Daimler-Benz Aktiengesellschaft Stuttgart Annual Report 1982

Table of Contents

Agenda for the Stockholders' Meeting 4 Members of the Supervisory Board and the Board of Management 6 Report of the Board of Management Status Report 9 Outlook 25 Research and Development 33 Purchasing 40 Production 43 Sales Organization 46 Employment and Benefits 49 Subsidiaries and Affiliates 59 Notes to Financial Statements of Daimler-Benz AG 75 Proposal for the Allocation of Unappropriated Surplus 84 Report of the Supervisory Board 85 Financial Statements of Daimler-Benz AG Balance Sheet 86 Statement of Income 88 Consolidated Notes to Consolidated Annual Report Financial Statements 89 Consolidated Balance Sheet 100 Consolidated Statement of Income 102 Appendix Daimler-Benz Highlights 104 Sales and Production Data 106 Charts and Graphs Relating to Automobile Industry Trends in Leading Countries 108 Agenda

for the 87th Stockholders' Meeting being held on Wednesday July 6, 1983 at 10 a.m. in the company museum, Mercedesstraße, Stuttgart-Untertuerkheim.

1. Presentation of the audited financial statements as of December 31, 1982, the reports of the Board of Management and the Supervisory Board together with the consolidated financial statements and the con­ solidated annual report for the year 1982.

3. Ratification of the Board of Management's actions. Board of Management and Supervisory Board propose ratification.

4. Ratification of the Supervisory Board's actions. Board of Management and Supervisory Board propose ratification.

5. Election of auditors for the business year 1983. The Supervisory Board proposes to elect Deutsche Treuhand- Gesellschaft AG, Wirtschaftspruefungsgesellschaft, Frankfurt (Main), as independent auditor for the business year 1983.

4 Agenda

6. Election of the Supervisory Board. Pursuant to Section 102 of the Aktiengesetz (Company Act), the tenure of the present Supervisory Board ends with the completion of the Stockholders' Meeting on July 6, 1983. The Supervisory Board - in accordance with Section 96, Subsection 1, Section 101, Subsection 1 of the Company Act and Section 7, Subsection 1, File 1 No. 3 of the Codetermination Law - is comprised often supervisory board members representing shareholders and ten representing employees, respectively. The Stockholders' Meeting is not bound by the election proposals. The Supervisory Board proposes to elect the following gentlemen as supervisory board members representing the shareholders:

Dr. phil. Dr. rer. oec. h. c. Marcus Bierich, Muenchen Chairman of the Supervisory Board, Mercedes-Automobil-Holding AG Dr. rer. pol. Friedrich Karl Flick, Duesseldorf Managing Partner, Friedrich Flick Industrieverwaltung KGaA Dr. rer. pol. Wilfried Guth, Frankfurt (Main) Member of the Board of Management, Deutsche Bank AG Dr. rer. pol. Alfred Herrhausen, Duesseldorf Member of the Board of Management, Deutsche Bank AG Dr. jur. Heribald Naerger, Muenchen Member of the Board of Management, Siemens AG Dr. rer. pol. Wolfgang Roeller, Frankfurt (Main) Member of the Board of Management, Dresdner Bank AG Dr. jur. Roland Schelling, Stuttgart Attorney at law Dr. jur. Walter Seipp, Frankfurt (Main) Chairman of the Board of Management, Commerzbank AG Diplom-Kaufmann Guenter Vogelsang, Duesseldorf

Prof Dr. jur. Joachim Zahn, Muenchen

The electors, chosen by the employees, vote on May 25, 1983 for the employee representatives on the Supervisory Board. The results of the voting will be published in the Bundesanzeiger (Federal Regis­ ter) pursuant to Section 19 of the Codetermination Law. The tenure of all supervisory board members will end with the completion of the Stockholders' Meeting which ratifies the actions and results of the 1987 business year.

5 Supervisory Board (Aufsichtsrat)

Hermann J. Abs, Frankfurt (Main) Honorary Chairman Honorary Chairman, Deutsche Bank AG

Dr. rer. pol. Wilfried Guth, Frankfurt (Main) Chairman Member of the Board of Management, Deutsche Bank AG Herbert Lucy, Mannheim*) Deputy Chairman Chairman of the Labor Council, Daimler-Benz AG Karl Aspacher, Stuttgart*) Member of the Labor Council, Untertuerkheim Plant and Main Office Dr.-Ing. Hans Bacher, Stuttgart (deceased October 30, 1982) Member of the Board of Management, Robert Bosch GmbH Dr. phil. Dr. rer. oec. h. c. Marcus Bierich, Muenchen (since December 30, 1982) Chairman of the Supervisory Board, Mercedes-Automobil-Holding AG Willi Boehm, Kandel*) Member of the Labor Council, Woerth Plant Dr. rer. pol. Friedrich Karl Flick, Duesseldorf Managing Partner, Friedrich Flick Industrieverwaltung KGaA Prof. Dr. jur. Gunther Hartmann, Koeln Member of the Board of Management, Mercedes-Automobil-Holding AG Dr. rer. pol. Alfred Herrhausen, Duesseldorf Member of the Board of Management, Deutsche Bank AG Erich Hirth, Gaggenau*) Chairman of the Labor Council, Gaggenau Plant Rudolf Kuda, Frankfurt (Main)*) Departmental Manager within the Board of Management, Metal Workers' Union Hugo Lotze, Reinhardshagen*) Chairman of the Labor Council, Kassel Plant Dr. jur. Heribald Naerger, Muenchen Member of the Board of Management, Siemens AG Dr. rer. pol. Wolfgang Roeller, Frankfurt (Main) Member of the Board of Management, Dresdner Bank AG Alfred Schaible, Renningen*) Chairman of the Labor Council, Sindelfingen Plant Dr. jur. Walter Seipp, Frankfurt (Main) Chairman of the Board of Management, Commerzbank AG Franz Steinkuehler, Stuttgart*) District Manager, Metal Workers' Union Dipl.-Ing. Maria-Christine Fuerstin von Urach, Stuttgart*) Director Diplom-Kaufmann Guenter Vogelsang, Duesseldorf Bernhard Wurl, Mainz*) Deputy Departmental Manager within the Board of Management, Metal Workers' Union Prof. Dr. jur. Joachim Zahn, Muenchen

*) Elected by the employees.

6 Board of Management (Vorstand)

Dr. jur. Gerhard Prinz, Stuttgart Chairman Prof. Dipl.-Ing. Werner Breitschwerdt, Stuttgart Research and Development Heinz C. Hoppe, Stuttgart (retired December 31, 1982) Sales Dr.-Ing. E. h. Werner Niefer, Stuttgart Production Dr. jur. Richard Osswald, Stuttgart (retired March 31, 1983) Personnel and Social Welfare, Administration Edzard Reuter, Stuttgart Finance Walter Ulsamer, Stuttgart Purchasing Dr. jur. Manfred Gentz, Stuttgart (deputy member) (since April 1, 1983) Personnel and Social Welfare, Administration Hans-Juergen Hinrichs, Stuttgart (deputy member) Sales Dr. rer. pol. Gerhard Liener, Stuttgart (deputy member) (since March 1, 1982) Subsidiary and Affiliated Companies

7 Hier gab es ein Produkt- oder Stimmungsbild ohne Text oder Zahlen. Es wurde in der PDF-Datei weggelassen, um eine nutzerfreundliche Dateigröße zu erreichen.

Here was a product or mood picture without text or figures. It was omitted in the pdffile to improve the usability of the file size. Report of the Board of Management

Status Report

OVERVIEW year, however, motor vehicle manufactur­ ers were affected by slackening export General In 1982, the recessionary economic demand so that, with domestic sales de­ Economic trend in most industrial countries contin­ clining further, several companies were re­ Situation ued unchecked. Rising unemployment and quired to take steps to adjust to reduced increasing budget deficits, as well as grow­ capacity utilization, in some cases even ing financing problems in many threshold introducing short-time work. and developing countries, resulted in sub­ Daimler-Benz, on the other hand, was stantial burdens. It was not until the end able to maintain its high level of employ­ of the year that distinctly lower inflation ment, despite the more difficult condi­ rates - particularly in the U.S.A. - allowed tions, and continue the steady growth of more latitude for interest rate and money the past years. We succeeded in consoli­ supply policies, and thus for a stimulation dating our market position at home and of economic growth. abroad. In the Federal Republic of Germany, the downturn largely paralleled the world Consolidated sales rose DM 2.2 billion Sales Increase trend. Consumer restraint and a slacken­ to DM 38.9 billion in 1982. As in the DM 2.2 Billion ing of investment activity, along with a previous year, the growth stemmed solely to DM 38.9 decline from mid-1982 of the initially very from foreign business, whose share of sales Billion high export volume, caused a drop in the increased to 65.8% (last year 63.0%). This gross national product during the year. again illustrates the importance of the for­ For the first time in three years, a cur­ eign markets for maintaining production rent account surplus was achieved. This and employment at Daimler-Benz AG. also shows the improving competitive Our foreign distribution companies prov­ strength of German exporters; it was help­ ed to be indispensable for ensuring the ed on the price side by a D-Mark that is sale of products from our domestic plants. still slightly undervalued in terms of pur­ Our foreign manufacturing subsidiaries, chasing power in relation to major foreign with minor exceptions, were able to hold currencies. or extend their market position under the The German motor vehicle industry, curtailed market conditions everywhere. through strongly higher exports, contribut­ Daimler-Benz AG alone succeeded in ed substantially to improve the foreign raising sales 7% to DM 31.1 billion in 1982. trade position of the Federal Republic of Respectable growth rates could be achiev­ Germany. The motor vehicle industry ed in a number of important export mar­ The new Mercedes- became the country's largest revenue- kets. Europe, chiefly the European Com­ Benz compact class producing exporter. It alone attained a munity, continues to be our largest market 190/190E: spirited trade surplus of about DM 58 billion in for exports. Domestic sales included, Eu­ performance and ropean countries account for about two- highest technical 1982 (last year DM 47 billion), approxi­ standards in com­ mately equivalent to the value of all Ger­ thirds of our business volume. The main pact form. man oil imports. In the second half of the foreign markets for our heavy-duty trucks

9 Group Sales

10 Status Report

continue to be the Middle East and North Africa. Our deliveries of commercial ve­ hicles and cars to this region rose strongly again, by more than DM .6 million to DM 5.3 billion. We were able to increase the value of our exports to the U.S.A. by 31% to DM 3.2 billion due to the big demand for our cars. The U.S.A. remains our largest single export market by far. The value added to overall sales by our foreign subsidiaries, after deducting inter­ company sales, was DM 7.8 billion, slight­ ly more than the year before (DM 7.6 bil­ lion). Sales at our South American companies were down 19% to the equiva­ lent of DM 2.3 billion, which is in contrast to a growth of value added by our North American companies of 31 % to DM 3.5 bil­ lion. (Our U.S. subsidiary Freightliner, acquired in 1981, was consolidated for the first time for a full business year.) worked to our advantage once before, in Currency-related influences also tended the opposite direction, in the mid- to increase the value of sales, but to a seventies, when demand for cars in the lesser degree than the year before. domestic market declined. A comparison of the sales of cars and commercial vehicles shows that in 1982 In 1982, we continued our medium- Worldwide growth within the Group was generated term investment program according to Capital solely by the car division, which increased plan. Worldwide capital investments in Investment sales by 13% to DM 18.7 billion. Commer­ fixed assets totalled DM 3.4 billion (last over cial vehicle sales of DM 18.9 billion were year DM 3.0 billion). We increased do­ DM 3 Billion on about the same level as in the previous mestic investments DM .7 billion to year. In the years before - particularly in DM 2.8 billion. 1980 and 1981 - we were able to achieve Domestic capital investments are allo­ stronger growth in commercial vehicles, cated to the different divisions: both in exports and also at our foreign manufacturing subsidiaries, so that com­ mercial vehicle sales within the Group thus exceeded car sales. In 1982 the trend reversed. Considerably higher car sales, with commercial vehicles about on par with last year, lead to a roughly balanced share between cars and trucks in terms of total sales. Thus, cars attained a 48.1% share of sales (last year 45.2%) and com­ mercial vehicles 48.5% (last year 51.5%). The bulk of our capital spending in the Noticeably improved appointments for These structural shifts show the advan­ domestic plants was once again directed the roomy models tages of the flexibility which the Group to the car division, mostly for the produc­ 200D to 280E. has developed in its two main areas of tion start-up of new models and compo­ Because of their nents. At the center of efforts was the pro­ high value retention, business; it serves to adjust to changing they continue trends of demand in the different markets. duction start-up of the 190/190E, at the to be in great The opportunity of such compensation end of 1982. We spent considerable sums demand (see above).

// Sales Structure

12 Status Report

to further improve product quality and according to modern ergonomic princi­ production flow. ples and to free our employees from heavy, In the commercial vehicle division, the manual and monotonous labor as much investments served mainly to supplement as possible. With our investments in the and modernize our vehicle range, to fur­ infrastructure and the production arrange­ ther streamline production and to inten­ ment of the plants, we placed increasing sify the production pooling system. By emphasis on the requirements of environ­ integrating similar component manufac­ mental protection. turing operations at one location, we want Capital investment abroad totalled DM .4 to continue making use of specialization billion (last year DM .8 billion). The capi­ in production and of the corresponding tal spending programs of our subsidiaries know-how, to cut costs further and so safe­ in Brazil and Argentina had to be adjusted guard jobs. We pursue this objective, to the difficult market situation in these among other ways, through the concentra­ countries. (Last year, the relatively large tion of van production at the Duesseldorf additions to fixed assets were primarily in plant. connection with the takeover of the plants As in the years before, in the new facili­ and facilities of the U.S. heavy-duty truck ties we endeavored to design work places maker Freightliner.)

13 Status Report

Financing In 1982, we were again able to fully iaries - Group earnings were affected nega­ of Investments finance our investments in fixed and finan­ tively. The very good utilization level in cial assets with funds generated internally. the car division, the gratifying proportion­ The sharply higher capital outlays, despite al increase of higher-priced cars and, in higher depreciation charges, resulted in addition, the continuing favorable demand the book value of fixed assets increasing for our heavy-duty trucks from the Near more than the balance sheet equity, which East, positively influenced earnings in had been strengthened through alloca­ 1982. Non-operating results were once tions from net income to retained earnings. more favorably affected by the unusually Nonetheless, a balanced, healthy ratio of high interest rate levels in 1982, in addi­ fixed assets to stockholders' equity con­ tion to higher gains from the dissolution of tinued to be ensured. This becomes even provisions. Net interest income (excess more evident when the amount of long- interest income over interest expense) term provisions is taken into account. before taxes rose to DM 610 million (last year DM 554 million) at Daimler-Benz High Level At the end of 1982, Daimler-Benz had AG. For the Group, net interest income of Domestic 149,118 employees (last year 149,096). In was DM 896 million (last year DM 804 mil­ Employment the last five years, we created 17,000 new lion). However, the interest income earn­ jobs in the domestic plants. We increased ed by our Brazilian subsidiary in large the number of openings for trainees again part merely compensates for inflation- in 1982, to a total of 8,500. In the Fall, induced erosion of purchasing power in more than 2,600 trainees - the largest num­ monetary assets. Net income at Daimler- ber in any one year - were hired. Benz AG rose 13% to DM 687 million Due to the necessary adjustment of work (last year DM 608 million). The combin­ forces to the drastically lowered capacity ed net income of all foreign subsidiaries utilization at our North and South Ameri­ increased 4% to DM 202 million (last year can subsidiaries, worldwide employment DM 194 million). Worldwide net income declined to 185,687 (last year 188,039). rose 11.5% to DM 921 million (last year DM 826 million). A Word of We thank our employees and their Gratitude to representatives on the plant and general The gratifying trend overall and the Proposal to Our Employees labor councils and in the executive com­ interaction of the profit-raising factors and the Shareholders mittees of the general labor council and the special influences described above have the management employees for their caused us to propose to our shareholders receptiveness and help. Their great dedica­ for the year 1982 a DM .50 higher divi­ tion and efforts, as well as their trustful dend, i.e. DM 10.50 for each common cooperation based on mutual understand­ share of DM 50 par value, plus a bonus ing, again enabled us to mutually master dividend of DM 1 for each common share the difficult tasks in 1982. of DM 50 par value. This would increase the total dividend payout to DM 350 mil­ Gratifying Earnings were influenced by contradic­ lion (last year DM 304 million). To further Earnings tory factors. Increases in wages and sala­ strengthen the equity capital base and with ries, and higher prices for purchased mate­ the approval of the Supervisory Board, we rials affected income; the latter increases - shall increase our capital stock at a ratio of directly and indirectly - were mainly due 1 for 9 to DM 1,699 million, using a partial to the sharp rise in steel prices. Moreover, amount of DM 170 million of the authoriz­ because of partially inadequate selling pri­ ed share capital. The new shares, which will ces and an unsatisfactory capacity utili­ be offered to the shareholders at the end of zation in the commercial vehicle division - 1983 at a price of DM 50 per common share particularly in the area of buses and vans of DM 50 par value will be fully eligible for and at our foreign manufacturing subsid­ dividends covering the year 1983.

14 Status Report

CARS In contrast, European demand for Jap­ anese cars was leveling off, largely due to World Car In 1982, demand for cars worldwide was market conditions. The receptive capacity DemandShrinks recessionary; however, trends differed in of markets in the threshold and develop­ important markets. World output declin­ ing countries decreased. Production declin­ ed in 1982 by 3% to 27.2 million units, ed 1% to 6.9 million units because of the almost exclusively due to a drop in produc­ reduced opportunities for exports. For the tion in the U.S.A. and Japan, and is now time being, the heavy expansion of the 14% off the previous high of 31.7 million past years has thus come to a halt. Never­ units in 1978. theless, Japan remains the largest pro­ In 1982, the American auto industry did ducer of cars - measured in units - ahead not succeed in overcoming its severest of the U.S.A. structural crisis to date. The newly devel­ In Western Europe, car sales rose slight­ oped U.S. compact cars were not as suc­ ly in 1982 to 10.2 million units. The mar­ cessful against the competing import mo­ ket share of Japanese makes, which dels as their makers had hoped. With the increased very quickly at the end of the overall market declining by 6.5% to 8 mil­ seventies, declined for the second year in lion cars, foreign makes boosted their mar­ a row. In all, West European manufactur­ ket share from 27.3% to 27.9%. The domes­ ers produced 10.3 million cars (up 5%). tic manufacturers were unable to react Their share of world output went from sufficiently to the demand for larger cars 35.1% to 37.8%. which rose during the course of the year as fuel prices dropped. With 5.8 million The German car market in 1982 was Federal Republic cars sold, they had to accept a sales decline characterized by the persisting sluggish­ of Germany: of 7.2%. Production was cut 18.9% to ness of the new car business. New car New Car 5.1 million units, the lowest level of the registrations declined 7.5% to 2.16 million Registrations past twenty years. This resulted in mass units. They have fallen each year since Down 7.5% layoffs and plant closings. 1979. Against the background of a poor The Japanese car industry was able to economy and a lack of confidence shown post an increase of 6% to 3 million units in by consumers and investors, market activ­ the domestic market in 1982, but exports ity was influenced by apparent buyer declined 4% to 3.8 million. Deliveries to restraint. Replacement purchases were the U.S. were subject to the self-restraint frequently postponed. This was shown agreement which limits Japanese imports very clearly by the increase in the average to 1.68 million cars annually. duration of car ownership over the pre-

Top engineering has a future. 1982 marked the first year in which over 100,000 S models, including SEC coupes and SL roadsters, were produced.

