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As filed with the Securities and Exchange Commission on March 3, 2010

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
Commission file number 1-12356

D AIMLER AG
(Exact name of Registrant as specified in its charter)

D AIMLER AG
(Translation of Registrant's name into English)

FEDERAL REPUBLIC OF GERMANY
(Jurisdiction of incorporation or organization)

MERCEDESSTRASSE 137, 70327 STUTTGART, GERMANY
(Address of principal executive offices)

Mr. Robert Köthner
Daimler AG
Epplestrasse 225
70567 Stuttgart
Germany
011-49-711-17-92543
011-49-711-17-94116 (facsimile)
(Name, address, telephone and facsimile number of company contact person)



Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class
   
 
Name of each exchange
on which registered
Ordinary Shares, no par value   Frankfurt Stock Exchange
New York Stock Exchange
Guarantee of the following securities of:    
Daimler Finance North America LLC    
  8.50% Notes Due January 18, 2031   New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.
NONE
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares, no par value . . . . . . . . 1,024,066,951

(as of December 31, 2009)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý   No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o   No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ý   Accelerated filer  o   Non-accelerated filer  o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP  o   International Financial Reporting Standards as issued by
the International Accounting Standards Board  ý
  Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o   Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   No ý


TABLE OF CONTENTS

 
   
  Page  

PART I

 

Item 1.

 

Identity of Directors, Senior Management and Advisers

   
2
 

Item 2.

 

Offer Statistics and Expected Timetable

    2  

Item 3.

 

Key Information

    2  

 

        Selected Financial Data

    2  

 

        Risk Factors

    5  

Item 4.

 

Information on the Company

    13  

 

        Introduction

    13  

 

        Description of Business Segments

    15  

 

                Mercedes-Benz Cars

    15  

 

                Daimler Trucks

    19  

 

                Mercedes-Benz Vans

    23  

 

                Daimler Buses

    25  

 

                Daimler Financial Services

    27  

 

        Supplies and Raw Materials

    29  

 

        Government Regulation and Environmental Matters

    30  

 

        Description of Property

    36  

Item 4A.

 

        Unresolved Staff Comments

    37  

Item 5.

 

Operating and Financial Review and Prospects

    37  

 

        Introduction

    37  

 

        New Accounting Pronouncements Not Yet Adopted

    39  

 

        Inflation

    39  

 

        Critical Accounting Policies

    39  

 

        Operating Results

    46  

 

                Information about EBIT

    47  

 

                Overview of Business Segment Revenue and EBIT

    47  

 

                2009 Compared With 2008

    48  

 

                2008 Compared With 2007

    54  

 

        Liquidity and Capital Resources

    60  

 

        Off-Balance Sheet Arrangements

    68  

 

        Research and Development

    70  

Item 6.

 

Directors, Senior Management and Employees

    71  

 

        Supervisory Board

    72  

 

        Board of Management

    77  

 

        Compensation

    79  

 

        Employees and Labor Relations

    84  

 

        Share Ownership

    85  

Item 7.

 

Major Shareholders and Related Party Transactions

    86  

Item 8.

 

Financial Information

    86  

 

        Consolidated Financial Statements

    86  

 

        Other Financial Information

    87  

 

                Export Sales

    87  

 

                Legal Proceedings

    87  

 

                Dividend Policy

    91  

Item 9.

 

The Offer and Listing

    92  

i


 
   
  Page  

Item 10.

 

Additional Information

    94  

 

        Options to Purchase Securities from Registrant or Subsidiaries

    94  

 

        Articles of Incorporation

    94  

 

        Material Contracts

    100  

 

        Exchange Controls

    101  

 

        Taxation

    101  

 

        Documents on Display

    105  

Item 11.

 

Quantitative and Qualitative Disclosures About Market Risk

    105  

Item 12.

 

Description of Securities Other than Equity Securities

    105  


PART II


 

Item 13.

 

Defaults, Dividend Arrearages and Delinquencies

   
106
 

Item 14.

 

Material Modifications to the Rights of Security Holders and Use of Proceeds

    106  

Item 15.

 

Controls and Procedures

    106  

Item 16A.

 

Audit Committee Financial Expert

    107  

Item 16B.

 

Code of Ethics

    107  

Item 16C.

 

Principal Accountant Fees and Services

    107  

Item 16D.

 

Exemptions from the Listing Standards for Audit Committees

    108  

Item 16E.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

    108  

Item 16F.

 

Change in Registrant's Certifying Accountant

    109  

Item 16G.

 

Corporate Governance

    109  


PART III


 

Item 17.

 

Financial Statements

   
112
 

Item 18.

 

Financial Statements

    112  

Item 19.

 

Exhibits

    112  

ii


Cautionary Statement Regarding Forward-Looking Statements

        This document contains forward-looking statements that reflect our current views about future events. We use the words "anticipate," "assume," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should" and similar expressions to identify forward-looking statements. These statements are subject to many risks and uncertainties, including:

    a lack of further improvement or a renewed deterioration of global economic conditions, in particular a renewed decline of consumer demand and investment activity in Western Europe or the United States, or a downturn in major Asian economies;

    a continuation or worsening of the tense situation in the credit and financial markets, which could result in a renewed increase in borrowing costs or limit our funding flexibility;

    changes in currency exchange rates or interest rates;

    our ability to continue to offer fuel-efficient and environmentally friendly products;

    a permanent shift in consumer preference towards smaller, lower margin vehicles;

    the introduction of competing, fuel-efficient products and the possible lack of acceptance of our products or services which may limit our ability to adequately utilize our production capacities or raise prices;

    price increases in fuel, raw materials and precious metals;

    disruption of production due to shortages of materials, labor strikes, or supplier insolvencies;

    a further decline in resale prices of used vehicles;

    the effective implementation of cost-reduction and efficiency-optimization programs at all of our segments, including the repositioning of our truck activities in the NAFTA region and in Asia;

    the business outlook of companies in which we hold an equity interest, most notably the European Aeronautic Defence and Space Company EADS N.V. (EADS);

    changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety;

    the resolution of pending governmental investigations and the outcome of pending or threatened future legal proceedings; and

    other risks and uncertainties, some of which we describe under the heading "Risk Factors" in "Item 3. Key Information."

        If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward-looking statements prove incorrect, then our actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.

References

        Unless otherwise specified, in this annual report, "we," "us," "our," "Daimler," the "Daimler Group" or the "Group" refers to Daimler AG and its consolidated subsidiaries, or any one or more of them, as the context may require.



PART I

Item 1. Identity of Directors, Senior Management and Advisers.

        Not applicable.


Item 2. Offer Statistics and Expected Timetable.

        Not applicable.


Item 3. Key Information.

SELECTED FINANCIAL DATA

        We have derived the selected financial data presented in the table below from our audited consolidated financial statements for the years ended December 31, 2009, 2008, 2007, 2006, and 2005. We prepared the consolidated financial statements included in this report (Consolidated Financial Statements) in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

        Our financial statements are denominated in euros, which is the currency of our home country, Germany.

        You should read the table together with our Consolidated Financial Statements and the notes thereto and the discussion in "Item 5. Operating and Financial Review and Prospects."

2


 
  2009   2008   2007   2006   2005  
 
  (in millions, except for ordinary share amounts)
 

Income Statement Data:

                               

Revenue 1

  78,924   98,469   101,569   99,222   95,209  

Earnings before interest and taxes (EBIT) 2

    (1,513 )   2,730     8,710     4,992     2,873  

Net profit (loss) from continuing operations

    (2,644 )   1,704     4,855     3,166     2,253  

Net profit (loss) from discontinued operations

        (290 )   (870 )   617     1,962  

Net profit (loss)

    (2,644 )   1,414     3,985     3,783     4,215  

Profit (loss) attributable to shareholders of Daimler AG

    (2,640 )   1,348     3,979     3,744     4,149  

Earnings (loss) per share for profit (loss) attributable to shareholders of Daimler AG

                               

Basic

                               
 

Net profit (loss) from continuing operations

    (2.63 )   1.71     4.67     3.06     2.16  
 

Net profit (loss) from discontinued operations

        (0.30 )   (0.84 )   0.60     1.93  
 

Net profit (loss)

    (2.63 )   1.41     3.83     3.66     4.09  

Diluted

                               
 

Net profit (loss) from continuing operations

    (2.63 )   1.70     4.63     3.04     2.15  
 

Net profit (loss) from discontinued operations

        (0.30 )   (0.83 )   0.60     1.93  
 

Net profit (loss)

