Mercedes Connected, Autonomous, Shared & Service, Electric Drive

In the automotive divisions, the restructuring of Daimler’s own dealership network led to expenses of €58 million (2015: €144 million).

During the year under review, Daimler Financial Services concluded  1.6 million new financing and leasing contracts worth a total of €61.8 billion. The total value of all new contracts rose by 7% compared with the previous year. Sales and leasing activities at Daimler Financial Services supported approximately half of all new-vehicle sales by the automotive divisions once again in 2016. More than 4.3 million financed or leased vehicles were on the books at the end of 2016; this corresponds to a 14% increase in contract volume to €132.6 billion. The acquisition of Athlon Car Lease International accounted for €3.7 billion of the increase in contract volume. Adjusted for Athlon and exchange-rate effects, the increase amounted to 10%. The division achieved EBIT of €1,739 million (2015: €1,619 million), the best EBIT so far. Return on equity was 17.4% (2015: 18.3%).

The main reason for this positive development was the growth in contract volume. Exchange-rate effects had a negative impact on earnings, however.

The reconciliation of the divisions’ EBIT to Group EBIT comprises gains and/or losses at the corporate level and the effects on earnings of eliminating intra-group transactions between the divisions. Items at the corporate level resulted in an overall expense of €333 million (2015: €79 million). This includes expenses of €400 million related to legal proceedings, the impairment of Daimler’s investment in BAIC Motor of €244 million and losses from currency transactions of €241 million. The gain of €605 million recognized on the contribution of the Renault and Nissan shares into the German pension-plan assets did not offset those expenses. The elimination of intra-group transactions resulted in income of €17 million in 2016 (2015: €50 million).

The special items affecting earnings in the years 2016 and 2015 are listed in the table on page 14.

Further increase in investment in the future

“Also in the coming years, we want to actively shape mobility with groundbreaking innovations, and in parallel we will push forward with digitization throughout the Group,” stated Dieter Zetsche. Daimler intends to play a leading role above all in the strategic areas for the future of connectivity (Connected), autonomous driving (Autonomous), flexible use and services (Shared & Services) and electric drive (Electric), as well as in the intelligent linking up of these areas.

For the reasons stated above, research and development expenditure was increased in 2016 from a very high level by another 15% to €7.6 billion. The focus was on new vehicle models, fuel-efficient and environmentally friendly drive systems, new safety technologies, autonomous driving and the digital connectivity of the products.

In order to implement the growth strategy with new products, innovative technologies and modern production facilities, investment in property, plant and equipment was also increased once again in 2016, from an already high level to €5.9 billion (2015: €5.1 billion).

At Mercedes-Benz Cars, investment in property, plant and equipment of €4.1 billion in 2016 was significantly above the prior-year level (2015: €3.6 billion). The most important projects included the product ramp-up of the new E-Class models, preparations for the new GLE SUV and the successor models in the compact class, as well as new combustion engines and transmissions. The division also made substantial investments in the reorganization of the German production facilities as competence centers and in the expansion of the international production network.

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