Daimler Trucks

Significant increase in unit sales, revenue and EBIT. The global economy recovered in 2010, although the rate of recovery varied greatly from region to region. The economic upturn led to a substantial increase in demand for commercial vehicles and transportation services. Daimler Trucks was able to post substantial increases in unit sales and earnings in this favorable environment. Unit sales rose by 37% to 355,300 vehicles with all of our core markets (Europe, the United States, Latin America, and Japan) contributing to this development. Revenue increased by 31% to €24.0 billion and EBIT reached €1.3 billion (2009: minus €1.0 billion).

Positive sales development at Trucks Europe/Latin America. The Mercedes-Benz Trucks brand stands for “Trucks you can trust.” This means always doing everything possible for our customers and being a reliable partner. With its Actros, Axor and Atego models, Mercedes-Benz offers individual solutions in the medium and heavy-duty truck segment for long-haulage transport, construction and local distribution applications. The portfolio is completed with the Econic, Zetros and Unimog models offered by the Mercedes-Benz Special Trucks unit.

One year after experiencing a sharp decline in unit sales, Trucks Europe/Latin America profited from the global economic recovery during 2010 and unit sales increased by 41% to 135,200 vehicles. With a market share of 24.3%, we expanded our leadership in the segment for medium and heavy-duty trucks in Western Europe (2009: 23%). Our position is particularly strong in Germany, where Mercedes-Benz Trucks was once again number one with a market share of 40.5% (2009: 41.6%).

After undergoing a disproportionate decline in the prior year, unit sales in Eastern Europe more than doubled in 2010 (+11,000 to 19,000 units). We achieved a 122% increase in unit sales to 11,500 vehicles in Turkey, where we are the market leader with a share of 38% of the Turkish market (2009: 33.5%). Extremely positive economic developments in Brazil and government subsidies that stimulated demand led to a sales increase of 45% to 44,300 units in that country. Due to intense competition, our market share in the medium and heavy-duty truck segment in Brazil decreased slightly to 27.4% (2009: 28.5%).

Continuous investment in the further development of the product range and the expansion of our plants contributes towards safeguarding our long-term competitiveness. Some of the results could be seen at the 2010 IAA Commercial Vehicles trade fair, where we presented a number of new products. In response to the tremendous increase in demand for heavy-duty long-haulage trucks in our core markets, we began assembling the Actros in Aksaray, Turkey, in late 2010 and will start production of that model in Juiz de Fora, Brazil, in 2012. Mercedes-Benz do Brasil also invested in expanding the production capacity of its São Bernardo do Campo plant by 15% to 75,000 units each year.

The demands placed on commercial vehicles are continually rising, and individual solutions and conversions are becoming more and more important in the truck segment. For this reason, Mercedes-Benz Special Trucks expanded its Mercedes-Benz Custom Tailored Trucks (CTT) unit in the past two years and established a development center for special trucks in Molsheim, France. CTT, which focuses on special customer requirements related to conversions and special equipment for Mercedes-Benz trucks, celebrated its tenth anniversary in 2010.

Sales growth in the NAFTA region. Trucks NAFTA is the leading truck manufacturer in North America in Classes 6 to 8. Under the Freightliner brand name, we offer customers heavy-duty trucks for long-haulage transport and medium-duty trucks mainly for local distribution applications. Heavy-duty trucks from the Western Star premium brand serve the markets for special-purpose, construction and long-haulage trucks. Since 1916, Thomas Built Buses has been the embodiment of innovative design, safety and top quality. The yellow school buses manufactured by the market leader are a common sight across the United States.

With sales of 79,400 units, Trucks NAFTA sold 25% more vehicles in 2010 than in the prior year. The region is currently experiencing a mild recovery. Our positive sales development is being achieved through our successful new EPA10-compliant engines and stepped-up activities in the sectors for construction and disposal services, particularly in the Class 8 segment. This allowed us to increase our market share in Classes 6 to 8 to 31.6%, making us the market leader in the entire NAFTA region (2009: 29.6%). Also in the United States, Trucks NAFTA is the most successful supplier in this segment with a market share of 32.6% (2009: 30.0%). In Class 8, we further increased our market share in both the NAFTA region with a share of 32.4% (2009: 30.9%) and the United States with a share of 33.9% (2009: 31.2%). This is clear evidence of customers’ strong acceptance of our products.

