Outlook

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Outlook Interim Report Q2 2008 (as of July 24, 2008)

The statements made in the Outlook section of the Interim Report are based on the current assumptions of the Daimler management. In turn, these assumptions are based on the expectations for general economic developments described below, which are in line with the appraisals made by renowned economic research institutions and the targets set by our divisions. Expectations for future business developments reflect the opportunities and risks arising from the market conditions and competitive situations as the year progresses.

With regard to existing opportunities and risks, we refer to the statements made in our Annual Report 2007 and the notes on forward-looking statements at the end of this Management Report. During the year 2008 to date, risks have grown due to the deteriorating economic outlook caused by the continuing crisis of financial markets, further increases in the prices of oil and other important raw materials, and the ongoing depreciation of major currencies against the euro. The volume of receivables relating to Chrysler has increased due to the utilization of the subordinate credit line of US$1.5 billion that was already agreed upon in the context of the transfer of a majority interest in Chrysler.

For full-year 2008, Daimler assumes that the world economy will continue to lose momentum as the year progresses. The influence of high raw-material prices, rising inflation rates, falling purchasing power and tight capital markets are likely to prevent a significant revival from taking place in the coming months. The growth slowdown is expected to affect nearly all regions, but to be particularly pronounced in the industrialized countries. But since the emerging markets should continue their solid expansion, although with less dynamism than before, their significantly increased importance for the world economy means that from today’s perspective growth of nearly 3% seems to be possible despite the current uncertainties (2007: 4.0%). This will only occur, however, if the expansionary economic measures taken in the United States are effective and facilitate at least a little economic growth in that country. Another major assumption is that inflationary pressure does not increase any further. The interest-rate policy reactions that would then become unavoidable would depress demand at least in the short term. At present, the biggest individual risk for the world economy is certainly to be seen on the side of raw materials and the development of the oil price.

Due to the gradual slowdown of global growth, Daimler foresees worldwide expansion in sales of motor vehicles of only approximately 2% in the year 2008 (2007: 4.2%). The main drivers of global demand for vehicles will continue to be the emerging markets of Asia, Eastern Europe and South America, especially the BRIC countries. Daimler anticipates aboveaverage growth in these regions once again in 2008, for both cars and commercial vehicles. However, the markets of Western Europe, North America and Japan will develop less dynamically. The total automobile market of Western Europe is likely to be smaller than last year due to the significant economic slowdown in the region, with unit sales actually falling in some high-volume segments. But a positive aspect is that the important German market should grow over the full year. In an increasingly difficult environment, the best that can be expected for the overall Western European market for commercial vehicles is that it remains flat at its high prior-year level, but with significant growth in the segment of trucks above 6 tons.

The weakness of the US economy is severely impacting the development of the motor-vehicle market. A further significant drop in demand for cars is to be expected especially in the volume segments. Within the US market for commercial vehicles, the anticipated revival for heavy trucks will probably not start before the end of 2008 or the beginning of 2009. The Japanese car market is likely to just about equal its prior-year level, while demand for commercial vehicles is expected to fall.

Based on the divisions’ planning, Daimler expects its total unit sales to increase in the year 2008 (2007: 2.1 million vehicles).

Mercedes-Benz Cars expects to increase unit sales in the year 2008. The full availability of the new C-Class sedan and station wagon as well as the new smart fortwo will make a big contribution to this sales increase. In the second half of the year, we expect new sales stimulus from the recently introduced A- and B-Class models, the CLS, SLK, SL and the new CLC. The launch of the refreshed M-Class and especially the new GLK in late 2008 will also provide additional sales momentum in the following year. However, for lifecycle reasons we anticipate lower unit sales of the E-Class, which is in its last full model year. In view of the worsening economic environment, production output will be adjusted compared with the previous planning. The changed market outlook, rising raw-material prices and ongoing negative exchange-rate effects will also lead to burdens on earnings that cannot be offset by our significant efficiency improvements and higher unit sales. EBIT is therefore expected to be lower than in the prior year, with a return on sales in the magnitude of 8%.

Daimler Trucks looks forward to rising unit sales in full-year 2008. This is largely due to positive developments in Europe and growth in Asian markets. Higher material costs and the effects of the weaker US economy will offset this positive development. Overall, we anticipate full-year earnings in the magnitude of € 2 billion.

Due to strong demand for the Sprinter and the positive sales trend of the Vito/Viano, Mercedes-Benz Vans expects significant growth with a new unit-sales record in 2008. In the bus business, we expect to match the high level of unit sales achieved in the prior year once again. Daimler Financial Services anticipates a moderate increase in its worldwide contract volume in full-year 2008. Despite the expenses connected with setting up its own financial services organization in North America, the division continues to assume that it will achieve a return on equity of at least 14% in the full year. We anticipate a slight increase in the Daimler Group’s total revenue in full-year 2008 (2007: €99.4 billion).

The number of employees at the end of the year is expected to be slightly higher than the number a year earlier.

On the basis of the divisions’ projections, in 2008 we expect the Daimler Group to post EBIT from ongoing operations of more than €7 billion. Effects related to Chrysler are not included therein.

More detailed information can be found in the extensive Annual and Interim Reports as well as in additional data files and reporting formats more