Mercedes-Benz Cars in Brief

Mercedes-Benz Cars continued to grow profitably in 2017. Unit sales and revenue increased significantly once again, and earnings before interest and taxes reached a record level, despite the considerable advance investment we made in our product offensive and new technologies. Our most important new model in the year under review was the updated S-Class. We also continued our dream car initiative with new attractive coupés and convertibles. In addition, we offered a preview of our upcoming electric mobility offensive and the future of mobility by presenting the EQA and smart vision EQ fortwo concept vehicles at the IAA in Frankfurt. Following the market introduction of the third generation of the CLS, the first half of 2018 will be dominated by the premiere of the new G-Class and the launch of the new A-Class.

Still on course for growth
The Mercedes-Benz Cars division consists of the Mercedes-Benz brand with the Mercedes-AMG, Mercedes-Maybach, and Mercedes me sub-brands, as well as the smart brand and the new EQ brand for electric mobility. The division continued on its course of profitable growth in the year under review, with unit sales increasing by 8% to the new record level of 2,373,500 vehicles and revenue rising by 6% to €94.7 billion. Mercedes-Benz Cars has improved its market position in nearly all regions. Despite considerable advance investment in our product offensive and new technologies, we were also able to increase EBIT by 13% to €9.2 billion.

Mercedes-Benz once again posts record unit sales
The Mercedes-Benz brand was able to increase its unit sales by 9% to 2,238,000 vehicles in 2017, achieving another record amount. As a result, the Mercedes-Benz brand not only grew much faster than the global car market as a whole, it was once again the premium automotive brand with the most sales. In fact, Mercedes-Benz is the number one brand in the premium segment in Germany, numerous other core European markets, the United States, Canada, South Korea, and Japan. We also significantly improved our position in China once again in the year under review.

Mercedes-Benz increased its unit sales in Europe by 5% to 911,700 vehicles in 2017. Substantial growth was achieved in the volume markets of France (+9%), Italy (+9%), Spain (+8%) and the United Kingdom (+4%), and we also increased our unit sales in Germany by 2% to 282,600 vehicles. Mercedes-Benz continued its success in China during the year under review. Unit sales in the country rose by 28% to 595,200 vehicles, which means we significantly outperformed both the market as a whole and our most important competitors. We also set new records for unit sales in other Asian markets – for example in Thailand (+31%), India (+14%), South Korea (+9%), and Taiwan (+7%). Total unit sales in the NAFTA region were at the prior year’s level. Here, sales increased significantly in Canada and Mexico but decreased slightly in the United States and in the NAFTA market overall.

The growth was primarily driven by our new E-Class. With the availability of all model variants, sales reached the new record level of 398,200 units (+31%). Our off-road vehicles were also very successful once again. All in all, sales in the SUV segment increased by 16% to 823,000 units. Demand for our C-Class models also remained very strong, with sales of these vehicles increasing slightly to 492,700 sedans, wagons, coupés, and convertibles in 2017. Unit sales of A-Class and B-Class models did not quite reach the previous year’s high level. Including the CLA and CLA Shooting Brake, a total of 420,200 units were delivered to customers. Sales of the S-Class totaled 79,400 sedans, coupés, and convertibles. The updated S-Class generated additional sales momentum in the second half of the year.

World premiere of the updated S-Class
In April 2017, the updated S-Class celebrated its world premiere at Auto Shanghai with extensive innovations. One of the highlights here was an all-new and highly efficient engine program featuring a range of new technologies for the electrification of the powertrain. In addition, the Intelligent Drive system has taken another step on the road to autonomous driving. For example, new and modified features have been added to the DISTRONIC active proximity control system and the Active Steering Assist. Forward-looking new technologies such as the electric additional compressor and the integrated starter generator EQ Boost with a 48-volt onboard power system also celebrated their world premieres in the new S-Class. The starter generator is responsible for hybrid functions, such as boosting and energy recovery, and thus enables fuel savings that were previously reserved for high-voltage hybrid technology. The improved third-generation plug-in-hybrid system is now available in the S-Class for the first time in the form of the S 560 e (fuel consumption combined: 2.1 l/100 km, electricity consumption: 15.5 kWh, CO₂ emissions combined: 49 g/km). Here, a significant increase in battery capacity to 13.3 kWh, the use of state-of-the-art lithium-ion technology, and an optimized operation strategy can extend the range of all-electric driving to more than 50 km (NEDC).