Daimler Trucks North America launched a repositioning program in 2008 that has since been successfully completed. In order to further consolidate our long-term competitiveness, we will continue to optimize our processes and improve our efficiency in the future. The successful implementation of the program was made possible in large part by an agreement with the United Auto Workers union (UAW) covering the four sites of Mt. Holly, Cleveland, Gastonia and Portland. Thanks to positive market developments in the NAFTA region, we increased production capacity in good time in 2010 and rehired nearly 1,100 workers. In addition, approximately 700 employees were newly recruited at our new plant in Saltillo. The Detroit Diesel engine plant in Redford, Michigan, also benefited from solid orders and the BlueTec engines newly introduced in the United States. We are currently investing approximately US$200 million in expanding the Detroit Diesel facility. Our commitment to developing environmentally friendly and efficient drive-system technologies was honored by the US Department of Energy at the beginning of 2010: Daimler Trucks North America will receive some US$40 million in funding over the next five years as part of the “21st Century Truck Technology Partnership.” The funds will be used for commercial-vehicle and engine development. The high level of acceptance enjoyed by our engines is confirmed by the success of the Captive Engine strategy at Trucks NAFTA. Today, more than 95% of our trucks in the heavy-duty segment are powered by engines we build ourselves.

Significant unit-sales increase by Trucks Asia. With its Canter, Fighter, and Super Great truck models and its Rosa and Aero buses, the Fuso brand has gained a reputation around the world as a quality-focused manufacturer of commercial vehicles. In addition to producing a successful range of models in the light to heavy-duty segments, Mitsubishi Fuso Truck and Bus Corporation (MFTBC) is also the competence center for light-duty trucks and state-of-the-art hybrid technology from Daimler Trucks.

At 140,700 vehicles, unit sales by Trucks Asia were significantly higher in 2010 than in the prior year (+41%). Trucks Asia’s sharp increase in unit sales in Indonesia by 82% to 55,700 vehicles was accompanied by a strong 30% rise in Taiwan to 8,200 vehicles. As a result, MFTBC was able to fully participate in the upturn there. The Japanese home market displayed a slight recovery and unit sales in Japan rose by 7% to 24,800 units.

Fuso is already the leader in several emerging Asian markets. We are number one, for example, in the segment for light-duty trucks in Taiwan and Indonesia.

During the year under review, we consistently and very successfully continued our program to realign MFTBC activities. The program was launched in 2009 in response to structural changes in the Japanese commercial-vehicle market. To ensure we remain well positioned and competitive in the future, we are placing great emphasis on maintaining the level of efficiency we have now achieved. In 2010, Daimler AG increased its interest in MFTBC from 85% to 89% through a capital increase of JPY30 billion (€271 million).

Fuso has great expertise in developing alternative drive systems for commercial vehicles and designing and developing light-duty trucks. Building on the success of the Fuso Canter Eco Hybrid, MFTBC has expanded its hybrid development activities. In December 2010, a new test rig was added to the Kitsuregawa test center in Japan, where hybrid drives are to be tested under various realistic conditions in the future.

Widespread acceptance of new products. Innovation and customer utility in relation to future product generations are two important elements of Daimler Trucks’ Global Excellence strategy. We presented numerous new products at the 63rd IAA Commercial Vehicles trade fair in Hanover, Germany, all of which take their cue from successful past vehicles. The new Atego and Atego BlueTec Hybrid were both named “Truck of the Year 2011,” and the hybrid version was also honored with the German Environmental Technology Award and the German Sustainability Award. The new Axor is winning over customers with its standard-fitted Mercedes-Benz PowerShift automated gearshift and a new design. With the second generation of our Active Brake Assist system, which can initiate an emergency braking maneuver in critical situations, we are once again underscoring our leading role in the field of safety. The system even responds to stationary objects. At Daimler Trucks North America, we focused on the development and market launch of new environmentally friendly technologies in 2010: Our presentation at the Mid-American Trucking Show (MATS) in March 2010 highlighted our three new DD13, DD15 and DD16 engines from Detroit Diesel (DDC). These engines are equipped with selective catalytic reduction technology (SCR) for exhaust gas treatment and comply with the EPA10 emissions standard that came into effect in the United States in early 2010. Nearly 20,000 trucks and buses from Trucks NAFTA have been put on the road in North America with this advanced technology since the introduction of the new engine generation. Fuso started its product offensive with the launch of the new Super Great long-haulage truck on the Japanese market in the spring of 2010. With its 6R10 engine from Daimler Trucks’ new heavy-duty engine generation (equipped with BLUETEC technology), Fuso’s flagship model fulfills the stringent JP09 emission limits. It is also equipped with various innovative safety systems. And since June, new versions of the medium-duty truck Fuso Fighter have been available in Japan. Trucks Asia presented the new Canter in Japan in November 2010. With its low fuel consumption, it sets new standards in the light-duty truck segment for efficiency, environmental friendliness, safety, and design. The Canter will also be launched in Fuso’s worldwide export markets beginning in 2011. Fuso’s introduction of the Duonic transmission marks the first time a dual-clutch transmission has been made available as standard equipment in a truck. The Fuso Canter is Daimler Trucks’ best-selling vehicle the world over and since February 2010, its standard diesel variant has complied with the Enhanced Environmentally Friendly Vehicle Standard. The Fuso Canter Eco Hybrid is number one in terms of fuel efficiency among trucks up to five tons gross vehicle weight in Japan. Altogether, more than 1,000 units have been sold worldwide to date. The vehicle is also now available outside Japan in Australia, Ireland, and Hong Kong. The world premiere of the Fuso Canter E-CELL concept truck also met with a very positive response. This model’s battery-electric drive system performs so well that a combustion engine is unnecessary. Fuso continued to move ahead consistently with its product offensive in the year under review with the introduction of its new Super Great long-haulage truck on the Japanese market in the spring of 2010.

