Bjoern Scheib - Head, IR Dieter Zetsche - Chairman & Head, Mercedes-Benz Cars Bodo Uebber - CFO Wolfgang Bernhard - Head, Trucks and Buses

Horst Schneider - HSBC Jose Asumendi - JPMorgan Jochen Gehrke - Deutsche Bank Mike Raab - Kepler Cheuvreux Adam Hull - Berenberg Charles Winston - Redburn Scott Sheridan - Barclays Frank Biller - Landesbank Baden-Wuerttemberg Mike Dean - Credit Suisse Fraser Hill - Bank of America Merrill Lynch Stefan Burgstaller - Goldman Sachs Dominic O'Brien - Exane BNP Paribas

So, good morning. This is Bjoern Scheib speaking on behalf of Daimler, I would like to welcome you all here in Stuttgart as well as on the internet for our full year investors and analysts conference. Today we're very happy to have with us the Chairman of the Board of Management and the Head of the very successful Mercedes-Benz Car Group; Dr. Dieter Zetsche, our CFO, Bodo Uebber and also the Head of our quite successful Daimler Trucks, Dr. Wolfgang Bernhard. Yesterday at the annual press conference, Dr. Zetsche and Bodo Uebber presented our financial figures as well as the strategy in details. I guess all of you have found the slide decks on our internet. And just to be precise, the missing appendix is on the web since yesterday morning so you will find the full set also in respect of the walks for the quarter and the full year on the website. Therefore, we will begin this conference with a short introduction by Dr. Zetsche, in order to provide you with the maximum time later on for Q&A. Now only one logistic remark, we would like to remind you that this investor conference is governed by the Safe Harbor wording that you can find on our published documents. Please note that all our presentations contain forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made. Please be aware that this conference will be recorded and broadcasted on our website. Later on I would also like to have you all giving your name and institution that you're representing before asking your questions. And from a technical point of view, please switch off your mobile phones because they may disrupt the - interference with our systems over here. With this, I would love to hand over to Dr. Zetsche.