Dream car initiative continues
The E-Class family was renewed entirely within one year and fully rounded out in 2017 through the addition of a coupé and convertible model. The new E-Class Coupé combines expressive coupé proportions, a clear and sensuous design, and long-distance comfort for four occupants with the beauty and classic virtues of a Gran Turismo. The new E-Class Cabriolet has been thrilling customers in Europe and the United States since September 2017. At once both hot and cool, the vehicle’s design idiom represents beauty and intelligence. We also unveiled the coupé and convertible models of the updated S-Class in both their series-production and AMG versions at the International Motor Show (IAA) in Frankfurt in September 2017. These models benefit from extensive new features that have been introduced in the sedan – for example greatly enhanced driver assistance systems, the state-of-the-art widescreen cockpit, a new-generation steering wheel and the holistic ENERGIZING comfort control system.

EQ — our electric mobility brand
In 2016, Mercedes-Benz consolidated all of its activities in the area of electric mobility into a new product and technology brand known as EQ. The new brand was heralded by the near-production Concept EQ from 2016 and the compact Concept EQA, which was presented at the International Motor Show (IAA) in September 2017.

Daimler plans to offer more than ten all-electric models in the passenger vehicle segment alone by 2022 — ranging from a smart to a large SUV. The first series-produced Mercedes-Benz model from the EQ brand, the EQC, will be unveiled in 2018 and be manufactured at the Mercedes-Benz plant in Bremen beginning in 2019. This will be followed by a model offensive that will gradually expand the product range of Mercedes-Benz Cars to include even more all-electric models. This new generation of electric vehicles will be based on an architecture developed especially for battery-electric models. This architecture is scalable in every respect and can be used in all model series.

Mercedes-Maybach: Perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity and individuality. The luxury brand, which was launched in November 2014, combines the perfection of the Mercedes-Benz S-Class with the exclusivity of a Maybach. Several exclusive options, including a duo-tone paintjob, made their debut at the Geneva International Motor Show in March. The Mercedes-Maybach S 600 Pullman launched in early 2016 (fuel consumption in l/100 km urban: 19.6/extra-urban: 10.3/combined: 13.6; CO2 emissions in g/km combined: 314) has a face-to-face seating configuration and is a clear top-of-the-line model. The brand’s first convertible was launched in the spring of 2017 as a limited edition of 300 units.

Mercedes-AMG: the sports car and performance brand
The brand claim of “Driving Performance” reflects the two core competencies of Mercedes-AMG: the ability to provide an unparalleled driving experience and the ability to serve as a driving force in the high-performance segment. The Mercedes-AMG sports car brand enhances the fascination of Mercedes-Benz with nearly 60 models. The brand’s dynamic vehicles especially attract young and sporty customers to the brand with the three-pointed star. Mercedes-AMG models differ extensively from their series-production cousins in terms of both engineering and appearance, thus strengthening the authenticity and distinctive identity of the Mercedes-AMG brand. Mercedes-AMG is continuing its success story and adding another important member to its GT family. The four-door AMG GT is the third sports car to be developed by Mercedes-AMG, after the SLS and the GT. The Mercedes-AMG Project ONE concept vehicle marks yet another milestone in the strategic further development of Mercedes-AMG as a sports car and performance brand. The vehicle once again underscores AMG development expertise.

In 2017, Mercedes-AMG finished the year of its 50th anniversary with a new record by selling significantly more than 100,000 units for the first time.

smart focuses on electric mobility
smart is currently the world’s only automaker to offer its model range with combustion engines as well as with all-electric battery drive systems. smart is also the first automotive brand that aims to consistently switch its models from combustion engines to electric drive systems. Since 2017 smart has offered nothing but electric vehicles in the United States, Canada, and Norway. Beginning in 2020, it will also only sell battery-electric vehicles in Germany and Western Europe. The same will be done in the rest of the world shortly thereafter.

