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MarketScreener Homepage  >  Equities  >  Xetra  >  Daimler AG    DAI   DE0007100000

DAIMLER AG

(DAI)
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Daimler : Zwischenbericht Q3 2020

10/23/2020 | 03:45am EST

Interim Report Q3 2020

INTERIM REPORT Q3 2020 | CONTENTS  3

Contents

A | Key Figures

4

B | Daimler and the Capital Market

6

C | Interim Management Report

7 - 28

Business development

7

Profitability

9

Cash flows

14

Financial position

18

Capital expenditure and research activities

21

Workforce

21

Important events

22

Risk and opportunity report

23

Outlook

27

D | The Divisions

29 - 33

Mercedes-Benz Cars & Vans

29

Daimler Trucks & Buses

31

Daimler Mobility

33

E | Interim Consolidated

Financial Statements

34 - 63

Consolidated Statement of Income

34

Consolidated Statement of Comprehensive

Income

36

Consolidated Statement of Financial Position

38

Consolidated Statement of Cash Flows

39

Consolidated Statement of Changes in Equity

40

Notes to the Interim Consolidated Financial

Statements

42

Auditor's Review Report

64

F | Addresses - Information -

Financial Calendar

65

Cover photo: The new Mercedes-Benz eCitaro articulated bus.

For sustainable, CO2-neutral public transport: The new, all-electric

­Mercedes-Benz eCitaro G articulated bus has extra space to carry up to 146 passengers. It is ideally suited for use in busy cities and metro­ politan areas with large passenger volumes and makes an important contribution to inner cities being pleasant to live in. As an option, the eCitaro G is available for the first time with solid batteries. They offer extra high energy density with a total energy capacity of 441 kWh. Thanks to its greater range, this bus can therefore operate very well on most typical city routes.

4 A | KEY FIGURES

Q3

Key Figures Daimler Group

€ amounts in millions

Q3 2020

Q3 2019

% change

Revenue

40,281

43,270

-71

Europe

17,535

17,308

+1

thereof Germany

7,021

6,606

+6

North America

10,943

13,055

-16

thereof United States

9,602

11,377

-16

Asia

10,002

10,337

-3

thereof China

5,495

4,648

+18

Other markets

1,801

2,570

-30

Investment in property, plant, equipment

1,193

1,772

-33

Research and development expenditure

2,126

2,501

-15

thereof capitalized development costs

572

737

-22

Free cash flow of the industrial business

5,139

2,819

+82

Free cash flow of the industrial business adjusted

5,345

2,931

+82

EBIT

3,070

2,690

+14

EBIT adjusted

3,479

3,142

+11

Net profit

2,158

1,813

+19

Earnings per share (in euros)

1.92

1.61

+19

Employees

291,770

298,6552

-2

  1. Adjusted for the effects of currency translation, decrease in revenue of 5%.
  2. As of December 31, 2019.

Revenue

In billions of euros

EBIT

Net profit/loss

In billions of euros

In billions of euros

Earnings per share

In euros

50

45

40

35

30

25

20

15

10

5

0

Q1

Q2

Q3

Q4

3.0

2.5

2.0

1.5

1.0

0.5

0

-0.5

-1.0

-1.5

-2.0

Q1

Q2

Q3

Q4

3.0

2.5

2.0

1.5

1.0

0.5

0

-0.5

-1.0

-1.5

-2.0

Q1

Q2

Q3

Q4

3.0

2.0

1.0

0

-1.0

-2.0

Q1

Q2

Q3

Q4

2019

2020

A | KEY FIGURES 5

Q1-3

Key Figures Daimler Group

€ amounts in millions

Q1-3 2020

Q1-3 2019

% change

Revenue

107,688

125,618

-141

Europe

44,334

51,165

-13

thereof Germany

17,748

19,694

-10

North America

30,304

37,877

-20

thereof United States

26,721

32,879

-19

Asia

27,779

28,998

-4

thereof China

14,672

13,697

+7

Other markets

5,271

7,578

-30

Investment in property, plant, equipment

3,830

5,191

-26

Research and development expenditure

6,735

7,236

-7

thereof capitalized development costs

1,915

2,199

-13

Free cash flow of the industrial business

3,508

-522

.

Free cash flow of the industrial business adjusted

4,261

-237

.

EBIT

2,005

3,930

-49

EBIT adjusted

3,490

7,899

-56

Net profit

420

2,720

-85

Earnings per share (in euros)

0.13

2.32

-94

Employees

291,770

298,6552

-2

  1. Adjusted for the effects of currency translation, decrease in revenue of 14%.
  2. As of December 31, 2019.

6 B | DAIMLER AND THE CAPITAL MARKET

Daimler and the Capital Market

Key figures

Sept. 30,

Sept. 30,

2020

2019

% change

Earnings per share in Q3 (in €)

1.92

1.61

+19

Outstanding shares (in millions)

1,069.8

1,069.8

0

Market capitalization (billions €)

49.26

48.81

+1

Xetra closing price (in €)

46.04

45.62

+1

Daimler share price (high/low), 2019/2020

In €

60

55

50

45

40

35

30

25

20

10/19 11/1912/191/20 2/20 3/20 4/20 5/20 6/20 7/20 8/20 9/20

Share-price development (indexed)

140

130

120

110

100

90

80

70

60

50

12/31/18 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20

Stock exchanges and automotive shares continue their upward trend in the third quarter of 2020

Global stock markets continued to grow in the third quarter, with some indices actually reaching new highs. In Europe, stock markets were initially boosted by the announcement of a €750 billion reconstruction fund by the EU, the upturn in global economic activity and positive news on the development of corona vaccines. The fact that the United States and China were maintaining their trade agreement also boosted share prices. This had an impact on also automobile stocks with their globally complex supply and production networks. However, rising corona infection figures worldwide negatively affected market sentiment at the end of the third quarter.

The Daimler share price showed a further significant recovery in the third quarter of 2020. In addition to the figures for the second quarter, which were better than the majority of analysts had expected, investors were encouraged by the announcement of measures to optimize fixed costs, positive sales figures at Mercedes-Benz Cars and the presentation of the new S-Class. Daimler shares were listed at €46.04 at the end of September, which was approximately 27% higher than at the end of the second quarter of 2020. Taking into consideration the dividend payment of €0.90 per share, our shareholders experienced a performance of +30%. During the same period, the DAX rose by 4% and the STOXX Europe Auto Index by 9%.

Daimler issues first green bond

The Daimler Group again successfully undertook refinancing on the international money and capital markets in the third quarter. In addition to several local transactions, Daimler AG issued the first green bond in the company's history with a ­volume of €1.0 billion and a term of ten years. The additional credit line of €12 billion agreed upon at the beginning of April was adjusted to an available amount of €8.8 billion in the third quarter after the capital-market transactions were completed. Furthermore, several asset-backed securities (ABS) transactions were carried out in the third quarter of 2020. A total refi- nancing volume of USD 4.2 billion was generated in the United States and a volume of CNY 6.0 billion was issued in China. In addition, an ABS bond was issued for the first time in Korea, with a refinancing volume of KRW 394.0 billion.

Daimler AG

STOXX Europe Auto Index

DAX

C | INTERIM MANAGEMENT REPORT 7

Interim Management Report

Significant decrease in total unit sales to 772,700 vehicles (Q3 2019: 839,300)

Revenue of €40.3 billion (Q3 2019: €43.3 billion)

Group EBIT of €3.1 billion (Q3 2019: plus €2.7 billion); adjusted Group EBIT of €3.5 billion (Q3 2019: €3.1 billion)

Net profit of €2.2 billion (Q3 2019: net profit €1.8 billion)

Free cash flow of the industrial business in first nine months of plus €3.5 billion (Q1-3 2019: minus €0.5 billion)

Unit sales and revenue expected to be significantly lower in full-year 2020 than in 2019, EBIT to be at prior-year level Free cash flow of the industrial business expected to be significantly higher than last year

Business development

Global economy recovering after deep slump

The global economy continued to be severely affected by the covid-19 pandemic in the third quarter. Following the massive slump in economic output in the second quarter as a result of national shutdowns in nearly all major economies, a fairly dynamic recovery began in May as restrictions were relaxed, and this continued in the third quarter. This improvement was quite uneven, however, both by region and by sector. Retail sales developed very dynamically, especially in Europe and North America, and in many places were already higher in the third quarter than in the prior-year period. The recovery of industry also came as a positive surprise, although production was still significantly below the previous year's level. The situation was significantly more difficult in the service sector, tourism for example. Leading indicators such as the purchasing managers' index for the service sector fell again perceptibly towards the end of the quarter, showing that there is still a long way to go to old normal levels, not least due to the renewed rise in new infections. The global stock market continued to improve in the third quarter and, despite a slight weakness at the end of the quarter, was recently almost 10% higher than a year earlier. The US economy recovered strongly in the third quarter and is likely to have grown significantly compared with the previous quarter. Compared with last year, however, American gross domestic product contracted once again. Consumer spending in particular recovered strongly and actually exceeded the prior-year level. The economy of the euro zone has also been recovering since May and is expected to have grown noticeably in the third quarter, although it still fell well below the prior-year level, with major differences within the region. Recent monthly data also show that the recovery has recently lost momentum after the number of new coronavirus infections reached new record highs in some regions. In China, which had already returned to pre-crisis levels in the second quarter, the situation normalized further in the third quarter and growth is likely to have accelerated again. Among the other major economies, the recovery in Japan was rather sluggish and the Indian economy was still severely affected by high infection rates, while the Brazilian economy developed noticeably better than had been feared. Central banks and governments in China, Europe, the United States and other regions maintained their expansive course in the third quarter, thus supporting the upswing. The price of oil remained within a fairly narrow corridor of USD 40-45 per barrel, providing little stimulus for the commodity exporting economies.

The development of worldwide demand for cars continued to be severely affected by the corona crisis. In line with the overall economic situation, most of the sales markets relevant for Daimler had already reached their low point in the second quarter and showed a noticeable revival in the third quarter. However, worldwide demand for cars was slightly lower than in the third quarter of last year.

The Chinese market, which had already reached its low point in February, continued its recovery. Car sales in the third quarter were again significantly above the prior-year level. The US market for cars and light trucks also improved visibly, but still recorded a year-on-year decline of nearly 10%.

The European market has also been on a recovery path since the low point in April and was only slightly below the prior-year level in the past quarter. A similar pattern was observed in Western Europe, where demand for cars was about 5% lower than in the previous year. All major Western European sales markets improved significantly in recent months. While sales numbers in Germany, France and Spain were still down by between 5 and 7%, market volumes in the United Kingdom and Italy were actually close to the prior-year levels. Due primarily to the improved situation in the Russian market and strong growth in Turkey, demand in Eastern Europe was significantly higher than in the same period of last year.

Demand for vans in the EU30 region (European Union, United Kingdom, Norway and Switzerland) in the third quarter of 2020 was about at the prior-year level. The market volume for mid- size and large vans was significantly above its prior-year mag- nitude, while the market volume for small vans was down by about 10%. The US market for large vans was slightly smaller than in the third quarter of last year. Demand for large vans in Latin America decreased significantly.

8 C | INTERIM MANAGEMENT REPORT

Major truck markets improved visibly in the third quarter after their severe losses in the first half of the year. In most cases, however, sales figures were still significantly lower than in the third quarter of last year. The North American market for heavy-duty trucks (class 8) contracted at a somewhat lower rate in the third quarter, but was still down by about 30% compared with the prior-year period.

Demand for heavy-duty trucks improved also in the EU30 region compared with the spring. According to recent esti- mates, the market was just slightly below the prior-year level, which had been relatively weak, however, as a result of regulatory special effects. The recovery in Brazil has recently been more dynamic than expected, with sales of heavy-duty truck only about 10% lower than in the third quarter of last year. Demand in Japan was rather weak with a decrease of about 20%.

Bus markets also continued to be affected by the corona

­crisis. According to the latest estimates, demand for buses in the EU30 region was significantly below the prior-year level, primarily due to the ongoing weakness of the touring-coach segment. The market in Brazil also declined significantly in the third quarter.

Significant decrease in total unit sales

In the third quarter of 2020, Daimler sold 772,700 cars and commercial vehicles worldwide (Q3 2019: 839,300). C.01

Mercedes-BenzCars sold 566,600 cars of the Mercedes- Benz and smart brands in the third quarter of this year (Q3 2019: 604,700). Despite the ongoing covid-19 pandemic, deliveries from July through September benefited from a recovery in end-customer demand in many markets. This increased demand could be met at short notice, in particular by reducing dealer inventories. In Europe, 229,800 vehicles were sold (Q3 2019: 253,200), thus continuing the sales revival. In Germany, the region's core market, Mercedes-Benz Cars sold 84,200 vehicles, almost matching the prior-year level (Q3 2019: 85,100). In China, Mercedes-Benz Cars' largest market, sales increased by 23% to 213,800 units (Q3 2019: 173,300), setting a new record for a third quarter. In the United States, Mercedes-Benz Cars delivered 52,000 vehicles, significantly below the prior-year level (Q3 2019: 75,700).

Mercedes-BenzVans posted third-quarter unit sales of 106,900 vehicles (Q3 2019: 100,300). In the EU30 region, Mercedes-Benz Vans sold 69,300 units (Q3 2019: 65,500). With sales of 18,500 units in North America, we recorded our strongest-selling quarter so far (Q3 2019: 14,100). In the United States, we sold 16,000 vans in the third quarter (Q3 2019: 11,600). Sales in Latin America decreased to 3,200 units (Q3 2019: 4,400). In China, sales of 6,500 units were significantly lower than in the prior-year quarter (Q3 2019: 8,500).

Unit sales by Daimler Trucks of 94,100 vehicles in the third quarter of 2020 were 25% lower than in the prior-year period, due in particular to the covid-19 pandemic. Our truck sales in North America decreased by 22% to 41,800 units. We were affected by the global market slump also in the EU30 region, with a significant decrease in sales to 15,400 units (Q3 2019: 19,900). In Brazil, we sold 6,000 units, a decrease of 26% compared with the third quarter of last year. In Asia, our sales of 21,900 trucks were also significantly lower than in the prior- year period (Q3 2019: 33,600).

Primarily because of covid-19,Daimler Buses' sales also decreased in the third quarter of 2020, by 43% to 5,100 units. In the EU30 region, Daimler Buses' third-quarter sales of 1,900 complete buses and bus chassis of the Mercedes-Benz and Setra brands were 23% lower than in the same period of last year. Our sales in Mexico also decreased significantly to 200 units (-71%). In Brazil, our main market in Latin America, we had a fall in sales of 55% to 1,600 bus chassis.

At Daimler Mobility, new business stabilized and was up by

2% compared with the third quarter of last year to €18.7 billion. Contract volume amounted to €149.8 billion at the end of Sep- tember, which is 8% lower than at the end of 2019. A recovery was apparent in the insurance business. Worldwide, 644,000 insurance policies were brokered by Daimler Mobility in the third quarter of this year (Q3 2019: 589,000).

C.01

Group unit sales

Q3 2020

Q3 2019

% change

Daimler Group

772,703

839,326

-8

Mercedes-Benz Cars

566,581

604,655

-6

Mercedes-Benz Vans

106,866

100,332

+7

Daimler Trucks

94,141

125,382

-25

Daimler Buses

5,115

8,957

-43

C | INTERIM MANAGEMENT REPORT 9

Profitability, cash flows and financial position

Profitability

In order to provide a better insight into profitability, cash flows and financial position, the condensed statement of income, condensed statement of cash flows and condensed statement of financial position are presented not only for the Daimler Group but also for the "Industrial Business" and for "Daimler Mobility." The industrial business and Daimler Mobility columns represent a business point of view. The industrial business comprises the vehicle segments Mercedes-Benz Cars & Vans and Daimler Trucks & Buses, as well as the companies of the Group that are not allocated to the divisions. Daimler Mobility corresponds to the Daimler Mobility segment. Eliminations of intra-Group transactions between the industrial business and Daimler Mobility are generally allocated to the industrial business.

Change in the Group's internal management and reporting structure as of January 1, 2020

Until December 31, 2019, the Group's reportable segments were Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Mobility. As of January 1, 2020, the Group's activities are divided into the segments Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks & Buses and Daimler Mobility. This corresponds to the internal reporting and organizational structure. The segments Mercedes-Benz Cars and Mercedes-Benz Vans are aggregated into the reportable segment Mercedes-Benz Cars & Vans in line with the nature of the products and services offered as well as their brands, sales channels and customer profiles.

In order to provide a more transparent presentation of the ongoing business, adjusted figures for both the Group and the segments are also calculated and reported from financial year 2020 onwards. The adjustments include individual items where they lead to material effects in a reporting year. These individual circumstances may relate in particular to legal proceedings and associated measures, restructuring measures and M&A transactions. Further information on the management system can be found in Annual Report 2019 in the Corporate Profile section of the Combined Management Report.

Adjustment of prior-year figures

In order to ensure that the figures for 2020 are comparable with the prior-year figures, the figures for 2019 have been adjusted to the new segment structure. Internal supply relationships within the new segments have been taken into account. Furthermore, in the figures for the previous year, the effects of certain legal issues and equity investments not previously allocated to the segments have been reclassified from the reconciliation to the vehicle segments.

Daimler Group statement of income for the three-month periods ended September 30, 2020

Despite the ongoing covid-19 pandemic, the Daimler Group's revenue of €40,281 million in the third quarter of 2020 was only slightly below the prior-year level (Q3 2019: €43,270 mil- lion). Whereas the revenue of the Mercedes-Benz Cars & Vans and Daimler Mobility segments was only slightly below the prior-year figures, the Daimler Trucks & Buses segment's revenue was significantly lower than in the prior-year quarter, due in particular to the covid-19 pandemic. Adjusted for negative exchange-rate effects, revenue was also slightly lower than in the third quarter of last year.

The measures taken in response to the covid-19 pandemic had a positive impact on gross profit and led to cost reductions also in other functional-cost areas. Due to increases in provisions for risks in the first half of 2020, no further additions to credit-risk provisions were necessary at the Daimler Mobility segment.

As in the prior-year quarter, earnings were additionally affected by individual items. In particular, personnel cost optimization programs had a negative impact on functional costs. In the third quarter of 2019, a reassessment of risks in connection with ongoing governmental and court proceedings and measures taken with regard to Mercedes-Benz diesel vehicles had led to significant earnings reductions, both in cost of sales and in other operating income/expense.

EBIT amounted to €3,070 million in the third quarter of 2020, which is slightly higher than in the third quarter of last year (Q3 2019: €2,690 million). The Daimler Group's adjusted EBIT was €3,479 million (Q3 2019: €3,142 million). The reconciliation from EBIT to adjusted EBIT is shown in table C.04.

Net interest expense in the third quarter of 2020 amounted to €38 million (Q3 2019: €115 million).

The income-taxexpense recognized in the third quarter of 2020 amounted to €874 million (Q3 2019: €762 million). The effective tax rate was 28.8% (Q3 2019: 29.6%).

Net profit for the third quarter of 2020 amounted to €2,158 million (Q3 2019: €1,813 million). Net profit of €109 million is attributable to non-controllinginterests (Q3 2019:

€94 million). Net profit attributable to the shareholders of Daimler AG amounts to €2,049 million (Q3 2019: €1,719 mil- lion), representing increased earnings per share of €1.92 (Q3 2019: €1.61).

The calculation of earnings per share (basic) is based on an unchanged average number of outstanding shares of 1,069.8 million.

Table C.02 shows the condensed statement of income of the Daimler Group as well as of the industrial business and Daimler Mobility. Table C.03 shows the composition of EBIT for the industrial business.

10 C | INTERIM MANAGEMENT REPORT

C.02

Condensed consolidated statement of income/loss

Daimler Group

Industrial Business

Daimler Mobility

for the three-month periods ended September 30

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Q3 2019

In millions of euros

Revenue

40,281

43,270

33,404

36,184

6,877

7,086

Cost of sales

-32,704

-34,596

-26,777

-28,416

-5,927

-6,180

Gross profit

7,577

8,674

6,627

7,768

950

906

Selling expenses

-2,364

-3,136

-2,208

-2,941

-156

-195

General administrative expenses

-888

-1,005

-699

-814

-189

-191

Research and non-capitalized development costs

-1,554

-1,764

-1,554

-1,764

-

-

Other operating income/expense

287

-167

250

-192

37

25

Gains/losses on equity-method investments, net

162

193

215

326

-53

-133

Other financial income/expense, net

-150

-105

-150

-106

-

1

EBIT

3,070

2,690

2,481

2,277

589

413

Interest income/expense

-38

-115

-36

-112

-2

-3

Profit before income taxes

3,032

2,575

2,445

2,165

587

410

Income taxes

-874

-762

-670

-640

-204

-122

Net profit

2,158

1,813

1,775

1,525

383

288

thereof profit attributable to non-controlling interests

109

94

thereof profit attributable to shareholders of Daimler AG

2,049

1,719

Earnings per share (in euros)

for profit attributable to shareholders of Daimler AG

Basic

1.92

1.61

Diluted

1.92

1.61

C.03

EBIT of the industrial business for the

Industrial Business

Mercedes-Benz Cars

Daimler Trucks

Reconciliation

three-month periods ended September 30

& Vans

& Buses

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Q3 2019

Q3 2020

Q3 2019

In millions of euros

Revenue

33,404

36,184

25,818

26,562

9,230

11,483

-1,644

-1,861

Cost of sales

-26,777

-28,416

-20,846

-21,035

-7,602

-9,253

1,671

1,872

Gross profit

6,627

7,768

4,972

5,527

1,628

2,230

27

11

Selling expenses

-2,208

-2,941

-1,820

-2,387

-566

-751

178

197

General administrative expenses

-699

-814

-379

-414

-344

-383

24

-17

Research and non-capitalized development

-1,554

-1,237

-342

25

costs

-1,764

-1,379

-379

-6

Other income/expense

315

28

582

123

165

121

-432

-216

EBIT

2,481

2,277

2,118

1,470

541

838

-178

-31

C | INTERIM MANAGEMENT REPORT 11

Segment revenue and EBIT for the three-month periods ended September 30, 2020

The revenue of the Mercedes-BenzCars & Vans division fell by 3% to €25,818 million in the third quarter of 2020 (Q3 2019: €26,562 million). The division's EBIT amounted to €2,118 million (Q3 2019: €1,470 million); adjusted EBIT amounted to €2,417 million (Q3 2019: €1,868 million). The adjusted return on sales of 9.4% was above the adjusted prior-year figure of 7.0%. C.03 C.04

In particular, due to the decrease in sales volume, gross profit in relation to revenue decreased from 20.8% to 19.3%. The measures introduced as a consequence of the covid-19 pandemic led to cost reductions in all functional cost areas. In par- ticular, a significant reduction in fixed costs also had a positive effect on earnings. Furthermore, improved price enforcement had a positive impact on gross profit. Adjustments to a retirement plan and a health care plan in the United States also had a positive impact on functional costs.