    (2.63 )   1.40     3.80     3.64     4.08  

Balance Sheet Data (end of period):

                               

Total assets

  128,821   132,225   135,094   217,634   228,012  

Non-current liabilities

    49,456     47,313     47,998     90,452     96,823  

Current liabilities

    47,538     52,182     48,866     89,836     95,232  

Share capital

    3,045     2,768     2,766     2,673     2,647  

Equity attributable to shareholders of

                               

Daimler AG

    30,261     31,222     36,718     36,925     35,545  

Equity

    31,827     32,730     38,230     37,346     35,957  

 

 
  2009   2008   2007   2006   2005  

Other Data:

                               

Weighted average number of shares outstanding

                               
 

Basic

    1,003.8     957.7     1,037.8     1,022.1     1,014.7  
 

Diluted

    1,003.8     959.9     1,047.3     1,027.3     1,017.7  

Dividend per share (euro)

    3   0.60     2.00     1.50     1.50  

Dividend per share (U.S. dollar) 4

    3   0.77     3.17     2.00     1.81  

1
In May 2008, the IASB published Improvements to IFRSs (International Financial Reporting Standards). One of the changes introduced by the 2008 improvements is an amendment to IAS 16 "Property, Plant and Equipment" regarding the presentation of the de-recognition of assets held for rental. Pursuant to this amendment, proceeds from sales of assets held for rental that occur in the ordinary course of activities must be recognized as revenue. We have applied the revised standard since January 1, 2009 and the 2009 figures in the above table reflect the new presentation. We also adjusted the 2008 and 2007 figures to make them comparable. Revenue and cost of sales recognized in the 2009 consolidated statements of income (loss) increased by €2,706 million and €2,706 million, respectively, as a result of this change in presentation (2008 increases: €2,596 million and €2,596 million, respectively; 2007 increases: €2,170 million and €2,170 million, respectively). The 2006 and 2005 figures are unchanged since the information necessary for an adjustment was not readily available. See also Note 1 to the Consolidated Financial Statements.

2
EBIT includes expenses from compounding of provisions (2009: €1,003 million; 2008: €429 million; 2007: €444 million; 2006: €418 million; 2005: €350 million).

3
Daimler AG will not pay a dividend for the 2009 financial year. Please also refer to the discussion under the heading "Dividend Policy" in "Item 8. Financial Information."

4
The U.S. dollar dividend amounts for prior years reflect the dividend amounts in euros as approved by our stockholders at the annual general meeting for the respective year, translated at the Deutsche Bank fixing rate for the U.S. dollar on the day following such approval.

3


    Exchange Rate Information

            The following table shows, for the respective periods shown, high, low, and average noon buying rates for U.S. dollar per euro in The City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York.

Year
  High   Low  
 
  (in US$ per €)
 
2010              
       

January

    1.4536     1.3870  

2009

             
       

December

    1.5100     1.4243  
       

November

    1.5085     1.4658  
       

October

    1.5029     1.4532  
       

September

    1.4795     1.4235  
       

August

    1.4416     1.4075  

       

Average 1  

 

2009     

          1.3955  

2008     

          1.4695  

2007     

          1.3797  

2006     

          1.2661  

2005     

          1.2400  

1
This column shows the average of the noon buying rates on the last business day of each month during the relevant year.



        On February 16, 2010, the noon buying rate for €1 was US$1.3742.

        Fluctuations in the exchange rate between the euro and the U.S. dollar affect the market price of our ordinary shares on the New York Stock Exchange and the U.S. dollar amount received by shareholders who elect to convert cash dividends declared in euros into U.S. dollars. Please refer to "Item 5. Operating and Financial Review and Prospects," "Item 11. Quantitative and Qualitative Disclosures About Market Risk" and Note 30 to our Consolidated Financial Statements for information on how exchange rate fluctuations affect our businesses and operations and how we manage our exposure to those fluctuations.

4


RISK FACTORS

        Many factors could affect our business, financial condition, cash flows and results of operations. We are subject to various risks resulting from changing economic, political, social, industry, business and financial conditions. The principal risks are described below.

    Economic

         A lack of continued improvement in global economic conditions or a relapse into recession in any of the major world economies could have significant adverse effects on our business and our future operating results and cash flows.

        In the aftermath of the financial crisis that began in the second half of 2008 in the United States, the world economy in 2009 experienced the worst recession since the Second World War and the Great Depression. Despite a moderate recovery in the second half of 2009, the global economy remains fragile because of a continued tightness in the credit markets and unpredictable consumer demand and investment activity, especially in the United States and Western Europe. If the economic recovery in those regions or in other key markets in which we operate does not continue or stagnates or if the economies of key industrialized countries fall back into recession, our financial condition, our profitability and our cash flows would be adversely affected.

        In an environment of a highly fragile global economy, the occurrence of any events that threaten consumer and investor confidence generally (for example, international disputes, political instability, terrorism, volatility in equity or housing markets, rising energy prices, or inefficient financial market regulations) may exacerbate any adverse effects of the global economy on future sales, primarily in Western Europe, the United States and in some emerging markets. Since a high proportion of our costs are fixed, even small declines in sales can significantly affect our operating results and cash flows.

        In connection with the crisis in the financial markets and its impact on the global economy, central banks and governments in the industrialized nations injected vast amounts of additional liquidity into the economy through credit and financial market support programs and increased government spending. These steps resulted in a significant increase in the monetary base and significantly higher fiscal deficits. Central banks appear to recognize that they must reduce the excess liquidity before one or more of the risks typically associated with excess market liquidity materialize. Similarly, governments are aware that they must address the significantly higher public debt ratios, either by increasing revenue or through budget cuts. If public spending is reduced too early or too quickly, however, the fragile economic recovery could be in danger. Conversely, if central banks and governments do not take timely and decisive steps to reduce excess liquidity and reign in government spending, inflation rates may increase significantly, thereby increasing the risk of creating new pricing "bubbles" in some market sectors and hampering future commercial and consumer spending and investment. If any of these potential developments materialize, demand for our passenger cars and commercial vehicles would likely decline, thereby negatively affecting our profitability and cash flows. Similarly, if severe deflation were to occur in some of our key markets, our business, future operating results and cash flows would be adversely affected.

         A renewed decline in consumer demand and investment activity or a prolonged economic stagnation in Western Europe, the most important market for our products, could significantly adversely affect our businesses.

        We derive approximately half our revenue from our business in Western Europe. In 2009, the global recession had a significant negative affect on the Western European economies, resulting in significantly reduced demand for consumer goods and capital equipment. Even though sales of passenger cars were aided by government-sponsored car-scrap incentives, these incentives primarily benefited the compact and micro-compact car segments and had virtually no slowing effect on the sales declines in the luxury car segment. At year end 2009, the major Western European economies began to show signs of modest improvement, although overall demand remains substantially lower compared to pre-recession levels. A relapse into recession or a prolonged stagnation in the Western European economies or in the industries in which we operate could result in a further

5



decline in consumer demand and investment activity. Such a decline could be exacerbated by a prolonged continuation or worsening of the tight credit markets, resulting in lower consumer and investor confidence. In some Western European countries, for example in Germany, the economic effect of restrictions in the credit markets may be even more pronounced since small and medium sized companies, which depend on readily available bank loans, represent a significant portion of total economic activity in those countries. If any of these risks materialize, sales of our passenger cars and commercial vehicles in Western Europe could experience significant declines, thereby adversely affecting our profitability and cash flows.

        Our business in Western Europe could be further impacted if business conditions deteriorate due to the structural weakness of some European economies, the spillover effects of a renewed weakness in other major economies or a further significant appreciation of the euro.

         A continuation or worsening of the tightness of the credit markets in the U.S. could result in a renewed decline in demand for consumer products and capital investment, which could affect our sales of automotive products in the U.S., and potentially other markets, as well as our profitability and cash flows.

        The United States is an important market for our products. Despite a modest recovery in the second half of 2009, the U.S. economy continues to experience tight credit markets, negatively affecting consumer spending and capital investment. In 2010, U.S. credit markets also may be adversely affected by a rise in defaults on consumer and commercial loans. Vast fiscal stimulus packages and a rising money supply have increased further the risk of a potential future economic downturn, potentially giving rise to a renewed decline in investment and private consumption in the U.S. Any of these developments could negatively affect sales of our passenger cars and commercial vehicles in the U.S. market and our profitability and cash flows.

