Mercedes-Benz AG — Call Transcript 2007

Feb 14, 2007

DAIMLERCHRYSLER

2006 RESULTS ANNUAL PRESS CONFERENCE & CONFERENCE CALL

Dr. Dieter ZetscheChairman of the Board of Management DaimlerChrysler AG Head of Mercedes Car Group

Auburn HillsFebruary 14, 2007

GROUP ACTUALS

	2005	2006
SUiltnaes	k4829,	k4700,
Reenesvu	€b1498n	€5b116n
ifiOPttperangro	€52bn	€55bn
iNtencome	€28bn	€32bn
iiDddven	€150	€150

DISAPPOINTING YEAR FOR CHRYSLER GROUP –GOOD PERFORMANCE BY ALL OTHER DIVISIONS

Substantial loss mainly due to changed market environment

Significant improvement in profitability Mercedes Car Group

Profitability on record level Truck Group

Further profit increase Financial Services

DAIMLERCHRYSLER

CHRYSLER GROUP RECOVERY & TRANSFORMATION PLAN2006 RESULTS ANNUAL PRESS CONFERENCE & CONFERENCE CALL

Tom LaSordaMember of the Board of Management Chrysler Group

Auburn HillsFebruary 14, 2007

• Intense competition in U.S.
• • Gas prices drive shift in consumer preferences from large SUV's, trucks, minivans to mid/small vehicles
• • CG derives over 70% of its retail sales from the minivan / truck / SUV segments
• • Global commodity and continued material cost headwinds pressure margins
• • Vehicle inventories not aligned with market demand
• •Dealer relations

Operating Profit FY 2005

Operating Profit FY 2006

CHRYSLER GROUPRECOVERY AND TRANSFORMATION PLAN

IMPLEMENTATION TEAMS

KEY MEASURES

RMteeneanagemenvu	CMil&Fidttaeraeossx	C/iPdiitttapacrocyuvy
Cidttonneproc•uuffi(d58oenseneanvwfhdditrereseproucsn)2007
/fIillittmproereaeemvx•
Allblhttcceeraegoagro•w
/Effikittecvemareng•iiditncenvespenng
iiRddteceanopme•uzdlktteaerneorowidlmproveeaerfibilittproay

SSKEYMEAURE
RMteeneanagemenvu	CMil&Fidttaeraxeoss	C/iPdiitttapacyroucvy
Cidttonneproc•uuffi(8d5oenseneanvwfihddtrereseprocsnu)2007/Iilflittmprovereaeemx•Allblhttcceeraegoagro•wEffiki/ttecvemareng•iiditncenvespenngRddiiteceanopmeuz•	Rdilbtteucemaeracossy•$15bb2009tpouyEll/itporesaeosorcng•xuufitononcoreoperaons-Sltteecpars–iiidbttsronprocessesuTittransporaon–iservcesSltteecspporu–fitnconsufAitssmonsoru•
dlktteaerneorowidlmproeeaervfibilittproay	pfilsccessnonuuuiittnegoaons

KEY MEASURES

Revenue Management

• • Continue product offensive (8 new and 5 refreshed products in 2007)
• •Improve retail / fleet mix
• •Accelerate global growth
• • Effective marketing / incentive spending
• • Reduce and optimize dealer network to improve dealer profitability

Material & Fixed Costs

• • Reduce material costs by up to $1.5b by 2009
• • Explore sale / outsourcing of non-core operations
  • – Select parts distribution processes
  • – Transportation services
  • – Select support functions
• • Assumptions for successful union negotiations

Capacity / Productivity

• • Reduce total assembly capacity by 400,000
• • Eliminate shifts: Newark & Warren in 2007, St. Louis South in 2008
• • Idle Newark Assembly plant in 2009
• • Idle Cleveland parts distribution center in December 2007
• • Reduce powertrain, stamping and component capacity