Yes, good. Thank you Bjoern Scheib. Good morning ladies and gentlemen and welcome to our analyst and investor conference. We made our 2014 business and financial results public yesterday. I assume you've already fully digested those numbers. So I will only sum up the highlights. That said, I trust you'll agree with me that our results speak for themselves. In 2014 we achieved all-time best in sales, revenues and earnings. This progress is a result of a lot of disciplined work. We're building on the strategic decisions and plans we made years ago. Now we're getting the payoff. In every corner of this company its clear Daimler is on the rise. Let me briefly discuss some of the highlights that defined this past year and our business. I'll begin with Mercedes-Benz Cars where we continued to renew and broaden our product lineup in 2014. One of our most important products was the new C-Class. This new model may have plenty of competitors in the segment, but in the opinion of many automotive journalists, has no real competition. That's especially true in terms of perceived value. Our C-Class not only sets a new benchmark in the segment, it also sets one for our production network. For the first time ever we're concurrently building a car in Germany, U.S., South Africa and China. In 2015 we benefit from our first full year of global C-Class sales. Next with our new GLA, we expanded our line of compact by one SUV. Both the compact and SUV market segment have high growth rates. That is true still for the combination of the two, compact SUVs. The GLA helped to push our total compact vehicle sales to roughly 472,000 units. That number is 23% higher than in 2013. Successful compacts are an important part of our overall strategy. They are key to achieving our sales goals, they ensure a balanced capacity utilization and perhaps most importantly, they are conquest cars. Now what does that mean? Consider the average frequency with which customers will switch brands when they purchase a new car. In the S-Class segment it's about 25%. In the compact car segment it's about 50% and with the CLA, our conquest rate is up to 80%. Obviously getting conquest sales in compact segments in which we previously did not compete is important to us. It means we're winning over entry-level and first-time premium customers to the Mercedes brand. And then we have the opportunity to keep them because the customer who buys an A-Class vehicle today might buy a C-Class tomorrow and perhaps an E or S-Class in the future. Of course we're not just focused on the compact end of our line-up. Again the proof is in the numbers. In 2014 we sold more S-Class cars than ever before in the long history of this model series. In addition to the sedan and coupe, we're growing our family of flagship cars with the addition of the Mercedes-Maybach S-Class. The top model is the S 600. Its V12 powertrain generates 530 horsepower. However, the S-Class also offers a completely different drive mode, as a Plug-In Hybrid, the car has the performance numbers of V8 but the fuel efficiency of a compact. You can drive more than 30 kilometers complete emission-free. 2014 was also a big year for Smart. We introduced two new models, the ForTwo and ForFour. They retain all the traditional smart strengths, first and foremost, the unique size and maneuverability. These are the first vehicles we've developed with Renault-Nissan from the ground up. They show it's possible to achieve both, synergies through joint development and, at the same time, absolutely separate vehicle characters. Nearly 1 million people attended Smart's introductory road-show. In 2015 we expect a significant increase in sales. Turning now to our commercial vehicles, the most important event to the year was the IAA in in Hanover. The highlight of our show was the Mercedes-Benz Future Truck 2025. We revealed the design of this autonomous truck following a demonstration drive in Magdeburg back in July. With our autonomous driving Future Truck, we provide a realistic look at where long haul trucking is heading. Into the future, that will be even more efficient, safer and better-networked. At IAA we also showed the breadth of our commercial truck portfolio. With six brands and 54 models, our line-up in all-important markets is broader and stronger than ever before. Add to that the trucks we produce and sell with local partners through joint ventures in China and Russia. So we're able to offer customers in every region of the world products tailored to their specific needs. For the year 2014 our truck business was shaped by very different regional developments. In Europe and Latin America weak economic outlooks and political uncertainties weighed on markets. In contrast, in North America and Japan we benefited from very strong demand for trucks. Business was especially dynamic for Daimler Trucks in the NAFTA region where sales rose by 19% through new record level. With the lion's market share of 37%, Daimler Trucks North America was once again the clear market leader in Class 6 to 8 trucks. In October DTNA booked about 31,300 orders for Class 6 to 8 trucks. That is the highest monthly order rate ever recorded, not just for DTNA but for the U.S. truck industry altogether. That's thanks in large part to our Mercedes Cascadia evolution. This truck is the most fuel efficient in its class and therefore has a very competitive total cost of ownership. Over in India we've built up our new brand BharatBenz in a short amount of time with new products, a new production facility and a new distribution network. In 2014 we launched five additional BharatBenz trucks. We now have all of the important market segments in India covered from 9 tons to 49 tons. BharatBenz trucks are sold through a network of approximately 80 dealers and very successfully. 2014 sales increased by 4100 units to total of 10,300 units. In the meantime BharatBenz has conquered third place in the Indian heavy-duty truck market with a market share of over 5%. What's more, FUSO trucks made in Chennai are also exported to other countries. More than 1000 had already been sold outside of India. Daimler Financial Services also recorded its most successful year in 2014. Growth came from both traditional and new markets. Chinese customers, for example, are increasingly turning to automotive financing. In 2014 we had nearly twice as many financed contracts signed in China as in the previous year. Worldwide we closed more new financing agreements than ever before. With a total of more than 3.3m current contracts, we also set a new record. At the same time, our loan default costs have not been lower in more than a decade. Of course, no discussion of Daimler's performance 2014 will be complete without Formula 1. This past season showed once again that determination and perseverance pay off. Over the past years our motor sports colleagues in Brackley, Brixworth and Stuttgart worked their way step by step to a record-setting 16 of 19 checkered flags and 11 one-two finishes. Capturing both the Formula 1 Driver and Constructor's titles is an important achievement. It builds awareness and endorses the performance aspects of our brand. This is true both in traditional and growth markets that are key to Daimler's future, because four or five of our passenger car sales are in countries in which Formula 1 races take place. There is also significant tangible value. Due to the hybrid tools the technology in the sport is developing in the same direction as the automotive industry. That results in synergies in development as it concerns, for example, batteries, electric motors and controller logic. We'll be happy to describe this hybrid technology to you in detail. Later on, one of our colleagues from R&D will be available to provide you with more information. So from smaller cars to large trucks, from financial services to Formula One, 2014 was a very good year for Daimler and now we're setting out to build on our momentum through 2015. At Mercedes-Benz Cars our product offensive continues. By the end of this year we'll launch a total of eight more new or renewed passenger car models. The focus in 2015 is on our high-margin SUVs, including our new GLE coupe. It combines the sportiness of a coupe with the versatility and robustness of an SUV. But you've probably heard that from Thomas Weber and Gordon Wagener yesterday evening when they gave you chapter and verse on our SUV plans. So I leave it at that. Our new CLA Shooting Brake will arrive on the compact end of our product portfolio. This fifth model completes our compact car family. Deliveries begin in March. There will also be an AMG version of the CLA Shooting Brake and for good reason; the tremendous success for our compact AMG models has contributed to AMG sales nearly doubling in the past two years. Over the next three years we plan to double our 2013 AMG sales again. Virtually all new Mercedes models will also be available as an AMG model. Mercedes AMG's position as a dynamic sports car brand gets even stronger with our new GT. This is the second sports car completely developed by AMG. And orders are exceeding our expectations. Another arena in which we define performance is electric mobility. And here we also have a well-defined strategy. Our technology of choice is Plug-In Hybrid. The S-Class was our first Plug-In Hybrid. Four weeks ago in Detroit we took another important step forward. Our new C-Class Plug-In Hybrid boasts a total power output of 279 horsepower, a combined torque of 600 newton meters, but fuel consumption of just 2.1 liters per 100 kilometers. The Plug-In Hybrid concept offers the lion's share of advantages of electric driving. Thanks to the combustion engine it also eliminates the disadvantages pure electric drives will still have today, namely, a limited range and recharging infrastructure. Hybrid models have the strongest growth in the electric car market and we assume the segment will continue to grow significantly. By 2017 we'll have introduced 10 new Plug-In Hybrids to the market. Before you reach for your calculators that's an average of one new hybrid model every four months. So across the spectrum of models and technologies with our new vehicles we expect to take sales to a whole new level. With our current product offensive, we aim to be in the top premium manufacturer in sales by 2020. That is our strategic objective. We're convinced that by building the best cars we should win over the most customers. But we're not going to chase sales at any cost. We're targeting profitable growth, driven by growing demand. On top of that we will use the coming years to make structural changes to sustainably raise our profitability. We secured earnings for the short term in the first phase of Fit for Leadership. Now we're entering the second phase called Next Stage. Our objective is to improve our business structure on a sustainable basis. Our planned growth does come with an increase in fixed costs and net assets. However, the structural changes we're targeting will significantly limit this increase. In this way we'll be more profitable and less vulnerable to external volatility. We know that meeting this corporate challenge will determine the long-term competitiveness of our company. An important key to profitable growth for us continues to be China. We're now back on track there as our 2014 sales rose by almost 30%. 2015 should be even better with continued double-digit growth and significantly more than 300,000 in car sales. The market potential in China remains huge, that's why we continue to invest in our product range. We're expanding our local production. In the coming years two-thirds of the cars we sell in China will be built in China. We're also intensifying our local development efforts. By year's end about 500 highly-qualified engineers and designers will work for us there. And we continue to further develop our financial services business in China. To that end we're increasing our equity base by €0.5 billion as the proportion of customers will finance the car purchases through the EFS will increase. Clearly China is not just any market for us. In China the race between premium manufacturers will be decided and Mercedes-Benz has plenty potential for improvement there. China is an absolute key market for Daimler Trucks as well and here the development of the market structure plays right into our hands. Demand in the years ahead will significantly shift from more simple to middle and high-grade trucks. Still the standard for truck technology will continue to be set in the triad. It's here that customers are most demanding. And the most important selling point is fuel efficiency, as diesel alone accounts for about 30% of the total cost of ownership, that's why we optimize our trucks for fuel efficiency and it pays off. In each and every triad market we're the champions of efficiency. In Japan our new FUSO heavy-duty Super Great 5 is the only truck in the market that betters the new 2015 fuel efficiency standard by as much as 5%. In North America, our freightliner Cascadia Evolution uses 7% less fuel than its predecessor model and less than any of its competitors. And here in Europe we have sent our Mercedes-Benz Actros into the so-called fuel duels. We put Actros up head-to-head against the most fuel-efficient truck in our customers' fleet in real-world use. We did so nearly 600 times last year. Actros won a full 90% of these match-ups with an average of 11% fuel savings. We intend to build on Daimler Trucks' global leadership through the continued rollout of our platform strategy. When it comes to modules and platforms, Daimler Trucks is years ahead of its competitors. We will fully exploit and expand this advantage. Until now, the platform concept in the truck business has primarily been focused on the drivetrain. We will roll out our platform strategy across the entire vehicle as far as regional requirements permit. By 2020 we will use our current modules and components in the large number of markets. That saves money and development and through volume-price advantages in purchasing. But saving costs is not our only objective. The platform strategy enables us to offer our customers everywhere the desired technology with optimum quality. Take just one example. Automatic transmissions in trucks were once rare in the U.S. Thanks to our experience at Mercedes-Benz Trucks in Europe, we could offer our proven DT12 automatic transmission to the American market with high quality in a reasonable cost. We transformed the market. Today U.S. demand for automatics has exceeded our expectations. One in four of our new Cascadia trucks is equipped with the DT12. Soon we'll launch its production at our plant in Redford. In addition, in the U.S. we established the concept of integrated powertrains. For decades American customers purchased trucks as follows. The engine came from Manufacturer A, transmission from Manufacturer B and the axle from Manufacturer C. We fundamentally changed this business model. We convinced more and more customers of the advantages of buying a complete driveline from one source, the chief argument being that you get better fuel efficiency through perfectly matched components. Next to modularization and fuel efficiency that have shaped our vehicle business for many years, autonomous driving is a focal point of our development work. It runs across our divisions at Daimler. Autonomous driving is one of the most exciting topics in our industry and no other company has as broad of a base in this area as Daimler. Last year on the heels of our autonomous S-Class, our Future Trucks served as the next proof point of our leadership in this field. It is the world's first self-driving truck. At CES in Las Vegas this January we again raised the bar in autonomous driving with our new research vehicle F 015. This technology leadership position did not simply fall into our laps. It is a result of many years of persistent development work. We've already made partially autonomous driving possible today in the C, E and S-Class. In coming years we'll take more steps forward. In terms of technology, the cars such as our research vehicle F 015 is realistic within a decade. Future autonomous driving automobile will radically change. The car will grow beyond its role as a means of transportation. Technology breakthroughs can also create new business models. Our position is clear. It's of no value to create lines of defense around business. As new concepts evolve, Daimler wants to shape them. For example, Car2Go has become the largest car-sharing service in the world. Our rental transactions tripled in the past year. And in some cities, they're already profitable. At Daimler car sharing is a business model. This year we launched Car2Go in China. It's our first step in the Asian market. Another mobility solution we're pioneering is Moovel. This smartphone app compares different modes of transportation and determines the optimal path from A to B. Our Moovel group already has over a million customers. We hope to get a few more today. Our colleagues from Moovel are here and will gladly assist you. Now what does all of this mean for our expectations for the year 2015? For starters, the global economy is currently experiencing moderate growth. For 2015 we anticipate growth of about 3%. In the auto markets there are signs of slight improvement. We expect global demand for passenger cars in 2015 to increase by around 4%. We also anticipate growth in demand for commercial vehicles. Concerning our sales, we expect significant growth at Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans. At Daimler Buses we expect slightly higher unit sales. At Daimler Financial Services we also aim to significantly increase our contract volume and new business. Based on our expectations for market developments and the planning for our divisions, we expect to once again significantly increase our Group EBIT from ongoing business in the year 2015. Overall we do not expect too much help from tailwinds in markets, except for passenger cars in China and trucks in NAFTA. The significantly improved earnings performance is mainly a function of our strong product portfolio and the disciplined execution of our efficiency programs. For Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans we expect EBIT from ongoing business significantly above last year's level. At Daimler Buses we expect results slightly below the previous year. Daimler Financial Services should be slightly above prior-year level. We continue with the execution of our divisional strategies. This of course includes our sharp focus on achieving the margin goals of our divisions. These are the core tasks of our management team. And with that, ladies and gentlemen I appreciate your attention and welcome your questions. Thank you.