Furthermore, the segment's earnings were reduced by restructuring expenses of €297 million. This amount includes €229 million for personnel cost optimization programs. In addition, the restructuring expenses include expenses of €68 million for the adjustment and realignment of capacities within the global production network in connection with the intended sale of the car plant in Hambach (France). Earnings in the prior-year period were reduced by individual items relating to ongoing governmental and court proceedings and measures taken with regard to Mercedes-Benz diesel vehicles (€362 million) as well as by restructuring expenses in connection with terminating production of the X-Class (€36 million). The reconciliation from EBIT to adjusted EBIT is shown in table C.04.

The revenue of Daimler Trucks & Buses decreased in the third quarter of 2020 by 20% to €9,230 million (Q3 2019: €11,483 million). EBIT amounted to €541 million (adjusted: €603 mil- lion; Q3 2019: €838 million). The segment's adjusted return on sales was below the prior-year figure at 6.5% (Q3 2019: 7.3%).

  • C.03 C.04

The development of earnings in the third quarter of 2020 was substantially adversely affected by declining volumes. Unit sales decreased in all regions, primarily due to contracting markets following the ongoing covid-19 pandemic. Earnings were also reduced by expenses for personnel cost optimization programs of €62 million. As a result, gross profit in relation to revenue decreased from 19.4% to 17.6%. The introduced measures led to cost reductions in all functional cost areas. In par- ticular, a significant reduction in fixed costs had a positive impact on earnings. The reconciliation from EBIT to adjusted EBIT is shown in table C.04.

In the third quarter of 2020, the Daimler Mobility segment achieved EBIT of €589 million (Q3 2019: €413 million); adjusted EBIT amounted to €601 million (Q3 2019: €469 million). Adjusted return on equity of 16.5% was above the adjusted prior-year figure of 13.5%. C.02 C.04

Positive effects were recorded, amongst others, due to the implemented measures to improve the cost position. Further- more, as a result of the response to the covid-19 pandemic in the first half of 2020, no further additions to credit risk

provisions­ were necessary in the third quarter of 2020. EBIT was affected by the impairment of software in the context

of streamlining the IT-architecture. The reconciliation of EBIT to adjusted EBIT is shown in table C.04.

The reconciliation of the segments' EBIT to Group EBIT comprises gains and losses at the corporate level and the effects on earnings of eliminating intra-Group transactions between the segments.

Items at the corporate level resulted in expenses of €222 million in the third quarter of 2020 (Q3 2019: income of €8 mil- lion). In particular, the impairment of Daimler's equity investment in BAIC Motor had a negative effect on EBIT.

The elimination of intra-Group transactions resulted in income of €44 million (Q3 2019: expenses of €39 million).

12 C | INTERIM MANAGEMENT REPORT

C.04

Reconciliation EBIT to EBIT adjusted for the three-month periods ended September 30

Mercedes-Benz

Daimler

Daimler

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

ciliation

Group

In millions of euros

Q3 2020

EBIT

2,118

541

589

-178

3,070

Legal proceedings (and related measures)

2

-

-

-

2

Restructuring measures

297

62

12

36

407

M&A transactions

-

-

-

-

-

EBIT adjusted

2,417

603

601

-142

3,479

Return on sales/return on equity (in %)

8.2

5.9

16.2

Return on sales/return on equity adjusted (in %)1

9.4

6.5

16.5

Mercedes-Benz

Daimler

Daimler

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

ciliation

Group

In millions of euros

Q3 2019

EBIT

1,470

838

413

-31

2,690

Legal proceedings (and related measures)

362

-

11

-2

371

Restructuring measures

36

-

45

-

81

M&A transactions

-

-

-

-

-

EBIT adjusted

1,868

838

469

-33

3,142

Return on sales/return on equity (in %)

5.5

7.3

11.9

Return on sales/return on equity adjusted (in %)1

7.0

7.3

13.5

1 Return on sales adjusted is calculated as the ratio of EBIT adjusted to revenue. Return on equity adjusted is determined as the ratio of EBIT adjusted to average quarterly equity.

C.05

Condensed consolidated statement of income/loss

Daimler Group

Industrial Business

Daimler Mobility

for the nine-month periods ended September 30

Q1-3 2020

Q1-3 2019

Q1-3 2020

Q1-3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Revenue

107,688

125,618

87,260

104,506

20,428

21,112

Cost of sales

-91,705

-103,827

-73,388

-85,444

-18,317

-18,383

Gross profit

15,983

21,791

13,872

19,062

2,111

2,729

Selling expenses

-7,715

-9,359

-7,223

-8,777

-492

-582

General administrative expenses

-2,616

-2,999

-2,059

-2,366

-557

-633

Research and non-capitalized development costs

-4,820

-5,037

-4,820

-5,037

-

-

Other operating income/expense

1,068

-786

967

-1,609

101

823

Gains/losses on equity-method investments, net

381

665

689

950

-308

-285

Other financial income/expense, net

-276

-345

-273

-346

-3

1

EBIT

2,005

3,930

1,153

1,877

852

2,053

Interest income/expense

-175

-404

-167

-397

-8

-7

Profit before income taxes

1,830

3,526

986

1,480

844

2,046

Income taxes

-1,410

-806

-1,066

-407

-344

-399

Net profit/loss

420

2,720

-80

1,073

500

1,647

thereof profit attributable to non-controlling interests

278

234

thereof profit attributable to shareholders of Daimler AG

142

2,486

Earnings per share (in euros)

for profit attributable to shareholders of Daimler AG

Basic

0.13

2.32

Diluted

0.13

2.32

C | INTERIM MANAGEMENT REPORT 13

C.06

EBIT of the industrial business for the

Industrial Business

Mercedes-Benz Cars

Daimler Trucks

Reconciliation

nine-month periods ended September 30

& Vans

& Buses

Q1-3 2020

Q1-3 2019

Q1-3 2020

Q1-3 2019 Q1-32020

Q1-3 2019 Q1-32020

Q1-3 2019

In millions of euros

Revenue

87,260

104,506

67,963

76,043

24,174

33,238

-4,877

-4,775

Cost of sales

-73,388

-85,444

-57,463

-63,004

-20,732

-26,902

4,807

4,462

Gross profit

13,872

19,062

10,500

13,039

3,442

6,336

-70

-313

Selling expenses

-7,223

-8,777

-5,928

-7,216

-1,802

-2,137

507

576

General administrative expenses

-2,059

-2,366

-1,136

-1,314

-981

-1,122

58

70

Research and non-capitalized development costs

-4,820

-5,037

-3,828

-3,954

-1,032

-1,119

40

36

Other income/expense

1,383

-1,005

1,895

-726

405

267

-917

-546

EBIT

1,153

1,877

1,503

-171

32

2,225

-382

-177

C.07

Reconciliation EBIT to EBIT adjusted for the nine-month periods ended September 30

Mercedes-Benz

Daimler

Daimler

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

ciliation

Group

In millions of euros

Q1-3 2020

EBIT

1,503

32

852

-382

2,005

Legal proceedings (and related measures)

148

-

-

9

157

Restructuring measures

1,085

71

120

52

1,328

M&A transactions

-

-

-

-

-

EBIT adjusted

2,736

103

972

-321

3,490

Return on sales/return on equity (in %)

2.2

0.1

7.8

Return on sales/return on equity adjusted (in %)1

4.0

0.4

8.8

Mercedes-Benz

Daimler

Daimler

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

ciliation

Group

In millions of euros

Q1-3 2019

EBIT

-171

2,225

2,053

-177

3,930

Legal proceedings (and related measures)

-

34

20

4,011

as well as Takata

3,957

Restructuring measures

602

-

74

-

676

M&A transactions

-

-

-718

-

-718

EBIT adjusted

4,388

2,225

1,443

-157

7,899

Return on sales/return on equity (in %)

-0.2

6.7

19.9

Return on sales/return on equity adjusted (in %)1

5.8

6.7

14.0

1 Return on sales adjusted is calculated as the ratio of EBIT adjusted to revenue. Return on equity adjusted is determined as the ratio of EBIT adjusted to average quarterly equity.

14 C | INTERIM MANAGEMENT REPORT

Cash flows

In the first nine months of 2020, cash provided by/used for operating activities C.08 resulted in a cash inflow of €17.3 billion (Q1-3 2019: €6.6 billion) and was particularly affected by the worldwide consequences of the covid-19 pan- demic. Whereas in the prior year period, the development of the leasing and sales-financing portfolio at Daimler Mobility negatively affected cash used for/provided by operating activi- ties, the first nine months of 2020 saw a significant positive cash-flow effect due to the decrease in the portfolio caused by the corona crisis. The consequences of the covid-19 pandemic also affected the development of working capital positively. Temporary suspensions of production during the second quarter of 2020 and a renewed increase in customer demand were the main drivers of the development of working capital. In the first nine months of 2020, all the automotive segments experienced a decrease in trade receivables, as well as a lower build-

up of inventories. A stronger increase in inventory levels at Mercedes-Benz Cars & Vans in the first nine months of 2019 was due to the normal cyclical development of inventories, as well as additional effects from model changes and restrictions in the availability of vehicles in certain international markets. Furthermore, cash used for/provided by operating activities was affected by increased cash inflows from dividends received from Beijing Benz Automotive Co., Ltd. The significant deterioration of the business performance associated with the consequences of the covid-19 pandemic was reflected in profit before income taxes, which had been reduced in the prior-year period by the non-cash increases in provisions and increases in liabilities included in other operating assets and liabilities. An additional effect in the first quarter of 2020 resulted from payments made in the context of reviewing and prioritizing the product portfolio for the planned discontinuation of X-Class production.

C.08

Condensed statement of cash flows

Daimler Group

Industrial Business

Daimler Mobility

Q1-3 2020

Q1-3 2019

Q1-3 2020

Q1-3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Cash and cash equivalents at beginning of period

18,883

15,853

16,152

12,799

2,731

3,054

Profit before income taxes

1,830

3,526

986

1,480

844

2,046

Depreciation and amortization/impairments

6,668

5,561

6,453

5,449

215

112

Other non-cash expense and income and

-423

-781

358

gains/losses on disposals of assets

-1,200

-808

-392

Change in operating assets and liabilities

Inventories

-933

-5,500

-1,140

-5,493

207

-7

Trade receivables

1,287

186

973

114

314

72

Trade payables

2,106

1,832

1,954

1,840

152

-8

Receivables from financial services

4,277

-1,620

-63

-42

4,340

-1,578

Vehicles on operating leases

2,393

-837

20

218

2,373

-1,055

Other operating assets and liabilities

-163

5,174

-38

5,110

-125

64

Dividends received from equity-method investments

1,234

637

1,234

636

-

1

Income taxes paid

-1,008

-1,199

-184

-287

-824

-912

Cash used for/provided by operating activities

17,268

6,560

9,414

8,217

7,854

-1,657

Additions to property, plant and equipment and

-5,967

-5,889

-78

intangible assets

-7,782

-7,649

-133

Investments in and disposals of shareholdings

-96

-1,268

-110

-242

14

-1,026

Acquisitions and sales of marketable debt securities

476

220

256

and similar investments

741

554

187

Other

267

164

257

138

10

26

Cash used for/provided by investing activities

-5,320

-8,145

-5,522

-7,199

202

-946

Change in financing liabilities

-4,486

6,048

-7,513

4,589

3,027

1,459

Dividends paid

-1,218

-3,710

-1,209

-3,697

-9

-13

Other transactions with shareholders

1

-43

-12

-11

13

-32

Internal equity and financing transactions

-

-

11,111

46

-11,111

-46

Cash used for/provided by financing activities

-5,703

2,295

2,377

927

-8,080

1,368

Effect of foreign exchange rate changes

-630

-522

-108

on cash and cash equivalents

426

400

26

Cash and cash equivalents at end of period

24,498

16,989

21,899

15,144

2,599

1,845

C | INTERIM MANAGEMENT REPORT 15

Cash used for/provided by investing activities C.08 led to a cash outflow of €5.3 billion (Q1-32019: €8.1 billion). The decrease resulted in particular from lower investments in ­property, plant and equipment and intangible assets compared with the prior-yearperiod. Furthermore, cash used for/pro- vided by investing activities during the first quarter of 2019 was affected by the merger of the mobility services of the Daimler Group and the BMW Group, which resulted in cash outflows (net) of €0.7 billion. This was mainly due to capital increases at the joint ventures.

Cash used for/provided by financing activities C.08 resulted in a cash outflow of €5.7 billion (Q1-32019: cash inflow of €2.3 billion). The change is primarily due to lower net cash inflows from financing liabilities, mainly in connection with the refinancing of the leasing and sales-financingbusi- ness. Positive effects resulted from the comparatively lower dividend payment made to the shareholders of Daimler AG in the current year than in the previous year.

Cash and cash equivalents increased compared with Decem- ber 31, 2019 by €5.6 billion, after taking into account currency translation. Total liquidity, which also includes marketable debt securities and similar investments, increased by €5.0 billion to €32.6 billion.

The parameter used by Daimler to measure the financial capability of the Group's industrial business is the free cash flow of the industrial business C.09, which is derived from the reported cash flows from operating and investing activities. The cash flows from sales and purchases of marketable debt securities and similar investments included in cash flows from investing activities are deducted, as those securities are allocated to liquidity and changes in them are thus not a part of the free cash flow. On the other hand, effects in connection with the recognition and measurement of right-of-use assets, which result from the change in lessee accounting and are largely non-cash items, are included in the free cash flow of the industrial business.

Other adjustments relate to effects from the financing of the Group's own dealerships and effects from internal deposits within the Group. In addition, the calculation of the free cash flow includes the cash flows to be shown under cash used for/ provided by financing activities in connection with the acquisition or disposal of interests in subsidiaries without loss of con- trol. The prior year period included effects from acquisitions and disposals of shareholdings within the Group resulting from Project Future. These were included in the cash used for/pro- vided by investing activities and were reversed in the free cash flow of the industrial business.

In the first nine months of 2020, the free cash flow of the industrial business led to a cash inflow of €3.5 billion (Q1-3 2019: cash outflow of €0.5 billion), and was particularly affected by the worldwide consequences of the covid-19 pan- demic. The temporary suspension of production during the second quarter of 2020 and the recovery of customer demand

C.09

Free cash flow of the industrial business

Q1-3 2020 Q1-32019

Change

In millions of euros

Cash used for/provided by

9,414

operating activities

8,217

+1,197

Cash used for/provided by

-5,522

investing activities

-7,199

+1,677

Change in marketable debt

securities and similar

-220

investments

-554

+334

Right-of-use assets

-239

-636

+397

Other adjustments

75

-350

+425

Free cash flow of the

industrial business

3,508

-522

+4,030

Legal proceedings (and related

452

measures)

285

+167

Restructuring measures

301

-

+301

M&A transactions

-

-

-

Free cash flow of the

industrial­

business adjusted

4,261

-237

+4,498

in the third quarter were the main drivers of the development of working capital. Trade receivables decreased and inventory levels increased more slowly at all automotive segments during the reporting period. Furthermore, in particular at Mercedes- Benz Cars & Vans, inventories increased more strongly in the first nine months of 2019 due to seasonal effects as well as model changes and restricted vehicle availability in some international markets. Additional cash inflows resulted from an increased dividend received from Beijing Benz Automotive Co., Ltd. Further effects on the free cash flow of the industrial business resulted from decreased investments in property, plant and equipment, intangible assets and right-of-use assets. The significant deterioration of the business performance associated with the consequences of the covid-19 pandemic is reflected in the profit before income taxes, which was reduced in the prior-year period by the non-cash increases in provisions and decreases in liabilities included in the other operating assets and liabilities. Additionally, payments made in connection with the product portfolio review and prioritization in the first quarter of 2020 had a negative impact on the free cash flow of the industrial business.

In the interest of greater transparency in reporting on the ongoing business, starting with the first quarter of 2020, we also report an adjusted free cash flow of the industrial business C.09. The adjustments for legal proceedings include payments by the automotive segments in connection with ongoing governmental and legal proceedings and related measures taken with regard to Mercedes-Benz diesel vehicles. The adjustments for restructuring measures include payments made in connection with the product portfolio review and

prioritization­. The adjusted free cash flow of the industrial

­business led to a cash inflow of €4.3 billion (Q1-3 2019: cash outflow of €0.2 billion).

16 C | INTERIM MANAGEMENT REPORT

In the first nine months of 2020, the free cash flow of the Daimler Group resulted in a cash inflow of €11.3 billion (Q1-3 2019: cash outflow of €3.0 billion). Besides the effects of the free cash flow of the industrial business, the free cash flow of the Daimler Group is mainly affected by the leasing and sales- financing business of Daimler Mobility. Additional effects resulted from the cash outflows (net) relating to the merger of the mobility services of the Daimler Group and the BMW Group in the first quarter of 2019.

As well as being calculated on the basis of the disclosed cash flows from operating and investing activities, the free cash flow of the industrial business can also be calculated on the basis of the cash flows before interest and taxes (CFBIT) of the automotive segments. The reconciliation from the CFBIT of Mercedes-Benz Cars & Vans and Daimler Trucks & Buses to the free cash flow of the industrial business also includes pay-

ments of interest and taxes. The other reconciliation items primarily comprise eliminations between the segments and items that are allocated to the industrial business but for which the automotive segments are not responsible. Table C.10 shows the reconciliation of the CFBIT of the automotive segments to the free cash flow of the industrial business.

The CFBIT of the automotive segments is derived from EBIT and the change in net assets, and also includes additions to right-of-useassets. Table C.11 shows the composition of CFBIT for Mercedes-BenzCars & Vans and Daimler Trucks & Buses for the third quarter of 2020 compared with the prior- year period. Table C.12 shows the reconciliation from CFBIT to adjusted CFBIT and the adjusted cash conversion rate for Mercedes-BenzCars & Vans and Daimler Trucks & Buses for the third quarter of the current and prior year.

C.10

Reconciliation from CFBIT to the Free cash flow industrial business

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

CFBIT Mercedes-Benz Cars & Vans

4,617

1,825

3,318

-1,151

CFBIT Daimler Trucks & Buses

1,142

736

936

1,531

Income taxes paid/refunded

-24

186

-184

-287

Interest paid/received

-133

-140

-82

-364

Other reconciling items

-463

212

-480

-251

Free cash flow of the industrial business

5,139

2,819

3,508

-522

C.11

CFBIT

Mercedes-Benz Cars & Vans

Daimler Trucks & Buses

Q3 2020

Q3 2019

Q3 2020

Q3 2019

In millions of euros

EBIT

2,118

1,470

541

838

Change in working capital

435

1

184

-100

Net financial investments

-58

-50

-35

-181

Net investments in property, plant and equipment and intangible assets

-1.603

-2,426

-131

-297

Depreciation and amortization/impairments

1,745

1,552

332

333

Other

1,980

1,278

251

143

CFBIT

4,617

1,825

1,142

736

C.12

Reconciliation to CFBIT adjusted

Mercedes-Benz Cars & Vans

Daimler Trucks & Buses

Q3 2020

Q3 2019

Q3 2020

Q3 2019

In millions of euros

CFBIT

4,617

1,825

1,142

736

Legal proceedings (and related measures)

204

112

-

-

Restructuring measures

-

-

-

-

M&A transactions

-

-

-

-

CFBIT adjusted

4,821

1,937

1,142

736

EBIT adjusted

2,417

1,868

603

838

Cash conversion rate adjusted1

2.0

1.0

1.9

0.9

1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.

The net liquidity of the industrial business C.13 is

calculated­ as the total amount as shown in the statement of financial position of cash, cash equivalents and marketable debt securities and similar investments included in liquidity management, less the currency-hedged nominal amounts of financing liabilities. To the extent that the Group's internal refi- nancing of the financial services business is provided by the companies of the industrial business, this amount is deducted in the calculation of the net debt of the industrial business.

Compared with December 31, 2019, the net liquidity of the industrial business increased by €2.1 billion to €13.1 billion. The increase is mainly due to the positive free cash flow of the industrial business, which was partially offset by the dividend payment made to the shareholders of Daimler AG.

Net debt at Group level, which primarily results from refinanc- ing the leasing and sales-financing business, decreased compared with December 31, 2019 by €15.5 billion to €118.2 billion.

  • C.14

The Daimler Group once again utilized attractive conditions in the international money and capital markets for refinancing in the third quarter of 2020.

In the third quarter of 2020, Daimler had a cash inflow of €2.4 billion from the issuance of bonds (Q3 2019: €9.0 billion). The redemption of bonds resulted in cash outflows of €2.3 billion (Q3 2019: €6.3 billion). An issuance volume of €1.0 billion was carried out in the form of the Daimler Group's first green bond (bond with dedicated use of funds for sustainable projects).

  • C.15.

In addition to the issuances shown in the table, multiple smaller issuances were undertaken in various countries.

Furthermore, several asset-backed securities (ABS) trans­ actions were conducted in the third quarter of 2020. In the United States, a refinancing volume of USD 4.2 billion was gen- erated. A volume of CNY 6.0 billion was issued in China. In addition, an ABS bond was issued in South Korea for the first time, with a refinancing volume of KRW 394.0 billion.

The additional credit line in the amount of €12.0 billion that was agreed upon at the beginning of April amounts to an available amount of €8.8 billion at September 30, 2020, after capital -market transactions were carried out in the third quarter. At September 30, 2020, the credit line had not been utilized.