15 Car Production Status Report

Traditionally, the most beautiful example of Mercedes-Benz engineering: the 380 SEC and 500 SEC coupes.

vious year. In addition, many customers ating during the two oil crises in the seven­ delayed their purchase decisions towards ties. Moreover, the workmanship of the end of the year in anticipation of fur­ German cars is highly reputed. A restrain­ ther interest rate reductions and the intro­ ed price policy and the undervaluation of duction of new models. the D-Mark, in terms of purchasing power, By contrast, demand was brisk in the were other factors favoring exports. Ger­ used car market. The number of title trans­ man car output went up 5.1% to 3.76 mil­ fers increased 5.5% to 5.2 million. The lion units, solely due to stepped-up deliv­ expectation that this trend foreshadowed eries to foreign countries. an imminent pickup for the new car busi­ ness - as it did in earlier years - was not In 1982, 225,217 Mercedes-Benz cars Daimler-Benz: confirmed in 1982. were newly registered in Germany. The Market Position Foreign car makes were more severely drop in registrations of 5.7% was less than Strengthened affected by the decline of the domestic the industry figure so that our market share at Home and market. Their share of new registrations climbed to 10.7% (last year 10.5%). The Abroad dropped to 24.1% (last year 25.3%). Japa­ growth in sales of our hi-line models, the nese cars accounted for 9.8% (last year SEC coupes and SL roadsters, was espe­ 10.0%) of domestic sales. cially gratifying. The slowdown of domestic demand was More Exports German car exports increased 12.6% to more pronounced for diesel cars than for Made Production a record annual volume of 2.19 million gasoline models. The diesel market reacts Increases units. Following an excellent first half (plus more sensitively and with considerable Possible 25.5%), growth rates slowed noticeably as fluctuation to the frequently changing price the year progressed. The increase was only differential between gasoline and diesel 9.4% in the third quarter and exports then fuel; the price advantage of diesel fuel fell 6.1% in the fourth quarter. The overall versus regular gasoline, as intended by offi­ improved competitive position of the Ger­ cial policy, was even cancelled out for part man manufacturers, especially in the major of 1982. West European markets, was based on Our car exports increased strongly to attractive model offerings thanks to a pro­ 225,977 units (up 13%). Our intermediate duct policy geared to requirements origin­ class in particular, for which the Turbo-

17 Status Report

The Mercedes-Benz T-Series consists of six models. They offer a variety of seating arrange­ ments for seven passengers, or a 700 kilogram payload.

diesel became available, contributed to foreign business, the export share of pro­ this rise. The S-Class models, 280S and duction increased to 49.3% (last year up, and the hi-line models (SEC and SL) 45.4%), but is still well below the industry continued to be in strong demand abroad. average of 58.3% (last year 54.5%). We succeeded in consolidating and exten­ ding our position in important West Euro­ The outstanding event was the intro­ New Car Series pean markets and enjoyed high growth duction of the new Mercedes-Benz com­ 190/190E rates in the larger markets. In Great Bri­ pact class models 190 and 190E. This adds tain we sold 11,800 cars (up 11%), and in a third car series of all new design to our France 17,800 cars (up 10%). In Italy, how­ traditional car line, the intermediate class ever, sales fell 16% to 12,400 units. In the (200D to 280TE) and the S-Class (280S U.S., despite the severe recession we were and up). Production start-up was right on able to boost sales 5% to 66,000 cars and schedule. As a result of our long years of the share of our large coupes and SL intense research and development, we suc­ sportscars is particularly high in the U.S. ceeded in setting new standards with top The increase of exports made it possi­ engineering and unmistakable styling of ble to raise car production by 17,500 units the 190/190E. Radical weight reduction (up 4.0%) to 458,345. Available produc­ through sturdy lightweight development - tion capacities were fully utilized through­ without sacrificing high standards of safe­ out the year. For the first time we were ty - and aerodynamic design - without able to exceed the 100,000 mark in the discarding important criteria such as visi­ S-Class. Including SEC and SL models, bility and comfort - distinguish the body­ we produced 105,093 units (last year work of this model. Soon after introduc­ 95,804). The Mercedes-Benz intermedi­ tion in December of 1982, a large part of ate class (200D to 280TE), with 348,600 the output planned for the German mar­ units, continued to be the mainstay of our ket in 1983 had already been covered by program. Particularly successful was our orders. The positive response by the mar­ T-series, of which 29,620 (last year 26,251) ket makes us confident of the lasting suc­ units were built. In line with the growth of cess of our broadened model offering.

18 Status Report

COMMERCIAL VEHICLES In Japan, commercial vehicle production was cut back 9% to 3.9 million units. Small Poor The drop in freight volume commensu­ vans and trucks were equally affected. Commercial rate with the decline of gross national pro­ In Western Europe, 1.4 million com­ Vehicle Business ducts, the unusually high-interest-rate lev­ mercial vehicles were manufactured (down Worldwide els of the first half of the year, and a steadily 2%). The continued, sustained demand downward trend in the capital goods indus­ from OPEC countries prevented a further try, impaired the commercial vehicle busi­ drop in production and employment. ness worldwide in 1982. In almost all indus­ trial countries, but also in the debt-ridden The German commercial vehicle mar­ Federal Republic threshold and developing countries, ket in 1982 was worse than the year before. of Germany: demand continued to recede, though with New truck registrations plummeted 16.8% Further considerable variations in individual coun­ to 123,549 units. Trucks over 6 tons GVW Worsening of tries and vehicle classes. Poorer capacity were down 18.4%, to 38,900 units. Sales in Commercial utilization and unsatisfactory sales prices, this market segment have thus decreased Vehicle Business due to the drastic stiffening of competi­ by about 40% in the past two years. tion, have impaired the earning power of Foreign manufacturers, while suffering the manufacturers. a decline in sales, were able to slightly World commercial vehicle output improve their market share in the Federal declined 3.3% to 9.17 million units in 1982. Republic of Germany to 19.6% (last year In the truck category over 6 tons GVW, 19.4%). In the class up to 6 tons GVW, the production losses were appreciably heav­ Japanese have strongly expanded their ier (down 16%). The fact that the Ameri­ position over the past years. In 1982, their can manufacturers were able to increase share of registrations stayed at 6.4%. output to 1.9 million units (up 13%) was Through their aggressive marketing strat­ solely due to the above-average produc­ egy, which is supported by a sizable cost tion growth of pick-up trucks which are advantage, they have noticeably intensi­ derived from the large-scale car produc­ fied competition with respect to payment tion. The output of trucks over 6 tons terms. GVW also went down in the U.S., by West German exports of 203,692 com­ 69,000 units - about one third! - to 158,000. mercial vehicles were on the scale of last

Mercedes-Benz Truck/Tractors for container-transport belong to the most cost-efficient and most economical transport systems.

19 Commercial Vehicle Production Status Report

From vans to long-haul trucks, Mercedes-Benz has a complete range of 212 basic models with 2,798 variations.

year. Whereas deliveries to foreign coun­ could only partially compensate for this tries grew at a considerable rate in the first through higher exports of about 4,000 units half of the year, they dropped off sharply to 125,583 commercial vehicles (up 3.4%). from the middle of the year on, particular­ Our export business was substantially ly deliveries of heavy-duty trucks to the influenced by the very high demand in the countries of the Middle East. first half of the year from the countries of The large export volume of the German the Middle East, particularly for heavy- producers had a favorable impact on ca­ duty trucks. Although sales to these coun­ pacity utilization in 1982. However, the tries declined in the latter half of the year, dependence on a few key markets also they still continued at a respectable level. entails a greater business risk. When In our traditional West European export exports slowed in the second half of 1982, markets, we managed to boost sales by 6% several manufacturers were forced to to 55,000 commercial vehicles, and thus adjust employment levels to the new di­ managed to further strengthen our market minished sales opportunities abroad and in position. As the largest manufacturer in many cases to institute short-time work Western Europe, we captured about a 25% or, in some instances, even to lay off share of the market for trucks over 6 tons employees. Total German commercial GVW. vehicle output declined another 5.6% to Once again, owing to the expansion of 301,229 units (last year 319,200). exports, we maintained production in our domestic commercial vehicle plants at the Daimler-Benz: Despite of its highly competitive vehi­ relatively high level of 187,044 units (last Market Position cle program and its efficient customer ser­ year 196,076). At the same time we even Consolidated at vice system, Daimler-Benz could not en­ managed, once more, to raise output of Home and Abroad tirely escape the impact of the poor condi­ heavy-duty Woerth trucks (16 tons GVW tion of the commercial vehicle markets in and up) to 63,513 units (up 2.5%). On the Germany and abroad. In the home mar­ other hand, output of vans at the Duessel- ket, we had registrations of 57,740 vans, dorf plant, of medium-duty Woerth trucks, trucks, buses and Unimog/MB-trac, which and of Mannheim buses declined. Thanks was 15.8% less than the year before. We to the better utilization of capacities at

21 Status Report

other commercial vehicle plants and at in the production flow, the relation of pro­ the car plants, we were able to shift and duction costs to prices obtainable in the maintain employment. marketplace was even more unsatisfac­ tory in 1982 than in the years before. Buses The bus business in 1982 suffered under Since we had to cut back production in the continued poor state of the domestic Brazil and Argentina due to the general economy. Private bus operators ordered market trend, worldwide output of cautiously. The expiration of the period Mercedes-Benz buses declined to 23,679 for orders entitled to investment credits units (last year 29,716). increased the number of incoming orders at the end of the year. Under pressure The Unimog and MB-trac business in Unimog from tighter budgets, municipal transpor­ 1982 was gratifying. Domestic sales increas­ and MB-trac tation companies once more slashed orders ed 8.1% to 5,272 units. Major orders enabl­ for city and suburban buses. Moreover, ed us to boost exports 42% to 7,555 units. overcapacities accelerated price deteriora­ Production could thus be increased 32.9% tion. Daimler-Benz was also affected by this to 13,200 Unimog and MB-trac. trend. Our domestic registrations declin­ ed 14.3% to 2,320 buses. On the other The demand for cross-country vehicles Mercedes-Benz hand, we were able to maintain exports at at home and abroad was impaired by the Cross-Country last year's level. In 1982, production at the unfavorable economic trend, but we were Vehicles Mannheim, Duesseldorf and Woerth still able to raise sales in the Federal Repub­ plants had to be cut back to 7,925 buses lic of Germany 7.5% to 2,308 units. A total and bus chassis (last year 9,647). of 6,566 (last year 6,455) Mercedes-Benz Despite continued efforts to further cut cross-country vehicles were assembled on costs in the labor-intensive bus produc­ a job order basis at Steyr-Daimler-Puch tion, and despite substantial improvement AG in Graz, Austria.

Bus tours are becoming ever more popular. Mercedes-Benz buses participate in this trend. Here the 0 303 with its new "face" and many improvements.

22 Status Report

Industrial The business in industrial engines and Engines and vehicle components was satisfactory. Even Vehicle though weak demand continued in the Components domestic construction and farm machine­ ry industries and for fork lifts, we were still able to offset the resultant sales drop with engine sales - for generators and pump sets - to domestic original equip­ ment manufacturers for their exports. Within our line of industrial diesel engines, which spans an output range from 17 to 452 kW (23 to 615 hp), sales of engines of more than 200 kW output rose much fas­ ter than other sales. Sales in this product line rose 12% to DM 312 million.

Foreign Sub­ Adverse general economic conditions, sidiaries With with unfavorable effects particularly in Own Commer­ commercial vehicle markets, led once cial Vehicle more to sales decreases in all countries in Production which we hold majority interests in com­ panies which manufacture commercial pany will build special-purpose vehicles Emergency gener­ vehicles. Nonetheless, in all these coun­ for the Swiss market based on our heavy- ator installed in a container. Noise- tries we succeeded by and large, in main­ duty truck program, and in Wetzikon, bus dampened unit: taining, and sometimes improving, our chassis using Daimler-Benz components. with an OM 402-V8 market position. Distribution and service for Switzerland engine, and electrical output of In Brazil, Argentina, the U.S.A. and are the responsibility of our Mercedes- 150 kVA. Spain we manufactured 56,469 commer­ Benz distribution company. From this cial vehicles in 1982 (last year 72,849). Our cooperation we hope for a further largest commercial vehicle subsidiary, strengthening of our position in this im­ Mercedes-Benz do Brasil, produced 32,669 portant neighboring market. units (last year 48,899). Following a new setback in Brazil - as a consequence of After long years of negotiations, we Project in Brazil's international debt burden - we were able to attain the preconditions for Turkey once again had to cut back production enlarging the product range of our affiliate schedules at the beginning of 1983. In OTOMARSAN of Istanbul. Since Janu­ Argentina, the U.S. and Spain, too, we ary of 1983, the company, of which we had to cut back output as compared to own 36%, has unrestricted permission from 1981. the Turkish government to manufacture Due to the aggravated situation world­ the complete program of commercial ve­ wide, Group commercial vehicle output hicles from Mercedes-Benz. We intend to fell to 250,079 units (last year 275,380). expand bus production there in the com­ ing years and, in addition, to set up produc­ Reorganization Our negotiations with AG Adolph tion facilities for medium and heavy-duty of Commercial Saurer and Oerlikon-Buehrle Holding AG, Mercedes-Benz trucks and commercial Vehicle concerning the integration of the commer­ vehicle engines. In the initial stage, an Activities in cial vehicle activities in Switzerland, led at annual capacity of 6,000 trucks and Uni- Switzerland the end of 1982 to the founding of NAW mogs, and 9,000 commercial vehicle en­ Nutzfahrzeuggesellschaft Arbon & Wet- gines is planned. zikon AG, Arbon, in which Daimler-Benz holds a 40% interest. In Arbon, the com­

23 Automobile Production Trends 1973-1982

24 Outlook

Recession Not The most stubborn recession of the post­ On the one hand, the oil price reduc­ German Yet Overcome war period had not yet been overcome in tions provide advantages to the German Economy: Despite Positive the first months of 1983. Although unem­ economy with its heavy dependence on Prospects for Signs ployment dropped in March of 1983 for oil imports; on the other hand, the penalty Recovery the first time in a long while, it still remains they place on the export of industrial goods high. All the same, the preconditions for to the oil-producing countries cannot be the targeted upturn have improved in overlooked. Additional export opportuni­ important industrial countries, with lower ties for the Federal Republic of Germany inflation rates and noticeably reduced result from the fact that the reduction of interest rates. Real upward tendencies are the oil-import burden for industrial coun­ clearly noticeable in several sections of tries improves the prospects of an expan­ the economy in the Federal Republic of sion of the exchange of goods between Germany and the United States. these countries. However, we note that such an important customer as Great Bri­ Effects of Oil Positive impulses are expected from the tain is adversely affected by the drop in oil Price Reduction reduction of crude oil prices; the succes­ prices, and that the economy of our lar­ sive jumps of crude prices have heavily gest customer, France, has to struggle to handicapped the world economy for stabilize its international competitiveness many years. Lower oil prices contribute and thus its buying power for imports. appreciably to improving the trade The most recent realignment of ex­ balances and the balance of payment change rates in the European Monetary accounts of the oil-importing countries, System in March of 1983 disadvantaged i. e. of practically all Western industrial no economy as much as the German econ­ nations. Purchasing power, previously omy. Yet we must concede that the trend immobilized by the high oil prices, is for our industry is still relatively favorable, freed. The deflationary effect of lower inasmuch as the revaluation of our own oil prices also assists the efforts of the currency and the devaluation of others oil-consuming countries to dampen infla­ simply evens out an existing inflation dif­ tion. Finally, economic conditions are ferential. eased for the oil importing developing For German export opportunities and and threshold countries. risks, it will remain important to improve But the adverse consequences of oil the competitiveness in terms of costs and price reductions should not be over­ prices, particularly against the worldwide looked. For the short term, the oil- Japanese competition. We have emphasiz­ exporting countries will have to restrain ed repeatedly that labor costs and efficient their demand for industrial goods due to utilization of production facilities play an sinking revenues. important role here. Particularly in the consumer countries, The growth of the economy in the Fed­ research and development and investment eral Republic of Germany requires, apart in the exploration and exploitation of new from rising exports, a strengthening of the oil supplies and other sources of primary ability and willingness of enterprises for energy have been postponed in a number capital investments. One of these require­ of cases or even abandoned, since they are ments is that enterpreneurial initiative no longer economical in view of the anti­ again be given more freedom, which has cipated short and medium-term trend of been restricted by taxes and levies unrelat­ oil prices. Thus, the danger grows that the ed to earnings, by excessive requirements, world economy will find itself with anoth­ and by a flood of laws and regulations. er shortage of oil supplies in a few years, A condition for lasting recovery in the with corresponding price jumps. Federal Republic of Germany is, further­ more, an undeviating stability-oriented economic and social policy. This is indis-

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pensable in promoting consumer and prescribe minimum local content require­ investor confidence and thereby streng­ ments for foreign manufacturers who sell thening the basis for future-oriented more than 100,000 units per year in the economic decisions. Since the latitude U.S. market. The objective is to diminish of economic policy is greatly limited and the cost advantages which the Japanese only a gradual recovery appears likely, manufacturers are believed to enjoy and it is all the more important that economic also to transfer employment to the U.S.A. and social policy demonstrate a clear- Such measures would hinder rather than cut course and confidence-building pat­ help solve the structural problems of the tern. American car industry. Consumers would feel the negative effects in the form of Good Prospects Despite the tight situation around the higher prices. for the Auto­ world in the past years, the car industry On the other hand, the Japanese auto­ mobile assumes that the long-range prospects for mobile industry increasingly endeavors to further growth of personal transportation set up assembly and production plants in are favorable and that car sales will rise the U.S. and Western Europe, or to coop­ again when overall economic growth resur- erate with local manufacturers in each mar­ ges. ket. In the developed countries and in many threshold countries, the car will retain its The German car industry is more German Car prominent role as a means of transporta­ dependent on exports and thus on unre­ Industry in 1983 tion for lack of realistic, and above all stricted access to the world market than economically justifiable alternatives. Al­ almost any other industry. Its growth in though motorization has already reached recent years proves that technical progress high levels in the industrialized countries, is most effectively achieved when compa­ no market saturation can be detected. In nies must face the demands of the market view of the production capacities ready to in free competition. Through the improve­ be put to work in Europe, the U.S.A. and ment in its products in the last few years, Japan, competition will remain stiff, the German automobile industry is in an nonetheless. even better position compared to earlier years. Protectionism In this situation we must reckon with The car features that directly influence No Solution to the growing danger that individual coun­ the customer's decision to buy, such as Structural tries will try to remove their own indus­ fuel economy, active and passive safety, Problems tries from the pressure of competition by comfort, workmanship and long life, are sealing off their markets. Protectionist increasingly augmented by demands that measures occur in many different forms: take even greater account of environmen­ bilateral self-restraint agreements, tariff- tal protection. based or administrative obstacles to trade Already at an early stage, German manu­ of different and imaginative kinds, local facturers began to gradually reduce pol­ content requirements. However, it cannot lutant emissions. Within the last ten years, be emphasized enough that countries in new cars, carbon monoxide emissions which resort to protectionism must real­ have been reduced by two thirds and hy­ ize that they are hurting their own inter­ drocarbons by one half. Since 1977, nitrous ests, for they, too, derive great benefit from oxides have also been contained and A broad range of models of high the international division of labor. appreciably reduced. The German manu­ quality, technically To improve employment in the Ameri­ facturers endeavor voluntarily to achieve - reliable and user- can car industry, the self-restraint agree­ ahead of schedule - further reductions in oriented vehicles for all needs of a ment negotiated with Japan was extend­ pollutant emissions, such as recommen­ demanding business ed. In addition, most recently the pressure ded by the U.N. Economic Commission community. on the U.S. Congress has been growing to for Europe (ECE emissions standard