        In addition, the U.S. economy continues to require significant capital inflow from non-U.S. investors to finance the current account deficit. A renewed decline in demand for U.S. dollar denominated investments (which could also be caused by considerable shifts of global currency reserve portfolios) could lead to a further and uncontrolled depreciation of the U.S. dollar, which would adversely affect our currency transaction risk, thereby negatively impacting our passenger car sales into the U.S. and the profitability of our Mercedes-Benz Cars segment. Because of the global importance of the U.S. economy and the existing interdependencies between the United States economy and other major economies throughout the world, any renewed significant economic downturn in the United States would likely also adversely affect Western European and other world markets.

         A sustained slowdown or economic downturn in Asian economies could delay our plans for expansion in Asian markets and intensify competitive pressures.

        During 2009, the major Asian economies remained relatively stable compared to the U.S. and Western European economies, primarily as a result of solid economic growth in China and India. In China, vast fiscal stimulus packages and a rising money and credit supply have increased the risk of a potential future economic downturn. A significant decline in economic activity in these countries or in other major Asian economies could negatively affect the future business prospects of our subsidiary Mitsubishi Fuso Truck and Bus Corporation and sales of our Mercedes-Benz passenger cars in that region. An economic downturn in Asia, particularly in China or India, could also delay our long-term strategic expansion plans in those increasingly important markets. Moreover, if economic conditions in Asia were to deteriorate, especially if coupled with depreciating Asian currencies, then Asian competitors with excess capacity might intensify their efforts to export vehicles to North America and Western Europe. This would not only intensify competition for market share, but also increase further the existing pressure on margins within the automotive industry.

         Our results of operations and cash flows could be adversely affected by economic or political change in some regions.

        We, in particular our Daimler Trucks segment, our Daimler Buses segment, and our Daimler Financial Services segment, have significant operations in several Latin American countries and in Turkey. Some of these countries may experience severe economic or political change, including currency fluctuations, social unrest or

6



instability in the governance regime, which could adversely affect our investments as well as local demand in those and neighboring countries, thereby negatively affecting our cash flows and results of operations.

        In addition, a substantial decline in raw material prices could have a significant adverse effect on the economic outlook of some emerging markets, for example, Russia and Brazil, whose economic growth depends to a large degree on exports of raw materials. As a result, our capital investments and sales of our automotive products in those countries could be negatively affected.

         Protectionist trade policies could negatively affect our business in several markets.

        Demand for motor vehicles could also be affected by adverse developments in the political and regulatory environment in the markets in which we operate. For example, a discord in international trade relations and the implementation of new tariff or non-tariff trade barriers could negatively affect our global sales, production and procurement activities as well as expansion plans in affected areas. The proliferation of bilateral free trade agreements between third party countries could negatively affect our position in those foreign markets, especially in Asia.

    Industry and Business

         Overcapacity and intense competition in the automotive industry create pricing pressure and could force further cost reductions which could negatively affect our profitability and cash flows.

        Overcapacity and intense price competition in the automotive industry could continue to force manufacturers of passenger cars and commercial vehicles, including us, to decrease production, reduce production capacity or increase sales incentives, each of which would be costly and therefore could negatively affect our profitability and cash flows. For example, the global economic slowdown that began towards the end of 2008 and continued into 2009 has caused a significant decline in demand for passenger cars and commercial vehicles in many geographic markets, which further increased overcapacity and intensified price competition in the automotive industry. If the weakness of the automotive markets continues, additional capacity adjustments or pricing measures could become necessary. In that regard, the discontinuation of the government-sponsored car-scrap and other incentives offered in certain Western European countries in 2009 could have an overall chilling effect on those automobile markets in 2010, potentially resulting in a significant decline in future passenger car sales. Even though in Western Europe the primary beneficiaries of those incentives were the compact and micro compact car market segments, there can be no assurance that any decline would be limited to those product segments.

        Our ability to improve or even maintain our profitability depends, among other things, on maintaining competitive cost structures and introducing attractive and fuel efficient new products. If we are unable to continue to provide competitive pricing, customers may elect to purchase competitors' products and our future profitability and cash flows may suffer. For example, some U.S. vehicle manufacturers received financial support from government sources or emerged from reorganization proceedings with a lower cost base, thereby enabling these manufacturers to improve their profitability or offer their products at lower prices.

        In addition, significant discounts and other sales incentives have become increasingly common in many automotive markets, including Western Europe, also as a consequence of the government sponsored car-scrap bonus programs. Sales incentives in the new vehicle business also influence the price level of used vehicles, which could adversely affect the profitability of our used vehicle sales and, indirectly, the profitability of our future new vehicle sales.

         A permanent shift in consumer preference could limit our ability to sell our traditional product lines at current volume levels and affect our profitability in general.

        In the recent past, there were indications in several geographic markets that consumer preference may have begun to shift towards smaller, more fuel efficient and environmentally friendly vehicles. A general shift in consumer preference toward those vehicles could negatively affect our ability to sell large or medium size luxury passenger cars at current volume levels. As a result, we may be forced to lower prices or increase sales incentives

7



on these products. Both, lower volume sales and lower prices could have a negative effect on our future financial condition, operating results and cash flows. In addition, we may be forced to adjust production capacity and further increase efficiency, which could result in significant additional costs, thereby negatively affecting our results of operations and cash flows. Conversely, if we are unable to adjust permanently our production capacity and cost structures to changed business conditions, including a permanent shift of consumer preference towards smaller, lower margin vehicles, our profitability and cash flows may be negatively impacted.

         The future profitability of our Daimler Trucks segment depends in part on the successful implementation of the business optimization and realignment plans of our subsidiaries Daimler Trucks North America and Mitsubishi Fuso Truck and Bus Corporation.

        In 2008, the board of management of Daimler AG approved a plan to optimize and reposition the business operations of Daimler Trucks North America (DTNA), a wholly-owned subsidiary of the Group. In addition, in May 2009, our board of management decided on a major realignment of our subsidiary Mitsubishi Fuso Bus and Truck Corporation (MFTBC). The future profitability and cash flows of our Daimler Trucks segment depend in part on the successful implementation of these plans. For further information on the measures initiated at DTNA and MFTBC, please refer to the discussion under the heading "Daimler Trucks" in "Item 4. Information on the Company."

         A renewed decline of vehicle sales combined with limited credit availability could continue to jeopardize the business viability of our dealers.

        In 2009, the financial viability of our vehicle dealers and importers was significantly affected by the decline in demand for passenger cars and commercial vehicles that resulted from the global economic downturn and the financial crisis, which resulted in higher refinancing costs and significantly reduced access to credit. A renewed decline of sales of passenger cars or commercial vehicles or even a stagnation of sales at low post-crisis levels could further jeopardize the business viability of our dealers. Any steps we take to provide financial support to our dealers or importers could negatively impact our cash flows and profitability.

         The pressure on automotive suppliers worldwide, the increased number of suppliers in financial distress or bankruptcy, supplier insolvencies, possible interruptions in our supply chain, or a renewed increase in commodities prices could negatively impact our profitability and cash flows.

        Our financial performance depends in part on obtaining competitive prices from suppliers and on a reliable supply chain for parts, sub-assemblies and other materials. Our ability to achieve further price reductions from suppliers may be limited by a combination of factors, including consolidation among automotive suppliers, the limitation of the supply base for certain components or financial difficulties at automotive suppliers induced by the global economic downturn which continued into 2009.

        The significant declines in vehicle sales as a result of the global economic downturn, exacerbated by the continuing intense competition in the automotive industry, had a significant adverse effect on the financial position of many of our suppliers, some of which are in financial distress or are the subject of bankruptcy proceedings. In some cases, we have provided or are providing financial assistance to suppliers in order to avoid prolonged interruption in the supply of parts or components. Providing such assistance also in the future could negatively impact our profitability and cash flows. Many of our suppliers also supply other automotive manufacturers. If one or more major global automotive manufacturers were to experience severe financial difficulties or relapse into financial distress, the financial condition of one or more of our suppliers could be significantly adversely affected, which in turn could result in further supplier insolvencies or the need to provide additional support to those suppliers. A consolidation among automotive suppliers, for example, due to acquisitions or mergers, could limit our ability to negotiate competitive prices due to reduced competition for certain components. Consistent with general industry practice, we also source select parts or components from a single supplier, which carries a risk of potential production disruption if the supplier is unable to perform its obligations.