C | INTERIM MANAGEMENT REPORT 17

C.13

Net liquidity of the industrial business

Sept. 30,

Dec. 31,

In millions of euros

2020

2019

Change

Cash and cash equivalents

21,899

16,152

+5,747

Marketable debt securities and

7,183

similar investments

7,522

-339

Liquidity

29,082

23,674

+5,408

Financing liabilities

-17,467

-13,289

-4,178

Market valuation and currency

1,464

hedges for financing liabilities

612

+852

Financing liabilities

(nominal)

-16,003

-12,677

-3,326

Net liquidity

13,079

10,997

+2,082

C.14

Net debt of the Daimler Group

Sept. 30,

Dec. 31,

In millions of euros

2020

2019

Change

Cash and cash equivalents

24,498

18,883

+5,615

Marketable debt securities and

8,063

similar investments

8,655

-592

Liquidity

32,561

27,538

+5,023

Financing liabilities

-152,220

-161,780

+9,560

Market valuation and currency

1,477

hedges for financing liabilities

579

+898

Financing liabilities

(nominal)

-150,743

-161,201

+10,458

Net debt

-118,182

-133,663

+15,481

C.15

Benchmark issuances

Month

Issuer

Volume

of issue

Maturity

Daimler Finance

North America LLC

USD1,250 million

March 2020

March 2023

Daimler Finance

North America LLC

USD450 million

March 2020

March 2025

Daimler Finance

North America LLC

USD450 million

March 2020

March 2030

Daimler AG

€1,500 million

April 2020

April 2025

Daimler AG

€1,000 million

May 2020 August 2023

Daimler AG

€1,250 million

May 2020 August 2026

Daimler AG

€750 million

May 2020

May 2030

Daimler AG

€1,000 million

Sep 2020

Sep 2030

18 C | INTERIM MANAGEMENT REPORT

Financial position

The balance sheet total decreased compared with December 31, 2019 from €302.4 billion to €290.7 billion. The reduction includes negative effects from currency translation of

€10.0 billion; adjusted for these exchange-rate effects, there was a decrease of €1.8 billion. Daimler Mobility accounts for €160.2 billion of the balance sheet total (December 31, 2019: €174.8 billion), equivalent to 55% of the Daimler Group's total assets (December 31, 2019: 58%).

The global impact of the covid-19 pandemic affected balance sheet items to varying degrees as of September 30, 2020. The decrease in total assets primarily reflects the reduced volume of the financial services business and lower property, plant and equipment due to the adjustment and realignment of capaci- ties. Opposing effects came from significantly higher cash and cash equivalents. On the liabilities side of the balance sheet, there were decreases in financing liabilities and lower equity, while provisions for pensions and similar obligations as well as trade liabilities were above their prior-year levels. Table C.16 shows the condensed statement of financial position for the Group as well as for the industrial business and Daimler Mobility.

Current assets account for 42% of the balance sheet total, the same proportion as at the end of last year. Current liabilities amount to 35% of total equity and liabilities, also the same proportion as at December 31, 2019.

Intangible assets of €16.4 billion (December 31, 2019: €16.0 billion) include €13.0 billion of capitalized development costs (December 31, 2019: €12.5 billion), €1.7 billion of fran- chises, industrial property rights and similar rights (December 31, 2019: €1.7 billion) and €1.2 billion of goodwill (December

31, 2019: €1.2 billion). The Mercedes-Benz Cars & Vans segment accounts for 94% of the development costs (December 31, 2019: 93%) and the Daimler Trucks & Buses segment accounts for 6% (December 31, 2019: 7%).

Property, plant and equipment decreased to €35.1 billion, partially due to the adjustment and realignment of capacities within the global production network (December 31, 2019: €37.1 billion). In the first nine months of 2020, €3.8 billion was invested worldwide (Q1-32019: €5.2 billion), primarily at our production and assembly sites for innovative products and new technologies, as well as for the modernization of the worldwide production network. The sites in Germany accounted for €2.6 billion of capital expenditure (Q1-32019: €3.4 billion).

Equipment on operating leases and receivables from financial services decreased to €142.8 billion (December 31, 2019: €155.1 billion); adjusted for exchange-rateeffects, there was a decrease of €6.6 billion. While new business stabilized in the third quarter, contract volume was below the prior-yearlevel, mainly due to lower customer demand caused by the corona crisis. In addition, there was an increase in risk provisions recognized in the first six months to take into account

C.16

Condensed statement of financial position

Daimler Group

Industrial Business

Daimler Mobility

Sept. 30,

Dec. 31,

Sept. 30,

Dec. 31,

Sept. 30,

Dec. 31,

2020

2019

2020

2019

2020

2019

In millions of euros

Assets

Intangible assets

16,430

15,978

15,651

15,077

779

901

Property, plant and equipment

35,092

37,143

34,781

36,782

311

361

Equipment on operating leases

47,704

51,482

17,506

18,799

30,198

32,683

Receivables from financial services

95,060

103,661

-80

-88

95,140

103,749

Equity-method investments

5,059

5,949

4,267

4,842

792

1,107

Inventories

29,534

29,757

28,553

28,420

981

1,337

Trade receivables

10,739

12,332

9,905

11,045

834

1,287

Cash and cash equivalents

24,498

18,883

21,899

16,152

2,599

2,731

Marketable debt securities and similar investments

8,063

8,655

7,183

7,522

880

1,133

thereof current

7,113

7,885

6,905

7,420

208

465

thereof non-current

950

770

278

102

672

668

Other financial assets

7,156

6,083

-10,712

-13,283

17,868

19,366

Other assets

11,318

12,515

1,538

2,349

9,780

10,166

Total assets

290,653

302,438

130,491

127,617

160,162

174,821

Equity and liabilities

Equity

58,623

62,841

44,092

47,858

14,531

14,983

Provisions

32,720

30,652

31,545

29,473

1,175

1,179

Financing liabilities

152,220

161,780

17,467

13,289

134,753

148,491

thereof current

59,553

62,601

-15,630

-21,218

75,183

83,819

thereof non-current

92,667

99,179

33,097

34,507

59,570

64,672

Trade payables

14,877

12,707

13,937

11,896

940

811

Other financial liabilities

8,376

9,864

5,015

6,224

3,361

3,640

Contract and refund liabilities

12,527

13,631

12,123

13,239

404

392

Other liabilities

11,310

10,963

6,312

5,638

4,998

5,325

Total equity and liabilities

290,653

302,438

130,491

127,617

160,162

174,821

C | INTERIM MANAGEMENT REPORT 19

the deteriorating economic forecasts in connection with the covid-19 pandemic. The leasing and sales-financing business as a proportion of 49% of total assets was below the level of the end of last year (51%).

Equity-methodinvestments decreased to €5.1 billion (December 31, 2019: €5.9 billion). They mainly comprise the carrying amounts of our equity interests in Beijing Benz Automotive Co., Ltd. (BBAC), BAIC Motor Corporation Ltd., There Holding B.V. and YOUR NOW Holding GmbH. The decrease is partially due to the approval of the dividend payment by BBAC in the second quarter, which took place in the third quarter.

Inventories decreased from €29.8 billion to €29.5 billion, equivalent to 10% of total assets and thus the same level as at the end of 2019. Adjusted for exchange-rate effects, inventories increased by €0.9 billion, amongst others in China, the United States and Germany.

Trade receivables decreased significantly to €10.7 billion (December 31, 2019: €12.3 billion). This is due to the global effects of the corona crisis and the resulting lower sales. The Mercedes-Benz Cars & Vans segment accounts for 65% of these receivables (December 31, 2019: 61%) and the Daimler Trucks & Buses segment accounts for 27% (December 31, 2019: 28%).

Cash and cash equivalents increased compared with the end of the year 2019 by €5.6 billion to €24.5 billion.

Marketable debt securities and similar investments decreased compared with December 31, 2019 from €8.7 billion to €8.1 billion. Those assets include the debt instruments that are allocated to liquidity, most of which are traded in active markets. They generally have an external rating of A or better.

Other financial assets of €7.2 billion are significantly above last year's level (December 31, 2019: €6.1 billion). They primarily consist of derivative financial instruments, equity and debt instruments, investments in non-consolidated subsidiaries, and loans and other receivables due from third parties. The increase is mainly attributable to higher positive fair values of derivative financial instruments.

Other assets of €11.3 billion primarily comprise deferred tax assets and tax refund claims (December 31, 2019: €12.5 bil- lion). The main effect here was from lower refund claims in connection with value added taxes.

The Group's equity decreased compared with December 31, 2019 from €62.8 billion to €58.6 billion. The decrease of €2.3 billion (adjusted for the effects of currency translation) resulted from losses of €2.2 billion in connection with pensions recognized in other comprehensive income and from the dividend of €1.0 billion paid out to Daimler's shareholders. On the other hand, there were gains of €0.7 billion on the remeasurement of derivative financial instruments recognized in other comprehensive income and net profit of €0.4 billion. Equity attributable to the shareholders of Daimler AG decreased accordingly to €57.1 billion (December 31, 2019: €61.3 billion).

Equity adjusted for the dividend decreased at a higher rate than the decrease in the balance sheet total of 4% compared with year-end 2019. The Group's equity ratio of 20.2% was therefore slightly below the level of year-end 2019 (December 31, 2019: 20.5%); the equity ratio for the industrial business was 33.8% (December 31, 2019: 36.7%).

Provisions of €32.7 billion were above the level of December 31, 2019 (€30.7 billion); they amount to 11% as a proportion of the balance sheet total, which is also above last year's level (10%). They primarily comprise provisions for pensions and similar obligations of €12.5 billion (December 31, 2019: €9.7 billion), which mainly consist of the difference between the present value of defined-benefit pension obligations of €38.3 billion (December 31, 2019: €36.2 billion) and the fair value of the pension-plan assets applied to finance those obligations of €26.9 billion (December 31, 2019: €27.8 billion). The decrease in discount rates led to an increase in the present value of defined-benefit pension obligations. This effect was boosted by a slightly negative development of interest rates on plan assets. Provisions also relate to liabilities from product warranties of €8.3 billion (December 31, 2019: €8.7 billion), from personnel and social costs of €4.3 billion (December 31, 2019: €4.2 billion), from litigation risks and regulatory proceedings of €4.7 billion (December 31, 2019: €4.9 billion) and from other risks of €3.0 billion (December 31, 2019: €3.1 billion).

Financing liabilities of €152.2 billion were significantly below the level of December 31, 2019 (€161.8 billion). The decrease of €3.9 billion, adjusted for exchange-rate effects, was mainly due to the development of the leasing and sales-financing busi- ness. 52% of the financing liabilities relate to notes and bonds, 24% to liabilities to banks, 11% to liabilities from ABS transactions and 10% to deposits in the direct banking business.

Trade payables increased to €14.9 billion (December 31, 2019: €12.7 billion). The increase relates almost solely to Mercedes-Benz Cars & Vans and is connected with the return to a high level of production in the third quarter of 2020. The Mercedes-Benz Cars & Vans segment accounts for 72% of those payables (December 31, 2019: 71%) and the Daimler Trucks & Buses segment accounts for 22% (December 31, 2019: 22%).

Other financial liabilities of €8.4 billion (December 31, 2019: €9.9 billion) mainly consist of liabilities from residual-value guarantees, salaries and wages, derivative financial instru- ments, deposits received and accrued interest on financing lia- bilities. The reduction is mainly attributable to lower negative fair values of derivative financial instruments.

Contract and refund liabilities of €12.5 billion are below the level of December 31, 2019 (€13.6 billion). They mainly comprise deferred revenue from service and maintenance ­contracts, as well as extended warranties and obligations from sales in the scope of IFRS 15. The reduction (adjusted for exchange-rateeffects) of €0.7 billion is related to obligations from sales.

20 C | INTERIM MANAGEMENT REPORT

Other liabilities of €11.3 billion (December 31, 2019: €11.0 bil- lion) primarily comprise deferred taxes, tax liabilities and deferred income.

Table C.17 shows the derivation of net assets for the

­automotive segments. They relate to the operating assets and liabilities for which the divisions are responsible.

Further information on the assets presented in the statement of financial position and on the Group's equity and liabilities is provided in the Consolidated Statement of Financial Position

  • E.03, the Consolidated Statement of Changes in Equity
  • E.05 and the related notes in the Notes to the Interim Con-

solidated Financial Statements.

C.17

Net assets of the automotive segments

Mercedes-Benz Cars

Daimler Trucks

& Vans

& Buses

Sept. 30, 2020

Dec. 31, 2019

Sept. 30, 2020

Dec. 31, 2019

In millions of euros

Intangible assets

13,913

13,234

1,723

1,828

Property, plant and equipment

26,506

27,933

7,953

8,569

Inventories

21,072

20,959

7,572

7,615

Trade receivables

6,983

7,556

2,923

3,469

Other segment assets

23,168

24,808

5,698

6,497

Segment assets

91,642

94,490

25,869

27,978

Trade payables

10,773

9,042

3,243

2,847

Other segment liabilities

50,247

52,150

13,794

14,706

Segment liabilities

61,020

61,192

17,037

17,553

Net assets

30,622

33,298

8,832

10,425

C | INTERIM MANAGEMENT REPORT 21

Capital expenditure and research activities

Workforce

The Daimler Group invested €1.2 billion in property, plant and equipment in the third quarter of this year (Q3 2019: €1.8 bil- lion). Most of that investment, €1.0 billion, was at Mercedes- Benz Cars & Vans (Q3 2019: €1.5 billion). The focus of capital expenditure was on production preparations for the new

S-Class and the successor models of the compact cars, as well as preparing for the launch of the new C-Class. High investments also continue to be made in battery production. The main areas at Daimler Trucks & Buses in the third quarter of 2020 were future technologies and tailored products for important growth markets, successor generations of existing ­products, global engine and transmission projects related to emission standards and fuel efficiency, and the optimization of our worldwide production and sales network.

The Daimler Group's research and development spending in the third quarter of the year amounted to €2.1 billion (Q3 2019: €2.5 billion), of which €0.6 billion was capitalized (Q3 2019: €0.7 billion). More than three quarters, €1.8 billion, of the research and development expenditure was at Mercedes-Benz Cars & Vans (Q3 2019: €2.1 billion). The main areas of development expenditure were for the next generation of electric vehicles and battery production. Furthermore, the topics of digitization and autonomous driving are constantly being pushed forward. The most important projects at Daimler Trucks & Buses were in the areas of emission standards and fuel effi-ciency, as well as tailored products and technologies for major growth markets. In addition, an important role is played by the future technologies of automated and autonomous driving, electric mobility and connectivity. Against the background of the measures we have initiated to secure liquidity and reduce costs, we also made reductions in the development budget, but the focus on future technologies remained unchanged.

At the end of the third quarter of 2020, the Daimler Group employed 291,770 people worldwide (end of 2019: 298,655). Of that total, 168,560 were employed in Germany (end of 2019: 173,813), 25,112 in the United States (end of 2019: 25,788), 10,939 in Brazil (end of 2019: 11,128) and 11,294 in Japan (end of 2019: 10,056). Our consolidated companies in China employed 4,229 people at the end of September 2020 (end of 2019: 4,439). C.18

C.18

Employees by division (as of September 30, 2020)

Daimler-Group

291,770

Mercedes-Benz Cars & Vans

168,823

Daimler Trucks & Buses

100,358

Daimler Mobility

11,923

Group Functions & Services

10,666

22 C | INTERIM MANAGEMENT REPORT

Important events

Electric first: Mercedes-Benz continues its strategy in the transformation to CO2-neutral mobility

Mercedes-Benz is taking another important step in the transformation to CO2-neutral mobility. At the beginning of July 2020, we launched a far-reaching strategic partnership, including an equity investment, with the Chinese battery-cell

manufacturer­Farasis Energy (Ganzhou) Co., Ltd. This step is another important milestone on the road to CO2 neutrality for Mercedes-Benz within the framework of Ambition2039. Core elements of the agreement are the development and industrialization of advanced cell technologies as well as ambitious cost targets. The agreement provides Mercedes-Benz with a secure supply of battery cells for its electric offensive, while Farasis gains planning security for capacity expansion. In order to meet the increasing demand from the German Mercedes-Benz plants in the future, Farasis is building a plant for battery cells in Bitterfeld-Wolfen and creating up to 2,000 new jobs there. The location in eastern Germany is designed from the outset as a CO2-neutral factory.

Daimler's management and General Works Council agree on key points for job security and profitability Following intensive discussions, the company's management and the General Works Council have agreed on key points for reducing personnel costs in Germany. The measures agreed upon will help to manage the difficult situation caused by the corona pandemic and to further safeguard employment. The main measures include reducing the weekly working time of Daimler employees in administration and production-relatedareas in most cases by two hours without compensation from October 1, 2020 to September 30, 2021. For all employees in administration and production, there will be no profit-sharingbonus for the 2020 financial year. Other bonus payments under the collective bargaining agreement for the year 2021 will be converted into paid time off work.

US regulatory authorities agree to a settlement in civil ­litigation related to diesel emissions

Daimler AG and its subsidiary Mercedes-Benz USA LLC (MBUSA) have taken a further important step towards legal certainty in connection with various diesel lawsuits: The US regulatory authorities have agreed to a settlement of civil and environmental claims. This comprehensively ends the related governmental proceedings in connection with emission control systems for approximately 250,000 diesel vehicles in the United States. On September 14, 2020, the settlement agreements were filed by the US authorities with the US Court for the District of Columbia, which must give final approval to the settlement.

These authorities are the US Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environment and Natural Resources Division of the United States Department of Justice (DOJ), the California Attorney General's Office and the United States Customs and Border Protection.

The company has also agreed with plaintiffs' counsel to settle the consumer class action "In re Mercedes-Benz Emissions ­Litigation," which is pending before the U.S. District Court for the District of New Jersey. That settlement was being sub­ mitted for court approval on September 14, 2020 as well.

The settlement of the proceedings avoids lengthy disputes in court with corresponding legal and financial risks.

As communicated on August 13, 2020, the company has recognized sufficient provisions in its balance sheet for the expected total costs of the settlements. We anticipate costs of approximately USD 1.5 billion for the settlements with the US authori- ties, including the civil penalty and the expected costs for ­mitigation measures and payments and for the implementation of service measures. The estimated cost of settling the class action is approximately USD 700 million, including attorneys' fees and costs, which are yet to be approved by the court. We estimate the further expenses to meet requirements of the settlements at an amount in the mid-triple-digit million euro range.

We expect a corresponding impact on the free cash flow of the industrial business over a period of three years, with the main impact expected in the next 12 months.

Presentation of new Mercedes-Benz strategy with the goal of structurally higher profitability

Mercedes-Benz has set a new strategic course for profitable growth in the luxury segment and aims for a leading position in electric drive and vehicle software. The strategic realignment was presented at the virtual investor and analyst conference Mercedes-Benz Strategy Update on October 6, 2020, and aims for the enhanced luxury positioning of the Mercedes-Benz brand, a higher-value product portfolio and more advantageous product mix, significant growth of the sub-brands AMG, May- bach, G and EQ, and accelerated development of electric drive systems and vehicle software. Expanded cost-reduction plans will reduce investment in property, plant and equipment, research and development expenditure and fixed costs, and will improve the industrial footprint.

C | INTERIM MANAGEMENT REPORT 23

Risk and opportunity report

The risks and opportunities that can have a significant influence on the profitability, cash flows and financial position of the Daimler Group, as well as detailed information on our risk and opportunity management system, are presented on Epages 135 to 149 of our Annual Report 2019. In addition, we refer to the notes on forward-looking statements provided at the end of this Interim Management Report. In particular due to the covid-19 pandemic, the assessment of risks and opportunities for the 2020 financial year is subject to a high level of uncertainty. Changes in risks and opportunities are continuously monitored, evaluated and, if appropriate, taken into account in planning during the year. This takes place under the assumption that economic conditions in our most important markets normalize again, and in particular that there are no further setbacks as a result of the covid-19 pandemic.

Economic risks

The entire global economy is affected by the covid-19 pan- demic, with declines, in some cases drastic, in economic ­output. The impact of the pandemic on the individual markets varies greatly. The economic expectations for each region are stated in the Outlook section.

Risks arise from a possibly even more serious development of the corona crisis, especially in the event of a massive second wave of infection, which would lead to repeated far-reaching lockdown measures. On the one hand, this would result in an even deeper slump for the global economy than anticipated in the Outlook section. On the other hand, the risks for Daimler - which affect not only the development of unit sales but could also have a significant impact on production, the procurement market and the supply chain - would in this case be even more serious than currently assumed. Further risks may arise from the development of the global stock market, which has already largely anticipated the hoped-for real economic recovery with its rise since the end of March. If the expectations of the financial markets are disappointed - for example, due to a second wave of the pandemic - a further fall in share prices could occur. This would have a corresponding negative impact on sentiment indicators, asset values and real economic develop- ment. However, in the currently unlikely event of a significantly earlier end to the corona crisis and a faster and more vigorous economic revival, there would be opportunities for a better sales development and a faster recovery of production, the procurement market and supply chains.

With regard to oil price developments, risks of supply shortages and significant price increases have been considerably reduced. In view of the sharp drop in demand, there is still more of a risk of a sustained very low oil price, which would put additional pressure on oil-exporting economies. This could have negative effects on unit sales for all Daimler segments in those countries.

Risks from legal proceedings in connection with diesel exhaust gas emissions - settlement of regulatory and civil proceedings in the United States

In the third quarter of 2020, Daimler AG and MBUSA reached an agreement with various US authorities to settle civil and environmental claims regarding emission control systems of certain diesel vehicles in the United States. The involved US authorities are the US environmental agencies Environmental Protection Agency (»EPA«) and California Air Resources Board (»CARB«), the Environmental and Natural Resources Division of the U.S. Department of Justice (»DOJ«), the California Attorney General's Office as well as the U.S. Customs and Border Protection (»CBP«).

The authorities take the position that Daimler failed to disclose Auxiliary Emission Control Devices (AECDs) in certain of its US diesel vehicles and that several of these AECDs are illegal defeat devices. As part of these settlements, Daimler denies the allegations by the authorities and does not admit liability, but has agreed to, among other things, pay civil penalties, conduct an emission modification program for affected vehicles, provide extended warranties, undertake a nationwide mitigation project, take certain corporate compliance measures and make other payments.

The company has cooperated fully with the US authorities and continues to do so.

In the third quarter of 2020, Daimler AG and MBUSA also reached an agreement with plaintiffs' counsel to settle the consumer class action "In re Mercedes-Benz Emissions Litiga- tion" before the U.S. District Court for the District of New

Jersey­ . As part of the settlement, Daimler AG and MBUSA deny the material factual allegations and legal claims asserted by the class action plaintiffs and class members, but have agreed to provide payments to current and former diesel vehicle ­owners and lessees.

For the settlements with the US authorities, Daimler expects costs of approximately USD 1.5 billion. The estimated cost of the class action settlement is approximately USD 700 million. In addition, Daimler estimates further expenses of a mid ­three-digit-million euro amount to fulfill requirements of the settlements.

The settlements are still subject to final court approval.

Risks from legal proceedings in connection with diesel exhaust gas emissions - governmental proceedings

Daimler is continuously subject to governmental information requests, inquiries, investigations, administrative orders and proceedings relating to environmental, criminal, antitrust and other laws and regulations in connection with diesel exhaust emissions.