27 Outlook

vehicles to an untenably high degree for often small markets, and furthermore, appreciably limit the mobility of drivers in international travel. The sharply higher development expen­ ses and investments in the past few years have changed the expense structure of companies. An even larger percentage of expenses has become independent of employment; that is, it can no longer be adjusted to a lower capacity utilization rate. This calls for stricter criteria applicable to production costs so that technical progress is not made unreasonably expensive for customers. Only then shall we be able to maintain our international competitive­ ness in the long run, achieve quantitative growth, and secure employment. For 1983, sales in the German car mar­ ket, which have fallen since 1979, can be expected to pick up thanks to numerous new models, lower fuel prices and pent-up demand. In exports, order inflow has stead­ Progress for the 15/04). Any reduction of pollution beyond ied in the last few months, but it will still building trade. New this, based on what we know today, is only require enormous efforts to approximate generation heavy- duty Mercedes-Benz possible if use is made of the environmen­ last year's large volume again this year. construction vehicles. tally more compatible diesel engine to a The capacity of important export markets greater extent than before and if - for is strained by slow economic activity and spark-ignition engines -leadfree fuel is disequilibrium in the balance of payment available for the then indispensable cata­ accounts. lyst technology. Car engineering can offer adequate In our car division, the favorable order Daimler-Benz solutions for emissions control. However, situation continues to ensure the full Car Division because it contradicts other goals, for employment of capacities. We plan to raise example fuel economy and low-cost manu­ sales and output once again in 1983. Our facture, development priorities would cars will also in the future meet the high­ have to be reshuffled, which would auto­ est standards for economy, environmen­ matically result in higher prices for cars. tal safety, utility value and long-term value To avoid competitive distortions and to retention. The persisting trend of demand achieve desirable development goals at towards cars with superior engineering and reasonable cost, it is necessary for the quality is to our advantage. policy-forming authorities to provide a With the addition of the 190/190E mod­ carefully balanced, reliable frame of els to our car line, we have increased our reference. For the benefit of customers, market potential. Today we can offer an aspects such as cost and price, but also attractive Mercedes-Benz car to an even a broad range of products that promote wider range of customers. In the course of competition, must not be neglected. this year, the new series will be successive­ Moreover, the standards for the cars ly introduced to the export markets. We should be agreed upon internationally; will also offer a diesel version. To meet individual national activities, particularly special requests, we will supplement our environmental protection laws, burden compact class with sportier variants. With

28 Outlook

the compact model series, we have enhanc­ want to win over - with a stable long-range ed the prerequisites for future growth. model policy. Additional production capacities will become available in 1984 with the produc­ In the international commercial vehicle Stiffer Compe­ tion start-up of the new model in the Bre­ markets, which are suffering far more tition in Com­ men plant. severly than car markets, the struggle for mercial Vehicle In our Research and Development work market shares and employment will gain Markets we continue to devote ourselves to improv­ further in intensity. The strong expansion ing the economy of our cars. The current of production capacities around the world moderating trends of crude oil markets in the past years contrasts now also on the and fuel prices will not affect this goal, for demand side with a more limited capacity taking a longer view, oil price trends will for absorption in oil-exporting countries. remain uncertain. Considerable fluctua­ Demand will nevertheless pick up again tion cannot be ruled out over the short or for the commercial vehicle industry with long run. On top of that, fuel efficiency the revival of economic growth and the already plays a permanent part in a cus­ accompanying rise of transport needs. tomer's purchasing decision. In our We expect a certain stimulation of the endeavor for even greater economy we commercial vehicle business from a slight Highly efficient will not neglect the classic characteristics increase of domestic economic activity in vehicles from of our cars. In our product policy we will Mercedes-Benz 1983. This is especially true for the already for fire fighting, abide by the principle of only introducing visible upswing in the construction indus­ emergency and new models when genuine technological try, which has put off replacement pur­ rescue use. progress can be achieved with them. In The result of a suc­ chases in the last few years because of cessful cooperation doing so we want to secure the confidence poor business conditions. In several West with experienced of our customers - also of those who we European countries and in the U.S.A. we bodybuilders.

29 Outlook

also reckon with slightly brisker demand output to match 1982, along with a sub­ due to cyclical influences. At the same stantial increase in the production of time, the export prospects for the Euro­ Mannheim buses due to an encouraging pean market are impaired by the yet-to-be- increase in orders. harmonized certification rules in the dif­ Our South American subsidiaries will ferent countries as well as by impediments have to accept a further decline of output to international freight traffic. Apprecia­ and employment because of the poor over­ bly fewer orders can be expected from all economic situation; demand, particu­ OPEC countries. The German commer­ larly in Brazil, has taken another sharp cial vehicle makers must thus adapt them­ drop. For the U.S. truck market we expect selves to a further overall decline of sales a pickup, albeit moderate, in the course of and output in 1983. the year, which should favor our sales of Freightliner and Mercedes-Benz trucks. Daimler-Benz With this market trend, short-term Our broad and complete, and highly Commercial sales opportunities for Mercedes-Benz competitive, commercial vehicle range Vehicle Divisioncommercia l vehicles have become less. offers an optimum solution to every trans­ We are trying as much as possible to cush­ portation task. On this basis, we will sys­ ion the impact of a drop in overseas exports tematically develop our products further. - particularly of the Woerth heavy-duty The primary goal is to enhance the trans­ truck range - by increasing activities in the port performance of our vehicles, com­ domestic and European markets, but we bined with high economy, and a further will not be able to compensate completely reduction in noise and pollutant emissions. for the shortfall in overseas exports. There­ Although we may not expect an overall fore, we have had to cut back our produc­ favorable course of business in the com­ tion schedules once more. Affected are mercial vehicle market in the short run, mainly medium and heavy-duty trucks, we do see a return of better prospects for medium-duty vans and Unimogs. On the our commercial vehicle business medium- other hand, we expect the light-duty van term.

To each his own. The Mercedes-Benz delivery vehicle program is especially geared to individual business applications.

30 Outlook

Investment Continuing our planned medium-term Planning capital investment program, we will invest about DM 3 billion in Germany in each of 1983 and 1984. Spending continues to focus on the car division. Here, as well as in the commercial vehicle division, the bulk of investments will go to improve current models, prepare for production of new models, and continue to improve effi­ ciency in production.

Continuous In its business policies, Daimler-Benz and Stable has gone its independent way oriented to Development long-term goals and, different from other motor vehicle makers, has been very care­ ful about participating in cooperative schemes. We will continue to pursue this policy. It remains our endeavor, on the basis of our comprehensive research and development work, to incorporate techni­ cal progress in our products in a sensible way and steadily improve our vehicles, particularly in regard to their practical util­ ity and thus their service to the customer. Both in cars and commercial vehicles, we attach unchanging importance to harmo­ nious overall design, balanced, mature engineering, and workmanship which satis­ fy the highest standards. We will thereby preserve the qualities of our vehicles, sales for the same period last year. Taken The new MB-trac 1000 allows multiple on which our customers depend while alone, the sales of Daimler-Benz AG rose and, therefore, most scaling new technological heights. 4% to DM 7.9 billion. economical applica­ We will spend considerable sums to cul­ tion: MB-trac and Unimog are tivate and extend already developed mar­ offered with en­ kets and obtain new markets, in order to The following section of this report cov­ gines of numerous ensure our worldwide position and our ers details of the various company divi­ HP ratings. growth for the long term and, simultan­ sions and activities: eously, to spread risks even more. We trust in the proficiency and commitment of our employees, in our experience and our know-how in all fields in which we are active, and in our sound financial founda­ tion.

Daimler-Benz: In the first three months of 1983, First Quarter Daimler-Benz manufactured 120,400 cars Trend 1983 and 46,100 commercial vehicles in Ger­ many. In addition, our foreign subsidiar­ ies built 10,300 commercial vehicles. Group sales in the first quarter of 1983 totalled DM 9.3 billion, about equal to

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The altered pattern of demand in the motor vehicle markets, with increasing requirements on vehicles, placed great demands on our Research and Develop­ ment division in the past years. Since the competitiveness of our Company depends to an increasing extent on our fulfilling these requirements - often at short notice - we will continue for the uninterrupted improvement in the high technical stan­ dards of Mercedes-Benz vehicles. Apart from reducing fuel consumption, we focus our attention particularly on environmen­ tal protection; but we do not intend to neglect the "classic Mercedes-Benz char­ acteristics" such as safety, quality, long life and comfort, because it is to them that our nameplate owes its reputation.

More Than In 1982, we raised expenditures for ing costs involved to comply with these Noise analysis of DM 1.4 Billion Research and Development to more than regulations are only justified for those a heavy-duty truck is performed on a for Research and DM 1.4 billion. Some 10,000 employees models that can be sold in Switzerland in dynamometer Development are engaged in constantly improving and larger numbers. test-stand enlarging our product range. We invested The Swiss exhaust and noise standards (left and above). DM 163 million in the extension of our will again be tightened in 1986. However, testing facilities and on buildings. These there is no technology available today to measures provide the foundation for our meet a large part of these requirements. wide-ranging Research and Development program, and are thus indispensable in With our wide range of diesel cars, we Constructive ensuring the future of our Company. offer vehicles which are particularly com­ Environmental patible with the environment. Further pro­ Protection Lack of Development work is rendered difficult gress in emission control in spark-ignition Harmonization by differing nation motor vehicle regula­ engines was achieved simultaneously with of National tions. Instead of contributing to the urgent­ a reduction in fuel consumption. Our new Design ly needed international harmonization of car series 190/190E, like our whole range and Certification the design and certification regulations, of diesel-powered cars already meets the Requirements Switzerland, for example, issued exhaust new emission standard R 15/04 of the U.N. and noise emission rules, effective Octo­ Economic Commission for Europe, al­ ber 1982, which deviate considerably from though this standard has yet to be imple­ those of other European countries. This mented by the ECE member States. In compells manufacturers, therefore, to this case, Daimler-Benz is complying with develop, certify and produce special vehi­ a request of the German Government to cle variants for a very limited market. Such meet stricter emission standards in new individual measures are extremely costly models, ahead of schedule if possible. A and, furthermore, tie up capacities that are very high standard has thus been accom­ otherwise urgently needed. plished, which at the same time represents Not only the vehicle manufacturers, but the maximum that can be achieved in to a far greater extent Swiss customers, are spark-ignition engines without going to affected by such isolated national action: additional expense and without changing cars are thus made more expensive and the composition of the fuel. In the event variety is reduced, because the engineer­ that more stringent standards are imple-

33 Research and Development

merited, they could only be met if the cata­ encouraged us to make this safety package lyst technology, as used in the U.S.A., is available also to our American customers. also applied in Europe. This in turn would In the course of the 1984 model year we require the availability of high-octane will offer airbag and belt tensioner as unleaded gasoline. With leaded gasoline, options in the U.S. versions of our S-Class the pollutant-reducing effect of the cata­ and our new 190 series. lyst would very quickly deteriorate due to the action of the lead. In any case, the To continue our extensive Research Boxberg introduction of high-octane unleaded gas­ and Development program, but also to Test Track oline will result in additional costs and demonstrate compliance with the numer­ higher energy consumption both for the ous regulatory requirements, we urgently oil industry and the automobile industry. need a new test track. Today, many tests As long as no unleaded gasoline is avail­ must be conducted on our, at times, over­ able, tougher regulations - i. e. those ex­ loaded track in Untertuerkheim and on ceeding the requirements of ECE stand­ public roads. The strictly laid-down test ards R 15/04, as for example in Switzer­ procedures demand maneuvers which can land and Sweden - result in markedly hardly be carried out in public traffic. higher fuel consumption. Unleaded gaso­ Reproducible test results, i. e. results not line is currently available only in the U.S.A. influenced by unpredictable traffic-caused and Japan. obstacles, are necessary in order to cope Back in November of 1981, as part of a with the growing multitude of tasks joint research project with the German brought about particularly by uncoordi­ Office for Environmental Protection, we nated international test specifications. If introduced several commercial vehicles we do not accomplish these tasks, we run which demonstrated the technical feasibil­ the risk of losing important export mar­ ity of additional noise-reducing measures. kets and thus jobs in our domestic plants. In continuing this project we have now Although we have already acquired developed a diesel-powered taxi with enough land in the economically underde­ improved noise control. It was introduced veloped Boxberg region of Main/Tauber to the public in March of 1983. Vehicles of county, we have not yet been able to begin this type are to be used mainly in areas construction of the test track due to the which are otherwise closed to traffic. obstructive activities of a small group. In Our objective is to ascertain public ac­ the meantime, in June of 1982, the higher ceptance of such vehicles in practical administrative court of Baden-Wuerttem- operation through selected customers. berg dismissed the voidance petition With these vehicles, the noise level in against the construction plans. Now that drive-by tests at accelerating speeds has the objections against the building per­ been reduced considerably, namely by mits, already issued in 1981, have been 6 dB(A), as compared to the standard vehi­ withdrawn in August, 1982, the permits cle. This necessitated extensive measures for the test track are valid under law. The which substantially affect both operation project opponents are now concentrating as well as weight and cost of the vehicles. their opposition on the land clearance pro­ cedure that is still necessary. As soon as Car Safety As a leader in the safety field, Daimler- the manifold legal requirements are met, Benz has been the first car maker in the we will immediately begin with the con­ world to offer since 1981 an airbag and struction of the facility. seatbelt tensioner in all models. Thus far, more than 12,000 cars from all production models have been equipped with these safety devices. The great interest demon­ strated by our European customers has

34 Research and Development

EDP use in engi­ neering. A CRT (computer terminal) workstation - the modern tool of the engineer - allows future-oriented problem solving. Here: the new 190/190E Multi- Link-Rear-Axle (below). CRT (left): wheel center point spring travel.

Cars: Aside from the continuous improve­ New Mercedes- ment of all our models, the outstanding Benz 190/190E achievement of our development work in the car sector in 1982 was the introduction of our new compact class, initially with the models 190/190E. These cars incorporate, without exception, all the traditional qual­ ities of our cars, in a compact shape. They are distinguished by exemplary aerody­ namic design, low weight, great ride com­ fort and excellent fuel economy. Drag coefficient, weight, and the factors of

35 Research and Development

safety and comfort have all been carefully acteristics for minimum fuel consumption considered. and excellent performance in this car class. The reserve power available contributes Standard- With the development of a new shock to active safety without even taxing the Setting Rear absorber-strut front suspension and a margin of safety inherent in the suspen­ Axle Design multi-link independent rear suspension of sion. One special feature is the mechani­ totally new design, we have succeeded in cally/electronically-controlled injection incorporating the proven ride and hand­ system of the 190E, which not only has a ling characteristics of the larger Mercedes- fuel cutoff when driving with the foot off Benz sedans also into the compact class. the accelerator but, because of its basic In compact, lightweight cars with high- mechanical operation, also permits emer­ payload capacity it is particularly difficult gency operation in the event that the elec­ to combine a high standard of comfort tronic system fails. with good handling and ride characteris­ New diesel and additional gasoline tics under all load conditions. However, engine versions will successively supple­ the newly developed rear axle made this ment the new series. possible without ifs and buts. Based on the requirements of the We introduced numerous innovations Commercial 190/190E series, we have developed a new to our extensive line of commercial vehic­ Vehicles automatic transmission that uses the tech­ les at the 1982 Hanover Fair. nology already incorporated in the auto­ matic transmissions of the S-Class. We offer the construction industry fur­ More Powerful The 4-cylinder engines used, with cross- ther opportunities for cutting costs with and Efficient flow cylinder heads, feature high torque at our new heavy-duty dump trucks. These Construction low engine speeds which are the best char- vehicles have large-displacement naturally- Trucks

Tougher than normal use: Axle- torsion tests prove reliability of design under tough conditions.

36 Research and Development

Modern methods for fuel efficiency and engine emis­ sion testing. With a Rubin-Puls-Laser as light source, com­ bustion processes are photographically and interfero-metri- cally tested.

aspirated engines with six, eight or ten many variants, to the standard commuter cylinders whose power characteristics - buses O 305/O 307, and the versatile peak torque is already available at 1200 rpm O 309 small bus program, all with compre­ - permit fuel savings while simultaneous­ hensive equipment options, has been fur­ ly improving hauling performance. Our ther improved in 1982. For example, the all-wheel-drive dump trucks were fitted long-distance touring coach O 303 was with newly developed auxiliary transmis­ restyled and provided a new front section; sions that combine particularly high trac­ the interior appointments were further tive power with great climbing ability. upgraded. Particular attention was paid to In the "New Generation" cabs, noise the design of the driver compartment levels were lowered appreciably through which encompasses the design criteria for the use of new insulating material on en­ a modern workplace. gine covers and cab floors. We consider this a significant advance towards creating In the field of suburban public transpor­ Local Public a more pleasant working environment in tation, testing of the "S 80" and "U 80" Transportation the truck cab. prototypes was continued. Together with Systems Development work on the large-dis­ the Association of Public Transportation placement turbocharged diesel engine OM Companies it was possible to establish 424 LA was completed in 1982. This specifications for the successor of today's engine offers versatile application; it is used city bus which incorporate all the experi­ as a power plant in railway cars and also in ences gained during testing. special heavy off-road vehicles. At the "Transport 82" exhibition in Our complete line of buses ranging from Munich, we introduced to the public, buses the series O 303 luxury coaches, with their and components for the "O-Way" transit

37 Research and Development

The Mercedes-Benz O-Way System shows the proven rail-guided buses. Part of the 8-mile long O-Way track in Adelaide, Australia.

system. Already in 1979, we presented this The Mercedes-Benz cross-country vehi­ economical and versatile concept for local cle range was supplemented in 1982 by public transportation at our test facility in the model 230 GE with our powerful and Rastatt, which has been considerably en­ economical 2.3 litre injection engine. We larged in the meantime. The "O-Way" have improved the standard interior transportation system combines the advan­ appointments of all cross-country vehi­ tages of rail transportation, which permits cles. operation of larger units on track-guided routes, with the economy and flexibility of Since the Fall of 1981 we have success­ Anti-Lock the bus. The first track-guided Mercedes- fully been offering the electronically con­ Braking System Benz buses have been operating in Essen trolled anti-lock braking system in heavy for Commercial since 1980. In the meantime, in Adelaide, trucks and buses. Extensive development Vehicles Australia, construction of the longest work is being done to use this brake sys­ "O-Way" track thus far has begun, and tem in the rest of our truck program, the the first section has been completed. The van models, and the cross-country vehi­ reason for the transit authorities' decision cles. In the coming years, we intend to in favor of this system was the 40% smaller equip our whole Mercedes-Benz commer­ investment compared with conventional cial vehicle line with this brake system. rail systems, the fact that a significantly Currently we are also working on studies higher percentage of people could reach whose object is the installation of ALS in their destinations without having to change trucks of our U.S. subsidiary Freightliner. trains, the lower maintenance costs for the busway, the lower noise levels, and In addition to the work we do for our Development finally the safety at high speeds. licensees all over the world, we carry on Workfor The Unimog line currently comprises extensive development activities for our Foreign nine basic models (U 600 to U 1700) with North and South American Subsidiaries, Subsidiaries engine outputs ranging from 38 to 124 kW which are intended to ensure consolida­ (52 to 168 hp). The models of the whole tion and extension of our market position. MB-trac series 700 through 1500, to which For this purpose the complete product the model 1000 was added in 1982, were line of MB do Brasil (vans, trucks and completely redesigned and modernized. buses) needs to be redesigned. Moreover, We continually develop this special- it must be ensured that the vehicles built purpose vehicle range, incorporating the in Brazil for the North American market latest technical advances in the produc­ comply with regulations in the U.S.A. We tion vehicles. intend to augment our commercial vehi­ cle program in the U.S. with modern tech-

38 Research and Development

nology from Europe and so improve our tion battery. We also showed a Mercedes- competitive position. Benz hydrogen car which, apart from the Mercedes-Benz engines from Mann­ partial substitution of gasoline by hydro­ heim are currently being tested for use in gen, permits cleaner emissions and reduc­ the heavy-duty haulers of Euclid. tions in fuel consumption. In the research car "Auto 2000" we have Research Group Our Berlin research group, which has installed a twinshaft gas turbine - using Berlin been in existence since 1977, held a semi­ all-ceramic rotors for the first time - which nar in 1982 on the topic "Outlook for Fu­ is undergoing thorough testing at temper­ ture Transportation". The sophisticated atures of about 1250°C and speeds of up to discussion showed that individual trans­ 60,000 rpm. portation, which accounts for 80% of pas­ Test operation by customers in Berlin senger traffic in the Federal Republic of of the M-15 cars powered by a gasoline- Germany, will continue to play a domi­ methanol mixture has been successfully nant role in future. completed within the scope of the demon­ In our Berlin-Marienfelde plant we have stration and research programm "Alterna­ meanwhile completed the building struc­ tive Energies for Road Traffic", sponsored ture for the driving simulator; it will be by the German Ministry for Research and used for research in the area of "driver - Technology. The tests with pure metha­ vehicle - environment". We expect that it nol are continuing. We are also working on can be put into operation sometime in other trendsetting projects sponsored by 1984. the German Government, which especially include projects in materials research, such AlternativeDrive At the "Innovation Market" of the 1982 as the development of fiber-reinforced Systems Hanover Fair we presented some of the plastics and light alloys. We further inten­ latest results of our research into various sified our cooperation with the responsible kinds of power plants, for example a ministries in all these areas in 1982, contri­ battery-powered car based on the T-series buting to their efforts with our own re­ with a newly developed nickel-iron trac­ search work.