EMPLOYEE IMPACT – 13,000 TOTAL

Hourly

Reduce Hourly employment by 11,000 over three years (9,000 in U.S. and 2,000 in Canada)

4,000 Assembly Plants 1,000 Powertrain and Stamping 1,000 Other, including potential sale of non-core functions 3,000 Technology, efficiency and productivity 2,000 Canada - Technology, investment efficiency, and productivity 11,000 TOTAL HOURLY

Salary

Reduce Salaried employment by 2,000 over two years

Special retirement, separation and attrition programs will be announced later

RESTRUCTURING CHARGES AND ADDITIONAL EFFECTS

iCRhttesrcrngargesuu$(/)i€bnn			iiffAddlEttonaecs$(i/)€bnn
	2007	Tltoa		2007
RiChttesrucurngarge	Utpo€10$()13	Utpo10€$()13	jIAdtttnvenoryusmen	€02$()03
CffhEtasec	€08$()10	€10$()13

ASSUMPTIONS AND IMPROVEMENTS

Base Planning Assumptions

	2006	2007	2008	2009
SAAR()iMiln	127	107	127	137
iiPrcng	0<	0<	0<	0<

Recovery Improvements (% break down)

	2009
RMteeneanagemenvu	20%
Mil,MfiViblttaeraanacrngaraeuuCdFidtanxeoss	80%
SSTARGETEDAVING*	€35bn$(5b)4n
SRlteurnonaes	25%

* - Stretch savings included to help offset unknown market factors

STRATEGIC TRANSFORMATION

15

CHRYSLER GROUPTRANSFORMATION PLAN

CUSTOMER AND BRAND FOCUS

2006 PRODUCT OFFENSIVE

CUSTOMER AND BRAND FOCUS

2007 PRODUCT OFFENSIVE (8 NEW, 5 REFRESH)

•

CUSTOMER AND BRAND FOCUS

• Product offensive continues (brand equity and differentiation)
  • •New versions of minivans, pick-up truck, and select LX vehicles
  • •20 plus all-new vehicles; 13 refreshed
  • • All-new commercial segment expansion (Sprinter and Class 4&5)
• Product mix shift to more fuel efficient vehicles
• Powertrain revolution
  • • $ 3 billion investment plan in new engines, transmissions, and axles
  • •BLUETEC diesel engines from MCG / Cummins
• •Dealer network optimization / stronger brand focus

CUSTOMER AND BRAND FOCUS

POWERTRAIN PORTFOLIO MEASURES

	Aitcon	fiBtenes
GASOLINE	I4WldEiorngne-VPhiEi6oenngnex-	Ifilif431tamesromo•:-fiifV6l41*tamesromo•:-
DIESEL	IMBEi4ngne-iV6MBEngne-CLDiDilummnsese	IdFlEncreaseueconomy•IdPfncreaseerormance•
HYBRID	FllHbiduyrMildHbidry	CiRddlteceompe•uxy
TRANS/AXLE	CDllhTiituaucransmssonCAlPommonerogramx	*Ttarge

CUSTOMER AND BRAND FOCUS

REDUCE NUMBER OF PLATFORMS FROM 12 TO 7 BY 2012

GLOBAL BALANCE

• Defend and grow Chrysler Group NAFTA strongholds
• NAFTA nameplate consolidation in selected vehicle segments
• Add new non-NAFTA vehicle programs crucial to global expansion
• Leverage 3rd party alliances to cost effectively access regional products and markets
• $5+ billion additional purchasing to low cost sources – balance supplier footprint

CHRYSLER GROUPTRANSFORMATION PLAN

Partner to accelerate growth and leverage resources

• •Manufacturing Assemble minivans for VW

• •

• •Small Vehicle Segment Chery in China

• •

• Retail Network Marketing Hyundai in Mexico

• Focused Alliances GEMA World Engine, Hybrid

KEY MEASURES

By 2009 …

• 400,000 unit capacity reduction
• Shift reductions; 1 plant to be idled; 1 parts distribution center to be idled
• •Workforce reductions of 13,000
• •Global market opportunities with low cost sourcing
• •Strong product pipeline
• • $3 billion powertrain investment leads to a more fuel efficient product line-up
• •Dealer network optimization
• • $4.5 billion targeted savings; including up to $1.5 billion targeted material savings
• •2.5% return on sales

