decade. Although flexible forms of use will continue to spread, our experience at present shows that such use will augment rather than replace the use of privately owned passenger cars. Volumes in the premium and luxury segments in particular should increase further. Growth here is likely to be driven primarily by China and other Asian markets, although the more established markets in Europe and the United States will contribute to this growth as well. We plan to exploit this potential, in particular with our range of high-quality models such as the G-Class, as well as through our Mercedes-AMG and Mercedes-Maybach sub-brands.

China is now the world’s biggest car market, but it is also an important market for new technologies and procurement. We plan to continue growing in China together with our partners, with whom we will also intensify our cooperation.

We expect to see further growth in the Vans segment as well. The ongoing increase in online retail sales in particular will likely serve as an important foundation for such growth. Mercedes-Benz Vans plans to further strengthen its position in specific customer segments and in North America.

With regard to Daimler Trucks & Buses, we plan to improve our market position in Europe with the help of the new Actros, and to expand our range of products in the NAFTA region through the launch of a new vocational truck. In Latin America, we seek to benefit from the market recovery and to expand our position in a highly profitable segment by launching a heavy-duty truck based on our global platform. As the market leader in our most important traditional core markets for buses over 8 tons gross vehicle weight, we plan to further safeguard this market position and develop our business in the NAFTA region and other markets.

Daimler Mobility offers mobility services under the motto “Mobility from years to minutes.” With its leasing, financing and insurance packages, Daimler Mobility supports the growth of our automotive divisions and the solutions it offers also increase customer loyalty and identification with the company. Additional innovative services such as Flexperience, a flexible vehicle rental model, will further support sales at our automotive divisions. We also plan to continue growing in the fleet management sector and to increase the share of our vehicles used in various fleets. In the area of digital mobility solutions, we plan to safeguard our strong position in the market for premium driver services over the long term and, as a shareholder in the YOUR NOW group, we will work with BMW to establish a relevant new player in the segment for mobility services in Europe and Latin America.

Mobility-Talks | Maximal Flexible Mobility

Efficiency

The financial challenges we now face are more extensive than ever before due to the measures we have to implement to help ensure a CO2-neutral future. Addressing these challenges will require extensive investment in electric mobility, which has higher production costs than with combustion engines, and a comprehensive restructuring plan. The attainment of our profitability targets and the maintenance of a solid cash flow have top priority here, as this is the only way to ensure that we will play a leading role in the transformation to a CO2-free society. Measures to improve efficiency have been defined at all divisions and for Daimler AG as a whole. These measures relate to our workforce, material-cost reductions, upper limits on investments, adjustments to our portfolio and vehicle models, the implementation of platform strategies, and across-the-board digitization of processes at Daimler Mobility. Plans also call for an increasing number of Group vehicles financed or leased by Daimler Mobility to be refinanced in a manner that does not impact our balance sheet. In addition, the allocation of financial resources at the parent-company level will be made transparent and be rigorously monitored.

Customers and brand

We are intensifying our focus on the customer experience. The further development of our brand plays a key role in this process. According to the current “Best Global Brands 2019” ranking from Interbrand, Mercedes-Benz is the most valuable German brand and the world’s most valuable premium automotive brand. We want to make our brand even more distinctive in the future, and make it more customer-focused as well. Maintaining emotional ties to our customers is more important than ever, especially in times of transformation. The brand emotions of LOVE and EASE complement the attributes that have always been an essential part of our Mercedes-Benz brand’s DNA and will remain so in the future: RESPECT and TRUST. The core of our brand (THE BEST), and our existing brand values (EMOTIONAL and INTELLIGENT), remain unchanged. We create emotional Mercedes-Benz moments for every physical and digital interaction with the brand. We plan to increase customer satisfaction with new and flexible usage models and seamless integration of our products and services.

With regard to our commercial vehicles as well, our customers are at the focus of everything we do. We seek to supply products and services that make them successful. We develop technologies in order to be able to further reduce the total cost of transport and to offer safe and efficient solutions for the goods transport and distribution of the future.

Electrification of our drive system portfolio

As we continue along the road to emission-free mobility, we intend to forge ahead with the electrification of drivetrains in Mercedes-Benz passenger cars using 48-volt technology. We will also gradually increase the number of hybrid and battery-electric models that we offer. Our goal here is to attain a sales structure in 2030 in which plug-in hybrids and all-electric vehicles account for more than 50 % of all the new cars we sell.

Mercedes-Benz Vans already offers the eVito; the eSprinter and our battery-electric full-size MPV is to follow in 2020. Mercedes-Benz Vans has also announced an electric variant of the successor model of the Citan. By 2022, Daimler Trucks plans to have electric vehicles ready for series production in all of its key regions and segments. The focus here will be on battery-electric models. The range of vehicles will subsequently be extended by the inclusion of fuel-cell/hydrogen-based systems for trucks. Daimler Buses presented the all-electric eCitaro back in mid-2018. Plans call for the range of bus products to be expanded to include buses equipped with fuel-cell systems. The E-Mobility Group Trucks & Buses is implementing the electric strategies for all truck and bus brands and establishing a globally standardized electric-vehicle architecture.