        Prices for raw materials that we or our suppliers use in manufacturing our products or components, such as steel, aluminum, petroleum-based products and various precious metals, declined in 2008 and early 2009. Some

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raw material prices began to increase during the remainder of 2009. Continued increases for these or other raw materials, including energy, may lead to higher component and production costs that could in turn negatively impact our future profitability and cash flows because we may not be able to pass all those costs on to our customers or require our suppliers to absorb such costs.

         Risks arising from our leasing and sales financing business may adversely affect our future operating results and cash flows.

        The financial services we offer in connection with the sale of vehicles, including the financing of dealer inventories, involve several risks. These risks include higher refinancing costs and the potential inability to recover our investments in leased vehicles or to collect our sales financing receivables. For instance, downgrades of our credit ratings could increase our refinancing costs, potentially necessitating adjustments to the terms at which we provide credit to our leasing and sales financing customers. These adjustments could have the effect of reducing new business and overall contract volume of our financial services business and in turn could adversely affect unit sales of our automotive businesses. In addition, our ability to recover our investments in leased vehicles may deteriorate as a result of a decline in resale prices of used vehicles, and our ability to collect our sales financing receivables could be negatively affected by consumer or dealer insolvencies or if the resale prices of the vehicles securing these receivables are insufficient. For example, we experienced a significant rise in credit defaults among our lease and finance customers in 2009, which increased our cost of credit risk and negatively affected the operating result of our financial services business. If the default rate remains at a high level for a prolonged period of time or rises further, our future operating results and cash flows could be adversely affected.

        New vehicle sales incentives indirectly lower the resale prices of used vehicles. A decline in resale prices of used vehicles in turn results in downward pressure on the fair values of leased vehicles and negatively affects the carrying amount of vehicles on operating leases, as well as indirectly lowers the value of collateral in place securing our sales financing and finance lease receivables.

        As a result of the global economic downturn, some of these risks have already materialized and may continue to materialize in the future, which could adversely affect our future operating results, financial condition and cash flows.

        Please refer to "Critical Accounting Policies" in "Item 5. Operating and Financial Review and Prospects" for additional information on how we account for our leasing and sales financing business. For additional information about credit risk inherent in our leasing and sales financing business and a description of our risk management, please refer to Note 30 to our Consolidated Financial Statements.

         Our future profitability will depend on our ability to offer competitive prices while maintaining a high level of product quality.

        Product quality significantly influences the consumer's decision to purchase passenger cars and commercial vehicles. Reductions in our product quality could severely tarnish our image as a manufacturer, thereby negatively affecting our future sales and, as a consequence, our future operating results and cash flows.

        Maintaining the quality of our products and developing new products meeting more sophisticated customer requirements require increasingly complex technical solutions, which result in higher research and development and other costs. Increased consumer sensitivity to pricing may limit our ability to pass higher costs on to customers and force us to continue to improve our efficiencies and cost structures. If we are unable to improve our efficiencies and adjust our cost structures as necessary, our results of operations may be adversely affected. Our attempts to reduce costs along the automotive value chain may also place additional cost and pricing pressure on suppliers, which can also negatively affect product quality.

        Additionally, component parts or assembly defects could require us to undertake service actions and recall campaigns, or even to develop new technical solutions requiring regulatory certification prior to implementation. We may need to expend considerable resources for these remediation measures, resulting in higher provisions for

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new warranties issued and expenses in excess of already established provisions for product warranties previously issued.

         Our future success depends on our ability to continue to offer attractive, fuel efficient, and environmentally friendly vehicles and to adjust to consumer demand.

        Developing attractive and fuel efficient new vehicles, including vehicles employing new propulsion technologies such as hybrid and electric vehicles, over increasingly shorter product development cycles is critical to the success of automobile manufacturers. For example, technical solutions that reduce fuel consumption and emissions, like the diesel hybrid technology, are costly but necessary for a sustainable mobility. Our ability to strengthen our position within our traditional product and market segments through innovations and to develop attractive and fuel efficient new products and services while expanding into additional market segments with those new products will play an important role in determining our future success. If we are unable to timely develop these products and meet consumer demand, a general shift in consumer preference toward smaller, more fuel efficient and environmentally friendly vehicles could have a negative effect on our future profitability and cash flows. Such a shift could result from, among other things, increasing fuel prices, government regulations, for example regarding the level of carbon dioxide emissions, speed limits or higher taxes on certain types of vehicles, such as sport utility vehicles or luxury automobiles, or environmental concerns. Potential delays in bringing new vehicles to market, the inability to achieve defined fuel efficiency or emissions targets without a decline in quality, and a lack of market acceptance of new models or temporary shortages of parts and materials required for new vehicles could adversely affect our financial condition, results of operations and cash flows.

         We are subject to legal proceedings and environmental and other government regulations.

        A negative outcome in one or more of our pending legal proceedings could materially adversely affect our future financial condition, results of operations and cash flows. Please refer to the discussion under the heading "Legal Proceedings" in "Item 8. Financial Information" for further information.

        The automotive industry is subject to extensive governmental regulations worldwide. Laws in various jurisdictions regulate occupant safety and the environmental impact of vehicles, including emission levels, fuel economy and noise, as well as the levels of pollutants generated by the plants that produce them. The cost of compliance with these regulations is significant, and we expect to incur higher compliance costs in the future. New legislation may subject us to additional expense in the future, which could be significant. Noncompliance with regulations applicable to the automotive industry could also result in significant penalties or the inability to sell noncompliant vehicles in the relevant markets.

        For example, in an effort to reduce greenhouse gases, several countries and the EU have already imposed more stringent regulations on carbon dioxide emissions or are currently in the process of adopting such regulations. For further information on government regulation and environmental matters, please refer to the discussion under the heading "Government Regulation and Environmental Matters" in "Item 4. Information on the Company."

         Risks arising from contingent obligations could affect us adversely.

        We sometimes provide guarantees for third party liabilities, principally in connection with liabilities of our non-consolidated affiliated or related companies, guarantees under buy-back commitments, and performance guarantees related to the contractual performance of joint ventures and consortia. These guarantees may expose us to financial risk. For example, as a result of the guarantees and other obligations our subsidiary Daimler Financial Services AG undertook as one of the consortium members of Toll Collect, our future operating results and cash flows may be adversely affected by penalties, damage claims and losses associated with an underperformance of the system. For further information concerning these contingent obligations, please refer to the discussion under the heading "Off-Balance Sheet Arrangements — Obligations under guarantees" in "Item 5. Operating and Financial Review and Prospects."

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         We depend on our ability to recruit and retain highly qualified management and technical personnel.

        Our future success depends in part on our continued ability to recruit and retain highly qualified managers, engineers and other specialized personnel. Competition for employees with requisite qualifications remains intense in our industry and the regions in which we operate. Changing demographics, primarily in Germany and other Western European countries, could exacerbate further the competitive recruiting environment as declining birth rates and a global marketplace reduce the pool of available talent in some regions. If we are unable to hire qualified personnel in sufficient numbers in the future, our business could be adversely affected.

    Financial

         We are exposed to fluctuations in currency exchange rates and interest rates.

        Our businesses, operations and reported financial results and cash flows are exposed to a variety of market risks, including the effects of changes in the exchange rates of the U.S. dollar, the British pound, the Japanese yen, the Chinese yuan and other world currencies against the euro. In addition, in order to manage the liquidity and cash needs of our day-to-day operations, we hold a variety of interest rate sensitive assets and liabilities. We also hold a substantial volume of interest rate sensitive assets and liabilities in connection with our lease and sales financing business. Changes in currency exchange rates or interest rates may have substantial adverse effects on our operating results and cash flows. For more information on how changes in exchange rates and interest rates may impact our operating results and cash flows, please refer to the discussion under the heading "Introduction" in "Item 5. Operating and Financial Review and Prospects," the discussion about market risk in "Item 11. Qualitative and Quantitative Disclosures About Market Risk" and to Note 30 to our Consolidated Financial Statements.

         Further downgrades of our debt ratings may increase our cost of capital and could negatively affect our businesses.

        In 2009, several rating agencies downgraded our long-term debt rating to BBB+ and some agencies changed the outlook from stable to negative. Further downgrades by rating agencies may increase our cost of capital and, as a result, could negatively affect our businesses, especially our leasing and sales financing business which is typically financed with a high proportion of debt.

        For a description of our individual credit ratings, please refer to the discussion under the heading "Liquidity and Capital Resources" in "Item 5. Operating and Financial Review and Prospects."