The high-capacity and electrically powered Mercedes-Benz O-Way is fed by overhead cable, at the Rastatt test track.

39 Purchasing

Purchasing The large Daimler-Benz purchase vol­ Volume ume was once again an important stabiliz­ Stabilizes ing factor for employment at our vendors Employment at in 1982, particularly the many small and Suppliers medium-sized firms. The value of our pur­ chases of manufactured parts, raw materi­ als and supplies, as well as capital goods and services, increased worldwide to DM 23 billion (last year DM 22 billion), and at Daimler-Benz AG to DM 18.5 billion (last year DM 17 billion). Our orders secured more than 150,000 jobs at suppliers and service firms and in some instances even created new ones. They also stimulated employment at primary material suppliers. Our increased capital spending volume especially benefitted industries that were particularly hard hit by the recession, as for example the construction and machine tool industries. When placing orders we have, as in previous years and in line with The substantial increase in costs placed Higher Prices our self-imposed economic and social a heavy burden on us and our vendors. for Materials responsibility, given particular considera­ The primary causes for this trend were, tion to regions whose development must apart from higher prices for plastics, partic­ be encouraged, such as Berlin, but also to ularly the successive price increases for medium and small enterprises and social ordinary and high-grade structural steel institutions, for example workshops for in 1981 and in the course of 1982. This the handicapped. substantial cost pressure, which was fur­ ther aggravated by the high level of energy and financing costs, could be offset only to

Contracts are awarded with social aspects in mind - here for example, pre-installation assembly at coopera­ tive workshops in Sindelfingen.

40 Purchasing

Improved material flow and storage comes with the use of on-line-EDP systems.

a limited extent by our vendors through nication time can lead to a reduction of productivity increases. inventories while improving availability. It can be assumed that during 1983 smaller price increases for primary materi­ In spite of schedule changes, which are Flexibility als and energy, lower interest rates and often necessitated at short notice by chang­ Ensures Smooth continued moderate collective bargaining ing market conditions, we were again able Supply of agreements will lead to smaller price rises in 1982 to ensure a smooth supply of mate­ Production for our material purchases. rials to all our production plants. The tra­ ditionally high quality standards were fully Improvement of An average daily receipt of 11,800 tons satisfied. Not least was this due to our Material Flow of materials in our domestic plants - deliv­ vendors. Because of their flexibility, the ered by 2,000 trucks and railroad cars - different production start-ups - especially and an inventory of some 220,000 differ­ that of the 190/190E - went off smoothly. ent parts for regular production, place great We express our thanks in this report to demands on our organization responsible all our business partners - vendors, car­ for the smooth and economical flow of riers and service companies - for this suc­ materials. Therefore, in 1982 we concen­ cess which they made possible through their trated our efforts on further developing commitment and dependability. We are existing systems of inventory control and convinced that, based on our principle of a designing new ones. The use of modern long-term relationship with our suppliers information techniques is indispensable and the mutual trust derived therefrom, for improving the flow of materials and we have contributed to the establishment optimizing inventories, ours and our ven­ of a solid base for the solution of the joint dors' common objective. Shorter commu­ tasks and problems facing us in the future.

41 Hier gab es ein Produkt- oder Stimmungsbild ohne Text oder Zahlen. Es wurde in der PDF-Datei weggelassen, um eine nutzerfreundliche Dateigröße zu erreichen.

Here was a product or mood picture without text or figures. It was omitted in the pdffile to improve the usability of the file size. Production

In 1982, the preparations for the produc­ Example of modern manufacturing tion start-up of our new car series technology in the 190/190E affected a substantial portion of Kassel plant: Case our work in the manufacturing sector. We hardening of ring- gears in continuous continued our efforts to make use of the push-through oven. opportunities derived from production pooling between our plants, and further extend them over the long-range. Despite these tasks, which placed great demands on the commitment of our employees and the flexibility of produc­ Friction welding tion, we have increased our efforts to system for axle enhance the quality of our products and frames. produce them more efficiently. The sys­ tematic exchange of experience between the domestic and foreign plants is an important means of achieving this. Assur­ ing the high quality of our products be­ comes increasingly more important in view of the stiffening competition in the motor vehicle markets. To strengthen our world­ wide position, we have systematically con­ dings, required to take over production tinued our activities abroad in the produc­ of all vans currently made in Bremen, tion and assembly sector; included here is have been completed. The technical the continuing adaption of manufacturing construction of the assembly lines is technologies to local requirements. progressing smoothly. The Rastatt sub- plant for commercial vehicle transmis­ Restructuring In keeping with our planning, and with sions, part of the Gaggenau unit, was and Enlargement the start-up of production of the new car expanded as planned. of Capacity in series, we have increased the production Our Domestic capacity and have changed the manufac­ In planning and designing the new Ensuring Plants turing structure ofour domestic plants. In facilities for the 190/190E series we sys­ Productivity conjunction with the new start-ups, we tematically applied modern production with Flexible have completed the large-scale construc­ technologies. With these facilities, apart Production tion projects in Untertuerkheim and Sin- from improved quality, we are able to Facilities delfingen. The Bremen plant is being achieve, also in the bodyshell production, developed into a second, large car body greater model flexibility and medium-term and assembly plant. With the additions productivity gains. With the same equip­ there - already completed in part - we will ment, we are often able now to manufac­ acquire an appreciably larger assembly cap­ ture different models. We can thus adjust acity. In 1982, a new manufacturing facil­ our car program to short-term demand ity was put into service. During the first changes to a greater extent than before. phase, the plant produced body parts for The robots introduced in component the new 190/190E series built in Sindel- manufacture in the Untertuerkheim plant fingen. Parallel to the conversion of the - for example in seam welding for the new Bremen plant into a car-only plant, we rear axles - substantially contribute along Robot-welding are concentrating our entire van pro­ with other modern production facilities to stations for the duction step by step at the Duesseldorf the uniform high quality and to the neces­ front axle lateral plant. In addition to the traditional Dues­ sary model flexibility. At the same time arm (190/190E) provides relief from seldorf program, we already built 11,105 these robots are used in pilot projects for high-fatigue labor. light vans there during 1982. The buil- the proposed expansion of the facilities.

43 Production

Defect-diagnostic systems are being integrated in the new production lines; they centrally monitor both the condition of the machines and their output. Sources of trouble can thus be quickly remedied. Moreover, these systems extend machine life.

In 1982, we were again successful in our Quality constant endeavors to obtain the highest Safeguards quality. To improve anti-corrosion protec­ Competitiveness tion on axle parts, cathaphoretic-dip paint­ ing was also introduced here with the pro­ duction start-up of the 190/190E. The paint particles in the dip tank are segregated on the treated parts by an electrochemical process and subsequently oven dried. This technique ensures a uniform paint layer thickness and an appreciably greater resis­ tance to corrosion. The positive experiences with the use of computers in quality control cause us to make greater use of them in production. Automatic measuring devices record data that are processed and statistically evalu­ ated by the computer. The distributions of measured values and trend projections pro­ vide a quick and comprehensive survey of the quality level in production.

We continued our efforts to further Work Place improve working conditions. We aim Design above all to reduce the physical strain on our employees. For example, we used more automatic transfer stations for mov­ ing heavy work pieces. Automatic bolting stations have increasingly replaced the manually controlled multiple bolt and nut tighteners. Increasingly, component as­ sembly is being performed with the com­ ponents remaining stationary. This allows greater scope for the individual employee. After completing his task, the employee himself releases the part for transfer to the next station. The work pieces are design­ ed in such a manner that inconvenient and fatiguing body positions are avoided. To the extent that the work flow allows A flexible facility it, we transfer assembly operations from for body manufacuring the production line to pre-assembly sta­ at the Sindelfingen tions which are not pegged to production plant

44 Production

ALS (antiskid) brake-test stand for heavy-duty trucks in the Woerth plant.

line cycles. We actively promote the dis­ we pushed the installation of the heat connection of man and machine by com­ recovery systems in our plants. We fur­ bining the machine units required for ther reduced peak-load electricity require­ assembly. Examples of this are the new ments through increased use of computer- assembly facilities for engines and rear controlled automatic shut-off devices. axles in Untertuerkheim, and for the G 1 Other measures involved the improvement and G 76 transmissions in Gaggenau. of heat insulation in new and old buil­ dings, and the energy-saving hookup of Energy In the period covered by this report we users to large district heating systems. Conservation reduced energy use through a large num­ Especially in Bremen, after hooking up ber of individual measures. In particular, with the district heating network, we suc­ cessfully reduced energy consumption through power and heat coupling. Our environmental protection efforts concentrated on measures in the paint- shop operations. The program for clean­ ing exhaust air and reducing solvent emis­ sions was continued in line with our long-term plans, particularly in the Sindel- fingen and Bremen plants. Recycling of waste water will be made possible with the ultrafiltration facility for treating oil-water emulsions planned in the Untertuerkheim plant. To reduce use of cooling water overall, recooling systems were increasingly planned or installed, respectively.

Body component manufacturing for the 190/190E at the Bremen plant.

45 Sales Organization

In the difficult worldwide economic sit­ as part of the Freightliner purchase, with uation, our sales organization at home and head office in Portland, Oregon, extended abroad found itself up against greater chal­ its financing facilities also to the products lenges in 1982. Starting out from a high of Euclid and the car business of Mercedes- plateau, it had to make even greater use of Benz of North America. To emphasize its its capabilities as an entrepreneurial instru­ increased function, the financing company ment. We continued to intensify our sales was renamed Mercedes-Benz Credit Cor­ efforts and methodically increase their poration. effectiveness. Through our subsidiary Merfina S.p.A., Rome, we now also handle the financing Service - Comprehensive customer service takes of car sales in Italy. Mercedes-Benz France an Increasingly on increasing significance as a selling tool. S.A. established a joint sales finance com­ Important We undertook a multitude of promotional pany with a large French bank to have an Selling Tool activities, and made large investments at additional sales-promoting instrument in home and abroad, to improve our service this major neighboring market. In addi­ in all areas. The criterion was and is the tion, we made arrangments with financial intention to improve the high technical, institutions inside and outside of Germany professional and organizational standards in order to assist sales with attractive fi­ attained so far, and thus meet our custom­ nancing facilities even in markets where ers and potential buyers on a firmly we don't have our own finance companies. founded, trust-building basis of exemplary quality. In the home market we currently have Service more than 40 factory-owned retail bran­ in Germany Further In the past two decades, in successive ches with 59 subbranches, 1,100 service Development steps, we have built up our own distribu­ points of our independent dealers and of the Sales tion companies in important foreign mar­ 600 Unimog/MB-trac sales and service Organization kets (see also chapter "Subsidiaries and points. A total of more than 16,600 me­ in Foreign Affiliates" on page 59ff.). However, we chanics work at 22,800 work places to serve Countries have only assumed the wholesale func­ our customers. A total of 2,100 youngsters tion when such direct control of the busi­ at our factory-owned retail branches and ness promised a better, and from a long- 9,500 at our distribution partners were term viewpoint, more reliable utilization trained in the skills required for our of market opportunities, or when general Mercedes-Benz service work. Our entire distributors did not appear to ensure a domestic sales and service sector employed sound future basis for Mercedes-Benz almost 55,000 people. marketing. As we enlarge our service organization, we endeavor to establish efficient-size ser­ Extension To strengthen our international posi­ vice centers in the interest of continuous­ of Marketing tion, we intensified our marketing activi­ ly improving performance. At the same Functions ties in 1982 through use of further improv­ time, we pay even greater attention to the ed, systematic planning efforts including a interior and exterior design of our shops. still more thorough sales training program. With standard furnishing and equipment Particularly with the introduction of the programs we wish to present as uniform new 190/190E, our sales efforts were di­ as possible an appearance to the public. rected even more at new customers and In the vehicle reception areas, new con­ new target groups. trol systems, emphasizing personal respon­ sibility, have been introduced to improve Sales Financing We gave more consideration to the the quality of work (quality control cam­ growing demand for sales financing. In the paign). course of the year, the Freightliner Credit Our "special services" round out the Corporation, acquired in February of 1982 activities and the image of the Mercedes-

46 Sales Organization

Modern technology is the basis for fast, reliable and economical service. Here the new repair shop of the retail branch in Regensburg.

Benz service system. They include the Parts supply serves to maintain the Parts System international emergency service system, value and operating condition of our vehic­ special taxi services, the "Transeuropa- les and thus contributes decisively to cus­ Service" as well as route planning and tomer satisfaction and loyalty. operational consulting in the truck field. In 1982, an exemplary degree of service was once again achieved. With a parts Service in Outside Germany, our sales and ser­ assortment of more than 300,000 items for Foreign vice organization comprises some 4,300 more than 5,000 models with 30,000 var­ Countries Mercedes-Benz and about 400 Freightlin- iants, about 92% of all required parts are in er and Euclid sales and service points with stock. Infrequently needed parts are deliv­ almost 69,000 employees, in more than ered in the shortest possible time with the 170 countries. Following the energetic express services permanently established expansion of our worldwide service net­ in Central Europe. work in the seventies, we continued the We continued our efforts to get the consolidation work in this area in 1982, name "Mercedes-Benz Original Parts" fur­ giving greater consideration to qualitative ther established as a quality brand. Apart aspects. We have further enhanced the from the quality of our vehicles, the "serv­ service quality through our service promo­ ice package" plays an increasingly crucial tion and advisory programs, and provided role in the parts sector. This package con­ investment aids by making tools and equip­ sists not only in the delivery of commonly ment available. We will enlarge the scope needed parts, but also in the complete of these measures in the years to come. availability of parts for out-of-production models, including the necessary litera­ Centralized and In 1982, a total of 28,000 employees ture and validity documentation of parts Decentralized were given additional specialized training changes, all of which are in addition to the Service Training either in our training center in Esslingen- availability of the total technical service Bruehl or directly on the job. In addition, potential. more than 40,000 employees were trained at our subsidiaries and general distribu­ tors.

47 Hier gab es ein Produkt- oder Stimmungsbild ohne Text oder Zahlen. Es wurde in der PDF-Datei weggelassen, um eine nutzerfreundliche Dateigröße zu erreichen.

Here was a product or mood picture without text or figures. It was omitted in the pdffile to improve the usability of the file size. Employment and Benefits

Emphasis of The Labor market trend in the Federal But two general statements of labor pol­ Our Personnel Republic of Germany reflected the unfa­ icy are possible and necessary in connec­ Policy vorable economic conditions. In many tion with the development of technology: other countries the situation was similar, • The introduction of new technologies in some cases even worse. in factories and offices creates - apart from In this situation, Daimler-Benz AG was efficiencies - new requirements and oppor­ able to maintain a high level of employ­ tunities for improving working conditions. ment overall. Several foreign subsidiaries, Despite the high level that has been achiev­ by contrast, were forced to adjust the work ed at Daimler-Benz, we are convinced that force to the changed economic conditions continuing further humanization of work and market trends. In all cases, arrange­ processes and work environment can con­ ments could be made which have found tribute appreciably to employee morale. approval also from a social point of view. • In many areas, the introduction of new The continuity of employment, which technologies will change the professional we have been able to maintain particularly skills demanded from employees. In the in Germany, is based on the success of our future, they will have to bring with them products in the marketplace and the plan­ still better professional qualifications for ning of the production capacity of our jobs with increased flexibility. Thus, the plants according to long-term trends. By contents of vocational training will often very careful personnel planning and pru­ have to change. The importance of con­ dent personnel management we did much tinuing professional training increases, as to prevent market-caused differences in does the significance of management capacity utilization rates from affecting development and management-employee employment in the various departments. relations. As a matter of personnel policy, To achieve this, in addition to other we are preparing ourselves for this with measures in 1982, we devised and imple­ educational and developmental programs. mented a plan to even out the employ­ In the face of the problems which Ger­ ment needs between the plants and retail man industry must overcome in the future, branches in a way acceptable to the one very often hears talk of increasing employees. The labor policy instrument disputes in the factories. of "temporary assignments" proved suc­ In 1982, our Company can again report cessful both for the employees and the constructive cooperation with the general Company, though it involved personal sac­ labor council at the company level, and rifices for the former and higher costs for with the labor councils at the plant and the latter. We will, therefore, continue to retail branch levels. Despite the different use this method in the future to smooth initial positions on the issues concerned, out different levels of employment. we were able to arrive at bargaining results We feel there is no justification for the and agreements which take into account generalization that new technologies elimi­ the interests of both the Company and the nate jobs. Where new technologies reduce employees. employment levels, we often see offset­ ting trends develop as a result of higher production volume and better-quality pro­ ducts, with a larger proportion of custom- made versions.

An important part of our training pro­ gram is the teaching of electronics.

49 Employees Employment and Benefits

The transmission plant in Untertuerk- heim utilizes a modern conveyor system for assembly. The transmission- mounting system can move to allow the worker a more comfortable body position.