DAIMLERCHRYSLER

2006 RESULTS ANNUAL PRESS CONFERENCE & CONFERENCE CALL

Dr. Dieter ZetscheChairman of the Board of Management DaimlerChrysler AG Head of Mercedes Car Group

Auburn HillsFebruary 14, 2007

TARGET: ACHIEVE 7% RoS IN 2007

Note: RoS as reported

PRODUCT QUALITY: SIGNIFICANT IMPROVEMENT

Failures/100 Vehicles ("12 Months in Service")

MODULE STRATEGY: FROM CAR LINE SPECIFIC ORGANIZATION TO CROSS-MODULAR ORGANIZATION

GROWTH: FUELED BY SHARPENED BRAND POSITIONING AND IMPROVED CUSTOMER CARE

NEW MERCEDES-BENZ PRODUCTS 2006

CL-Class(September)

New GenerationE-Class(June)

GL-Class(May, US)

SMART: NEW BUSINESS MODEL, PRODUCT, MARKET

TARGET: RoS OF AT LEAST 7% AND RoNA OF 30%OVER THE CYCLE

• "Global Excellence" as major lever
• Management of cycles
  • Operational excellence
  • Market penetration & growth
  • Future products

Truck Group

MANAGEMENT OF CYCLES: SUSTAINABLEPROFITABILITY IMPROVEMENT

OPERATIONAL EXCELLENCE: MANAGE COMMON PLATFORMS

Ydteseray	Tdoay	Tomorrow
Sdltanaone-dlteveopmen	Shddldaremoesanuhittarcecures	Cfltommonpaorms
	Iittnegraonivaddtsanariftneraces	ii3lblgoaengneerngtcenersilkttconenonarcsvu-i(h)capoverengneeavy-()ilihtcapoerengnegv-Cfttenersocompeence(HbidF)tegyrauso

MARKET PENETRATION AND GROWTH

Traditional markets Europe: Truck Dedication NAFTA: Product/market approach Sterling Fuso: International markets

Dedicated downstream activities

Enhance product portfolio

Emerging markets

• China
• India
• Eastern Europe

Tailor business model to market (esp. sales & after sales)

Adapt products to region

Truck Group

Truck Group

MAJOR LEVERS FOR INCREASED PROFITABILITY

Vans, Buses

Vans, Buses

NEW VANS AND BUSES 2007NEW VANS AND BUSES 2007

Mercedes-Benz CapaCity Mercedes-Benz CapaCity

Mercedes-Benz ConectoMercedes-Benz Conecto

Freightliner Sprinter Freightliner Sprinter

TARGET: MAINTAIN HIGH PROFITABILITY IN CHALLENGING BUSINESS ENVIRONMENT

Major levers

• Brand support
• Operational excellence
• Regional initiatives and best practices

Note: RoE as reported 1) Incl. sale of IT Services

LEVERAGE REGIONAL AND FUNCTIONAL INITIATIVES TO ACHIEVE JOINT TARGET

CREATING A HIGH PERFORMANCE ORGANIZATION

PRIORITIES FOR THE COMING YEARS

Summary

Stabilize the business for the long-term

Sustain momentum to first achieve and then exceed 7% RoS

Further optimize cycle management; capitalize on growth in emerging markets

Score globally with regional initiatives & operational excellence

DAIMLERCHRYSLER

2006 RESULTS ANNUAL PRESS CONFERENCE & CONFERENCE CALL

Bodo Uebber Member of the Board of Management Finance & Controlling / Financial Services