A - Bjoern Scheib: So thank you very much, Dr. Zetsche and we're now moving on to the Q&A session. If you want to ask a question, please use the microphone in front of you. And, in respect of fairness, we would kindly ask you to limit, if you ask questions, to raise three questions only at once. We probably have time for the second round and in addition, please give your name and the institution that you're representing. Please be aware that this Q&A session is also being broadcasted on the internet. So, ladies and gentlemen, we're going to start. Horst?

Horst Schneider from HSBC. Then I start with my three questions. First of all, on currencies, Mr. Uebber, maybe you can clarify a little bit the impact that you mentioned yesterday at the press conference of €500 million. Is that including transaction and translation effects and maybe you can split the effect up into these two elements? And then also maybe you can quantify what is the €500 million impact that you mentioned, I assume that's including Russia. What would be the impact excluding Russia basically for 2015? And then the second one, I want to know what is the trade-off between price and mix this year. So maybe Mr. Zetsche, you could, yes, tell us your thought, what you think about pricing this year for Mercedes. And against that what the mix is doing. I can see that the SUV sales are increasing this year so probably mix will be negative. And then the third question that I have is on trucks. Can we expect this year then finally again positive other cost changes like in 2014? And what do you think, Mr. Bernhard, how will the pricing develop in 2015?