At the Geneva Motor Show 2018, Daimler announced that the battery-electric versions of the smart will be the first series-production models of the product and technology brand EQ. These electric drive models — the smart EQ fortwo, smart EQ fortwo cabrio, and smart EQ forfour (electricity consumption combined: 13.2-12.9 kWh/ 100 km; CO2 emissions combined: 0 g/km) — combine the agility of a smart with locally emission-free driving at an affordable price — the ideal combination for urban mobility.

With its smart vision EQ fortwo concept vehicle, the brand presented its vision of the future of urban mobility at the IAA 2017. This carsharing concept vehicle, which is of course both electric and autonomous, illustrates the future possibilities for personalized and highly flexible public transport with maximum efficiency.

The range of services offered for the smart brand is being continuously expanded. One example here is “smart ready to drop.” This service, which is offered in cooperation with various logistics companies, enables parcels to be delivered to the trunk of a customer’s car and also allows for the pick-up of returns using the same system. "smart ready to share" enables carsharing in closed groups – e.g. within a family, between friends or at small companies – in an extremely user-friendly manner with the help of an app that eliminates the need to hand over actual keys to the next user. Since March, customers have been able to order
the associated “ready-to” hardware package as optional equipment for the smart fortwo and the smart forfour in Germany, Italy, and France.

The smart brand sold a total of 135,500 vehicles in 46 markets worldwide in 2017. The smart was particularly popular in China, which is now the smart brand’s third-biggest sales market after Germany and Italy.

Partnership in China strengthened
Sustainable development with local partners is crucial for continuing our business success in China. The signing of two framework agreements has further strengthened cooperation between Daimler and BAIC Motor in their Beijing Benz Automotive Co., Ltd. (BBAC) production joint venture. Daimler and BAIC Motor are jointly investing in the production of battery-electric vehicles in Beijing, and in the construction of a battery factory that will further pave the way for the introduction of vehicles equipped with alternative drive systems. In this manner, we are creating the foundation for further sustainable growth and continued success in the future for Daimler in China, which is the world’s biggest automotive market by far.

All in all, we were able to increase sales of Mercedes-Benz brand vehicles in China to the new record level of 595,200 vehicles in 2017, an increase of 28% from the previous year. More than two thirds of the vehicles we sold in China during the reporting year were manufactured locally at facilities operated by our BBAC joint venture.

Global production network boasts maximum flexibility
Mercedes-Benz Cars has a flexible and efficient production network with more than 30 locations on four continents. Because the plants are fully utilized worldwide, new facilities and locations are being added. At the Mercedes-Benz plant in Sindelfingen, the company is building one of the world’s most advanced automobile production facilities: Factory 56. At the beginning of the next decade, the facility will produce upper-range and luxury class cars and electric vehicles as well as robotaxis. Factory 56 combines three pioneering characteristics: The facility is digital and flexible throughout and it puts the concept of “green production” into practice. In China, the joint venture BBAC with BAIC-Motor will acquire an existing plant in the greater Beijing area. Once the facility is comprehensively modernized, it will produce Mercedes-Benz brand vehicles and all-electric automobiles. A second plant will be built at the existing location in Kecskemét. It will flexibly manufacture vehicles with front and rear-wheel drive. The construction of a new plant in Russia is already far advanced. The facility in Esipovo, northwest of Moscow, will produce SUVs and E-Class sedans in the future. A new engine plant is currently being built in Jawor, Poland, for the production of highly efficient state-of-the-art four-cylinder engines. At the same time, Mercedes-Benz Cars has laid the strategic groundwork for an electricity offensive in production and made considerable progress in its implementation. The EQ models will be integrated into the series production operations of the existing Mercedes-Benz and smart plants. This means that all drive system variants will roll off the same assembly lines. In order to optimally utilize the opportunities of electric mobility, the company will further increase flexibility and considerably limit its investment needs. The Mercedes-Benz plant in Bremen will manufacture the EQC, the first series-produced Mercedes-Benz vehicle from the product and technology brand EQ. EQ vehicles will also be produced in Sindelfingen, Rastatt, Beijing, and Tuscaloosa. All-electric two-seaters bearing the EQ nameplate are already rolling off the assembly line at the smart plant in Hambach.