Employees Employment at Daimler-Benz AG at systematically continued our special ef­ the end of 1982 matched the previous forts to offer young "second-generation year's high. By contrast, worldwide foreigners" skilled vocational training. employment declined by 2,300. This is The average age of our employees is due chiefly to work force adjustments at 39 years; average service with the com­ the North and South American produc­ pany is 12 years. The loyalty to the Com­ tion companies. pany is also evidenced by the large num­ ber of high-seniority employees (25 years Employee The ratio of wage earners to salaried and more with the Company): they num­ Structure employees is unchanged at 2.7 to 1. In ber more than 17,000 wage earners and terms of the labor law and in the practical salaried employees. application, this distinction becomes less Again in 1982, we met the employment and less important, however, particularly quota of the law pertaining to the severely in view of the fact that about a third of all handicapped. We stress appropriate design wage earners now have so-called monthly of work stations and environment which wage contracts. take the handicaps of these employees The proportion of foreign employees in into account. the domestic work force of 20.4% is notice­ In addition to the large number of dis­ ably lower than last year (21.8%). We abled persons employed by us, we again placed large orders with workshops for the handicapped. The total volume of such orders was DM 13.3 million in 1982.

In the metal-working industry, wage Labor and salary increases of 4.2% became effec­ Contracts tive on March 1, 1982. A lump sum of The use of most DM 120 for the month of February was modern technology paid to each employee. In all collective places great demands on bargaining districts of the metal-working the qualification industry, the six weeks contractual vaca­ of personnel. tion for every employee has been in effect

51 Employment and Benefits

SUMMARY OF PERSONNEL EXPENSES - DAIMLER-BENZ AG

') Without allocated overhead.

since 1982. The average annual vacation our experience available, and make prac­ entitlement of our employees is now well tical suggestions to the self-governing bod­ past the 30-day mark, including the con­ ies of the different social security branches tractual and statutory vacation supplement for the continued development of the for high-seniority employees and disabled social security system. In 1982, more than persons. 150 employees were active as employer or employee representatives on the commit­ Social Welfare Increases in the contribution rates and tees dealing with pension, health, accident Law the wage base for social security, unem­ insurance and labor administration. ployment insurance, and for parts of the medical insurance, resulted in higher costs For our employees, the soundness of Social Security in 1982. Again last year, we strived to make the pension fund, which supplements the payments of the government social securi­ ty and the individual's own provisions, has a very special significance. The level of retirement payments made in accordan­ ce with the rules of the Daimler-Benz Provident Fund is shown by the following figures: In 1982, DM 139 million was disbursed for current benefits to 32,854 pensioners, widows and children. Payments to employ­ ees who retired in 1982 averaged DM

52 Employment and Benefits

538 monthly. At the end of 1982, more an average of 8 workdays lost per acci­ than 2,100 former employees - more than dent. The 1982 accident rate was cut by half of them foreigners - had vested pen­ 3% from 1981. The decline reflects initial sion rights. In 270 cases, pension benefits successes of our program to reduce are already being paid. We have helped behaviour-related accidents. Sickness rates more than 5,800 employees through one­ were sharply down in 1982. In relation to time assistance payments. the number of hours that should have People are generally well aware of the been worked, the average sickness level fact that the proportion of disability cases declined from 8.5 to 7.6% (wage earners among new pension recipients at Daimler- 8.8%, salaried employees 4.5%). Benz is clearly lower than the average for all insured persons. The table on page 52 shows the person- Personnel nel expenses of Daimler-Benz AG. The Expenses Health, In line with job safety legislation, the ratio of personnel expenses to total sales is Job Safety health services at our plants were system­ 28.2% (last year 28.0%). (Compare chart atically improved in 1982. In addition to on page 82) preventive and follow-up checkups, the Personnel expenses - wages, salaries work of our plant physicians is concentrat­ and social levies - increased 7.1% to DM ed particularly on contributing medical 8,109 million. know-how to workplace design and work assignment. The number of accidents has In view of the balanced employment Christmas dropped again: 67 accidents occurred for situation overall, and considering the per- Bonus and each million productive man-hours, with formance of our employees and the favor- Special Payment

Added value Company/retained earn. Shareholders/dividends Lenders/interest expense

Federal, states, municipalities/taxes

Employees/ total personnel expenses

53 Employment and Benefits

able trend of our business, we raised the Christmas bonus and the special remu­ neration for our employees. The average payment per eligible employee (excluding trainees) increased to DM 2,782 (last year DM 2,561), and total expenditure from DM 364 million to DM 396 million.

Our contribution to employee capital Employee formation rose once again. In addition to Capital the contractually guaranteed DM 624, Formation every employee received a voluntary pay­ ment of DM 156 for capital-forming in­ vestments in 1982. Employees were able to choose between "employee shares" and "company debt certificates". The number of employee shareholders increased to 83,400 (last year 74,800). Our employees have purchased some 340,000 employee shares since 1973. Almost 9,000 employees subscribed to company debt certificates in 1982. We specifically promoted personal capital for­ mation by our employees in the form of home or apartment purchases. Despite the difficult situation in the construction and housing market, we extended loans total­ ling DM 35.4 million for the construction of 1,547 employee-owned apartments or homes in 1982. Our residential building loans for the last ten years is totalling DM 237 million.

On the basis of the existing internal Working agreement we continued as planned our Conditions, social benefit program "Shift Work", at Shift Work the heart of which is the prophylactic health care and medical supervision. Again in 1982, we demonstrated through numer­ ous individual measures that "human­ ized working conditions" are a central theme of our personnel policy. Efforts con­ centrated on special training in the area of production flow planning. We will conti­ nue the educational and informational acti­ Personnel, at dif­ vities for the employees concerned. ferent work stations, must be familiar The promotion of the Company's sug- Suggestion with modern tech­ nology, to assure gestion program remains an important tool Program the quality of our of management. Just under 7,000 em­ products. ployees submitted some 14,500 sugges-

54 Employment and Benefits

tions in 1982, for which awards totalling DM 3.2 million were paid.

Educational To relieve the tight situation for Policy apprenticeship jobs in the Federal Repub­ lic of Germany, but also to secure our own requirements for junior employees, we have steadily increased the number of training positions over the past years. With more than 2,600 youngsters commencing training in 1982, we reached a record level of recruitment for vocational training. At the end of 1982, Daimler-Benz AG had 8,500 apprentices and trainees undergoing practical training. The attractiveness of our training pro­ particularly to the teaching of decision­ Particularly for handicapped per­ grams and the general situation for train­ making and problem-solving techniques sons, we frequently ing opportunities is evidenced by the fact as well as to the development of leader­ have to provide that more than 19,000 boys and girls ship abilities. equipment so that applied for job training with us. the work place In 1982, some 53,000 employees took allows the individual We systematically continued our efforts part in internal and external company- to work efficiently. to help solve socio-political problems by related courses offering continued and training youths with learning disabilities advanced training. and by training children of foreign wor­ New training centers were established kers. About 150 foreign youths, 6% of all at our Brazilian and Nigerian affiliates in newly recruited trainees, were given train­ 1982. We are convinced that such educa­ ing positions at Daimler-Benz in 1982. tional investments of German companies The training at the Baden-Wuerttem- in foreign countries have exemplary char­ berg Vocational Academy has particular acter. At the end of 1982, a total of more Our South Afri­ can affiliate UCDD: appeal for high-school graduates, as than 2,300 youngsters were undergoing with the use of demonstrated by the number of applica­ training in 28 training centers operated by modern teaching tions received from all over the country: our foreign subsidiaries and our general accessories, theo­ retical and practical 1,200 high-school graduates applied for distributors, mostly in developing coun­ know-how is con­ 60 training positions in 1982. In the field tries. veyed to young of adult education, through continuing trainees. training, we must assist our employees to prepare for new functions. A central task will be to extend help to our employees to enable them to master and apply new tech­ nologies and methods in production and administration. It is our objective to include blue-collar workers in our continuing train­ ing efforts in order to give production employees opportunities for career devel­ opment and, at the same time, enlarge the pool of future candidates for specialist and management functions in the Company. Of special significance is the develop­ ment of the approximately 12,000 employ­ ees who have been assigned management functions at Daimler-Benz. Training refers

55 Daimler-Benz Worldwide Daimler-Benz Worldwide Principal Subsidiaries and Affiliates - Summary

58 Subsidiaries and Affiliates

Safeguarding The guiding principle underlying our CONSOLIDATED COMPANIES Our Position in policy of investment in subsidiaries and WITH THEIR OWN MANUFACTURING the World Market affiliates remains the maintenance and the FACILITIES strengthening of the companies' position in the world marketplace. This policy thus The recession in Brazil, which afflicted Mercedes-Benz serves to a large degree to secure and the country's economy in 1981, continued do Brasil promote deliveries from the parent plants with undiminished intensity in 1982, even in Germany. In 1982, the worldwide reces­ taking a further turn for the worse during sion impacted sales in many countries in the second half of the year. The growing which we have wholly- or partly-owned restraint of investors, and particularly of production companies. Within the oppor­ public authorities, unfavorably influenced tunities available to Daimler-Benz AG as demand. The commercial vehicle markets the parent company, we assisted our sub­ thus contracted even further. sidiaries to adjust their structures to chang­ This trend adversely affected Mercedes- ing market conditions. We hope that these Benz do Brasil S.A., Sao Bernardo do measures will aid and enable our subsidia­ Campo, whose commercial vehicles sales ries to exploit their specific market poten­ declined 33% to 31,345 units (last year tial as independently and as flexibly as 47,012). Mercedes-Benz do Brasil manag­ possible. ed to maintain its leading position. In the In the markets referred to here, we were domestic market, it was able to maintain usually able to hold, and in many cases its market share of about 51% for trucks, increase, our market shares. It was con­ but the market penetration for buses and firmed once more that we can successfully bus chassis fell to 87% versus 92% the year compete with our product offering adapt­ before. The continued weakness of the ed to particular market conditions. This markets in the main importing countries encourages us in our expectation that we for products of our subsidiary - among will be able to take advantage of sales them the U.S.A. and Nigeria - resulted in opportunities in the event of a gradual a drastic decline of exports to 3,510 units economic recovery in these countries. (last year 10,445). In order to adjust to the worsening ca­ pacity utilization rates and to reduce inven­ CONSOLIDATED COMPANIES tories, the company had to temporarily Modern foundry of our subsidiary shut down operations during the course of Sofunge, Sao Paulo, Larger The subsidiaries included in consolida­ the year and stop replacing people leaving Brazil. Contribution tion had sales totalling DM 15.8 billion in to Consolidated 1982 (last year DM 13.9 billion). Of this, Net Income companies with their own manufacturing facilities accounted for DM 4.8 billion (last year DM 4.9 billion) and distribution com­ panies for DM 11.0 billion (last year 9.0 bil­ lion). The results of operations varied con­ siderably at the various companies. The contribution of the foreign subsidiaries to consolidated net income - converted from local currency to D-Mark and thus subject to currency fluctuations - increased by 4.1% in all, to DM 202 million (last year DM 194 million). During the year, our policies at home and abroad were again in accordance with the "OECD Rules for Multinational Companies".

59 Subsidiaries and Affiliates

Sofunge S.A., Sao Paulo, a wholly- Sofunge, Brazil owned subsidiary of Mercedes-Benz do Brasil, supplies its parent and also other Brazilian motor vehicle makers with cas­ tings. In reaction to the generally worsen­ ing market situation, output of castings fell 38% to 30,000 tons (last year 49,000 tons). The company had to temporarily place workers on short time and pare the work force by 20% to 1,769 (last year 2,222). Sales - converted to D-Marks - declin­ ed 17% to DM 96 million (last year DM 116 million). Operating results were still around the break even point.

The recessionary trend, which began in Mercedes-Benz 1980, worsened even further in 1982 for a Argentina number of reasons, not the least of which was the burden from the Falklands con­ Typical Freightiiner the company. These measures did not flict. The reorientation of economic pol­ vehicle. The com­ icy, begun in mid-1982, has not yet result­ pany, acquired by prove sufficient, on account of the sharp Daimler-Benz in sales decline in the fourth quarter, and ed in the business upturn that was hoped 1981, builds heavy- were followed by additional unavoidable for. Again in 1982, the Argentine peso was duty conventional production cutbacks. Another 2,800 em­ sharply devalued on several occasions. The and cab-over engine trucks for the ployees had to be layed off in January of inflation rate rose to over 300% (wholesale American market. 1983. The company made substantial, in price index). large part discretionary, payments to the The commercial vehicle market declin­ people who were affected. The company ed another 31% in 1982. Our subsidiary still had 11,784 employees as of January 31, Mercedes-Benz Argentina was also affect­ 1983. ed. Although the company's domestic Sales in local currency rose - due to commercial vehicle sales dropped 28% - inflation - 43% to Cruzeiro 149 billion. the market share increased slightly to 59% Converted to D-Marks, sales decreased (last year 58%) - the company was able to 20% to DM 2.1 billion (last year DM limit the overall sales decline to 20% - 2.6 billion). Due to the cost-cutting mea­ 4,717 units (last year 5,922) - by increasing sures and thanks to its sound financial posi­ exports to the Latin American market. tion, the company still had satisfactory Because of the price rise due to devalua­ earnings. tion and because of growing obstacles to The investments planned for 1982 - imports, only 248 Mercedes-Benz cars (last including the establishment of a new train­ year 1,638) and 65 commercial vehicles ing center - were carried out according to (last year 225) were imported and sold. schedule. The medium-term investment Slow sales forced the company to cut back program concentrates on measures to commercial vehicle output to 4,216 units improve and supplement the product line. (last year 6,007). The cutback was accom­ The country's extremely precarious finan­ panied by a further 29% reduction of the cial and economic situation and the tight­ work force to 1,929 (last year 2,729). The ening by the Brazilian government of its company had to work short hours repeat­ restrictive policies make it impossible to edly. expect a quick recovery of the commercial Sales in local currency rose solely due vehicle market. As we see it today, a further to inflation. Converted to D-Marks, sales decline in sales can be expected in 1983. dropped to DM 396 million (last year DM

60 Subsidiaries and Affiliates

Total view of the Mount Holly plant, one of the three Freightliner plants in the U.S.A. and Canada.

599 million). However, the devaluation of duty truck sales declined to 76,000 units the peso against the D-Mark contributed (last year 100,000), medium-duty truck to the drop. As in the year before, the sales (9-15 tons GVW) to 106,000 units decline of business volume led to losses (last year 127,000). Freightliner suffered a and consequently to an unsatisfactory cap­ 28% drop in heavy-duty truck sales in ital structure. Daimler-Benz AG, there­ North America to 7,651 units (last year fore, had to support the company's equity 10,605), but was able to defend its 10% base through capital stock increases in market share in the U.S. against keen com­ 1982. petition. In the medium-duty truck mar­ ket, the sales of our vehicles, which are Freightliner, After the takeover of the Freightliner assembled in Hampton, Virginia, from U.S.A. Group by Daimler-Benz on August 1, components imported from Brazil, declin­ 1981, the year 1982 was marked by the ed 40% to 2,324 (last year 3,843). The mar­ reorganization of our expanded truck acti­ ket share diminished from 3.2 to 2.7%. In vities in the U.S. The main goal was the this very hotly contested segment of the integration into the Freightliner organiza­ market, American manufacturers count­ tion of the medium-duty (9-15 tons GVW) ered the imports through further intensi­ Mercedes-Benz truck activities. (This busi­ fied price competition. ness was previously taken care of by our The Freightliner Group, which em­ sales company Mercedes-Benz of North ployed 3,672 people at the end of 1982, America, Inc.). With the closing of an older had consolidated sales - converted to assembly plant in Indianapolis, Indiana, D-Marks - of DM 1,261 million, including the production of heavy-duty trucks with medium-duty trucks. Again in 1982, results the Freightliner nameplate was concen­ of operation were not satisfactory. At the trated at the two modern plants in Port­ earliest, we expect demand to pick up dur­ land, Oregon, and Mount Holly, North ing the course of 1983, but the upturn will Carolina. not have the vitality of earlier business In 1982, the U.S. market for medium- cycles. The modernization and expansion and heavy-duty trucks (diesel and gaso­ of our product range necessary for achiev­ line models) took a plunge that even pes­ ing our long-range market goals in North simistic forecast had not foreseen. Heavy- America were continued according to plan.

61 Subsidiaries and Affiliates

Euclid U.S.A. The persisting recession in North Euclid has improved its product range America led to a renewed sharp decline of as planned, notwithstanding the cyclical the market for heavy-duty haulers in 1982. weak demand. The sales prognosis for 1983 The export markets were also sharply is uncertain since the special market for down. In addition, our export business heavy-duty rear dumps and coal haulers, was impeded by the strength of the in which Euclid is active, is particularly U.S. dollar. Due to the renewed decline of dependent on the development of raw mat­ demand and the resultant drop in capacity erial markets and on large-scale construc­ utilization in the industry, the pressure on tion projects. In particular, sales opportun­ prices continued. Despite clearly lower ities to the raw material countries of the sales, Euclid managed to increase its share Third World are uncertain because of their of the North American market, but lost often acute payment problems. The num­ shares on the world market. Sales - con­ ber of large construction projects has verted to D-Marks - declined to DM decreased appreciably there, as they have 464 million (last year DM 602 million). in OPEC countries. This development affected earnings quite negatively. After a further adjustment of The Spanish commercial vehicle mar­ Mercedes-Benz the work force as a result of the business ket declined again in 1982 due to the over­ Espana situation, Euclid had 1,151 employees at all economic trend. Mercedes-Benz Espa- year-end (last year 1,497). na, Madrid, nevertheless succeeded in

Heavy-duty hauler from the Euclid production program in Cleveland, Ohio, U.S.A.

62 Subsidiaries and Affiliates

The new central spare parts depot of Mercedes-Benz Espana at Miral- campo.

raising the market share in its segment of Mercedes-Benz commercial vehicles were the commercial vehicle market slightly to sold. Furthermore, we sold 4,588 cars (last about 43% (last year 42%). The addition of year 3,747). Company sales - converted to a medium-duty van to the product line D-Mark - amounted to DM 670 million contributed to the increase. (last year DM 693 million). Year-end Unit sales of the vehicles manufactured employment of 4,139 was almost unchang­ by the company amounted to 11,419 (last ed from last year's 4,198. The results of year 12,952). In addition, despite still high operation were not satisfactory due to the duties, 657 (last year 625) imported lower utilization of production capacity.