So I'll take over the first question. We have announced for 2015 an impact, a positive impact of €500 million against 2014 actuals coming from FX, that includes of course not only the U.S. dollar and renminbi, but also include ruble development, the yen development, but also South African rand and so on and so forth, so all currencies. That is split up mainly to the two divisions, trucks and cars, evenly. So the main impact goes to trucks and to cars and within trucks it is mainly related to translation effects and in cars it's mainly related to transaction exposure effects. The ruble impact is a substantial one. As you can imagine, the same holds true for the year 2014. And that is the information we give to the currency side.

That Bodo can't be more specific as far as the ruble impact is concerned because we have to find the equilibrium between rising prices and losing volume and therefore if you just focus on the by-car currency effect, you don't get the full story so it doesn't help you much anyway. Overall for cars we see prices in our planning for 2015 stable. This is transaction prices of course all included. The mix will deteriorate based on further strong growth on the compact side and smart. On the other hand, we have the year of the SUV, one of them being compact one, so we have offset. But overall the mix will be negative, the mix effect will be negative.

Sorry, a small follow-up on this price and currency issue. You don't think that the currency advantage will result in a negative pricing eventually in the market because all the three Germans have got this currency tailwind effect?

And the FX impact is excluding these price measures that you mentioned in Russia, right?

Yes, yes.

Okay.

For trucks we also can expect in 2015 other cost changes that will positively impact the EBIT. So another year of successful work on the cost side of our business, pricing will be a challenge this year, very different in the different regions. Very tough in Europe and also in Japan, but overall we think that we can even out all negative impact in price effects. So by the end of the day we expect that pricing will be stable this year.

Okay. So the next one will be Jose and then Jochen.

Jose, JPMorgan. A couple of questions, Dr. Zetsche, as you look at the business in China over the next five years, where do you want to take the business unit-sales-wise which vehicles would you like to introduce and how do you monitor-control growth in the region? If you can maybe also comment on where the bottlenecks are, engines, axles, transmissions. Second question for Dr. Bernhard, could you comment on the Brazilian situation, the work you have been doing over the past years to reposition the car plant into a truck plant there, the level of local content on the heavy-duty front? And also on the cost savings front, what are the next steps on cost savings? There were some comments from Dr. Zetsche, but so what are the next steps in order to squeeze more cost savings from the machinery? Thank you.

We generally do not give forward-looking sales numbers and that applies to China as well. But clearly we want to grow our business there and certainly the success of our competitors is a guideline for us what is possible in this market. As far as specific models are concerned, in general, basically all products being launched on a global basis will be launched for China as well. There are a few additions to that, as you know and that's not just by us, like an extended C-Class or an extended E-Class. There might be future product launches as well as specific longer wheel-based versions for China. We'll come to that when we launch this product. Of course, as I said, parallel to growing the overall sales volume, we're growing the share of product being produced in China, so the growth percentage in our plans is even higher. We have made significant investments in our plant which basically are now three plants in China, between a front-wheel drive or rear-wheel drive and an engine plant and we have overall for our business bottlenecks as far as transmissions and engines are concerned and we're working hard in opening these bottlenecks with further investments across the board in components, including China.

I will answer the question on Brazil, if I may. The Brazilian market was fairly week. Last year it went down 13%. And now after the election what we see is that the new government is basically pulling back all subsidies on truck financing. In essence we have a new FINAME financing scheme for trucks now that ask for a 10% down payment and doubles basically the interest rate in the vicinity of 12% to 18%. So overall speaking we get the impression that basically the government is determined to pull out of any truck sales support on the financing side. And that will have an heavy impact on sales, truck sales in Brazil. In the first month of this year, in February, we saw an overall market in Brazil of 7000 trucks being sold. That is a very, very, very low number. We don't expect that this will change any time soon. So basically it's hangover time after getting the subsidies out and we're anticipating for this year, as we said around 10% minus. It might be that at the end of this year the Brazilian might recover, but it's a far-fetched expectation. With respect of our operations, as you know, we have taken over Juiz de Fora from the passenger car side in order to have another manufacturing point and manufacturing base there. This plant has been fully converted. It is up and running and is producing vehicles and cabins, painted cabins. So this is all set up now. With respect to localization, also our heavy trucks are now fully localized. And we're now, now that FINAME is going away, we're fully complying with FINAME. So it's a little bit of an irony here. However, what's also important to say, that we have last year been able to improve our market share in Brazil. After many years of decline we now finally turned the corner. We inched up 1 percentage point of market share and this is particularly interesting because the needed product changes that we will make to our vehicles are just coming, just in front of us. So with those changes that we introduce throughout the course of this year, we see even a better chance to compete in the Brazilian market. So now we have to wait until the market comes back. And basically the same weak market applies for Argentina where the market is going down. The trade between the countries, Brazil and Argentina is very difficult as you know because there is not much reserves available, foreign currency reserves, available in Argentina. Latin America is a very unstable and a very precarious situation right now and we don't expect this to change any time soon. So we have a very - gives us the opportunity to restructure and do the things we need to do to get the business right. So this is the situation in Latin America.

Jochen Gehrke, Deutsche Bank. Three questions if I may. Just first of all, on the Chinese situation, regarding parallel imports, Dr. Zetsche, could you just quickly comment on how Mercedes wants to tackle that? How can you control your dealers outside the country from selling cars and therefore competing with our footprint in the Chinese market? Secondly, obviously we've seen very solid improvement at Mercedes over the last two, three years. Where do you now see the gaps left that you want to close in, say, the next two, three years regarding both on the product side, but more importantly, on the vertical integration of the business, if you could give us an update there? And then finally, on trucks, Dr. Bernhard, your guidance on the European markets turns out to be a bit more cautious than your Swedish competitors. I appreciate the uncertainty, but could you just outline this year how you look at the European market? Obviously we have seen dramatic changes in oil prices and the FX, to which extent that offers an opportunity in the marketplace to see accelerated replacement demand? Thank you.