Platforms and drivetrains

Over the medium to long term, we plan to reduce the high degree of complexity of our passenger car models and engines, as well as the number of platforms we use for passenger cars. Because we believe that new vehicles with combustion engines will continue to play a role in the market for new cars and vans over the medium term, we are further developing our conventional engines in line with the next stage of EU certification. We plan to complete this process over the next few years, after which we expect to see a significant decrease in development work and expenditure on combustion engines. We will compensate for the currently higher costs associated with electric drive by developing a flexible architecture for such drive systems and combustion engines in which the integration of electric-drive components will be given absolute priority. Our plans for the next few years also call for the customer-oriented optimization of both the number of different truck models and the number of drive types and regional platforms.

Digital services and digital platforms

Mercedes me and our digital services are designed to generate added value for the customer. Activities relating to digital services for Mercedes-Benz cars are therefore based on the development of an open software architecture that offers controlled access and interfaces that enable customers also to utilize third-party services. We are convinced that as a vehicle manufacturer, we should also have our own operating system and be able to understand, monitor and control it. This approach gives us direct access to the customer and enables us to ensure that customer and vehicle data is handled in a responsible manner. With MBUX (Mercedes-Benz User Experience), we have set a new standard for intuitive multimedia systems that manage communication between the driver and the vehicle and its surroundings, and which are capable of adapting and learning. With trucks, the focus has also increasingly shifted to the development of software and electronic systems in recent years. The Truck Data Center launched by Daimler Trucks is the brain that allows connectivity between trucks of different brands. It continuously monitors the status of vehicle systems and sends and receives data in real time. Digital services such as Fleetboard, Mercedes Uptime, Detroit Connect, Virtual Technician and Truckonnect are all based on this connectivity module and thus help to increase the efficiency of transport operations. With its digital cockpit, the Mercedes-Benz Actros allows for simple and intuitive operation and makes it possible for drivers to perform numerous tasks from the cockpit. Daimler Buses offers its digital services via the OMNIplus On platform, while Mercedes PRO is the digital services brand at Mercedes-Benz Vans. Daimler Mobility is now looking to completely digitalize its processes and the customer journey all the way through to the payment process.

Mercedes PRO connect explained

Autonomous and automated driving

As we continue to develop automated and autonomous driving, we are focusing on driver assistance systems on the one hand and highly automated (SAE Level 4) and fully automated urban driving on the other.

In order to get automated systems to market more quickly, while simultaneously easing our cost burden, we have launched a long-term development partnership with BMW. This is just one of our cooperation projects in this area. We intend to work together with BMW to develop the next generation of technologies for driver assistance systems, automated driving on highways, and automated parking systems. Such systems will be made available in cars for private customers starting in 2024. The partnership with BMW is open to other automakers and technology partners. Furthermore, the results of the partnership will be offered to other vehicle manufacturers via licensing agreements.

In the area of automated driving Daimler Trucks initially aims to focusing on Hub2Hub transport in SAE Level 4 mode on highways in the United States. The possibility of not having to use a driver will lead to cost savings, which in turn will result in a viable business model. The Daimler Trucks Autonomous Technology Group, which brings together all of the expertise and activities in the field of automated truck operation, is consistently moving ahead toward series production of automated trucks. Torc Robotics, a company in which we acquired a majority interest in 2019, is now part of the Autonomous Technology Group. Daimler Trucks and Torc Robotics have now begun developing SAE Level 4 technologies for testing on roads in the United States.

Partnerships

The competition for the best solutions in the automotive industry will continue to be decided by who has the best access to the latest technologies and the ability to provide sufficient capital and resources. As a result, partnerships will hold the key to leadership for all automakers. We have recently entered into a variety of partnerships. For example, we are developing autonomous driving systems with BMW and systems for automated trucks with Torc Robotics, and we are also cooperating with the battery material specialist Sila Nanotechnologies. In addition, we have teamed up with BMW and Geely to offer mobility services in China. Geely is a Daimler shareholder from China with whom we have established a 50:50 joint venture to further develop and operate the smart brand globally as a manufacturer of all-electric vehicles. In order to more firmly establish electric mobility on the market, we have teamed up with several other European manufacturers to create a joint venture known as IONITY. Through this company, we are moving forward with the creation of a full-coverage, high-power charging network for European highways.