63 Subsidiaries and Affiliates

DISTRIBUTION COMPANIES already mentioned above - rose to the equivalent of DM 5.2 billion (last year DM Mercedes-Benz Our North American distribution com­ 4.1 billion). Results of operations were of North panies Mercedes-Benz of North America, once again quite satisfactory. America and Inc., Montvale (MBNA), and Mercedes- Mercedes-Benz Benz Canada, Inc., Toronto (MBC), in a Freightliner Credit Corporation, which Mercedes-Benz Canada continously declining market, boosted was acquired in February of 1982 as part of Credit their car sales to 70,481 units (last year the purchase of Freightliner and which Corporation 62,342), and thus further strengthened has now been renamed Mercedes-Benz their market position. The favorable trend Credit Corporation, with head offices in of our sales business was based on the Portland, Oregon, has extended its financ­ continued strong demand for the models ing activities to our medium-duty Merce­ of the S-Class, including the Turbo-diesel des-Benz trucks, our cars, and the pro­ 300SD, the coupes and SL roadsters. Our ducts of Euclid. With the expansion of the fuel-efficient diesel cars, accounting for company's functions, business and operat­ 79% (last year 78%) of overall sales, have ing results have developed positively. an extraordinary significance. Again in 1983, we expect our car business to grow. New car registrations in the French Mercedes-Benz In conjunction with the higher sales, we market rose by about 12% in 1982, to more France strengthened our service network. A new than 2 million units. Foreign manufactur­ parts depot was built in Illinois; prepara­ ers upped their share of the market. tions are being made for two additional Mercedes-Benz France S.A., Rocquen- parts depots in the East that will be ready court, raised its sales to 20,159 units (last at the beginning of 1984. Our Canadian year 18,381). Distribution company added one retail The truck market (over 2 tons GVW) store in Vancouver and one in Montreal grew by about 3%. Our truck sales could to its existing outlets in Toronto, Montre­ be raised 16% to 15,669 units (last year al and Vancouver. 13,479). Our market share thus improved The companies' sales revenue - which to about 9% (last year 8%). Sales revenue no longer includes the sales of medium- rose 13% to the equivalent of DM 1.9bil- duty trucks following the reorganization lion (last year DM 1.7billion). The deval­ of our truck activities on July 1, 1982, as uation of the franc against the D-Mark and

Enlargement of the sales and service network in France. The new retail outlet of Mercedes-Benz France in Nice.

64 Subsidiaries and Affiliates

The new vehicle preparation center of Mercedes-Benz (United Kingdom) in Harwich. From here, Mercedes- Benz cars are deliv­ ered to the British market.

the price regulatory activities of the French million (last year DM 746 million). The government since June of 1982 have company's earnings were once again satis­ impaired the results of operation. factory.

Mercedes-Benz In Great Britain, total new car registra­ Due to the continuing economic diffi­ Mercedes-Benz United Kingdom tions in 1982 increased by 5%. Mercedes- culties in the Netherlands, overall car sales Netherlands Benz United Kingdom Ltd., Hayes/Lon­ in this market ran only slightly ahead of don, raised its car sales 22% to 12,751 units last year's sales. By further improving our (last year 10,445). Particularly the S-Class position in the diesel car business, increased its market penetration. Mercedes-Benz Nederland B.V., Utrecht, Our commercial vehicle sales rose 47% succeeded in increasing its sales by 4% to to 8,996 units (last year 6,114), while the 7,643 units (last year 7,339). overall market grew 6%. As in the year On the commercial vehicle market, before, this trend was based mainly on the which was marked by stepped-up price brisk demand for our vans. competition particularly in the heavy-duty Despite the distinctly downward trend truck sector, our sales declined slightly to of the pound sterling exchange rate to­ 6,472 units (last year 6,590). Our market wards the end of 1982, sales revenue in­ share in the class over 2 tons GVW was creased 29% to the equivalent of DM 959 24% (last year 25%).

65 Subsidiaries and Affiliates

The sales revenue of our Dutch subsidiary Sales revenue rose to the equivalent of amounted to DM 658 million, about on DM 616 million (last year DM 580 mil­ level with last year's sales of DM 647 mil­ lion). Several changes of the currency par­ lion. Results of operation improved. ities and government price controls impair­ ed company earnings. Mercedes-Benz Under unfavorable economic condi­ Belgium tions, Mercedes-Benz Belgium S.A./N.V., Following other European countries, Mercedes-Benz Brussels, managed to defend its market Italy's commercial vehicle market also suf­ Italia position overall. While the general car mar­ fered a noticeable decline. Accordingly, ket declined another 2% due to sinking commercial vehicle sales of Mercedes- real income, our car sales of 10,681 units Benz Italia S.p.A., Rome, declined 27% to easily matched last year's total of 10,136. 4,917 units (last year 6,772). Nevertheless, The commercial vehicle business was our market share of more than 7% in the impaired by a decline in freight traffic. vehicle class of 2 tons GVW and up could Accordingly, our commercial vehicle sales be maintained. fell 8% to 3,034 units (last year 3,309). The The cooperation in 1982 with our sales devaluation of the Belgian franc and the financing company Merfina S.p.A., Rome, D-Mark revaluation, in conjunction with became more important with the difficult the devaluation of the Swedish krona, situation on the commercial vehicle mar­ which advantaged our Swedish competi­ ket in 1982. Our Italian customers increas­ tors, resulted in stiffer competition. Thus, ingly availed themselves of our financing our market share in the vehicle class over offers. 2 tons GVW went down from 14.9% to Mercedes-Benz Italia took over the parts 14.2%. distribution as of January 1,1982, and the

At the new, large "Parts + Service Center" at Zaven- tem, near Brussels, Mercedes-Benz Belgium has brought its service center and parts depot under one roof.

66 Subsidiaries and Affiliates

Again in 1982, car distribution as of July 1, 1982, from Mercedes-Benz cars our previous general distributor Autostar have gained many new friends in S.p.A., Rome. Whereas the overall car mar­ North America. ket in 1982 only declined by 3% from 1981, the decline in the segment in which Mercedes-Benz competes was consider­ ably more pronounced. Car sales in the second half of the year, after taking over the import function, came to 4,978 units. For the full year, Mercedes-Benz registrat­ ions were down 15.7% to 12,418 units (last year 14,724; we managed, however, to defend our market share of about 15% in the comparative class. The sales revenue growth of 39% to the equivalent of DM 483 million is solely attributable to the takeover of the parts and car activities. Earnings were satisfac­ tory.

Mercedes-Benz The stable condition of the Swiss car Despite the dull economy, the markets Mercedes-Benz Switzerland market, which in 1982 again reached the for cars and buses in Australia showed an Australia high level of the previous year, is attributa­ upward trend, while truck sales went down ble chiefly to advance purchases in anti­ 15%. cipation of the exhaust emission and noise Mercedes-Benz (Australia) Pty. Ltd., regulations which took effect on October Mulgrave/Melbourne, raised sales in all 1, 1982. Mercedes-Benz (Schweiz) AG, segments of the market. The 24% increase Zurich, could increase its car sales 12% to in car sales to 3,414 units was due for the 4,981 units (last year 4,464). most part to brisker demand for S-Class The slowdown of business in the models. Commercial vehicle sales rose to course of the year resulted in a 9% drop in 894 units (last year 454). In particular, we the commercial vehicle market. The sales were able to recapture truck market shares of our subsidiary were down 7% to 2,762 with newly introduced models. units (last year 2,965). The company man­ Sales revenue in local currency rose by aged to hold its market share of 13% in the 39%, and in D-Marks by 32% to DM truck class over 2 tons GVW. In the truck 403 million (last year DM 305 million). class over 14 tons GVW, as well, our mar­ Company earnings were satisfactory. ket share of 46 % - taking into account the Saurer trucks which have been sold Our subsidiary Mercedes-Benz Hellas, Mercedes-Benz through our marketing organization since Athens, established in November of 1981, Hellas the middle of 1982 - is about the same as commenced business at the beginning of last year. 1982. The subsidiary carries on the sales The sales revenue of Mercedes-Benz activities of our former general distribut­ (Schweiz) AG rose 12% to the equivalent ors in Greece. of DM 440 million (last year DM 395 mil­ Apart from the expected start-up diffi­ lion). The results of operation follow the culties, it was the economic and political positive trend of last year. conditions, with their negative impact on our sales, which lead to a most unsatisfac­ tory business development and operating results.

67 Subsidiaries and Affiliates

OTHER AFFILIATES Daimler-Benz AG, Adolph Saurer, and NAW Nutzfahr- Oerlikon-Buehrle Holding AG combined zeuggesellschaft MTU The domestic MTU Group, with MTU their commercial vehicle activities in Swit­ Arbon & Companies Motoren- und Turbinen-Union Muen- zerland at the end of 1982 by establishing Wetzikon AG, chen GmbH, MTU Motoren- und Tur­ for this purpose NAW Nutzfahrzeuggesell- Switzerland binen-Union Friedrichshafen GmbH, and schaft Arbon & Wetzikon AG, of Arbon. MTU Maintenance GmbH, Hannover, At the beginning of 1983, our affiliate was able to boost consolidated sales in FBW-Fahrzeug AG, Wetzikon, Switzer­ 1982 by 17% to DM 2.1 billion (last year land, also transferred its business activi­ DM 1.8 billion). With exports rising fur­ ties to NAW. Daimler-Benz holds 40%, ther, about 50% of sales revenue was Saurer 45% and Oerlikon-Buehrle 15% of obtained abroad. An order backlog of DM the new company's capital stock of sfr 2.7 billion ensures employment to the 15 million. Munich and Friedrichshafen plants also At the beginning of 1983, the company for the coming year. Orders were favor­ began to manufacture special-purpose ve­ ably affected by the expansion of the civi­ hicles based on our heavy-duty truck pro­ lian aircraft engine business through the gram and - using Daimler-Benz compon­ conclusion of new long-term development ents - bus chassis destined mostly for the and production contracts. Swiss market. During a transitional pe­ By acquiring a majority in the capital riod, activities will mostly include the stock of Kuehnle, Kopp & Kausch AG, assembly of heavy Saurer cross-country Frankenthal, the makers of turbo machi­ trucks for Swiss customers; this is in addi­ nery, MTU Muenchen has created the pre­ tion to the other two Swiss partners' pro­ requisites for the joint and intensive use of grams which will be phased out. the know-how possessed by both compa­ With this reorganization, we hope to nies in this special field. The company has strengthen our position in this important thus taken an important step towards its neighboring market. goal of acquiring a broader base within its field of business. In connection with this Despite the deteriorating business cli­ UCDD, acquisition, the capital stock of MTU mate in South Africa in 1982, our affiliate South Africa Muenchen was increased by DM 46.6 mil­ in Pretoria was able to extend its position lion to DM 156.6 million. This will enable in a 6% declining car market. UCDD rais­ the company to finance, on a sound basis, ed car sales 30% to 14,816 (last year 11,362), the expansion of business in the civilian thus making Mercedes-Benz cars the mar­ aircraft engine field. MTU Maintenance ket leaders in their class. In 1982, the com­ GmbH, Hanover, which commenced pany increased its market share from 3.9% business in the Fall of 1981, systematically to 5.4%. expanded its business. The expectations Since October, 1982, UCDD has been raised by the establishment of this com­ manufacturing HONDA cars under a li­ pany have been fulfilled through the con­ censing agreement (a total of 2,266 units clusion of maintenance, reconditioning through December 31, 1982). The expan­ and repair contracts with several airlines. sion of business with HONDA cars serves The German MTU Group had 12,859 to improve the utilization of our produc­ employees at year-end (last year 12,911). tion capacities in East London and to sup­ After due provision for income taxes, the plement the overall program. This is two shareholders, Daimler-Benz and designed to strengthen the dealer orga­ M.A.N., each received DM 5.8 million in nization by increasing their sales volume. accordance with the profit and loss trans­ On the commercial vehicle market, fer agreement. which cyclical trends caused to shrink, UCDD sales were down 6% to 5,787 units (last year 6,167). Our market position

68 Subsidiaries and Affiliates

This four-axle Mercedes-Benz truck is built by our Swiss affiliate, NAW Nutzfahrzeuggesell- schaft Arbon & Wetzikon AG.

improved all the same. Our market share Sales revenue - converted to D-Marks - in the vehicle class of over 5 tons GVW amounted to DM 327 million (last year rose from 19 to 26%. DM 353 million). The results of operation The sales revenue of the UCDD Group can still be termed satisfactory. jumped 23% to the equivalent of DM Due to the dependence of the Nigerian 1.4 billion (last year DM 1.2 billion). Com­ economy on world oil markets, our affili­ Administration pany earnings, which were impaired by ate will have to adjust itself to increasing building of CDA the market trend in the commercial vehi­ difficulties in 1983. in South Africa. cle business, were once again satisfactory overall. At the end of 1982, Daimler-Benz AG acquired the South African Rentmeester group's 10% interest in UCDD. We thus increased our holding from 26.7% to 36.7%.

ANAMMCO, Continuously declining foreign ex- Nigeria change revenues from exports of crude oil, Nigeria's most important source of income, and the restrictive monetary and fiscal measures enacted for this reason, determined the trend of domestic busi­ ness in 1982. The Nigerian commercial vehicle market was deeply affected. These unfavorable developments im­ pacted our affiliate Anambra Motor Manu­ facturing Company Ltd., Enugu, Anam­ bra State. Its sales of commercial vehicles declined 15% to 3,610 units (last year 4,249). Nonetheless, the market share could be increased from 27% to 31%.

69 Subsidiaries and Affiliates

adjusted for inflation through conversion of retained earnings and now amounts to TL 550 million (DM 7.0 million). We already mentioned at the beginning of this report that the Turkish government early in 1983 approved a project for the expansion of the Mercedes-Benz truck and engine production program and the increase of the production capacity for buses.

The economic situation in Iran, and IDEM Iran thus also the country's motor vehicle mar­ ket, was difficult in 1982, particularly due to the situation of the oil market and the war in the Gulf. Nonetheless, Iranian Diesel Engine Manufacturing Company (IDEM), Tabriz, raised the sales of its NAI The commercial vehicle market in Saudi diesel engines 19% to 13,499 (last year Saudi Arabia Arabia continued to grow in 1982. Nation­ 11,336). al Automobile Industry Company Ltd. Sales revenue in local currency rose (NAI), Jeddah, fully participated in this 68%; converted to D-Marks, sales rose to development. The company was able to DM 170 million (last year DM 101 mil­ increase the number of assembled com­ lion). Results of operation, still negative mercial vehicles by 20 % to 7,834 units though, showed improvement commen­ (last year 6,535). Sales revenue in local surate with the better utilization of capaci­ currency rose 22 % and in D-Marks 29 % ties. to DM 817 million (last year DM 632 mil­ lion). Earnings were also satisfactory. The Indonesian economy was impaired German Motor In view of the dwindling petroleum by the decrease of income from crude oil and Star Motors revenue of the oil-producing countries, exports. The overall motor vehicle market Indonesia we should not expect further growth, but contracted by 15%. rather a decline of the commercial vehicle Our Indonesian affiliates, P.T. German business in Saudi Arabia. Motor Manufacturing, Jakarta (assembly and manufacture), and P.T. Star Motors OTOMARSAN, The Turkish government successfully Indonesia, Jakarta (import and marketing), Turkey continued its measures in 1982 to stabilize were not left unaffected by this trend. Car the overall economy. Accordingly, domes­ sales could be maintained at last year's tic demand rebounded in the course of level with 598 unit sales, but commercial the year. The sales of Otobues ve Motorlu vehicle sales dropped 29% to 2,634 units. Araclar Sanayii Anonim Sirketi (OTOM­ Whereas our truck sales fell sharply, partic­ ARSAN) rose 16% to 1,589 units of ularly because deliveries for fleet orders The roughly 4,500 OM 302 and OM 309 buses (last year from public authorities tapered off in 1982, Mercedes-Benz 1,375). The market share increased from sales of buses could be increased. vehicles in the Peo­ 80% to 83%. Sales revenue declined 15% to the equiv­ ples Republic of China now have at In local currency, sales revenue rose alent of DM 269 million (last year DM their disposal this 59%; converted to D-Marks, sales rose 318 million). Nonetheless, the companies service and repair 26% to 323 million (last year 256 million). had satisfactory earnings again - also on shop in Peking which opened in Earnings continued to be quite satisfactory. account of the strength of the local curren­ November of 1982 The capital stock, unchanged since the cy, which is tied to the U.S. dollar. (above). company was established in 1966, was In September of 1982, the assembly

70 Subsidiaries and Affiliates

plant, relocated from Jakarta to the new scale of last year (5,442). With the rescis­ site of Wanaherang, was dedicated with sion on January 1, 1983 of the tax mea­ considerable publicity. The construction sures introduced in 1978, which particular­ of facilities for a newly contemplated com­ ly affected luxury cars, demand for our pany for commercial vehicle engines in cars picked up noticeably. Indonesia will begin this year. Due to the lack of economic growth in Austria, our commercial vehicle deliver­ FAP FAMOS, In Yugoslavia, economic conditions ies of 3,071 units did not quite match last Yugoslavia further deteriorated in 1982. The efforts to year's level of 3,157 units. reduce the foreign debt resulted in tighter foreign exchange restrictions and limita­ Deutsche Automobilgesellschaft mbH, Deutsche tion of imports. Hannover, jointly owned by Daimler-Benz Automobil­ Our joint venture partner FAP FAMOS AG and Volkswagenwerk AG, carried on gesellschaft was also affected by the trend. Commer­ its research and development work in the cial vehicle output declined 17% to 5,529 field of electrive drive and storage systems units (last year 6,691) in 1982. Sales reven­ in 1982. The results were equally shared ue fell 8% to the equivalent of DM 461 mil­ by both partners in accordance with the lion (last year DM 499 million). The results profit and loss transfer agreement. of operation can still be termed satisfactory. The DAUG Hoppecke-Gesellschaft fuer Batteriesysteme mbH, jointly owned by Daimler-Benz Our affiliate in Austria, Daimler-Benz Deutsche Automobilgesellschaft mbH Austria Oesterreich Vertriebsgesellschaft mbH, and Accumulatorenwerke Hoppecke Carl Salzburg, which merely coordinates our Zoellner & Sohn GmbH & Co. KG, Bri- sales activities in Austria, carried on busi­ lon, utilizes selected research findings in ness according to plan. Our car deliveries the field of industrial batteries. The com­ to Austria - 5,428 units - were on the pany continued its work as planned.

The new assembly plant at Wanaherang, Indonesia, builds Mercedes-Benz trucks and buses; passenger cars are also assembled there.

71 Daimler-Benz AG and its Principal Subsidiaries and Affiliates

72 Daimler-Benz AG and its Principal Subsidiaries and Affiliates

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Here was a product or mood picture without text or figures. It was omitted in the pdffile to improve the usability of the file size. Notes to Financial Statements Daimler-Benz AG

75 Notes to Financial Statements Daimler-Benz AG

Balance Sheet Asset and In 1982, investments in fixed assets - particularly pension provisions - rose Capital (tangible fixed assets and financial assets) DM 647.4 million to DM 7,099.8 million. Structure amounted to DM 3,002.0 million. After The ratio of liabilities to total capitaliza­ depreciation expenses and fixed asset dis­ tion of 43.1% was nearly unchanged from posals, which totaled DM 1,963.4 million, last year's 42.9%. The "Statement of fixed assets rose DM 1,038.6 million to Changes in Financial Position for 1982" DM 5,379.2 million; their share of total gives an overview of the sources and assets amounted to 32.6% (last year 28.8%). application of funds. The substantially Current assets rose DM 401.1 million to higher investments in fixed assets and long- DM 11,109.3. Of this increase, DM term financial assets could again be financ­ 177.8 million was attributable to invento­ ed in 1982 through internally generated ries, DM 150.8 to receivables and DM funds, i.e. depreciation expense, increase 72.5 million to cash and other assets. of retained earnings and provisions. Through allocation from net income for the year to retained earnings, and through As a result of the high capital invest­ Fixed Asset an increase of the special equity reserves, ments, the ratio of stockholders' equity to Coverage stockholders' equity rose DM 368.4 mil­ fixed assets declined to 91.0% from 104.3% lion to DM 4,894.1 million; the ratio of last year. Inventories and substantial por­ stockholders' equity to total capitalization tions of other current assets continue to amounted to 29.7%, slightly less than last be financed on a long and medium-term year's 30.1%. Within liabilities, provisions basis.