Partially I already gave the answer to your first question in the sense that there is very little you can do in controlling gray imports in China. You have to look at your dealers outside and that's what, exactly what we're doing. And there are a number of - first of all, you have to have transparency. You have to realize where the sources are. And when you accomplish that, then you have to have definitions in line with your dealers which makes it less attractive for them to do this kind of business. I think we're in both aspects relatively successful and so far gray imports are no source of concern for us at the current time. It doesn't mean that it doesn't pose a risk going forward, but at the current time it's not a significant issue. Secondly, you are asking about gaps left to our competitors, both obviously being slightly differently positions. In both cases China is the main source for the remaining gap, just based on volume which is significantly different between the three of us still. There obviously the remedy is to grow our volume. The vertical integration, more recent numbers and analysis we try to pursue suggested that there is not too much left as a difference in this regard. Of course we know the obvious differences like, for instance, transmissions is a significant one. Not all of them we're doing ourselves any more, but overall we were pretty successful underneath to reduce the in-house production to the main parts in assembly and outsource a lot underneath. We will continue this process so there might still be a little impact and as far as transmissions are concerned, we're pretty sure, especially for the rear wheel automatic transmission, overall this is not a profit burden on our side even though it's a higher vertical integration. Downstream of course we have the issue with own retail. We're addressing that. We might not close the gap to our competitors, but certainly we will move into the right direction with a significant step. Without highlighting that, probably the impact of Mini versus Smart is different as well on the bottom line. On the other hand we have advantages of course as well, like strong S-Class sales and things like that, but we're getting closer. We're looking at all the productivity numbers. We see there are some areas where we still might have some work to do. You know that on the sales side, our costs were higher on a comparable basis. Still some room to move. We're addressing that as well with significant structural changes. So we have a relative good transparency, but we think we're closing these gaps and as a result we should close the margin gap as well.

With respect to our truck Western European guidance, what the market concerns, we have guided we see the market as a plus/minus zero basically which basically means we will stay at a relative stable on a weak level that we had last year. If you look back a couple of months, European market did not have much positive momentum. Basically not much growth in European countries, still a lot of uncertainty whether France will be able to turn the corner, with the election in Greece, questions about the ripple effects to the financial institutions are still there. So there is not much good things to go around and this was the case until a couple of months ago. Now for the first time we see two good effects coming through. The first one is the exchange rate which might result in a better export opportunities for euroland. And the second one is lower fuel prices which will give more purchasing power to euroland and on top of it, as an effect, for some of our logistics companies, our customers with lower fuel expenditures give them some money and some financing opportunities to renew their fleet. We don't believe that these two effects will come through the first half of this year. So it will take time until these things trickle through. It might be that in the second half of this year we might see the positive effects to it. But in the same point of time we might also have a war on hand with the Ukraine. So there is positive and negative things basically still out there. Euro is very much of a difficult thing right now to estimate so we believe that this year the market will be flat with an opportunity at the second half.

Just a very brief addition to the first question. Obviously the structural changes we're very much focused on are aiming at the structural competitiveness of course and our policy is here to act and not to talk too much because that in itself improves our chance for action. And especially in the plants there quite a lot of things have happened more recently and quite a lot of agreements have been made which will show their impacts in the time going forward.

Next one will be Michael and then it's Adam.

Mike Raab from Kepler Cheuvreux, I've got a question for each of the three of you, perhaps. First of all, for Dr. Zetsche, being close to 0.5 million units with your compact family and that being quite successful, what sort of peak volumes should we expect for the family in its entirety in its current shape? Then one for Mr. Uebber please. Could you please remind me, because I think I missed out on that number yesterday, what the profit contribution of your joint venture with Beijing Motor has been in 2014 and how that compares to 2013? And then finally one for Dr. Bernhard, how far away is from your standpoint the next tougher set of emission regulations in Europe for trucks, call it Euro 7, Euro 6B, whatever you want to give it as a name. Thank you.

To your first question, this year, as you know, we will introduce the fifth and last member of this generation's compact car family. We were adding and continue to add significantly capacity, namely now the Chinese capacity which goes online this year. So in the past we didn't have the full family available and we were significantly capacity constrained. This year we basically can exploit, I would say, to the maximum the opportunities of that generation which will produce another significant increase in that segment. From there on I would say the normal lifecycle effects start to impact sales. So '16, '17 would be at best flat and then start to decline towards the replacement of the generation, the current generation.

We will disclose at February 17 our annual report where you get all the details also about the joint venture developments. But as an information, we went slightly up in the BBAC joint venture net profit. That is something what you see in the accounts then. And for 2015 we plan also an increase, not a big step forward because you have to account for also the GLA introduction, for example, so therefore more improvement is in the years to come, the higher improvement.