24 C | INTERIM MANAGEMENT REPORT

Several federal and state authorities and other institutions worldwide have inquired about and/or are/have been conducting investigations and/or administrative proceedings, and/or have issued administrative orders or, in the case of the Stutt- gart district attorney's office, a fine notice. The aforementioned matters particularly relate to test results, the emission control systems used in Mercedes-Benz diesel vehicles and/or Daimler's interaction with the relevant federal and state authorities as well as related legal issues and implications, including, but not limited to, under applicable environmental, criminal and antitrust laws. The authorities and institutions involved include, amongst others, the DOJ, which has requested that Daimler conduct an internal investigation, the EPA, the CARB and other US state authorities, the South Korean Ministry of Environment, the South Korean competition authority (Korea Fair Trade Commission) and the Seoul Prose- cutor's Office (South Korea), the European Commission, the German Federal Cartel Office ("Bundeskartellamt") as well as national antitrust authorities and other authorities of various foreign states as well as the German Federal Ministry of Transport and Digital Infrastructure ("BMVI") and the German Federal Motor Transport Authority ("KBA"). In the course of its formal investigation into possible collusion on clean emission technology, the European Commission sent a statement of objections to Daimler and other automobile manufacturers in April 2019. In this context, Daimler filed an application for immunity from fines (leniency application) with the European Commission some time ago.

The Stuttgart district attorney's office is conducting criminal investigation proceedings against Daimler employees on the suspicion of fraud and criminal advertising, and, in May 2017, searched the premises of Daimler at several locations in Ger- many. In February 2019, the Stuttgart district attorney's office also initiated a formal investigation proceeding against Daimler AG with respect to an administrative offense. In September 2019, the Stuttgart district attorney's office issued a fine notice against Daimler based on a negligent violation of supervisory duties in the amount of €870 million which has become legally binding, thereby concluding the administrative offense proceedings against Daimler.

Daimler continues to fully cooperate with the authorities and institutions. Irrespective of such cooperation and in light of the recent developments, it is possible that further regulatory, criminal and administrative investigative and enforcement actions and measures relating to Daimler and/or its employees will be taken or administrative orders will be issued. Such actions, measures and orders may include subpoenas, that is, legal instructions issued under penalty of law in the process of taking evidence, or other requests for documentation, testimony or other information, or orders to recall vehicles, further search warrants, a notice of violation or an increased formalization of the governmental investigations, coordination or pro- ceedings, including the resolution of proceedings by way of a settlement. Additionally, further delays in obtaining regulatory approvals necessary to introduce new or recertify existing vehicle models could occur.

Since 2018, the KBA has issued various administrative orders holding that certain calibrations of specified functionalities in certain Mercedes-Benz diesel vehicles are to be qualified as impermissible defeat devices and ordered subsequent auxiliary provisions for the respective EC type approvals in this respect, including mandatory recalls and, in certain cases, stops of the first registration. In addition and since 2018, Daimler has (in view of KBA's interpretation of the law as a precaution) implemented a temporary delivery and registration stop with respect to certain models, also covering the used car, leasing and financing businesses, and is constantly reviewing whether it can lift this delivery and registration stop in whole or in part. Daimler has filed timely objections against the KBA's administrative orders mentioned above in order to have the open legal issues resolved, if necessary by a court of law. In the course of its regular market supervision, the KBA is routinely conducting further reviews of Mercedes-Benz vehicles and is asking questions about technical elements of the vehicles. In light of the aforementioned administrative orders issued by, and continued discussions with, the KBA, additional administrative orders can be issued in the course of the ongoing and/or further investi- gations. Since September 1, 2020, this also applies to other responsible authorities of other Member States and the Euro- pean Commission which conduct market surveillance under the new European Type Approval Regulation and can take measures upon assumed non-compliance, irrespective of the place of the original type approval.

The new calibrations requested by KBA are being processed, and for a substantial proportion of the vehicles, the relevant software has already been approved by KBA; the related recalls have insofar been initiated. It cannot be ruled out that under certain circumstances, software updates may have to be reworked or further delivery and registration stops may be ordered or resolved by the Company as a precautionary mea- sure, also with regard to the used car, leasing and financing businesses. Daimler continues to fully cooperate with the responsible authorities and institutions.

As described above, in the third quarter of 2020, Daimler AG and MBUSA reached agreements with various US authorities to settle civil and environmental claims regarding emission control systems of certain diesel vehicles in the United States that are still subject to final court approval.

C | INTERIM MANAGEMENT REPORT 25

In light of these matters and in light of the ongoing governmental information requests, inquiries, investigations, administrative orders and proceedings, as well as our own internal inves- tigations, it is likely that, besides KBA, EPA and CARB, one or more regulatory and/or investigative authorities worldwide will reach the conclusion that other passenger cars and/or commercial vehicles with the brand name Mercedes-Benz or other brand names of the group are equipped with impermissible defeat devices and/or that certain functionalities and/or calibrations are not proper and/or were not properly disclosed. Furthermore, the authorities have increased scrutiny of Daimler's processes regarding running-change,field-fix and defect reporting as well as other compliance issues. As described above, the Stuttgart district attorney's office's administrative offense proceedings and the proceedings underlying the civil settlements with the US authorities have been resolved, whereas the settlements are subject to final court approval. The other inquiries, investigations, legal actions and proceedings as well as the replies to the governmental information requests and the objection proceedings against KBA's administrative orders are still ongoing and open. Hence, Daimler cannot predict the outcome of these inquiries, investigations and proceedings at this time. Due to the outcome of the administrative offense proceedings by the Stuttgart district attorney's office against Daimler and the civil settlements with the US authorities, as well as the above and any potential other information requests, inquiries, investigations, administrative orders and proceedings, it is possible that Daimler will become subject to, as the case may be, significant additional monetary penalties, fines, disgorgements of profits, remediation require- ments, further vehicle recalls, further registration and delivery stops, process and compliance improvements, mitigation measures and the early termination of promotional loans, and/or other sanctions, measures and actions (such as the exclusion from public tenders), including further investigations and/or administrative orders by these or other authorities and additional proceedings. The occurrence of the aforementioned events in whole or in part could cause significant collateral damage including reputational harm. Further, due to negative allegations, determinations or findings with respect to technical or legal issues by one of the various governmental agen- cies, other agencies - or also plaintiffs - could also adopt such allegations, determinations or findings, even if such allega- tions, determinations or findings are not within the scope of such authority's responsibility or jurisdiction. Thus, a negative allegation, determination or finding in one proceeding, such as the fine notice issued by the Stuttgart district attorney's office or the allegations underlying the civil settlements with the US authorities, carries the risk of being able to have an adverse effect on other proceedings, also potentially leading to new or expanded investigations or proceedings, including lawsuits.

In addition, Daimler's ability to defend itself in proceedings could be impaired by the fine notice issued by the Stuttgart district attorney's office, the civil settlements with the US authorities as well as by the underlying allegations and other unfavorable allegations, findings, results or developments in any of the information requests, inquiries, investigations, administrative orders, legal actions and/or proceedings discussed above.

Risks from legal proceedings in connection with diesel exhaust gas emissions - court proceedings

A consumer class-action lawsuit is pending in the United States in which it is alleged that Daimler AG and MBUSA conspired with Robert Bosch LLC and Robert Bosch GmbH (collec- tively, "Bosch") to deceive US regulators and consumers. As described above, in the third quarter of 2020, Daimler AG and MBUSA reached a settlement with the US consumer class action plaintiffs that is still subject to final court approval.

A separate lawsuit was filed in January 2019 by the State of Arizona alleging that Daimler AG and MBUSA deliberately deceived consumers in connection with the advertising of Mercedes-Benz diesel vehicles. Consumer class-action lawsuits containing similar allegations were filed against Daimler AG and other companies of the Group in Canada in April 2016, and against Daimler AG in Israel in February 2019. A similar class action was filed in the United States in July 2017, but in December 2017, the parties stipulated to dismiss that lawsuit without prejudice. It may be filed again under specific condi- tions.

Furthermore, class actions have been filed in the United States and Canada alleging anticompetitive behavior relating to vehicle technology, costs, suppliers, markets, and other competitive attributes, including diesel emissions control technology.

Daimler AG and the respective other affected companies of the Group regard these lawsuits as being without merit and will - except for the US consumer class action settlement - defend against the claims.

26 C | INTERIM MANAGEMENT REPORT

A securities class action lawsuit has been pending in the United States on behalf of investors in Daimler AG American Depositary Receipts which alleges that the defendants made materially false and misleading statements about diesel emissions in Mercedes-Benz vehicles. The parties have agreed to settle the lawsuit, such settlement being subject to final court approval.

In Germany and other European states, particularly in the Netherlands, a multitude of lawsuits by customers alleging contractual and non-contractual claims are pending. In addi- tion, investors have filed lawsuits in Germany alleging the violation of disclosure requirements. In this context, motions to initiate a model proceeding in accordance with the Act on Model Proceedings in Capital Markets Disputes (KapMuG) have been filed by investors as well as by Daimler AG. Currently, no model proceeding is pending. Daimler AG also regards these lawsuits as being without merit and will defend against the claims.

If court proceedings have an unfavorable outcome for Daimler, this could result in significant damages and punitive damages payments, remedial works or other cost-intensive measures.

This also applies to the US consumer class action settlement. This settlement and other court proceedings can in part also have an adverse effect on the reputation of the Group.

Furthermore, Daimler's ability to defend itself in the court proceedings could be impaired by the US consumer class action settlement as well as unfavorable allegations, findings, results or developments in any of the governmental or other court proceedings discussed above, in particular the fine notice issued by the Stuttgart district attorney's office and by the civil settlements with the US authorities.

Risks from other legal proceedings

Following the settlement decision by the European Commission adopted on July 19, 2016 concluding the trucks antitrust proceedings, Daimler AG and Daimler Truck AG are facing ­customers' claims for damages to a considerable degree. Respective legal actions, class actions and other forms of legal redress have been initiated in various states in and outside of Europe and should further be expected. Daimler takes appropriate legal remedies to defend itself.

As legal proceedings are fraught with a large degree of uncer- tainty, it is possible that after their final resolution, some of the provisions we have recognized for them could prove to be insufficient. As a result, substantial additional expenditures may arise. This also applies to legal proceedings for which the Group has seen no requirement to recognize a provision.

It cannot be ruled out that the regulatory risks and risks from legal proceedings discussed above individually or in the aggregate may materially adversely impact our profitability and financial position.

Although the final result of any such litigation may influence the Group's earnings and cash flows in any particular period, Daimler believes that any resulting obligations are unlikely to have a sustained effect on the Group's financial position.

Further information on legal proceedings is provided in

ENote 30 of the Notes to the Consolidated Financial Statements of the Annual Report 2019.

C | INTERIM MANAGEMENT REPORT 27

Outlook

After the world economy had slipped into a deep recession in the first half of this year due to the covid-19 pandemic, a dynamic recovery started in most economies in the third quar- ter. The decisive factors for the ongoing recovery towards the end of the year will be the development of infection numbers in the coming months and the effectiveness of potential renewed economic interventions. From today's perspective, a significant decline in global economic output is anticipated for the year 2020 as a whole.

The Chinese economy was the first of the major economies to suffer a massive slump, but also the first to approach normality again. Nonetheless, it is to be expected that China will achieve only slight growth of approximately 2% this year, instead of the originally expected 5 to 6%. For the economy of the European Monetary Union (EMU), significant contraction must be expected in the full year due to the economic impact of the covid-19 pandemic and the deep recession in the second quar- ter. Although it is currently assumed that the recovery will continue in the fourth quarter of the year, the great majority of analysts anticipate a significant decline in gross domestic product (GDP) for 2020 as a whole. Current expectations are that none of the larger individual economies of the EMU will be able to escape this fall in GDP. The decline in economic output is likely to be above average in countries very severely affected by the pandemic, such as France, Italy and Spain. The recovery of the US economy currently seems to be quite robust. How- ever, due to the deep slump in the second quarter, the US economy is also expected to suffer a significant GDP decline.

The economies of major emerging nations are also likely to be very weak due to the impact of the covid-19 pandemic. For major commodity exporters such as Russia and Brazil, the likely continuation of the rather low oil price during the rest of the year will have an additional negative impact. A sharp decline in economic output is therefore expected both in Eastern Europe and in South America, which has been particularly hard hit by the pandemic.

Worldwide demand for cars will continue to be severely affected by the corona crisis in most of the sales regions important for Daimler. The low point for many markets was already reached in the first half of the year. The improvement in the market situation observed since then is likely to continue in the coming months, but many markets will remain below their levels of 2019. For this reason and due to the substantial losses that occurred in the first half of the year, we continue to expect significant contraction of the global car market in full- year 2020.

The European market is likely to contract, with a significant decline in demand anticipated in Western Europe. This will probably affect all major individual markets, each with significant decreases. Significant contraction of the car market in Eastern Europe is also to be expected.

A significant decline in demand is expected in the US market for cars and light trucks. Among the major sales markets, China is likely to be the first to reach a moderate recovery path. It will probably not be able to fully offset the substantial losses of the spring, however, so significant market contraction is expected for the year as a whole.

We expect mainly negative developments for van markets, as a result of the deep global economic recession. In the EU30 region (European Union, United Kingdom, Norway and Switzer- land), a significant drop in demand both in the combined ­segment of midsize and large vans and in the market for small vans must be anticipated. In the United States, demand for large vans is also likely to be significantly lower than in the previous year. We expect the market volume for large vans in Latin America to decrease significantly as well. The volume of the market for midsize vans in China should be at about the level of the previous year.

According to current assessments, major truck markets will develop very unfavorably this year as a result of the corona- related economic crisis. In the North American market, we assume that demand for heavy-duty trucks (class 8) will decrease significantly. We also expect sales of heavy-duty trucks to decline significantly in the EU30 region. The same applies to demand for heavy-duty trucks in Brazil and Japan.

For buses, we expect market volumes in both the EU30 region and Brazil to be significantly lower than in 2019.

Assuming that economic conditions in our most important markets continue to normalize and in particular that no further setbacks occur as a result of the covid-19 pandemic, we can make our forecasts for full-year 2020 more specific again in the form of presentation familiar from our Annual Report 2019.

On the basis of the assumptions presented above for the development of the markets important for us and of the divisions' current assessments, Daimler expects its total unit sales in 2020 to be significantly below the magnitude of the previous year.

Due to the far-reaching effects of the coronavirus, Mercedes- Benz Cars anticipates unit sales in full-year 2020 significantly below the level of the previous year. This assessment also reflects the complete changeover of the smart brand to all- electric models. Mercedes-Benz Cars intends to launch a total of about ten new or updated models in full year 2020, which will further rejuvenate the product portfolio and extend it, in particular with electrified models. We expect positive sales impetus from the ongoing popularity of our SUVs, such as the GLB, GLE and GLS models launched last year.

28 C | INTERIM MANAGEMENT REPORT

At Mercedes-BenzVans, unit sales in 2020 are likely to be significantly lower than in 2019, primarily due to the effects of the coronavirus.

In addition to the already expected normalization of our core truck markets, the covid-19 pandemic will lead to further customer restraint, resulting in significantly lower worldwide unit sales for Daimler Trucks in full-year 2020.

Daimler Buses also anticipates significantly decreasing unit sales in 2020. As before, however, Daimler Buses expects to maintain its market leadership in its most important traditional core markets for buses above eight tons.

Due to the effects of the covid-19 pandemic and the resulting lower unit sales by our automotive divisions, Daimler Mobility anticipates a significant decrease in new business and a reduced contract volume in full-year 2020.

We assume that the significant sales losses we recorded in the first nine months due to the covid-19 pandemic will only be partially offset by the end of the year. We therefore expect Group revenue in 2020 to be significantly lower than in the previous year. The division Daimler Mobility anticipates a slight decrease in revenue.

On the basis of the expected market development and the current assessments of our divisions, we assume that Group EBIT in 2020 will be at the level of the prior year. As the EBIT of the Mercedes-Benz Cars & Vans division was adversely affected by substantial special items in 2019, we anticipate EBIT for this division significantly above the prior-year level despite the effects of the covid-19 pandemic. For the divisions Daimler Trucks & Buses and Daimler Mobility we expect EBIT significantly below prior year.

The individual divisions have the following expectations for adjusted returns in the year 2020: Mercedes-Benz Cars & Vans: adjusted return on sales of 4.5-5.5%. Daimler Trucks & Buses: adjusted return on sales of 1-2%. Daimler Mobility: adjusted return on equity of 9-10%.

We anticipate a significant increase in the free cash flow of the industrial business compared with the previous year. The free cash flow of the industrial business does not take into account possible expenses in connection with legal and governmental proceedings.

We expect the adjusted cash conversion rate for the Mercedes-BenzCars & Vans division in 2020 to be at 1. For Daimler Trucks & Buses, the adjusted cash conversion rate for the full year should be at 2.

As part of the measures we are taking to safeguard liquidity and cut costs, we are also reducing our investment in prop- erty, plant and equipment and our research and development expenditure. However, we will continue to maintain the advance expenditures that serve to secure the future viability of our company. Overall, we assume that investment in prop- erty, plant and equipment will be significantly below prior year and research and development expenditure will be slightly lower than in 2019.

The focus of investment in property, plant and equipment at the Mercedes-BenzCars & Vans division is on the successor models of the S-Classand C-Class.In addition, we continue to plan high investments for electric mobility. Daimler Trucks & Buses will invest primarily in future projects and successor generations for existing products, global engine and transmission projects, and the optimization of the worldwide production and sales network.

At Mercedes-Benz Cars & Vans, a large proportion of the expenditure for research and development activities will be for the renewal of the product portfolio. The most important individual projects here are the C-Class and the compact cars, as well as the expansion of the model range of the EQ product and technology brand. We are also working hard on new, low- emission combustion engines, electric mobility, vehicle connectivity and innovative safety technologies for automated and autonomous driving. Despite covid-19-related reductions in the development budget, the topics of automated driving, electric mobility and connectivity play an important role at Daimler Trucks & Buses. Other key areas are successor generations of existing products, fuel efficiency and reduced emissions, as well as customized products and technologies for important growth markets.

Forward-looking statements:

This document contains forward-looking statements that reflect our current views about future events. The words "anticipate," "assume," "believe," "esti- mate," "expect," "intend," "may," "can," "could," "plan," "project," "should" and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a deterioration of our refinancing possibilities on the credit and financial markets; events of force majeure including natural disasters, pandemics, acts of terrorism, political unrest, armed conflicts, industrial accidents and their effects on our sales, purchas- ing, production or financial services activities; changes in currency exchange rates and tariff regulations; a shift in consumer preferences towards smaller, lower-margin vehicles; a possible lack of acceptance of our products or services which limits our ability to achieve prices and adequately utilize our production capacities; price increases for fuel or raw materials; disruption of production due to shortages of materials, labor strikes or supplier insolven- cies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook for companies in which we hold a significant equity interest; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending government investigations or of investigations requested by governments and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading "Risk and Opportunity Report" in the current Annual Report or this Interim Report. If any of these risks and uncertainties materializes or if the assumptions underlying any of our forward looking statements prove to be incorrect, the 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 since they are based solely on the circumstances at the date of publication.

D | THE DIVISIONS 29

Mercedes-Benz Cars & Vans

Sales of 673,400 vehicles in the third quarter (Q3 2019: 705,000)

Mercedes-Benz Cars celebrates the world premiere of the new S-Class

Mercedes-Benz Vans starts production of the battery-electric EQV

Adjusted EBIT of €2,417 million (Q3 2019: €1,868 million)

D.01

Q3

€ amounts in millions

Q3 2020

Q3 2019

% change

Revenue

25,818

26,562

-3

EBIT

2,118

1,470

+44

EBIT adjusted

2,417

1,868

+29

Return on sales (in %)

8.2

5.5

.

Return on sales adjusted (in %)

9.4

7.0

.

CFBIT

4,617

1,825

+153

CFBIT adjusted

4,821

1,937

+149

CCR1 adjusted

2.0

1.0

.

Unit sales

673,447

704,987

-4

Production

687,846

747,080

-8

Employees

168,823

173,3942

-3

1 Cash conversion rate

2 As of December 31, 2019

Unit sales, revenue and EBIT

The Mercedes-Benz Cars & Vans division delivered 673,400 vehicles worldwide in the third quarter (Q3 2019: 705,000). Revenue fell by 3% to €25.8 billion. Adjusted EBIT amounted to €2,417 million (Q3 2019: €1,868 million). The adjusted return on sales of 9.4% was higher than the prior-year figure of 7.0%.

Mercedes-Benz goes DIGITAL

With Meet Mercedes DIGITAL, the new news series launched at the end of May, Mercedes-Benz once again presented many current topics in the third quarter. In a total of nine episodes, the innovative news format gave experts the opportunity to speak and provided background information, as well as presenting talks in the studio and reports from production plants or test tracks. Mercedes-Benz's own production facilities

are also being digitized. The new digital ecosystem from Mercedes-Benz Cars Operations (MO360) that was presented in August makes complex vehicle production completely ­transparent and maximizes efficiency.

D.02

Q1-3

€ amounts in millions

Q1-3 2020

Q1-3 2019

% change

Revenue

67,963

76,043

-11

EBIT

1,503

-171

.

EBIT adjusted

2,736

4,388

-38

Return on sales (in %)

2.2

-0.2

.

Return on sales adjusted (in %)

4.0

5.8

.

CFBIT

3,318

-1,151

.

CFBIT adjusted

4,062

-866

.

CCR1 adjusted

1.5

-0.2

.

Unit sales

1,700,989

2,044,094

-17

Production

1,719,481

2,176,811

-21

Employees

168,823

173,3942

-3

1 Cash conversion rate

2 As of December 31, 2019

Mercedes-Benz Cars highlights

The new S-Class had its world premiere in September in the newly opened Factory 56, whose innovative concept embodies the future of production at Mercedes-Benz and sets new standards for automobile manufacturing. The new luxury sedan, which will further strengthen its leading position in this segment with pioneering innovations, was already available to order two weeks after the world premiere. At Auto China in Beijing, it was on display for the first time at a trade fair alongside the long-wheelbase version of the new E-Class. In July, Mercedes-AMG presented the top model of the GT family: the new Mercedes-AMG GT Black Series (fuel consumption combined 12.8 l/100 km; CO2 emissions combined 292 g/km). Orders for this new super sports car have been taken by authorized dealers since the end of July.

Expansion of the Mercedes-Benz Vans product portfolio In July, we announced that we would also offer a small van for private customers starting in the first half of 2022. The new T-Classwill primarily address the needs of family and leisure- oriented customers. Like the commercial successor to the Citan, it will be developed in cooperation with Renault-Nissan-Mitsubishi. The new V-Classhad its market launch at Auto China in Beijing and is now available in the world's largest automobile market - tailored to the wishes of Chinese customers.