Auburn HillsFebruary 14, 2007

FY2006 FROM A FINANCIAL PERSPECTIVE

Profitability improved, reflecting

• Higher unit sales and better model mix at Mercedes Car Group and Truck Group
• Successful implementation of efficiency programs
• Compensation of higher raw material prices and less favorable US dollar hedge rates
• Loss at Chrysler Group due to difficult market conditions in the US
• High special charges

Key earnings indicators

• Operating profit of EUR 5.5 billion, up 6%
• Net income rose 13% to EUR 3.2 billion

Key financial metrics

• Positive free cash flow in the industrial business of EUR 1.9 billion
• Net liquidity of the industrial business at EUR 6.4 billion

SUCCESSFUL NEW PRODUCTS INCREASED UNIT SALES AND STRENGTHENED MARKET POSITION

Operating Profit FY 2005

Operating Profit FY 2006

LOWER SALES REFLECT SHIFT IN DEMAND TOWARDS SMALLER VEHICLES AND EFFORTS TO REDUCE DEALER INVENTORIES

LOWER SHIPMENTS RESULTED IN A SUBSTANTIAL LOSS in millions of EUR –

Operating Profit FY 2005

Operating Profit FY 2006

RECORD SALES DUE TO STRONG TRIAD MARKETS

EARNINGS BOOSTED BY EFFICIENCY IMPROVEMENTS AND STRONG SALES

in millions of EUR –

FY 2005

FY 2006

INCREASE IN NEW BUSINESS AND STRENGTHENED MARKET POSITION

EARNINGS IMPACTED BY CHARGES FOR NEW MANAGEMENT MODEL AND GAINS FROM SALE OF ASSETS

in millions of EUR –

Operating Profit FY 2005

Operating Profit FY 2006

STRONG OPERATING PROFIT IMPROVEMENT IN Q4 2006

– in millions of EUR –

	Q42005	Q42006
CMdGerceesarropu	1	1295,
ChlGrserropyu	428	()124
TkGrcropuu	144	487
SFiilinancaervces	347	399
VBOhtanuser,,	201	16
Eliiitmnaons	()73	()196
DilChlGamerryserroup	1048,	1877,

NET INCOME AND EARNINGS PER SHARE

Net Income in billions of EUR -

Earnings per Share in EUR -

RETURN ON NET ASSETS

– after tax at Group level –

59

RETURN ON NET ASSETS OF THE DIVISIONS

– before taxes –

KEY BALANCE SHEET AND FINANCIAL FIGURES

iiifbllEURnonso--	D31ec2005	D31ec2006
iCDlhlGamerrserropyu
1)Eiittqraoƒuy	13%7	12%7
Gliiditrossqƒuy	126	131
IdilBitnsrasnessuu
)1Eiittquyraoƒ	248%	251%
Nliidittƒequy	37	64
SFddttneasuu
Piensonsƒ	()27	()23
Hlhteacareƒ	()158	()141
Fhflidilbitreecasonsrasnesswuu	21	19

ASSUMPTIONS FOR THE AUTOMOTIVE MARKETS IN 2007

Mixed development of car and light truck markets:

• Slightly shrinking North American market to 17.0 million cars and light trucks
• Western Europe similar to 2006 levels at best
• Slight growth in Japan
• Substantial growth in emerging markets

Cyclical decrease in truck markets:

• Sharp decline in North American heavy truck sales (up to -40%)
• Significant decrease in Japan
• Slight decrease in Western Europe
• Further growth in emerging markets

DIVISIONAL EARNINGS OUTLOOK 2007

Mercedes Car Group expects to achieve at least 7% ROS.

• Earnings at Chrysler Group will be impacted by restructuring charges of up to EUR 1.0 billion. In 2007, the loss from ongoing business is expected to be less than in 2006.
• The Truck Group earnings will be below 2006 level due to lower volume in major markets. However, it expects to earn at least its costs of capital.

Financial Services will continue to support Group sales and aims to achieve a return on equity of at least 14%.