Emission schemes for trucks, right now Euro six governance particulate matters and NOxs. On top of it, CO2 is another emission standard that we have to look after and we have to look at. Right now we don't see any discussion on the Euro 7 right now. We're just in the process of digesting and getting fully through with the transition to 5 and 6. On NOxs and particulate matters the levels are so low that it is very difficult to measure. So it is hard to see that we will go anywhere beyond the current levels that we have on NOxs and particulate matters. Different story with CO2, CO2, we expect regulations that at some point of time. We're right now in the process with the European Commission to see how we can measure CO2 emission of the truck that is very difficult because trucks are very different from each other. They come in all shapes and sizes. It's very difficult to make regulations for that. So right now we're working with a scheme with the European Parliament - with the European Commission to measure CO2 on different trucks. And we expect at some point in the future, but not before the year 2020, discussion will start how can we put values and limits to CO2. This is all not threatening because our customers are also interested in reducing the fuel consumption of their trucks, even more so than with passenger cars. So as long as these regulations are in line with what our customers want and as long as those, the costs that we have to put into the vehicles and the effect of it is a positive business case which on the trucks is much more likely than on passenger cars, it is a good thing and doesn't bother us any way. So we will see how this comes out. But CO2, in short, no Euro 7 right now on the horizon. CO2 regulation pending, might come up after 2020. If that is not disruptive regulation, forcing us to do something that does not make from a business - that doesn't make business sense, is not an economic case, if that is then we have a problem. But we don't see that coming.

It's Adam Hull from Berenberg. Two questions on Mercedes and then one on free cash flow. Firstly, on MRA, I don't know if you can give us a bit more of a feel for the timing and size of the cost savings, how much relates to 2016 and 2017 and how much you're roughly getting in 2014 and 2015? Is it sort of 70%, 75% in 2016 and beyond? Secondly, on Mercedes, considering the FX tailwind which seems to be much more coming through potentially in 2016 and beyond and considering the negative, a higher proportion of Plug-In Hybrids etcetera should we be thinking about the 10% margin in terms of timing, is it feasible you could get that in 2017 or is that too hopeful? And then finally on free cash flow, you seem to be guiding to roughly €3 billion to €5 billion for free cash flow in 2015. Maybe you could give us a bit of a feel for why that's a bit down and why such a big range, in effect? And should we be expecting that to clearly rise beyond that, in 2016 and onwards? Thanks.

What we said is that the commonality between the C-Class and the E-Class is developing its full positive impact after the launch of the E-Class. Now to put a number to that is somewhat difficult because it very much depends on what you want to use as base case for that. Independent of that with all car lines, but certainly with MRA as well, we're focusing on continuous improvement. There are measures both from a technical point of view as much as from a commercial point of view with our suppliers. We have stated the strategic target of 10% margin which is absolutely valid. We have said that we will get there step by step. I think we have shown some significant steps in recent times and you will see the next steps going forward. I would like to leave it with that.

With regard to your question with regard to cash flow, of course the math you did I do think is reasonable. You know that cash flow has volatilities within year-end numbers and quarterly numbers, as you know and therefore I do think it is quite smart also to give a bandwidth, so to say. With regard to 2014 I do think we did a good job in our cash flow management. It's not only coming from earnings, but also from a disciplined working capital management, supply chain management and also investment efficiency and R&D efficiency which we installed in the divisions had their impact also in 2014. What we're doing in 2015 is to increase substantially the R&D and the invest, total funding. We've given you yesterday in some slides some indication for the years 2015 which of course will have an impact on the cash flow side on the one hand. Of course on the other hand we will increase earnings, so to say with the positive impact for the year 2015 and we have to keep in mind we're growing the company and therefore some working capital investment, if I may say so, is also necessary. And again with the volatility we stick first in the beginning of the year to bigger bandwidth.

Can I just check, the directive on working capital, that negative effect was all taken in 2014, is that right?

All taken so we're growing the company not only one year but over many years so therefore it should be year-over-year working capital increase.

Charles Winston from Redburn. It's a difficult topic for you, but is there any comments or are there any comments you can make about negotiations with the NDRC in China? And even, if nothing else, perhaps your thoughts on timing as to where we might get some resolution on that? And linked to that, bearing in mind that there is fairly widespread expectation that at some point the pressure to reduce pricing in China for Mercedes towards more world levels, do you think any of your competition might use the current strength of the renminbi to effectively start perhaps adjusting their global - China pricing towards a global norm because, after all, it could be done in a reasonably profit-neutral way given that tailwind? Just any thoughts you could see about competitive behavior in that environment would be useful. Thank you.

To your first question, you're right. We will not be specific in our comments, but you already gave me a hint how to answer. I expect in the very near future an answer to that question. As far as pricing is concerned, there's very good transparency to the pricing development of all competitors available to everybody. I guess you know these numbers as well. And there you can see that we as Mercedes have a very positive development both on our historic own history, as much as in comparison to our two main competitors. But for all of them, for instance, in January, we saw positive pricing development in a significant way. First of all, the assumption, take the customer price in China and a comparable vehicle in the U.S. and you will see the potential for price reduction is very much misleading. Otherwise we would make obscene profits in China which you would see in the balance sheet. So there are many more effects included and therefore the pricing potential is not as significant as when you would come from that simple analysis. I don't see any interest or initiative at any site as far as pricing is concerned. Yes, some competitors have been or are in a significant push mode with their dealer body which then has impacts on dealers' profitability and pricing. But overall I do not see any intended moves. I'm speculating because I don't know the plans of my competitors in the industry.

This is Scott Sheridan from Barclays. First, on trucks, in NAFTA you had a book-to-bill in Q4 in excess of 2. I just wanted to get some indication of how confident you feel that those orders will translate into sales and what kinds of criteria to use to make sure that one of those orders is real? Also on trucks, you're losing market share in Europe in Q4 with a book-to-bill of 0.8 and could you just give some color on why that dynamic is different from the U.S.? And then finally on trucks with the provision of €600 million in the year, do you have any indication of when you have further clarity on whether that provision is enough or whether it might need to be increased? Thank you.

Okay. First question on the order income in NAFTA, we're very confident that those orders are very solid. It's always been the case in the past that especially the orders too far out might be a little bit softer than those in the near future. But at this point of year and this point of time we can - we're very confident about those orders coming in that will all translate into sales. Second one, market share in Europe, overall we could not only hold our market share in Western Europe last year, so we also could improve it. Last quarter in Western Europe a slight drop in market share which is basically coming back to the position of pricing, we will not make it easy on our competition and at the same point of time we're not just going for volume and for sake our margins. So by the end of the day it's basically attributed to the fact that we hold fast on our pricing and are willing to take our premium, as we have been doing that in the past. We don't think that a 0.8% of market share is substantial and it's also always driven by big fleet sales that might come in or not come in, in a particular quarter.