         We depend on the issuance of debt to manage liquidity. Our ability to issue debt instruments in the future may be adversely affected by declines in our operating performance and the future condition of the credit markets.

        To manage the liquidity of the Group, we depend on the issuance of debt, principally in the European and U.S. capital markets. A decline in our operating performance or lower demand for these types of debt instruments could increase our borrowing costs or otherwise limit our ability to fund operations, either of which would negatively affect our operating results and cash flows.

        The tightening of the credit markets in the latter part of 2008 and into 2009 resulted in significantly higher borrowing costs. If these difficult financing conditions were to recur, we could be faced with higher borrowing costs and reduced funding flexibility. In particular, this could negatively affect the competitiveness and profitability of our financial services business or even result in a limitation of the financial services we offer, thereby negatively affecting our vehicle sales.

        For a more detailed description of the impact of the turmoil in the credit markets on our borrowings please refer to the discussion under the heading "Liquidity and Capital Resources" in "Item 5. Operating and Financial Review and Prospects."

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         The carrying value of our equity investments in companies in which we hold a non-controlling equity interest depends on the ability of those companies to operate their businesses profitably.

        We hold non-controlling equity interests in various companies. Most notably, we hold an equity interest in the European Aeronautic Defence and Space Company EADS N.V. (EADS) and in Tognum AG (Tognum). Any factors negatively affecting the profitability of the businesses of these companies may adversely affect our ability to recover the full amount of our equity investments, and as a result, could require us to record impairment charges. In addition, if we account for those investments using the equity method of accounting, such factors may also affect our proportionate share in the future operating results of our equity investees. For more information on how EADS affected the 2007 through 2009 operating results, please refer to the discussion under the heading "Operating Results" in "Item 5. Operating and Financial Review and Prospects." Please also refer to "Critical Accounting Policies" in "Item 5. Operating and Financial Review and Prospects" for information on our accounting policies with regard to the impairment of equity method investments. EADS is the most significant equity investment which we include in our consolidated financial statements with a three-month lag. In connection with recent developments in the negotiations regarding EADS's A400M military transporter program, EADS announced on February 17, 2010 that it will update the A400M provision in its 2009 consolidated financial statements. This update will require certain critical assumptions and financial assessments to be made which were not finalized when our supervisory board approved Daimler's 2009 Consolidated Financial Statements on March 1, 2010. Any future increase in that provision would negatively affect EADS's actual 2009 results and would also negatively affect Daimler's proportionate share in EADS's results which will be reflected in Daimler's consolidated interim financial statements for the first three months of 2010. The resolution of this matter could have a material negative effect on Daimler's earnings in the first quarter of 2010.

         We may need to make cash contributions with respect to the funding of our pension benefit plans. In addition, our total pension benefit expense may increase.

        We have pension and, to a minor degree, other post-employment benefit obligations which are underfunded. The funded status of our off-balance sheet pension and other post-employment benefit plans is subject to changes in actuarial and other related assumptions and to actual developments.

        Even small changes in the assumptions which affect the benefit plan valuation, such as discount rates, mortality rates and other factors, may lead to increases in the size of the respective obligations, which would affect the reported funded status of our plans and, as a consequence, could negatively affect our total pension and other post-employment benefit expense in subsequent years.

        Actual developments, such as unfavorable developments in the capital markets — particularly with respect to equity and debt securities — can result in lower actual returns on plan assets or in a significant decrease in the market value of plan assets at year end. This in turn would affect the reported funded status of our plans. In addition, a decrease in the rate of expected return on plan assets can result in higher pension and other post-employment benefit expense in subsequent years.

        For additional information on employee benefits accounting, please refer to the discussions under the headings "Critical Accounting Policies" and "Liquidity and Capital Resources" in "Item 5. Operating and Financial Review and Prospects" and to Note 21 to our Consolidated Financial Statements.

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Item 4. Information on the Company.

INTRODUCTION

Organization

        The legal and commercial name of our company is Daimler AG. Daimler AG is a stock corporation organized under the laws of the Federal Republic of Germany. Its registered office is located at Mercedesstrasse 137, 70327 Stuttgart, Germany, telephone +49-711-17-0. Daimler AG's agent for service, exclusively for actions brought by the United States Securities and Exchange Commission pursuant to the requirements of the United States federal securities laws, is Daimler North America Corporation, located at One Mercedes Drive, Montvale, New Jersey 07645-0350.

History

        Daimler AG was incorporated under the name DaimlerChrysler AG on May 6, 1998, the year in which Daimler-Benz Aktiengesellschaft and Chrysler Corporation combined their respective businesses, stockholder groups, managements and other constituencies. On August 3, 2007, we transferred an 80.1% controlling interest in the Chrysler automotive activities and the related Chrysler financial services business in the NAFTA region (the Chrysler activities) to a subsidiary of the private equity firm Cerberus Capital Management L.P. (Cerberus). We initially retained a 19.9% non-controlling equity interest in Chrysler Holding LLC, a newly established holding company for the Chrysler activities. Following a resolution adopted at an extraordinary shareholders' meeting in October 2007, we changed the name of the company from DaimlerChrysler AG to Daimler AG.

        As a result of the transfer of a majority interest in the Chrysler activities in 2007, we reported the Chrysler activities in our consolidated statements of income (loss) as discontinued operations, with all recorded income and expense items related to the Chrysler activities included in the line item "Net profit (loss) from discontinued operations." We do not include amounts related to discontinued operations in our segment reporting. For further information, please refer to Notes 2 and 31 to our Consolidated Financial Statements.

        In June 2009, based on a binding term sheet signed in April 2009, we entered into a redemption agreement regarding our remaining 19.9% non-controlling equity interest in Chrysler Holding LLC. As a result of the redemption, Daimler no longer holds an equity interest in Chrysler Holding LLC or any of its subsidiaries and all Daimler designees resigned from the board of Chrysler Holding LLC and the boards of any of its subsidiaries. Please also refer to the discussion under the heading "Material Contracts" in "Item 10. Additional Information." For additional information on the effect of the redemption on our Consolidated Financial Statements, please refer to "Operating Results" in "Item 5. Operating and Financial Review and Prospects" and to Note 2 to our Consolidated Financial Statements.

        From August 4, 2007 through the date of redemption on June 3, 2009, we accounted for our non-controlling equity interest in Chrysler Holding LLC with a three-month time lag using the equity method of accounting. During that period we included our proportionate share of the consolidated results of Chrysler Holding LLC, which we previously reported as part of Vans, Buses, Other, in the reconciliation of total segment EBIT to Group EBIT.

Business Summary and Developments

        Daimler AG is the ultimate parent company of the Daimler Group. The Group develops, manufactures, distributes and sells a wide range of automotive products, mainly passenger cars, trucks, vans and buses. It also provides financial and other services relating to its automotive businesses.

        We offer our automotive products and related financial services primarily in Western Europe and in the NAFTA region, which consists of the United States, Canada and Mexico. We derived approximately 46% of our 2009 revenue from sales in Western Europe and 21% from sales in the United States. With respect to Western Europe, approximately 52% of the revenue achieved in that region resulted from sales in Germany and 48% from sales in other countries. Revenue in Asia represented approximately 16% of our total revenue in 2009.

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        For information on significant acquisitions and dispositions of businesses during the last three years, please refer to Notes 2 and 12 to our Consolidated Financial Statements. For a discussion of their effect on our revenue and operating results, please refer to "Operating Results" in "Item 5. Operating and Financial Review and Prospects."

        Our aggregate capital expenditures over the past three years for property, plant and equipment of our continuing businesses were €2.4 billion in 2009, €3.6 billion in 2008 and €2.9 billion in 2007. In 2009, the United States and Germany accounted for 8.1% and 72.6%, respectively, of these capital expenditures. Expenditures for equipment on operating leases related to our continuing businesses were €10.8 billion in 2009, €10.2 billion in 2008 and €10.8 billion in 2007. For additional information on our capital expenditures, please refer to "Description of Business Segments" and "Description of Property" below.

Business Segments and Other Business Interests

    Business Segments

        At the beginning of 2009, we made some changes to our segment reporting. We now separately present the business activities of Mercedes-Benz Vans and Daimler Buses which we previously reported as part of Vans, Buses, Other. We have adjusted 2008 and 2007 figures to reflect this change in segment presentation. For further information regarding our segment reporting, please refer to the discussion under the heading "Operating Results" in "Item 5. Operating and Financial Review and Prospects" and Note 31 to our Consolidated Financial Statements.