Mercedes-Benz Vans goes electric

Since September, the first premium multipurpose vehicle from Mercedes-Benz with purely battery-electric drive has been driving off the production line in Vitoria. The EQV (combined power consumption: 26.4-26.3 kWh/100 km; combined CO2 emissions: 0 g/km)1 combines the variability of the V-Class with the advantages of a locally emission-free drive system. With a range of up to 418 kilometers2 and a broad spectrum of applications for a wide variety of customer needs, the EQV sets new standards for electric mobility in its class. In August, Mercedes-Benz Vans and Amazon announced that the largest order to date had been placed for Mercedes-Benz electric vehi- cles. Starting this year, more than 1,800 battery-electric eVitos and eSprinters will be delivered to Amazon and used within Europe.

  1. Power consumption is measured on the basis of VO 692/2008/EC and depends on vehicle configuration.
  2. Range is measured on the basis of VO 692/2008/EC and depends on vehi- cle configuration. Actual range also depends on individual driving style, road and traffic conditions, ambient temperature, the use of air condition- ing/heating etc., and may deviate from the stated figures.

30 D | THE DIVISIONS

D.03

Q3

Unit sales Mercedes-Benz Cars

Q3 2020

Q3 2019

% change

Total

566,581

604,655

-6

Europe

229,829

253,213

-9

thereof Germany

84,168

85,084

-1

North America

60,723

89,972

-33

thereof United States

51,998

75,666

-31

Asia

261,027

240,335

+9

thereof China

213,846

173,321

+23

Other

15,002

21,135

-29

D.04

Q3

Unit sales Mercedes-Benz Vans

Q3 2020

Q3 2019

% change

Total

106,866

100,332

+7

EU30

69,314

65,523

+6

thereof Germany

32,600

28,863

+13

North America

18,495

14,057

+32

thereof United States

16,025

11,602

+38

Latin America (excluding Mexico)

3,189

4,444

-28

Asia

8,297

10,113

-18

thereof China

6,517

8,516

-23

Other markets

7,571

6,195

+22

Mercedes-BenzCars sold 566,600 automobiles of the Mercedes-Benz and smart brands worldwide in the third quarter (Q3 2019: 604,700). Deliveries from July through Septem- ber benefited in many markets from recovering demand from end-customers, despite the ongoing covid-19 pandemic. This increased demand could be met at short notice, in particular by reducing dealer inventories. In Europe, 229,800 vehicles were sold (Q3 2019: 253,200), thus continuing the sales revival. In Germany, the region's core market, Mercedes-Benz Cars sold 84,200 vehicles, almost matching the prior-year level (Q3 2019: 85,100). In China, Mercedes-Benz Cars' largest mar- ket, sales increased by 23% to 213,800 units (Q3 2019: 173,300), setting a new record for a third quarter. In the United States, Mercedes-Benz Cars delivered 52,000 vehicles, significantly below the prior-year number (Q3 2019: 75,700).

Deliveries of the compact cars, including the A-Class, the A-Class Sedan, the B-Class, the CLA Coupe and the CLA Shooting Brake, totaled 131,200 units in the third quarter (Q3 2019: 145,300). Sales of the SUVs in the period of July through September increased by 23% to a total of 242,100 units (Q3 2019: 197,400). This was a new record for a third quarter and reflects the high demand for, among other models, the new GLB, GLS and G-Class. Deliveries of the C-Class Sedan and Wagon totaled 75,400 units (Q3 2019: 95,200), and 72,300 of

the E-Class Sedan and Wagon were sold (Q3 2019: 87,900). Deliveries of 13,000 S-Class Sedans were lower than in the prior-year period for lifecycle reasons (Q3 2019: 16,900). The new S-Class Sedan will be delivered to customers in Germany and other European countries as of December, with China and the United States to follow in the first half of 2021. Sales of the smart were additionally reduced compared with the prior-year period by the discontinuation of the previous models and the changeover to purely battery-electric drive. A total of 10,200 units of the smart models were delivered worldwide (Q3 2019: 22,800).

Mercedes-BenzVans posted third-quarter unit sales of 106,900 vehicles (Q3 2019: 100,300). In the EU30 region, Mercedes-Benz Vans sold 69,300 units (Q3 2019: 65,500). With sales of 18,500 units in North America, we recorded our strongest-selling quarter so far (Q3 2019:14,100). In the United States, we sold 16,000 vans in the third quarter (Q3 2019: 11,600). Sales in Latin America decreased to 3,200 units (Q3 2019: 4,400). In China, sales of 6,500 vans were significantly lower than in the prior-year quarter (Q3 2019: 8,500).

D.05

Q1-3

Unit sales Mercedes-Benz Cars Q1-32020

Q1-3 2019

% change

Total

1,446,086

1,735,606

-17

Europe

532,388

733,299

-27

thereof Germany

184,724

245,689

-25

North America

189,554

254,573

-26

thereof United States

162,975

215,422

-24

Asia

678,373

686,215

-1

thereof China

541,585

514,786

+5

Other

45,771

61,519

-26

D.06

Q1-3

Unit sales Mercedes-Benz Vans Q1-32020

Q1-3 2019

% change

Total

254,903

308,488

-17

EU30

165,335

210,702

-22

thereof Germany

72,774

83,917

-13

North America

36,671

38,066

-4

thereof United States

31,953

29,116

+10

Latin America (excluding Mexico)

8,155

13,520

-40

Asia

25,079

28,156

-11

thereof China

20,187

21,781

-7

Other markets

19,663

18,044

+9

D | THE DIVISIONS 31

Daimler Trucks & Buses

Unit sales significantly below prior-year level at 99,300 vehicles (Q3 2019: 134,300)

Daimler Trucks presents a fuel-cell concept truck for long-distance haulage, the Mercedes-Benz GenH2 Truck

Market launch of the new Mercedes-Benz Intouro intercity bus with Active Brake Assist 5 emergency braking assistant Significant decrease in adjusted EBIT to €603 million (Q3 2019: €838 million)

D.07

Q3

€ amounts in millions

Q3 2020

Q3 2019

% change

Revenue

9,230

11,483

-20

EBIT

541

838

-35

EBIT adjusted

603

838

-28

Return on sales (in %)

5.9

7.3

.

Return on sales adjusted (in %)

6.5

7.3

.

CFBIT

1,142

736

+55

CFBIT adjusted

1,142

736

+55

CCR1 adjusted

1.9

0.9

.

Unit sales

99,256

134,339

-26

Production

100,508

134,801

-25

Employees

100,358

101,3972

-1

1 Cash conversion rate

2 As of December 31, 2019

technologies­it is driving forward at full speed so that heavy- duty fuel-cell trucks can operate in flexible and demanding long-distance applications with ranges of up to 1,000 kilometers. Series production of the GenH2 Truck is planned to begin in the second half of the decade. Thanks to the use of liquid instead of gaseous hydrogen, the vehicle's performance should be on a par with that of a comparable conventional diesel truck, due to its significantly higher energy density.

Mercedes-Benz eActros LongHaul for purely battery-­ electric long-distance applications

Daimler Trucks also provided the first preview of a purely battery -electriclong-distance truck, the Mercedes-Benz eActros LongHaul. It is designed to cover regular journeys on plannable routes in an energy-efficient manner. Daimler Trucks plans to have the eActros LongHaul ready for series production in 2024, with a range of approximately 500 kilometers on one battery charge.

Unit sales, revenue and adjusted EBIT significantly below prior-year levels

Unit sales by Daimler Trucks & Buses in the third quarter of 2020 decreased to 99,300 vehicles, primarily due to the ongoing worldwide effects of the covid-19 pandemic (Q3 2019: 134,300). Revenue also decreased significantly compared with the prior-year quarter to €9.2 billion. Adjusted EBIT of €603 million was also significantly lower than the prior-year level (Q3 2019: €838 million). The adjusted return on sales was 6.5% (Q3

2019: 7.3%).

Daimler Trucks presents a fuel-cell concept truck for long­ -distance haulage, the Mercedes-Benz GenH2 Truck During the presentation of the technology strategy for the electrification of its vehicles, Daimler Trucks presented the hydrogen-based fuel-cellconcept truck for the long-distancehaulage segment. With the Mercedes-BenzGenH2 Truck, the manufacturer is showing for the first time which specific

D.08

Q1-3

€ amounts in millions

Q1-3 2020

Q1-3 2019

% change

Revenue

24,174

33,238

-27

EBIT

32

2,225

-99

EBIT adjusted

103

2,225

-95

Return on sales (in %)

0.1

6.7

.

Return on sales adjusted (in %)

0.4

6.7

.

CFBIT

936

1,531

-39

CFBIT adjusted

936

1,531

-39

CCR1 adjusted

9.1

0.7

.

Unit sales

257,863

390,694

-34

Production

263,554

403,266

-35

Employees

100,358

101,3972

-1

Daimler Trucks presents the new Western Star truck Daimler Trucks North America (DTNA) presented the new Western Star 49X truck in the United States. The US truck will be used in North America primarily as a special-purposeand construction-sitevehicle in the so-calledvocational segment. While DTNA is the undisputed market leader in the long-distancesegment, the company sees further growth opportunities in the vocational segment. To utilize this potential, DTNA designed the new Western Star 49X from the ground up to meet customers' needs for more robustness and safety and a low weight.

Market launch of new Mercedes-Benz Intouro intercity bus with Active Brake Assist 5 emergency braking assistant With optional assistance systems such as Active Brake Assist 5 (ABA 5) and Sideguard Assist, the newly developed Mercedes- Benz Intouro offers a higher level of safety in intercity and touring traffic. As the world's first emergency braking assistant for buses, ABA 5 can perform an automated emergency stop as a reaction to moving persons. The optional Sideguard Assist with person recognition warns the driver when turning both of moving objects such as pedestrians and cyclists and of stationary hindrances. In addition, optimized aerodynamics and a newly developed, lighter body ensure improved fuel efficiency.

Retrofit solutions to protect against infection

Daimler Buses offers its customers numerous (retrofit) solutions to protect against infection in view of covid-19. They include, for example, sensor-controlled dispensers for disinfectants and driver-protection doors with full-surface separating panes but also so-called active filters for coaches.

  1. Cash conversion rate
  2. As of December 31, 2019

32 D | THE DIVISIONS

D.09

Q3

Unit sales Daimler Trucks

Q3 2020

Q3 2019

% change

Total

94,141

125,382

-25

EU30

15,351

19,942

-23

thereof Germany

6,912

8,616

-20

North America

41,755

53,240

-22

thereof United States

36,500

47,307

-23

Latin America (excl. Mexico)

7,672

11,569

-34

thereof Brazil

6,020

8,157

-26

Asia

21,912

33,550

-35

Other markets

7,451

7,081

+5

for information:

34,679

BFDA (Auman Trucks)

18,169

+91

D.10

Q3

Unit sales Daimler Buses

Q3 2020

Q3 2019

% change

Total

5,115

8,957

-43

EU30

1,897

2,474

-23

thereof Germany

724

769

-6

North America

230

797

-71

thereof Mexico

230

790

-71

Latin America (excl. Mexico)

2,106

4,629

-55

thereof Brazil

1,558

3,465

-55

Asia

352

695

-49

Other markets

530

362

+46

Daimler Buses wins major orders

Daimler Buses successfully participated in a major tender in Israel and was awarded the contract for a total of 415 city and intercity buses. The vehicles will be used throughout the coun- try. Orders for the all-electricMercedes-Benz eCitaro city bus were received in the period under review, 30 buses for the Rhine-Neckar region and 24 for the Darmstadt urban area. In Belgium, Daimler Buses won a tender for 129 Mercedes-Benz Citaro hybrid units for the Walloon region.

Significant decrease in unit sales at Daimler Trucks

Sales of 94,100 vehicles by Daimler Trucks in the third quarter of 2020 were 25% lower than in the prior-year period. This development was mainly the result of the ongoing worldwide impact of the covid-19 pandemic. In North America, our truck sales decreased by 22% to 41,800 units. In weight classes 6 to 8, Daimler Trucks continued to be the market leader with a market share of 36.5% (Q3 2019: 34.3%). Sales of 15,400 trucks in the EU30 region (European Union, United Kingdom, Switzerland and Norway) were also significantly below the prior-year level (Q3 2019: 19,900). With a market share of 20.7%, Mercedes-Benz trucks remained the market leader in the medium- and heavy-duty truck segment (Q3 2019: 20.1%). In Germany, sales of 6,900 trucks were 20% lower than in the third quarter of last year. In Brazil, we sold 6,000 units, which is a decrease of 26% compared with the prior-year period. In Asia, our deliveries also decreased significantly to 21,900 trucks (Q3 2019: 33,600). In Indonesia, we sold 2,800 units, also substantially fewer than in the prior-year quarter (Q3 2019: 9,800). Our sales in Japan decreased as well, by 20% to 9,400 trucks. With the FUSO brand, we achieved a market

share of 19.6% of the total Japanese truck market (Q3 2019: 18.3%). On the other hand, truck sales in India increased slightly to 2,800 units (Q3 2019: 2,700). Deliveries by Auman Trucks, our joint venture in China, increased significantly compared with the prior-year period to 34,700 units (Q3 2019: 18,200) due to the strong increase in demand in the Chinese truck market.

Unit sales by Daimler Buses significantly below the prior-year level

Daimler Buses achieved sales of 5,100 vehicles in the third quarter of this year (Q3 2019: 9,000). This significant decrease also continued to be mainly influenced by the global consequences of the covid-19 pandemic. With sales of 1,900 units in the EU30 region, Daimler Buses sold 23% fewer complete buses and bus chassis of the Mercedes-Benz and Setra brands than in the prior-year quarter. The decrease was particularly pronounced for touring coaches. Sales in Germany fell by 6% to

700 units. With our Mercedes-Benz and Setra brands, we con- tinued to be the market leader by a clear margin in the EU30 region with a market share of 26.9% (Q3 2019: 31.0%). Our sales in Mexico also decreased significantly to 200 units (-71%). In Brazil, our main market in Latin America, our unit sales were down by 55% to 1,600 bus chassis. Our sales in India also fell significantly to 100 units (Q3 2019: 400).

D.11

Q1-3

Unit sales Daimler Trucks

Q1-3 2020 Q1-32019

% change

Total

244,554

367,776

-34

EU30

38,223

58,745

-35

thereof Germany

16,747

23,038

-27

North America

97,328

155,598

-37

thereof United States

85,235

135,276

-37

Latin America (excl. Mexico)

20,876

30,461

-31

thereof Brazil

15,825

21,555

-27

Asia

70,302

101,839

-31

Other markets

17,825

21,133

-16

for information:

99,550

BFDA (Auman Trucks)

63,746

+56

D.12

Q1-3

Unit sales Daimler Buses

Q1-3 2020 Q1-32019

% change

Total

13,309

22,918

-42

EU30

4,387

6,230

-30

thereof Germany

1,845

2,035

-9

North America

918

1,844

-50

thereof Mexico

917

1,827

-50

Latin America (excluding Mexico)

5,741

11,504

-50

thereof Brazil

4,393

8,366

-47

Asia

888

2,257

-61

Other markets

1,375

1,083

+27

D | THE DIVISIONS 33

Daimler Mobility

New business stabilizes (+2%)

Contract volume decreases to €150 billion

Digitization boosts sales figures and customer satisfaction

Increase in adjusted EBIT to €601 million (Q3 2019: €469 million)

D.13

Q3

€ amounts in millions

Q3 2020

Q3 2019

% change

Revenue

6,877

7,086

-3

EBIT

589

413

+43

EBIT adjusted

601

469

+28

Return on equity (in %)

16.2

11.9

.

Return on equity adjusted (in %)

16.5

13.5

.

New business

18,676

18,279

+2

Contract volume

149,816

162,8431

-8

Employees

11,923

12,6801

-6

1 As of December 31, 2019

New business worldwide in magnitude of prior-year period Daimler Mobility's business development stabilized in the third quarter and the first signs of a recovery were perceptible. Total new business was at the prior-yearlevel. Worldwide, 516,000 new leasing and financing contracts were concluded in a total amount of €18.7 billion, 2% more than in the prior-yearperiod. Contract volume amounted to €149.8 billion at the end of ­September, and was thus 8% lower than at the end of 2019. Adjusted for exchange-rateeffects, contract volume decreased by 4%. Adjusted EBIT amounted to €601 million (Q3 2019: €469 million) and the adjusted return on equity was 16.5% (Q3 2019: 13.5%).

Europe region: new business at prior-year level

In the whole of Europe, 225,000 leasing and financing contracts were signed in the third quarter (-6 %). New business of €7.8 billion was at the prior-year level (-1%). Contract volume in Europe of €63.3 billion at the end of September was lower than at the end of 2019 (-6%). At the end of the third quarter, Athlon and Daimler Fleet Management had 406,000 contracts on their books, equivalent to contract volume of €6.5 billion.

D.14

Q1-3

€ amounts in millions

Q1-3 2020

Q1-3 2019

% change

Revenue

20,428

21,112

-3

EBIT

852

2,053

-58

EBIT adjusted

972

1,443

-33

Return on equity (in %)

7.8

19.9

.

Return on equity adjusted (in %)

8.8

14.0

.

New business

48,821

53,966

-10

Contract volume

149,816

162,8431

-8

Employees

11,923

12,6801

-6

1 As of December 31, 2019

Decreased new business in the Americas

In the Americas region, leasing and financing contracts with a total value of €5.8 billion were concluded in the third quarter of 2020 (-8%). New business was slightly lower than in the prior-year period in the United States (-4%), but significantly lower in Mexico (-55%) and Brazil (-40%). Contract volume

in the Americas region amounted to €52.6 billion at the end of September, and was thus significantly below the level of year-end 2019 (-12%).

Asia-Pacific, Africa & China: increased new business New business in the Asia-Pacific,Africa & China region amounted to €5.1 billion and was thus significantly higher than in the third quarter of 2019 (+25%). Contract volume in the region totaled €33.9 billion at the end of September (-6%).In China, 130,000 new leasing and financing contracts in a total amount of €3.4 billion were concluded in the third quarter (+67%). The ongoing economic recovery in China during the third quarter had a positive impact on new business. Contract volume in China amounted to €17.0 billion at the end of Sep- tember, and was thus slightly higher than at year-end2019 (+3%).

Recovery also noticeable in the insurance business Daimler Mobility brokered approximately 644,000 insurance policies in the third quarter of 2020 - an increase of 9% ­compared with the prior-yearquarter. The development was particularly strong in China (+32%) and Spain (+19%).

Digitization boosts sales figures and customer ­satisfaction despite impact of covid-19

Since the beginning of the year, the number of registered users of the customer portal increased by 85% in Europe. In the United States, online access to contract documents had more than doubled by the end of September. In addition, 99% of credit applications in China were submitted online in August. Convenient digital interaction increases customer enthusiasm and is a key efficiency driver.

StarRides: premium ride hailing now also in Chengdu Following its launch in Hangzhou in late 2019, the StarRides limousine service started in Guangzhou in July 2020 and in Chengdu four weeks later, giving it a presence in three Chinese cities. StarRides is a joint venture of Daimler Mobility AG and the Geely Technology Group.

YOUR NOW joint ventures: continuation of upward trend At September 30, 2020, approximately 96 million people were using the mobility services of the joint ventures FREE NOW & REACH NOW, SHARE NOW and PARK NOW & CHARGE NOW. Following the decrease in March and April 2020 due to covid- 19, the significant increase in user numbers continued in the third quarter. At the same time, the services were expanded.