Sorry and just on the provision?

Sorry to say, I come to your point. Your third question, as previously announced, we have increased the relevant provision by €600 million in the fourth quarter. In December we announced that and on the whole we assume that we have made adequate risk provisioning. More than this, I can't give you more details and I can't talk with you about timing or other topics. I ask for your understanding.

It's Frank, it's Mike and then Fraser.

Frank Biller from LBBW. Three questions, the one is on your restructuring charges of the sales organization in Germany. So in Q4, you had an amount of €160 million divided in four divisions and you're announcing another €0.5 billion in the next two years to come. Maybe you can elaborate a bit on that? What is this related to and what is the timing here? Is the bulk of these expenses in 2015 or is it 50-50? And then on other special items in 2015, here you mention €50 million in the truck division. Is there any other special item in 2015? And on the merger and acquisition side, do you plan any acquisitions or sales of some parts of your company or you're feeling comfortable with your current situation here?

Yes, we have announced - first of all, the risk provisioning in the fourth quarter, it's €160 million and it divides up into the different divisions. Main part, piece here is Mercedes-Benz cars with over €80 million. And we plan for another up to €500 million for the next two years. The main portion of the €500 million will be related to the year 2015 directionally. The later question where you said to you think that we sell something, of course piece of the own-retail restructuring is that we partially sell some of our own dealerships. So that is related to M&A, other than this we have nothing in mind currently which is as big that we should talk about here And to trucks, Wolfgang, we do what we did in Germany and Brazil going forward. So we have planned for our restructuring programs another €50 million for the years 2015 and 2016. That's it. As you know, we have spent in 2014 roughly €150 million for the restructuring charges of Germany and Brazil. The main piece in 2014 was in Brazil. A -: And it's primarily workforce changes that we have.

And the positive effects coming from this restructuring in Germany, what you are expecting on the positive side here against these €0.5 billion losses?

Altogether of course we have our NPV calculation on this overall step and without considering improvement of the performance of the network which we definitely expect, we come to a positive net present value which I guess basically answers your question.

And it lowers our fixed costs base, makes us less vulnerable.

Now it's Mike and then Fraser.

Mike Dean from Credit Suisse. Adam asked my free cash flow question, but could you give us some guidance on CapEx for this year? And then just on pricing discipline in a weaker euro environment, in the U.S. we've seen Japanese premium brands at around $1000 of free content in response to a weaker yen. Are you concerned that euro OEMs will follow this trend?

To the second part, what I said about China holds true for U.S. as well. We always have seen the one or the other competitor in certain situations to be more aggressive on special programs, but I don't see an overall trend in this regard. And we had seen in particular Lexus in a much stronger performance some years ago. They have recovered and of course these discussions on recalls and their vehicles were damaging to them. We have seen them recovering, but we do not see a new quality of competition, including pricing, against the Japanese competitors. And therefore our plan clearly is not changed as far as going for value pricing and creating demand rather than creating volume by negative pricing.

We plan to spend €5.6 billion in average for the next two years and you find a breakdown of this number on page 41 in our appendix for property, plant and equipment.

It's Fraser Hill from Bank of America Merrill Lynch, just got a couple of questions on China, returning to your dealership structure. You achieved a pretty successful level of dealer growth last year, I think over 100. Can you just outline your plans for how we should see that progressing over the next couple of years? Will we see a similar level of expansion in the dealer network this year? And just following on from that, there been a lot of news flow over the past two months regarding bonus top-ups, dealer support, dealer subsidies from many participants in the industry, not just premium, but also mass-market. How has that dynamic affected Mercedes? Have you also made top-ups or is there a different dynamic view within the market? And then on a separate topic, for Dr. Uebber, on the balance sheet we have a substantial net cash position. I think that's well understood. And you're expecting to generate excess cash in return of your dividend going forward. What do you see as a minimum level of cash now and at what point do you start to think about further shareholder returns? And how would you think about that in terms of special dividends or buybacks or perhaps not at all, just conceptually? Thank you.

As rightfully said, we increased our dealer count last year actually by almost 110 versus a planned 100 and so that was successful. The focus in that expansion, as you know were second, third tier markets. We see meanwhile there are some additional capacity needs in first tier major markets, major cities. The number increase will by far not be as large as in 2014. We do not have a specific number for you. What we see is that while, for instance, Audi's dealer count is not that much different from ours anymore, the capacity per dealer is significantly higher. So in the future we might see more of you might call that qualitative growth than quantitative growth on the specific dealer sites and this then will be less visible in statistics. Second part as I said before, the more push marketing you do, the higher the dealer discounts will develop and the less profitable your dealer body will become and the more demanding they will be at the end. Now you could in the best case address that by having a more pull marketing strategy which we try to establish. You always try that, sometimes more successful, sometimes less successful. With our new product we have a much better opportunity there. Secondly, you could change your provision scheme with your dealers to include that in the overall provision from the get go. The disadvantage of that strategy is that the tendency to spend the money in the market is even higher. So it's kind of a withholding which is included in this late-year negotiation strategy and that might be reasonable. We try toward that in the first place, as I said, by not over-stress our volume intentions to the dealer body and this worked pretty successfully. You have heard very little on our side and this relates to very little money being involved in this regard as well. So I think we were one of the least involved in this part of the business.