        Following the changes in our segment reporting, we report the following five segments:

    Mercedes-Benz Cars

    Daimler Trucks

    Mercedes-Benz Vans

    Daimler Buses

    Daimler Financial Services

    Other Business Interests

        Our other business interests consist primarily of our equity investments in the European Aeronautic Defence and Space Company EADS N.V. (EADS) and in Tognum AG. We now include these and other remaining business interests, which we previously reported as part of Vans, Buses, Other, in our reconciliation from total segment EBIT to Group EBIT, together with corporate items and eliminations of intersegment transactions. For further information, please refer to the discussion under the heading "Operating Results" in "Item 5. Operating and Financial Review and Prospects" and to Note 31 to our Consolidated Financial Statements.

        EADS.     As of December 31, 2009, one of our subsidiaries held a 22.5% equity interest in EADS. EADS is a publicly-traded company and a global supplier and service provider in the aerospace and defense sectors. The EADS Group includes Airbus, a manufacturer of commercial and also tanker, transport and mission aircraft, the helicopter supplier Eurocopter, and EADS Astrium, a European space company involved in several space programs, including the Ariane program. In addition, EADS is a partner in the Eurofighter consortium and holds an equity interest in MBDA SAS. We account for our investment in EADS with a three-month time lag using the equity method of accounting.

        In 2004, 2006 and 2007, we entered into several transactions involving our EADS shares which reduced the Group's equity interest in EADS on which the Group bases its at-equity accounting. Our share in the results of EADS in 2007 is based on an equity interest which declined from 33% at the beginning of the year to 24.9% at year-end 2007 and our share in the results of EADS in 2008 is based on an equity interest which declined from 24.9% at the beginning of the year to 22.5% at year-end 2008. This 22.5% equity interest in EADS is held by a

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subsidiary in which we hold a 67% interest and minority investors have a 33% interest. For further information on these transactions, please refer to Note 12 to our Consolidated Financial Statements and "Operating Results" in "Item 5. Operating and Financial Review and Prospects."

        Tognum.     As of December 31, 2009, we held a 28.4% equity interest in Tognum AG. Tognum is a global supplier of off-highway engines, propulsion systems and decentralized energy systems. In 2008, we acquired shares in Tognum AG for a total amount of €702 million in cash, primarily from the Swedish investor group EQT. We account for our investment in Tognum with a three-month time lag using the equity method of accounting.

Significant Subsidiaries

        The following table shows the significant subsidiaries Daimler AG owned, directly or indirectly, as of December 31, 2009:

Name of Company
  Percentage Owned  

Mercedes-Benz Bank AG, Stuttgart, Germany, a German stock corporation

    100.0  

Daimler North America Corporation, Montvale, New Jersey, USA, a Delaware corporation

    100.0  

DCFS USA, LLC, Farmington Hills, Michigan, USA, a Delaware limited liability company

    100.0  

Daimler Trucks North America LLC, Portland, Oregon, USA, a Delaware limited liability company

    100.0  

Mercedes-Benz do Brasil Ltda., Sao Bernardo do Campo, Sao Paulo, Brazil, a Brazilian private limited company

    100.0  

Mitsubishi Fuso Truck and Bus Corporation, Kawasaki, Japan, a Japanese corporation

    85.0  

DESCRIPTION OF BUSINESS SEGMENTS

Mercedes-Benz Cars

        Mercedes-Benz Cars designs, produces and sells Mercedes-Benz passenger cars, Maybach high-end luxury sedans and smart micro compact passenger cars. In 2009, Mercedes-Benz Cars contributed approximately 51% of our revenue.

    Products

    Mercedes-Benz

        Mercedes-Benz passenger cars are world-renowned for innovative technology, highest levels of comfort, quality and safety, and pioneering design. We offer most Mercedes-Benz passenger cars with a choice of several diesel and gasoline engines. In 2009, we began to offer the S-Class and the ML-Class also with a gasoline hybrid engine. Under the AMG brand, we offer high performance versions of Mercedes-Benz vehicles with V8 or V12 engines in all classes, except in the A-, B-, R-, GL- and GLK-Classes. The availability of individual models differs by geographic market. The Mercedes-Benz passenger car product range consists of the following classes:

        S-Class.     The S-Class is a line of full-size luxury sedans, which are available in short and long wheelbase versions. In June 2009, we introduced a new generation of the S-Class sedans, including a hybrid version, the new S 400 BlueHYBRID.

        The S-Class sedans are complemented by the CL, a top-of-the-line two-door coupe, and the SL, a luxury roadster. We plan to introduce a new generation of the CL in September 2010. Until the end of 2009, we also produced the SLR, a high performance Mercedes-Benz sports car, in cooperation with McLaren Cars Ltd. The production of seventy-five special edition Stirling Moss vehicles marked the end of production of the SLR model family.

        At the 2009 Frankfurt Motor Show we presented an all new sports car, the Mercedes-Benz SLS AMG. We intend to launch the SLS AMG beginning in March 2010.

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        E-Class.     The E-Class is a line of luxury sedans, coupes, convertibles and station wagons. We launched all new versions of the E-Class sedan and the E-Class station wagon in March 2009 and November 2009, respectively. We also offer the CLS, a four-door coupe based on the E-Class.

        In May 2009, we introduced an all new E-Class coupe as part of the repositioning of the successor model of the CLK coupe as an E-Class model. Similarly, in March 2010, we intend to launch an all new version of an E-Class convertible as part of the repositioning of the successor model of the CLK convertible as an E-Class model.

        C-Class.     The C-Class is a line of compact luxury sedans and station wagons. The CLC Sports Coupe and the SLK, a two-seat roadster, complement the C-Class product family.

        Until the planned introduction of the E-Class convertible, the CLK convertible continues to be a part of the C-Class product family.

        A-/B-Classes.     The A-Class is a front wheel drive compact and the B-Class is a front wheel drive 4-door Compact Sports Tourer (CST). We do not offer the A- and B-Classes in the United States.

        ML-/R-/G-/GL-/GLK-Classes.     The ML-Class is a line of sport utility vehicles with permanent all-wheel drive.

        The R-Class is a line of SUV Tourers, which is available in a short and a long wheelbase version. We plan to introduce a new generation of the R-Class in August 2010.

        The GL-Class is a line of seven seat luxury sport utility vehicles. We introduced a new generation of the GL in August 2009.

        The GLK-Class is a line of compact sport utility vehicles. In September 2009 we launched a GLK model with rear wheel drive in addition to the permanent all-wheel drive models.

        The G-Class is a line of cross country vehicles with permanent four-wheel drive that come in a short and a long wheelbase version and as a convertible.

    Maybach

        Under the Maybach brand, we offer a line of exclusive high-end luxury sedans with outstanding luxury, comfort, and individuality. Maybach sedans are available in a short and a long wheelbase version, including the Maybach 57S and 62S as sportier variations.

    smart

        The smart brand represents a micro compact car concept. We currently offer two models, the smart fortwo coupe and the smart fortwo cabrio. In 2009, we introduced the smart brand in Denmark, in major metropolitan areas in China and in Sao Paulo, Brazil. We plan to introduce a new generation of the smart fortwo in the third quarter of 2010.

    Markets, Sales and Competition

        Markets.     In 2009, the main markets of our Mercedes-Benz Cars segment were Germany (27% of unit sales), the remainder of Western Europe (30% of unit sales), the United States (19% of unit sales) and Asia (13% of unit sales).

        Due to the severe global economic downturn, demand for passenger cars in 2009 experienced a decline in many of our main markets. In Western Europe (excluding Germany), new registrations of passenger cars for all manufacturers fell 7% to 9.8 million units. In contrast, in Germany new passenger car registrations for all manufacturers increased 23% to 3.8 million units. This increase was mainly due to higher sales in the micro and subcompact car segments induced by the car scrap incentives provided by the German government. In the United States, sales of passenger cars decreased 21% to 10.4 million units, while in Asia, sales of passenger cars increased 18% to 20.0 million units.