34 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Income Q3

E.01

Q3 2020

Q3 2019

In millions of euros

Revenue

40,281

43,270

Cost of sales

-32,704

-34,596

Gross profit

7,577

8,674

Selling expenses

-2,364

-3,136

General administrative expenses

-888

-1,005

Research and non-capitalized development costs

-1,554

-1,764

Other operating income

373

456

Other operating expense

-86

-623

Gains on equity-method investments, net

162

193

Other financial expense, net

-150

-105

Earnings before interest and taxes (EBIT)

3,070

2,690

Interest income

56

86

Interest expense

-94

-201

Profit before income taxes

3,032

2,575

Income taxes

-874

-762

Net profit

2,158

1,813

thereof profit attributable to non-controlling interests

109

94

thereof profit attributable to shareholders of Daimler AG

2,049

1,719

Earnings per share (in euros)

for profit attributable to shareholders of Daimler AG

Basic

1.92

1.61

Diluted

1.92

1.61

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 35

Consolidated Statement of Income Q1-3

E.02

Q1-3 2020

Q1-3 2019

In millions of euros

Revenue

107,688

125,618

Cost of sales

-91,705

-103,827

Gross profit

15,983

21,791

Selling expenses

-7,715

-9,359

General administrative expenses

-2,616

-2,999

Research and non-capitalized development costs

-4,820

-5,037

Other operating income

1,461

2,189

Other operating expense

-393

-2,975

Gains on equity-method investments, net

381

665

Other financial expense, net

-276

-345

Earnings before interest and taxes (EBIT)

2,005

3,930

Interest income

184

286

Interest expense

-359

-690

Profit before income taxes

1,830

3,526

Income taxes

-1,410

-806

Net profit

420

2,720

thereof profit attributable to non-controlling interests

278

234

thereof profit attributable to shareholders of Daimler AG

142

2,486

Earnings per share (in euros)

for profit attributable to shareholders of Daimler AG

Basic

0.13

2.32

Diluted

0.13

2.32

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

36 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income Q3

E.03

Q3 2020

Q3 2019

In millions of euros

Net profit

2,158

1,813

Gains/losses on currency translation

-931

718

Gains/losses on debt instruments

3

1

Gains/losses on derivative financial instruments

370

-331

Gains/losses on equity-method investments

-2

-8

Items that may be reclassified to profit/loss

-560

380

Actuarial gains/losses from pensions and similar obligations

-855

-1,101

Gains/losses on equity instruments

23

-15

Items that will not be reclassified to profit/loss

-832

-1,116

Other comprehensive income/loss, net of taxes

-1,392

-736

thereof income/loss attributable to non-controlling interests, after taxes

-24

20

thereof income/loss attributable to shareholders of Daimler AG, after taxes

-1,368

-756

Total comprehensive income/loss

766

1,077

thereof income/loss attributable to non-controlling interests

85

114

thereof income/loss attributable to shareholders of Daimler AG

681

963

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 37

Consolidated Statement of Comprehensive Income/Loss Q1-3

E.04

Q1-3 2020

Q1-3 2019

In millions of euros

Net profit

420

2,720

Gains/losses on currency translation

-1,941

1,007

Gains/losses on debt instruments

2

8

Gains/losses on derivative financial instruments

719

-616

Gains/losses on equity-method investments

-3

-13

Items that may be reclassified to profit/loss

-1,223

386

Actuarial gains/losses from pensions and similar obligations

-2,188

-2,584

Gains/losses on equity instruments

32

9

Items that will not be reclassified to profit/loss

-2,156

-2,575

Other comprehensive income/loss, net of taxes

-3,379

-2,189

thereof income/loss attributable to non-controlling interests, after taxes

-43

30

thereof income/loss attributable to shareholders of Daimler AG, after taxes

-3,336

-2,219

Total comprehensive income/loss

-2,959

531

thereof income/loss attributable to non-controlling interests

235

264

thereof income/loss attributable to shareholders of Daimler AG

-3,194

267

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

38 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Financial Position

E.05

Sept. 30, 2020

Dec. 31, 2019

In millions of euros

Assets

Intangible assets

16,430

15,978

Property, plant and equipment

35,092

37,143

Equipment on operating leases

47,704

51,482

Equity-method investments

5,059

5,949

Receivables from financial services

53,304

52,880

Marketable debt securities and similar investments

950

770

Other financial assets

3,862

3,347

Deferred tax assets

5,779

5,803

Other assets

1,014

1,286

Total non-current assets

169,194

174,638

Inventories

29,534

29,757

Trade receivables

10,739

12,332

Receivables from financial services

41,756

50,781

Cash and cash equivalents

24,498

18,883

Marketable debt securities and similar investments

7,113

7,885

Other financial assets

3,294

2,736

Other assets

4,525

5,426

Total current assets

121,459

127,800

Total assets

290,653

302,438

Equity and liabilities

Share capital

3,070

3,070

Capital reserves

11,551

11,552

Retained earnings

43,273

46,329

Other reserves

-754

393

Equity attributable to shareholders of Daimler AG

57,140

61,344

Non-controlling interests

1,483

1,497

Total equity

58,623

62,841

Provisions for pensions and similar obligations

12,484

9,728

Provisions for other risks

11,036

10,597

Financing liabilities

92,667

99,179

Other financial liabilities

1,873

2,112

Deferred tax liabilities

4,012

3,935

Deferred income

1,461

1,598

Contract and refund liabilities

5,897

6,060

Other liabilities

899

586

Total non-current liabilities

130,329

133,795

Trade payables

14,877

12,707

Provisions for other risks

9,200

10,327

Financing liabilities

59,553

62,601

Other financial liabilities

6,503

7,752

Deferred income

1,550

1,624

Contract and refund liabilities

6,630

7,571

Other liabilities

3,388

3,220

Total current liabilities

101,701

105,802

Total equity and liabilities

290,653

302,438

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 39

Consolidated Statement of Cash Flows

E.06

Q1-3 2020

Q1-3 2019

In millions of euros

Profit before income taxes

1,830

3,526

Depreciation and amortization/impairments

6,668

5,561

Other non-cash expense and income

-458

-478

Gains (-)/losses (+) on disposals of assets

35

-722

Change in operating assets and liabilities

Inventories

-933

-5,500

Trade receivables

1,287

186

Trade payables

2,106

1,832

Receivables from financial services

4,277

-1,620

Vehicles on operating leases

2,393

-837

Other operating assets and liabilities

-163

5,174

Dividends received from equity-method investments

1,234

637

Income taxes paid

-1,008

-1,199

Cash provided by operating activities

17,268

6,560

Additions to property, plant and equipment

-3,830

-5,191

Additions to intangible assets

-2,137

-2,591

Proceeds from disposals of property, plant and equipment and intangible assets

279

215

Investments in shareholdings

-323

-1,614

Proceeds from disposals of shareholdings

227

346

Acquisition of marketable debt securities and similar investments

-2,985

-4,349

Proceeds from sales of marketable debt securities and similar investments

3,461

5,090

Other

-12

-51

Cash used for investing activities

-5,320

-8,145

Change in financing liabilities

-4,486

6,048

Dividend paid to shareholders of Daimler AG

-963

-3,477

Dividends paid to non-controlling interests

-255

-233

Proceeds from the issue of share capital

31

63

Acquisition of treasury shares

-30

-42

Acquisition of non-controlling interests in subsidiaries

-

-64

Cash used for/provided by financing activities

-5,703

2,295

Effect of foreign exchange rate changes on cash and cash equivalents

-630

426

Net increase in cash and cash equivalents

5,615

1,136

Cash and cash equivalents at beginning of period

18,883

15,853

Cash and cash equivalents at end of period

24,498

16,989

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

40 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Changes in Equity

E.07

Equity

instruments/

Share

Capital

Retained

Currency

debt

capital

reserves

earnings

translation

instruments

In millions of euros

Balance at January 1, 2019

3,070

11,710

49,490

472

15

Net profit

-

-

2,486

-

-

Other comprehensive income/loss

-

-

-3,895

977

14

before taxes

Deferred taxes on other comprehensive

-

-

1,311

-

3

income/loss

Total comprehensive income/loss

-

-

-98

977

17

Dividends

-

-

-3,477

-

-

Changes in consolidated group

-

-

-14

-

-

Capital increase/Issue of new shares

-

-

-

-

-

Acquisition of treasury shares

-

-

-

-

-

Issue and disposal of treasury shares

-

-

-

-

-

Changes in ownership interests

-

-139

-

-

-

in subsidiaries

Other

-

-

60

-

-

Balance at September 30, 2019

3,070

11,571

45,961

1,449

32

Balance at January 1, 2020

3,070

11,552

46,329

930

30

Net profit

-

-

142

-

-

Other comprehensive income/loss

-

-

-2,582

-1,897

43

before taxes

Deferred taxes on

-

-

393

-

-9

other comprehensive income/loss

Total comprehensive income/loss

-

-

-2,047

-1,897

34

Dividends

-

-

-963

-

-

Changes in consolidated group

-

-

-83

-

-

Capital increase/Issue of new shares

-

-

-

-

-

Acquisition of treasury shares

-

-

-

-

-

Issue and disposal of treasury shares

-

-

-

-

-

Changes in ownership interests

-

-1

-

-

-

in subsidiaries

Other

-

-

37

-

-

Balance at September 30, 2020

3,070

11,551

43,273

-967

64

The accompanying notes are an integral part of these Interim Consolidated Financial Statements.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 41

Other reserves

Items that may be reclassified to profit/loss

Share of

Equity

investments

Derivative

accounted for

attributable to

Non-

financial

using the

Treasury

shareholders

controlling

Total

instruments

equity method

shares

of Daimler AG

interests

equity

In millions of euros

-95

5

-

64,667

1,386

66,053

Balance at January 1, 2019

-

-

-

2,486

234

2,720

Net profit

Other comprehensive income/loss

-872

-13

-

-3,789

30

-3,759

before taxes

Deferred taxes on other comprehensive

256

-

-

1,570

-

1,570

income/loss

-616

-13

-

267

264

531

Total comprehensive income/loss

-

-

-

-3,477

-251

-3,728

Dividends

-

-

-

-14

-11

-25

Changes in consolidated group

-

-

-

-

32

32

Capital increase/Issue of new shares

-

-

-42

-42

-

-42

Acquisition of treasury shares

-

-

42

42

-

42

Issue and disposal of treasury shares

Changes in ownership interests

-

-

-

-139

-16

-155

in subsidiaries

-

-

-

60

4

64

Other

-711

-8

-

61,364

1,408

62,772

Balance at September 30, 2019

-546

-21

-

61,344

1,497

62,841

Balance at January 1, 2020

-

-

-

142

278

420

Net profit

1,031

-3

-

-3,408

-43

-3,451

Other comprehensive income/loss

before taxes

-312

-

-

72

-

72

Deferred taxes on

other comprehensive income/loss

719

-3

-

-3,194

235

-2,959

Total comprehensive income/loss

-

-

-

-963

-261

-1,224

Dividends

-

-

-

-83

2

-81

Changes in consolidated group

-

-

-

-

13

13

Capital increase/Issue of new shares

-

-

-30

-30

-

-30

Acquisition of treasury shares

-

-

30

30

-

30

Issue and disposal of treasury shares

-

-

-

-1

-

-1

Changes in ownership interests

in subsidiaries

-

-

-

37

-3

34

Other

173

-24

-

57,140

1,483

58,623

Balance at September 30, 2020

42 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Interim Consolidated Financial Statements

1. Presentation of the Interim Consolidated Financial Statements

General

These Interim Consolidated Financial Statements (Interim Financial Statements) of Daimler AG and its subsidiaries ("Daimler" or "the Group") have been prepared in accordance with Section 115 of the German Securities Trading Act (WpHG) and International Accounting Standard (IAS) 34 Interim Financial Reporting.

The Interim Financial Statements comply with the International Financial Reporting Standards (IFRS) as adopted by the Euro- pean Union.

Daimler AG is a stock corporation organized under the laws of the Federal Republic of Germany. Daimler AG is entered in the Commercial Register of the Stuttgart District Court under No. HRB 19360 and its registered office is located at Mercedesstraße 120, 70372 Stuttgart, Germany.

The Interim Financial Statements of the Daimler Group are

­presented in euros (€). Unless otherwise stated, all amounts are stated in millions of euros. All figures shown are rounded in accordance with standard business rounding principles.

The Board of Management authorized the Interim Consolidated Financial Statements for publication on October 22, 2020. These Interim Consolidated Financial Statements have been reviewed by the Daimler Group's auditors.

All significant intercompany accounts and transactions have been eliminated. In the opinion of the management, the Interim Financial Statements reflect all adjustments (i.e. normal recurring adjustments) necessary for a fair presentation of the prof- itability, liquidity and capital resources, and financial position of the Group. Results for the interim periods presented are not necessarily indicative of the results that may be expected

for any future period or for the full financial year. The Interim Financial Statements should be read in conjunction with the December 31, 2019 audited and published IFRS Consolidated Financial Statements and notes thereto. The accounting

policies­ applied by the Group in these Interim Financial Statements fundamentally correspond with those applied for

the Consolidated Financial Statements for the year ended December 31, 2019.

IFRS issued, EU endorsed and initially adopted in the reporting period

In the second quarter of 2020, the International Accounting Standards Board published an amendment to IFRS 16 ("Covid- 19-Related Rent Concessions"), in which they provide an accounting policy choice to lessees to apply practical relief for rent concessions arising as a result of the covid-19 pandemic. Daimler does not apply these practical expedients for lessees.

Accounting estimates and management judgements due to the covid-19 pandemic

Accounting estimates and management judgements can affect the amounts and reporting of assets and liabilities, the reporting of contingent assets and liabilities as at the balance sheet date, and the amounts of income and expense reported for the period. Due to the still not fully foreseeable global consequences of the covid-19 pandemic, these accounting estimates and management judgements are subject to increased uncer- tainty. Actual amounts may differ from the estimates and ­management judgements; changes can have a material impact on the Interim Consolidated Financial Statements.

With the update of the accounting estimates and management judgements, available information on the expected economic developments and country-specific governmental countermeasures has been included.

This information was included in the analysis of the recoverability and collectability of financial assets, especially of receivables from financial services and equity-method invest- ments. With regard to hedge accounting, estimates were updated concerning whether forecast transactions can still be assumed to be highly likely to occur. Furthermore, estimates of future residual values of leased vehicles, the measurement of provisions for residual value guarantees and the measurement of the net realizable value of inventories have been updated to include the expected consequences of the covid-19 pandemic. In addition, impairment tests for the cash-generating units of the automotive business have confirmed the correctness of the corresponding carrying amounts.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 43

Adjustment of segment figures in the prior-year period due to the change in the Group's internal management and reporting structure as of January 1, 2020

Until December 31, 2019, the Group's reportable segments were Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Mobility. As of January 1, 2020, the Group's activities are divided into the segments Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks & Buses and Daimler Mobility. This corresponds to the internal reporting and organizational structure. The segments Mercedes-Benz Cars and Mercedes-Benz Vans are aggregated into the reportable segment Mercedes-Benz Cars & Vans in line with the nature of the products and services offered, as well as their brands, sales channels and customer profiles.

The figures for 2019 have been adjusted to the new segment structure to ensure that the figures for 2020 are comparable with the prior-year figures. Internal supply of goods and services within the new segments have been taken into account. Furthermore, in the figures for the previous year, the effects of certain legal issues and equity investments not previously

allocated­ to the segments have been reclassified from the ­reconciliation to the vehicle segments.

In this context, the amortization of capitalized borrowing costs is included in EBIT as of January 1, 2020. From the 2020 financial year onwards, EBIT will therefore be presented in the Consolidated Statement of Income as an arithmetical amount.

2. Assets and liabilities held for sale

Intended sale of the car plant in Hambach, France

In the third quarter of 2020, in the context of adjusting and realigning capacities within the global production network, the Daimler Group decided that it intended to sell the car plant in Hambach, France. The assets and liabilities relating to the Hambach plant are therefore classified as held for sale as of September 30, 2020. The remeasurement of the assets and liabilities had already resulted in expenses of €0.4 billion at the Mercedes-Benz Cars & Vans segment in the second quarter of 2020. The remeasurement of the "assets and liabilities held for sale" resulted in additional expenses of €0.1 billion in the third quarter of 2020.

Due to their minor significance for the financial position of the Daimler Group, there is no separate presentation of the held- for-sale assets (€131 million) and liabilities (€56 million) in the Consolidated Statement of Financial Position.

Joint venture between Volvo Group and Daimler Truck AG In April 2020, the Volvo Group and Daimler Truck AG signed a letter of intent on the establishment of a joint venture for fuel- cell activities. It is planned that the Volvo Group and Daimler Truck AG will each hold a 50% interest in the joint venture. The Group is placing the assets and liabilities of its Group-wide fuel-cellactivities in the company Daimler Truck Fuel Cell GmbH & Co. KG, a 100% subsidiary of Daimler Truck AG. This entity is classified as held for sale as of September 30, 2020. A binding agreement with the Volvo Group on the sale of a 50% interest in the company for an estimated price of €0.6 billion is expected in the fourth quarter of 2020. The transaction, which is expected to be concluded in the first half of 2021, will have a significant positive effect on the Daimler Group's earnings.

Due to their minor significance for the financial position of the Daimler Group, there is no separate presentation of the held- for-sale assets (€31 million) and liabilities (€18 million) in the Consolidated Statement of Financial Position. In the future, the joint venture will probably be included in the Consolidated Financial Statements using the equity method and will be reported in the Daimler Trucks & Buses segment.

44 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

3. Revenue

Revenue disclosed in the Consolidated Statement of Income includes revenue from contracts with customers and other revenue not in the scope of IFRS 15.

Revenue from contracts with customers (revenue according to IFRS 15) is disaggregated by the two categories - type of products and services and geographical regions - and presented in table E.08 and table E.09. The category type of products and services corresponds to the reportable segments.

Other revenue primarily comprises revenue from the rental and leasing business, interest from the financial services business at Daimler Mobility and effects from currency hedging.

Despite the ongoing covid-19 pandemic the Daimler Group's revenue in the third quarter of 2020 was only slightly below the prior-year level. As a result of the worldwide fall in unit sales due to the lower customer demand caused by the covid-19 pandemic and the closure of sales-and-service centers and dealerships in important markets, the Daimler Group's revenue had declined significantly in key markets in the second quarter of 2020.

E.08

Revenue for the three-month periods ended September 30

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q3 2020

Europe

12,081

2,870

1,163

16,114

-679

15,435

North America

3,924

3,919

1,524

9,367

-71

9,296

Asia

7,990

1,452

46

9,488

-10

9,478

Other markets

894

719

41

1,654

-1

1,653

Revenue according to IFRS 15

24,889

8,960

2,774

36,623

-761

35,862

Other revenue

929

270

4,103

5,302

-883

4,419

Total revenue

25,818

9,230

6,877

41,925

-1,644

40,281

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q3 2019

Europe

11,557

3,182

1,152

15,891

-712

15,179

North America

5,040

5,111

1,481

11,632

-191

11,441

Asia

8,122

1,764

24

9,910

-5

9,905

Other markets

1,196

1,180

35

2,411

-3

2,408

Revenue according to IFRS 15

25,915

11,237

2,692

39,844

-911

38,933

Other revenue

647

246

4,394

5,287

-950

4,337

Total revenue

26,562

11,483

7,086

45,131

-1,861

43,270

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 45

E.09

Revenue for the nine-months periods ended September 30

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q1-3 2020

Europe

29,276

7,310

3,221

39,807

-1,693

38,114

North America

11,896

9,664

4,272

25,832

-502

25,330

Asia

21,887

4,353

129

26,369

-15

26,354

Other markets

2,664

2,063

100

4,827

-4

4,823

Revenue according to IFRS 15

65,723

23,390

7,722

96,835

-2,214

94,621

Other revenue

2,240

784

12,706

15,730

-2,663

13,067

Total revenue

67,963

24,174

20,428

112,565

-4,877

107,688

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q1-3 2019

Europe

33,503

9,375

3,402

46,280

-1,410

44,870

North America

14,436

14,714

4,428

33,578

-654

32,924

Asia

22,426

5,125

107

27,658

-16

27,642

Other markets

3,657

3,298

107

7,062

-10

7,052

Revenue according to IFRS 15

74,022

32,512

8,044

114,578

-2,090

112,488

Other revenue

2,021

726

13,068

15,815

-2,685

13,130

Total revenue

76,043

33,238

21,112

130,393

-4,775

125,618

4. Functional costs

Cost of sales

Cost of sales amounted to €32,704 million in the third quarter of 2020 (Q3 2019: €34,596 million) and €91,705 million in the nine-month period ended September 30, 2020 (Q1-3 2019: €103,827 million). It primarily comprises the expenses of goods sold.

The decrease in cost of sales was caused by cost adjustments in response to the covid-19 pandemic. Also in the other functional cost areas, the measures taken due to the current economic situation, including the use of short-time working in ­Germany particularly in the second quarter, led to an improvement in the cost position.

Cost of sales were affected at the Daimler Mobility segment by the impairment of software in the context of streamlining the IT-architecture in the third quarter of 2020. Due to additions to provisions for risks in the first half of 2020, no further additions to the credit risk provisions were necessary in the third quarter of 2020.

Expenses in connection with the adjustment and realignment of capacities within the global production network in the Mercedes-Benz Cars & Vans segment had a negative impact on cost of sales mainly in the second quarter of 2020.

In the prior-year period, a reassessment of risks in connection with ongoing governmental and court proceedings and measures taken with regard to Mercedes-Benz diesel vehicles in various regions had led to significant earnings reductions in cost of sales. Furthermore, expenses connected with an updated risk assessment for an expanded recall of Takata air- bags in Europe and other markets and expenses in connection with terminating production of the X-Class had a negative impact on cost of sales in the prior-year period.

Selling expenses

In the third quarter of 2020, selling expenses amounted to €2,364 million (Q3 2019: €3,136 million) and in the nine-month period ended September 30, 2020, they amounted to €7,715 million (Q1-3 2019: €9,359 million). Selling expenses consist of direct selling costs as well as selling overhead expenses and comprise personnel expenses, material costs and other selling costs.

General administrative expenses

General administrative expenses amounted to €888 million in the third quarter of 2020 (Q3 2019: €1,005 million) and €2,616 million in the nine-month period ended September 30, 2020 (Q1-3 2019: €2,999 million). They consist of expenses which are not attributable to production, sales or research and development functions, and comprise personnel expenses, depreciation and amortization of fixed and intangible assets, and other administrative costs.

46 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

E.10

Other financial income/expense, net

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Income and expense from compounding and effects from

-68

-128

changes in discount rates of provisions for other risks

-80

-278

Miscellaneous other financial income/expense, net

-82

-25

-148

-67

-150

-105

-276

-345

Research and non-capitalized development costs Research and non-capitalizeddevelopment costs were €1,554 million in the third quarter of 2020 (Q3 2019: €1,764 million) and €4,820 million in the nine-monthperiod ended September 30, 2020 (Q1-Q32019: €5,037 million). They primarily comprise personnel expenses and material costs.

Overall, functional costs include expenses in connection with personnel cost optimization programs of €339 million in the third quarter of 2020 and of €468 million in the nine-month period ended September 30, 2020.

The use of short-time work in Germany led to social security claims that are included in other operating income.

Other operating expense was €86 million in the third quarter of 2020 (Q3 2019: €623 million) and €393 million in the nine- month period ended September 30, 2020 (Q1-3 2019: €2,975 million). The decrease mainly resulted from expenses in connection with ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles in various regions in 2019.

5. Other operating income and expense

6. Other financial income/expense

Table E.10 shows the components of other financial income/

Other operating income amounted to €373 million in the

expense, net.

third quarter of 2020 (Q3 2019: €456 million) and €1,461 mil-

lion in the nine-month period ended September 30, 2020

(Q1-3 2019: €2,189 million). A positive impact in the first quar-

ter of 2020 was the contribution of the smart brand to the joint

venture smart Automobile Co., Ltd. This resulted in an income

of €154 million. See ENote 12 for further information. In the

first quarter of 2019, income of €718 million resulted from

the merger of the business units for mobility services of the

Daimler Group and the BMW Group.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 47

E.11

Interest income and interest expense

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Interest income

Net interest income on the net assets of defined-benefit pension plans

1

1

2

3

Interest and similar income

55

85

182

283

56

86

184

286

Interest expense

Net interest expense on the net obligation from defined-benefit pension plans

-33

-45

-112

-136

Interest and similar expense

-61

-156

-247

-554

-94

-201

-359

-690

E.12

Income taxes

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Income before income taxes

3,032

2,575

1,830

3,526

Income taxes

-874

-762

-1,410

-806

Tax rate

28.8%

29.6%

77.0%

22.9%

7. Interest income and interest expense

The composition of interest income and interest expense is shown in table E.11.

8. Income taxes

Table E.12 shows income before income taxes, income taxes and the derived effective tax rate.

The income taxes recognized in the first nine months of 2020 were significantly impacted by the non-recognition of deferred tax assets on losses incurred in Germany in the first half of 2020.

For the first nine months of 2019, the mainly tax-free gain on the merger of the mobility services of the Daimler Group and the BMW Group reduced the effective tax rate.

9. Intangible assets

The composition of intangible assets is shown in table E.13.

E.13

Intangible assets

Sept. 30,

Dec. 31,

2020

2019

In millions of euros

Goodwill

1,233

1,217

Development costs

13,038

12,525

Other intangible assets1

2,159

2,236

16,430

15,978

1 At September 30, 2020, after the impairment of software by approximately €0.1 billion at the Daimler Mobility segment.

48 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

E.14

Property, plant and equipment (excluding right-of-use assets)

Sept. 30,

Dec. 31,

2020

2019

In millions of euros

Land, leasehold improvements and

buildings including buildings on land

9,614

owned by others

9,859

Technical equipment and machinery

9,537

10,113

Other equipment, factory and

7,213

office equipment

7,864

Advance payments relating to plant and

4,944

equipment and construction in progress

5,073

31,308

32,909

E.15

Right-of-use assets

Sept. 30,

Dec. 31,

2020

2019

In millions of euros

Land, leasehold improvements and

3,547

buildings

3,956

Technical equipment and machinery

156

187

Other equipment, factory and

81

office equipment

91

3,784

4,234

10. Property, plant and equipment

Property, plant and equipment as presented in the Statement of Financial Position with a carrying amount of €35,092 million (December 31, 2019: €37,143 million) also includes right-of-use assets related to lessee accounting.