To your question with regard to dividend and net liquidity, the year 2014 of course we ended up with €16.9 billion net liquidity in the industry which is very comfortable level. But we also plan to keep on this high level due to the high volatility we see in financial markets and end-markets where we're doing business in. And as you have seen that we also have the plan to increase our total funding for R&D and CapEx on top. So we will invest a further into product which is the best return you can get finally also as a shareholder. Other than this, you have to keep in mind that our under-funded position on the pension side is €11 billion currently. So we have invested another €2.5 billion, but the low interest rate environment led us almost offset this impact during the year. So we're currently at 62% funded status. Having said this, of course we're, I do think we demonstrated also in 2014 that we're passing over of course substantially to our shareholders. We increased our dividend from €2.25 to €2.45 and we will keep our payout ratio also for the future further with our 40% to 40%, not only in a sustainable manner for the absolute term, but also for the relative term. So you can expect us to act further when we have a good environment also in the interests of shareholders.

Stefan Burgstaller, Goldman Sachs. Two questions, one, lower oil prices on the first glance should be a positive. I'm not so sure. Could you just talk a bit about how a low oil price might impact your ability to price for fuel efficiency measures in the truck division? And then on the car side, it might drive mix up near term, but then how does this impact your plans to comply with the various regulatory CO2 regulations and targets in place? And then the second question's more broader, the auto industry historically has enjoyed a place of political and economic importance. When I look at this these days I'm worried about the importance or dependency of China, or on China and I'm also worried about the influence or the attention the industry now gets from big data, big technology companies. And I was just curious on your thoughts how in a period of substantial technological change and challenges you face, how these two pressure points might influence your strategic developments. And could it be that at the end the auto industry finds itself in a relatively weaker spot in the [inaudible] decade?

As far oil prices are concerned, of course there are a number of markets, Russia obviously being one but Middle East as well, where oil prices have a negative impact on car sales, oil price developments, but the majority of the markets can get a lift from that. You're obviously right that the deviation between market/demand-driven product mix and regulation-driven product mix is increasing. And, more specifically, all of us need to sell at least partially electric vehicles in order to meet the CO2 requirements and there's very little demand for these vehicles and that's obviously not a good situation. And on the one hand we have to see how we can make these vehicles, beyond their fuel efficiency even more attractive, one example being the boost function of a hybrid for the power which is a different aspect. And on the other hand we have to drive the cost down when the market is not willing to pay for these CO2 reductions based on this technology. So that's a whole mix and I agree with you that the oil price reduction overall is positive, but has its challenges, including as well China dependence. And you want to make this point first? That's fine.

It's more common on the truck side with respect to fuel prices. When our customers make their decisions fuel prices are high on their minds. So far we see no effect from lowering fuel prices on decisions on products because right now we believe that our customers have the perception that these price changes are just transitionary, that they might go away and possibly go away in the next years to come. So I don't believe that there is an expectation that fuel prices will stay at these low prices and oil will be, sustainably will be at $50 per barrel or even below. The widespread assumption is that after some point of time, these prices will go back where they fundamentally are perceived they should be and there will be. And nobody, none of our customers would like to be caught with fuel inefficient truck with high fuel prices, that's something nobody wants to be. So basically the purchasing decisions that we see right now are not based on current spot prices. They are based on long-term beliefs where the oil price will be. And right now the oil price, that expectation is still continued high fuel prices.

Passenger car buyers in the U.S. seem to be more shortsighted and there you always see a direct impact on the mix between light trucks and passenger cars and the resurgence of the U.S. manufacturers to some extent relates to that oil price development. Dependency on China, every coin has two sides, so our relative weaker position in China so far makes us less dependent on China than the others. First of all, I would say that before China becoming a major market we were dependent on fewer markets than we're today and therefore we're better balanced today which is a positive. But of course, at least for some manufacturers, the China piece has a significant portion of the total sales, meanwhile still less so for us. I don't see the risks in China significantly different from other major markets. Yes, the growth could come down or even be, the market could be flat, but I don't see a bigger risk for reduction of sales in China than in the U.S. or in any other markets. Technology, the entire world is heavily influenced by the tech development, the digital world with many disrupting technologies resulting from that and changing overall business systems. Moovel is just one of many examples in this regard, a more recent one and of course we see the - and we think in our cars this has been technology before, there a Silicon Valley popped up - but anyway the conversion of the traditional, if you want, automotive technology with this new technology from Silicon Valley provides tremendous additional opportunity, autonomous driving and so on. My understanding is the main strategy or the main objective is, continues to be very different between the Googles of this world and the automotive industry. When Google bought Nest I don't think the main interest is to control the temperature in the rooms, but to get more information about what people are doing at home. And there are basically three places - it's home, it's car, it's office - where people spend their time and car is one of these three and therefore Google and the likes want to get involved I don't think in the first place to build vehicles. And we have to understand that and then try to find our roles, to which extent we're complementary, to which extent we become dependent, to which extent we're competitors. And I think one major element in that is that we must be able to collect data independent of Google because we want to use this data exclusively to serve our customers on their demand and with their release. So when we talk about high safety with Mercedes, this does not apply specifically for protection in accidents or from accidents, but this means safety of their personal data as well. And to be able to provide that, to practice data, we have to keep control and we can't do that when it's collected by Google. And that's where we see a major task for us, to provide this kind of platform which is not in existence today. Beyond that we'll see how this all sorts out. There are risks, but I don't see from the, as I said, main business strategy the intention of these tech companies to take over the order business. Dominic O'Brien: This is Dominic O'Brien from Exane. And quickly on FX, could you give us an idea of how much of your 2015 exposure is currently hedged? And secondly, if we stayed at current spot rates, would this €500 million tailwind in 2015 change? Thank you.

No, because it is done on the current spot rates so that is the number I already announced. The hedges for 2018 for all these currencies are roughly between 70% and 80% in 2015.

So, ladies and gentlemen, thank you very much for being with us today. Thank you very much for your questions. I also would love to thank management for sitting down with us today to discuss the numbers and the Daimler strategy. With this, the official part of the investor conference ends. Goodbye, stay tuned and we look forward to see you soon.