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        Sales.     The following table shows the distribution of revenue and unit sales for our Mercedes-Benz Cars segment by geographic market since 2007:

Revenue and Unit Sales

 
  Year Ended December 31,  
 
  2009 1   % change   2008 1   % change   2007 1  

Revenue (€ in millions)

                               

Western Europe

    21,613     -16     25,676     -11     28,972  
 

Germany

    10,955     -11     12,277     -9     13,492  
 

Other

    10,658     -20     13,399     -13     15,480  

NAFTA region

    7,981     -18     9,721     -17     11,655  
 

United States

    6,809     -21     8,620     -19     10,600  
 

Canada and Mexico

    1,172     +6     1,101     +4     1,055  

Asia

    7,777     +2     7,600     +16     6,575  
 

China

    4,057     +29     3,146     +63     1,935  
 

Other

    3,720     -16     4,454     -4     4,640  

Other markets

    3,947     -17     4,775     -9     5,228  
                           
 

World

    41,318     -14     47,772     -9     52,430  
                           

Units

                               

Western Europe

    623,489     -15     733,233     -6     779,157  
 

Germany

    297,756     -10     332,472     -3     342,860  
 

Other

    325,733     -19     400,761     -8     436,297  

NAFTA region

    235,549     -17     282,161     +2     276,062  
 

United States

    202,955     -19     251,160     0     251,789  
 

Canada and Mexico

    32,594     +5     31,001     +28     24,273  

Asia

    138,942     -4     144,141     +17     123,356  
 

China

    67,451     +39     48,620     +59     30,615  
 

Other

    71,491     -25     95,521     +3     92,741  

Other markets

    95,925     -15     113,478     -1     114,609  
                           
 

World

    1,093,905     -14     1,273,013     -2     1,293,184  
                           

1
Revenue and unit sales for 2009, 2008 and 2007 include sales of Mitsubishi pickup trucks (L200) assembled and sold by one of our subsidiaries in South Africa and Mitsubishi Pajero vehicles sold by that subsidiary (5,274, 8,190 and 10,066 units, respectively).



        In 2009, worldwide unit sales of our Mercedes-Benz Cars segment went down 14% to 1,093,905 compared to 1,273,013 in the prior year. Primarily due to the global economic downturn, unit sales declined in almost all of our classes. Sales of the S-Class (including Maybach) were 39% lower at 57,109 units compared to 92,869 units in 2008. Due to the availability of the new models of the E-Class sedan, coupe and station wagon (since March, May and November 2009, respectively) unit sales of the E-Class increased 23% to 212,142 units in 2009 compared to 172,912 units in 2008. Unit sales of the C-Class family decreased 28% to 322,815 units, partially as a result of strong price competition in that vehicle segment, but also due to the repositioning of the CLK coupe as an E-Class coupe in May 2009. Sales of the ML-/R-/G-/GL-/GLK-Classes at 167,153 units were slightly above the prior year's level of 161,337 units. A decline in unit sales of the ML-/R-/G-/GL-Classes was more than offset by the first time full availability of the GLK-Class. Sales of the A-/B-Classes dropped to 215,475 units compared to 250,304 units in 2008. Overall, sales of smart vehicles reached 113,937 units, 18% below last year's sales of 138,957 units.

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        In Germany, Mercedes-Benz Cars sold 297,756 units, a decline of 10% compared to 2008. Unit sales in Western Europe (excluding Germany) decreased 19% to 325,733 units. In the United States, we sold 202,952 units in 2009 compared to 251,160 units in 2008. Unit sales in China went up 39% to 67,451 units, while in the rest of Asia (excluding China) sales decreased 25% to 71,491 units. The decrease outside of China was primarily due to lower unit sales in Japan (26,669 units in 2009 compared to 36,969 units in 2008). For a discussion of changes in revenue, please refer to "Operating Results" in "Item 5. Operating and Financial Review and Prospects."

        The following table shows, by vehicle line, the number of units sold since 2007:

 
  Year Ended December 31,  
 
  2009   2008   2007  

Units

                   

S-Class (including CL, SL and SLR) and Maybach

    57,109     92,869     107,021  

E-Class (including CLS and, since May 2009, the E-Class coupe)

    212,142     172,912     230,878  

C-Class (including CLC, CLK and SLK)

    322,815     448,444     386,521  

A-/B-Classes

    215,475     250,304     275,413  

ML-/R-/G-/GL-/GLK-Classes

    167,153     161,337     180,217  

Smart

    113,937     138,957     103,068  

Other 1

    5,274     8,190     10,066  
               
 

Total

    1,093,905     1,273,013     1,293,184  
               

1
This category represents Mitsubishi pickup trucks (L200) assembled and sold by one of our subsidiaries in South Africa and Mitsubishi Pajero vehicles sold by that subsidiary.

        Competition.     In Western Europe, our Mercedes-Benz passenger cars compete primarily with products of BMW (BMW, Rolls-Royce), Volkswagen (Audi, Porsche, Bentley, VW) and, depending on the market segment, Fiat (Lancia, Alfa Romeo, Ferrari, Maserati), Ford (Volvo), General Motors (Opel, Vauxhall), PSA (Peugeot/Citroen), Renault, Tata Motors (Jaguar, Land Rover) and Toyota (Toyota, Lexus).

        In the United States, our principal competitors of our Mercedes-Benz passenger cars include BMW (BMW, Rolls-Royce), Ford (Lincoln, Volvo), Honda (Acura), Nissan (Infiniti), Tata Motors (Jaguar, Land Rover), Toyota (Lexus), Volkswagen (Audi, Porsche, Bentley, VW) and, depending on the market segment, Nissan, other Toyota brands and certain models produced by General Motors (Cadillac) and Fiat (Jeep).

        In Asia, our main competitors are BMW (BMW, Rolls-Royce), Volkswagen (Audi, Porsche, Bentley, VW) and, depending on the market segment, Fiat (Lancia, Alfa Romeo, Ferrari, Maserati), Ford (Volvo), General Motors (Opel, Vauxhall), PSA (Peugeot/Citroen), Renault, Tata Motors (Jaguar, Land Rover) and Toyota (Toyota, Lexus).

        Competitors of the Maybach are Rolls-Royce and Bentley sedans.

        Principal competitors of smart vehicles are certain models of Fiat, Ford, PSA (Peugeot/Citroen), Renault, Suzuki, Toyota (Toyota, Daihatsu), BMW (Mini) and Volkswagen (Seat, Skoda, VW).

    Distribution

        We distribute Mercedes-Benz passenger cars through a worldwide distribution system. The sales organization differs by geographic market depending on local needs and requirements. At the wholesale level, we distribute Mercedes-Benz passenger cars through affiliated or independent general distributors or through wholly owned subsidiaries. In major markets worldwide, including the United States, Canada, Japan and most European markets, we operate our own wholesale subsidiaries which we call market performance centers. In Canada, South Africa, Australia, Germany and select European metropolitan areas, we also operate our own retail outlets.

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        In Europe and Asia we sell our Maybach sedans through Maybach centers, which are dealerships exclusively dedicated to the Maybach brand, and through select Mercedes-Benz dealers. In the United States we distribute our Maybach line through select Mercedes-Benz dealers.

        A wide network of smart dealerships in forty-two countries provides sales and repair services for our smart vehicles. We sell the smart fortwo coupe and the smart fortwo cabrio in the United States through Penske Automotive Group (PAG) as the official distributor.

    Capital Expenditures; Research and Development

        The following table shows capital expenditures for property, plant and equipment and intangible assets and research and development expenditures of the Mercedes-Benz Cars segment in the last three years:

 
  Year Ended December 31,  
 
  2009   2008   2007  
 
  (€ in millions)
 

Capital expenditures for property, plant and equipment and intangible assets (excluding finance leases)

    2,585     3,379     2,680  

Research and development expenditures

    2,696     2,994     2,733  
 

thereof: Capitalized development costs

    913     1,060     705  



        The significant decrease in capital expenditures in 2009 resulted primarily from cost reduction initiatives in response to the global economic downturn. Despite that decrease, capital expenditures for new products remained at a high level. The main drivers of our investment activities in 2009 were the successor models of the E-Class sedan and station wagon, the E-Class coupe as a repositioned successor model to the CLK coupe, and new engines with higher fuel efficiency and lower carbon dioxide emissions.

        Research and development activities of Mercedes-Benz Cars in 2009 related primarily to the development of new and successor models of the A-/B-Classes, the ML-/GL-Classes and the S-Class (sedan, SL). Another focus was the further reduction of fuel consumption and carbon dioxide emissions through, for example, hybrid-, Bluetec-, electro- and fuel cell technologies.