76 Notes to Financial Statements Daimler-Benz AG

ASSETS Depreciation on 1982 additions, includ­ ing transfer from construction in pro­ Fixed Assets Fixed assets (tangible fixed assets and gress and advance payments relating to financial assets) rose DM 847.1 million to building and plant from prior years, was as DM 4,482.0 million. They are valued at follows: acquisition or manufacturing costs, re­ duced by accumulated depreciation. The opportunities for special tax deductible accelerated depreciation, particularly in connection with Section 7 d of the Income Tax Act (environmental protection invest­ ments), Section 14 of the Berlin Assis­ tance Act and Section 3 of the Border Area Assistance Act were fully utilized. Invest­ ment tax credits earned were for the first time used to reduce acquisition costs. The manufacturing costs of inhouse-produced fixed assets include production material, direct labor and manufacturing overhead Daimler Benz AG has recorded lease­ (excluding depreciation and administra­ hold rights in favor of third partners who tive expenses). have erected factory and office buildings Scheduled depreciation expense was cal­ for plants and retail branches on land culated generally using the following use­ owned by the company. As of Decem­ ful lives: 17 to 25 years for buildings, 10 to ber 31, 1982, there were 12 (last year 11) 17 years for site improvements, 3 to leasing agreements for buildings and build­ 10 years for machinery and plant, 2 to ing improvements; payments for such 10 years for factory and office equipment. leases amounted to DM 10.9 million (last Machinery and plant used for multi-shift year DM 7.1 million). operations was depreciated using corres­ pondingly lower useful lives. After additions of DM 295.0 million, Investment in Moveable property with a useful life of and depreciation and disposals in the total Affiliated four years or more is depreciated using amount of DM 107.6 million, the balance Companies the declining-balance method. We change sheet value of investments in affiliated from the declining-balance method to the companies rose DM 187.4 million to DM straight-line method of calculating sched­ 782.2 million. Additions in Germany were uled depreciation when the equal distribu­ largely for the acquisition of a 25% interest tion of the remaining net book value over in Allgemeine Verwaltungsgesellschaft the remaining useful life leads to higher fuer Industriebeteiligungen mbH, Muen- depreciation amounts. Assets of small chen (which in turn holds an interest of value are expensed in the year of acquisi­ about 35% in Metallgesellschaft AG, Frank­ tion. furt/ Main), and for the capital stock increase at MTU Motoren- und Turbinen- Union Muenchen GmbH, Muenchen. Additions abroad were particularly for the capital stock increases at Mercedes-Benz Belgium S.A./N.V., Bruessel, and Merce­ des-Benz Argentina S.A., Buenos Aires.

77 Balance Sheet Structure - Daimler-Benz AG Notes to Financial Statements Daimler-Benz AG

The deduction of DM 24.4 million in Cash and temporary investments in Cash and investments in affiliated companies was securities rose DM 31.9 million to DM Temporary principally in connection with the reorgan­ 2,838.4 million. Other liquid funds were Investments in ization of our investment position in the invested in short and medium-term secur­ Securities U.S.A.. ities, which represent by far the single Write-downs of DM 83.2 million (of largest item in the balance sheet caption which DM 16.8 million relate to invest­ "Other Assets". ments in 1982) were made for foreign in­ vestments, largely due to losses as a result For the purpose of issuing shares under Treasury Stock of poor market conditions. the employee stock purchase plan, a total of 31,250 shares (with a par value of DM Inventories The increase of inventories by DM 1.6 million = .1% of total common stock) 177.8 million to DM 3.120.8 million was was purchased at an average price of about caused by higher inventories of finished DM 321 a share, namely 3,150 shares in products. Among these were the new pas­ January, 9,450 shares in February, 7,400 senger car models 190/190E which had shares in March, 7,850 shares in Novem­ been completed by the end of 1982 but ber and 3,400 shares in December. which were not delivered to customers In July, 70,406 shares (with a par value until the beginning of 1983. of DM 3.5 million = .23% of total com­ The valuation methods remained un­ mon stock) were sold to our employees at changed from prior years. Raw materials a preferential purchase price of DM 156 a and supplies were valued at the lower of share. cost or market. Finished goods were val­ As of December 31, 1982, we held ued including direct material, direct labor 81,942 shares (with a par value of DM and manufacturing overhead. Reasonable 4.1 million = .27% of total common stock); deductions were made for obsolete items of these, 50,692 shares were purchased in after longer storage or after design changes. 1981. The shares were valued at DM 12.8 million. Receivables Total receivables rose DM 150.8 million to DM 2,848.3 million. Trade accounts and The increase by DM 88.2 million to Other Assets notes receivable declined DM 107.2 mil­ DM 2,226.8 million is mainly due to invest­ lion. The foreign share of trade accounts ments of liquid funds in short and medium- and notes receivable was 57%, nearly term time deposits and similar debt unchanged from last year's 58%. The DM instruments. Moreover, interest receiv­ 258.0 million increase in receivables from ables, claims for added-value tax refunds, affiliated companies was mainly attribut­ receivables from profit and loss transfer able to Maschinenfabrik Esslingen AG agreements, are included under this bal­ because of advance financing of invest­ ance sheet caption. ments, to Mercedes-Benz Leasing GmbH, and to European and North American distribution companies because of a higher business volume. We have reduced the gross valuation of non-interest bearing receivables by dis­ counting them to maturity. In valuing our receivables we have made allowance for all known risks.

79 Notes to Financial Statements Daimler-Benz AG

STOCKHOLDERS' EQUITY, The general credit risk at home and Lump-Sum LIABILITIES, ETC. abroad has been considered on a country- Allowance/or specific graduated scale of 4% to 10% (last Doubtful Capital Stock The capital stock amounts to DM year uniformly 10%). The calculation Accounts and Retained 1,528.8 million and is unchanged from last included, apart from trade and notes receiv­ Earnings year. According to the resolution by stock­ ables, also receivables from affiliated com­ holders at the annual meeting on July 1, panies and advance payments made to 1981, there remains in force an "authoriz­ suppliers. The total lump-sum allowance ed share capital" of DM 350 million until for doubtful accounts amounted to DM June 30, 1986. Of this, a partial amount of 165.0 million (last year DM 203.6 million). DM 170 million will be used at the end of 1983 through the increase of share capital Old-age pension provisions increased Provisions for at the ratio of 1 for 9. DM 579.1 million to DM 3,632.7 million. Old-Age According to the information received The fact that a further portion of vested Pensions by us under Section 20 Sub-Section 1 of pension and disability benefits was trans­ the Company Act, "Deutsche Bank ferred from the Daimler-Benz Provident Aktiengesellschaft", Frankfurt (Main), and Fund to Daimler-Benz AG has also had "Mercedes-Automobil-Holding Aktien­ an effect here. We have reduced the actu­ gesellschaft", Frankfurt (Main), each owns arial interest assumption for pension obli­ more than 25% of the capital stock of our gations under the pension regulations from company. 5.5% to 5%; the other pension provisions Retained earnings allocated under stat­ have been calculated on the basis of an ute increased DM .5 million to DM 156.3 interest rate of 3.5% as heretofore. as a result of the premium received on Pension provisions - including the fractional shares sold on the open market. adjustment risk accrued to date in accor­ In adjusting treasury stock on hand to dance with Section 16 of the Pension Law the balance sheet value, a partial amount - were calculated actuarily, using the indi­ of DM 6.1 million was charged to retained vidual level premium method. earnings allocated for treasury stock. The assets of the Daimler-Benz Provi­ An amount of DM 343.6 million was dent Fund - after receipts of DM 80 million allocated from net income to unallocated from DBAG - have now reached DM retained earnings. 2.5 billion.

Special Special equity reserves are established For maintenance planned in the report­ Provision for Equity in accordance with existing tax regula­ ing year but not carried out, we have made Deferred Reserve tions. Of the balance sheet amount of DM a provision of DM 108.4 million. Maintenance 287.4 million, DM 128.4 million pertain to reserves allowed under Section 3, Sub- The other provisions, which increased Other Provisions Section 1 of the Foreign Investment Act DM 61.3 million to DM 3,358.6 million, (losses of foreign subsidiaries), DM are primarily for our worldwide warranty 123.8 million pertain to reserves allowed obligations and for legal and litigation risks. under Section 1, Sub-Section 1 of the Moreover, they cover obligations in the Income Tax Act for Developing Coun­ social benefit area, possible losses inher­ tries and DM 35,2 million pertain to a ent in pending business transactions and reserve for price increases allowed under from investments in affiliated companies, section 74 of the Income Tax Act. and tax risks.

80 Notes to Financial Statements Daimler-Benz AG

Statement of Income Long-Term After obtaining loans of DM 19.4 mil­ Total revenue increased 6.6% to DM Total Revenue Liabilities lion, which were almost exclusively used 31.4 billion. While sales increased 7%, for co-financing of Berlin investments and inventory increases of DM 153.5 million repayment of loans totalling DM 27.2 mil­ were smaller than last year's increase of lion, long-term liabilities were reduced by DM 255.9 million. DM 7.8 million to DM 130.4 million. The planned repayments in 1983 will amount Cost of raw materials and supplies and Cost of to about DM 22.0 million. of goods purchased for resale rose 4.9% to Materials about DM 16.0 billion. This dispropor­ Other Liabilities Other liabilities rose DM 428.4 million tionate increase, in comparison to the total to DM 3,696.7 million. This was due to revenue, is due - despite substantial price the increased purchasing volume, higher increases for materials - in large part to commission obligations and higher tax the greater share of less material-intensive liabilities. vehicles in terms of total output.

Contingent Discounted notes receivable amounted Net income from affiliated companies Excess Income Liabilities to DM 27.6 million. Guarantees for liabil­ was as follows: over Losses ities of others are stated at DM 241.0 mil­ from Affiliated lion; they were given for domestic and Companies foreign affiliated companies. Payment guarantees totalling DM 57.7 million have been given in favor of credi­ tors as a result of the 1970 DM bond issue, and the 1982 lfr bond issue by Daimler- Benz Finanz-Holding S.A., Luxemburg. The obligation arising from stock sub­ scriptions and contingent liabilities of "Close Corporations" (Section 24 of the GmbH Act), and guarantees given by coop­ eratives owned by subsidiaries, amount to DM 27.3 million. We are jointly and severally liable for two partnerships which have profit and loss transfer agreements with parent com­ panies. * Under the assumption that the propos­ ed dividend is ratified by the stockholders at the annual meeting, renumeration for the members of the Board of Manage­ ment amounted to DM 8,166,166. Dis­ bursement to former members of the Board of Management or their survivors and to members of the Supervisory Board The dividend payment from our Brazil­ totalled DM 2,998,703 and DM 1,262,040, ian company represented the remaining respectively (including value-added tax). dividend amount for the year 1980.

81 Expense Structure in Terms of Total Revenue - Daimler-Benz AG Notes to Financial Statements Daimler-Benz AG

Net Interest With interest income of DM 678.7 mil­ The losses of DM 64.3 million pertain Write-Down Income lion (last year DM 610.0 million) and inter­ predominantly to individual value adjust­ of Financial est expense of DM 68.7 million (last year ments of receivables from affiliated com­ Assets DM 56.9 million), net interest income panies, and write-down of treasury stock. amounted to DM 610.0 million (last year DM 553.6 million). These figures express Taxes on income and property rose Taxes on the continuing unusually high interest lev­ 6.9% to DM 2,648.0 million. Included Income and els and the good liquidity situation. here is DM 100.7 million arising from Property the limitation of the deductibility, for tax Incomefrom Our assessment of a lower exposure for purposes, of accrued pension provisions. Dissolution of legal and litigation risks, and of potentially Since the beginning of 1982, the interest Provisions lower losses from pending business trans­ factor to be used in determining accrued actions caused us to dissolve DM pension liabilities for tax purposes has been 207.1 million (last year DM 87.9 million). increased from 5.5% to 6%.

Other Income The various income items combined This summary expense caption increas­ Other Expenses here and totalling DM 200.4 million (last ed DM 297.9 million to DM 2,387.6 mil­ year DM 127.6 million) represent - apart lion. As heretofore, it comprises predom­ from profits on the sale of securities, alloca­ inantly administrative and selling expenses tion of administrative expenses etc. - main­ including sales commissions, rental and ly recoveries for prior years' write-offs of lease expenses, and additions to provi­ individual customer accounts. sions insofar as such additions are not shown under other captions. Personnel Despite only negligibly higher total Expenses employment, "wages and salaries" and Net income for the year rose by DM Net Income "social security levies" rose to about DM 79.3 million to DM 687.3 million. Accord­ for the Year 8.1 billion (last year DM 7.6 billion). The ing to our calculations, net income for the contributing factors for this roughly 7% year includes no inflationary profits. rise were - apart from labor contract For the reporting year, there was a differ­ increases - the disproportionately grown ence of DM 157.6 million pursuant to Sec­ social security levies which reflect both tion 160 Sub-Section 2, Clause 5 of the the higher wage base for social security but Company Act, which led to a reduction of also the substantially higher contributions net income for the year. This difference to the Federal Pension Guaranty Corpora­ was largely caused - after offsetting contra tion. amounts - by the reduction of the interest Expenses for "old-age pension and sup­ rate used for the computation of pension port payments to dependents" increased provisions as provided for by pension to DM 741.8 million (last year DM regulations. 688.1 million) as a result of the lowering An amount of DM 343.6 million was of the actuarial interest rate assumption transferred from net income to unallocat­ for the calculation of pension provisions ed retained earnings; this left an unappro­ and the transfer of another portion of vest­ priated surplus of DM 349.8 million (last ed pension and disability benefits. year DM 304.0 million), after taking into More detailed explanations can be seen account the transfer from retained earn­ under chapter "Employment and Bene­ ings allocated for treasury stock. fits" (compare page 49).

83 Proposal for the Allocation of Unappropriated Surplus

The annual financial statements as of December 31, 1982, as submitted by the Board of Management, approved by the Supervisory Board and thus confirmed, show an unappropriated surplus of DM 349,767,297.

It is proposed to the Annual Meeting of Stockholders that the unappropriated surplus be applied as follows:

Stuttgart-Untertuerkheim, April 19, 1983

The Board of Management

84 The Board of Management

In the Supervisory Board meetings of Bacher pursuant to Section 7 Subsection 2 the past year, in numerous individual meet­ of the company's bylaws. ings, and by means of written and verbal Mr. Heinz C. Hoppe, after 28 years of reports, we have been informed in detail service to Daimler-Benz, including 13 years and have consulted with the Board of Man­ as a member of the Board of Manage­ agement on the state of the corporation ment, retired at the end of 1982. Mr. Hop­ and on principal matters of corporate pol­ pe decisively shaped the build-up and icy. In particular, these discussions center­ expansion of our Mercedes-Benz distribu­ ed on employment trends, results of oper­ tion organization in North America and ations and medium and long-range the restructuring of large portions of our corporate planning including capital spend­ European distribution organization. He ing policy. Furthermore, we discussed can take great credit for opening up the important business transactions and made Near and Mid-East markets for our truck business decisions which by law or bylaws business. In his responsibility for all sales had to be submitted to us for approval. at home and abroad, he was successful, We have examined the financial state­ through manifold initiatives and meas­ ments, the annual report, and the recom­ ures, in enhancing in a most positive way, mendations for the payment of dividends. the standing and reputation of our name The financial statements as of December in all markets. 31, 1982, the annual report and the Dr. jur. Richard Osswald, after 27 years accounting principles used were verified of service to Daimler-Benz, since 1976 as by the Deutsche Treuhand-Gesellschaft a member of the Board of Management, AG, Wirtschaftspruefungsgesellschaft, retired on March 31, 1983. During these Frankfurt/Main, and have been found to years together with his colleagues, he deci­ be in accordance with the books and with sively fashioned the personnel and social the pertinent legal requirements. The policies of our company. With great per­ Supervisory Board has noted the result of sonal involvement, he devoted himself to the audit with approval. the development and maintenance of bal­ The result of the examinations made by anced relations with our social partner in the Supervisory Board and the auditors the area of collective bargaining, and in has shown no cause for question. The the promotion of management training. Supervisory Board has reviewed the con­ The build up and expansion of operation­ solidated financial statements, the consol­ al education, at home and abroad, was idated annual report and the report of the particularly dear to his heart. auditors. In this report, the Supervisory Board The financial statements of the corpora­ also wishes to express to these two gentle­ tion as submitted by the Board of Manage­ men its special gratitude and recognition. ment are hereby ratified and approved, Dr. jur. Manfred Gentz was appointed and we concur with the recommendations deputy member of the Board of Manage­ of the Board of Management regarding ment effective April 1, 1983; he has taken the application of the unappropriated sur­ over the responsibility for "Personnel, plus. Social Welfare, and Administration". Dr. Ing. Hans Bacher, who had been a member of the Supervisory Board since Stuttgart-Untertuerkheim, May 1983 1975, passed away on October 30, 1982. To us he had been an outstanding advisor The Supervisory Board with intimate technical knowledge of the automobile, and who had close ties to our company. We owe him a great deal of gratitude. Dr. phil. Dr. rer. oec. h. c. Marcus Bie- rich, Muenchen, was appointed to the Supervisory Board, replacing Dr. Ing. Hans Chairman

85 Balance Sheet of Daimler-Benz AG

86 87 Statement of Income of Daimler-Benz AG

In 1982, pension payments to retirees and payments to the Daimler-Benz Provident Fund GmbH The accounting, the annual financial statements and the for current obligations amounted to DM 162,837,257. In the following five years, payments - management report, which we have examined with due care, not considering adjusted obligations pursuant to section 16 of the corporation pension law - comply with the law and the company's bylaws. will in all likelihood be made amounting to 99, 105, 112, 119, 126 % of this amount.

Stuttgart-Untertuerkheim, April 19, 1983 Frankfurt (Main), April 21, 1983

Daimler-Benz Aktiengesellschaft Deutsche Treuhand-Gesellschaft Board of Management Aktiengesellschaft Wirtschaftspruefungsgesellschaft Prinz Breitschwerdt Niefer Dr. Goerdeler Dr. Koschinsky Reuter Ulsamer Wirtschaftspruefer Wirtschaftspruefer Gentz Hinrichs Liener (independent auditors)

88 Consolidated Annual Report Notes to Consolidated Financial Statements

89 Notes to Consolidated Financial Statements

COMPANIES INCLUDED IN During the year under review, apart New CONSOLIDATION from two smaller domestic retail compan­ Subsidiaries ies, seven foreign subsidiaries were includ­ The consolidated financial statements ed in consolidation for the first time; the fundamentally include all domestic and addition abroad was largely due to the foreign subsidiaries in which Daimler-Benz corporate restructuring of our North AG (hereinafter referred to as DBAG) has American activities. Three foreign com­ a direct or indirect interest of more than panies were merged with other consolidat­ 50%. The consolidated financial state­ ed companies. ments, as submitted and including DBAG, comprise 105 companies (last year 99), of which 22 (last year 20) are domestic com­ panies and 83 (last year 79) are foreign companies. (Compare page 97f.) As in previous years, we did not consol­ idate some foreign subsidiaries without or with only negligible business activities. These companies had no transactions which would have had a material effect on the Corporation's consolidated financial statements. The following companies which are providing old-age pension ben­ efit to our employees were not included in consolidation as they are not considered subsidiaries under the law (Section 18, Sub-Section 1, Clause 1 of Company Act): Daimler-Benz Unterstuetzungskasse GmbH, Stuttgart Holzindustrie Bruchsal Unterstuetzungskasse GmbH, Bruchsal Bruehler Unterstuetzungsgesellschaft mbH der Wuerttembergischen Baum- woll-Spinnerei und -Weberei bei Esslingen a.N., Esslingen a.N.