GROUP PROFIT OUTLOOK

• DaimlerChrysler's profitability will be strengthened by the ongoing efficiency programs throughout the Group.
• The implementation of the Chrysler Group's recovery and transformation plan will impact the operating result in 2007.
• As of 2007, the Group will adopt the International Financial Reporting Standards (IFRS).
• DaimlerChrysler will provide an earnings outlook for 2007 based on IFRS with the Q1 disclosure.

DISCLAIMER

This document contains forward-looking statements that reflect our current views about future events. The words "anticipate," "assume," "believe," "estimate," "expect," "intend," "may," "plan," "project", "should" and similar expressions are used to identify forward looking statements. These statements are subject to many risks and uncertainties, including an economic downturn or slow economic growth, especially in Europe or North America; changes in currency exchange rates and interest rates; introduction of competing products and possible lack of acceptance of our products or services; competitive pressures which may limit our ability to reduce sales incentives and raise prices; price increases in fuel, raw materials, and precious metals; disruption of production or delivery of new vehicles due to shortages of materials, labor strikes, or supplier insolvencies; a decline in resale prices of used vehicles; the ability of the Chrysler Group to reduce costs, especially in light of restructuring activities underway at some of our major competitors in the NAFTA region, and to respond to shifts in market demand towards smaller, more fuel efficient vehicles; effective implementation of cost reduction and efficiency optimization programs, including our new management model; the business outlook of our equity investee EADS, including the financial impact of delays in and potentially lower volume of future aircraft deliveries; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety, the resolution of pending governmental investigations and the outcome of pending or threatened future legal proceedings; and other risks and uncertainties, some of which are described under the heading "Risk Report" in DaimlerChrysler's most recent Annual Report and under the headings "Risk Factors" and "Legal Proceedings" in DaimlerChrysler's most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission. If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward looking statements prove incorrect, then our actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward looking statements. Any forward looking statement speaks only as of the date on which it is made.

SPECIAL ITEMS AFFECTING OPERATING PROFIT

		4hQttuarer		Fisca	lYear
iillnm-	ifEURonso-	2005	2006	2005	2006
GCM	RitttesrucurngsmarWkfditororcereuconffRliilitteeaseoprosonorearreremenvyRlfiiffblteeaseoprovsonaeravoraediEUiilttterconcompeonavw	-()057--	9()16--	()1,111()057-60	()946()28691-
GC	SfGlAiPidaeoronarongronszvuSfClli&AiktuppororonsmanPdldhttroucreaecargesSliliiitttpperoongamoraonuz	240()34()107105	-()26--	240()99()107105	-()66--
GT	CMMlMibihiFttttseemenonsssouuIiAiLFtmparmenmercanaranceRlfiiflitteeaseoprovsonorearyreremenfff-Dilhihbisposaoogasnesswyu	----	---13	267()87--	--5513
OBV*)Inc	NMMdlteanagemenoewDilfff-hihbisposaoogasnesswyuSlflttaeoreaesaeffRliilitteeaseoprovsonorearyreremenfldiilEUR35illitngongongresomonuu	----	()1671447-	----	()393*24813320

STATUS OF PENSIONS AND POSTRETIREMENT HEALTH CARE BENEFITS

	Pen	isons	Hltea	hCare
ibillifEURnonso--	D31ec5200	D31ec2006	D31ec5200	D31ec2006
))12O/OPBAPB	()415	()375	()177	()160
Pltanasses	343	352	1.9	1.9
Fddttunesaus	(2)7	(23)	(158)	(141)
3)PiAtensonsse	()06	()1.8	00	00
)Al3ccrasu	53	41	98	141
iifFddlttuneposonneoaccruas	()25	()00	()60	()00

1. PBO = projected benefit obligations

2. APBO = accumulated postretirement benefit obligations

3. 2006: Recognition of funded status in balance sheet according to SFAS 158

EUR 11 BILLION EXPENDITURE FOR THE FUTURE

– in billions of EUR –

68