Culture and integrity

Especially in times of change and upheaval, we need to have values that offer us guidance. We also need to develop skills that make us faster and more agile and enable us to speed up our pace of innovation. The continuation of our “Leadership 2020” program as “Leadership 20x” ensures that we can promote the development of such skills. We rely on the high degree of motivation among our employees, with whom we want to actively drive forward the transformation of our industry. Daimler stands for diversity and promotes integrity. As a company that operates around the globe, we stand for tolerance, openness, trust and fairness. Integrity is one of our key corporate values and a central element of our corporate culture. New technologies and business models offer tremendous opportunities, but at the same time they pose questions - for example, with regard to ethical and legal topics. Our inner values and attitudes are put to the test when such issues arise. The further development of the Technical Compliance System and the compliance system for data is intended to ensure that we can provide support with regard to new topics from the beginning, provide the maximum possible clarity and avoid mistakes.

The Group’s strategic approach can be summarized in three core statements:

 

MOVE - Reinvent the invention

As the inventor of the automobile, it is in our nature to repeatedly reinvent mobility. Our aspiration is to offer sustainable solutions for mobility and the transport of goods in the future. We want to inspire emotionally and convince rationally. We aim to bring sustainability and luxury into harmony. Our innovative and highly efficient commercial vehicles are designed to make our customers in the haulage and transportation sectors successful.

We are working systematically to achieve our “Ambition 2039” goal of CO2-neutral mobility. To do so, we are also utilizing the potential offered by automated driving and digital services.

PERFORM - We create sustainable value

We aim to create value that is sustainable. Our business is grounded in what we do best — delighting our customers with fascinating vehicles. Here, the attainment of our profitability targets and the maintenance of a solid cash flow remain top priorities for the short and medium term. Together with our partners, we seek to develop new technologies and share the costs of development activities. We want to continue to grow profitably and expand our leading position in all the sectors in which we operate worldwide.

TRANSFORM - Reinvent ourselves

Our transformation is a long-term process of adapting the implementation of our structures and processes in cooperation with our employees. We have a workforce that is agile and willing to learn, and this facilitates the development of the skills needed to face new requirements. Our corporate culture creates the foundation for the outstanding innovative capability displayed by our employees. We put diversity into practice, and integrity is our inner compass. The principle of integrity guides our actions and our relationships with our business partners.

With our sustainable business strategy, we are shaping the transformation of the automotive industry from a position of leadership in a sustainable, customer-focused and innovative manner to safeguard our economic success.

Extensive investment in the Group’s future

In order to utilize the opportunities offered by the international automotive markets and to help actively shape the coming transformation of mobility, we will continue to invest substantially in new products, innovative technologies and state-of-the-art production facilities in the coming years. One focus of our efforts will be on the future-oriented fields of digitization, autonomous driving and electric mobility. We plan to invest approximately €14 billion in property, plant and equipment in 2020 and 2021, as well as nearly €19 billion in research and development projects. We will therefore continue to maintain a high level of investment in order to safeguard the future of our company. The decrease in investment volume from the 2019 figure is in part because we will be making much more efficient use of our financial resources and will also focus more strongly on issues that are important for the future of the Group. During the year under review, we also entered into several partnerships in areas that will play a key role in the future of mobility. This will enable us to limit our own expenditure even as we ensure our access to new technologies. Over the medium and long term, we expect investment and expenditure on research and development to be reduced, step by step, to below the extraordinarily high levels of recent years. This should be achieved in part by reducing the number of vehicle architectures and platforms at Mercedes-Benz and a decrease in their complexity, in addition to lower investment in traditional drive systems. (See tables A.10 and A.11)

A.10 Investments in property, plant and equipment

  2018 2019 2020 – 2021
Amounts in billions of euros      
       
Daimler Group 7.5 7.2 13.8
Mercedes-Benz Cars & Vans 6.2 5.9 11.3
Daimler Trucks & Buses 1.2 1.1 2.3
Daimler Mobility 0.06 0.09 0.1
Corporate 0.1 0.1 0.1

A.11 Research and development expenditure

  2018 2019 2020 – 2021
Amounts in billions of euros      
       
Daimler Group 9.1 9.7 18.8
Mercedes-Benz Cars & Vans 7.6 8.1 15.5
Daimler Trucks & Buses 1.5 1.7 3.3

Investment in property, plant and equipment will mainly be applied to prepare for the production of our new models. Other focal points will be the realignment of our manufacturing facilities in Germany, increased local production in the growth markets and the development of a global production network for electric vehicles and batteries.

Most of our expenditure for research and development will flow into new products. Key individual projects include the successor models of the C-Class and the S-Class and new vehicles from our EQ electric mobility brand. Other key areas at our automotive divisions include innovative drive-system and safety technologies, the connectivity of our products and the further development of automated and autonomous driving. Our plans also call for substantial funds to be invested in particular in our comprehensive electric mobility offensive at all of our automotive divisions.

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