90 Notes to Consolidated Financial Statements

PRINCIPLES OF CONSOLIDATION Revenues and expenses are translated at average annual exchange rates. Excep­ Classification The individual domestic financial state­ ted are depreciation charges for fixed assets and Valuation ments included in the consolidation were and gains and losses from fixed asset dis­ classified in compliance with statutory posals, which are translated at historical requirements of the Company Act, and rates. The translation difference of bal­ certified by our outside auditors. As in ance sheet and profit and loss items at prior years, the individual foreign financial different rates was reflected in the income statements - which were prepared and statement. certified in accordance with the laws of the respective countries - have, for consolida­ Capital consolidation was effected in Capital tion purposes, been reclassified to con­ accordance with the principle of "First Consolidation form to the presentation requirements of Consolidation" whereby the parent's the Company Act, and have been valued acquisition costs are eliminated against the according to methods uniformly applied relevant share capital and retained earn­ to all consolidated companies. ings at acquisition. The difference resulting from this elimi­ Currency The accounts of foreign subsidiaries are nation is shown in the balance sheet as Translation translated into D-Marks on the basis of "Cost of Investments in Consolidated Sub­ historical exchange rates for fixed assets at sidiaries in Excess of or Below Book Value the time of acquisition, and at year-end at Acquisition". exchange rates for current assets, liabili­ Profits earned by foreign subsidiaries ties and unappropriated surplus. Stock­ after date of acquisition plus the unappro­ holders' equity in D-Marks is the remain­ priated surplus for 1982 - excluding minor­ ing difference between translated assets ity interests - are added to retained earn­ less translated liabilities and less unappro­ ings. Thus, the unappropriated surplus of priated surplus. DM 349.8 million in the consolidated fi­ As a result of the foreign exchange fluc­ nancial statements equals the unappropri­ tuations of individual local currencies in ated surplus of DBAG. relation to the D-Mark, changes in the D-Mark net equity always occur when its Intercompany receivables and payables Other amount differs from the amount of fixed between subsidiary companies have been Eliminations assets translated at historical exchange eliminated; intercompany profits in fixed rates. The majority of our foreign subsid­ assets and inventories were likewise elim­ iaries also finance a portion of current inated. assets with equity capital. Negative transla­ Valuation adjustments, write-downs, tion differences were thus largely due to and provisions recorded on the books of high devaluations of the South American the parent company for the decline in asset currencies and of the English pound values of subsidiaries have been elimi­ against the D-Mark, and positive transla­ nated in consolidation. These elimination tion differences were due to rate improve­ measures have increased retained earnings ments (particularly the U.S. dollar). correspondingly. The remaining negative translation dif­ The consolidated income statements are ference was charged to profit and loss as in presented on a fully consolidated and previous years; it thus neutralized the detailed basis pursuant to Section 332 of high inflationary profits, notably from our the Company Act; i. e. intercompany sales Brazilian companies. and intercompany earnings were elimi­ nated against the relevant cost of sales and expenses, respectively.

91 Notes to Consolidated Financial Statements

Consolidated Balance Sheet Asset and Total assets of the Group rose 12.4% to Despite a DM 651.1 million increase in Capital DM 22,954.3 million. This increase was stockholders' equity (capital stock, allocat­ Structure larger than DBAG's 9.6% increase in its ed retained earnings, minority interests balance sheet; DBAG's share in the and special equity reserves), the ratio of Group's assets and capital amounted to stockholders equity to total capitalization about two-thirds. The greater increase of declined to 30.1% (last year 30.7%). The the Group is due to the larger number of ratio of stockholder's equity to fixed assets subsidiaries that are included in the con­ amounted to 99.8% (last year 109.4%). solidation but also because of the effect Outside capital (liabilities and provi­ from translation into D-Marks of foreign sions) increased by DM 1,932.9 million to balance sheets prepared in local curren­ DM 15,779.1 million; its ratio rose to 68.7% cies. On the one hand, this was caused by (last year 67.8%) of total capitalization. the exchange rate improvement of the U.S. dollar and on the other hand, by the smaller devaluations of the external exchange rate of some currencies in rela­ tion to the actual internal rate of inflation, particularly the Brazilian cruzeiro. Total fixed assets rose DM 1,203.8 mil­ lion to DM 6,930.8 million. This dispro­ portionate increase of 21% (caused by heavy capital spending) in comparison to total assets, allowed the ratio of fixed assets to total assets to rise to 30.2% (last year 28%).

92 Notes to Consolidated Financial Statements

ASSETS The increase of inventories by DM Inventories 223.3 million to DM 5,039.9 million origi­ Tangible Fixed Because of substantial capital invest­ nated mostly at DBAG and pertained to Assets and ments by the Group, tangible fixed assets the planned inventory increase of the new Intangible and intangible assets rose DM 1,026.5 mil­ car models 190/190E, the delivery of which Assets lion to DM 6,435.6 million; most of the to customers did not start until the begin­ additions related to investments in Ger­ ning of 1983. About two-thirds of total many. Abroad, it was largely our Brazilian inventories pertained to DBAG. manufacturing companies and the Belgium distribution company which had capital Receivables - mostly trade and notes Receivables outlays. receivables - rose DM 505.5 million to About 80.5% of total depreciation was DM 3,501.5 million. The increase was due accounted for by DBAG and 9.2% by our largely to the first-time inclusion of North and South American manufactur­ Mercedes-Benz Credit Corporation, a U.S. ing companies. finance company.

Investments in Investments in non-consolidated affil­ The increase in this balance sheet cap­ Cash and Affiliated iated companies rose DM 153.0 million to tion of DM .5 billion to DM 4.6 billion Temporary Companies DM 265.6 million. Additions mostly com­ pertained predominantly to foreign com­ Investments in prised the acquisition of a 25% share inter­ panies, particularly to the North Ameri­ Securities est in Allgemeine Verwaltungsgesellschaft can companies. Further liquid funds are fuer Industriebeteiligung mbH, Muen- invested in short-term debt instruments chen, and a capital stock increase at MTU which, as in prior years, are shown under Motoren- und Turbinen-Union Muen- "Other Assets". chen GmbH, Muenchen.

Cost of This amount represents the difference Investments in between the cost of investments in subsid­ Consolidated iaries and the book value at the time of Subsidiaries in acquisition. Offsetting the debit amounts Excess of Book (cost in excess of book value) of DM Value at 119.4 million (last year DM 155.8 million) Acquisition against the credit amounts (cost below book value) of DM 91.9 million (last year DM 91.9 million) resulted in a net debit balance of DM 27.5 million. The debit amounts represented acquisi­ tion costs in excess of book value. The credit amounts arose largely with the pur­ chase of our South American subsidiaries in the 1950's when portions of the contrac­ tual capital stock increases were paid for with tangible fixed assets (particularly machinery and equipment). The DM 36.4 million decline in the cost of investments in consolidated subsidi­ aries in excess of book value at acquisition was largely due to write-downs of such investments by the parent company.

93 Consolidated Balance Sheet Structure Notes to Consolidated Financial Statements

STOCKHOLDERS' EQUITY, Provisions rose DM 1,039.5 million to Provisions LIABILITIES, ETC. DM 8,314.5 million. Of this amount, DM 3,856.1 million pertains to pension provi­ Stockholders' The capital stock in the consolidated sions, of which about 96% was provided for Equity and balance sheet is identical to the capital by DBAG. The 77% share of DBAG in Retained stock of DBAG, and at DM 1,528.8 mil­ other provisions was also relatively high Earnings lion is unchanged from last year. since obligations and risks with worldwide The paid-in-surplus represents capital effect are predominantly taken into contributions in excess of par value in account by DBAG. connection with the 1977 and 1981 capital When making provisions, we also have stock increases. taken into account all currency risks which Retained earnings of DM 4,965.7 mil­ had been sufficiently determinable at the lion (last year DM 4,364.2 million) com­ time the balance sheet was prepared. prise retained earnings of DBAG which were allocated from net income, and from Liabilities with a term of at least four Long-Term proportionate retained earnings, unappro­ years rose DM 262.4 million to DM 805.2 Liabilities priated surplus and deficits earned or in­ million. This increase is principally due to curred by subsidiaries subsequent to their the first-time inclusion of Mercedes-Benz acquisition. Moreover, elimination Credit Corporation. Bonds were shown in amounts affecting income are debited or the amount of DM 57.7 million and DM credited here. 17.6 million at Daimler-Benz Finanz- Holding S.A., Luxemburg and Mercedes- Minority This balance sheet caption comprises Benz France, respectively. Interests in outside third-party interests in the net Subsidiaries equity and unappropriated surplus and These liabilites are mostly for borrow­ Liabilities deficit of consolidated companies. The in­ ings from the DBAG Unterstutzungs- to Provident crease in minority interest was also the re­ kasse GmbH. Funds sult of the first-time inclusion of Merce­ des-Benz Credit Corporation, in which Short-term liabilities increased DM Other third-party interests hold about 15%. 584.5 million to DM 6,133.9 million. Of Liabilites this increase, two-thirds are attributable to Special Equity The special equity reserves, which are DBAG and one-third to other companies Reserves created pursuant to the respective tax which have been included in the consol­ regulations, increased DM 39.7 million to idation for the first time. The increase of DM 357.7 million. The balance sheet liabilities to credit institutions by DM amount pertains largely to DBAG and 144.2 million to DM 1,117.2 million is due Mercedes-Benz France, with DM 287.4 to the expansion of business volume in million and DM 61.4 million, respectively. the European distribution companies.

Lump-Sum The lump-sum allowance for doubtful Apart from the obligations shown for Contingent Allowance for accounts declined DM 57.4 million to DM DBAG, there are no significant contin­ Liabilities Doubtful 258.1 million. It is used to cover the gener­ gent liabilities for companies included in Accounts al credit risks at home and abroad, and is consolidation for obligations arising from computed at 3 to 10% of total receivables. stock subscriptions, for liabilities arising from capital subscriptions in "Close Cor­ porations" (Section 24 of the GmbH Act) and for guarantees of liabilities of cooper­ atives owned by consolidated companies. Payment guarantees for subsidiary com­ panies totalled DM 37.0 million.

95 Notes to Consolidated Financial Statements

Consolidated Statement of Income Net Sales In 1982, consolidated sales rose 6.1% to Other income rose DM 127.5 million to Other Income DM 38.9 billion. Details are explained on DM 604.6 million. This caption includes page 9ff. credits for receivables previously written off and profits from sale of securities. Cost of The cost of raw materials and supplies Materials and of goods purchased for resale rose 2.8% Personnel expenses (wages and salar­ Personnel to DM 20.0 billion. This disproportionate ies, social levies, old-age pensions and Expenses increase, in comparison to sales, is due to support payments to dependents) rose a change of the manufacturing structure; 7.2% to DM 10.7 billion. The increase was i. e. the share of the less material-intensive predominantly at DBAG. vehicles increased. Moreover, changes in currency values played a part. Tax expenses rose 7.1% DM 3,310.0 Taxes on million, particularly at DBAG which Income and Net Interest Net interest income (excess interest accounted for 80% of the total. Property Income income over expense) rose DM 91.5 mil­ lion to DM 895.7 million; interest income Other expenses rose DM 557.5 million Other Expenses of DM 1,409.7 million was contrasted by to DM 4,076.8 million. This caption in­ interest expense of DM 514.0 million. cludes sales commissions (mostly at About two-thirds of net interest income DBAG), additions to reserves, rental and pertained to DBAG. As in the prior year, lease expenses, and advertising and sales the foreign contributions were mainly promotion expenses; furthermore, it derived from liquidity investments by our includes charges from currency transla­ Brazilian subsidiaries at inflation-caused tions. high interest rates. The inflationary profit contained in such interest income was to a Consolidated net income for the year Net Income larger extent offset in the income state­ rose 11.5% to DM 921.3 million and is ment by charges for the negative exchange made up as follows: differences resulting from the conversion of the individual foreign balance-sheets; these charges are reflected in "Other Expenses".

The DM 95.0 million increase nearly corresponds to the rise in net income at DBAG.

96 Notes to Consolidated Financial Statements

COMPANIES INCLUDED Mercedes-Benz do Brasil S. A., Foreign IN THE CONSOLIDATION Sao Bernardo do Campo/Brazil Companies Sociedade Tecnica de Fundicoes Domestic Daimler-Benz Aktiengesellschaft, Gerais S. A., Companies Stuttgart Sao Paulo/Brazil Maschinenfabrik Esslingen AG, Mercedes-Benz Argentina S. A., Esslingen a. N. Buenos Aires/Argentina Wohnungsbau GmbH Weinstraße as well as one financing company Mettingen, Esslingen a. N. and one reality company Daimler-Benz-Wohnungsbau GmbH, Mercedes-Benz Espana S. A., Stuttgart Madrid/Spain Mercedes-Leasing-GmbH, Stuttgart Comercial Mercedes-Benz S. A., Daimler-Benz Project Consult GmbH, Madrid/Spain Stuttgart Daimler-Benz of North America Holzindustrie Bruchsal GmbH, Holding Company, Inc., Bruchsal New York/U.S.A.2) Industrie- und Handelsbeteiligungen Freightliner Corporation, GmbH, Stuttgart Portland/U.S.A. Pro-Data EDV-Beratung GmbH, Consolidated Metco, Inc., Weinheim Portland/U.SA. Porcher & Meffert GmbH, Stuttgart Freightliner of Canada Ltd., Industriehandel Handels- und Vancouver/Canada Industrieausruestungsgesellschaft mbH, Mercedes-Benz Truck Company, Stuttgart Inc., Portland/USA.1) Wuerttembergische Baumwoll-Spinnerei as well as one service company, und -Weberei bei Esslingen am one reality company Neckar AG, Esslingen a. N. and one financing company Hanomag-Henschel GmbH, Euclid, Inc., Cleveland/U.S.A. Hannover Euclid Canada Ltd., Maschinen- und Werkzeugbau GuelphlCanada Zuffenhausen AG, Stuttgart Euclid Belgium S. A., Chemie- und Textil-Gesellschaft mbH Bruessel/ Belgium Friedrichshafen, Friedrichshafen as well as four service companies Rohtex Aktiengesellschaft Mercedes-Benz of North America, fuer Textilrohstoffe, Stuttgart Inc., Montvale/U.S.A.1) Daimler-Benz Grundstuecksgesellschaft Mercedes-Benz Canada, Inc., Hamburg mbH, Sitz Stuttgart Toronto / Canada Daimler-Benz Grundstuecksgesellschaft Mercedes-Benz Hollywood, Inc., Bremen mbH, Sitz Stuttgart Hollywood/USA.1) Autohaus Braun GmbH, Nuernberg1) 1 as well as one retail company and one Hans Braun GmbH, Nuernberg ) service company Mercedes-Versicherungsdienst GmbH, Mercedes-Benz Credit Corporation, Stuttgart Portland/U.S.A.1,3) Reparaturwerk Boeblingen GmbH, Boeblingen 1) Additions in 1982. 2) Former: Mercedes-Benz of North America, Inc., Montvale/U.S.A. 3) Former: Freightliner Credit Corporation, Portland/U.S.A.

97 Notes to Consolidated Financial Statements

SOFIDEL S. A., Rocquencourt/ Mercedes-Benz Hellas S. A., France Athen/Greece Mercedes-Benz France S. A., Daimler-Benz Holding AG, Zuerich/ Rocquencourt/France Switzerland as well as sixteen reality companies Mercedes-Benz Nederland B. V., Mercedes-Benz (United Kingdom) Ltd., Utrecht/Netherlands Hayes/Great Britain as well as one reality company Daimler-Benz (United Kingdom) Ltd., Mercedes-Benz (Schweiz) AG, Hayes/Great Britain2) Zuerich/Switzerland Mercedes-Benz Car and Truck Centre as well as four financing companies, Ltd., Hayes/Great Britain1) one retail company and three reality Mercedes-Benz (United Kingdom) companies Trustees Ltd., Hayes/Great Britain1) AGAM Financiering B. V., as well as two retail companies Utrecht/Netherlands Mercedes-Benz Belgium S. A./N. V., as well as one financing and two service Bruessel/Belgium companies as well as nine retail companies UBG-Beratungsgesellschaft mbH, 1 Mercedes-Benz Italia S. p. A., Rom/Italy Graz/Austria ) Daimler-Benz (Australia) Pty. Ltd., Mulgrave/Australia Mercedes-Benz (Australia) Pty. Ltd., Mulgrave/Australia

1) Additions in 1982. 2) Former: Mercedes-Benz (Commercial) G. B. Ltd., Hayes/Great Britain.

98 Comparison of Balance Sheets (in condensed form)

99 Consolidated Balance Sheet

100 101 Consolidated Statement of Income

The consolidated financial statements and the reports relating there to, which we have examined with due care, comply with the statutory requirements. Stuttgart-Untertuerkheim, April 19, 1983 Frankfurt (Main), April 21, 1983

Daimler-Benz Aktiengesellschaft Deutsche Treuhand-Gesellschaft Board of Management Aktiengesellschaft Wirtschaftspruefungsgesellschaft Prinz Breitschwerdt Niefer Schnicke Dr. Koschinsky Reuter Ulsamer Wirtschaftspruefer Wirtschaftspruefer Gentz Hinrichs Liener (independent auditors)

102 Appendix

103 Daimler-Benz Highlights

Note: "Daimler-Benz Group" comprises Daimler-Benz AG plus domestic and foreign companies, in which Daimler-Benz' direct or indirect investment is more than 50%, and which are consolidated.

104 Daimler-Benz Highlights

Comprising: Liability reserves of a long and medium-term nature, long-term liabilities to banks and to the Daimler-Benz Provident Fund. Exclusive of extraordinary expense for old age pension in the amount of DM 1.408 million. Restructuring of old age pension with tax-deductible extraordinary addition to pension reserves. Excluding dissolution of provision in the amount of DM 391 million. This amount was previously set up for underfunding in the Provident Fund. Full dividend entitlement of new shares from capital increase out of retained earnings (1 for 4). 50% dividend entitlement of the new common shares as a result of the capital increase in December (1 for 7 issued at par). Dividend and bonus. Full dividend entitlement of the new common shares as a result of the capital increase in December (1 for 8 issued at par). For our stockholders who are liable for income taxes in the Federal Republic of Germany. Allowing for capital stock increases.

105 Sales and Production

Figures of Daimler-Benz are inclusive of Unimog vehicles and MB-trac.

106 Sales and Production Data

*) Figures of Daimler-Benz are inclusive of Unimog vehicles and MB-trac.

107 Car Industry of Leading Countries

Figures are partly estimated. From 1978 on, actual figures excluding major components. 108 Including exports to Canada. Car Production Trends of Leading Countries 1962-1982

109 Commercial Vehicle Industry of Leading Countries

Figures are partly estimated. From 1978 on, actual figures excluding major components. 110 Including exports to Canada. Commercial Vehicle Production Trends of Leading Countries 1962-1982

111 Truck Production Trends of Leading Countries 1972-1982 (over 6 tons gross vehicle weight)

112

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