Shaping Future Transportation. Our new products and technologies offer evidence of the success of the CleanDrive, SafeDrive, and ValueDrive programs from our Shaping Future Transportation initiative, which was launched in 2007. CleanDrive stands for environmentally friendly and economical commercial vehicles built by Daimler for all different types of applications. Within the framework of SafeDrive, we are pursuing the vision of accident-free driving and continually developing new safety technologies. We constantly focus also on customer utility, because operating and maintenance costs account for approximately 90% of the total cost of ownership (TCO) of a commercial vehicle. This is where the various customized services from Daimler Trucks come into play such as Charterway and the FleetBoard telematics services, all of which are consolidated into the “ValueDrive” program.

For ten years, Daimler FleetBoard has been developing and marketing telematics solutions to boost the profitability of commercial vehicle fleets. Key benefits here include average fuel savings of seven percent within the first three months after the system is introduced, training programs for new customers, significant savings on maintenance and repair work for longtime customers, optimal order management thanks to the FleetBoard transport management system, close to real-time transmission of vehicle locations and routes using satellite images and FleetBoard Mapping, and a time management system that enables operators to better monitor drivers’ working and resting times and thus optimize order management.

Outstanding global position with the Global Excellence Program. The penetration and extensive management of new markets and growth sectors — another pillar of the Global Excellence strategy — was successfully continued during the year under review. In Russia, our joint ventures Fuso Kamaz Trucks Russia and Mercedes-Benz Trucks Vostok manufactured the first Fuso and Mercedes-Benz trucks to be produced in the country and launched the vehicles on the domestic market. At the end of 2010, we also signed a memorandum of understanding with Kamaz relating to cooperation on the production of axles in Russia. In addition, Kamaz is currently introducing the Truck Operating System (TOS) that Daimler Trucks uses around the world. This system forms the basis for the Operational Excellence initiative, which is part of the Global Excellence strategy. The initiative concentrates on the rigorous reduction of material expenses and fixed costs, as well as the optimization and standardization of global processes and the increased flexibility of production plants. In India, we consolidated all the country’s truck sales activities at Daimler India Commercial Vehicles (DICV) in Chennai. DICV is thus also responsible for sales and marketing of Mercedes-Benz trucks in India. We also put our proving grounds into operation in the spring of 2010. In China, we received approval from the Chinese National Development and Reform Commission (NDRC) as the first major step toward establishing a 50:50 joint venture with the Chinese truck manufacturer Foton Motor, with whom we signed a joint venture agreement.

In December, we signed an agreement covering the delivery of Mercedes-Benz truck components to Finnish truck manufacturer Oy Sisu Auto Ab. With this contract, Mercedes-Benz is opening up a new area of business and generating additional sales potential for vehicle components. The contract involves the delivery of Mercedes-Benz Actros cabs, engines, and transmissions for 200 to 400 vehicles each year. Heavy-duty Polar Truck models will be assembled by Sisu and sold in Finland under the Sisu brand name. Plans call for the first trucks to be delivered to customers in March 2011.