Table E.14 shows property, plant and equipment excluding right-of-use assets. The decrease is partially due to write- downs in the amount of €0.4 billion for the adjustment and realignment of capacities within the global production network.

Table E.15 shows the right-of-use assets.

11. Equipment on operating leases

At September 30, 2020, the carrying amount of equipment on operating leases was €47,704 million (December 31, 2019: €51,482 million). In the nine-month period ended September 30, 2020, additions and disposals amounted to €15,408 million and €10,709 million respectively (Q1-3 2019: €19,527 million and €11,864 million). Depreciation for the nine-month period ended September 30, 2020 was €7,141 million (Q1-3 2019: €6,735 million) and includes impairments in the amount of €0.3 billion primarily arising in connection with the corona cri- sis. Other changes primarily comprise the effects of currency translation.

12. Equity-method investments

Table E.16 shows the carrying amounts and gains/losses on equity-method investments.

Table E.17 presents key figures on interests in associated companies accounted for using the equity method in the Group's Consolidated Financial Statements.

Table E.18 presents key figures on interests in joint ventures accounted for using the equity method in the Group's Consolidated Financial Statements.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 49

E.16

Summarized carrying amounts and gains/losses on equity-method investments

Associated

Joint

Joint

companies

ventures

operations

Total

In millions of euros

At September 30, 2020

Equity investment1

3,614

1,429

16

5,059

Equity result (Q3 2020)1

190

-29

1

162

Equity result (Q1-3 2020)1

683

-305

3

381

At December 31, 2019

Equity investment1

4,349

1,582

18

5,949

Equity result (Q3 2019)1

394

-202

1

193

Equity result (Q1-3 2019)1

981

-331

15

665

1 Including investor-level adjustments.

E.17

Key figures on interests in associated companies accounted for using the equity method

BAIC

THBV

BBAC

Motor2

(HERE)

Others

Total

In millions of euros

At September 30, 2020

Equity interest (in %)

49.0

9.6

29.7

Equity investment1

2,284

325

361

644

3,614

Equity result (Q3 2020)1

363

-168

-6

1

190

Equity result (Q1-3 2020)1

949

-312

62

-16

683

At December 31, 2019

Equity interest (in %)

49.0

9.6

29.7

Equity investment1

2,519

665

475

690

4,349

Equity result (Q3 2019)1

331

8

-11

66

394

Equity result (Q1-3 2019)1

1,000

29

-82

34

981

  1. Including investor-level adjustments.
  2. Earnings of BAIC Motor Corporation Ltd. (BAIC Motor) are included in Daimler's Consolidated Financial Statements with a three-month time lag.

E.18

Key figures on interests in joint ventures accounted for using the equity method

YOUR NOW2

Others

Total

In millions of euros

At September 30, 2020

Equity interest (in %)

50

Equity investment1

575

854

1,429

Equity result (Q3 2020)1

-37

8

-29

Equity result (Q1-3 2020)1

-285

-20

-305

At December 31, 2019

Equity interest (in %)

50

Equity investment1

866

716

1,582

Equity result (Q3 2019)1

-222

20

-202

Equity result (Q1-3 2019)1

-351

20

-331

  1. Including investor-level adjustments.
  2. Earnings of YOUR NOW are included in Daimler's Consolidated Financial Statements with a one-month time lag. The figures for the equity result of Q3 relate to the period of June 1 to August 31. The figures for Q1-3 2019 relate to the period of February 1 to August 31, 2019. The figures for Q1-3 2020 relate to the period of December 1, 2019 to August 31, 2020.

50 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

BBAC

In the second quarter of 2020, the shareholders of BBAC approved the payout of a dividend for the 2019 financial year. The amount of €1,174 million attributable to Daimler reduced the carrying amount of the investment accordingly. The dividend was paid in the third quarter of 2020 and led to a cash inflow of €1,151 million. Daimler plans to contribute additional equity of in total €0.5 billion in accordance with its shareholding ratio in the years 2020 to 2022.

BAIC Motor

In the first quarter of 2020, due to a reassessment of the business development in light of the covid-19 pandemic, the Group recognized an impairment loss of €150 million with respect to its investment in BAIC Motor Corporation Ltd. (BAIC Motor). In the third quarter of 2020, an additional impairment loss

of €180 million was recognized. The losses are included in the line item profit/loss on equity-method investments, net.

THBV (HERE)

In December 2019, There Holding B.V. (THBV) and HERE International B.V. (HERE) and other companies signed an agreement on the basis of which 30% of the shares in HERE are to be sold to a joint venture between Mitsubishi Corporation and Nippon Telegraph and Telephone Corporation. The transaction was completed on May 29, 2020 after receiving the approval of the relevant authorities and lead to a gain of €105 million, included in the line item profit/loss on equity-method investments, net.

In the year 2020 to date, THBV has implemented capital ­measures which have reduced the carrying amount of the investment by €177 million.

YOUR NOW

In the second quarter of 2020, the profit/loss on equity- method investments, net of YOUR NOW Holding GmbH (YOUR NOW) includes an impairment loss of €105 million.

In the third quarter of 2019, an impairment loss of €107 million was recognized on joint ventures, mainly resulting from

the adjustment of earnings forecasts for individual mobility services.

Other joint ventures accounted for using the equity-method

In December 2019, Mercedes-Benz AG and Zhejiang Geely Holding Group founded the joint venture smart Automobile Co., Ltd. (smart). In the first quarter of 2020, each company contributed CNY 2.7 billion to the equity of the joint venture. The share of Mercedes-Benz AG essentially consisted of the contribution of the smart brand, leading to a positive effect on earnings in the amount of €154 million in the first quarter of 2020, recognized in other operating income. The joint venture is allocated to the Mercedes-Benz Cars & Vans segment.

13. Receivables from financial services

Receivables from financial services are shown in the following table:

E.19

Receivables from financial services

Sept. 30, 2020

Dec. 31, 2019

Current

Non-current

Total

Current

Non-current

Total

In millions of euros

Sales financing with customers

17,551

32,152

49,703

18,963

30,627

49,590

Sales financing with dealers

13,567

3,221

16,788

21,016

3,573

24,589

Finance lease contracts

11,394

18,826

30,220

11,461

19,329

30,790

Gross carrying amount

42,512

54,199

96,711

51,440

53,529

104,969

Loss allowances

-756

-895

-1,651

-659

-649

-1,308

Net carrying amount

41,756

53,304

95,060

50,781

52,880

103,661

At September 30, 2020, €0.5 billion of the loss allowances relates to the increase in the allowance for credit losses as a result of the worsened economic outlook in connection with the covid-19 pandemic, which was recognized in the first half of the year at the Daimler Mobility segment, with an impact on earnings.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 51

14. Inventories

Inventories are comprised as follows:

E.20

Inventories

Sept. 30,

Dec. 31,

2020

2019

In millions of euros

Raw materials and manufacturing

3,271

supplies

3,321

Work in progress

4,232

4,290

Finished goods, parts and products held

21,870

for resale

21,922

Advance payments to suppliers

161

224

29,534

29,757

15. Equity

Approved capital

The Annual Shareholders' Meeting held on April 5, 2018 authorized the Board of Management, with the consent of the Supervisory Board, to increase the share capital of Daimler AG in the period until April 4, 2023 by a total of €1.0 billion in one lump sum or by separate partial amounts at different times by issuing new, registered no-par-value shares in exchange for cash and/or non-cash contributions (Approved Capital 2018). The new shares are generally to be offered to the shareholders for subscription (also by way of indirect subscription pursuant to Section 186 Subsection 5 Sentence 1 of the German Stock Corporation Act (AktG)). Among other things, the Board of Management was authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights under certain conditions and within defined limits.

Approved Capital 2018 has not yet been exercised.

Conditional capital

The authorization granted by Annual Shareholders' Meeting on April 1, 2015, to issue convertible and/or warrant bonds was limited until March 31, 2020. This authorization has not been exercised. The corresponding Conditional Capital 2015 was cancelled by resolution of the Annual Shareholders' Meeting on July 8, 2020.

Also by resolution of the Annual Shareholders' Meeting on July 8, 2020, the Board of Management is authorized, with the ­consent of the Supervisory Board, until July 7, 2025 to issue convertible and/or warrant bonds or a combination of these instruments ("bonds") with a total face value of up to €10.0 billion and a maturity of no more than ten years. The Board of Management is allowed to grant the holders of these bonds conversion or warrant rights for new registered no-par-value shares in Daimler AG with an allocable portion of the share capital of up to €500 million in accordance with the details defined in the terms and conditions of the bonds. The bonds can be offered in exchange for cash and/or non-cash contribu- tions, in particular for shares in other companies. The terms and conditions of the bonds can include warranty obligations or conversion obligations. The bonds can be issued once or several times, wholly or in installments, or simultaneously in various tranches as well by affiliates of the Company within the

meaning of Sections 15 et seq. of the German Stock Corporation Act (AktG). Among other things, the Board of Management is authorized to exclude shareholders' subscription rights

for the bonds under certain conditions and within defined constraints with the consent of the Supervisory Board.

In order to fulfill the conditions of the above-mentioned autho- rization, the Annual Shareholders' Meeting on July 8, 2020 also resolved to increase the share capital conditionally by an amount of up to €500 million (Conditional Capital 2020). Conditional Capital 2020 will be effective upon being entered in the commercial register.

Treasury shares

The authorization granted by Annual Shareholders' Meeting on April 1, 2015 to acquire and use treasury shares expired on March 31, 2020. By resolution of the Annual Shareholders' Meeting on July 8, 2020, the Board of Management is again authorized, with the consent of the Supervisory Board, until July 7, 2025 to acquire treasury shares in a volume up to 10% of the share capital issued as of the day of the resolution or - if this is lower - of the share capital existing at the time of the authorization being exercised, to be used for all permissible purposes. The shares can be used, among other things, with the exclusion of shareholders' subscription rights, for business combinations or to acquire companies or to be sold to third parties for cash at a price that is not significantly lower than the stock-exchange price of the Company's shares. The acquired shares can also be used to fulfill obligations from issued convertible bonds and/or bonds with warrants and to be issued to employees of the Company and employees and board members of the Company's affiliates pursuant to Sections 15 et seq. of the German Stock Corporation Act (AktG). The treasury shares can also be canceled.

In a volume up to 5% of the share capital issued as of the day of the resolution of the Annual Shareholders' Meeting, the Board of Management is authorized, with the consent of the Supervisory Board, to acquire treasury shares also by using derivatives (put options, call options, forward purchases or a combination of these instruments), whereby the term of a derivative must not exceed 18 months and must not end later than July 7, 2025.

Employee share purchase plan

In the first quarter of 2020, 1.1 million (2019: 0.8 million) Daimler shares were purchased pursuant to Section 71 Subsection 1 No. 2, of the German Stock Corporation Act (AktG) without utilizing the authorization to acquire treasury shares granted by the Annual Shareholders' Meeting on April 1, 2015, to be reissued to employees in connection with employee share purchase plans. The shares were reissued on March 25, 2020.

Dividend

The Annual Shareholders' Meeting held on July 8, 2020 authorized Daimler to pay a dividend of €963 million (€0.90 per dividend -entitledno-par-value share) from the distributable profit of Daimler AG (separate financial statements) for the year 2019 (2019: €3,477 million and €3.25 per share). The dividend was paid out on July 13, 2020.

52 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

16. Pensions and similar obligations

Development of funded status

The funded status of pension obligations is shown in table

  • E.21. The increase in the present value of defined benefit obligations results from a decrease in discount rates. This effect is increased by the slightly negative development of the return on plan assets.

E.21

Development of funded status

Sept. 30,

Dec. 31,

2020

2019

In millions of euros

Present value of the defined

-38,298

benefit obligation

-36,195

Fair value of plan assets

26,945

27,760

Funded status

-11,353

-8,435

thereof recognized in other assets

85

83

thereof recognized in provisions

-11,438

for pensions and similar obligations

-8,518

Pension cost

The components of pension cost included in the Consolidated Statement of Income are shown in table E.22 and table

  • E.23. The gain of €105 million shown in the third quarter of 2020 in the line past service cost results from the freeze of the defined benefit pension plan in the United States. It has been replaced with a defined contribution pension plan. The gain is presented under functional costs in the segment Mercedes- Benz Cars & Vans.

Contributions to pension plan assets

In the third quarter and the first nine months of 2020, contributions by Daimler to the Group's pension plan assets amounted to €16 million and €136 million respectively (2019: €15 million and €104 million).

Other post-employment benefits

In the third quarter of 2020, future contributions to one plan of the other post-employment benefits in the United States were adjusted. This resulted in a gain of €140 million, which is presented under functional costs in the segment Mercedes- Benz Cars & Vans.

E.22

Pension cost for the three-month-periods ended September 30

Q3 2020

Q3 2019

Non-

Non-

German

German

German

German

Total

plans

plans

Total

plans

plans

In millions of euros

Current service cost

-194

-170

-24

-176

-150

-26

Past service cost

105

-

105

-

-

-

Net interest expense

-26

-19

-7

-33

-23

-10

Net interest income

1

-

1

1

-

1

-114

-189

75

-208

-173

-35

E.23

Pension cost for the nine-month-periods ended September 30

Q1-3 2020

Q1-3 2019

Non-

Non-

German

German

German

German

Total

plans

plans

Total

plans

plans

In millions of euros

Current service cost

-593

-512

-81

-524

-449

-75

Past service cost

105

-

105

-

-

-

Net interest expense

-81

-57

-24

-98

-70

-28

Net interest income

2

-

2

3

-

3

-567

-569

2

-619

-519

-100

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 53

17. Provisions for other risks

Provisions for other risks are comprised as shown in table E.24.

E.24

Provisions for other risks

Sept. 30, 2020

Dec. 31, 2019

Current

Non-current

Total

Current

Non-current

Total

In millions of euros

Product warranties

3,396

4,944

8,340

3,744

4,964

8,708

Personnel and social costs

1,345

2,937

4,282

1,522

2,726

4,248

Litigation risks and regulatory proceedings

2,059

2,591

4,650

2,498

2,404

4,902

Other

2,400

564

2,964

2,563

503

3,066

9,200

11,036

20,236

10,327

10,597

20,924

18. Financing liabilities

Financing liabilities are comprised as follows:

E.25

Financing liabilities

Sept. 30, 2020

Dec. 31, 2019

Current

Non-current

Total

Current

Non-current

Total

In millions of euros

Notes/bonds

16,632

62,837

79,469

17,806

67,819

85,625

Commercial paper

884

-

884

3,278

-

3,278

Liabilities to financial institutions

22,322

13,529

35,851

23,043

16,768

39,811

Deposits in the direct banking business

10,487

4,035

14,522

9,713

3,406

13,119

Liabilities from ABS transactions

7,860

8,527

16,387

6,911

7,021

13,932

Lease liabilities

659

3,150

3,809

703

3,537

4,240

Loans, other financing liabilities

709

589

1,298

1,147

628

1,775

59,553

92,667

152,220

62,601

99,179

161,780

54 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

19. Legal proceedings

As previously reported, Daimler AG and its subsidiaries are confronted with various legal proceedings, claims as well as governmental investigations and orders (legal proceedings) on a large number of topics.

Diesel emission behavior: settlement of regulatory and civil proceedings in the United States

In the third quarter of 2020, Daimler AG and Mercedes-Benz USA, LLC (MBUSA) reached an agreement with various US authorities to settle civil and environmental claims regarding emission control systems of certain diesel vehicles in the United States. The involved US authorities are the US environmental agencies Environmental Protection Agency (»EPA«) and California Air Resources Board (»CARB«), the Environmental and Natural Resources Division of the U.S. Department of ­Justice (»DOJ«), the California Attorney General's Office as well as the U.S. Customs and Border Protection (»CBP«).

The authorities take the position that Daimler failed to disclose Auxiliary Emission Control Devices (AECDs) in certain of its US diesel vehicles and that several of these AECDs are illegal defeat devices. As part of these settlements, Daimler denies the allegations by the authorities and does not admit liability, but has agreed to, among other things, pay civil penalties, conduct an emission modification program for affected vehicles, provide extended warranties, undertake a nationwide mitigation project, take certain corporate compliance measures and make other payments.

The company has cooperated fully with the US authorities and continues to do so.

In the third quarter of 2020, Daimler AG and MBUSA also reached an agreement with plaintiffs' counsel to settle the consumer class action "In re Mercedes-Benz Emissions Litiga- tion" before the U.S. District Court for the District of New

Jersey­ . As part of the settlement, Daimler AG and MBUSA deny the material factual allegations and legal claims asserted by the class action plaintiffs and class members, but have agreed to provide payments to current and former diesel vehicle ­owners and lessees.

For the settlements with the US authorities, Daimler expects costs of approximately USD 1.5 billion. The estimated cost of the class action settlement is approximately USD 700 million.

In addition, Daimler estimates further expenses of a mid three- digit-million euro amount to fulfill requirements of the settle- ments.

The settlements are still subject to final court approval.

Diesel emission behavior: class-action and other lawsuits in the United States, Canada and Europe

As already reported, several consumer class-action lawsuits were filed against MBUSA in Federal Courts in the United States in early 2016. The main allegation was the use of devices that impermissibly impair the effectiveness of emission control systems in reducing nitrogen-oxide (NOX) emissions and which cause excessive emissions from vehicles with diesel engines. In addition, plaintiffs alleged that consumers were deliberately deceived in connection with the advertising of Mercedes-Benz diesel vehicles. Those consumer class actions were consolidated into one class action pending against both Daimler AG and MBUSA in the US District Court for the District of New Jersey, in which the plaintiffs asserted various grounds for monetary relief on behalf of a nationwide class of persons or entities who owned or leased certain models of Mercedes-Benz diesel vehicles as of February 18, 2016. Daimler AG and MBUSA moved to dismiss the lawsuit in its entirety. By order dated December 6, 2016, the court granted Daimler AG's and MBUSA's motion to dismiss and dismissed the lawsuit without prejudice, based on plaintiffs' failure to allege with sufficient specificity the advertising that they contended had misled them. Plaintiffs subsequently filed an amended class action complaint in the same court making similar allegations. The amended complaint also adds as defendants Robert Bosch LLC and Robert Bosch GmbH (collectively; "Bosch"), and alleges that Daimler AG and MBUSA conspired with Bosch to deceive US regulators and consumers. On Feb- ruary 1, 2019, the court granted in part and denied in part Daimler AG's and MBUSA's subsequent motion to dismiss. As described above, in the third quarter of 2020, Daimler AG and MBUSA reached a settlement with the US consumer class action plaintiffs that is still subject to final court approval. Daimler has made sufficient provisions for the expected costs of the settlement.

On January 8, 2019, the Arizona State Attorney General filed a civil complaint in Arizona state court against Daimler AG and MBUSA making similar allegations that Arizona consumers had been deliberately deceived in connection with the advertising of Mercedes-Benz diesel vehicles. The state seeks monetary penalties for violation of Arizona's consumer protection laws.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 55

Another consumer class-action lawsuit against Daimler AG and other companies of the Group containing similar allegations was filed in Canada in April 2016. On June 29, 2017, the court granted a procedural motion to certify certain issues for class treatment, and on March 12, 2018, the court ordered the parties to send a notice to the class by May 18, 2018, informing class members that the litigation is ongoing and that they will be bound by the outcome. That notice was sent, and class members had until July 20, 2018 to opt out of the class to avoid being bound by subsequent rulings in the case.

On July 14, 2017, an additional class action was filed in the Superior Court of California, Los Angeles County, against Daimler AG and other companies of the Group, alleging claims similar to the existing US class action. That action was removed to Federal Court and, on October 31, 2017, was transferred to the District of New Jersey. On December 21, 2017, the parties stipulated to dismiss, without prejudice, that lawsuit. It may be filed again under specific conditions. Daimler AG and MBUSA, respectively, regard the foregoing lawsuits in the United States and Canada as being without merit and will defend against the claims, unless a settlement has already been reached as described above.

Furthermore, a class action against Daimler AG and other Group companies was filed in the Netherlands on June 23, 2020. The class action makes allegations comparable to the aforementioned US and Canadian class actions relating to all Euro 5 and 6 diesel vehicles sold in the EU between 2009 and 2019. The plaintiff, a foundation under the law of the Nether- lands, is representing Dutch claimants and seeks certification of an opt-out Netherlands class (Dutch claimants are participating in the class action by law). In the course of the proceed- ings, other claimants who bought such vehicles in the EU market have the option to declare participation in the class action (opt-in). Furthermore, the plaintiff is seeking declarations of law concerning the customers' entitlement to nullify or rescind their vehicle purchase contracts, to demand replacement of their vehicle and/or to demand damages. Daimler AG and the other Group companies affected regard this class action as being without merit and will defend against the claims.

In Germany, a multitude of lawsuits by investors alleging the violation of disclosure requirements is pending against Daimler. In addition, some investors have raised out-of-court claims for damages. The investors contend that Daimler AG did not immediately disclose inside information in connection with the emission behavior of its diesel vehicles and that it had made false and misleading public statements. They further claim that the purchase price of the financial instruments acquired by them (in particular Daimler shares) would have been lower if Daimler had correctly complied with its disclosure duties. In this context, both investors as well as Daimler AG have filed motions to initiate a model proceeding in accordance with the Act on Model Proceedings in Capital Markets Disputes (KapMuG). Currently, no model proceeding is pend- ing. Daimler AG also regards these lawsuits as being without merit and will defend against the claims.