Moreover, Mercedes-Benz Cars is continuing to expand its global battery production network within the Mercedes-Benz Cars manufacturing network. The second battery factory for plug-in hybrids and all-electric vehicles is currently being built at the site in Kamenz. Batteries are also being produced in Untertürkheim, Beijing, Tuscaloosa, and Thailand. In its global battery production network Mercedes-Benz Cars will thus have six battery factories on three continents.

Comprehensive plan for the future of diesel engines
We are convinced that diesel engines will continue to be an integral part of the drive-system mix, not least due to their low CO2 emissions. The debate surrounding diesel engines is leading to increasing uncertainty among customers, however. For this reason, the Daimler AG Board of Management approved a comprehensive plan for the future of diesel engines in July 2017. The plan calls for a massive expansion of the current voluntary service measures for vehicles in customers’ hands, as well as the rapid market launch of a completely new diesel engine family. As early as 2016, Mercedes-Benz began offering diesel vehicles that were able to meet the Real Driving Emissions (RDE) limit values that went into effect in the EU in 2017. This achievement was made possible by an all-new modular family of efficient and clean diesel engines. In the future, this modular engine family will be utilized across the entire product range of Mercedes-Benz and also at Vans. The new engines’ exemplary emission values have also been validated by measurements conducted at independent institutes.

Best Customer Experience
Best Customer Experience (BCE) is a global sales and marketing program at the Mercedes-Benz Cars division. The key drivers of our growth strategy are innovative products and entry into new markets and market segments. The program seeks to more strongly align the division’s sales and marketing organization with changing customer wishes and requirements and in this manner generate additional growth. Our goal here is to make the Mercedes-Benz brand more attractive to new and also younger target groups while also strengthening the brand loyalty of established customers. Our BCE program thus systematically focuses on customers and their need for personal assistance at every point of contact with the brand, its products, and its services. To this end, Mercedes-Benz is using new sales channels and digital portals as innovative interfaces with the brand. Various sales formats, such as those that use new digital channels, supplement the services offered at traditional Mercedes-Benz dealerships and showrooms. An important component of Best Customer Experience is the “Mercedes me” digital ecosystem, which enables personalized interaction with the Mercedes-Benz brand. This makes customer contact with Mercedes-Benz more individualized, convenient, and transparent. For example, customers can use Mercedes me to obtain information on and utilize services for mobility, connectivity, customer support, financing, and lifestyle. Mercedes me is now used by more than one million satisfied customers in 36 markets.

The Mercedes-Benz brand’s "She’s Mercedes" initiative specifically addresses women with the aim of making the brand more appealing to women and increasing the proportion of female customers. Along with community and inspiration platforms, the initiative also offers training for sales staff and seeks to increase the number of women in sales positions.

#4TheTeam: Successful in motor sports
Mercedes-AMG Petronas Motorsport captured both the Drivers’ and the Constructors’ Championship in the Formula 1 racing series for the fourth consecutive year in 2017. The special thing about this achievement is that the team was able to defend its titles despite the extensive changes made to Formula 1 regulations. Last year marked the fourth time that Lewis Hamilton has won the Drivers’ Championship. Moreover, the Mercedes-AMG Project ONE show car that we unveiled at the IAA is the first vehicle that could bring Formula 1 hybrid technology from the race track to the road. Mercedes-AMG Motorsport also recorded six victories and 14 podium finishes in 18 races in the German DTM touring car series. As part of the strategic repositioning of our motorsports activities, we have decided to end our participation in the DTM series after the 2018 season and participate in the Formula E in the future. This will enable us to demonstrate the performance capability of our intelligent battery-electric drive systems in a motorsports setting as well, and it will also foster a positive attitude toward the EQ brand. Participation in motorsports is an important factor of success for Daimler – not just in terms of the significant image enhancement and the extensive publicity provided by the races, but also with regard to the valuable experience we gain through the use of hybrid technologies and lightweight designs in our motorsports activities.