Daimler Trucks

        Daimler Trucks manufactures and sells trucks and specialty vehicles under the brand names Mercedes-Benz, Freightliner, Western Star, Thomas Built Buses and Fuso. Our worldwide facilities provide us with a strong production and assembly network for commercial vehicles and core components. Daimler Trucks contributed approximately 21% of our 2009 revenue. In 2009, we ceased production of trucks under the Sterling brand name, although our 2009 sales included 2,725 Sterling units from existing stock.

        In the fourth quarter of 2008, as part of a strategic partnership, we acquired a 10% equity interest in the Russian commercial vehicle manufacturer Kamaz OAO for US$250 million in cash. The purchase agreement requires us to make an additional one-time payment in 2012. The amount of the payment will depend on Kamaz's interim business performance, but in any event will not exceed US$50 million. We account for our equity interest in Kamaz with a three months time lag using the equity method of accounting. We also plan to work with Kamaz on joint projects in several areas, including product distribution, component sharing and technology transfers. In that regard, at the end of 2009, we entered into agreements with Kamaz to establish two joint ventures regarding the distribution and, with respect to some truck lines, the potential assembly of Mercedes-Benz and Fuso trucks and the sale of Mercedes-Benz and Setra buses in Russia.

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    Products

        Mercedes-Benz Trucks.     Our European Mercedes-Benz truck lines consist of the Actros and the Axor in the heavy-duty category, the Atego in the medium-duty category, and the specialty vehicles Econic and Zetros. The Unimog, a four-wheel drive vehicle for special purpose applications, complements the line-up. In Turkey and Brazil, we manufacture heavy-duty and medium-duty trucks for the respective local and certain export markets. Overall, our Mercedes-Benz trucks range from 6 metric tons gross vehicle weight (GVW) to 41 metric tons GVW. In 2008, we started to introduce trucks with alternative drive systems, the Axor BlueTec Hybrid, the Econic BlueTec Hybrid and the Econic CNG Hybrid. At the end of 2010, we plan to expand our hybrid truck line with the launch of the Atego BlueTec Hybrid in the medium-duty category.

        Freightliner Trucks, Western Star Trucks, and Thomas Built Buses.     Our U.S. subsidiary Daimler Trucks North America LLC manufactures trucks and buses (based on truck chassis) in Classes 3 through 8 (from 9,000 lbs. GVW to 160,000 lbs. GVW) and sells them under the Freightliner, Western Star, and Thomas Built Buses brand names, primarily in the NAFTA region. It also manufactures chassis for trucks, buses, walk-in vans and motor homes in Classes 3 through 7 (from 10,000 lbs. GVW to 33,000 lbs. GVW). In 2009, Freightliner introduced a new version of the Coronado, a premium on-highway truck. Production of the new Coronado commenced in January 2010.

        In order to comply with the new U.S. emission regulation EPA 10 which became effective in January 2010, we began to offer truck engines based on our Heavy Duty Engine Platform featuring our BlueTec emission reduction technology.

        In the fourth quarter of 2008, we adopted a wide-ranging plan to optimize and reposition the business operations of our subsidiary Daimler Trucks North America. Measures provided for in the plan included the discontinuation of the Sterling Trucks brand in 2009, a further consolidation of our production network in the NAFTA region, capacity adjustments, including closing two truck manufacturing plants in 2009 and 2010, respectively, and headcount reductions of up to 3,500 (of a total headcount of 20,205 at the end of October 2008) to be accomplished primarily in 2009 and 2010. We achieved most of the originally targeted headcount reductions in 2009. In October 2009, management decided not to proceed with the closing of the truck manufacturing plant in Portland, Oregon, which was originally scheduled for June 2010. In order to compensate for the discontinuation of the Sterling brand and in an effort to serve market segments that were previously covered exclusively by Sterling vehicle offerings, Daimler Trucks North America expects to supplement the Freightliner and Western Star product lines where appropriate. For information on how the optimization plan of Daimler Trucks North America affected EBIT of our Daimler Trucks Segment in 2008 and 2009, please refer to the discussion under the heading "Operating Results" in "Item 5. Operating and Financial Review and Prospects" and to Note 4 to our Consolidated Financial Statements.

        Mitsubishi Fuso Trucks and Buses.     Our Japanese subsidiary Mitsubishi Fuso Truck and Bus Corporation (MFTBC) offers a comprehensive truck portfolio and several bus lines, primarily for the Japanese and other Asian markets. The line-up includes the Canter trucks (light-duty), the Fighter trucks (medium-duty) and the Super Great trucks (heavy-duty) and also certain bus models (Rosa and Aero). MFTBC also sells trucks in Africa, Australia, Europe, Latin America and the United States. In 2009, MFTBC introduced a new version of the Mitsubishi Fuso Super Great truck in Japan, and in 2010 it plans to introduce a new light duty truck.

        In May 2009, we announced a plan for a realignment of MFTBC's global operations to optimize its business and address changes in the markets in which it operates. The plan calls for the streamlining of the product portfolio, reorganizing the plant network, consolidating and strengthening the Japanese retail network, and other efficiency improvements. In that regard, we expect to relocate and idle select production sites, reduce headcount by up to 2,300 employees by the end of 2010, and reduce the total number of dealers in MFTBC's Japanese dealer network. For information on how this program affected EBIT of our Daimler Trucks Segment in 2009, please refer to the discussion under the heading "Operating Results" in "Item 5. Operating and Financial Review and Prospects" and to Note 4 to our Consolidated Financial Statements.

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    Markets, Sales and Competition

        Markets.     Demand for trucks in most geographic areas depends to a large degree on prevailing general economic conditions, which directly influence transportation needs and the availability of funds for capital investment. Our most important truck markets are Western Europe (17% of unit sales), the NAFTA region (24% of unit sales), Latin America (14% of unit sales) and Asia (excluding Australia) (33% of unit sales).

        As a result of the global economic downturn, demand for transportation services generally decreased, leading to significantly lower truck sales in almost all of our main markets.

        In Western Europe, combined registrations for medium- and heavy-duty trucks decreased significantly from 333,232 units in 2008 to 192,280 units in 2009. In the heavy-duty truck segment, registrations were down 45% from 268,362 units in 2008 to 148,914 units in 2009 and registrations in the medium-duty segment fell from 64,870 units in 2008 to 43,366 units in 2009.

        In Germany, combined registrations for medium- and heavy-duty trucks declined 39% from 92,903 units in 2008 to 56,987 units in 2009.

        In the NAFTA region, retail sales of all manufacturers of trucks in the medium- and heavy-duty categories (Classes 5 through 8) reached 215,899 units, 35% less than in 2008 (332,727 units). This decrease primarily reflects the continuing decline in demand for heavy- and medium-duty trucks in the United States, where retail sales of all manufacturers in the medium- and heavy-duty categories (Classes 5 through 8) decreased 31% from 262,050 units in 2008 to 179,828 units in 2009. Retail sales in the medium-duty segment (Class 5 through 7) fell from 128,577 units in 2008 to 85,030 units in 2009, and retail sales for all manufacturers in the Class 8 heavy-duty truck category were down 29% from 133,473 units in 2008 to 94,798 units in 2009.

        In Latin America, sales of heavy- and medium-duty trucks reached 161,124 units, 19% less than in 2008.

        In Japan, sales of trucks and buses by all manufacturers decreased 40% to 107,662 units. This decrease was mainly the result of the continued weak economy in Japan.

        Sales.     The following table shows the distribution of revenue and unit sales of our Daimler Trucks segment by geographic market since 2007:

Revenue and Unit Sales

 
  Year Ended December 31,  
 
  2009   % change   2008   % change   2007  

Revenue (€ in millions)

                               

Western Europe

    5,835     -40     9,671     -1     9,761  
 

Germany

    3,669     -35     5,665     +1     5,634  
 

Other

    2,166     -46     4,007     -3     4,127  

NAFTA region

    4,791     -28     6,656     -12     7,599  
 

United States

    3,894     -28     5,372     -14     6,241  
 

Canada

    501     -36     785     -5     823  
 

Mexico

    395     -21     500     -7     535  

Latin America

    2,080     -32     3,046     +25     2,442  
 

Brazil

    1,728     -21     2,174     +32     1,654  
 

Other

    352     -60     871     +11     788  

Asia (including Australia)

    4,224     -31     6,090     +14     5,358  
 

Japan

    2,434     -22     3,124     -3     3,215  
 

Other

    1,789     -40     2,966     +38     2,144  

Other markets

    1,431     -54     3,109     -6     3,306  
                           
 

World

    18,360     -36     28,572     0     28,466  
                           

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