Diesel emission behavior: governmental proceedings As reported, several federal and state authorities and other institutions worldwide have inquired about and/or are/have been conducting investigations and/or administrative proceedings and/or have issued administrative orders, or in the case of the Stuttgart district attorney's office, a fine notice. The aforementioned matters particularly relate to test results, the emission control systems used in Mercedes-Benzdiesel vehicles and/or Daimler's interaction with the relevant federal and state authorities as well as related legal issues and implica- tions, including, but not limited to, under applicable environ- mental, criminal and antitrust laws. The authorities and institutions involved include, amongst others, the DOJ, which

in April 2016 requested that Daimler AG review its certification and admissions processes related to exhaust emissions of

diesel­ vehicles in the United States by way of an internal investigation in cooperation with the DOJ, the EPA, the CARB and other US state authorities, the South Korean Ministry of Environment (MoE), the South Korean competition authority (Korea Fair Trade Commission (KFTC)) and the Seoul Public Prosecu- tor's Office (South Korea), the European Commission, the ­German Federal Cartel Office ("Bundeskartellamt"), as well as national antitrust authorities and other authorities of various foreign states as well as the German Federal Ministry of Transport and Digital Infrastructure (BMVI) and the German Federal Motor Transport Authority (KBA). In the course of its formal investigation into possible collusion on clean emission technol- ogy, the European Commission sent a statement of objections to Daimler and other automobile manufacturers in April 2019. In this context, Daimler filed an application for immunity from fines (leniency application) with the European Commission some time ago. The Stuttgart district attorney's office is conducting criminal investigation proceedings against Daimler employees concerning the suspicion of fraud and criminal advertising, and, in May 2017, searched the premises of Daimler at several locations in Germany. In February 2019, the Stuttgart district attorney's office also initiated a formal

investigation­proceeding against Daimler AG with respect to an administrative offense. In September 2019, the Stuttgart ­district attorney's office issued a fine notice against Daimler based on a negligent violation of supervisory duties in the amount of €870 million which has become legally binding, thereby concluding the administrative offense proceedings against Daimler.

56 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Since 2018, KBA has issued various administrative orders holding that certain calibrations of specified functionalities in ­certain Mercedes-Benz diesel vehicles are to be qualified as impermissible defeat devices and ordered subsequent auxiliary provisions for the respective EC type approvals in this respect, including mandatory recalls and, in certain cases, stops of the first registration. In addition and since 2018, Daimler has (in view of KBA's interpretation of the law as a precaution) implemented a temporary delivery and registration stop with respect to certain models, also covering the used-car, leasing and financing businesses, and is constantly reviewing whether it can lift this delivery and registration stop in whole or in part. Daimler has filed timely objections against the KBA's administrative orders mentioned above in order to have the open legal issues resolved, if necessary, also by a court of law. In the course of its regular market supervision, KBA is routinely conducting further reviews of Mercedes-Benz vehicles and is asking questions about technical elements of the vehicles. In light of the aforementioned administrative orders issued by, and continued discussions with, the KBA, additional administrative orders can be issued in the course of the ongoing and/or further investigations. Since September 1, 2020, this also applies to other responsible authorities of other Member States and the European Commission which conduct market surveillance under the new European Type Approval Regulation and can take measures upon assumed non-compliance, irrespective of the place of the original type approval. The new calibrations requested by KBA are being processed, and for a substantial proportion of the vehicles, the relevant software has already been approved by KBA; the related recalls have insofar been initiated. It cannot be ruled out that software updates may be reworked, further delivery and registration stops may be ordered or resolved by the Company as a precautionary mea- sure, also with a view to the used car, leasing and financing businesses, under the relevant circumstances.

Daimler continues to fully cooperate with the responsible authorities and institutions.

As described above, in the third quarter of 2020, Daimler AG and MBUSA reached agreements with various US authorities to settle civil and environmental claims regarding emission control systems of certain diesel vehicles in the United States that are still subject to final court approval. Daimler has made ­sufficient provisions for the expected costs of the settlements.

As described above, the Stuttgart district attorney's office's administrative offense proceedings and the proceedings underlying the civil settlements with the US authorities have been resolved, whereas the settlements are subject to final court approval. The other aforementioned inquiries, investiga- tions, administrative proceedings and the replies to these related information requests as well as the objection proceedings against the administrative orders are ongoing.

Accounting assessment of the legal proceedings in ­connection with diesel emission behavior

With respect to the legal proceedings described in the two preceding chapters, in accordance with IAS 37.92 no further information is disclosed with respect to whether, or to what extent, provisions have been recognized and/or contingent liabilities have been disclosed, so as not to prejudice Daimler's position. This does not apply to the extent any settlement has been reached or any proceeding has been concluded. A contingent liability from the class action in the Netherlands cannot currently be measured.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 57

Antitrust law proceedings (including actions for damages) Starting on July 25, 2017, a number of class actions have been filed in the United States and Canada against Daimler AG and other manufacturers of automobiles as well as various of their North American subsidiaries. Plaintiffs allege to have suffered damages because defendants engaged in anticompetitive behavior relating to vehicle technology, costs, suppliers, mar- kets, and other competitive attributes, including diesel emissions control technology, since the 1990s. On October 4, 2017, all pending US class actions were centralized in one proceeding by the Judicial Panel on multidistrict litigation and transferred to the U.S. District Court for the Northern District of California. On March 15, 2018, plaintiffs in the US class action amended and consolidated their complaints into two plead- ings, one on behalf of consumers and the other on behalf of dealers. On June 17, 2019, the court granted motions to dismiss in the consolidated US class action proceedings, albeit with leave to amend, and on August 15, 2019, the plaintiffs filed amended complaints making similar allegations. On March 31, 2020, the court granted motions to dismiss these first amended US class action complaints, albeit with leave to amend. On June 26, 2020, the plaintiffs filed second amended com- plaints. Daimler AG and MBUSA regard the US and Canadian lawsuits as being without merit, and will defend against the claims. This contingent liability cannot currently be measured.

In this context, Daimler AG may disclose that it filed a leniency application with the European Commission some time ago. In late October 2017, the European Commission conducted pre- announced inspections with Daimler in Stuttgart (as well as further inspections with other manufacturers) in order to further clarify the facts of the case. In the third quarter of 2018, the European Commission opened a formal investigation into possible collusion on clean emission technology. In the course of such investigation, the European Commission, in April 2019, sent a statement of objections to Daimler and other automobile manufacturers to which Daimler responded in good time. At present, Daimler does not expect this issue to have any material impact on the Group's profitability, cash flow and financial situation.

Following the settlement decision by the European Commission adopted on July 19, 2016, concluding the trucks antitrust proceedings, Daimler AG and Daimler Truck AG are facing cus- tomers' claims for damages to a considerable degree. Respective legal actions, class actions and other forms of legal redress have been initiated in various states in and outside of Europe and should further be expected. Daimler is taking appropriate legal remedies to defend itself. In accordance with IAS 37.92, no further information is disclosed with respect

to whether, or to what extent, provisions have been recognized and/or contingent liabilities have been disclosed, so as not to prejudice Daimler's position.

Class-action lawsuits Takata airbag inflators

As already reported, class actions in connection with Takata airbags are pending in Canada, the United States and Israel. The lawsuits are based on the allegation that, along with Takata entities and many other companies that sold vehicles equipped with Takata airbag inflators, Daimler entities were allegedly negligent in selling such vehicles, purportedly not recalling them quickly enough, and failing to provide an adequate replacement airbag inflator. In detail: In August 2016, Mercedes-Benz Canada (MB Canada) was added as a defendant to a putative nationwide class action that remains pending in Ontario Superior Court. In addition, Daimler AG and MBUSA were named as defendants along with Takata companies in June 2017, in a US nationwide class action, which was filed in New Jersey Federal Court. In the third quarter of 2017, such lawsuit was transferred to federal court in the Southern District of Florida for consolidation with other multidistrict litigation proceedings. Further class action lawsuits in the USA were integrated into the multiple district proceedings. One of the multidistrict litigation complaints also asserts claims by automotive recyclers who allege injury because they are not able to re-sell salvaged airbag inflators that are subject to the Takata recall. The motions to dismiss against that complaint are still pending. In February 2019, Daimler AG and its non- subsidiary Israeli distributor (Colmobil) were named as defendants in an Israel-wide class action alleging inadequacy of Takata recall efforts in Israel and that action remains pending. The previously reported lawsuit filed by the State of New

Mexico­ against MBUSA was dismissed without prejudice on June 22, 2017. It may, however, be filed again under specific conditions. Daimler AG continues to regard all these lawsuits brought with regard to Mercedes-Benz vehicles as being ­without merit, and the Daimler Group affiliates respectively affected will further defend themselves against the claims. Contingent liabilities were disclosed to a low extent for this topic.

The statements regarding legal proceedings set out above are to be read in conjunction with ENotes 23, 30 and 31 to the Consolidated Financial Statements as at December 31, 2019.

58 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

20. Financial instruments

Table E.26 shows the carrying amounts and fair values of the Group's financial instruments.

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Given the varying influencing factors, the reported fair values can only be viewed as indicators of the prices that may actually be achieved in the market.

E.26

Carrying amounts and fair values of financial instruments

Sept. 30, 2020

Dec. 31, 2019

Carrying

Carrying

amount

Fair value

amount

Fair value

In millions of euros

Financial assets

Receivables from financial services

95,060

96,908

103,661

104,930

Trade receivables

10,739

10,739

12,332

12,332

Cash and cash equivalents

24,498

24,498

18,883

18,883

Marketable debt securities and similar investments

8,063

8,063

8,655

8,655

Recognized at fair value through other comprehensive income

4,534

4,534

5,323

5,323

Recognized at fair value through profit or loss

3,053

3,053

2,858

2,858

Measured at cost

476

476

474

474

Other financial assets

Equity instruments and debt instruments

943

943

860

860

Recognized at fair value through other comprehensive income

578

578

482

482

Recognized at fair value through profit or loss

365

365

378

378

Other financial assets recognized at fair value through profit or loss

112

112

27

27

Derivative financial instruments used in hedge accounting

2,180

2,180

1,191

1,191

Other receivables and financial assets

3,450

3,450

3,328

3,328

145,045

146,893

148,937

150,206

Financial liabilities

Financing liabilities

148,411

150,164

157,540

159,288

Trade payables

14,877

14,877

12,707

12,707

Other financial liabilities

Financial liabilities recognized at fair value through profit or loss

23

23

52

52

Derivative financial instruments used in hedge accounting

347

347

1,186

1,186

Miscellaneous other financial liabilities

7,877

7,877

8,491

8,491

Contract and refund liabilities

Obligations from sales transactions

4,193

4,193

5,200

5,200

175,728

177,481

185,176

186,924

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 59

The fair values of financial instruments were calculated on

the basis of market information available on the reporting date. The following methods and premises were used:

Marketable debt securities and similar investments, other financial assets and liabilities

Marketable debt securities are recognized at fair value through other comprehensive income or at fair value through profit or loss. Similar investments are measured at amortized cost and are not included in the measurement hierarchy, as their carrying amount is a reasonable approximation of fair value due to the short terms of these financial instruments and the fundamentally lower credit risk.

Equity instruments are recognized at fair value through other comprehensive income or at fair value through profit or loss. Daimler does not generally intend to sell its equity instruments which are presented at September 30, 2020.

Marketable debt securities and equity instruments recognized at fair value were measured using quoted market prices at the end of the reporting period. If quoted market prices were not available for these debt and equity instruments, fair value measurement is based on inputs that are either directly or indirectly observable in active markets. Fair values are calculated using recognized financial valuation models such as discounted cash-flow models or multiples.

Other financial assets and liabilities recognized at fair value through profit or loss include derivative financial instruments not used in hedge accounting. These financial instruments as well as derivative financial instruments used in hedge accounting comprise:

  • Derivative currency hedging contracts; the fair values of cross currency interest rate swaps are determined on the basis of the discounted estimated future cash flows (taking account of credit premiums and default risks) using market interest rates appropriate to the remaining terms of the financial instruments. The valuation of currency forwards is based on market quotes of forward curves; currency options are measured with option-pricing models using market data.
  • Derivative interest rate hedging contracts; the fair values of interest rate hedging instruments (e.g. interest rate swaps) are calculated on the basis of the discounted estimated future cash flows (taking account of credit premiums and default risks) using the market interest rates appropriate to the remaining terms of the financial instruments.
  • Derivative commodity hedging contracts; the fair values of commodity hedging contracts (e.g. commodity forwards) are determined on the basis of current reference prices with consideration of forward premiums and discounts and default risks.

60 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Contract and refund liabilities

Contract and refund liabilities include obligations from sales transactions that qualify as financial instruments. Obligations from sales transactions should, in principle, be regarded as short term. Due to the short maturities of these financial instruments, it is assumed that their fair values are equal to their carrying amounts.

Table E.27 provides an overview of the classification into measurement hierarchies of financial assets and liabilities recognized at fair value (according to IFRS 13). At the end of each reporting period, Daimler reviews the necessity for reclassification between the fair value hierarchies.

For the determination of the credit risk from derivative financial instruments which are allocated to the Level 2 measurement hierarchy, portfolios managed on basis of net exposure are applied.

E.27

Measurement hierarchy of financial assets and liabilities recognized at fair value

Sept. 30, 2020

Dec. 31, 2019

Total

Level 11

Level 22

Level 33

Total

Level 11

Level 22

Level 33

In millions of euros

Financial assets recognized at fair value

Marketable debt securities

7,587

4,958

2,629

-

8,181

5,254

2,927

-

Recognized at fair value through

4,534

1,905

2,629

-

5,323

2,396

2,927

-

other comprehensive income

Recognized at fair value

3,053

3,053

-

-

2,858

2,858

-

-

through profit or loss

Equity instruments and debt instruments

943

341

276

326

860

275

270

315

Recognized at fair value through

578

299

160

119

other comprehensive income

482

205

158

119

Recognized at fair value

365

42

116

207

through profit or loss

378

70

112

196

Other financial assets recognized at

112

-

112

-

27

-

27

-

fair value through profit or loss

Derivative financial instruments

2,180

-

2,180

-

1,191

-

1,191

-

used in hedge accounting

10,822

5,299

5,197

326

10,259

5,529

4,415

315

Financial liabilities recognized

at fair value

Financial liabilities recognized

23

-

23

-

52

-

52

-

at fair value through profit or loss

Derivative financial instruments

347

-

347

-

1,186

-

1,186

-

used in hedge accounting

370

-

370

-

1,238

-

1,238

-

  1. Fair value measurement based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
  2. Fair value measurement based on inputs that are observable in active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
  3. Fair value measurement based on inputs for which no observable market data is available.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 61

21. Segment reporting

As described in ENote 1, as of January 1, 2020, the internal reporting and organizational structure is based on the segments Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks & Buses and Daimler Mobility. The segments Mercedes- Benz Cars and Mercedes-Benz Vans are aggregated into the reportable segment Mercedes-Benz Cars & Vans in line with the nature of the products and services offered, as well as their brands, sales channels and customer profiles.

Taking into account the internal supply of goods and services within the new segments, segment information for the year 2019 has been adjusted to the new segment structure. Further- more, in the figures for the previous year, the effects of certain legal issues and equity investments not previously allocated to the segments have been reclassified from the reconciliation to the vehicle segments. See ENote 1 for further information.

Segment information for the three-month periods ended September 30, 2020 and September 30, 2019 is as follows:

E.28

Segment reporting for the three-month periods ended September 30

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q3 2020

External revenue

24,976

8,845

6,460

40,281

-

40,281

Intersegment revenue

842

385

417

1,644

-1,644

-

Total revenue

25,818

9,230

6,877

41,925

-1,644

40,281

Segment profit/loss (EBIT)

2,118

541

589

3,248

-178

3,070

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q3 2019

External revenue

25,623

11,107

6,540

43,270

-

43,270

Intersegment revenue

939

376

546

1,861

-1,861

-

Total revenue

26,562

11,483

7,086

45,131

-1,861

43,270

Segment profit/loss (EBIT)

1,470

838

413

2,721

-31

2,690

62 E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Segment information for the nine-month periods ended

September 30, 2020 and September 30, 2019 is as follows:

E.29

Segment reporting for the nine-months periods ended September 30

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q1-3 2020

External revenue

65,523

23,139

19,026

107,688

-

107,688

Intersegment revenue

2,440

1,035

1,402

4,877

-4,877

-

Total revenue

67,963

24,174

20,428

112,565

-4,877

107,688

Segment profit/loss (EBIT)

1,503

32

852

2,387

-382

2,005

Mercedes-Benz

Daimler

Daimler

Total

Recon-

Daimler

Cars & Vans

Trucks & Buses

Mobility

segments

ciliation

Group

In millions of euros

Q1-3 2019

External revenue

74,030

32,155

19,433

125,618

-

125,618

Intersegment revenue

2,013

1,083

1,679

4,775

-4,775

-

Total revenue

76,043

33,238

21,112

130,393

-4,775

125,618

Segment profit/loss (EBIT)

-171

2,225

2,053

4,107

-177

3,930

Reconciliation

Reconciliation of the total segments' profit/loss (EBIT) to the

EBIT of the Daimler Group is as shown in table E.30.

The reconciliation comprises corporate items for which headquarters is responsible. Transactions between the segments are eliminated in the context of consolidation.

E.30

Reconciliation to Group figures

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

In millions of euros

Total segments' profit/loss (EBIT)

3,248

2,721

2,387

4,107

Share of gains/losses on equity-method investments1

-169

9

-312

29

Other corporate items

-53

-1

-211

-211

Eliminations

44

-39

141

5

EBIT

3,070

2,690

2,005

3,930

1 In the first quarter of 2020, the impairment of Daimler's equity investment in BAIC Motor of €150 million is included. In the third quarter of 2020, the impairment of Daimler's equity investment in BAIC Motor of €180 million is included.

E | INTERIM CONSOLIDATED FINANCIAL STATEMENTS 63

22. Transactions with related parties

Related parties (companies or persons) are deemed to be associated companies, joint ventures and unconsolidated sub- sidiaries, as well as persons who exercise a significant influence on the financial and business policy of the Daimler Group. The latter category includes all persons in key positions and their close family members. At the Daimler Group, those persons are the members of the Board of Management and of the Supervisory Board.

Related companies

Business transactions with related companies are generally carried out at market terms. Most of the goods and services supplied between the Group and related companies comprise transactions with associated companies and joint ventures and are shown in table E.31.

Associated companies

A large proportion of the Group's sales of goods and services with associated companies relates to business relations with LSH Auto International Limited (LSHAI) and with Beijing Benz Automotive Co., Ltd. (BBAC), which are allocated to Mercedes- Benz Cars & Vans.

The purchases of goods and services shown in table E.31 were primarily from LSHAI; the receivables and payables shown relate primarily to BBAC.

Joint ventures

In business relationships with joint ventures, significant sales of goods and services took place with Fujian Benz Automotive Co., Ltd., which is allocated to Mercedes-Benz Cars & Vans, and with DAIMLER KAMAZ RUS OOO, which is allocated to Daimler Trucks & Buses. In addition, other operating income of €154 million resulted from the contribution of the smart brand to the joint venture smart Automobile Co., Ltd. in the first quarter of 2020.

ENote 12 provides further details of the significant associated companies and joint ventures.

E.31

Related party relationships

Sales of goods and

Purchases of goods and

services and other income

services and other expenses

In millions of euros

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

Q3 2020

Q3 2019

Q1-3 2020

Q1-3 2019

Associated companies

3,484

3,472

9,582

9,875

175

174

593

556

thereof LSHAI

1,646

1,884

4,783

5,235

106

148

377

475

thereof BBAC

1,726

1,512

4,530

4,343

66

22

205

66

Joint ventures

320

211

923

640

104

33

274

83

Receivables1

Payables2

Sept. 30,

Dec. 31,

Sept. 30,

Dec. 31,

In millions of euros

2020

2019

2020

2019

Associated companies

2,743

3,324

122

116

thereof LSHAI

611

1,288

32

24

thereof BBAC

1,998

1,966

81

78

Joint ventures

369

213

94

78

  1. After write-downs totaling €85 million (December 31, 2019: €66 million).
  2. Including liabilities from default risks from guarantees for related parties.

64

Auditor's Review Report

To Daimler Aktiengesellschaft, Stuttgart

We have reviewed the condensed interim consolidated financial statements of Daimler AG - comprising consolidated statement of income/loss, consolidated statement of comprehensive income/loss, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and selected, explanatory notes - together with the interim group management report of the Daimler AG, for the period from January 1 to September 30, 2020, that are part of the quarterly financial report according to § 115 WpHG ("Wertpapierhandelsgesetz": "German Securities Trading Act"). The preparation of the condensed interim consolidated financial statements in accordance with International Accounting Standard IAS 34 "Interim Financial Report- ing" as adopted by the EU, and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports, is the responsibility of the Company's management. Our responsibility is to issue a report on the condensed interim consolidated financial statements and on the interim group management report based on our review.

Based on our review, no matters have come to our attention that cause us to presume that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with IAS 34, "Interim Financial Report- ing" as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.

Stuttgart, October 22, 2020

KPMG AG

Wirtschaftsprüfungsgesellschaft

We performed our review of the condensed interim consoli-

Sailer

Dr. Thümler

dated financial statements and the interim group management

report in accordance with the German generally accepted

Wirtschaftsprüfer

Wirtschaftsprüfer

standards for the review of financial statements promulgated

by the Institut der Wirtschaftsprüfer (IDW) and additional appli-

cation of the International Standard on Review Engagements

2410 "Review of Interim Financial Information Performed by

the Independent Auditor of the Entity" (ISRE 2410). Those stan-

dards require that we plan and perform the review so that we

can preclude through critical evaluation, with a certain level of

assurance, that the condensed interim consolidated financial

statements have not been prepared, in material respects, in

accordance with IAS 34, "Interim Financial Reporting" as

adopted by the EU, and that the interim group management

report has not been prepared, in material respects, in accor-

dance with the requirements of the WpHG applicable to interim

group management reports. A review is limited primarily to

inquiries of company employees and analytical assessments

and therefore does not provide the assurance attainable in a

financial statement audit. Since, in accordance with our

engagement, we have not performed a financial statement

audit, we cannot issue an auditor's report.

Addresses |

Financial Calendar

Information

Investor Relations

Telephone

+49 711 17 95277

17

92285

17 95256

Fax

+49 711 17

94075

This report and additional information can be found on the Internet at www.daimler.com

Concept and contents

Daimler AG

Investor Relations

Publications for our shareholders

Annual Report (German and English)

Interim Reports on the first, second and third quarters (German and English)

Sustainability Report (German and English) www.daimler.com/ir/reports

Interim Report Q3 2020

October 23, 2020

Analyst and Investor Conference

(with Annual Report 2020)

February 18, 2021

Annual Press Conference

February 18, 2021

Annual Shareholders' Meeting 2021

March 31, 2021

Interim Report Q1 2021

April 23, 2021

Interim Report Q2 2021

July 21, 2021

Interim Report Q3 2021

October 21, 2021

As changes to the above dates cannot be ruled out, we recommend checking on the Internet shortly before each scheduled date at www.daimler.com/ir/calendar.

Daimler AG Mercedesstr. 120 70372 Stuttgart Germany www.daimler.com

Disclaimer

Daimler AG published this content on 23 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 October 2020 07:44:02 UTC


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